Posted tagged ‘Personal Finances’

First Step in Debt Free Living – Controlling Your Spending

January 17, 2011

The first step to financial independence and debt free living is to control your spending.  We live in a consumer driven world that encourages the use of credit for every purchase.   As a result, Americans are burdened by excessive consumer debt.  A recent report by the Federal Reserve stated that Americans owe approximately 826 billion in revolving credit card debt.   The burden of this debt is overwhelming families and robbing them of their hopes and dreams for the future.

A roman author, Pubilius Syrus from the 1st century wrote this quote 2,000 years ago.   “Debt is the slavery of the free”   How much more true is this quote today? 

If you are ready to take control of your financial future you must start by taking control of your spending.  Here are some proven tips and ideas to that are easily implemented that can dramatically impact your personal finances.

Breakout Your Expenses – Pull out all of your credit card statements, bank statements,  etc. and breakout all of your expenses into specific categories.   Create a ledger and enter each individual expense into the appropriate category.  Review each expense to determine what is a regular monthly recurring living expense and what were discretionary purchases.    Then total each category for last month.  This first step will provide you with some interesting data on your spending habits.  It will also provide you ideas on where you can start reducing or eliminating unnecessary expenses.

Track Every Expense for 30 Days – This exercise is absolutely critical and it will provide you some great insights into your spending habits if you track every dollar you spend for 30 days.  Use the memo pad in your cell phone or keep a small notebook with you to write down each expense as it occurs.   Don’t see this exercise as a burden.  Have some fun with it.  Set up a ledger with different expense categories and enter all of your expenses at the end of every day.  Use the same ledger system to enter all of your normal payments on the 1st and 15th as well into their specific categories.  

Debt Free Living is Possible – What if you were debt free?  How would you live differently?   Debt free living can be a reality for anyone that is willing to commit to the goal.  I hope you will take some time as part of this exercise to stop and think about your life, your finances and your hopes, goals and dreams for your life.  Take the time to reflect on how your debt has impacted your life and your finances.  More importantly, take some time to declare some new goals for your life.  Goals based on being debt free.   Goals that will motivate you and inspire you to take action today to take control of your personal finances and change your life forever.   See my previous post Financial Literacy begins with – The Power of a Vision to Transform Your Life and Your Finances.

Accept the Challenge – I hope you will make the commitment to track your expenses for 30 days.  The exercise is truly valuable.  It will provide you new insights into where all of your money goes every month.  It will also provide you with some ideas and insights on how to reduce or eliminate unnecessary expenses.  This is the first step in taking control of your finances and moving closer to debt free living and achieving financial freedom.

Challenging Our Family –  I am going to take this challenge as well.  I will keep you updated on my progress, my breakthroughs and my insights.   This will be a great exercise for my wife and two teenagers.  We will make it a fun family challenge with a prize for achieving the goal of tracking every expense for our entire family for 30 days.  This is an excellent opportunity to share financial literacy lessons with our kids.

Quotes to Motivate and Inspire:

Empty pockets never held anyone back.  Only empty heads and empty hearts can do that”  Norman Vincent Peale

“A miser grows rich by seeming poor.  An extravagant man grows poor by seeming rich” William Shakespeare

“If you would like to be wealthy, think of saving as well as getting” Benjamin Franklin

“If you want to feel rich, just count the things you have that money can’t buy” Proverbs quote

“It is not how much you earn, but how much you save”  Anonymous

 

I hope you have benefited from this post on Financial Literacy.  If so, leave a comment.  In addition, please forward this to anyone you think might benefit from this short financial literacy lesson. 

You can follow Fiscal Literacy on Twitter and Facebook.

Begin 2011 with a Personal Budget

January 7, 2011

A personal budget is absolutely critical for anyone that is committed to taking control of their personal finances.  Why? Because a budget provides us the input we need to manage our income, track our expenses, improve our cash flow to payoff debt and start a savings plan.  A personal budget provides us a tool to work on achieving our financial goals.   It is the first step in taking control of our personal finances.

