Gails Blog

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%.

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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.

Y’all have heard me say, propound, shout, that you need an emergency fund. There’s nothing worse than having worked hard to create a stable financial life only to have the whole thing toppled by an unforeseen whatever. The roof starts to leak, but your maintenance account was just wiped out by your scheduled house repainting. Your car coughs and heaves and you discover the trannie’s gone. Your plan to get pregnant next year took a leap forward.

Okay, so nobody’s arguing with the fact that having an emergency fund makes sense. And how much to have is a pretty standard rule:

You need the equivalent of three months’ income or six months’ expenses, whichever is greater.

Fine.

Or not fine. It can be overwhelming coming up with a huge dollar amount when you look at it as a HUGE dollar amount. It can be so overwhelming, in fact, that many people just don’t bother.

No matter how often I say, “Don’t worry, just start saving… even $50 a month gets you closer to your goal,” people still resist because the idea of accumulating thousands of dollars is so alien to them they think it’s impossible.

So here’s another idea for getting your emergency fund together.

List each category of expense you would have to keep covered if you hit an emergency. That may include rent or mortgage payments, food, medical costs, insurance, child-care, car payments, gas, and whatever else is ESSENTIAL.

Go back over your list and cut out anything you’ve kept that’s not ESSENTIAL to keeping body and soul together. Let’s face it, if you’ve just gone from two incomes to one, you CAN give up your cable, telephone, entertainment and everything else you wouldn’t die without, at least in the short term. Your Emergency Expenses should cover the essentials of life.

Now write in the average monthly amount for each of your Essential Emergency Expenses (EEEs). Then put six check-boxes beside the amount.

Pick the first expense you want to have covered. Most people pick either the roof over their heads or the food in their bellies. Let’s go with food for our example, and say you need a minimum of $400 for food each month.

How much can you save every month? Ten dollars? $25? $100. Whatever it is, open up a savings account somewhere where they’ll pay you a decent rate of interest and ask that the amount you’ve designated be deducted from your regular account to this account every month. In our example, we’ll say you can save $50 a month.

First you’re going to save your first month’s worth of food expenses. So when you’ve got your first $400 in your EEE Savings Account, you’re going to put a check-mark in one of your boxes. There. You’ve done it. One month’s worth of food money at the ready, just in case.

One of the decisions you’ll have to make is whether you’ll save all six months’ worth of food money before you start on your second category, or if you’ll check the first box for each category before saving more food money. That’s your choice. My choice would be to put a check-mark in the first box of each category, and then move on to save my second month’s worth of EEEs.

Okay, so now you have a plan to build your Emergency Fund. All that’s left is for you to start DOING it and stop THINKING about it. Go ahead, pick up a pencil and a piece of paper and start making a list of your EEEs. NOW!

I remember when I was growing up, everyone used to tell me, “You can’t have it all. You’ll have to choose.” I heard it again and again, from everyone. Everyone, that is, except my mother who told me, “You can have it all, you’re just going to have to work hard for it.” Thankfully, I believed my mom.

You know, I still hear that old phrase: you can’t have it all. I was told I’d have to choose between raising a family and having a career.  Tell that to my kids who, as toddlers, would come running into my home-office, bare-butt just before they jumped into the tub.

I was told “You have to decide whether you’re a child or a grown up, and behave appropriately”. Yeah, right? Fact is, I’m pretty button-down when it comes to the detail of my business and financial life. But you don’t get much more free-spirited than howling — arrrrooooooooooo — loudly for a husband lost in the aisles of the local supermarket.

So I have it all. I’ve got a happy home life, a lovely husband, two kids I’d die for, work that I love to do (even at 4:00 a.m. in the morning, which is when I often write) and I’m financially free.  My life is in balance.

