Thursday, December 31, 2009

Welcome to the new Decade

I had not really thought there was a problem with ushering in the new decade until my pal Rick made a quick note about it the other day.

Rubbish. The year 2010 is the last year of the decade, not 2009. The year 2009 is the NINTH year of the first decade of the 21st century. We have another year to go.

Rick is a smart guy, and the logic is sound. I tucked this away in the back of my mind.

It came back again at lunch.

Paying Back Money

I caught part of a Talk Radio show while driving to lunch. The host was having an amiable disagreement with the caller. The hypothetical situation used to prove the host’s position is as follows.

If you owe someone $10.00, you can’t stop at $9.00. You are still short a dollar.

That makes sense, but something did not sit well.


And this is where it hit me. Let’s say that some kind soul gave you an ITunes gift card and you are buy some songs. You download “Another One Bites the Dust (Queen),” “Cars (Gary Numan)” and “You May Be Right (Billy Joel").”

How do you tag these songs that came out in 1980? Are these hits from the 80’s or sounds of the 70’s?

It’s A Floor Wax, It’s A Desert Topping

Perhaps this is not really and either/or situation, but rather, is rooted in the context of how we are use the term decade. Maybe they are not, as Rick points out, the same set of 10 years, but still we frequently use the term interchangeably to refer to both periods.

It’s enough to make your head spin round and round (“right round, like a record baby*”).

See, I told you he was a smart guy!



*Dead or Alive - 1985

Wednesday, December 30, 2009

Spending Habits

There are three things that you can do with money: spend it, save it or give it away. Going along with yesterday’s theme, knowing what we can do with money is another teachable moment that we can pour into our kids.

While you are enrolled in FPU or reading The Total Money Makeover, you are going to spend money. Unlike a diet, you simply can’t starve yourself past a weigh-in. You need to “un-learn what you have learned” and develop a game plan to not overspend and derail your budget.

I think the best way to accomplish this is to choose paper over plastic.

You will spend more with Credit Cards

I remember the first time in 2004 when a local McDonald’s installed a credit card machine in front of the register. I am old enough to remember when McDonald’s stopped taking checks! For many years, McDonald’s operated on a cash-basis. If all you had in your pocket was enough for a Big Mac, fries and a Coke, that is all you could buy. Today, you can add an Apple Pie because it all goes onto the card.

McDonald’s discovered that people spending went from $4.50 to $7.00 once they started accepting plastic. Dunn and Bradstreet also discovered that, on average, you will spend 12 – 18% more when using your credit card.

Why? Because of that wonderful brain in your head.

You brain will register something when you spend with cash: loss. Swiping (or waving) a card, your brain doesn’t registered that you had to give something up in order to make a purchase. Researchers at Carnegie Mellon summed it up this way: “Credit cards effectively anesthetize the pain of paying.”

Even if you are paying with a Visa Debit Card (which I use), you still spend more, but not as much because you know that it is directly tied to your bank account.

Going Green!

When FPU members start getting their house in order, I like to recommend that they start mixing cash back into the equation. Cindy and I waited nearly seven months before we got to this point.

Here is a scenario that you are likely to encounter. You are in the grocery store and you go through the check out. Your total is fifty dollars over what you budgeted for Groceries.

What do you do? If you are paying with your debit card, you swipe the extra fifty – it’ll come from somewhere.

Cindy played that scenario out for many years. We had a number on the budget, but, if we did not honor that number and over spent anyway, we did not have a budget. We had a theory. What she needed was something with here in the store that said “you need to put something back.”

Cindy uses an envelope system that she will put cash in each payday. She will cash a check that covers the Groceries, Sundry (things that you buy at the Grocery Store, but you do not eat), Restaurants and Blow Money (more on that later) categories. The teller is given instructions that states the denominations that she wants. Once the cash has been dispensed, she places the correct amount into corresponding envelopes.

When Cindy shops at the grocery store, she always pays out of the envelopes. Sometimes, this means that she can’t get an item this week and something has to go back. We also use the envelopes whenever we go out to eat – If there is no money in the restaurant envelope, we stay home.

Blow Money

Every budget needs a little wiggle room, or you will always find yourself constantly moving money between categories. Blow money is a concept that recognizes that need for wiggle. There might not be money left over in the Restaurant Envelope, but, maybe we could use some blow money and go out to eat after all.

We’ve taken the concept a little further, and divide the blow money between the two of us. You can do whatever you want to with your blow money. Most of mine seems to go to Starbucks.

How much should you be putting aside in blow? It should be Baby Step appropriate. If you haven’t saved up for Baby Step One, and both you and your spouse are giving each other $125 in Blow Money, that’s not Baby Step appropriate.

