50/30/20 Series Part 1:“It’s time to stop worrying, and start living.”

First, let me start by saying WELCOME! Super happy you are joining us for this money saving series!

This first post is the first HALF of part 1 in a 6 part series. I thought we would start off with this for thought: Any money saving, successful plan that you have should be for a LIFETIME, and not just a quick fix. This series is not about getting rich quick, about investing into the stock market to hit the jackpot, and it’s not about winning the lottery!

So, let’s begin with getting our hard look at money out of the way. The reality is, we live in a tough economy, and times are just not what they used to be. In your gut, you know that times have changed. I remember my grandfather saying “Old fashioned hard work pays off, Eyuh. You’ll git everything you need if you work Sun’up to Sun’down!!” Well, Grandpa, come into our unstable economy where having a college education now means there are no jobs and you might be working at Walmart as the greeter with your Fine Arts Degree! Real financial peace seems so hard to achieve! With the reality of changed times also comes the reality that you now have to count on yourself to make your finances work.

The level you take this thinking to is your own responsibility. DO you just want to get out of debt and live a balanced life? Or do you want to succeed to the point that you work for yourself? Your goal should be at the forefront of your mind every single day! This series is about getting started.

Just for a little perspective, and background on my financial path, I will share with you a little about how I managed to leave behind me a LOT of debt, as a single Mother, and how I see my own finances today

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Many of you already know that I am quite the Coupon gal- I use coupons to get much of my NEEDS for free, or pennies. I have been doing that routinely for about 13 years, and have dabbled off and on with coupons for about 20 years. I want to say right off the top- this series is NOT about using coupons to get yourself debt free (Although that IS possible!). As we will discuss later, if times are dire enough, and you want to get out of debt badly enough, you will find any reasonable means that you can to increase your income. That just happened to by my resource at the time- and I now excel at it as a hobby! So finding my own self-worth, capitalizing on it, and taking ACTION- all were very key points.

My financial downturn really started after a nasty divorce- I inherited about $35,000 of debt, agreed to some terrible financial advice from an attorney and spent my savings, and topped it all off with using credit cards to accrue another $15,000 of debt- my grand total of debt  was about $50,000. This is not something I will justify or am proud of- it was just the reality of where I was at the time. The really telling part of my situation was a conversation with my mother- I found I couldn’t answer a simple question: “Where is all your money going, and how are you managing?” I realized that I was living my life paying off my bills, and living on whatever was left. I had no plan other than to pay off the debt to keep my head above water. It didn’t take long for me to realize I was headed for a crash and burn.  

Now when you are a single mom, your daily fear is falling on your face and not making it, losing your kids, and losing everything you have. Losing everything I had was really minimal compared to the fear of losing my kids-that was unacceptable. I took that fear, and made it my absolute driving force to get myself out of debt. I began reading financial series, attending financial (Free) seminars, watching tv infomercials, etc-and I came to a realization. Many of those series were geared towards already having money, already investing {what the heck IS a mutual fund!} and it was not speaking to ME! I didn’t give up though- and kept going  until I found a formula that made sense to me. One day I saw a show that talked about finding balance in your finances, and the man repeatedly talked about “Paying yourself first.” I thought “HOW SELFISH! How can you take care of you first and then worry about your house payment! Is this man an idiot!? He can’t have ever been in debt!” Well, I listened a little further, did some online research, and found out this man was a multi-millionaire, who started out with three times my debt –on less of an income! So much for my self righteous bubble!

I went on to do some further research, and for me, combined a variety of financial plans into a map that would work for me. 2 years after I started, I found a book on the exact subject! A woman and her daughter wrote the same plan, although they very much fine tuned it! Talk about validation on your choice to get onto a path to your goal! I used my own research, combined with theirs, and have paid off the debt that was weighing me down.  Now this does not mean I am a millionaire, it doesn't mean I am debt free, and it doesn't mean I am not still a work in progress! This takes TIME! I didn't get into debt in a month, a year, or 2 years! The work you put into this is the work you will get out of it!! Also, when certain life experiences happen, your formula can change abruptly. This is a general guideline for you to follow to get yourself on the right path.

