Mormon Life - Budget tag

Dave Says: Worry about Your Wallet, Not Your Image

Tue, 27 Mar 2012 00:04:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: I'm a new doctor with an old car. Should I upgrade?

Dear Dave,

I’m a new doctor, and I drive a car that has over 200,000 miles on it, is 10 years old, and a few dings in the doors. I’ve heard image is everything when you’re a doctor, but I like not having a car payment. Should I just get over being self-conscious about my old car?

Mario

Dear Mario,

I like not having a car note, too. I’d walk, ride a bike, or drive your car with a great, big smile on my face before I picked up a car payment!

As new, young doctor you’ve probably got six figures in student loans hanging over your head right now. So you need to get out from under all that before you start thinking about driving something fancy. If this car is truly on its last legs, then I’d say save up for a few months then upgrade to a good, reasonably-priced, used car.

Just remember, a Mercedes or BMW doesn’t prove you’re a doctor, and it doesn’t mean you’re a good doctor, either. You just need to worry about what’s smart for you instead of what other people think!

—Dave

For more financial help, please visit daveramsey.com.

Dave Says: Why the Need for a Fresh Monthly Budget?

Tue, 20 Mar 2012 00:02:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: Why do you recommend a new budget every month if the same budget should work month to month?

Dear Dave,

I was wondering why you recommend doing a fresh budget every month. Once you’ve figured out your expenses and income, won’t the same budget work month to month?

Kara

Dear Kara,

I understand what you’re saying, but if you look closely at every month, you’ll see pretty quickly that they’re not all created equal in terms of expenses. On top of that, if you work a commission-based job, your monthly income will fluctuate throughout the year.

Now, there are some things that will remain pretty standard. A few things like your rent or mortgage payment will probably be the same month to month. But what about things like utilities and food? Chances are your electric or gas bills will be higher during certain months as you heat and cool your home depending on the weather. What about holidays and special occasions? It’s likely you’ll end up spending more on food, gifts and related items around Thanksgiving and Christmas or other months when family and friends have birthdays and other events.

These are just a few of the reasons it’s a good idea to customize your budget every month. A good, accurate monthly budget should always reflect your reality, Kara. Not only will this give you a more realistic idea of where your money is going, but the knowledge also helps you control your money instead of it controlling you!

—Dave

For more financial help, visit daveramsey.com.

Dave Says: Question about Home's Value

Tue, 13 Mar 2012 00:03:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: Is it legitimate for a law firm to offer protesting the value of our home in return for 50 percent of any tax savings? Dear Dave,

We keep getting offers in the mail from a law firm that offers to protest the assessed value of our home for property tax purposes. They say that we’ll pay them nothing if they can’t save us money, but if they do the fee is 50 percent of the property tax savings. Do you think it’s ethical to dispute these findings, and are these services legitimate?

Kristen

Dear Kristen,

There’s no real problem with this, so long as there are no up-front fees. The real question, though, is whether your assessment is accurate.

First, there would have be some kind of basis for the protest – like if your assessment is really out of line compared to similar homes in the neighborhood. Usually, they aren’t assessed at 100 percent. But if you discovered that a comparable home was assessed at 73 percent and yours was based on 82 percent, then you’d have both an ethical and legal right to protest the assessment.

I think one of two things will happen. If you talk to this firm, you’re either going to find out that there’s something going on with the tax base that makes them think they can actually reduce the numbers, or they’re going to try and hit you with a “processing fee” or some other kind of garbage.

If this is the case, you should just walk away.

—Dave

For more financial help, please visit daveramsey.com.

Dave Says: Sell the Bike?

Tue, 06 Mar 2012 00:03:00 -0700

by Dave Ramsey
source: MormonLife.com

Mormon Life says: My husband and I disagree about selling our motorcycle to help with debt. What should I do? Dear Dave,

My husband and I have been through Financial Peace University. I’ve always been the numbers nerd, although he’s catching on and doing pretty well. He has a motorcycle he bought a few years ago before we got married, and still owes $7,000 on it. My common sense says we need to sell it, but he doesn’t want to, even though we haven’t been riding in over a year. What should I do?

Gina

Dear Gina,

It sounds like he’s making progress, so we don’t want to ruin that. Here’s the question: if you win the bike battle, do you lose relationship war? In other words, if you force him to give up the motorcycle, will it damage the marriage and the progress he’s made toward getting out of debt and learning how to handle money?

If I were you, I’d first sit down with him and tell him how proud I am for the way he’s trying to improve the financial situation in your home. Then, I’d suggest that the motorcycle is a stumbling block to your shared financial goals. Ask him what he’d be willing to do to get the motorcycle paid off more quickly. Would he pick up a part-time job, or maybe sacrifice something else he’s spending money on?

But let him know the motorcycle isn’t really the issue. The issue is that you guys need a plan to get this $7,000 debt out of your life!

—Dave

For more financial help, please visit davesays.com.

Dave Says: Where Do Toys Fit in the Baby Steps?

