Friday, August 30, 2013

Finding Balance

In all the years that I’ve been coaching and advising people about their finances, the collective accomplishment for everyone, whether wealthy, struggling or somewhere in-between, has been balance.

Balance hasn’t always been what people have shown up looking for. The reasons that someone gets ready to do something different with their finances are wide and varied:
  • they’re sick and tired of living paycheck to paycheck,
  • they want to be able to figure out what the next right money move is,
  • they wish they could see where their money went,
  • they yearn to make more money, or
  • they just want whatever pain their relationship with money is causing in their life to stop.

When each of us begins focusing on our money, looking at where it’s going and thinking about where we want it to go, we can’t help but make little changes. You don’t have to jump in with both feet and go hog wild to make a difference in your financial life. Even taking little simple baby steps will begin to steer you in the right direction. If you make one shift in your money habits every month for a year, by the end of that year all of the changes will have accumulated to significant changes.

Along the way, an interesting phenomenon happens. As you clear away the money sludge that’s existed, you begin to realize what is at the core of what has been bothering you about your money. For many of us, until we get clear, everything bugs us. Extra car repair bills, the annoyance of selecting the right retirement investment plan, credit card bills that feel like quicksand and the list goes on. No matter where you are in your financial life, there is always something more you could do.

As you focus and begin to knock off one little problem, and then the next, its like washing a really dirty window; you begin to see with so much more clarity what it is that’s important to you. And that’s when you find balance. That’s when you embrace that you have enough, you are enough and you’ve done enough for today.

The more you begin to embrace that balance, the easier it becomes to get the next right thing done. My financial coach calls it “what's one sweet thing you can do today?” Doesn’t that sound easy? String together one little next right financial move after another, and before you know it, you’ll have found balance too. 

-Stacey Powell

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
Are you ready to reach your financial goals? Get motivated. Get support. Get results!

Tuesday, August 27, 2013

Savers Want Expensive Pretty Things Too

I’ve been tooting my horn a lot about being such a great saver. Not to say that I’m not. But it’s time for me to reveal some of my human weaknesses. Yep, humility here I come.

My favorite moment of weakness was when my husband and I were buying our first house. We ran our numbers and we decided, together, that we didn’t want to spend more than $200,000. That’s not much in California. We knew that the homes in our price range were going to need more than just a little TLC. But we were prepared to put our blood, sweat and tears into fixing up the place. That’s another story.

So, we met with our mortgage broker and she told us that we were qualified for a $400,000 mortgage. What?! Really?! That. Is. Awesome! The houses in that price range are SO much nicer. This is when I got distracted by pretty shiny things. My rational thinking went out the window and my emotions were in overdrive. We all want nice things, right? So, when a financial professional and the entire banking industry tells you that you’re eligible to buy more, bigger, better - It’s hard (no, practically impossible) to say, “no, I want less.”

At my core, I’m a small-quaint-house person. But the carrot dangling in front of me turned me into a big-fancy-house person. I was dreaming about moving into a house that wasn’t just turn-key, it was perfect. Luckily my husband wasn’t distracted for a minute. He saw me going over the deep end and he let me indulge in my fantasy for a minute. But after a couple of weeks, he sat me down and had a nice long talk with me about our house budget. It felt like Thor's hammer came crashing down on all of my newly found dreams. I hated him.

He reminded me that the banking industry determines how much we can afford based on our current lives, but they don’t know what our future lives look like. We knew that we would eventually leave town, rent out our house, and be unemployed for an extended period of time while traveling. He reminded me that a $400,000 house wouldn’t make those plans easy. He was right. It wasn’t a pleasant conversation. Honestly, it wasn't a pleasant couple of weeks afterward either. But it had to be said. And in the end, I was glad he said it.

