Jeremy Fulton, Financial Wellness Coach

Tag: saving

  • The Reluctant Spouse, or “He keeps messing up my budget!”

    The Reluctant Spouse, or “He keeps messing up my budget!”

    If you are reading this, you are probably the money nerd of your family.  You like to know where your money goes.  You like to watch your nest egg grow each month (or cringe when the market is down).  You know the value and power of budgeting.  You probably even enjoy working in Excel (I know I do!).

    Then there is your spouse.

    •  He won’t join you for your monthly Budget Committee Meeting
    • She says, “Whatever you say, dear!” and then comes home with several bags from the mall.
    • Believes that budgets are a punishment.
    • Isn’t willing to give up her lattes or his green fees because she/he “works hard and deserves it.”

    You’ve begged, pleaded, nagged, and maybe even raised your voice, but to no avail.  You can’t seem to convince your spouse that you need to cut back, pay off the debt, and start putting money aside for “a rainy day.”  You are tired of trying your best only to have your hard work wasted by the arrival of a large package from Amazon.

    It would be hard to NOT to be frustrated with him or her for the lack of willingness to participate in this part of family responsibility.  But may I risk pointing out that you may have some fault in this??

    Hold on a minute!  Put down the pitch forks & torches and give me a second to explain!!

    I’m not excusing their behavior, but suggesting that your approach in bringing your spouse alongside needs some adjustment.

    Ask yourself these questions:

    • Am I nagging my spouse?
    • Does my spouse see the budget as a restriction?
    • Do I constantly talk about “what” she needs to do?
    • Have I used the phrase, “Dave Ramsey says. . .”?
    • Has my spouse ever been ‘abused’ by budgets in the past?
    • What is it about budgeting that causes my spouse to disconnect?

    I’ll give you a minute.

    Your intentions were good and noble, there is no doubt!  And since we can’t change the past, lets talk about today and your future.  Lets look at an approach that will help your spouse truly come onboard; let’s help him understand and embrace the why!

    You know the why; you instantly saw in your mind what life will be like when you have no debt, a huge emergency fund, and have a plan to accomplish your family goals.

    Your spouse doesn’t.

    You need to help her see and embrace a why of their own.

    Here is one strategy that should work for just about any reluctant spouse.

    Step 1: Forget the past, both their misbehavior and any nagging/mistakes you’ve made.

    Step 2: If you were harsh on your spouse, ask for forgiveness for how you approached the subject.  As hard as it is, it can be a crucial step in getting your spouse’s attention.  You can say something like, “Honey, I need to ask your forgiveness.  I’ve been harsh with you about our family’s spending habits and I’m sorry.  I don’t want money to come between us.  I want us to work together as a team in this marriage; not me as your boss.  Will you forgive me?”  Feel free to adapt that to your style, but be sincere!

    Step 3: Dream Date.  It’s not what you think; it’s better!  Hire a sitter (or barter kid watching time w/ another parent), if you have kids, and have a nice dinner date.  If you are staying in for this date, set the atmosphere by turing off all phones & the TV, put on some soft music, light candles, etc.  With your spouse’s full attention, start dreaming together.  Ask, “if money was no issue, where would you like to go/what would you like to do?” “What does the ideal retirement look like to you?”  “Where would you want to live/work if money didn’t matter?”  Get the idea?  Make sure you share you own version, too!  Once you have spend some time dreaming, and your spouse is sharing, express that these dreams are reachable, that you two can work together to get to a place, financially, to make them come true!  He or she may not believe you at first, but the next step will help.

    Step 4: Express to your spouse that as a team, you can do anything.  You don’t expect him or her to handle the day-to-day finances or even craft the monthly budget; just that he give his input, come to an agreement (yes, your spouse gets an EQUAL say in the budget!), and stick to the agreement!  Ask him or her to try it for a couple months; if budgeting ends up not helping to accomplish goals, then you can quit! (Hint, it’s a trick: budgeting always works!)

    Step 5: Time for some work for you.  Craft a workable budget, calculate how long it will take to reach some goals/dreams, and present it in a simple format.  I would discourage you from using your 5 sheet, cross-linked spreadsheet for the next step; instead, use this form (or similar).  But fill it out in pencil, not pen.

    Step 6: Budget Committee Meeting.  You sit down with your spouse, eliminate all distractions (put the kids to bed, turn off TV/phones, etc), and slide the budget, along with a pencil and eraser, across the table.  Insist your spouse change at least one item! (Hint: this is how you get him/her to take ownership and not feel dictated to).  Now be silent and let him look and make some changes.  Once both of you agree on it, sign the bottom as a contract (if you feel inclined).

