Seth Godin on personal finance

I'm a big fan of marketing guru Seth Godin and I've read a number of his books and tried some of his marketing ideas for my side business (www.mystaffarranger.com).

I was catching up with some of my favorite blogs yesterday, and I was pleasantly surprised to see some sound personal financial advice from Seth. Boy, he sure sounds like a Dave Ramsey fan!

Check out Seth's personal finance post here.

Great post, Seth. Hope your a Dave fan! If not, your advice is awesome anyway. It's time for America to wake up and get out of debt as quickly as possible, especially with America's current financial challenges.

Getting Unstuck - follow-up

One of the great benefits of blogging is that it's somewhat therapeutic - blogging is very related to journaling in the sense that you're getting your thoughts down in writing, giving you more clarity on what you need and desire.


A few posts ago, I blogged about feeling stuck personally and financially and the steps I was preparing to take to get unstuck. Here's a brief update on where I'm at:

1. Emotionally and mentally I feel much better than last week. I have accepted that our current situation is just a season of our lives that will pass, probably in 2-3 months. My brain is now focusing on solutions not my family's problems! That's a huge step.
2. I purchased the 4 books I mentioned in that previous post. Already halfway through the 4-Hour Workweek - great book; I highly recommend it.
3. I sat down with my wife and we went over the June budget together. That went well, and I also shared with her my little needs/goals picture chart. So far, so good.
4. One of our big needs is tires for my Jeep. I placed an order for those and they should be installed at the end of the week.
5. My oldest daughter's behavior is improving as a result of 3-4 weeks of counseling, so things are being to look up for the Jones' family.

Just remember, action is the key to getting yourself unstuck. Small goals with identifiable action steps will begin to clear the logjam from your life.

Getting Unstuck - needs and goals

In yesterday's blog post, I mentioned that today I was going to post a listing of our current needs and goals list that we're working on for the remainder of 2008. OK, so here we go!




CURRENT NEEDS

1. New set of tires for my 1995 Jeep Grand Cherokee - approx. $600-700
2. New headliner for my Jeep interior - approx. $200-300
3. I need an eye exam and new glasses - $200-300

GOALS AND WANTS

1. 3-month Emergency Fund: $12,000
2. Dave Ramsey Financial counseling training: $4,000+
3. 10-year wedding anniversary trip: $2,500 (est.)
4. Ball and hitch install on our 1998 Honda Odyssey: approx. $280
5. Used Pop-up Camper $2,000 - 3,500

The current needs that we have should be relatively easy to take care of over the next couple of months. The goals and wants may take us a little longer than I like, but we'll just enjoy the journey as we go through the process!

Getting unstuck - creating forward momentum

In a couple of previous posts, I expressed a few of my current financial frustrations. I have felt "stuck" financially, especially after a devastating tax season, not receiving my stimulus check yet, and unexpected emergency-type expenses. Now that my family is debt free, I feel like I'm having a "wilderness" type experience; a time of testing to see if the Jones family is really committed to being debt free and building wealth over the long haul. I find myself wavering, beating my head against the wall trying to get the financial log jam broken so we can move forward in our family's finances.

I have faith and belief that we will move out of our current financial state soon, but I'm doing some things right now to hopefully get momentum moving along faster. Here's what we're doing:

1. My wife felt that she needed to go back to work part-time to help pay for some of our current unexpected expenses. She started that job about a week and a half ago.
2. Yesterday, I ordered 4 books from Amazon.com that I really want to read some books to help get me "unstuck," mentally. The books I ordered were: The 4-Hour Workweek, Get Unstuck! The Simple Guide to Restart Your Life, Seven Practices of Effective Ministry, and Creating Customer Evangelists: How Loyal Customers Become a Volunteer Sales Force.
3. Over the last 2 days, I have been putting together a picture needs and goals chart; I'm trying to get clear in my mind what our financial priorities are for the remainder of 2008.
4. Since it's the end of the month, I will be working on our June budget. I plan on having my wife work with me on seeing what we can trim out of our budget, and I plan to share with her my needs/goals picture chart. I'd like to post multiple copies of this around the house as reminders to us on what we want to accomplish right now.

