Saturday, February 28, 2009

A Financial Balancing Act

I send messages to my subconscious!

One such message is: My spending and savings plans are balanced.

My subconscious then goes to work to make this a reality. I find tools, self-discipline, and motivation to make my “dream” come true.

I’ve heard that two of the greatest strains on a marriage are… money and kids.

A key to alleviating money problems is a family budget. Generally, if you want to improve something, you have to find a way to measure it. A budget is a spending (and saving) plan.

Creating a budget makes you think and plan. (Maybe even prioritize!)

But that’s only part one: you have to gather data to see if your budget is working. There are tools out there to help. I use my bank’s online bill payment system to create an electronic (but safe) audit trail, along with Mvelopes personal budgeting software. Crown Financial Ministries’ web-site helped me on my first stab at a budget.

Mvelopes budget system has helped me get more out of my paycheck, and it provides guidance when I have to buy something: Do I have the money put aside? (Check the envelope!)

Now I’m prepared for car repairs, vacations, insurance, and surprises. I still overspend sometimes, but it’s usually on purpose. The budget is not king, I am! ;-)

I’ve been able to reduce some expenses, but mostly I’ve discovered what things cost: like vacations, pets, hair care, and groceries. (Eating out was a surprise too!)

But my affirmation is about balance: My spending and savings plans are balanced.

Savings is about providing a cushion against expenses, planned and unplanned. It’s also about building wealth. Home equity can be viewed as a savings. I’ve used my home equity several times to fund a remodel and a new roof. (Perhaps to pay some large medical bills too.)

Balancing the spending and savings provides peace of mind and a tool for building personal wealth. It’s a dance, and many of us need dance lessons!

What I’ve come to enjoy is finding a balance point that doesn’t leave me teetering on the brink of insolvency, but a balance point that allows me to sleep well, not argue with the spouse, bail out kids (it happens), buy major appliances, and even help pay for college. (With a good plan, even Christmas doesn’t have to bankrupt you!)

A balanced spending and savings plan even provides for being generous and giving. You can afford it.

So if you want to borrow something from me… I’ll give you two things: free advice and a useful affirmation/goal: My spending and savings plans are balanced.

I send messages to my subconscious!

(All other requests for assistance will NOT be considered.) ;-)

Friday, February 27, 2009

My Personal Prosperity Program

My fiscal goals are specific, yet broad.
My second financial goal is found in the following affirmation: I enjoy living well and prospering, now and in the future.

Remember, according to psycho-cybernetics, an affirmation serves as an instruction to the sub-conscious (the automatic success mechanism). My sub-conscious is now “tuned” to finding a way for me to “live well and prosper, now and in the future.” Not a bad target for me to steer unconsciously towards.

As I think towards the future and retirement, I want to live well. One of my sisters commented recently to my wife as she surveyed our living room, “You guys live within your means.” She meant it as a compliment, and my wife took it as such. (We pretty much “own” our lifestyle rather than rent it.)

We aren’t rich, neither are we poor. We are living well and prospering. We are content. We recognize that there are things we don’t have, but we have enough. We have some luxuries, but we don’t live in luxury. And all that is okay. We are content. (I paid less than $10 in credit card interest last year on my main credit card.)

I’m probably an underachiever financially, because I’ve never made it my aim to be “rich.” I’m not adverse to wealth either, I’ve just never made it a priority. I’ve sought to balance the demands of the present with the possibilities of the future.

As a young man I rarely looked to the future, and as a young father, I was rarely able to look much past a paycheck or two. But we lived well and prospered none-the-less.

Now, as an empty-nester, I look forward to retirement, and I have to decide where to set the bar regarding quality of life. Here’s where I set it: “…live well and prosper, now AND in the future.”

I don’t want to spend my retirement in poverty and want, but I don’t need to spend it in the lap of luxury (or indulgence) either.

I’ve looked at my current budget, and I’ve looked at what income levels I would need to support a lifestyle similar to my current one. I’ve looked at what expenses I could eliminate (like a mortgage and/or a car payment). I’ve worked up some estimates as a reality check.

But there is a limit to what expenses you can cut. Cutting expenses needs to be balanced with maximizing my retirement income streams. Social security, pension, IRAs, personal savings, home equity, (adult children)… these are my “assets.” The picture of my future is fuzzy, but not blank.

