Cash flow planning help

After the cash flow planning / budgeting week, you may be a little overwhelmed by all the paperwork Dave recommends to manage your financial life...each month. People often ask me, "Do you really do this?" I can assure you that I do and I can assure you that I don't.

Let me explain. I don't complete all the paper forms, but I have a spreadsheet that includes all the forms and I plug our numbers into that every single month, adjusting until income minus expenses equals ZERO. And it takes just a few minutes. Carrie and I discuss it and agree to the plan. We use the cash envelope system, which reduces the workload through the month. And I can assure you that it works.

Keep in mind that once you get the kinks worked out of your budget many of the line items don't change. That is why I encourage people to do the hard work and commit to stick it out for 3 months at least before deciding how doable it is.

And when it comes to the envelopes, here is how we do it. When we take the money out for groceries for example, I count that full amount as spent for the month. I don't track our spending within the envelope, if that makes sense. Some people do. I don't. So instead of 6 or 7 or more transactions for groceries, I record only one each month. This makes the tracking very simple. And Carrie doesn't have to call and ask about buying something. As long as she stays within the cash allotted for a category, she has total freedom. She likes that!

Below are some online money management tools you may want to check out. They do the math for you, making the process of of adjusting to zero much easier. These are great tools that will help you to WIN.

• Dave Ramsey's Gazelle Budget Software (available free for members during FPU)

https://mrc.daveramsey.com/

This is the real deal right from the source. You get access to all kinds of tools, help and encouragement to keep you "Gazelle Intense" on your journey to Financial Peace. This is an incredible tool I encourage you to check out.

You can also buy the software on CD for $18.95 at http://www.daveramsey.com/store/budgeting-tools/budgeting-software/cBUDGETING-cBudSoft-p1.html

The CD software is PC-only. Dave often offers it on sale for only $10.

There is a "Lite" version of the budget form you can use without login at:

http://www.daveramsey.com/tools/budget-lite/

Just print it off after completing the form.

• Mvelopes

http://www.mvelopes.com/

This is another amazing online software system that is available for a fee. It can connect with your accounts online if you want for it to automatically download transactions. You can make adjustments from there if needed. It uses a virtual "envelope system" to track you budget-to-actual and keep you on track. You "fund" the "mvelopes" and spend from them online, making tracking very easy.

• Mint.com

https://www.mint.com/

Mint has become very popular because it also connects online with your bank and other accounts and because it is free. It automatically assigns expenses to budget categories based on the place of purchase (for example, if the purchase is from a grocery store it determines the expense to be groceries). You can make adjustments as needed. Mint does collect data about your finances anonymously, which is a concern for some.

• YNAB (You Need A Budget)

http://www.youneedabudget.com/

YNAB is available online or you can purchase the software for PC or Mac. It offers lots of online resources to help you understand how to use the YNAB system. YNAB is a great tool, available for a fee.

• Pear Budget

https://pearbudget.com/

Pear is a simple but powerful budget system offered for a small monthly fee. Pear Budget "Uses the classic “envelopes” method of budgeting, but updated for the web. Fans of Dave Ramsey love us!"

• Microsoft Excel or other spreadsheet software

If you are comfortable and familiar using spreadsheets and would like me to email you forms in this format, just let me know and I will send you what I use.

Some people like the manual forms. Others prefer different software tools. Find what works best for you and that you will use ongoing. Make it a habit!

Most importantly and this is true always...if you need any help or have questions, please contact me. I am here to help in any way I can.

Week 3...

As Dave asks, "If you managed money for You, Inc. the same way you manage money for you would you fire you?" Think about it.

Right about now is when you start to realize this isn't just fun and games, but it will really require real time, real effort, and real work! Financial Peace isn't a light-weight plan but requires you to do some heavy lifting.

If you were to make $1 million wouldn't you spend some time learning how to manage it? What should you do with that much money? What are wise things to do? What are stupid things to avoid? What will it take day-to-day to take care of that sum? Consider that over your working lifetime, you will undoubtedly make at least $1 million. That's right. Add it up. You will probably make quite a bit more than that.

