What’s the quickest way to start a heated debate among a room full of personal finance experts? I’m not certain, but starting a debate on the concept of good debt vs. bed debt must rank pretty highly on the list.
Opinions on the matter run the full gamut. Some people believe that debt is a tool to be utilized to finance a lifestyle – because #YOLO. Others would not borrow money for any reason whatsoever because debt is dumb and Dave Ramsey says so.
The trouble with such extremism, aside from being wildly unappealing, is the fact that a one-size-fits-all approach rarely works in life. The good debt vs. bad debt debate is no different.
What kind of debts are we discussing? What are the terms? What is the purpose behind the act of borrowing? Will the items or experiences being financed maintain value? What is the opportunity cost?
All of this is enough to make heads spin.
Traditional Stance on Good Debt vs. Bad Debt
Ask five of your closest friends whether they have any debt, and you’ll likely hear variations of the following:
“No, we’re not in debt. We just have a car payment, student loans, and our mortgage.”
“We have a few credit card balances – does that count?”
Answers like these can help us to begin to frame the issues surrounding good debt and bad debt.
Traditionally speaking, the average Baby Boomer defines good debt as money owed on an appreciating asset or an experience (i.e. education) which is likely to yield financial returns or benefits. Bad debt is defined as debt incurred on depreciating assets, i.e. does not yield positive cash flow.
Over time, however, these definitions have ridden the wave of cultural change. Today, in fact, some experts preach that all debt is bad.
Grandma and Grandpa may hold a traditional view on good and bad debt, but to their instant gratification seeking offspring, all bets are off. “If debt allows me to get what I want when I want it, it must be good!” they reason. This is a classic example of the leap-before-you-look mentality, and the eventual landing usually isn’t a pretty one.
Generational assumptions aside, we find ourselves at a tipping point in the Great Debt Debate. With any luck, the following may shed further light upon the issue.
Less About the Debt, More About the Debtor
Debt is a undoubtedly a complicated concept. Perhaps the only piece of the puzzle which is more complicated is the debtor himself.
When we borrow money, we make a statement about ourselves. We claim confidence in our ability to pay back our debts. This confidence can be fully justified or woefully misplaced.
Suppose for a moment that an uber-wealthy entrepreneur purchases a beach home on Lake Michigan and takes out a mortgage. Is this a good debt or bad debt? In this case, if she has the regular income and liquidity to pay off the mortgage in a relatively short period of time, we may safely consider this a healthy debt. After all, the home is likely to appreciate over time, and the mortgage provides additional flexibility to divert funds to other investments.
Let’s change a few pertinent facts in the above scenario for a moment. Suppose our entrepreneur is already upside down on her Chicago high-rise condo and is quickly burning through liquid cash like a raging wild fire due to a poor quarter for her business. We’re looking at a bad debt in this case, in all likelihood.
When evaluating debt, the circumstances of the debtor are everything.
So where does this leave us? What circumstances impact whether a debt is good or bad?
Years ago I purchased a 2008 Honda Accord from my grandparents. The vehicle was worth $17,000 at the time. I put down nearly half of the cost and financed the rest. We quickly paid the vehicle loan off, but even if we hadn’t done so, we were protected by built in equity. If at any time things went south, we could have sold the vehicle, paid off the remainder of our loan, and used the remaining cash to buy a beater car and buffer our emergency savings.
Equity is a fine mitigator of risk associated with debt.
2. Consistent discretionary income
When it comes down to the bottom line, the scariest thing about debt is the prospect that we might not be able to pay it off. As we’ve seen, equity is a great hedge against this possibility, but consistent discretionary income is even more valuable.
For the family who routinely spends all of its earnings, it doesn’t take much for what was once a manageable debt to become a significant problem. But for those who maintain sizable wiggle room on a monthly basis – say 5-10% of monthly take home pay – a healthy buffer can eliminate the stress of difficult periods which stretch the budget.
3. Liquidity (Cash is King)
Dave Ramsey begins every radio show with the reminder that “Debt is Dumb” and “Cash is King.” I feel the latter is correct, but the former requires modification. “Some Debt is Dumb” is more appropriate.
Again, assuming reasonable interest rates, debt becomes a problem when the debtor cannot meet his obligations. A healthy level of liquid cash acts as an additional line of defense. With cash in the bank, the debtor has options if debt obligations become cumbersome. He may sell the asset, rely on discretionary income to avoid touching liquid savings, or draw on his savings.
If you find yourself in debt or are considering entering into a debt relationship, consider the aforementioned factors to evaluate the situation. Generally speaking, based upon the established criteria above, the following are examples of good debt and bad debt.
1. Mortgage on primary residence
2. Home equity loan for home improvement purposes* (Depending upon interest rates, expected rate of return on the project, and existing equity)
1. Student loans
2. Auto loans
3. Revolving credit card balances
4. Cash advance and pay day loans
Readers, what is your position in the “good debt vs. bad debt” debate? How do you evaluate whether a debt is good or bad?
Last week, the state of Illinois finally passed what I would describe as a “Band-Aid” budget. While politicians largely celebrated this move and patted themselves on the back, their budget does very little to solve the gaping wound that is the state of financial chaos in which Illinois currently finds itself.
As I read the headlines and a few articles, I marveled at the difficulty the legislature faced in passing a budget. As you may or may not know, Illinois recently went an entire fiscal year without a budget. This standoff made previous budget delays (18 days in 1991, multiple delays of several weeks in the 2000s, and the bitter standoffs of recent years) look like small blips on the radar.
While Governor Rauner and Speaker Madigan set aside partisan gridlock long enough to pass a budget, public schools, state universities, and social service agencies are from celebrating. To the detriment of the citizens of Illinois, the finger pointing between Republicans and Democrats will surely resume and intensify in the next months.
Right around the time that Governor Rauner was delivering his press conference regarding the new budget, I sat down to review my planned budget for July 2016. Since September 2009, I have created a unique monthly budget using Gazelle Budget, the online software platform created Dave Ramsey’s team at Ramsey Solutions. That makes 71 unique budgets. It felt good to add yet another accomplishment to the mental list of ways in which I put the state of Illinois to shame.
MY FIRST BUDGET
As I often do when completing a budget, I took a look through the archives to see how Mrs. Superhero and I have come. My trek brought me back to September 2009, the month in which I created my very first budget.
In September 2009, I was a newly-employed, engaged bachelor, living independently for the first time in my life. Less than one week before the new public school year started, I accepted a job offer to teach music about 25 miles away from my university campus. With a week to prepare, I scrambled to locate housing, sign my contract, and prepare for a radical life change.
