thesmartestway

Use Your Greatest Asset, Your Greatest Resource, and Your Unique Ability

 


 
Brian Tracy, the self-help author and speaker points out that, “Your greatest asset is your earning ability. Your greatest resource is your time.”

Heidi: We all underestimate the power of time as a resource. Not one hour or minute of our lives can be reclaimed.

Sam:  Applying your greatest resource (your time) to improving your greatest asset (your personal ability to earn money) is the way to leverage success.

So…what is your greatest asset and greatest resource?

Everyone has unique abilities. It can take awhile to figure out what they are. Do your know what abilities make you special? It’s the skill that you find to be easy and enjoyable. Time flies when you are doing your unique skill. People tell you that you’re good at it, but you shrug it off, thinking, “Anyone could do it. It’s not that hard.” What is your unique ability?

Heidi: My unique ability is writing. In my past, I didn’t take it seriously enough, because it’s fun and satisfying. It took a lifetime of people telling me that I had a special talent for me to start valuing what I have to offer.

Sam: My unique ability is to find creative solutions to financial challenges and partner with others to accomplish goals. I am not good at details, so I find people who can help follow through with my business ideas. This has been a major factor in my successes. For example, our book “TheSmartestWay to Save” would have remained only an idea rather than the force it has already become if I had not had Heidi’s persistence, support, and follow through.

So…do you know what your unique ability is?

(Written by Samuel K. Freshman and Heidi Clingen, authors of TheSmartestWay™ to Succeed Series and TheSmartestWay™ to Save—Why You Can’t Hang on to Money and What to Do About It.)

How to Become Debt Free

 
 
 
 
 
If you command your wealth, you command your life. We believe that your life was meant to be full. We want you to have the financial resources that will allow you the freedom to pursue that “fullness of life.” Do not let debt sap your wealth and limit the “fullness of life” that you are destined to experience.


If you are in debt, you are not free. We like helping people become free of debt. Here are three ways you can fight the debt battle, become debt free, and reclaim a healthy personal financial life.
Cleanse yourself of toxic debt
Toxic debt is poison. It constricts your financial wellbeing by burdening you with interest payments, fees, and dependence on further debt. Toxic debt also prevents you from investing and achieving financial independence.                For most consumers, their debt is working against them. They have toxic debt that only takes and does not give.                Even if you understand this, it still may be hard to stop using your credit card. When you want something you cannot afford, it is easy to think, “I’ll just put it on the card."                You may be "living large” now, while you are racking up debt. You may be keeping up with your friends, family, and neighbors. However, they may be spending beyond their means too, and you could all be quietly sliding down the road to ruin together.
In any case, if you keep up your current level of debt, you will not have enough money left over to invest in your future and create financial independence for yourself.
Protect your credit ratingYou may be handling those “easy, low, minimum payments” every month. However, what if something happened in your life that made it difficult to make those payments? What if you lost your job, got injured, sick, or divorced? What if the interest rate on the credit card was increased?
If you are late on your payment, the credit card company has the right to “dial down” your credit rating. This is very serious. A low credit rating, also known as your credit score, could prevent you from getting a loan or buying a home. Protect your credit rating by refusing to take on any more credit debt until you have paid down the debts you already have.
Keep a small wallet                Here’s another trick related to dieting. You may have noticed that if you have a larger plate, you tend to take more food. In addition, if you put a large portion on your plate, you tend to eat it all!                The same concept of the size of your dinner plate applies to the size of your wallet. Keep a small wallet. Do not carry more cash with you than you are going to need.                As an experiment for one week, reduce by 20% the amount of cash you usually keep in your wallet for weekly spending money. At the end of the week, you will probably have managed just fine. Now you can save that money every week. It will start to add up!
Try these three techniques to become debt free. They are simple and doable. Remember, simple is not always easy, but you can build these techniques into your life, one by one, and gain freedom from debt gradually and persistently. Good luck!
(Written by Samuel K. Freshman and Heidi Clingen, authors of TheSmartestWay™ to Succeed Series and TheSmartestWay™ to Save—Why You Can’t Hang on to Money and What to Do About It.)

How to Invest Wisely

Everyone understands that investing wisely is the best way to get ahead. Here are a few principles to consider when planning your investment strategy:

Make interest your friend, not your enemy.

Interest works 24/7/365. Is interest working for you—or for someone else? The answer is easy. Interest is working for you if you have investments. It is working against you if have debt. That’s because debt takes money from you and gives it to others. Here’s the winning strategy: Make interest your friend, make it work for you, not against you!

Compounded interest takes small amounts and makes them large amounts over time by paying interest on the interest. If you save even modest amounts over as little as fifteen to twenty years, that savings can create financial independence for the rest of your life. Earning interest helps you the same way that owing interest hurts you.

Spend on items that increase your wealth

Buy things that will appreciate in value and pay you back. This makes more sense than buying things that decrease in value and cost you more money, i.e., clothes and cars. Investments like real estate increase in value. Just as importantly, real estate can offer more tax advantages than other investments.

An investment in your earning potential pays you back. You can invest in your career by spending on advanced training, tools, software, and the appropriate wardrobe that increase your potential for advancement. Be realistic about what will actually pay you back.

Understand the difference between assets and liabilities.

To put it simply, some assets are possessions that add to your wealth. (Let’s call them “cows,” because they give milk.) Other assets can actually take wealth away. (Let’s call them “alligators,” because they take a big bite out of your income.) Some possessions look like cows, but actually, they are alligators. The goal is to raise cows, not to try to tame alligators.

An example of an alligator is your car. Yes, a car is considered an asset, because it is something you own. But it is not a real cow because it doesn’t earn you money (unless you are in the taxi or limousine business). It is like an alligator because it costs you money to maintain and fill with gas. Also, the value of the car decreases with every year and every mile.

Your home is probably increasing in value as a long-term investment. In that way, it’s an asset, or cow. But you have locked up a huge investment of your funds into your home. There is a “lost opportunity cost” on that money. (That is the cost you “paid” because you couldn’t invest the money in ways that made a higher profit.) Also, your house consumes income for maintenance, improvements, taxes, insurance, etc. In that way, your house is a liability or an alligator.
Renting a home is seldom good use of your money. Renting is an alligator because it only takes and doesn’t give.

It’s interesting to ask yourself questions about the best way to use your money. What you could have done with the funds you invested in a house if you hadn’t purchased it? In other words, is your home value going to increase faster than the money you could have invested in something else?

Keep your funds invested and working for you, but cautiously

Why You Need to Save

We live in the richest country in the world, but many Americans are just living “month to month.” They have trouble paying their rent or mortgage, their car lease payments and their credit card bills. Others may have a nagging feeling that they should be saving more money.
In our crazy, consumer-driven society, why are some people able to hang onto their money? In the last few years, Americans have collectively spent more than they earned after taxes. This means that their out-go is greater than their in-come. If they try to solve this problem only by focusing on earning more money—and do not control where they spend it—they will find themselves “running in circles.”

