For those of you making even a little bit more than you need for your fixed expenses, we are going to start a gentle and sustainable saving process that will help you build an emergency fund or, better yet, an investment fun.

After a recent personal budget review, I realized that I have been systematically spending more than I am making. I have a strict "no credit card debt" policy, so I was simply going to savings each month to pay everything off and thinking the following month I would be sure to spend less and make up for extra spending the month before. After 9 months or more, my savings account is teetering on extinction.

The cost of my children's after school activities started mounting and I could not say no to many expensive private lessons and sports activities.  Add summer camp to that, a new needed sofa and computer, and you can see how quickly the costs add up.

Hopefully by now you went through your budget and determined an amount that we can take off the top every month and set aside. The strategy is to pay yourself first. In this process, I am assuming you are receiving a traditional paycheck where taxes and  401k contributions are already taken out. I am assuming you are maximizing your 401k and now we are building a personal savings account in addition to your retirement account.

The amount you save per month can be as low at $25 or as high as you can commit to month after month. The objective is for you to put this money permanently aside for a 6-month cash reserve or begin a long-term investment account.

read more »

In my first article, I discussed the importance and inevitability of developing and living with a spending plan ( budget), savings plan, and debt management plan. Now that we agree we all must have one, let's discuss each one separately and then give you the tools to prepare one for yourself.

The Spending Plan

This is really actually quite easy because you have to start by listing all of your fixed monthly expenses. Take out a piece of paper now and do that. Include everything you can think of and then total that up. At this point, I have a catch-all for miscellaneous, and that is my average credit card monthly bill. I have to be careful here because many people I know who have a spending problem stop using their credit card, but I use mine for everything because I like to get the miles and I am disciplined enough to pay it off every month.

Accumulating miles on my credit card has been a great way for me to get free airline tickets over the last 10 years. Many of my clients are choosing the credit cards that give rebates and it is important to look at each. You must, however, be able to pay them off monthly and not incur any interest charges for them to make any sense at all. Personally, I have a strict "no credit card debt" policy so I am able to charge my sundry items and some bills to my credit and get the benefit of miles. Again, you can only take advantage of the miles or rebates if you have a strict discipline of paying your credit cards off monthly and on time.

read more »

Budgets are like diets...difficult to maintain and backfire resulting in binging and rebellion. Admitting that I cannot spend like I use to or like the "Jones" immediately puts me in a place of defensiveness and determination to take a well deserved vacation or "invest" in a new summer wardrobe.

In the last 10 years we have identified in our country an obesity crisis spanning from our youngest citizens to most middle-age Americans. It was embarrassing to face, but the statistics and health problems stemming from this fact were too strong to ignore. Now we cannot look at an overweight person without having compassion and concern about their heart attack risks, diabetes and general propensity for other health problems. It is no longer simply a judgment on their appearance but a concern for the inevitable health issues that come from prolonged obesity.

The crisis emerging among Americans today is a spending and debt crisis. An over-indulgence in consumption of the material kind. So likewise, today when we have a friend or family member who is overspending or simply not preparing or saving for their old age, we worry for the long term consequences on their quality of life.

All of us know that, as we age, our metabolism slows down and watching what we eat is more important than ever. Likewise, as we age our earning capacity levels out and we have less years to save and plan for retirement. Consequently, like watching our food choices becomes more and more important as we age for health and weight reasons, a regimented savings, spending, and debt management plan becomes imperative for sound financial health.

Resign yourself to developing a sound savings, spending, and debt plan and, in my next article, I will give you the simple tools to begin your own personal one no matter where your financial situation is at this time.

From Elaina Goodman: Even though I'm constantly struggling, I don't want my kids to grow up with a scarcity mentality, so we talk a lot about helping people with less and we always donate when we can. When I can't afford to buy/do something, I approach it in terms of already having plenty and not needing more. When my gas was turned off for lack of payment, I explained it as the heater was broken and we'd have to get someone out to repair it. What else can I do to ensure they don't take on the stress/worry/fear of having too little resources?

Maryann Kelly writes:

Elaina, your concern goes to the heart of the American family and you are not alone in your balancing act of wanting to live abundantly while having the constraints of a budget. I believe children under age 12 cannot appropriately grasp household financial management issues, and keeping then in the dark when there are problems is best. The potential stress and worry would be difficult for them to process.

However, once in their early teens, children can understand and appreciate the truth about the financial matters in their own household. It can be presented in a truthful, matter of fact, yet hopeful and abundant manner. A child can be reassured that the family unit is safe and able to maintain a place to live, but that mom is rebuilding her savings safety net in order to create options for the family in the future.

This is where a Family Mission Statement written and posted on the wall can come in handy. The Mission Statement can list their commitment to education, helping the less fortunate, saving for the future and not taking on debt or living beyond their means. The family can discuss times when going into debt is a good thing (like going to college, buying a home, or even buying a car to get to work in). But debt incurred simply to have more clothes or electronics is not something they believe in as a family.

read more »

One of my favorite clients recently said to me, "You have to have fabulous hair in your forties". She certainly does, and it looks great. I have nice hair too when I color it, trim it regularly, and blow-dry it professionally. The whole process takes an entire Saturday morning and, in Los Angeles, costs about $200 plus tip. I have so much gray that I was running to the salon every 3 to 4 weeks, and the costs were mounting. Of course there are also the manicures, pedicures, occasional facials, and much needed botox treatments.