    Step 7: Show lots of gratitude and respect for his/her participation (back rub, do the dishes, etc).

    So, what are you waiting for?  Start tonight!

    Please let me know how this works for you, or how you handled your reluctant spouse in the comments below.  Or, if you were the reluctant spouse, what did it take to get you onboard?

  • The Artist Within

    The Artist Within

    Just a heads up about this post: it’s not about money!  Or is it??

    Before I went full-time as a Financial Coach, I was an engineer.  I sat in front of a computer, wrote emails, made phone calls, and tracked the status of my projects.  My job required zero creativity and when I tried to be creative, it went against the grain of “that’s how we always do it” mentality.

    I had to find a way to let my creativity out or I would have probably had a mental break down (well, that’s a bit of an exaggeration, I know).

    Creating art in the medium of photography is my outlet.

    I believe that each and every one of us is hardwired to need an outlet for the creativity that we are created with.  I wonder how much of the depression, crime, suicide, drug use, and other social ills would be eliminated if each person discovered their creative potential and exercised their creative gifts would remain?  hmmm….

    I know that letting my creative side out helped me reduce stress, sleep better, engage with friends better, meet new friends, and generally allowed me to be a better person.

    When I pick up my camera I can feel any stress start to melt away as my heart rate climbs a bit due to the excitement and adrenalin flowing though me!  Making a great image (or attempting to) has turned many a bad start to a day into a great finish!  I forget the issues at work and the stress of providing for my family as a self-employed individual, as I focus on what I see though the viewfinder (you can check out my work at JeremyFultonPhotography.com).

    After spending time looking through a lens, capturing the world as I see it, I feel that I am more focused and able to do what is required of me (at work and at home).  It allows me to accomplish more, with less stress, which actually helps me professionally!

    In what ways do you express your creativity?  You may not be talented with a musical instrument, paint brush, or camera, but none-the-less I bet there is a way you create art!  Do you work on old cars, building the engine into a powerhouse?  Do you write computer programs or apps?  How about working in your flower/vegetable garden?  Do you perform tricks/stunts with a bike/snowboard/skis?  Those are all creative outlets!

    Please share with us your creative outlet and how it helps you!

  • Re-blog: A Booby Trap in the Christian Budget

    Re-blog: A Booby Trap in the Christian Budget

    My wife discovered this blog post today on DesiringGod.org and thought I would be interested in it.  I read it and though it was well written and had a great message for those of us who are interested in being intentional with our finances and doing the most good we can (for us, our family, and friends) with our money.

    So, without further ado, here is the first section, and a link to read the entire post.  I welcome your comments and discussion on this write-up:

    “The Bible is clear that we will put our money where our hearts are, so it is important that we regularly test our treasure. There are lots of ways to lose our life over a love for money. We want our money to serve our greatest lasting good and happiness, not kill it. So I proposed four questions to keep close to your wallet:

    1. Is my spending marked by Christian generosity?
    2. What does my spending say about what makes me most happy?
    3. Does my spending suggest I’m collecting for this life?
    4. Is my spending explicitly supporting the spread of the gospel?

    Here, I’d like to add a fifth aimed at the frugal among us: Is my spending so cautious that it’s captured my heart and keeps me from loving those close to me well?….”

    A Booby Trap in the Christian Budget

  • Cash is King! (Sorry Elvis)

    Cash is King! (Sorry Elvis)

    Today I was sitting at my desk pondering what subject I should write about next.  I have a list of subjects to choose from, but none of them were jumping out at me.  As any of you who are writers know, if you don’t feel something about what you are writing about, it comes out flat and lifeless.  It seems that when I write, how I feel about the subject flows into the words I write; its as if the keyboard is an extension of my thoughts and emotions.

    So I decided to browse some news sites to see what was going on and look for inspiration. If you are an artist or writer you know that sometimes you need some external inspiration to start the creative juices flowing. (I am actually both: I write this blog and express my artistic side with my camera; feel free to see my other side at JeremyFultonPhotography.com)  I came across an article that mentioned the future of credit cards and started my thoughts on the differences in spending habits when we use credit cards verses when we use physical cash.

