Paying down debt

Hi John!
Hope the weather in Georgia isn’t as nutty as it has been in NY.
After several weeks of bright sunny weather with an average of 75 degrees, we had pea sized snowballs come down from the sky. Yesterday we went from snow flurries to bright sunshine on and off all day. Boy Mother nature can throw us some curve balls sometimes! I’m not complaining, but do find the humor in it all!
Wanted to give you a few updates on some progress I have made since our last meeting.
First off, I had an LOC (Line of Credit)  with the bank I have my checking account with, which was used as my overdraft protection. They changed the terms and went from 8% to 18% and a 3$ charge for each transaction.
That account is now paid off and closed and has been replaced with a savings account of which I set up with the minimum required, $250.00. With this account I can make up to 6 transactions in a month and not be charged any fees.
It will just be there if needed but only because of my PAST bad habits of overdrawing on my account.

Secondly, I paid off my Carecredit card, the one I used for my medical expenses, which was a zero percent interest, provided it was paid off within a 6 month period. I also managed to pay my Father some money I owed him, but will still be carrying a bit of a balance for a while…
Soon I should be able to pay off some medical bills, which are on a budget plan, but we’ll have to talk about that because I’ll need some of your expert advice as to where to apply the money I had been paying on some of these accounts I mentioned above.
Tomorrow I’ll be getting two deposits and will be funding envelopes on Thursday.

So there is an update. Baby steps but with that comes encouragement, because had I not signed up for this Coaching who knows how much more debt I could have racked up!
Hats off to you, and the accountability you offer in this process! Have a great week, and I look forward to meeting with you Monday!
Lorie Jo

Children and delayed gratification

How delayed gratification can help your little ones succeed in life

I’m a mom of two young boys. Joshua is six and loves playing by the rules. He does not handle change very well. His shoelaces always have to be tied evenly (and I mean to the inch!) and he does fairly well with delaying gratification and with being patient. Daniel, age 4, is our “creative” type. I’m sure many of you moms are already smiling inside. Rules are always meant to be broken, change is where he thrives, his imagination is always at work, and patience is his Achilles’ heel.

So, when it came time for my husband and me to start training our boys in sound “financial doctrine,” I started doing some research on how to handle such different personalities while helping instill in them solid financial wisdom.

While doing my research I stumbled upon on a test performed in the 1960s by Stanford University. It was a very simple test and consisted of one marshmallow and one four-year-old, placed together in a quiet room.

The test administrator would hand one fluffy marshmallow to the child saying: “Susie (or Johnny), you can eat this marshmallow now, or you can wait till I come back, and if you still have not eaten your marshmallow, I’ll give you another one.” Easy!  Eat one NOW or wait and get two LATER! Parents of each of the 600 plus children who were tested watched in anticipation, wondering what choice their darling would make.

As you would imagine, most children devoured their marshmallows almost immediately (within 30 seconds – 3 minutes). Only 30% of those tested had enough will power to wait.

What I found most fascinating about the Stanford University test is not that most of the four-year-olds ate their marshmallows. It’s what happened to each of those two groups of children later in life.

Stanford followed each of the tested children into adulthood to see how their decision to delay gratification would impact them later in life. The results were stunning. Those who were in the 30% - able to wait – preformed much better academically. They were also able to relate better to their peers, had higher capacity to plan and think ahead, and were more effective at coping with problems.

As an adult who has been applying solid financial principles for many years, I fully understand the benefits of waiting. My husband and I are enjoying the rewards of applying “pay now, play later” advice we received from our pastor long ago. But how can I teach my little guys to follow these principles if they are not naturally “wired” that way, especially my creative one?

I finally came to a simple conclusion that actually had everything to do with my husband and me and very little with how our boys are wired.

Our children observe us constantly. They behave the way we behave and not necessarily the way we “tell” them to behave. They watch how we spend, they watch how we give and they hear our arguments over money. It’s unreasonable to expect our young ones to learn anything we ourselves are not living out through our daily choices. So, changes had to start with us first.

Here are four practical ways you can help your children mature into wise and financially responsible adults. As you’ll see, these are also things you need to practice!

·      First things first. Generosity is one of the best ways to gain a proper and balanced attitude towards money. Honoring God with first fruits, not just as a habit, but also as a way of showing gratitude, will help your children understand that all things come from God. So every time they earn an allowance teach them to set aside a portion for the Lord. Maybe there is a special project in your church they would enjoy giving to, or a family in need?

·      Let them earn it. Teaching children, even as young as four to six years old, to work for their allowance is a great way to teach them a good work ethic and to have an appreciation for the money they’ve earned. Access to “easy money” may prevent them from learning this valuable lesson. We chose to teach our boys that certain responsibilities like cleaning their room, making their beds and clearing dishes from the table after dinner are just part daily life. If they want to earn money there are specific jobs outside of the regular “life routine” they can do. Create your own “job” list, name the price for each job and let them enjoy earning the money.