Learning how to spend within your budget is a key behavior that needs to be developed. Watch out for things that might make you overspend – start spending with cash so that you don’t bust your budget.

Tuesday, December 29, 2009

Teaching Your Kids Compound Interest Fu

I love movies. I especially love movies that come from left field and are simply awesome. For me, The Matrix was that type of movie.

The idea that we are all human batteries, living life in an imaginary world is creepy. However, being able to download any type of learning into the brain was the stuff of Cyberpunk. I loved it.

There is one scene where the main character, Neo, awakens after having martial arts fighting skills downloaded and exclaims “I know Kung Fu.”

Let’s teach our kids about compound interest.

“But Chuck,” you say, “There are so many other things I need to teach the kids, and I am sure that they will learn all of this in High School Economics. I don’t even understand it myself.”

Raise your hands out there if, at anytime in your adult life, you have uttered this phrase “I wish I would have started this when I was 20.”

Ok, now that I have lowered my hand, I can keep typing.

Make it Real

I love reality shows. This is the first year that we let the kids watch Survivor with us, and they were amazed that you could actually win a million dollars.

Did you know that most millionaires in America are “First Generation” rich? They did not win it on an Island, they did not hit the lottery – they did a lot of little smart things over a long period of time.

Booyah, as Russell might say.

What is Compound Interest?

Very simply put, it is magic. Seriously. If I was to take five dollars and put in in the cookie jar every day, I would have at the end of the year $1825. You can simply multiply 365 times $5.00. You can then multiply that out by the numbers of years you plan to invest in the cookie jar.

Instead of putting it in a cookie jar, let’s put it into something that has an interest rate associated with it. The cookie jar has a 0% interest rate, and is a lousy investment tool.

However, a mutual fund that averages 12% since it’s inception is a very nice tool. But, what does that mean? You multiply the $1825 by the interest rate (assuming yearly interest for ease of math) and you would have an extra $219.

If you take that $219 and put it back in your investment, instead of taking it home, next year you will not have interest on $3650 ($1825 times two years), but $3869. The second year, your interest would be $464.28.

Rinse, lather and repeat. It just keeps growing.

Drinking at Five Bucks

Consider my earlier post, I picked on Starbucks Coffee because I like their product. I can easily drop two to five dollars a day on any of their drinks and not bat an eye. I simply annualized the money to show how much you could put back into your wallet for the sake of increasing cash flow.

Taking my previous example, instead of putting five dollars a day and calculating interest on an annual basis, let’s do real world. You would normally save that five dollars and invest it on a monthly basis. In addition, interest is calculated on a monthly basis, not an annual basis.

So, let’s invest $150 a month between age 16 and 76. Working a part time job, do you think they could save $150 a month (hint…yes)?

Total Money Invested


Total Interest Earned


Total Future Value


$1,000,000 Year


Age your sixteen year old will be in 2046


You can play around with these numbers using any financial calculator. The reality of the stock market is that we have bear markets (when stock market is down 20%) and bull markets. That’s why the age of your investment tool and the average rate it has returned since inception is so important.

And…what if I am half wrong?

I Only Wish…

Seriously, I wish that I had known this when I was sixteen. I got my first job at eighteen working at a gas station and then moved into ushering theaters. I was making minimum wage and could make more than $150 a month. I had some friends throwing boxes at UPS and the rumor was that these guys made great money.

The thing about compound interest is that it is a slow cook over time. Time is your enemy. An early start changes everything.

Even, possibly, changing your family tree.

New Years Resolution

Are you finding any of my latest post interesting? Want to learn more? Then pick up a copy of The Total Money Makeover. Want to go deeper? Then find a Financial Peace University class in your area.

The class that I am teaching starts on January 14th at Atlantic Shores Baptist Church at the corner of Kempsville and Centerville Turnpike in Virginia Beach. My best buds Ron and Sheila will be teaching a class on Sunday nights starting on January 10th.

Child care is provided through the church.

Each class is comprised of 13 lessons:

Date Lesson
Jan 14 Super Saving
Jan 21 Relating With Money
Jan 28 Cash Flow Planning
Feb 4 Dumping Debt
Feb 11 Credit Sharks In Suits
Feb 18 Buyer Beware
Feb 25 Clause and Effect
Mar 4 That's Not Good Enough
Mar 11 Of Mice and Mutual Funds
Mar 18 From Fruition To Tuition
Mar 25 Working In Your Strengths
Apr 1 Real Estate and Mortgages
Apr 8 The Great Misunderstanding

If you have taken FPU before, remember, you are welcome to visit any lesson. Just bring your work book in with you. If you haven’t taken the class before, you can visit any one of these classes as my guest. Please contact me via Facebook or this blog so I know to expect you and can arrange child care.

Hope to see you there!

