Archive for the ‘I Need a Plan’ Category

Chronic Vagueness

March 3rd, 2011 by Dewayne | Posted in Budgeting, Consumerism, Good Advice, I Need a Plan, Uncategorized

One of our users coined this term to me the other day and honestly, I’ve been thinking about it a lot lately.  What is Chronic Vagueness, and how does that apply to personal finance?  The answer is certainly much more clear than the term.

I guess if we apply the definitions of these two words, it makes more sense.  ”Chronic” means, constant, habitual, continuing a long time or recurring frequently.  ”Vagueness” means, not established, determined, confirmed, or known.  Putting both together, “Chronic Vagueness” could be a constant, habitual thought or set of actions that are done without an established, determined, or known set of facts.  Does that describe how you feel about your personal finances?

One of the things I love the most about what I do is talking with people that are clearing the chronic vagueness from managing their personal finances. Just recently, I spoke with a BudgetSketch user that was struck by the fact that her and her husband were understanding clearly their financial position for the first time, and BudgetSketch was working to help them create new habits and patterns of thinking about their finances.  Since she could see her budget plan in one view, she manages it daily by tracking her actual spending against her plan.  She said they have eliminated several hundred dollars of wasted money per month, and have already planned the payoff of their second vehicle over the next 3 months.  All of this is happening because they’ve changed their habits, and have a clear well-defined plan for moving forward.  I hear a lot of stories like this, and it’s music to my ears.

Many people “manage” their personal finances in a state of chronic vagueness.  Spending behavior is habitual, with no plan for how their money will be spent or even knowing if they can afford the constant spending patterns they’ve established every month.  Once a person tries to get a handle on this, it seems daunting, as it could be really hard to get their arms around.

BudgetSketch is as much a tool to remove the “chronic” spending behaviors, as it is medicine for removing the “vagueness” out of establishing a plan or even knowing your true financial situation.  It does this by first showing you a clear picture of your financial situation, and then it works to change chronic spending behaviors.  In BudgetSketch you’ll plan to spend, not just spend.

If you’ve made a plan to only spend $50 this week for work lunches, and by using BudgetSketch, you know you’ve already spent $50 by Wednesday of the week, you have a decision to make for the 2 remaining workdays.  In the past, you may have just continued to buy your lunch for Thursday and Friday, spending $70, but since you now know you’ve already spent your plan for the week, you can make some modifications.  Maybe you bring your lunch the next two days, or perhaps you reduce $20 from some other budget item.  Regardless, when you know, the vagueness is removed, and the chronic behavior of spending an extra $20 for the week on lunch is now a decision to make, not just a chronic behavior.

This is working for my family, and for many BudgetSketch users all over the world.  I would love to hear about your successes or best practices to remove the “chronic vagueness” from your personal finance management. You can do it!

The Cart and the Horse

July 12th, 2010 by Dewayne | Posted in Budgeting, General, Good Advice, I Need a Plan, Uncategorized

There seems to be a flurry of activity these days when it comes to conversations about personal finance management.  What applications are best to use, what are the best methods of tracking your finances, who has the slickest tools, account aggregation, etc.  Two and a half years after creating BudgetSketch, it amazes me how little this conversation has changed.

Horse and Cart

When we set out to solve our own personal finance issues, it became painfully clear to me that tracking expenses alone was an almost fruitless exercise.  My wife and I tried many personal finance management tools, but they all did the same thing… tracked my spending.  I would look back at what I spent last month, then still scratch my head as to why our money was just gone.  I could see things like a hundred dollars for the month being spent at the local coffee shop, but nothing about that information told me if I could afford it or not, only that I spent it.  It all seemed so reactionary and frankly frustrating.

“Putting the cart before the horse” is a common phrase meaning to reverse the accepted order of things.  This statement is also an example of a hysteron proteron in Greek, in grammatical terms, meaning a figure of speech used to describe a thing that should come second, but is put first.  We’ve all said, “Put on your shoes and socks” to our kids, but we all know that you must put your socks on first before your shoes.

