A Financial Education Event
 

Your Money Buddy

BGadmin

As we are on our Heroes at Home Financial Event tour (at 17 bases in 5 countries) we often talk about how to follow through on our good intentions when it comes to money matters. The best way to do this is to have a regular money workout with an accountability partner.

A great example of this is these Newlyweds, who just finished their first Sixty Minute Money Workout and they loved it!

They did the “Money Personality” workout and discovered what personality each of them has and how they relate to money.

The number one reason marriages fail is because of arguments about money so if you can learn how to have a good workout, then you can get fiscally fit. You don’t have to be married either, you can have a “money buddy” just as you have a workout partner to help spot you when it comes to lifting weights or kicking it in cross fit.

But it begins with setting proper boundaries, so you can learn to get along and not digress into arguments. This is the same technique I shared on Nightline as I coached a couple on how to fight fair.

Boundaries:

First of all, people need to understand that you don’t have to be a couple in order to do the workout. You can do it by yourself, or with a trusted friend, or even a family member who isn’t your spouse if you are single. But whoever you do the workout with, it’s important to set some boundaries to prepare:
• no condescension or negativity
• no interrupting your workout partner when they are talking
• no name calling
• no throwing food –
• start by saying one positive thing to each other
• end by saying one positive thing to each other
• create an environment that encourages comfort and success
• have a timer on hand (the one on your phone works well)

Step 1 – 5 Minutes – Make Up Your Mind Warm-Up
Here is where you set your timer for each section. When the timer goes off, then move on! In this section, you set the topic for the hour and begin with a “can do” attitude. It’s important to begin by saying or doing something positive. If you’re working out with a spouse, then begin by taking your spouses hands, looking into their eyes and saying something affirming.

Step 2 – 10 minutes – Strength Training
While step one was to start with affirming words and decide on your money topic, this next section is a time to write down goals on paper so that you will have a tangible and objective standard to work toward. Decide how you would like to see the topic resolved today, in six months and what the outcome of your goals will be in the long run. For example, if your topic is setting up a spend plan, you can also access tools like Mint that will help you in the workout.

Discuss obstacles that have kept you from reaching your goals in the past. If spending too much money on Amazon is slipping you up, then regulate that habit. Or if eating out too often gets you offline, then discuss ways to eliminate that obstacle.

Step 3 – 20 Minutes – Cardio Burn

In this step, you give feet to your goals. If you’re setting up a budget, then you write down the specifics and course of action for your topic of the day. This may not seem like a lot of time on this section, but realize that you may not get it resolved during the first workout. The key is to keep the discussion moving and work on what you can, whatever you missed, you can get the next time around. For example, if you’re looking to pay down debt, then go to Annual Credit Report to order free copies of your credit report. If your topic is improving your credit score, then go to Credit.com to discover where your score is weak and how to improve it. Or listen to a Periscope #CreditChat from@Experian_US. This show is hosted by Rod Griffin, our credit speaker on the Heroes at Home Financial Event tour.
Step 4 – 20 Minutes – Taking Your Heart Rate

If you are making progress on your goal, then continue to do the work. If you have gotten bogged down or you’ve reached a standstill, then use this time to redirect.

For example, if you’re developing a spend plan, and realize you are spending too much in an area, then you could redirect at this time to review this blog and learn quick ways that will help you save money in a variety of categories.
For instance, how to save on groceries.  We’ve saved over $160,000 in the last 20 years by employing a variety of tips I discuss in my books and blog.

Step 5 – 5 Minutes – Congratulations Cool Down
The workout has gone by quickly and now the last 5 minutes are dedicated to the “Congratulations Cool Down.” End your workout and sit back, grab a glass of something cool to drink and reflect on all you’ve accomplished in just one hour! You started on a positive note and you’re going to end positive as well. Take this time to tell your partner one thing that you appreciate about today’s workout in order to end the discussion well.

Keep in mind that just as you don’t get physically buff in just one workout, your finances aren’t going to get in shape after the first try either. But after you and your mate have exercised with this money workout a half a dozen times you’ll find you are making progress that can revolutionize your finances in only an hour a week!

For a free “Sixty Money Workout” review sheet, just email assistant@elliekay.com and ask for this resource.