At the time, I had barely a tiny inkling of how to responsibly manage my money. I had recently read The Total Money Makeoverin record speed, but I didn’t know the first thing about budgeting an “adult” paycheck. This was going to be the first time I had ever earned a paycheck which included a comma in the amount field!
After reading about Gazelle Budget (which is being replaced soon by EveryDollar), I purchased an 18 month membership, which included access to all three hours (ad free) of the Dave Ramsey Show podcast, for $89.95. Moments later, I created my first budget.
I began by projecting my total net income for the month, $2,357.29 in total. In that moment, I recall feeling pretty wealthy. I continued by inputting my desired charitable giving ($236 – 10%), rent ($400 – I rented a room in a two-bedroom condo from a friend-of-a-friend), food ($305 – for groceries and restaurants), and my debt obligations ($50 car payment and $200 credit card bill). From that point, I filled out the budget with an estimate of utilities, transportation (gas, car insurance, and routine maintenance), clothing (new work clothes and change for laundry), personal spending (spending moneyblow money Starbucks fund, books, gifts, hair cut, toiletries, and the Gazelle Budget subscription), and savings (emergency fund and honeymoon fund).
As you can see above, my projections for spending (middle column) were not entirely accurate when compared with my actual spending (leftmost column) at the end of the month. In fact, despite projecting a zero-based budget, I spent more money than I earned in September 2009.
This was hardly a Superhero effort.
On the other hand, the percentages of my categorical spending mimicked responsible spending.
THE TROUBLE WITH PROJECTIONS
For the first full month of living on my own, I updated my budget on a daily basis. I kept a stack of receipts for all cash purchases and utilized internet banking to reconcile all other transactions. Yet despite my diligence, I was still brand-new to the process of budgeting.
As you can see below, I overspent considerably on food and personal spending; I had budgeted a combined $572.29, approximately 24% of my net income, but at the end of the month, I had spent a combined $761.58, approximately 32% of net income.
When I broke these spending figures down further, I discovered that I had spent $156.50 at restaurants and $80.77 at Starbucks.
20 TIPS FOR THE BACHELOR’S OR BACHELORETTE’S BUDGET
I chose to present the above figures for two primary reasons. First, I wanted to prove that it is possible to build and maintain a monthly budget as a single person. Second, I wanted to be fully transparent about my early mistakes.
Yes, creating a budget is not always easy. It isn’t the cool thing to do, especially as a young 20-something fresh out of college. Even at age 30, I can still recall the temptation to throw caution to the wind and live it up. Heck, I almost went out and leased a car!
However, I still recall one of the most powerful motivators for a 20-something single: the desire to prove one’s independence. Creating a budget is one of the best ways to set out to accomplish this goal and appear to be an adult. If you don’t manage your money responsibly, you will surely appear to be a child to you parents and extended family.
To win with money as a bachelor or bachelorette, follow these 20 tips.
1. Share costs with a roommate.
In my case, I avoided spending $1,000 per month for a one-bedroom apartment and spent $400 to rent a home in a two-bedroom condo. By sharing costs in this manner, I avoided spending 40% of my net income on housing costs.
Housing is by far the biggest budget buster for the average bachelor or bachelorette. Spending within this category can be a difference-maker.
2. Gather an accurate picture of your monthly debt obligations.
When you are just starting out, you will feel the temptation to delay examining your debts, particularly if your student loans are still in deferment. Avoiding your debts will not make them go away, so gather this information, including total principal, interest rates, minimum payments, and loan terms for each debt. If you’re unsure or unclear about any debts, contact the appropriate customer service department right away. Also, you should check your credit report; remember, this can be done free of charge once per year with each of the major credit reporting bureaus.
3. Prepare your own meals and cook at home as much as possible.
As a single young adult, preparing your own meals will accomplish two goals: you will save money, and you will not gain weight eating low nutrition/high calorie fast food. As an added bonus, you will be able to host your dates for dinner and impress them with your fine culinary skills. They’ll expect Ramen, and you’ll blow them away with shrimp creole!
Ladies, don’t forget, the way to a man’s heart is through his stomach.
4. Maintain a college lifestyle, at least in terms of spending.
When your first paycheck rolls in, you will immediately experience the temptation to buy everything in sight. If you establish an unreasonable level of spending out of the gate, you will set yourself up for failure. As much as possible, continue to live a college lifestyle (i.e. behave as if you are poor), within reason, of course.
5. Do not go out and buy a new (or new to you) vehicle.
You need to get used to living on a budget first in order to determine what you can or cannot afford in a new vehicle. Don’t allow pride and vanity to influence your decision-making process. If your current vehicle gets you from point A to B, it’s a keeper – at least for a few months.
6. Invest in a decent coffee maker with a timer function and brew your own coffee at home.
I learned this the hard way when at the end of my first budgeted month I had spent $80.77 on coffee on my way to work. I had a decent Mr. Coffee coffeemaker, but it didn’t have a timer feature. If I happened to be running late to work in the morning, I resorted to a quick Starbucks stop, which cost me significant money without adding any perceived value (neither happiness-wise nor nutritionally speaking).
7. Stay in.
Fortunately, I did a good job of this. My wife-to-be and I enjoyed cooking dinner at my condo and watching reruns of The Office. I know that many single people will feel the temptation and be pulled into the expensive night life scene, but do so within reason. Invite friends or your significant other back to your place, where food and drinks are cheap.
8. Find affordable dates with Groupon and Restaurant.com . I’m not even sure if Groupon and Restaurant.com existed back when I was a bachelor, but taking advantage of them today is a key part of our dining out experience. With either platform, you can purchase certificates for what is usually a fraction of the value, which allows you to realize significant savings and still enjoy a night out. The most common Restaurant.com offer is $10 for a $25 gift certificate. Check out the Restaurant.comofferings in your area by following the link and entering your zip code.
9. Build an emergency fund as quickly as possible.
As a young single person, building an emergency fund is the definition of adulting. Without an emergency fund, you will face unexpected expenses and be forced to swipe your credit card. Or worse yet, you may have to beg your parents for a loan or a gift.
10. Begin charitable giving right away.
While I have always given 10% to charity and missions organizations, I know this isn’t for everyone. If you’re not a natural giver, start small. Even $1 or $10 per month will benefit worthwhile organizations. If you’re not into structured giving, pay it forward and purchase the coffee or meal for the driver of the vehicle behind you in the drive-thru.