I share this because I want each of you to know that I have been there. It is hard work to change your financial frame of mind. This series is not about making you a millionaire on your $30,000 a year income.  It’s not about retiring at age 40, or putting $5 a week away into savings to become rich, or changing to "generic" everything to save your budget. This series isn't about pinching pennies either- because all that really leads to is arguments and gets you distracted! This is about getting your DOLLARS to work for YOU!  

With all that said, what if I told you that I can teach you how to pay your bills, without worry or fear? Then, what if I told you that you can have some money for fun, without worry? Then, what if I went one crazy step further and told you that the cherry on top was that you can have a rainy day or savings plan without worry or fear? Think that’s a train you could jump on? I did it – and so can you. BALANCE. Write that word down, and REALLY understand that is the direction we are headed with your finances.

The first lesson I had to REALLY be open to was to entirely CHANGE the way I thought about money! Managing money, once in BALANCE, becomes automatic- I promise! Balancing your money isn't about making money your life true obsession. Money isn't really the goal at all. Chasing lots of money isn't a substitute for a real life. Not having a financial goal, though, CAN and will take over your life in the form of WORRY, worry, worry….top that with most of our negative money ways of thinking: 

“I am a single mom, so I will never be rich.”

Really?  Says who?  

“My family doesn't come from money, so I don’t expect to live any differently than they do.”

Do you see a problem with this kind of thinking? If you tell yourself you are living without means, then that is EXACTLY how you will live. If you change your mindset to “I can and I will," then with a little hard work, you will do it. It’s your choice!

One BIG POINT here: If you hit yourself against a cement wall – it hurts, right? If you keep hitting your head against that wall, will it still hurt? My guess is- YES! So, if you keep hitting your head, do you expect a different outcome? You should expect what you get out of your actions- pain with hitting your head, right? If you are spending and planning, and spending and budgeting and it’s not working, that is the equivalent of hitting your head repeatedly- and expecting a different outcome!  It’s time to readjust your thinking, and be open to a new plan. If you are here because you are doing “ok,” but want to be financially sounder, it’s VERY likely you are still addressing your finances in the “Cement pounding” way. We will revisit mindset later in the 2nd part of our 6 part series.

SO! Let’s GO! Today we start the first half of Part 1 {of 6}: Evaluate Where I Am!

  **TIP: DO not skip any one of these steps. Portions of them will be needed later on! 

Let’s start with your probable reality: “I can think all I want how abundant my money is, but the bills are piling up!”  ~My cup does not runneth over!

We can not discount this. The bottom line is, you can’t start onto a path of financial success until you know where you are presently. To do this, you MUST have a budget. Not  “Let’s pay the bills then see what’s left” plan either- that is NOT a budget!!!!  You need a reality check as step ONE. Let’s figure out your income and your spending!

Step 1:  Write down every single  penny that comes in as your income. This means your family paycheck, side family job, 2^nd job income, your child support, your monthly stipend from source X,  disability- you name it.

     -IF you do not have a normal, set monthly income, and get a varied check each month, take  your last 6-12 month total and divide it by 6 to 12 months, depending on how many months you have worked in the last year. That’s your monthly income.

     -Now take out your taxes. This is your AFTER tax income, and the number that we will be working with. So again, figure your income up, look at how much is being taken out in taxes, and set this as your AFTER TAX INCOME. Add onto this the deductions from your salary- that is, your 401k, your insurance deductions, disability deductions, etc). This is your TOTAL After Tax Income. 

Step 2: Make a list of every single current BILL that you have. This means everything you MUST pay. This list should include anything at all that you write a check for each month, is taken out of your check automatically (401k, etc), yearly home taxes (divide by 12 to see where it fits into your budget). Also include such things as daycare, mortgage/rent, utilities, your credit card payment, tuition, loan payments, phone, cable, cell phone, church donations, groceries, clothing, eating out, savings account deposits,  ANYTHING you have been spending routinely every month. You may have to look back at 30 days of checks, or your bank account ATM/Debit/Credit card spending. NOW is the time to put it all onto paper!

We are going to stop here this week. Grab all your bills, your check book, your bank account, and get these written down. Write down your TOTAL Income, your AFTER TAX Income, and then all of your "Bills"/spending/saving/payments. Bring this with you next week! 

Oh and I know what you are thinking: EEEK! Well, don’t look at it as depressing to see your finances on paper- look at it as the first step to financial BALANCE! 

Until next week,

Karen