Best of the week – January 24, 2015

Here are some articles that caught my eye this week….

The Most Important Number

What so many people fail to realize, and I didn’t understand until I read Thomas Stanley’s book, The Millionaire Next Door, is that the secret to wealth really isn’t about how much you make. It is about how much you keep. Many people make six figure incomes but have little to show for it because they spend as much or more than they make. You must be consistently spending less than you make to build wealth, regardless of your income. One excellent way of tracking this over time is by periodically doing a personal net worth statement. It is simple to do and gives you great indicator of just how well you are doing. This article is a bit long but he provides a very simple explanation of net worth statements and then provides several thought-provoking ways to look at that number and what it means for your financial success.

THIS, Not THAT, Is the Real Point of Budgeting

I think one of the most common reasons people don’t budget is because they feel like if they had a budget they wouldn’t get to have any fun. But the point of budgeting is just the opposite. The point is to make sure you spend your money on what matters most to you.

Ask the Readers: What are your best tips for interview success?

I am not one that has ever been very good at thinking quickly on my feet, especially in a somewhat stressful situation like an interview. I am more likely to think of the perfect answer 2 days later. So for me one of the keys was to develop a list of common questions that interviewers often ask and then write out answers ahead of time and rehearse them. I also created a list of accomplishments I had previously achieved that were related to skills the new job might require. I reviewed both of those lists prior to my interview and with those things fresh in my mind I was able to handle most questions without stumbling too badly.

The most important key for me though was understanding that God was ultimately in control. 1 Chronicles 29:11-12 is a great scripture that reminds us that all we accomplish is really done through the strength God gives us. I prayed that scripture and ask that His will would be done before every interview I entered.

Fake IRS phone calls tops list of tax scams

We received one of these calls just a couple of days ago. We had a voice mail claiming we owed the IRS money for back taxes and would be prosecuted if we didn’t respond immediately. Several of our friends have recently received similar calls. Don’t be taken in by scams like these. Never, ever give out your personal information or credit card numbers to an unsolicited caller. Scam artists can be very convincing. Don’t be fooled.

Improve Your Financial Situation By Making This One Change

“You are the average of the five people you spend the most time with.”? Jim Rohn

9 Best Road Trip Destinations in the USA on a Budget

I’ve been fortunate to have been able to experience at least 3 of these. Would love to see all 9 someday.

How Dick Fosbury revolutionized the high jump and what it means for your finances today

You may have never heard about Dick Fosbury, but his willingness to think outside the box revolutionized the track and field high jump competition. Prior to Fosbury the predominant method used by jumpers was something known as the “straddle method“. Jumpers would try to straddle the bar jumping face down and sideways over the bar. It was the conventional approach that almost all jumpers used.

Thinking outside the box

Fosbury determined to find a better way. He experimented with different techniques and some have said in the early days he appeared to be suffering a mid-air seizure as he attempted to cross the bar. Eventually, he settled on a technique where he would turn his back to the bar just as he got to it and then jumped backwards over the bar kicking his legs up at the last instant to clear the bar. The technique required him to jump backwards and headfirst over the bar.

Many thought the technique was dangerous. Others doubted that he could ever be successful. Even his freshman track coach at Oregon State insisted that he practice the more conventional straddle method, although he did relent and allow him to use his new methods in meets. When he shattered the school record with a jump of 6’10” during his sophomore his coach finally gave in and accepted that this new technique which became known as the “Fosbury Flop” might actually have merit.

In 1968, Fosbury won the conference title and then an NCAA championship in the high jump. He went on to attempt to qualify for the Olympic team. Many were skeptical if he could produce the same results at the high altitude of Mexico City where the 1968 games were to be held. He proved his doubters wrong though with a jump of 7 feet 4 1/4 inches which broke the US and Olympic records and gave Fosbury the gold medal. It changed the world of high jumping forever as the “Fosbury Flop” became the technique that nearly all jumpers use.

Don’t be like everyone else

You say, “Bob that’s a great, inspiring story but how does that change my finances?”

The point is Fosbury refused to just follow the crowd and do what everyone else did. He was willing to try something different even if it meant some wouldn’t understand. Even if some made fun of him and his coaches were slow to accept his ideas, he was willing to press ahead with what he knew he had to do to succeed.

I think the same is true for your financial situation today. I believe one reason why so many people struggle financially is because they just stumble along doing what every one else is doing. Normal finances for most people today is broke and up to our eyeballs in debt.

We buy a new car every 3 or 4 years because that’s what everyone else does. We believe the lie that you’ll always have a car payment.

Our kids graduate from college with thousands of dollars in debt because no one can get a degree without student loans.

We live our life on credit cards because that’s what all our friends do. After all “Life takes VISA” right?

We struggle getting by from one paycheck to the next, never saving much, never really making much progress because we are drowning in debt.

Sounds familiar? It is the story for far too many. For many years it was my story too.

Be willing to be different

But what if you decided to live a different way.

  • What if you were were willing to sacrifice in the short-term so that you could succeed in the long-term?
  • What if for a time you were willing to get a second or a third job to really go after that debt?
  • What if you were willing to drive a clunker for a few years so that later you could drive in style with cash?
  • What if you decided that you were no longer going to play around with credit cards and determined that if you didn’t have the cash that meant you couldn’t afford it and had to say no to yourself?
  • What if you were to live on a spending plan so you were prioritizing what you did with your money instead of just gliding along allowing life to happen to you?
  • What if you decided that your debts never brought blessings to your life and you were determined to do whatever it took to have a different life?
  • What if you decided that the writer of Proverbs was right when he said “The borrower is a slave to the lender”?

