Thursday, June 28, 2007

Beat the Great Depression by Saving Money!

Posted by Janine Bolon

The headlines were blaring at me: ”Savings at the Lowest Rate since Great Depression.” My husband handed me the financial section of our local newspaper as I was finishing up the breakfast dishes last week. “Oh no,” was my reply as I read the truly negative news. It seems we Americans have hit another record and, unfortunately, it isn’t one that I’m very proud of. For the second time in 73 years we are now saving in the negative numbers. 2006 has the dubious honor of a -1% savings rate. Yikes! On the average we are now spending more than we earn as a population. 2005 had us saving at -0.4% rate and what is even worse is there have only been two other years that we have saved so little as a country and those were 1932 and 1933.

During the Great Depression, however, we were saving less due to the loss of jobs. One out of four households had no work and these families were tapping into savings in order to make ends meet. Food and rent were the major reasons for their decreasing balances. For 2006, what are the reasons for the negative numbers? A good economy! Believe it or not. I was stunned to read that the Associated Press article was listing low interest rates were the primary reason for this decline in our savings accounts. It seems at times like these it is more attractive to borrow money to make purchases by refinancing one’s home! The Federal Reserve has driven rates down to the lowest level in more than 40 years so is it a wonder folks are jumping at the ability to get a loan? These lower interest rates have caused a major increase in housing purchases, which has caused an increase in housing prices which has, in turn, increased the number of mortgage refinancing so people can have more money to spend on things. Eeek!

There are problems on the horizon if this sort of spending continues. At some point the money will have to be repaid. Remember that the boomer generation is just starting to retire and pulling money from their savings to compensate for the lack of paychecks. This is adding to the negative numbers we are currently seeing and the number of retirees is going to increase over the next decade.

So, what do you do? I mean, all this negativity about saving and the consequences of excessive spending is enough to make the stoutest heart want to grab the wallet, head to the mall and SPEND! Here is what you do. Make sure that at least 10% of your income is going directly into an IRA, 401k or if you are self-employed, pick one of the solo401k options that allow business owners to invest income in a retirement vehicle. It is important that you don’t give up your future due to the lures of today. If you are unable to save 10% of your income then start looking at what you are buying on a daily basis that can be handled a different way.

We are NOT talking about deprivation here. If you are buying a cup of coffee at your local coffee shop every morning on your way to work, then I suggest you buy a thermos and make your coffee at home and take it to work with you. If you buy a trinket or little “something” every time you checkout at your local food mart then I suggest that you find another way to fill that emotional need. What is important is to ask yourself this question; “Why am I buying this?” It will amaze you how many times the answer is something out of a 3-year-old’s mouth. “Because I want it!” or “Because I’m mad/upset/irritated!” Often, many of my clients tell me that they get so depressed about their credit card bills they go out shopping to feel better! Talk about your vicious cycles, right?

Here are some tips to avoid this sort of trap:

1-Every time you avoid buying a trinket or item at checkout, put that money into a savings account. One of my clients told me that by the end of one week she had $112 in her checking account. Talk about an eye opener. She knew that she had been spending money on stupid stuff, but had no idea it was THAT much in a week!

2-Track all your expenses. Yes, all of them. Buy or make yourself a little notebook that you carry around with you all the time. Every time money or a credit card leaves your wallet, record the expense. Over a month of recording you will start to see patterns in your spending that are impulsive, not satisfying in the long run and destructive to your mental health. Eliminate those expenses or find low cost alternatives so you don’t go into a deprivation/splurge cycle.

3-Track your savings. Keep an eye on your savings account and watch it grow over time. When an emergency occurs or an unplanned expense hits, pull the money from your savings account and put that credit card back into your wallet. If you don’t have the money saved, then it is simple, don’t buy it!

4-Make financial goals. This is the single most powerful exercise anyone can do, but is the most often neglected. By making REALISTIC financial goals you will achieve them. What is necessary in making goals is to have a reason for them. Saying that you want to have $5,000 in a savings account by this year’s end is not enough motivation for me. I have to have a reason for that $5,000. Before I had an IRA in my name, I was totally committed to saving money so I could open it and to make sure I could fund it every year! Why? Because I had a picture in my mind of me old and grey and not able to work anymore, the thought of living with my children or being a burden to them is enough to make me save money for my IRA.

5-Affirm your financial goals. Instead of telling yourself or your loved ones, “Sorry, honey, you can’t have that we don’t have enough money.” Start affirming a positive financial picture. A better way to affirm abundance of money is to state, “I can’t have that, because I spend my money on different things.” This keeps the affirmations out of the negative and starts you to thinking about the purchases that really matter. Then, your not just throwing your money away.