You are doing the right thing by setting aside a mere 13 weeks to explore the issues surrounding money and sound management.

Fight through the cash flow planning forms if it isn't easy. Talk about money honestly and openly with your spouse if you are married. Do the hard work to make it work.

And keep coming to class! It will change your life! There is so much more to come, from insurance, to investing, from dealing with creditors to negotiating.

Are you going to do what it takes to win? I believe you will.

If you don't read anything else today...

I ran across a couple of old posts in another blog that I wanted to pass on today. These are excellent in many respects and I wanted you to read them and apply them to your life.

http://www.leadingsmart.com/leadingsmart/2006/08/it_just_makes_c.html

http://www.leadingsmart.com/leadingsmart/2007/03/lets_give_1_mil.html

By the way - thanks for reading. I should post more often or in a predictable pattern...maybe I'll set that as a goal in the next few months...maybe! I appreciate your involvement in this blog by reading, considering, applying, and occasionally even commenting. I just wanted to say, THANKS!

There Are Always Options

So it's Thanksgiving Day and my family is driving to Wichita to celebrate the holiday. We are getting close to my parents' home when I hear a clatter under the hood. I pull over thinking something has come unclipped and needs to be reattached, but no, it is the serpentine belt coming apart. The outer two edges are flopping wildly, slashing at vacuum hoses, etc., under the hood. Doesn't look good, but at least it didn't break!

We made it to my parents' home. My brother-in-law came out to pick up our family (he has a minivan, too!) to take us to the place of our Thanksgiving celebration (not feeling so festive at the moment). He loaned us his van after taking his family home so we could get back to my parents' and return for a visit the next day. Instead of visiting my sister, my dad, my brother, and I worked on the van, replacing what seemed like everything on the passenger side of the motor (including the water pump for you Dave Ramsey fans). Total cost: $140 and a lot of inconvenience on a holiday weekend.

The advice I want to pass on today is simple, but we often bypass it in the stress or emotion of the moment.

Consider your options

But what do I know about repairing a car? It is so cold and this is a special weekend. I should spend it with family, not repairing the car. Again, consider your options.

Who do you know that could help? My brother-in-law was willing to help with a ride and a temporary vehicle. My dad and brother were willing to help with the repairs (both time and expertise). All I had to do was lay down some pride and frustration to allow for the blessing of their generous gift. More than likely you know someone who could help. You just have to ask. Whatever happened to neighbors and friends helping each other? Don't let the spirit of giving lapse. Look for opportunities to help others and ask for help when you need it.

What must be done and what can wait? I am often tempted to do things that are unnecessary for convenience. "While I'm at it, I might as well..." Thankfully, I don't use credit cards. Back in those days, I would have not only rationalized the repairs to the van, but probably a new set of tires as well! While a new set of tires might be nice, and even needed in the near future, they were not necessary to fix the problem at hand. So, if they weren't in the plan for the month, they should wait. Especially when facing something unexpected, stick to the necessary. Times of crisis are not the best to make decisions - especially financial ones.

What can you really afford? You can afford whatever you can fit into your budget for the month! But isn't this what an emergency fund is for? Yes - and no. I could have coughed up several hundred dollars that Friday to have a shop do the work. It would have been well within the $1,000 baby emergency fund we have in the bank. It was VERY tempting. Don't use the emergency fund unless you have an emergency - and almost nothing is really an emergency. If everything is an emergency, you won't have an emergency fund left when a real emergency comes along! Try, if at all possible, to find it in your budget.

What are you willing to do to win? Stay focussed on the goal. Remember, there are times when we "live like no one else so later, we can live like no one else." Even though it was in my emergency fund, I am closer to my goal of being debt-free because I didn't spend the money on labor. It took some effort, some discomfort, and inconvenience, but in the end it was worth it. I got to spend some great time with my dad and brother, fixed the van, and was actually able to budget the repair into my December budget rather than tapping the emergency fund. Remember, it's your behavior that leads you to win.

