Tag Archives: Budget

January 18, 2011

No, You Can’t Have That!

By Chris LoCurto
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controlfreak

Image by celine nadeau via Flickr

I……am a control freak, when it comes to doing the finances at home. But I have a really good excuse for it! ;-) It comes from a bad situation I was in where I lost everything I had due to trusting someone else with my money. I was young and ignorant…and trusting, and it cost me years of heartache. And because of that, I have had this….thing, where I have to be in control of the finances, knowing where every penny is at all times. That’s not bad is it?

The problem came in when I got married. Now we had two people who did the finances, but one wouldn’t give it up. (If you’re still with me, you know which of us that was.) This became a point of contention because she liked doing the finances. But we were able to come to an agreement. I would do the finances as long as we had two things: a budget committee meeting, and I would bring to that meeting a print out summary of the finances/investments/bank statements, that way she could see exactly where everything was, and have a really good feel for where we were going.

Now, the later of the two is pretty self-explanatory. But if you don’t know what a budget committee meeting is, it’s when the one spouse prepares the budget before the next month begins and presents it to the other spouse. This gives the other spouse the opportunity to inspect it to see if it lines up with what was previously discussed, as well as give input on things left out. I.e., their mother’s birthday is that month and they’ll need to buy a present. There will be a field trip for the kids at school that will cost money. This may mean that some things need to be adjusted if the suggestions add more mullah than is available. If you’re budget is already tight, you might have to not go out to dinner to pay for your mother-in-law’s Snuggie.

Most importantly, you have to come together at the end of each month and plan what’s going to happen next month. It’s called being grownups. And, if one of you is a control freak in the area of finances, this give your spouse the comfort of knowing that everything is in place and is all right.

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January 14, 2011

Wait, Don’t Throw That Out.

By Chris LoCurto
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The Chair (gimpified)

Ken Munday and I were on the way to the airport when he got a phone call from his daughter Maegen. While he was on it, he said something that I had to ask about when he hung up. He said, “Use it up, wear it out, make it do, or do without.”

It sounded like a great financial principle, so I asked where it came from. He said that it came from a friend years ago names Virgil Coffee, and it was something he would say from time to time. Ken and his family have carried on that saying as a way of working through financial decisions like spending money for something that you may already have.

In other words, if you’re working through your debt snowball, do you buy a new couch even though you have one that works? It may have a few dings and scratches, but it’s doable. It’s like throwing out jeans that fit really well just because  someone came out with a new style? (Ok, so you can tell by earlier posts that I have a thing for jeans that fit.)

Another discussion came up along these lines a few weeks ago in a meeting where it was mentioned that people used to hold onto stuff to pass it on. Like furniture, families would save it to pass on to their children to start their lives on their own. That way they didn’t have to go out and spend crazy amounts of money, that they probably don’t have, to furnish an apartment or a house. They could be blessed with enough stuff to start building their life and income, and later could “upgrade” if they could afford it. Items would be passed from generation to generation.

What happened to these concepts? Have we become too proud to use something that has some scratches on it? Or take something that used to be in our grandparents’ home? Are we trying too hard to impress our friends when they walk into our home? Or has it just become too easy to go into debt and get whatever we want? Perhaps with the advent of debt and stuffitis, we’ve become a culture who’s too proud to make the financial decisions needed to get us ahead.

Am I saying you can’t have new stuff? Absolutely not! Doing what I’ve been doing for ten years, I’ve had the opportunity to see tons of families leverage debt to get stuff that they want, stuff that they can’t afford, only to end up in trouble with debt down the road. And I wonder if they just had the mentality of, “Use it up, wear it out, make it do, or do without” where would they be? Just a thought.

Tell me if you agree or disagree. What other great sayings have you heard that have helped you?

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January 6, 2011

Dude…Where’s My Car?

By Chris LoCurto
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Car rental counters of New Chitose Airport
Image via Wikipedia

It’s almost an inevitable question when talking with people who aren’t fully immersed in the FPU plan. When I tell people that I haven’t had a credit card in now eleven years, they have a tendency to say, “You don’t have any credit cards whatsoever?! How do you…rent a car. I hear you can’t rent from most rental car places without a credit card!”

Now, if that’s you, I don’t mean to offend you, but you’re a little behind the times. With what I get to do, I have traveled every year, for the past ten years, more than most people I’ve ever met. (See the Southwest Airlines post to see how many flights.) I say that to then say, I’ve done all of that travel with only two debit cards; a business debit card and a personal debit card. Now, in the early days, it was a little difficult to rent from the companies that charge too much for a car, but why rent from them anyway. The reason they didn’t take debit cards was simple, you most likely won’t upgrade with a debit card. They’ve since realized that they are losing business by not taking them. For the last five or six years, I haven’t found a company that still only takes credit cards.

