Financial Independence Part 1

In honor of Independent Day/Fourth of July, I want to talk about many people’s ultimate goal of financial independence. According to Wikipedia, financial independence is described as “generally used to describe the state of having sufficient personal wealth to live, without having to work actively for basic necessities. For financially independent people, their assets generate income that is greater than their expenses”.

Yes, we all probably want this and therein lies the problem. How do we attain this?

There are some generally agreed upon principles that are good practices that we all should attain to:

Avoid consumer debt
Spend less than you earn/Pay yourself first (save)
Don’t keep up with the Jones’

These are all great suggestions and work really well, but what if you need to work on some of these steps. In my opinion it all goes back to budgeting. Budgeting is the road map of your finances. You can see where your money is going and then make the necessary steps to eliminate consumer debt, reduce your spending, save by paying yourself first and break your habit of keeping up with the Jones’. It may sound simple but it isn’t. So with this issue and the next three I will tackle these issues.

Today, let’s look at avoiding consumer debt. This can be difficult to attain. But on the other hand, this is so important – too important not to strive for.

There have been times in my life that I have had more debt than I would like to admit. Yes, this happens to me too. In my opinion, there are two steps to start on the path to being debt free. First, you have to stop creating debt. Yes, you heard me. You need to do whatever it takes to avoid adding more to the debt. With that said, you can’t put every extra penny towards your debt and not have an emergency fund. Otherwise, the next time an emergency happens and you don’t have a fund to fall back on, you will create more debt.

In May and June, my husband had surgery and was home from work for a month without pay. We only had about 6 weeks’ notice to plan for this. We got through this period with the help of the emergency fund and savings to cover the shortfall. This was the key to us being able to live and pay the bills. Without the savings to fall back on, we would have had to use credit cards and create debt. So you can see how having an emergency savings plays a big part in getting rid of debt.

Back to the debt. Second, there are many ways to tackle this. Start by taking an honest look at your all your debt. Make a list including how much you owe, the minimum payment, interest rate, etc. I understand this is hard, but it’s necessary.

Now make the plan. You can payoff the smallest debt first to eliminate one debt (gives you momentum). You can payoff the debt with the highest interest rate (saves you money). You can plan to get more money (bringing in more income) with many options to add to your payment. Take some time to brainstorm what will work best for you and then put that plan into action.

You’ll need to stop creating additional debt and to create or increase your emergency fund. Next issue, I will discuss spending less than you earn/pay yourself first.

Save

Your Emergency Savings Account

What’s your emergency savings account look like? Suze Orman suggests that you have eight months of income in your emergency savings. Dave Ramsey and Jean Chatzky both say 3 to 6 months. Hello Wallet suggest that you think of emergency saving in three ways – minor emergencies, major emergencies and job loss. Bottom line, you need an emergency savings account.

As with any goal, start with a plan – then automate it. When we started our emergency savings, our goal was to save $1,000. That would get us through the unexpected small expense. We started by saving $20 per week to reach that $1,000 goal in one year.

Once you accomplish your goal, I would like you to about your next savings goal. Sometimes unexpected emergencies cost more than you expect, especially if you are a homeowner. I have always thought that the major repair emergency fund should be in the $5,000 range. So then we started on this goal. $100 a week gets you to $5,000 in a year. We divided this between both our paychecks. My husband gets paid weekly so he contributes $50 each week. I get paid every other week, so I put in $100. We then have achieved this goal of $5,000 in a year.

Remember, this is not a save for one year and done type of thing. You may need to use this money, so you need to replace what you use. You can never have too much money saved for the what if’s of life.

Different Types of Refinancing

We’ve all heard the word “refinance”, but what typically comes to mind is mortgages. Yes, you are correct. It also can apply to other areas of your finances such as car loans, student loans and credit cards.

As with any borrowing, you want to pay off the debt as quickly as possible. But sometime you cannot afford to purchase a car with cash, so you take a car loan. You may want to look into refinancing your car loan if you can get better terms – lower interest rate.

For student loans lower interest rate is probably not the answer. You may have several loans and several payments. It might be easier for you to keep track of and have only one payment per month, if you consolidate. Check out your options to determine if this is right for you.

Credit cards are a good example. You may be payoff debt and it may seem like it takes forever. It could if you have high interest rates. Refinancing a credit card balance to a lower or zero percent interest rate will help you pay back what you owe quicker and pay less in finance charges.

