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WHAT’S IN IT FOR ME?

Most people are familiar with the phrase, “What’s in it for me?” And many may think it is the cry of a selfish or immature person. This phrase can be a valuable stepping-stone to determine where you stand financially, and an effective process to review your goals! Cost-benefit analysis weighs the total expected costs against the total expected benefits of your actions, in order to choose the most beneficial option.

Many people think of cost benefit analysis as something large corporations do annually for their board and stockholders. It is also a great tool for you to weigh your personal financial choices. It is important to take out the emotional responses and express all benefits and costs in monetary terms.

There are some people who regularly deny themselves life’s pleasures; typically they come from a generation that has experienced hardship. Saving is very important, but taken to an extreme, even saving can be harmful. An extreme saver risks losing the joy of living today by planning for a future that never comes.

Current American culture, on the other hand, teaches that all desires can be met with a credit card. We live for the moment. Not only do we neglect to think about the future, but we also sacrifice future stability for instant gratification. It is important to find a balance between saving and spending.

***Spoiler Alert*** You are going to have to budget to see this in action!

For example, you may say, “I really need a vacation in Hawaii. It’s going to help me relax and feel less stressed.” If you charge a package trip to Hawaii now, are you willing to give up some weekly luxuries and put 200 dollars monthly toward the credit card until it’s paid off?

If you can commit to that plan, take the vacation and keep your promise to yourself! Since there are no physical reminders to make the payments, you need to be disciplined enough to follow through with your budgeting choices.

Now you’ve made a conscientious choice. Either way – Hawaii or a “stay-cation” – you set your parameters ahead of time and empowered yourself financially. When you tap into your own financial power, you no longer wait for a lucky break or hope that you win the lottery – you are actively taking charge of your life. What a great way to end the day!

Bob

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START TO QUESTION

3x3 Habits we learn from parents

You have probably heard this story before, but I wanted to share it again because it made such an impact on me.

It is easy to get caught up in the business of our lives and lose sight of what’s important and “WHY!”

A little boy started saving his allowance and any spare change he found, stashing it under his pillow.

One night, the little boy greeted his father at the door and asked, “How much money do you make?” The father was slightly offended and told his son it was none of his business.

Later, the father started feeling guilty and went back to his son and said, “Son, I make twenty dollars an hour.” The little boy’s face brightened and he asked his dad if he could borrow $12. Now his father blew up, “Why would I give you $12? You probably just want to spend it on junk toys and silly games!” He told his son to go to bed and angrily left the room.

As the father sat in the living room and his anger dissipated, he realized that his son very rarely asked for money. He had not given his child the opportunity to share why he needed the money. He went back to his son’s room and apologized, “I’m sorry I got angry. You rarely ask for money and I will give you the $12 you asked for. Why you are asking for extra money?”

With tears in his eyes, the young boy looked up and said, “I know you are very busy and have so much to do. I wanted to know how much you make so I could save enough money to buy an hour of your time. With the money you have given me, I have enough! Will you please come home earlier tomorrow night and have dinner with me?”

It has been said by many that no one regrets spending more time at the office as they look back over their life. Family and friends are valuable and your investment in relationships will always outweigh pure materialism. Do we need money? Yes! Do we need to manage our finances effectively? Yes! But remember there is more to life than just more.

As you walk through life, take a moment and breathe deeply enough to create a space; space that allows you to make choices objectively. Rather than simply reacting, have empathy with yourself and others. I hope you will honor yourself and others this week!

Bob

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DEFINE YOUR MONEY NERVE

We all have different wants and needs and there are many roads to reach the same goals. In the same way, we all have different levels of emotional tolerance toward our present financial situation. If your money nerve is being pinched, it is time to explore ways to release the tension.

Have you ever noticed how one friend always has to buy what they want NOW? And then needs to borrow cash for lunch? Or how another friend drifts through life without being aware if there is enough money for food and rent? You may have a friend who makes plans and no matter what happens, sticks to them – even when circumstances change and a shift might be beneficial.

Let’s see how one of my clients made a change.

John came from a family that relied entirely upon faith. John’s father was a devout Christian and a pastor of a small church. It was a point of pride that the Lord always provided, even if John’s family didn’t have a lot of money. Almost without fail, when winter came, a member of the church would approach his father and say, “The Lord has put it in my heart to buy your kids winter coats.” Thus, the family would get winter coats. John’s parents trusted God to take care of the family, and they were always taken care of – just not on John’s timetable.

