Tuesday, December 31, 2013

Resolutions vs. Goals: Setting Yourself Up for Success

Goal reminder: me at my ideal weight. 

I love to eat! I live to eat.

When I was younger, my love of eating wasn’t as much of an issue because my metabolism could keep up…well, most years…that being said, my weight has always been an issue.

Back in the day, when I used to make New Year’s resolutions, my go-to was something along the lines of “eat less” or “lose weight.” I never achieved my resolutions. So, I stopped making resolutions, but I never stopped trying to control my eating and my weight.

It’s been more years than I can count since I gave New Year’s resolutions a second thought, but this year, I’m surrounded by people talking about New Year’s goals...Amazing how one little word can make all the difference in the world.

“Goals” I get!

I set and achieve goals for every aspect of my life, except my weight. Why is it common sense for me to set financial goals galore, but rocket science that I should set goals for my weight?

Of course, I’ve set short-term goals for my weight in the past, such as “I need to lose 20 pounds before bikini season/my wedding/vacation/family reunion…” Sometimes I’m successful, sometimes I’m not. But these don’t help me with my long-term goals.

New Year’s resolutions are supposed to be long-term goals that create a new healthy habit for an entire year, which turns that healthy habit into second nature for the rest of our lives.

If I were to make a resolution today, it would be “lose 25 pounds and learn portion control.” I can already tell you that that resolution is doomed to fail.

So, instead I’ve set measurable goals with action plans, including milestones, rewards, support and accountability:

  • Lose 25lbs by June 1, 2014. 
  • Then maintain a healthy weight of 135lbs till December 31, 2014.
Action Plan: 
  • I will track my daily calorie intake on a mobile app for the entire year. 
  • I will consume the recommended 1,200 calories per day to lose 5lbs every month for 5 months. 
  • On June 1, I will increase my daily intake to 1,600 calories per a day to maintain my weight. 
  • I will continue to eat healthy and exercise regularly. 
  • I have set monthly milestone reminders in my calendar. 
  • At the end of each month, I will reward myself with a $25 non-food related splurge if I reach my monthly goal. 
  • If I reach my overall goals on June 1 and Dec 31, I will reward myself with a $100 non-food related splurge for each.
  • My husband is my accountability partner. 
  • At the end of every month, I will tell him whether or not I met my goal. If I don’t achieve my monthly goal, I have to tell him why I didn’t.

I’ve been creating this plan for a couple of weeks, but it’s the first time I’ve written it down – this is totally doable! :) 

What goals are you going to set for 2014?

If you’re ready to turn your “spend less and save more” resolution into an achievable goal – We can help!  

-Leah Schonlank

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
We motivate. We inspire. We support. We help people change their lives by improving their finances.

Thursday, December 26, 2013

The Holiday Money Hangover and New Year's Resolutions

What would our lives look like if we could all accomplish what we manage to accomplish the month before December 25th all year long? With seemingly little additional effort we squeeze in shopping, baking, holiday parties, gift wrapping, deliveries, visiting, correspondence and a whole lot of extra spending. Oh, and a few favorite movies as well. (Mine’s The Grinch That Stole Christmas, what’s yours?)

And on December 26th, many of us wake up from the flurry of activity and excitement of it all and our bank accounts (or credit cards) have a bit of a hangover. Even those of us with supportive budgets and normally good adherence to them can get carried away. “Oh, I really should just pick up a couple of more things for the kids.”

Do you know who doesn’t have a hangover? Anyone who still uses the old-fashioned “Santa Saver” accounts of yesteryear. Those people have been putting $100, $200 or even more into their account all year long, and then voila, they magically have a nice little sum of money to fund not just gifts, but all of the other expenses that pop up during the month of December.

If you’re someone who has been challenged by getting into the savings habit, Santa Saver accounts are a great way to experience the wonders of setting money aside for what I call “predictable, but non-monthly expenditures.” It will not only make a wonderful positive impact on your 2014 holidays, it might also inspire you to start your own “silo” accounts where you save for other priorities that you know you need to, but just haven’t found the willpower.