Ellie Kay
America’s Family Financial Expert (R)

Quick and Easy Steps to Healthy Finances in the New Year

With the hustle and bustle of the holidays at a close, I remember what it was like to play with the new toys from Christmas long after ringing in the New Year. It was the time of marbles, pick up sticks, and hot wheels racers sets. My favorite toy was a set of Klackers. These came on the market in the late 60s and lasted into the early 70s. They looked like glass, but were actually acrylic balls attached to a string with a ring or small handle attaching the two strings. The object was to get the two balls going up and down and have them “klick” and “klack” against each other. You would build up momentum until they were hitting on the top and bottom in an arc. It was very hard to do at first and when they hit your fingers instead of each other, it was incredibly painful, too. Without fail, every time I played with my Klackers I ended up with bruised and banged fingers. But I kept playing, day after day.
I’m reminded of my Klackers when I look at today’s economy. Consumers have been playing with debt for years and it’s been hurting them—but they just kept playing. In fact, between 1989 and 2001 credit debt nearly tripled from $238 billion to $692 billion and last year it was up to $937 billion. The average debt-laden American especially feels the pinch when the economy is lagging, gas prices are rising, home values are imploding and inflation is rising. But there is hope and a way to not only survive a possible recession—but thrive in the midst of it.

Here are seven basic tips to help you beware and prepare in the new year:

1. Credit Credibility ––The first step, no matter what your financial picture is to improve your FICO (Fair Isaac Credit Scores) as these scores can determine a variety of financial issues including auto insurance premiums, whether you’ll get the promotion or the job (many employers check FICOS), and whether you pay a security deposit for utilities. You can get a free copy of your credit report at credit.com . If you downsize a home or a vehicle, you’ll also need to have an excellent FICO to get the best APR rates. You can improve your FICO in three easy steps:

  • Pay your bills a day early (rather than a day late) by setting up payments online
  • Pay $5 to $10 more than the minimum balance which indicates paying down debt
  • Proportionality: make sure that you don’t have more than 50% of the available credit charged on any one card.

2. Savings Savvy– I get loads of emails every week from people who are cutting hundreds from their household budget by following simple savings tips. From insurance to groceries, there are savvy ways to save at your fingertips. I have a lot of these savings tips on my blog. Start to implement these tips and it will create good discipline that will prepare you for a recession. Use the money saved from these tips to pay down debt and build short term savings.

3. Debt Deal Dilemma: With a slowing economy comes an influx of those who want to “help” prepare you for the worse by consolidating your debt. However, most “for profit” debt counseling companies charge a hefty fee for their services which is usually tacked onto your debt load. Instead, go to the National Consumer Credit Counseling Service and use their free services.

4. Don’t Do Dumb Debt– As things begin to get tight, you might be tempted to get a HELOC (Home Equity Line of Credit) or refinance your home in order to pay consumer debt. Bad idea. This will only deteriorate the equity in your home and chances are really good you’ll be right back in that HUGE boat load of debt by this time next year. The better option is to cut costs, budget, and go to the NFCC.

5. Budget Baby and Learn – If you don’t have a budget, as part of your lifestyle, then yesterday was the day to start. Set one up with online budgeting tools, found at www.elliekay.com. It’s also important to learn how to budget, a great new program that helps military families with their money matters is supported by the Military Family Advisory Network called MilCents and it begins a new (free) course in February.

6. Repurpose Funds: My daughter loves to take antiques and even junk and repurpose it to give it more life (and save money in the process). As you save money in one area, it’s important to redirect it to another area through proactive actions such as writing a check to pay debt or to fund your savings account.

7. Plan With A Purpose – Whenever a “theory” is tested, it must stand up to a “proof” in order to be established as true. You can have all this good stuff on paper, but if you slap down the credit card to pay for a “40% off” killer Marc Jacobs suit, or use debt to fund a vacation–then your plan is only a theory. For it to become REAL, you need to make it part of your daily life. This means you start living with your plan and don’t incur more debt.

Happy Savings and Happy New Year!

Ellie Kay

 

Boomerang Babies

 

“My kids will never come back to live with us after they are launched.” 

“I don’t have worry about boomerang children, mine have great jobs.”

