Gails Blog

Now that the kids are safely ensconced in school, you have a minute or two extra to do some stuff for YOU. While many people consider January 1 to be the start of the New Year, I’ve always felt that September is my New Year. I guess it’s a hold over from getting new school supplies, new clothes, a fresh start on a new school year.

With the holiday season just around the corner, and 2009 a glimmer on the horizon, this would be a good time to do a Fall Financial Check-up to see how you’re doin’, what needs some attention, and what could use a complete overhaul.

Okay, grab a pencil and a piece of paper and answer me a few questions:

• On a scale of 1 to 10 (10 being “ecstatic”) how do you feel about where you are financially today?
• What’s the biggest financial concern you have right now
• What one thing do you want to accomplish before another year rolls past?

If you’re on target, give yourself a pat on the back. If you’re not, give yourself a Gail Hug and know that you can change anything you want about your life, if you want it badly enough.

Time to take a look at your budget and see how the numbers shake out. Often, as we progress through the year and get comfortable living on a budget, we also get complacent and our costs start to rise. Look at your last month’s spending to see if it is still in line with your planning. Is it time to do some trimming? With food and gas prices having risen significantly, do you have to trim in other areas to rebalance your budget? Are there other changes that have taken place since you did your budget that you need to incorporate officially?

Are you on target to be debt free PDQ? I know some people find that it’s hard to even imagine being debt free, but you can be. It may take another job to earn the extra money to get out of debt, but if that’s what it takes, you can do it.

I just finished working with a lovely couple – wait till you see this show, there’s a big surprise ending. I asked Sean to find a way to make another $400 a month that could be devoted to debt repayment. He changed his job – he was working at a hospital and switched departments – and came up with another $1400 a month. And Amanda found a part-time job, aside from the one she was doing at home, to push the debt away even faster. They had a real CAN DO attitude, and just needed a push in the right direction

Is your emergency fund growing? Again, it takes small steps to get to where you want to be. Having three month’s income or six months’ worth of Essential Expenses isn’t a nice to have, it’s a gotta have. I’m just posting the numbers for a family that got way behind several years ago when their young daughter was diagnosed with cancer and they had to go from two incomes to one. If they had had an emergency fund, the damage to their financial picture would not have been so severe, enabling them to find their feet more quickly when the emergency had passed.

Are you taking advantage of a retirement plan at work (and the savings matching program they may offer), or are you using an individual retirement savings plan? If you answer “no” to this question, give your head a shake. How will you eat when it comes time to stop working? How will you keep a roof over your head? If you think your kids are going to take care of you, how would you do right now if your mom and dad showed up on your doorstep?

How are you putting your money to work for you? In other words, what are you investing in, and are those investments still working for you?  Are you well diversified? Diversification helps you weather investment volatility because all your money isn’t tied up in one sector, type of investment or geographic location. If your advisor hasn’t reviewed your portfolio with you yet this year, get on the horn. This would be a good time to adjust the investments that may have fallen out of whack with your goals and tolerance for risk.

When was the last time you reviewed your insurance coverage: car insurance, property insurance, life and disability insurance. If you think insurance is a waste of money, how would you cope if the worst did happen? How would your family cope? As if a disaster isn’t bad enough, would it be fair to them to be financially wiped out at the same time?

Do you have a will? Powers of attorney for both personal care and money? And have you named a guardian for your children? Have you reviewed this documentation in the last two years, or since your last major life change (marriage, divorce, moving, birth of a child)? If not, time to dig out the paperwork and have a look to see if it still meets your needs.

It’s easy to put off looking at your money. Put it off. Put it off. Put it off. But you’ll get no peace of mind from not knowing where you stand. Better to grab the paperwork and a cuppa, a calculator or your spreadsheet, and do the detail. While you’re at it, create the checklist you’re going to use next year to make sure you’re covering all your bases.

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Every week I work with families who are spending too much money. Too much money on clothes. Too much money on entertainment. Too much money on food. And I regularly get emails from people who what to know how much they should be spending on food. I don’t know. It depends on how much you make, how many people you’re feeding, and what you like to eat. I’m just working with one family right now how are mad for organics. Buying organics means your grocery bill could be 40-50% higher than with conventional foods. And if those organics are being shipped from some far-away far, then the whole “better for the environment” question is moot.

Not that I have anything against organics. Nope. It’s your belly so you get to decide what you put into it. But if you’re going to shop organic, you should at least know when you’re getting your money’s worth; not all foods need to be organic. Bananas don’t have to be organic. Not with that thick peel. Ditto avocados and pineapples. A big surprise for me was when I saw that broccoli doesn’t have to be either. Apparently, regular broccoli doesn’t have a lot of bad gunk attached, so the organic version isn’t putting you much further ahead.