·      Teach them to save. This is your opportunity to help them learn delayed gratification. Label three jars as Give, Save, Spend. Every time allowance is earned or birthday money is received, teach them to save a portion of that income. Savings can be used to purchase bigger items they really want but require a much larger sum of money. It can also be used for teaching investment principles.

·      Let them decide. This is a hard one—allowing your children to make decisions with their earned money. This is only half the battle. You must also allow them to experience the consequences of bad financial decisions. No bailouts allowed! If your child wants to spend their money on a silly toy just because they have to have something now, let them, but also teach them that the toy they really wanted can’t be bought until they save for it. This is the only way to help them understand that in life we make choices, and those choices have real consequences.

Self-control is a daily battle, but it can be won, if you are consistent. The key is to recognize early on your child’s natural tendencies. Do the “marshmallow” test with your children at home. Use the results to train up “two marshmallow” kids who in turn will become “two marshmallow” adults. Imagine how different our nation would look today if all of us lived out the principle of delayed gratification.

You met and sparks flew. You couldn’t imagine your life without him (or her). You had so much in common. You loved the same movies, same music; you finished each other’s sentences. Before you knew it, you had your future children’s names picked out and you were planning for the BIG day. Life couldn’t get any better!

Then “money” happened.

According to a poll by USA TODAY, nearly two-thirds of married couples talk little or nothing about money before they say, “I do.” The majority decide to join their lives without talking about joining their bank accounts. While agreeing on a place to live, how many children to have, and what the children’s names will be, most have no plans on how to spend, save and give their money.

Another statistic from the USA TODAY/CNN/Gallup Poll states that spending too much and saving too little is the most common issue that causes strife among married couples.

Since we know that family and strong marriages are the fabric of our society, what can we do to preserve them?

Here are few practical steps every couple (married or engaged) can take to protect and strengthen their relationship, while implementing sound financial habits.  Taking these few simple steps can save much heartache and bring more peace, not only to the couple but also to the entire family.

1. Straight money talk

Money has been a taboo subject among couples for way too long. It’s time to break the silence and start talking.  Set aside one night a month for your “money talk.” Do it over coffee and desert, or after your children go to bed so there are no interruptions.  Be honest with each other and listen. Use that time to discuss problem areas and possible solutions.  Don’t waste it on playing the blame game.

2. Wisdom in the multitude of counselors

Admitting financial problems is never easy. However, finding a trusted and objective source of counsel is often critical for couples who simply can’t figure it out on their own. Do you know a couple that’s making the right financial decisions? Befriend them. Ask them questions. Learn from their experience. If they can do it, so can you! If you are further along on your financial journey, look for a sound financial advisor who shares your values and will be able to guide you as you look ahead to retirement, saving for kids’ college education, investing, etc.

3. Spender or Saver – which one are you?

Learning each other’s money personalities is key to helping you succeed financially. Most likely one of you is a spender while the other one has a tendency to save. Forget the traditional roles regarding who should handle money at home. Let the one who is a saver manage your home finances. Build a budget together, agree on how much you’ll spend on each budget category, and let the saver keep you accountable for sticking to the plan! Think of creative ways to reward the spender for sticking to his or her allowance each month. It’ll keep them motivated to keep it up.

4. Make budgeting fun with technology!

Budget does not have to mean boring and complicated excel spreadsheets. Today, technology offers many great budgeting solutions to help you and your spouse not only track every single penny but also plan on how you will spend it. Once you find a solution that fits your needs, both you and your spouse will be able to have much more fun in the process.

5. Break the yoke of debt - start saving

If you are in debt, the one sure way to break that cycle is to start saving. Too many couples use their debt as an excuse not to save.  Make a list of small, doable goals. Start with saving $1000 as an emergency fund and then keep going. Your goals should include having 3-6 months of living expenses set aside.  If you have a hard time leaving that saved money alone, talk to your bank about putting restrictions on your savings account not to allow withdrawals. According to the FPA poll, only one in five couples make investment decisions together. Work hard on breaking that trend. Plan together, set goals together and celebrate every accomplished milestone together.

Money does not have to be the cause of relational breakdowns. You may have heard this saying before: Money is a great servant but a bad master. Learning how to master your money will eliminate relational stress. It will create financial breathing room and a solid foundation for your family’s future. So take it one step at a time. Fight for your marriage by making daily smart money decisions.

By Megan Pacheco

When you right-click within the Envelope or Account register, you will be presented with the option to “Export Register”. Once selected, you will see the export setting window appear, with the option to choose either PDF or CSV.