“Junior would never get into trouble and need me to bail him out, he’s a good boy.”

Have you ever made a declarative statement that you had to take back and eat, along with a big, fat slice of humble pie?  I have. In fact, I’ve eaten so much humble pie that I’ve put on five pounds just this week!  Let me clarify that I haven’t had to eat any pie about boomerang babies as of date, and I don’t intend to start now. That’s why I’m approaching today’s blog very circumspectly.

“Failure to Launch” is not only a popular Matthew McConaughey movie (would someone puleeze give that man a shirt!). It’s also a syndrome in America among Boomer parents and their babies. There are many reasons for this boomerang barrage. One primary factor has to do with the unemployment rate among 20 to 24 year olds, which was 15.4% last year according to the Bureau of Labor Statistics.

Furthermore, statistics from the Pew Research Center indicated that 13% of American parents with an adult child had a child move back into the family home. While 40% of recent college graduates still live at home.

Money matters are the number one reason why these kiddies come back home to mommy and daddy as well as the struggling economy, student loan debt, consumer debt and in some cases legal troubles. 

There is good news and bad news for families in this situation. A boomerang incidence is bad when the children have an entitlement mentality, don’t carry their own weight in the home, are not looking for work, and cause their parents to delay retirement in order to get them financially settled. In short, when they are mooching.

The good news of the situation exists when this living arrangement is only temporary and involves a solid exit plan. In fact, it can be a great bonding time between generations, especially if there are grandchildren involved.

But one thing is certain:  boomerang babies introduce more stress into the household for everyone involved. But what to do? What to do?

Here is a suggested motto for a situation like this, just tell those babies:  “My love for you is unconditional, but my money is not.”  Your “money” in this case includes your home, furnishings, food, car, cash, retirement fund, home equity, phones, insurance, and anything else in your monthly budget that is impacted by new peeps living with you! If your resources are going out, then there needs to be requirements attached.

Here are some guidelines to follow if you find yourself in this situation:

  • DTR – “Define The Relationship” by discussing the living arrangement and defining the expectations on both sides. Come to an agreement as to what is expected of one another and delineate the boundaries.
  • Develop An Exit Strategy First – A solid exit strategy will have them back on their own between 3 and 6 months. If they know when they will be expected say “sayonara,” then that gives them a deadline to work toward in becoming financially independent again. It also helps to eliminate resentment when the time doth draw nigh.
  • Do What – Do What? – This is your new song, in that you are going to ask that son or daughter to do their portion for the household. This could mean doing chores and paying rent, or contributing by buying groceries and paying the light bill. The more uncomfortable it becomes in the parent’s home, the more motivation that child has to re-launch.  
  • Define the Rules – Unlike the DTR step, this is the part of the exit strategy that includes the establishment of a budget for the adult child. If they are living in your home, then you have the right to oversee a budget that will help them live on their own again. The idea of this may seem to restrict their freedom but it’s all part of the diabolical plan to give them the gift of financial freedom.
  • Demand the Rent – Once they are employed, then begin to increase the rent over the course of the next months until they are ultimately paying the same rent to you that they would be paying for a place of their own. YES, it’s probably more than what your lovely room and board is worth—BUT THAT’S THE POINT! You want them to see how it’s not worth it to live with mumsey, it’s a better value elsewhere.
  • Do Unto Others –– If you want to be kind (and sneaky), then you can take half the rent they give you (in the previous point) and put it in an account that you can relinquish to them forthe first and last month’s rent on a place of their own. But you don’t “owe” them this act of kindness, your money, after all, is conditional while your love is unconditional and don’t let them trap you into defining your love with how much you pay their way.
  • Do Give Them Wisdom – In some cases, the best assistance you can give them (besides the establishment of a budget) is to get them to a financial counselor such as www.nfcc.org that will help them for free. The National Foundation for Credit Counseling can renegotiate loans, restructure debt and provide accountability outside of your direct influence. There’s nothing like a third party to be the bad guy when it comes to letting them know the real deal in the real world and the accountability that the NFCC requires is nothing short of beautiful.   
  • Don’t Bail them Out! – Just remember the idea of precedence:  what you do once, you will have to do again for the same child (or for another one of your children). Keep in mind your needs such as retirement, getting under water in your home, paying your bills, your credit scores and your financial future. We owe our children food, shelter and clothing for 18 years and the training to launch on their own. We owe them unconditional love for a lifetime. But we don’t owe them a bailout when they overextend themselves or fail to plan responsibly.  