John told me that when he was young, his family had a tradition: if you were passed a dime and needed the dime, it was yours; but if you didn’t need to spend it, it should be given to someone else who might need it. They called it living on faith and the family never “wanted” for their needs. As a child, John never had control over whether his wants and needs would be met. While his childhood experience of passively counting on others did not lessen his faith in any way, it did help him to recognize that he wanted a more active role in his financial decisions. As an adult, John created a long-term financial strategy. For him, it was essential to set targeted goals to fulfill his needs.

Have you explored your core emotional impulses when certain money situations come up? How do you react to an overdrawn bank account? Do you feel panicked and make corrections quickly? Or do you shrug it off – because you have overdraft protection!

Are you living on the edge or do you have some reserve? What emotions come into play as you navigate your finances: Feeling scared, empowered, ashamed, proud or angry?

As you review your feelings and reactions to financial choices, you may see patterns or habits you didn’t notice before. Once you define what is happening, you can make different decisions for a new result, just like my client John.

Bob

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Does Money Solve Everything?

yard work with grandpa

Do you use money to “solve” problems or to make people like you more?

My grandparents gave my family so much! They provided TVs, stereos, a vehicle when we turned sixteen – and we loved being spoiled by them. When I was a young adult and my grandparents needed some help around the house, I spent a weekend in their yard fixing things up. At the end of the weekend, my grandfather tried to give me a hundred bucks, which I politely refused. My grandparents were very confused and hurt. They could not comprehend that I simply wanted to spend time with them because I loved them.

It wasn’t until recently that I realized what my grandparents were really saying with their overly generous attention: “We don’t feel worthy of your love, but if we give you lots of money, will you pretend to love us?” I was totally taken aback and saddened by that thought.

What I came to understand is that my grandparents grew up feeling insecure and unworthy of attention. The only way they thought they could convince people to love them was through bribery. My grandparents taught my mother the same lesson, which not surprisingly trickled down to my siblings and me. Buying expensive presents, always treating friends or family to meals or providing luxuries that they cannot afford, to make others love you more, isn’t a “real” relationship.

All of these activities are positive things that we do with friends and family because we care about them. However, if the underlying emotion is based on fear and need, it might be time to explore your actions. Is your money serving you well when you “buy” people? Investigate the emotions that trigger your automatic responses in relationships. Begin making conscious choices that will generate a genuine connection based on love and trust.

Bob

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Begin With the End in Mind

3x3 Begin with the End in Mind

Beginning with the end in mind means getting in touch with your deepest core values and clearly visualizing what you want.

Let’s apply visualization to our financial life: Are you where you want to be financially? To make a financial shift, you will need to open your mind to change and new possibilities. Once you determine what goals you would like to achieve, planning the next steps is key to success.

I believe that one of the most important ways to bring about change is through visualization. This technique involves envisioning your future with a new perspective (rather than as an extension of your current reality). You may see yourself with an abundance of money or paid up on all your credit card debt or driving a new car. If you can’t visualize how your future could be, it is difficult to believe you can take the necessary steps to get there.

Many people say that you only need to believe in something to make it come true. Here is something that should come as no secret to most of you: success requires consistent effort.

Yes, I believe that it is important to visualize your future in order to make changes. However, if your reality keeps reflecting something different than what you envision, you may need to put in a few more hours or revise your strategy.

Envision what you want, tell yourself it can happen and draft a plan. Here’s a great example:

Sam, a client of mine, had always wanted to own his own business. He didn’t have specific details; he just knew he had a dream. Sam worked in a business park and there was no convenient place for a quick lunch. Each day, he’d come to work and think, “This place needs a sandwich shop.” He realized there might be an opportunity to open his own business and began to envision the details of his dream.

He made some plans and worked out all of the financial details for his own sandwich shop. He would offer a limited variety of Panini sandwiches (two types of cheese, two types of meat), canned soda or bottled water, and two types of chips. He determined that meal prices at ten dollars or less would attract lunch customers. He decided to lease four Panini machines for the first six months (rather than purchase them) in case the restaurant didn’t work out.

He needed a certain amount saved up before launching his plan. If the business took off in six months, he would continue building his sandwich shop business. If not, he would be able to get out without long-term debt. His exit strategy was in place. He saw a need and envisioned himself filling it. To his credit, Sam now owns a thriving sandwich shop.

What are your goals for this summer season? Setting your end result first will pave the way for change!
Bob

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Hidden Costs

What is the real cost of careless money management or your lack of decision making?

Choosing to look the other way, sticking your head in the sand when “things” get overwhelming or not assessing your current financial situation can become your default method of reacting to life. Instead, select how you want your life to unfold.

