Savings


“It’s important for people to look back before they’re able to move forward.”–Karen McCall

Karen McCall has a special place in my heart. She was the first one to tell me I was an underearner. And it really pissed me off!

“I am not,” I said defiantly. “I’m a writer!”

Talk about chutzpah!  Here was the leading pioneer in the field of financial recovery. And I’m arguing with her?

Of course, she saw right through my defenses and gently guided me to the truth.

I can honestly say Karen changed my life…in ways I couldn’t even have predicted at the time!!!

She stopped seeing clients years ago to focus on training Financial Recovery Coaches.

Now there’s BIG NEWS!

Jedi Master McCall (one of her students used this phrase, in an email to me, to describe Karen) is offering a special 3 month program…Financial Recovery Foundational Training…for anyone.

Yes, it’s a prerequisite for the Certification Core Training.

And it’s also ideal for professionals to augment their financial coaching skills.

But, for the first time…and here’s why I’m so excited…this training is open to ANYONE (you, maybe?) who wants to transform their relationship to money.

This is an amazing program. There is nothing like it anywhere that I know. It’s truly transformational! Karen, herself, will be teaching. And the sessions are on the phone.

You will be matched with a personal mentor, led through  your own money history, uncovering limiting beliefs, and given a tool box of “Financial Recovery’s underlying methodology.”

In other words, if you’re really serious about healing your relationship with money, this class was tailor-made for you!!! To learn more: www.financialrecovery.com.

This course will rock your world. Are you ready?

Long time…no blog!  Did you miss me?

In case you were you wondering what happened (or not), I’ve been waiting…for all your contest submissions to flow in.

Remember?  In my last blog, I asked you: How have you overcome inertia in your financial life…without waiting to be hit over the head with a sledgehammer? The winner would get a mouse pad.

To all who entered, thank you. There were some great ideas.

To all of you who are struggling with inertia and haven’t a clue what to do, help is here…take a look:

  • Honorable mention goes to Tracy, who quoted a bumper sticker: “Debt is Normal. Be Weird.” Great words to live by!!!!
  • Third runner up is Donna, for calling me “a genius for starting this contest.” …in all due modesty.
  • Second runner up is a financial coach, Michele, who advocated hiring a “financial coach like us.” Makes sense to me!
  • First runner up is Barbara W. who declared  “a deadline can be a powerful force against inertia, even if it’s self-imposed.” For example, she suggests, “agree with a friend to update your wills by the end of November, and schedule cocktails to celebrate.”  Cheers to that idea!
  • The Winner is: Laurie, who suggested a great exercise: “write down the best things that could happen if you change what you’re doing now AND the worst things that could happen if you don’t change. Then share the results with one person and receive feedback.”  This is quite an eye-opener!

Congratulations, Laurie…if you email me your address, I’ll send you a bright red mouse pad that says “Scare Yourself Every Day!!! You’ll be the envy of the office. But let them know, they too can order one on my website: www.barbarastanny.com. Come to think of it, those mouse pads would make great Xmas gifts.

If you have built castles in the air, your work need not be lost;

that is where they should be. Now put the foundations under them.
Henry David Thoreau

Had a brief, but interesting conversation while shopping  in Costco with My Man and his son a few days ago. His son, a senior in college, is a sheer delight. He’s ambitious and charming, with a vivid imagination and a quirky view of life. We were walking down the home furnishing aisle when he made an announcement.

“I’m going to live in a Castle one day, “ he declared, and proceeded to describe how it would have a gym, a pool, a hula hoop court (he’s an amazing hooper!), and all the amenities castle’s typical have, including lots of turrets. The boy was dead serious.  I was intrigued.

“Good goal,“ I assured him, and meant it. But even more, I saw it as a wonderful metaphor for the big dreams many college kids have for life  after graduation.  Problem is, like most his age, he hadn’t really thought through how to make it happen.

“If you start now,” I suggested, “You can definitely make it happen.”  He asked for my advice. I was ready to give it, but standing in the middle of Costco, there were too many distractions.

So this blog is meant to help him (and anyone else) build a firm foundation under their future castles.