Take a look at your savings account balance as it stands today. Then, make a financial goal that is realistic for how much you want in that account in three months, then six months and then the end of the year. Write these numbers down and then post them conspicuously in your home. You will be amazed how those numbers keep floating around in your head and how they keep your fingers from grabbing your wallet the next time you pass the candy aisle!

Wednesday, June 20, 2007

Clearing Closets & Purging Possessions, posted by Janine Bolon

You may think it odd that I would bring up the subject of Clutter. I mean, what does clutter have to do with your checkbook, anyway? A lot more than you realize. It is the clutter in your closets, drawers and rooms that is keeping you from living the simple life. Yes, it is true! As weird as it may seem the connection does exist between the two, finances and clutter.

Here is the deal. In order for Life to gift you with the resources, money and opportunities that you want, you first have to have room for them. You may be saying to me right now, “Hey, Janine, I’ve got PLENTY of room in my checking account for an extra few thousand dollars right now! Where is it?” As I chuckle at your all too appropriate request, I also know that the problem is not the low balance in your check book; it is the over stuffed closet next to your bedroom.

Americans, Canadians and Britons on average buy more stuff than they have room. The quantity of You-Store-It warehouses is testimony to that! It is a problem of our capitalistic economies. It is very easy for us to “get” stuff. It is easily accessible and for the most part we pay less for “stuff” than most of the world. Because of this cargo and our high standards of living, we have a tendency to really get ourselves over stuffed on “things.”

When you start out to create your financial plan I ask you this question, What do you really want out of life? Once this question has been answered people tell me what amazing transformations occur. They stop impulse buying, their expenses drop almost magically and they realize that many of the shopping habits they had in the past were due to their lack of understanding. They didn’t know what they really wanted in life so they fixed their lives by buying more stuff!

Well, you now have an opportunity to align your home as well as your finances. In order to have space and time to take the opportunities that will come to you as you lower your debt and become more financially stable, you now need to purge your home of its unnecessary stuff! Does this cause you to recoil! Do you suddenly start to hyperventilate and feel yourself hugging your precious stuff in fear that Janine is going to make you give up something priceless? Look closely at yourself and your emotions during this trip of thinning your things. You know you have more stuff in your life than you can possibly use. Why do you hang onto it? Why do you allow it to take up your time, money and energy as you move it, store it and haul it around? It is crazy! Does this stuff love you? Then why do you love it back?

Here is a quick list of things to do over the weekend to get you started on your decluttering campaign.

1) Start Small. Don’t tackle a HUGE project like the garage right off the bat. Do something really easy, like, your wallet or purse. Dump everything out of it onto the table and throw away, put away or file all the little pieces of paper that you’ve been carrying around for weeks. Then decide what REALLY needs to go back into the purse or wallet and return them. Isn’t that wonderful! Don’t you already feel like you’ve lost weight? Don’t you feel lighter on your toes? I mean, you can actually sit down now with your wallet in your back pocket, right? When was the last time that happened?

2) Check Out the Medicine Cabinet. After you’ve finished with your purse or wallet and now have a sense of accomplishment move on to the next item. The bathroom medicine cabinet. This is a small enclosed space that will take you very little time. Even if this is the first time in 5 years that you’ve actually cleaned it out. Take all the items out of the cabinet and decide which ones really belong in there. I mean, do you really want that old razor to continue sitting on shelf #2 leaving a rust mark? Look at all the medicines you have in there. Are the expired? If they are, pitch them in the trash. Don’t let them take up any more space! They’ve served there time in your washroom, throw them out!

3) What's Under the Sink? Dig out all the stuff that is under your sink in your bathroom. This place is usually loaded with 15 bars of travelers soap and itty, bitty bottles of shampoo that have never been used along with mounds and mounds of out dated cleaners, dispensers and soap dishes. I mean, really, do you need that electric blue eye shadow that you used in the 70s? No kidding, I had a client once tell me that she found 5 different bottles of foundation that she never used. Throw it out!

4) Time to Clear the Closet. Whatever you do don't attack the biggest one first. If you haven’t cleaned out the master closet since you moved in, wait on that one. Do the smaller ones first. Get some successes behind you and have the adrenalin rush working for you before you move on. Pull out everything in the closet and lay it out on the floor. You will be amazed at what you find no matter how small the closet is. I continually startle myself with the amount of “stuff” I can pack into small spaces.

