What’s Your Monthly Nut?

Monthly Nut

The Wall Street Journal ran a great article by Carolyn Greer this week, From Spender to Saver to Investor. The financial media focuses so much on investing, it was refreshing to read an article about an every day person with every day money struggles. The story illustrated the exact type of family we strive to help.

 “A reader in Minneapolis has an all-too-common problem. Despite holding down a job in luxury-car sales for the past eight years, he struggles to save money.” The story went on to describe the exact circumstances of so many that I've worked with over the years:

• living paycheck to paycheck
• not living a life of luxury, and
• watch what they spend.

Why, one wonders, would someone who has a steady job and is careful about their spending still be struggling? That’s a question that perplexes millions of people about their own finances.

The answer is often found in their "monthly nut,” the amount of set expenses they have signed up for when they bought their home, car, private school tuition or any other number of financial decisions that we make and are then locked into for 5, 10 or even 30 years. You can tighten your belt month to month all you want. If your mortgage is 45% of your income, getting to the end of any month with extra money is going to be a problem.

I suspect that that is where the solution to Mr. Minneapolis’ quandary lies. His “monthly nut” wasn't mentioned in the article. If he was being honest about his obsession with careful spending, the only answer left is that his core expenses are too high for his income level.

Our financial health equation is simple:

Earn  >  Spend  =  Savings

When we talk about cutting back on our spending, we are usually talking about eating out less, watching our grocery bills and not buying so many new pairs of shoes. But the discretionary areas our spending, according to the Bureau of Economic Analysis, are often only about one-third of our expenditures. Shelter, transportation and health care comprise nearly two-thirds and thus have the biggest impact. I suspect that Mr. Minneapolis’ monthly nut includes a home that is more than 30% of his monthly income. 

Society encourages us to buy the biggest home we can afford. Mortgage brokers and Realtors persuade us, "keeping up with the Jones'" eggs us on, and our tax code puts the cherry on the top. "Oh, but I’ll be able to deduct more." Yes, yes you will.

If you really want to make an impact on the spending side of your financial health equation, get a pencil and paper out and do the math on what your financial situation would be if you bought a home that had cost 80% of the cost of your current home. And it’s of course not just the mortgage, but the total cost of your home impacts the cost of property tax, insurance, utilities and maintenance. The average cost of maintaining a home is around 1% to 3% of it's value. Price matters.

Did you do the math? What would your equation be? What would you do with the extra money you've not spent on your shelter?

“What would you do with the money” is the trick. If you're going to take that money and buy more shoes and dinners out, then you might as well just stay in your bigger home. But if you're going to take the extra money and use it on some important goals you haven't been able to reach, then perhaps its time to start hunting for a new home.

I can hear many people saying “hey, moving, selling and buying a home itself carries a cost with it!” True. If you're going to make a decision like this, you really need to be sure the math pencils out. For many, it will. If you really want to make an impact on your long term financial health, this is a decision that should be considered carefully. Even if you decide not to do it, simply considering it will give you a fresh perspective on your monthly quandary.

And don’t forget to make an honest assessment of the rest of your monthly nut. Shelter is most people's largest expense. Once you’re done with that calculation, move on to your next largest category. Is it transportation, children's tuition, vacations or some other area that is causing the squeeze on your financial health equation? Do that math too.

How much of an impact could you have on your financial health equation if you made one hard choice?


- Stacey Powell

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

Boring! (Financial Literacy Month)

I’m all about Financial Literacy; really I am. It’s a subject I’m wildly passionate about. And April is…you guessed it…Financial Literacy Month.

Does it make you want to go out and buy a new money book, read a new blog, or listen to a new podcast? I bet not. Because what about the phrase “Financial Literacy Month” inspires you to want to make a difference in your life? Breathe easier? Enjoy life more? Nothing. It just sounds like a lot of boring reading.

To riff on some of my favorite friends’ Burning Man camp name, I think the name Financial Literacy Month should be changed to “MoFuLeSu Month.” (More Fun Less Suck) Don’t you find that a little more inspiring?

I want more fun!

I want less suck!

You know what happens when you dedicate a little bit of your time to learning more about money? Yes, you become more learned and literate. But more importantly, your money starts to feel a little easier. It starts to make a little more sense. Dare I say, sometimes it’s even fun. I've had countless people declare with a jubilant and surprised tone “I did my numbers the other day and you know what? It was fun!”