As with any financial transaction, do your research and compare all terms and conditions to see if this is the right move for you and your finances at this point in your life.

How to plan for a dog before buying a puppy

I am passionate about travel, but it doesn’t compare to how I feel about my dogs. Brownie has been a member of the family for seven years now. We rescued her at about 8 weeks when she was only 12 pounds, a far cry for her 70 pounds now. We love her just as much as any of our other dogs.

But owning a pet can be a budget breaker. Pets are expensive. You need to consider their day to day costs – food, supplements and services – which can range in price from affordable to “how am I supposed to pay for that?”

The Initial Costs

According to peteducation.com, the first year can cost between $500-$6,600 depending on how much you’re willing to spend.

You have the simple comforts and necessities: bed, leash, collar, food bowls, toys – these aren’t too expensive individually, but can add up when you’re buying them all at once.

Then there are your legal requirements, like puppy shots, license and tags.

You may also want to consider having your puppy neutered and micro-chipped. Thank goodness where we rescue the cost of puppy neutering is included, so it’s not an extra cost for us. If you rescue, ask to see if you can save too.

Finally, depending on the dog’s personality or medical issues, you may have other expenses. Brownie went through the teething stage, as puppies do, but she wasn’t interested in inexpensive items like shoes or pillows. She chewed the molding around the door so that we needed a carpenter to make the repairs. That was expensive.

The Costs Going Forward

According to the Pet Education, the annual costs can be anywhere between $300-$2,500.

Brownie’s annual vet check-up and shots cost about as much as a car payment and are due every summer along with her license. That’s not including any extra trips to the vet for illness, injuries, etc. All these need to be planned for.

Your homeowners / renter insurance can increase depending on your dog’s breed.

Lastly there is caring after your dog’s emotional and physical well-being. Do you need to have a dog walker while you’re at work or to board your dogs when you’re traveling? More costs.

Lots to think about. Besides just selecting the right pet for your family, make sure to plan the financial part, too.

Start Flexing Your Financial Muscles to Make Your Dreams Come True

Welcome to our very first Blog Hop for 2015!

This month we want to help you start the year off with a fresh start featuring articles, how-to’s and resources that have helped each consultant, blogger and business owner on the hop in their own lives and businesses. Get ready to be inspired for a fabulous year ahead of you as you move along through the blog hop.

You may just be starting the blog hop or may have come from Deb Brown at Touch Your Client’s Heart on Natalie Bradley’s Blog Hop. If you get off track at any time, the full lineup below will help you move along from blog to blog so you make sure to see and learn from all of the articles featured here today.

Start Flexing Your Financial Muscles to Make Your Dreams Come True

It’s the New Year and you may have goals related to your appearance and business, but what about financial fitness? When you strengthen your “core” you’re improving your center of balance, and your money is the main center of movement for your lifestyle. If it’s in balance, everything flows from dream stage to the “I can do it” stage.

So how can you start flexing? Try these exercises:

You may not be great at them at first, but just remember how you felt in your favorite exercise class the first time you tried it – a bit slow, out of synch, not sure what came next. Now you love it, and you’ll love these too because they feel good and get you what you want most: a lifestyle that serves you.

1. Keep your credit score as high as possible.

First get your credit score for free (CreditKarma.com, Quizzle.com, CreditSesame.com). Then, take little steps over the next 12 months to increase your score. This is a new exercise, so take it slow. You can do one small thing each month to improve your score: pay extra on a debt; earn a little extra income; or, check your official credit report for errors. Just like training your muscles, your task is to nudge that score higher over the course of a year. Patience and diligence will pay off and your higher score will reap big rewards in respect and savings when you enter into a new financial agreement.

2. Live under your means.

Yes, I mean spend less than you earn. I know it’s hard when everything you buy feels like something you need – so don’t go cold turkey! Instead, each month look around and see if there’s one thing that can be replaced with something cheaper. Have you tried the library lately? They’ve moved beyond print. You can borrow the DVDs for Game of Thrones, or download an audio book. Some people are saving $1,000 per year by disconnecting cable TV and replacing it with services like Netflix, Hulu and Amazon Prime. You may be able to get cheaper car insurance or move your phone service to a “friends and family” plan. You might find out that you love using your pressure cooker to make amazing soups from leftovers, or that you love having a vegetable container garden.

There are a number of ways to save that actually enrich your life, giving you a bigger benefit, and making you feel the opposite of poor. To find your biggest budget leaks, I recommend tracking your spending for a month. I offer a tracker when you sign up for my newsletter.

