Monday, August 10, 2009

Sage on Finances

I was going to give Sage an introduction, but it looks like he covered that as well! :) So read on.

Hello all, this is my first post here so be gentle. I am Southern Sage. If you want to know about me you can do that on my 100 things.
I also post every day in Sageville NSFW on Sundays, politics on Tuesdays and Saturdays.
Independent Thinkers Lounge, Post on Tuesday and Saturday and sometimes in between, politics and current events only.
And Hotdads with other guys.

Well I have been following y'all here with money struggles. I saw Youngblood post about making ends meet and Shelle a little bit tongue and cheek about her fella and her discussing sweetly I'm sure her guys buying being big things and hers being small things. Some posts on the topic as well as one from another blog.

HERE

HERE

HERE

HERE

I know some of you would be what folks would classify as religious, here is some biblical reference.

Luke 16:11

Proverbs 13:22

Proverbs 22:7

(ok those of you who don't know me, I will run a rabbit in my posts, like this!)

~~ 22:7 is the main reason I hate debt. Y'all that know me know I don't usually walk the line or follow or do what everyone else does. I do my thing, stay out of my way and I'll stay out of yours and we'll be good. The borrower is servant to the lender.....
Why in the name of all things good would someone choose this? Most things, hell everything other than your house can be purchased without being the banks or the credit card companies servant. I'd be lying if I said that this verse turned a light on for me and thats why I see it the way I do, it's just always how I have rolled. Think about that. Why would you intentionally be a servant to anyone? Why put yourself into slavery? Would you intentionally lock yourself in jail?~~

Onward

It seems to me that in my marriage, even with a contact :-) most of the arguments we have ever had were because of three things. Money, child rearing technique and insurance (I know that prolly ain't on the top 10 reasons list but I hate it second only to taxes so I b*tch about it!). Especially in these times with the economy down and the huge strain of uncertainty of what this run-away government is doing, right now is by far the worst financial time of my life for the average family. As you will see if you read this entire saga here it is my belief that the main problem with couples and finances is they don't talk about it BEFORE there is a problem and they don't make and follow a plan (budget) when they do discuss it.

Now I am no financial genius but I thought I'd post on the topic anyway. The problem is that people don't really WANT to be out of debt, or financially secure. It is EXACTLY the same as weight loss. When one finally decides they don't WANT to be over weight anymore or they NEED to lose weight for quality of life reasons then they will do what needs to be done to accomplish their goals. Most people just keep on keeping on though and 1-2-3 years from now will be sitting in the same place they are right now. I submit to you that if you DECIDE to get right with your money then in 1 year you will be in a much much better place. There are many reasons people aren't where they want to be financially. One thing that happens to folks is they get poor advice from people and they have poor role models (Like Youngbloods parents). The terrible foundation young people get in the form of advice is detrimental to them and has long term negative effects. It seems the advice every young person gets is "You have to build your credit" (Insert GONGGGGG sound here) WRONG! You do not need credit, if you want to build something then build your assets. Build your savings. Build your investments. Build your income. It is never to late though. The number one thing everyone should be trying to do is to get out of debt. Debt is what will kill you. They have never repossessed or foreclosed on ANYTHING that was paid for. This is the same as losing weight. You didn't gain it all in one day and you can't lose it all in one day. You didn't get this far in debt in one day and without some windfall you ain't gonna get out in one day either. There is one thing you can do today though, you can decide to never go into debt again. The only way to climb to the top of a mountain is one small step at a time. Do you want to be debt free? Do you want to be more secure financially? Well here is my take on these things. The VERY VERY VERY first thing you (you right there reading this) need to do is have a written budget every single month of the rest of your life. If you have a spouse then you need to turn off the idiot box, shut down your communicators turn off the internet and give the kids benedryl something to do. ----->This WILL NOT work if it is a one sided effort. People (me included) think that they can outearn their spending or they will skimp on something else to make their spending work out. It is my thought that if your spouse is not on board with a budget/plan then the problems in your relationship are worse than just financal.