Knowing stuff is fun. Remember learning to ride your bike? Fun. Algebra? Fun (OK, or whatever your favorite subject was.) Driving a car? Fun. Once we know how to do something, our lives become much easier. When it comes to money, we can all get along knowing just enough. But when we take the time to read more, listen more, or hire a professional to teach us, it all becomes easier and dare I say…fun.

The opposite of not knowing about money: suck. Here are some top of mind real world examples about how your money can suck if you don’t know enough about it:

• Your brakes go out and you have yet to learn about the importance of setting aside money for such things,
• You invest a ton of money in your good friend’s business who has promised you consistent 19% returns (and you convince other friends and family to join you),
• You let your mortgage broker convince you to buy the most expensive home you will qualify for, even though you have a little voice in your head saying “this doesn't seem right.”

We all make mistakes with our money at times and it sucks. The more we learn, listen and educate ourselves, the fewer the mistakes, the less suck, and the more fun.

So, during MoFuLeSu Month, go buy a new money book, read a new blog or listen to a new podcast. You’ll not only become more financially literate, you’ll probably have a little fun too.

- Stacey Powell

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

Light Your Debt on Fire

My friend Anne did an amazing thing last week: she lit her second mortgage on fire. It was a rite of passage that was the result of four years of persistence, prioritization and stretching out of her comfort zone.

I often weave Anne into my writing. Not because she’s fabulously rich, but because she’s fabulously consistent. And we all know from The Tortoise and The Hare fable who wins the financial race: the tortoise. When I met her, she was already living a life of intentionality. Every year, she would choose five birthday goals: three personal, two professional. With great care, she would set out and achieve them.

When I was curating my first prototype Finance Boot Camp, she was an obvious choice. I needed people in that group who were going to declare with honesty what they needed to do with their finances and then do it. I didn't know many details about her finances at the time. I didn't think she was in misery. But I knew she was like many of us, living a little paycheck to paycheck, not earning as much as she was worth and not prioritizing savings and retirement. And then the inevitable happened: her home needed a new roof. She had no savings. She had boxed herself into a corner. Either forgo the badly needed roof, which isn't really an option, or take out a second mortgage.

She hated doing it. She had long been on a mission to pay off her home, and was closer than many because she bought it in her 20’s and hadn't succumbed to the ever enticing “home equity windfall” that so many had. The thought of more debt was dreadful to her, as was the thought of another monthly bill.

In her words from her Facebook post:

"Five years ago I was stuck in a job I hated, $23K in debt, & barely able to make ends meet. I felt horrible. With the support and skills I learned at Finance Gym, I turned it all around. I'm SO much happier today -- on many levels. If finances are a problem, or you simply want to get better at planning, financial accountability and building toward your dream, please consider www.thefinancegym.com. It works. The proof is in the burn."

Every person who has ever been in a Finance Boot Camp has a story of financial transformation to tell, and I greatly appreciate that she always calls out Finance Gym as the impetus for her financial turn around. But the truth is, Anne has done all of the heavy lifting. She’s the one who gets the kudos.

If you want Anne’s secret formula to financial success, here it is. With great consistency:

1. Be honest about your financial facts with yourself and select others,
2. Be honest about your financial feelings with yourself and select others,
3. Find cheerleaders to help you along when it gets rough (because it will),
4. Take courageous action in finding work that you love, and that compensates you at a level worthy of your skills and talents,
5. With every salary increase or windfall, mindfully allocate it to savings, retirement and debt repayment, and
6. Be measured about your spending (not frugal, which leads to all or nothing behavior.)

Did I mention consistency? Above all else, the thing that has shifted Anne’s financial reality so dramatically is that she’s made her financial life a little bit better every single month. Over time, it’s added up to all of her debt being paid off (other than her first mortgage) and a substantial amount of money in retirement, savings and reserves. (Yes, that’s three different types of savings.)

Congratulations Anne! You’re an inspiration. I look forward to the ceremony when you light your first mortgage on fire!

- Stacey Powell

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

The Emotional Side of Savings

One of my favorite banking industry slogans is “We, The Savers.” Launched in 2008 by the cutting edge online bank ING Direct (now owned by Capital One), it pokes fun at our nation of non-savers. Three out of every four people in the United States don’t have the recommended six months of expenses saved. One out of every four don’t even have one month of reserves. 

Let me say that one more time. 1 out of 4 don't even have one month of reserves. We know we should, but few of us do.

When we hear these statistics barked from the media, most of us hear them as just that: statistics. We don’t stop to think about how it impacts our lives. Our car breaks down, and we have no personal safety net to get it repaired. That sounds so matter of fact, but if that has ever happened to you, you know that underlying the fact is a deluge of emotion, frustration, shame, annoyance or fear. And the impact comes not just from when we let it happen to ourselves, but we also have to feel some of the brunt of it when it happens to our children, coworkers, and other family and friends. There’s no faster way to a bad day than a sudden expense you were unprepared for.