This post is not to toot my own horn, but to give a real-life example of how it is done. I run into people all the time who have lots of excuses why they are not getting traction financially. They "don't have a choice." They refuse to consider their options.

You may have to take your car to the shop because you truly cannot do the repair yourself and don't know anyone who can help. That's okay IF you truly have no options. It may not even be your car that is the concern. But whatever you are facing, always consider your options.

Make exploring and utilizing the options you have a habit. If you are willing to do a little extra work, suffer a little inconvenience, and allow some people in your life the opportunity to help, you will find there are many different ways - many options - to solve the problem you are facing, whether it is financial or otherwise.

Getting a job (part 2)

Earlier I wrote about my friend who had lost his job but lost no time in finding several very realistic prospects. I believe one reason he was able to capitalize on those prospects was that he had guarded his good name. Today's post discusses another reason he is going to win.

2) The proactive approach always wins. He began his search the day he lost his previous job. He looked at all job options rather than limiting his search to a narrow industry or job type. He didn't sulk or take a break, but he took care of the important business right away. He got the unemployment insurance claim process started so that if he needed it, it would be ready. He sent out resumes, searched online job postings, and networked with everyone he knew. He and his wife addressed the personal finance side of the situation. What's more, they had already prepared for the eventuality of an emergency occurring. He sought counsel.

I often talk to people who are looking for jobs. They send out resumes in a shotgun blast and wait for callbacks. It's not going to happen for them. They don't get interviews. Don't think I'm minimizing the difficulty of finding a job, especially in a tough economy. But people are being hired every day. It might as well be you.

a) Prepare for emergencies (they will happen). Because he had prepared (had an emergency fund), the stress of losing a job was somewhat diminished and my friend had the emotional and financial capital to take some time to make a good transition.

b) When you're knocked down, get back up. Don't sit and sulk for two weeks before you engage in the process. You were planning to go to work tomorrow before losing your job, so go to work tomorrow looking for a job instead.

c) Keep seeking until you find. If at first you don't succeed, try, try again! Follow up. Call again. Learn to distinguish yourself. You have only a few moments to make an impression, so be ready. Unending persistence will pay off. Read The Go-Getter by Peter B. Kyne. It's an old book that will teach you how to be one!

d) Do whatever it takes. Lay down your pride and even your dreams for a while. If you still aren't finding what you need, secure temporary work to survive. There are jobs out there. They may not be in your chosen field and they may not be appealing long term, but when you face a crisis (like losing your job) and you aren't prepared, you don't have time to wait for the perfect opportunity.

These two posts are not an exhaustive list of what to do if you lose your job, but represent my initial observations after talking to my friend about his situation.

Just Do It!

I'm tired. I've been busy. I haven't been as productive as normal. I haven't written my weekly blog for a few weeks. A lot of life has felt out of my control. So what's the problem here? ME!

My attitude, my actions, my discipline, my responses to circumstances and even feelings all have one thing in common. They are mine. I can allow them, adjust them, change them - whatever. It's up to me.

One of the things that slid this month was creating our family budget (I just finished it last night - 8+ days late). I was on vacation (excuse), then I was catching up at work (excuse), and meetings, responsibilities, interruptions (excuse, excuse, excuse)...

Cash flow planning (budgeting) is the fundamental key to success with money. A new budget should be in place and agreed upon by spouses before the month begins. But it is also the hardest thing to implement and maintain - especially when we don't feel like it.

Winning with money is all about BEHAVIOR. That's why it is so hard. If we don't change our behaviors, our finances won't change. If we do change our behaviors, our money situation will change, too. Make a plan and stick to it! Write it down and evaluate it weekly.

When it comes to doing these hard things, I often think back to what Dave Ramsey say in the first lesson of Financial Peace University: what if my child's life was on the line? It was all up to me. Could I find a way to get this stuff done? YOU BET! I could. It's a morbid question but it makes the point--

IT IS POSSIBLE. NO MORE EXCUSES! It is a question of priority and willingness to DO WHATEVER IT TAKES.

