Friday, October 31, 2008

Where's My Money Going?

Most people don't sit down and take a look at where their money goes, simply because they don't want to know how much trouble they are in. It is a look in the mirror and can be quite an emotional experience. Not as bad as finding out exactly how much debt you have, but tough nonetheless. If you don't know where your money is going, you need to find out if you ever expect to get on top of it! My advice is to get a computer program to help you. I bought a copy of Quicken on EBay for a little over $20, but you can do it for free on paper or you can use excel spreadsheets. The point is to do it.

To start, get all your bills, receipts, bank statements, paychecks and anything else pertaining to your finances out for the past month. Add up all your money that you have made and write that number down. Then add up all the money that you spent(including credit card purchases) and write that number down. If the money going out is more than the money going in, you have to change your spending behavior immediately!

If you don't have records of all of your transactions from the last month, then start keeping track now. I have a special pocket in my wallet that only receipts go in. At the end of the day or couple of days, I pull them all out and put them into Quicken. I ask for a receipt for everything! If I can't get one, I ask for a piece of paper to write it down.

Next put all of your transactions out into categories by what was purchased. There are two major Categories that all the others fall under; indiscretionary, which means you have to pay them in order to survive/maintain your quality of life, and discretionary, which means your life could continue without it. For Example:

Utilities(not cable and satellite)
Car Payment
Anything required to fulfill your job duties

Dining out
Cell Phone(you can survive without one)

If you aren't sure if something is discretionary or not, try to live without it for two weeks. If you don't die it's probably discretionary.

You should have a good Idea of where your money is going now. Once you have done this, you should have a pretty good idea of what you need to do next.

Rich or Poor is Not About Money

Rich or Poor is a frame of mind, not a set of circumstances. How many rich people have you heard about who who lost it all, only to become more wealthy afterwards? Better yet, how many poor people have won the Lottery, only to be poor again six months later? So with this in mind, you have to get your head right if you want to get your money right.

Thursday, October 30, 2008

Problem Solving

Here is a practical guideline to solving any problem you may have, be it financial or otherwise. I am sure this is in an elementary schoolbook some where, and if not, it should be.

1. Recognizing the problem
2. Investigating the problem
3. Assessing possible solutions to the problem
4. Creating a plan
5. Implementing the Plan

I will go into greater detail on each step later. Stay tuned!

Tuesday, October 28, 2008

About Me

I am no one particularly special, no financial adviser, economics guru, or even college graduate. I am just an ordinary man, with a wife and children, trying to share what I have found out about money and it's use. I got sick and tired of making money, according to some more than I ought to, and having very little to show for my efforts. I started reading, learning and doing what I saw to be the best course of action, and now with the "economic crisis" I think the things that have worked for me and my success may be an inspiration to others. I enjoy feedback, and would like to hear your advice, success stories, or questions. Drop me a line anytime!

Where to Start...

Where to start is sometimes the biggest stumbling block, but you already have by reading this! Cheesy but true, you have recognized a that there is a problem with your finances and are seeking help! The first step in any problem solving process is determining the root of the problem. This is quite difficult for most people because it strikes a chord in our hearts that we are doing something wrong, or have let down those important to us or any number of uncomfortable emotions. This strong tie to emotion that money has over most of us is difficult to overcome, because money is so important to our livelihood, security, and happiness. Just to be certain, money does not cause this, our views of money does. Thus, the goal, freeing our emotions from our money. This is also the most difficult thing most of us will ever do, I still haven't accomplished it, but I have a plan.