With that said, there are some things you have to deal with. Most places ARE going to put a hold of a certain amount on your bank account. But again, if you’re following the plan, you should actually have MONEY in your account. It’s usually anywhere from $150 to $300, and it gets removed when you turn in the car and pay for it. At an airport rental place, you most likely can’t rent one way with a debit card without calling first. And, it’s always a good idea to call anyway just to make sure you haven’t found the one branch that’s still stuck in the past. (We almost never actually call and I still haven’t had a problem.) Other than that, it’s the same as with a credit card. The world is changing my friend. The more people refuse to use credit, the more companies will pay attention!

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December 31, 2010

Is That Your Wallet Vibrating…

By Chris LoCurto
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Tomorrow is a brand spankin’ new year! And with each new year, comes resolutions. In our business, we have two New Year’s: one at the beginning of each year, and one when the kids go back to school. Both times of year people decide that they are going to get their finances in order. It’s a funny phenomena. It’s like people wake up one day and think, “Oh crud! My finances are whack!” Or something like that. Then they seek out any possible way to try and get back on track, as if they were on the tracks to start with. There’s a lot of midnight cable watching, brother-in-law asking, get rich scheme talkin’ goin’ on. But for a select percentage of the population, they actually get on a plan that changes how they handle their finances for life: our plan! (Insert guy with pearly white teeth and a single “DING” sound.)

But let’s go back to the other FANTASTIC ideas that will help people stop their horrid spending habits and get focused on the things that will truly make them rich. Like the three wallets that fine folks at M.I.T. came up with. As Michael Koretzky reported, they developed some wallets to combat “our consumer impulses.”

  • The Bumblebee – which vibrates whenever your bank registers a transaction.
  • The Mother Bear – which has a hinge that gets tougher to open as your account gets smaller.
  • The Peacock – which inflates or deflates as your account gets cash flush or cash poor.

As I read this I couldn’t help but think, “These are some great novelty items.” That’s right, novelty. “But Chris, wouldn’t that stop my over-spending? Wouldn’t that keep my bank account full? Wouldn’t that get me on the path to financial freedom?” Uhhhhhh, no. It really wouldn’t. Disciplining yourself to be on a budget that allows you to spend for what you need AND (here it comes) want, will get you on the path. Yes you can actually budget the things that you want as well as need. Actually having a plan of how to live on less than you make will get you on that path. A trick wallet that tells you how dumb you’ve been lately isn’t the thing that’ll do it. Pretty soon you’ll just get tired of the wallet telling you what you can and cannot do, and you’ll toss it for the one that was more spender friendly.

Please…pleeeeeeease start your year off right and get on a plan. It’s really not that hard to do, and you’ll be amazed at the difference it makes.

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December 22, 2010

That’s Just Silly

By Chris LoCurto
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We’ve known Dave Ramsey for a long time. A really long time. And while I would charge the gates of hell with him, side by side with nothing but water pistols, I do have to say that I have had…oooooh…moments of doubt. I know, I know, it’s crazy, but you have to realize that until ten years ago, we….dare I say it…weren’t following the plan. We were friends with Dave and Sharon, but didn’t realize how stupid we were being. So when we started the plan, a little tool popped up for us to use: the Envelope System. To which I said, “That’s just silly. I’m not carrying that around.”

In case you don’t know, the purpose of the envelope system is to take the budget that you should have done, spending money on paper before the month begins, and filling  the envelope with cash for the budget categories that you don’t just write checks for, like bills. Examples would be groceries, eating out, entertainment, clothing, etc. (In one guys case he had a pot envelope. Yes, pot. When he realized how much he was spending a month on pot, he quit smoking.) So if you budget $100 for entertainment, that’s all you end up spending. When the envelope is empty, you go home and count the number of ketchup packets you have in the fridge for entertainment instead.

And me in all of my brilliance, thought that I had a better way. But we did something that I thought was pretty smart. We collected receipts on things that we bought for a couple of weeks. It was just something that I wanted to see out of curiosity. When I saw how much money was being spent at the BP on just sodas and junk food, I became a huge proponent of the envelope system. It was ridiculous! We quickly decided that Dave was right….’cause Dave was right, and we began making giant steps towards getting control of our finances, and getting out of debt.

We hit it hard for a year and got completely out of debt except for the house. We went on a work trip, where we tagged a couple of vacation days on, and I forgot to get the budget done and the money for the envelope system. But I thought, “It’s no big deal, I’ll just use my debit card and keep track in my head what we’ve spent. I won’t go over.” Well, I’m sure you know what happened next.

So next time you see something that seems a little silly, maybe spend a few minutes actually learning what its purpose really is. It just might save you some trouble.

Now I know those of you reading this have had a similar experience. Comment about it.If you are enjoying these posts, be sure to click the follow button.