Hidden costs show up on many levels. There are COSTS that cannot be seen or are not included in a purchase that can often affect you negatively in the future.

Smoking is a good example; a pack of cigarettes may cost you five bucks today. Be aware of the implications from hidden costs. Decreased health and a higher cost of insurance and medical bills due to lung cancer may be a much greater cost than you want to pay in the long run. Those high health bills could be a hidden cost that most people don’t ever expect to face, but studies have shown are a real risk.

Another example is the hidden cost of winning. My aunt used to win every contest she ever entered. Of course, as a child, I thought this talent for winning was the greatest! However, there were numerous costs associated with every FREE prize. One year my aunt won a boat. She and my uncle were so excited, they named the boat “Wee Won.” First they had to pay extra income taxes on the free boat. Second, they had to purchase boat insurance. And third, they needed to buy a trailer so they could get it to the ocean and back to the house. Next they took lessons because neither one of them knew anything about boating. Then, of course, each trip required a tankful of gasoline to zip out into the ocean! Honestly, they LOVED that boat and had years of enjoyment, but they also spent tons of money on that one free gift!

Let’s zoom in on one hidden cost many of us are affected by and may not always know about. That is the ever-increasing interest rates that credit card companies and banks charge for the privilege of using their services. This is an area where buyers really need to be smart.

Invest some time into exploring various vendors. Investigate what their rates are and what happens to that rate if you make one late payment. You may pay the full amount due on time and still get hit with interest charges if you pay after the billing cycle ends. That doesn’t seem fair, does it?

Also, check to see if the interest rate goes up after your first year. That 0 % card may be great for the first year and then it may balloon up to 17% or 23% moving forward. That is a huge chunk of your hard-earned money! If you work to keep your credit score high, you will be rewarded with better rates, some as low as 7% for select credit cards.

Be curious and shop for the best deal you can find. It will save you thousands of dollars in a five-year period! Knowing what all the hidden costs are will help you make the best decision. You now have a more complete picture of how you manage your dollars, your cost of doing business and staying focused on a few long-term goals.

If you slip up and overuse credit cards, put a freeze on them – literally! Fill up a container with water, dump your cards in there and stash them in the freezer. You may have a burning urge to use them, but by the time the ice melts, the urge may have cooled!

Use your knowledge and a little bit of humor to take back your power and choose the best direction for your financial freedom!

Bob
 

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Honest Assessment

Growing Your Money

More month than money? It happens to the best of us!

Our outflow of money surpasses the inflow of income.

Fortunately, there is a way to take action. To get an honest assessment of your situation, you can make a list of all the money coming in and going out. Once you know the reality of your current lifestyle, you can change it. No judgment, no self blame.

Look at your paycheck. You must create a budget based on the figure that is actually deposited in the bank. If you base your plan on $1,000 per week when your take-home pay is really $750, you aren’t being fair to yourself and will always go over your budget!

Now you have jotted down all the numbers. Surprised? Now is the time to be honest and take action.

The next step is the tricky one. Write down ALL the things you spend your money on. EVERYTHING! Don’t be bashful. If it’s embarrassing, list it as personal or give it a “code name.”

See if you are saving any money. If you have no savings plan, create a small savings habit. Set it up as an automatic draft or debit from your checking account into a savings account. This will help you create a new habit and learn to pay yourself consistently.  Explore what saving is all about. It is not a punishment or a painful experience. It is simply a gift to yourself and your future. It is exciting to see how a strong foundation of saving quickly grows into a substantial investment. Save first and then spend your extra dollars.

If you totaled up all the income you would make in your lifetime, it will easily add up to over a million dollars. Wow! Who knew? Invest in yourself – you can do it!

Bob

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Know Your Value

I am valuable

What value do you place on financial freedom? If you place a high value on being debt-free and are consciously choosing how to manage your finances, you can start to mentally “pay yourself.”

Reward yourself for taking the time to map out your plan.

By questioning and evaluating your process of handling money, you can turn off the autopilot mode you were in and begin to explore new options. Navigating this new course may feel strange and uncomfortable at first. Stick with this action plan; you’ll develop new habits to support your dreams, and very quickly, this new lifestyle will become second nature to you.

Find the value in yourself, your relationships and your financial future. If you track your progress, you will see a series of small successful steps – all pointing toward your goals. If you find there are areas where you need help, enlist the guidance of a friend, colleague or family member who can be a champion. For example, if you are not sure how to start saving for retirement or need help setting markers for that big goal, a champion or a mentor can be valuable helping you navigate new territory and get you on the right track.