    I used to use credit cards for EVERY purchase; I was doing my best to collect all those reward points my credit card company was offering me!  It seemed like a great idea: pay off the cards every month and get free gift cards every 3-6 months.  What I didn’t account for was that between the points and lack of feeling associated with plastic spending is that I was spending a lot more that I realized.  I can recall, now, several months where I had to dip into savings to cover the card balance.  But those points were so ‘wonderful’ I didn’t even think long term about my spending habits.

    It turns out I wasn’t alone.  It turns out that a lot of research has been done on spending habits over the years.  Carnegie Mellon actually conducted a study using an MRI machine to measure the pain centers of the brain when purchase decisions were made.  One conclusion of the study was that spending your own money (i.e. cash) activated the pain centers where delaying the payment (i.e. credit cards) did not.

    Spending with cash is painful!  Have you every noticed for yourself how you react emotionally when you are counting out actual greenbacks at the register?

    Even McDonalds knows that you will spend more if they take your plastic.  Remember back when you had to have cash at the drive through?  When McDonalds started taking credit cards, their average sale per transaction when up 40%!  Many businesses followed their example and now you can buy just about everything with credit!  They all know that we are less likely to worry about the cost of an item, and more about its features, status, and ‘quality.’

    In researching for this post I read many articles, interviews, and a couple of paper summaries; they all agree that we will spend more when using credit over using our own money (cash/debit) when making purchases of all sizes.

    “So,” you may be asking, “What do I do?”

    Cash.

    For your budget categories that you tend to be freer in your spending, cash is king!  My wife and I personally use cash for ‘blow money’, eating out, and groceries.  We use an old system called “the envelope system.”  We withdraw money from the ATM each pay period in the amount we budgeted for and put that cash into physical envelopes (you can get a modern system here).  When we go out to eat, we only use cash from that envelope; when it’s gone we eat in.  Same for groceries; when the envelope runs out it’s time for leftovers and goulash.

    It has really helped me reign in my spending habits, especial when going out to eat!  Back when I was on the “points system” I could easily spend over $400 a month on eating out!  Yet my retirement was hardly getting funded; how terrible is that?

    There are other benefits to using cash over other forms of payment beyond just keeping your spending in check.  When you pull out cash, it has immediacy; it tells someone you do have the money to spend.  The seller of a service/item knows that you are there and want to spend, and that you don’t need a credit check.  You can walk away. This gives you power. Power over price.

    Almost all prices are negotiable, to some extent (maybe not so much at Taco Bell), and that fact is more evident when you pull out a few Benjamins.  The vendor may give you a discount just for using cash (they pay 2-4% in fees to credit card companies).  You can also negotiate the actual price, esp. on large ticket items or dealing with individual sellers (like with Craigslist).  I know several people who have had success bargaining with cash, including a friend who paid half price for a hotel room just the other day!  This is a win-win deal for you; you are not going into debt to buy something, and spending less on the item/service!

    I’ll cover the myth that you need a credit card in a later post (I’ve traveled the US and visited Spain, France, Andorra, and Israel with my debit card).  So, what’s holding you back?  Why not try it for a month and see what happens?  You can always go back to using your credit card if I’m wrong!

    Let me know what experiences  you have had using cash in your life below:

  • The Rain Is Coming, Do You Have A Rainy Day Fund?

    The Rain Is Coming, Do You Have A Rainy Day Fund?

    I just read an article from The Wall Street Journal describing how few people actually have a ‘rainy day’, or emergency fund, and that most of those people who do have some savings, don’t have enough.

    Statistically speaking you are one of the 209 million people who don’t have sufficient savings.  Of those, 82 million have NO savings.  WOW!

    I would wager, if I were a betting man, that very few of those surveyed even know how much is sufficient.

    3-6 months of expenses is what the experts (myself included) recommend.  For most people that’s $15-25,000, sitting untouched in a savings account.

    “That’s a lot of money sitting around not making any interest to speak of, why not invest that money and just use a credit card or home equity line of credit (HELOC) when an emergency comes?” you might ask.

    That might work for you to cover an auto repair, or your auto insurance deductible, but what happens when the boss comes to you on Friday, letting you know that you are part of the rumored layoffs?  That ‘secure’ job you were going to use to pay back the credit cards is gone, and racking up debt while unemployed is never a good idea!