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December 8, 2010

The Secrets We Keep

By Chris LoCurto
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"LIES"

Image by Toban Black via Flickr

I used to date a girl whose mom handled the finances for their house. There’s nothing wrong with that, except for the fact that she would also handle spending all of the finances for the house as well. As for her husband…clueless! He would bring her check home…hahaha…his check home and give it to her. (Interesting slip of the tongue.) Since they are supposed to be one in marriage, let me say their check. Anywho, she would cash the check and burn through it faster than a cement torch. She also happened to be a rep for a multi-level product line, so she was constantly purchasing stuff that she wasn’t able to completely sell. She would then give away the leftover so it didn’t look like they were spending money on something that wasn’t working. On top of that, she had run up a BUNCH of credit card debt that he didn’t know about. The whole time he was oblivious to what was going on. She would give him his $20 allowance a week and he would be on his way. It was no surprise that her daughter, my girlfriend, had completely destroyed her finances after watching her mother do this to theirs. I didn’t stick around to find out what the outcome was, but I hope they got some help.

Come to find out this kind of thinking isn’t foreign. There was a time when a bunch of people from our office (Dave Ramsey office) went to support a friend of one of our team members by attending her “in home party to sell you kitchen stuff” party. Now, I have no problem with the company that does that, we own probably everything they have since we have supported so many friends as they sold it to help get out of debt. Great idea! The problem came in at this one ladies party when she dropped a bomb. After doing a fantastic job explaining all that they had to make our lives in the kitchen easier, she began to explain the payment processes. (Keep in mind who’s in the audience.) She said, “…and ladies, you can put it on your credit card so your husband won’t know.” Seriously? That’s your sales pitch? Lie to your husband! Great, I’ll take two of everything then!!

The amazing thing is this really isn’t that uncommon. As a matter of fact, men and women have been lying to each other over purchases for all too long. CNNMoney.com did an article highlighting 6 men and women who apparently are so ashamed of it, that they did an interview for A NATIONAL NEWS OUTLET! The genius of it all!! Not only will I hide my spending from my spouse, but I’ll tell everyone who’s willing to read about it.

I do believe you need to have an amount that you agree on that is okay to spend without approval from your spouse. Past that, if you’re having an issue discussing what you’re spending, then you have a much bigger problem than buying too many shoes. There’s a lack of trust in the relationship, and that should scare you more than if they find out you spent too much on prime sirloin. That’s why you MUST be working on your budget together. It’s okay if one person puts it together, but both need to be going over the numbers and agreeing to only spend what’s in the budget. When you spend the next month’s money on paper before the month begins, if there’s a discrepancy it won’t be hard to find. Thus holding everyone accountable. Then you can brag to the world on how well you’ve done NOT lying to your spouse.

Without naming names, do you know of someone who’s done this?If you are enjoying these posts, be sure to click the follow button.

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December 3, 2010

Why Credit Cards Are Like Taxes!

By Chris LoCurto
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How in the world are you going to tie those two together. Well, it’s actually quite easy and I get to use the wisdom of the Federal Government. wink wink. Stephen Moore and Richard Vedder have done some incredible research about raising taxes in the U.S.

In an article they posted in The Wall Street Journal, thank you Marsha Blackburn, they show that post World War II through to 2009 for every $1.00 of new tax revenue raised politicians spent $1.17. As they put it, “Politicians spend the money as fast as it comes in—and a little bit more.” If you are a proponent for higher taxes because bureaucrats say we need them…WAKE UP!

Okay, now that that’s out of the way, what does that have to do with credit cards? Well, the average person has a tendency to think the same way as the government when it comes to spending with credit cards. If I have it, I can spend it…and then some. I remember when I was eighteen years old, in one week I got a Visa, MasterCard, and an American Express.

I was on cloud nine. I could buy anything I wanted, that I couldn’t afford at eighteen, and all I had to do was pay the minimum payment! Uhhhhh, except on that last one. Nobody told me that you had to pay off the Amex balance every month. So I didn’t. Then one day while I was in a video store renting a VHS movie (some of you may have to Google what VHS tapes and video stores were, uh, are) it was taken from me. THE HORROR! THE EMBARRASSMENT!I couldn’t believe what had happened, and with people around me watching. But I’m the dummy who for a few months spent way more than I actually had, and when I saw the statement, I just sent in what I felt was doable.

The great thing was that I still had two cards that only required me to pay the minimums. I continued to spend like I actually had the money, and ended up in trouble down the road. Does it sound familiar to how our government handles taxes? But there’s a way for you to actually reduce your “deficit.” It’s called living on less than you make!

I know, it’s edgy, but it actually works. “But Chris you don’t understand my situation!” Really? I bet it’s you who doesn’t truly understand your situation. Here’s what I know, every time you don’t go into debt, you don’t have to pay any debt off! Every time you don’t spend everything you make it leaves you with this funny thing called cash.

Say it with me, C…ASH, C..ASH CAASSHHH. See, that wasn’t so hard. So here’s an idea, get serious about getting rid of the debt that you have. Get on a plan of spending with cash, and don’t spend everything you have! Then you can truly begin to enjoy life without the stress of not having money. It gives you more room to stress about the way Government spends.

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