Tue, 03 Jan 2012 00:03:00 -0700

by Dave Ramsey
source: MormonLife.com

Mormon Life says: According to your savings plan, when is it okay to get a toy like a boat or motorcycle?

Dear Dave,

When is it okay to have a little fun and get a boat or a motorcycle when you’re doing the Baby Steps?

Jennifer

Dear Jennifer,

I always recommend that folks complete the first three Baby Steps before running out to buy a bunch of toys. Baby Step 1 is to save up $1,000 in the bank for a starter emergency fund. Baby Step 2 is to pay off all your debts, except the house, using the debt snowball method. Then, on Baby Step 3, we go back and fully fund the emergency fund to contain three to six months of expenses.

After you’ve gotten this far, it’s okay to have a little fun and save up for a toy. But don’t forget about Baby Step 4, which is putting 15 percent of your income into pre-tax retirement plans, like mutual funds and Roth IRAs. Don’t neglect saving for college, either, if you have kids. That’s Baby Step 5.

Baby Steps 6 and 7 are paying off the house early and building wealth and giving. Everyone likes having fun, and there’s nothing wrong with a few toys if you an afford them. Just make sure you don’t sacrifice your financial health for the shiny things!

—Dave

For more financial help, please visit daveramsey.com.

Dave Says: New Family, Lifestyle Changes

Tue, 25 Oct 2011 00:03:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: Getting out of debt means big changes for my new stepchildren. How do I break this to them gently?

Dear Dave,

I just got married to a wonderful lady with two children. We’ve talked over our financial situation, and we’re determined to get out of debt within two years. This will mean some big changes in our teenager’s lifestyles. How can we break this to them gently?

Dan

Dear Dan,

Having your wife, who is also their mother, on board with the plan makes a big difference. I think all of you need to sit down and have a frank, but loving, discussion about the changes that are going to come with this marriage for everyone. The kids have to adjust to a stepdad being on the scene, just like you have to adjust to a new marriage where teenagers are part of the package.

Let them know that you don’t want to be the bad guy, but that you and mom have been looking at the money situation, and things just don’t add up. Then, it wouldn’t be a bad idea for mom to speak up at this point. Let her tell the kids that you’ve both decided it’s time you made the money behave, and this will mean some lifestyle changes for everyone.

Listen to reasonable input from them, and let them know their thoughts and feelings matter. But they also need to know things are going to be different, and this part needs to come from mom. Otherwise, they’re likely to see you as the wicked stepdad!

—Dave

For more financial help please visit daveramsey.com.

Dave Says: Time to Break Out the Lunchbox!

Tue, 11 Oct 2011 00:03:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: My husband is attached to eating out for lunch, and it's hurting our budget. Help!

Dear Dave,

I love your plan, but I think my husband is attached to eating out. Budgeting is very hard for him, and the cost of his fast food lunches is making it difficult for us. He’s also taken a salary cut recently, and I’m working a part-time job to help us get by. Can you give him some tough love from a male perspective?

Valerie

Dear Valerie,

It sounds to me like you’ve been way too nice. You’re acting like a mother dealing with little kid, and that’s not a good way to relate to a husband. Plus, if you guys are having money problems, the only time either of you should see the inside of a restaurant is if you’re working there!

A man has several jobs in life, and one of those is to take care of his wife and children. You’re wife shouldn’t have to work so you can stuff your face with fast food. When you married him, you didn’t want a little boy. You wanted a man. He needs to grow up and start acting like one!
That being said, my perspective probably won’t help. There’s a saying that goes, “Those convinced against their will are of the same opinion still.” He needs a serious change of heart.

You said you love my plan, right? Then sit down with this guy, and show him the numbers. Show him where all the money is going, and tell him it’s just plain wrong for him to eat out all the time while you have to work just to make ends meet.

People can do all kinds of things when they’re stressed out because of money problems. I’m sure taking a cut in salary was a blow to his self-esteem. However, it’s time for a strong wake-up call when these behaviors start to have a negative impact on family and finances!

—Dave

For more financial help please visit daveramsey.com.