I think you have the idea now. You start to declutter your abode by working with manageable tasks and then moving to the bigger ones. When you decide that it is time to get more space in your life start small and work up. Eventually you will be able to take each evening for a week to declutter the garage. It is amazing how fanatical you become as you move from closet to closet. As you find the 6th pair of leather gloves and vacuum parts from an appliance you haven’t owned in 15 years. Have no fear or hesitation. Pitch it in the trash, give it to a thrift store or find a friend who can use it. The main point here is to remove it from your house!

After you’ve taken a weekend to start this process, you may want to then consider moving to different rooms of the house for decluttering. Try attacking the kitchen. Do you need 4 pancake turners, 3 coffee makers (2 by the way are broken) and 6 bread pans when you only use 2 at a time? Figure out what it is you truly need and then make room for it by removing the rest from your home.

I highly recommend that you read a book by
Don Aslett. It is called, Clutter Free! Finally and Forever. By reading Don's books, I have lost my pack rat heritage and I now purge my house once every six months to unload it of all the stuff that has accumulated from the last throw out. It is amazing what finds its way into your home.

How does this work in your favor for cash coming into your life? Well, you now know what it is you want out of life, you have cleared out all the items in your world that don't serve you (husbands and children excepted, just joshing folks!) and now you have space in your life for new opportunities and experiences. I have had client after client tell me that as soon as they decluttered their house (for some it took weeks, others months) they were astonished how a yard sale yielded them hundreds of dollars even though no item was over $2. They had more time in their life for their home-based business because they no longer had to find a path through stuff to reach their computers. I have no idea in what way Life will decide to share with you abundance after you've made space for it. But the one thing I do know is that you will see a change for the better in your life. I wish you good luck and now, pull out that wallet/backpack/purse and start purging it!

Tuesday, June 19, 2007

Setting Reasonable Financial Goals

"Janine, I don't see how you do all the things you do?" I've been asked this so many times over the past 10 years. I really don't have a snappy come back or some magic cure for this question. I usually answer it with something incredibly mundane comment as "I write down my goals." This is not what most people want to hear, but it is the truth.

I am able to get so much done due to some wonderful guys like
Brian Tracy, Zig Ziglar and Earl Nightingale. Back in the 80s when I was working in the corporate world, I had the fun of being able to attend a seminar given by Brain Tracy. I learned of Goal setting and Goal planning during that seminar and I haven't been the same since. I have been able to do more, have more fun and be more productive due to the books and CDs I ordered and implemented from these motivational experts.

Here is an article I wrote when I had a group of students ask me about setting goals and life plans. You'll see elements of the above teachers as well as stuff from
Hyrum Smith and Dr. Covey. I'm not saying any of this stuff is new, but it is amalgamated here after being tried, worked and digested for over 20 years. I hope it helps you in your goal planning.

The major issue most people have with setting goals is that they aim too high, too far and expect WAY too much from themselves all in one lump. Here are a few tips that I’ve learned over the years when it comes to setting goals.

1) Call them targets. Don't call them goals. I learned this in 1989 from Brian Tracy. Brian is a motivational speaker that was a salesman who learned how to make his goals a reality. He became financially independent and started traveling around the country giving seminars on how to create the life you want. He was the guy who first taught me that if you call goals “targets” you’ll win an internal battle every time. With targets you get “points” for getting close! With goals, just like in football, you only get “points” if you make it. You get a goose egg for missing. If you set a “target” for yourself and slip up, that’s not a bad thing because you’ll try again, you didn’t fail. Just by changing the name in my mind from goals to targets, I found myself celebrating every time I took a baby step toward my targets rather than getting all frustrated because I wasn’t moving fast enough toward a goal.

2) Make a hierarchy of targets and all the ways that you can move slowly to your ultimate goal. Let’s take my latest target of “exercise.” I wanted to eventually get to the point of lifting weights and doing aerobics for an hour a day. Well, since I haven’t done anything but walk and light exercise for the last four months, I knew that target was going to take some “building up” on my part. So, I sketched out a plan where I walked on the treadmill for 30 minutes a day for a week, then I added sit ups and push ups the second week while continuing to walk the treadmill. By the third week, I would be ready for some aerobic work…and so on. Instead of going for the big “goal” up front, create a target and then work out the levels of tiny steps to give you a better chance of success.