I don’t pretend to have it all figured out, but I know where I’m heading… I enjoy living well and prospering, now and in the future.

I know where I’m heading, I just don’t have the turn-by-turn directions yet. (And I don’t need them.) All I really need is the goal and the next step. Right now, the next step is learning to set the right goals and priorities, and learning to ask the right questions: Like how to balance spending and saving... oh, that's tomorrow's topic!

Thursday, February 26, 2009

I feel good being fiscally intelligent.

Fiscal Affirmation #1: I feel good being fiscally intelligent.

I’ve pondered and read a bit about poverty over the past ten years. The problems and by-products of poverty are well-documented, but so are a few solutions.

One solution involves helping the poor gain access to “organized capital.” Organized capital is a phrase I encountered in a book called Think and Grow Rich. The book purports to be the result of a decades long pursuit of the methods of men and women who acquired great wealth. (Methods are learn-able!)

Organizations such as Grameen Bank and Heifer International have helped many escape poverty by helping them gain access to organized capital in the form of micro-loans and live-stock. The back-bone of these endeavors is helping the poor become fiscally literate. (A large portion of those using these organizations are poor women and their families.)

Having access to banking services and knowing how to use them are key components to creating a brighter fiscal future. I’ve heard it said, “It takes money to make money.” Organized capital provides financial backing to enable people to improve their fiscal futures.

Fiscal intelligence begins with understanding financial concepts such as income, expense, cash-flow, budget, interest rates, loans, credit, savings, checking, and more. (Expertise is often contained in specialized vocabulary.)

Financially illiterate people don’t know the terminology or the processes. It’s more likely that the wealthy and middle class know the terms, the processes, the strategies, and they teach them to their kids.

Learning things the hard way is sometimes very expensive: figuratively and literally. Web-sites such as Crown Financial Ministries is a great place to start. I’ve used their site to gain insight into debt, savings, and budgeting. They also recommend a personal finance tool called Mvelopes that I have used for several years.

Because I see myself as fiscally intelligent, I’m on the look-out for ways to become smarter. It’s a self-fulling prophecy that pays dividends.

It hasn’t hurt me that my dad was a bank manager, I’ve worked for an insurance company, and I’ve worked in data processing for a bank. I’ve bought cars, a house, and major appliances using credit. (I’ve also raised a family and seen three kids through college.)

It’s taken a while, but I’m getting smarter. Now I’m navigating my way towards retirement in a decade or so. Some might say I’m a bit late in that effort, but I’ve been busy. I think I’ve built a good foundation of knowledge (and wealth) which needs to be expanded. (More on that in later posts.)

I’ve gained a lot of fiscal intelligence, and I’m on my way to gaining more. How about you? Have you taken stock of your personal knowledge base regarding fiscal intelligence? What are your “liabilities”? Your “assets?” Your “business plan?”

Hmmm… good questions. Let’s get smart!

Wednesday, February 25, 2009

My Financial Futue: Am I smart enough?

Yesterday I posted that I'm going to write a few posts on My Financial Future, and I quoted Lincoln who said, "The best way to predict the future is to create it."

To create a better future, you've got to be pretty smart. Now,I like to think that I’m a pretty smart guy: at least above average? But am I smart enough create a better financial future for myself?

Traditionally, one accepted measure of intelligence has been the IQ, or Intelligence Quotient. A quotient is the result of a division problem, and in the case of Intelligence Quotient, it is Mental Age divided by Chronological Age.

So if your 40 years old chronologically, and you’re only as smart as a 5th grader (a 10 year old) then 10 divided by 40 is .25. Oops. I forgot to multiply the result times 100! – Your IQ is 25. Yikes.

Less than 68 is mentally retarded. (80 to 120 is low average to above average, 100 is average). If your mental age is 40 and your chronological age is 40 then 40/40 X 100 is 100: You’re average. (This simple ratio model has been replaced by a method that uses test results to place a person on a Bell curve producing similar IQ scores.)

Is my IQ high enough to create a better fiscal future for myself?