If you did that would everyone understand? Might some think that you went off the deep end? Sure, just like many questioned Dick Fosbury when he was willing to go against “What everyone else was doing”, there may be some people in your life who will wonder what you are doing.

But if you want a different life than the average person who is struggling with debt, you need to be willing to do something different than the average person.

I’m not suggesting living like a miser of the rest of your life. That’s not healthy either. But you may need to sacrifice deeply for a short time so that you can get yourself to a point where those sacrifices are no longer necessary and you do the things you dream about.

You can do it! We did. Is it easy to pay off debt? Of course not. It’s hard. But anytime you step out and decide to do things different than all those around you, you will face struggles. But just like those struggles led Dick Fosbury to the gold medal platform in Mexico City in 1968, I believe you will find the sacrifices worth it in your financial situation too!

If you’d like to talk further about what steps you can take to get out of debt and start living a different life, contact me. I’d be happy to talk to you.

11 ways to save when eating out

I enjoy eating out at a nice restaurant. My wife is a terrific cook, but it is still fun to go out to eat once in a while. (Not to mention she kind of likes getting a break from cooking!) However, as nice as it is to eat out, those restaurant bills can take a big bite out of your wallet.ways to save when eating

In my experience, one of the areas that many people find most surprising when they first sit down and do a budget is just how much they are actually spending each month on eating out. The good news is this is a category that is very much under your control. If you are struggling to get by or to pay off debt, your dining out budget item is a great place to start. It will almost always be cheaper to eat at home.

However, even if you are struggling, it is still nice to be able to eat out once in a while to celebrate some good news or a birthday or anniversary. Even if you are doing well, you might still want to make your dollars go as far as possible. Here are some ways to save when eating out:

1. Ask!

Ask your server or hostess if there are any special deals today. The worst that can happen is they say no. You might be surprised what is available.

2. Go for lunch

Especially at nicer restaurants, the lunch menu is often significantly cheaper than the dinner menu. Lunch portions may be smaller, but most restaurant portions are over-sized anyway.

3. Drink water

Soft drinks usually have huge mark ups, and alcohol is even worse. Drink water. Think about it. Are you coming to enjoy that nice juicy steak? Or a coke that is no different than the 12 pack you have in the fridge? Spend your money on what makes eating out special.

4. Share

Restaurant portions are often well over-sized. Consider sharing a meal with your spouse or a friend. Or if you don’t want to do that take some home in a doggy bag and you can enjoy it again for lunch the next day. That way you are essentially getting two meals for the price of one.

5. Restaurant.com

Restaurant.com is a site that allows you to buy certificates to area restaurants. I have used it to get $25 gift certificates for less than $5. Two caveats though to be aware of with Restaurant.com: First, participating restaurants vary greatly depending on where you live. Second, you need to be careful to read the fine print. Many offers have restrictions; there may be minimum purchases required. For example, I once bought a $25 certificate for $5, but found it required a $40 purchase to use it. That’s still a good deal as I was getting a $40 meal for only $20, but it wasn’t quite as good a deal as it might appear at first glance. So read the fine print to avoid surprises.

6. Daily deal sites like Groupon

Many daily deal sites like Groupon or Living Social frequently have savings coupons for local restaurants.  Like restaurant.com though, just make sure you read the fine print for any restrictions. Most of these offers have an expiration as well, so be sure you will be able to use it before the offer expires.

7. RetailMeNot.com

RetailMeNot is another great site for finding savings opportunities on a wide variety of products. Food is no exception as there is an entire section devoted to restaurant coupons.

8. Check the web site

Before you go, check the restaurant website. Some restaurants have special deals or coupons you can print directly from their web site.

9. Join loyalty programs

If you have establishments that you go to frequently, sign up for any loyalty programs they might have. Often these programs may provide you with a free appetizer after spending a certain amount of money, or perhaps a pizza shop might give a free pizza every X purchases.

10. Follow them on Facebook

If you are a user of Facebook, follow any restaurants you regularly frequent. Some restaurants post deals occasionally just for their loyal Facebook subscribers, or at the least it may be a good way to find out what deals may be available.

11. Discounted gift cards

There are many sites that specialize in buying gift cards and reselling them at a discounted rate. Sites like E-bay, GiftCardGranny, and CardPool are popular places to find discounted gift cards. If you can buy a $50 card for $45, you just saved 10% on your meal. Just be careful that you buy these from a reputable site that verifies the cards being sold are valid.

What tricks have you used to save when eating out?

Why our New Year’s Resolutions often fail and what to do about it

The end of an old year and the start of a new year just naturally leads us to be a little more reflective. That’s why so many of us make New Year’s Resolutions. We look back at the past year. Determine areas of our lives that we wish were better and resolve to change in the new year.

But we also all know how effective those New Year’s resolutions often are. A week in. Couple weeks. Maybe by Feb. 1. Most of our resolutions along with all those good intentions are forgotten.New Year's resolutions

Change is hard

We are often talking about habits. Habits are comfortable, even when they are unhealthy. Habits don’t require much thought, and typically they don’t really require much will power. Habits are the default. Habits are like auto-pilot.

