Battle Plan Series – Phase 1 (STEP) – T.rack Your Spending

Now that you have figured out how you got here, where you are and where you want to go, its time to start getting things lined up.

The next stage is to put your spending habits on paper, create a budget and squeeze the most you can out of it.

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Creating Your First Budget (Made Easy)

By: Amber Moore

You may have watched your parents budget their paychecks and you’ve probably heard many people say that a budget is the best way to control your money (instead of feeling like it controls you!), but if you’ve never done one before, the thought of it might seem overwhelming!

It’s really not, I promise. I’m going to show you how to create your very first household budget without making your head spin.

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Battle Plan for Financial Freedom

CAM offers a two phase program. STEP is for people just starting out on their path to financial freedom and walks you through getting completely out of debt. Once you graduate from STEP, you will enroll in DFAS where you will build up savings, retirement and pay off your house. If you are interested in learning more about the program or would like CAM to walk with you on your journey contact us me at Charles@CAMFinancialCoach.com.

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How to Get Back on Track After the Holidays

If you are anything like my wife and I, you may have let the holiday spirit run free and possibly got off track with your finances. It’s okay to intentionally let go of the handlebars bicycle-1279907_1920and coast on rare occasions, but we never want to completely lose control. If you missed our blog for letting go you can find it here.

 

Now that the holidays are over, we want to recover and set ourselves back on track to success. Just like when you let go of your handlebars while riding your bike and go to regain control, we don’t want any sudden movements or adjustments. Don’t go to regain control of your finances and over correct. Don’t come and look at the budget and say, “Oh well, I guess we can’t buy food this month because we bought Grandma Bette those bottles of Italian wine” or “Hey little Johnny, you got all the toys you asked for so now you have to go work in a sweatshop down the street to make up for it.” We want to intentionally take back control and assess where we may have allowed some slippage.

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“Look Ma! No Hands!” How to Temporarily Let Go of the Handlebars

With all of the holidays, it is easy to focus on just the season and giving and to forget about all other plans. I want to give you permission to put things on autopilot while you deal with the holidays. Yes, that is right: you can have an autopilot schedule for your finances during hectic times.

Does this sounds too good to be true? Who would say to have an autopilot for finances? When we think about the absurdity of this, it is a little hard to grasp. However, for most of us, having our finances on autopilot is how we handled our finances before we started taking control and being in charge of our finances with a budget. BUT just like riding a bike, you can, momentarily, strategically take your hands off the handlebars without crashing.

bicycling-1160860_1280While controlling your finances there will be times where everything just takes over and you may forget something. This is when you take another look at your monthly budget and adjust. Or maybe some things came up that weren’t really planned for, but you still have a sinking fund for, so there is no need for concern.

During the holidays there are always surprises, whether that be gifts under the tree or family and friends showing up or inviting you over to share in holiday cheer. The holidays are for spending time with family and friends and not the time to be stressing over every penny in the budget.

Now don’t jump out of one ditch and into another. This does not mean blow the budget! What it does mean is you are in control and have been doing great so allow the budget to work for you. Just like you do with the bike allow the momentum and wisdom you have learned over the past couple of weeks or months to give you the confidence you need to take your hands off and have a controlled moment of autopilot. And just like when you regrab the handle bars on your bike, there will most likely be a slight correction needed, so street-962796_1920prepare for that.

But don’t get too excited because, unfortunately, this cannot be for everyone. Just like with our children, I would not recommend to my two year old, who is new to a bike, to ride without hands. So, if you are new to a budget and still learning how to control your finances, don’t let go. You need to keep control of your finances through the holidays and maybe if your momentum slows just a bit, that is fine. The biggest thing is don’t lose momentum all together. And definitely don’t allow yourself to go backwards. All of those deals, stores handing out credit cards like candy, can be very tempting. Don’t fall for it. Keep your hands on the handle bars, keep your budget fresh on your mind, but know that a budget is a learning process.

 I really hope no matter where you are in your journey, that you realize that its not going to be easy. You will fall, you will scrape your knees, but the important thing is to get up, wipe it off, and keep pushing. Strategically place people around you that will keep you accountable, offering encouragement when you fall, and cheering you on when you make a win.

DW and I sat down with a family recently. We were helping them get ahold of their finances. Now, this couple was going through Financial Peace University and were sold into making a change.

The hardest decision to make is the decision to change.

We were just there to help them wrangle everything in, to offer support and accountability. We went through and put all of their information into a CAM Workbook for them. It was obvious through talking to them and presenting the information that change was needed and the question was just how much change were they going to commit to. We did a budget together. They did a budget multiple times before committing and signing to the change. Everything looked great. The first day on their budget one of them forget their lunch at home and some coworkers wanted to go to lunch. They fell off the bike and went to lunch. Later that evening they were going to buy groceries (and following the cash system they had pulled cash out so they could feel their spending) and the money was lost. This wasn’t just falling off, this felt like being pushed straight into a thorn bush and crashing off the bike.

Many people would have just quit here. They didn’t. They had fully and irrevocably bought into change. In fact, since our meeting they have made more progress than they had committed to on paper in our home that night. They didn’t let the nicks and scrapes or battle scars of a new decision keep them down.

