There’s nothing like a job-layoff notice, getting a call from the bank saying you’ve bounced your account to the moon—or in my case back in the ‘80s learning that our home was about to be foreclosed—to tell you that you need an extreme money makeover..
Before picture. Any makeover worth its salt needs a great before picture. A personal financial snapshot is called a Statement of Net Worth—a realistic estimate of how much money you would have left if you sold all that you own and paid off all that you owe. It’s a picture you need no matter how dire your situation may seem to be.
Your attitude. Face it. The only thing you control absolutely is your attitude—the way you choose to respond to life and all of its challenges. This is a season in your life that has come and will go. It’s not forever. You can handle anything as long as you know it will end. Choose to face your extreme situation with an equally intense response.
Get a plan. Write a simple plan for how you will reach your goal keeping in mind that a good plan is specific, reasonable, realistic, finite with a way to measure results. Give yourself a date by which you plan to have this makeover complete. Now create stepping stones so you can measure your progress.
Freeze spending. Yes, it’s extreme but so is your makeover. Imposing a spending freeze for the next week or two will give you the jumpstart you need. Then move into a non-essential spending freeze for the foreseeable future.
I love the story author Jaroldeen Edwards tells (Things I Wish I’d Known Sooner) of the trip she took with her daughter one bleak and rainy day. She wasn’t that thrilled to drive more than two hours to see flowers some woman had planted. But her daughter was insistent. “You’re going to love this, Mom!” Tell me what mom could resist going along with that kind of enthusiasm.
They drove along the Rim of the World Highway, inching their way toward Lake Arrowhead through fog and drizzle in the San Bernardino mountains, north of Los Angeles, Calif.
By now, Jaroldeen was so agitated, she was certain she was being kidnapped by her daughter. Still not convinced this could be worth the trouble, Carolyn parked next to a small stone church and announced they would need to walk along a path, through huge, black-green evergreens and over a thick blanket of old pine needles.
Just as they turned the corner, Jaroldeen stopped dead—literally gasping in amazement. “There before me was a most incredible and glorious sight! So unexpected and unimagined.”
From the top of the mountain, sloping down several acres across folds and valleys, between the trees and bushes, following the natural flow of the terrain, were rivers of daffodils in radiant bloom. Every color of the spectrum of yellow blazed like a carpet before them.
There is a very real and terrible scam going on in the U.S. and abroad, in which grandparents are being targeted.
The scam begins with something most grandparents don’t get enough of—a phone call, email message or a message through Facebook from a grandchild. The scammer, impersonating that grandchild, is frantic and says he’s been hurt in a car accident, or arrested, or gotten in some kind of trouble and needs money fast.
One former scammer told CBS News that he can easily make $10,000 in a single day. He just keeps calling until someone bites. Then he does it again and again.
A typical conversation goes like this:
Hey, Grandma, Hi Grandpa … It’s me Johnny. I’m in a little bit of trouble right now. Yeah, Ashley is good. But I’ve got a problem. If I tell you, just keep it between us. Don’t tell Mom and Dad—they’d freak out and they wouldn’t understand. I’m on vacation, but I got into a little accident, and I was arrested for a DUI. Things got out of control, and I need you to pleeeeeze send me money.
I wonder how well I’d do as a contestant on the hit TV show, Survivor. Have you seen the rules for what contestants are allowed to bring? Basically, it’s the clothes on your back, sunscreen and one luxury item. For example, a toothbrush is considered an acceptable luxury item; a hairdryer is not. Paper and pen—yes; Macbook Pro—no.
While I’m certain I could survive in my life with far fewer things than I do (I have in the past, trust me), there are things that I depend on heavily and use nearly every day—16 to be exact. These are things I love because they bring efficiency, joy and beauty to my life.
I’d need to be granted some kind of exception to allow me 16 rather than one luxury item on Survivor Island. Shouldn’t be a problem, right?
1. SHARK NAVIGATOR. Just the most amazing vacuum cleaner known to mankind. The bonus is that it is also inexpensive. While there are many models, I love my Shark Navigator with the Liftaway option and hard floor attachment. Simply indescribably efficient.
2. DYSON HANDHELD VAC. While not exactly the one pictured (mine is now 8 years old, because they change up the look with each model, I use my Dyson handheld vac every single day, sometimes multiple times. It’s like a member of the family.
