Why is the monthly budget so important?

Why do we need to be so detailed and log all our income and expenses? Isn’t it enough that we know how much we earn and control spending?

No, it is not enough. Knowing what we earn and controlling spending does not take into consideration future spending, periodic expenses, unexpected expenses (although there is no such thing as unexpected expenses since ALL expenses can be forecasted), future plans, goals and dreams. If we do not plan and manage a budget, but only control spending, once any of these future expenses come into play, we will not have enough disposable income to cover them and we may be forced to either give up on our plans or go into debt – psychologically, going into debt is much easier, also practically it is much easier because the bank can be very generous with its money since the payback is big.

Not fulfilling our plans and dreams is a much more difficult proposition. What? We’re not going to take that family vacation to Europe? What? Not trade in our 3 bedroom apartment for a beautiful house with a yard? What? Not drive around in a brand new Jeep or SUV? No way! Not after we have invested so much! So much time and money and sacrifice! No, we want something to show for all our hard work! We want all those around us to know that we have succeeded and that we are "movin on up".

When these emotions start welling up, it is very difficult to take a moment and think about the consequences: About the insidiousness of debt and it ever growing nature. True, we accomplish our plans but at what price? Not only are there the associated bank charges and interest, but now that we have debt, we have less disposable income to pay for the everyday things that we used to be able to manage just by "controlling spending".

If we have a budget, we know exactly what our current expenses are; we know for what future expenses we are saving and when the cash will be available. Trip to Europe – budgeted and the funds WILL be available next summer. New car - No problem. Every 5 years like clockwork. We will be prepared for those "unexpected expenses" like repairing or replacing your refrigerator or car or TV and we will be able to support ourselves when we retire. Knowledge is Power.

Planning and managing a budget gives us the ability to set priorities on our spending. Putting top priority things first (including future plans) and getting rid of the waste.

Our money is hard earned and limited so we must use it wisely.

We need to control our money and not have our money control us!

Mindy

The Insidiousness of Overdraft and Debt

It has been a long time since I wrote a post and I apologize for that. So much has been happening around the launch of our new course that I just couldn’t get my head around it. But now I am back and I want to share some thoughts with you about overdraft and debt.

They both are so sneaky! They seem as though they are your best friends, but really they are your worst enemy – almost like a drug – you become addicted – you just can’t get away from them, as much as you want to. The temptation is too strong, the feeling is too good!

We all want to buy new and pretty things. We all want the little (and big) pleasures in life and the easiest and fastest way to get them is by taking money from the bank – and the bank gives it to us so generously. “It is only temporary. “Soon I will be making or coming into more money and I will return ALL the money to the bank”. “I am already in debt so what’s a little more” we say to ourselves. The cycle is endless and the debt only gets bigger.

The pressure grows. We don’t make more money, or we do, but our expenses increase as well. We don’t come into the windfall that we expected, or we do, but it is not the amount that we expected or Big Brother has eaten up half.

The stress begins to get to us. Headaches, indigestion, blood pressure raises, can’t sleep well at night. More and more fights about money and priorities with you partner, you kids, your parents. There’s additional stress at work – now you’re stuck – like it or not, your continued salary is your goal and job satisfaction goes out the window.

As I go on, the situation sounds more and more like that of an addict. Scary! How did we get to this horrible place? How do we get out of it?!

The answer is as simple as it is hard – go cold turkey! Just like with drugs. You stop. No. It is not easy. Withdrawal is not easy, but it is the only way.

Stop spending more than you earn! Learn the proven rules of good money management, join a support group (Over Spenders Anonymous - :-)) and get a financial education!

Healthy Finances is your “Over Spenders Anonymous” you just need to be ready to make the change.

Withdrawal is not easy, but with the right tools and support, it can be done.

Mindy

Don't take my wheels away!

It has been a year since I opened my office at home and sold my car. I can't believe how quickly time passes. A year ago when I decided to work full time from my home office, I also decided to sell my car. Believe me when I say that the decision to sell my car was much more difficult than the one to work from home!

I grew up in the suburbs of New York City, and like most of my friends had access to a car since I was 16 years old. I had always prided myself on being completely independent and totally spontaneous. So you can imagine the weight of my decision to trade in my wheels for a good pair of walking shoes and a bus ticket.