Monday, December 28, 2009

Baby Step 3 – Three to Six Months Emergency Fund

Baby Step 3 is an exciting step to start. Once you have gotten to this step, it means that you have paid off all of your debts, except the house.

For some, it was just a matter of minding the store. Getting a budget in order and executing on that budget – telling your money who is in charge.

For others, it was very hard. You had an uncommitted spouse, maybe you are a single parent or maybe the hole was really, really deep. But you made it.

Expenses or Income?

Hopefully, you have called into “The Dave Ramsey Show” and screamed “I’M DEBT FREE!!!” Now, it’s time to roll up your sleeves and get to work on your next goal.

You and your spouse will need to decide if you are going to try and cover three or six months (or in between). You will have different factors to consider. In our case, we leaned more towards the six months – I have the larger salary and work outside the home. Cindy teaches private lessons and teaches our kids in home school. If I am out of work, then I will have to be able to cover the family expenses for the amount of time that I am trying to get another job. We both feel comfortable with that amount.

The mistake that is sometimes made is that people try and save three to six months of income. That’s not necessary. If you have suspended investments, you need to keep in mind that you want to get them plugged back in within 24 months of unplugging.

Hopefully, by now, you know what your expenses are because you have many months of budgets behind you. You know where your money goes and exactly how much you need to live.

Where to Keep It?

I made a mistake when we got to Baby Step 3 – I was “walking like Gomer Pyle on valium” through the first four months. One day, it hit me that the next step was investing 15% of our income into retirement. After a committee meeting, we adjusted our budget so we were putting 15% of our income into the Emergency Fund.

This knocked it out in short order.

Where we put the Emergency Fund was important also. You need to be able to draw on it at anytime without penalties, and that led us to a Money Market Account.

We opened one online when rates where better than CDs, and even today, the rates are still better than a standard savings account. We have check writing privileges and can transfer money into and out of the account.

But, don’t be concerned about the rates. The Emergency Fund is not an investment, it is insurance.

Don’t get fancy looking for a bigger, better deal.

The Long Road

It does take awhile to get to Baby Step 3. The average time it takes for an FPU member to get to Baby Step 3 is 18 – 24 months. This is not a race – it takes time. And, there will be setbacks along the way: life will happen.

And when life does happen, pay minimums on your debt snowball, rebuild the Baby Emergency Fund and then pick it up again.

But the rewards are so worth the effort!

Breath this thought in for just a minute – You and your family are DEBT FREE! The money that comes into your household does not have anyone else’s name on it.

It does not have Chase’s, Capital One’s, Sallie Mae or GMAC’s name it. It simply has your family’s name on it.

What does being debt free do to your Marriage? What impact will it have on your Kid’s lives as you teach them these principals? How neat is it going to be when a single mom at church needs $200 to keep the lights on and you can just walk over and stroke a check without thinking about it?

Breath it in!

Sunday, December 27, 2009

Hole to Shovel Ratio

There is a part of FPU that is very hard for me: when you have members who have a “hole to shovel” ration problem. This simply means that their income alone is not going to get them out of their current debt situation.

The reason that this is difficult for me is because more often than not, these members have lost hope and some have simply resigned themselves to their current situation.

What can they do? It’s time to get creative!

Old Fashion Garage Sale

This is one of my favorites because it can be played several ways. In my last class, I had a member hold two garage sales and she unloaded over $1000 worth of Japanese Furniture. This wasn’t your typical garage sale where you are nickel and diming over old clothing, but she came back to class absolutely GLOWING!

Garage Sales might not be your thing, but, how about selling stuff on Craig’s List or EBay? It is amazing what you can unload.

What about combining the two? My neighbor has collected quite a few bicycles from garage sales and fixed them up and resold them. By low, sell high!

As Dave would say, “Sell so much stuff, the kids think they are next!”

Part Time Job

Sometimes the answer to getting more money to pay off debt is to look at taking a part time job. It might not be a permanent solution, but if it helps you pay of debt, the sacrifice is worth the time.

A guy in one our classes went to Sears to pick up part time work for the holiday season. They asked him to come on full time as a manager. You never know what opportunities are waiting for you!

Finding Your Career

Have you ever had a job where you worked a lot of hours (50 – 70) but made crappy money? Or, where you are salaried for 40 hours, but have to work nearly 60 hours a week (and none of those extra hours are ever paid out)?

Is that a good employer? It might be time to have a talk with them to adjust the compensation to reflect the work. If not, you might need to really consider your position. I would never recommend that you quit a job, especially if you do not have something to go towards. But, you might want to start putting out feelers.

But, what if you are in the wrong field all together?