But many have questioned whether IQ really measures intelligence. One researcher/writer named Howard Gardner popularized the notion of multiple intelligences. He teased out seven ways to be intelligent: linguistic, logical-mathematical, musical, interpersonal, intrapersonal, visual-spatial, and bodily kinesthetic.

Gardner’s paradigm of intelligence broadens the scope and allows for the reality that different people are “smart” in different areas. Gardner allows us to change the question from “How smart are you?” to “How are you smart?” I think that is a better question.

But am I smart enough in the right ways to create a better fiscal future for myself?

Another researcher/writer, Daniel Goleman, has put forward the notion that the most important intelligence is EQ or Emotional Intelligence. This intelligence refers to how intelligently you manage emotions (personal and social).

Is my EQ high enough to create a better fiscal future for myself?

My background understanding on intelligence has led me to a new pursuit: developing fiscal intelligence.

I have little background on financial world history, international economics, national fiscal policy, the California state budget crises, or even my employer’s fiscal problems.

Me? I’m trying to develop personal fiscal intelligence.

I’ve learned a few things, but I feel that I have much to learn.

Today I am continuing a series on my financial future. I want to develop and use fiscal intelligence and personal affirmations to program myself to achieve a brighter fiscal future. That’s one of my goals. So…

Fiscal Affirmation #1: I feel good being fiscally intelligent.

That should help me become smart enough to develop a brighter fiscal future for myself.

Tuesday, February 24, 2009

My Financial Future!

For the last few days I’ve been thinking about topics I’d like to write about. I’ve thought about writing about the past, because I have some interesting stories: travel stories, people stories, even some funny stories.

But I was reluctant to engage those topics, and I wondered why. Finally it struck me that I don’t like living in the past. For one thing, my recollections are skewed, and secondly, it implies that the best of life is past.

Well, if I’m not going to write about the past, that leaves the present and future (or the pretend!) I’m opting for the future!

Not too long ago I shared this quote from Abraham Lincoln, "The best way to predict the future is to create it.”

What future do I want to write about? What would I like to see in my future?

A week ago I attended a one-hour retirement planning seminar, and that got me thinking about my financial future. So that’s what I’m going to blog about for a bit: starting today!

Sunday, February 22, 2009

Never alone...

Until I started blogging, all the world was a prompt, waiting for my next quip. But blogging has changed that. Now I look for prompts for meaningful reflection. (Okay, I admit, I still look for the joke prompt too.)

Since today is Sunday, and I like to share something meaningful, I had to hit my mental pause button, rewind through the week, and search out a worthy prompt. I found it on my daughter’s blog. She wrote:

“When almost everything else is stripped away - whether it is mountains or just leaves, that's when I re-discover the (best or worst) things that have been there all along. Barrenness or loneliness or despair are no fun, as a prairie pioneer or ocean sailor could tell you. But they can show things for what they really are.

When my mom passed away, I found the friends that were right by my side. And a sense of God unlike before or after.”

Whether in nature or in life, stripping away is inevitable. Perhaps what Joanna found was what Jesus meant when he said, “…I will never leave thee, nor forsake thee.” I’ve heard this verse paraphrased, “Never will I leave you, never will I send you away.”

When things are stripped away, you see what’s there and what’s not there. You also see who’s there, and who’s not there. One of the things Joanna found during the time of her mother’s death was a sense of God.

Friends and family may be a God-send during times of bereavement or during other times of great loss, but sometimes it comes down to you and God. During those times, we are often incapable of doing our part. We are running on empty, but we’re not alone.

Jesus consoled Simon Peter with these words, “But I have prayed for you, Simon, that your faith may not fail. And when you have turned back, strengthen your brothers."

Sometimes, what has carried me through the greatest lows of life have been the prayers of Another. He knows, he cares, he consoles, and he carries you through. He even prays for you.

Jesus is a “friend that sticketh closer than a brother.” He’s the friend of sinners, and he’s the friend you will find never leaves you, nor forsakes you, even when you’ve been stripped by the circumstances of life.

Life happens, but “No temptation has seized you except what is common to man. And God is faithful; he will not let you be tempted beyond what you can bear. But when you are tempted, he will also provide a way out so that you can stand up under it.”

Keep going. Don’t quit. Brighter days will return. Lean on Another. Fall forward!

Happy Sunday fellow pilgrims!