When I was first tackling my financial issues with my own money mentor, every time I had a “my car broke down” issue (or whatever the issue of the day was), he wouldn't spend a minute talking with me about how to resolve the problem that I didn't have money in savings, and I didn't want to use my credit card. He would only talk about what I was saving, was it enough and how I could save more. Frustrating! I walked away from so many conversations with him completely annoyed, and ashamed because once again, I was in a financial bind.

But then, finally, came the first time that my car suddenly needed a major repair and I had enough in my savings account. It was a revelation. A relief. A moment of "feeling adult." I finally not just logically understood the importance of my savings, but more importantly, I understood the importance from a deep emotional place.

If not having enough causes frustration, shame, annoyance and fear, having enough brings a sense of ease, pride, and safety. What's your emotional experience of your money“

- Stacey Powell

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

Reach your financial goals. Get motivated. Get support. Get results. Are you ready?”

How to Save a Billion Dollars on Taxes!

H&R Block Bahooey

It’s that time of year again...tax time. And along with tax time comes the barrage of advertisements about who you should pay to do your taxes.

And OMG I passionately hate the particularly annoying advertisement plastered everywhere: “Get Your Billion Back America.” H&R Block has been running these super cute, super slick, super fun ads that let you know if you don't use them, you won't get your portion back. Your portion of a billion dollars! Wow! Makes you feel left out, doesn't it?

Advertisements like these play right into people's fears that they are missing some important deduction, that if they don't use a professional (or as they call them, “Tax Pro”), they'll be paying more to the government, that the tax code is somehow set up for you to have to be "in the know" to get all of the right tax breaks, and that you probably aren't smart enough to do it yourself.

For the majority of Americans, this is a bunch of bahooey. If you are like most people, have a job with W2 income and own a home, your taxes are fairly simple. Should you pay someone to get your taxes done? Well, if you have room in your spending plan and don't want to do it yourself: yes. But will the H&R Blocks of the world get you a bigger tax refund than Turbo Tax will? No. Absolutely not.

Frankly, I think they should be ashamed of themselves.

There's an ethical code you learn when you become an accountant. You're here to help people, not play into their fears. You're supposed to teach them, not tell them they'll never know how to do their own taxes.

Now, if you own a business, have rental properties, or any other special circumstances, then my opinion on professional vs. Turbo Tax is different. The more special circumstances you have, the greater the likelihood that you should hire a professional. The more you have at risk, the likely it is a worthwhile expenditure. But if you fit into one of those categories, the national tax franchises aren't where I’d recommend going. You can read my “where to go” recommendations on Forbes.com: Where Should I Go To Get My Taxes Done?

And, for those of you that who are on a limited income, and for whom paying a professional would be a hardship, research the programs that are out there to help you. The most well known one is VITA. You’re not going to get a hard sell there, like you do at the tax franchises. You’re just going to get some simple, straight forward, free assistance getting your tax return completed.

- Stacey Powell

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

Prioritizing Needs vs. Wants

I no longer need or want a dryer.

We need air, shelter, water, and food (in that order).

Survival rule of threes: You can survive for three minutes without air; three hours without shelter; three days without water; and three weeks without food.

Absolutely everything else is a want.

When it comes to my personal finances. I need emergency reserves.

Everything else is a want.

It’s so easy to get distracted by our wants because there are so many of them and they are so easy to fulfill. I want a new pair of shoes, the store is just down the street, and they’re only $50, done. The problem is that those shoes aren’t going to do anything for me in the long-run.

My favorite financial want vs. need dilemma was when my husband and I moved into our new house and there was no washer or dryer and our emergency reserves were just under my comfort zone. We went to the laundry mat for a month before a friend gave us a free washer because they had just upgraded. Then I wanted a dryer, but my reserves were my primary concern, so we started hang drying our clothes because it was summer and 100 degrees outside. Months later, I no longer wanted a dryer. It turns out that I like hanging my laundry to dry—it’s good for my clothes, the environment, and my pocketbook.

Designating my emergency reserves as my financial priority helps me put my life into perspective and I haven’t even gotten to the amazing emotional rewards.

My emergency reserves provide me with a sense of freedom. When shit hits the fan, I’m prepared. Just want to emphasize that I just used “when” not “if” because no matter what, shit will hit the fan. That’s life. And it’s not just when there’s an unexpected home repair, it’s also when I want to make a life change.