There no better time that the beginning of a fresh new year to implement some fresh new healthy habits. Log into your bank and see if they have holiday savings accounts. Most credit unions do, while most banks have done away with them (yet one more reason I prefer credit unions over banks; they have services that support your financial growth, not just theirs.) If your bank doesn’t have one, another option is to set up an account at an online bank with an automatic transfer feature. I like ING Direct’s (now Capital One) feature that allows you to name your own accounts.

You might just want to name your account “My No Holiday Hangover in 2014” account, and resolve to do 2014 a little bit differently.

Happy Holidays!

-Stacey Powell

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
We motivate. We inspire. We support. We help people change their lives by improving their finances.

Thursday, December 19, 2013

Simple and Smart Year End Decisions to Reduce Your Taxes

This is the time of year I start getting questions like “Is there anything I can do to reduce my tax bill?” My answer is an emphatic “Yes!” Especially if you are a business owner. Even wage earners have a number of opportunities.

When I was planning this blog I decided to find a couple of really good sources to link to. After all, I’m not a tax accountant so surely there are some tax accountants out there with excellent lists. There are. And if you want some nighttime sleepy reading, just google “year end tax planning for businesses.” I couldn’t find one single source that I felt was simple and to the point. They were all ridiculously lengthy, highly technical and focused on mostly obscure expiring tax credits. Need I say more?

For your personal finances, I did find an excellent straightforward list at Kiplinger. Basically, maximize your retirement and other tax savings accounts, finalize your charitable contributions and buy health insurance on the exchanges prior to December 23rd.

And for the business owners out there, I made my own simple straightforward list. I think the most important thing to think about is that for every $1,000 you spend before December 31st, your final tax bill will be about $333 less. Conversely, for every $1,000 you don’t collect from your clients, your final tax bill will be about $333 less.

Now, there are all kinds of caveats on those statements. They only apply if you’re a cash-basis reporting business; it doesn’t actually save you money, it just defers it until 2015; and you have to balance your desire to hit 2013 goals with your desire to save money. Most importantly, you can only do this kind of tax planning if you have excess cash in your business. If your business is “living invoice to invoice,” you likely don’t have any cash sitting around with which to plan. But if you do, here are some simple recommendations:

  1. If you have any need for equipment or furniture in the next 3-6 months, buy it now. Section 179 deductions will allow you to write off the total cost of most purchases.
  2. Paying your estimated state income taxes before December 31st will allow you to deduct them on your 2013 federal return if you itemize your deductions.
  3. Pay every accounts payable you have due over the next month. If you really want to make an impact, reach out to a few vendors that you think might appreciate the cash flow and ask if you can prepay in exchange for a discount. You’ll save on your bill, and you’ll defer your taxes.
  4. Take your foot off the gas on any collection activities. It’s counterintuitive to good business practice, but now is no time to be hitting your accounts receivable hard. Every dollar you put in the bank over the next couple of weeks you will have to pay taxes on by April 15th. If those same dollars aren’t deposited until early January, you won’t have to pay tax on them until April 15, 2015. That sounds a little better, doesn’t it?
  5. Maximize your retirement contributions if you haven’t already. Just do it.
And, speaking of April 15th, there’s no time like the present than to do a rough calculation of what your tax bill is going to be. Those of you with rock star accountants already know the general range that will be due. For everyone else, pick up the phone and ask your tax accountant to estimate it for you. Or, roll up your sleeves, get your calculator out and use your algebra skills. [2012 Tax Bill/2012 Net Profit = x/2013 Net Profit] Solve for x.

Tax planning, short, smart and simple style.

[Big huge disclaimer: Everyone’s tax situation is different. To make the best tax planning decisions, talk to your tax accountant and CFO. Tax planning from a blog is just that; tax planning from a blog. But I hope I gave you some food for financial thought.}

-Stacey Powell

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
We motivate. We inspire. We support. We help people change their lives by improving their finances.

Tuesday, December 17, 2013

Happy Everything!

I love the holidays! Billions of little lights twinkle, fireplaces are roaring, snow blankets the mountains, strangers joyously greet each other in the streets, and the world, as we know it, will seemingly shutdown for the next couple of weeks.