Tomorrow, I'll post the list of these picture needs and goals that we will be working toward through the rest of 2008.

Book Review - Thou Shall Prosper (Part 3)

In a previous post, I wrote an brief "overall" review on the book Thou Shall Prosper by Rabbi Daniel Lapin. This book comes highly recommended by both Dave Ramsey and Dan Miller.

In this post, I continue going through each commandment in more detail. Today, we're going to look at The Second Commandment - Extend the Network of Your Connectedness to Many People.


Lapin suggests in this chapter that friendships lead to wealth, rather than the reverse. Here are some of his key points regarding building relationships:

1. Honor the relationship with your parents and learn from them.


2. Health and human companionship do go hand in hand.


3. Try to win friends not in order to influence people for your benefit, but for the sheer joy of forming and maintaining human relationships. This cannot be faked!


4. Find opportunities to make friends - civic clubs, Rotary International, synagogue, church, etc.


5. Forge friendships by creating ongoing obligations. This may seem materialistic, but constantly creating and discharging obligations nurtures and sustains a friendship.


6. Only crowds of people can create wealth - locate yourself in the heart of large populations of people who share your values. Then begin connections.


7. Improving connections enhances wealth creation.


8. Helping others improve their lives helps you improve your own life.


9. Don't be a "wage slave" - be in business for yourself.


10. Be proud of and let people know what you do.


11. Choose your friends and customers carefully.


12. Service doesn't mean servility.


13. Love others, not just yourself.


14. To learn how to serve, learn how to be served.

This book's second commandment could be summarized thus: Make lots of new friends, try to help them, and make sure that they all know how you could help them and that you are eager to do so.

The effect of money challenges on the family

Over the last three years, our family has accomplished amazing goals in the area of personal finances:

1. Sold our house at a good price before the housing dip. This enabled us to pay off almost half of our debt right off the bat!


2. Over the next 18 months, we were able to pay off the remaining debt. We became completely debt free on June 15, 2007!


3. My side business (music arranging/typesetting) had its best year ever in 2007. This enabled us to quickly pay off our remaining debt and start saving a larger emergency fund.


4. Paid a large chunk of taxes in April 2008 - fortunately we were able to cash flow this through our larger emergency fund. This completely cleaned us out, though, financially!

Even though we have accomplished these amazing goals, I have found myself completely and utterly frustrated with our financially situation. I know I should feel blessed and excited about the future, but with inflation occurring in food, gas prices, and the overall rise in the cost of goods and services, our dollars are not stretching as far as they did 2-3 years ago! I feel stuck on moving forward with our financial goals when the money coming in is not going as far as it once did.

OK, so with all of these frustrations weighing on me on a regular basis, little disagreements on spending between my wife and I have been occurring more and more frequently over the last several months. Unfortunately, these disagreements are happening in front of our children.

Over the last two years, my wife and I have seen disturbing behavior problems in our oldest daughter. These behavior problems have escalated to the point that we have sought family counseling to intervene in our situation. I know that I'm personally responsible for my daughter's issues right now, especially in my possibly obsessive compulsive patterns regarding our finances. I believe the more I can relax in these areas of personal finances, I will communicate a more relaxed household.

I'll be working on this area of my life for the next several days, weeks, and months to come!

Book Review - Thou Shall Prosper (Part 2)

In a previous post, I wrote an brief "overall" review on the book Thou Shall Prosper by Rabbi Daniel Lapin. This book comes highly recommended by both Dave Ramsey and Dan Miller.

Now, over the next several weeks, I would like to go through each commandment in more detail, so let's review Lapin's 10 Commandments for making money:

1. The First Commandment - Believe in the dignity and morality of business


2. The Second Commandment - Extend the Network of your connectedness to many people


3. The Third Commandment - Get to know yourself


4. The Fourth Commandment - Do not pursue perfection


5. The Fifth Commandment - Lead consistently and constantly


6. The Sixth Commandment - Constantly change the changeable, while steadfastly clinging to the unchangeable


7. The Seventh Commandment - Learn to foretell the future


8. The Eighth Commandment - Know your money


9. The Ninth Commandment - Act rich: give away 10 percent of your after-tax income


10. The Tenth Commandment - Never retire

OK, so here's some more detail on The First Commandment - Believe in the dignity and morality of business.