I strongly believe that regular, consistent giving is a key to winning with money. The act of giving teaches you that money is not an asset to be horded, stockpiled, wasted, or worshipped, but a tool to help yourself and others.
Remember, you will fail at this at first. Over and over and over. However, I found comfort in a Dave Ramsey quote during my initial months of struggle with my budget:
Adults devise a plan and stick to it. Children do what feels good. -Dave Ramsey
12. Accept that your budget projections will rarely be perfect.
On a related note, embrace your budget mistakes as they occur. Be willing to adjust your budget several times during the first several months.
13. Share your budget with a friend who is wise with his or her finances.
Accountability is helpful for everyone. It is part of the reason why I write this blog. A good budget is not inflexible.
14. Tell yourself every day that instant-gratification isn’t all that gratifying.
A few days ago, I read that the average person only waits 5 seconds for a web page to open before becoming irritated and moving on. Clearly, we live in a culture which embraces speed and instant results over patience.
You will need to learn to delay your desires in order to maintain a successful budget. Make a plan and stick to it.
15. Don’t worry about investing money right out of the gate.
In the personal finance blogging community, the suggestion to delay investing for retirement is utter blasphemy! However, I believe that there are better uses for your first months of pay. Make sure your budget is in order, build an emergency fund, and take time to research your investment options. When the time comes to invest, look into low-cost options through Betterment and Motif Investing. You will be glad that you waited.
16. Identify your values and be sure that your budget follows them.
If you’re not sure where to start with values-based budgeting, check out my two part series on budgeting with values in mind:
Writing V-SMART Goals is the best way to accomplish your goals.
18. Be transparent with your friends and family about your budget.
It is OK to explain that you are striving to manage your spending responsibly. In fact, if you keep your budget goals a secret, it will be more difficult to stick to your budget, as co-workers will invite you out for happy hour drinks and apps every Friday. Just be up front and honest.
19. As follow-up to number 18, be willing to say “no.”
If you want to live on a budget and win with money, you will likely hurt people’s feelings from time to time.
20. Avoid making any purchases on impulse.
If you are considering a sizeable purchase, write it down and check back again in thirty days. See my recent piece, The Thirty Day List, for a step-by-step process on delaying purchases.
Note: This piece contains affiliate links. FinanceSuperhero only recommends products designed to save readers money.
Readers, what budget tips do you have for singles?
Recently, in an effort to force myself to slow down a bit and actually relax, I started watching a few episodes of the hit-show The Goldbergs, which is set in 1980s Pennsylvania. Mrs. Superhero claims that I am really half-watching and half-working on my laptop, but that is a subject for another article.
In an episode I watched last week, Murray, the family patriarch, is sitting in his recliner, sans pants, and his wife, Beverly, is in the kitchen, when his oldest son, Barry, approaches and asks for money. Here is their conversation:
Barry: What if I told you one day there’d be a piece of technology that can guarantee I play professional basketball? Well, that day has come. The Reebok Pump. A cushion of air around the foot that literally allows you to defy the laws of gravity. And the amazing part? It’s only $175. Don’t say no.
Beverly: Honey, I’ve got a pair of Reeboks upstairs you can have.
Barry: Oh, really? Can I please borrow your beige mom sneakers? Listen! My dream is to be a basketball superstar, not a nurse!
Murray: Well, here’s the thing about your dream. It’s stupid.
Barry: You have the money. Just get your pants and give it to me.
Beverly: Barry, your father’s pants are not a bank.
Murray: Money comes from hard work, you moron. You really want those shoes, come down to the store and work for ‘em.
Barry: Fine! But when I get to the NBA, and you want my autograph, I’m signing it, “Worst wishes, Barry.”
As I watched this episode, all I could do was laugh–a lot. An hour later, as I lay in bed, my stupid brain could not stop thinking about this conversation and the events which followed.
Barry Goldberg begins working with his father at the local furniture store. Ironically, he is a natural salesman and does very well, but his success comes after some early struggles. When his first payday arrives, Barry is astonished to receive a paycheck for $33.
Barry: Is this some sick joke? Oh. You’re just busting balls, huh? This is a joke paycheck.
Murray: I wish I was busting balls. Welcome to the real world.
Barry: I know I made more than this. Why is it so low?
Murray: Taxes! You got federal, state, social security, F.I.C.A..
Barry: What are you talking about? Those aren’t real things.
Murray: Did you ever go to school? Taxes? Those are totally real things.
Tough Love and Tough Lessons
In these two brief scenes, Barry Goldberg’s words and behavior provide a glimpse into the American entitlement culture and the interconnected role of money.
-Barry is easily swayed by the power of advertising.
-Barry expects money to be given to him rather than earned.
-When Barry begins to work, he overvalues his contributions and expects unrealistic earnings.
-Barry is oblivious to the basics of federal and state taxes.
Fortunately, Murray Goldberg, while unconventional, is a good dad at heart and teaches Barry key lessons in a very short time.
-Money is easy to spend but difficult to earn.
-Money comes from hard work, moron!
-Taxes are a painful reality.
Early Money Lessons
Fortunately, Superhero Dad wasn’t too much like Murray Goldberg when I was growing up. He wore pants, most of the time, and didn’t call me and my siblings morons.
Like Murray, Dad worked hard to provide for our family, and he made sure that we did not go without anything which was truly a need.
On the other hand, we experienced our fair share of tough love, and I am grateful for that today.
Like Barry Goldberg, I used to ask Superhero Dad for money for many unnecessary things, like going to the movies with friends or baseball cards. I quickly learned a simple lesson:
Work and get paid; don’t work – don’t get paid.
When Dad opened up his wallet, I could be sure that I would soon be raking leaves, mowing the lawn, or climbing up on the roof to clean out the rain gutters in order to earn the money bestowed upon me.
The Finance Superhero Plan for Raising Financially-Literate Children
Mrs. Superhero and I do not yet have children of our own. However, between the two of us, we know a thing or two about teaching children as a result of our professional backgrounds. When we do have our own children, we will carefully implement the following techniques and teach financial lessons:
–We will let our children see how we manage our finances. We will be appropriately transparent, within obvious reason, so our kids learn the value of money.
–We will implement commission rather than allowance. Our children will learn that those who work get paid and those who do not work do not get paid.
–While the importance of work and the natural compensation which follows will be emphasized, we will teach our kids that not all work is for the purposes of getting paid. Sometimes, we will roll up sleeves and work to serve other people and support the community. Sometimes, we will work to care for our own household or personal belongings. Pay is not to be expected for all work.