Over that last decade, maybe in conjunction with learning and practicing personal development, life coaching and financial coaching, I have become more and more "Green". I really believe that we all need to take responsibility and protect the environment for the generations to come. It is also clear to me that by saving the environment and reducing waste I save money and in fact raise my quality of life.

So being the ideologue that I am I finally made the ultimate statement (in my opinion) in saving the environment and guess what! It's not so bad! And it didn't take too long to get used to it either. The hardest thing was arranging rides for my kids to and from afternoon classes and introducing them to the public transportation system. I am still independent and spontaneous although it might take me a little longer to get to where I want to go.

Guess what else! I have saved a lot of money. Cars are expensive to maintain. Let's compare:

WOW! I spend less on all my transportation expenses than I used to spend just on gas!

I save about 830 Shekels a month, 9,960 Shekels a year.

I admit that it is a very difficult decision to make, but it is well worth the consideration. If being without wheels is totally out of the question for you, could you consider sharing one car in the family?

Mindy

Becoming Financially Fit

Today we received a comment from one of our readers stating that our tips are focused on people who have money and not on those who are struggling financially.

Wow!!! We were so moved by this comment and we thank her so much for sharing her impressions with us.

I especially was moved by her comments because I understand her really well! I am a mother of two, and I used to really struggle to make ends meet. I had an overdraft that some how kept getting bigger and bigger even though I spent the bear minimum.

We also thank her because it gives us an opportunity to clarify: Our tips are designed for people who understand that they need to manage their money and not let their money manage them! We know that it sounds impossible when you feel that you can't breathe financially, but believe me, I am living proof that once you take control of your money, you will have money to take control of.

Our tips are for people who want to STOP struggling financially. They are for people who are in the processes of financial recovery and are looking clear and practical solutions to everyday financial concerns.

We want to take this opportunity to outline again our 4 step process for turning around your personal finances and we think that it will help put our tips in perspective:

1^st – Decide to build and live within a monthly budget. This means that your expenses must be less than or at least equal to your income. If you do not already live this way, the thought of it can be daunting, but know that it can be done!

2^nd – Make it a priority to pay off all debt. Make sure that there is a category in your monthly budget dedicated to this. The monthly return should be as large as possible and do not reduce the amount until ALL your debt is completely paid back. This may take time, but it can be done!

3^rd – Identify monies and other assets that are not "working" for you. If the return on your savings or other assets is less than the cost of your debt then you may consider using them to pay back your debt. Sounds crazy, but when all your debt is paid off, you can start to invest the money that was dedicated to paying back your debt and move on to step 4.of the process.

4^th – Increase you income with special attention on passive income. This is the best part of the process. If you continue to live within your budget and always say NO to credit and debt, then this definitely can be done!! And remember, once your income increases, your expenses can increase, too.

The goal of our methodology and tips is to bring you first to a place where you CAN buy yourself clothes and then on to a place where you can financially make your dreams come true!!

I did it and so can you !!!!

Mindy

Back to school

Over the last month, children in many countries all over the globe have been returning to school after their summer holidays.

Small children, who are starting nursery school or kindergarten, are excited and a little scared about their formal separation from their parents and care givers. Children a little older are also excited and a little scared about starting first grade. It is hard to tell who is more excited, the children or their parents? As the children grow older, they are less excited and maybe even not so happy to be returning to school after the long holiday. However, the parents are very excited and happy to have their children go back to school and to return to the familiar routine.

The summer holiday is very long, very exhausting and very expensive! Baby sitters, camp, daily activities to occupy the kids' time (anything to reduce the hours spent in front of the television and computer) and in many cases a family vacation. The summer holiday is a big burden on the family budget and it seems as though the never ending expenses get bigger from year to year. The end of the summer and the return to school is also associated with rather large expenses; new school bags, books, supplies, new clothes and shoes. And the list goes on and on and on!!

Surely, whoever does not plan for all these expenses can find themselves in a financial nightmare! So how can you plan?

We recommend that you identify and tally all the "special" expenses that you had during the summer holiday and for getting the kids ready for the new school year. In as much as every year we are surprised by these expenses, they are generally the same expenses from year to year with minor adjustment that can be calculated ahead of time. Once you have the total value of all these "special" expenses, divide the total by 10 to give you amount of money you need to put away every month for the next 10 months to be able to finance next summers expenses. This becomes a new category in your monthly budget! Next year, and the years after, divide the total by 12 and start putting the money away already in July.