Saving money is even better than making money—and a lot easier. That is because you do not have to go out and earn it—you just keep it!

They say that the quickest way to double your money is to fold it in half and put it back in your pocket. But seriously, saving increases your money!

Slow and steady saving wins the race. The turtle will outrun the hare if the turtle perseveres. Small savings over time are more likely to create wealth than taking big risks. Use the magic of compounding interest to help you. If you keep time on your side, you can create substantial wealth.

Here is an example: If you start by saving just 1% of your income and you bring home (net) $2,000 per month, you would save $20 per month. Doesn’t sound like a lot, right? Here is the good news: If you saved $20 per month for 20 years at an annual rate of 10%, you will have saved about $14,000. At the end of 40 years, you would have saved about $112,000!

Many people don’t think about it when they buy something small but overpriced, like a $5 cappuccino. Take a close look at the small treats you buy for yourself. If you gave up just one $5 treat each week, you would have your $20 per month to invest and $14,000 more to invest probably well before you are ready to retire.

Small amounts grow to large ones over time if properly invested. It is not too late to start saving. Of course, the earlier you start the better, as it is much easier to save when you are young and do not have as many commitments and obligations. No matter where you are in life, you can start now to save and reach your savings goals.

If your income is $1,000 a month and you need only $900 per month, you will be happy that you have $100 left over to invest or spend as you wish. You have avoided debt and managed your income responsibly. On the other hand, if your income is $1,000 and you need $1,100 per month, you will be unhappy because you don’t have anything left over. You will continue to fall more and more behind. As Charles Dickens wrote in David Copperfield more than one hundred fifty years ago, “Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

In other words, if you spend less than you receive, you are more likely to be happy. However, if you spend more than you have, you will be unhappy, because overspending puts you into debt. As someone once said, “If your outgo exceeds your income, then your upkeep will be your downfall.” So learn to be thrifty.

Perhaps your parents or teachers told you to “save for a rainy day” and “pinch your pennies.” That’s being thrifty! To be thrifty is to be economical, spend wisely and save your money.
Thriftiness is not just for average people. Some billionaires are thrifty. For example, Jim Walton, of Wal-Mart, worth $18 billion, drives a 1999 Chevy pickup. Warren Buffett, worth $57 billion, lives in the same house he bought for $31,500 almost fifty years ago.

Some people spend much of their free time thinking about shopping and how to spend money. Sometimes they think they are “saving” when they shop. Unfortunately, most of the time they are just spending.
Other people devote their spare time improving lives, instead of spending money. They visualize how good their life will be when they are finally financially independent. They have learned the game of not spending their money—and enjoy it. They learned to be the winner of the savings game, and you can, too!


Samuel K. Freshman and Heidi Clingen are authors of The Smartest Way™ to Save, Why You Can’t Hang on to Money and What to Do About It. They offer only their opinion, which does not constitute professional, financial, or legal advice. To receive a copy of The Principles of Financial Independence or submit questions, email them at Heidi@TheSmartestWay.com.

How to Make Your Financial Life More Manageable


We have no doubt about it: Money management can be complicated. Another thing we know for sure:  If you have a financial partner, your money decisions are twice as complicated. It is time to make it simple again. Sit down for a serious discussion with your financial partner—your spouse, your parents, your roommate. Decide which of you balances the checkbook better. Decide which of you shops for groceries better. Decide which of you files the taxes better. Then make a plan and try it out for a few months.
Here are some more ways to simplify your life and your money:

  1. Get on a cash-and-carry basis with the envelope system.
                Here’s how to do it: First, list all the things you can use cash to purchase, such as groceries, haircuts, lunches, gas for your car, clothes, entertainment, etc.
                Second, put the amount of cash you have allocated for each month in each category in its own separate envelope. Be sure to include a small weekly allowance for “walking-around” fun money or spending money. You need some spare money for the occasional treats such as beverages and grooming items. However, once that weekly allowance is spent, you must wait until next week to treat yourself again.
  1. Resolve to quit using debit cards and checks.
  2. Resolve to quit using credit cards. You and your financial partner need to promise each other that you will not use credit cards anymore. The only conditions in which you would use the credit card are (1) if it is a planned purchase that you both agree on together, or (2) if you were 100% committed to paying off the entire balance that month.
  3. Put away your plastic. If you keep extra credit cards handy, you may start to use them. Credit is very, very expensive money. Use it only in an emergency. If you cannot pay the card off at the end of the month, you cannot afford the purchase. Try to remind yourself, “It’s not money; its plastic—and its toxic debt!”
  4. Resolve to get “unhooked” from your credit cards. Credit card addiction can sneak up on you. Before you know it, you may start “tossing down your plastic” several times a day. It is not until you get your monthly credit card statement that you finally realize what you are doing to yourself.
  5. Control your saving. Formulate a realistic plan to save, even if it is just a few dollars a month. Starting out small is okay. The goal is to develop the habit of saving. Gradually increase the amount you save. Most people should be saving at least 10% of each paycheck for an “emergency” fund. The larger the savings, the larger the results. Strategic, disciplined savings can have enormous, long-term benefits.

When you start to stockpile your savings account, use cash, and stop using your credit cards, your friends will be curious how you did it. They will wonder how can became so disciplined and prepared. Share your secrets with them. Let them know that you are proud to be living within your budget and they can do it, too.

Heidi Clingen is a long-time resident of Stevenson Ranch. She and Samuel K. Freshman are authors of The Smartest Way™ to Save, Why You Can’t Hang on to Money and What to Do About It. They offer only their opinion, which does not constitute professional, financial, or legal advice. To receive a copy of The Principles of Financial Independence or submit questions, email them at Heidi@TheSmartestWay.com.
Make Excellent Small Choices and Be Excellent at the Right Time




The choices we make today determine our tomorrow. No matter what our circumstances, we can strive today to position ourselves to be in an even better place tomorrow. What choices are you making today that will change your tomorrow? Are strengthening habits that are positive, healthy, and support the future you want? These small, daily choices may not seem to matter. But over a lifetime, they do.

Heidi: I have to force myself to exercise daily. It’s so easy to say, “I’ll do it tomorrow, missing one day doesn’t matter.” But I know that my choices add up. And every once in awhile, I get a boost. For example, finally, I have exercised often enough in the past month, that exercising is starting to give me energy, not take it away. I don’t want to lose that momentum. So that keeps me motivated!

Sam: Our book, “TheSmartestWay to Save” tells the story of a small choice of investing only $100 early in my career that resulted in a return of $100,000 later on. My greatest successes have often been the result of small choices.

So…do your small choices matter?

Some people say we need to exhibit excellence 100% of the time. “Anything worth doing is worth doing well,” is another way to say it. But sometimes, we need to prioritize which tasks deserve the best of our efforts. Do you know when you need to produce excellence?