The same applies to personal finance.  We spend so much time focusing on the need for expense tracking (“The Cart”) that we fail to see the Cart is really useless without “The Horse” (a Budget).  It began to dawn on me that my plan for how I will spend money is the first thing to establish, then I should track how well I’m doing against this plan.

Expense tracking has it’s place in our arsenal of tools, but only implemented to help validate how well we’re sticking to our Budget plan.  So it has to make you wonder why there are so many tools focused solely on expense tracking with a spending alert feature masquerading as a budget.  If you’ve reached that conclusion… you’re not alone.

The saying is best said, “Never put the cart before the horse”, so why do we try and manage our financial lives this way?  Take hold of your financial future by taking the reins and tell that horse where to go.  Establish a solid budget plan and stick to it, and only look back long enough to validate how well you’re moving forward.

It’s time to change the conversation about personal finance and get real about solutions instead of allowing ourselves to be convinced by who has the best pie charts.  Personal finance is about a plan, everything else is a support mechanism for that plan.

It’s time to change the accepted order of things… one budget at a time.

Simplicity is the Ultimate Sophistication

March 18th, 2010 by Dewayne | Posted in Budgeting, Good Advice, I Need a Plan, Uncategorized

Life can certainly be complicated.  Juggling work with family responsibilities, combined with financial stress is all too common in many households.  Notice I said, “can” be complicated.  Many times we work against ourselves and make challenges into very complicated matters.  Managing your finances is no exception.

I’ve been on a bent for the last several years to find ways to simplify my life.  I look at my growing children and think, “How much am I missing because my life is disorganized?”  Understand, I’m in no way qualified to be an expert in organization, but I do believe we can simplify our lives.  Reduce the noise and the stresses, but continue to do the things that matter the most to us.

While I’m in no position to offer suggestions in many areas of life, one I feel very confident in is how to simplify money management.  Recently, I came across an excellent article written by Jennifer Derrick at SavingsAdvice.com, where she talks about simplifying financial management.

Jennifer wrote:

When people set out to make a budget or adhere to a financial plan, they sometimes make things so complicated that they have no chance of success. They set up accounts at many institutions, they open ten credit cards to maximize the rewards, they make too many rules about what can and cannot be bought, and they try to divide their budget into too many categories. As a result, they end up with a financial plan that is too complicated and that even they don’t understand.

When a financial plan/life is super complicated, you don’t want to deal with it. The thought of balancing all those accounts, paying all the different credit cards and dealing with the rewards, tracking all the budget categories, and adhering to all the rules is exhausting. You may only be able to keep up with a complicated plan for a month or two before you throw up your hands, declare it’s all too hard, and give up, leaving your finances to go their own way (which is almost never in the direction they should be going).

This is why it’s important to keep your financial life as simple as possible. The simpler something is, the more likely you are to keep up with it and actually live by that plan. When dealing with your accounts and your budget is easy and not too time consuming, you’re more likely to find time for it instead of putting it off.

Jennifer couldn’t be more right!  Managing your finances is not something that should be complicated.  You may have some complex financial issues to solve, but a simple plan is the most effective way of unraveling that complexity.  If you’re committed to losing weight and improving your health, a complex diet and exercise plan won’t be sustainable for most people.  Same goes for effective personal finance management.

The place to get started is a simplified financial plan. BudgetSketch was specifically designed to simplify the management of your finances.  Get started by creating a budget and getting a visual of your financial situation. Remember, keep things simple.  Reduce clutter and complexity, and begin to feel empowered again!  I know you can do it! :)

The Debt Free Vacation

September 9th, 2009 by Dewayne | Posted in Budgeting, Good Advice, I Need a Plan

I recently read an article by Sadie Morris talking about this subject on her A Life Without Debt blog. No, she’s not talking about taking a “vacation” from your debt free plan, but about how many people do incur debt just to go on vacation.

