AJ: I begged Kirby to write a series on how to use credit cards to your absolute benefit, and I’m so excited about this post. Kirby is an absolute machine at navigating the positive side of credit card and bank account benefits. Heed his advice, the points and cash back benefits are well worth it!

KJ: Beware: the information contained in this post may make you suddenly generate extra cash. This sudden windfall might leave you with a strange feeling of ‘why haven’t I always done this?’

I got my first credit card in my first year of college. There were offers around every corner (something quite disgusting for college students who typically have little wherewithal or knowledge on how to properly manage a credit card), so it was (and is) important to pick a credit card that is right for your lifestyle whether that be mileage benefits, cash rewards, or other rewards programs. At the time, I didn’t even have to provide any documentation showing what my income was in order to determine how much credit I could qualify for. Why is that okay? From the get-go, many companies are setting you up for failure. Why wouldn’t a college student with little income per month not say ‘sure, I’ll take $2,000 of credit!’? ‘It’s okay, I’ll just pay it back when I get that great job’…

My view for the only way to optimally use a credit card is to use it for your regular monthly expenses, earn rewards, and pay it in full at the end of the month. If you instead add expenses and simply make the minimum monthly payment, it would take you YEARS (or even DECADES if you are adding anything to the card each month) to pay it off, and that $1,500 tv that was such a ‘steal’ could end up costing you over $2,800! Since the interest rates that most companies charge are exorbitant (the best rates can be around 9% per year while good rates can still be in the mid-teens), it’s easy to fall victim to credit card companies. Few are designed to actually help the consumer from a long-term perspective, and in fact many keep the consumer indebted for years. When used properly though, you can enhance your savings by gaining some attractive rewards.

Here are ten rules and guidelines my wife and I live by:

1) Do not get a credit card you cannot pay off regularly.

The expenses and interest you will pay will FAR outpace the benefits you would have otherwise received no matter how enticing the card’s initial terms or rewards. Some of the best cards available for rewards I’ve found are Chase’s Freedom card for cash rewards as well as some of the Citi American Airlines cards for airline rewards. As unique as a budget, not all credit cards are for everyone, and one size does not fit all.

2) Get the card that fits your lifestyle to maximize the benefits.

Shop ’til you drop. Not for purchases though! Do your research upfront Bankrate.com is a great resource to evaluate different credit card offers). For us, our preference is for cash rewards.

3) Save most (or all) of your rewards.

If cash rewards are your elixir, when you come across ‘sudden’ money in the form of rewards redeemed, try saving it all (or at least save an equal amount to what you plan to spend). You didn’t have the money yesterday, and you don’t have much control of when it will hit next, so why tack it on as an increase in your lifestyle and living expenses? Once you get accustomed to a certain lifestyle, it is tremendously difficult to take a step back.

4) Stick to your guns.

If you open a credit card for the rewards, and you plan to close it after the initial teaser reward, then stick to your guns. Pay attention to minimum holding periods (six months for some cards) where the rewards are eliminated if closed within that period of time. This is particularly important for some of the glamorous first time card offers. Especially with some of the bonus airline mileage cards, they have a fee after the first year of the card, which may make the card become unattractive after the grace period.

5) Credit is better than debit.⁽¹⁾

Compared to the debit card counterparts, you often have more protection against wrongful purchases and product returns in the event that something doesn’t work as the merchant promised.

6) Find ‘foreign travel’ friendly cards for out of country visits.

Certain credit cards are ‘foreign travel’ friendly with minimum transaction costs and exchange rate fees. In my experience, Schwab and Capital One have been good companies for travel protection, access, low fees, etc. especially since they both typically reimburse all ATM fees. If you’re traveling out of the country, be mindful of charges for foreign transaction fees and conversion charges. Foreigners are particularly susceptible to identity theft/fraud, and watching your accounts regularly to see if something crops up is important.

7) Cash advances can be dangerous.

They start charging you interest from the day you take the cash out. As such, use only as a last resort!

8) Try something new: LOWER your credit limit.

Contact the credit card companies to reduce your available credit amount. Hear a pause at the end of the phone followed by a ‘what is that you say?’ and you will know it’s not a common question they receive. It’s so easy to fall into a trap of having several credit cards: the access to a higher credit limit and other rewards can be intriguing, but it can get you into trouble. If you reduce your credit available, you will have to rely more and more on your personal savings and cash before making a large purchase, but you will find yourself in a much stronger financial position long-term. Our grandparents used to pay for everything with cash (cars, larger down payments on a home, appliances, furniture, etc.), so why not bring cash back into style?

9) Do the math.

If you are applying for a card with an annual fee, calculate if the rewards for what you regularly purchase more than offset the annual fee compared to other rewards cards. In order for the math to work, sometimes it entails increasing your expenses to make the rewards worthwhile, and that’s precisely the last thing you should do!

10) Easy isn’t always better.

Credit cards make access to money easy, but when was the last time the easy route was the best route?

The methods outlined above are really only feasible if you have a good handle on what your income AND expenses are each month (see also our relevant posts: How to build a budget and Budgeting: a very good place to start). Then, you really KNOW what you can and cannot afford. Follow the steps of:

(1) establish an emergency fund,
(2) eliminate credit card debt, and
(3) begin saving for your future goals (vacation or retirement).

You will find you are in a much better position to handle the unexpected that invariably comes up.

For some additional references with comparisons of credit cards versus debit cards:
(1) http://www.cbsnews.com/8301-505146_162-57365965/4-reasons-to-use-credit-cards-versus-debit-cards/
(1) http://www.fdic.gov/consumers/consumer/news/cnfall09/debit_vs_credit.html

The above post was republished with consent by DebtFreeMarriage.org from TheSimplemoneyBlog.com.

Here’s the deal.. Financial Infidelity shows up in BIG ways.. and in some small, subtle ways. See if any of these resonate with you.

- A husband JUST finds out that his wife of 5 years has debts from BEFORE they were married, and he NEVER knew about it.
- A wife tells hers kids, “don’t tell daddy about ____”, as she buys them yet ANOTHER toy after her and her husband agreed that the kids have WAAAY too many.
- A husband eats out with his coworkers daily… but his wife thinks he eats out once a week.
- A wife brings home a free puppy or kitten without talking it over with her husband.. It’s cute, but you gotta FEED it!
- A husband tears up the bathroom on a whim with a sledgehammer and starts a big remodeling project, but it wasn’t a planned expense.
- A wife has a closet full of clothes and shoes she purchased without her husbands knowledge.
- A husband, knowing that money is tight, says yes to a trip across the state because he can’t say NO to his wife. He puts on a facade that “Everythings ok” when he knows that they are behind in the bills.

These were just a few examples.. but all are very REAL circumstances that I’ve either witnessed or been a part of. I’ve also used the terms Husbands and Wives a lot in these examples.. because married partners should be 100% accountable to each other. Each time one spouse tells a little white lie, makes a hidden purchase, or buys something without speaking to the other, it UNDERMINES the relationship. If you’re single.. the only person you’re really accountable to is yourself, however once you tie the knot, your finances and your credit will be co-mingled with your spouse. I don’t mean to scare the engaged couple.. after all, two heads are better than one and when you make decisions together, you do it to benefit the both of you.

If you’re currently committing Financial Infidelity.. you may be closing off the person who can help you the most… your SPOUSE!

The wife, who had debt before she got married, it all blew up when she couldn’t pay those “Hidden” bills. When her husband found out.. was he mad? Absolutely.. but then he asked…”Why didn’t you let me know you were in over your head?”. Now he is working to help her pay down the debt.

Who are you hurting the most? Why… it’s YOU!

If you’re married…sit down with your spouse regularly and go over all your finances. Adopt a policy of FULL DISCLOSURE will all your purchases. Then set some goals and work on them together. Accomplishing goals as a partnership will bond you closer together and it is a beautiful thing.

If you’re engaged…make plans to mingle your finances together after you get married and make sure you are BOTH involved in the decision making process. When one spouse controls all the money… it becomes way to tempting to make a hidden purchase here or there while the other has to ASK for money.. this is not wise. All accounts, passwords, bills, and expenses should be shared.

Should each of you have SOME money that you can spend without being accountable? A small amount is fine.. but be careful.. if it causes resentment in your spouse.. you may want to rethink that. I know someone who always spent HIS money on games… and she was spending HER money on HIM.. does that seem fair?

Best thing to do, right now.. it to start being HONEST with your partner. Don’t make big decisions by yourself. Don’t start new projects that cost money without your confidante’s support. Don’t keep your partner in the dark either… if you know something bad is coming (like a potential layoff), don’t let your partner get blindsided by the news or be told by someone else.

Finally, be honest with yourself.

Your comments are welcome!

Suppose I have an $8000 credit card and an $8000 bank loan. They both have the same interest rate of 14.4% AND they both have the same payment of $220.

You would think that these two loans would get paid off at the same time, but that would be very wrong.

By the time you pay of Credit Card, you’ll have spent $3300 more in interest than you would have using the bank loan.

WHY IS THAT?

- Is it because credit cards are more convenient?
- Is it because credit cards are revolving loans?