With food prices going through the ceiling, people are looking for ways to keep their budgets in line while still being able to eat well. Probably the best to do this is to meal plan and shop with a list. Over and over I’ve give this as a challenge on the show, and over and over the couples have LOVED it. Since they have to do it for me, their resistance goes down. And once they’ve done it, they’re totally convinced it’s the best thing since sliced bread.

Planning menus a week in advance lets you see just what you’ll need to buy – eliminating overbuying and waste. It’ll also let you “shop the fliers” so you can centre your meals around what’s on special.

One of the ways we drive our food costs way up is by buying too much. Buying in volume only to have to throw out part of it saves no money. If you’re buying in bulk and storing food in a freezer, you should divide your buys into individual servings so you can take out what you need whether you are feeding a brood or just a couple of people.

If you do have leftovers, use them for lunches and save the eating out money for special occasions. And consider bulk cooking so that you have stuff at the ready in the freezer to pull out and warm up when time just gets away from you. That’ll save ordering in when your get to the end of the day and are just too beat to cook.

When I make soup, spaghetti sauce, tomato sauce… or even roast a big piece of beef, I always put at least one serving – usually more – away in the freezer for those days I just can’t face the kitchen. Since I live in the bush, there’s no ordering in. This has also given my kids, particularly Alex, some extra independence. With her favorite home-made roasted garlic/basil/tomato sauce in the freezer, she can make pasta for herself when she doesn’t like what I’ve whipped up.

I’m a big believer in buying in bulk. But not everyone has the extra money or the space to store lots of extra stuff. The solution: get together with family or friends and split whatever you’re buying into thirds, quarters or fifths. You’ll each get a cut of the savings but you want have to manage too much inventory at once.

In my house we keep a running list of what we’ve used up so that we automatically restock our larder. When stuff goes on sale, I buy four or six. Most grocery items are discounted once every three months or so. Seasonal items (think barbecue sauce in summer, soup in winter) have big “sell off” discounts at the end of the season. Of course, if you have stuff in your pantry that you never use, that’s a waste. So, at least once a year, I run the larder down to next to nothing, using up old stock, and saving the money I’m not spending to do a restock.

This year I’m also planning a big party, and the food costs will be significant. I cashed in my Airmiles points for grocery coupons so the big shop won’t throw our budget out of whack. That’s thinking outside the box.

While you’re shopping, watch for shrinking product packages. While manufacturers are sensitive to the increased costs they’re having to deal with, and in response to the recession, instead of putting the price of a package of OJ up, they’re reducing the size of the OJ container. So you’re paying the same amount of money for less product. Don’t assume because the package looks the same, that the amount you’re buying is the same.

Be sure to check your cash register receipt before leaving the store parking lot. Cashiers can make honest mistakes that end up costing you money. If you have been overcharged for an item, you are more likely to return for a refund (and more likely to receive it) if you are still just outside the door.

I often talk about habits and how important it is to get busy forming good ones. Sometimes it’s in the context of the question: Why save when you have debt? Because saving is a habit, and the longer you take to form the habit, the less likely you are to get good at it. Sometimes it’s in the context of exchanging bad habits with good ones. This is a challenge I sometimes give my couples, and it works really well to bring home the point.

Habit can be your best friend or worst enemy. Get in the habit of whipping out that credit card every time you see something that makes your juices flow and you’ll be neck-deep in debt FOR FRICKEN’ EVER! Get in the habit of saving the money you want to spend on an indulgence before you go shopping and you’ll always be in the black. Wow! What a concept.

One of the things that can get in the way of forming a new, positive habit is not being clear about what you want to achieve and how you’re going to go about doing it. If you’re planning on tracking your spending, you need to have how you’re going to do that clear in your mind – what tools you will need, when you will do it == and you need to WRITE IT DOWN.

Focusing on one habit at a time is more effect than splitting your energies in several directions. Once you’ve established the habit, you can then look for a new positive habit to establish.  The idea is to make the thing you are doing – the habit you are establishing – so ingrained that not doing it isn’t even an option.

It’s useful to recognize the obstacles that may interfere with your habit formation as long as you don’t use those obstacles as your excuses for not continuing to establish the new habit.

The Japanese have an interesting approach to forming new habits. Kaizen focuses on continuous but small change, which helps to maintain momentum. So instead of saying you’re cooking all your meals at home from here on in, you pick one night a week when you’re going to cook and you stick to it, until The Wednesday Night Home-Cooked Meal is a habit. Then you add another day. And another. And another, until you’ve reached your final goal.

Rumour has it that it takes 21 days to form a new habit. I happen to take longer. I’m a slower burn. So I think the amount of time it’ll take before you move to the next level is dependant on your personal resistance to change.