Changing those habits requires effort. It may require a different way of thinking. It may require learning some new skills or behaviors. It often means moving outside our comfort zone. While intellectually we know that taking the medicine will be for our longer-term good, that doesn’t change the short-term bad taste. And so it is easier to just slip back into our comfortable routine.

Letting your dissatisfaction drive you to change

I love this quote by Douglas Horton:

Change occurs in direct proportion to dissatisfaction, but dissatisfaction never changes.

Most people only change when we reach the point of being fed up with our current situation, but too often we become comfortable in our dissatisfaction.

Dave Ramsey says that we are often like a toddler with a messy diaper. “I know it smells bad, but it’s warm and it’s mine.”

It feels easier to bemoan our circumstances. We might blame others. If only I hadn’t got laid off from that job or the marriage that ended in divorce or the business relationship that went sour. Perhaps we feel a victim. My car broke down so I had to go buy a new one even though the payments are killing me. I know I should have more saved for retirement, but now at my age it’s just too late. I didn’t want to charge up my credit card, but the water heater broke, and I needed new tires, and the kids needed new clothes for school, and, and, and….

While it may “feel” easier to just complain about the unfairness of life, living in our dissatisfaction doesn’t do anything to help clean up the messy diaper we are sitting in.

Taking steps toward a better year

So perhaps you can’t fix all your problems in one week or even one month. But what if you committed to take at least one step this year toward a better life?

You can’t change the things that have happened in the past to get you to this point. But you can change what you will do in the future.

Are you drowning in debt? Make it a goal to start paying it off. List them all smallest to largest. Start chipping away at that smallest one. When it’s gone take that payment and start chipping away at the next smallest.

No emergency savings? Commit to putting away whatever you can each month. Ideally, you should have at least 3-6 months of expenses, but even if you can start to put a few dollars from each pay away you’ll be better off than if you did nothing.

No retirement savings? Start contributing to your 401K today if you have one at work, or if you don’t, open a retirement account to start saving. If you aren’t sure how to do this, find a good financial advisor to help you get started. You say “But Bob that would be great if I was 20 but I am too old to start now.” Certainly the younger you are when you start to save the easier it is. But there is an old proverb that says the best time to plant an oak tree is 20 years ago. The second best time is today. If you are getting started late ask yourself if you would be better off with 10 or 20 thousand in savings or with nothing, which is what you’ll have if you take no action. Any savings is better than no savings.

Where do you want to be one year from now?

So here is the question before you. Where do you want to be on January 1, 2016? How about January 1, 2020?

Time will pass regardless of what you do. You can continue to struggle with the same issues, or you can decide to day to make the hard choice to change.

Consider this. Suppose you set a goal of saving $100 a month this year to start to build some emergency savings, but then life happens and you fail to reach your goal. You manage just half of that. That still means you have $600 sitting there to help you in the case of an emergency that you don’t have today. That’s progress!

Lastly, give yourself some grace. Perhaps you have made mistakes with money that have gotten you where you are. You can’t change the past. But your past doesn’t have to define your future. You can decide today to start making wiser decisions from this day forward. Your financial life may not change over night, but I guarantee you will be better off 12 months from now than you are today.

If you have work to do in some of these areas and would like some one to help walk you through it, feel free to contact me. I would love to help.

What change are you making this year?

5 financial questions to ask as the year ends

financial questions to ask as the year endsAs another year comes to a close and a new year is about ready to start, we often start to reflect a bit on where we have been and where we are going in the new year. This natural tendency to reflect is why we often make New Year’s resolutions as we look to improve on areas of our life where we feel we have found short comings.

As you look back to evaluate and forward to the future here are 5 financial questions to ask as the year ends.

Do I need to improve my tax situation?

Now is the time to consider if there are any actions you need to take to help reduce the taxes you may owe come April 15.

Is there a charitable contribution that you have been meaning to make? Perhaps an investment that is doing poorly that you could cash in and use the loss to reduce your taxes?

If you are over the age 70 1/2 and you have money in a traditional IRA or 401(K) have you taken enough out to meet your required minimum distributions for the year?

If for some reason your income was down this year, you might consider converting some of your IRA to a Roth IRA this year while you can benefit from being in a lower tax bracket.

Give your accountant or financial advisor a call if you think any of these might be beneficial to you.

Do I need to readjust my investments?

This is also a good time to take a look at your investments. You should always be invested across a variety of types of investments in order to reduce your risk. Never have all your eggs in one basket. Mutual funds are one good way to accomplish that since one fund might allow you to own a little slice of hundreds of companies.

The problem is not all funds grow at the same rate. Perhaps you invest in four different mutual funds and decide to put 25% of your money in each one. But then one fund did really well this year and perhaps a couple of others were just so so. You might find that you now own 35% of the great fund, still 25% of the one fund, and only 20% of your money is now in the funds that only did so so. Your money isn’t distributed like you intended, so you need to rebalance your portfolio. This is just a fancy way of saying you want to redistribute your money to get back to having it split evenly across all your funds.

This isn’t something you need to worry about from day-to-day or even month to month. But it is something you should consider at least once or twice a year. If you haven’t done this for a while now is a great time to take a look.

You might also consider if you need to change any of your investments. Maybe as you are getting older and closer to retirement, you need to adjust your investments to reduce your risk a bit. Or perhaps you have an investment that just has not been performing well for a long period of time and it may be time to change to a different fund.

All of these questions are things a good financial adviser can help you with.

Am I in a better financial situation than I was this time last year?

How are you doing this year compared to this time last year? Has your debt increased or decreased? How about your savings? Is your income improving or did it go down in 2014?