–We will guide our children to give, save, spend, and invest. Dave Ramsey touts the “give, save, and spend” mantra, in that order, and I don’t have a problem with it. We want our children to experience first-hand that that money is not meant for hoarding; rather, it is a tool to take care of both oneself and others, too.
As a result, some of our children’s savings will be in a liquid money market or savings account. This won’t be about earning interest, which will be low, but it will show our children the value of having money remaining and to teach them not to spend all they earn. When they want to spend all of their money and deplete their savings, we will let them from time to time (this will be SO painful for me!) and allow them to learn from their mistakes at an early age.
In addition to learning about spending and proper decision making, we will teach our children about the power of investing when their limited earnings permit it. We believe that children can learn the power of compound interest at an early age. If their earnings won’t support investing, we will involve them in the process of funding their ESA and 529 accounts when they are mature enough to understand.
–Likewise, we will emphasize the importance of investing to instill a long-term mindset. We will start them early on this so they think investing is “just normal” and “what everyone else does.” They will be astonished when they look up as adults and see that their once small investment has grown due to time and compound interest.
Leaving a Legacy
As Mrs. Superhero and I get closer and closer to starting a family of our own, I have thought increasingly about the legacy we will leave behind. I have thought about all I have learned from my elders, including Superhero Grandpa (and Grandma) and Superhero Dad (and Mom). I know I will be like most parents and rarely have all the right answers.
In the ancient Book of Proverbs it is written, “A good man leaves an inheritance to his children’s children.” Through education and experience, we hope to leave this kind of inheritance, built upon a foundation of love, wisdom, and stewardship.
Readers with children, what have you taught your children about money? Do you provide an allowance? At what age do you believe children should begin learning about money? Readers without children, how did your parents teach you about money? What lessons remain vivid in your memories today?
Two weeks ago, I channeled my inner Cesar Millan and began training our newest four-legged friend, Coda, who joined our family on Easter. I stood at the top of the staircase and looked down at my puppy. He stared back at me. And then it started: the shrill, deafening barking.
Some readers may find my training methods a bit cruel, but I refused to walk down the staircase to carry the little pup up the stairs. Yes, I felt bad, but after a few minutes of prolonged whining, Coda’s persistent protest gradually shifted toward perseverance.
One step. Two steps. A struggle to conquer the remaining steps.
Without becoming overly philosophical with this illustration, I believe Coda succeeded for a reason. It was not because of my tough love. He made it to the top of the stairs because he had not yet been conditioned to give up.
In this moment, it occurred to me:
Whining might get you pity, but it won’t net you any PROGRESS.
Unfortunately, the average person yields to his own inner whining and gives up far too easily. We are conditioned by our culture to seek and accept the path of least resistance. Furthermore, we whine and complain that life is so difficult and trying even in the absence of real difficulty, discomfort, or strife.
I am guilty of it from time to time, and chances are, you are, too.
The Problem With Whining
Despite my best intentions to avoid association with chronic whiners and complainers, society has conditioned us all to complain as an odd sort of coping mechanism. We are encouraged to talk about our problems, yet rarely are we encouraged to act upon potential solutions.
So instead of helping each other to grow and overcome difficulty, we lend a listening ear, nod in agreement, and encourage the status quo.
Over the years, I have heard it all. Nothing surprises me anymore. The following are some of my favorites:
The little guy never gets ahead.
I often wonder who started this myth and why it continues to linger in the collective consciousness of the people. It is ironic that this statement is believed by so many, while countless underdog stories prove otherwise.
For example, consider the life of businessman Tom Gores. Born in Israel, Gores moved to the United States prior to turning five years old. He grew up playing playing football, basketball and baseball at Genesee High School in Genesee, Michigan. He stocked shelves at his father’s grocery story in nearby Flint, graduated high school in 1982, and attend Michigan State University, where he earned a Bachelor of Science degree in Construction Management.
Gores did not experience a privileged upbringing by any stretch of the imagination.
I’ll always have debt of some kind. It is a necessary tool for most people.
My head nearly explodes every time I hear this or a similar variation. When I achieve financial independence, I may take out a month-long ad in several major newspapers to remind the public that debt is not mandatory. These ads will also include a reminder that debt is not an exclusive club designed for lifelong participation, though Visa, American Express, and MasterCard would like you to believe otherwise.
I will not sport a holier-than-thou position and claim that debt has not helped me. Debt has allowed me to earn two college degrees and buy a house. However, these experiences would have been far sweeter had debt not been part of the equation.
When Mrs. Superhero and I finish paying off my student loans in the next few months, there is no turning back into debt (barring absolute catastrophe). Income is the only we will use to support our family and lifestyle.
I’ll always have a car payment/car lease because I can’t afford a nice car without one.
This statement also sends me into orbit every time. The truth is that moving up in vehicle is a process which need not involve debt nor take long if you are willing to be patient for a short time. Mathematically-speaking, a car payment or car lease are usually the worst methods toward owning a vehicle.
Let’s suppose you currently own a $2,000 beater car. While it is likely to depreciate over the next 12-24 months, I am willing to bet the vehicle could be sold for $2,000 in 18 months with careful marketing. Let’s also suppose that you saved $250 per month for 18 months prior to selling the beater. Through this flipping method, you could afford a $6500 vehicle. Continue the plan for another 18 months and an $11,000 vehicle is in reach. One additional cycle could allow you to purchase a vehicle valued at $15,500. In four and a half years, you’ve moved up in car from a 1993 Honda Civic to a 2013 Hyundai Elantra. And you did it without a single payment! Of course, saving more than $250 per month could significantly change the conversation.
I deserve to be paid more than my current salary.
I find this phrase (and similar offshoots) is most often uttered by millennials. Please allow me to apologize for the collective whining of my generation.
Facebook envy is largely to blame. Pictures of new cars and new houses lead the average millennial, especially men, into foolish spending in order to maintain appearances.
I am not saying that millennials should not increase their earnings. However, I am saying that whining is not the way to achieve that increase.
Recommended Action Plan
If you want to be successful, not just with your finances, you must start by addressing your attitude. Stop whining and take action to get ahead. Envision what you want your circumstances to look like and figure out how you will make that vision a reality. This will require V-SMART Goals, a plan to achieve the goals, and accountability. Ask a friend to call you out every time you complain about any financial struggles in your life. Put your wasted time to good use and correct the circumstances you hate.
A friend recently commented to me and Mrs. Superhero, “You two are busier than any other couple I know.” I had to hide my excitement that she had noticed! Ironically, she probably doesn’t even know how right she is; collectively, Mrs. Superhero and I typically work over 120 hours per week.