So lets explore…

Most people are aware that when you take the more convenient choice… you pay more. It’s more convenient to go to a gas station than it is to visit the grocery store, but the prices are almost double for the items there. Whenever you shorten the length of time to do something, you pay a premium to do so.

So what makes a credit card more convenient than a bank loan? Well… it’s an easier application process for one. You fill out a pamphlet and give it to the bank teller, or you do it all online. Then you get your answer in the mail. Applying for a bank loan is not convenient at all. You have to go to the bank and sit with the loan officer and if feels like begging.

With a bank loan, once you pay it down, you can’t just borrow more money unless you go through the loan process again to get another loan. With a credit card on the other hand, you can pay it down and charge it up again without every having to apply.

This is called revolving credit. You can pay down and charge up your credit line. You can borrow, repay, borrow again, and repay as often as you like without the hassle of creating new paperwork. Revolving credit is a cool idea and it’s a convenient idea, but it is a COSTLY idea!

Here’s why:

A bank loan has a fixed payment schedule. In the case of the loan above, an $8000 balance will take 48 months to payoff with a payment of $220 and an interest rate of 14.4%.

The credit card with the same numbers will have a payment of $220 as well, but ONLY for the first month! The second bill has a payment of $217 and the third bill has a payment of $214.

It’s called a Decreasing Minimum Payment. Because you pay less and less each month, it takes you longer to pay off the bill AND it costs you more money in all. In fact, this loan will take 202 months to pay off and costs $3300 more in interest charges. This is true even if you are never late and interest rates never go up.

This is a big problem with an easy solution. You can pay off a credit card just as if it was a bank loan simply by keeping your payments the same each month. Whatever you are paying today, just keep paying it until your balance is $0. It helps to pay more when you can… but definitely DO NOT just pay the minimum payment they send you. Minimum payments are ineffective and do not put a dent into your balance.

With this strategy, you can pay off your credit cards faster and save a lot of money.

For a more comprehensive look at this subject please check out this report:
Credit Card vs. Bank Loan

Also… the strategies listed in this article and in the report are just a FEW of the strategies included in the Debt Elimination Engine found here:
www.DebtFreeInnerCircle.com

And finally… here is my Debut Podcast on iTunes. Feel free to comment below.

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On Monday. I called the mortgage company as soon as they opened and I learned some shocking news. It seems when they set up the escrow on the mortgage, they figured in the home owners insurance but they did NOT figure in the property taxes. In fact… they didn’t pay the property taxes for THREE YEARS! They “just” realized it and paid what was owed… but now they want to COLLECT it back from us in 12 months. This means a payment hike MORE THAN DOUBLE what we were paying before. Only problem was.. We couldn’t afford the new payment.

Now… I don’t like to cause my wife any undue stress, but this was BIG DEAL, and I don’t like keeping things from her. But before I could show her the letter and tell her what was going on, I had to find a solution. I asked the mortgage company if they would collect the deficiency over 24 months instead of 12. They agreed that the circumstances were unusual so they granted the request. Now the mortgage payment was set at $1107. It would still be hard… but doable.

The mortgage company sent us a new “Escrow Analysis” letter showing the $1107 payment, and I sat down with my wife to talk about it. Understandably she was upset at the situation. How could the mortgage company DO that? I explained everything I learned, and let her know where the money was going to come from to make the difference. She appreciated me doing my research and felt much better that we had plan was in place.

If you have “bad news” to give… follow these tips:

When you have “Bad News”

1. Don’t hide it – Many times it’s tempting to pretend you never got the bill, or the letter, or the eviction notice… but things like this ALWAYS come out at some point. When it does, you spouse will not appreciate the blind side.

2. Have a solution if possible – You don’t want to simply dump the problem on your spouse. If you have any control over the situation, present to spouse both the PROBLEM and the SOLUTION.

3. Ask for help – If you don’t have a solution, or you can’t implement the solution alone, ask your spouse for help. You will need their support no matter what.

4. Thank them – Thank your spouse for listening, for offering suggestions, and for being brave under the circumstances.

Have you had to give bad news to your spouse? Do you have more tips on how to make it easier?

So what makes the difference between those who succeed at accomplishing their goals and those that don’t? Is it the person or the goal? Sometimes it’s both.

Problems with the Resolution Itself

Many times a person will state a New Years Resolution but leave it vague, unrealistic, or based on results. Lets take a look a each of those problems:

Too Vague: If my new years resolution is “I want to lose weight”, that leaves a lot of open questions. How MUCH weight? What timeframe? HOW am I going to do it? The problem with this resolution is that it isn’t specific enough. It would be better to say “I want to lose 35 pounds by June 1st, 2013 by eating healthy, drinking lots of water, and daily exercise.” This statement gives you the WHAT, WHEN, and HOW the resolution is going to be achieved. A goal that is vague and not specific is nothing more than a wish.

Unrealistic: If my new years resolution is to “Win the Lottery”, “Lose 100 lbs in 3 weeks”, or “Sell my house for profit by the end of the month” then I’m just asking for failure. These goals are unrealistic because they too dependent on outside circumstances beyond your control. You cannot MAKE the lottery machine spit out the correct numbers. You cannot force your body to lose 100 lbs in 3 weeks (not the correct way anyhow), and while it might be POSSIBLE to sell your house for profit by the end of the month, it’s highly IMPROBABLE. Ask yourself what’s more likely? Is it more likely that you’ll burnout trying to lose too much weight too fast than actually succeed? Is it more likely you’ll sell your house for profit if you don’t rush the process than if you took the first offer than came along? Is it likely that you’ll win the lottery at all? Make sure your goals are firmly rooted in reality and based on things you can actually control.

Based on Results: Some goals focus on the end results instead of the means to which you can get those results. For example, if your goal was to “Sell $500,000 worth of product”, that is focusing on the results you want. Results are consequences of your actions. Getting sales is a consequence of making sales calls right? So if you were to focus on the actions you take (such as making more sales calls), then you would naturally increase your results. So a good goal in this case would be “This year I’m going to increase the number of sales calls I make to 35-50 a day”. A different example would be “For the next three months I’m going to do the P90X workout routine”. Focus on the actions only and then the natural consequences of those actions will follow.

Even if people can make a well established goal, there is still one obstacle they need to overcome: Themselves.

Personal Blocks to Achieving Your Goal

Many times…the roadblocks to accomplishing a goal or resolution are rooted in FEAR, BELIEF, and a LACK of planning. Even if your goal is reasonable, realistic, well thought out, and worth the effort, there still may be a part of you that is afraid to take the first step.

Before you even take your first step, you have to believe in your own success. If you don’t believe that you can lose the weight, quit cigarettes, or pay off the debt, then it just won’t happen. So first you have to believe that it is possible to accomplish. You’ve known people who have accomplished the goal, so you know it’s possible. Next.. you have to believe that it is possible FOR YOU to accomplish. Visualize yourself doing the ACTIONS that will take you to a completed goal. See yourself winning and feel now what it feels like to win in the future. Sometimes, your belief is all you need to motivate you to success.

Sometimes a goal never gets achieved because you never take the first step. Usually when procrastination rears it’s ugly head it is due to a FEAR of some kind. Here are some common fears:

Fear of failure, Fear of success, Fear of looking like an idiot, Fear of stepping out of your comfort zone, Fear of people leaving you, Fear of growth, Fear of gain, Fear of being hurt, Fear of death, and the biggest one: Fear of the unknown.

Many people fear the unknown more than they fear death. Strange isn’t it? We will continue to do things that are harmful to us, because we are resistant to the making change and face the unknown. But once you do… the unknown becomes known and it really isn’t so scary.

Whatever fear is blocking you from succeeding with your goal. Face it instead of delaying the start of your journey. When you feel the fear…acknowledge it and continue walking the path anyway. Pretty soon you’ll get over the fear.

Lastly…another block to achieving your goal is a lack of planning and preparation. You can’t succeed at a goal unless you have setup the environment for success. If your goal was to run a marathon in July and you signed up for it, but then did not start training for it, you won’t be prepared when the day comes. You can’t build anything without plans… and you can’t succeed at your goal until you have the right environment and the right mindset.

So..it all comes down to the final questions. Whatever your New Years Resolution is:

Is it Specific?
Is it Realistic and Attainable?

Before you get started remember to BELIEVE that YOU can achieve the goal, acknowledge your fears about it, and set up your environment.

What are your New Years Resolutions and what are your FEARs in relation to them?

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So what does this mean to you?

Can you solve the nation’s debt problem?  Can I solve the nation’s debt problem?

Unfortunately the problem is much bigger that we think and you and I cannot do a thing on our own to solve the nation’s fiscal problems.

There needs to be a EXTREMELY STRONG MESSAGE that will reach all Americans:

You are a Part of the Solution

Here’s the thing… our Government, just like most American’s today, have maxed out their credit cards.  The only way the problem will be solved is by either increasing income and cut spending.  Our Government will eventually have to do BOTH.

What does this mean to you?

You will see prices rise, you will see taxes rise, you will see interest rates on loans rise.  But you will not see your income rise in the same rate.  You will feel the SQUEEZE of the Government correcting a problem it should have corrected long ago.

It’s coming folks..  if not for us… for our children.

I don’t say this to be all doom and gloom.  I’m telling you this so that you can do something about it now for you and your children.