Export Register option accessible via right-click

CSV option now available

The most common mistake I have seen is making a goal but not putting a plan in place, or finding the proper tool to help you accomplish the goal. You can say that your goal is to save more or pay off your debt but unless you put a plan into place and find a tool that will help you track your progress, you probably won’t be able to accomplish that goal. Having a balanced spending plan, based on the principles of envelope budgeting, and a tracking tool that will help you check your progress is critical to reaching your goal.

Another challenge is not being specific enough when setting goals or resolutions. “Save more” is arbitrary and vague; whereas “save 10% of my income” is specific and can be measured. It is a specific amount and you can easily see if you are making progress and meeting your goal. When creating your spending plan you can allocate 10% of your income into your savings envelope. If at the end of the month your savings envelope hasn’t increased by 10% of your income, you know that you have not met your goal and have spent that money in ways contrary to that goal. If this happens, reevaluate your plan and look for ways to reduce spending in other areas.

The other mistake that I often see is not setting benchmarks. It’s important to have set time frames where you measure your progress and look for ways to improve if you have fallen short, and hopefully celebrate your wins as well. Check your progress in regular intervals, whether that be monthly or quarterly.

If you are able to overcome these challenges, you should be able to make meaningful progress on your New Year’s Resolution this year. Get started now and make 2013 the best year yet!

• The top navigation bar is now intelligent in that it detects the width of the available space on the screen and will show as many options as possible. So if you access Mvelopes on a wide monitor, you will likely not see any items within a “More” listing.
• Small tweaks to the look and feel of the top navigation on mouse-overs and selections.
• You can now un-assign a downloaded transaction, that is to say that you place a previously assigned transactions from your financial institution, back into the New Transactions register.  This action is available using a right click. And can be performed if the transaction is selected from either the envelope or the account register
• Added a specific year option to the Envelope Spending by Month report, so you can run the report for 2012, or 2011 instead of just a rolling 12 month period.
• When assigning a deposit transaction to the Income Cash Pool using in-line edit instead of drag and drop, the Funder window now appears.
• In preparation for the Windows 8 release, users who attempt to launch Mvelopes using Internet Explorer 10 in the Metro interface will be directed to launch the Desktop version of IE 10 which natively supports Flash content.
• Resolved a bug where the Spending Plan was not being populated for the current month
• Newly created incomes will appear in the Funding screen without the need to logout and back in
• Resolved a bug which caused the funding and spent amounts not to be reflected on the envelope summary screens.
• Manually refreshing accounts will now display any newly aggregated transactions without having to logout and back in.
• Resolved a rounding issue in the Envelope Spending and Funding report
• Envelope Spending and Funding report now have Planned and Funded amounts shown by default.
• Resolved an issue where Split transactions were not showing their associated account in the exported PDF of the register.
• Envelope Spending and Funding report now showing the correct planned amount.
• Group name & envelope name are now displayed in the Envelope Spending and Funding report graph.
• Group name & envelope name are now displayed in the Envelope Balance report graph.
• Resolved bug where accounts were unselected while attempting to add them to Mvelopes
• Resolved a rounding error seen while splitting transactions.
• Resolved an error seen while editing the sweep envelope drop down.
• The Envelope Summary preferences (open or closed) are now saved.

First, we have oil changes. On average you will typically need 4 oil changes per year, depending on your mileage and driving habits of course. The cost of an oil change can vary depending on your city/state, type of car, and your your mechanic. Let’s use a rough estimate of $50 per oil change. That would mean $200 per year, or $16.66 per month.

Second, we have miscellaneous things like windshield washer blades, windshield washer fluid, light bulbs, oil, perhaps a car wash here and there. Let’s assume $50 a year for these types of expenses and supplies. You could also look at this as $4.16 per month.

Tires would be another expense that in most cases you can plan ahead for. People replace their tires every 3 to 5 years typically, again depending on their driving habits, mileage, etc. Tires can vary a great deal in price, but for this example let’s use a rough estimate of $100 per tire. Let’s assume we replaced our tires 2 years ago and we want to get new tires in about 2 years. Four tires would cost $400 and if we had 2 years to set that money aside, we would want to set aside $16.66 per month, for 24 months.

With just these minimum typical expenses, we have easily come up with a budget of $37.48 per month for Auto Expenses, or $450 per year for the next 2 years.

You would of course also want to take into account the age of your car, and the mileage. For example, there are manufacturer recommendations for certain services to be performed at 50,000 miles, 100,000 miles, etc. Your mechanic should be able to provide you with a list of those services and their cost.

The same type of exercise can be done for home maintenance, holiday expenses, etc. As you use Mvelopes you will become more aware of where exactly your money is going and you will find it easier to estimate these types of expenses.

-Jennifer Hickman, Director, Money4Life Coaching