3) Write your goals down. If you don’t bring these targets out of your head and post them on paper somewhere, they don’t really exist in our 4-dimensional world. It is a requirement that you write or type or paint a picture of your targets and post them where you see them every day! I know this sounds trite and maybe even patronizing. It is not meant to be. I write down my goals all the time. I have a new set for this quarter taped to the wall behind my computer monitor. That way, each time I look up, I see the list. It helps keep me focused and in line with what is important to me.

4) Don’t give up. When you slip up and miss a step (I do this all the time!) Don’t hang up your hat and call it quits! Keep at it. Maybe you tried to move to quick to your target. (This is usually where I mess up.) Step back a bit and take it slower. Maybe you had your steps out of sequence on the way to your target. Reevaluate your targets and steps and see if you’re trying to do too much in too many areas of your life. I suggest that you make no more than three major targets at any one time. I usually only have one or two that I work on at once, but for you type-A personalities, feel free to go as high as three!

Life is not an easy road, but it is made simpler by doing goal setting each week. I have my to-do list for each day, but once a week I look over what I have scheduled to do and then work out a plan on how to achieve what needs to be done. I must tell you. My plan rarely works out. I have to constantly adjust, amend and adapt. The one thing to remember in all this is make sure you keep giving yourself a pat on the back with each step, you’ll eventually find yourself celebrating the fact that you hit the bull’s-eye!

Saturday, June 16, 2007

Angels on the Street Corner: Impulse Giving

Many of you who have read my stuff know that I am WAY big into philanthropy. I focus heavily on this aspect of the flow of money because of the importance this action has to the continued cycle of cash in your life. Recently, I had a request from several of you for an article I wrote regarding the panhandling community. I reprint it here with permission so everyone can enjoy it.

Angels on the Street Corner: Impulse Giving
There is a major aspect to philanthropic giving that is hidden from most people. This aspect is the numerous opportunities for unplanned giving that the Universe will throw at you to see if you are paying attention. I have been giving money away for almost 30 years, and I started my streak as an “impulse giver” when I was 12 years old. What do I mean? Well, the usual pattern for me is that I’ll be walking down a street, and on the corner will be a guy standing with a sign stating that he needs money so that he can get something to eat. It is so habitual for me to take advantage of these impulsive opportunities that I am reaching for my wallet before I have finished reading the sign. Why? Because I know that the Universe is about to send me money or an opportunity to make money, and I need to prime the pump. This panhandler is actually an angel in disguise, and he is begging on that corner not just to help himself but to help ME!

So I walk by the guy and slip a small gift into the bucket – not much, but whatever amount my conscience whispers to me. When I was 12-15 years old my usual donation was 25¢ to $2.00, which was all I could afford at the time. Now, I’m a lot better off and I’ve been known to drop $20-$60 at a time. I always listen to my conscience when selecting the amount. After donating to my “angel,” I will receive within a few days or that same day a phone call with a job opportunity or a check will arrive in the mail or I will be given something that I desperately need for “free.”

Now, you may consider me totally na├»ve for giving in this fashion. You have probably heard plenty of stories about panhandlers who spend their donations on booze, or who beg because they make more that way than they could in an “honest” job. You know my response to that? NOT … MY … PROBLEM! I am not here as anyone’s judge; I am only responsible for giving other people a hand up, in whatever fashion seems best. I give my money to them because that is what I’m supposed to do. What they choose to do with that money once they receive it is so not my issue; it’s theirs. You and I are responsible only for listening to what our conscience tells us to do. So, don’t look at a panhandler with revulsion! See them for what they are, angels in disguise.

The Universe wants to bless you with money, but you must prime the pump first, so dig into your pocket the next time your conscience whispers to you, “Hey, give that guy a fiver!”

Learning from Others’ Mistakes, Read the Blogs!

The blogging world is amazing. You can find someone spouting an opinion on just

about every topic imaginable. Use this fantastic medium to your advantage. I
just found this incredible article on the “Top 100 Most Influential Personal
Finance Bloggers.” If you can’t find someone you identify with on this list, I
would be shocked. They’ve got lifestyles and personalities of all types.

(Oops, it seems the original link I posted in 2007 no longer works, thank you Donna for telling me! The article was pulled off the credit card lowdown site.) Bummer! However, don't let that stop you!!! Here are a few of the bloggers that the twitter community likes to hear from) I checked the link myself as of May 15, 2009, if it drops...let me know and I'll dig up another one for you.

To read the whole list go to:
(Sorry, folks, this article is no longer available!)

I don’t care which system you choose to get out of debt, the point is to pick a
system and then implement it! This article will present you with over 100
individuals that have found their own ways out of debt and into wealth. What an
excellent resource. You see, you’re not alone!!!