My emergency reserves provides me with choices. The choice to live my life as I see fit. This does not mean to buy the things that I hope will make my life better. I’m talking about the freedom to change careers, travel the world, or even start working as a consultant.

The absolute best part about having emergency reserves is not worrying. When I have less than three months of reserves, I’m constantly stressed that something will pop up, because expenses are always popping up. When I have six-months socked away, I can focus my energy on the important things in life, because I’m not constantly worried about my emergency reserves.  

What's your financial priority? 

-Leah Schonlank

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

Reach your financial goals. Get motivated. Get support. Get results. Are you ready?

#Debtfree2014

I have long believed that the reason so many of us feel stuck financially is because we don’t talk about money. I write about it all the time. I think the single most important thing you can do to change your financial position is to find someone to have a constructive conversation about it with.

So imagine my surprise this month when I (for the third time) was making a concerted effort to engage in Twitter (I feel so old) and found people on Twitter talking about their money. I knew there were people like me, financial experts, using Twitter as a platform for their business. But I wasn't expecting everyday people telling their friends about how they've paid off another credit card, made their final car payment or sharing the actual amount of debt they've paid off.

One particularly courageous soul (@famdebtjourney) links to her blog where she’s declared 2014 the year to put it all out there and share her family’s story about their journey to get out of debt. Beginning with a blog in January, My Family's Debt Journey itemized their debt:

• Credit Card Debt:           $27,102

• Auto Debt:                     $16,173

• Mortgage:                     $133,968

Can you imagine posting everywhere your truth? That’s laying the gauntlet down! Making that kind of public declaration will no debt propel them, and hopefully provide inspiration when the going gets rough. Just like a diet, becoming debt free is a journey with peaks and valleys for sure.

Who would you be willing to share your numbers with? Do you think it would propel your financial health?

-Stacey Powell


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

Reach your financial goals. Get motivated. Get support. Get results. Are you ready?

Why Do We Need to Hit Bottom to Change?

For the past couple of months, I’ve been trying to figure out why I (and so many that I know) need to hit a bottom before we implement change.

My current personal quandary is my behavior change due to the current drought. I consider myself water conscious. I’m very aware of our household water usage. And more often than not, I find myself asking someone (friends and strangers alike) to turn off the tap when it’s running unnecessarily. That being said, I also know that I could be doing a lot more.  

For instance, I’ve known for years, that I should implement grey water usage at home. Years! But it wasn’t until last month when Governor Brown declared the current drought a state of emergency that we finally started using our perfectly good grey water at home.

Step one: We switched from environmentally friendly detergent to grey water friendly detergent. Easy to find and reasonably priced at Trader Joe’s.

Step two: Was already done! This is the part that blew my mind. We were already set up for the biggest change, we just had to make a little extra effort to actually do it. Our washing machine already drains into a utility sink, which makes it very simple to stop up the sink and bucket out the water to water the lawn and plants.

The most ironic part of all of this is that we stopped watering our lawn last spring to save the water since we’re planning on replacing it with drought-resistant landscaping. Now that we’re using our grey water, our lawn is starting to come back.

Now, back to money; because everything relates back to money.

Why do we need to hit a bottom before we do something different to change and make our money better?

I’ve talked to so many people that say “I’m good” when I ask them about their money, but when we start diving deeper and asking more questions, they reveal that they’re not doing so good. Turns out that they’re just making due and they just don’t want to deal with it. For most of us, it isn’t till we hit our own personal bottom that we really change anything. And that’s okay. To each his own and all in good time. 

But I want to ask you: What is your bottom? What does it look like? And do you really want to be there before you start making things better? 

-Leah Schonlank

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

Reach your financial goals. Get motivated. Get support. Get results. Are you ready?

Why I Love My Credit Cards

A number of experts recommend that people go all cash to learn how to manage their budget. It seems to work for many, but it doesn’t work for me. Personally, I rarely keep more than $20 cash on me when running around in my daily life. I’ve found that when I have $100 in cash, it just disappears. I save all my receipts and still can’t figure out where all of it went. When I keep $20, it seems to last forever.

So, these are the reasons I love my credit cards:

Tracking

I can see every single little thing that I’ve spent my money on all in one place. I can easily see if I overspent on one category or another. I’m also reminded of purchases that may have seemed justifiable at the time, but a month later, give me reason to question my logic.