You MUST do the following:

- Get out of ALL debt, including your mortgage.  Pay it all off and OWN it all.

- Live on CASH.  Debit cards are fine,  Credit cards are not.

- SAVE in your emergency fund to protect you from job loss.

- Invest your money to build personal wealth

I realize that this is a simplistic view of what needs to be done..  but I can tell you that only 4% of Americans are actually doing this.  The other 96% are spending way beyond their means with credit.

If every American got themselves out of debt.. and started saving again, the nation might have a chance.  Unfortunately that is only wishful thinking on my part.  The only thing I can do right now is to tell you how to get there yourself.  The government is going to solve it’s fiscal problem whether you were part of the solution or not.  If you don’t start getting yourself out of debt right now…you will eventually live a substandard life because you’ll be owing 75% of your income to taxes and interest.

I’m not crying wolf here.  Others have been there and done that.

I am thankful that these projects have not tied up a lot of money. It’s stressful enough to be overextended with my time… but it would be worse to also be financially overextended as well. If I started several websites and sunk a lot of money into each of them, then I would be under a lot of pressure to make sure each of them was successful and turn a profit at some point. Essentially, each website is its own mini “business” and I can spread my efforts amongst all of them or just one at a time.

A friend of mine told me “I’d rather be 100% done with ONE thing… then 10% done with each of TEN things.” I wish I had headed that advice long ago.

So how does all this relate to your finances? Do you find yourselves juggling too many services, memberships, and clubs. Do you spend too much time volunteering for your kids school functions, organized sports, and other enrichment?

We know some folks… We call them the “Soccer” family. That’s because all three of the children are enrolled in Soccer. Because they are all different ages, they have to attend practice at different times and their game schedules are hectic. On a typical weekend, the parents have to attend FIVE games in 2 different stadiums. Maybe that’s normal for some… but to me that’s being overextended.

Others are overextended with debt. They are juggling credit cards because they have too many. It’s a tough spot to be in and the pressure is enormous. Quite often people in this situation spend more money on things just to feel better, meanwhile they are adding to their debt level.

Solution:

Find ways to simplify your life. Take a look at how your time is being spent? Do you ENJOY all of it? If not, why do you continue to do it? Take a look at where you’re money’s going. If most of it is being spent on debt, isn’t it time to start taking steps to eliminate it so that you don’t have debt anymore?

In my case, I’ll need to discontinue building new websites until I complete the ones already in motion. Working on them one at a time until they are all completely done.

What’s got you overextended?

Right now, we have “other things” we’re saving for. Just recently we saved up the money to build our kids a huge playground in the backyard. We did the saving, we did the building ourselves, and now the kids can enjoy it to the fullest. We enjoy watching them play on it with their friends and we can bask in the fact that it’s all paid for.
But before we even built the playground, we were excited about it.

You see, once you start saving…once you put that first dollar in the jar (or the savings fund), the anticipation and the excitement can begin.

We’ve done this for a while, so when we say we’re going to save up for something, we MEAN it! Right now, we’re excited about the theme park passes we’re planning to get before the summer starts. We’ve been building the excitement in our kids about the parks we’re going to. We are ACTIVELY saving up for this right now, because it was the next thing on our list. We can keep the excitement going on and on until the day comes for us to buy them. Then we are really going to enjoy ourselves. The best part of all, is that we won’t be coming home from the theme park wondering how we’re going to pay for it all…because we already did!

Contrast that with a family who doesn’t save. Using the theme park example, the parents decide to take the kids to the theme park on impulse. They say “Surprise kids, we’re going to the Disney World!”. They go the following weekend and they pay for everything on credit. When they get to the theme park the worrying begins. The kids are having a great time, but the parents are scratching their heads wondering “how much ARE we spending?”. The father says “Let’s just go with it…we’re here to have fun!” but the mother just isn’t too sure. They can try to forget about the growing cost…for a while…but in the back of their minds they know reality is coming back soon, and this realization STEALS the joy they could be having in this moment.

I don’t know about you…but I don’t want to be worrying about money WHILE I’m on vacation! I’d rather know that the trip is already paid for and that the spending money for souvenirs, pictures, food, snacks, hotels, and transportation have already been paid for in advance. That way, I can lay back, watch, and enjoy my family having the time of their lives. When I get home…I don’t have to worry about the post-trip blues. Yes, I still have to come back to reality, but the adjustment won’t include a credit card bill!

I know it’s sounds old fashioned…but saving up for your vacation allows you to have positive anticipation BEFORE it starts…FUN while you are away…and NO BILL when you get back. The alternative is to miss the anticipation stage altogether, go on a trip and worry about money while you are away, and have a bill come in your mailbox when it’s over.

So it won’t be long before we have completely saved up for our theme park passes. We are looking forward to having many great times over the next two years with them.

So what’s next?

Well…I’m anticipating walking up to my wife with sunglasses and a Hawaiian-shirt on saying “Do you know what day it is?? TODAY is the day we start saving up for a cruise!”

Is there something you are saving for right now?

This building has been sitting unfinished for more than a decade! What happened? A Christian television station decided to build a building entirely on donations. The problem was they didn’t plan for the total cost of the project and the donations ran out. Now instead of being the Majesty building it was intended to be… it has been dubbed the “Eyesore on Interstate-4″.

Now let’s get personal…

A budget is meant to be a tool for you to use to keep track of your spending. Many times though… people go over budget… people had expenses they didn’t plan for… people didn’t write down everything they were supposed to. When this happens… people… because we’re all human… throw the budget out the window and assume it didn’t work.

So what happened? Did you FAIL because you blew the budget? Are you a bad person because you blew the budget?

No… and No….

The problem here is that emotional response you make when you know that you have exceeded your plan. Was the problem with your ability to stick with the plan? or was the plan UNREALISTIC for you?

So let me make a blanket statement that will put all these questions behind you:

“Human’s are not perfect, nor are the budgets they create…”

Okay.. with that said.. now I’ll go into the nitty-gritty of what to DO when you blow the budget.

First of all… you DON’T throw your budget out… you simply make changes to it.

It’s called “Course Correcting”

If you were on a boat and you were navigating by the stars… you’d get your bearings and steer the boat towards your destination. Every once in a while you check your bearings again… if you’re off course, you change direction and you get back on track to your destination.

It’s the same thing with a budget as in this example:

Let’s say that you started with $500 in your checking account, and you earned about $3000 this month.  You planned on spending only the money you brought in, and still have $500 left in your checking when the month was over.  Unfortunately life happened and it didn’t quite workout that way.

So in the budget above… you went over by $250.00. Now you’re left with $250 in the checking account instead of $500 like you planned. What will you do now?

You make changes in your budget. Set new goals for yourself…course correct. Next month.. try to spend a little less on food and gas. Lower the budget on Dr. Visits from $80 to $30 and budget $50 to go back into your checking account. Hopefully by then end of next month.. you end up with more in your checking than when you started.

So instead of starting all over again. Make changes to the original budget. Add new line items for expenses you forgot to write the first time. Increase some areas and decrease others. After a few months of course correcting.. you’ll end up with a budget that you don’t have to spend a lot of time to maintain.

Happy Budgeting!

If you DO find that you are ALWAYS spending more than you make… then you have a cash flow problem and that takes solutions of a whole different kind!

Feel free to leave a comment. Have you created a budget and stuck with it?

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When it comes to using your money however, you don’t want to play around too much to see what works and what doesn’t.  There are 3 things you can do with the money you earn.  You can SPEND it, or SAVE it, or GIVE it away.  Everyone spends.  Most people don’t save.  Even fewer people give away a substantial portion of their income. Most people are on the 100% spend plan, and find that they are NOT happy nor have they built up a sizable nest egg to ensure future security.  If this is you, try a new approach. Try living on less than you make.  How?  Try the 80-10-10 budget plan.  This means SPEND 80%, SAVE 10%, and GIVE 10%.

Some people have a hard time with this.  To some people, asking them to SAVE 10% seems totally outrageous and asking them to GIVE 10% is utterly ridiculous!  Doing BOTH seems impossible.  I’m here to assure you that it’s not.  I’m also here to tell you that your best FINANCIAL life CAN be accomplished by having a proper balance of all three uses of money.

Giving 10%  – Giving your money away, to a church, to a charity, or to a great cause, not only benefits those whom you give to, but it benefits YOU.  When you give your money away freely, with no strings attached, you feel good about yourself.  Even better than giving money away freely is to do it ANONYMOUSLY.  When you give, just for the sake of giving, you open the door to receiving more.  It’s a phenomenon that’s been around as old as time.  What you sow you will also reap.  When you give your money away selflessly, new opportunities and blessings find you.

Save 10% – This is the pay yourself first principle.  This is setting aside 10% of your income for your retirement consistently over your working life.  This ensures that you will have a nest egg large enough to sustain you in your later years, IN LUXURY.  However..  there is one caveat I’ll mention now before continuing.  If you have debt, then this 10% should be used towards eliminating your outstanding debt instead of saving.  Once all your debt is eliminated, then you can begin saving and investing your 10%. For more information about eliminating debt quickly Click Here…

Spend 80% – This is for the rest of your monthly expenses.  Budget the everything else in your life with this remaining amount.