16 things I wish I knew about money when I graduated college:

1.     If you can’t afford something, don’t buy it. Delayed gratification is the gateway to wealth (and a sign of maturity).

2.     Despite what you’ve heard, money is NOT power. Money is simply a tool. The trick to getting the most out of any tool is to know how it works and to use it responsibly.

3.      Understand the miraculous power of compounding—where your money earns interest, then your interest earns interest, and then that interest earns interest, and before you know it, you’ve got a lot more than when you started.

4.     Make savings a habit. Every month, have a small amount–say $5 to $10–automatically transferred from your checking account to a savings account.

5.     Consistent savings, no matter how tiny, adds up quickly.

6.     Always have a Safety Net…just in case—accumulate at least 6 months of living expenses, to be used for emergencies only.

7.     Create a Fun Fund for short-term purchases, like a ‘gotta-have’ video game or a weekend getaway—open a separate savings account, or simply drop spare change in a jar.

8.     Begin now building good credit. Apply for a credit card and use it responsibly, which means paying it off every month  (refer back to #1!)

9.      Never, I mean NEVER, get into credit card debt (not for a castle or the carpet or even a couch).  Mounting credit card bills destroys your peace of mind and your quality of life. What good is a castle if you can’t enjoy it?

10.    Keep your checkbook balanced. Even better, put everything on Quicken. Clarity (knowing precisely how much you have) is power.

11.     Learn about investing. Take a class. The only way to make sure your money grows (enough to buy a castle and also maintain it!) is by putting at least some of your cash in long term assets (like stocks & bonds) that will grow faster than inflation and taxes will take it away.

12.      Never invest in anything you don’t understand. Otherwise, you won’t know what you’re buying; you won’t know when to sell; and you can’t accurately evaluate the advice you’re given.

13.     Don’t put off investing until you’re older. If you start now, regularly investing small amounts (in mutual funds), that money will grow into millions. Really!!!

14.     Own and respect your value. Never settle for less than you deserve or desire. Always ask for more than feels comfortable.

15.     The biggest financial risk you can take is to ignore your money, and do nothing at all.

16.     Read biographies of wealthy, successful people. They’ll inspire you to think bigger about what’s possible, and give you the fundamentals for making it happen.

That’s my advice. But it’s certainly not a definitive list. I’d love to hear from others. What would you add?

Barbara Stanny

The leading authority on women & money
barbara@barbarastanny.com
www.barbarastanny.com

Sign up for Barbara’s free newsletter at

http://barbarastanny.com/inner-circle-join.html

Twitter Barbara at: http://twitter.com/barbarastanny

Join me in the inspiring tale of a woman (I’ll call her Jane) who discovered the stunning power of women joining with other women to take their financial lives higher.

I’ve never met Jane.  But recently, she emailed me to say a good friend started an Overcoming Underearning® Book Club, and she became a member.  Five women meet monthly, at 7:30am for “OU Power Breakfasts.” The group reads one financial book a month.  I am proud to report the first was mine — Overcoming Underearning®.  Next was On My Own Two Feet: A Modern Girl’s Guide to Personal Finance by Manisha Thakor and Sharon Kedar.

Here’s how the club works:  “We have assignments for our breakfasts, like writing our Contracts with Ourselves and our Wish Lists to share with the group.  We also share our successes in the group in person and via email.  We often include some variation of  “underearning is no longer an option!”  in emails!

“I feel AMAZING afterwards.  It gives me such a boost throughout the day, knowing that I had done something really great for myself and spent time with supportive, uplifting, inspiring friends before going to work.”
But the group gave Jane more than good feelings.  It gave her guts.

“I have a job where I’ve done several extra assignments over the past few years,” she explained, “but have never gotten paid extra for them. I was initially told there was no extra compensation for them and I never asked again.  I was happy for the exposure.”

After she turned in her latest extra assignment, however, her supervisor asked Jane to do more revisions.  The request followed her first book club.  Bolstered by the Power Breakfast, she refused to do more because she wasn’t getting compensated.

Guess what happened?