One great way to keep track of this is by doing a net worth statement at least once a year. While it might sound complicated, a net worth statement is really very simple. You basically just list everything you own or have saved, then subtract all your debts and the number you have left is your net worth. For a more detailed description of how to create a net worth statement check out A great way to track your progress on your road to financial health

As you complete this activity from year to year it becomes easy to track your progress. Is your net worth higher today than it was one year ago? Congratulations. You are in a better shape financially. If your net worth is lower then you are not as well off as you were a year ago. Compare this year’s statement to last year. What is different? Did you make progress reducing debt? Do you have some investments that went up or down? Have you made some significant purchases?By comparing last year to this year, you can get an idea of what areas you may need to improve.

The Net Worth statement is a great, relatively quick way of getting a one page picture of how you are doing.

Is my career on track for where I want to be in life?

This is also a good time to consider how you are doing career-wise. Sometimes people struggle financially simply because they don’t make enough money. They live frugally, but there simply isn’t enough coming in each month to pay the bills.

There is no shame in this. Most of us have struggled at some point in our lives. However, if this is where you find yourself now, start planning for how you might be making more income this time next year, and even more 5 or 10 years from now.

Maybe you need to get a degree or a certification in your field. Perhaps you need to consider changing careers. Maybe you need to find ways to make yourself more valuable to your current employer so you can be trusted with greater responsibilities. Whatever the case may be, spend some time thinking about how you could improve your income.

Or perhaps you have a good income, but you really hate your job. Do you feel a little nauseous when you think about going into work? Do you hate Mondays and long for the weekend? Maybe you don’t mind what you do but you are constantly stressed out.  If so, start planning for how you might be able to move toward something that provides a good income and allows you to do work that you enjoy.

Lastly, even if you currently are making enough income to support yourself and your family and you are doing work that you enjoy, you should still spend some time considering how you can become even better at what you do. What new skills could you be trying to learn? What would you need to do to get promoted to a new level? Do you see a need that no one is filling that you could volunteer to take on? Schedule some time with your boss to ask sincerely and humbly what areas you could improve to make yourself a more valuable employee.

Our world is constantly changing. Those who don’t adapt will quickly fall behind. Spending some time to consider how you can improve your skills is an investment in your most important asset. You!

What is the most important financial goal I need to accomplish in 2015?

Lastly, consider what is the most important thing you could work to improve in 2015?

I think we sometimes fail to achieve our goals because we try to do too many things at once. I would rather accomplish one important goal in the coming year than make only minimal progress on five different things.

  • Do you need to eliminate debt?
  • Build up a real emergency fund of 3 to 6 months or more of your expenses?
  • Get started saving for retirement?
  • Start living on a written monthly budget to gain a sense of control of where your money is going?
  • Find a new job?
  • Save up for a down payment to buy a house?
  • Sign up for some classes to move toward a new career?

Whatever it is pick one financial goal and put together a plan to accomplish it in 2015!

What goal will you pursue this year?

Choose joy this Christmas

In the Jim Carrey animated retelling of The Christmas Carol that was produced a few years ago there is an exchange near the beginning of the film between  Scrooge and his nephew Fred that really struck me.

Scrooge asked his nephew Fred, “How can you be so happy when you have so little?” Fred responds, “How can you be so miserable when you have so much?”

The elusive chase for happiness

Our normal tendency is to think happiness is just around the corner.

  • When I get that new job or that promotion…
  • When I can trade in this clunker and get a new car…
  • When I can finally move into a little bigger house…
  • When I can finally pay off Jr.’s college…
  • When I can retire and not have to go to this job anymore…

The problem is happiness is not really found in things. Oh sure, you may be feeling pretty good the first couple months driving that new car around. But there will always be just one more thing that will replace it. Chasing happiness through stuff is a useless pursuit.

Money isn’t the issue

The real tendency of money is to just make us more of what we already are. If you are greedy with the little amount you have, you will be greedy with much. If you are a joyful person despite not having much, you will find ways to be even more joyful when you have plenty.

I have known people that were well off and were miserable, cranky people and I have also known people who I know had very little and yet were some of the most joyful, fun-to-be-around people that I have ever known. I’m sure you can say the same.

You see, just like with Scrooge and Fred, money doesn’t provide happiness. Joy is a choice. It is an attitude that we can choose.

Finding joy this Christmas

At Christmas we have an even greater reason to choose joy.

Most of what causes us sorrow really stems from the fact we live in a broken world. The world we live in is not the world that God intended, but sin corrupts and that corruption is the ultimate source of much of what can steal our joy.

But the good news of Christmas is that baby whose birth we celebrate, was born to put an end to sin and grief and hardships. That little baby grew up to be the Savior who defeated the Deceiver forever on that cross 2000 years ago. While we continue to struggle for a little while in this world, we know that because of what Jesus did we have a much different eternity to look forward to. As Paul said:

For our light and momentary troubles are achieving for us an eternal glory that far outweighs them all. 2 Corinthians 4:17

If you are hurting financially or otherwise this Christmas, I would never make light of your struggles. But, just remember that this world is temporary. In that baby born in Bethlehem was born hope and peace and love and joy.

Choose joy this Christmas!