I believe there are only two reasons why we have financial distress:

1) We have made a decision that is out of our financial position (e.g., bought a home or car with a payment that throws the fixed expense out of line) or

2) We are not managing our money well.

To fix 1), SELL IT.

To fix 2), BUDGET IT.

But no matter what, in the immortal words of Nike, JUST DO IT!

Our journey

We are coordinating our second Financial Peace University at Antioch starting August 23. I was thinking back over some of our journey and thought it might encourage someone who finds themselves along the way...

When I completed my formal education, Carrie and I had been married almost two years and had about $60,000 in debt. We should have been terrified (our debt was about twice our income at that moment), but I actually rationalized that it wasn't too bad. I had bought into the "good debt, bad debt" myth and the "car debt is inevitable - at least early on" myth. Since "good debt" (student loans) and "normal" debt (cars) made up most of our debt load, I actually thought our overall debt load to be reasonable at our stage in life. And Carrie trusted me with our money.

Over the next couple of years I got a job, Carrie quit hers to stay home with our new family, we changed cars, bought a house, and lived a bunch of life. During this time our debt load varied slightly, but we were basically in the same place, only we now had a house that needed a complete remodel. Now that's a great place for a young broke family!

About this time we went through Crown Financial Ministries' small group study and started getting serious about our money. We began to make some adjustments, but with all of life that happens while starting a family and the busyness, we still weren't giving it enough focus or intensity. Debt at this time was probably around $50,000 (without the house) and we were trying to get the debt related to our remodel paid off.

Let me break here to ask a question. Why had we not gained more traction? There are lots of answers that I find are common to about everyone who is struggling:

• We had not broken the cycle of debt. We were still using credit cards while trying to pay them off.


• We were not both intimately involved in our family's finances.


• We were not in complete unity on the level of sacrifice we should make to get ahead.


• We were not using a monthly spending plan.


• We were still reacting to circumstances rather than living our financial life on purpose. We weren't being intentional enough.


• We were not exercising the hard work, discipline, and diligence needed to win with money.

What really got me motivated was watching my kids grow up and realizing just how short time really is. The 4th baby was coming. School was going to start in a couple of years for our oldest. Teenage years were soon to follow. Cars would have to be purchased and insured. The roof would need to be replaced, along with the furnace and air conditioner - not to mention retirement and college savings (for which TIME invested is one of the determinants to success).

And since our kids were born so close together, once the first hits any stage in life, the others follow, like, immediately. In other words, most of my saving for each stage in life had to take place before our first reached that stage.

Carrie has always been an amazing wife and she got behind me on reaching the goals for our future. She became especially motivated during the Financial Peace University class we coordinated.

So, things had to change. How did we get into debt? Not paying attention. Dave Ramsey says, "You can stumble into debt in our culture but you will never stumble out." How did we get out? Focused intensity. It's the only way.

New rules:

• We make a written spending plan (budget) every month, spending every dollar on paper on purpose before the month begins.


• We communicate regularly about our money, making changes to the budget as necessary. Spending all the money on paper requires us to find offsets anytime there is an additional expense we had not accounted for. And Carrie is very involved in this process.


• We use cash everywhere possible to hold ourselves accountable to our spending plan, make wiser spending decisions, and negotiate bargains.


• We don't use credit cards at all.


• We pray about this regularly.

What else?

• We saved $1,000 in the bank as a starter emergency fund.


• We began paying off our debts smallest to largest with a vengeance.


• We picked up extra work to advance the cause.


• We got very diligent about our finances.


• We held off on some wants that sometimes felt like needs.

That was just under one year ago. Today, we have about $11,000 in student loans to go. Everything else is GONE FOREVER. By the end of next year we will be debt-free (except our home), have an emergency fund of 3 - 6 months expenses, and will have cash-flowed a 10-year anniversary resort stay in Cancun.

We are on our way to Financial Peace! Two years of hard work to change our future. Well worth it! And let me assure you of one thing - WE ARE NEVER GOING BACK!