We all know about getting physically fit: Participate in aerobic exercise, do some weight training and walk whenever you can. But how much do you know about getting fiscally fit? It’s not difficult but it does require a plan like this:
RECORD YOUR SPENDING. Sounds like a silly instruction, especially if you feel overwhelmed and under deposited. Nonetheless, if you will begin keeping a written record of every expenditure I can promise you a couple of things: 1. You’ll hesitate before making silly, impulsive purchases. 2. You’ll start taking back control once you see where all of your money goes.
GIVE BACK. I know. You’re broke. You have mountains of debt and some idiot is suggesting you give money away. That’s right (except for the idiot part). Giving is a mysterious, miraculous activity that when practiced regularly, will transform your life. Giving away part of what you have is the antidote for that wretched trend toward excess and self-indulgence.
PAY YOURSELF. Ideally, you should pay yourself ten percent of what you earn. If you can’t start with ten percent, start with something. Even if it’s a dollar a week, start saving. Even if you are heavily in debt, start saving. Saving money is a great attitude booster. If you’re discouraged and down-in-the-dumps, start saving money
Wedding season is in full bloom and while tying the knot is getting more expensive for the bride and groom, attending a wedding is becoming costlier, too. In fact, a Market Watch reveals from a recent survey that the average guest will spend $673 this year to attend a single wedding—including but not limited to travel, accommodations and attire.
And then there’s the wedding gift. The average spending ranging from $80 to $150 per person, according to The Knot Registry Survey. Want to cut the cost while still giving a gift the couple wants and will appreciate?
COMPARE PRICES ON REGISTRY ITEMS. It’s wise to reference a registry to see what the couple wants, but it’s even smarter to compare prices among stores. Online retailers like Overstock sell popular registry brands for less than most high-end stores.
USE DISCOUNT GIFT CARDS. If you’re planning to give a gift card or you’re buying an item off a couple’s registry, save money by purchasing discount gift cards from GiftCardGranny.com. The site offers gift cards for less than face value, like a $100 Macy’s gift card for $80.
KNOW WHERE TO FIND COUPON CODES. Most stores offer coupons these days, you just have to know where to look to find one. By signing up to receive an e-newsletter from Pottery Barn or Williams-Sonoma, you’ll get a coupon code for 10 percent off a future order.
The data is in and it’s not pretty: The average overspending American spends $1.22 for each $1 of income. If you’re “average” you’re in trouble. You are digging yourself into a horrible pit of debt.
Let’s say you’re below the average and spend $1 for every $1 you earn. That’s a lot better. Still, you’re living from paycheck to paycheck. If one thing goes wrong, you’ll be in trouble.
The key to achieving financial freedom is to live below your means—you limit your spending to $.80 for each $1 you earn. That leaves $.10 to give away and $.10 to save for the future. That’s called balance and I promise if you live by that formula you will never be broke. Impossible? No. It takes skill, effort and determination. It takes desire and commitment to live below your means without giving up your style and your quality of life.
The first step is to adopt a new attitude, a simple personal standard: I do not pay full price for anything. It is not realistic to think you will never pay full price for anything or that everything is available somewhere for just pennies on the dollar. But if your goal is half-price, it will average out over time. This is a mindset, an attitude.
It’s easy to see a tax refund as some kind of gift from the universe. It’s not. It is a chunk of your annual income you should have been seeing all along in your paychecks. Plan now for how you’ll manage it, or your refund could easily evaporate into thin air!
1. Treat it like a paycheck. Give away 10 percent, save 10 percent and put the rest into your household account. This would be especially advisable if you are having trouble keeping up with your current financial obligations.
2. Stash it. Put it in your Contingency Fund or Freedom Account. Don’t think twice. Just get it into the bank quickly before you are tempted to pick out a new TV or book a vacation trip abroad. Money in the bank lets you back away from the “edge” in ways that buying more stuff cannot.
3. Open a Roth IRA. Talk with your bank or go to Vanguard.com to discover your options. Provided your Contingency Fund (a pool of money you keep in a safe place for serious emergencies) is well-funded and you are not drowning in credit-card debt, this may be the perfect opportunity for you to boost your retirement funding.