Do You Control Your Money or Does Your Money Control You?

money troubles

I had a conversation with someone who has consistent financial troubles. I learned the main issues were a lack of sufficient income and money management skills. I began to offer suggestions such as searching for a higher paying job, limit eating out and carpooling to work. Unfortunately, every suggestion I gave was immediately shot down with what I considered to be an excuse. In the middle of the conversation I realized I wouldn’t be able to help this person. In hindsight, I don’t think the person wanted my help. It made me realize that some people aren’t truly ready to make improvements to their finances. If you want to improve your finances you have to be ready to get real. The first step is to take responsibility for making your situation better.

I began noticing a pattern when speaking to people about their money issues and concerns. What I heard was complaining about not having enough money and not getting ahead in life. The few times where I interjected and asked what they planned to do about it, I could tell my question was unexpected.

I pose the same question to you, if you are unhappy with your financial status, what do you plan to do about it?

Do you honestly want to put in the work required to generate change? Or are you hoping your money issues will work out on their own?

Do you believe that you can live a better life? Or do you quietly tell yourself that everyone struggles with money and you are no different?

Today I saw the quote, “In order to succeed, we must first believe that we can.”-Nikos Kazantzakis

The mind is an incredibly powerful tool. If you don’t have the correct mindset you can sabotage your journey before you even take the first step. You can be told over and over that it is possible for you to increase your quality of life and decrease your financial stress. However, it will never happen if you do not BELIEVE it can happen.

If you are having a hard time taking control of your finances and you think the task is too big, then start small. Set small obtainable goals and prove to yourself that getting a handle on your finances is possible. Your goal should have clear and measurable results.

For example, if you need to increase your savings, make a goal that every time you get paid you will put a certain amount into a savings account. You can start out small with $25 or 5% of your pay. Challenge yourself to do it for three months. Another goal could be to decrease the amount of money you spend on eating out. Allow yourself to eat out only once a week for a month.

The goal is for you to turn these trial practices into habits, but you have to take the first step. Once you have smaller challenges under control you can then begin to focus on your bigger financial problems. Remember you didn’t get into your current financial situation overnight. It may take some time to get you on the right path, but slow progress is better than no progress at all.

Continue to remain encourage and move towards progression. “If you believe it, you can achieve it”, may be cliché, but it holds a great deal of truth.

Free is for Me!

January 27^th  marked the beginning of the last year of my 30’s. Getting older and finding random gray hairs can be slightly depressing. Although, I was reminded of how joyous another birthday could be every time I opened my e-mail and found a special gift just for me. These gifts were coupons for free stuff! I got them from various corporations because I am enrolled in their membership clubs. The membership clubs offer reward programs which are usually based on a point system.  You accumulate points based on your spending totals. Once you have spent a certain amount of money you will receive a coupon for a free item or a discount on your next purchase. Many of the corporations will give you an extra bonus for your birthday by giving you something for free.  As the saying goes, “Free is for Me!” `

Since January is my birthday month, I have received coupons for free meals from IHOP and Houlihans, wings from Buffalo Wild Wings, ice cream from Cold Stone, a beverage from Dunkin Donuts, and my choice of an appetizer or dessert from Red Lobster and Olive Garden. I also received $25 in coupons from DSW and $15 from Best Buy. This is only a partial list of membership rewards I received. Signing up for membership clubs at many stores and restaurants is free and normally an introductory gift is given just for signing up.  The corporations use their membership clubs to keep customers aware of new product offerings and sales. The preferred method of communication is e-mail. If you do not want the store promotions intermingling with other personal or business e-mails, I suggest setting up a separate email account for your club memberships.

Receiving these coupons can be an extra little perk, but they can also save you a significant amount of money over time. I have a dog that eats expensive food that doesn’t go on sale often. I am enrolled in the Petco rewards club. Every time I reach $100 in purchases, I receive a coupon for $5 off my next purchase. That is an 8% savings on a $60 bag of food.

Being a part of these memberships clubs has shaped the way that I think about spending. I almost never want to pay full price for anything. I seek ways to find discounts and keep more money in my pocket! Below is a list of some stores and restaurants that offer membership club rewards. Go sign up and enjoy your savings!

