mary hunt’s guide to jumpstart your finances€¦ · purchase things, it felt like i had money....

Guide to JumpstartYour Finances

Mary Hunt ’s

Practical help for families and their finances

Mary Hunt’s Guide to Jumpstart Your Finances. Copyright ©2012 byMary Hunt. All rights reserved. No part of this book may be reproduced ortransmitted in any form or by any means, electronic or mechanical, includingphotocopying, recording, or by any information storage and retrieval system,without written permission from the publisher. For information, address DPLPress, Inc.

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My Story

It was a typically hot California summer day. I needed to get away aloneto think things through. In desperation I grabbed the car keys and took

off, no particular destination in mind. I wandered around for a whilehoping the pain would go away but it didn’t. I ended up at my in-laws’home, relieved to discover no one home. I didn’t feel much like talking.

I found the key, slipped in through the back door and fell into the closestchair. I could hardly breathe and not because of the heat. To call this“anxiety” would be to make a serious understatement. Never before inmy 34 years had I known such loss, fear and dread. I was out of options.Nowhere to turn; no help. And worse, no hope.

From my earliest recollections, my life centered on a simple premise,which became my secret promise: When I grow up I am going to be rich.Very rich. I wasn’t going to be like my family, which I perceived to bepoor. I blamed our poverty for the cloud of sadness and despair thathung over my life. How I would become rich wasn’t important, only that Iwould.

In time my plan became my reality. It was the comfort I craved andneeded to fill a void deep inside of me. That promise turned into the lightat the end of a dark tunnel. I saw it as my ticket to happiness. On this fic-tional foundation I built all of my hopes and my dreams. I fixed my eyesand set my heart on that “Someday” when I would grow up, leave home,have lots of money and be happy.

I went away to college, a scared freshman reduced to something betweenbewilderment and embarrassment. I didn’t fit in. My clothes were allwrong, my hair wasn’t right. I didn’t have a car; I was backward, small-town, sheltered and naïve. I was an oddball. Everything about me wasweird and I was devastated.

I wanted to be like the cool people, to fit in and to be accepted. I knew Icould learn. I was confident I could change provided I had a plan. Therewas just one tiny problem: I needed money.

It’s not as though I was broke. I’d worked through high school saving allthat I could, but that was mostly earmarked for tuition and books. Ilanded a part-time campus job, taught piano lessons and played theorgan in a local church on the weekends. While my cash flow was barely

3Copyright ©2012 DebtProofLiving.com

a trickle, I did have limited funds. And I had a checking account.

Along with new friendships came new expenses. Going out to eat, mallshopping and keeping up with my stylish friends came with a price tag. Icouldn’t stand keeping track of my checking account, but hated evenmore not having money. Even when I was short, if I could figure a way topurchase things, it felt like I had money. Writing a check on a Wednesdayeven though I couldn’t cover it until I got paid on Friday seemed perfectlylogical provided I could get away with it. And I did. Over and over. Hav-ing stuff now and paying for it later gave me some kind of a rush, asense of beating the system. It was my little secret, no one needed toknow how often I spent money before I actually received it. And when Ibounced a check and overdrew my account, no one knew that either.

My pattern of life became one of deceit and manipulation. Every time Iwrote a check I’d just hold my breath until I could figure a way to cover it.Over and again I’d try to reform. Somehow I’d cover everything andpromise myself that I’d never write another bad check. Until the next time.

Knowing that my state of poverty was only a temporary condition gaveme some kind of weird comfort. It also justified my actions. I was a poorstarving student waiting for Prince Charming to arrive. While I didn’tknow the particulars—like his name—I knew he’d be along someday.Then my money problems would be over because I’d be sure to marrywell. I’d finally be rich and all of this nonsense with scraping by, jugglingmy checking account and worrying about irate phone calls would end.

Harold and I married shortly after I graduated. We met on that first dayof college and dated for a couple of years. We had a lot in common andhe had great earning potential. By this time he’d begun a respectable ca-reer and you can be sure this dimension of his life was very important tome. Things were falling into place nicely. For sure I’d be rich. He was inManagement Training with one of the country’s most prestigious banks.Our future was bright.

In the years we dated I never tipped my hand about my little spendingproblem. He might think poorly of me. Besides, it was absolutely unnec-essary. Once we were married that would be my private history, the oldme. I wasn’t bringing much debt or an overdrawn account to the mar-riage. This would begin a whole new chapter in my life, a chance to startover. And if that wasn’t enough, I’d have a brand new, unblemished, jointchecking account with someone who actually knew how to reconcile it. Iwas living the dream I had designed. Life was wonderful.


I was a little surprised that my new husband wasn’t as rigid with themoney as I had anticipated. I knew he was opposed to incurring debtand overdrawing our checking account was unthinkable, but beyond thatwe didn’t have a plan to save or to budget. He wasn’t even worried aboutbalancing the account, which came as a big relief to me. He could checkthe balance at work and as long as it wasn’t red, that’s all that reallymattered. We shared a cavalier attitude about our money. We got it, wespent it. Our dual incomes and low overhead gave us plenty of opportu-nity to do lots of the latter.

I never meant to overdraw the account that first time. It was an honestmistake. And Harold hit the roof. We didn’t communicate well when it in-volved money so I wouldn’t understand for years how serious it was forthe bank branch manager’s personal account to show up on the RejectedDebit Report. My screw-up was a double-violation: First at home, then atthe office. Of course I was repentant. I promised it would never happenagain. And I meant it.

Sometime during those first few months I suggested we should get acredit card. Harold didn’t particularly care for that suggestion. So I waiteda while, and re-suggested. I was fairly certain I could get him to changehis mind. He needed to be more progressive. With only mild persistence,he agreed to a Texaco gasoline charge card that required full paymentevery month. Success!

In retrospect, that first card was pathetic as credit cards go, but very sig-nificant for me. My first charge card filled me with pride and status. I wassomebody when I drove in for a fill-up. I had a rather inflated opinion ofhow much dignity and respect the card afforded me each time I used it.But the best part, I could use my gas money for something else. My hus-band would pay the bill at the end of the month. It felt great to have aman take care of me. For the first time in my life I felt protected and nur-tured. I soaked it up like a sponge.

Imagine my surprise to learn that with a valid credit card I could get aSears’ card with no problem at all. And no permission. I could sign for itall by myself, a detail that was more significant to me than even getting it.

Soon other department stores began sending their credit cards withoutrequest (a practice halted by law in the years to come). Money in themail, imagine that. With all my heart I believed credit was evidence of anexcellent evaluation of my character and self-worth. If these companieswere willing to trust me with credit surely they knew I could afford it.


Getting our first bankcard was a defining moment that would reshape mylife and not for the better. Harold could hardly balk about getting a Mas-terCharge account—forerunner of MasterCard—because it was issued byhis employing bank. He’d been through all the training and employeebrainwashing about the benefits of consumer credit. He helped directinner branch campaigns to get customers on board and into “perma-debt” (carrying a revolving balance forever). Our dual cards and accom-panying credit limit (a whopping $300) were now part of his benefitpackage. While he still opposed the idea of a revolving balance, heseemed to be softening a bit.