Lapin suggests in this chapter that making money is more difficult to do if, deep down, you suspect making money to be a morally reprehensible activity. Jewish tradition views profit and wealth creation as a moral activity if, of course, your occupation is a moral one to begin with!

Step one in increasing your finances is to begin mentally and spiritually accepting these two beliefs:

1. you are in business


2. the occupation of business is moral, noble, and worthy

Lapin asserts that if you feel really good about your profession, that you bring others along with you because of your enthusiasm. Making more money changes you as a person. You become a slightly different person, and people notice this change.

This could be expressed in a mathematical equation:

Old you + More money = New you,

or to put the equation a different way:

More money = New you - Old you

In order to acquire more money, you need to work on far more than merely learning new skills. You need to work on changing yourself and belief system.

Society teaches today that if you own a business and are earning an incredible amount of money, you must be cheating or stealing from others. Lapin totally rejects this notion. Are there bad, corrupt business out there? Sure, there are a few bad apples, but the majority of businesses are providing valuable goods and services to people and their communities.

In our business and occupations, we all must believe that we are providing valuable goods and services to others. This is a morally excellent way of life!

Getting your financial life organized

Over the last several months, I've been spending a little time each week trying to get my family's financial life organized.

Now that we're completely debt free and now focused on trying to "win" with our money, I want to double back and be sure that my family is now on a solid, financial foundation as we move forward.

Here's some of the activities I've been involved in over the last several months to shore up our foundation:

1. purchased a medium-size fireproof safe to have a safe, secure place to put all the important legal documents I would be putting together for a strong financial foundation.
2. purchased will and other legal documents online; my wife and I filled these out and had them officially signed and notarized.
3. purchased more disability and life insurance to protect my family if I should become injured or pass away unexpectedly.
4. secured copies of my wife's and my birth certificates.
5. secured copies of our marriage license.
6. secured miscellaneous additional legal documents important to the family.

What I have remaining to complete in this area:

1. secure my daughter's gift certificates
2. purchase a portable hard drive to store important documents, files, photos, and store this in our safe.
3. be sure all my paper legal documents (will, listing of assets, etc.) is completely clear and complete
4. write down instructions to my wife or family members so they know exactly where to go and what to do in case of my death or both of our deaths.
5. put together my personal notes, journals, and instructions to access my 2 personal blogs for "posterity" purposes to my family.
6. put together any and all recordings I have ever created with my playing trumpet, conducting, and music arranging for "posterity' purposes for my family
7. put together any original music and arrangements I have ever written for "posterity" purposes.

As you can see, this will probably be a continual, ongoing projects for my family!

Larry

Book Review - Thou Shall Prosper (Part 1)

Over the last several weeks, I've been reading the book Thou Shall Prosper by Rabbi Daniel Lapin. This book comes highly recommended by both Dave Ramsey and Dan Miller.

I'll say this from the beginning, this is a deep book and not an easy read (it was written by a Rabbi!), but I'm so glad I persevered and made it all the way through. The last 2 chapters were the best of the entire book.

For today's post, I'm just going to give a quick overview of what the book is about.

Introduction: This book is essentially a Jewish outlook on making money and creating wealth.

Lapin contends that God's chosen people have long been known to be excellent business people and good money managers, due to certain fundamental principles detailing how the world works being deeply ingrained in the Jewish people since the time of Abraham. These certain fundamental principles all come from the Bible and Jewish oral tradition.

The essential "framework" in which Lapin constructs his book is his Ten Commandments for making money.

1. The First Commandment - Believe in the dignity and morality of business
2. The Second Commandment - Extend the Network of your connectedness to many people
3. The Third Commandment - Get to know yourself
4. The Fourth Commandment - Do not pursue perfection
5. The Fifth Commandment - Lead consistently and constantly
6. The Sixth Commandment - Constantly change the changeable, while steadfastly clinging to the unchangeable
7. The Seventh Commandment - Learn to foretell the future
8. The Eighth Commandment - Know your money
9. The Ninth Commandment - Act rich: give away 10 percent of your after-tax income
10. The Tenth Commandment - Never retire

I'll post more on this book over the next couple of weeks.