Explore your value in the workplace as well. Ask yourself, “Do I do everything possible in my position to demonstrate my value?” Determine what level of compensation others in your industry and at your level receive. Is there an industry standard of pay and is there a documented skill level or list of job descriptions you can use to compare with your current position?

You may find that you are under-valued at work and need to share what you contribute each day with your upper management. Do you have advanced skills? Have you taken extra training classes? Worked on special projects? Make a list of what makes you a more valuable employee and ask to be compensated. There are many people who wait for someone to recognize them or offer them a raise. If you ask for higher compensation, you have a better chance of boosting your wages. Ask and you may get it! You really have nothing to lose.

After making industry comparisons, you may also find that you need to update skills or invest in yourself. Take the initiative to make yourself more valuable. Conversely, you may find that it is time to move on.

Exploring, calculating and defining your value gives you the power to control your options. Whether you stay, change jobs, get more education or work harder to be the best at your current position, you have empowered yourself by knowing your value. Now you are better able to choose the best life for you and your family.

Here’s to a life of value!

Bob

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Tools For Success

3x3 Financial Toolbox

Last week we investigated your personal definition of success and this week I would like to give you a tool to assist you with defining how your money ebbs and flows.

Watch: A true story, finding an solution for a successful outcome! 

Once you know where your money comes from and where it goes, you can take steps to change the flow if needed. You may find that your current spending habits keep you from getting ahead.

It took me a year to eliminate a kickboxing gym membership!

I wanted to be able to kick butt, but the fees were the only thing kicking butt. I didn’t even have time to go to the classes. I held on to the membership because I wanted to envision myself as an active kickboxer. I spent over a hundred dollars per month to pretend I was Jean Claude Van Damme. The only weight some people lose by having a gym membership is the money weight they lose from their wallet each month.

Now that you are aware of your Money Nerve, you can begin to assess which expenses really serve to feed your financial growth—and which expenses really starve your financial future.

ASSESS YOUR BUDGET

1. What are some of your beliefs that block financial success?

2. Write the following at the top of your weekly budget: “I am going to list all my money, in and out, for the week of April 24- May 1. I will be completely honest and without judgment.” Lay out Income and Expenses side by side.

3. Make two columns:       Income             Expenses

Make a list of the income & expenses under each title

4. After you lay out your budget, determine whether the final amount you have is an accurate representation of your cash on hand at the end of that week. How does it look?

5. Determine which expenses you can cut.

6. Begin to analyze the income side of your budgeting and find possible adjustments.

7. Write down the steps you will take to begin building an emergency fund.

8. Have a contingency plan in place.

Write it here.

9. Continue writing in your daily journal.

Download a PDF of the Budget Worksheet here:

Remember, you are taking a snapshot of the money flow. No guilt, no blame, just an assessment of your money. You can take back the power to make new or different money choices to create the life you really desire!

Best of luck & if you have questions, just follow me on Twitter and ask! @themoneynerve

~ Bob

 

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Timeline For Success

Appearance of Success

Thirty years ago, success may have been defined as working at one company for a lifetime and being a loyal worker. I believe that today success can be found in the idea of increasing personal viability – searching for opportunities that allow you to grow within an organization, seeking new ventures and being open to emerging fields.

You have reviewed your inner dialogue and you are ready to define your concept of success. What steps do you need to take to fulfill your goals? Be prepared, there will probably be some frustrating moments.

Take a moment to assess your talents, your time and your budget. The more honest you are in assessing your current situation, the more secure you will be in moving forward on your path.

To turn around feelings of insecurity:
• Evaluate your social circle
• Surround yourself with like-minded people who support you
• Budget truthfully to know your current financial position

Your choices and accomplishments have gotten you exactly where you are today. This is where you wanted to be! Every decision you have made has led you to this place. If this is a shock and your “real life” doesn’t synch with what you say you want – this might be the very best day to formulate a fresh plan.

This is your personal space to make some Money Magic appear. You control the numbers and you define how and where you want to divert your money. Don’t let the media, advertisers, family or friends tell you what YOU want. Declare what is most important to you and create a roadmap to execute the outcome.

Take this moment to acknowledge:
“I am passionate about ________ and my goal is to someday _________!”

You will find that your timeline for success is built one day at a time as you execute small successful goals. Achieving goals consistently enables you to build a meaningful and prosperous life in your own time, even when roadblocks and detours pop up along the way!

Overall, you will be charting your own course with thoughtful intention. Your budget ebbs and flows as you invest in your future; planting seeds and making conscious choices to purchasing a home or taking that big trip; as you harvest the rewards. Living an abundant life becomes a way of life, not just a one-time destination.

Let your journey begin!
~Bob