Having my own bankcard gave me an inner sense of prestige. I felt mod-ern and well to do. I could shop in all kinds of places and know thatHarold would take care of the payments later. And I loved the minimumpayment option. It was like a gift, a special entitlement that I surely de-served. A $100 outfit was more like $10 a month. Quite affordable.

Living from paycheck to paycheck worked as long as we had two of themevery week. And as long as the cars didn’t break down. Or Christmasdidn’t come or vacation or our wisdom teeth didn’t scream for extraction.Spending all that we had just as quickly as we got it left no margin for theunexpected. It wasn’t long before our credit cards became necessary so-lutions. Harold hated them; I thought they were blessings.

I learned quickly that we had a lot more peace in our home if I was judi-cious with how much information I shared with my husband. I knew whatwould upset him and what he didn’t really need to know. I could buy allkinds of things and he wouldn’t notice. I figured out ways to do thingsthat would create the least volatility.

I began collecting credit cards in the same way kids collect baseballcards, for sport. I didn’t really plan to use them, but things came up and Ifelt I had no other choice. Paying the full balances every month justwasn’t happening. Harold had to resort to making minimum payments.But the cumulative payments depleted our cash flow so severely, using thecards regularly and allowing the balances to grow became the normwhere once it had been the exception.

Harold hated it and I hated hearing about it. Every time he gave me a lit-tle talking to about our tenuous financial situation I felt small and dimin-ished—like I’d been called to the principal’s office or lectured by myfather. I would always repent; promise to do better—whatever I had to doto bring the conversation to a quick conclusion.


We had two boys one right after the other when we’d been married forabout five years. While certainly not unexpected events, children broughtwith them a new level of expense we’d not anticipated. We bought a big-ger house, we needed new cars. Our boys needed to fit the images andplans I’d been making for them. I found myself reliving my own child-hood through theirs.

Many times during those years, Harold came to the end of his rope withour financial situation. Reluctantly he’d agree to refinance our home. Be-cause real estate values were increasing at unprecedented rates, we hadequity—a fact that was always at the forefront of my mind. I knew thatequity was an asset and it was our asset. It was a lifeboat tied to the sideof our ship always at the ready if we needed it. We were young, retire-ment was a lifetime away and if we needed our money now, we shouldnot hesitate to gain access to it. Even if the worst happened and we losteverything, we could just start over. I had an answer for everything.

Our home equity consolidation bailouts were never the solution. Sure,they eased the pain for a time. But the cruel reality was that together withour other living expenses and payments, we never had enough.

Always the answer was more credit, higher limits, bigger payments, morecredit, juggling balances, cash advances from one card to make the pay-ment on another. Riding a financial roller coaster became our way of life.

Harold’s career with the bank was going well. By all bank standards hisfuture was bright. But not by my standards. I thought he deserved somuch more. He simply did not make enough money and given the bank-ing industry, I doubted if he ever would. And I told him so. I didn’t trusthim to be the leader in our marriage. He needed my intervention. Therewere so many areas I believed he could improve. I took him on as an im-provement project. I “encouraged” him to think about a new career,something that would pay us what he was worth. I nagged and pleaded.He resisted. I suggested and directed. He withdrew. I wouldn’t give up.

We were the quintessential financially mismatched couple. I spent to feelgood and to prove to myself that we were not poor. His inclination was tonot spend to make sure we didn’t become poor. Despite all of our differ-ences and the horrible financial strain on our marriage, he never gave upon me. Neither of us ever left, not even for a day, a fact I can only con-tribute to the mercy of God and the undying commitment of my husband.A lesser man might have, and with good reason.

In my heart I was sure that prosperity and incredible wealth were right


around the next bend. I had to believe that for my life to make any sense.My job, I determined, was to find it and to just hold on by any meansuntil I did. And I knew I could change my husband’s mind so that hewould be as driven as I to be successful.

Just as I’d planned, I found it. Prosperity, wealth. Well, at least the prom-ise for how we could be prosperous and wealthy.

One of Harold’s clients at the bank was a Florida-based young, hip dis-tribution company. They’d recently opened operations in southern Cali-fornia. It became obvious to Harold this was what one might call a “cashintensive” business.

They had a very active distribution operation of ordinary householdgoods. These guys had the good fortune (and I use the term loosely), ofgetting in on the infamous ground level of the country’s latest multi-levelmarketing opportunity. They were slick and very friendly. They appearedto be authentic. They dressed to the hilt, drove fancy cars, lived in gor-geous beach homes and to my utter joy, befriended us.

One weekend they said the words I’d been waiting a lifetime to hear:They were willing to share their dream with us! Their opportunity wouldbecome our opportunity. I was ecstatic.

I convinced Harold to say goodbye to his 16-year banking career, fulltenure and regular paychecks. Blinded by greed and my insatiable desireto get rich quickly, together we took our deepest financial plunge yet andinto a business we nothing about. Worse, we did it with borrowed funds.

It’s no wonder that in only four months our first entrepreneurial endeavorended in an abrupt and devastating failure and the loss of all the moneywe’d borrowed plus all that we’d poured into this bogus venture. Thosenewly found friends of ours disappeared more quickly than the money.

Our debts were enormous, our income nonexistent. Now both Haroldand I were unemployed and the anxiety and turmoil became unbearable.We had no income, no liquid assets. We were beginning to hear the rum-blings of foreclosure on our mortgage that was now four months in ar-rears.

That day as I sat in the silence and emptiness of my in-laws’ house, Icould see no way out. I was terrified and desperate. This strong, take-charge, I-can-do-anything wife and mother was hanging on by a thread.

I’d run out of options and clever schemes. The pain in the pit of my


stomach was worse than anything I’d ever known.

I’d brought together all the elements that frequently prompt divorce,bankruptcy, the loss of the home and the destruction of a family. I com-pletely fell apart. I could not go on. There was no way out, no hope. I’druined everything—Harold’s life, my life, our boys’ lives.

I don’t know how long I sat there that day. But I know that I hit rock bot-tom and it was only in that dark, lonely painful place that I was willing to look inside myself and find where the real problem resided. Not in myhusband, not in our failed business or in our miserable marriage.

I learned something that day. When you’re at the bottom, there’s onlyone way to look and that is up. It was as if God turned on the floodlightof heaven to illuminate the dark caverns of my life. For the first time I sawthe magnitude of the mess I’d made. The ugliness of my greed and secretplans. I saw for the first time how deceptive, deceitful and manipulativeI’d been. I’d lied to have things my way. And I was certain that I’d all butdestroyed my husband’s life. The enormity of that was almost more than Icould bear.

As I began to deal honestly with my situation I fell to my knees andbegged God’s forgiveness for the horrible mess I’d created and for helpto rebuild my life. I made a new promise: I would stop my irrationalspending and "debting," I would do whatever it took to pay back whateverwe owed. And when I said I was willing to do anything, I meant it morethan I’d ever meant anything in my life. I asked God to help me change.

