JD Roth has a guest blog over at Get Rich Slowly on how a reader (someone like you!) ruined their credit score with poor financial decisions & still managed to recover gracefully. Interesting read. Check it out!
The Importance of New Years Resolutions.
All right, I admit it. Guilty as charged. What I’m alluding to is the fact that I failed to attain some of this passing years New Years Resolutions. Call it lack of discipline, a bad economy, or whatever, the fact is, I just didn’t make all of my goals.
Now goal setting is a practice that I’ve subscribed to for several decades. I discovered the power of goals early in my running career. Observe the habits of any competitive runner, or any serious athlete for that matter, and you’ll find that all of them have a structured routine. Structure is imperative, if a person expects to excel in a sport. The same principles apply to many facets of life, including goals. While following these steps don’t assure that you will achieve everything that you set out to accomplish, they can certainly go along way toward increasing the likelihood. So, here they are:
(1) Write down what it is that you would like to accomplish.
(2) Log your progress.
(3) Review.
(4) Make adjustments as necessary.
One of my favorite quotes was coined by author and accomplished salesman, Zig Zigler. It goes something like this, “If you strike at nothing, you’ll hit it every time”.
The list of gotta have stuff continues to grow…
There are a myriad of articles written on the topic of consumer debt and the unsustainable pace at which we consume, but little attention is given to the root causes of this behavior. At risk of divulging my age, let me say that I remember a time (in the not too distant past, mind you) when most of the stuff on our gotta-have lists didn’t even exist. I’ll offer a few examples of what I’m talking about. Take Television, for instance. At one time, the only requirement for watching Television was electric service to the house. Depending on your preference today, you can spend upwards of several hundred dollars a month for the privilege of watching what you want.
And, how about Cell Phones? Reserved mainly for businessmen and the elite, it wasn’t until the late 1980’s that Cell Phones began to gain a foothold in the American Market. Now, it seems that everyone has one. When I got my first, I signed up for a two year plan at a cost of $9.99 a month. At present, four members of my family have one at a cost of $189 a month. About the same time that Cell Phone ownership became popularized, the Personal Computer became affordable to the average consumer. What at first was considered as a novelty item, used mostly as a stand-alone Word Processor, has evolved into a sophisticated networked device at the center of an array of consumer gadgets attached to the World Wide Web. And Dial-up, forget it! High Speed Internet is the only way to go. We can also add to our list GPS, Bluetooth, Blue Ray, LCD TV’s, and the list keeps growing. Unfortunately, most our incomes are finite, while the list of items available to us is unlimited.
The rate at which new goods and services are being offered is growing at a rate faster than most incomes. We understand this intellectually, but we are creatures of habit and conditioning. From the moment we are able to hold up our heads, we are inundated with commercials and clever advertising intent on getting us to buy something. Combine easy credit policies and human nature, it’s no wonder that so many have fallen victim to there own spending habits. Now, I’m not letting folks off the hook. Eventually, we have to look inward and decide for ourselves what’s important. This may require a resetting of priorities. It most certainly requires taking control of ones finances, and making better choices.
Are you a Dave Ramsey fan?
I‘ve been a Dave Ramsey fan since stumbling onto his radio program about 1999 or 2000. Disillusioned by the dot.com fallout that led to the evaporation of a significant portion of my 401k, I’d been searching for a guru who could lead me out of the financial straits that had frustrated my wife and me for the first fifteen years of our marriage.
Within a couple of years of following Dave’s advice, we repaired our financial house. By 2003, I decided that I too desired to serve others in teaching personal finance. Long story short, I quit my day job, went back to school full-time, and graduated in the spring of 2005 with a BA in Finance.
Upon graduation, I was hired by a major wire house and began my career as a Financial Advisor. Company sales goals were established, and I was provided with an array of investment options to offer potential clients. The different types of investments came with differing fee and commission structures. I decided to use a fee platform. From the onset, I found myself discounting the fee to what I felt was reasonable. Now reasonable is considered subjective, but most folks simply don’t understand how much they are paying in underlying fees and commissions. And, with the subtle intricacies of investment products, the products themselves can be quite complicated. Even I, with formal investment training, and a degree in Finance struggle to grasp the subtle nuances of some of these financial products. Like Dave, I suggest finding an Advisor who has the heart of a teacher. One who can lead you through the maze of investments and select those that are most appropriate for your situation.
But here’s a thought; Perhaps the greatest tool to risk management is found not in amassing an enormous retirement nest egg, but in getting out of debt, and living life with a vision.
The "B" word
For many folks, the word “budget” conjures up images of straight jackets and handcuffs. They think of a budget as something for nerds, or those types that simply don’t know how to relax. In reality, however, a budget can be a liberating experience. Budgeting enables a person to untangle himself from a web of payments; payments that have imperceptibly begun robbing him of his ability to enjoy a rich and meaningful life.
During the past 30 years or so, debt has become the preferred means to getting what we want, fast. With billions of dollars spent on advertising and marketing each year, it’s no wonder, that so many have fallen victim to their perceived desires. Today, with new products and innovations being developed at an ever increasing pace, many folks are beginning to find that they simply can not afford to keep up. We are awakening to the realization that we can’t continue to outspend our incomes.
But, there really is a way out. For many of us, the simple answer is to develop a written budget. What is a budget? According to financial guru Dave Ramsey, a written budget is simply “you telling your money where you want it to go”. It enables a person to readily determine the impact of his spending and saving decisions. A budget also can aid the user in establish his priorities, and perhaps more importantly, provides a means of accountability.
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