    Lets also consider the intangible benefits of having a fully funded emergency fund.  There is a sense of peace in your home when you know that you will be OK, no matter what happens.  Think back to the last time you had an emergency (had to fly last-minute to a funeral, your car broke down, the furnace broke one cold and snowy weekend night); was there any panic in your mind, wondering where you would get the money to pay for it, or pay off the card, in addition to the actual thing that happened?  When you have some cash sitting around for those kind of events, it turns them from emergencies to inconveniences.  The stress level drops to near zero.  Your spouse is relaxed, not having to worry about grocery or rent money being spend, and it becomes easier to focus on getting through the actual event.  Think about that.

    I can attest from personal experience how important it is to have an emergency fund.  I’ll give you to recent examples from my own life:
    1. On my honeymoon last year, while 2000 miles from home in the Black Hills, one of the tires on my car came close to having a blow out.  Instead of having to cancel the rest of the trip, or any of the fun stuff we had planned (and stressing out my new wife), I simply put on the spare, dropped off the car with a local mechanic, bought 4 new tires (the rest were due to be replaced, too), went on our tour, and picked up the car afterward.  We hardly skipped a beat in our day, and even were able to smile when we talked about it that evening over supper.
    2. At the end of January of this year, after almost 5 years at a very stable engineering company, I was let go.  I didn’t enjoy what I did (have you ever had a life-sucking J-O-B?) and would not wanted to go back to work as a cube-dwelling engineer for another company. Having a fully funded emergency fund has allowed me to start my own Financial Coaching business!  This is something I’ve been preparing to do (school, training, reading, etc) for a long time, and now I can!  My wife is not stressed out about the money situation, even as the company is slowly growing, because she knows that we can go many months w/o any income and be OK.

    “Ok, ok, I get it; I need to start saving more.  But I’m not sure I can.”  The key to this is using a monthly budget, paying off your debts, then living on less than you make until you’ve saved enough.  If you are still in debt, quickly save up $1,000 then attack your debt.  $1,000 is enough to cover most emergencies, but low enough that you should feel the urgency to become debt free quickly so you can build that rainy day fund.

    So, where do you stand?  Fully funded?  Almost there?  Ready to start saving?

  • Start Saving NOW! A story about Compound Interest

    You may think that you have plenty of time to save for retirement; after all, you are young and won’t retire for many decades!  Maybe you haven’t even given any thought to retirement and figure that you’ll worry about it later, maybe when you make more.  Or perhaps you are older and think it’s too late to save for the future, since it’s so close.

    What if I told you that money invested now is MUCH more valuable than money invested “later,” would you believe me?

    Let me introduce you to the term “Compound Interest.”  According to dictionary.com, compound interest is defined as, “interest paid on both the principal and on accrued interest.”  In simple terms it means that the money you earn on your investment (or savings) earns it’s own money.  Let’s use a simple example to illustrate:

    Suppose that our friend Bob has $100 to save.  He does his research and finds a savings account that pays 10% (yes, I know this isn’t a realistic number, but it makes the math easy, so bear with me).  He opens an account and deposits the $100.

    One year later, Bob opens his statement and sees that he now has $110 in his account!  His initial deposit earned $10. [$100×1.10=110]  Bob decides to leave his initial deposit and the earned interest alone for another year.

    The next year when he opens his statement, what does it say?  Does it say $120?  Nope!  It reads $121!  That extra dollar is due to compound interest; that $10 of interest he earned last year earned 10%, too. [$110×1.10=121]

    This happens year after year after year, each year’s interest earning interest during the following year.  If Bob left the $100, and it’s interest, alone for 40 years (i.e. age 30 to 70) he would have $4,525.93!  If he instead pulled out the $10 interest payment each year and put it in a cookie jar, he would have only $400 in that jar, to go with his $100 in the bank.  Pretty incredible, right?

    So now you are thinking, great example, but how do I apply this to my situation?  Great question, I’m glad you asked!

    Once you are out of debt and have an emergency fund saved up, start saving for retirement!  Some day you will retire, either by choice or due to health or a layoff.  Social Security will probably not pay enough (assuming it’s still there) to support you in your current lifestyle.  If you are young and start now, you should be able to retire comfortably.  If you are not so young, you need to start now so you have something to help you out.  Even a little bit invested now will help you out later.

    Now for your financial nerds out there, I know that savings accounts don’t earn anywhere near 10%; this a very basic example of how compound interest works.  Also, investments (stocks, bonds, mutual funds) don’t earn ‘interest’ but have a rate of return, which I’ll go into in much more detail in a later post, but the idea that any growth in your fund grows with the original investment still holds true.

    So, are you ready to start saving?