Convenience

Remember back in the day when people wrote checks at the store and the minute you saw the checkbook come out, you started looking for a new line, because you knew it was going to be a while. Now, that’s how I feel about cash. First the customer has to count it, then the cashier has to count it, then there’s change, or the dreaded “oh wait, let me give you a nickel” scenario. Credit cards are so much faster. No counting required. Swipe. Yes. Sign. Go.

Protection

If I lose my credit card, I can cancel it. If something goes wrong with a purchase, I can dispute the charge. If someone else uses it, the credit card company won’t hold me responsible. Some cards even insure the things that I buy with it.

Rewards

Cash Back. I earn 1-3% cash back on my purchases. And it may not be a lot, but it’s considerably more than 0. I pay my household bills with my credit card for the cash back every month. I even charged the down payment for our car for the cash back.

Plus, some of the sign-up rewards are incredible! My husband and I each signed up for a new credit card the other day because they were offering $200 cash once we spent $500 on the card in the first three months. So we spent $1,000 combined on things that we would’ve purchased no matter what (food, gas, bills, etc…) and they credited us $400 cash. 

It’s always important to remember that ‘they’ (the financial lending institutions) are in the business of making money. They provide these incentives to lure people in and they are betting on the majority to hold a balance so 'they' make money on the exorbitant late fees and interest. Don’t fall for it. If you don’t have the cash to pay it off, don’t use the credit card. 

Speaking of which, that’s the perfect segue into the things I don’t do to make sure my credit cards and I continue to have a healthy relationship:

• I never keep a balance on a credit card. Ever. I pay every single month’s balance in full and on time. Credit cards are a very slippery slope.
• I don’t pay annual fees. It’s not worth it.
• I never spend money that I think/plan/expect I’ll have later. I only spend what I know I have now, can afford, and will have in a month when the bill comes due.
• I don’t authorize indefinite auto-payments on my credit card. If there is something that has to be an auto-charge, I track it very carefully to ensure there aren’t any glitches in the system…Ahem…over charges, fees, or extra charges.
• I double check all return credits to ensure that the money is actually being credited back to my account. As we all know, technology isn’t perfect. So, I keep all of my receipts to remind myself when I need to check. It’s my money, it’s my responsibility.

In short, I use credit cards because they save me money and they help me track my spending. 

-Leah Schonlank

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

Reach your financial goals. Get motivated. Get support. Get results. Are you ready?

Sudden Wealth and Mindfulness

What would you do if you won the lottery? Or a jackpot? Or, a more likely scenario, received an inheritance?

The statistics surrounding sudden wealth are remarkable:

•  Family money rarely survives three generation, with 70% evaporated by the end of the second generation and by the end of the third generation, 90% of the wealth is gone.
• Those who receive inheritances in their 20s, 30s and 40s only save about half of the inherited money. The other half is either spent, given away or lost investing.
• Lottery winners in one large study in Florida were found to be twice as likely to have declared bankruptcy within five years of their win than those who hadn't won a lottery.

In my years of working with clients around money issues, I've worked with those who have received large inheritances, small inheritances, large jackpots, and significant insurance settlements.

The first sudden wealth client I ever had, I must admit, I was not yet experienced enough to be guiding them. It was early in my career, but at the time I reasoned that they were refusing to go to anyone else; they trusted me because of a mutual friend. I led with what I knew to be sage advice: don’t make any sudden decisions. Carve out a small percentage for mad money, and then let’s look at the long term choices and implications. By the time I got them back on the phone later that month, they’d spent, loaned and gifted half of their winnings. It doesn't take a rocket scientist to figure out what their trajectory was going to be. They were one of the above statistics.

As I've gained more experience, and spent more time learning about our behaviors with money, my experiences with clients have become much richer. Some of my most rewarding experiences have been working with clients who came to me with a goal of “honoring their inheritance” that was received from a cherished and loving family member.

Some have honored their sudden wealth by being good stewards of the money, carving out an amount they were committed to saving, and not touching it. Others have honored the money by choosing something really special to spend it on. Still others used their sudden wealth to wipe their slate clean on debt that had been weighing them down.

Of the clients that I've worked with that looked back and felt good about their decisions, they had one thing in common: mindfulness.

They thought about and talked about what they wanted to do, they made a plan, they looked back from time to time to see if they were sticking to the plan, and they were honest with themselves (and me) about areas that they veered from their plan.

If you've found yourself in a place of sudden wealth, here’s my advice:

• Become a student – read a book on inherited wealth or lottery winnings;
• Hire a trusted and certified professional – it will be well worth the investment;
• Start a journal – write or draw your intentions for the money;
• Set look-back milestones – monthly at first, and then quarterly, look back and see if you are using the money within the intentions you set.