Larry

Sunday morning Advance article - early preview

To all my FPU class members:

Bro. Paul has blessed me this week by allowing me to write "his" column in the Advance for this Sunday. How cool is that! The article's focus (of course) is on personal finances and promotion of the Dave Ramsey Live event on May 3.

I thought I would give you all a preview of the article before Sunday morning. Check it out.


Larry's Advance article for March 30, 2008:

Money is an excellent servant, but a horrible master.

In Romans 12:2 we read, "And do not be conformed to this world, but be transformed by the renewing of your mind…" I'm afraid that many Christians today, have been conformed to the world's image when it comes to money. Approximately 70% of American families live paycheck to paycheck, and the average typical household debt totals more than $38,000. We have too much month at the end of our money!

It may surprise you to learn just how much the Bible says about finances. There are more than 2,350 verses on how to handle money and possessions, and our Lord said more about money than almost any other subject. He knows how important it is to be in control of our money, instead of it controlling us.

Over the last three years, my family and I have undergone a total money makeover, living on less than we make and aggressively paying off all of our debt, while still continuing to give above the tithe to our church. God has done an amazing work in our lives, and we invite you to join us on the journey of Financial Peace.

Our financial counselor through this process has been best selling author and nationally syndicated radio talk show host, Dave Ramsey. Dave makes financial talk simple, giving you a step by step plan to get out of debt and then save, invest, and give like never before.

Dave will be in Kansas City for his Total Money Makeover Live Event on Saturday, May 3 at Kemper Arena. Our church has been given a special discount rate of $23 per ticket, and I invite you to sign-up through the church and attend this life changing event. Once the live event is over, we will be offering additional Financial Peace University classes.

For more information on this event, please see the article in this week's Advance, or stop by the table in the main lobby after the service.

Larry Jones
Associate Worship Pastor

Tax Rebate - I misunderstood the news!

OK, I've dug a little deeper into this stimulus package rebate, and here's what the IRS is saying:

How much will you get? The actual amount depends on the information contained on your tax return. Eligible individuals will receive between $300 and $600. Those who are eligible and file a joint return will receive a total of between $600 and $1,200. Those with children will get an additional $300 for each qualifying child. To qualify, a child must be eligible under the Child Tax Credit and have a valid Social Security number.



So, for a family of 4, the rebate could be up to $1,800 with the addition of $300.00 per child if you qualify. I stand corrected. The Kiplinger's Tax Rebate Calculator was right when I plugged in our numbers a few weeks ago.

Larry

The Light Bulb Finally Came on

At least once or twice a week, I try to scan as many financial blogs as I can stay current with what's happening out in the personal finance world. In the "Stupid Tax" section of Dave Ramsey's site, I ran across this little gem about bank programs that are supposedly designed to help you, but in reality are another way for the banks to nickel and dime us so that they get rich.

If we just pay attention and become better managers of our finances, we won't encounter the type of problem that Sharon got herself into. Enjoy the article.

You can also view the original article here.


The Lightbulb Finally Came On

By Sharon in Houston

A few years ago my credit union created an overdraft fund of $500 to cover me. Seemed like a great deal.

In less than a year, I was hooked and used it every payday. I paid $29 each time and soon became "clever" enough to make sure I only incurred one $29 charge every payday. Rarely did I not use the $500 overdraft feature.

One day a lightbulb came on in my head: "Wait a minute. I'm paying the bank to play with the same $500 over and over and over." I added it up. The bank's generous initial investment was $500. I used this feature at least 24 times a year, so it cost me $696. Plus, if I had to guesstimate all the other times I incurred the fee (about 20), that part adds up to $580. So, to play with the same $500 month after month, year after year, cost me about $1,300!

For 2008, I broke free of this crazy program. I did it! I gave the bank their $500 back, and the service was removed from my account. No more going up to the $500 mark and taking the chance of going over, thereby incurring more than one $29 fee. No more running to the bank to get that last $500 and having to pay everything else with cash. No more paying the bank $1,300 a year for the "privilege."

My STUPID TAX for the past 3 years is at an end. Blessed be.