The process of forming a habit is easier if the habit activity has a reward associated with it. A work out is rewarded with endorphins, a study session with a great grade. But the reward doesn’t make a habit. That comes with repetition and the neurological pathway. That’s why the more you practice piano, tennis or reading, the better you get at it.

It takes determination, hard work and self-discipline to develop a good habit. I once heard it likened to putting a satellite into space: at first it requires a huge amount of force and energy to get the satellite into space, but once there, it moves effortlessly.

Aristotle said:

“We are what we repeatedly do. Excellence then, is not an act, but a habit.”

So what habits are you working to form? What’s your best habit and what did you have to do to make it a habit? 

I’m a very happy woman.  I’m convinced that one reason I’m so happy is because I see the donut and not the hole.  Lots of people I know can only see what’s missing in their lives, so they head out to the mall to fill the holes. Me, I only buy stuff when I’m bored or really need something. So if I’m bored I find something constructive to do, or I stay out of the stores. If I really need something, I make sure I have the money for it or I find something constructive to do to get the money, or I stay out of the stores.

Back to being happy. My happiness is part contentment. When I first got him, my husband used to quote me this poem (while smiling):

Contentment
is for babies
and for cows
To live life
vibrantly
is to dangle
securely
from a
frayed
string.

I said, “Hogwash” and set out to prove that contentment wasn’t something to be despised. I’ve converted him.

My contentment is hard earned. I’ve read a lot to find answers to the questions that have plagued me and come up with some nice guidelines. Here’s one of my favorites quotes from Zen Master, Thich Nhat Hanh:

Whatever the tasks,
do them slowly

with ease,
in mindfulness,
not with the goal

of getting them over with.

Resolve to do each job
in a relaxed way,

with all your attention.

Our lives are busy and we tend to rush through things to get to the next thing to rush through. So we forego all the pleasure we would derive from completing the task. I find this with cooking. When I have to just Get It Done, I don’t get any of the pleasure I normally derive from Creating a Masterpiece. When I Zen Cook, I have way more fun and the food usually tastes much better. And I am content.

If, at the end of the day, you are exhausted and stressed out, it may be that you are rushing through your life, taking no pleasure from the completion of tasks and the achievement of contentment. And if you’re only pleasure today was from shopping, it may be that you’re filling the hole in your life with the wrong thing.

Try this:

Think about what’s important to you. What do you really want to be doing? Who do you like to spend time with? What do you want to accomplish? Make a short list of 4-5 answers for each of these questions.

Assess your commitments. Are you trying to do too much? Is your plate too full? Are you over-committed? You can’t possibly enjoy your life if you’re trying to do too much. Accept that you can’t do everything, know what you want to do, and work to eliminate the commitments that aren’t as important.

Leave space in your life. Put in time to do nothing but sit, think, imagine. It doesn’t have to be a lot of time. But you do have to make time to be with yourself in joy. Another mistake is trying to schedule things back-to-back, which leaves no space in case things take longer than planned or something unexpected crops up. It also leaves us feeling rushed and stressed.

Prioritize. You can’t do everything on your to-do list, so begin by deciding what you MUST do. Write an “A” beside those things, and focus on getting them done. “B” things come next, and “C” things can fall off the list, please! Now, slow down and enjoy doing each “A” task. This is the most important step, so read it again.

Finally, take pleasure in the simple things you do throughout your day. Knowing what your simple pleasures are, and putting a few of them in each day, can go a long way to making life more enjoyable. I commute my kids to and from school – half-hour each way — and I could make it into a chore, but instead I look forward to that time. I can use it to plan, to work through stuff I’m trying to figure out, to look at the beautiful scenery, to listen to an audio-book, to plan dinner, to talk to my children… the list goes on and on. I use it for pleasure.

I am a happy woman. Some of it’s natural. Some I’ve worked hard at. And I’m content in the happiness I’ve achieved. From time to time something comes along that pushes me out of The Happy Zone, but I fight like a fiend to get back into it. I guess I’m an addict. A happiness addict. I will not settle for less.

Here comes another beautiful summer weekend and you probably have a place or two to go. So pack up your car and have fun. Speaking of your car, in my experience, car-owners fall into one of two categories:

• there are the people who loooooovee their cars. They name them. They treat them like babies. They’re obsessed with polishing them and adding accessories, and
• there are the people who no nothing ’bout cars. I fall into this category. I think the dirt is fine since it’s probably holding my car together. I don’t sweat the dings and bumps. And the inside of my car always looks like I’ve just come back from a long car-trip with a band of wild children.

Sadly, both these groups of people may be wasting tons of money with their cars. Look through the following list and see if you’re doing anything wrong that you can cut out and save yourself some cash.