4 reasons we overspend at Christmas and what you can do about it

overspend at christmasI suspect if you ask most people if they didn’t list Christmas as their favorite holiday, it would probably at least rank in the top 3. Yet so often we overspend at Christmas which can be a real killer for our budgets. Too often we get caught up in the emotions of the moment and pull out the plastic figuring it isn’t that much and we’ll just pay it off in January. After all, Christmas only comes around once each year right? Rinse and repeat a few times and when January comes we get a real shock when we open that credit card statement. Then we spend most of next year trying to pay it off, until next December comes and we start the process all over.

One solution is to have a Christmas Fund where we save a little each month so that we have cash to pay for things when Christmas rolls around. This works, but the problem is sometimes there are things we forget about.

Extras

We know we have to spend money for presents for friends and family, a Christmas tree, and some other common things. But what about the extras?

  • Baking supplies for all those Christmas goodies
  • Wrapping paper, ribbon and bows
  • Travel expenses to visit family
  • Christmas cards
  • Postage to send those cards as well as any packages you need to ship
  • Special giving you do at the holidays
  • Family Christmas pictures
  • Special Christmas events you may attend

These are just some of the extra expenses that can trip you up.

What you can do about it

Ultimately, most of these items aren’t really unpredictable. They are expenses that we know we will have; we may just forget to plan for them. Perhaps it is too late to plan to handle these budget busters this Christmas, but this is a great time to make sure you aren’t tripped up next year. Start making a list of any expenses you have that are Christmas related.

The problem is come January when you decide you are going to save for Christmas next year, you will have forgotten some of these items. If you make a list now, then you’ll have a good idea of how much you need to save for next year and these Christmas “extras” won’t give you a January headache.

Emotional spending

This can be a tough one, especially as parents. We want Christmas to be perfect for our children. And when Johnny looks at us with those big blue eyes and tells us how much he wants that new iPad or video game or bike or you name it, it is hard not to cave in. And while that is true for our children, it is just as true for our spouses or other family members. Sometimes the only difference is the older we get our “Toys” just get more expensive. We know that we don’t really have the money to buy those presents, but then we start to think about the smile and the joy we’ll see on their faces when they open that gift and our will power disappears.

Now there is nothing wrong with buying things we think will make a loved one happy. However, when this emotion-based spending leads us to making purchases we’ll spend the next 12 months trying to pay off, it can be very damaging to our finances.

What you can do about it

Remember that “stuff” really isn’t the path to true happiness. If little Suzie doesn’t get that doll house she wanted, she probably won’t be scarred for life. Little Johnny probably won’t end up pursuing a life of crime because his parents didn’t buy him an Xbox when he was 10 years old.

I believe that most often the things that provide our most cherished memories are far more about people and relationships than they are about things. Do you remember what you got for Christmas when you were 7 years old? Probably not. But do you remember going to Grandma’s house on Christmas evening, or driving around to see the lights, or that special breakfast you always had on Christmas mornings, or a host of other traditions that make the holidays special?

Don’t put so much pressure on yourself to make the perfect Christmas. You loved ones will remember it as a perfect Christmas because of the time they spent with you not because of some present that will eventually be forgotten.

Fatigue

Fatigue is often a culprit for overspending.  You head out in the morning for a day of Christmas shopping. You spend the day going from store to store. Fighting the crowds. Standing in checkout lines. Etc. And by evening you are tired. Your feet hurt. Your back hurts. And what happens? You say let’s just order pizza tonight because no one wants to cook!

Or perhaps you are out doing that shopping and all you have left is crazy Aunt Mary. You planned to get a $15 dollar item for her but you haven’t found anything yet. You are tired and just want to get home, so you give in and buy that $40 item just so you can say you are done.

What you can do about it

The key to beating fatigue is planning ahead. If you know you are going to be out Christmas shopping all day, throw something in the crock pot before you head out or have some freezer meals planned ahead of time available. Or perhaps this is just another of those extras I mentioned earlier that you need to plan ahead for. Maybe part of your Christmas savings needs to be for having a little extra money for eating out.

Another key to dealing with fatigue is don’t wait until the last minute. I know there are some of you that enjoy heading out on Christmas Eve to finish off your list. Generally speaking though that’s a recipe for overspending. You’ll be tired, maybe a little frustrated with the crowds and feeling the pressure of time, and you’ll end up spending far more than you intended.

Unplanned events

Lastly, there are things that come up that despite the best intentions you just didn’t plan for. You started a new job a few weeks ago and had no idea that they traditionally have a gift exchange within the department. Your first child entered school this year and you forgot to plan for buying a Christmas present for his teacher. You pull out the lights to decorate the house and find that something happened over the course of the year and most of them are no longer working. Who knows. Often, despite our best efforts to plan, life throws us a couple curve balls.

What you can do about it

This one is tough as it is hard to plan ahead for the unexpected. The best advice would be to just assume something unplanned is going to come up and build a little extra fudge factor into your savings.

Remember the real reasons for Christmas

First and foremost remember Christmas is really about celebrating the birth of our Savior. In all of the hype and consumerism, that is easy to lose. While I don’t think all those other things we surround Christmas with are bad things, they can be bad if they cause us to forget the real meaning of Christmas.

Second, I think Christmas is a time for family and close friends.

Both of those things can be celebrated without creating bills that will take us most of the next year to pay.

What trips you up most often at Christmas time?

14 Great books to give this Christmas

I believe that being a reader is one of the most important keys to personal and financial success. We live in a crazy world. Pretty much the only constant we have is change. If you are not constantly learning new things, you will be quickly left behind. Reading is one of the easiest ways to always be filling your mind with new thoughts and new skills.