Ellie Kay

America’s Family Financial Expert ®

The Sixty Minute Money Workout

Today’s blog is a test: do my kids read my blog or not? For example, here’s a pic of my son , from a few years ago, making a New Year’s resolution to be more buff. He’s now a senior, how long will it be before I’m forced to remove the photo.

According to a recent survey (Source: Auld Lang Syne) 40 to 45% of American make one or more resolutions each year. Among the top new year’s decisions are resolutions about weight loss, exercise, and money management or/ debt reduction.
The following shows how many of these resolutions are maintained as time goes on:
– past the first week: 75%
– past 2 weeks: 71%
– after one month: 64%
– after 6 months: 46%
While a lot of people who make decisions during the new year do break them, research shows that making a decision to change is useful. People who explicitly make resolutions are 10 times more likely to attain their goals than people who don’t explicitly make resolutions.
If you are wanting to make a decision to get fiscally fit in the new year, then take a look at my newest book, The Sixty Minute Money Workout (Waterbrook, 2011) Let’s go through each part of the workout:

Boundaries:
As people prepare for the workout, it’s important to establish boundaries, here are some of the things that you need to know before you begin.
First of all, people need to understand that you don’t have to be a couple in order to do the workout. You can do it by yourself, or with a trusted friend, or even a family member who isn’t your spouse if you are single. But whoever you do the workout with, it’s important to set some boundaries to prepare:
• no condescension or negativity
• no interrupting your workout partner when they are talking
• no name calling
• no throwing food –
• start by saying one positive thing to each other
• end by saying one positive thing to each other
• create an environment that encourages comfort and success
• have a timer on hand
• Do the pretest to prepare you for the work. Each pretest will vary according to the chapter or topic you choose.

Part 1 – 5 Minutes – Make Up Your Mind Warm-Up
Here is where you set your timer for each section. When the timer goes off, then move on! In this section, you set the topic for the hour and begin with a “can do” attitude. It’s important to begin by saying or doing something positive. If you’re working out with a spouse, then begin by taking your spouses hands, looking into their eyes and saying something affirming.

Part 2 – 10 minutes – Strength Training
While step one was to start with affirming words and decide on your money topic, this next section is a time to write down goals on paper so that you will have a tangible and objective standard to work toward. Decide how you would like to see the topic resolved today, in six months and what the outcome of your goals will be in the long run. This gives you both a temporary focus (for today) and a long term focus (for the next few months) as well as a big world picture (for the long term.) Your goals will depend on your topic of the day. For example, if you are discussing a budget your goals might include: a) to set up a budget that is real and workable, b) to stay on that budget for the next six months in order to learn how to spend less than what you make, c) to have a budget become such a habit that it is a financial vehicle that will get your family out of consumer debt, help you pay for your kid’s college and fund your retirement.

Part 3 – 20 Minutes – Cardio Burn

In this step, you give feet to your goals. If you’re setting up a budget, then you write down the specifics and course of action for your topic of the day. This may not seem like a lot of time on this section, but realize that you may not get it resolved during the first workout. The key is to keep the discussion moving and work on what you can, whatever you missed, you can get the next time around. Go to my tool section for free online financial tools, http://elliekay.com/financial-resource-center.php

Part 4 – 20 Minutes – Taking Your Heart Rate
This is the point where you do any “work” that needs to be done after you’ve written a step by step plan from the previous section. For example, if you need to save money on your expenses in order to live on the new spending plan you set up, then you could spending this time on quick ways that will save you hundreds of dollars:

1) Save on Tax Preparation – Go to www.TaxAct.com in order to prepare and file your federal income tax return for free. This free software asks you all the right questions to make sure you are getting every deduction that you have coming your way.

2) Save on insurance – Go to www.progressive.com to compare auto insurance. It only takes a few minutes to get several quotes from different companies. You can save as much as $500 by shopping around.