I recommend that you check out Dan Miller’s site, 48 Days. It is based on his book “48 Days Till the Work You Love.” In the book, the author is not showing you how to get “another job,” but about finding the work you love (your calling). This is another book that I highly recommend, but it is not a book you can just read. You have to work your way through it.

Awesome Victories

When couple start off in this situation, they often just don’t know what they are going to do – they feel hopeless. It is really awesome to see ideas spark in their heads as they go through FPU and say “Hey, I got nothing else to loose” and try some of the crazy ideas we discuss.

It is really inspiring to me when you see these very same couples complete the thirteen week course winning!

Saturday, December 26, 2009

Does Your Stuff Own You?

When new members come into FPU, they come just as they are. The class is a judgment zone free: we’ve all done silly things with money (some with more zeros than others).

The first time I heard Dave Ramsey say “Hi, my name is Dave, and I like stuff” I knew I was going to like this guy. You see, that is exactly who I am: I like stuff. And, if it is computer or home theater related, I like it even more.

I did not even know I had a problem with stuff, after all, I could afford it. But that was a form of denial. I was living with just enough “manageable debt”, with less than $1,800 in a savings account (and feeling good about that), no retirement plan (other than randomly picked investments in my company’s 401k) and no savings towards the kid’s college (unless you counted about $600 in a savings account).

My stuff was owning me and was preventing me from doing what I knew I should be doing.

I needed to change.

I Can Make The Payments!

The last time I bought a car, it was a 2002 Pontiac Grand Am. It was my second car that I had bought from a dealer, and I was by no means an expert at negotiations. Most likely, I had a nice red “Sucker” written across my forehead. I just didn’t know it at the time.

I remember taking the test drive, falling in love with the car on the test drive and emotionally buying that car within twenty minutes of being on the lot.

I was nervous about buying the car because I new how much I could afford to pay each month (I had just finished paying off another car, so I knew I had that much). However, some creative financial magic must have occurred in the back room and the payments where right on target.

I drove off the lot with a brand new car whose payments were not much higher than the car I had just paid off.

The Cost of Opportunity

What I had really done was just committed to five years of $400 payments for a vehicle whose value would drop about 70% in the first four years.

Think about what $400 a month injected into your budget would help you accomplish? What if you had financed two cars? Breath in what an $800 dollar monthly raise would feel like!!

If you have watched the video Drive Free, Retire Rich on Dave’s sight, you might think as I did “sure, I can invest $400.00, but, would I really do that?”

Maybe not right now, but, wait until you get to Baby Step 4 – Retirement. You are going to start putting away 15% of your income to retirement. Do you like to give? 10% is a lot easier when your paycheck doesn’t go to GMAC. Think you can’t pay cash for next year’s Christmas? Think again!

You can only spend a dollar once, and it is gone. You have to choose what you are going to do with it. But, once it is gone, you loose the opportunity to spend it elsewhere.

I want my FPU members to begin thinking about spending in terms of opportunity cost. I really want them to break the “I can make the payments” mentality, because that mindset has not helped them out so far. I want them to get the most out of their budgets by not taking on more payments (aka debt).

Live like no one else, so later, you get to live like no one else.

Friday, December 25, 2009

Increasing Cash Flow

I hope that FPU members get it in their hearts that operating with debt has not brought them blessings. If not, why are they coming to FPU? When they come through our door I hope they are open to making some changes.

Paying off debts is not easy, it takes “purposeful intention.” You did not intend to wander into so much debt – it just happened over a period of time. You are most likely not going to wander out of it either. You will need to get really focused and a bit radical.

I want you to get radical about increasing your Cash Flow! There is always the part time job, but, before we go there, let’s take a look at some other areas.


I pick on coffee drinkers because I am one. At one point, I would visit my local baristas about five times a week. My drink of choice was an extra hot, non fat, no whip mocha. A medium ran me nearly five dollars (ok, four dollars and some change, but let’s round up because math is hard for me, remember?).

Spending $25 a week does not seem too bad. I get paid biweekly, and really, I cannot live without my coffee. I can afford this luxury.

Then I annualized how much I was drinking - $1300 a year. In coffee!!

I could increase my cash flow to pay of debts simply by decreasing how much coffee I bought.

Short Term Loans to the Government

Another area that I mentioned earlier was by looking at my tax refunds. I was getting $5, 000 dollars back from the Government. It was like Christmas day when that refund was deposited into my bank account. Once I started my total money makeover, I saw that I was sending the Government $5, 000 TOO much and they were just giving it back (without interest).

I divided that amount by each paycheck to figure out how much was going out extra and adjusted the claimed exemptions on my W4 until I got close to that amount with out going over.

With simple paper work, I increased my cash flow to go to the debts.

Retirement and Kid’s College Savings

The last thing we did, and possibly the hardest, was stopping the retirement investments. 401k, Roth’s – everything. Yes, we lost the company match for nearly two years.