Balance, of course, is the ability to deal with myriad priorities, giving each just as much attention as it deserves. Balance means not working so hard at accumulating assets that you fail to spend time watching the children play. Balance means weighing the need for future retirement savings with the need for providing your partner, your children, your friends with fun and exciting experiences in the present. It’s about taking care of today and tomorrow. And it’s about satisfying your soul while you challenge your intellect.

Now, it’s pretty hard to keep your sense of balance when reality bites — when divorce, widowhood, disability, or unemployment contrives to push you off kilter. “Balance?” you shriek, “How can I have any sense of balance when I’m just barely making it from day to day, paycheque to paycheque?”  Ah, yes. Well, that’s where the plan comes in.

Balance isn’t something that happens. It takes work. It requires that you create a blueprint for your life. And it requires that you take control of the components of your life that you can control, so when you stumble over one of life’s bumps in the road you can pick yourself up and move on. It means planning like a pessimist so you can live like an optimist.

By taking care of the financial parts of your life , you’ll be covered for any of life’s financial disasters. Whether you find yourself suddenly living on one income, having to care for your aging parents, or dealing with kids who have boomeranged home, you’ll be prepared, at least financially, to cope.

By setting goals, you’ll be laying the blueprint for how you want your life to look. You’ll be creating the balance with which you want to pursue your dreams and achieve your purpose.

When I had my children and I moved from being a career-focused glamour-puss to being a much more balanced, whole woman. My babies were the catalyst for reviewing my life and deciding what I wanted to expend my life’s energy to achieve. I decided on a little of this, and a little of that. Some career, some learning, time spent nurturing my soul and my babies. In the process, I proved my mom was right.

I learned I can have it all… I just can’t have it all at the same time. Maturity has brought the ability to prioritize, to give a little, to negotiate with myself and others so that I can do what’s most important at a particular point in time. When it looked like my Malcolm was going to have to be home-schooled because his Asperger’s Syndrome was too much for the school system to cope with, I quit all my jobs, packed up and moved to the country (to cut overheads) and got busy figuring out what I’d needed to know. Luckily, in the process, I found a school that was up to the job. 

I do consider myself to be a very lucky girl. But I also know that I’ve been willing to take advantage of opportunities — even to make opportunities — that would take me to where I wanted to be next. None of it has been accidental.

Think about what you want your life to look like five years from now. Who will you be near to? What will you be doing? And what steps do you have to take financially to get to where you want to be?

Decide that you’re not going to feel bad, overwhelmed, stupid, stressed, or anything else negative about your money anymore. Instead, you’re going to do something about it — no matter how small those steps — so you can achieve your own sense of financial peace.

Close your eyes, take a deep breath and repeat after me: “I am more than what my financial statistics say about me. I can have anything I want, if I prepared to work hard. Today I want to ….”

Go ahead, fill in the blank.

Alex has been having a tough time at school recently. The schoolwork part is okay – I hope, I pray, I cross my fingers – no, it’s the “social” part. There’s been a huge kafuffle and the group she hangs with is splintering. It’s tough to watch from the outside. It must be crap to live through. Anyway, as I woke her up I used the mantra I’ve been using with her since she was just a smudge:

My brave, strong girl

My wise and sensible girl,

My kind and gentle girl,

My happy, smiling girl.

She smiled up at me and said, “It worked, Mama.” Yes it did.

So I got to thinking about mantras and the role they can play in my life. I believe in them very strongly mostly because I know our brains believe what our ears hear. So by repeating a positive mantra I’m creating a self-fulfilling prophecy.

Too often we repeat negative things to ourselves, creating a reality that makes living harder. We focus on what we’ve done wrong, on what our mates have done wrong, on what our children have done wrong. We focus on the asshole who cut us off, stole our idea, made us feel small and insignificant. We live in anger. We live in fear.

It’s a hard way to live.

Years ago I read a book (this has happened more than once) that changed my life. It was called Feel the Fear and Do It Anyway. It was all about how the tapes we recorded as a child continue to replay in our consciousness and sub-consciousness, limiting our achievement by filling us with destructive emotions.  I decided then that I would not let my history be my future. And I’ve worked hard to feel the fear and do it anyway. Sometimes I’ve cried as I’ve pushed myself forward. Sometimes I’ve puked. But I’ve moved. I haven’t allowed fear to stop me.