3) Save on groceries – When you can combine sales, coupons, double coupons and store coupons, then you can save thousands of dollars every year on your grocery bill. We’ve saved over $160,000 in the last 20 years by doing this. Go to www.couponmom.com and enter your zip code they will show you what is on sale and what coupons match up with the sales items to get things for pennies or free.

4) Save with Social Media – By going to the www.facebook.com page of your favorite retailer or signing up to follow a beloved restaurant on www.twitter.com, your savings can add up to hundreds of dollars every year. Social media followers are often the first to know about limited offers or free items. For example, my college student daughter, in Chicago follows her favorite cupcake store and by saying the word of the day, she gets a $5 cupcake free. That’s a savings of $1865 every year! Somedays, she gives the cupcake away—so she saves and shares!

Part 5 – 5 Minutes – Congratulations Cool Down
The workout has gone by quickly and now the last 5 minutes are dedicated to the “Congratulations Cool Down.” End your workout and sit back, grab a glass of something cool to drink and reflect on all you’ve accomplished in just one hour! You started on a positive note and you’re going to end positive as well. Take this time to tell your partner one thing that you appreciate about today’s workout in order to end the discussion well.

Keep in mind that just as you don’t get physically buff in just one workout, your finances aren’t going to get in shape after the first try either. But after you and your mate have exercised with this money workout a half a dozen times you’ll find you are making progress that can revolutionize your finances in only an hour a week!

Ellie Kay
America’s Family Financial Expert (R)

Bush Announces Rebates Checks Go Out Early–The Check is In The Mail!

Apparently, the check is in the mail! We’ve all heard that before. I remember a magazine publisher who took a bunch of the writers to a conference in Fort Worth, TX. Somehow we ended up at Billy Bob’s and I found myself riding a mechanical bull–while wearing a suit and heels! Yee haw! I stayed on the bull longer than anyone and it was a wild ride. However, much to my dismay, the bull ride didn’t end at Billy Bob’s. Several months later, that magazine publisher got behind in their cash dispursements for their writers. They owed me $2500 and kept saying that “the check was in the mail”–right before they announced bankruptcy! What a buncha bull!

But this time, we have the President of the United States telling us that the checks are in the mail.

According to the AP news release, Bush said tax rebates will start going out Monday, earlier than expected, and should help Americans cope with rising food prices and gasoline costs, as well as aid a slumping economy. “Starting Monday, the effects of the stimulus will begin to reach millions of households across our country,” Bush said Friday in remarks on the South Lawn of the White House.

But these checks won’t help most Americans unless they follow three steps found in my 10/10/80 Rule (TM) :

  1. 10% – Give Generously – This may seem like a radical way to start dividing your tax rebate check, but it’s a way to help everyone–including yourself. Giving is the new cool. Look no further than Oprah’s new hit reality show, “The Big Give” or Bill Clinton’s new bestseller, “Giving.” But don’t leave the giving to Oprah and Bill. Here’s your chance to live like a millionaire and give 10% to your community, region or even the world. Buy groceries and give them to the homeless shelter, buy some new socks and underwear for the kids up the street whose dad got laid off work. By giving away the first 10%, you’re helping the economy, helping your neighbors and helping yourself feel good in the fact you can give.
  2. 10% – Save Safely — One of the safest things you can do with this part of your check is to put it in your savings account. Let’s face it, baby, the economy isn’t too stable and you need as big a buffer between you and creditors as possible–this is found by putting away some dough to bake future bread. So save at least 10%, if not more!
  3. 80% – Spend Smartly — Is smartly a word? If it is, then now is the time to behave smartly. This means that you spend it in a way that will s-t-r-e-t-c-h your dollars as far as possible. Buying a big screen TV and paying full price for it, just because you have the money is s-t-u-p-i-d. But buying that big screen TV at a store that offers “low price guarantees” such as Wal-mart, means that you’re paying the least price possible and will have money left over to put toward credit card debt. Just because you have it, doesn’t mean you should fritter it away. Save money and live well at the same time.

So enjoy the rebates, but make that enjoyment last as long as possible by giving it away, putting it away and spending it away–all in a smart way!

Ellie Kay

America’s Family Financial Expert (R)

http://www.elliekay.com/