It took us a while to find a house that was in our price range that wasn’t a complete dump. Seriously, a few houses were going to come crashing down with a big gust of wind, another one flooded every year, and the one with the great view was going to implode from a leaking oil tank. All of these dumps made it really hard to keep looking at houses in our budget. It would’ve been so much easier if we could’ve just spent $50,000 more. But it would’ve increased everything – the mortgage, taxes, insurance, maintenance…the list goes on…

We finally bought the cutest little cabin five blocks from Lake Tahoe for $180,000. Then we put another $20,000 in renovations (plus the blood, sweat and tears that I mentioned earlier). The best part is that we’ve never had a single moment of buyer’s remorse. It took us longer to find the house than we would’ve liked, but it fits perfectly into our lifestyle and into our budget. Which meant we were able to rent it out and be unemployed world travelers for six months.

We’re all human. Sometimes we can rein ourselves in. Sometimes we need someone else to rein us in. We rarely want to hear it. But sometimes we need to. 

-Leah Schonlank

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
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Thursday, August 22, 2013

Teenage Money Date Night, Part III: Judgment Free Coaching

I began “Teenage Money Date Nights” when Oliver’s brakes went out and I realized that I let her buy a 10-year old car without teaching her to immediately begin saving for repairs. Bad mom. Bad financial coach. I needed to immediately step up my efforts to teach her two of the most important things we all need to know: how to budget and how to save for predictable, but nonrecurring expenses.

Once a month we set ourselves an appointment and went to dinner at the super-cool Bows & Arrows cafe. We'd hang out afterward to have little working sessions. Being at Bows & Arrows set the stage for fun. Note to the parents out there: choosing a place that served wine was also a plus.

Date Night #1 was rough. Frankly, I wasn't too sure what I was going to teach her. I've taught tons of people, but I've never taught a teenager. I knew that lecturing wouldn’t help much; she was already getting lame “financial literacy” education at school. I knew what she really needed was what many of my clients need, someone to do the work alongside them and ask them the right questions. Ooooh, that’s what I needed to do, treat her like a client.

First task with a client: see them as a hero. I learned from Master Coach Maria Nemeth to always see the good in your clients, to know that they are on a mission in life and that it is your sole purpose to support them, to the best of your ability, on that mission. So when I decided to fashion our Teenage Money Date Nights like a client meeting, I knew I’d have to see Oliver as the hero she is. Which meant I had to set all judgments aside, even the ones about her buying ridiculously frivolous things and even the ones when she didn’t send her savings away like she said she would. It was not my job to judge; it was only my job to teach. 

It was hard; really, really hard. But luckily I listened to the little voice in my head that kept saying, “treat her like a client, treat her like a client.” That first meeting was the hardest. I think we were both nervous, didn't know what to expect and emotions were charged. By the end of the night, I could see that there were judgments hanging thick in the air, but interestingly none of them were mine. By the time Oliver had sketched her spending plan together and realized that it didn't work, she was upset and berating herself. I didn't need to; she was doing a good enough job herself.

My job became being the impartial teacher:
  • “Well, how far off is your budget?”
  • "Are there any spending categories you want to shave a bit off of?” 
  • “Is there any way to earn a bit more money?” 
  • “What would the risk be if you saved a little less for car repairs?”
  • “How close are you now?”

My job became being the truth telling cheerleader:
  • “Honey, many people's budgets are out of balance.”
  • “You're doing the next right thing by looking at it and calculating it.”
  • “If you keep doing this work, you'll get it in balance. It just takes a while.”
  • “Don't beat yourself up.”

My job became being the leader: 
  • “I think we've done enough for now. Let's work on it again next month.”
  • “I don't think we're going to come up with a final solution tonight, and that’s ok.”

I didn't push her for a workable solution. I knew it was time to walk away and come back to it before emotions got crazy out of hand. And I knew that she’d find the right solution on her own; clients eventually do. I taught her an important lesson I’ve learned, that there are few financial emergencies. Most financial issues, if dealt with consistently (and preferably in advance) have several potential solutions.

I showed up to that first meeting thinking I was going to be teaching her about money, but in the end I realized that it was just a little bit about the money. Mostly I was simply serving as a Sherpa, helping her navigate through her own ascent into the world and emotions of money.

