When I graduated from Florida State University with a degree in Finance, I became a financial planner. All I wanted to do was find a way to help people manage their finances so that their lives would be easier. Well, I started working for a company and soon realized that selling insurance and other financial products really wasn’t my thing. Far too often I would meet individuals who had no idea what was in their bank accounts, how much money they were investing each month, or even how much extra cash they had available from each paycheck! I thought to myself, how can you plan for big purchases or survive financial emergencies if you have no idea how much money you have left over after you pay all of your bills? So shortly after ending my career as a financial planner, I began a new career dedicated to helping individuals learn to see where they are headed financially. I mean, what good is any financial solution if it doesn’t clearly spell out where you will be in six, twelve, or even sixty months?
Don't lose sight of your financial goals.
When you've been married for a while, it's easy to become accustomed to who you're with--even to the point where you think you know their financial goals inside and out. You've created a budget together, you've outlined your goals and created a plan, and now the plan is on autopilot.
To a point this is very comforting because you know exactly where you stand with your partner and your financial goals.
The challenge is when something changes. People can change their mind about their financial goals, outlook on life, or practically anything. Sometimes it's a sudden change, but usually it's a gradual change due to a change in thinking.
Often these gradual changes are so subtle you may not even realize something has changed in your marriage. if you're not careful, you may wake up to find a person that you barely know next to you. Of course there are many serious implications in such a scenario, including your path to your financial goals.
There is only one way to prevent this from happening and that is to talk. Talk about your jobs, your goals, your friends--talk about everything in your marriage and include your finances on a regular basis.
Keep the discussion going.
You can start by having a monthly discussion to discuss where you are heading financially. Review your budget, talk about any recent overspending or other financial mistakes, and review upcoming expeditures and milestones.
Also take a moment to review your overall financial plan and long term financial goals. Your goals will change over time and your five year goal today may even be different from what it was a year or two ago. It's only natural that we learn and grow as people and this growth brings accompanying changes in our goals.
If you were to assume your partner's goals were the same as they were say, five years ago, as they are today and kept working towards these goals without talking to them you may find yourself disappointed once you reach the goal. You would then realize that although the goal was important then, your partner's goals had changed slightly and they wanted something slightly different. That would be frustrating, but wouldn't it be more frustrating to realize you and your spouse weren't on the same page?
These moments of disconnection can wreak havoc on a marriage over the long term. They can steadily erode the bond of trust you have formed and the connection that made your marriage ironclad to begin with.The solution is simply to talk to each other.
Talk about creating a budget you can stick to.
Talk about the future; talk about your goals and dreams; talk about how can get to where you want to be. Talk frequently, because it's one of the simplest things you can do to ensure a strong relationship and alignment as you move forward together in life.
How do you and your partner manage your funds?
Do you have one joint account and separate individual accounts or do you share one account?
There should be one joint account and an understanding that debts affect both partners in the relationship. Without the trust that is required for this to be successful, the relationship may hit a rough patch.
Establishing a joint account helps address the issue that arises if there is a major disparity between your paychecks. This inequality in your paychecks can also seem like an inequality in the overall relationship, but there’s another major challenge that couples have to overcome in establishing their financial path.
Where are you two headed?
One of the most important discussions a couple can have is one that establishes the goals they have in common along with the things they’ll do to get there.
This isn’t just a one-time discussion, either. It’s an ongoing conversation that every couple needs to have.
For starters, both partners need to lay their goals on the table. Where do you each see yourselves in five years? Ten years? Twenty years?
Those visions for the future won’t always be perfectly in sync, and that’s where the discussions begin. Instead of looking at the differences, focus on the things those visions have in common.
For example, you might want a game room to entertain your guests, with a big screen TV, Xbox, and a few chairs and couches. This might sound great to you, but what if your partner wants a pool to lounge in? This can also entertain guests, but also comes with some fairly substantial upfront and ongoing maintenance costs. So you must discuss these types of big decisions to ensure you stay on the same page, working towards shared goals.
Ultimately there should be some commonality between your shared goals.