3. Having savings for times of need.

Again, take it slow. Just like you won’t get fit in a day, you won’t have a big savings account in a day. It’s all about moving a little money over on a regular schedule. If you receive a paycheck, you can have it deposited automatically. If you’re an entrepreneur, you can schedule a monthly transfer from checking to savings. Out of sight is out of mind. It’s just like hiding the snacks in the back of the cupboard.

I don’t want to to scare you, but without a savings, you are one step from financial disaster when the next unexpected expenses occurs. Having a savings account is a lifestyle and it’s one you want to work your way into.

Turn these steps into regular exercise and you’ll have healthy finances to support your dreams.

The next stop is Kim McDaniels at iBiz Design Duchess on Natalie Bradley’s Blog Hop! Thanks for visiting and I hope to see you again next month!

Natalie Bradley at Natalie Bradley Consulting
Cari Vollmer at PassionIntoProfit.com
Wendy Bottrell at Lifestyle Transformation
Janet Slack at Solopreneur.Biz
Vicki Heise at Live Your Healthy Life
Rochelle Togo-Figa at Speaking Breakthrough Strategist
Lisa Ivaldi at InsightClarityGrowth.com
Robin Hardy at Integrity Virtual Services
Sandra Gardner at Tall Red Poppy // Marketing, Magic, & Design Sanctuary
Deb Brown at Touch Your Client’s Heart
Jill Russo Foster at JillRussoFoster.com <<– you are here!
Kim McDaniels at iBiz Design Duchess
Sharon Lewis at Questiam Leadership Development
Chérie Ronning at Chérie Ronning, Consultant-Mentor-Speaker

Jill’s Financial Tracker and NearlyFreeTravel

To Receive Jill’s Financial Tracker and her bi-weekly newsletter (only 26 issues a year) AND register for her free Travel Class in February, follow the link below:

In Nearly Free Travel: Lessons in Travel from Jill’s European Vacation, Jill shows you how she plans her trips and ups her miles & travel perks – without actually flying! This is Jill’s latest free class and it starts in February. You’ll also receive her bi-weekly newsletter and her Financial Tracker.

Sign me up for Nearly Free Travel!

Email Address *

First Name *

Don’t Let Money Ruin Your Romance

In honor of Valentine’s Day, I want to talk to you about love and money. I have known many couples who were in love until they found out about the other person’s money habits.

Your money incompatibility doesn’t have to end the relationship. If this is the one, you can make it work. You just have to ask the right questions.

This is what you need to know about each other:

Financial Issues: Income, assets, expenses, debt and credit. Understand what is going on with each other’s finances. Are there debts and back taxes? Are the savings accounts available to use jointly? Should some of the assets be merged or sold off, and if so which ones?

Money Type: Are you a Spender or a Saver? If you know, you can use your joint goals to meet in the middle on common ground. If you’re habits are extreme, you might want to keep separate bank accounts. That way, one of you won’t feel pinched while the other is in a constant state of sticker shock.

Long Term Goals: What do you want from life? Do you want to be married or single? Do you want to be a homeowner or rent for the rest of your lives? Do you want to have children? These questions need to be answered so you can save towards the same goals.

CFO (Chief Financial Officer): Who is in charge of the money? Is it one of you or both? Will you split the responsibilities by category or do everything jointly? Knowing will keep “that’s mine” arguments to a limit.

With this information, you can decide if you want to keep your finances together or separate. Joining your bank accounts together with someone who has ignored debt or back taxes may mean your money is at risk (even if it’s not your obligation), and in the end, puts you both in the same deep hole with no way out.

Finances can be the doom of relationships. Being informed and making proactive choices is the best way to make the relationship work.

The Worst Things You Can Do With Your Money

This is my personal top five list of the worst things you can do with your money

no-1 1. Pay ATM fees (or for that matter, any bank fees) – There are banks out there that won’t charge you just for the privilege of having a checking account. You shouldn’t be paying a monthly maintenance fee or ATM fees. Ask your banker how to eliminate the fees. If they can’t, or won’t, move your money to a better bank.