My wife and I love to travel. We love seeing new places and certainly getting away from life’s normal schedule. To be honest, we haven’t taken a “qualified” vacation since 2003. By “qualified” I mean a vacation that costs more than $500 and lasts more than a weekend. We have been working hard over the last number of years to overcome past financial disasters decisions, and allocating funds to vacations just hasn’t been a priority.

Now… I know the common argument, “you’ll burn yourself out if you don’t take a vacation.” While I’m sure there are studies out there to prove this point, should a person that is working to payoff debt decide to incur debt to take a vacation? That certainly depends on the individual and how committed they can make themselves to paying off any debt incurred. I would assert that if you are truly inspired to be debt-free, it might be hard decision to incur debt for a vacation.

So where is the balance? How can I make a vacation happen and still feel good about my financial plan and not sacrifice my promises to myself?

Decide how you will allocate vacation funds. In my house, we haven’t allocated any funds to this category since 2003 because we haven’t been able to get past other priorities with any funds left to allocate. Next year is shaping up to be our first year that we will plan a vacation that costs more than $500 and lasts longer than a weekend! As we plan, we will use the following guidelines to make our 2010 vacation successful and not compromise our promises to ourselves:

We have to decide to pay cash, and not incur debt. I can assure you right now, if we wanted to go to the Bahamas’ next year, there is no way to do it unless we incur debt. So, making a decision based upon priorities, we have decided that any vacation must be paid in full with cash. Sorry Bahamas!

Picking a destination is also important. Many people will select the destination, then decide how they will pay for it, or in a lot of cases, finance it. Set a dollar figure that you know you can attain, then select destinations that will fit the bill so to speak. We have a short list of places we would like to go, but we won’t make a decision until we know we will hit our vacation savings goal. This keeps us from over extending ourselves!

We also must decide if we will take several smaller trips through the year, or use all our funds on one nice vacation. Don’t get caught in the trap of finding that you have spent your vacation dollars throughout the year and end of “having” to put the planned trip on a credit card. Traveling debt free can be done, but not without proper planning and discipline.

Speaking of planning… I use BudgetSketch to help me plan for vacation. (there’s my shameless plug!) I have a goal entered into the system called, “2010 Vacation Fund”. I have set the goal amount and I track each month how much money I am allocating to it. I simply allocate a portion of each month’s surplus to the fund… but I do have funding priorities. I have other goals that are higher priority than my vacation goal. Things like emergency fund, car maintenance fund, medical deductible, etc. I fund all of my goals as a list of priorities. Given this, my wife and I have forecasted we should be able to fund all of these goals and still meet our vacation goal.

Since we are committed to not incurring debt, should one of our other goals have a higher priority need and require additional funding, i.e., an unforeseen car repair that exceeds our allocation to that fund, then in our case, the vacation fund will suffer a bit, unless we can make up some ground somehow. In years past, we would have told ourselves, “We know the transmission was unforeseen and it cost more than we expected, but we owe it to ourselves to take this vacation anyway because we have worked hard!” “We’ll make it a priority to payoff the credit card we use!” Famous last words…

If you can manage your credit balances well, and I have friends that are excellent at this, then it’s always an individual choice to finance your vacation with debt or go debt free. However, no matter your choice, I can assure you, paying cash is much cheaper and whole lot more rewarding.

We would love to hear about your experiences or good tips on how to have fun on your debt free vacation!

Ask not for whom the bell tolls!

March 28th, 2009 by Bill | Posted in Budgeting, General, Good Advice, I Need a Plan

It was the best of times. It was the worst of times. OK, so I’m mixing my metaphors or actually literary works in this case but the bug that’s been going around finally got around to me. “The flu?” you ask. If only… Nope. I’ve got a full blown case of pink slip-itis!