I’ve used mantras along the way.  I use them to remind myself to breathe. I use them to move out of anger. One of my most recent is, “I am the stone in the river,” which brings the picture to mind that helps to quell my rising bile. It works. I probably have a dozen that I use regularly. And the one I’m using with Alex right now is this:

Where you are today is not where you’re going to be tomorrow.

That’s right. If you’re in a good place, you better say thank you and take the time to enjoy your place since in the circle of life crap is around the corner. And if you’re in a bad place, breathe and remember tomorrow is another day. This way over-simplifies what this mantra does for me. There is depth and texture, meaning and strength  in these words. They work for me. They work for Alex too.

I wonder what you’d like to achieve for yourself, and what mantra you would use to make your dream a reality. I wonder how you would help yourself reach a goal by telling yourself in a most positive way what you want to achieve.

Think about it. What thoughts do you have that are destructive, and what positive mantra could you replace those thoughts with to move forward to a place you want to be.

If you’ve never tried using a mantra before, try it. You might like it.

TTFN

When was the last time you went through your bills? I don’t mean just paying them. I mean sitting down and reading them to see what you’re spending your money on. I can’t believe the number of people with whom I work who don’t have Clue One where they’re spending their money. Man, we work so hard for it you’d think we’d take better care of it. But we’re lazy. We fall into habits and then never look for ways to break them, even when they’re bleeding us dry.

Buying newspapers is a habit. Sure, you need something to read on the way to work. Borrow a book from the library. Picking up magazines at the check-out counter is another habit. Again, go to the library, or, at the very least, subscribe and save 50%. Better yet, split your subscription with a friend and save 75%.

Okay, so we all have habits, and not reading your bills is one of the worst. People don’t read their check-out bills at the supermarket and spend a lot they don’t even know they’re spending when there’s an error. And they don’t read their bills at home either. They just pay them. Blindly.

When was the last time you looked over your phone bill? Yet you’re prepared to lay out hundreds of dollars a year on your land line. Never mind what you’re spending on your cell phone. Ditto your electrical bills, your gas bills, your credit card statements, your bank statement. I’m willing to bet you dogs to donuts right now that you can’t tell me what you paid in service charges on all your bank accounts last month.

Here’s today’s challenge: Spend one hour going over ALL your bills so you’re completely familiar with where your money is going. That’s right, gather them all up, get yourself a highlighter pen and start familiarizing yourself with where your money’s going. If you find places where you’re surprised at what you’ve been shelling out, it may be time to re-evaluate what you’re getting for what you’re spending.

Keep in mind that if you have auto payments set up, you may have to go online to get the itemized bill to see where you racked up those charges. Don’t wuss-out. Do it.

Are you paying to have movies piped in, but never seem to watch? Axe it.

Are you buying services at a premium? Move to a lower level of service.

Paying for membership at a gym that you haven’t visited in six months? Lose it.

Paid even $1 in banking machine fees? Stop it!

Got a renewal for a magazine subscription you never have time to read? Don’t just automatically renew it out of habit.

Look for all the things you pay for, but seldom use, and as you chop, trim, slice and dice, make a list of the money you’re saving.

Eliminate just $50 worth of monthly spending, and you’ll have $600 to add to your savings this year. Take that $600, invest it in an RRSP at an average return of 5%, and REINVEST your tax refund every year to make your RRSP contribution grow and in:

20 years you’ll have $29,610
25 years you’ll have $37,485
30 years you’ll have $45,360
35 years you’ll have $53,235
40 years you’ll have $95,424

… all from a measly little $50 a month. Can you imagine what you could do with $100?

Can’t find anything to trim? Really? Did you look really hard? Well good for you. It means you’re running a tight ship.