You’ll find that by doing this..  you’ll be a happier person in general… because it feels good to give… because your debts are going down or your savings is going up… and you are living below your means.

What about you?  Do you think it’s possible to live this way?  Do you think it’s possible FOR YOU?  Why or why not?

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Fortunately for us, we can cover the expense without dipping into the emergency fund, but I really have to smack myself for forgetting to budget for this item. What I SHOULD have done, was set aside an additional $21 in my maintenance fund right after paying for it LAST year!

But hey, we’re only human… Can’t think of everything right?

There are things that you and I pay for once, twice, maybe 3-4 times a year… and we forget all about them because we are trained to think in terms of “Monthly” bills and “Monthly” income. How often does your auto-insurance come due? How often do you have to renew the tags on your vehicle? What about the annual maintenance fees on your gym membership?

Instead of letting them sneak up on us when the time comes, wouldn’t it be better to already have the money set aside for it? That way.. when the notice comes in the mail, you can just write a check and send it back.

So what kinds of expenses do you have that occur less than quarterly? You might have:

• Auto Insurance – Every 6 Months
• Vacation Bible School – Once a year
• Summer Camp – Once a year
• Tag Renewal – Once every 1-2 years
• Drivers License Renewal – Once every 3-4 years
• Gym Memberships – Once a year
• Annual Fee on Credit Cards – Once a year
• School Programs
• School Yearbooks
• etc.

So are you ready for these expenses? Or will they be sneaking up on you too?

Feel free to comment below. What expenses do you have that I didn’t list?

My family and I use coupons everyday, and we’ve seen just about every reaction imaginable from the people behind us in line and from the cashier too. The strangest reaction, however, was when someone said: “You use coupons?… You MUST be POOR!”

Now, that has left me pondering… “Are we poor, because we use coupons?”

To answer that question, I took a look at my family’s financial situation as a whole. We have ZERO consumer debt, a few medical bills here and there, and our home mortgage. We spend about $400 a month on groceries, toiletries, and health & beauty products. That is probably 50% less than the average household who spends $600-$800 on these items. Could we spend as much as other families on their grocery bill? Can we not afford more?

The answer is yes: We COULD spend $600-$800… but we DON’T HAVE TO… Because we use coupons.

You see… while other families spend $600 to get $600 worth of groceries and other stuff, we’re spending $400 to get $4,000 worth of groceries and other stuff. We’ve been tracking our spending and savings for the last year and a half and we managed to have a CONSISTENT savings rate of 85%-92% every month. How can this be? It’s all because of those little coupons!

Using coupons doesn’t mean you’re POOR… it means you’re SMART!

For example, let’s say your family likes Jenni-O Turkey Burgers and you need TWO boxes. One box normally costs $8.59, which means for two boxes you’d pay around $17.18. But if you had two $2.00 off coupons and the boxes were on a buy one get one free sale, you can save a lot of money. Consider the following:

Scenario 1: No Coupons, No Sale
Buy 2 boxes of Jenni-O Turkey Burgers: 2 @ $8.59 each = $17.18
You pay $17.18 for two boxes

Scenario 2: Use Coupons, No Sale
Buy 2 boxes of Jenni-O Turkey Burgers: 2 @ $8.59 each = $17.18
Use 2 $2.00 off coupons: -$4.00
You pay $13.18 for two boxes

Scenario 3: Use Coupons, Buy One Get One Sale
Buy 2 boxes of Jenni-O Turkey Burgers: 2 @ $8.59 BOGO = $8.59
Use 2 $2.00 off coupons: -$4.00
You pay $4.59 for two boxes
Price for EACH: $2.30 a box!

Isn’t it SMARTER to pay $2.30 a box, rather than $8.59 a box? …and this is just ONE ITEM. What if you applied this principle to EVERYTHING you buy?

If you’re in debt, living paycheck-to-paycheck, it’s really worth it to use coupons to improve your situation. The money you save will help make your payments easier. For more information about how to use coupons effectively like this, follow this guide I wrote a couple of years back.

For some offline learning, The “How To Shop For Free” book by couponing expert, Kathy Spencer, is a MUST HAVE!

And finally.. visit www.couponfedfamily.com or www.couponfedfamily.com/facebook to see how my family and I save 90% on just about everything!

But then something strange happened. On Saturday (VERY NEXT DAY) there were long lines at the RETURN DESKS! The same people who waited in long lines to BUY stuff are now waiting in long lines to RETURN it? Big Screen TV’s, Blu-Ray Players, and toys were all being returned. Could it be that they found a better deal somewhere else? I have my doubts!

What is going on here?

I had always thought that the returns would happen AFTER Christmas…meaning AFTER the items were wrapped up and given away as presents. Not So! It appears that people who were caught up in the spending frenzy of Black Friday were buying things on CREDIT CARDS! They bought too much stuff using money they didn’t have, and came into the store with NO PLAN. After they had a chance to sleep on it, the buyer’s remorse kicked in and convicted them. They spent too much on credit and they know that they cannot afford the payments. The only thing left to do is to take the item back.

So how to you avoid waiting in line to buy things you’ll just take back later? It’s easy…USE CASH!

You can’t possibly overspend if you run out of cash now can you? And you won’t overfill your cart if you think you’ll see the word “DECLINE” when you use your debit card. You should already have an idea of what you’re going for when you shop and how much it’s going to cost. Set yourself a limit before go as well, in case you DO find some unadvertised deals out there.

Christmas should never leave you in more debt than what you started with. The problem is that many people feel obligated to out-do their siblings, or their parents, or their friends and digging themselves into a hole. Instead of CHARGING to buy gifts for people when you are low on cash…MAKE the gifts instead. I have found that the best gifts were hand made and were more meaningful than any gadget money can buy. Make something that is uniquely you, and has meaning for the person you are giving it to.

If you were caught by the spending bug…don’t fret. I know your heart’s in the right place. Pay it off as fast as you can and start saving cash for next Christmas!

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The SPENDER Money Personality

You know who they are… they could be your neighbor, your mother, your father, your spouse, or even YOU.  Spenders are fun to be around.  They like to go out to eat, entertain, buy gifts, host parties, plan vacations, and all sorts of things involving spending money.  The best thing that can happen to a spender is to win money and the worst thing that can happen to a spender is to be told they can’t spend anymore because there isn’t any left.  Whether the purchase is big or small makes no difference, spenders simply love to buy things.  If you are a spender, here are some of the reasons why people like being around you so much:

Pro’s of being a Spender

- You are extremely generous.  You can give like no one else can.  When someone’s birthday is around the corner, you’ll want the best for them and you’ll enjoy not only buying them a gift, but you also want to be there when they unwrap it.  You are also give larger tips than most people.  You do this because you have a kind heart.

- You know how to have fun.  Spending time with you on a vacation or on a date is a joy unto itself.  You spare no expense so you don’t usually say “no” to others who are with you.  You obtain joy from the spending and it’s easy for others around you to get caught up in that vibe.  This makes them feel good, and therefore want to spend time with you too.

- Men, you guys like to spend money on home improvements, kitchen remodeling, building a deck, and so on to keep your house functional and modern.  Ladies, you love to spend money decorating the house and making the house a home.  When someone walks into your house… they can tell that a spender lives here.

- You are spontaneous.  You might see something in the store what you weren’t planning to buy, but its something that you know that a friend would love, so you get it.  You could be at the mall with a friend and suddenly you smell ice cream or those soft pretzels and suddenly you want one, so you get it.  This is who you are, and there’s no guilt or shame about it.

Sometimes people avoid you though.  It could be that they are jealous of you because you have money to spend, or it could be that you’ve bought things for them from a kind heart but they still feel obligated to you for some reason.  Most of the time, it could be that you might display one or more of these, well..unattractive characteristics:

Con’s of being a Spender

If you are a spender, you should know that you CAN be -

- Selfish.  You buy for yourself and yourself only.  When others are around you, they may feel pressured to spend more than they want to because you’re spending all the time wherever you go.  Even if you DO spend money taking your friends out to eat, they still have to spend more because it’s usually understood that next time… they’re paying!

- Lazy with your finances.  You spend, but don’t keep track of what your spending.  This may cause adverse effects such as bounced checks, over the limit penalties on your credit card, and so forth.  When you want to talk to someone… they roll their eyes at you and say “DUH! you spend too much!”

- Impatient. You want to go spending money now.  RIGHT NOW! If go crazy if you have to wait for your paycheck to be deposited.  On payday, you might go on a spending spree until it’s all gone… after you pay bills of course.

- Impulsive.  Spending money on things that you need is great.  Spending money on things you don’t need, using money you don’t have (with credit cards) just to feel better is where some people begin to pull away from you.  Impulse buying is ok when it’s small.  But when you do it often it adds up. You complain to others you have no money to do buy toilet paper but then the next day you tell them about the $250 you spend renting a bounce house for the birthday party.

-Competitive.  Keeping up with the Jone’s.  Buying things you don’t need to impress others, to one-up others, or to appear better than other.  Racking up massive debt just to be the best in the neighborhood doesn’t mean you’re winning in life.  If anything, it puts you in a vulnerable position.