Tax Rebate Calculator - correction

Over the weekend, I was reading an e-newsletter from U.S. Legal Forms, and in the newsletter they mention something about a $600 per person cap on the Tax Rebate. For a married couple filing jointly, they said your maximum rebate would be $1, 200.00.


So, I think there's possibly a problem with the Kiplinger on-line tax rebate calculator. Instead of my family receiving $1,800, it looks like we may only be getting back $1,200.


If I uncover any more significant information on the tax rebate, I'll keep you posted.


Larry

Tax Rebate Calculator

Over the last several weeks in the media, there have been many questions surrounding the specifics on the tax rebate that President Bush and Congress have put together.

To be honest with you, I have paid moderate attention to the discussion, but I have somewhat assumed that my rebate was not going to be very substantial.

Then, I ran across this nifty little tax rebate calculator at Kiplinger.com. After I ran my numbers and specific information through it, I was pleasantly surprised to find out that I should be receiving approximately $1,800 (probably $900 each for both my wife and myself).

Now, I'm not holding my breath that I'm going to get that exact amount, but whatever amount we do receive will most likely be higher than I ever anticipated.

When we do receive our money back from the government (yes, it's my family's money, not the government's money!), I plan on using it to continue funding our large ER fund - Baby Step 3 on the Dave Ramsey plan.

Hey, You. Get a Second Job! (part 3)

In two previous posts, I discussed the issues surrounding my music arranging business as a second income stream. As the business grew and expanded, the income generation went up to help my family get out of debt faster.


One thing I forgot to mention in this discussion of additional income streams is that my wife also got a part-time job for a period of time (approx. 6 months) to help us get out of debt even faster. When my wife had our first child over 7 years ago, she stopped working outside the home, but when both our daughters were in the same school last year, she had blocks of time in her schedule when she could work a part-time job. My wife probably averaged $350-$400/month of income during this time, but hey, I'll take it to get out of debt even faster! So with my wife working, we had three income streams for a period of time to accelerate our debt reduction.

When you finally get gazelle intense (as Dave Ramsey would say) about getting out of debt, you need to have a serious game plan about generating additional income streams to get out of debt as quickly as possible. The longer you put it off or the longer it takes you, the less likely it's going to happen.

As Larry the Cable Guy says, "Get 'er done!"

What I'm reading right now - Automatic Millionaire (part 2)

Today, I'm continuing with more excerpts from The Automatic Millionaire.

On page 33-35, I really liked what David says in the following excerpts:

Are You Earning More...And Saving Less?

Over the years, I've watched people I love increase their earnings but often not their freedom. I've got one friend who's worked extremely hard and seen his income go from $50,000 a year to more than $500,000. But while his lifestyle has increased along with his income, his savings haven't...He's succeeding at a level that most Americans can only dream about, but in reality he's caught up in the same rat race as a person who earns a fraction of his salary.

What about you? Chances are that you're earning more than you were ten years ago. But are you saving more? Are you getting ahead or running harder just to stay even. Is your income helping you become more free or less free?

Why Most Americans Have So Little Saved

Aside from the equity they may have in their homes, most Americans really don't have any savings to speak of. On average, most of us have less than three months' worth of expenses in the bank.

Why so little? The answer is simple...most of us waste a lot of what we earn on "small things." I put quotation marks around "small things" because the phrase is misleading. The so-called small things on which we waste money every day can add up in a hurry to life-changing amounts that ultimately can cost us our freedom.

I Owe, I Owe...It's Off To Work I Go

It doesn't have to be this way. Most of us don't really think about how we spend our money - and if we do, we often focus solely on the big-ticket items while ignoring the small daily expenses that drain away our cash. We don't think about how many hours we had to work to earn the money that we so casually spend on this or that "small thing." Even worse, we don't realize how much wealth we might have if, instead of wasting our income, we invested just a little of it.

Dave Ramsey Intro Video

I was poking around YouTube today, and I ran across this video of Dave Ramsey. This is a really good introduction or synopsis of the Dave Ramsey plan. I hope you enjoy it.

Larry

Hey, You. Get a Second Job! (part 2)

Today, I continue with my story about my business as a second job.