This week is all about getting everything done before next week. Next week is all about family, friends, and food. Then BAM! It’s New Year’s. Nope. I’m not ready to think about that yet.

I’d like to savor next week: I will be sleeping in, playing in the snow with four-legged (and two-legged) loved ones, sipping apple cider next to a toasty wood burning stove, enjoying lively dinner conversations with my beloved family, and eating more than my fill.

Ahhhh…I can’t wait!

I’m not going to write about money this week or next week. Because no matter where we all are financially, this is the time of year to be grateful for the things we have and the people we love; to enjoy the wonderful things in life; and wish for joy, happiness, and peace for all. 

Happy Everything! To Everyone!
-Leah Schonlank

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
We motivate. We inspire. We support. We help people change their lives by improving their finances.

Thursday, December 12, 2013

Reflecting on 2013

It's that time of year where somehow, in the midst of the holiday parties, preparations and bustle, we also somehow manage to find time to reflect on the past year and start thinking ahead to the New Year.

When it comes to our money, one of the most valuable actions we can take is to set annual goals and then take the time to reflect upon them. To ask ourselves not just the quantitative "did I go over budget this year" or "how much did I pay down debt," but also the qualitative "do I feel good about the financial movement I made this year" and "what is the most important thing to me about my money moving into the new year."

I believe that when we treat our personal finances a little more like a business' finances, we get the clarity that comes from having well defined financial goals and a system put in place to review them. Any business that is smart and mindful about its growth has already developed their 2014 budget, and they've reviewed "how is 2013 going" every month this year. They'll be doing one final review in January and then forge ahead working on 2014.

What is your plan for reviewing your 2013 numbers and launching your 2014 budget and goals? In the Finance Boot Camps, we often ask the question "what would your hero do?" One of my financial heroes is a friend of mine who has a system that on January 1st of every year he carves out a portion of his day to look at his numbers for the year. For many of us, this would take all day long. For him, I suspect it’s fairly quick as he has the same routine as each month ends. Having that level of systematic approach to your personal finances keeps you from straying too far from your target and leaves you with the peace of mind of know where you are.

What should you look at? I encourage people to keep it simple. It's far more meaningful to look at your big picture numbers:
  1. How much did you earn?
  2. How much did you spend?
  3. How much did you increase your savings overall, and then in each category (retirement, reserves, other special savings accounts)
  4. How much did you decrease your debt?
  5. In each of those categories, did you do what you said you'd do? If not, why?
  6. What do you aspire to do differently (or the same) next year?
I've slated the morning of January 4th to answer these questions for myself. When would be a good time for you to answer these questions? 

-Stacey Powell

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
We motivate. We inspire. We support. We help people change their lives by improving their finances.

Tuesday, December 10, 2013

Talking About Money is Difficult

My dad read my last blog and asked me, “Why would you write these things for the whole world to see?” And then he pointed out, “it doesn’t make you sound good.”  

He has valid points.

The truth, especially the truth about money, isn't always pretty. I write about my money because:

I hope that my thoughts, experiences, successes, and mistakes will help others with their money.

I hope that my honesty, as unflattering as it may be, will make some people feel like they aren’t alone. And as one friend pointed out, will make others feel grateful for what they have.

I hope that it will get people to talk openly about their money, because it’s the best way to find a solution to their financial concern or simply find a better way of doing things.

I hope that people will chime in and give me advice or suggestions. Which happened this weekend and was super helpful.

He also said that the last one was too long. So, I’m keeping this one short and sweet. 

-Leah Schonlank

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
We motivate. We inspire. We support. We help people change their lives by improving their finances.

Thursday, December 5, 2013

Holiday Cheer

How would you like to experience cheer and joy with your finances during the holiday season?

Entertaining, stocking stuffers, extra travel expenses, cookies for the neighbors, decorations, office holiday party gifts, holiday grocery shopping and of course, presents… these are just a smattering of expenses that are about to edge their way into your spending plan over the next several weeks.