-Stacey Powell

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
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Tuesday, August 20, 2013

Journey of a Spender and a Saver: A Bumpy Ride


In the beginning of our relationship, my husband and I would have a big fight about money approximately once a year. It wasn’t that we were holding it in for a year, we would have little “discussions” about money often, but once a year there was a biggie. The first one was the orange juice (part I). The second big fight was over a pair of jeans that he bought in New York and we fought about all through Europe. My argument was that he wasted $20 because he bought the jeans with the intention of getting rid of them in a couple of weeks. His argument at the time, was that they were only $20.

The challenge was that our value of money scales were so different: The spender thinks that $5 is nothing and $20 is barely anything. Whereas the saver, keeps every penny, because it’s one cent closer to a roll of 50 and it all adds up.

Fast forward eight years, we’re driving out to the coast for our anniversary and I ask my husband to refresh my memory about this long lost fight. He recaps defensively. I realize that something is still bothering him about that fight. He doesn’t talk to me for an hour. Fun times. Then after he’s had time to think back and sort his thoughts, the truth comes out...I wasn't ready for this one. 

He goes through all of the details again, along with the range of emotions that come when you’re angry, and finally lands on the real reason he’s mad – He thinks I’m a hypocrite! From his perspective, I was ragging on him for buying the disposable $20 jeans, when I bought a pair of leather boots that cost $127 (yep, he remembered) and the only time I wore them was on our trip. What he didn’t know was that when I bought them I planned on wearing them till they fell apart, but they ended up being horribly uncomfortable and made my toes go numb.

So, we talked about it for the rest of the ride… We now understand each other’s side of the story. And I’m embracing the fact that I’m a flip flop/barefoot girl and I accept that no matter how much I spend, the shoes aren’t going to be comfortable. So, I’m going to stop searching and save our money for something that we’ll both enjoy.

In short, these are the overarching lessons that we were reminded of:
  • No matter how long we’re together, it’s all about ongoing two-way communication.
  • While there may be some yelling, it’s best to talk it through sooner than later.
  • Compromise. Compromise. Compromise. On both sides.

- Leah Schonlank

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
Are you ready to reach your financial goals? Get motivated. Get support. Get results!

Friday, August 16, 2013

Teaching Your Teenager about Money: Part II

Last year I walked my kid through buying her first car. She wasn’t responsible for the cost of the car; she had some special savings that had been put away , but we did make her responsible for putting together a Quick Spending Plan before she got the car, and made it clear that she was going to be responsible for registration, a third of the insurance, general maintenance and all gas beyond the $70 monthly stipend we’re throwing in. If you’re old enough to drive a car, you’re old enough to do research on the cost of insurance for different types of cars, the mpg of the cars you’re considering, the estimated cost of gas and the cost of registration. 

The result, she chose a reasonable 10-year old starter car that costs her $200 a month (and only costs me $150); she put an earning plan in place to increase her $650 monthly income; she suffered through DMV; she is now officially a car owner and understands the costs that come with car ownership.

And then an interesting thing happened: her excess earning plan fell through. Instead of being upset about it, or railing about the unfairness of her plan not working, she moved right on to Plan B. Because she had put the plans together, she knew immediately what her hole was going to be, the unfunded part of her plan. And she immediately set about making a new Earning Plan. And that’s the value of teaching your kids about money. You've not given them a fish but instead taught them how to fish. She solved her own problem.

But wait, that wasn't the end of the lessons. The next lesson was for her, and for me too. As it goes with 10 year old cars, 3 months into owning the car she had a major repair. She discovered her brakes were worn down to the rotors. Total cost: $400. Ouch. A $400 car repair is a hard hit to many adults, and to a high school senior, well, ouch.

This is where my lesson came in. I wanted to rescue her. I didn't want it to hurt so bad. I felt horrible for her. I remember sitting at my desk that day staring out at the window and I just kept telling myself that the right thing to do is to let her weather this. It wasn't just the money; it happened on her way out of town for a holiday weekend at the beach with her friends. She had to turn around and come home. She had to wait to get the car fixed by a mechanic friend who could do it a little less expensive.