By joining forces via a joint account and sharing the burden of carefully managing each dollar of income that hit's that account, you can stay focused on your shared goals and perhaps make them a reality.
When you share a goal, there’s incentive to push each other to the finish line instead of grumbling about the effort wasted toward something one of us doesn’t care about.
Everything becomes easier when you get on the same page.
Thank you for visiting BuildMyBudget.com and for testing the first release of our new budgeting software. BuildMyBudget is dedicated to showing you where you are headed financially so you can make financial decisions today that will help you reach your goals tomorrow. Instead of spending hours categorizing transactions, you can update your budget in 15 minutes each pay period and get on with the important part--making sound financial decisions so you can reach your financial goals!
BuildMyBudget 2.0 has the same flexibility that the original spreadsheet had, but now has removed the need to know how to use Microsoft Excel. With the new software you can:
- Create a custom budget based upon when you are paid
- Forecast exactly when you need to pay your bills and out of which paycheck they should be paid
- See exactly where you might run into a cash crunch
- Quickly enter and itemize expenses and track them as they are paid
- More effectively plan for large expenditures
- Avoid spending hours categorizing transactions
Please help us make the next release of the BuildMyBudget software the best it can be by downloading the software and testing it. Then take the survey and tell us what you liked and what we can improve!
Click the "Test the Software" button; a small window should open.
It will ask you if you want to save the software. Save it to your desktop and open or click run to install the BMB application.
Thank you and as always, keep budgeting!
Recently my wife and I returned from a European vacation to Dublin, London, and Paris. We traveled with six other friends, meaning there were eight of us running around trying to catch taxi's, trains, and flights together.
The trip was amazing. We visited many places that have been on my bucket list for quite some time, including Stonehenge, the Eifel Tower, Giant's Causeway, and the Tower Bridge in London. Each was more breathtaking than I imagined it would be, especially because my wife and I had been looking to the trip for so long.
We drank Guiness in the Gravity Bar in Dublin, sipped wine on the lawn of the Sacre Coeur in Paris, and watched the changing of the guard at Buckingham Palace. Like I said: amazing.
On our last day of the trip, we set out to have breakfast in the Luxemburg Palace gardens in Paris. By this point, we were all pretty tired after climbing what seemed like a million stairs during our travels.(Which consequently helps explain why Europeans are so skinny!)
We found a quaint restaurant called the Les Fontaines and tried our best to order off a menu written completely in French. My wife and I ordered a salad, crepe, omelet, two coffees and one glass of orange juice.
Like all the food in Paris, it was truly delicious and quite a memorable meal. It was outside in the gardens on a cool, clear day and there was nothing to worry about except perhaps the health of some obese pigeons who seemed to be permanent residents of the cafe.
Then came the bill.
Now the exchange rate at the time was $1.56 to one Euro, so it was already expensive to begin with. Add to that we were dining in the garden of a palace in the middle of Paris and wa-la, our breakfast cost around $90 with the glass of orange juice alone costing $18! My heart immediately went into palpatations knowing that we had already drastically exceeded our budget, but then I realized two things.
First, I was with a great group of friends in a place none of us will ever forget. We'll always be able to share the experience we had at that cafe and laugh about how each of us could have bought six half gallons of orange juice for what was spent on a single glass. It wasn't a special day because we spent it in such a fancy place. It was was special because I was with my wife and great company.
The second thing I realized was that we could do whatever we felt like doing, with only a few suitcases to worry about. We were a continent away from any worries in our lives. This was following a period in which I had worked long hours for several weeks and desperately needed a break from the grind.
While we were in Europe, there was no working late. There were no emergency tasks that had to be completed or problems to solve. There was just me, my wife, our friends, and a lot of simple and enjoyable things.
Looking back now, I realize that the location could have been almost anywhere and it still would have been an amazing ten day trip. We could have just thrown two changes of clothes into the back of our car and driven away and it would have been delightful.
Even though we went ridiculously over budget at this breakfast and our trip as a whole, I wouldn't change a thing because the experiences were priceless. It'll take a little longer to pay off the trip, but it was worth it. You might run into broken hotel beds, scalding hot shower handles, or forget a power cord or two...but hey, that makes the trip just that much more memorable. Great memories don’t come from expensive trips or meticulous planning. They come from spending time with little obligation other than to enjoy yourself.