• Benihana
• Best Buy
• Buffalo Wild Wings
• California Pizza Kitchen
• Chili’s
• Cold Stone
• Dairy Queen
• DSW
• Dunkin Donuts
• Houlihans
• IHOP
• Longhorn’s
• Panera
• Petco
• P.F Chang’s China Bistro
• Olive Garden
• Outback
• Red Lobster
• Ruby Tuesday
• Starbucks

Don’t Spend Money You Haven’t Earned

It is that time of year again, when we gather with friends and family around a large feast and discuss why we are thankful. While you take this much needed time for reflection, know that there is a well-developed plot against you that is about to unfold. It is what many Americans have come to know as Black Friday. Black Friday is the day after Thanksgiving that marks what some say is the official start of the holiday shopping seasoning. The term “black” refers to retailers making a profit or “being in the black”.  The day was designed to separate you from your money.

Studies have shown that Black Friday is one of the busiest shopping days of the year. According to the National Retail Federation,  in 2013 consumers spent $57.4 billion dollars during the Black Friday weekend. What makes Black Friday so different from the other 364 days of the year? The lure of rock bottom prices, steals and deals that retailers claim you will only see on this one day. People line up and camp out at stores, hours even days before the Friday store opening, to ensure their chances to purchase that “must-have”.

I am not sure if this is capitalism at its best or at its worst. I don’t think I need to say (but I will), that $57.4 billion dollars is a heck of a lot of money. I wonder how much of that was actual money that consumers had versus credit they used. I know it is easy to be lured in and to think that you are actually saving money with Black Friday deals, however it is only a deal if you have the money to make the purchase.

Get out of the habit of spending money that you have yet to earn. That is exactly what is happening when you use credit cards with the intention of paying them off at a later date. After paying the interest that accrued, I guarantee you that the purchase wasn’t much of a bargain when it is all said and done.

I say this from experience because I would shop on Black Friday religiously, and used my credit cards without hesitation. I would swipe my cards without any immediate consequences and rave about the money I “saved”. Once I received the credit card bills, reality set in. I, like many other credit card holders, didn’t have the money to pay off my balances. I then struggled to figure out how to pay these new bills with my existing expenses.

As the saying goes, “When you know better, you do better”. I no longer make this common financial mistake.

Going into debt to get more “stuff” simply isn’t worth it. Being able to sleep at night without financial worries, is far more valuable than the last electronic or a new pair of jeans.

Remember, if it is not in your budget, you can’t afford it.

Happy Holidays and remember to be financially responsible!

Don’t Be Afraid to Negotiate

Negotiation is a powerful tool that consumers do not use enough. Salespeople know the majority of buyers would rather not engage in haggling over price. Initially, it can be uncomfortable talking about cost and your unwillingness to pay the stated amount. I would shy away from negotiating because I didn’t want to appear as if I couldn’t afford the item I wanted to buy. I was actually concerned about how the salesperson would view me. One day I realized this was a bunch of psychological nonsense. There is a psychology to selling and I was playing right into the hands of the person that wanted to take me for every dime possible. I will offer you this useful advice, if you are scared of negotiating….get over it!

You work hard for your money, don’t give it away easily. As I said, there is psychology to selling goods and services. It is all designed to create a transaction that is most beneficial for the seller. Use the tool of negotiation to make the playing field a little more even. Negotiating is a skill but anyone can master it. It will require that you do a little homework, but the small amount of time you spend doing research can potentially save you a significant amount of money. You will need to gather information from a few different sellers/providers about the price of the goods or services that you are looking to purchase. If the seller/provider that you choose to do business with doesn’t have the lowest price, use the information you gathered to negotiate a better deal.

There are a few rules to remember when negotiating. First, have a predetermined amount that you are willing to spend. Always exhibit confidence and stand firm in your decisions. Lastly, if you don’t think you are getting the best deal or what you want, don’t be afraid to walk away.

There are certain situations that are notorious for negotiating, like buying a car. There are other situations where negotiating can be used as well, such as having work done around your house. I recently tried this myself and was very happy with the outcome.