She was so sad. And I wanted to make it better.

In the end, I steeled myself and let her deplete her saving to repair the car, as hard as it was. It was a great lesson for me. I saw it as a fork in the road: I could be the kind of mom that financially rescued my (almost) adult child, or I could be the kind of mom that taught her to rescue herself. I scheduled our first "Teenage Money Date Night." We went to a favorite cafe, and I started teaching her about her overall spending plan and the importance of "savings silos." We calculated how much she should put in savings every month for car repair, because a 10 year old car will need repairs. I sure wish my dad had done that with me.

Oh, and I also gave her $50. Not for the car, but so she could have a "staycation" that weekend she and her friends were stuck in Sacramento while the rest of their friends were camping on a Mendocino beach. She felt a little better, and so did I.

- Stacey Powell

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
Are you ready to reach your financial goals? Get motivated. Get support. Get results!

Tuesday, August 13, 2013

Journey of a Spender and a Saver: Finding Common Ground

My husband and I are celebrating our first date & wedding anniversary this Friday and I'm feeling a bit sentimental. So, I'm going to tell the story of how we got on the same page about our finances. Romantic, right?

A little background: nine years ago we had our first date, one month later we signed a lease, three months after that we were engaged, and then married three years after our first date.

When I met my husband, he was a spender. No, that’s an understatement, he was a big spender. He spent a lot on everything and often. He made good money and smart investments, but at the end of the day he should’ve had more money socked away (granted that could be said of me as well, but that’s another story).

I’ve been cheap for a long time and it’s ingrained in everything I believe and everything I do. Don’t get me wrong, I splurge on some things, but I splurge with intention.

It was apparent early in our relationship that our spending/saving habits were very different and it was going to be an issue. We had to get on the same page about our finances. We both knew that it wasn't going to be easy. And I can't speak for him, but I knew that we had to address this immediately, especially considering how quickly our relationship was moving along. 

I still remember our first big fight about money – it was about a glass of orange juice. Have you ever noticed that a tiny glass of o.j. at a restaurant is around $5, but you can buy a half gallon at the grocery store for $2.50? My husband hadn’t and he didn’t appreciate me bringing it up at breakfast during our ‘we just started dating’ weekend getaway. He argued that he likes o.j. with breakfast, so he was going to have o.j. with breakfast. I argued that it was a huge waste of money and just because we want something doesn’t mean that we should get it. It was not a romantic weekend.

We learned a lot about each other that weekend…We huffed and puffed…We talked and talked…Then we moved on. He admitted that my argument was logical, but he didn’t care. I learned that this approach wasn’t going to work.

It was time to do some deep thinking. I asked myself, “Why do I save? How do I justify depriving myself of wants on a daily basis?” The answer was simple, travel. The more I saved on the things that I didn’t really care about, the more I had for travel later – a longer trip or a nicer trip.

I knew that I couldn’t marry a man that didn’t enjoy traveling with me. And I figured that if he loved traveling as much as I did, he may refrain from impulsive purchases and expenditures in order to save for adventures abroad. 

I decided to test my theory. Our first international trip together showed him that dreams can come true: we spent three weeks in Costa Rica jumping from one surf spot to another and staying at guesthouses on the beach. 

Hook. Line. Sinker.

My husband-to-be started to question his big ticket purchases: electronics. He realized that $500 on a new shiny electronic toy will only bring him a small amount of fleeting satisfaction, because it's outdated almost as soon as he buys it. He now sees that same $500 as a plane ticket to another adventure.

And the orange juice...he orders it when he really really wants it, but more often than not, he refrains because the white pineapple in Costa Rica tastes better than the glass of o.j. ever will. 

Lesson learned: Don’t tell him. Show him how it can be better. 

- Leah Schonlank

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
Are you ready to reach your financial goals? Get motivated. Get support. Get results!