If people are noticing your hard work, you are on the precipice of greatness! Mrs. Superhero and I have done some basic math. There are 24 hours in one day and 168 hours in one week. This gives you plenty of opportunity to change your circumstances. Time is the great equalizer. It is an asset everyone possesses equally.
Suppose the average person logs a 40 hour work week and sleeps 40 hours per week. This is less than half of the available hours in a week!
If you have significant financial problems, you have approximately 88 hours each week, when you are not working or sleeping, to roll up your sleeves and pursue progress! Pick up overtime, extra shifts, work a little harder to earn extra commission, start your own business, work as an independent contractor, start a new side hustle, or start your own blog with Bluehost. Even if you worked one additional hour Monday-Friday and five hours on Saturday or Sunday, your progress would be significantly boosted.
Time is the great equalizer. It is an asset everyone possesses equally.
My dad is a great example a Finance Superhero in this regard. He typically works 55+ hours per week. Similarly, Superhero Grandpa often worked 16+ hours per day in his younger years and even worked 8+ hour days on his side hustle in retirement.
Grandpa was too busy making (and counting) money to whine or complain.
As an added bonus, if you work additional hours for a short time period, you will not have time to spend money foolishly or put yourself into further debt. This is a worthwhile, temporary sacrifice. Yet people today are averse to hard work because we are conditioned, as I wrote earlier, to seek the path of least resistance.
This is why Americans are in love with debt. Our society must learn to see hard work, in a sense, as a punishment for putting yourself into a situation to have to pay off debt. Yes, you should be a little masochistic for a while. It will be good for your progress. Too much comfort breeds contentment, and contentment is the enemy of progress. Every time you feel tired or just want to quit, you should relish the feeling and know that you are on the verge of winning.
You won’t have to work hard forever. Do it for a short time and earn the right to relax in early retirement. As talk show host Dave Ramsey often says, “Live like no one else so later you can live like no one else.”
Readers, what do you do to guard against whining and complaining? How do you respond when others do it? What is the most common complaint you hear when others whine about their finances?
Earlier this week, I published a post about the importance of written financial goals. Several readers and commenters agreed that the creation of written goals has been one of the largest contributors toward their financial progress. In reading and responding to their comments, it is clear to me that these commenters have detailed plans and have been able to follow them.
I believe their successful planning and subsequent written goals ultimately stem from possessing an accurate understanding of their financial outlook at all times. Furthermore, written goals often provide the added motivation and accountability needed for that final, persevering push toward achievement.
Organization is Vital
Yesterday, I was having one of those mornings. I found myself in a mad scramble to locate a pair of socks which would fit in with the color family of my pants, shirt, and tie. After a few minutes of searching through an unsorted basket of socks, I located a pair. Though this simple search only stole a few minutes of my time, it got me thinking about the perils of my own disorganization.
When you do not maintain organization, in all areas but specifically your finances, uncertainty lingers in the air like the smell of rotting garbage; it may not bother you much at first, but if it is ignored, the problems will quickly worsen.
Five Steps You Can Take Today Much like unsorted laundry, your money is helpless without you. If your finances require some decluttering, whether minor or major, now is the time to take control and do what is necessary to be the Superhero that your finances desperately need. You can start by implementing these five easy steps toward decluttering your finances:
1. Automate Your Finances As Much Possible
If you are like me, you value your time just as much as you value money. By automating common expenses, such as mortgage or rent payments, utility bills (such as water, trash, electricity, gas, television/internet, and mobile phone), life insurance and disability monthly premiums, car payments, student loan payments, retirement account contributions, and even savings, you can save yourself significant time, energy, and money. The days of writing countless checks, licking envelopes, and purchasing stamps will be drastically reduced.
Most major banks will allow you to set-up auto-pay on these bills with very little effort involved. You can even negotiate with most providers to establish a chosen day of the month for your auto-draft to occur, which will allow you to spread out your payments to align with your pay periods. Lastly, some institutions, particularly student loan servicers, may provide a small APR reduction when you sign-up for auto draft and paperless billing.
Alternatively, you could choose to place these expenses on a credit card each month, leaving yourself with only one condensed bill to be paid. This could be advantageous if you receive rewards.
2. Sign-up for Paperless Billing
When you became an adult, checking the mail each day surely lost its allure. Good news: you can restore fun to the act of walking to the mailbox each day by signing-up for paperless billing with all providers who offer this service. Doing so will literally and figuratively decrease the clutter in your mailbox and your finances. Furthermore, with electronic copies housed by your various institutions on secure servers, your information will be protected, you will be less likely to experience identity theft, and you will not need to fear losing an important document or missing a bill in the mail.
After utilizing Gazelle Budget for many years, I am currently transitioning over to a paid subscription version of EveryDollar, a product created by the team at Ramsey Solutions. EveryDollar is a very effective way to create detailed monthly budgets, track spending by linking with all of your financial accounts, and monitor progress on your goals. I particularly enjoy the features which allow users to create sinking funds and budget for irregular (bi-monthly, quarterly, semi-annual, or annual) expenses.
I also utilize Personal Capital to gather a daily snapshot of all of my accounts and to gauge my current net worth. It is the most simple and effective way to monitor all of your accounts, and furthermore, it will be provide a variety of analyses. The best part? It is free!
4. Use Cash Allowances to Pay for Basic Spending
While EveryDollar can certainly ease the burden of tracking a multitude of debit and credit transactions within your monthly budget, I recommend providing cash allowances within basic categories such as groceries, restaurants, gas, and discretionary spending (or what Mrs. Superhero likes to call her Stitchfix Fund). You can include these cash allowances in your budget with one simple transaction on the first day of the budget month and be finished with the category.
If you are like me and Mrs. Superhero, these categories will represent a large percentage of your monthly expenses. By implementing cash allowances, your will provide an additional layer of accountability to stay on budget (you cannot spend more money when the cash is gone) while simultaneously freeing up additional time each week, which you could allocate toward a side hustle or building your own blog.
5. Eliminate Your Debts as Soon as Possible
For many families, debt can represent a significant percentage of their monthly budgeted income. When you shed the shackles of debt, you free up additional streams of income which may be re-allocated as automated contributions toward liquid savings, retirement accounts, non-retirement investments, and savings toward the purchase of rental properties.
Additionally, without multiple debt obligations, the sheer number of your monthly transactions will be reduced. Fewer transactions will lead to even greater simplification. You will also experience the peace that comes with no fear of missing a payment or incurring late fees and interest charges. Lastly, you will not experience guilt each month as financial institutions earn interest on your hard-earned income. Trade monthly debt payments for the joy of watching interest work in your favor as soon as possible!