I needed to have the fence that surrounds my backyard replaced. When having any type of work done it is best to get three estimates so that you can make an informed decision. That is exactly what I did.   I was shocked by the huge difference in the estimates I received, but decided to use it to my advantage.

The three estimates were:

Company A-$3,008

Company B-$2,554

Company C- $1,925

I ruled out the estimate from Company A, because it was significantly higher than the other two. Even if I negotiated a lower price I thought it would still be inflated. I wanted to contract with Company B because I believed they would do the best work. Despite that, I couldn’t  ignore the $629 difference between them and Company C. I wasn’t going to do business with Company B unless we negotiated a lower price.

I contacted Company B via e-mail and attached the estimate I received from Company C. I explained I would like to do business with them but I received another estimate that was significantly lower. I asked that we split the difference between the two estimates and contract for $2,239. I received an e-mail back from Company B, stating that Company C neglected to include the $150 cost of a necessary permit in their estimate. Based on that Company B stated they would do the job for $2,314.

This prompted me to do a little more research and I found out my township didn’t require a permit for the type of fence I was going to have installed. I e-mailed Company B back with this information and requested that the full amount of the permit be removed from their estimate. My request was granted and I was very pleased when we agreed on a final price of $2,155. That was $399 off the original estimate I was given.

I saved all that money because I wasn’t scared to negotiate. I did my homework and I went into the discussions prepared. I did not cave when I received resistance to my first counter-offer. Like with any skill, you will get better and more comfortable with negotiating the more you practice. So don’t hesitate to use negotiation when you can. Don’t forget to share your stories with me. I would love to hear them!

Make Saving Your New Habit

Saving Mr. Jackson

Saving your money is essential to breaking the living paycheck to paycheck cycle. If you are saying to yourself “How can I save money, when I don’t have enough money?” I am sure there are some things that you can do to cut back on your expenses and start saving. If you need advice on how to accomplish this, I suggest reading some of my previous posts. They will help you to budget and find ways to live within your means.

Have you ever heard the phrase “Pay yourself first”? It means before you pay any of your bills or spend any of your money, put a portion of your income into savings. It is very important that you save for retirement, but in this post I am going to focus on money saved outside of your retirement funds.  Rule of thumb says that you should save 10% of your pay. Overtime you want to accumulate savings that is equal to at least six months of your net pay. Six months of your net pay should be able to help you maintain your standard of living in the event that you lose your job or source of income. When I first read this advice, I figured this information was for people in good financial situations but for me it seemed unrealistic. Over time, I realized that this was even more important for people just like me. I was a single mom and had many years before I could even begin to think about my retirement. If I lost my job, I needed a way to be able to support my daughter and myself other than relying on an unemployment check which would only provide 60% of my pay.

Dealing with finances can seem overwhelming because we have a tendency to want to see results immediately. Saving should become a habit. It should be looked at as an exercise that you continuously practice. Working towards goals takes time. Even if you aren’t in a position to save 10% of your income, you can save something. Maybe it is only 5% or just 2% in the beginning. When either you increase your income or decrease your expenses you can begin to save more.

I suggest setting up a savings account that isn’t easily accessible. This will prevent you from carrying out an impulse to tap into it.  If you have direct deposit for your paycheck you can have your employer deposit a portion of your pay into the savings account. Or, you can authorize your bank to make monthly automatic deposits  into your savings account. This is another measure that will make it easy for you to put the money away without any interference.

It is important to have a “rainy day” fund but savings can also be used to make large financial purchases. Visa, MasterCard and Discover would try to convince you otherwise. They would tell you instead of saving, use them. Many Americans do just that. The average American household has over $15,000 in credit card debt. That debt has interest accumulating daily. If only the minimum payments are made it will take several years to dig out of that hole. When you use a credit card,  you end up paying an amount that would have scared you if it was on a price tag.

As Americans we have moved away from saving because we fall victim to instant gratification. That pretty much means we want what we want and we want it now. However, this causes havoc on our finances and can have a major impact on our lives. Saving is not just a good thought, or something that only some people can accomplish. It is key for everyone in establishing a healthy financial outlook. I strongly encourage you to create a habit of saving and practice it throughout your lifetime!