Heidi: I tend to be a perfectionist. I create a lot of stress for myself. To mellow out, I sometimes tell myself, “75% is better than nothing.” I would love to give 100% to everything I do, but I’ve learned over time that I can’t uphold an unrealistically high standard all the time.

Sam: Striving for perfection is all right is you realize there has to be a time to stop and finish the project. There will always be some errors and the world is waiting. For example, it took fifteen months and five rewrites to complete our book, “TheSmartestWay to Save.” If we insisted on perfection, it would never have gone to print. Being excellent doesn’t mean being perfect. Excellence is the best we can be in the time allotted. No one is ever perfect.

So…when do you have to be excellent?

(Written by Samuel K. Freshman and Heidi Clingen, authors of TheSmartestWay™ to Succeed Series and TheSmartestWay™ to Save—Why You Can’t Hang on to Money and What to Do About It.)

Caring Builds Success and Keeps You Passionate

Someone may have asked you this question at some time in your life. The truth is, yes, sometimes it does hurt to care. Caring takes involvement. Passion takes energy. There is always a risk that our emotions could be abused. If you are in a profession or a personal situation in which you need to give a lot of caring, be careful with your emotional energy. You may need to take frequent breaks and protect yourself from burnout.


Heidi: Sometimes it feels like I care too much. Then it hurts when I feel unappreciated. When that happens, I know I need to take a break and get a fresh sense of perspective and recharge my emotional batteries.


Sam: Caring is essential to accomplishment. It fosters the discipline to focus on goals. You must have a high sense of care about results and take the pain of risks. But you also need to step back from time to time to see if you are putting your efforts toward the most profitable direction.


So…would it hurt you to care?


 James Allen, the author of As a Man Thinketh, wrote, “…man is the master of thought, the molder of character, and the maker and shaper of condition, environment, and destiny.“  If you haven’t found what makes you passionate about your life, you’ll find it difficult to get out of bed in the mornings. Find genuine satisfaction in productive, meaningful effort. Find what you are passionate about, and your attitude will change.

Heidi: Writing our books makes me passionate. I’m much happier when I get to do things that have meaning.


Sam: When you attitude changes, your behavior changes. When your behavior changes, your life changes. It’s as simple as that. The quality of our thoughts equals the quality of our lives.           

So…what makes you passionate?


(Written by Samuel K. Freshman and Heidi Clingen, authors of TheSmartestWay™ to Succeed Series and TheSmartestWay™ to Save—Why You Can’t Hang on to Money and What to Do About It.)

Understand the Money Machine

 

Heidi has a term she likes to use: The Money Machine. It is another name for “big money,” the global financial system that operates beyond our control. Massive financial institutions and global banking conglomerates control how most of the world’s money operates. The Money Machine is the mover and shaker of finance on a micro and macro level. In many ways, we are entirely powerless over it. As consumers, the Money Machine knows how to manipulate us, and separate us from our money.


Therefore, we urge you: Watch over your money. Do not give it away freely. Otherwise, if you are not careful, your money will sprout wings and fly away, only to be pulled back into the vast void of the Money Machine.

Here is an example. Banks design their products to offer convenience, but there is a cost for that convenience. One of those costs is overdraft fees. You pay overdraft fees if you spend more than the amount in your account. The fees are small, but in 2007 alone banks raked in a whopping estimated $17.5 billion from overdraft fees. Apparently, a little bit from a lot of people can add up fast.

Here are two ways to outsmart the Money Machine:

1. Avoid debit cards

Debit cards make you lose control over your bank account. If you and your spouse/significant other withdraw from the same bank account throughout the day, you easily could become overdrawn and bounce checks all over town. It may be better to have separate accounts or mutually decide before each purchase.

2. Learn about “positive debt”

Debt can work either for you or against you. Some kinds of debt can work for you. If a debt is increasing your cash flow, it is called “positive” debt.

One suggestion is to use a low-interest rate loan to pay off high-interest debt. Here is one example: Say you have a large debt on a credit card that charges you 18% interest. If you could get a loan from the bank at, say, 8% interest and pay the credit card off, you would have automatically saved yourself 10% in interest payments. This could be a significant savings.

Here is another example: Say you have $10,000 in the bank earning 3% interest. You also have a loan for a car, on which you are paying 6% interest. It makes sense to take money that is giving you 3% and use it to pay off a loan that is costing you 6%.

In other words, if you have debt or a loan at a higher interest rate and you can get another loan at a lower interest rate, you can pay off the higher rate loan with the lower rate loan. On the other hand, you can use a loan at a lower interest rate to buy something that earns you a higher interest rate. Either way, you can save large amounts of money in interest payments that you did not have to pay.

The consumer is the “little guy” compared to the Goliath of the Money Machine. Stop allowing yourself to be manipulated. Become educated and regain control of your finances. Become committed to outsmarting the system, legally, by making wise choices. Remember, when they designed the Money Machine, they did not plan on consumers as smart as you!

Heidi Clingen is a long-time resident of Stevenson Ranch. She and Samuel K. Freshman are authors of The Smartest Way™ to Save, Why You Can’t Hang on to Money and What to Do About It. They offer only their opinion, which does not constitute professional, financial, or legal advice. To receive a copy of The Principles of Financial Independence or submit questions, email them at Heidi@TheSmartestWay.com.

You Can’t Become Debt-Free on Your Own

You may have found that to fight debt is hard work. It is easy to say that you will “beat the system” and take control of your finances. It is easy to say you will pay down your debts, save for investments, and start enjoying more peace of mind and confidence. However, we know how hard it really is to do so. Our goal is to help people realize that a change of attitude can get them back on track. We believe that people can play the lifetime money game and win.
In taking these steps to financial freedom, you may find that it helps to have support from others. Try these two steps to enlist the help of others in establishing you new money mindset:

  1. Find a role model. Is there someone you know who handles his or her money well, who has money left over at the end of the month? Maybe it is a friend, relative, co-worker, church member, or club member. Tell them that they have been an inspiration to you. Find out if they will give you some advice or mentor you and support your efforts to do better.
  1. Ask someone to hold you accountable. There is nothing like accountability to help you eliminate bad habits. Choose someone you trust to hold you accountable. Tell that person your savings goal. It could be, “I’m going to buy only one latte per week this month,” or “I’m going to put $100 in my savings account at the end of each month,” or “I’m going to pay off all my credit cards by the end of the year.”


Give that person permission to ask you periodically if you achieved your goal. Write the goal down on a piece of paper, tape it to your bathroom mirror, and look at it when you brush your teeth twice a day. This helps you set the goal in your mind as a top priority.

  1. Learn to play The Game of Not Spending Money. You are playing the game to win, to win over your compulsion to spend. Like any game, when you gain points, you get a sense of satisfaction. This game should be no different. When you reach each goal, give yourself an appropriate reward, based on how hard the goal was to achieve.