This blog doesn't focus on the usual money saving tips or why it's important to know where you are heading financially. Instead it recognizes that every once in a while a relaxing break is just as important.
So you’re in a relationship and it's starting to get serious. You’re thinking about marriage or some other form of long-term commitment.
Quite often today, people are bringing significant debt into relationships with them. Credit card debt. Student loan debt. Auto loan debt.
I often get emails from readers asking me how to deal with them. Should they keep these loans separate from each other? How much debt should they really share?
This was also an issue that could potentially have become a problem when I got married. After some struggles, we eventually came to a conclusion that really makes the reality of these debts quite clear.
First of all, regardless of who actually owns the debts, they are now shared debts. When you’re married, your money effectively becomes a shared pool, whether or not you directly share that money or not. If one of you has a debt, the money to pay for that debt comes out of the shared pool. What’s left in that shared pool is smaller, reducing your opportunities as a couple to build towards other financial goals.
When we were married, for example, I had an auto loan and student loans and my wife had no debt. Luckily, neither of us had credit card debt, but I knew that very shortly we would need to replace her car. Naturally, this meant increasing our debt load and taking on another payment.
At first, we each tried to handle our own debts. What we discovered, though, is that after covering these debts, we each had much less left over to contribute to the things we shared – rent, energy bills, food, and so forth.
Even though we were keeping our debts separate, the reality was that the consequences of those debts were shared. If the consequences are shared, then it follows that the responsibility for paying off the debts ought to be shared as well.
Which brings me to my next point: once you acknowledge the debts as essentially shared, the optimal way to get rid of those debts is to consider them all together. It should no longer matter who has the worst debt. What matters is that the worst debt is the one that you both focus on first.
When my wife and I reached this conclusion in 2008, we began to really work together to focus on all of the debts either one of us had. It didn’t matter whose name was on the credit card or on the car title. The consequences of those debts were shared, so we both benefit when any of those debts go away.
Doing all of this successfully requires complete openness. You can’t hide debts from each other. You can’t hide money from each other. You can’t hide spending splurges from each other.
Whenever you do these things, you are taking money out of that shared pool that helps you both get what you want from the future. You’re also being dishonest with your partner and, likely, you’re undermining your debt repayment plan and other financial plans for the future.
This type of dishonesty is acid to any relationship. It opens the door to other forms of dishonesty that can completey destroy a relationship. I've seen it happen first hand and it's really not a pretty sight.
Any relationship where things are not completely in the sunshine is a relationship that’s eventually asking for problems.
If you’re not comfortable with that openness, then your relationship needs work. This goes beyond mere finances. It’s an indication that there are trust issues in your relationship and as long as those trust issues exist, you’ve got a gigantic fault line in your relationship that can easily erupt into a earthquake.
Simply put, share your debts. Regardless of who brings them to the table, you share the consequences, so you should also share the effort of eliminating them. Working together will also help you to pay them off in a more optimal fashion.
Whether you are bringing the debts to the relationship or just helping pay them off, if you work together to budget, live lean, and focus on your goals you'll find that you can overcome the situation and find yourselves stronger than ever.
Yes, I've finally accomplished a goal I set out to achieve long ago. I finally convinced my wife to cut my hair.
For someone like myself, who is constantly trying to find ways to make their money work harder, this is an excellent way to squeeze extra dollars out of the monthly budget which can be otherwise used to increase savings or pay down debt. By cutting out an $18 biweekly haircut at the local Hair Cuttery, I've managed to save approximately $324 throughout the rest of the year. (which is great right now because I really want to purchase an iPad2)
So what can you find in your budget to save $324 extra bucks to pay down debt, increase savings, or use towards your own iPad? Here are ten things you can do today to make sure you save $324 or more by the end of the year.