The spiritual axiom “how we do one thing is how we do everything” can become our crystal ball. If in the first few months of your sudden wealth, the money was spent outside of your intentions, it’s time for some truth-telling. Draw, or spreadsheet, or however you are able to see into a crystal ball what the path will be of your money. It will likely look very much like it did in those first few months because, how we do one thing is how we do everything.

More than anything, though, I urge you to bring mindfulness into your financial life. Five, ten, twenty, even forty years from now you’ll look back on the decisions that you made. If you practiced mindfulness with the money, you’ll feel good about your decisions, no matter what those decisions were.

-Stacey Powell


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

Reach your financial goals. Get motivated. Get support. Get results. Are you ready?

To Debt or Not to Debt?

My very wise uncle, is a firm believer (and promoter) that if they’ll loan it to you, borrow! Especially, if they’re loaning it for less than you’ll make on it. I should note that he is not a professional money guy, he’s a lawyer, so we take everything he says with a grain of salt. 

That being said, I agree.  

But then I hear some money guy (it always seems to be a guy) on the radio telling the world: Pay off your debt now! Pay off your house now! Live debt free! And it reignites a yearly discussion between me and my husband. Which of course is a good thing. Just because we’ve done something for years, doesn’t mean that it’s still the right decision…So we discuss. 

Should we pay off our mortgage early? 

The answer was “no” when we bought our house and it’s been “no” every year since. We pay a little extra every month, but we don’t have any plans on paying it off early. Our answer is based on our circumstances: we bought a small fixer upper in a good enough neighborhood, close to the bottom of the market, for a low price and locked in a low interest rate. 

When we bought the house, we decided to get a 30-year fixed loan rather than the fashionable 15-year with a lower interest rate because we wanted to lock in the rate for as long as possible, because you just never know what the future holds and we can always pay off the 30-year sooner, but we can’t extend a 15-year. 

In addition, we plan on buying another house during the next recession and we can’t do that if our money is tied up in our first house. 

At the end of the day, everyone’s circumstances are different. It’s up to each of us to determine what’s best for ourselves. And I’ve found that the best way to figure something out is a good old-fashioned conversation over a massive cup of tea. 

-Leah Schonlank

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

To Hire or Not to Hire a Tax Professional?

Ah, January. The beginning of the month is all about starting new and fresh…we’re all full of hope… ready to make our world a better place...Then the tax forms start showing up and reality hits us square between the eyes.

Taxes…

I do my own taxes, because overall, I don’t mind doing them…I may even enjoy it…I always learn something…and I always feel a great sense of accomplishment when they’re done. I'll admit that every year, there’s at least one moment where I’m reading through the tax codes about something and I want to pull out all of my hair and pay someone to do my taxes for me. But every year, I make it through and the numbers work out in my favor.

Well, until last year, when we had to pay additional taxes for the first time. Which of course made me think that my husband and I are finally at a point in our lives when it’s time to pay a professional to do our taxes for us.

There are easy tax years, when I know that I can ignore my taxes till April 1^st and get them done in one night (those years aren’t as common anymore). Then there are the more complicated years, when I need to start in January because there’s a new and exciting taxable something or other in our lives that I need to deal with.

This year is going to be one of the complicated years because I need to learn about depreciating a rental property. Fun for the whole family… Just a quick glance at the IRS Depreciation of Rental Property webpage and I’m convinced that this is the year that I hand it over to a professional.

That being said, I’m still going to do them myself first so that I’m at least familiar with the rules, regulations and numbers and then I’m going to hire a professional to do our taxes. 

My decision to hire a professional was further validated when I started asking people about their taxes and the general consensus is that the people who have a tax professional consider them an absolute must. 

Looking forward to saving some money on taxes this year. 

-Leah Schonlank

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

Reach your financial goals. Get motivated. Get support. Get results. Are you ready?

Speaking Your Numbers Out Loud

We all have different ways of learning and digesting information. Some of us are visual, others auditory and still others kinesthetic. Yet when it comes to knowing where we are with our money, there’s usually only one way of learning what where we are financially: by reading reports. 

If you’re a visual learner and good with numbers, then financial reports are probably a great way to anchor yourself in where you are financially. For everyone else, though, financial reports just might be saying to you “blah blah blah blah,” much like the Far Side cartoon from the 90’s.

In my years of working with clients, I have often incorporated different approaches to teaching clients their numbers. At Creating Answers, we not only give clients reports, but we read them to them, have them read them to us, draw them on the wall, and sometimes have them write their numbers down themselves. 

