Compelled By Reality

3 Steps to Living Beyond Your Means

Filed under: Blogging, Comical, Featured, Money

If you’ve been reading my blog for a while you probably know that I have a little bit of passion when it comes to managing money. I’m one who will tell anyone that in order to get on the flip side of debt, you have to have an aggressive motivation and start attacking it. Many in this country are upside down in their personal finances and aren’t quite sure how they got there, or how to flip the boat back over.

However, there are many who just laugh and brush off those like myself who are so intently against credit cards, against car loans, personal loans, any kind of loans (that are not your mortgage) and who think making a budget is for those who have a lack of self-control when it comes to money.

So I’ve decided to write an article for you Mr. I don’t need a budget, Credit cards are the best thing since sliced bread, Mr. why do I need a savings account when I’ve got a $20,000 limit on my Visa Platinum?

Here are 3 steps to making sure you are living beyond your means:

Step 1: Make SURE You are paying more than 28% of your income on your mortgage/rent payment.

If you add up your taxes, insurance and rent/mortgage payment and it is 28% or less, than you are in major trouble. If this is you, then you have probably experienced the pain and suffering of going to a friends place and foaming at the mouth at what they are able to “afford” making the same income as you. Do something about it. Move into a new house. Rent a nice condo downtown! Why should you have to work your way up, your parents probably have a nicer house than you… Why should they get it and you not?

Step 2: Keep at least 5 credit cards open at all times, only pay minimum balances, and then take out a new loan to pay off / consolidate your debts

If you are not cashing in on the features and rewards that credit cards are offering these days, you are missing out! With 1%, 2% and even 5% cash back bonuses, sky miles, reward programs… how can anyone resist? I mean with the economy like it is we really MUST have the security of a credit card to fall back on in perilous times. And they even pay you to keep the credit cards! These credit card companies really don’t know what their doing if they are giving you money to keep their cards. All you have to do is pay off the balance every month and you’ll be fine. Or better yet, pay the minimum balances and refinance your mortgage and take the equity out of your house to pay off all your cards.

Step 3: Buy a brand new car cashing in on the LOW INTEREST loans with little or NO MONEY DOWN!

Go out and find a NEW car… not a 1 or 2 or (I shiver at the thought) more than 3 year old car. Make sure you talk to the loan officer at the car dealership and let them know you are wanting a 5, 6 or 7 year loan, because this will make sure your car payment is very low. Wheel and deal until you get them to give you this car with NO MONEY DOWN, and a low interest rate.

Only about 40% (1 out of every 2-3 people) of american consumers are upside down in their car loans, but that could never happen to you! Those are just scare tactics from those gloom and doom old people who just want to be pack rats and pay cash for everything.

I mean seriously… The average car payment in America is $374 per month. If you were to drive a quality USED car (that you paid cash for) from age 25 - 65 and invested that $374 in a growth stock mutual fund (averaging 12%), you would have over $4 MILLION dollars. At that point you could give cars away.

BUT THATS A LONG TIME! Who has the self-control to be able to wait that long? Besides When you want to be able to enjoy stuff NOW right? How is anything worth doing now if you don’t get to enjoy it until you are old and wrinkly?

Tags: credit cards, debt, finances, living beyond your means, loans, Money, self control

Managing Money Well

Filed under: Blogging, Money, Practicals of Life

I wanted to take this post to highlight some previous posts on this site that are way back in the archives. If you have a job, a regular (or irregular) income or have ever thought to yourself “I wish I had more money,” then I recommend looking over these posts. Also if you have ever said the “b” word (budget) or even tried using it and have failed miserably, than these posts are for you.

Also, at the end of this post I have included a free downloadable spreadsheet!

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5 Ways to Simplify Your Budget

Filed under: Blogging, Money, Practicals of Life

I’m always looking for ways to make my finances behave better and I’m a technogeek at heart so I love to find cool new ways to track, manage, and view my finances. But sometimes things can get a little too complicated, and you end up spending 2 hours on something that should take 15 minutes. I know this is not a new concept and they have been discussed in many other settings, but in my experience these things really work.