Somehow I went home that day. Nothing radical happened, we were stillnot speaking to one another. The pain of what we were going throughwas so enormous. But something was changing inside of me. And in ahealing kind of way I began to take personal responsibility for the situa-tion I’d created.

Without words and without any kind of announcement I made a decisionto respect my husband and to begin to honor his position as leader ofour family. I wanted more than anything to trust him wholly. I won’t say itwas easy. This was so out of character for me to even consider giving upcontrol. And I won’t say I was instantly successful, but little by little thingsbegan to change. One hour at a time, a day, a month and then yearafter year.

Though both Harold and I had made big mistakes, I was the one prima-rily who had brought us to the point of financial and emotional ruin. Iknew what had to happen. I needed to start making major financial con-


tributions to our marriage partnership. I had made far too many with-drawals. I went back to work.

Because I earned my real estate license, I was able to combine propertymanagement with sales, providing a steady income plus commissions. Itwas a good thing, too, because Harold decided he needed to stay homefor a while.

What an amazing turn of events. We immediately eliminated all day carecosts. Two little boys got to spend huge amounts of time with their dadwho also took over many of the household tasks. It was awkward at first,but I adapted. Being scared witless was probably the best thing that couldhave happened to me. I was willing to try anything.

Slowly we began to communicate. We began to know each other on alevel we’d not known before. We had to hang on to each other, there wasno one else who understood what we were going through. We were justtoo embarrassed and ashamed to reach out.

At the same time we had to learn frugality—a new concept for me. It did-n’t come naturally by any means. But we were shocked at how much wecould cut back. The most amazing thing is that no one, including thekids, really noticed our scaled-back standard of living. It just goes to showthat others are not nearly as impressed by our artificial lifestyles as wethink they are.

Gradually, we reversed our spending habits, we began to get out of debtand our drastically reduced living requirements became our way of life.Things went so well that in 1985 we were able to go into business forourselves in a more practical and sensible way. With backgrounds inbanking and real estate we opened our own industrial real estate com-pany.

By that time we had struggled through 10 years of financial recovery. Wedidn't have a good master plan, but still by this time we had paid backthe major portion of the debt; and things were going reasonably well. Iwas becoming impatient and began looking for a way I could bring freshnew excitement into my life and at the same time make enough addi-tional income to get rid of the debt once and for all.

My search ended when I got the wild idea to write and publish a sub-scription newsletter. I had the equipment, I had a modicum of computerknowledge and I sure knew the subject matter. After a few months ofplanning and strategizing Cheapskate Monthly was born January 1992.


In the first issue I gave a very abbreviated version of my story, the mess I'dmade, and the journey we were taking toward recovery. I had learned torefer to myself affectionately as a "cheapskate" because that was the bestword I could come up with which defined the radical changes in my life. Iredefined a cheapskate to be one who saves consistently, gives gener-ously, and never spends more than he or she has.

Within a short time I felt as if someone had turned on a faucet. Subscrip-tions began pouring in, the media started calling and I had to get a big-ger post office box to handle all the mail. Repeatedly I would open aletter which would begin, "Dear Mary: I've never told anyone what I'mabout to tell you ..." and then the floodgates would open. With each issueof CM I would open my heart further, which in turn would encouragereaders to do the same. As I became accountable to thousands of peoplethroughout the U.S. and Canada my own personal recovery began tospeed up.

As I began reading everything I could get my hands on in preparation forwriting a new issue each month I began to understand where I'd been,why I did what I did and how far I'd come. I found validation in learningthat much of what we had done in order to get back on the right financialtrack was right. I also had moments of regret and sadness as I admittedthat we'd blown it on more than one occasion.

In time, I began speaking publicly, telling my story and offering hope andencouragement to others. Soon I found myself living my recovery in fastforward mode and in the public spotlight.

Since then I have been privileged to watch thousands of people use sim-ple principles to turn their lives around, to get out of debt and go on tolive within their means. I’ve seen divorces diverted, marriages restoredand families preserved.

If all of this sounds too easy, understand this is the condensed version ofmy life. Nothing happened overnight. In fact, it took 13 years to reverse12 years of financial damage and to pay back the more than $100,000in unsecured debt we’d amassed including everything we borrowed to getinto that “business.” But we did. We paid back every single dime of inter-est, penalties and principal.

Did developing financial harmony in our marriage promote a new kindof intimacy we’d never known before, or did the intimacy promote theharmony? Whichever way it happened, thank God it did. It wasn’t easy inthe beginning but we did start talking about money and those kinds of is-


sues that reside deep inside in that place we rarely allow anyone to enter.

It was many, many years before I understood the relationship my child-hood dreams had on my adulthood behaviors. But figuring that out, andthen choosing to confront the beliefs as false and unworthy to shape theway I live my life, was a real turning point for me.

In the past the changes I made in my behavior were strictly external. Theywere put on to impress others or to get Harold off my back. But now Ibegan to change from the inside out. It was only as God changed myheart and my desires that I experienced lasting and meaningful change.

The scars of financial recklessness and irresponsibility will be with us al-ways. There’s not a day that goes by that I am not in some way remindedof the wasted years, the lost opportunities. We will never be able to makeup what we didn’t save for retirement during the years that would havecounted the most. We will always wonder what might have been. But onestep at a time, we continue to make progress. And every day I offer mythanks for how far we’ve come and how much we’ve learned.

I know that who I am today is the sum total of all I’ve been in the past, allthe things I’ve done and the experiences I’ve had. Every day I acknowl-edge how easily I could go back to my old ways, that my dignity and self-worth do not come from possessions and my value is not in the color andquantity of my credit cards.

When I prayed for God’s forgiveness for the horrible mess I’d createdand asked for help to rebuild my life, I never dreamed he would do all ofthat and so much more. I’ve been blessed beyond anything I could haveever imagined. And with that blessing comes a responsibility to share withothers what I’ve learned.

I would love to hear from you. You can send email HERE. I hope that youenjoy the articles that follow and that they will nudge you to take controlof your finances, get out of debt and save for the future.

Warmly,


mailto:[email protected]

Copyright ©2012 DebtProofLiving.com

Financial IntelligenceImproves Your Life

Money mastery is not hard. It’s the lies we believe about what moneycan do for us and the dumb decisions we make out of ignorance

that cause so much misery. Once the misery sets in, then personal financeand money management can take on high-levels of difficulty, to the pointwe are overwhelmed.

I hate to think what life would be like if there were no rules. From morningto night, every day of our lives, we live by some kind of rules.

Most families have rules of the house—expectations of conduct and deco-rum that are expected of all those residing therein, with age appropriateconsequences for failure to follow the rules.

If you’ve ever built or remodeled a home, you know something aboutrules contained in local building codes, which I will admit that to a layperson can appear to be useless and a total waste of time and money.Still, these rules make for much safer and more pleasant living conditionswhen all is said and done.

Like guideposts that mark the sides of the road, rules keep us from wan-dering off into danger. They offer assurance that we’re on the right path.