(If we were investing for our kid’s college at the time, we would have stopped that as well).

This single action not only increased our cash flow to pay off debts but it also helped us to fund the Baby Step 3 Emergency Fund and to buy a used Toyota Sequoia with cash.

Live Like No One Else

“Live like no one else, so that tomorrow, you can live like no one else” is the motto that helped me to make these life changes.

Today, we are investing 15% of our income to retirement. I NEVER would have been able to do that before while making payments on new cars.

We are not only cheerful givers to our Church, but we also look for opportunities to give outside of the Church. Cindy and I would hear of a need, but have nothing to give. Now, we are often able to find that extra bit in our budget.

We are also funding the kid's college starting this past February. I realize that we are late in getting started, but we are making some headway!

And yes, I am enjoying coffee (all though, today I prefer a tall Americano, and with my Barnes and Nobles membership card it cost $1.99).

I have not, however, decreased my exemptions on the W4. I will keep as much as I am legally allowed to keep.

It can be done!


If you are adjusting your W4 withholdings, you might want to investigate the IRS Withholding Calculator. Personally, I found that it went a little too high for my liking.

Also, according to DR, your Human Resources should be able to help you to achieve the right balance. Be sure to listen to the caller (there is a subtle “VCR” control on the page).

Thursday, December 24, 2009

Baby Step 2: Pay off your Debts

Now that you have the baby emergency fund in place, and have committed to stop spending using credit cards, it’s time to start paying off your debts.

To accomplish Baby Step 2, tear off another sheet of yellow paper and list your debts excluding the house. The order that you list the debts is important. You want to write them down based on the amount owed (smallest to largest) and not based on the interest percentage.

It’s Not Mathematical

Earlier, I think I alluded to the fact that I really do not mathematically trust myself – I unapologetically will use a calculator to accomplish very simple task. However, I do know that the longer you take to pay of something the more you will pay because of the interest.

Shouldn’t the mathematically correct order be based on the interest rate?

It would be if we were concerned with the math, which, honestly, we are not. We are concerned with behavior. When you reinforce good behavior with immediate results something happens – you begin to believe that this stuff is going to work.

And, once you believe, brother, trust me, you start having a new kind of hope with your finances.

It’s a Snowball

We want to target the smallest debt to try and get a quick win and give you some positive traction. Pick up your debt list and add a column called Minimum Amount and fill in what the debtors indicate is the minimum amount that you need to pay.

While paying off your debts, you are going to pay the minimum amount on all of your debts with the exception of the smallest debt.

The smallest debt, you are going LOOK for extra money in your budget (now that it is listening to you) and add that to your smallest payment. Here is the mental picture – you want to get laser focused on paying off that smallest debt and knock it off.

Once the smallest debt is paid off, you are going to take the amount you were previously paying on the first debt and then apply that to the second debt.

Each time you pay off a debt, the amount of money that you have to pay the next debt off increases. It’s like building a snowman – you start with a tiny snowball, but every time it flips over it grows bigger and bigger.

And this stuff works!

Wednesday, December 23, 2009

BS 1.6 – The Dreaded “B” Word

Please note – FPU only has 7 Baby Steps. I have added the “sub-steps” because I feel that they are important to the overall process.

It’s Our Money

Prior to succeeding with FPU, there is a mindset that married couples have to have – they are not a Joint Venture. A JV is when two companies join for a common venture in order to maximize resources. Your marriage is NOT a Joint Venture. But, if you listen to the words that they use, it makes you wonder:

“Her money, my money”

“His paycheck, my paycheck”

“My account, his account”

God declared you one. That includes everything: it’s our money, our paychecks and our accounts. I have to die to this every time I start to think that I can do whatever I want to do with money. Cindy and I have a trust with each other that is based on three years of doing this program – I will not break that. It doesn’t mean that those attitudes do not slip in, it means that I have to recognize those thoughts and adjust them.

Singles generally do not have this problem. However, they generally have to find some means of being accountable so that they do not spend everything.

Let the Money Know Who Is In Charge

Once we have agreed that all of the money belongs to us, budgeting becomes easier. Most people absolutely HATE the term budget because to them, it represents restrictions and the inability to simply be spontaneous.

Let’s define what a budget really is: it is a imperfect instrument that you and your spouse agree to that tells your money who is in charge.

I like that definition. Why? Because I included the word “imperfect.” No matter how well you budget, something will come along to wreck it – that’s what is known as Life (thank goodness for that Baby Step 1, right?).

Also, I like it because Cindy and I have to agree to it. I generally prepare the budget, but I leave flex room in it for Cindy to tell me about what other family needs exists. We symbolically pinkie swear that we will keep to the plan.