Therefore, the start of a new year is the perfect time to commit to creating and using a personal budget.   This does not have to be an overwhelming task.  There are countless free personal budget resources and free personal budget software resources online to help you get started.  Don’t get caught up in selecting the perfect budget format.  It is not that important.  What is important is capturing all of your income and expenses.  Pick something that is simple to use.  We use a simple budget worksheet in Excel. Here is a link to a Microsoft personal budget template that has over 3.4 million downloads.  http://bit.ly/gatAnx

It is also very important when creating a personal budget to capture all of your miscellaneous expenses that occur throughout the month.  The only way to accurately capture all of these expenses is to save every receipt for every dollar you spent for a minimum of 30 days.  This information  is essential to preparing an accurate monthly budget.  It will also provide you some great insights into where all of your money goes on a monthly basis.

Once you have completed an accurate monthly budget and have captured all of your expenses you can start looking for creative ways to reduce or eliminate unnecessary expenses and save money.  The monthly savings you create can be used to start paying off consumer debt and funding your savings goals.   

A personal budget is the first step in taking control of our personal finances, controlling our spending and achieving our financial goals for our lives.    Start today and change your life and finances forever.  

 I hope you have benefited from this post on Financial Literacy.  If so, leave a comment.  In addition, please forward this to anyone you think might benefit from this short financial literacy lesson. 

You can follow Fiscal Literacy on Twitter and Facebook

Fiscal Literacy Friday / Financial Literacy 3 Keys to Debt Free Living

November 19, 2010

Debt is consuming the lives of millions of people.   Debt is what keeps us from pursuing our hopes, goals and dreams for our lives.  Debt robs us of our future.  The only way we can take control of our financial lives and our future is by becoming debt free and never going back into debt.  Debt free living must become your passion and your unrelenting goal.  Debt free living can be a reality for anyone that is willing to commit to the goal.  What if you were debt free?  How would it change your life?  What could you do or pursue if you were debt free?  Here are 3 Steps to help you become debt free.  

 

1.  Cut Expenses – We live in a consumer driven world.  Our spending habits are consuming our future.  We must take control of our spending habits to start moving towards achieving debt free living.  Therefore, the first step towards achieving debt free living is to cut out our unnecessary expenses.  When was the last time you reconciled every dollar you spent for the last 30 days?   When was the last time you looked at every charge on your credit card statement?   I challenge you to track every expense for a minimum of 30 days to see where all the money goes every month.  My family and I just completed this exercise.  I was blown away at how much money we wasting every month.  We were only able to identify these unnecessary expenses by tracking every dollar and keeping every receipt for a minimum of 30 days.  This simple exercise has dramatically impacted our spending habits and has freed up a lot of money.  Therefore, I challenge you to use this exercise to look for ways to reduce your unnecessary expenses and start saving money.

2.  Payoff Debt – Our debt is typically the result of the lifestyle choices we make on a daily basis.  We never stop to realize that with every swipe of the credit card we are consuming our future.  We never stop to think how much the new car, boat or other luxury items we purchase with a personal loan costs us over our lifetime.  Until one day we wake up and realize we have nothing to show for all of our hard work.  This is the reason millions of people are unable to retire and enjoy life the always dreamed of living. Therefore, nothing is more important than paying off your debt and taking control of your financial future.  We must create a plan to systematically eliminate all our debt one debt at a time.  We must commit to stop using our charge cards and only paying cash.  This will require a change in lifestyle and discipline. However, the financial freedom and rewards of debt free living will change your life forever.   It will free you up financially to pursue your hopes, goals and dreams for your life. 

3.  Cash Cushion – It is a lack of personal savings that forces us to use our credit cards or obtain personal loans to pay for the expenses we incur in our lives.   Many of these expenses are unplanned expenses for car repairs, kid’s braces, home repairs, etc.  We also use our credit cards for pay for other large expenses i.e. vacations, holiday shopping, home furnishings, etc.  These large expenses dramatically impact our overall debt, increase the costs of every purchase due to the interest we pay over time and also reduce or eliminate our ability to save money, fund retirement, etc on a monthly basis.  Therefore, we must commit to establishing and funding a cash cushion account or emergency funds account to pay cash for these expenses as opposed to charging the expenses.    