If you read the Marriage Contract then you know I believe a marriage is NO DIFFERENT than any business agreement, and if it is seen as a business agreement then it will work better. Would you be in a business with a partner and no budget? No plan? Get your trapper keepers out and do it. I even looked up and linked an example of a budget HERE

Write down all of your bills. Most bills are exactly the same every month, most pay checks are the same every period also. Lights and bills that fluctuate some can be approximated.

Mortgage/rent
food
electric
(those 3 are to be paid first)
transportation
and on and on and on until you list EVERYTHING you pay every month.

Then write down your income. Most folks have a set income. They make X amount a week/month whatever. Then you apply that money BEFORE you make it. You work hard for that money don't let it run you, you have to run it. You tell it what to do. You will actually be surprised at how much money you SHOULD have over and above what it takes to pay your bills.

This is a good start. This MUST be done. You won't do it though, its too elementary for you. You can handle it without a silly written budget. When you have had enough though hit back on this post and then do the budget. If you will get pissed off and do it it will work for you. Microsoft has a written budget, Chevron has a written budget, it seems profitable successful companies have one, the US government though evidently does not have a written budget.

Adopt this creed:
If it isn't written down and budgeted then I don't spent it, ever.

In Shelle's situation they should put a personal allowance for each of them on the budget. Then if MSM wants to save his allowance for 10 years and buy a yacht then so be it, if Shelle wants to buy lipstick every week with her allowance and never save any then so be it.

A few things smart people do that are stupid.

*Finance a brand new vehicle.
*Buy outright a brand new vehicle
*Loan money.
*Own credit cards.
*Borrow money.

Why is it you think they make getting a credit card so easy?
Why will they finance almost anyone for a car?
Why is it easy to borrow money?

Some easy tips.

1. Take only the money budgeted to spend to the store for groceries, clothes, school supplies, etc. This keeps impulse purchases down. Take CASH, yes stores still accept this form of payment. This makes you VERY aware of exactly what items cost.
2. Start today cutting expenses. This year since everything was so strained I decided to do at home what I always attempt to do in business, cut expenses 10%. I cut the cable/satellite bill down to basics. Stopped caller ID and voice mail and bought a $20.00 answering machine with a tape in it, cut cell phone minutes in half. Turned off the light on the pole in the yard ($20.00/month) , incessantly turn off house lights, etc.

3. See your purchases is hours worked and not in money, and NEVER consider the payments, if you have to make payments then you can't afford it. If you make say $10.00/hr (for easy math purposes) and the new item you want is $250.00 that is 25 hours of work. If you were not going to get a paycheck for working 25 hours but instead they were going to give you that item would you think differently about it?


4. Can you imagine how much money you would save per year if you (and your spouse)took your lunch to work everyday?

See the reason people have to get fed up is because EVERYONE else lives differently than this post suggests and the peer pressure to have items, to "do" lunch, to have an equal vehicle to have nice clothes etc is stronger than most peoples desire to be debt free and financially secure. It is a choice people.

You choose.

Do the budget then once you get that done we can get you out of debt!! I'll splain more about how to do that once we get the budget done, if anyone cares to read it anyway.

Then we have to save and invest which I will also opine on if you would like.

I'll also give my take on most anything if anyone so desires so say it and I'll post on it.

Thanks ladies for letting me play with y'all!

Discuss.

14 comments:

Shelle-BlokThoughts said...

You mean I have to TALK to him... about MONEY??? And I have to KNOW how much I'm spending and where it's going?

My guy better not read this... what if he actually wants to DO it!

LOL... no I kid. Seriously good post Sage... my guy and I honestly need to do this it would be such a help!

Southern Sage said...

You should make him read it! You have the right collateral to cause change in your house!!!
;-)

Southern Sage said...

It'll work if folks try it though, most folks won't until they hit the bottom though, that is what it usually takes to change peoples behavior. I will promise they will be better off financially as well as in their relationship.

Shelle-BlokThoughts said...

I don't doubt that it will help a relationship...cause if u both know what's happening with ur money...know how and where its being spent then what do u have to argue about?