Go Spend All of the Money

Making a budget is not complicated. You really do not need computer software – you need several pencils, a calculator and a yellow pad.

At the top, you write sum up all of the income generated in the family. Along the side of the paper you write all of the categories where you usually spend money (gas, food, entertainment). Finally, you put money in each category until you have no money left.

You spend all of your money on paper prior to the month beginning. Now, that is just the plan. You have to have another page on your budget that tells you when you are going to spend the money.

Along the top, where you have your total income, make some more columns. These columns represent when you get paid and you are going to write the total take home in these columns. Finally, you divide your categories between the total number of payment columns, making sure that you do not overspend your take home.

Easy Cheesy Math that you learned by the time you where in the third grade.

Unexpected Benefits

Here is a secret that everyone in FPU learns– your first budget…it isn’t going to work. That’s ok, because a budget is imperfect: you probably never really thought about how much you need for gas.

But once you get to your third month, things make a lot of sense. In fact, I noticed that I was drinking half of my budget in coffee. Starbucks didn’t taste quite as good once I saw this, and I added a category for Starbucks onto the budget so that I managed how much I consumed.

The first budget, Cindy and I panicked simply because we had too many categories and was trying to fill all of them up with what we wished we made, not with what was actually needed. Now, we know what we spend on Food, Restaurants and Gasoline. And, sometimes, yes, we have to “rob” one category to supplement some spontaneous opportunity (in our minds, Red Robin is a valid spontaneous opportunity). We simply decrease that category and increase the other and we are done. We both agreed to change what we had previously pinkie swore to not change (this is known, in FPU parlance, as an emergency budget committee meeting).

Because of the level of communication that takes place when executing on our budget, that trust I spoke about early has developed between us. It did not exist before: we had some really great fights when we discovered that there was too much month left at the end of the money.

And once we started telling our money what to do, it stopped talking. It stopped saying “Good bye.” On average, most people “find” money in their budget and feel like that they have been given a raise.

That’s really cool, because this getting out of debt thing that we go to FPU for in the first place is going to require that we tell the money who is in charge.

Online Tools

Several of my FPU members have really liked using the Gazelle Light Budgeting Tool. It is simple, but it also helps with the math (I still stink at third grade math).

If you are better with addition and subtraction, these forms may be helpful. The instructions are on the form – just a hint though, you do not have to fill in every category. There is also a form for Irregular income as well.

Monday, December 21, 2009

BS 1.5 – What’s the Deal with Credit Cards

When I start an FPU class, I make one simple assumption about everyone who is in the class – they are sick and tired of being sick and tired when it comes to money.

I liken it to going to Weight Watchers – you are there to loose Weight! WW has a specific plan that has been successful for many, but, before you can blame WW for not working, you have to do the program.

The assumption for FPU is that if you are in the class, you have some kind of hole that you are standing in a financial hole of some size. It might be big, or small.

When you are standing in a hole, and you want to get out, you have to stop digging. The Credit Card is just one of the many shovels that people use to dig their hole.

I am not mad about people using Credit Cards, and I would certainly not judge you personally for using yours, but I was never able to succeed at the level I am now by using mine. My name is Chuck, and I like stuff (“Hi Chuck!”).

The number one reason for using the credit card is that it now represents a financial “security” blanket. The couples coming through our class have one or more credit cards just in case of an emergency.

And here’s the tie back to Baby Step 1 – If you had $1000 saved up, would that cover most of your average emergencies? Flash forward to Baby Step 3 – If you had 3 – 6 months of expenses saved aside as an Emergency Fund, would that cover your average emergencies as well as some of the more unexpected ones, such as getting laid off?

The Credit Card as an emergency money is, in my opinion, a crutch against doing the hard part – saving money for a rainy day. It allows you to spend more freely, as studies have shown that our brains operate differently when paying with cash than paying with a credit card.

When a class member cuts up a credit card they have just committed to the class in a way that will help them succeed. The admit that, like myself, they like stuff…and the credit card has not helped them get ahead. In fact, like Proverbs 22:7 states, they are actually a servant to the bank that owns the credit card. The collection practices violate federal law on a daily basis and, as you can read right now, the Banks are scrambling to adjust the interest rates on existing clients prior to new laws going into affect next year.

What’s in my wallet? My Visa Debit Card and Money!

Sunday, December 20, 2009

For those who liked my Grits

Grits are a definite Southern dish. I figured that I would keep changing how I prepared my Grits until my Yankee Wife liked them.

Originally, I was going to name this “North Augusta” Grits in honor of Old MacDonald’s Fish Camp, where I first learned that Grits simmered in Milk is delicious. However, I think I will call them Yankee Grits in honor of my wife.