No, I didn’t fire myself as the president of Finagilous. As perhaps you already know, Finagilous was formed to create BudgetSketch®. Along with a small team I have been pouring money and sweat into the effort on as near a full-time basis as I could manage over the past year. I was, until recently, financing my business development passion via a “steady” day job.

“So what’s all this best and worst of times non-sense?” you ask. Well, it couldn’t have happened at a better or worse time. Better because my position was eliminated a month away from the formal launch of BudgetSketch® leaving me plenty of excuses not to be pounding the pavement looking for work so I can work overtime on BudgetSketch®. “And the worst of times?” you press. Have you picked up a newspaper lately?! There hasn’t been a worse time to be unemployed in 75 years.

“And this pertains to budgeting how?” you follow. Well, first, I’m glad my wife and I had begun getting our financial house in order a couple years ago or my job loss might have put us over the edge. Next, we know exactly how much cash we need to get by each month because we’ve got a budget. Finally, when all else fails, we’ve got an emergency fund. All the product of having a sound financial plan, AKA “a budget”.

Perhaps the biggest lesson is that you never know what lies around the next bend in the road, especially in trying times like these. So it is wisest to be prepared. Not having a plan is not being prepared. Are you prepared? I hope you don’t have to find out the way I found out but life’s little twists and turns have a way of highlighting your preparedness, or unpreparedness!

“Ask not for whom the bell tolls?” It tolled for me!

Live Well Without All of the Costs

February 13th, 2009 by Dewayne | Posted in Budgeting, Good Advice, I Need a Plan

If you are reading this blog, I am sure you are convinced (or maybe almost) that the path to financial happiness doesn’t include living as Dave Ramsey coins, “Debt People”.

Developing an effective budget is the place to start, and of course I am going to recommend BudgetSketch® as the best tool to use, but what about practical advice on how to lower your cost of living?

While there are many ways to save money and plenty of resources to teach you how to improve your financial situation, here are 10 quality ideas to get you started!

1. Setup your budget using BudgetSketch® .

After all… you gotta get started with one and you might as well use the best tool you can! :)

2. Cut little luxuries during the workweek.

It’s just a cup of fancy coffee. But at $2.75 per day, it comes to more than $700 per year. Lunch out? At $8 a day, you’ll spend around $2,000 a year. A travel mug and brown bag never looked so good.

3. Don’t use so much gasoline.

Break out the bike. Carpool. Or try public transportation. You could save hundreds or even thousands of dollars — and reduce your impact on the environment.

4. Get a grip on credit.

Pay off your credit cards. And pay monthly balances in full. Say you owed $1,500 on an 18 percent interest credit card, and you paid $75 per month. If you stopped using the card, it would take 24 months to pay off at a cost of $1,800. That’s $300 in interest. Also, choose your card wisely. Look for no-annual-fee cards with low rates and benefits such as money back or frequent-flier miles.

5. Stick with water.

When you eat out, skip the wine and drinks. It’s where restaurants make most of their money, and where you’ll blow a big piece of your budget. Save the glass of wine for when you get home.

6. Freeze an extra meal.

When cooking, make an extra pan of food and freeze it. Then when you’re not in the mood to cook, you can pull a homemade meal from the freezer. It saves you the cost of carryout, and it can be healthier.

7. Pack the snack.

For family outings to a museum, zoo or park, bring your own snacks and drinks. You’ll save a lot of money without missing any of the fun. You’ll also have a healthier day.

8. Share tools to save.

Collectively buy tools with your neighbors, friends or family. Follow the example of five Boston neighbors who bought a snowblower at low cost, and then turned winter storms into parties.

9. Get real with your budget.

Take the time to figure out your monthly expenses. Know what your disposable income is. Pay off debt. Decide what kind of spending gives you the greatest pleasure and cut out other luxuries.

10. Be sale savvy.

Buy clothes at the end of the season. Watch for furniture sales. Comparison shop on the Internet. And remember, you often can negotiate non-sale items.

Items 2 – 9 courtesy of P&G Everyday Solutions