Cash out of Debt: Three Steps to Financial Freedom

Mon, 10 Aug 2009 18:00:00 -0600

by Don Milne
source: MormonLife.com

Mormon Life says: Debt. It's a four-letter word that many of us use with careless frequency. We get a loan to buy a car. We get a second mortgage to pay for a wedding. We even buy our groceries with a credit card. It adds up. If you're like most people, you have between $40,000 and $50,000 in consumer debt, including about $9,000 of credit card debt. Save. Another four-letter word and one that too many of us avoid. Save for emergencies. Buy food storage. Save for missions. Pay the home off early. Save for retirement. Save for college expenses. Chances are that by trying to do them all, you will do none of them. That would make you normal. It will also make you broke.
Three Simple Steps
During our first twenty years of marriage, my wife and I handled money the way most people did--we borrowed. We weren't spendthrifts; we paid our tithing and lived frugally on a single income. But every year we ended up a little more in debt than the year before.
Fast forward twenty-three months, and our consumer debt went from $26,000 to $0. What changed was not knowledge, it was behavior. We followed these three simple steps:
1. Pay a full tithe and generous offerings.
2. Save a beginner's $1,000 emergency fund.
3. Pay off all consumer debt, one debt at a time beginning with the smallest.
In order for this plan to work, we also had to change three behaviors:
1. We cut up our credit cards.
2. We started using a cash envelope system
3. Together, we planned a monthly zero-based budget to tell our money what to do, each and every month.
Now the only debt we have is our mortgage. Great, you can be happy for me, but what does that do for you? Not much. But if you decide to follow these three steps and change these three behaviors, I predict that in eighteen months to three years, you too will be debt free except for your mortgage.
Step 1: Pay a full tithe and generous offerings
As a rule, many of us could do better with charitable contributions beyond tithing and fast offerings. Maureen Smith from Bountiful, Utah, who was still in debt, had been saving her music lesson money to replace a ten-year-old living room carpet worn thin by six busy children. In December 2005 her bishop was asking for donations to help needy families with Christmas. She gave him $600 - so much for plans for a new carpet. Around this same time, a local restaurant burned to the ground, and the law firm next door was required by their insurance company to pull out their three-month-old carpet, even though it was not damaged. To Maureen's surprise, the carpet was dropped off in her garage and is now in her home.
Step 2: Save a beginner's $1,000 emergency fund
If you set up a $1,000 beginner's emergency fund, two things will happen--you will be more careful in spending your hard-earned cash, and emergencies will happen with less frequency. Most people can set up this emergency fund in a few weeks or months. Sell something, take a temporary job, make minimum debt payments and throw that money into this fund.
Step 3: Pay off all consumer debt, one debt at a time beginning with the smallest.
With the first two steps taken care of, focus turns to paying off all consumer debt. Make minimum payments on everything but the smallest debt and use all your financial resources to pay it off as quickly as possible. As each debt is paid off, the amount you have to attack the next debt grows like a snowball. With focus, planning, dedication, and discipline you should be debt free except for your home in around two years.
Consumer advocate and personal finance author Dave Ramsey likes to say, "Personal finance is eighty percent behavior and only twenty percent head knowledge." If you can implement the following three behaviors, you will be able to easily follow the three steps above.
New Behavior 1: Cut up your credit cards
Professor Elizabeth Warren of Harvard Law School is known for her bold statement that credit card companies use the same marketing tactics as drug dealers. The average household has at least four credit cards, and fifteen percent have at least ten. The average user with a credit card balance owes around $9,000, and just like a drug addict, they had no intention of getting into this position. The average non-user owes nothing. There is no reason why a family can't make do with one credit card or none at all. You can use a debit card in place of most any type of credit card purchase.
New Behavior 2: Use a cash envelope system
Studies have shown that people who buy things with a credit card will spend thirty percent or more than by using cash. Your money will last a lot longer if you set up a cash envelope system for food, entertainment, clothing, and any other area where it is easy to overspend. Decide how much you are going to spend in each of these areas on payday and put the cash in separate envelopes. This money needs to last until you refill the envelopes again with the next paycheck.
Mandy and Steve Baker of Burley, Idaho, have used this system for a number of years. They have found that sometimes they have had to juggle money between envelopes, but they don't overspend. As a result, they have paid off nearly $10,000 of consumer debt and are now building up their emergency savings fund to equal three to six months of expenses.
New Behavior 3: Plan a monthly zero-based budget to tell your money what to do each and every month
Tyrell Arnold of Vanderhoof, British Columbia, was $30,000 in debt, and his wife BreAnn was expecting their first child. They held monthly budget meetings to plan what their money would do each month. They sold an expensive truck and made other adjustments that allowed them to pay off all their debts in four months. No debts mean they are getting a head start on saving for their children's education.
Joe Loughmiller of Fairmont, Minnesota, started holding a monthly budget meeting with his wife, and in twenty-eight months paid off more than $40,000 of debt. This monthly budgeting kept them on track with their goals. It was hard the first few months as they learned and honestly confronted their spending patterns, but they soon got the hang of it, as the results show.
The key is to use this budget for at least three months. Each month you will do better.
You now can choose to be normal and broke or change your behavior by following these simple steps to financial freedom. Since being debt free is more compatible with gospel principles, I hope to see you join the thousands of members that have already found this financial peace.

Don Milne lives in Bountiful, Utah. He directs a Zions Bank program (endprogram.com), which has partnered with businesses and churches in Utah and Idaho to teach classes on getting out of debt. More than 6,000 people have participated.

Suddenly the Breadwinner

Mon, 27 Jul 2009 18:00:00 -0600

by Jamie Lawson
source: MormonLife.com

Mormon Life says: Economic downturn, divorce, or a spouse’s illness or death can force a homemaker into the job market without warning. So how do you cope with this new role as breadwinner when it wasn’t in your plans? When Charlynne Oborn's third child was just a year and a half old, her husband was diagnosed with a pituitary brain tumor. He lost his job and started receiving disability a month later, but it wasn't enough to keep the family afloat. After five years as a stay-at-home mom, Oborn suddenly found herself searching for a job as a legal secretary.