1. You pay to have someone wash your car. I can’t believe what a carwash costs. Every time I drive through the gas station that offers a car wash and see what they’re charging I shake my head. If you’ve got a bucket and some soap and water at home, why would you fork over $10 or more to have some machine wash your car. Why not turn it into a family affair, bathing suits and all, and have a car-washing-soap-and-water fight with the kids.

2. You never put air in your tires. Tires that need air use more gas and wear out more quickly. Don’t over-inflate though. That can be dangerous since not enough rubber hits the road to keep you safe.

3.  You buy premium gas.  Rumour has it if you use only the best gas your car will need fewer tune-ups and get better mileage. Yes, if you’re driving a high-performance vehicle, you need super-de-dooper gas. But most of us don’t, so don’t waste your money. According to them that know, the difference between 87 and 93 octane is so small that you won’t get better mileage or see lower maintenance bills.

4. You don’t bother to maintain your car or keep records. According to Natural Resources Canada Office of Energy Efficiency Auto$mart Thinking program, a well-tuned engine alone can improve fuel economy by up to 4% while a poorly maintained vehicle can increase fuel consumption by up to 50%. And if you aren’t keeping records, how will you know when someone’s trying to talk you into something you don’t need?

5. You haven’t raised your deductible on your car insurance. You wouldn’t make an insurance claim for less that $1,000 so why not raise your deductable that high and boost your emergency fund.  Make the call to your insurance company and see just how much you could save.

6. You’re a speed demon. Cars are most economical at about 100 kph. Driving faster uses up more gas.  According to one European study, rapid starts from traffic lights and hard braking consums 39% more fuel. And accelerating and braking is not only hard work on the car, it’s tougher on you as a driver. So relax, which brings me to…

7.  You’ve never turned on your cruise control. I love my cruise. It keeps my pace even, eliminates my sometimes leaden foot and makes my ride that much more comfortable. Just don’t turn it on when it’s pouring since there have been problems with cruise control causing hydroplaning.

8. You “warm up” your car. Really? You let your car sit there burning gas going nowhere. So you don’t think your mileage is crappy enough? According to Transport Canada, if every Canadian motorist reduced idling time by just five minutes a day, carbon dioxide emissions would be reduced by 1.6 million tonnes per year. Whew!

9. You never ask for directions. I know more than a few people who fall into this category. Okay, so if you get lost and end up driving around for an extra ten minutes, you don’t think that affects how much you’re spending on gas? Hmmm.

10.  You refuse to turn on your air conditioner because it wastes gas. Yah, A/C makes extra work for the engine, increasing the amount of gas you burn. But air conditioners are very efficient so around-town driving using the A/C will reduce fuel economy by about a mile a gallon. The highway is a different kettle of fish. Since driving at higher speeds with the windows down greatly increases drag, using your A/C is the more efficient choice.

11.   You don’t plan your trips. You need milk, you jump in the car. Your kid has hockey practice, band practice, skating practice, you jump in the car. You forgot to get the gezunta that goes with the whatchumacalit, you jump in the car. Since trips of less than five kilometres don’t usually allow the engine to reach its optimum operating temperature, particularly in the colder months, you burn more gas.

12. You drive around with your trunk full of crap. For every extra 45 kg (100 lbs) you carry in your vehicle, your fuel efficiency can drop by 1-2%. If you’re not using your roof rack, take it off. Not only is there a weight factor, it affects the aerodynamic efficiency of your vehicle reducing your fuel economy by as much as 5%.

BTW: Now you can save your favorite blogs using any of the bookmarks below. Hope you like this added feature. cheers, and have a great weekend. g

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One of the biggest issues for people who are having financial difficulties is the fact that everything about their money is disorganized. They pay bills late, don’t pay them at all, or pay the same bill twice. Yup, I’ve seen it with m’own eyes, people. They transfer money back and forth between numerous accounts, often incurring overdraft fees because they miss by minutes. They take $100 out of the bank and 20 minutes later they’re back for another $20. Whazzup with that?

Most of us are disorganized in some way. I can never seem to find my keys. No matter how many “spots” I have in my purse, in my fanny pack, on the hook, I seem to spend more time than I should looking for my keys. Some people can’t keep their shelves organized. Other people have a junk drawer where they dump stuff until they “have the time” to get it put away. I’ve seen the Junk Drawer principal even applied to a whole room in a house. Sheesh!

Disorganization is one of life’s great stressors. Visual clutter makes us feel uncomfortable. Mental clutter keeps us awake at night. Taking the time to get your stuff organized, including your finances, will pay in time saved, reduced stress and a clearer path to being financially balanced.

People want to be organized and they’re constantly looking for an easy way to put things in order and keep them that way. When I did my speaking engagements last year, we gave away an Office in a Box at each session. People cried when they won the Office in a Box. It was relief, I think.