Now I’m not trying to beat up on you… I can say these things about spenders because I am one.  The truth is that all the money personalities have pro’s and con’s.  Not one is any better than another.  Having all these personalities around adds flavor and spice to your life and your marriage.  Just realize that you are a unique individual and have a lot to contribute.

What about you?  Are you a spender?  Are you married to one?  Please share your thoughts in the comments section below.

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Your spouse is an important person. So when you are leaving them for a few days or more, make sure they are taken care of at home. For example: One wife might make sure that her husband has some frozen meals on hand before she leaves for a convention. She knows that her husband won’t cook for himself but he’ll not starve if he has something quick to make. Another example is a husband who leaves for training and makes sure that he calls home often to touch base and say hello. He knows his wife wants to update him on what’s going on, so when they talk he gives her his full attention.

The key to understand is that while you are away, you CONTINUE your relationship instead of putting it on hold. With that in mind, here are some do’s and don’ts with regards to being away from your spouse.

THE DO’s:

1) Check in often - Call your spouse a few times per day to say hello and that you miss them.  For me this is like touching home base.  Don’t just talk about the logistical stuff (what did the kids eat?), but talk about whats happening in both of your lives.

2) Take care of your spouse’s needs – Make sure your spouse at home has everything they need before you leave.  Men, make sure your wife has enough cash on hand and transportation.  Ladies, make sure your husband have enough food and clear instructions (if needed) on how to run the household.

3) Update your spouse – Let your spouse know when you’re getting on the plane, when you land, and when you arrive at your destination.  Traveling is stressful, not only for you, but also for your spouse.  Let them know that you are okay and you made it to the next part of your trip.

4) Be understanding – Your spouse is left to do things that you normally do around the house, and they may not do them exactly the same way you do.  With that in mind, show your appreciation for any amount of effort your spouse puts in at home while you’re away.

THE DON’Ts

1) Don’t brag – While it’s normal to enjoy yourself while you are away, don’t call your spouse to tell them what their missing out on.  They might be at home taking care of the kids, they don’t need to hear “Woo Hoo!” in the background while you’re at the dance club.  If circumstances were different, your spouse would be able to be there with you.  So don’t rub it in, it’s cruel.

2) Don’t ignore your spouse – When your spouse calls you, give them your full attention.  Things can happen at home and you may be needed to make a quick decision.  Don’t blow off your spouse and say something like “Don’t bother me unless it’s life of death…”

3) Don’t leave angry – Those moments leading up to your trip can sometimes be awkward and tense.  Don’t fight with your spouse just before you leave.  If you do, call quickly and apologize.

4) Don’t relax immediately when you get home – Men, don’t come home and leave the unpacking for your wife to do.  When you walk in the door, be prepared to offer your help to whatever needs to be done in the house, and then relax WITH your wife later.

Even if you only travel away from your spouse a few times a year there is still an impact on your spouse.  Make sure that impact is minimized and that your spouse is taken care of.  When you get back, spend time with your spouse and your children.  Time spent reconnecting will go farther than any gift or souvenir you can bring home.

How has traveling away from your spouse affected your marriage?

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What you do, when you have irregular income, is you find out how much you need minimally in a given month.  Let’s say that $1800 per month covers your rent, utilities, gas, food, coffee, entertainment, and all your other expenses.  Now let’s say that you’re irregular income changes based on the amount of work you did in the month or the sales that you do in a month.  Your income could be anywhere between $2000 and $3000 for the month.

The trick to budgeting on an irregular income is to DEFINE a threshold that you do budgeting with.  Let’s suppose in this example that you’ve been doing this sales job for awhile and you’ve never made below $2100 in a month.  So you can assume that if you have a bad month… that you’ll at least get the $2100 as a minimum.

With your threshold set..  You can do a budget just like a person with a FIXED income and you list the $2100 and you spend it on paper.

Now if you make MORE than $2100 in this example… which is LIKELY because you have an irregular income, some nice things can happen.  You should compile a LIST of financial goals that you want to achieve using the amounts you get in EXCESS of the $2100 that you budget with.  Lets say that you wrote down the following goals:

1) Put $1000 in a savings account

2) Buy a big screen TV

3) Take your spouse on a cruise

4) Pay off the car

When you have a GOOD month (or anything over the $2100).  You can put the extra towards one of these goals.  Each GOOD month you have…put it towards the SAME goal until that goal is complete.  Don’t start a new goal until you finish one.  The key is to FOCUS on one thing at a time.  So conceivably, you can have the $1000 in a savings account goal completed in 2-3 GOOD months.  Each time you finish a goal…talk over the next goal with your spouse, then work towards that one.

With a system like this in place… you can budget your expenses and spend on paper,  AND you can treat the excess income as a WINDFALL and use it to work towards some serious goals.

Now if you’re not able to count on at least your minimum expenses being paid each month.. then you may have to take 1 or 2 of those GOOD months and place some padding in your budget by having money set aside.  You may even need to increase your income (with a 2nd job) if it is not sustainable.

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When you walk together financially with your spouse… it’s as beautiful as walking down a beach together. You start on the same page… you both know what your financial situation looks like… you both know what your goals are and you both agree on the steps to reach those goals.

When a couple does not talk about money.. does not have the same goals… does not have the same methods.. does not start in the same place with the same information… how can they possible walk together in agreement? The outside observer will witness one partner walking north and the other partner walking south. They are so far away that they can’t possibly HEAR each other.

What happens when a couple doesn’t communicate? They start living separate lives under one roof. There is division…disunity…it opens the door for financial infidelity…and it causes pain. But it doesn’t have to be this way.. because a couple can learn how to communicate financially.

Let’s take a classic example of a Spender/Saver relationship. He’s a spender… She’s a saver… He likes to have fun, and buy gifts for people… She like’s to have cash on hand and cannot stand wasting money.

At first this couple clashes big time: He calls her a tightwad… she calls him a child.. He says she is no fun at all… she says he’ll spend all the money until they’re broke. They are focused on each others flaws…and the negativity continues until their both start walking in different directions financially.. and then communication completely stops.

Instead… if they focus on each others STRENGTHS… they can then realize their OWN flaws… and work together to walk along the same path.

He can realize that she DOES like to have fun… she just doesn’t want to pay FULL PRICE for fun. So he can say to her.. “Honey.. I’d like to go to this water park.. are they running any specials?”. This gets HER excited, because she loves deals. So they start planning a trip to the water park when it doesn’t cost an arm and a leg.

She can realize that he’s not wasteful, but generous! She realizes his gift giving for what it is..and she can also realize the joy in giving to others. So she starts finding ways to buy gifts for less. He doesn’t mind buying gifts cheap… because now he can buy more gifts than he used to.

So if you’re in financial discord with your partner…try to understand what strengths your partner has…and focus on those instead of their flaws. Start being honest with your partner in what you’re doing too, and if you need help.. ask for it.

Two people can’t walk together unless they agree. They have to agree on where to start, what pace to walk, and where they are going. Walking together financially is a beautiful thing. Just like a walk down the beach.

What are your thoughts?

He writes:
“ive been looking for a new truck… had my eyes on an 05 ram 1500 4 door short bed 111,000 miles chrome wheels SLT with a hemi for 15,000 worth like 18,000 and no one would finance me cuz ive been at my job 2 months and have 0 credit. but this new finance guy at <dealership> ran me through <bank> and they actually financed me for this car! its 21%… but still they did it lmao (laughing my ass off). no clue why cuz ive been workin for 2 months and have no credit at all. tell the finance guy at ur dealership to try to get u a loan through <bank>”

Now.. he’s actually telling another young person where to get their new car purchased and what bank to use… but do you hear the hidden message?

He’s basically saying, “I have NO CLUE why anyone would finance me!!”, and he’s HAPPY he’s got the truck he wanted.

Now I don’t like bursting bubbles for fun. But in this case I felt it was necessary. This was my reply to him:

“<name>,

I’ve done some quick calculations.. better sit down.

If you financed $15000 at 21% for 60 months… you will pay $24,350 (with 9,350 being interest) and your payment is around $406.00 per month.

or if you opted for a 72 month loan… you will pay $26,500 (with 11,500 being interest) and your payment is around $368 per month.

Now..your truck may be worth $18,000 today.. but what is it going to be worth 5 or 6 years from now? I’ll assume that it’ll lose 1/2 of it’s value in those years.

So on month 60 or month 72 when you finally pay your 24,000th dollar or your 26,000th dollar.. you’ll be relieved that you’ve paid off your $9000 truck.

It’s very sad, but very true.. you thought you saved $3,000, but you are going to pay $9,000-$11,500 in interest because they let you take the truck home today.

In contrast.. if you had saved up your truck payments in advance..(about $400 a month) for about 32 months.. you’d have about $13000 in CASH. Then you could have walked into the dealership and you could have said “I want that $18,000 truck, and I have $13,000 cash. You can sell it to me now, or I can walk across the street and buy another truck from the dealership over there.” Then they would have stumbled over each other to get their commission because they would NOT have let you walk out the door. They DO NOT let real cash walk away. After you bought the truck cash.. YOU’D HAVE NO PAYMENTS.. you would then get to spend your $400/month on something else…

I’m afraid, as said before. You got jacked.