My most remarkable memory of the impact that this had with a client was with a client on her first visit. Admittedly, I was a little nervous about how I could help this client. She was extremely successful financially, as in multi-million dollar success; her industry was one that I’d had very little experience in, and I knew that she already had some very highly respected consultants advising her in her business. I wasn’t sure I was going to have much more to offer than she was already receiving. 

In her first meeting, I handed her the financial reports and proceeded to walk her through them, asking her to speak the numbers out loud to me. She was floored. She’d been looking at her financial reports for months, but had never really understood them the way she did after she spoke them out loud to me. 

There’s a huge body of work out there that explains the brain science behind all this. But that’s not my passion. My passion is to help people really understand and know their numbers. If you want to have a different experience with your numbers, try a method you’ve never tried before. Here are some ideas:

• Get a pencil out and transcribe your major numbers: income, major categories of expenses, and net income.
• Take your monthly financial report and go stand in front of a mirror and read it out loud to yourself.
• Get some crayons and butcher paper and draw your assets and liabilities in a chart or graph.
• Look at your 2013 income, expenses and growth of your assets and liabilities and write about 6-10 sentences about how you did last year (e.g. “my business earned 116% of what we budgeted” or “I have $3,400 less debt than I did at the beginning of 2013.”)

Keep trying a method until you find one that really speaks to you. Have some fun with it. And most of all, embrace the fact that truly knowing where you are financially is empowering and motivating. 

-Stacey Powell

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

Reach your financial goals. Get motivated. Get support. Get results. Are you ready?

My Experience Buying Bitcoin

We researched. We read. We watched. We discussed. We figured that this was as good of a time as any to get our foot in the door. So, my husband and I bought some Bitcoin over the weekend. Only $100 worth to get our feet wet and learn the ropes of this brave new world.

An interesting thing happened when we started the process, because yes, it’s a process to buy this digital currency that works outside of the financial institutions that we know. 

There are a number of ways to acquire Bitcoin. First you have to create a wallet and it can be stored online or on a device. Once we had a wallet, my husband’s first attempt to fill our wallet was to ask our friends via facebook to send us a small amount, pennies even, just so we could test out using our wallet and transferring Bitcoins. No go.  

Second attempt, my husband was a gamer in his younger years, so he decided to try buying Bitcoins through a game broker. I doubt this is what they’re actually called because I don’t understand how this option works, but he seemed to think it was going to be easy enough. It wasn’t.

Third attempt, buy through a Bitcoin broker that requires a bank account number and credit card attached to our wallet. Not our first choice because of security concerns. But it was the easiest, or at least the most straightforward. 

So, we addressed our main security concern (really the only one we can do anything about) by opening a bank account that is just for buying Bitcoin; it has little to no money in it and it isn’t connected to anything else. 

We were ready. Or so we thought. Right as we're about to hit the button that started the verification process of attaching our bank account to our Bitcoin wallet, my husband says “Wait!” Which was a surprise considering that 1) he’s been the main driver on us buying some Bitcoins and 2) we were so close to finally buying some Bitcoins after trying for more almost two weeks. 

He was having second thoughts because it’s new to us and it’s entirely digital, which leads to greater security concerns. Even though we had taken some precautions, he was still concerned. Which is justified, considering that 70 million Target customers were affected by the recent security breach. But on the other hand, the Target breach proves that nothing is safe. 

So, we took the conversation to the place of no regrets. Under what circumstances would we regret our decision when we’re 70?

Scenarios:

1. If Bitcoin goes through roof like the experts predict, then yes, we would regret not getting in when we could. So, we should BUY.
2. If Bitcoin tanks and disappears, will we regret spending $100 on Bitcoin to try it out? No. So, we should BUY.  

Both scenarios point to buying a small amount of Bitcoins. No regrets!

My husband and I were reminded of one of our core life principles: we have to continuously push ourselves and do things that are new and slightly scary, so that 1) we don’t become obsolete and 2) we don’t end up 70 years old wishing we would’ve done things differently.

Living life with no regrets!

-Leah Schonlank

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

Reach your financial goals. Get motivated. Get support. Get results. Are you ready?

Money and Sex: Normalizing the Conversation

When I was a teenager, I remember closing myself off in my bedroom to listen to Dr. Ruth’s pioneering radio show on sex. No one talked about such things! It was shocking. And somehow, normalizing. There were real people, getting on the phone, asking questions and admitting that they had questions and uncertainties. Wow, me too! I learned a lot from Dr. Ruth and from all of the callers.