Build your own Office in a Box. You probably have lots of this stuff just sitting in a drawer somewhere. All you need are:

• Box of file folders (approx 30)
• Box of hanging folders + tabs (approx 25)
• Box to hang folders in
• Lables (1 box)
• Pens coloured (1 pack)
• Pencils plain (1 box)
• Eraser
• Small stapler
• Staple remover
• Scissors
• Scotch tape
• Paperclips
• IN box tray x 2
• Post-it notes
• Calculator
• Envelopes (letter sized)
• Stamps
• Accounting book — ruled

There’s no magic in getting organized. It takes time. It takes focus. And it requires that you have a process that you can follow. But it isn’t hard. Any dope can do it. 

When it comes to getting organized, everything needs a place. Gather all your paperwork and create a file folder for each of your accounts, forms of credit, home, insurance, estate, and taxes. You can use a filing cabinet or a box. The folders have to be able to stand up on their own, or you can use hanging folders to keep them straight.

Welcome to 21st Century banking.
 If you don’t already have it, set up telephone or internet banking. If you don’t have a “free” or almost free transaction account, you can reduce fees by setting up a buffer
 If you can afford it, transfer $1,000 float to your chequing account (pretend it isn’t there) and use that to minimize your banking costs. If you’re paying more than $20 a month (that’s high) for your banking, you’re a sucker!

Save automatically.
 Create an auto-debit from your chequing account to a savings account that will not be touched. Most people won’t put money into a savings account on a regular basis, opting to wait for a tax-refund or bonus before setting aside some money for the future. Establish an automatic savings deposit every month and your nestegg will accumulate faster than you think.

Create a Monthly Bill Summary. List your bills in the date order they need to be paid to prevent you from missing a bill. If you have bills that are paid automatically from your account, write an “A” beside these bills and remember to deduct them from your Spending Journal at bill payment time each month.

Set-up your in-baskets. 
Create an in-basket with two Unpaid Bills folders labeled “1-15″ and “16-31″ 
 Don’t let the mail pile up. As soon as you bring in the mail, look at the due date on the bill and put it in the appropriate folder. Recycle all the marketing crap in the envelope. 
Create a second in-basket with 3 folders labeled “bank statements”, “bills paid” and “tax receipts”.

Weekly


Make a date with your money. 
On the 12th and 28th of each month to pay bills, set aside the time in your schedule - you’ll need about 30 minutes, depending on your bills — to pay your bills.

Always pay your bills in one place that you’ve equipped with your bill paying system, spending journal, envelopes, stamps, pens, pencils, a calculator, tape, a stapler and return address labels and recycling bin for all that marketing stuff you’re going to dump.

When you pay a bill, write the cheque or transaction number, amount paid, and the date you paid it on the bill. Put the paid bill in your “bill’s paid” file. Deduct the amount you’ve spent from your Spending Journal. If a bill has not been paid in full (tax bills are paid over several months, for example) put it back in your Bills Folder so you don’t forget it.

Monthly

Reconcile you bank statements. When you bank statements come in, put them in your in-box folder. Make a date when all your statements are in (it’ll depend on when you receive them) to:

• review your statements to make sure there are no mistakes
• reconcile your Spending Register; clearly mark the cheques that have gone through your account and highlight the ones in your Spending Register that haven’t yet cleared the bank. A cheque that is taking a long time clearing the bank can lull you into thinking you have more money than you do. Go back at least a month to make sure all previous cheques have cleared.
• talk with your partner about anything unusual

Quarterly


File. 
Once a quarter, file all your paperwork to keep your system current.

Talk.
 Have a dinner with your partner and talk about the bumps, your goals and how you’re doing.

Annually


Re-vamp your budget. 
Review your budget using last years cc statements and bank statements to see what you actually spent. If you spent more on a particular category, make sure you know why, or look for ways to trim.

Clean up.
 Go through your files at the end of each year and throw out bills and receipts no longer needed for auditing/budgeting purposes.

• Tax Returns and Backup Documentation: Whether personal or business, the general rule is seven years.
• Insurance policies: Keep everything for as long as the policy is in effect. You can dump the old policy if you get a new one with your renewal each year. Don’t rely on the insurance company to provide copies of your records since any burden of proof will fall to you.
• Warranty Documents: Review your warranty file annually and get rid of documents for defunct appliances, telephones, or anything else that’s gone the way of the recycling bin. And, of course, when the warranty expires, you can chuck the paperwork.
• Home Repair Bills & Contracts: For as long as the warranty is in place, or longer if you want to prove upgrades for insurance or home resale purposes.
• Pay Stubs: Keep your last two year’s worth.
• Bank Statements: Keep a year’s worth in an accessible place so you can re-vamp your budget from accurate figures. File everything else for five years.
• Credit Card Statements: Keep the current year’s on hand for revamping your budget.
• ATM Receipts: Dump them once you’ve reconciled your bank statement at the end of the month.
• Investment Documents: If you have stocks, bonds, or mutual funds, you are buried in prospectuses, privacy notices, address confirmations, along with your regular statements. Keep the statements. Forever.
• Utility Bills: Writing off your utility bills for tax purposes? Keep them in your tax file. Otherwise, keep one year’s worth for comparative purposes. 
• Mortgage Documents: Until you die or the mortgage is paid off, whichever comes first.

