Just saw this on a social media post from a friend. As funny as it is true. If you and your partner are in agreement on financial issues, you’ll be wildly successful. If not, “unfollow” happens in a ton of different ways…
Sadly, as of last week, over 25 percent of resolutions have already gone by the wayside. But I have an idea and a way out of that: Think of January as a free trial month. You get that with some subscriptions, perhaps with a fitness club trial and other offers. So learn the lesson and start again on February 1st with your financial goals!
Make sure that your financial to-do and to-resolve list starts with something really simple, really short, but also really critical. It’s an entire chapter in the Money Tools book called: Do you have a half hour?
Yes, you do have it – but do you want to invest that half hour into getting some of your financial stuff in order for at least the coming year?
First thing is to have a coffee date with your partner if you are in a relationship. If you’re not on the same wave length – nothing else really matters. Talk about your financial goals and hurdles for at least this year.
Do you want a $10,000 vacation? If you don’t have it set aside, what’s the plan to save $800 a month if it’s next winter, or save $1,500 a month if it’s this summer.
Want to just charge it on a credit card? That’s your choice if you and your partner agree…but at a 20% rate it’ll be $20,000 in total price in four years. I think that’s a horrible idea, but it’s your choice IF you agree and IF you know what you’re getting into.
Is there one specific debt want to pay off? Do you agree it’s worth it and which one? How important is it to you two? What will you do or give up to achieve it?
If you’re a home owner, and your mortgage is coming up for renewal, are you planning to stay in town, in the home, in your job? What’s the longer term life plan…..because you don’t want to sign another five-year mortgage if you haven’t talked it through, or your penalties will be upwards of $20,000 if you change your mind!
Open a TFSA or RRSP: If you don’t have one – it takes less than half an hour with an online brokerage or your financial institution – that’s it. If your tax refund or other money comes in you have a way to invest it. If you don’t – that money is most likely going to leak out elsewhere.
Open an emergency savings account: You want a basic one week net pay to start. Not hooked to an ATM. But you first need the 15 minute to just open it and put 10 bucks in it. That’s a start – and the longest journey always starts with that first step!
It lets you get traction…because without it you’re not going anywhere…
Since Adam and Eve, every couple has had arguments in their relationship. But the topics of the arguments are an accurate predictor of divorce risk.
In a study of more than 4,500 couples by Kansas State University (for the National Survey of Families and Households), money, finances and debt are the big red flags to trouble. In previous studies, it’s been found that 70% of couples can’t go a week without a money-issues related fight.
In the words of Sonya Britt, assistant professor of family studies, “arguments about money is by far the top predictor of divorce.” That’s not actually breaking news, but just one more study to confirm what’s been known for decades.
The study actually controlled for income, debt, and net worth. It didn’t matter how much you made or how much wealth you had. Arguments about money are the top predictor for divorce because it happens at all income and wealth levels. Money arguments last longer, they’re more intense and it takes a lot longer to recover from them in any relationship.
The study found that the predictor is accurate right from the start of a marriage. No matter how long ago that was, money fights plummet the quality of a relationship. Then, the increased stress, even setting aside the impact on kids, leads to even less financial planning, less getting onto the same page, and exasperates the situation.
The Money Tools book has an entire section on relationships. The before, the during, and the after – if sadly it comes to that. The basics are that each couple needs to:
-have a joint bank account – yes, some don’t and it works fine, but for most it just becomes a ‘my money’ and ‘your money’ when relationships are about US as a couple and a team
-have their own ‘me’ money to blow or save. Whether it’s $30 or $300 – then nobody starts with ‘you spent WHAT on a manicure’ or how can you waste that much on dinner with your buddies.’
-have an agreement on what debts you’re working on paying off, and which ones you’re fine with at minimum payments, such as a credit line or the car or mortgage.
George Boelcke – Money Tools & Rules book – yourmoneybook.com
Last week, the 2nd annual survey by the National Payroll Association was released. Unfortunately, it’s bad news – and something we have been talking about a number of times in the last year.
According to the survey, 59% of people would be in financial difficulty if they missed one week of pay. Just think about that for a minute. One week of pay would cause a significant problem for almost two-thirds of workers. That figure is actually much higher for young people and single-parents.
Let’s be honest: If we can’t do without one week of income, we are really close to the edge, financially, and in trouble. With the national average income of around $45,000, take away 20% or so in taxes, and the average net pay a week is really about $700.
In other words, $700 stands between us and serious financial trouble. Just imagine what kind of stress that creates in our lives. It’s not a fun way to live. But we create our own mess, the mess doesn’t just happen to us. No, not consciously, but in the financial decisions we make, the debts we take on, and our priorities with money.
In the It’s Your Money book is a huge headline that says: It might take two minutes to spend it, but it’ll take years to pay off. It’s the debts and bills that are killing us, more so than our incomes, if we were to be honest with ourselves. In order to change things around, we can spend less, or earn more. Either one works, and both together change our financial situation that much faster.