If you are willing to dedicate a few hours this weekend, you can implement the above steps to greatly declutter your finances. The sacrifices you make in doing so will pay great dividends, pun partially-intended, for your financial future. After doing so, you will be free to turn your attention from fretting and worrying about your finances and onto creating a game plan and written goals for your future.
Readers, what steps have you taken to simplify your finances? What recommendations would you suggest, in addition to the above suggestions?
People believe that their circumstances dictate their actions. They don’t realize that they can begin to dictate their circumstances by taking a single step in the right direction.
In my recent series on Values and Budgeting (Part One and Part Two), I highlighted a progression toward writing what I have coined V-SMART Goals. As a review, V-SMART Goals are
Values-based, Specific, Measurable, Attainable, Realistic, and Time-Oriented
When I wrote this post, my natural assumption was that a majority of the population implemented SMART Goals or general goal-setting practices in some capacity. A bit of research showed that my assumptions were quite naïve.
The Shocking Statistics About Goals
In the book What They Don’t Teach You at Harvard Business School, author Mark McCormack cites interviews performed with new graduates from the Harvard MBA program in 1979 and 1989, respectively. Full disclosure: The above link is an affiliate link. I have not yet read this book in its entirety, but it is on my reading list. However, the statistics contained in the book are alarming.
In 1979, interviewers determined that:
-84% of adults had no specific goals
-13% of adults had specific goals that were not written down
-3% of adults had specific, written goals
When this cohort was interviewed again in 1989, the results showed were predictable:
-The 13% group had, on average, earned twice as much as the 84% group who had not established goals
-The 3% group who had written goals, on average, earned ten times as much as the other 97%, collectively speaking.
Impact of Goals is Not Limited to Income
While the results above should not surprise us, they left me with unanswered questions.
-In 1989, which group, on average, had the highest net worth?
-In 1989, which group had the highest percentage of written monthly budgets?
-In 1989, did the 3% cohort create and monitor written goals for other areas of their lives?
Without having access to the interviewees, we cannot ascertain the answers to these questions. However, I feel the answers are not likely in doubt.
In my own life, I have seen that greater organization and goal setting in one area can easily spread like wildfire into other life areas. When I got my act together, financially-speaking, and set written goals, I suddenly became highly aware of other areas in my life in which I needed to establish written goals and hatch plans to achieve them.
For example, as a new graduate who had just entered the workforce, I established a written budget and soon realized that I needed a similar plan to improve my physical fitness. I began running with a friend, signed-up for a half-marathon and later a marathon, and trained according to an established plan. Without realizing it, I had created a SMART Goal for my race training, even though aspects of the goal were unwritten (For shame!).
When I got my act together, financially-speaking, and set written goals, I suddenly became highly aware of other areas in my life in which I needed to establish written goals and hatch plans to achieve them.
The Power of Written Financial Goals
I strongly feel that the power of written financial goals cannot be overstated. One my favorite talk radio hosts, Dave Ramsey, often says, “If you aim at nothing, you will hit it every time.” By definition, having no established goals is aiming at nothing.
In order to adhere to the Superhero Value of Maximization, you must strive to make every single penny work hard for you, and this begins with written goals. As mentioned previously, I prefer to think of my dollars and cents as employees. If I do not direct them, they will not be maximized. Furthermore, this is the one time in which I am a huge advocate for micromanagement! You should be reviewing your finances with a fine-toothed comb on a regular basis.
When you established Values-Based, Measurable, Attainable, Realistic, and Time-Oriented Goals, you are poised for a high probability of success. Additionally, you are only one step removed from being able to share your goals with others, who in turn will be able to hold you accountable. Even the simple act of posting your written goals in a prominent place in your home, such as your refrigerator or bathroom mirror, can simultaneously serve as both a means of keeping your goals at the forefront of your mind and providing accountability.
Why Some People Continue Without Written Goals
Over the years, I have heard people share many reasons for their lack of written goals. Frankly, I am not a fan of any of them. I find it is easy to make excuses, and I hate when I catch myself doing it. Here are a few of the common reasons/excuses I often hear:
–They don’t think about goals. Why? They spend too much time on social media, TV, and other major time wasting activities.
–They have given up. They believe their circumstances dictate their actions. They don’t realize that they can begin to dictate their circumstances by taking a single step in the right direction.
Financial Goals for Everyone
To get started with written financial goals, I believe everyone should pause for a moment and visualize what they would like their financial landscape to look like next week, in 3-6 months, in one year, and in 3-5 years. By beginning with the end in mind, we can create goals that will serve to motivate and inspire. After jotting down some notes, you are equipped to begin writing goals in the categories below.
Note: Brief, vague examples are provided in parentheses; these examples may not fit your circumstances. They should be modified to align with your visions and expanded to meet V-SMART specifications based upon your specific circumstances.
Short-term: (reduce your weekly spending, renegotiate television/internet contracts with service provider)
Intermediate/Mid-range goals: (pay off debt, establish a 3-6 month emergency fund, save for a home down payment)
Long-term – (purchase a rental property with at least a 20% down payment, create multiple streams of passive income, reach a net worth of $1 million, retire early!)
Readers, do you maintain written financial goals? Do they follow the V-SMART recommendations? What barriers are preventing you from establishing written goals? How have written goals boosted your achievement in the past? Share one current financial goal in the comments section below!
Do you feel hopeless about money? Have you tried to make a budget in the past and bombed big time? In this post, we will take a detailed look at how to create a zero-based budget which will help you take back control of your life and money.
What exactly is a zero-based budget?
A zero-based budget is a budget in which all income is allocated to a budget category with no remaining unused funds.
At this point, you should realize that you can’t afford to go another month without a budget. It could be the difference between one day reaching financial freedom and remaining in bondage to debt. It could leave you trapped working a job you hate just to pay the bills. It could diminish your happiness. If you don’t feel urgency and understand the importance of a budget, start here.
Methods of Budgeting
Depending on your personality and degree of tech-savviness, you may wish to create a budget the old-fashioned paper-and-pencil way. You may prefer using Excel, or even an automated program, such as Mint, YNAB, or EveryDollar.
If you are a budget rookie, I cannot understate the importance of creating a budget and crunching the numbers yourself, at least for your first few budgets. I highly recommend the pencil-and-paper for your first few budgets simply because it will force you to pay attention and be precise.
Before we get into the specifics of your budget, let’s review some key basics.