I always use Quaker Quick Grits. If there is another brand, I’ve never even looked at them. Then, follow the direction on the box in relation to serving sizes. Around here, I usually just fix four servings.

While you are waiting for your water to boil, place about an Inch of a stick of butter into the water. I never measure this part, but go on feel. Also, salt. Salt is tricky, but I think when it comes to Grits, you have to have a little bit more than you would think. However, the golden rule of salt applies – you can always add more, but you can never take away. So, until you get the hang of it, you can always add Salt to your serving.

By the time the water boils, the butter will be melted. Once the water is boiling, pour in the Grits. You might want to take the pot off the burner, and you will want to stir as you pour. This will help to keep the Grits from clumping up. Turn the stove down (I usually go all the way down to low) and stir some more (actually, this is usually one long motion). Once you are sure that the water/grit/butter combination is not gonna boil over (a regular happening…not to worry, it will just smell like something’s burning) put a lid on the pot.

This is a great time for a cup of coffee and something to read.

Technically, Quick Grits will usually cook in about a minute. I like to let them get just a little firm, so I will stir from time to time. Once they get to the consistency that I like, I will add the following:

A little bit of milk (maybe a quarter cup, but you can play around with this). Too much milk and it will taste like milk. But, once you find the sweet spot it makes them rich tasting.

Two slices of American Cheese. The first slice is for taste, the second is for those you love.

Finally, a little more butter. Cover the pot and let the cheese get soft. Then, stir it up and you should have a bit of yellow color going on. You should be ready to go.

Serve hot to the ones you love.

Bon Appetite.

Baby Step 1: $1000 Emergency Fund

I wanted to go through the Baby Steps that we teach in Financial Peace University. Prior to starting the baby steps, you do want to make sure that you are current and begin paying minimum amounts do. Why? Because we are going to try and accomplish Baby Step 1 as quickly as possible.

Baby Step 1 is getting $1000.00 “Starter” Emergency Fund.

When I first started teaching FPU, I did not really appreciate all of the various backgrounds that people are coming from when they start the course. For some, BS1 is just an automatic step, but for the rest, this can sometimes be a rather challenging process.

Small changes in priorities can make big changes. I am talking about cash flow. You want to adjust things so that you get more cash in your hands.

I like to ask people do they like getting their Tax Refund Checks. It’s kinda of a baited hook question. I know that there are those who take FPU where they are dealing with Tax Issues, but the vast majority answer “Yes” to my question. When I tell them that by adjusting their W4 they will get more cash flowing to them instead of the government, I get one of two responses:

1. The Tax Refund is my Built In Savings Method (that’s ok, it was mine for a while, but I am going to show you a better way).

2. Wow, Really?

In 2008, I gave myself a $200 a month raise by adjusting my W4. Sure, last year I did not get anything back, but hey, at least I was able to use that $200 to help fund my Emergency Fund.

The other area that I like to challenge folks on are the services that they are subscribed to. Prior to Tivo, the idea of paying for recording TV was laughable. Now, we can’t live without these conveniences. If it’s not Tivo, then its XM-Radio, or the Newspaper or, wait for it…Cable TV.

Cable TV is my personal favorite only from personal experience. Most people forget that TV comes over the air for free! However, we get tons more channels with Cable (or satellite or fios) along with a myriad of premium channels. I think the Boss got it right “57 Channels and nothings on.” Doesn’t something bother you somewhere deep down inside that you are paying for so much, yet watch so little?

Here’s my story: on Inauguration Day 2009, we cut Cable TV to our home. It was a radical decision, but it has paid off in spades: $1212.40.

We were paying about $104 with Cox Cable (2 HD DVRs, 2nd Tier programming (which we were told we needed to have in order to get HD) and no premium channels.

Now, I am not saying that I will NEVER have Cable TV again, just not right now. You see, if you choose to live like no one else today, later, you’ll get to live like no one else.

By changing your actions, behaviors and spending habits, you can get that $1000 dollars. I have had members hold huge garage sales, empty out those coin jars and many other ideas. Just get to it…make it happen!

Friday, December 18, 2009

Feeling Good and Violent

I wonder if Netflix’s suggestions knows the real me:


What’s your Representative Doing?

This post is not meant to be the ramblings of a Conservative Republican, but, do you know what your representative in congress is doing? Every night, we hear about Congress doing this or that, but have you ever thought about that there is only one person you really care about? That’s right! The representative from your district. That representative is the person speaking FOR YOU. Even if you did not vote for the person, they are still representing you before the house.

So, what is your Representative doing?

Each member of Congress has a web site. I highly recommend getting on your Representative’s email list. My Representative, Randy Forbes, sends out regular emails about his position on the issues.