Well, I had to find a breakthrough, and I did...at my local beauty school. I have to admit, my mom always went to the local beauty school in Long island when we were growing up. I actually think the schools have gotten even better. I introduced myself to the head of the school. She is an experienced hairdresser with beautiful hair and great color. I asked for an advanced student and for her oversight with mixing the color. Once we found the right mix for me, she wrote it down for future visits and she promised to oversee my future visits. The cuts have been a little more inconsistent, but the blow dry always looks great. Then again, many of my $200 haircuts were inconsistent too. A great blow-dry can make most hair look fabulous. The whole treatment: $20...and that is in Los Angeles.

read more »

Let’s face it — money can cause emotions to soar and plunge. Yet strategic financial decisions are best made in the absence of emotion. Thus, a woman going through divorce must learn how to separate her emotions from the financial issues facing her divorce.

I recommend building two separate support teams that a woman can access throughout her divorce: One to help her process her emotions, and the second to strategize financial decisions. The importance of having separate teams is that it requires you to stay focused and not drift into emotion or seek counsel from unqualified people on important financial matters. It is highly damaging to call a friend with no financial experience who feels sorry for you and starts telling you to take your soon-to-be ex to the cleaners. That kind of attitude can cause you to wrack up legal fees and cause dissension with your ex.

I recommend that, as emotions flare up, the woman call on her emotional support team (like a best friend, mom, therapist, pastor, or rabbi). Conversely, when she is called to make financial decisions, she turns to her CPA, a friend who is great with finances, or even a pastor. The key is to keep them separate.

Learning to identify your emotions is a real skill, and it is imperative to be able slow down when you are sad about the impending change in quality of life, scared about going back to work, or angry about the debt he accumulated or investments he lost. When you feel these feelings, STOP and write in your journal, meditate, or call on your emotional support team. Moreover, get some rest before resuming you strategic financial planning. It is extremely confusing and exhausting to try to make smart financial decisions with someone who is angry or sad due to lack of sleep. It is difficult to stay on topic, and your professionals will become impatient with you (and can even charge you additional fees for their time).

read more »

I am not a fan of eating out. It is expensive, bad for your health, and not conducive to good family time. Many moms fall into the trap of eating out regularly because they are in a rush and they have neglected to plan mealtime into their busy schedule. They are caught between sports practices or errands and pull into the nearest fast food chain or family restaurant.

read more »

When faced with divorce, how does a traditional stay-at-home wife assess her financial value? And more importantly, will the courts agree? The short answer to this question is that a good mother and devoted wife is a priceless blessing in any family. There is just no amount of money that can be attached to this role.

While each state has different laws on divorce, generally speaking I believe the courts are fairly sympathetic to the stay-at-home wife and mom when a marriage commitment fails. They understand this woman has often sacrificed advanced education and work experience to be head of the household.

My main concern is a much more dire concern than the courts not being supportive. I think the biggest risk to these women is the integrity and earning capacity of their former spouses.

As a financial professional, I see men being downsized quite frequently. Often, men going through divorce are having a mid-life crisis and face job problems, health problems, and other issues that effect their ability to perform in the workplace. Moreover, they might begin spending lavishly on women and begin hiding money. I have also seen many who, when faced with a large settlement, quit their job and take a long sabbatical rather than pay the alimony. That really scares me for women who rely on these men to pay their rent and feed their children.

A man’s prime earning years are often from 35–55, and for many it can become difficult to compete with younger co-workers willing to do his job for half of the salary. So even if the courts say you are to get $6000 a month if he gets fired or downsized, that settlement will be reduced until he gets another high paying job. That could take years if he is even able to get another big corporate job.
read more »

I know, I know—you're already saying, "My ex will never give me more. He is broke, he is cheap, and I never see him." But this approach is worth a try, and you have nothing to lose.

The Bible has an interesting passage that basically states, "Where your MONEY goes, your HEART will follow". Isn't that weird? I thought it would be, "Where your heart is, your money will follow". In other words, I always thought people will spend money on the people and things they love...but it is the exact opposite: You fall in love with the things you spend money on!!! Maybe because you are forced to search for the value in it...

Ok...let's see if you can follow my train of thought. Taking that passage, I thought I better show my ex directly how his money is being used, and he would fall in love with the process of educating, properly feeding, and caring for his children. Remember—where your MONEY goes, your HEART will follow. So I wanted him to know all of his money went right to the kids...I wanted him to fall in love with his kids and the process of educating, raising, and developing them. Then he might be more motivated and willing to work more and contribute more.

I am going to get right to the point. If you are lucky enough to have an ex who gives you child support, consider giving him an accounting of exactly how it is spent. Itemize the healthy food you buy them, the karate classes, the new swimsuit and the $10 or even $100 you saved for your child's college account. Thank him for all the help and begin to give him direct credit for his financial participation in your beautiful child's development and success.

read more »

The date is March 6, 2008 and economic data has been overwhelmingly bad for the past six months. I was concerned about the housing issue for a year before it finally came to a crash and I believe we are still going to experience continued weakness in the economy. The areas of weakness are as follows:

1. Real Estate will continue to go down. Real Estate cycles are historically about 8years, and we are just beginning the downturn cycle. I believe we are about 2 years into a real estate downturn and housing prices will be 20% less in the next two years. I believe it will affect even the most desirable places to live and places that have not yet been hit like New York City. The downturn will affect consumer spending and decrease profits in companies that rely on consumer spending.

2. Corporate earnings will be lower. Inflation and the cost of raw materials like oil, gold, and cement are increasing rapidly, causing the cost of manufacturing to skyrocket. Companies cannot raise their prices fast enough to protect their profits, so profits (or earnings) are falling. Companies related to real estate and to consumer spending are experiencing tremendous decreases in demand and earnings will be significantly lower this year.

3. Inflation will begin to affect the economy further, resulting in continued slow growth and downward pressure on the strength of the dollar. This will push boththe consumer and corporation further into debt—eroding the quality of life forthe consumer and profits for the corporation.

read more »