To get motivated, make a list of rewards that would be fun or feel good. Some of your rewards should not cost any money. Some examples of no-cost items could include rewarding yourself with taking a hike, relaxing in the bathtub, planning a romantic picnic, or lying on the grass at night to look up at the stars.

  1. Reveal your goals and your planned rewards to your loved ones and your mentor. They will encourage you and celebrate with you. Whatever you do, do not spend yourself back into debt when you celebrate! Dream of the day when you will be able to pass on the favor and mentor someone who, like you, became snared in debt, but with your help broke free.


Here is how to visualize yourself taking back control of your life. When you have a few quiet moments, close your eyes, and imagine yourself accomplishing the first small, easy steps. What will it feel like to look at your bank account balance and see a large amount? What will it feel like to see your billing statement with zero due? What will it feel like to cut that credit card in half? Let yourself feel the pride and relief. Remind yourself often what that feels like.
Start today to find your support team and start living your dream of financial independence!

Heidi Clingen is a long-time resident of Stevenson Ranch. She and Samuel K. Freshman are authors of The Smartest Way™ to Save, Why You Can’t Hang on to Money and What to Do About It. They offer only their opinion, which does not constitute professional, financial, or legal advice. To receive a copy of The Principles of Financial Independence or submit questions, email them at Heidi@TheSmartestWay.com.

Successful People Believe in Themselves


Norman Vincent Peale, the author of The Power of Positive Thinking “People become really quite remarkable when they start thinking that they can do things. When they believe in themselves, they have the first secret of success.”

Heidi: It really helps to have other people believe in you. But it’s not enough. If you don’t believe in yourself, too, you’ll never make it.

Sam: Goal setting is only half the battle. You also have to have positive thinking and a belief in your ability. Visualize yourself being successful. Feel yourself being successful. Remind yourself what it means to you.

Maybe you’re being mean to yourself and didn’t realize it. If so, stop! Be a friend to yourself, instead! After all, there will always be someone out there who is willing to speak or think badly of you. There’s no need to add to your own misery. Don’t abuse yourself. Treat yourself with the kindness, and respect that you give to others.

Heidi: I realize that I’m obligated to myself to not speak badly of myself. So I try to present myself honestly, but in a positive light. The main thing is to quit apologizing for everything.

Sam: It has been proven over and over that positive self-thinking is a major factor in success. Remind yourself that have the ability to reach your goals.

So…are you mean to yourself?

(Written by Samuel K. Freshman and Heidi Clingen, authors of TheSmartestWay™ to Succeed Series and to Save—Why You Can’t Hang on to Money and What to Do About It.)

Teach Your Children How to Save

 


We absolutely believe that children need to learn how to save money. We are convinced that they will benefit from this lesson their entire lives. There are many ways to make saving a fun activity and set a good example for your children. Here are some of our favorite ideas:

Have everyone in your family toss their loose change into a big “savings jar” at the end of each day. In a few months when the jar is full, help your children take the jar to your bank. Some banks, at no charge, will count your change in a change-counting machine.

Then each member of the family writes down what he or she estimates the total amount of the jar will be. The person who comes closest to the total chooses on which family activity the money will be spent. The family activity could be dining out or a day at an amusement park. The purpose is for everyone to benefit from the time together, since everyone put his or her change into the jar. You can also use the funds for long-term investment and growth.

Make saving a part of everyday life. When your children are young, they can save some of their allowance in their piggy banks and set up lemonade stands, baby-sit and mow lawns. They can learn early to comparison shop for everyday items such as clothes, food, and music.

When they are a little older, your children can open up a savings account at your bank and watch the balance grow. They can mow lawns, organize neighborhood garage sales, and get summer jobs at stores or summer camps. To give them incentive to work and put money away in their savings account, you may offer to “match” their funds or reward them when they reach a savings goal. This way, they can experience the satisfaction of selecting and buying larger items they want, such as technology, cars, and auto insurance.

Help them choose their college and their career. Make no mistake, the colleges your children choose will directly affect you and your children’s financial situation for years to come in many ways. What are the tuition, room and board, and travel costs? Does the school specialize in their chosen career? While they research these questions, your children can “visit” more colleges remotely by viewing hour-long video tapes of college tours, available online.<

Colleges get more expensive every year. Young people incur some of their deepest debts while in college. However, you do not want your children to be burdened with debt before they even start their professional lives. Help your children understand that they need to help with the expense of their education. Explain to them that their career path will affect their income and standard of living. Student loans take a long time to repay, so they may need to apply for all available scholarships and get a job while going to school. You can get help with college tuition through the Federal Student Financial Aid Information Center www.studentaid.ed.gov (800-433-3243). If you have student loans, perhaps you can consolidate them. Visit www.loanconsolidation.ed.gov.

Be the role model that they need. Our children are always watching their parents. Parents need to do their best to be good models of how to manage money. In more than one way, setting an example for good money management is a “priceless” gift that our children will benefit from all their lives.

(Written by Samuel K. Freshman and Heidi Clingen, authors of TheSmartestWay™ to Succeed Series and TheSmartestWay™ to Save—Why You Can’t Hang on to Money and What to Do About It.)

Successful People Believe in Themselves

Saving Smarties Column

Norman Vincent Peale, the author of The Power of Positive Thinking, wrote, “People become really quite remarkable when they start thinking that they can do things. When they believe in themselves, they have the first secret of success.“

Heidi: It really helps to have other people believe in you. But it’s not enough. If you don’t believe in yourself, too, you’ll never make it.

Sam: Goal setting is only half the battle. You also have to have positive thinking and a belief in your ability. Visualize yourself being successful. Feel yourself being successful. Remind yourself what it means to you.

So…you really believe in yourself?

Maybe you’re being mean to yourself and didn’t realize it. If so, stop! Be a friend to yourself, instead! After all, there will always be someone out there who is willing to speak or think badly of you. There’s no need to add to your own misery. Don’t abuse yourself. Treat yourself with the kindness, and respect that you give to others.

Heidi: I realize that I’m obligated to myself to not speak badly of myself. So I try to present myself honestly, but in a positive light. The main thing is to quit apologizing for everything.

Sam: It has been proven over and over that positive self-thinking is a major factor in success. Remind yourself that have the ability to reach your goals.

So…are you mean to yourself?

(Written by Samuel K. Freshman and Heidi Clingen, authors of TheSmartestWay™ to Succeed Series and TheSmartestWay™ to Save—Why You Can’t Hang on to Money and What to Do About It.)

Savers work their plan

A person’s ability to save depends on his or her habits. Firmly ingrained habits can increase your ability to postpone the desire for “instant gratification.” Savers have developed habits that help them “plan their work and work their plan” to their savings goals.

If you have a low tolerance for delayed gratification, here are some ways to strengthen your “savings muscles. One strategy is to find a way to make saving your money a gratifying endeavor. Another way is to make your goal very specific. Also, you can have a vivid, sensory imagine what you will experience as the result of your saving.