A cash cushion is an emergency fund that is created to cover your living expenses for 3-6 months.  It is also used to cover unforeseen expenses, repairs, etc. that come up in everyday life.  The purpose of a cash cushion is to keep you from incurring expenses on your credit card when emergencies arise.  A cash cushion will also provide you peace of mind that you have 3-6 months living expenses in the bank at any time.   I encourage you today to set up a separate bank account and start funding your cash cushion account

I hope you have benefited from this post on Financial Literacy.  If so, leave a comment.  In addition, please forward this to anyone you think might benefit from this short financial literacy lesson. 

You can follow Fiscal Literacy on Twitter and Facebook.

Financial Literacy begins with – The Power of a Vision to Transform Your Life and Your Finances

July 19, 2010

What is the purpose of Fiscal Literacy?  It is a commitment to help improve the financial literacy of Americans by providing clear concise information, facts & expert advice to educate people on a variety of topics i.e., money, finances, debts, mortgages, real estate, budgets, etc. 

It is a commitment to help educate and empower people to make informed choices regarding their personal finances that dramatically impact their personal and financial lives.  

People become empowered to take action to transform their lives when they learn that they have the ability to impact their lives, to achieve their goals and make their dreams become a reality.   This realization or breakthrough creates hope for the future.   It is this hope for the future that will compel people to take action, to stay the course, to overcome setbacks and to make conscious choices on a daily basis to move closer to their goals. 

 History is full of compelling stories of individuals who overcame adversity, lack of education, physical limitations, lack of financial resources, etc. to accomplish great things in their lifetimes.  They were able to accomplish these great feats because they had a crystal clear vision of what they wanted to accomplish in their lives.  They were unwilling to accept failure or be deterred from achieving their vision for their life.

Therefore, it is essential that we work on developing a crystal clear vision for our lives.   This is the first step in our pursuing Financial Literacy for our lives.  Financial Literacy is not just about the money.  It is  all about understanding the power of money, the impact of our financial choices, and how we can use our financial resources to accomplish our goals for our lives.  

Everyone wants to achieve financial independence but few people actually achieve it.  Why?  Most people end up consuming their future by the financial choices they make every day.  They never stop to consider the how their financial decisions today will impact their future.  Unfortunately, many people never received any formal education in school regarding financial principles on money, budgeting, investing, etc.   Therefore, they were at a disadvantage from an early age.  For many people their only source of input on money came from their parents.  Well intentioned parents may have never received any formal education on money during their lifetimes as well.  Therefore, they may not have been the  best source of information or set the best example with their personal finances for their families. 

However, there is a group of people who achieve financial independence. There was a great book written that examined the lives, lifestyles and financial habits of self-made millionaires.  There are no get rich quick stories.  It is about average people who achieved above average results in their lives.  The common denominator is revealed as you see the similarities in their lives.   The book will provide you encouragement and insights into achieving the same goals for your life. 

The book is “The Millionaire Next Door” by Thomas J. Stanley Ph.D. and William D. Danko Ph.D.  Here is a link to Google Books for a preview and review of the book.   http://bit.ly/asJ15s

 It is interesting to note that approximately 80% of the people who achieved financial independence did so on their own, they did not inherit their money.  They worked hard, lived conservatively, learned sound financial principles and became financially independent.   These statistics should provide hope and encouragement for any person who wants to take control of their finances and move closer to financial independence.   It all starts with a vision of what can be possible for our lives when we see that it became a reality in other people’s lives.

Therefore, It is critical that you stop and take some time to reflect on what you want, why you want it, what will it give you.  This will help you create a vision for your life.  Here are some questions to help you start working on creating a clear and concise vision for your life.  A vision that you are passionate about achieving in your life.  The list is not all-inclusive, but is only meant to serve as a reference to help get you started.  It is your life and your future. Think Big and don’t limit yourself! 

Questions to help you create a compelling vision and goals for your life

What are your hopes and dreams for someday?

What’s missing in my life? 

What are you passionate about?