"I was happy being Mom. The next thing I knew, I was competing for jobs with countless others who didn't have a huge gap in their resumes," she recalls.

Unfortunately, circumstances for any family can change abruptly. And with the world in the midst of an economic recession - and men's jobs accounting for nearly 80 percent of all job losses - homemakers everywhere are updating their resumes and holding their breath, hoping they don't have to hack their way through the corporate jungle.

If, for whatever reason, you are getting ready to trade in your t-shirt for a tailored suit, read on for tried-and-true strategies for dealing with your newfound responsibility as a financial provider.

Finding Employment

When life has thrown you a curveball and you decide that finding employment is necessary, there are many things you can do to increase your chances of finding the best job opportunities and standing out among your fellow applicants.

Network

You could spend countless hours scouring online job boards, but according to Gustavo Estrada of LDS Employment Resource Services, networking with people you know is the best way to go.

"Studies show that the success rate for anyone looking for a job is accelerated through networking - and women naturally network," he says. "Women are generally more aware of what's going on in other people's lives. And working women are more likely to know what's going on in other departments of their company." So be sure to spread the word with friends and neighbors, and don't forget to make the most of social websites like facebook.com. The more people who know you're looking for work, the greater your chances are of finding it.

Polish Your Presentation

Estrada says two of the most common mistakes women make when searching for a job are undervaluing their experiences and not presenting their skills correctly on a resume. "If you've been a Relief Society president or a PTA volunteer, those are great experiences to share with potential employers. You can address your time as a stay-at-home mom by saying, 'I was president of a nonprofit women's volunteer group. I directed a board of ten people, and I managed a budget.' These are valuable, transferable skills."

In fact, it was by highlighting her talents as a homemaker that Oborn was able to find employment again. "Interviewers gave me a hard time about the gap in my resume," she says. "But I pointed out the organizational skills I had used to run a household, and I got the job."

Take Advantage of Church Resources

By utilizing LDS Employment Resource Services through your ward or stake employment specialist, you can attend career workshops, receive assistance preparing resumes, find job leads, practice interviewing, explore self-employment options, and much more.

"In our career workshops we engage the head and the heart. We stimulate the brain, help you find your passion, and provide a safe environment where you can practice and improve your skill set," says Estrada. Visit providentliving.org to learn all that LDS Employment Resource Services has to offer.

Continue Your Education

"Take advantage of every opportunity to learn," counsels Estrada. "That way, when a crisis hits, you'll be prepared for it. Attend community classes, or finish your degree. That doesn't mean you need to put undue stress on you and your family - take your time, but do make the effort."

Start Your Own Business

Another option for earning money is to start your own business, which is what Tamalin Christen did when her husband died of cancer three years ago. Widowed in her 30s with four young children to raise, she turned a hobby that she loves - catering - into a successful business.

"It was easy for me to make that switch from a hobby to a business," Christen says. "Luckily I'm able to work from home most of the time, but it takes a lot of planning, and it's difficult not to be able to depend on a set income. But I'm blessed to have family and friends who are willing to help me with child care when I need it."

Coping with the Emotional Toll

If you are successful in finding work, be prepared for the roller coaster ride that may follow. Homemakers who enter the workforce often experience intense emotional turmoil, including guilt for being away from their children and resentment toward their spouses.

"I felt a lot of guilt for taking my children to be cared for someplace else. It's heart wrenching to have to do that," recalls Oborn. "Going back to work brought a flood of emotions. There were a lot of tears as I wondered, 'How am I going to do it all?'"

For Christen, her role as single mother and sole provider continually takes its toll. "There's no break. I get tired," she says. "That's one of my biggest frustrations. There's just not enough time to do everything."

If a woman becomes the breadwinner because her husband is unemployed, the role reversal in the marriage can be difficult for both.

"Marriage is being put under a tremendous strain by the economy," says Dr. Elia Gourgouris, a psychologist and life coach. "When things are going well financially, other issues are pushed below the surface. But when a husband loses his job, that kind of stress can exacerbate other problems."

Gourgouris says that if such a role reversal occurs, it is critical to clarify roles and expectations from the beginning. "Defining expectations gives the couple a much better chance of staying close and connected while working through the crisis," he says. "If you don't define expectations, there's a lot of room for miscommunication and disappointment." This includes expectations regarding child care, housework, and job-hunting activities.

But Gourgouris also cautions women to recognize how closely a man's employment is related to his self-esteem. "Men, for the most part, connect their self-worth with their paycheck and their ability to be providers. When they lose their jobs, they often become depressed, and the longer it takes to find work, the deeper the depression can get."

If your husband is currently unemployed, keep a positive attitude (he's well aware of what's at stake), help him establish a daily routine that includes plenty of time for job-hunting and networking, and encourage him to learn new skills to make himself more marketable.

Moving Forward

Whether you wanted to be the breadwinner or not, Gourgouris says attitude can make all the difference.

"The mindset has to switch from 'Why did this happen to me?' to 'What will I do about it?' Get something positive out of it," he says. "There are benefits, like self-worth."