Meet the 7 Rules

Over the years, I have taken the lessons I’ve learned, the mistakes I’vemade, the principles in Scripture and wisdom from experts, counselorsand teachers whom I respect and boiled it all down to these simple rulesthat changed my life.

Rule 1: Spend less than you earnRule 2: Save for the futureRule 3: Give some awayRule 4: Anticipate your irregular expensesRule 5: Tell your money where to goRule 6: Manage your creditRule 7: Borrow only what you know you can repay

13


The 7 Rules are not seasonal, nor are they based in emotion. They workfor people who have lots of money as well as those who are struggling tosurvive on a single income or are between jobs.

The 7 Rules are for every income, every age, every stage of life. Theyapply to an unemployment check, an allowance, a paycheck, a dividendcheck, a bonus check, a trust account, an inheritance and even a vast es-tate.

The 7 Rules apply to individuals and families who are deeply in debt, justas they do for those who are debt-free. The rules do not change, becausethey are based on timeless truth and unchanging principles. They’re likeanchors that keep us from drifting off course or running aground even inthe midst of a storm when visibility is all but lost.

Here’s the best part: The 7 Rules are simple. So simple, in fact, they canfit on the back of a business card. Given 15 minutes you could evenmemorize them. In fact, I recommend you do.

Why you should care

About once a month or so I travel to speak to groups of people aboutmoney, something I love to do. Just before I step to the podium, I lookout at the audience. I can almost hear what they’re thinking, “Great,she’s going to talk about money. Why should we care?” That’s a questionthat revs my engine and puts me into my zone. I hope you’re asking thesame question, right now. Here are four reasons:

1. Because money is important. Its impact is also emotional, spiritualand personal, which can be tricky, especially the emotional part.

2. Because money impacts our lives. It determines where we live, whatwe drive, where the kids go to school. It’s the means by which we pay ourbills, protect our families and prepare for the future. Wrong choices andbad decisions can turn an otherwise pleasant life into a miserable exis-tence.

3. Because Americans are finding themselves more financially chal-lenged as prices soar but paychecks remain stagnant. Recovery fromThe Great Recession is turning out to be slow and uncertain. Those sittingon the sidelines waiting to move ahead with their lives until everything getsback to “normal,” may be in for a very long and disappointing season.

4. Because you may be called upon to handle a significant amount ofmoney in the future. It might be an inheritance, a job promotion or a

sizable investment portfolio. Or it might be simply a second chance forgetting things right. Will you be ready?

Clean sweep

I’m a sucker for home improvement TV shows, especially the ones thatfocus on organization and de-cluttering. That’s where I learned this im-portant tip on organization: Don’t try to organize your clutter. Instead,move everything out to create a clean, clear, open space. Then gothrough everything you removed, sorting and evaluating what you wantto keep. Next, bring things back into the room in an orderly manner.

In your mind’s eye, picture your financial life as a big room that is filledwith every aspect of your current financial situation: bills, debts, income,taxes, mortgage, savings, student loans, unemployment, retirement con-cerns—everything that you identify as part of your money life.

Using the “clean sweep” approach, empty that room. Haul everything outonto the lawn or somewhere far from your mind’s view. Don’t stop toponder over stuff, just round it up and move it out.

Mentally, give that space a good “cleaning” or whatever it takes for youto be able to take a deep breath, sit back and enjoy the absence of finan-cial noise.

It is against the backdrop of this fresh, clean slate that I want to offer youthe seven simple money rules in theory so you can grasp how they workand fit together, without interference from what may be going on withyour finances at the moment.

We are going to do this one chapter, one rule at a time. I will explain therule then tell you why the rule is integral to your life. I will include clear in-structions, suggestions and frequently asked questions for how to applythe rules to your life starting with your current financial situation. Think ofthis as an orderly way to move items back into the “cleaned room” ofyour personal finances.

I can’t promise an overnight transformation. But by facing the truth andapplying the rules, change can begin right away.

Excerpted with permission from 7 Money Rules for Life: How to Take Control ofYour Financial Future, by Mary Hunt, Revell Books, 2012; $17.99


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How to Live on a Budgetand Love It

Iknow what you’re thinking. Just the thought of the word ‘budget’ is likenails on a chalkboard. I know the feeling.

For many years I wouldn’t have anything to do with a budget because Icouldn’t stand the idea of anyone—or anything—telling me how to spendmy money. And where did that get me? Into one big financial mess.

Every month, when I ran out of money, I would turn to MasterCard andVisa for a bailout. Really bad idea.

What I learned from going through that experience and finding my wayback to solvency is that, as much as we may loathe it, a budget is theticket to financial happiness—not the straitjacket I feared it would be. I’vecome to prefer to call this a “spending plan” rather than a budget, buthonestly the terms are interchangable. It’s just a way to pre-spend yourincome so that every dollar is assigned a job to do.

Like the blueprints to build your dream house, a spending plan showsyou where you are and how to get where you want to be. It’s the placewhere you spend your paycheck on paper even before you cash it.

A good spending plan gives every dollar a specific job to do. Once youhave it just the way you want it, the plan becomes a handy road map forkeeping your finances on track.

So, take a deep breath and let’s walk through the basics of creating asimple budget, or spending plan.

Step 1: Write down your total take-home monthly income

This is the easy part. Jot down what you earn. Because many expensesare billed monthly, it makes good sense to use monthly income to createyour budget.

Step 2: Write down your essential expenses

Start with fixed bills like rent, mortgage, car payment, credit-card debtand insurance, then factor in other monthly costs that are always thesame. These are your essential fixed expenses.


Step 3: List your essential variable expenses

You know you’ll have these bills, but the amounts vary. Examples are yourphone, utilities, food, household expenses, gasoline, medication, publictransportation, shoes and clothing. You can assign an estimated amountto each based on past experience, rounding to the closest $10.

Step 4: List reasonable amounts for nonessential expenses

This includes entertainment, eating out, hobbies and other ways youspend money on a regular basis.

Step 5: Find the extras

Go to your current method of tracking your spending (your checkbookregister, credit card statements, online reports) to see what expensesyou’ve left out. You’ll likely see items for car maintenance and repair,gifts, vacations, Christmas and holidays. For items that do not recurmonthly, determine the annual cost, then divide by 12 to see how muchyou should set aside each month to anticipate that irregular expense.

Step 6: Figure out your totals

Add up your expenses, then subtract that amount from your income. Withluck you’ll come out in the black, with at least a little money left over. Butif your expenses exceed your income, you’ll see a negative sum. Don’tpanic—this is just the start of an ongoing process.

Step 7: See where you can cut

If you came up short, go back to your projected monthly expenses andsee what you can get rid of. Look first to your nonessential expenses.Which items can you remove altogether for a while (eating out seems likea fine target; perhaps hobby expenses, for a season)? Keep goingthrough the list, making adjustments until your total expenses are lessthan your income.

Step 8: Follow your spending plan as closely as possible

Track your spending every day. Take notes and research ways you’ll beable to do even better next month. At month’s end, add up your actualspending and compare it with what you planned. Use this information tocreate next month’s Spending Plan.

