Should I Save or Pay My Debt Off First?

Welcome to The Finance Gym Action Plan for a Better Life with Money video series. My name is Stacey Powell, and if you’re ready not just to know better but do better with your money, you’ve come to the right place.

Lately, we’ve been talking about the four letter word “debt”. How to stop using debt. Today I’m going to talk about how to, both, stop using debt and how to pay off your debt. I get asked this all the time. Now should I pay all my debt down first and then start saving? And in fact, if you watch Dave Ramsey, he says to save $1000 and then do nothing but pay down debt whether you have $5000, $20,000, $60,000.

I disagree. I think that it’s really important that you pay your debt down at a rate somewhere equal to what you’re saving. Because if you don’t have savings set aside, it’s like Groundhog’s Day all over again. Emergencies are going to happen. They are always going to happen, and you’re going to need a way to pay for the emergency. If you made a commitment to stop using debt, but you have an emergency, and you have to keep going back to the credit card, energetically, it just doesn’t work. We all think a lot harder about what our options are when we have to take money out of our emergency savings account than if we just pull our credit card out.

It’s something like needing a root canal and you don’t have savings. Well, I’m certainly not going to tell you that this is the moment to absolutely stop using your credit cards. But if your TV breaks, stop watching TV for a while. If your tires go bad, well, you know what? Maybe it’s time just for a couple of months to put used tires on or take public transportation or borrow somebody’s car. There are always options out there and we look at the situation differently when we're using our savings account rather than our credit card or getting the help from some other place.

So my recommendation when it comes to paying down debt and saving is: if you’re paying $500 to bills, put $500 into savings. Make sure you’re building your savings at a rate somewhere equal to the amount that you’re paying your debt down.

As always, these things aren’t easy to do on your own. If they were, you would have done it by now. I would love it if you would join us. We have a support group on Facebook called Team Do Better. It’s private. The only people that are in there are people just like you who are ready to do something different with their money life.

You can also sign up for our newsletter at TheFinanceGym.com or subscribe to our YouTube video series right here and be sure to watch next week when I give my one last final great tip about how to get out of debt.

The Golden Rule of Buying Stuff

Hi. Welcome to The Finance Gym Action Plan for a Better Life with Money video series. My name is Stacey Powell, and if you’re ready to not just know better about your money but do better, then you’ve come to the right place.

Today we’re going to be talking about the golden rule of buying, and it comes out of the chapter of the book called Buying Stuff. In that chapter of course at some point, I get around to talking about buying a home, buying a car, buying a college education.

But at the beginning of the chapter, I take us all the way back to what we should have learned when we were kids, what hopefully some of our parents taught us. But we know most of our parents, they didn’t teach us this stuff. So now it’s time to start learning, and I start by teaching you about how to buy a bike.

Maybe it’s a $500 bike, $100 bike. You could spend $1000, $3000 on a bike and so what I ask you to do in the chapter is practice some mindfulness techniques when you’re buying. My golden rule of buying is ask how much and get 3 quotes. That’s not just when you’re buying a car, but that’s also when you’re buying a $200 piece of electronics or when you’re getting a root canal from your dentist.

When you are buying anything, just practice asking how much and that way, when you’re buying a house or a car or a really big ticket item, you’ve practiced what you should have practiced when you were kids so that it became easier.

Can you imagine asking how much? Something that the doctor’s office is going to cost. I found for many people it’s uncomfortable and becomes more comfortable when we just practice. So here’s what I would like you to do. The next thing you’re going to buy that is in that kind of mid-range couple of hundred dollars, several hundred dollars, I want you to do these 4 things.

I want you to get paper and pencil out, and I want you to do a little journaling about how important is it that you have the best of this thing you’re buying.

1. What would make a difference if you bought a new one or a used one? 
2. How many years do you plan on having this thing you’re going to buy? 
3. Then the last and most important question. If you bought the less expensive one if you’re going to buy a bike and you’re going to buy an inexpensive used bike or a really expensive brand new one, what are you going to do? 
4. If you choose the less expensive one and you’re going to save all that money, what would you do with that extra money if you chose the less expensive one? 

So I encourage you just to practice the mindfulness around your buying and practice on smaller stuff where the stakes aren’t quite so high as they are when you’re buying a house or a car. Let me know how it goes.

If you want to know where to let me know how it goes, come into our Facebook group Team Do Better and you can chat with me in our private group. You can also sign up for our newsletter at www.TheFinanceGym.com and subscribe for our YouTube video series. Now go out there and practice some mindful buying.

How to Manage Your Money Action Plan Part 5 - Intention

Welcome to the Finance Gym Action Plan for a better life with money video series. My name is Stacey Powell, and I am here to help you have a healthier life and a happier life with your money.

If you're watching the video series while you're doing the book I want to give you a big, huge congratulations. Because today's video is the very end of chapter 1. and so if you made it to the end of chapter 1 huge kudos to you for starting out on this journey and making it there.

And as a little treat, at the end of every chapter I do something, that when I was a kid I thought was incredibly fun. I loved Mad Libs when I was a kid, before I decided I could actually be a writer, it made it so simple to just fill the story in. So I included something like that at the end of every chapter, and that's what we're going to do today.

You're going to tell a little story about your path with money. Why are you reading this book? What'd you learn in the first chapter? And what are you hopes and your commitments as you move forward in the book?
So the first question is, It's my intention to have a better life with money. My hopes and dreams for that better life are …. You fill in the blank.