You need to create a new, unique budget at the beginning of the month, every month. Why? Some expenses occur on a bi-monthly or quarterly basis, and you will want to capture this within each unique budget you create. Remember, some expenses are fixed, while others vary from month to month.
Your budget should be based upon your net income (after state and federal taxes, employer deductions, and insurance premiums). Whether you are paid bi-weekly or weekly, this figure, too, will vary from month to month.
You should create a budget which utilizes categories. I personally use the following categories, which are recommended by Dave Ramsey. You should use the categories that represent areas of significant expense in your budget, delete those which do not, and add any pertinent categories which may be missing.
Within each category, your expenses should fall within the following typical ranges.
Sample Expenses Within Each Category
Giving/Charity: Tithes and offerings to church/religious organization, charitable donations
Saving: Emergency fund savings, retirement savings (401k, 403b, Roth IRA, Traditional IRA), college savings (ESA, 529), vacation savings fund, sinking funds
Housing: Rent, mortgage (including property taxes and insurance in escrow), home maintenance
Utilities: Electric, Gas, Water, Trash, Home/Mobile Phone, Cable/Internet, Home Security
Food: Grocery, restaurants, fast food, coffee and drinks
Transportation: Fuel, auto insurance, auto maintenance, bus passes, train tickets, Uber fares, tolls, miscellaneous transportation costs
Clothing: Includes shoes, outerwear, work wear, accessories Personal: Discretionary spending, disability/life/identity theft insurance premiums, miscellaneous spending
Debt: Student loans, car loans, home equity loans, credit cards
The Specifics of a Budget
Your figures may or may not fall neatly within the categorical ranges above. For example, if your Housing costs represent 24% or 36% of your monthly budget, this is not a serious problem. The percentages above are only suggestions for a healthy budget. Clearly, room exists for give and take, particularly if you are a very low or very high income earner, as long as your percentages add up to 100%.
Some of the categories above cover fixed expenses, such as Housing, Debt, and Utilities. Others address what we will call variable fixed expenses; you will spend money in each of these categories during a typical month, but the amounts may vary slightly from month to month. Variable fixed categories include Food, Transportation, Clothing, and Personal. Finally, the remaining categories, including Giving, Saving, and Recreation, are what we will refer to as discretionary expenses. You may choose to allocate money within these categories, but it is not mandatory for your family’s survival.
Here is a sample zero-based budget based upon a $5,000 monthly income:
Dollar Amount Allocated
Allocations as Percentage of Budget
As you can see above, the total of all categories combined equals $5,000. This budget adheres closely to the recommended percentages, and it even manages to stay below the recommended percentage ranges in the Health/Medical and Recreation categories.
Creating Your Zero-Based Budget
In the previous section, we allocated targeted spending amounts based on our categories – put simply, we made a plan. Now, we will explore how to reconcile our actual monthly spending with these estimated allocations, or examine how well we are following the plan.
Start by downloading copies of your monthly checking, savings, and credit card statements. If you are doing a paper pencil-and-pencil budget, I recommend adding expenses by category using columns on a legal pad.
Once you have calculated categorical totals for the entire month, the final step is to add all categorical totals and compare the final sum to your allocated final sum. Again, in order to have a zero-based budget, these figures should be identical.
Possible Problems and Trends
As you are doing your first few monthly budgets, you are likely to encounter the following problems or trends:
Spending more than the allocated targets in one or more categories
Spending less than the allocated targets in one or more categories
Why? A budget is a rough prediction. Think of it as a rough draft of an essay. You will return to it and refine any errors at the end of the month. The previous mistakes you made will influence and impact your thought process as you create later budgets.
Serious Warning Signs and Solutions
The following are two warning signs that your budget is not working:
Warning Sign: You consistently spend more than the allocated targets in specific categories. Solution: Increase allocated funds for the category if you are within recommended ranges. If you are exceeding recommended ranges, implement measures to reduce spending.
Warning Sign: Your spending exceeds your income. Solution: Forgive me for shouting, but STOP OVERSPENDING! Stay out of restaurants, learn to like your old clothes, and ride your bike to save on gas. Alternatively, seek alternative streams of income.
Now that you understand the nuances of a zero-based budget, get started on yours today. A budget only takes a few minutes to assemble, but the rewards are potentially without limit. Getting on the right path, understanding your money, and controlling your money are keys to winning with money. A budget doesn’t require sophistication, manipulation, or secret wisdom. It requires patience, intentionality, and a desire to be in control of your money. Even if you suck with money, you can do it!
And if you’re looking to move beyond a basic budget and Take Back Control of Life and Money, be sure to check out the ONLY online personal finance course we endorse: Budgeting for Budget Haters.
This comprehensive course is designed by my friend Adam Hagerman, a certified financial planner (CFP) and accredited financial counselor, with one goal in my mind: to help you reach financial freedom!
Adam’s course is one of a kind, and when you sign-up he will personally help you:
Gather the right information needed to create your budget
Set smart financial goals and use them to avoid the debt/savings roller coaster
Create an annual budget and plan like you’ve never planned before
Budget for periodic expenses
Budget for the fun stuff and incorporate guilt-free spending
Budget with a variable income
Prioritize debt repayment
Use budgeting software (with on screen instructions!)
Talk money with your honey
Set up your budget so it requires low maintenance
And much more!
As a member of Adam’s course, you get a LIFETIME membership to access four hours of video guides with step-by-step instructions to build a budget that will work for you, access to downloadable forms, worksheets, and spreadsheets, and access to your own personal financial coach who is able to answer specific questions. This last benefit alone is worth HUNDREDS! And as the course is updated over time, you receive all updates at absolutely no cost.
I’ve personally reviewed Budgeting for Budget Haters and feel it is one of the best step-by-step resources on creating a budget available today. If you want access to a top professional who will walk you through every step of the way, Budgeting for Budget Haters is for you! You can try the course out 100% risk free for 60 days. If you’re not satisfied after completing all of the forms and related course steps, Adam offers a 60-Day Money Back Guarantee.
Readers, how do you plan your monthly budget? Do you create a zero-based budget? Do you use automated software? Excel? Paper and pencil? How much time do you spend on your budget each month? Share your thoughts and burning questions in the comments section below.
A few weeks ago, I was lamenting the cost of graduate school with a friend over coffee. I commented that I had no idea why so many people were willing to go back to school for an MA or MBA and happily load up on debt that would have to be factored into their budget.
Yup, I said the b-word. My friend winced, as if I had just kicked him in the shin under the table.