BTW, people have been asking about The Budget Binder. There’s an example of how to make your own in the Your Questions section.

As I was checking into my hotel last night I was greeted by a lovely young man who expressed some frustration at not being able to beat down his debt. With about $12,000 in debt, some at the highest interest rates going, he was frustrated. He’d tried to get a consolidation loan but had been turned down because the bank said he was already overextended. (We’re going to see more and more of this as credit gets tighter.) He was wining the battle, but said, “It’s hard staying motivated.”

Yup, when it feels like you’re progressing in teeny tiny steps, it can be hard to stay motivated. Just the thought of tackling a mountain of debt can stop the less brave from even beginning. It can seem like a massive undertaking to jump-start yourself into action. It can seem even more daunting to maintain your focus when your progress, although steady, seems really slllooooooow.

So what can you do to help you stay motivated? Try some of these ideas and see what works for you.

Make a List. Write down your financial goals in small increments.
So if you want to pay off a $3,000 balance on a store card you might write:

Transfer balance to a lower-cost card
Earn an extra $200 a month
Trim $100 from my budget
Pay $300 a month toward card in August
Pay $300 a month toward card in September
Pay $300 a month toward card in October

And so on…

As you achieve each of your individual steps on your list, you can stroke them off. Man, what a feeling as you watch your page fill up with stroked-out achievements! And if you start doubting your progress, if you start feeling demotivated, you can look back at the success you’re having and kick yourself in the pants.

Tell Everybody What You’re Trying to Do. One of the biggest problems we have is the fact that money is still a BIG SECRET. Whazzup with that? I mean, if we’re prepared to talk about our most private matters, why the big secret when it comes to money? Because we judge others using money as a benchmark. And we’re afraid they’re going to judge us. STUPID. Let’s face it, we’re all making mistakes and if we don’t share our mistakes it means we have to make them all over and over, never learning from our friends or family. And keeping secrets means we can’t count on our friends or family to pull us back from the edge when we come close to falling. But if we tell people we made a mistake, if we ask them to help us stay on the straight and narrow, then when we become tempted we can use our Safety Network to pull us back, to help us stay motivated.

Keep a Journal. Don’t moan. I know not everybody likes doing this, but it works. Write down what you’re doing, what’s working, what’s not, and what you’re going to change, and you’ll find yourself closer and closer to your goals.

Eat the Frog! If you have things you need to do that you find easy to procrastinate, then do them first! It’s called “eating the frog.” It’s a quote from Mark Twain who said if the first thing you do in the morning is eat a frog, nothing else will seem as hard for the rest of the day. So, Eat the Frog!

Keep Your Goals Visible. Post them on your fridge, on the bathroom mirror, on the wall right behind your computer. Put them where you see them ALL THE TIME so you can stay on track.

Measure Your Progress. This works for kids. And it works for grown-ups too. Draw yourself a thermometer graphic to show how much debt you have to pay off. As you pay it off, colour your way up the thermometer. There. You have a visual record of your progress to keep you motivated.

One of the most important lessons you will learn is that no matter how well you prepare and how many precautions you take, there will be times when you’re thrown off track by an unexpected setback. That’s life. Having friends to urge you on, going over what you’ve achieved on your List, taking pride in your progress chart are all ways to get yourself re-motivated to get back on track. And you can use my blog to share your frustration and accept encouragement. Whatever you’re facing, it can be a temporary setback or you can let it permanently derail you. It’s up to you.

As usual, I’m working with a family that’s spending a ton of money on STUFF. Most people do this unconsciously, never giving a thought to how much of their life’s energy is going into the purchase. This is a concept I learned from the book, Your Money or Your Life. (Another one of those books that changed my life. I am so grateful to Gutenberg.) I’ve put it to work personally, and I’ve put it to work with my fams, and it has a big impact

Let’s say you decide you just HAVE to have the newest cell phone that spits nickels and whistles Dixie while calculating how far you haven’t walked this week.  It runs for $379.99.

Now let’s say you have a great job. You earn $75,000 a year GROSS, which means you take home approximately $50,000 NET. That translates into a net hourly income (assuming 50 weeks and 40/hrs a week for work) of $25. Yup. You make a whopping 25 bucks an hour after taxes.

