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Good Ol' Fashioned Financial Common Sense

August 25th, 2011 at 01:39 pm



Occasionally, some well-intentioned soul makes the argument that having an emergency fund or planning for retirement means that you’re “a pessimist” or that you “don’t have enough faith,” and you “just need to trust God more.” Now I can appreciate people’s varying points of view. But there are times that I just want to say “ARE YOU KIDDING ME?” Of course I don’t actually yell at them…that would be rude…but I do think it.

With all my heart, I want you to be debt free and prepared for the future, which includes a 3-6 month emergency fund and a solid retirement plan. Would that mean you don’t have enough faith or that you’re a worry-wart? I don’t think so!

Consider this famous story from Aesop’s Fables, circa 600 B.C. You may have read it before, but its’ wisdom is worth revisiting. You may remember that Aesop also gave us the morals of such stories as The Boy Who Cried Wolf and The Tortoise and the Hare. I think he was on to something!


The Ant and The Grasshopper


In a field one summer's day a Grasshopper was hopping about, chirping and singing to its heart's content. An Ant passed by, bearing along with great toil an ear of corn he was taking to the nest.

"Why not come and chat with me," said the Grasshopper, "instead of toiling and moiling in that way?"

"I am helping to lay up food for the winter," said the Ant, "and recommend you to do the same."

"Why bother about winter?" said the Grasshopper; we have got plenty of food at present." But the Ant went on its way and continued its toil.

When the winter came the Grasshopper found itself dying of hunger, while it saw the ants distributing, every day, corn and grain from the stores they had collected in the summer.

Then the Grasshopper knew...

It is best to prepare for the days of necessity.



Of course, this concept of preparing for the future goes back even farther. Consider the words of the wise King Solomon, circa 1,000 B.C.:

Go watch the ants, you lazy person.
Watch what they do and be wise.
Ants have no commander,
no leader or ruler,
but they store up food in the summer
and gather their supplies at harvest.
-Proverbs 6:6-8


The moral of the story:

Become debt free, stay debt free, save up a 3-6 month emergency fund and plan for future expenses and your retirement. That’s just good ol’ common sense!



Yours In Freedom,

Clint



The original post can be found here: Debt Free

How to Save $1,393 with 4 Easy Phone Calls

August 3rd, 2011 at 12:12 pm




So you’ve heard about making BIG sacrifices to win with money. You’ve been told you need to get on a budget and cut out all discretionary spending. You’ve been told to cut out lattes, personal care, and eating out. And I know you’ve heard the phrase, “you have to give something up to get what you want.” And all these things are true. But there are some small, easy changes for those of you who want a big return with little to no change in lifestyle.

One Thursday, I got out my laptop, my phone and I started making some calls and saving some money. These are the changes we made and the money we saved…and you can do it too!


1.) Change Your Internet Provider
With new internet providers popping up all the time, you should be able check out a few that offer a low introductory rate for one year. You don’t have to sign a contract and you can always switch again once the introductory rate is up. We were paying $62 a month and with 1 quick phone call to a new provider we reduced that to $14.95 a month.

Annual Savings: $565.00

Side Bonus: We had the great pleasure and satisfaction of cancelling with a crappy provider that gave us horrible customer service! That one felt good!



2.) Lower Your TV Plan
How many channels do you really watch? With services like Netflix and Hulu, there is no reason you NEED over 200 channels. We called our satellite TV provider and switched to a less expensive package. If we really need to watch something that doesn’t come on our basic channels we just stream it from the internet. We went from paying $56 per month to $20 per month. The savings really do add up!

Annual Savings: $432.00

Side Bonus: The lack of “mindless” entertainment forced us to become spontaneous and interact more. Now we create our own entertainment and have more fun!



3.) Lower Your Cell Phone Plan
We called our cell phone provider and had them do a quick audit of our phone bill for the last 5 months. The sales rep told us we were consistently under our minutes and our text messaging plan. We switched to a lower plan that saved us $26 a month.

Annual Savings: $312.00

Side bonus: The sales rep told us about a new free service they offered to all customers on the plan we switched to! Don’t be shy to ask about new promotions and services.



4.) Report Home Security Upgrades to Your Insurance Company

Have you invested in a home security system? It could even be a deadbolt or a fence. We had actually already reported our upgrades to our insurance company. But you could save around $7/month for a newly installed home security system. Instant savings for a 5 minute call.

Annual Savings: $84

Side bonus: While you are on the phone with your insurance company, you could ask about any additional discounts available to you. You’ll never know if you don’t ask.


FINAL BONUS: Once you are debt free, you can begin putting the extra $1,300 annually into a retirement account that is earning around 8% (or more). If you start at age 30, over the course of 35 years, you will have added an extra $250,000 to your nest egg. Not too shabby for 4 phone calls!


It pays off BIG to shop around, and I think you’ll agree that it’s completely worth the time and effort. If you have a busy schedule, you might consider taking a ½ day or a full day off work to make these calls. And don’t think of this as just cutting your expenses. The process of making these calls and learning about your options will create a deeper awareness of your entire financial situation. It’s a big step towards taking control of your finances and creating a more conscientious mind set.

