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Establish Attainable Financial Goals

Often times, when we set goals, they are often worthy and laudable. Unfortunately, rarely are they attainable. We establish goals that are seemingly doable, but we haven’t honed the skills necessary to reach them. When we start back at the gym, we vow to ourselves that we’ll go five days a week, for two-hour stretches. We may keep this up for a week or two. Then we stop because we are exhausted. The plain fact of the matter: we were not in good enough shape for such a workout routine to begin with. The same can be said for planning and setting financial goals.

Establish Attainable Goals – Articulate the biggest and wildest dreams you have. Figure out a way to achieve these dreams by breaking them up into smaller, more attainable tasks. Once you’ve done that, breakdown those goals into smaller objectives and tasks. For example, you might decide that you want to have a net worth of $1 million (dream/overall goal). To do this, you might realize that you first have to own a house (smaller goal). In order to own a house, you might have save money for a down payment (smaller task). In order to save money for a down payment, you might have to reduce your credit card debt (smallest task). Therefore, in order to reach your large goal, first concentrate on the attainable short-term goal of eliminating your credit card debt.

Start Small – As mentioned above, starting small will give you the skills, building blocks, and confidence to reach your goals. Start small and expand from there. If you have a goal of saving X amount of money this year, but you have never saved money before, then start small and build off your success. Try to set aside 1% of your paycheck. When that is a comfortable amount, up it to 5%. When that has become comfortable, raise it to 10%. Many stop at 10%, but you may want to extend it to 15-20% of your paycheck.

Work Through the Setbacks — As with most things in life, there will be setbacks. Face this fact early on and arm yourself with the necessary mindset right away. Know that these hiccups will come along the way in reaching your financial goals. Be confident that you will be able to work through the setbacks and that you will be able to keep your eyes on the prize.

If you establish goals–attainable goals–you will build the necessary habits and develop the ideal skills to make your financial dreams a reality.

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Three Ways to Bust Your Budget

When I talk to people about budgeting, the #1 complaint I hear is, “I don’t do budgets, because I can never stick to them.” Budget-busting seems to be pandemic behavior among these individuals. I am not surprised, however. Budget-busting used to be a common experience in my life, too.

1. Not Having A Budget — It is vitally important that you sit down and work out your budget. I remember Dave Ramsey explaining in perfect terms what a budget does: “It is not your money telling you what you can not do. It is you telling your money what to do for you.” If we think of budgets as restrictive and oppressive, chances are we will not work to create one (nor will we work to maintain one). You need to figure out where your money is going every month.

2. Not Maintaining A Budget — In addition to creating a budget, it is vitally important that you maintain your budget. Working within the parameters that you have established will help you stay focused on your quest to financial clarity. Maintaining a budget does not mean that you can not roll with some level of financial flexibility. Some months you may spend less on entertainment or grocery needs. You can take that money and pay down your debt or increase your savings. But make sure that you maintain your budget–and revisit it from time to time–to serve your financial goals.

3. Abandoning the Budget because of Setbacks — This was the most difficult concept for me. When I abandoned my budget–or any goal, for that matter–it is because I give in to the negative self-talk that got me in the situation in the first place. A speeding ticket that I could not afford used to bust my budget. The self-talk that ensued always sounded like this, “See, I will never get ahead. I will always be in debt.” The reality is quite different. As you work with your budget, you will find ways to make sure to guard against any setbacks. When those setbacks do arrive, take a deep breath, remember that this one setback should not get in the way of the rest of your life, and move through it.

Inaction causes us to continue to float through our financial lives without much purpose or without any clear direction. By creating, maintaining, and following-through with your budget you will find success in reaching your financial goals.

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Tightening that belt…

I was reading the LA Times on Sunday morning and came across the article “Our daily bread? It costs more” by Jerry Hirsch. In the article, Hirsch talks about how the increase in the price of wheat worldwide has caused an increase in basic wheat-based staples around the world. Pizza is more expensive. Breads are more expensive. Tortillas are more expensive. This increase in wheat prices has jumped 300% in just 12 months. A 50-pound bag of flour cost $12 a year ago. That same 50 lb bag costs $27 today–and experts expect it to hit $30 in a few weeks and $60 by the end of the year.

Gulp.

All of this is interesting. Fascinating to me, actually. The most important facts that I hit me from the article were these: the price of bread and cereal products rose nearly 2% (the largest increase since 1975). Additionally, the cost of eating at home–something that I think it crucial to saving money–has seen a 5% increase “so far this year” (the fastest increase since 1990).

Clearly, it is time to start tightening that belt and increase the amount you are saving. Just as clear to me, the rainy day I have been saving for (metaphorically), is actually here.

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MollysBrother.com Wants to Hear From You

It’s time to turn the lens on to you. For over two years, I have shared with you my ideas to reduce debt and save money. Now, it’s your turn. If you want to share your story on how you reduced debt or if you’d like to share any money saving tips that you employ in your life, simply send me an email.

Share you story with all of us!

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Monthly Bills: A Fair Strategy for Couples

I think in this age, more and more couples are keeping their finances separate and only combining them for joint expenses. Even though I am in a relationship and we do share monthly expenses, we both make about the same amount of money. However, I was wondering what couples should do if one person makes significantly more than the other.

A friend of mine told me what she does with her boyfriend.

Sometimes couples make the same amount of money. If that’s true, then the monthly bills should be split 50-50.

However, if one person in the relationship brings home a lot more than they other, then you should reassess how to break down the monthly expenses so it’s fair to both people in the relationship. Figure out how much your gross take home is for the month. If you make $3000/month and he makes $7000/month, then the two of you bring home 10K a month. He brings in 70% of the money. Therefore, every single bill should be divided 70-30. That’s fair.

I’d be interested to hear what people think of this approach to paying bills.

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Guard Yourself Against Rogue Debt Collectors from CNN.com

There was an excellent article writte by Jen Haley over at CNN.com entitled “Rogue debt collectors — how to fight them.”

She reminds us of the following steps that we can take and the following rights that we have. Among them, she mentions:

Head on over to CNN.com to continue to read the entire article. It is full of helpful information for you if you are facing this issue.

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Budget for Gifts

We are at a point in the year when it is nice to remind ourselves of our financial goals. Only a scant three months ago, we were all drowning in the holiday stress–the pressure to attend parties and to buy gift for loved ones. At this point in the calendar–in between holidays–remember to budget for gifts.

A PERSONAL STORY

I have often written about the strength of budgeting for gifts. I have done it myself for the past two years to some degree (in all honesty, i never budget enough!). Around Christmas, a friend was talking to his aunt about his about spending during the holidays. Her reply was, “I don’t get stressed. I have a holiday slush fund.”

He discussed this with her for a couple more minutes and discovered that she puts 10% of her paycheck away for a holiday slush fund. Ten-percent of her earnings every two weeks. By the end of the year, she admitted, that she has more than enough money to buy gifts for her children and loved ones.

MAKE GIFTS A LINE-ITEM ON YOUR BUDGET

There is a lesson here. Maybe it is not feasible to put away 10% of your weekly earnings towards gifts. But by planning for gifts, a couple of things happen: 1. You end up spending less (and keep your credit card use to a minimum); 2. You end up being more intentional with your gift-giving.

Figure out how much money you can budget each month on gift-giving. Valentine’s Day has passed. While Christmas is 9 months away, surely there are birthdays and anniversaries between now and then. Budgeting for gifts is one way to limit your spending.

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