Oborn agrees. "I strongly believe that if we're creative, we can find ways to earn money," she says. "Plus, if you know you are doing everything you can, if you know you're helping to provide for your family, it will help with your self-esteem."

"Don't approach the work as a job only," adds Estrada. "When you do that, you tend to do just the minimum. Approach your work as a career. A career is where you hope to grow into something more. You'll learn more, you'll produce more, and you'll invest more."

Few know the importance of attitude and hard work more than Christen. "Staying positive is a conscious choice," she says. "Somehow things work out if you keep doing your part and have faith. I think if we get really stressed and spend time and energy worrying, then there is a tendency for things to go wrong. Maybe this isn't exactly what you planned on, but somehow it will work out."

This article was inspired by a class from BYU's 2009 Women's Conference.

Keeping Cash in Check

Mon, 20 Jul 2009 18:00:00 -0600

by Jamie Cline
source: MormonLife.com

Mormon Life says: Starting (and keeping) a budget may seem like an impossible task, but it is certainly worth it in long run. We’ve asked the experts some common budgeting questions—and found a great new program to help you—so that you can learn how to get the most for your money. When Calvin Carter started dating Daisy Williams, he didn't know that along with a beautiful girl, he was going to get a lesson in money management. Daisy, a Wyoming native and BYU accounting major, has always taken care of her finances. "My parents were careful about saving their money, and encouraged all their kids to keep some money in savings. By the time I came to college, I was pretty set."

Calvin, however, hadn't had that luxury. And when Daisy showed him how to track where his money was going, he was pretty surprised. "I was spending way too much money on fast food," says Calvin. "I would eat out once or twice a day, and it would add up quick, but I wouldn't realize it." By using money management skills, Calvin and Daisy were able to pay for their June wedding in the Idaho Falls temple, and are now saving for Calvin's law school.

What's the secret?

We asked this young couple what makes their story so successful. "Basically, we just spend less than we make," says Daisy. Financial experts agree that this phrase is the key to money management. Steve Smith, president and CEO of Finicity, a financial software and services company, says, "As simplistic as it sounds, spending less than you make is how to budget. If you say that to someone, he'll say, 'Well, of course you should do that.' But people don't follow that rule and that's why there's so much debt in our country." Statistics show that the average American spends ten percent more money than they earn each month. Spending less than you earn is the only way to break out of this vicious cycle.

How do I get started?

Jared Garrett, an account executive with WeXL Business solutions, outlines a simple plan for creating that may work for many: (1) Spend what you normally do in a month and save all receipts, (2) Pull out the receipts at month's end and tally expenses, (3) Decide what you shouldn't have spent, then (4) Use your required expenditures to create a categorized budget. (Remember that you should check with your partner about expenses; it's never good to have one person controlling the finances.)

But even with all our good intentions to keep track of what's left in our budget, many of us get frustrated and confused and give up about two weeks into the month. We need more help.

This is where an easy-to-use program might come in handy. Smith's company, Finicity, has put a revolutionary twist on the old "envelope" budgeting approach, in which you set aside cash in envelopes for different expenses such as groceries, entertainment, car maintenance, and so forth. Once the money is gone from a certain envelope, there is no more spending money in that category for the rest of the month. Mvelopes, an online service that automatically tracks your expenses, uses the same approach by allowing users to take each paycheck and divide the money into virtual envelopes of their choosing, each for a different expense.

During the month, as it tracks your purchases, it automatically subtracts the money that you've spent out of that envelope. For example, if you have put $100 dollars in the "clothing" envelope, and you spend $20 on shoes with your credit card, when you come home and check your balance, the program will have removed $20 from your "clothing" envelope and placed $20 in your "Credit Card" envelope. This ensures you have set aside $20 to pay back the credit card at the end of the month and shows you exactly where your money was spent. Mvelopes is even accessible on your mobile phone, allowing you to track your spending - real time - wherever you are, so that you can make wise, more informed spending decisions.

"Because Mvelopes uses traditional envelope budgeting principles, combined with cutting-edge technology, users are often able to recover roughly 10 percent of their income from hidden spending," says Smith. How can I stay motivated?

They say that it's almost as hard to start a habit as it is to break one. Print out your budget and put it in a prominent place, so you are reminded of it everyday. Garrett says that another option to create a family goal, such as saving for a new car or a family vacation. "What's nice is that once you get started, you find that you are addicted to it. You find out where your money is going, and it's a liberating and empowering experience."

Do I really have enough money to save?

One of the most common misconceptions, says Smith, is the belief that "if I made more money, I could save money." "But the truth is, people spend what they make. It doesn't really matter what level income you are - you can still save money, as long as you spend less than you make."

How does budgeting help me get rid of debt I already have?

When people finally take a close look at their finances, most are surprised, disappointed, and sometimes frustrated at what they see. With everyone having multiple credit cards and bank accounts, it's really difficult to keep track of finances, and it's extremely easy to build debt.