But it doesn’t have to end badly for you. Maybe you don’t see this as a mistake just yet (because the euphoria hasn’t worn off). But this could just be the biggest blessing or opportunity you’ll have.

You DON’T have to pay ALL $9000 or $11,500 in interest. If you worked really hard at paying the truck off, you might be able to reduce that down to about $3000 or $4000. Maybe less if you worked REALLY REALLY hard.

Here’s how: Get a second job, and use EVERY PENNY of that 2nd paycheck and put it all towards your truck. 100% of that extra money goes to the principal of the loan (the part that interest is charged on). If you’re knocking down principal each and every month, there is quickly nothing left for them to charge you interest on. The only way to beat the dealerships at their own game is to pay MORE each month then they asked you to.

However.. I’d advise you to take the truck back. Lesson Learned…then start saving the money to buy a truck with CASH. But if you must have it… pay off that loan as FAST as possible…don’t borrow the money to do it… EARN IT. You can save yourself a good portion of the interest and be much better off then if you just make payments the way THEY want.

Reality hits HARD… and when it hits you… you’ll end up HATING the truck instead of LOVING it…

I guarantee if you work hard to pay it off, you’ll appreciate the truck a whole lot more.

If you want more accurate numbers please send me an email. I imagine that the actual amount financed is MORE than $15,000, am I right?

Good Luck sir!”

Let me know if you think I was too hard on him. What would YOU have said? Please comment below…

Your wife looks to you to provide the basic necessities of food, clothing, shelter, utilities, transportation, and a little excitement and fun. If you can do that, then your wife will be able to make the house into a home, raise happy kids, entertain friends and guests, and enrich the lives of everyone around her including you. However, if your wife has to help provide the basic necessities of life as well, then she cannot do these things.  At best, she may not be able to devote any energy into the home or to your marriage, and at worst, she may resent you BIG TIME.

Consider these scenarios:

1) A husband got laid off from his job and is on unemployment.  Meanwhile his wife is working two part time jobs.  She comes home from her 2nd job, then cooks, cleans, and gives the kids a bath.  Over the weekend she’s got the kids with her as she shops for groceries and runs errands.  On her way home she’s thinking, “Is this all there is??”

2) Another man works 40 hours a week and when he gets home each day, he see his wife for 20 minutes, then she’s off to work.  He puts a TV dinner in the microwave and starts heating it up.  Then he sits down at the home projector screen and watches some TV.  When his wife gets home from her job, he’s fast asleep in the Lazy Boy recliner.

3) Yet another man works 60+ hours a week.  His wife doesn’t work, but she spends her week chauffeuring the kids around to various soccer games and dance recitals.  On the weekends his kids say to him, “Can I have some money?” and his wife is spending time at the salon.  He thinks to himself, “What am I, an ATM?”

All three of the above scenarios have one thing in common: A lack of balance and no focus on what’s important in life.

The first guy is SURE to have some major resentment against him from his wife.  Because he doesn’t do ANYTHING.  If he can’t find a job, the LEAST he could do is help around the house or watch the kids or do the grocery shopping.  He has forgotten that financial stability is something he needs to provide FOR his wife.

The second couple is also in trouble, they both work to pay for their nice house and their awesome furniture and entertainment systems, but they don’t have time for each other.  Stuff does not bring happiness, so having both spouses working to pay for STUFF will not lead to a happy marriage.

The third man is flat out being USED.  He’s done too much of the PROVIDING that there is no QUALITY TIME with anyone.

So where is this balance found?

The balance is found in living below your means.  It is the MAN working to provide the basic necessities of life, plus a little extra to have some family fun.  It is the WOMAN nurturing the relationships and making the home a comfortable place for everyone.  When these things are not in balance, we see the following symptoms:

1) The man loses self esteem because he’s not providing at a level he should be.

2) The woman feels fear because the house and home are vulnerable to financial ups and downs.

3) The woman resents and does not respect a man who cannot provide for her.

4) The man and the woman are chasing happiness by going after material things.

5) The man and the woman have no time for each other.

Please don’t get me wrong.  I am not against your wife working.  I DO believe, however, that it should be her choice to work because she WANTS to and not because she HAS to.  All the money the man makes should pay for bills, food, and a little fun.  The money a wife makes, if she makes any at all, should be gravy.  The thing to remember is that a wife who works should always have the opportunity to QUIT working and raise children if life calls her to do that.

Did I ruffle any feathers?  Please let me know if you agree or disagree.  I appreciate your comments!

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He wants to take the kids to the park and she agrees to it, only to find out later, that what he meant by “park” he meant a 4-day 3-night stay at a Disney Resort!  Even worse, it’s NON-Refundable! And it’s too late!

So she accuses him of WASTING money and he snaps back and calls her a “Joy-Stealer”.  Round and round they go until they are both exhausted.  They go on the trip and only the kids have a good time.  She’s not happy because they spent so much on it unplanned, and he’s not happy because he’s in the doghouse for overspending, not to mention losing his wife’s trust.

This story is an exaggeration, but miscommunication like this happens between couples all the time.  Communication is VERY important in your marriage, and that starts with knowing what your money personality combo’s are.

See the money personalities.

So the gentleman in this example, could have realized that because his wife is a Saver/Security-Seeker, that she’s going to want to be involved in the vacation planning process.  The Saver in her would have thoroughly researched, planned, and organized the trip, and she’d have likely find a vacation deal for far less than he did by buying it on impulse.  Having paid less, EVERYONE could have enjoyed the vacation.

This is just one example of the types of conflicts that can arise due to miscommunication.  Here are some others:

Buy understanding your partners “combo”, you can have an understanding of his/her point of view and really learn appreciate what they bring to your financial table.

What conflicts have you had with your partner that resulted from “Combo Conflict”? How did you overcome it?

What should you do with a large windfall, like an inheritance, or winnings?

My answer to that question is: to further along your financial goals, WHATEVER they may be.

There are people who work diligently, month after month, who are paying down their debt… and they they receive a cash windfall. So what do they typically do with it?

THEY BLOW IT!

They treat the windfall money DIFFERENTLY than they do the money that they earn simply because it came from a different SOURCE. WHY IS THAT?

Usually.. the person feels that the windfall was a gift.. a gift they didn’t earn, they somehow feel like they didn’t deserve it, and so they spend it.

It is any wonder why people who win the lottery end up broke again?

The better thing to do.. it to treat ALL money the same.. regardless of where it came from. Take the windfall and PLUG it into your financial goals..

If you’re currently saving for a car.. take the windfall and add that to your savings..

If you’re trying to pay off a credit card… take the windfall and pay off your credit card.. and maybe the next one too.

Should you spend any of it on yourself?

Sure.. why not?

Take a small part of the windfall and treat yourself.. and put the rest into your plans..

The problem is spending ALL of it.

What kinds of windfalls happen in your life?

Work Bonuses.. Tax Returns.. Inheritances.. Insurance Claim money (after the repairs are done)… Radio Contests.. the list goes on…

Money can come to you unexpectedly… you deserve it.. but don’t sell yourself short by blowing it.

Have you ever BLOWN it with a windfall? What did you buy?

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So now I’ve started a new process going. “Killing Weeds in my driveway”. But it also got me thinking, how many people are unaware that there are weeds cropping up in their finances, or in their marriages. If not dealt with, the process of accumulating debt, paying interest and fees, impulse spending, can become overwhelming. If not dealt with, one spouse will resent the other, and the process can grow and fester like an open sore and turn into bitterness. In time, a process can drive a wedge between two people.

That was the bad news.. The good news is that people can start up new processes. Since a process got them in their predicament, a process will get them out. Let’s say you are heavy in debt, or overweight, or you’re depressed, or there is tension in the house, etc. You’ve got a way to turn the situation around.

Take depression, for instance – Is your process of continuous negative self-talk causing you to feel down, worthless, un-loveable? It’s time to start a new process. Learn how to take a negative thought and toss it out. Replace the negative though with a positive one. It might feel silly at first, you might have to step out of your comfort zone, but dare to imagine your life thinking only good thoughts about yourself. It won’t happen overnight. But creating a new positive thought pattern in your mind will CAUSE you to feel the happy, good, warm, feelings that you want and deserve.

If you’re deep in debt.. there is a process working against you. A monthly finance charge is eating away at your ability to become financially free. To turn things around, you need a process that will systematically eliminate debt one at a time, until you have none left.

In your marriage, begin a process of communicating regularly, openly, and honestly. Make sure that what ever process you do brings you CLOSER together as a couple instead moving you further away from each other.

Can you identify where processes are working against you in your career? in your education? in your friendships?

Where do YOU need to spray some weed killer?

If you’re in need of a process that will get you out of debt.. the answer can be found in my E-book
“How to Eliminate Debt(in the fastest time possible without feeling deprived)”

Your comments are welcome!

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Well..with such little information..one would conclude that the couple making $85,000 would be the one’s better off, after all.. they MAKE more money! But perhaps more information might paint a different picture.

What if.. the family of four was living well below their means. Spending $2000 of their $3000 net monthly income on bills and food..giving $300 to their church and saving $700 each and every month and has no debt. And what if the young couple spent $4000 of their $5000 net monthly income on debt payments, bills and food, didn’t save, and spent the other $1000 on buying stuff and eating out and having parties.

