The One-Third Money Rule

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 but also do better with your money, you’ve come to the right place.

The last few weeks, we’ve been showing videos on the four letter word “debt” and as I’ve looked at them, I realized, oh my god, they’re really serious. Like, I’m really serious when I’m talking about and telling you to stop using debt in this very serious tone.

Maybe I shouldn’t have been quite so serious. But you know what? It’s a serious issue. But today we’re going to talk about something a little bit more fun around debt and that’s how you can accelerate your debt payments in kind of a fun way.

So one of my very favorite money tips that I ever got and now it’s the favorite money tip that I give, I like to call the one-third rule. Whenever you get extra money, no matter what kind, you divvy it up in thirds. One-third goes toward your debt. One-third goes into savings because we do that equally and then one third goes towards something fun, something that you’ve really wanted, something that you haven’t let yourself buy because you’ve been so busy paying down debt over here.

So whether it’s a tax return, a bonus at work, birthday money, yeah, even birthday money, like if you’re serious about getting out of debt, even birthday money, an inheritance. Now if you get some huge inheritance, I’m not suggesting that you use the one-third, one-third, one-third rule. I’m suggesting that you go talk to a certified financial planner.

But if you get a $5000 inheritance, $10,000, $20,000, even something small, still sit down and think about this one-third, one-third, one-third concept because I think like with everything in life, if we do things in a more balanced approach, it benefits us. It benefits the mission we’re on. I see so many people get their tax refunds every year and use it to pay down debt and then they use their credit cards all year long and then they get another tax refund and they use it. It’s just this ongoing cycle.

What would it look like if you had a tax refund and you had no debt to put it down towards? You can do a one-half rule. Half of it goes towards savings and half of it goes towards fun.

So this is a tip that I’ve seen really accelerate people’s mission to pay off their debt. I’ve seen it accelerate their mission to build their savings and the other great thing about it is that you also kind of remember that when these little pockets of money come up, instead of just immediately shoveling all of that money off here towards paying down debt, it in a way motivates us. So that’s my favorite tip to get yourself out of the four-letter word “debt”.

So, as always, I would love it if you would come join us over at Team Do Better on Facebook. You can sign up for our newsletter over at TheFinanceGym.com. Subscribe to our videos right here and the next time you get some extra unexpected money, sit down and think about where you would like to spread that out to.

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.

Why You Should Have 6 Savings Accounts (Not Just 1)

Hi, welcome to the Finance Gym Action Plan for a better life with money video series. My name's Stacey Powell and I'm here to help you and your money get stronger.

And today we're here to talk about savings. But not just the singular savings, we're here to talk about the 6 different kinds of savings. One of the things that I certainly had a hard time with and I think many people also do is that we think of savings as a singular thing.

We keep it in 1 place and often that's in the "savings" account at our bank. Which is, of course, tied to our overdraft protection. Well, that's not really very useful when you're trying to keep savings as savings and not spend it on a monthly basis.

One of the other things is, we don't really have a structure around our savings. If it's all in one big pot, we don't have things that it is assigned to be for.

And so, one of the things that really shifted for me and I've seen shift incredibly for others is thinking about savings, not as one thing but as 6 different kinds.

The first kind, of course, most important emergency reserves. The second one is short term things that are not consistent, but predictable. Things like when your car breaks down or your cat has to go to the vet. Then there's long term things like putting a new roof on your house or saving for a car.

And then 4, 5 and 6 are separate long term savings that I've identified as 4, 5 and 6 because I think they're so important. And that is saving for a home, saving for your kids college education and then the third one is the big one, saving for retirement.

If you flip to page 47 in the book, and if you go to my website if you haven't bought the book I'm going to have up there for you page 47 so you can just take a look at it. You'll see all 6 of these areas with a list of what are these things and what's the purpose behind each one of them. How do you decide how much you should put in each one of these 6 accounts? And some suggestions about where you might keep it.