If you would like to give the gift of a good book this year, here are some of my all-time favorites.

The Total Money Makeover by Dave Ramseygreat books

This book was the catalyst that started our family down the road to financial health. It is a great resource for people who are struggling. It is also a great resource for any young people just getting their start in life. We give this book to newlyweds as a part of our wedding gifts because we feel so strongly that, if followed, the principles in this book will draw them together as a couple.

The One Thing by Gary Keller

If you or someone you know struggles with heading in 12 different directions at once, then Gary Keller’s book, The One Thing, might be just what you need. He talks about looking at your activities to determine that “One Thing” that will have the most impact on your ability to accomplish what you want. Often we find ourselves busy all day doing a bunch of minor but momentarily urgent tasks and the most important things sometimes get pushed to the side. Yet had we focused on our “One Thing” instead, many of those other tasks might have become unnecessary.

David and Goliath by Malcom Gladwell

This might be the most interesting book I read this past year. Gladwell talks about how very often the things we see as weaknesses in our lives could be the thing that is our biggest advantage. He walks through several case studies but one of the most striking to me was of David Boise, one of the best trial attorneys in the nation. Boise is dyslexic and has always struggled to read. When he was young he would listen very closely to his mother as she read stories to him, eventually memorizing the stories so that he could appear to “read” them back to her. Turns out as a result of those listening skills he developed, he is devastatingly effective in cross examining witnesses, because he can remember past testimony and excels at picking up on minute details that many of us would miss. The very thing that seemed a handicap has helped him develop his greatest strength. The book is full of similar stories and really makes you rethink the excuses we often use for why we can’t accomplish things.

The Traveler’s Gift by Andy Andrews

The Traveler’s Gift is one of my two or three favorite books of all time. Andy Andrews tells the story of David Ponder, a down-on-his-luck business man, who while in a coma from a car accident is taken on a trip through history to meet several famous characters just as they are facing their greatest trials. For example, in his first trip he meets Harry Truman on the night before he is about to order the use of the atomic bomb on Japan. From Truman he learns that the buck stops here. We must take personal accountability for our actions. The book continues on as he meets six more famous figures. The fictionalized narrative makes the book a very easy read, and it contains tremendous wisdom. My wife and I like to give this as a graduation present to new graduates each year as the concepts in this book are key to leading a successful life.

The Millionaire Next Door by Thomas Stanley

Thomas Stanley studied hundreds of millionaires and studied the characteristics of their lives. What he found was that most millionaires are not like the stars we see on TV. Most millionaires lead very quiet lives and are very modest in their purchases. In fact, they often may live a life indistinguishable from your next door neighbor. The most important thing I learned from this book that really changed my thinking is that long-term financial success really isn’t tied as closely as we would think to the size of your income. The truth is, many high income earners that appear to be very successful also spend as much or more than they make. In spite of a large income, they have very little saved. The key is not how much you have coming in but how much you spend vs. what is coming in. The book really gave me a new perspective on financial success.

The Truth About Money by Ric Edelman

Ric Edelman is one of the leading financial planners in the country and is very good at explaining financial matters in a very simple, easy to understand fashion. While there is much here about investing, it is far more than an investing book.  He talks about getting rid of debt, insurance, wills and estate planning, mortgages, and many other common financial topics. It’s a very good primer for those looking to build their financial knowledge.

God Came Near by Max Lucado

This might have been the first book I ever read by Max Lucado. I read it many years ago and I loved the way that Max takes the love and grace of God and presents it in such an understandable way that really touches the heart. God Came Near is a collection of short thoughts focused on the Christmas season.   You couldn’t go wrong giving any book by Max Lucado but God Came Near remains one of my favorites.

Who Moved My Cheese by Spencer Johnson

As I mentioned above, one thing that is certain in life is change. This marvelous little parable tells the story of a group of mice in a maze who suddenly find that the cheese no longer shows up in same place it always has, and follows how the different mice handle it. It is a simple story with deep implications for how we handle change.

Fresh Wind Fresh Fire by Jim Cymbala

One of the best books I ever read on prayer. Jim Cymbala 35 years ago took over a tiny run down church in a tough New York City area. The book follows the story of how that church reached a very hardened culture and grew into what we know as the Brooklyn Tabernacle. Amazing stories of how through prayer God moved in incredible ways to change lives.

The Five Love Languages by Gary Smalley

The Five Love Languages is a classic book on marriage. Gary Smalley’s premise is that each of us feel loved in different ways. Problems arise when we don’t understand how our spouse understands love. For example you might feel love through acts of service so you run errands and do lots of nice things for your spouse, but your spouse feels love through quality time spent together so they actually feel rejected because you are always off running these errands. By understanding how your spouse feels love you can make sure that you are building each other up in a meaningful way. It is a wonderful book for the young married couple.

The Case For Christ by Lee Strobel

Lee Strobel was a reporter and an atheist who set out to disprove Christianity after his wife’s conversion. He used his reporting skills to track down various experts to try to find conclusive evidence that Christianity was based on a lie. The deeper he dug, the more he began to realize the irrefutable truth of the gospel and he became a Christian himself. The Case For Christ chronicles that search. He has since written several other “The Case For” books investigating various aspects of Christianity. All of them are very well done.