Money and sex are a lot alike. No one talks about money. No one wants to admit their uncertainties. Most people feel they should know so much more, that their money situation could be so much better and that they are the only ones. But as with listening to Dr. Ruth, once you spend some time listening to your peers about how they feel about money, you feel some relief. “I’m not the only one.”

As a financial coach, I’ve experienced over and over new clients walking in and before the end of their first session, grabbing the Kleenex box. Talking about your money is cathartic as well as motivating and clarifying. But wow, is it hard and scary. I’m not sure why it is that we’re so fearful. It’s as if something is going to break if we tell someone else how much debt we have, how much we earn or how much we have (or don’t have) set aside for retirement. It’s a shared fear for most of us.

And if telling a financial professional isn’t scary enough, can you imagine what it would be like to tell an entire group? I’ve led countless mastermind groups through the process and it’s always so interesting and inspiring to watch everyone’s financial growth as they first admit to something they don’t know and then share some truth about their finances.  I think it must feel a little like I felt as a teenager, closing my door and listening to people talk about something I never thought I’d get to hear them talk about. I think a lot of people who’ve joined a Finance Boot Camp must think “Wow, me too!”

Here are some of my favorite strategies and resources to help you normalize the money conversation:

• Join a support group: we of course love Finance Gym’s Finance Boot Camps, but Debtors Anonymous is a good option too.
• Take a class: Dave Ramsey’s Financial Peace University groups have been successful for many or look into your local learning center for classes on investing and other financial topics.
• Find someone to talk to: we of course love Creating Answers’ financial coaching, but there are also excellent professionals trained in financial recovery counseling, and CFPs who prioritize money conversations over charts and graphs.
• Set a “Date Night with Your Finances:” ask someone you respect to mentor you by joining you once a month to talk about your money.
• If you’re married, set a “Date Night with Your Finances” with your spouse. Once a month set a date, get out of the house, go somewhere special and talk about your money. Not the nagging “why did you buy this?” conversation, but the supportive “these are my hopes and dreams and fears” conversation.

And if you just can’t bring yourself to talk to other live people then take your radio into your bedroom, shut the door, and listen to a radio show on money.

-Stacey Powell

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

Reach your financial goals. Get motivated. Get support. Get results. Are you ready?

Have Your Cake and Eat it Too!

Or in my case, a doughnut.

Turns out that budgeting calories is very similar, if not, just like budgeting money. I can already hear some of you saying “duh,” but this is new to me, because I’ve never budgeted my calories before. It’s been over two weeks now and Oh. My. I’m loving this!

I wanted a doughnut. I ate a doughnut. And it tasted like sweet victory!

RELATED: Resolutions vs. Goals:Setting Yourself Up for Success

If I were on a diet, I would’ve wanted a doughnut, but I would’ve told myself, “no, I can’t, because I need to lose weight.” Then I would’ve wanted it 100 times more. My willpower may have held on for a week or so, but I would’ve broken down sooner than later, because all I’ve thought about for a week is that one stupid doughnut. When I finally got to eat the doughnut, it would make me feel weak and guilty. I would continue on, just long enough to reach my short-term weight goal and then I’d revert back to my old habits. Eventually the weight would come back. Cycle continues. 

Diets don’t work. Yes, I know, this isn’t news. I suppose I had always considered counting calories just another form of dieting...but after doing it, I realize it's just a method to educate myself so that I can make informed decisions. Which of course, is exactly how I already feel about budgeting my money. 

                RELATED: Budget for the Life You Want

So, back to the wonderful calorie budgeting present. My doughnut was 300 calories. I could totally work that into my calorie budget. I had so many options:

1. Doughnut replaces my breakfast.
2. Doughnut is an afternoon snack, so I have to cut a little from lunch and dinner.
3. Option 2, but I cut a little less from my other meals and exercise a bit more/harder.

Based on timing and circumstances, I went with option 3 and I enjoyed that doughnut completely guilt-free. OMG! Writing that sentence feels amazing! That's an accomplishment! 

Disclaimer: I get a doughnut craving about once every couple of months…My options would be very different if this was a daily or weekly craving, because I know doughnuts aren’t good for me, even if they fit into my calorie budget. That’s a whole other blog.

Options are everything! The truth is in the numbers.

When you need to save money for something fabulous, determine how much you need, cut a little here, cut a little there, earn a little extra, and voilà, you’re enjoying your tropical vacation worry and guilt-free.

But first you need to know your numbers. Get our ideal life budgeting tool for free when you subscribe to our newsletter. It’s all free and we promise not to spam you.

-Leah Schonlank

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

Reach your financial goals. Get motivated. Get support. Get results.