What things do you value most in life?

What gives you meaning and purpose in your life?

What is your idea of the perfect life?

What would it look it? 

Where would you live? 

How would you spend your time? 

How would you touch and impact others lives?

What your natural gifts and talents?  Are you using them to your benefit?

Are you living a balanced life?

What things do you value most in life?

What are you committed to personally that would be bring balance to your life?

How much money do you want to make?

What would you do with the money?

Why is being successful important to you?

How would you use your success to help others?

Vision Planning – This is the first step to creating a compelling vision for your life.  You need to take your answers and insights from your planning questions and clearly articulate the vision for your life.  This needs to be written as if it has already occurred in your life.  I suggest writing from the perspective of a journal entry reflecting back on your awesome life at a given point in time in the future that you select.  For example, a key birthday, a specific date like 12/31/2020.  This vision for your life must be written be so clear that you can see it, feel it, touch it and experience it as if it has already occurred in your life.   

Convert your vision into specific goals and commitments.   Once you have clarified your vision for your life and committed your vision to writing, it will be much easier to establish meaningful goals.  You want goals that will inspire you to take action.  Goals that keep you committed to achieving your goals and ultimately the vision for your life.  Why?  Because your vision for the future will compel you take action today.

What actions MUST you take to achieve your goals? Break them down yearly, monthly, weekly daily.   Nothing meaningful ever happens with our hopes, dreams or goals for our lives until we commit to a “specific date” that we will achieve our goals.  Therefore, once you  have committed to these dates, you are on a path to achieve your goals.  Next you can start creating an action plan to achieve the goals you set for yourself.  Therefore, you must take your goals and break them down into measurable tasks, activities and results that you can measure.  This provides you a basis for tracking your progress and celebrating the achievement of your short-term goals and successes on the way to celebrating the achievement of your ultimate vision for your life.

What are your personal commitments to achieving your goals?  You can create an awesome vision for your life, set specific goals and create action plans to help you achieve your vision for your life.  However, without an unwavering personal commitment to changing your habits, actions and thoughts you will never achieve them.  You need to realize that there will be setbacks, road blocks, break downs along the way to achieving the ultimate vision for your personal life and finances.

However, just like with every other person who has achieved something meaningful in their lives, they remained committed to their goals, hopes and dreams for their lives.  They were unwilling to accept failure or be deterred from achieving their vision for their lives.     Therefore, I suggest you read and reaffirm your vision for your life on a daily basis.  Think about it, dwell on it and act on it every day until it becomes a reality in your life.   You can achieve your dreams…..

I hope this blog post has added value to your life.  I hope it has inspired you to take action.   If so, I hope you will forward this post to someone else who might benefit and become inspired in their lives.  You can follow my posts on Twitter as well.  

The focus of this blog will be Financial Literacy.  The goal of Financial Literacy is to help educate and empower people transform their lives in a way that not only touches and impacts their lives but also gives them the resources to touch and impact others lives.  That is why I have created Fiscal Literacy.

I wanted to leave you with a compilation of famous quotes on the subject of vision, goals, etc.  I hope they inspire you to take action in your life today, not someday….

Inspirational Quotes

“People never plan to be failures; they simply fail to plan to be successful”  William Ward

“Vision is the art of seeing the invisible”  Jonathon Swift

“Goals are not only absolutely necessary to motivate us.  They are essential to really keep us alive”  Robert Schuller

“Goals determine your thoughts – thoughts determine your life”  Anonymous

“The greatest thing limiting ourselves, is our conversation with ourselves”  Scott Cummings

“Your life is an expression of all of your thoughts”  Marcus Aurelius

“What the human mind can conceive and believe, it can accomplish”   David Sarnoff

“Some men succeed because they are destined to, but most men because they are determined to succeed”  Anonymous

 “Success if it is to be, it is up to me”  Anonymous

“Only those who dare to fail greatly can ever achieve greatly”  Robert F. Kennedy

“If one advances confidently in the direction of his dreams and endeavors to live the life which he has imagined, he will meet with success unexpected in common hours.”  Henry David Thoreau