1) Cancel your newspaper or magazine subscription: Perhaps one of the easiest ways to save a few bucks right away is to cancel your newspaper or other subscriptions. Nowadays you can get much of the same content for free online through various news sources and other websites. If you live close to a library you can typically find recent newspapers and magazines there in additions to countless copies of books, videos and music. The library is a great way to save if you are constantly consuming media and book content.
2) Get rid of your premium cable channels: One of my happiest moments within the last year was the moment I said goodbye to HBO and replaced it with Netflix. Many of the shows and movies I liked to watch on HBO were on Netflix and I even saved $5-6 by switching. It helped my budget and my patience, since I often had trouble getting my HBO on demand to work. If you have more than one premium channel, you can potentially save even more.
3) Mow your own lawn: Here you can probably save more than $324 by the end of the year. If you pay for a lawn service, you're probably paying from $50-$100/month to have your lawn manicured. Cancel the service, locate and purchase some used lawn equipment in your local neighborhood or perhaps Craigslist and you'll be on your way to saving buku bucks by the end of the year.
4) Bring your lunch instead of eating out: Instead of eating out every day, get out of bed early and make a sandwich. You could also prepare a lunch the night before and take that lunch with you to work the next day. If you're spending $7 a day, it means you're spending $1750 in a given year just on lunches. If you skip even three months worth, you'll save $420!
5) Make things like your own laundry detergent, or soap: There are so many things you can make to save you money throughout the year such as laundry detergent. A simple formula can wind up saving you quite a bit over a year, just like growing your own tomatoes or baking your own bread can save money as well prove to be healthier options.
6) Save on electricity by turning your lights off or running your AC less: If you leave your lights on and fans running when you leave the room or constantly hear your AC running when it's nice enough outside to open the windows, take a moment to shut them off. Wasted electricity or water, if you have a leaking toilet for example, represents your hard earned dollars literally being sucked down the drain. By becoming more efficient at home you may easily save your $324 by the end of the year.
7) Break a bad habit such as smoking, or online gambling: Expensive habits such as smoking or drinking can be a huge drain on your financial situation. Eliminating an expensive habit can quickly improve your financial situation while also improving your health (which can also improve your financial situation by reducing health care costs). It doesn’t have to be smoking or drinking either—habits such as online-gaming or shopping in general can prove to be expensive habits that prohibit financial health. Breaking such a habit can prove to be invaluable to getting your finances back on track.
8) Skip your daily visit to Five Bucks (Starbucks!): It's tough to break a habit, especially if it's one that helps you get out of bed and moving in the morning. Consider that if you stop just twice a week at Starbucks or your other favorite coffee shop, spending roughly $10 a week, you are spending more than $475 a year! That's quite a bit of moola when you consider the weeks where you stop three, four, or five times.
9) Cut down on expensive hobbies: Are you engaged in a hobby that requires a lot of financial upkeep, like golf or collecting? Instead of continuing to spend on your hobby, watching it drain all your hard earned cash, try to find another activity you enjoy that doesn't require so much upkeep cost. Perhaps exercising or reading a good book will do the job. With a library card you can read all you like for a few bucks a year.
10) Stop trying to keep up with the Johnsons: Perhaps one of the easiest things to do to help you save $324 is to avoid trying to keep up with the Johnsons. Do you find the need to purchase the latest clothes, shoes, video games, cars, boats, or whatever else that your friends or neighbors buy? Well take a page out of any financial book and try to live like no others do, so you can live (debt free) like no others do. Chances are by skipping the latest fad you can increase your savings in no time.
So whether you decide to try one or all of these suggestions, know that there are plenty of ways to save a few bucks here or there to help make your financial goals a reality. For me, the latest was the simple act of asking my wife to cut my hair and her lovingly accepting the challenge. By eliminating haircuts from our budget we will save $324 by the end of the year which can gladly be use for something else. Now I'm off to try to locate an iPad2--Does anyone know a store that isn't sold out?
What could you do with $324? Leave a comment and let me know.
This week we were lucky enough to receive a guest post from Melanie Taylor regarding debt management.
If you're finding your debts difficult to manage, and you can't afford your monthly payments anymore, a debt management plan may be right for you.