Getting Naked by Patrick Lencioni

If you know someone who works in a customer service or consulting type role, Getting Naked: A Business Fable About Shedding The Three Fears That Sabotage Client Loyalty is a great book for understanding how to create lasting, meaningful relationships with customers. Much like Andy Andrews, Lencioni also writes a fictional tale that illustrates how showing a little bit of vulnerability can inspire tremendous customer loyalty. The narrative style makes it an easy, entertaining book to read.

Mere Christianity by C.S. Lewis

A classic book by a classic Christian author. In Mere Christianity Lewis presents a logical defense of basic Christianity. A great book to help you understand why Christianity is true.

The Light and the Glory by Peter Marshall and David Manuel

Looks at the birth of America from the voyage of Christopher Columbus down to the founding of the fledgling new nation and how God provided throughout. If you have a history lover in your family, they will enjoy this book.

These are some of my favorite books I have ever read. You can check out my Bob’s Bookshelf page for even more suggestions. Give the gift of reading this Christmas!

What are some of your all-time favorite books?

The 3 simple steps to achieve financial freedom

Financial FreedomVolumes have been written that claim to have the secret to financial success. Some are good. Some not so much. But the truth is that personal finance really isn’t all that complicated. The secrets to financial success are really so basic that it really shouldn’t be necessary to state them. But the reality is common sense isn’t so common and as a result people struggle to follow these three simple steps.

1. Live on less than you make

This is the most basic of financial principles and yet is so often ignored. You will simply never make any progress as long as you are spending as much or more than you have coming in.

There are really only two parts to this equation. It is how much you have coming in (your income) minus what you have going out (your expenses). If you currently are spending more than you earn then you have to address one side or the other of this equation.

More income

If your income is so low you can barely meet your basic needs then the answer lies in finding ways to improve your income. In the short-term that might mean getting a part-time job or trying to pick up some extra hours or some overtime at your current job.

Working long hours might solve your immediate problem, but it isn’t really a long-term answer. If you try to work 80 hours a week at low paying job for years on end eventually you’ll burn out. If this is where you find yourself then you need to start to think about what you can do to find yourself in a better place 5 years from now.

  • What do you really enjoy doing and is it feasible to make a living at it?
  • Are there some classes you need to take?
  • Are there some books you need to read?
  • Is there an apprenticeship that you could get into?
  • Do you know someone that currently does that “thing” who could offer you advice or help you get your foot in the door?

The bottom line is the next 5 years will pass regardless of whether you do anything or not. You have a choice to spend those 5 years learning new skills so that 5 years from now you are in a better place, or you can spend the next 5 years complaining about your current situation and wake up 5 years from now no better off than you are now.

Cut expenses

While there are certainly some folks who are living at the poverty level and have an income issue, the truth is that for most of us we have enough coming in to meet our basic necessities. Perhaps not all our wants, but certainly we have enough to put food on the table and provide basics of shelter, clothing and transportation.

The problem is we live in a very marketing-oriented culture and the basic job of marketing is to convince us that our lives are somehow lacking and we would be so much better off if we only had this one thing.

So we decide I’d be happy if I only had a better car even though my current one gets me where I need to be. Or maybe it’s a bigger house. Or a better smartphone. Or these new tools. Or that new gadget. And before we know it we end up spending more than we have coming in and we wonder why we can’t save or give like we know we should be.

You will never find real happiness in stuff. True joy doesn’t come from the newness of our car, or the size of our home, or anything else we can buy. Chasing after happiness through stuff is an empty pursuit.

If you have enough coming in to cover your basic needs but not all your wants it’s time to start looking hard at your expenses to see where you can cut.

2. Have a spending plan

The second key to financial health is you must live on a spending plan.

I don’t believe most people are purposely spending more than they make. Even the most financially irresponsible ones among us have at least some idea that you probably can’t spend more than you make over an extended period of time. So why do so many do it? I think the answer is simple. They simply don’t know. Without a written spending plan we only have a vague idea of what is going out and coming in each month.

Our easy access to credit cards makes this even worse because if we come up a little short we can always use the plastic and worry about it next month. A few dollars here and a few there don’t seem like that big of a deal until we finally reach the point where we can no longer make the payments and by then it may be too late.

A spending plan doesn’t need to be complicated. You don’t need an 8 tab spreadsheet full of complicated formulas to track your spending. It can be as simple as just a piece of paper where you list your paycheck at the top of the page and then start subtracting off one by one the expenses you have coming in for this month. The keys are:

  1. Since every month is different you need to do a new plan every month. Sure many things are the same from month to month, but every month has a few things that are unique.
  2. You need to assign a purpose to every dollar you have coming in. Unassigned dollars disappear. Maybe those extra dollars are assigned to paying down debt, or increasing savings, or even to buying that item you have been wanting. But if you don’t decide ahead of time, you’ll get to the end of the month and wonder where those dollars went.
  3. You have to stick to it. Your budget won’t be perfect. That’s OK. But just understand if something unexpected happens and you go over in one category you have to compensate by reducing other categories in your budget. It all still has to balance or you are wasting your time.
  4. It is about priorities. The purpose of your spending plan is to make sure you are able to spend your money on what matters most to you and not your day to day whims.

3. Look in the mirror

This is the most difficult of the three steps. Ultimately, financial issues are rarely related to money. Money is merely the symptom. The problem is our own behaviors and beliefs that get us into trouble.

For many years I basically lived paycheck to paycheck. I wasn’t doing anything dramatically wrong, but I wasn’t really doing things right either. I was frustrated because it seemed like I could never quite get ahead. Financial things were always a matter of two steps forward and three steps back. What I was doing wasn’t really working but I also didn’t really want to change. It was only when I reached the point that I was fed up with making a decent living yet always feeling broke that I was willing to start doing things a different way.