If we wanted to, we can sell our car with the big payments by next week, and drive a $2,000 very used car until we’re debt free. Just not having that car payment is a huge amount of money that could go to paying off other bills. If we wanted to…
People don’t move until they’re fed up and mad with their financial situation. When we no longer want to live in the state we’re in, you’d be amazed how quickly we can turn things around. But until then, we keep confusing our needs with wants, and here we are: almost two thirds of us are on a financial cliff.
In relationships fights over money is one of the #1 issues with couples. It’s the biggest cause of divorces, and a huge contributor to male suicides. We hear this, we experience the fights, and we STILL keep doing what we’re doing? Does that make sense at all?
That’s not a life – that’s surviving, not thriving, and it’s not a fun way to go through life! At some point, all the stuff we’re still making payments on isn’t worth the financial pain we’re saddled with. But it isn’t that hard to turn around, if we focus, if we want to, and if we choose to be really disciplined for a year or two.
Step one: Do a written budget with your partner. Every dollar is planned, and nothing gets spent over and above the budget. It’ll really clearly show you where all your money is going. Right now, you think you know – but trust me, you don’t. Your goal is to cut your expenses by $150 a month – no matter what it takes.
Step two: Set up a separate savings account. The $150 savings, and whatever $20 or $30 you can find goes into this emergency account until you get one weeks’ pay in there. In three months, you’ll now be better off, financially, than two-thirds of the country, and your stress level will be seriously reduced.
A survey weeks ago by the Canadian Payroll Association found that around 60% of us live paycheque to paycheque. While their president stated he was very surprised that people were so close to the line, we shouldn’t be surprised at all. In fact, I believe the figure is actually higher!
Being poor and broke is most often a choice. We create our own mess, the mess doesn’t just happen to us. No, not consciously, but in the financial decisions we make, the debts we take on, and our priorities with money. I know that if I spill a cup of coffee, right now, this minute, I’m going to clean up the mess. That’s a cup of coffee – why don’t we take that same attitude towards our finances?
To change it around, we can spend less, or earn more. Either one works, both together change our financial situation that much faster. If we wanted to, by next week, we can make around $1,000 extra each month delivering pizza, the newspaper, or a bunch of other part time jobs. If we wanted to…
If we wanted to, we can sell our car with the big payments by next week, and drive a $2,000 beater until we’re debt free. Just not having that car payment is a huge amount of money that could go to paying off other bills. If we wanted to…
People don’t move until they’re fed up and mad with their financial situation. When we no longer want to live in the state we’re in, you’d be amazed how quickly we can change it around. But until then, we keep confusing our needs with wants, and just give our money to everybody but ourselves.
We’re like an ATM – two paycheques go in, and all the money quickly goes out to make every payment in the world, and we just hope that we’re not out of money before we’re at another payday. Everybody has their hand out for our money and we give it to them voluntarily, and then complain that we’re broke. That’s not a life – that’s surviving, and it’s not a fun way to go through life!
At some point, all the stuff we’re still paying for isn’t worth the financial pain we’ve taken on. At some point, hopefully soon, it has to become an issue of the heck with the cheeses, I just want out of the trap!
In relationships fights over money is one of the #1 issues with couples. It’s the biggest cause of divorces, and a huge contributor to male suicides. We hear this, we experience the fights, and we STILL keep doing what we’re doing? Does that make sense at all?
People know how to get wealthy and know how to avoid making their financial situation worse. But why don’t we take the steps to make it happen? The bottom line is whether we’re prepared to do what it takes to turn it around? If so, it starts with some easy steps that very few people take:
Sit down without the TV and the kids and do a written budget with your partner. Every dollar is planned, and nothing gets spent over and above the budget. It’ll really clearly show you where all your money is going. If the budget is $600 for groceries, $300 cash goes into an envelope or a jar for the coming two weeks. When that money is gone – you’re done spending.
Step two is to get an emergency fund of one week’s gross pay into a separate savings account. Stop being naïve – there will be an emergency. This small rainy day fund is critical. It will rain – you know that!
Step three is to focus on paying off your debts. No RRSP savings, no investments, no vacations, and you’re not seeing the inside of a restaurant unless you work there. But rather a 100% focus on getting debt free except the mortgage. The It’s Your Money book has an easy to understand section that has you list your bills smallest to largest, then every dollar goes to the smallest debt until it’s paid off. Then it rolls to the next one, and so on.
There was a survey done of the richest people in the world from the Fortune 400 list. Seven out of ten started with nothing. Their wealth was built entirely on their own, without inheritances. When they were asked what the number one key was to building wealth, the answer was always: Get out of debt and stay out of debt.
It might seem cruel, but if were to be honest with ourselves, would we agree with this line from Larry Winget’s book jacket: People want what they’ve got. It’s a simple formula: You have what you want because your actions produced your results.
Can you get out of the life of living payday to payday? You bet. Do you want to? I’m guessing we all do. Will you do what it takes to make it happen? Ah – that’s where 90% of people choose not to…