Here is an example from his email that came last night:

Opposing $447-Billion in Federal Spending

Congressman Forbes voted against the conference report on H.R. 3288, the Fiscal Year 2010 Omnibus Spending bill that funds six departments of the federal government. The bill increased spending by $50 billion over last year's budget, and increased the base funding for the departments by 12 percent at a time when American families are being forced to cut back.
The legislation passed by a vote of 221-202.

Calling for Answers on Decision to Try Terrorists in the U.S.

Congressman Forbes joined with fellow members of the House Judiciary Committee and Armed Services Committee in cosponsoring resolutions of inquiry, H.Res.920 and H.Res. 924, to force Attorney General Eric Holder and the Department of Defense to release documents related to the Administration’s decision to try 9/11 conspirators in federal court in New York City. Congressman Forbes said "The American public deserves to know the potential ramifications of relocating and trying terrorists in the United States."
H.Res.920 failed by a vote of 20-13.

Restoring Fiscal Responsibility in Washington

Congressman Forbes voted in favor of repealing the Troubled Asset Relief bailout program (TARP), and directing any unspent or new bailout towards reducing the national debt. House Majority leadership proposed an increase of the national debt limit this week as a result of increased government spending.
The Motion failed by a vote of 190-232

Monday, December 14, 2009

Trombonist under Fire

Taken from the article Civil War Bands and their Music.

Performing under fire became commonplace for bands under the command of General Philip H. Sheridan. Sheridan loved music and took a personal interest in his bands. This was shown in the equipment, mounts, and uniforms he accorded his bandsmen. To pay for these privileges, his bands performed at the front during battle playing the liveliest airs in their repertory.


At Dinwiddie Court House, Sheridan massed all his musicians on the firing line with the order to "play the gayest tunes in their books .... Play them loud and keep on playing them, and never mind if a bullet goes through a trombone, or even a trombonist, now and then." General Sheridan paid tribute to Army bands when he remarked, "Music has done its share, and more than its share, in winning this war."

Saturday, December 12, 2009

Fall FPU Class Completed

I am so proud of our FPU members from the 2009 Fall Semester – they got it! We had members from all stages of life, including a couple that was engaged. Can you imagine starting your marriage over again and being able to work a budget. Not just Budget Theory, but really telling your money what to do? Those two are going to be able to give like no one else later in life!

I was balancing my emergency fund this morning. I keep it in a simple money market account. Not very sophisticated, I know, but, very liquid in case I need it for, you know, an emergency. I haven’t had a credit card in about three years now – and like cable TV, I haven’t missed it. At the start of the FPU semester, I ask the class “Why do you have a credit card?”

Having a credit card for an emergency is generally the number one answer (full disclosure – that was my answer, too). I like to follow up and ask, “So, if you had $1000.00 that you could get to pretty quick at anytime, would that cover most of your emergencies?” People usually nod agreement, but really, we know that it will cover the $1000 or less emergency.

As I am balancing my account, this was what was going through my mind. I can see the interest deposits and the withdrawals that were made through out the year. This past year, we had a total of $653 dollars that we could not, for one reason or another, cash flow. Or, as Cindy likes to say, $653 that did not go onto a credit card.

Thanks to learning how to budget our spending, I was also able to budget our savings. Without that skill, I would never have been able to save six months of expenses. Like loosing weight, it is not easy, but, it is a worthy goal.

I am excited for our FPU class. At the close, I ask them what was the most important thing that they learned. Without fail, budgeting and spousal communication about money is the number one answer.

I love this class!

Wednesday, December 09, 2009

Thank God We are Weak

If life were stable, I’d never need God’s help. Since it’s not, I reach out from him regularly. I am thankful for the unknowns and that I don’t have control, because it makes me run to God.

Francis Chan
Crazy Love

Wednesday, December 02, 2009

The best part of giving a gift…

Is wrapping it.

During those moments when you are picking out the right paper, hunting down another roll of tape and finding the scissors you are thinking about the gift recipient.

When you fold the paper so that the seam is perfectly centered, you imagine handing the gift over to your loved one.

Creasing the corners so that a tight and neat end is formed just right, the curious look on the face of the receiver plays in your mind as they try to guess what might be underneath the paper.

Once the gift has been wrapped and placed underneath the tree, you envision the smile of delight as the paper falls away.

Don’t wait till the last minutes to wrap your gifts. In a moment, the paper will be discarded into the bin, and with it, the anticipation of the giving.

Enjoy it, don’t rush it. Make the time.

Merry Christmas.

Tuesday, December 01, 2009

Christmas Express

Yesterday, I ordered a rather large (and cool) gift for Megan from Amazon. It qualified for FREE shipping (but, it would take 5 – 7 Business Days).

The package just arrived.

So, if you are ordering from Amazon and your purchase qualifies for FREE shipping, take it.

Of course, YMMV.