Now get to it!


Yours In Freedom,

Katy


The original post can be found here: Debt Free

Join the conversation…what other quick and easy changes could you make in order to save big? Leave your comments below.'

The original post can be found here: Debt Free

16 Lies We Believe About Money - Part 3

July 26th, 2011 at 03:15 pm




Throughout your life you’ve heard millions of messages about money, debt, credit, savings, retirement and spending. Most of them came from the advertising industry; some may have come from teachers and mentors. But perhaps your greatest source of financial influence came by observing your parents’ financial habits. For most of us, that’s not good news. We’ve all been sold a long list of financial lies. But it’s time to wake up to the truth and start making a better choice.

In parts 1 and 2 of this blog post series, we started the journey toward financial truth. Now to wrap up the series, I present:


16 Lies We Believe About Money

(part 3 of 3)




11. Everyone Should Aim to Save 10 Percent of Their Income.
“My parents always said that 10% of my paycheck needs to go straight in the bank.”

Why It’s Bogus: It may be a good idea to put 10% of your income into savings. But that percentage will vary (sometimes drastically) depending on your life-stage and where you are in your financial journey. You may need to save much more than 10% when you’re building up your $1,000 beginner Emergency Fund. Once you’re debt free, you need to build your Emergency Fund up to cover 3-6 months of your living expenses as fast as possible. That too may require you to save much more than 10%. If you’re on the verge of needing to replace a to vehicle, planning have a baby soon, going back to college, starting a business or saving for a down payment on a house, you most definitely need to be saving much more than 10% of your income.


12. Putting Money Into a 401(k) Is Always The Best Investment
“I just need to invest in my company’s 401(k) and I’ll be set at retirement.”

Why It’s Bogus: Another “usually”…it’s usually a good idea to invest for retirement inside of your company’s 401(k) plan. It’s almost always a wise choice to invest at least up to the amount your company will match you. However, most 401(k) plans have very limited, and often under-performing, investment options. If they don’t offer a match, it would be a better idea to invest in a Roth-IRA which gives you the same type of tax benefits, but with more investment options. Do your research and get professional guidance. Don’t flippantly set up a mis-allocated 401(k) plan and think it was automatically a good decision. It’s your money and no one will care about your money as much as you!


13. Money Is The Root of All Evil
“It says in the Bible that money is the root of all evil. People lie, cheat, steal and kill for money….it’s evil.”

Why It’s Bogus: I’m not here to preach, but let’s be clear…the Bible says no such thing! The often misquoted verse actually says that “the love of money is the root of all kinds of evil” (1 Tim 6:10). It is dangerous to love money. Greed causes people to do some horrible things. But money itself is neutral…it’s not good or evil. It’s just paper; it does what you tell it to. We sponsor a child in Africa with money, we help fund a non-profit with money. Money feeds the homeless, treats disease, cures addiction and provides shelter, clothing and education. Because of the good that money can accomplish, good people (including you) need to concern themselves with making money and accumulating wealth so we can do some good with it!


14. It’s All Their Fault
“I just can’t get ahead because of…the government…my parents’ bad example…bad luck…the crooked bank…”

Why It’s Bogus: Most people, myself included, are pre-programmed to shift blame and resist taking responsibility. But the truth is only you are responsible for your financial situation. The bank didn’t trick you when they jacked up your credit card rate. It’s not the mortgage company’s fault that you signed up for a mortgage you couldn’t really afford. Stop playing the blame game. We’ve ALL made dumb financial moves. But taking responsibility for your actions and learning from your mistakes is incredibly liberating! And when you do, you’re able to take the steps toward a solution. You can’t change the past, but you can take responsibility for creating the future you want!


15. If I just try harder, I can save more, keep a budget and pay off my debt.
“I just need to set my mind to it and exert my will-power.”

Why It’s Bogus: Let me have a Dr. Phil moment here and ask, “How’s that workin’ for ya?” Will power is great for launching off, but it’s almost never sustainable! If it was, we’d all be skinny and we’d all be rich. Just saying you want to do something and “trying harder” is a great plan for failure. Financial success does require some will-power and it does require you to try harder. But more importantly, it requires you to make some tough decisions, set some specific (written) goals, to develop a systematic plan, to seek accountability and to surround yourself with people who are moving in the direction you want to go. Learning to manage your money and getting out of debt is hard work. But if you have a solid plan, accountability and support, you can absolutely do it!


16. But Clint…you just don’t understand myyyyy situation…
(note the *whiny* emphasis on the “my”)
“You just don’t understand, I can’t….I don’t….”

Why It’s Bogus: In the words of Tyler Durden, “You are not a beautiful and unique snowflake” (us guys will recognize this from Fight Club). I’m not trying to be insulting in anyway. But I want to acknowledge that we are ALL in the same boat….and your situation…it’s probably not that unique. And you definitely shouldn’t let it hold you back! There are a million reasons NOT to start a budget…NOT to begin paying off debt…NOT to save an emergency fund…NOT to start planning for retirement… But you work too hard and make too much money to live your life broke and in debt! You, your family and your future are too important to make excuses. So unless your family is vastly wealthy, it’s time to start taking control of your finances…today…right now…get to it!