I want to give this roof as an example to show you how I work with people and how I think through where to put my savings. If I know I have to put a roof on my house sometime in the next 3 to 5 years and that roof is going to cost $15,000. Well, I need to be putting away between $300 to $500 a month, every single month to make that goal. And it better not be in an account tied to my checking.

I like to keep my reserves at Capital One 360. And this is not a sales pitch, this is really where I keep them. And here's why, Capital One lets you name every single savings account its own name. So for my roof account, I can name it something like "roof, dry roof, don't touch". Something funny to remind me when I get tempted to use all that roof money when it starts to grow, that what I really want is a dry roof. Separating out all of your savings like this, I know sounds a little bit overwhelming especially for those of you that are still struggling to put $25 aside.

And I assure you that if you go listen to my last video you'll know that I was once there. That I just couldn't put $25 a month aside. You can do it when you start practicing bit by bit. I promise. And the biggest thing you will get out of it is peace of mind for yourself and your money.

As always I don't want you to do this alone. You can join us over on our Facebook group Team Do Better. Come on in the water is warm. You can also go follow us at thefinancegym.com and join our mailing list or go like us over on Facebook and, of course, subscribe to these YouTube videos. Have a great day!

Free download of page 47 - Making Your Savings Rules

Melbourne, Australia on $50 a day

I normally travel to developing countries, where traveling is fairly inexpensive, even cheap in some countries, but I just got back from one week in a very expensive city, in an expensive country - Melbourne, Australia. 

How expensive? Well, the currency exchange rate is US$1 to AU$1.07. So, basically we pay slightly more than their price. Here are some of the prices that blew me away: a pint of Ben and Jerry's ice cream for $12; a pint of beer for $10 ($5 during happy hour); and a pack of cigarettes for $17. Ouch! Lots of great reasons ($$$) not to have any vices. 

Here are some of the money saving tips that helped me stay within my $50 a day budget:

Spending

• Just because you eat it, buy it, or do it at home, doesn't make it a given when you're traveling. If it's more expensive at your travel destination than at home, it's time to reconsider how important that thing is to you and possibly find an alternative; you may be pleasantly surprised. 

Money

• Check with your bank(s) and credit card(s) to make sure that they don't charge you international fees. If they do, consider opening a new account that doesn't or choose the lesser of the evils. 
• Exchanging currency is big business for companies. Exchange rates vary from one company to the next. But don't just go on the posted exchange rate, because they also charge a fee. This fee is negotiable. 

Lodging

• Always check prices online. Deals are everywhere, but rarely at the front desk. 
• Hostels are a great way to meet people and save money on lodging. If sharing isn't an option, most of them have private rooms and they're normally cheaper than hotels. 

Transportation

• Public transportation is a great way to get the local experience - The good, the bad and they ugly. 
• Local buses are a great way to see a city for a fraction of the cost and they stick to a route, so you don't have to worry about getting off track. And if all else fails, the bus will always take you back to where you started...unless of course, it's the last bus of the day... 

Communication

• Travel with a device that has WiFi access. There were plenty of free WiFi spots all over town. And if I wanted it at my hostel, they were charging $4 per hour to use their computer or $4 for a day for WiFi. 
• Skype is awesome! Free computer to computer calls and cheap rates for calling phone numbers from your computer/mobile device. 

Luggage

• It's amazing how little you actual need. It's also amazing how much it costs for your luggage to travel: airline baggage fees, airport luggage carts, taxis, car rentals, portage, etc...
• I've traveled around the world for months at a time with just a carry-on sized backpack (32 liter) and a small messenger bag. It's doable, liberating and super cost effective because you aren't ruled by your things. 

My $50 a day Budget (give or take):

         $25 a night hostel bed
         $6-8 for breakfast
         $6-8 for lunch
         $8-10 for dinner
         $5 or less for everything else, depending on how much I spent on food.

Basically, I eat less, I walk a lot, I enjoy free entertainment, and I don't party. It's not for everyone, but I always enjoy myself.  

Here's to your adventures! 

-Leah Schonlank

35 countries and counting

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