"First, examine the debts that you have and create a plan to pay them off," suggests Smith. The simplest way is using a debt roll-down structure. Find how many debts you have and how much money you owe on each. Arrange them up with the lowest balance first, followed by the next lowest, and so on. Pay minimums on all your debts, except the smallest - and pay as much as you can towards that debt. Once you have paid off that debt, use the extra cash flow (that you are no longer paying on interest) to start paying off the second one. "It's a huge win just to get that first debt paid off," says Smith. "It's just a great feeling."

Begin a free trial of Mvelopes by clicking here.

Budgeting for Stupid

Mon, 15 Jun 2009 18:00:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: Would budgeting out some money for lottery tickets be a good idea? Dear Dave,

Do you think it would be a good idea to budget a little money each month for playing the lottery? I spent $10 on scratch tickets the other day and won $100. I think it might be a pretty good idea to save $90 and put the other $10 toward more tickets.

Edward

Dear Edward,

Here's a thought. Just stuff ten bucks down your garbage disposal each month and save the cost of driving to the nearest convenience store.

Really, now, you can't be serious! The lottery is a tax on the poor, and on people who can't do math. I'm not riding a moral high horse. Research shows that people from lower income brackets, folks who can't afford to be throwing their money away on some ridiculous game, spend four times as much on lottery tickets as anyone else. Rich people don't mess with this garbage, because they know the lottery isn't a wealth-building tool. When was the last time you saw a line of BMWs and Mercedes pull up to your local convenience store to buy lottery tickets?

The only winners in the lottery game are the students who get scholarships, but in reality they are riding to school on the backs of the poor masses who gamble away their grocery money.

Lots of people think winning the lottery will mean life on easy street. The truth, however, is that it rarely works out that way. Did you know that 65 percent of Lotto winners go bankrupt in less than 15 years? Your chances of winning big are about 125,000,000 to 1. You're more likely to be bitten by a snake, or die in a car accident on the way to buy the stupid lottery tickets!

If you've got money to throw around, do something smart with it, like get out of debt! Do you have an emergency fund? Are you investing for your retirement, or your kid's education? If you've done all of this, give it to someone who's hurting, or invest it in your community. Don't waste it on something as dumb as the lottery!

- Dave

* For more financial advice, plus special offers to our readers, please visit davesays.org.

Pinching Vacation Pennies

Thu, 30 Apr 2009 18:00:00 -0600

by Ashley Evanson
source: MormonLife.com

Mormon Life says: With strategic planning, a few travel secrets, and a little sacrifice, your dream getaway is entirely realistic. Stress and economic fear are strangers to no one these days. Most people could use a relaxing vacation right about now, but how to afford it in a time like this? Budget travel.

"There are three major things that can impact what you spend on vacation: where you go, when you go, and what choices you make while you are there," says Tim Leffel, author of Make Your Travel Dollars Worth a Fortune. "If you can control all three of these variables, you will always get a better deal than most people."

Where to Go

Go where the dollar is strong, of course! Don't give in to the glitz and glamour of hyped up tourist destinations - you can go somewhere similar for half the price. Instead of Western Europe, try Eastern Europe; don't go to Cancun, go to Panama; and forget San Francisco - Portland is incredible.

"We are in a rare period right now where the dollar is way up around the world, so apart from Japan, every country is on sale for us," says Leffel. He suggests places like Iceland, Hungary, South Africa, and Mexico - which is a "screaming bargain" - as countries where the dollar is significantly stronger than local currency.

He also notes, "There are bargains all over Latin America once you land and there's no jet lag getting there and back. From Guatemala down to Argentina, the dollar goes a long way."

Booking a Bargain

Booking a vacation through a travel agent can actually get you the best deal out there. Many people think it will cost more, but it doesn't. Travel agencies get paid by the companies they book for, not the by their customers.

"Travel agents know all tricks; they know what's on sale," says Susan Reesor, a booking agent at A Travel Center, one of Utah's oldest travel centers. "And a travel agent can guarantee the best price." For example, if you book a cruise for $500 a person six months in advance, but the price goes down to $250 three months later, an agent will adjust your price, guaranteed.

So what can you book for a deal these days? Reesor suggests a cruise, especially if you're LDS. Cruise prices are down as it is, but cruise lines count on alcohol and gambling for good chunk of their profit. They're not included in the initial price, which is why cruises can be found for so cheap.

Also, "You can get more bang for your buck by booking at the last minute," says Laura MacNeil, associate editor of Budget Travel Magazine. "You can also find tremendous bargains by booking - and paying upfront - for deals far in advance." A lot of hotels, airlines and cruises have fire sales for unsold inventory at the last minute. She says companies are offering deals with fewer profits, or even no profits at all, just so they can stay afloat.

MacNeil says other budget - friendly destinations include all - inclusive resorts and river cruises. "People want to know they're getting for their money’s worth," she says. Even in more expensive places like Europe, these types of vacations are a good deal.

Spend Your Money Wisely

Even if you get a good deal on your hotel and airline tickets, you can still rack up your vacation bill if you spend your money unwisely.