While planning is essential it is only the first step. Planning without doing, won’t get you anywhere. A great idea without implementation is just an idea.  You need a roadmap to where you’re going, but then you have to get on the road and move. Remember if you goal looks too big, you won’t start working toward it. There is an old saying that “the only way to eat an elephant is one bite at a time.” It is doing that results in getting. “Without doing there is no getting.”

Automatic savings plans can launch you toward you savings goals. Your paycheck is automatically deposited by your employer. This results in saving you time, earning you more interest (since your money goes into your account earlier), and most importantly putting you on a guaranteed road to financial success. Talk to your banker about it.

Do not spend money on things you do not need. This is not as easy as it sounds. “Is it a want–or is it a need?” is a complicated question. Often, people think of too many of their expenses as needs. Hard times, however, require hard questions. The answers redefine one’s concepts of wants versus needs. For example, does your elementary school child really need a cell phone–with an expensive text messaging package? Does your first baby really need to be driven around in a large SUV? Does your fifteen-year-old really need a brand new car? Do you really need the very latest palm, pod, pad, or video game? You will be surprised by the number of trimmable expenses you can find. Just think of them as “trimmables” that you can cut back now, and add later if necessary.

Which would you rather have: a high-fashion wardrobe—or your own home? Your wardrobe will inevitably go out of style. Your worn clothing has far less value than when you bought it. But property has lasting, long-term value.  While many say that they want their own home, they may not have thought through the daily choices that are required to reach that goal. A six- to twenty-four-month change in lifestyle may be all that is necessary, but it requires a dramatic adjustment in ones thinking and attitude and actions. 

Deferment of gratification, clear visualization of long-term goals, and learned patience and optimism are some of the qualities that “saving for the future” require. Combine that with honesty and wisdom about what is really necessary and what can be eliminated at least temporarily, and you have the secret sauce to how savers “plan their work and work their plan.”

 

Dealing with the B-Word: Budget

 

There is no way to avoid the B-Word. We believe that you must have it if you want to hang onto your money. Sam is a successful businessperson who has owned his own businesses for the past 50 years. He could not have done it without the B-Word.

The B-Word is a budget. People are afraid to say the word aloud, as if it was contagious! However, a budget helps you control your spending so it does not control you. If you have never created a budget before, think of it as a simple chart that tells you what money you have coming in and going out. A budget is a guideline to help you understand how much you can afford to spend on which categories of expenses.

Here are some tips on how to make a simple budget for yourself and stick with it.

A great plan with no action is simply a great plan

A budget is a plan that will not work unless you act on it. Once your budget is in place, you can adjust it as needed. Only you know what you really need to include in your budget and what you can eliminate. If your budget is accurate for you specifically, you will be able to discipline your spending.

“Most people don’t plan to fail, they just fail to plan.” Without a plan, it is easier for your money will disappear and you will not know where it went. Make a plan to keep track of where your money goes throughout the day, the week, the year, and your entire life.


Use a budget guide

To set up your budget, you can use the 27-page budget guide on http://www.familycredit.org/. It has worksheets to list creditors, calculate your net worth, your income and expenses, your monthly budget, and your bi-weekly budget.

At http://www.teachmeaboutcredit.org/ (800-994-3328), you will find a personal budget guide, as well as newsletters that will send you monthly budgeting tips. The Personal Credit Guide points out how you can save thousands of dollars simply by eliminating things like sodas, donuts, morning cappuccino, video rentals, and cigarettes. If you are in the habit of buying your lunch on workdays, you may be paying at least $6.00 per day. If you make your lunch at home and bring it to work, you would save $1,500 per year. Not only that, two other things could happen: you could finish your work earlier and you could lose weight!

Be realistic

Everyone has more expenses than he or she thinks think they do. When you design your budget, be honest with yourself. First, add up all of your fixed monthly expenses. Then add in fixed annual expenses including the premiums on all of your insurance policies and property taxes. Make a rough estimate (on the high side) for income taxes, annual physicals, dental cleanings, and routine car maintenance. Establish how much you want to spend each year on gifts, travel, and home improvement. Do not forget that everyone has unplanned expenses for car repairs, home repairs, dental work, and doctor’s visits.



Use different kinds of money

To master your finances with a budget you need to know about three kinds of money: fixed expenses, flexible expenses and discretionary expenses.

Fixed expenses never change month to month, such as rent or mortgage payments, loan payments, car payments, insurance payments, etc.

Flexible expenses are for necessary items that change in amount month to month, such as groceries, utilities, credit cards charges, household items, clothes, haircuts, etc.

Discretionary expenses are things without which you can survive. This is what is left over after your fixed and flexible expenses have been allocated. It includes the things you do for entertainment, such as dining in restaurants, going to the movie theater or plays, joining clubs and buying books, music and hobby items. It is your daily cappuccino and newspaper. Discretionary items are purchased with what is called disposable income.

Know your disposable income

When you cash your paycheck, set aside your savings first. This is called “paying yourself first.” Then set aside the money you need to pay your bills and provide for your monthly needs such as food, lodging, health insurance, transportation (bus fare or auto maintenance and insurance).

What is left over is your “disposable income.” Save most of this in a special account or envelope for upcoming events, such as travel, entertainment or holidays. You also need a certain amount of “walking around” fun money to use as you wish during the week. Even if your fun money budget is only a few dollars, you can enjoy spending it without guilt.

Make a budget that works

To make a budget that works, first figure out what you spend for the three kinds of expenses listed above. Second, plan to take out the fixed expenses from your income each month as quickly as possible. You could have online billing that takes it directly from your paycheck. Third, determine a specific amount that you can spend on all the flexible expenses, such as groceries and clothes. Put that amount in cash in a separate envelope for each category. Fourth, at the end of each month, decide what you will be able to spend the next month on discretionary items. Put the cash into a special discretionary envelope and use it for your entertainment desires.


Remember, if your budget is not workable or if you deprive yourself too much, you will be tempted to toss the budget in the trash. Make your budget realistic and gradual. If you are patient with yourself, you will stick with it and see the results.

Heidi Clingen is a long-time resident of Stevenson Ranch. She and Samuel K. Freshman are authors of The Smartest Way™ to Save, Why You Can’t Hang on to Money and What to Do About It. They offer only their opinion, which does not constitute professional, financial, or legal advice. To receive a copy of The Principles of Financial Independence or submit questions, email them at Heidi@TheSmartestWay.com

Savers work their plan

A person’s ability to save depends on his or her habits. Firmly ingrained habits can increase your ability to postpone the desire for “instant gratification.” Savers have developed habits that help them “plan their work and work their plan” to their savings goals.

If you have a low tolerance for delayed gratification, here are some ways to strengthen your “savings muscles. One strategy is to find a way to make saving your money a gratifying endeavor. Another way is to make your goal very specific. Also, you can have a vivid, sensory imagine what you will experience as the result of your saving.