A debt management plan, to put it simply, is a debt solution designed to help people with unmanageable debts repay the money they owe at a pace that suits their current situation.
We're going to discuss debt management in this article, but if you'd like to see a more in-depth look at this particular debt solution, take a look at this information on debt management.
Debt management - how does it work?
A debt management plan is an informal financial agreement between you and your unsecured creditors. It basically involves your creditors being asked to accept lower monthly repayments over a longer period of time - lowering your monthly payments and meaning you can afford to repay your debts again.
If your creditors agree to accept lower monthly payments, they may also agree to reduce or even freeze the interest charged on your debts. This can stop your debt from growing any more, and can help you repay your debts at a faster rate (than if they had continued to gather interest, that is).
You can set up a debt management plan on your own if you want to (by contacting your creditors directly) - but many people prefer to contact a debt management company.
Debt management - would it be right for me?
There isn't a definitive 'check list' to let you know if a debt management plan would be the right debt solution for you, but your unsecured creditors are only likely to agree to one if they can actually see that you're not able to maintain your current level of monthly repayments, but that you could repay the money you owe if you were allowed to do so at a slower rate.
No matter how much debt you have taken on, you need to think about whether a debt management plan really would be right for you.
Before making this decision, though, you might benefit from speaking to a professional debt adviser and having them explain the ins and outs of debt management, and help you figure out whether or not an alternative debt solution may be suitable for you.
As with any debt solution, there are several points you should keep in mind before entering a debt management plan. For example:
• Arranging to repay the money you owe over a longer timeframe could lead to you paying more (because of interest).
• Entering a debt management plan means you're defaulting on an original agreement… which will be recorded on your credit history for six years (potentially impacting your ability to obtain further credit for this time).
• Your unsecured creditors don't actually have to agree to any alterations to the original repayment agreement.
Thanks for the guest post, Melanie!
Ever wonder what the big deal is about being debt free? A little credit card debt doesn't hurt, right? Wrong! Especially now, credit card companies are charging minimum fees which can almost prevent you from every paying off the balance! So during a recent conversation with a close friend about her debts and why it is such a big deal, we pulled together a list of 20 fantastic reasons to be debt free. Thankfully this list made her realize that now is the time to do something about her debt.
Here are the twenty reasons why you should make the decision too:
1. You live in the present, not in the past.
2. You no longer have to worry about late fees, interest rate changes, interest payments, lost payments or finance charges.
3. Undoubtedly, you have a much greater peace of mind. If something were to happen to you, your spouse or family wouldn't have to worry nearly as much about your finances.
4. You earn interest instead of paying interest! (which is awesome)
5. You become more aware of the value of a dollar. In the past, if you could make payments, you could afford it. Now, if you can’t pay for it, you can’t afford it. This basic shift in thought will radically change your life!
6. You will no longer dread going to the mailbox.
7. You can afford to put away money in retirement accounts.
8. You can afford to fund education savings accounts.
9. You can be free from the emotional baggage associated with debt. It’s impossible to adequately describe how good it feels to be debt free. If I had known how awesome being debt free felt back in college, I would have gotten out of debt a decade ago!
10. You can begin to inspire and encourage others.
11. You can set a much better example for your close family and friends.
12. You may be able to give more time and more money to those who are in need. There are only three things one can do with money – give, save, and spend. It feels good to save. It feels good to spend. It feels great to give.
13. You now know that you can establish a goal, push through difficult times, and overcome your fears to successfully change your life. These truths will help you take on bigger and bolder challenges and will help fuel your motivation.
14. You can now make bigger plans. I have learned to dream of a better and brighter future for myself and my family.
15. You can spend a little extra on nicer things for my family. In the past, credit card debt crippled me. Now, with a proper budget and some forward thinking, I can actually plan for nicer things.
16. You can disregard every credit card application that comes your way. Simply tear them up when they arrive in the mail.
17. You can establish a solid financial foundation. With your debts eliminated and an emergency fund in place, you can rest assured you will feel much more secure than ever before! None of us knows what the future holds, but I feel much better now than I did before I began focusing on paying off my debts.