Even though my music arranging business ended up as a second stream of income, I really did everything backwards.

This was the process I originally went through 5-6 years ago:

1. Had a little bit of debt.
2. Came up with a "great" business idea.
3. Started my business and realized I didn't have enough money to get it up and running in a "big," professional manner.
4. Refinanced our home to get more money out of our house. Went through $2,000-$3,000 rather quickly!
5. Took out a $25,000 personal loan to "pay off" 2 small car loans, a couple of credit cards, and used remaining money (approx. $4,000-$5,000) to attempt to grow my business. My big concern at the time was figuring out a way to lower my payments down to a "manageable" amount and still get some money out to grow the business.
6. After spending all of this money, the business was painfully slow in growing. Many months, I was funding business expenses through my regular income.
7. After many stressful months of this plan not working, my wife and I sold our house, used our equity to pay off half of the debt, and then the next 18 months to pay off the remaining $12,000.

This would have been a Smarter Financial course of action:

1. Had a little bit of debt.
2. Came up with a "great" business idea.
3. Started my business and realized I didn't have enough money to get it up and running in a "big," professional manner.
4. Decided to grow the business more slowly. Educated myself on growing a business through books, mentors, etc.
5. Went out and got a second job with a steady monthly part-time income.
6. Paid off our current debts as quickly as possible.
7. Once the debts were paid, we saved enough money to cash flow my business start-up in a smarter way. The business started to grow; attracted more clients; quit my initial part-time job.
8. We didn't have to sell our house! We still have equity in a home!

Even though hindsight is 20/20 and I wish I had done things the smarter way, I have no regrets in how things turned out. I feel like I learned a lot over the past 3-5 years. I learned my lesson the hard way, and I'll never do "stupid" again when it comes to home purchases, debt, and starting a business.

Larry

Hey, You. Get a Second Job!

Here's a two-step, fool proof way to get out of debt really quickly:

1. Control your spending, by getting on a tight, no frills budget.
2. Go out and get yourself a part time job in order to clean up your mess!

Here's my own lengthy version of my 2nd job story.

Part of the reason my wife and I got into so much debt 4-5 years ago was that I came up with a "brilliant" idea for a business that I could build by leveraging myself with a whole bunch of debt, thinking I could grow myself out of the debt really quickly (kind of sounds like the government!).

You can see my music arranging and typesetting business site at www.mystaffarranger.com.

Anyway, This was a really STUPID mistake, and I don't think the Lord honored and blessed the business (at first) because I was being a horrible steward of His money. When we started doing right things with money (i.e. getting on a tight budget and paying down our debt), the Lord blessed us and I started picking up more and more clients. I started being more and more selective about how much money I was spending on advertising and where I was spending that money.

To make a long story shorter, my business expenses came down and my revenues went up! Any profit that I was making with MyStaffArranger.com went directly toward debt reduction and taxes. I was able to use my part-time business as a "2nd job" to generate additional income and get out of debt faster.

Tomorrow, I'll complete my thoughts about the 2nd part-time job and debt reduction.

Larry

Give me my points and miles!

Over the weekend, I went to a couple of social events where people know that I'm coordinating our church's Financial Peace University class. Inevitably, we end up discussing topics revolving around finances.

One topic that comes up regularly is purchasing items using a credit card in order to gain points or airline miles. For me, using a credit card to get airline miles is not a big concern because my family and I fly once or twice a year. I can't justify using credit cards to get cheaper flights for a couple of reasons:

1. It's a well known fact that if you pay for items using a credit card, you end up paying 18-20% more than if you were to pay purchases with cash. The full amount of the purchase doesn't register with us when we pay with plastic. There's more "pain" when we pay with cash; we feel it more.
2. You put yourself in a dangerous position by trying to "beat the system" with credit card companies. These ruthless companies are known for charging late fees (even if you weren't technically late with a payment) and changing interest rates on their customers. I think people are just playing with fire if they decide to use them, even if you are faithful in paying the balance each month.

It seems to me a better course of action would be to get on a solid budget, use a cash envelope system for purchases, and plan and save for future trips. In the end, I'm betting that you would save more money with this approach than using credit cards to gain airline miles.

Larry