Money Saving Tips

We all know there are a million and one ways to spend money. There are many ways to save money as well. It takes a little more effort to save but I have tips that can help. You will feel great once you begin to reduce the costs of things you purchase.

1. Use Coupons!!!!

I must admit that one of my favorite things to do is use coupons. If I can’t use a coupon to purchase something, I don’t really want to buy it. I use coupons for groceries, dog food, clothes, shoes, eating out, movies, books and even appliances. I have the Sunday edition of the newspaper delivered to my house solely for the purpose of getting the coupons. The money that I save far outweighs the cost of the subscription. I also use coupons that are delivered in the mail. For the past few years I have been able to purchase a coupon book called “Kid Stuff”. Many schools sell this coupon book for $25 as a way to raise money. The book has coupons for clothes, groceries, shoes, restaurants and movies. The possible savings makes this book a great investment.

You may be saying to yourself, “I live a busy life, I don’t have time for cutting coupons”. I am telling you that you do. You only need about 15-20 minutes a week. Buy a coupon organizer and put your coupons in order so that they are easy to find while you are in the store. Keep your organizer in your purse or in your car so it is handy when you’re out and about.

Another great way to get coupons is by signing up for promotional e-mails. I know your e-mail box is already cluttered, but you can create an e-mail account specifically for receiving coupons and discounts. I get coupons for free meals from IHOP and Houlihans each year for my birthday and for my yearly membership anniversary. As a member of an e-mail club you can receive notices about exclusive sales and events. I signed up to be a part of PETCO’s rewards program and I receive e-mails when my dog’s food is on sale. As well as coupons for 10% and $5 off purchases.

2. Membership Cards

Many grocery and drug stores will offer discounts and sales on items if you sign up for a membership card. With the help of technology most stores can use your phone number to access your account information instead of having to scan an actual membership card. This past weekend I needed to buy some vitamins. They were $11.99 for a bottle at Target. I went to Walgreen’s where I have a membership card and I got the same vitamins and same quantity for $9.99. There was a sale for card members and I got a second bottle for free! I also went to the movies this weekend and used my membership card (as well as coupons from the Kid Stuff book), and received membership awards. It included a free movie ticket and small popcorn. Who doesn’t love getting something for free? Since going to the movies is one of my past times, being a reward member is saving me money on an entertainment expense.

3. Periodically Shop for Cheaper Rates on Services

Do not get lulled into paying the same rate every month for the services that you use. If you’ve been using a service for more than a year, check around to see if it is still a good deal. Call you cable provider to see if there are any discounts that you could take advantage of. Or, downgrade if you don’t truly need all of the channels included in your package. Call your insurance company to make sure all of the discounts available are being applied to your account, such as multi-policy discount or a good driver discount. Also if you live in a state where you can choose in energy suppliers check around to see who is offering the best plan for you. In PA you can review electricity suppliers at http://www.papowerswitch.com/.

4. Buy When There is a Sale

I know it may seem like I am stating the obvious, but I am not talking about impulse buying. Once you determine you have a need for something, wait for a possible sale. I have literally painted every room in my house. I noticed that Lowes and Home Depot periodically offer mail-in  rebates for $10 off a gallon of paint and $25 off of five gallons. As a result, I began to wait until there was a rebate offered on paint to make my purchases. I would save about 25% off the cost. Many retailers have a cycle for putting items on sale. For example after the 4^th of July summer clothing begins to go on sale. If you stay  relatively the same size you can get good deals for this summer and future summers.

5. Don’t Buy Items Unless There is a Need

We have all seen an ad or walked into a store and discovered a sale that we thought was too good to pass up. A sale is only a good deal if is for items that you need and within your budget. If you have not budgeted for this purchase, don’t buy it. Retailers use psychology to make you believe their product is a “must have”. I have heard many people justify buying things they don’t really need by saying “It was on sale” or “I work hard, I deserved it!” What you really deserve is peace of mind. Knowing that you are financially stable will help you to sleep better at night.

Once you begin to use these tips they will become a part of your lifestyle. As always, I hope you find this information helpful and look out for my next post about increasing your savings!