While planning is essential it is only the first step. Planning without doing, won’t get you anywhere. A great idea without implementation is just an idea.  You need a roadmap to where you’re going, but then you have to get on the road and move. Remember if you goal looks too big, you won’t start working toward it. There is an old saying that “the only way to eat an elephant is one bite at a time.” It is doing that results in getting. “Without doing there is no getting.”

Automatic savings plans can launch you toward you savings goals. Your paycheck is automatically deposited by your employer. This results in saving you time, earning you more interest (since your money goes into your account earlier), and most importantly putting you on a guaranteed road to financial success. Talk to your banker about it.

Do not spend money on things you do not need. This is not as easy as it sounds. “Is it a want–or is it a need?” is a complicated question. Often, people think of too many of their expenses as needs. Hard times, however, require hard questions. The answers redefine one’s concepts of wants versus needs. For example, does your elementary school child really need a cell phone–with an expensive text messaging package? Does your first baby really need to be driven around in a large SUV? Does your fifteen-year-old really need a brand new car? Do you really need the very latest palm, pod, pad, or video game? You will be surprised by the number of trimmable expenses you can find. Just think of them as “trimmables” that you can cut back now, and add later if necessary.

Which would you rather have: a high-fashion wardrobe—or your own home? Your wardrobe will inevitably go out of style. Your worn clothing has far less value than when you bought it. But property has lasting, long-term value.  While many say that they want their own home, they may not have thought through the daily choices that are required to reach that goal. A six- to twenty-four-month change in lifestyle may be all that is necessary, but it requires a dramatic adjustment in ones thinking and attitude and actions. 

Deferment of gratification, clear visualization of long-term goals, and learned patience and optimism are some of the qualities that “saving for the future” require. Combine that with honesty and wisdom about what is really necessary and what can be eliminated at least temporarily, and you have the secret sauce to how savers “plan their work and work their plan.”

Frugality is the New Normal

Everyone, no matter their income, would like more money. The easiest way to increase your money is to reduce the amount you spend and increase the amount you keep. It is easier to save money than to earn it. An added bonus of reduced spending: Unlike increased income, you do not have to pay taxes on it your new-found funds. Saving money makes more sense than ever. Frugality is the New Normal.


In good times as well as in bad times, a plumped up cash cushion softens the landing of unexpected economic disturbances. Don’t be caught unprepared by the loss of your job, your marriage, or your health. As Paul Valéry once said wistfully, “The future is not what it used to be.” Just because you have a job now does not mean you will in the future. The same could be said for anticipated inheritances and entitlement payments. All you can really count on is today. Therefore, a “rainy day fund” is not only a sound financial strategy; it also broadens your array of options, and thus enriches your life.

True financial freedom is to not have to worry about money. It is to wake up each morning and how that you have enough money for the rest of your life. The first step sounds easy, but it isn’t: learn to save enough that you can manage to live below your income. If you do not save and you continue to outspend what your earn, earning more will not solve the problem, will it?

There are many reasons why saving has become an admired and respected trait. Setting aside funds for investment, retirement, emergencies, and charitable goals isn’t so bad, after all. Frugalists learned they need to put their “oxygen mask on first,” so they can help others. They’ve eliminated debt and stress from their lives. People respect savers and ask for their advice and guidance. They’re often the ones chosen to become community leaders, business and personal partners, and can manage successfully their family affairs.

Feeling frugal and acting thrifty will be a permanent, long-term condition among Americans, even when the economy revives. A hefty savings buffer is never a bad idea, in either good times or bad. The cost of living and everything connected with it continues to increase. The single most successful way of coping on a fixed income is to wring more value out of your dollars. You may have friends who live better on less than others who make more than they do. Frugality does not mean deprivation. You can have a life well lived and still be careful with your resources.

Changes in behavior have to seem easy or you won’t play along. Life isn’t a sprint; it is a marathon. It is not a crash diet. It is the daily healthy choices, day after day, that drop the pounds and gain the wealth. You do the things that you want to do. You need to believe, “Not only do I need to do it—I can do it!” What is the meaning and purpose of your life? Is it just about pursuit and disposal of income? You will have a fuller life if you gain mastery over your money–by learning to save it. Welcome to the New Normal.

Learn the Difference Between Have-to, Want-to and Need-to Decisions

Happiness is being satisfied with what you have. Unhappiness is always wanting more. To take responsibility for your money management is to manage your wants. Every decision can be placed in one of three categories: “have-to” decisions, “want-to” decisions, or “need-to” decisions. The first step is to separate your wants and your needs.



Understand “have-to” decisions

Have-to” decisions“ are decisions about what someone else wants us to do, or which you think you need to do because someone else expects you to do it. Do you worry too much about what other people think about you? For example, would you say to yourself, "I ‘have to’ buy that new car or house—or I will feel embarrassed around my friends.” Sadly, it’s human nature to judge others by their possessions, rather than by their character.

Whenever you hear yourself think, “But I have to!” stop and ask yourself, “Do I really have to?”

News flash: other people are not thinking about you as much as you think they are. They are too busy thinking about their own problems and themselves.

You may have heard the phrase, “He who dies with the most toys wins.” Unfortunately, there is no way to win that game. Why? There will always be someone who has more toys than you. The game that you can win is this one: save, invest, and get rich. Here is the irony: If you’re so busy competing and trying to appear wealthy, you’re actually ruining your chance to become truly wealthy.


Understand “want-to” decisions

The next level of money motivations is “want-to” decisions. “Want-to” decisions are choices we make to buy things personal pleasure or comfort, temporary satisfaction or to relieve some stress or disappointment. Have you ever said to yourself, “I bought it because I wanted to. I know I couldn’t afford it, but I wanted it so I bought it anyway.” Look at “want-to” decisions carefully. They are seldom rational.

To spend needlessly on “wants” puts you behind on your investment program and derails your track to wealth.


Don’t catch “the wants” virus

Don’t have endless wants. Learn to want only those things that you truly need. Constant longing for something you can’t have or shouldn’t have can make you miserable. This misery can be called “the wants” virus. You have “the wants” virus when you say frequently, “If only I had [fill in the blank].”

Even if you finally get what you think you want, you may be surprised that it isn’t what you really wanted after all. You may have heard the warning, “Be careful what you wish for—you might get it.”


Understand “need-to” decisions

The last and most important level of motivation is “need-to” decisions. What is necessary to meet your life goals and care for your loved ones? You need to pay for your basic need of food and shelter (appropriate in relation to your income) and to save for investment, retirement, your children’s education, and unexpected emergencies. You probably have life goals that require investment in yourself for future reward.

Everyone has had the unpleasant surprise of broken major appliances, unplanned car repairs, costly dental work, or medical tests. Someone close to you may need long-term medical care someday. Medical expenses can crack your retirement nest egg, if your health deteriorates. Health care costs are rising all the time and people are living longer than ever. Put all these possibilities together, and you can see that saving your money wisely is a “need to” decision.