2. Pay interest or finance charges on credit cards – Paying interest or finance charges is a complete waste of perfectly good money. It might have been a great deal when you swiped your card, but when you add interest, you’ll end up paying more than it was worth. If you currently have credit card debt, try moving it to a card that offers zero percent interest on transfers for the first 12-18 months. Once you are out of debt, pledge that you will not pay interest or finances charges ever again.

no-1 3. Sign without reading the fine print – Never sign anything that you don’t read. If you read it and don’t understand it, then ask questions or do your own research to understand it before going forward. I speak with so many people who just signed an agreement thinking they got a great deal, and then were blindsided hidden fees and additional charges. Were they really cheated? No, they just read the price in the big print, and not the details in the small print.

4. Pay for unused services (or things) – Are you paying a monthly fee for services you don’t use or could get for free? If you’re actually using them, that’s fine. But if you not, you could use that money for something that will actually make you feel good. I cancelled my magazine subscriptions because I wasn’t reading them. If you pay a credit monitoring service, you can do this for free with very little time investment. Are you paying for online services instead of using the free version? If so, are you actually making the most of it?

no-1 5. Duplicate Spending – Have you bought something at the store only to find out you already had one in the back of the closet? That is duplicate spending. You can resolve this by getting organized and getting rid of the clutter. If you know where to find something, you can easily access it before you go out and buy a duplicate.

In the comments, let us know where you stopped wasting your money!

Get Ready for 2014 with Smart Goals

What are your goals for 2014? Let’s see if I can guess… is it one of these?

Get organized
Lose weight
Eat healthier
Exercise more
Save money
Get out of debt

Almost everyone wants something on this list. Why do we keep setting and forgetting the same goals every year if these are the basics of a healthy lifestyle? Let’s step back and talk about goals in general.

All goals should be S.M.A.R.T.

Specific
Measurable
Achievable
Reasonable
Timely.

Your goal to “Save more money” is smart, but it’s not S.M.A.R.T. With a general goal, you’ll never know how well you’re doing. “Saving more money” could mean adding an extra $1 to savings. It’s not going to do much for your budget in the long term.

But, if your goal is to “Save an extra $500 by the end of 2014”, that’s S.M.A.R.T. You have a specific amount, it’s reasonable, you can track your progress and make adjustments to reach your time limit.

Back to 2014 goals – here are some resources that I use to make my goals a reality.

A Scanner

I’ve been tackling “getting organized” as a goal for a few years now, but I’ve been using the S.M.A.R.T. method, so I organized different items each year.

In 2012, I scanned all of our medical records.

For 2013, I scanned and saved all my recipes. My grandmother and mother, being great cooks, left me lots of family recipes. Plus, I had a cookbook collection, and lots of magazine and newspaper cutouts. So far, my scanned recipes have been a big plus in my life. They’re easy to find and share, my cupboards aren’t stuffed with paper, and we were able to donate 75% of my cookbooks.

For 2014, I am scanning all the family photos, slides and movies. This is going to be a big project for me because I’ve become the archiver of family photos as relatives have passed away. I have to admit that I have started a little early with my new all in one printer / fax / scanner.

Websites I’ve used to meet my goals

TripIt.com is how I organize all of my travel plans in one place – airline confirmations, hotel and car reservations, tours etc. All the information is in one place and easy to access. It’s as simple as forwarded the email receipt to Trip It and it appears on your itinerary.

For my goal of getting healthier (making better food choices, eating at home more and fitting in exercise), I use LoseIt.com. It’s helped me with my 2013 goal of leading a balanced life and making more time for me. Part of my goal was getting to know the feeds I eat so I can make better choices. LoseIt.com helped me to keep track of my food and to stay balanced (like watching the carbs to protein ratio). The website and app lets you input a recipe and save it for future use. There is a section for exercise too.

What are your tips and resources to help you achieve your 2014 goals? We’d like to know what you do.

To really get your goals started for 2014, you can join my new Facebook group. It’s a month long class that will help you set realistic goals for the year ahead.

A Facebook Group for Your Goals

Join me for the month of January for Taking Charge of Your Finances. Many people want to have more in savings, to spend less, to pay down their debt, save for their children’s education, save for retirement, buy a home, and more. This will be your chance to connect with other like minded people, and get your New Year’s resolution off to a solid start.

completely-free

Learn more here

I Created a Work / Life Balance on a Small Budget

This year my goal was to create a better work / life balance. Sound familiar? I know that others have tried it, and frankly I’ve tried before, too. This year I was determined not to fail. (Just like every other year.)

Well, we are in the 9^th month of the year and I’ve actually done it. My daily routine has been reformed. I’m still going strong on my first small action steps, and I’ve added more over the year. I didn’t go from nothing to full speed ahead. Instead I made little changes to clear the road and aimed for forward movement.