Whether you’ve been saving all year, plan to squeeze it into your regular monthly spending, plan to not partake in any of it, or have a credit card you use for the holidays, now is a good time to make a plan. Even if you don’t stick to your plan completely, just spending the time to fill out this handy holiday plan will provide you a road map for the trip you are about to take.

  • What are your priorities? 
  • What are your limits? 
  • What are your expectations? 
  • How do you feel about the money you’ve spent during past holidays? 
  • What could you do differently? 
  • And a favorite question from our Financial Boot Camps, what would your hero do?

This is my favorite Holiday Spending Plan: “Manage Your Holiday Spending” guide from the AFSA Education Foundation. It’s easy, just print it, take a walk, think it over, journal the above questions if you’d like, then get a pencil and a calculator and make your plan!

Enjoy the season!

-Stacey Powell

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
We motivate. We support. We help people change their lives by improving their finances.

Tuesday, December 3, 2013

Journey of a Spender and Saver: How to Stop the Nagging

I hate nagging my husband. I try so hard not to. But sometimes it's unavoidable. Especially when it comes to our money. 

My husband’s spending has decreased so dramatically over the past nine years that I feel bad when I bring up little expenses that pop up. But I know, that if I don’t say something, he won’t know, then I’m even more frustrated if they happen again, and we all know what happens when something is left to stew and brew inside. So, I’m a firm believer in talking about it before it becomes a bigger issue.  

I’m fully aware that the examples I’m about to list will seem like nothing to some of you. I also know that I’m going to sound crazy cheap, but…that’s probably because I am (compared to some). But I absolutely hate wasting money on little things that fly under the radar that I don’t get any pleasure from. So, here goes:

$1 fee for using his ATM card to buy something. Fees are unacceptable! It infuriates me that banks want to charge me to use my money, when they are making money off my money. We don’t incur late fees, usage fees, monthly fees, or interest. Period. 

$4.99 for a large pack of gum at the convenient store around the corner from his work that we could buy for $2.29 at Target, if he planned ahead. 

$200 a month spent on random out and about stuff, food, things, etc...We know what some of the expenses are and I nag because I disagree with his choice to spend money on them, he gives me the husbandly “uh huh” and then does as he pleases, because after all, it is his money. 

Yes, I heard the tone in that last sentence. The wifely tone and husbandly response is exactly why we have decided to start managing our money separately. After six years of me managing our money, my husband feels restricted and slightly resentful. I can’t blame him. 

So, we’ve separated our income into personal accounts. We split up our household budget 50/50. We each agreed to put 15% into our joint long-term savings per month. In addition, each of us is responsible for funding our own savings for a trip to Europe this summer for a friend’s wedding. If one of us doesn’t save enough, then that person doesn’t get go. Guidelines established. 

When we were discussing our new plan, my husband was confident that this was going to be a piece of cake. After all, his not-spending skills have come so far. But his saving skills… 

One day, he was daydreaming about how he was going to spend his savings on after Europe. He's always wanted a motorcycle, but it's never fit into our budget. Now, it’s his budget. After a bit of online window shopping, he realizes that if he spends his savings on a motorcycle, he won't have any savings left. Which means he won't have anything saved for our next trip, because there’s always a next trip. 

He just talked himself out of something in minutes that I’ve been trying to rationalize out of him for years.

Next step, he creates his very first budget. 

(Income) – [(50% of household expenses) – (long-term savings) – (his personal miscellaneous expenses)] = (Europe savings)

Realization: He can’t have his cake and eat it to. 

At this rate, he’ll only have enough for the flight and nothing for the trip. So, he heads straight for the “miscellaneous” expenses, because it’s the one category he has most control over. If he cuts it to $0, he’s solid. But that’s not realistic. So, first things first, he identifies exactly what ends up in this category, prioritizes, then cuts and trims. 

Once again, he’s just figured out in an hour, what I’ve been talking (sometimes nagging) about for months. 

I can’t wait to see what happens next. 

Oh, I forgot, I had realizations about myself and my budget too. Next time. 

Want more stories about our journey with money as a couple? Check out my other blogs “Finding Common Ground" and "A Bumpy Ride."

-Leah Schonlank

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 
We motivate. We inspire. We support. We help people change their lives by improving their finances.