18. You can listen to your favorite financial guru and smile knowingly when callers request help to get out of debt.
19. You will have a deep respect for those who have paid off much more than you paid off – and for those who are still in the midst of their debt reduction journeys. I am constantly amazed by some of the debt reduction stories that I have read over the past several years. Read a few blogs and you'll be amazed as well as motivated!
20. You will be motivated to share your story with the world. You can join blogs and forums, share your story, and provide support for those people who are where you used to be. It's a fantastic feeling to help others and what better way than to share your true story of how you became debt free?
If you are ready to get out of debt and start your own journey towards being debt free with a strong financial foundation, start today by building a budget. By seeing where you are heading financially you can make better decisions today about how to pay off your debts faster and reach your financial goals.
Have any other reasons to add? Please share them in the comments and as always, keep budgeting!
Recently I was discussing programs such as Dave Ramsey’s Financial Peace University and other such personal finance coaching programs with a few friends.
What they give you
These programs, such as Financial Peace University collect together several personal finance resources into one place. Typically, these programs provide a step-by-step plan for getting out of debt or recovering from a poor financial situation, such as bankruptcy, and offers suggestions on how to build a strong financial foundation.
Once you’ve ordered, these packages typically are delivered as a large package, containing books, workbooks, CDs, DVDs, or even instructions on how to access live seminars via the web. These packages try to reach out to all types of learners - those who learn from reading, those who learn from watching, and those who learn from listening to and having the opportunity to ask questions of a speaker. Unfortunately, I tend to learn best when I can watch somebody do something, so either a video or live speaker work best for me.
Quite often, such coaching packages revolve around a series of seminars which function a lot like college classes: there are “assignments” of reading, writing, or DVD watching outside of class, as well as other personal finance tasks. The seminars themselves usually reiterate the material but focus on getting you excited and thinking positive - encouraging you and reinforcing the idea that you can do this, even if it seems impossible at the moment.
Although I’ve investigated only a few of these coaching “systems,” the mainstream programs (like Dave’s Financial Peace University) tend to package a good deal of valuable information with proven motivational techniques. It can have much the same impact as a physical trainer at the gym, providing the motivation and encouragement one needs to push themselves to the next level.
What they take from you
These personal finance systems aren’t free, however. Typically they are relatively expensive, and if you’re already in financial trouble, another expense is often prohibitive if not a downright poor decision. For example, the Financial Peace University package costs $119 and includes worksheets, books, a journal, software, and the opportunity to attend any FPU seminars you want. The version with DVD materials is even more, costing $229.
As I mentioned, for a lot of people that’s prohibitively expensive. If you’re working a minimum wage job, that could be as much as a week’s pay! Even if you’re earning more, that’s more cash than you probably need or want to spend.
Another important thing to consider is that most of the information you’ll get from such courses is already out there. Such courses rarely provide any significant new information that can’t be found for free at the library or on the internet by searching for “debt help” or by reading through the “debt” category at a good personal finance blog. I know I’ve seen Dave Ramsey’s Financial Peace Revisited at the library and it contained much of the material in the course—all for free!
Should I or Shouldn’t I?
If you’re simply seeking out the information from these courses, I recommend looking for other sources, such as the library or the internet. You can find all the information you need for getting out of debt without the expense or annoying email advertising that you will be subjected to following a purchase. Of course, the first step to building a strong financial foundation is to begin tracking your expenses and create a budget.
I think that the most valuable parts of these systems comes from the motivational support that they provide. Many people need step by step guidance on what to do today to start fixing their financial situation. Many simply thrive on having a person motivate them to make better choices - dietitians and personal trainers are two examples of this—and can mean the difference between success and failure.
Of course, you also have the option of seeking out your own motivation. Find a friend who is in a similar circumstance who can serve as a watchful eye and motivator—and you do the same for them. Alternately, talk about your situation with the people in your life who do the best job of inspiring you to better things - and you’ll feel driven by their knowledge of your situation to improve things.
Of course, good old fashioned direct coaching is the best option for some people and if you’re in that boat, programs like FPU can be just what you need to turn your situation around.
As always, keep budgeting!