We wish you a successful and enjoyable school year!

Share with us your tips for saving during the summer vacation and back to school season.

Neomi

Did you know that your body is made up of 70% water?

Drink Water from the faucet – Bottled water is not healthier than tap water but it is much more expensive. Not only that; manufacturers that bottle spring water are drying up those natural resources and the bottling process, plastics bottles and transportation of bottled water are also not good for the environment.

Drink a lot of water – Your body is made up of 70% water (just like the planet Earth) and in the summer you lose a lot of water due to extra sweating. It is important to replenish your body with all the water that it loss in order to maintain the 70% level and not dehydrate. In the summer months when you are outside a lot it is really easy to dehydrate. Even if you are at the beach or by the pool and you do not really feel the heat. Therefore it is very important to remember to drink a lot of water, even in places where it is cool.

Drink only water – Many people already know that it is important to drink a lot and they do - but they drink a lot of coffee or tea or soft drinks. Even though all these drinks are based on water the other ingredients in the drink can often times do damage to you health. Did you know that coffee is dehydrating?

Try not to drink sweet drinks – The big soft drink companies invest millions to entice you to drink their sweet and delicious soft drinks. These soft drinks may be tasty, but are they good for you? They are loaded with fattening calories. It is also reasonable to assume that they also have a lot of artificial flavors, colors and preservatives. Stick to tap water, it is all natural and relatively free.

How do you know that you have drunken enough? It is recommended to drink about 8 cups (1.6 liters) of water a day. Prepare a 1.5 – 2 liter bottle or pitcher of water every day and drink from it throughout the day, with the goal of finishing it by the end of the day. Check yourself and let us know if you manage to finish the bottle/pitcher by the end of the day. Prepare a separate bottle/pitcher for every individual in the household.

Water with a twist – If you find it difficult to drink water because you have become used to the taste of sweetened (including artificially sweetened) drinks, add a twist to give it some extra flavor. Add lemon slices or lemon verbena leaves or mint leaves in the warm months since they have a cooling effect. Add ginger, sage or rosemary leaves in the winter since they have a warming effect.

To your health, your well being and of course your pocket.

Neomi

How to Finance Dental Care

Another friend just old me about the horrible dental work that she needs to get done.

Not only is it not pleasant, to say the least, to sit in the dentist's chair and have your teeth pulled, root canal done or go through the process of getting implants, but the costs are extraordinary! Dental work is a very big concern and financial outlay. So much so that a simple Google search of "cost of dental procedures" brings up a lot of websites dealing with this subject and I even found a dental procedure calculator.

Of the websites that I found, the following are very interesting. What do you think?

http://downloads.pennnet.com/web_dl/1281.pdf

http://www.dentalfearcentral.org/dental_plans.html

What is really interesting is that most dental work can be prevented if you take good care of your teeth to being with.

I am really lucky! My mother had us go to the dentist every 6 months for a periodic check and cleaning and my sisters and I all had braces. I guess that you can say that my mother had high awareness to the importance of dental hygiene. I am not sure if it came out of financial concerns or aesthetic concerns but, no matter the reason, we were at Dr. Fried's every 6 months like clock work.

I follow in my mother's footsteps and my kids and I go for a check up and a cleaning every 6 months. The check up is free and the cost for the cleaning is nominal. I am happy to say that my daughter and I have required very little dental work. My daughter had braced but does not have a cavity in her mouth and I, with very few cavities, have only had to replace a filling or two in the last decade.

My son, has not been as lucky. He is 11 years old and only a few baby teeth have fallen and the rest are holding strong. The dentist and orthodontist (and after seeing the x-ray) decided to pull 4 of his baby teeth to make room for his grown up teeth which are full grown and searching for a way to break out. My son, of course, complained and didn't like that four teeth had to be pulled, but all in all he was very brave and did what he had to do.

If we have not taken care now, his grown-up teeth would have found their way out somehow, and could have damaged the nerves as well as the rest of his mouth (a dentist can better explain the ramification). If it has gotten to that, my son would have needed dental surgery and most likely with general anesthesia. And the costs and the discomfort would have been extraordinary. By the way, it cost us in total 880 NIS (about $220) to have all 4 teeth pulled.

In short, brush your teeth when you wake up and before you go to sleep, floss every evening (this is something that I have to work on) and visit you dentist for a periodic check and cleaning every 6 months.

Mindy