Congratulations—you’ve just elevated yourself from being clueless to


financially savvy. You should feel very good about this!

As difficult as it might be to see in black and white that your income andexpenses are not quite in sync, just knowing where you are is going tomake all the difference.

Even if you find yourself in a particularly tight financial position right now,take heart. As you pay off debts and find more ways to cut expenses,you’ll begin to sense a significant loosening of financial pressure. Soonyou’ll be ready to add new categories to your spending plan for thingslike saving for a new car, home improvements or going back to college.

The sooner you get started, the sooner you’ll be on your way to reachingfinancial freedom.


Spend Money But Only Where It Counts

Even the mention of words like frugality and thrift send some peopleover the edge because, for them, those words conjure up thoughts of

poverty and deprivation. They assume that cutting costs is tantamount todiving into dumpsters to find one's next meal. No wonder so many peo-ple prefer a life of debilitating debt to one of frugality.

Let me set the record straight. Please.

There is nothing undignified about spending less than you earn. That'scalled living below your means, and it's a fabulous way to live! When youspend less than you earn, you have some to save. And to give away, too.When you spend less than you earn, you are not dependent on credit toget by. It is a very good thing.

So you may be wondering how you can move from overspending tospending less, without giving up your quality of life. It starts with prioritiz-ing everything according to how important it is to your life. Then onlyspend on things at the top of the list, ruthlessly cutting your spending onthe things that don't matter.

The way to get started with prioritizing things in your life is to come upwith a system, like "on a scale of one to 10 ..." Now, apply this to everyway that you spend money. Do not hand out "10s" willy-nilly. Reserve thatdesignation for only those things you truly love because they bring incred-ible joy and fulfillment to your life.

As you prioritize, examine everything. Do you eat out often? Go to themovies? Travel? Do you spend on home-improvement projects, kitchengadgets and visits to the gym? Are cable television and electronic devicesa main source of joy? Are you most fulfilled when you are donating yourskills and time to an outreach charity in your community? Is fancy jewelryyour thing, or are you more into driving a fancy car? Perhaps for you it'sshoes, or gifts for those you love.

Our lists are not likely to be the same. For example, eating out inmediocre chain restaurants is not a priority for me. To me, the food isoverpriced and of inferior quality. Having my own car is not high on my


list, either. And I could not care less about English bone china or main-taining a koi pond, but I know people for whom both rate 10s on theirlists.

But having a beautifully maintained yard with flower gardens, traveling tobeautiful places and spending time with good friends are all at the top ofmy list. I will cut mercilessly in other areas to have money for the thingsthat I really love.

Personal finance is not about saying "no" to spending on the things youlove. Living below your means is not about adopting a life of poverty. It'sabout conscious decisions, not guilt. It's planning and thinking and decid-ing what's really important to you.


Gratitude:The Antidote for Greed

Gratitude is more than an annual ritual performed hastily before div-ing into the Thanksgiving meal. It’s more than a holiday decoration;

more than a snappy word that rhymes with “attitude.” I am told that of allthe human emotions, gratitude is the most powerful.

So powerful is gratitude, it can obliterate fear, hopelessness and doubt.Gratitude can heal a broken heart, slow the aging process and restorebroken relationships. Gratitude creates hope and hope brings joy. It is injoy, not fear, that we can find strength.

Greed is the Enemy

We have just come through a period in our country’s history when somuch has meant so little to so many. The easy availability of credit thatallowed us to live beyond our means enabled greed to creep into everyarea of our lives. Some call the affliction “Affluenza”―an unhappy condi-tion of overload, debt, anxiety and waste resulting from the dogged pur-suit of more.

The more we have, the more we want. The more we want, the more ittakes to feel satisfied. The more credit we accept the further into debt weslide.

The more we have the greedier we become and the more we suffer frompossession overload. We let what we lack eclipse any feelings of gratitudefor what we already have. Affluenza in its advanced stages leads tostress. And stress leads to the breakdown of mental and physical health.

Gratitude is the Antidote

Gratitude, the conscious and heartfelt expression of appreciation andthankfulness, is the number one best antidote for dissatisfaction.

Greed says I must have more; gratitude counters with I have more thanenough. Greed says my life is pathetic; gratitude says I am so blessed.Greed steals joy; gratitude restores it. To develop gratitude you need totalk to yourself and regularly write down your thoughts.


The idea is to begin to see all of life, even the difficult times, as chal-lenges, opportunities and blessings. You may also find it helpful to “re-frame” a situation—to choose to see it from a new perspective.

Reframing can be difficult but is especially important when misfortunestrikes. If you wreck your car, that is unfortunate. Still, it means you’realive and that is something for which to be grateful. And you get bonusblessings if no one was hurt, you have a good insurance policy or the carwasn’t totaled.

Authentic and heartfelt gratitude can hush up insatiable desires and neg-ative attitudes.

For instance, you can hate your job, hate the boss, hate the people, hatethe commute and hate the work. Or, you can be genuinely grateful thatyou have a job today.

You can learn to appreciate everything about that job, even the distastefulaspects because they build your character, tolerance and compassion.

No matter the situation, you choose your focus. If you choose fear andanger, expect depression and misery. If you choose to respond with agrateful heart, expect hope, satisfaction and joy. Yes joy, even in the midstof adversity.

Giving is the Action

Want to really pull the plug on your greed? Become a giver. Giving awaysome of what is most precious to you—your money—is the ultimatethank-you note.

Giving opens the door to God’s blessings and your eyes to see the bigpicture. It allows us to view the world through new eyes of compassion.

Giving is an outward expression of a personal affirmation that no matterhow bleak your situation may appear, you really do have enough.

Gratitude unlocks the fullness of life. It turns what we have into enough,and more. It turns denial into acceptance, chaos to order, confusion toclarity.

Gratitude can turn a meal into a feast, a house into a home, a strangerinto a friend.

Gratitude makes sense of our past. It brings peace for today, and createsa vision for tomorrow.



Save? Yes, You Can!

How are you feeling these days? Not physically, but how would yourate your financial well-being?

For most of us, how much we earn tells us how we’re “feeling” finan-cially. But your income is only one part of the equation. How much ofyour income do you actually keep?

Not very much, I’ll bet. Your income is low, you say; you’ve got bills topay. Gas prices are sky-high, grocery costs are through the roof—whocan possibly save?

My answer: You can. And I am going to help you do it—starting rightnow. Come on, just do it!

Pick a Goal

Saying you want to save a million bucks is admirable, but let’s face it, it’snot reasonable.

In order to reach a goal you need to make it specific, realistic and meas-urable, something like, “I’m going to save $500 in the next five monthsby transferring $25 every Friday to my savings account.” Much better.

You need an emergency stash of cash equal to at least three months’ ex-penses.

Think of it this way: How much money would you need in the bank to payall of your bills for three months without any paychecks? Saving thatamount might seem impossible. So, for now, why not set your goal as theamount of one of your paychecks? That’s an amount just about everyonecan scrape together with enough determination. When you’ve done that,go for two paychecks, then four. Soon you really will reach that three-months’-worth goal.