To categorize a purchase as a real “need,” you must have a clear understanding of your own definition of “have-to"s, "want-to"s and "need-to"s. A good test is to ask yourself The, "Is this the best use of my money? Can I live without this? Do I really need it to improve my life?” Keep your real needs uppermost in your mind. This will help you resist the “have-to"s and "want-to"s, and help you focus on the "need-to"s. If you learn to tell the difference between something that you need to survive from something that you simply desire, your purchasing decisions become easier to make and they will make more sense.

How to Develop Financial Discipline

As W. Somerset Maugham so sadly pointed out, "The unfortunate thing about this world is that the good habits are much easier to give up than the bad ones.” Someone else observed, “Bad habits are like a comfortable bed, easy to get into, but hard to get out of.”

We all know that it takes discipline to handle money wisely. Nevertheless, if you treat your money well, your money will be good to you. Here are some ways to treat your money well:


Get a good return on your money

Everyone wants to get a good return on their money. How would you like to make 10% to 20% on your money? Here’s an easy way: pay off your credit cards! If you don’t have to pay your credit card interest rates of 10% to 20%, it’s the same thing as saving or earning that money. Don’t be one of the vast numbers of credit card holders who are paying interest on their balances. Be smarter than they are.


Verify your expenses

Open up each bill when it arrives and analyze each bank and credit card statement to check if it’s accurate. Put each bill in its own file or envelope.

For your checking account, use check stubs that make a copy of the checks you write. This helps you keep your checkbook balanced because it provides a copy of all the checks you wrote, in case you forget to note it in your records.


Avoid ATMs

Avoid automated teller machines. Sure, ATMs are convenient, but convenience costs. If you use an ATM at a bank branch that isn’t your own branch, many banks charge a fee for using that ATM. Some banks have been raising these fees. The fees can add up fast. The cure for ATM dependency is to plan ahead, go to your bank during bank hours, and withdraw the cash you need.


Don’t hide your spending behind “saving” with coupons or sales

When you buy something, if it is a “want” rather then a “need,” it is not a savings, even if you used a coupon or got it on sale. You didn’t really “save” money, you spent money. This reminds us of the story of the spouse who proudly returns home from a shopping trip and tells his or her mate how much money all the sales at the store “saved” them. The response from the mate is, “If we saved so much, why do I feel so broke?”

We encourage you to use coupons and shop at sales. Just don’t let yourself get carried away by all the spending opportunities.


Earn extra money

To reach your goal of having extra money, you may need to explore beyond your “comfort zone” and look for new ways to make more money.

Weekend or evening jobs can supplement your earnings. You can share your home or apartment with a friend, relative, or tenant and split expenses with them. For extra spending money, you can tell friends and family that you are willing to house sit, pet sit, walk dogs, run errands, or provide other occasional services.


Sleep better at night

There is an old saying, “Make good habits and they will make you. Pretty soon, your new savings habits will become easier and you will start to see how they make good things happen in your life. Plus, the peace of mind you will gain will help you sleep better at night.


How to Fight Money Procrastination

A law of physics states, "A body in motion tends to stay in motion; a body at rest tends to stay at rest.” When it comes to money, procrastination—doing nothing—can hurt you. You may feel indecisive, not knowing how to start saving. But choosing to do nothing is still a choice with consequences. This choice can cause you to lose out on opportunities that could change the course of your life.

The following suggestions can help you overcome procrastination in your savings program.


Identify your favorite excuses

We all have our favorite excuses for why we can’t or won’t do the things that we should. For example, we all know we should “eat less and exercise more.” It’s a simple concept. Why is it so easy to find good excuses not to do it? We tell ourselves, “I’m too stressed out,” “I’m too tired,” “I’m too busy,” “I’m too upset.” We claim, “I don’t have enough confidence or energy,” “That’s just the way I am,” or “I can’t do this on my own.”

Here’s the deal: You can pick any excuse. Each excuse works as well as any other. No matter what your reason is, you are using it to stop you from doing what you know you should be doing. You are allowing excuses to paralyze you.

Your excuses may be true and worthy, but it doesn’t really matter. The fact is, if you want to increase your savings and improve your life, you need to figure out how to overcome these destructive self-messages.

Think of your “Top Three” favorite excuses for not saving. Write them down and take a look at them. To help you overcome the paralysis that excuses create, here are some ways to get started.


Use automatic savings

Automatic savings is an automatic deduction from your payroll check or your bank account to go into a savings account. You can set aside money weekly or monthly. Once established, the program will work in your favor. Studies show that workers who are on an automatic savings plan are more likely to stick with that plan.

Automatic savings takes only a few simple steps to set up. They work because you never see the money. Some plans can be put into an investment automatically to start earning a return. Study the 401(k) plans and savings plans offered at your place of employment.


Use automatic deposit

You can have your paycheck automatically deposited. This way you can’t misplace your paycheck, and your money is available to you faster than if you deposited it in the bank yourself. If you track your bank accounts online, you can see exactly what checks have been deducted and what haven’t yet been cleared from your account. Don’t forget to check your statement each month for any bank errors.


Use automatic bill paying

Another technique is to pay bills automatically. This is when your bill payments are deducted from your bank account or payroll check and sent directly to the vendor to pay your bills. This prevents you from misplacing your bills, forgetting to pay them, or paying them late. If you’ve ever paid a bill late, you know about late fees and penalties. With automatic bill paying, your bills are paid on time, every time.

To make automatic bill paying work, be sure you have enough money in your bank account on the day that each bill payment transfer is put through. Otherwise, you will have overdraft charges or checks bouncing. You can protect yourself from overdraft fees by acquiring a line of credit linked to your savings account. Nevertheless, there is no reason to overdraw your account. If you are concerned about exceeding your balance limit, put as much “padding” as you can into your account. But don’t spend the padding!


Avoid overdraft fees and late fees

When you have several payments pending, many banks have adopted the procedure of processing the largest check you wrote before they process the smaller checks you wrote. Banks make lots of money charging overdraft fees. They are more likely to collect those fees and more of them if they deduct the larger check before the smaller amount.

Banks and financial institutions stay in business by making money. To do this, they use your money. To achieve that goal, they need to do several things. They need to acquire as much of your money as possible, keep your money as long as possible, charge you the highest interest rate possible, and pay you the lowest interest rate possible.

On the other hand, the banker at your local bank branch can be very helpful. Go in and create an alliance with him or her. Ask for suggestions about how you can do a better job budgeting, saving and eliminating fees.

You may be able to spread out the payments that are deducted from your account. Ask your creditors to try to change the “due dates” on your bills so that they are not all due at the same time of the month. This will help you manage your finances and prevent overdraft fees and late fees.