So the goal here is to find some ways to simplify your budget in 2 ways. First, to simplify by downsizing, thus saving money which will allow us to get out of debt faster and give more. And Secondly, to simplify the way we practically view, track and manage our finances.
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Poll: How Often Do You Write Out Your Budget?

Filed under: Blogging, Money, Polls

I’ve been talking a lot about finances this week and I thought it might be time for a reader discussion on the topic that has been on my mind lately - “How often do you write out your budget?”

New Update: New Polling Plugin
I have added a Poll to the site so cast your vote and then discuss why you voted what you voted in the comments here. If you are reading this in a RSS reader, then head on over to the site and cast your vote.

Share your own experiences and tips on how you manage and budget your finances while keeping the debt monster away.

What’s worked for you?
What hasn’t worked for you?
What would you recommend for someone just starting out in writing a budget?

I’m looking forward to reading your responses. The poll will go for about 5 days.

Giving Principles

Filed under: Blogging, Christianity, Money, Practicals of Life

As you may know, Stephanie and I have really taken an aggressive approach lately with our finances. I’ve talked about a few of things we’ve done on this blog such as: Attacking Debt and having a financial plan as well as my recent post on Creating a Zero-based Budget.

As I was doing some reading from the Bible, there were some major principles that stuck out to me that have shaped our view of money and of giving it away. There are many people with needs in the world, but one of the greatest needs of all is to know that God is really there and that He really does care about you and works through people like us to show that He cares. One really great way to do this is in our giving. It doesn’t always have to be monetary, but on an ongoing basis I believe that writing giving into your budget (above and beyond tithes) is financial wisdom, tons of fun and has the side benefit of God’s blessing.

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Creating a Zero-based budget

Filed under: Blogging, Featured, Money, Practicals of Life

In my journey in managing the finances I have been given, there have been a few things that have helped along the way. One is the war I have started against an enemy I call debt; Creating a strategy to attack it and keep attacking until it begs for mercy (see this post for more info on that strategy American Cravings: Money).

Who OWNS 100% of my money?
I used to think of the money I earned as just that; money that “I” earned, therefore it was “MY” money. This however differs from God’s view. “The earth is the Lord’s, and all its fullness, the world and those who dwell therein.” God is the owner of 100% of the finances I have. Not just 10%. He owns all 100%, but has given it to me to manage it. So I can no longer think of myself as the OWNER of this money, like it is mine, but I am managing it for God.

So if I was an investment banker and someone gave me $50,000 a year to manage for them, I would need to make sure to take the time to put down on paper and do the research to figure out the best strategy possible. I need to do the same for the money God has given me to manage. First I need to find out what he wants me to do with it, and then manage it appropriately.

One of the things that has helped in this mindset shift of managing the finances given me was to create a “Zero-based budget.” Well, “what is a zero-based budget?” you might ask. I’m glad you asked. I asked myself this same question when I first heard of it.

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Tags: giving, Money, zero based budget

American Cravings: Money

Filed under: Blogging, Christianity, Money, Practicals of Life

The typical American household has $38,000 in debt. 71% of Americans say debts are making their home lives unhappy. The #1 reason couples list for getting a divorce is money. We need to learn to say “no” to ourselves.

Learn to Delay Pleasure
As a people we have forgotten how to delay pleasure. We must have everything now. We are living in a microwave generation. We are addicted to stuff! Come on, admit it. We all enjoy stuff, especially new stuff. For guys it may be the latest laptop or iPod or some tech gadget we just really “NEED.” For gals, most women just love to shop. Getting those essential shoes that go with that outfit that you bring home and add to the 30 or 40 other pairs you have in your closet, or maybe its clothes. But we of course have to have it now, when its “on sale” because of course it will never go “on sale” again.

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