Maybe on the surface.. it might STILL appear that the young couple is better off (i.e. they have more stuff, and more FUN) But what happens if BOTH families continue doing what they are CURRENTLY doing for the next 10 years?

Lets assume that both couple still live in the same house, and both households’ income increased by 50%.

In 10 years time.. the young couple will STILL be spending 100% of their net income on Debt Payments, Bills, Food, Eating Out, buying STUFF, and entertaining. They’ll have no savings, and their debt balances and expenses are higher (not lower) than they were 10 years ago. The family of four on the other hand, STILL have no debt, STILL tithe 10% to their church, and STILL invest a good portion of their income. In fact.. their expenses didn’t increase at all.. since they have no debt.. all they are paying for is their monthly necessities, which hasn’t changed much at all in the last 10 years. The only thing that changed for them was the GAP between their INCOME and their EXPENSES. With a wide gap, this allows the family of four to put away more than $1000 a month for a rainy day and for their future. The young couple has no increase in their gap.

Then a layoff hits… The young couple and the family of four lose their jobs. Who is better off now?

The family of four, who was prepared to weather out the storm, is much better off than the young couple, because they can live off their savings and investments for at least 6 months while he looks for another job. The young couple..who have been living paycheck to paycheck despite their high income.. will soon be having collectors calling them at best.. and at worst.. having to face bankruptcy.

So the lesson for you is… Do you know what your GAP is? What is the difference between your INCOME and your EXPENSES? Do you need to take steps to WIDEN the GAP?

Under these circumstances, the best option would be to have a talk with your would be partner and look for a suitable solution to get rid of monetary problems and live a debt free life.

5 Tips for premarital financial planning

Assess your personal finances to achieve success – It is bit difficult to go for premarital financial planning but assessing your personal finances can help you achieve success. Both you and your would be should take out time, sit down and go through the bank statements in details, assets and liabilities. If you find that you have a bad credit score, make sure to rebuild your credit score so that you can become credit worthy. This, in turn, will help you save money for your future and live a debt free life.
Formulate a suitable budget and try to follow it – A well-planned budget is a solution to every monetary problem that you’re facing. With the help of a suitable budget, you will be able to pay off your outstanding debts and manage your money flow. Make sure that you follow the budget that you formulate other wise, you’ll not be able to manage your money properly.
Share money matters openly between each other – You should feel free to share money matters openly between each other and should not hide anything from your would be partner. Keep in mind that the two of you can become one by sharing money issues and sorting out the monetary problems that you’re associated with.
Proper communication between the couple – The right key to make your marriage successful is proper communication between the couple. As such, you should not wait to discuss your financial worries until you both tie the knot. Make sure to discuss freely about the outstanding debts that you need to repay, student loans and credit history. Also share your ideas about how you’re planning to save money so as to secure your future.
Build a savings fund and save a fixed amount – Building a savings plan from before hand will help you protect your future from the unforeseen days when finance would only be your major need. By doing premarital financial planning, you will be able to save at least three to six months of your expenses and will also be able to safeguard yourself from any unexpected circumstances. Thus, it is seen that money management habits can help you save more dollars for your future.

Thus, by following the above tips, both you as well as your would be partner would be able to understand the importance of managing money properly and set up a suitable financial planning to secure your future.

Author- Barbara Delinsky

The formula for profit is: (REVENUE – EXPENSES) = PROFIT.

Companies that want to increase profit can so do in two ways. They can work to increase the REVENUE or decrease their EXPENSES. Either way will work to increase profit.

But which is better?

Lets look at increasing REVENUE:
It’s HARD to increase revenue without also increasing your expenses at the same time. The old saying “It takes money to make money” applies here. Companies that want to sell products have to research and develop, create, market, advertize, and sell new products and it’s just plain expensive. They have to make sure that the NEW revenue is higher than the new costs to make a marginal profit.

Decreasing EXPENSES:
On the other hand. Cutting COSTS is another way to increase profit. The sad truth is that cutting costs usually means laying people off…but not always. Sometimes it could mean that the 401(k) match will disappear this year, other times it may mean that there’s no Christmas party. Hopefully the cost cutting measures in your company haven’t been too drastic.

Ultimately, the businesses that will succeed are the ones who can keep or increase their customer base (REVENUE) AND also reduce operating costs (EXPENSES) without sacrificing customer service.

Fortunately… I don’t manage the finances for a company. Thankfully, I need only worry about the financial entity that truly matters: My family finances. Everything I said earlier about the profit of companies still applies to your home.. but now you replace REVENUE with INCOME.

If you were to operate your family finances as if it were a business… would you say you’re making a profit? Just breaking even? Deep in the hole?

As Dave Ramsey says in his Financial Peace University Classes “If you managed a company called YOU Incorporated. Would YOU FIRE you?”

I think a lot of us would be fired right now. If you’re not “making” a profit at the end of each month and you don’t have any cash reserves left then it’s time to make some hard decisions.

So what do you do? Do you increase INCOME or do you decrease EXPENSES?

I’m a fan of the latter and here’s why: One of the side effects of getting a higher paying job is that the family expects to have an increase in their standard of living. A person might say to themselves, “I used to have a $40,000 a year job and now I have an $80,000 a year job… let’s get a bigger house!” It’s okay to want bigger and better things.. but most people don’t plan ahead and actually run the numbers. I can say that because I’ve done that myself! A person who just received a $300 a month raise will often “reward” themselves by getting a new car with $400 a month car payment! Now I ask you.. how smart is that and how long will it take for that plan to backfire? This sort of thing happens every day. People spend more than they make easily with credit cards and increasing debt.

Now lets look at going the other route, cutting expenses:

Once you cut an expense… it’s GONE! Unless you go out and get another monthly expenditure you have just increased your monthly bottom line. For example.. A couple goes over their cell phone bill and realized that they’re spending over $400 for the whole family each month. Suddenly, paying $99 per phone for 2 twin 8 year old girls doesn’t seem like such a great idea. So they take away the cellphones and cut the bill in half. C’mon.. do 8 year olds REALLY NEED a cellphone?

Another couple might start making small changes all around the house.  They start conserving electricity by turning down the temperature on the hot water heater, then turn off lights more often and put the TV’s on powerstrips and turn them off at night. Then they call up auto insurances companies because they can get the same coverage for less with another company. They start eating out a little less and drop themselves down to basic cable TV.  All of the changes add up to a bigger bottom line.

I can’t say what changes that you need to make for your family…but I can say that if you’re struggling right now, look to cutting costs first, rather than trying to find ways to increase income. Once you have cut the costs enough… you can pay off the debt you accumulated or begin saving that emergency fund that you desperately need.  After you have yourself a solid financial foundation again and are moving in a direction that is increasing your net worth, then start looking to increase income if you still want to do that.  Cutting costs down to the bone doesn’t mean you’re poor, broke, or downtrodden. It makes you smart!

How is your “Business” being managed?  Feel free to leave a comment below!

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That’s what THIS blog is all about; Discussing and resolving the issues related to financial communication in marriage.  If you’re not married yet, don’t worry, the information you’ll find here will help you too.

Given the fact that every person is unique, you’d think that there would be millions of money personalities out there, and identifying yourself could be take a long time.  Fortunately, we can narrow the mainstream attutudes and personalities down to FIVE types.  Lets see if one of these resonates with you:

The Spender – The spender loves to spend money and buy things.  He feels good to exchange money for some thing that will enhance his life or the lives of others.  Big or small, the size of the purchase doesn’t matter. It’s the very act of buying that brings a thrill to the spender.

The Risk Taker – The risk takers are the entrepreneurs of society.  They make decisions based on gut feelings and put money on the line for big reward.  Living on the edge is normal for a risk taker.  Failure is only seen as one step closer to success.

The Saver – The saver loves to get a deal.  Why pay more for something when you can get it for less?  Savers are thrilled when they can get something for free, or next to nothing.  They cut coupons, shop sales, and implement cost cutting measures in EVERY area of their life.

The Security Seeker – The security seeker “plays it safe”.  They feel comfortable knowing that their money is tucked away in a CD or building in a retirement account.  They love having their money accumulate and grow or having their house appreciate in value.

The Auto Pilot – The Auto Pilot coasts through life.  They’re content to know that life is good and that they can make and spend money without having to pay much attention to it.  They are also content to let “other people” handle their finances just so long as they can spend money when they need it.

Most people have tendencies of two or more of these money personalities, as in they have a primary and a secondary one.  None of these personalities is “The right one” or “the wrong one”.  They are all valid, equal, but different.  There are Pro’s and Con’s to EACH of them.  These we will explore later.

Understanding your own personal combination and that of your spouse will help you learn how to communicate with your partner. You might even learn a thing or two about yourself.

For now though, please answer this question for me.

Based on the descriptions of the five money personalities above, which combination do you think you are and why?  For example.  I am a Spender/Auto-Pilot, because I tend to buy impulsively, and I generally don’t check the balance in my checking account.

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Prioritize Your Goals as a Couple

Sit down over a nice dinner and talk about your future goals whether it is planning for kids one day, buying your first home together or taking a second honeymoon. Talk over ways you are willing to help each other achieve your goal.

