Financial Fluff.

Finances Can Be Confusing.

As promised, I'm writing again this week about a much lighter topic than my quarter-life crisis. A big thank you to the comments I received, by the way. My readers (and friends) are so thoughtful, understanding and supportive.


Anywho - onto the financial fluff. How's everyone doing with some of the financial suggestions I've tossed out? I was sad concerned I received no emails about the financial planning first steps post I put together back in March and to boot, I didn't receive hardly any reaction about the disability planning. I can't possibly put into words how passionately I feel about having a solid financial plan - I don't care who you are, wherever you are - what the hell heck is your financial plan? What are your financial goals for the future? Where do you want to be financially in 6 months? 1 year? 2 years? 5 years? 10 years?


If you don't have answers to all these questions, it's something you should look into finding answers for, but it's OK - that's why I'm here. If nothing else, my goal is to motivate you to take action, take control and take responsibility for your financial situation.


Couple of facts:

1. 44% of American Families spend more than they earn. If this number isn't alarming to you, please read this statistic again. This stat seriously makes me hurt because I know, for a fact, that a good portion of this percentage is because of point number two...
2. Despite this fact, Americans continue to live outside their means. Enough with all this "keep up with the Jones'" mentality. In fact, enough with all the over access crap. Example from my own financial situation: My husband and I recently decided to cancel our cable and get basic television. Why? Because "cable" was costing us over $100 per month and we were constantly complaining there was nothing on T.V. Not to mention our sons are obsessed with the movies Hop and Cars and we normally are forced to watch too... Now we pay $10 a month for basic T.V. Presto! An extra $90+ per month into our savings.

A few suggestions (please follow these steps):

1. Write down, right now, on paper, how much money you TAKE HOME in a month. The "take home" part is important - Unfortunately, you pay Uncle Sam first...
2. Create categories according to what you spend your money on (rent/mortgage, food, gas, utility bills, cable/internet, cell phone, daycare/school costs, insurances, student loans, credit cards, etc.) DO NOT CHEAT YOURSELF. Be honest about your "spending categories".
3. Write down the dollar amount you spent in each of these categories in the past month - You can do this by going to http://www.mint.com and it will do it for you - However, you can also easily do it yourself by looking at your bank statement.
4. Add up all your spending dollars and subtract it from the number you wrote down in number 1.
5. HOW DID YOU DO? Did you spend more than you earn? Spend less than you earn? Break even to what you earn?

Next steps:

If you spend more than you earn... Do the same exercise (steps 1-5) for two months prior to see if this is a trend. Sometimes things happen - you had car trouble, a medical expense came up or you threw a party and spent more on food than normal - What's important is to recognize if you have a pattern of spending more than you earn. If the pattern if more spending is clear, make two columns on a piece of paper: One column should be a list of things you "can financially control" and the other should be things that you "cannot financially control". (Example: Price of Gas is something you cannot financially control, but you can control how much you're driving around). From those columns, you have to decide where you can cut back on spending. Pretty simple, but it's a lot easier said than done.

It doesn't stop there, challenge yourself to stick to these guidelines! Do this exercise again in a couple of months and see how you're staying on track. If you're continually getting off track, I would consider sitting down with a financial professional.

Another bit of advice, take a look at how many allowances/dependents you claim on your paycheck. Did you know you can take home more money if you claim more allowances? I was only claiming 2 for the longest time, then I realized that I can claim myself, my husband and both our kids and PRESTO! $200 more on each paycheck! BE CAREFUL though. You may have to pay back some of the money at the end of the year if you take home too much...

If you break even to what you earn I would do the same as I've recommended above. You may not be spending more right now, but if you're breaking even of "right on the cuff" that's still not the greatest because you're not saving or getting ahead financially. I would consider scaling back on your lifestyle in some ways to be able to save each month. Even if it's only $30-$50, it's better than $0.

That's all on financial fluff for today! I hope you learned something and if not, thanks for reading anyway!