Need some motivation? Get visual and hang up a picture of the item orevent you’re saving for. If you’d just like to have some money in the bank,make a calendar to post on the fridge and check off all your savings de-posits. (You’ll be amazed at how great you’ll feel writing those down.) Orfigure out how much you’ll have in your account a year from now if youdon’t miss a deposit.


Write it down on a piece of paper (in big numbers!), and tape it in aplace where you’ll see it every day.

Jump In

Warning: You might not want to hear this, especially if you’re not a saver.But if you’re going to commit to the program, this is the most importantthing to know: Pay yourself first.

Before you pay your bills every week, before you buy groceries and gasand clothes for the kids, you’ve got to put something into your savingsaccount. Even if the amount is sometimes less than you were hoping tosave, set it aside anyway. As long as you’re headed in the right direction,even the baby steps count.

Watch it grow

You may be tempted to stash the cash under your mattress, but I wouldn’trecommend it. Sure, interest rates on savings are so low as to be nearlynon-existent as I write, but that will change someday. Open a savings ac-count where your money will be safe (mostly from you!) and will earnsome amount of interest.

Legend has it that Albert Einstein called compound interest “the eighthwonder of the world.”

Here’s why: Let’s say you decide to save $25 a week in a savings accountearning 3.5 percent interest (these rates will come back), and you do thisfaithfully through your working years from age 35. On the day you retireat age 65 you’ll have $69,000 in your account, even though you onlydeposited $39,000 of your own money. Change that to $50 a week at 6percent interest, and you’ll have $219,000. Pretty miraculous.

What makes compounding effective is not touching your money—so theinterest you earn every month will become part of the principal balanceand then begin to earn interest, too.

5 things you can do today

Sell out. Go through every cupboard, closet and drawer. If you aren’tusing it regularly, get rid of it on eBay or have the mother of all yardsales. A typical sale could raise $500 or more when you start to un-load your white elephants. There! You’ve cleaned out the house andyou’ve got a pile of cash to show for it.

http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=1&pub=5575017208&toolid=10001&campid=5337132048&customid=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg

Give it up. I’ve said it a hundred times, but you’ve got to say goodbye tothat little vice (fancy coffee drinks, cigarettes, candy bars, bottled water). Itcan really add up—saving $5 a day gives you $1,825 a year.

Think hard about driving. Cutting out 20 miles a week of driving willadd nicely to your savings.

Buy used. When you need something, check sites like CraigsList.org orFreecycle.org. It takes a little more time, but you’ll have more for yourbank account. I came close to paying full price—$100—for a replace-ment charger for my phone. But the thought of spending that muchmoney gave me a rash, and sent me to eBay. In no time I bagged a reg-ular charger plus one for the car for less than $10 with shipping. Needsomething for one-time use? Borrow it from a friend or neighbor (andencourage them to do the same).

Cut the cards. You use plastic to pay for stuff because it’s convenient. Sostop using it. It shouldn’t be so convenient to spend your money. That’s alot of money you can free up for savings.

Big boosts

Looking for bigger ways to give your account a boost?

Bank the raise. The next time you get a raise (or a bonus, refund, wind-fall), save at least half. Let’s say that raise improves your monthly take-home by $200. If you save half at 6 percent interest and do that for thenext 10 years, that money you didn’t miss (because you never saw it) willgrow into $16,570.

Save the payment. When you pay off something big like a car loan, takethe amount you were paying every month and add it to your savings in-stead. A $330 monthly payment to yourself over five years turns into$19,800—and that’s without consideration of any interest you may earn.

Do something major. Once you catch the savings bug, do somethinggrand. Get rid of one car if you can. Or move to a cheaper area. Onebig change could send your savings to the moon.

Become a saver

Here’s the thing about saving: At first it’s going to feel like a hardship(like dieting, all you can think about is what you can’t have). During myworst years, when I was spending with reckless abandon and racking updebt, I would have told you with all sincerity that we didn’t have enoughmoney to save.


http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=1&pub=5575017208&toolid=10001&campid=5337132048&customid=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg

http://www.freecycle.org/

http://www.craiglist.org

But once I jumped into saving (just a few dollars at first), somethingamazing happened: I began to feel a new sense of self-worth, dignityand calm. The more I saved, the better it felt. This will happen to you,too. And as you watch your balance grow, prepare for a surprise—savingwill become addictive.

Try it. See if it doesn’t become habit-forming.



Dare to Dothe Unthinkable

On an ordinary hot summer day in rural Georgia just weeks beforeheading off for his first year of college, Scott Rigsby’s life was to

change forever.

Riding in the back of a pickup after a long hard day of landscapingwork, Scott and his buddies were laughing and talking about the upcom-ing weekend.

Suddenly, and without warning, a passing 18-wheeler ran them off theroad sending Scott under a 3-ton trailer, dragging him more than 300feet.

By all human expectations, Scott should not have survived. But he did.And with horrific injuries. One leg was completely severed, the other lefthanging by a thread—and he suffered third-degree burns over his back.

What followed were 26 surgeries, a second amputation of the leg thatcould not be saved, unspeakable depression, fear and uncertainty.

In the blink of an eye, Scott’s life changed from one with a bright collegecareer ahead to one of unbearable challenges, dashed dreams andpoverty.

It’s not surprising that as a result of his now broken body and constantpain, Scott waged a battle with prescription drug addiction. After allthis, plus no steady income, Scott lost his dreams of a stable and successful future.

A decade later, in 2005, Scott read about the Ironman Triathlon, a seriesof races consisting of a 2.4-mile swim, a 112-mile bike ride and amarathon (26 mile) run—raced in that order and without a break. AllIronman events have a strict time limit of 17 hours to complete the race.

On that day, Scott made a promise to himself that one day he wouldcompete in the Ironman. What irony. Not only is this a man with no legs,he didn’t even know how to swim! With a new sense of determination,Scott figured that if he’d come this far through so many physical chal-lenges, learning to swim should be simple by comparison.

And learn, he did.

Scott completed 13 triathlons and five road races in less than a year onhis way to setting multiple world records for a double below-the-kneeamputee.

On Oct. 13, 2007, Rigsby became the first double amputee in the worldto complete an Ironman-distance triathlon with prosthetics at the 140.6-mile World Championship in Kailua-Kona, Hawaii. Scott calls it “Doingthe Unthinkable,” the motto he has embraced since that day in 2005when he picked himself up off the couch and decided to stop being a vic-tim of his circumstances.

I’ve watched the videos of Scott in action, and recently had the privilegeto hear him speak. With humility and gratitude, Scott faces life with un-common determination and gentle strength.

What kind of 18-wheeler has run you off the road of life? Is it unemploy-ment? Divorce? Health issues? Whatever it is that has cut the legs outfrom under your financial situation, it’s time for you to get up out of thatrecliner!