Establish Shared Needs

You need a place to live, you both may need a car or some kind of transportation, but you may be surprised to find out that your spouse thinks they need something you never would have considered. In order for a budget to be effective, both spouses need to be on the same financial page.

Develop a Budget

Now that you have your needs and wants prioritized, sit down and create a budget you are both willing to follow whether it is by creating a new budget or merging your individual budgets together. Besides your basic expenses, a good budget should also include a plan for savings and emergencies.

Eliminate or Reduce Debt

You may have both brought debt into your marriage, but now that you are a couple it is important to work together to eliminate or reduce your debt. Improving credit rating will open the door for future loans at a lower interest rate when you are ready to buy your dream home. Improving credit rating as a couple will also allow you to have more disposable income as each debt is paid.

Plan for Emergencies

Every newlywed couple should incorporate a plan to save for emergencies. Having a cash reserve can save you financially if faced with a loss of income, major car repairs or any other unanticipated expense.

Protect Yourself

Make sure you have adequate home, health and life insurance for both spouses. Insuring you are protected in case of a catastrophe is one of the best things you can do not only for each other, but for yourself as well.

Retirement Planning

Retirement may seem a long ways off when you are just starting a new life together, but it is never too early to start planning for your retirement. The sooner you start planning for your retirement; the better off you will be when it is time.

Financial Education

Many people do not understand finances and if you, as a couple, do not then consider taking the proper steps to learn more about budgeting, planning for the future and eliminating debt. The more you know at the beginning of your life together, the better and more financially secure you will be for the duration of your life together.

Professional Advice

Do not be afraid to consult with a financial counselor. Financial counselors can offer a fresh perspective to your finances, help you avoid pitfalls you may not see coming and help you plan out a sound financial future. Money issues can be a sensitive topic and you do not want something like finances causing a rift between you and your new spouse.

Make a Financial Date Night

Schedule and set aside time once a month or so to sit down and talk about your finances. Use this time to talk about your budget for the next month and make any adjustments as necessary. Make it fun, but also make it a priority.

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1. If you are already stuck in financial maze, look for a professional financial
advisor who can guide you best to develop a workable budget and a financial
plan towards meeting your daily and long-term needs.

2. The newly married couple holds the most advantageous position and can
chalk out a budgeting plan quite early. Sit with your spouse and plan for a
monthly budget that separates personal expenses from necessities.

3. Both spouses should open joint and personal accounts and keep their personal
expenses separate from valuable funds which will be used for monthly bills
and emergencies needs.

4. If both you and your mate maintain transparency and stay honest about your
financial transactions, you can easily evade nasty financial surprises which
can precipitate a marriage crisis in the near future.

5. A robust saving plan is a must for every household. Formulate a savings
plan to put aside some funds solely for the purpose of reimbursing debts and
meeting unforeseen and unexpected emergencies.

6. If your everyday debt problems become a debt menace, you can consider
balance transfer or debt consolidation as your viable option. Make sure the
interest rates and terms that are offered in the new repayment plan will allow
you to aggressively pay down your high-interest debt.

7. Curtail your expenses on unbudgeted items or pleasures, avoid extravagance
and embrace frugal living if required.

8. Last but not the least, you and your spouse should stay committed and faithful
to each other and evade all financial nuisance which can arise out of minor
misunderstanding between a couple.

To conclude, follow the above mentioned points and work out a budget and financial plan
to live within your means and stay honest and open with each other.

Author Bio: Marc Brown is an Associate Editor with OVLG. He has been writing on financial topics overs the years with special focus on European economy. Marc also takes interest in debt related issues and contributes articles on debt relief to personal finance blogs.

In the past I’d have called AAA and had the car towed to Tire Kingdom. Why Tire Kingdom? Was it because of their prices and service? No. I would have went to Tire Kingdom because that’s the ONLY place that I had a Credit Card specific to Automotive Repair.

Because I had a Tire Kingdom credit card:
When I needed an oil change – I went to Tire Kingdom,
when I needed new tires – I went to Tire Kingdom,
and when the A/C went out, or there was an oil leak – I went to Tire Kingdom

Because I had a Tire Kingdom credit card – I had no other choice.

Fast forward to today – because I don’t use credit anymore, and only pay cash for things, I have choices again.

I did a search online and found the best place to buy a new tire for the van. I went to the store, bought the tire cash, took it home and installed it myself. Since I wasn’t in bondage to a particular store anymore, I had the ability and the responsibility to do a little price comparing.

Just in case you are interested, Tire Kingdom had the best price on the tire I was looking for. But if they weren’t, then my business would have gone somewhere else.

I don’t have anything against Tire Kingdom personally, I just don’t want to be locked in debt to them.

Is there a department store, supermarket chain, electronics store, or repair shop that you are LOCKED IN with, simply because you have available credit there and no-where else? Tell me about it….

It doesn’t have to look fancy.  It can be a No-Frills simple budget.  The key is to take ALL of your income and allocate it into SOMETHING until there is nothing left to allocate.

For example, Let’s say you make $3000 a month.  You know you’ll need gas, food, electric, phone, etc.  So write out a list to take care of those things first.  It might look something like this:

The big thing to remember here is that the balance at the end of the budget should be ZERO.  This means that you have a plan for all the money you have coming in.

What if I have an expense that’s not on the budget?

The only thing you CAN do in a situation like that is take money OUT of one of the other categories.  So if you had a car repair for $100 (Something you HAVEN’T budgeted for), then you may have to lower the budget for entertainment or food (or both).

Next month, any expense categories that you didn’t anticipate SHOULD be put into next months budget so that you can plan for those expenses in the future.

Now is a good time to set aside some money for a vacation, or a car repair fund, or an emergency fund.

If you’ve allocated money to every thing you can think of,  and you still haven’t reached ZERO at the end of the budget, you can use the catch all category:  SAVINGS.

Have you had any trouble keeping a budget?

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So add some categories to your budget as the new ones crop up, and make adjustments to the amounts. Here are some of the categories my wife and I have:

Tithe
Savings
Mortgage
Electric
Water
Home Owners Association
Waste Mgmt
Cell Phone
Netflix
Auto Insurance
Food AND DEALS
Gas
Kids Allowance
Entertainment
Clothes
Dr. Visits
Car Repairs
Birthdays and Gifts
Brownies
Home School Costs
Travel Expenses
Fees
House Maintenance
Other

See what I mean? Some months these items will have a ZERO budget, meaning we don’t expect to have a transaction that month. We’re not done adding categories by the way.. there are still things that we haven’t planned for yet that will crop up in the next few months. When they happen, we’ll know it. As of this moment, I don’t have a Christmas Budget or a Date-Night Budget

One of the challenges with budgeting comes when you want to do something this month that you didn’t plan for. Should you still do it? If you and your spouse want to…YES! Have a sit down, discuss where the money will come from, adjust the numbers and go have fun. As long as both of you agreed to it then you can both have fun and no one gets hurt and no one feels guilty. Communication is KEY.

This is HARD to do, and don’t think I’m perfect either. I’m just like all of you…I screw up all the time. When it happens… apologize and move forward. While it’s easy to say that you must be 100% honest with your spouse about major purchasing decisions, our selfish natures get in the way sometimes. So lesson learned right? Don’t change the budget without your spouse.

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Well, my friend, there are two parts to consider.  First is knowing how much you currently spend and the second is planning your future spending.  You really have to do both otherwise your budget won’t be based in reality.

Tracking your spending – First, you can’t make a realistic budget without first knowing what your reality looks like.  This means you need to write down what you spend everyday.  Now, a lot of people will suddenly change their spending habits the instant they begin writing things down.  Why is that?  Is it because you KNOW you are overspending, but don’t want to admit it?  Just be honest with yourself. write down what you do, day in and day out.  Then you can take an honest look at your financial situation.

You may be surprised about how much you are spending on fast food, entertainment, candy, movies, gifts, etc.

You can’t change what you don’t know.  Just be honest with yourself (and your spouse).

Planning – after you have a REALISTIC picture of what a months spending looks like, you can now make changes for next month.  Let’s suppose you now know that you spend over $100 on fast food, and you’ve been feeling VERY guilty about it.  Now you can set a goal to spend only $75 on fast food.  Now, you can go enjoy fast food without the guilt because now you’ve BUDGETED for it.  Hopefully you found good use for the other $25, such as a special gift for your spouse.  Plan to make changes in the areas that you overspend, and plan for MORE room for areas that need attention.  Maybe, you don’t have a car repair fund yet.  Now it’s time to budget for expenses that you KNOW are going to hit you someday, (like new tires), and set aside some money for that planned expense.

Start by tracking, then once you know what you’re up against, start planning.

Write it all out, and take a look at it with your spouse.

Allow yourself some flexibility.  Don’t beat yourself up if you blow your budget either.  It’s a tool for you, to help you accomplish your goals, not a cage to keep you pinned down in deprivation.

If you’ve never created a budget before, try it out.  It doesn’t have to be perfect, just start today!

Tell me about your budgeting experiences, have you every blown your budget big time?  On the other hand, how much has your budget helped you and your life?