The first thing I did was to start meditating each morning. What I do, is get my iPod out and listen to a guided meditation. My mind is always racing on to the next thought, then the next thought, and so on. I need help so I can set aside my mental to-do list and work on relaxing instead. I’ve enjoyed meditations by Collette Baron Reid and The 21 Day Meditation Challenge from the Perfect Health series by Oprah and Deepak Chopra

Next, I wanted to get a grip on my eating and exercising. I still have my garden for fresh vegetables. There is nothing better than picking the lettuce and tomatoes from my garden for a salad and eating it that very day. Sadly, it’s Fall and the garden is winding down for the season. What will I do this winter?

With the help of my good friend, role model and inspiration, Vicki Heise of Live Your Health Life I tried LoseIt.com. It helps me track my eating and exercise. Most of the foods Dave and I eat are already programmed in by brand and restaurant – and I can add my own recipes. It’s a website and an app, so I can use it wherever I am – no more pad and paper for me. I check the calories and nutritional break down to see if I am eating too much of the same types of foods. The best news? There’s a free version.

Now for the exercise portion – I have always been a walker but recent vertigo attacks have made me nervous about walking by myself. Then I found a program called WalkWithADoctor.org. It’s a health program where you can take your walking exercise with a real, honest-to-goodness, right-there-with-you physician. The nearest location to me is Stamford, CT. I walk with two cardiologists for 45 minute sessions. This program has locations throughout the US. Now that the weather is getting cooler, it’s such a pleasure to be outside.

As you can see, I am moving forward with my goals and making lasting changes versus quick fixes. I’m not letting distractions or disabilities get in my way.

All the little improvements have come at a much slower pace than I’m used to. I make one small change, get used to it, then make another. That’s worked much better than the all-or-nothing, go-all-out-for-30-days-and-fail routine. And, I haven’t spent a whole lot of money. That’s good for the budgeter in me and it’s another step towards maintaining my work / life balance.

Why Financial Envy is a Waste of Time (Update)

You see this happen all the time. You are in a situation with other people and someone mentions his nice vacation plans. What is the first thing that pops into your head? Are you genuinely happy for him or do you automatically think about how much he’s spending (that includes jealous thoughts of the “he must be making more money than me” kind). You know what I mean.

But in the past few years, I have learned to stop comparing my financial situation with friends and family family (I’m not perfect but I am improving). I have come to realize that I am projecting my values and beliefs onto other people. What I think or believe about another person’s finances has no basis in reality. I am not in their shoes and don’t know what their situation is.

People spend money on things that are important to them. I know that some people may think I travel a lot. When one vacation ends, I am already planning the next. I personally always want to have a trip to look forward to. You might be thinking thoughts like “how can she afford it?” or “where does she get the money to travel?” You may even be envious. But you won’t know exactly how I make my little dreams come true because personal finances are just that – personal. .

Although in a few weeks,, I will shed some light on how we travel.

The other side of comparing your finances is the presumption that you are somehow morally better or worse than others. Grim tales of credit card debt are all over the news, often mixed with stories of foreclosure and homelessness. You may feel good about yourself because your debt is lower, but do you know why the person on the news has the debt? Was it really insane overspending, or was it a medical emergency or a layoff. Maybe the credit cards were used as a last resort to pay bills?

I have heard it said that “to compare is to despair.” This thought process of judging others is detrimental to you. You have no idea whether another household spends more money than they have, is in debt to their eyeballs, or has planned ahead to achieve their desires. You don’t know how much they earn or how much they give to charity. It is much easier to judge someone else than look inward at your own spending habits.

In the budgeting process, people track their daily expenses to see how much they spend and in what category. This can be a great exercise. Once you see where your money is going, you can make life-changing decisions. Where do you want to spend? What do you want to save for?

There are no right or wrong answers. There are only personal choices. Maybe you choose electronics over vacations. Maybe you choose decorating and entertaining over both. Maybe you choose to give your children spectacular holidays or birthdays over everything else. These are the kind of choices your neighbors, friends and family members made when they did something that impressed you and made you envious. They simply chose to spend their money in a different way than you.

So the next time you see someone order an expensive meal at a five star restaurant, purchasing the latest greatest electronics, or buying a designer outfit, don’t judge them. Not only is the thought process destructive, but it is a total waste of your time.