"If you take an extra bag for souvenirs without even knowing what's for sale, that's probably a good sign you’re going to be wasting a lot of money," says Leffel. If you wouldn’t buy it at home, you probably don’t need it.

Leffel says a lot of money also gets wasted out of laziness. It's easy to stay at an international chain hotel, but looking for an alternative with more character is usually cheaper. The same thing goes for eating out. Don't eat at tourist restaurants; find out where the locals eat. And don't take a special hotel taxi when the regular ones, or even the subway, are less expensive. "Just reading a guidebook before you go can easily save you hundreds of dollars on all counts," he says.

Other money-saving tips include:

See if your credit card company offers a discount if you book a vacation using their card (many do).
Go out for lunch and stay in for dinner.
Go grocery shopping for snacks and small meals instead of eating out.
Travel after peak season.
Stay fewer nights. If you're not willing to give up the destination, don't stay as long to cut down costs.
Skip the attractions and just enjoy the surroundings.
Go somewhere close; driving is generally cheaper.
Go with another couple and split the bills.
If you're planning a European vacation in the future, buy Euros now before they go up again.
Do a staycation. Stay local and discover what your own city has to offer.

Inexpensive Family Fun

"Remember that almost any place can be an adventure for kids, and the things they will get the most excited about are seldom the ones that cost the most," says Leffel. He suggests aimless adventure instead of overscheduling. Plan a day to just hang out at the pool, go on a picnic, or find a local park - they'll enjoy these far more than another museum. "Don't be afraid to be spontaneous, both in the planning and after arrival," he says. "You don't get extra points for leaving nothing to chance!"

MacNeil says road trips are some of the best family vacations. Consider camping at a state park - "National parks get all the attention and the crowds, but state parks are often under-utilized, which you can use to your advantage," she says.

Regardless of where you go or what you do, family time is an adventure in and of itself, and you’re sure to have a blast. Getting a little bang for your buck will only make it all the better.

Stupid Tax - Paid!

Mon, 02 Jun 2008 18:33:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: My husband got talked into a department store credit card just to get a discount. He made one purchase of $25, and afterwards he forgot all about the card because he'd never had one before. They wrote down the wrong address on the application, and nine months later we found it had been turned over to a collections agency. With late charges the total due is $285. What do we do? Dear Dave, Even though we make $70,000 a year, my husband got talked into a department store credit card just to get a discount. He made one purchase of $25, and afterwards he forgot all about the card because he'd never had one before. They wrote down the wrong address on the application, and nine months later we found it had been turned over to a collections agency. With late charges the total due is $285. What do we do? Vicki Dear Vicki, Here's what you're going to do. You're going to write a check for $285 today, and in the space marked "for" you write "dumb behavior by husband"! I'm sorry, but you guys are completely liable for this. And besides, it would cost about $3,000 worth of your time to get these bozos to listen to reason and go away. The next time you go into one of these places and a clerk starts jumping up and down about discounts when you use their credit card, you need to tell them to go jump in the lake! Pay the bill, close the account, and cut up the plastic. This is a perfect example of why I always tell people to stay away from credit cards! Dave

Prepare Every Needful Thing

Fri, 23 Jan 2004 08:13:00 -0700

by Dawn Frandsen
source: MormonLife.com

Mormon Life says: It's January--time to organize! The superstores have those giant plastic containers on sale, so you can sort all the stuff you've accumulated this past year. But how many years has it been since you sorted out the clutter in your financial house? This article isn't about how to balance your checkbook or verify how much your stock portfolio is making. It is about things you'll leave behind to make life bearable for your family.

Several years ago, a family friend died in a small plane crash. The grief and anguish over his loss were poignant. When this man died, however, his financial house was in immaculate order.

The goals he and his wife had set for their young children were accomplished. Though achieving them alone, his wife was able to do all the things she wanted to do. Today, she lives a comfortable life. Their children had money for missions, college and advanced degrees.

Once you are gone (and that often comes without warning) you can't fix what you didn't do. Many people assume that after their demise, their money and assets will go to their family. But without correct planning, as much as 49% of your estate could go to the IRS -- before your children get anything.

Statistics show that only 41% of Americans have a prepared will or estate plan and a sufficient amount of life insurance. Worse yet, only a third of families with children have made the necessary decisions regarding the appointment of a guardian and how the financial needs of their children will be met.

If you and your spouse were to die without these plans being made, you may unknowingly give the court power to make crucial decisions about your children and the distribution of your estate.

There are several things to consider when putting your financial house in order.

Will

First is your will. Is it current, or have you had two children since you last looked at it? The purpose of your will is to specify how you want your assets distributed. It names your executor and the guardian of your children. Moreover, it helps eliminate bickering and hurt feelings if your instructions are described with meticulous detail.

Insurance

Do you still have enough insurance? Maybe your youngest son was married last year and you have too much. Do you have the correct types? Life, disability, health and long-term care should all be considered.

Trust

Trusts are not just for millionaires. There are several types of trusts, each with different benefits. Trusts can provide advantages over a simple will. They can be used to avoid probate and its associated costs. Unlike a will, which is a public document, trusts are private. They therefore protect the privacy of your estate plan. An estate-planning attorney can help you determine which trust will best suit your needs.