Your Home is an Investment and a Liability


For years, homeowners have had pride in home-ownership. Lately, the American dream of home ownership has been threatened for many in our country.  Here are some tips to help you maintain your greatest possession:

Understand that your home is an important debtThe biggest debt that most consumers have is their home loan. Your home is your castle. Hopefully, you didn’t buy more castle than you can afford. You may have assumed that the value of your home would never drop. Maybe you were hoping that your income would increase so that you could afford the higher payments. Maybe you forgot to add in the cost of maintenance, insurance, and taxes on your house. For whatever reasons, many people fool themselves into buying more house than they can comfortably afford.


Hang onto your homeIf you bought your home with an adjustable-rate mortgage (ARM), the interest rate on your loan may be resetting to a higher rate soon. If you have an ARM, make an appointment as soon as possible with your home loan provider. Assure them that you will work with them closely to keep your home. Get a printout of your reset mortgage estimate, including what your new monthly mortgage will be and when it will start. If the reset rate is higher, you will have to pay more each month to keep your home. Start preparing for this new expense immediately.If you have good credit and want to avoid the uncertainty of adjustable interest rates, you can try to refinance your home with a fixed interest rate. In a time of tight mortgage credit, however, this can be more difficult to do. If you need to refinance and you can’t find a new loan, ask your lender for help. Document your efforts.


Avoid foreclosureMany homes across the country go into foreclosure. If you are afraid that you can no longer pay your home mortgage, you may be facing foreclosure, too. Whatever you do, try to avoid foreclosure.Here are some online resources to help you prevent foreclosure:


· www.hud.gov/foreclosure (800-569-4287). HUD is the U.S. Department of Housing and Urban Development. This site lists HUD-certified credit and foreclosure prevention counseling agencies. ·     www.housing.org (888-331-3332). Project Sentinel is a local HUD-certified counseling agency. ·     www.nhssv.org (408-279-2600). Neighborhood Housing Services Silicon Valley is another local HUD-certified counseling agencies. ·     www.homeloanlearningcenter.com. Mortgage Bankers Associations Home Loan Learning Center has information under Your Finances, then Foreclosure and Delinquency. ·     www.995hope.org (888-995-HOPE). This is the site for Homeownership Preservation Foundation.


Save on your property insuranceYou may be able to save on your property insurance. Property insurance companies often sell their client data to each other. If this happens to you, you could possibly be charged higher rates and offered lower coverage due to a previous claim. An “insurance score,” similar to a credit score or rating, is often assigned without the client’s knowledge. Find out what your insurance score report says and if it includes any errors. Request your free copy at www.choicetrust.com and www.iso.com (under the link “useful features”).


Save on your property taxesYou may be able to save on your property taxes. If your home has dropped in value, you may be able to petition your county tax board to reassess your home and tax you at its current, lower value. File the request for reduction in your property tax assessment by contacting your county assessor’s office. They will ask you a few simple questions such as your contact information, parcel number of your house, and your estimation of what the current value of your house might be. It’s not necessary to hire someone to file the request for you.


Heidi Clingen is a long-time resident of Stevenson Ranch. She and Samuel K. Freshman are authors of The Smartest Way™ to Save, Why You Can’t Hang on to Money and What to Do About It. They offer only their opinion, which does not constitute professional, financial, or legal advice. To receive a copy of The Principles of Financial Independence or submit questions, email them at Heidi@TheSmartestWay.com

How to Control Your Money Consumption


There is an old joke that makes us chuckle: Some people go over their budgets very carefully each month—others just go over them! Actually, it is not an amusing situation. However, if you can make things seem easier and more fun, sometimes that helps.

Sam likes the analogy that a spending diet is like a food diet. It is easy to spend too much and it is easy to eat too much. He believes you can get your spending under control in ways similar to how you get your eating under control. Belt tightening on the budget and the waistline.
One trick is to think of spending money like eating food. Steal a tip from people who lose weight. Dieters are advised to keep a “daily food diary” to monitor what they eat. Do the same thing with your money consumption. Keep a “daily money diary.” This will show you how much money you are spending each day, when and where.Put a small piece of paper in your wallet or carry a notepad in your purse. Every time you buy something, jot down the details of the purchase. You could also enter it in your PDA. Yes, it is inconvenient to make a note of every purchase. However, that is partly why this trick is helpful: it makes you stop and think each time you buy something. You may even be less eager to spend money because you know that you will have to log the purchase into your “daily money diary.”

To break a habit, you have to first notice when you are doing it. If you spend money unconsciously, without thinking about it, it has become a habit. A “daily money diary” helps you notice when you are spending so you can learn to control your behavior.

The “daily money diary” also helps you see exactly how much you spend on those little “budget-busters” every week. Do this for a month. Then use the list to help you establish a monthly budget that realistically meets your needs.
Keep a small wallet
Here’s another trick related to dieting. You may have noticed that if you have a larger plate, you tend to take more food. In addition, if you put a large portion on your plate, you tend to eat it all!
The same concept of the size of your dinner plate applies to the size of your wallet. Keep a small wallet. Do not carry more cash with you than you are going to need.
As an experiment for one week, reduce by 20% the amount of cash you usually keep in your wallet for weekly spending money. At the end of the week, you will probably have managed just fine. Now you can save that money every week. It will start to add up!
Get on a cash-and-carry basis
Here’s how to do it: First, list all the things you can use cash to purchase, such as groceries, haircuts, lunches, gas for your car, clothes, entertainment, etc.
Second, put the amount of cash you have allocated for each month in each category in its own separate envelope. Be sure to include a small weekly allowance for “walking-around” fun money or spending money. You need some spare money for the occasional treats such as beverages and grooming items. However, once that weekly allowance is spent, you must wait until next week to treat yourself again.

Third, resolve to quit using debit cards, checks, and credit cards. You and your spouse or significant other must promise each other that you will not use your credit card anymore. The only conditions in which you would use the credit card are (1) if it is a planned purchase that you both agree on together, or (2) if you were 100% committed to paying off the entire balance that month.
Extra plastic on hand can make you feel like you have extra money on hand. This is not true. Credit is very, very expensive money. Use it only in an emergency. If you cannot pay the card off at the end of the month, you cannot afford the purchase. Try to remind yourself, “It’s not money; its plastic—and its toxic debt!”
It is easy to become “hooked” on credit cards. Credit card addiction can sneak up on you. Before you know it, you may start “tossing down your plastic” several times a day. It is not until you get your monthly credit card statement that you finally realize what you are doing to yourself.

When you get “unhooked” from credit card addiction and use cash to pay for things, your friends will be curious. They will wonder how can you be so prepared and disciplined to be on a cash-and-carry basis. Simply explain to them that you are living within your budget and they can do it, too.

Heidi Clingen is a long-time resident of Stevenson Ranch. She and Samuel K. Freshman are authors of The Smartest Way™ to Save, Why You Can’t Hang on to Money and What to Do About It. They offer only their opinion, which does not constitute professional, financial, or legal advice. To receive a copy of The Principles of Financial Independence or submit questions, email them at Heidi@TheSmartestWay.com