Its applying it and having something like patience to see it through...

I think it would be nice to have our own slush money to spent however we please... That would solve a lot... My mind knows that...its applying it!

ZenMom said...

I think these are very good and practical opinions and suggestions!

Unsecured personal debt (as opposed to real property debt, which I don't have a problem with in general) is a huge issue. If we could all live within our means as individuals, I think our country might stand a better chance of doing the same.

OMG, I'm agreeing with Sage. I think I need to lay down a minute.

Southern Sage said...

Ok Zen take some deeeeeeeep breaths!! It isn't as scary as it seems when crossing over from the dark side!

Real property debt I don't hate but only if it right. I mean to owe more on something than it is worth is stoooooooooooopid, regardless of what it is. So I can somewhat agree. My take though is if you can make payments on any of it then you can save it and pay for it. I do have a mortgage, and actually it is one smart debt that I have because I had the money to pay for it when it was built but at the time 07 some big political changes were going on and I knew the economy was going to falter so I held back. Had I not I'd realllllly be struggling right now.

Homer and Queen said...

SAGE!!!! Seriously?!! Nordstrom is not free you know!!!

Shelle-BlokThoughts said...

Zen--dont let Sage fool u... It is just as scary as u think it is... I still have my brown bag that I'm breathing into... Who would have thunk he had this him.... No seriously... Who knew?

Queen-hahahahahahahaha OMGOSH that is so true. Maybe we invest in Nordstrom? :)

ZenMom said...

*breathing*

I actually have two mortgages - the house we live in and the house we rent out to others. The second one pays for itself, so that's a null-debt. I think we made a smart purchase on the first - it's still worth more now that what we paid for it, even with the floundering economy.

But I do know so many people who purchased a house in the boom market and, frankly, overpaid, overextended, and are now in over their heads. It's heartbreaking, really.

And, I have to confess, that I am one of those with more credit card debt than I am comfortable with currently.

But, just as Sage advises here, we have put ourselves on a diet to battle the financial bulge and it's working - slowly.

We have a monthly budget and we've trimmed (almost) out all the "extras". (Caveat: I do believe that one should budget for "fun" things, too!)

The one difficulty that we've run into personally is "emergency" money. Every now and then something unexpected comes up - medical expenses, home repairs, family emergencies, etc - that requires a ready flow of cash. Things like that have put us in a two-steps-forward-one-step-back position more than once in recent months. Which is where some of that credit card debt has come from.

So, in addition to our other monthly budget items - which includes putting money into our savings and retirement funds and the kids' college funds, I'm trying to squeeze in a budget allocation for an "emergency fund", too so that we don't get caught in a situation where we have to dip into savings or accrue more debt for those inevitable unexpected items.

Southern Sage said...

I'd be better equipped to contribute if I knew WTFantastic four Nordstrom was?!

Southern Sage said...

Zen, If the comments warranted it I was going to follow with the get out of debt plan. If you can't get your spouse to budget you can't get out of debt either in most cases. So I figured I'd go with this first.

Emergency tactics:
Since there is always an emergency, actual or implied, you SHOULD have an emergency allotment, but not as part of your budget. You should stop any over pays you are doing and put that in a SEPARATE SAVINGS account for emergencies. So if you are over paying on some of your bills then go back to the minimum and put the additional into the emergency fund. When you get to an amount you deem sufficient then you can go back to attacking the debt with additional payments. If there was no extra I would find some additional income to build the emergency savings outside of my budgeted funds.

I'm talking like 1-2 grrrr, not a years salary.

Homer and Queen said...

Sage...it is only the BEST dept store...ever!!!

Homer and Queen said...

Really...I suck a budgeting...I single handedly put us in terrible debt and after 20 yrs. of marriage, hubby finally took all cc's away from me and left me with only a debt card. 6 yrs later... we are out of the red and he really monitors my spending. I deserve it, I know.

I am getting better though. We are getting ever closer to retirement!

ZenMom said...

In that case, can't wait to read more on the subject from you in the future, Sage. :)

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