Estate Planning

Proactive estate planning also is not just for the rich and famous. Proper planning will allow you to transfer assets quickly while minimizing settlement costs. If your total assets exceed $1,000,000, planning ahead will be very beneficial to your heirs. Once you’ve determined your assets, consult with a financial planner and attorney to put together the correct plan.

Estate Taxes

It’s a good idea to estimate your estate taxes – you’re probably worth more than you think. Again, a professional financial planner or attorney can help you prepare for your individual needs. Life insurance can be a valuable tool when dealing with estate taxes and the administration costs of settling your estate.

Since your net worth changes many times throughout your life, ensuring your family’s financial future is an evolving process. Children are born, grow up, and leave. Parents grow older. The worth of a business grows. Financial needs evolve with each of these changes.

Being prepared with the correct plan in place will reduce the heartache and eliminate the headaches of death. Start now. While you are setting your own financial house in order, check with your parents. Discuss and explain to your children the provisions you are making. Let them know that you have prepared so they need not fear.

Mothers, Fathers, and Money

Tue, 23 Dec 2003 08:53:00 -0700

by Gregory Brough
source: MormonLife.com

Mormon Life says: Being a parent today is no easy task. Many parents are concerned how they should teach their children about money matters and better prepare them for life. After all, if we as parents don't teach them, who will?

Perhaps we weren’t blessed with parents who perfectly taught or modeled financial wisdom and acumen. However, the issue facing us today is that we as parents are responsible to teach our own children about handling money wisely. The good news is that what we don’t know, we can learn.

Money handling includes both how to earn money and how to wisely plan for its use. Here are some things we parents can do now to help our children handle money better in the future.

Become a Role Model

Regardless of what has happened in our lives thus far, we can become an example of provident living and a practitioner of sound financial principals. It may take some study and effort on our part – reading, taking a class or two, and changing some habits – but we can do it. If we consistently buy designer brand clothing time after time, we can’t expect our children to be content with thrift store bargains. Our daily example in handling money will be a force in molding their attitudes as they see us, hear us, and do as we do.

Share Your Plans

Let your children see you discussing goals, budgets, and progress. As they see you weigh decisions like whether to buy a used car, new car, or fix up “Tillie” for another year or so, they will come to appreciate how you set spending priorities in a calm, businesslike manner.

Children can participate in decisions about spending for vacations, holiday gifts, and significant budget items, and in saving for missions and education. Don’t burden them with problems, but show them how you can handle financial challenges, set priorities, and keep focused on goals that affect every family member. Children enjoy offering ideas and suggestions that help the family achieve a common goal and will be more inclined to make the sacrifices to bring it about.

Identify Wants and Needs

Just because everyone else has something doesn’t mean it is a need, but these kinds of wants don’t have to be ignored either. There is nothing wrong with spending for selected wants as money permits. Parents can also say, “We can’t afford that right now. If it’s really important to you, let’s add it to your list.” Children may then make special efforts to earn and save for the item. Sometimes, however, something that once was urgent may not be a few weeks later.

Parents can also be an example in how they practice the principle and blessing of deferred gratification. Parents may save money now for a home, a mission, and a college education, instead of buying something less important now. Such sacrifice and discipline may also serve to reinforce the principle of obedience in this life to gain celestial glory in the next.

Stick to Your Budget

Children should see (and help) you make shopping lists, use the coupons, weigh the choices of brands and quality, prioritize expenditures, and keep within your targeted spending. Give children the challenge to plan, shop for, and prepare a family meal by giving them a budget, sending (or taking) them to the grocery store to do comparison shopping for the ingredients.

Don’t Forget Tithing

I’ve admired parents who provide opportunities for their children to work – offering a parcel of land to grow corn, opening the door for an after school job, and other opportunities. Work brings tangible rewards, including money to spend. Work opportunities help children learn traits and skills that will bless their lives.

With work’s rewards comes the opportunity to teach about tithing. Take children with you to tithing settlement. Help them learn that everything belongs to the Lord, and from what he gives us, we choose to return 10 percent to him first.

Along with tithing, our children must learn to pay themselves (or save). We created financial incentives to encourage our children to save and even created a family “bank” where accounts earned interest. Each month I followed up with the children to praise them for their thrift and point out how their savings were growing.

My wife and I began teaching our children early. We were amazed at how the children imitated our practice of clipping and using coupons. They set up an imaginary town where they bought and sold things. They worked, did their chores, and as they were paid, we reminded them to pay their tithing first. We also encouraged them to save some of their money. We guided them in their spending, and at times let them spend their money for things we didn’t necessarily agree with.

Because of the comfort level we’ve developed in discussing financial matters in our family, our adult children now come to us for advice on adult financial matters, such as whether to choose a certificate of deposit or mutual fund investment.

Our attitudes about money and those we develop within our children can shape their lives for better or worse. As your children learn from you – and perhaps see their friends and colleagues struggling – they will be grateful that you took the time and had the discipline to teach them how to handle money.