Just as Scott knew that he could not grow new legs, you need to acceptwhat is true and stop fantasizing that you’ll win the lottery or your formeremployer will apologize and beg you to come back to your old job.

It’s time to find new strategies, plans and methods that will become yournew prostheses.

Lost your home? Stop wallowing in self pity. Pick yourself up and startlooking for a landlord.

Can’t find a job? Maybe it’s time to become your own next employer.

Whatever it is that is keeping you deep in debt and a victim of a rotteneconomy, stop giving it power to hold you down!

Let go of whatever it is that brings you to this place. Stop counting themoney you’ve lost in your retirement account. No more dwelling on howmany weeks you didn’t get an unemployment check.

Give up looking in the rear view mirror of your life. What happened thenis over now. It’s done and there is nothing you can do to change it.

Instead, look at what lies ahead. There’s a big clean canvas out there justwaiting for you to paint the next season of your life. Identify yourtriathlon. Give it a name. Start training.


You are stronger than you know and smarter than you think. Dare tothink big and set goals to match.

Unthinkable goals!


“We’re Drowning in Debt!”Dear Mary,I am completely overwhelmed and scared. We are totally in debt and I feelguilty that we are relying on credit to get by. We can’t keep doing this, Iknow, but I don’t know how we will survive. I am ready to do anything toget out of debt.

We do not want to declare bankruptcy, but some days that seems like ouronly option. We are so ready to get out of debt we will do anything tochange the way we handle our money.

We need a fresh start!Kathryn Gritts

When Kathryn wrote to me in August 2006, she said she would do prettymuch anything to get out of her financial mess. I replied: If you agree tofollow a plan that I set up—no matter how challenging—I’m in.

Too many expenses

Kathryn, a medical writer and divorced mother with two children, ages 6and 9, married Galen, an executive recruiter, in 1993. They blended theirlives and incomes, and the result was a comfortable lifestyle that includedvacations, eating out and a bigger house. When their son, Remington, wasborn, Kathryn stayed at home, and they adjusted to a single income with-out giving up much at all.

In 2001, Galen found himself unemployed. He saw this as the perfect timeto pursue his own executive recruiting business. But then the aftermath of9/11 hit his industry.

“We were desperate,” says Kathryn. “We wanted to keep up appearances,so we turned to credit cards to keep the bills paid, food on the table andour social life intact. It seemed like any day the business would take off.

When it didn’t, Kathryn went to work full time as an administrative assis-tant. Her salary helped, but it wasn’t enough. By the time she wrote to meshe’d been working full time for four years and Galen was looking for ajob. Her son Jonathon, now an adult, was living on his own. Her daughter,Bryanne, was a college freshman at an expensive school and Remingtonwas in the fifth grade.

Kathryn’s first assignment was to keep a written record of all their spending



for 30 days. The results were shocking: She and Galen were spendingmore than $7,000 a month—or $84,000 a year—just to get by. Theircombined income had fallen to $61,000. For Kathryn, the pressure of jug-gling bills and taking on more debt had become unbearable.

“There were times I felt like an utter failure,” she says. “I was managingthe finances and we were so far in the hole it felt like we’d never get out.”

At the start of our year together, the Grittses had $342,608 of mortgagedebt, $40,090 in credit-card debt and school loans, and $38.59 in thebank.

The Plan

As long as they had some income and Galen was willing to find a job, Iknew I could help. Using five important elements of Debt-Proof Living, weset a plan in motion.

1. 10-10-80 Formula

Even if you are deeply in debt, my guiding formula is to give away 10 per-cent, save 10 percent and live the best life you can on 80 percent of yournet income. I explained to Kathryn that my formula might be shocking toher because this is not something she would hear from a traditional li-censed financial advisor. But I’ve learned from my own experience withslaying the debt monster, and also by helping thousands of other peopleto get out of debt, that giving and saving are like magic bullets for finan-cial problems. Giving to others who are less fortunate releases gratitudefor what you have.

Knowing you have money in the bank quells the fear of being broke. To-gether, giving and saving promote contentment, which makes us willing todo whatever we must to spend less than we earn.

“Knowing we had a plan that was written down brought relief,” saysKathryn. “Suddenly it didn’t matter that the carpet was old.”

In the beginning, the Grittses gave up every optional expense: no cellphones, cable, movies out. They kept other purchases to a minimum, too.If they couldn’t borrow it from the library or buy it at Goodwill, they didn’tget it. They stopped eating out, except for very special occasions. Theywatched every drop of gas, walking whenever possible. They excusedthemselves from social engagements that cost money.

“At times it was really difficult to say no to the kids,” says Kathryn. “And

some of our friends disappeared when it was clear we weren’t going tokeep living a fake life just to impress them.” But that sadness was nothingcompared to the joy of having money in the bank and giving to others.

2. Spending Roadmap

I encouraged the couple to “spend” their paychecks on paper beforecashing them. They needed to decide where every penny would go, start-ing with giving and saving, then moving on to essentials such as the mort-gage and home equity loan. They paid bills according to the severity ofthe consequence if they didn’t pay or were late. After that, they moved onto optional expenses such as clothes and eating out. Because there wasn’ta lot of extra money, there wasn’t a lot of optional spending in the begin-ning.

Kathryn tracked their actual spending each month to compare with theplanned spending. Seeing how short they were, she took a second jobworking nights and weekends at a crafts store. This increased their net in-come by $345 a month—not a great deal, but enough to keep the lightson and food on the table.

Food was a big item for the Grittses. At one time they were spending$900 a month for groceries and restaurant meals. That quickly droppedto around $300 when Kathryn joined The Grocery Game, learned how touse coupons effectively and took advantage of organizations that providedfood relief in their community.

3. Contingency Fund

The 10 percent Kathryn saved each month was put into an emergencyfund. At first, she wanted to use the money to pay off her credit-carddebt—that’s what most professional financial experts advise, because ithelps hold down the amount the debt increases each month due to inter-est charges. But to me, the emotional calm of knowing you have money inthe bank is worth taking longer to pay off your credit cards. That keeps aperson from running to the credit cards for a bailout every time somethingcomes up that was not expected. Kathryn and Galen would keep saving10 percent from each paycheck until they had $10,000 parked in a safe,interest-bearing account.

4. The Rapid Debt-Repayment Plan (RDRP)

This is my method to rapidly repay unsecured debts such as credit cardsand student loans. Because the RDRP is based on minimum monthly pay-


ments, Kathryn and Galen had to agree that they would not add anymore new debt which meant their credit cards were out of reach for now.

Next, they “fixed” their monthly payments at the amount they paid in thefirst month on the plan. They lined up their debts with the smallest at thetop. As the first debt was paid off, its payment was added to the regularpayment of the next debt in line. Based on the plan, they could pay offtheir $40,000 of unsecured debt in just 59 months. If they had paid thisoff according to their creditors’ schedules, it would have taken twice aslong!

5. Freedom Account

Setting up this account gave Kathryn a way to anticipate irregular ex-penses such as Christmas gifts and clothing. We estimated these on ayearly basis, then she deposited one-twelfth of that amount each month.