Thursday, August 8, 2013

Teaching Your Teenager about Money: Part I

This is an intermittent series on the foibles and successes of teaching my kid about money.

Here’s the truth. I did a horrible job of teaching my child about money. If you read "Telling the Truth", you know I’ve come to this work because I teach what I needed to learn. And when my kid was young, I’d pay her allowance sometimes, and then I wouldn’t. Sometimes it was because I forgot; but sometimes it was because I didn’t have $10. Or I thought I didn’t. And I never clarified what the allowance was for, because I had mixed feelings about the purpose of an allowance. [Note: Big mistake! Always be clear about what allowance is for. If it’s just because they’re a part of the family, be clear about that too. Tell them why you’re giving them money, or what it is they’re earning it for.] My mixed feelings led to vagueness and inconsistency. I gave her young formative mind so many mixed messages about money; I did it all wrong.

As she reached her teen years, I began feeling pressure to make up for lost time. I needed to teach her as much as I could, as fast as I could, to somehow make up for the years I didn’t have it together, and I needed to do it before she left for college.

How do you teach a teenager about money? Imperfectly. I started a few years ago by sharing our household spending plan. I’m sure she glossed over the dull areas like Shelter and Transportation, but I’m also sure she was the only kid in her class that knew exactly how much she had to spend on clothes and entertainment every month. She knew that every July we’d lay low on movies and art supplies, our typical entertainment expenditures, because our fabulous State Fair was happening, an event that we happily spent the entire months’ budget on.

I shared, but not too much. I began to weave in numbers where appropriate “well, it’s the end of the month, so we only have $80 left in our food budget for the month,” or “we haven’t been clothes shopping for a while, so I think you have $105 to spend.” She didn’t always need to know the numbers, but I think it made her feel a part of some of the mechanics of how our household worked, financially. And where possible, I’d include her in decisions. If we wanted extra money to buy more fun stuff at the State Fair, we made a joint decision about how much to borrow from September’s entertainment budget.

And, if she learned nothing else from my proactively sharing our household spending plan, she learned that it’s ok to talk about money. That it’s just a normal conversation; a part of everyday life.

Stay tuned for Part II  - Coming August 15

- Stacey Powell

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
Are you ready to reach your financial goals? Get motivated. Get support. Get results!

Tuesday, August 6, 2013

A Constant Battle Between Time and Money

“There isn't enough time.”

My entire adult life has been a battle between time and money. When I’m working, I have money and limited time. When I’m traveling, I have all the time in the world and limited money. Since, I’m just back from traveling, I’m still trying to figure out how to squeeze everything into the limited hours.

“There isn't enough time.” The more I say it, the more I realize, I’m not managing my time well. I associate managing my time with being more productive at work. So in my personal life, I prefer to go where the wind blows me. Well, within reason. But lately, this has led to wasted weekends. Which in my opinion, is a great tragedy. The weekends are already too short.

I know exactly what I want to do on the weekends, but I’ve never mapped out how many hours it actually takes to do things. So, before my husband and I lost another weekend, we sat down and wrote out what our ideal weekend looks like, down to the hours: wake up late; have a leisurely breakfast; six hours outdoor recreation with dog, friends, family (four hours if it’s the day we have to clean the house); and then a relaxing dinner and movie.

Once we wrote it out, it became painfully obvious where our weekends were going…and I’m a little embarrassed that we didn’t realize it sooner or maybe it just put it in a light we couldn’t ignore. Anyways, we learned that our leisurely breakfast was taking much longer than it was supposed to, which was cutting into our fun time, and then we would rush the fun, to make sure that we had enough time to clean the house…yeah, I just said that…Yuck. So unsatisfying!

We now have a weekend schedule. That still sounds horrible. But, now we know what time our leisurely breakfast should end. If it doesn’t, we’re making a conscious decision to minimize our fun time, because the must dos, must get done.

Now, back to money.

Have you ever said “I wish I had more money”?

If so, it’s time to create your ideal budget. Stay with me.