If any of these money lies have been preventing you from living the life you want, I want you to know there’s no better time than now to change course and start achieving financial freedom and peace!


This is your money and your life…take control!


Yours In Freedom,

Clint



***Join the conversation…what will you do immediately to begin taking control of your money and life?



Debt Free

Are You Eating Away Your Future?

May 5th, 2011 at 08:03 am



The original post can be found here: Debt Free

Several years ago when we finally decided to take control of our money, we took a close look at our spending. We were absolutely blown away when we realized how much we were spending on dining out. On average, we were spending well over $300/month…for just the 2 of us.

You may spend more or less. But let’s work with this figure for now. Let’s say that from age 25-65 we spent $300 per month on dining out. This is really a conservative figure because we are assuming that those costs would never rise and that we would never be spending money on kids’ meals out.

Spending $300 per month for 40 years equals $144,000 spent on dining out! That number blew me away, and I hope it blows you away too.

Now let’s imagine that we invested that same amount. $300 per month invested for 40 years with an average annual return of 12% would equal $3,092,912.61. Are you kidding me?? Let’s say I’m overestimating the rate of return on the investments. What if we only averaged 8% annual return, which is much lower than the stock market’s 50 year average. That would still be $1,007,211.74!

But let’s be honest here, I love dining out. Who doesn’t? So I’m not suggesting that you never dine out. I am, however, challenging you to consider how you are spending your money.

We have cut our restaurant budget down to $140/month. That’s $160 per month less than we used to spend. Let’s say that we invest just the extra $160 per month for the next 40 years. At an average 12% annual return, that will give us an extra $1,649,553.39.

Well over a 1.5 million dollars earned for retirement simply by investing our saved restaurant money!

And what did we sacrifice for it? Not much…we still go out for dinner at least once per week.

Small choices and sacrifices can add up to huge results. Instead of spending mindlessly, you must be conscious of your choices if you want to win with money. Take the time to sit down and evaluate the amount your family is spending on restaurants. You could literally be eating away your future.

Yours In Freedom,

Clint



Join The Conversation…by how much will you commit to reducing your restaurant budget?

Do You REALLY Need Life Insurance?

April 22nd, 2011 at 08:22 am



The original post can be found here: Debt Free


“Preston Newby, 24, was a youth pastor who “lived to serve other people,” says his wife, Tara. So it was no surprise when he pulled off the Interstate late one night to help passengers in a car that had just collided with an elk. While calling for help, Preston was struck from behind by a driver who swerved to avoid the accident scene. He died moments later in Tara’s arms.

The tragic situation would have been much worse if it hadn’t been for the Newbys’ decision a few years earlier to buy life insurance. “We discussed how, if one of us passed away, the other would want to stay home with the children,” says Tara. Sadly, that hypothetical discussion became reality all too soon for Tara, who was 10 weeks pregnant with her second child when Preston’s life was tragically cut short.

But thanks to the life insurance, she is able to be a full-time mother to Jacob, 2, and Micah, 3 months. She also paid off her student loans and other debts. More importantly, it gave her time to grieve and to focus on her children. “With so much to stress about while raising two children, it’s a blessing not to have to worry about finances,” says Tara. “I feel like it was Preston’s last gift to us.”” (from LifeHappens.org)




What would happen to your family if you were to die suddenly? Would they be able to afford to pay for your funeral and burial? Would they be able to maintain their lifestyle? Would they be able to keep their home? Would they have to rush back to work in the middle of their grief?

If you die without life insurance your family may find themselves in a financial disaster at a time when they are already overwhelmed with grief. Most people are adamant about taking care of their families….family vacations, fancy anniversaries and elaborate birthday parties, new gadgets, and even saving for college. But get this…

-Only 44% of households carry personal life insurance policies.

-And approximately half a million adults ages 30-55 die prematurely every year.


If you have a spouse and/or children under the age of 18, and you don’t have life insurance, you need to get up from the computer and find someone to give you a good kick in the butt. Then when you recover, pick up the phone and call a good insurance agent. Many people are never taught how important life insurance is. But now that you know, you can do something about it.

There Is No Excuse. Life insurance is a non-negotiable if you love your family. In the event of your death, your term life insurance policy will make sure your loved ones are taken care of. You should carry a 15-20 year Term Life Insurance policy with a value of 8-10 times your annual income. This amount will cover your funeral expenses, most or all of your outstanding debt including your mortgage, most or all of your children’s’ college, and leave your family enough to replace your income for several years. They could also invest this money with a 10-12% return and completely replace your income.

And the cost of this type of policy? For a 35 year old man in reasonable health…about $25 a month!!

So what are you waiting for? Please do not neglect this aspect of your financial plan and debt free life. Plan for the future and make sure your loved ones are taken care of, even when you pass from this life. It’s one of the very best decisions you can make, and one of the most profound declarations of your love.


Yours In Freedom,

Clint