“My supervisor then said, ‘We can compensate you!’ and within a week all the email approvals had been done to process me getting paid.”

Like most people, she had just assumed a bad economy precluded any extra pay.

“In this climate of cost-cutting I initially did not think that this was going to be possible, but once I verbalized it I realized how much work I had done and that I deserved to get paid, and felt confident that I would. This was a turning point for me in terms of now getting compensated separately for the extra work I do within my company, outside of the responsibilities of my job.”

But the story doesn’t end there.  Her credit card debt, once $10,000,  “is now under $1,000 and I am very close to paying it off altogether, and when I do I’m going to have a party – I will invite you and if you’re in New York I would love to have you there!”

I’d love to come. There’s nothing more inspiring than being around women empowering other women.  If you’ve had any successes with similar groups, I’d love to hear about them!!!

Barbara Stanny

The leading authority on women & money
barbara@barbarastanny.com
www.barbarastanny.com

Sign up for Barbara’s free newsletter at

http://barbarastanny.com/inner-circle-join.html

Twitter Barbara at: http://twitter.com/barbarastanny

The Money/Happiness debate continues.  Just today,  USAToday http://www.usatoday.com/news/health/2009-08-05-happiness-apa-money_N.htm asked the age old question, yet again:  Does money bring happiness?  Well, I’m here to resolve this issue, once and for all! (drum roll, please).

Money does NOT make you happier.  But poverty doesn’t either.  What  DOES  make you happier?: taking control of your money, instead of allowing your money to control you!

Let me give you an example.  Here was  a woman (a successful attorney),  who for the last three years,  felt helpless,  hopeless,  and (obviously) very unhappy as her life,  and her debt,  spiraled out of control.

Then, last month, she called me for coaching.  We’ve only had 3 sessions so far.  And most of our time was spent dealing with her resistance (“I’m NOT going to change my lifestyle,” she told me firmly) and getting her out of denial (“OMG, I’m spending way more than I earn!!”).

Finally, last week, she sprang into action.  I share her latest email with you because its proof positive how much happier life can be when you take charge of your finances.

“I have been working diligently to shave my monthly expenses and I am having a blast!” she wrote.

Of course, it wasn’t easy, she admits. “One thing I will say:  it’s a lot of work and takes a lot of discipline to save money,  and was much easier to stay in debt – which is how the system is designed.  But I like the power I feel now much better.  Saving money is actually making me feel very sexy, and probably the sexiest thing I have ever done!”

You’ve got to admit—she’s one happy camper!!!  How did she do it?  With this 7 Step Formula.  She:

  • Opened a savings account:   “$10 per month is automatically transferred from checking,”
  • Cut spending:   “I shaved $1400 from my monthly expenses.”
  • Stopped using cards, even her debit card:  “I was using my debit card the way people use their credit cards and it was getting me into trouble.  I cut it up.”
  • Negotiated with creditors:  “I am working liking crazy with my credit card companies” to decrease rates.
  • Created a spending plan:  “I figured out how much money I needed this month by category and have gotten out the appropriate amount of cash, put paper clips and sticky notes to each allotted amount, and that is all I can spend.”
  • Stuck to her budget no matter what, even during a major move:   “In the past I would have just gotten out my credit card, charged the move and said I would deal with it later.  Now I am planning, looking at all of the expenses and figuring out the best steps and ways to save money.”
  • Followed the coincidences (which always occur when you start taking charge):  “On top of this, I just landed a HUGE new client in Santa Fe, NM –  out of the blue, of course.”

Ultimately, this woman created her own happiness by making 2 crucial changes:  she changed her behavior along with her attitude.

Getting out of debt, she told me, has become “such a fun game.  It’s amazing to see where my money goes!  Wow – to be conscious is incredible. Thanks Barbara – I am loving this!”

Don’t YOU want what she’s having??

Barbara Stanny

The leading authority on women & money
barbara@barbarastanny.com
www.barbarastanny.com

Sign up for Barbara’s free newsletter at

http://barbarastanny.com/inner-circle-join.html

Twitter Barbara at: http://twitter.com/barbarastanny

Just as the cherry blossoms were bursting into bloom, Obama was issuing instructions to his cabinet:  cut $100 million from the budget.  Three months later, mission accomplished — $102 million in expenses had been slashed.