I did this when I first started working at Finance Gym and it was…interesting. Then I did it again in more detail, when I was creating a new template and…It. Blew. My. Mind.

Confession time: I’ve never had a formal budget. I keep track of all of my numbers and review them at least twice a month. I know where I can cut if I need to. I always have a savings cushion, just in case shit hit the fan and also so that I can splurge when I want to. This has worked for me for decades. So, the idea of creating a budget seemed unnecessary.

Now that I work for a personal finance company, creating a budget seemed mandatory. It definitely wasn’t something I was looking forward to…but our budget template, starts with creating an ideal budget, which I had never heard of before and it intrigued me because I love dreaming about what can be and then making it happen.

So, your ideal budget focuses on all of the things that you want to have or want to do. Then you see how much income you need to make your ideal life a reality. Once you compare your ideal budget to your actual budget – light bulbs start glowing everywhere!

My Epiphanies:
  • We’re saving so much money by not owning a car, that I never ever want a car again. Ever. A car isn’t important to me. My husband’s going along with it for now, but forever isn’t in his plan. So, we’ll save for one. Plus, I’ll probably change my mind, when it’s pouring rain outside.
  • We spend a lot of money on travel. This is our passion, so it’s in the budget (actual and ideal).
  • We need to contribute more to our retirement. We’re not going to be young forever.
  • We need to earn more money. And now we know what our ideal earnings are so that we can afford our ideal budget, which of course includes lots of travel and recreation.

Because everything is better with a cow. Pushkar, India.

Are you spending your time and money on the things that you value most?

- Leah Schonlank

You can get our free budget template, by signing up for our newsletter HEREOr try the template that we created for the book. We only have a PDF right now, so break out your pencils. We would love your feedback.

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 

Are you ready to reach your financial goals? Get motivated. Get support. Get results!

Thursday, August 1, 2013

What Should Hobbies and Managing Your Money Have in Common?

Most of us have embraced one hobby or another at some point in our lives. Whether it be fishing, yoga, knitting, gardening, or working on a house. Our hobbies become an extension of who we are. We build a relationship with our hobbies. Friends may even tease “he spends more time with his fishing rods than with his friends.”

Whatever your passion may be, there was a point in your life that you knew nothing about it. Fishing is a great example, because even if you learned at a very young age, someone taught you and you continue learning. To become a master at fishing, you build a relationship with your new found hobby. Of course, you don’t think about it as building a relationship; you’re just doing it because it’s fun. You enjoy it.

But think about the things you do as you learn a new hobby:

  • Talk to others about how and where to fish,
  • Go to sporting goods stores to learn about equipment,
  • Ask for help from someone more experienced,
  • Read books, magazines and blogs about fishing,
  • Watch fishing shows,
  • Take a class,
  • Spend money on the right gear,
  • Invite your friends to fish with you,
  • Set aside a lot of free time to enjoy fishing.

As you learn more about your sport, you become more confident, you enjoy it more, and you then become a mentor to others. For those that become the most passionate about fishing, it inspires them in other areas of their lives: they finish their chores during the week so they have time to fish on the weekend; they rearrange their spending so they can buy more equipment; they earn more money or more vacation time so they can fish in far off destinations; they focus their life around their passion.

Now, what if you managed your money as if it was the hobby you’re most passionate about? It’s a bit of a stretch, but stay with me.

  • Who can you talk to about money?
  • Who can you learn from?
  • What can you read or watch to get learn about managing your money?
  • What if you took a course?
  • What equipment do you need to buy to manage your money better?
  • What if you got together with a group of friends to talk about money?

You can have fun managing your finances, it’s all a matter of how you go about it. You can sit alone in front of the computer, hating the fact that managing your money is a part of life, and wonder why your numbers aren’t doing what you want them to. Or you can learn more, get the tools you need, grab a bottle of wine, sit down with a friend and talk about what’s working, what isn’t and get some ideas about how to make your numbers better.  

- Stacey Powell

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
Are you ready to reach your financial goals? Get motivated. Get support. Get results!