Alright, I'm going to sit here for a second. I want you to grab a pencil, and I want you to actually write that down.

Did you do it? No really like if you didn't do it go get a pencil and write it down. Hit the little pause button, I want you to write that down. I want you to be really clear with yourself about why you're taking a few minutes to watch this video. Why your taking time to read this book.

What are your hopes and dreams? Because if you're just doing this so you can learn something about your money, that's not motivation enough. Money is the thing that fuels our hopes and dreams. So if you're not clear about that, this is a great time to get clear.

So a couple of other things - you can turn to chapter 1 at the end and fill this out. But if you don't have the book, I'm going to let you know what a few of the other “fill in the blank” sentences are.

So when you were sketching out the big picture that was in the last few videos, I realized that the areas I most need to focus on are … fill in the blank.

And the other thing I realized was, Thank goodness I'm already a rock star at x. What are you a rock star at? We're all good in some area of money, some little area for some of us. But we're all really good at something with our money.

So what did you see? As you worked through parts of looking at the big picture.

And last, but not least, to get healthier I'm going to commit to working on my money. How many times a month? How many times a week? For the next, how long?

I want you to write that down too, and then I want you to tell someone. You can put it in the comments below on YouTube, that's fine. You can join our Team Do Better group and let us know. And I'll check in on you from time to time.

If you tell me how much you want to commit to working on. I promise I'll check in with you. God knows, I could not do this alone when I started doing this. And I want to help you get better with your money.

As always, no way you're alone, so come over to Facebook and join our Team Do Better Group. Or join one of our Finance boot camps. You can find those at www.thefinancegym.com or subscribe to our YouTube channel and keep watching these videos.  See you next time.

How to Choose a Recordkeeping System - Part 4

Welcome to The Finance Gym Action Plan for a Better Life with Money video series. If you’re ready to not just know better but to do better with your money, you’ve come to the right place.

Today’s topic, one of my favorites, recordkeeping. It’s actually not really one of my favorites. I like recordkeeping. But given a choice on a Saturday, do I want to go hang out on a river, go for a bike ride or do recordkeeping? I think the choice is pretty obvious.

But what it came down to for me is, “Do I want a peaceful, healthy, successful financial life?” Well, that’s what I wanted and the conclusion I came to is I had to do more recordkeeping than I was doing.

For many of you, you’re probably going to have to too. Not for forever but definitely for a while. So I’m going to talk a little bit about recordkeeping today and I’m going to show you the super fun way of recordkeeping to just give you an example of what might work for you.

I get asked the question all the time. What’s the best recordkeeping system? What should I be using? Well, there’s no one answer. It’s just not that way.

So my answer is, “What recordkeeping system do you think is the most fun?” If your answer is none, “Well then, what recordkeeping system do you hate the least?” because the truth is you just have to pick something you’re going to use and whether that’s Quicken or Mint or Excel or a butcher paper or just writing it down the old-fashioned way in a ledger, I’ve seen so many people be successful in all of those modalities.

You really just have to pick which one is going to be – maybe not fun. But you know, why not try to make it fun? So this is the thing that Cassie did to make hers fun. She was a client of – in our finance boot camps and very creative and there was no way she was going to put everything of hers in Quicken.

So she said, “I don’t know. I’m going to put this butcher paper up on the wall,” where her kids could see it in the dining room and start keeping track of when money came in and when money went out so that she could get a feel for it.

So what I’m going to show you is extremely simplistic, $4000 something every single month. By the end of the year, it’s very easy to see she has brought in $48,000 and she was kind of writing down what she had spent money on but just the big swaths, nothing specific. Who cares if you spent $3 at Starbucks?

What’s really important is at the end of the month where you made $4200, did you spend $4600 or did you spend $3800? Those are really the most important questions. So she did the same thing with this blue line here as her spending and you can see like most Americans, she ends up kind of living paycheck to paycheck all month long or all year long.

Some months are different. Some months are better than others. Some months are worse. Then the same thing with tracking where your debt is. Take a look at the beginning of your year. So for her, she had $49,000 worth of debt and if you’re living paycheck to paycheck and not really putting a dent in it, which is what she was doing, she can end up with $49,000 of debt at the end of the year.

But if she can shave this blue line down and start tracking the reduction of her debt, you can draw it up here and see it. In a lot of ways, I think this is almost more valuable to do this where you can see it.

Last but not least, tracked her savings. So she didn’t have any savings at all. She was totally living paycheck to paycheck. But what she did have was retirement which is a form of savings. So $35,000 in her 401(k) and it was just inching up. By the end of the year, she’s at $38,000.

So there’s nothing rocket science about this. It doesn’t take that long. I pulled that together and drew that in less than five minutes. It will take you just a little bit longer but not all that much longer and here’s the thing. Just having that up there, isn’t that a lot better information than you had five minutes ago?

Are you going to get better information by using an Excel spreadsheet or a Quicken software? Absolutely. But is having that much greater detailed information going to impact the changes that you’re trying to make? Maybe. I think that remains to be seen as you kind of move through the work that we’re doing here together. For some of you, you’re going to have to drill into the details.

But for a lot of you, this big picture view is really all you need to do. So get your colored pens out, some butcher paper and have some fun. As always you don’t have to do this alone. In one of the chapters in the book Date Night with Your Money, I talk about the importance of grouping together with your community or an accountability partner.

Come be a part of our community. Subscribe to our YouTube videos or join us over on our Facebook private group, The Finance Gym Action Plan.

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.
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