The truth is most often our problem is really the person staring back at us in the mirror each morning.

Living on less than you make is not easy. Often it means saying no to something you want today so that you can say yes to something you want even more tomorrow. While creating and living on a spending plan isn’t complicated, it does require some amount of discipline.

The Weight Watchers folks have a saying that “Nothing tastes as good as thin feels.” The point being if we want to be healthy and feel the way we want tomorrow, then we may have to put down that doughnut today. That’s hard to do when I am staring at that box of Krispie Kreme’s. My will power will likely fail until I get so fed up with struggling to tie my shoes that I want to be thin more than I want that doughnut.

The same thing applies to financial matters. Until you decide that it is worth whatever sacrifices you need to make, you will probably continue to struggle financially.

If you are frustrated with where you are financially, and you want to change but you aren’t sure where to start, send me a note. I’d be glad to work with you in more detail on any of these steps.

The bottom line is basic personal finance isn’t complicated. You don’t need a master’s degree in finance. There are no secrets that only the wealthy know and there are no short cuts. You simply need to spend less than you make, have a plan, and have the discipline to stick with it. Simple, but not easy or everyone would be doing it.

This week choose gratitude

Often people ask how I manage to be happy despite having no arms and no legs. The quick answer is that I have a choice. I can be angry about not having limbs, or I can be thankful that I have a purpose. I chose gratitude. – Nick Vujicic

For those of you living in the United States, this week we celebrate Thanksgiving. It is a day where we often gather with family, stuff ourselves with way too much food, then watch football through the afternoon in a semi-comatose state as we recover from that big meal. Hopefully, in the midst of that we each take some time to reflect a bit on the many things we have to be thankful for.

I believe far more than a feeling, gratitude is most often a choice. It is a matter of where we put our focus. Most situations can be seen from more than one perspective.

Not an easy choicechoose gratitude

Five years ago near the bottom of the great recession I was laid off from a job I had for 21 years. I had thought after 21 years that I would probably retire from that company but as so many have discovered in recent years the days of 30 years, a gold watch, and a nice little retirement party are almost over.

So how do you respond to something like that?

  • I could have turned bitter.
  • I could have complained about the unfairness of being dumped after so long a time.
  • I could have been paralyzed with fear. 2009 was a scary time as unemployment was sky high and every day it seemed there was another bad report on the nightly news.
  • I could have decided that while age discrimination is illegal that doesn’t mean it doesn’t subtly still happen and resigned myself to never finding a comparable job in my field.
  • I could have just decided life was unfair and given up.

Choose gratitude

I will admit that many of those thoughts crossed my mind. But there is another way to look at it.

  • I could also focus on many great people that I had the opportunity to work with over those 21 years and the friendships and good times we shared.
  • I could focus on the generous severance package I was given that gave my family some cushion as I looked for a new job.
  • I had the opportunity to pick my son up from school each day that year, something I enjoyed tremendously and an experience I would never have had if I had been working.
  • I could be grateful for the many interviews I was able to get during that time even though many of them didn’t pan out.
  • I am thankful I had the opportunity to teach some at a local community college which afforded me the opportunity to try out something I had always thought about doing.
  • I could be very grateful that I had stumbled across Dave Ramsey a few years before so we were debt free and in fairly decent shape financially when the storm hit.
  • And finally, I am especially thankful that 8 months later I was offered a job with my current employer at slightly more money than I made at my old employer.

It all comes down to where I choose to focus. I believe the key is gratitude is a conscious choice. We must deliberately choose to be grateful even when sometimes we might have to stretch to find reasons for it.

You might say it is easy to find gratitude looking back with a new job and the days of uncertainty behind you. It is a fair point. It is a lot harder to trust the sun is still shining when the storm is raging around you than it is after the storm has passed. There were certainly many days of discouragement during those 8 months. That’s why choosing gratitude is hard.

Purposely decide your focus

I want to make clear, I don’t want to minimize anyone’s situation. There are many who were laid off as I was during 2008 and 2009 and have struggled greatly in finding comparable work. Financial hardships can be devastating when we face the fear of not knowing how we will be able to provide for our family.

And beyond finances there are other situations that can be even more painful. Failing health, broken dreams and death are realities that we all face. The small town where I live was rocked this past weekend when three teenagers were tragically killed in a car accident as they lost control on icy roads. Why do things like that happen? Where could we possibly find reasons for gratitude in situations like that? I don’t know.

Sometimes though it is only in those darkest of days where we learn that when we don’t have all the answers, we serve a God who does. When we get to the end of our abilities, we find that God is still able to carry us through, even if we don’t see how it is possible.

In about 3 months I will celebrate 5 years with the company I now work for. I wish I could report it is all sunshine, but it is not. There have been challenging times. There are still things I wish were different. Life is rarely exactly as we’d like it to be. And that is a good thing. Because it is through those challenges that we grow, and one of the areas where I am still growing is learning to find reasons for gratitude in all situations.

I write about the power of trying, because I want to be okay with failing. I write about generosity because I battle selfishness. I write about joy because I know sorrow. I write about faith because I almost lost mine, and I know what it is to be broken and in need of redemption. I write about gratitude because I am thankful – for all of it. – Kristin Armstrong

What will you choose to be thankful for this week?