And for those of you new to a budget I want you to use that story of perseverance to hold on through the holidays. For those readers not on a budget or wanting accountability partners please reach out to us. We are here to help and want to help everyone to be able to take your hands off the handle bars.

charlesheadshotCharles Moore is a veteran, rocket doctor, financial coach, and blogger. If you’ve decided its time for you to suit up and fight for your financial freedom, check out his website at www.CAMFinancialCoach.comwhere you can get information on the coaching process, package options, and an unbeatable library of knowledge on winning financial battles.

What You Need to Know About Saving for College

We are continuing in our College series. Last week we talked about having a plan for your higher education (you can read that here). My goal is to help just one person with the road to college, whether that is a parent or if that is a student, as long as they want to make a change and break the continual cycle of loans, debt, and free flow planning instead of intentional living.

This week we will start at the beginning of college planning which we feel is the financial planning or saving for college. Financial planning we put first because with this out of the way many obstacles and objections to college can be overcome.

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“I don’t have time (working three jobs to make ends meet).”

“It’s too expensive.”

“I don’t need to go to college; there are many successful people who haven’t.”

“College is a business and not about education anymore.”

These are just a few of the mindsets people have today about the possibility of higher education, but if you were to have college already taken care of financially, would your stance change?

As parents, we want nothing more than for them to have the opportunities we didn’t have so they can have the life we didn’t. Something my father always said was, “Listen and adult-education-572269_1920learn from my mistakes; there is no reason for you to make the same mistakes.” As I look back on this, I see how important and how much wisdom could have been gained if I would have grasped all of that phrase when he was saying it. With all of this being said, I want to make it clear that neither me or my wife had college paid for upon graduating high school. In fact, I went out of state to a college I was paying $10,000 per semester, all paid for with student loans. After one semester of partying and $10,000 in loans with no transferable grades to show for it, I moved back home to my dads and decided to go to work. I don’t want my children to continue this cycle.

As parents and, more importantly, as a team, my wife and I continually tell our children that they will go to college (even if they choose to serve in the military). Not because we think it is necessary for success, but because we believe that the knowledge gained, connections made, people met, and the real-world experience learned are all valuable tools for life. We, however, do feel that it is our responsibility to provide this financially for them and so we have started saving for all of their tuition costs. Many people have different feelings on whether it is their responsibility to provide this for their children and I do not believe any of us are necessarily right or wrong, but no matter what your belief is, one thing that is for certain is that we as parents must plan.

How Much to Save

block-1512119_1920To fully fund a college education at an in-state school, it currently costs approximately $40,000 in tuition. Now this is a 4-year degree at a state school completed in 4-years. We can lower this number with grants, scholarships, and financial aid, but for this let us use this as the base number. In order for parent(s) to fund this $40,000, we have to start now.

I will admit that my wife and I are behind on this. We also have 4 children (11,9,2,1) and will fund all of their college (plus we want more kids: YIKES!). Let’s figure out what my family will need to save assuming a 3% annual college inflation rate and a rate of return of 10%. To fund this starting at age 11, we have to save $300 per month at least, for the 9-year old it is $225, 2 it is $110 and we would need to save $100 per month for our 1-year old. Obviously the sooner we start the easier and lower the number. Also something to consider, if for a new born you were to put back $7,000 when they are born, you would have $40,000 at the age of 18.

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The reason I break these down is to show you how starting early can save you money. The $300 needed to fund our oldest daughter’s college, is as much as a car note. The $100 (lowest number) needed for my youngest is the same amount we were paying for my student loans that have been around for the past almost ten years. We have put a priority on our children’s education and even it is expensive, I want to provide this so that our children don’t start out their adult life with that insane student loan debt lingering over their heads when they graduate.

Check out this college savings calculator (or any of the many out there) to figure out how much you need to be saving for your children for college.

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Where to put the money

For college education, there are many options for college savings from government bonds (probably the most famous grandparent gift), taxable savings account, 529 college savings plans, and 529 pre-paid tuition plans.

What we recommend is to put the money first into a 529 college savings plan and to diversify and control the investment. Investment options with your 529 plan can include stock mutual funds, bond mutual funds, and money market funds, and even age-based portfolios that become more conservative as the child gets closer to leaving for college. 529 plans allow your money to grow tax-free (some states will still charge state tax) and to withdrawal without penalty as long as the money is going toward eligible college expenses (tuition, room and board, books, etc.). You can learn all about 529 plans in this article from the US Securities and Exchange Commission.

Things to Remember

income-tax-491626_1920Contributions to your child’s (or grandchild’s, niece’s, etc.) college saving plan count as a gift from you. You have an allowance of $14,000 per year for gifts (you can choose to pay up to 5-years worth at once as long as it wouldn’t exceed that allowance). Check with your accountant for tax implications.

You don’t have to be the only one saving for your child’s college. In lieu of big expensive gifts that will go unplayed with, you could ask friends and relatives to instead give children college contributions for birthdays or other holidays. Also, when your child is old enough to start earning his/her own money, a portion of that should be going toward their education.

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Charles Moore is a veteran, rocket doctor, financial coach, and blogger. If you’ve decided its time for you to suit up and fight for your financial freedom, check out his website at www.CAMFinancialCoach.comwhere you can get information on the coaching process, package options, and an unbeatable library of knowledge on winning financial battles.