When I read this in the Wall Street Journal, http://online.wsj.com/article/SB124882436513388423.html,  my immediate reaction:  “Why hasn’t the media made more of this fact?”   We hear, ad nauseum, about the stimulus (read: spending) packages, dragging the nation deeper into debt.  But what about these recent efforts to save money?  Now, in my mind, that’s news!!

Granted, that $102 billion is a microscopic portion of the general deficit, 0.0006%.  But the real story is how quickly and seamlessly government made those cuts… and the public never even felt the pinch.  If a giant bureaucracy can do that, certainly each one of us can too.

Washington called this program “The $100 Million Savings Challenge.” Imagine if you began your own “$100 (you determine the zero’s) Savings Challenge?”  Imagine if you started today, right now, shaving small amounts from your spending every month.  Then imagine if you took it one step further, and stashed the savings in the bank.  Imagine what that would do for your personal fortune!

There is a saying; “It’s easier to find 500 ways to save $1, than one way to save $500“.  That’s exactly what these government heads did: found all kinds of ways to trim small amounts.  For example, making double-sided photocopies, emailing documents instead of printing them, cutting unused phone lines.  Small.  Simple.  Painless.  Very effective.

I’ve always said, small steps consistently taken create remarkable results. Now what about you? What teeny-tiny cuts can you begin making right now? I’d love to hear your ideas.

Barbara Stanny

The leading authority on women & money
barbara@barbarastanny.com
www.barbarastanny.com

Sign up for Barbara’s free newsletter at

http://barbarastanny.com/inner-circle-join.html

Twitter Barbara at: http://twitter.com/barbarastanny

I’ve been in a tizzy ever since Suze Orman changed her tune.  Last month, the ubiquitous financial guru stood before the masses and told them to “listen up”,  stop paying off debt,  and put every extra penny into savings.

credit card debt

Now,  let me make this clear.  I’m a HUGE advocate (borderline obsessive) for adequate savings.  I personally have way more than 10 months (Suze’s barometer) socked away in cash.  But to say to everyone: “only pay the minimum due on your credit card balance and instead make it your top priority to build as much of an emergency cash fund as you can.”  Huh????  That pronouncement made my head spin!!

Then I read my favorite financial columnist (the Web’s favorite too!),  Liz Pulliam Weston,  on msn.com.  Liz did what she always does for me — made sense of what sounds complicated,  or in this case,  crazy.

http://articles.moneycentral.msn.com/Banking/CreditCardSmarts/why-suze-orman-is-wrong-again.aspx?page=1

Liz made a critical distinction Suze apparently overlooked.  Such a severe approach only applies to those in dire straits.  As Liz explained,  the only times when “paying the minimum or,  preferably,  just a bit more is the best of bad options” if:

  • You’ve been or are about to be laid off.
  • You’re on the financial brink.
  • Your accounts have already been frozen.

For everyone else,  Liz advised, “a more balanced approach might be the best course.” As she astutely points out,  it could take years to build up a big bundle in savings.  Dumping repayment plans for a lengthy period leads to unnecessary interest,  damaged credit scores,  and possible victimization by lenders.  Instead,  Liz  wisely suggests:

  • Stay the course. Continue paying down credit card debt,  but look for extra expenses to cut to pad your emergency fund as well.
  • Open an escape hatch.  If all your credit cards are with the same issuer, consider getting a card or two from different issuers so all your credit isn’t in the hands of one lender.
  • Monitoring your accounts.  Many lenders are trimming credit lines with little notice,  so checking your credit limits at least once a month is good practice.”
  • Pushing back.  Card issuers are hoping you accept their changes without a fuss,  but if you have good credit scores (FICOs of 720 or above),  you have some leverage and should be able to get them to rescind their decisions or take your business elsewhere.

Moral of this story: Beware of experts touting one approach for all.  Cookie cutter solutions can be harmful to your financial health!

Next Page »