 

 

 

 

 

 

 

 

Creating A Monthly Budget

Now that you have an understanding of where your money is going each month, it is time to create your monthly budget. The term monthly budget doesn’t always spark positive thoughts. A budget may be looked at as being restrictive or a hindrance to your lifestyle. I don’t want you to view it that way. A budget is a tool used to help you maintain your standard of living and meet your financial goals.

What are some of your financial goals? Is it to pay off your credit card debt? Save for a down payment on a house? Or increase your emergency savings fund? Whatever your goals may be, budgeting will help turn them into a reality.  Create a chart similar to the one I have below. List your goals and figure out how much money you need to obtain them. Then determine the timeframe in which you want to achieve each goal. . Give your goals a priority, because you may not have the funds to accomplish each goal at the same time. Therefore, you may have to wait before you can add a goal into your monthly budget. Below is an example of the worksheet:

Goal	Total $ Amount Need	# of Months to Reach Goal	$ Need Each Month	Priority
Vacation	1000.00	12	83.33	3
Laptop	500.00	12	41.67	4
Six months of Salary in Savings	18000.00	60	300.00	1
Create fund for Home Repairs	5000.00	36	138.88	2

Now we are going to construct your monthly budget. Use a spreadsheet application to create your budget. If you don’t have access to software, you can construct a chart similar to the one I have below.  You will add the following sections:

1. Net monthly income
2. Monthly expenses
3. Lifestyle Expenses
4. Financial goals

Subtract the total of your monthly expenses, lifestyle expenses and financial goals from your net monthly income. Below is an example:

Net Monthly Income
Bi-Weekly Paychecks	$3,000.00
Child Support	$400.00
Total	$3,400.00
Monthly Expenses
Mortgage/Rent	$1,100.00
Car Payment	$300.00
Utilities	$250.00
Cable	$100.00
Credit Cards	$100.00
Car Insurance	$85.00
Cell Phone	$85.00
Total	$2,020.00
Lifestyle Expenses
Groceries	$250.00
Gas/Transportation	$160.00
Clothes/shoes	$70.00
Eating out	$50.00
Hair Done/Cut	$50.00
Total	$580.00
Financial Goals
Six months of Salary	$300.00
Funds for Home Repairs	$140.00
Savings for College Tuition	$200.00
Total	$640.00
Net Monthly Income	$3,400.00
Monthly Expenses+ Spending+Fin. Goals	($3,240.00)
Balance	$160.00

After completing your budget, if your balance is positive, meaning you have money left, congratulations! You have created a budget that is within your means and have increased your chances of sticking to it.

If your balance is negative, meaning you do not have any money left, you will need to rework your budget. You have to reduce the amounts designated to your lifestyle expenses and your financial goals.

Remember the amount spent on each item within your monthly budget doesn’t have to be set in stone. You should always be looking for ways to reduce your expenses. Also once you accomplish one of your financial goals you can remove it from your budget and work towards the next goal on your list.

Keep your budget somewhere easily accessible so that you can refer to it and become familiar with it. If you are having trouble sticking to your budget you will need to re-work it or use greater discipline in your spending habits.

If you have any questions or need some advice, just ask. I would be happy to hear from you! Stay tuned for my upcoming posts on ways to save money and stay within your budget!

 

What is Coming In and What is Going Out?

Every time I hear the phrase “living paycheck to paycheck” it makes my ears hurt. There are so many things wrong with this phrase for so many reasons. I can’t help but want to ask a series of follow-up questions, such as how much money is being made and what is it being spent on? Please, understand I am not being judgmental. Right now, there is a major debate in this country about people being able to earn a wage that allows them to live a decent life. I fully understand that trying to make ends meet can be difficult. However, I do think there are things that can be done so that people can start to break the paycheck to paycheck cycle. I want to help you create and manage your monthly budget. Before we do that, we need to evaluate your financial state.

Calculate your monthly income

First, figure out exactly how much money you make and/or receive each month. This is a fairly simple process. If you work the same number of hours each week or you are salaried, add up the net amount of your paychecks for a month. The net amount is the actual money that you receive after taxes and any other payroll deductions you may have. If you are paid hourly and your hours worked fluctuate each week, use three months of pay stubs. Add up the net amount of all the paychecks, then divide by three. This should give you a good estimate of the amount of income from work you can expect to have on a monthly basis. Also consider any money that you rely on from sources other than a job. This could include funds from a Social Security check, disability check, alimony or child support.