It's a given for me but let me be very clear - To God be all the praise, honor, and glory. We are applying His principles, His truth, and trusting in His provision. We are given strength by His Spirit and are encouraged by His people. He is the Lord of our lives.

I do quite a bit of financial counseling and I have yet to see a situation beyond two years of hard work and sacrifice from being cleaned up. The only question is whether the family is willing to pay the price.

If you are tired of living with the financial stress ... if you work too hard and make too much money to be this broke, please contact me or join a Financial Peace University class near you. This will change your life!

I plan to...

I talk to people daily who say, "I plan to...." I now reply, "Really? Let's see it." They normally respond with some variation of, "Huh?"


The oft quoted rule of law states, "If it is not in writing, it never happened." Consider this: "If it isn't written down, it won't happen."


It is amazing how we (yes, me included) approach lifetime goals and make important decisions without a plan that's specific enough to get us anywhere near our desired destination. We plan to... but we don't really have a plan.


Related to their finances people often say, "We try to save money, but we never seem to get anywhere." Again, I ask, "Let's see your plan." And get the normal reply. Financial expert Dave Ramsey often says, "Normal is broke. Be weird!"


If you plan to go on vacation next summer, what is your plan to pay for it? You need to have a plan. If you plan to buy your kids Christmas gifts, what are you saving toward that each month? You need to have a plan. If you plan to ever re-pace your work schedule (sometimes called retirement), how much do you need to save to draw from during those years? You need to have a plan. Few people like the word, budget but practically, it just means, money plan.


A monthly family budget needs to include all the things we plan to do. We plan to pay our rent or mortgage payment, utilities, groceries, etc. But what about the other planned spending (e.g., gifts, vacation, insurance, taxes, etc.)? Writing all of this down on paper before the month begins is a vital component to your financial success. Each month should begin with this plan in place.

• Write it down

Spend every dollar you are going to receive - on paper, on purpose. Spend each paycheck in order of importance and due date until you have used the entire check on the page. Your most important plans should take priority. If you are struggling, start with food, shelter, utilities, transportation, and clothing. These are the basic necessities of life. Take care of them before anything else (and even if someone else doesn't get paid this month).

• Agree on it with your spouse or accountability partner

Those of us who are married MUST work together if the money is going to work. Some need accountability so as to not make impulse buys. Others need the input from their spouse so the family actually has a life (I tend to squeeze the budget so tight there is no money for fun)! Both spouses have a voice in the process. Singles need the accountability of a trusted friend who is willing to ask tough questions. They don't have a say in the final decision, but wise advice should always be regarded.

• Review it weekly for changes and to stay on target.

Remember, you have spent every dollar you are going to receive, so if there is a change - either an expense that was greater than planned or something unplanned, you will have to find the money somewhere else. But you are making the decision on purpose. You are making decisions based on true priorities - what is most important. These offsetting adjustments force you to stay within your total budget.

As is often the case with topics related to money, planning affects many other areas of life. If you plan to improve your marriage or other relationship, you need to have a plan. What are the steps you are going to take today...tomorrow...next week.... If you plan to get married, you need to have a plan. What characteristics are non-negotiable? If you plan to move ahead in your career or get a better job, what are you doing to move that direction? Is there a class you need to take or training you need to go through?

In our pursuit to be more like God, we have to ask the question, "What is God like?" I know one thing - God has a plan - and He wrote it down.

In the Bible Jeremiah the prophet wrote to the people of Israel who were exiled in Babylon, "For I know the plans I have for you," declares the Lord, "plans for wholeness and not for evil, to give you a future and a hope." (Jer. 29:11) I believe these words hold true for the people of God everywhere.

On the other hand, 1 Peter 5:8b says, "Your adversary, the devil prowls around like a roaring lion, seeking someone to devour." It is important that we realize that if we don't have a plan, someone has one for us!

We all need to have a plan for our life and our money - written down - and it needs to be God's plan. The alternative it not pretty. I have seen estates, budgets, families, and individuals "devoured" by nothing more than lack of planning.

Take the time. Develop your plan. Write it down. If I can help in any way, please contact me.