But that’s NOT your disposable income. You have to cover stuff like rent, car payments, debt repayment (for the last phone and all those dinners out), savings, and the like. Okay, let’s say your Essential Expenses – rent, food, and all the other things you MUST pay to keep body and soul together – add up to $3,300 a month. That’s breaks down to $19.80 per hour. (3300 x 12 / 50 / 40)

Are you still with me?

So your actual disposable income is your net monthly income of $25 less your Essential Expenses of $19.80, which leaves a whopping $5.20 an hour.

Now here comes the really PAINFUL part.

Take whatever you’re thinking of buying, and divide the cost by your Hourly Disposable Income (HDI) to see how much of your life’s energy you have to swap for that handy-dandy new device. In the case of that Phat Phone, you’d have to work for about 73 hours. Yup. Almost two weeks.

Hmmm.

If you really want the phone, and you have the money set aside to pay the bill right off the bat, you should buy it. But you should also do this exercise since its useful for putting things in perspective. 

If you really want the phone and you’re going to put it on credit, then you have to add in the interest you’ll pay to come up with the right number of hours of your life you’ll be swapping for it.

Want to work out your Hourly disposable income?

1. Take your net pay and divide it by the number of hours you work a year. I find dividing by 40 (for hours worked in a week) and then by 50 (for weeks worked in a year) works great. This is your Net Hourly Income.
2. Then calculate your monthly Essential Expenses. Multiply that number by 12 and divide it by 40 and then by 50.
3. Subtract your Essential Expenses hourly cost from your Net Hourly Income. You’re left with your HDI.

Now, whenever your trying to decide if a purchase is really worth it, divide your purchase price by your HDI to see how many hours you’ll have to work to pay for the item.

Of course, you’d be a maniac to do this every time you’re considering buying something. Com’on. You don’t want to be OBSESSIVE or anything. But if you even give a second’s thought to the question, “Should I?” when it comes to buying something, do this calculation. Then stick the money you would have spent in your savings account. You were going to blow it on STUFF anyway, so you can consider it SPENT. 

The Muslims call it Zakah. The Jews call it Tzedakah. And the word “charity” comes from the French root “caritas” which means “Christian love”. Around the world, people give of their money, of their possessions and of their time to help those who are less fortunate.

Causes abound, from the preservation of land and species, to myriad health-related foundations, to the rights and freedom of men and women around the world. Most religions require the act of selfless sharing as part of an individual’s ethical obligation to help people who are less fortunate. Beyond traditional religions — beyond religion completely — people give to preserve their culture, their children’s future and the world’s resources.

Under Jewish and Muslim law, there are very specific requirements for sharing. While Christians have no specific law that demands an act of charity, teachings about charity abound in the New Testament, and tithing is common among many Christian groups.

Muslims calculate their own Zakah individually, paying one-fortieth of their capital (excluding their houses, cars and tools) on an annual basis. But giving isn’t restricted to Zakah, for a Muslim may also give as much as he or she wishes as Sadaqa-h, or voluntary charity. Tzedakah is one of Judaism’s must basic value concepts and every Jew is required to give Tzedakah, even the most needy. There are a variety of levels of giving ranging from giving all that the poor man needs to one-fifth of one’s salary. If he or she cannot give one-fifth, then he or she should give one-tenth. Christianity, too, has guidelines for giving: gifts should be proportional to one’s income, consistent, sacrificial and cheerful.

If you are not bound by religious law or committed to formal tithing, the decision of how much to give can be a difficult one. With disposable incomes falling, expenses rising, and uncertainty a way of life, one oft-expressed sentiment remains, “I’ll give once I’m sure I have enough.”

How much, then, is enough? When is the safety net big enough to allow us to share with those who need help? And how much is enough when it comes to sharing?

Perhaps the simplest answer is to give as much as you can, to share your good fortune with others willingly, and to offer to give up something that is simply a “nice to have” to provide someone else with a “must have”. The whole point of sharing, after all, is to recognize that the most basic needs of others must be met, and that as part of the family of man we each play a part in meeting those needs.

Giving recognizes that there is someone who is less fortunate than we are. It’s one part counting our blessings and one part social responsibility. To not share is the most selfish and self-centered act, for it states quite plainly that we believe we are the only ones deserving of our bounty.

If we begin our philanthropy early in life, the single amount that we give is not as important for we have put time on our side in terms of sharing our good luck. And if we focus our gifts, rather than reactively scattering them, our gifts will not only have more impact, they will be fore satisfying for us. Find a cause that you are passionate about, and make it as important to you as your own child. It is, after all, an investment in the future of your child’s world.

Think about ways in which you can leverage your gift. By combining small amounts with others you can offer a pooled gift that may make a big difference. By challenging others to support causes you consider important, you may involve people who would never have considered giving.