Calculate your monthly expenses

Once you have calculated your monthly income, make a list of all the bills that you pay on a monthly basis and the amount you spend on each. The list should include expenses such as your monthly mortgage or rent, car payment, electricity, water, credit cards, cell phone, etc.  No bill is too small. If you pay $15 a month to have the paper delivered to your house, include that as well. For utilities that fluctuate such as gas and electricity, take a six month average of what you pay. Add up the total bills for six months and then divide by six. Use this number as your monthly amount. Personally, I like to include food and gas for my car as part of my monthly expenses. I include them because they are necessities that I spend roughly the same amount on each month. However, since they aren’t actual bills, for this exercise it is your choice to include them or not.

Determine your disposable income and what to do next

Now, that you have your net income and monthly expenses, you can determine your disposable income. Disposable income is money that you have left to spend on whatever you choose.  Subtract your monthly expenses from your net monthly income and the amount left is your disposable income.

Below is a sample chart of an income and expense comparison.

 

Income Source	Monthly Amount
Net Bi-weekly paycheck-$1500	$3,000
Child support	$400
Total	$3,400
Monthly Expenses	Amount
Mortgage/Rent	$1,500
Car payment	$350
Utilities	$300
Student loan	$100
Cable	$100
Cell phone	$80
Car Insurance	$80
Credit Card	$75
Total	$2,585
Monthly Income-Monthly Expenses	Disposable Income
$3400-$2,585	$815
*This example does not include food or gasoline, because they aren’t fixed debts. Include them if you want a more precise representation of your disposable income.

Now that you have this very important information, how do you feel? Are you surprised, shocked, happy or was it what you expected?

If your net income was lower than your monthly expenses, you have no disposable income. You are in a deficit each month and living above your means.  A deficit is the amount by which something, especially a sum of money is too small. You need to review your expenses and figure out which ones can be reduced.  Target the expenses that are luxuries and figure out how you can cut back. For example, if you are paying for the premium cable package discontinue service or at the very least downgrade.

If you fall into the category of having some disposable income but not as much as you would like, go through the same exercise. If you conclude there aren’t areas where you can cut back, then you need to focus on ways to increase your income.

Finally, if you are pleased with the amount of disposable income that you have, congratulations on being a good steward of your finances. Creating a monthly budget can still be beneficial to you. A budget is a plan about how you are going to spend your money. It is important you have a plan to help you achieve personal financial goals.

In my next post I will give details and instructions on how to create a monthly budget that will work for you. My hope is that the information I have supplied was helpful and just the first step in our journey of making your finances simple!

Start Managing Your Money

There are many conversations that take place around money. The topics range from making money, not having enough money and all the ways we find to spend money. Another topic that needs to be added to the conversation is managing money.  I have a Bachelor of Science degree in Finance and Marketing from Drexel University, and I understand that thoughts of managing money can be scary. For many the phrase “managing your finances” sparks thoughts of investing in stocks, bonds and other financial instruments. Some believe that this is a science that they will never master and usually shy away. There is no reason to be scared.

You can take small steps in your journey of understanding and mastering your financial situation. You don’t need to aspire to be the next Wall Street superstar, but you can be a successful manager of a household budget. In the past 20 years I have gone from not having 65 cents in my pocket to buy a soda on a hot summer day, to being a financially stable homeowner with a luxury car parked in the driveway. I have learned a lot during this time and I want to share it with you.

I want to start with having you evaluate your current financial state. If you are making more money than you can spend, this blog may not be for you. For the other 99% of America, I have practical tips that can improve your financial situation and increase your quality of life. Yes, I am saying that improving your financial outlook can make your life better. Think about it, what if you could decrease the stress in your life that is associated to money? Wouldn’t your life be better?

I want to help you learn about managing money in a way that may be new to you.  It will take some effort but I assure you that implementing some practical techniques will pay off. So let me help you, make your finances simple!