For reasons I will forever struggle to understand, the word budget is a major taboo in today’s culture. Of course, I have never let that fact stop me in the past, and I wasn’t about to let it in this conversation, either.
“You do have a budget, right?”
“No. . . Budgeting just isn’t my thing. Besides, I’m always going to have debt anyway. What’s the point?”
Sadly, this attitude isn’t all that uncommon today. Chances are, you have also had similar conversations with friends, relatives, co-workers, or maybe even your neighborhood barista.
So why don’t people budget? They have the wrong idea about budgeting.
Five Reasons You Desperately Need to Budget
While there are far more than five reasons everyone should have a budget, this post will focus on five big reasons. My intention is to make you think and simultaneously stir your emotions. After reading this, please do not go another day without having a budget in place for your family.
1. A Budget is Easy to Create
I am convinced that the average person’s resistance to budgeting stems from the budgetary failures of both federal and state government units. They ask, “If they can’t figure it out, how am I supposed to do it?”
In my home state of Illinois, for example, our elected representatives and Governor have consistently demonstrated an inability to play nice and do what is best for their constituents. Ironically, the Illinois General Assembly recently enjoyed a vacation after months of accomplishing nothing.
Honestly, you can do much better. Let’s walk through the basics of a simple starter budget:
If you have an understanding of addition, subtraction, basic fractions, and can operate a calculator, you can do a budget. Grab a pencil, a legal pad, and get started.
List your income from all sources at the top of the page. I recommend using net income, commonly referred to as “take home pay.”
Gather information on your fixed necessity expenses: mortgage/rent, utilities, and medications.
Gather information on your flexible necessity expenses: food/groceries/toiletries, clothing, and fuel/transportation.
Gather information on your discretionary expenses: restaurants, entertainment.
Calculate the total of your expenses and subtract this figure from your total net income. If you are spending more than you are earning, something must change. First of all, aim to reduce unnecessary discretionary spending. Next, explore ways to reduce/eliminate restaurants, save on groceries and toiletries, and formulate a plan to reduce fuel/transportation expenses through well-planned travel. If you have money remaining at the end of your budget, it can be used to build your emergency fund, pay off your debts, and give to organizations/individuals in need.
Lastly, examine your fixed expenses and explore all avenues to reduce them. This can be done by paying off debts, thereby reducing your monthly obligations, negotiating rent/refinancing your mortgage (especially if your mortgage is 3-5 years old, you may be missing out on historically low interest rates), and reducing your usage of utilities. Any additional cash you can save is equivalent to receiving a raise.
You work hard to earn your income. I know I do. Without a budget, it is difficult to keep your income under control.
Each dollar you earn in your lifetime is like a tiny employee that is ready to work for you. You wouldn’t hire an employee for your department or business and fail to provide her with a detailed purpose and role. If you did, you would be a poor boss. Employees need guidance and structure to succeed, and your money is no different. Put those dollars to work by assigning them a unique role. That begins and ends with a budget.
3. A Budget Requires You to Pay Attention to Your Money
With several Mr. Washingtons working for you, suddenly doing exactly what you tell them to do, things begin to change. You notice that your grande non-fat no whip latte costs you $7 each morning. You may even experience a bit of pain upon realizing that this equates to $35 per week and over $1800 per year.
Noticing details like this is just the beginning when you maintain a monthly budget. And when you start to pay attention, innocent trips to the ATM don’t seem quite so innocent anymore. You begin to think twice before you spend because you understand the severe consequences of departing from your plan, a point which segues nicely into the next reason to budget.
4. Operating Without a Budget is a Missed Opportunity
Though the US government prints money like it is going out of style, you and I know that money is a finite resource. Each of us has a limited number of working years, and logically, our earned income is similarly limited as a result. Do not let any of it go to waste. You must be intentional to be successful.
Today, more and more people strive to out earn their stupid spending. They work long hours to pay for cars, boats, and summer beach homes, yet they are too busy working to enjoy the fruits of their labor. I am not condemning hard work, nor am I saying that you should not have nice things.
However, as Chris Hogan puts it, “I don’t want nice things to have you!” If you do not have a budget, your hard-earned money is likely being wasted on buying things you don’t need to impress people you don’t even know. The longer you continue this way, the longer you are missing out on what Albert Einstein dubbed the Eighth Wonder of the World: compound interest. And in this case, being late to the party isn’t fashionable; it’s stupid!
For example, consider the following scenario: Ben and John are both 20 years old. Ben begins investing $250 per month in index funds, and he continues until he is 30 years old, at which time he never invests another cent, allowing compound interest to grow his money until retirement at age 59 ½. John decides to lease a vehicles for $250 per month during this same 10 year window, and wisely snaps out of it when he reaches age 30, at which time he begins investing $250 and continues until age 60. For the sake of argument, let’s assume that both gentlemen invest in similarly-performing index funds, which average a 10% return each year. Surely John must catch up to Ben? Take a look below:
At age 59 and approaching retirement, Ben will have invested a total of $30,000 and hold a portfolio valued at $917,725.45. John will invest $90,000 over 30 years -three times what Ben invested-yet he will only hold a portfolio valued at $542,830.31! John never caught up due to the avalanche of compound interest that worked in Ben’s favor.
5. A Budget is Freeing
When my friend claimed that a budget really wasn’t his thing, I immediately realized that he had never experienced the freedom that results from a fine-tuned budget. When you maintain a budget, you have the benefits of:
knowing how much money you have at any given moment
knowing you do not have to fear a bounced check or overdraft fees
peace of mind that comes from having budgeted for emergencies
It’s a common complaint, but the notion that a budget is restrictive is pure nonsense. As a regular listener of The Dave Ramsey Show, I have heard countless “Debt-Free Screams” in which the callers said that planning a budget felt like they had received a raise.
Lastly, a budget is freeing because it causes you to think. Thinking leads to reflection, and reflection leads you to consider your values and decide what is most important to you. Value driven budgeting is the key to seeing beyond the numbers and focusing on the why behind the numbers.
What the Heck Are You Waiting For?!
A budget only takes a few minutes to assemble, but the rewards are potentially without limit. Getting on the right path, understanding your money, and controlling your money are keys to being a Finance Superhero and Taking Back Control of Your Life and money.
Remember, a budget doesn’t require sophistication, manipulation, or secret wisdom. It requires patience, intentionality, and a desire to be in control of one’s money.
Get started on your budget today!
Do you have a monthly budget? How you maintain it? How much time do you spend on budgeting each month? Please share your thoughts on all things budget-related in the comments section below.