One of the most important gifts you can give is to teach your own children to share. Both my kids put five percent of their allowance toward sharing each week. They know that money is for those people who aren’t as lucky.

Not all of us can afford to give financial gifts. I work with fams who are deeply in debt and have to find another way to share. It’s not that hard. We all have other gifts to share: our skills, our time, our good will.

For those of us who can afford to give a financial gift, we must consider carefully how we arrived at our gift amount. If the gift causes no pause to think, we probably haven’t shared enough of what we have. As Winston Churchill said, “We make a living by what we get, but we make a life by what we give.”

Back in 1883 when Chancellor Otto Von Bismarck of Germany introduced the concept of retirement at the magical age of 65, hardly anyone lived to collect. The world’s changed a lot since then. According to Statistics Canada, 82.5 years for women and 77.7 years for men. Increased life expectance is one reason retirement planning is such a Big Idea. In 2006, 1,167,310 people were aged 80 years and over, up 25% from 2001.

The struggle to balance building retirement assets for tomorrow against today’s very real demands for cash means that often the Big Idea is pushed to the side. Ooops. There goes the Big Idea, hidden behind “not enough money”, “paying down the mortgage” and “coughing up for university.”

It’s human nature to find overwhelming reasons not to change course. So starting something new, putting the Big Idea into action, takes more effort than not. Curiously, the effort is smallest when the need is furthest away.

A young person starting out can sing the popular tune, “I’ve got no money.” And it’s true. With lower incomes, student debt to pay off and retirement thirty-five or forty years away, who needs the extra pressure? The thing is the pressure never lets up, and recognizing that fact early on can mean establishing a strategy that seeks to create a balance between the present and the future.

Implementing the Big Idea when you’re young has significant benefits. First, spring chickens can set aside a significantly smaller percentage of their income to grow their retirement nest-egg. More importantly, perhaps, with a long, long, long term investment horizon, there are far more investment options available that will do the trick. Want to compensate for a small monthly contribution? Look for an investment that produces a higher-than-average rate of return. Worried that your conservative approach to investing might be limiting your growth? Don’t be. With so much time on your side, conservatism isn’t a dirty word. You can afford to make like the tortoise.

Resist the urge to dip in as you move along life’s path. Going back to school, time spent between jobs and mounting debt can all be tempting reasons to cash in retirement funds. How to overcome temptation? Have a plan.

Plan and stick to a budget that includes an emergency-only cash account, vacation savings account, and the like.

Make sure you’re covered by the right kind of insurance so your retirement assets don’t become your emergency fund.

Establish an automatic investment program.

Plan for big expenses: returning to school, a down-payment on a home, that new car.

It’s one of life’s big jokes that as we earn more money we seem to have less money at our disposal. Like a gas expanding to fill a container, our expenses grow in proportion to our increased incomes. We want to have a family. We need a bigger house. It’s time to trade the compact for a mini-van. But wait! What if you got a raise and the first thing you did was set aside a portion of that raise for the future? Before the Devil Expenses could get their hands on your money, you whisked it away into an investment program.

Here are some tips to stay on track with your plan:

Ignore the “all or nothing” message. You do not have to forgo a life in order to implement the Big Idea. The idea is to balance today’s needs with tomorrows.

Don’t make your plan so grand that you end up defeating yourself with unrealistic expectations. Start small, grow your investments over time, keep your perspective.

Pay off your consumer debt. Every dollar you pay in interest is a dollar lost to your investment portfolio.

Watching the kids go off to university or college can be frightening for parents. Empty Nest Syndrome is a well-documented stress. So, too, is the realization that you may be running out of time. You’ve got to get the mortgage paid off, buy a new car, eliminate that credit card debt, get the kids through university, all while putting together that retirement portfolio you’ve deferred for so many years.

Relax. The nice thing about retirement is you have control over when you do it. The institutionalization of age 65 as the retirement age is simply a holdover of Otto’s idea. Since then we’ve moved many of the sign-posts of life further along the road — we have children later, go to school longer, and live healthily for many more years. So we can also move forward the signpost for retirement to 70, 75, or even later. Escape the mindset that says retirement at 65 is “normal” and you can not only build more accomplishment into your life, you can further feather your nest. Extending your working life also extends your investment horizon, allowing you to maintain your investment strategy.

Things to watch for:

You’re prime filling for the sandwich between your kids’ educational needs and the help your parents may need. Consider the impact of elder-care on your investment portfolio and take the steps to mitigate that impact.

Consider government pensions to be the gravy in your retirement income. While younger Canadians have already come to terms with the fact that they will be responsible for themselves, those of us who have grown up with the security offered to our parents may be less willing to emotionally forgo our “rights.”

Hold your assets wisely: keep your interest-bearing investments inside your RRSP and hold your equities outside to take full advantage of the beneficial tax treatment on capital gains.