Where they are now

Shortly after they began the money makeover, Christmas arrived. “I didn’tbelieve we could get through it spending only the money we’d saved inour Freedom Account,” says Kathryn. “But we did it!” She made gift bas-kets using ideas from sites like OrganizedChristmas.com.

“Even though Galen and I didn’t exchange gifts that year, we all agreed itwas our best Christmas ever,” she says.

The Grittses also faced the truth that they could not afford Bryanne’s col-lege, already owing $12,000 for the first year. “We were committed to nomore new debt, so Bryanne moved home, which was very sad at first,”says Kathryn. “But she adjusted quickly and was very happy to completecollege locally.”

There were weeks when there simply was no money for food, so Kathrynlearned to create something from what she could find in the cupboard orfreezer. And during the year they faced a major car repair, the breakdownof home appliances and a flood that ruined their floors.

In June 2007, Galen got a job offer with an executive recruiting company.Within days he got a second offer that was even better than the first.

At that point, despite all the challenges, their annual combined income increased to $88,000. They reached their $10,000 goal in their Contin-gency Fund, just at the time that their Freedom Account zoomed to$8,149. Four years later, they completed their RDRP and right on


schedule. Kathryn sent the following letter:

Dear Mary,I can’t believe it’s been a whole year! Pinch me—it seems like a miracle.What peace of mind! Thank you, Mary, for the tools, the encouragement,the plan. We’ve gone from “throw your hands up in the air” victims to an“attitude of gratitude.” Kathryn

Kathryn and Galen made it all the way to debt-free and their determina-tion continues to be inspiring. It was a thrill for me to watch them crossthat finish line!


5 Simple Stepsto Stop Arguing about Money

My husband’s payday was always the worst day of the month for me.That’s when he would pay the bills and discover how much I’d been

spending. I had a habit of “forgetting” to record checks.

The confrontations were awful, making me physically sick. Of course Iwanted to stop the fighting, but apparently not badly enough to changemy behavior.

My solution was to take my spending activities underground with creditcards that he didn’t know about and a secret post office box for the state-ments. My deceit stopped the fighting and I was able to carry it off for afew years. But that made things much worse—in the end, I managed torack up more than $100,000 in debt.

It’s been many years since I made a U-turn on the road to financial dev-astation. First, I had to come clean to my husband, which was humiliat-ing. But by the time I hit rock bottom emotionally, he’d already found outabout my financial shenanigans because I could no longer afford to payfor the post office box.

Once I admitted my mistakes, my worst fear—that he would leave me—proved totally unfounded. Instead, we set a goal to repay all the debt,and did it one step at a time by saving, reducing our spending and stick-ing to a payback schedule. It took a long time (13 years!), but togetherwe repaid it all and found financial intimacy in the process—the placewhere we can be completely honest about who we are without fear ofbeing rejected.

What I didn’t realize until I began researching this article is how much Ihad been relying on money for personal fulfillment and how detrimentalthat was to our relationship. In a way, I was having an illicit affair withmoney.

“Money symbolizes a great deal about power and control, and the way acouple handles money is a reflection on how they view themselves as acouple,” explains Scott Stanley, PhD, co-director of the Center for Maritaland Family Studies at the University of Denver and co-author of You Paid


How Much for That?!: How to Win at Money Without Losing at Love.

Los Angeles marriage therapist, Steven C. Schoger, PsyD, agrees. “In onesense, the spender who is attracted to a saver is looking for a rescue,” hesays. Problem is, the spender may come to resent the control and railagainst the saver.

But simply understanding the dynamic can go a long way toward resolv-ing the problem. “When you accept that your spouse’s views aboutmoney are just different, it becomes easier to see that he may actually betrying to help you, not punish you,” Schoger says.

So, if my story of overspending sounds a lot like what you and yourspouse are going through, follow these steps to stop the arguing and getyour finances—and your marriage—on track.

Step 1: Turn off the TV and talk

It’s possible that you, like many married couples, talk about money onlyduring a heated argument. Tonight, turn off the TV and sit down for amoney talk. This first step may be the most difficult, but it will give you afoundation and mutual starting point.

If things are really tense in your relationship, mention the talk to yourspouse in the morning; that way he or she won’t feel ambushed later.Once you sit down, discuss where you are right now financially, whereyou hope to be, the fears, secrets, bills—all of it. How much debt do youhave? Is there anything left in savings? Give each other uninterruptedtime to speak, and make sure you listen to what the other person is say-ing.

“In order for couples to solve their problems, they both need to beheard,” says Jeffry Dew, PhD, professor of family, consumer and humandevelopment at Utah State University. And while you’re talking, take aclose look at the way each of you grew up.

“The way you deal with money has a lot to do with the way your parentshandled money,” says Schoger. “Many couples fail to talk about theirmoney beliefs and spending habits before they get married.”

If your dad always worked, paid the bills and gave you everything youwanted, you may expect your husband to carry on the tradition. But yourhusband may come from a background where his parents worried everyday because there was never enough money. His fervor to save maycome from his determination never to put his own family in that position.


Knowing your histories can help you understand and empathize withwhere you’re each coming from. Sure, one of you may need to put thepast to rest and just get over it, but verbalizing it can help you accomplishthat.

Step 2: Create an agreement

“Arguing never solves a money issue because arguments always end withone person having to accommodate the other, leaving the former feelingangry and resentful,” says clinical psychologist and marriage counselorWillard Harley, Jr., PhD, author of His Needs, Her Needs: Building an Affair-Proof Marriage.

The way to stop the arguments is with what Dr. Harley calls a “Policy ofJoint Agreement,” which you both write and sign. Basically, it says that nomatter who earns what percentage of your income, you both will decideequally how to spend it.

The agreement should state that you will negotiate in a courteous way (noyelling or name-calling) every spending decision (yes, even the groceriesand incidentals), with the goal of reaching a conclusion you can both behappy about. If you cannot agree on a certain item or how to spend ablock of money, “you do not spend until you can find a solution you canboth agree on enthusiastically—that’s the rule,” he says.

Easier said than done. “This requires a lot of negotiation,” says Harley.So how do you arrive at an outcome that works for both of you? Spendtime brainstorming, and don’t correct each other when you hear a planthat you don’t like. You can voice your opinion when it’s your turn tospeak.

If your brainstorming fails to lead to a solution, take a break, then talkabout it again at a different time.

Step 3: Get a spending plan

Now that you have your joint agreement in place, it’s time to face thenumbers: your income and outgo. A spending plan is simply a way towrite down and “pre-spend” your money on paper before you ever cashyour paycheck, so you won’t spend more than you’re bringing in.

Over a few one-hour sessions, work your way through how much moneyyou have and how it should be spent. Start by listing your fixed monthlyexpenses—the bills you have every month that you know you must pay(your mortgage, car payment, grocery expenses, credit-card debt). Sub-


tract those from your income. Now deduct your variable expenses (cableTV, gym memberships).

If you don’t know what you’re spending, take a month to carry around anotebook and pen, recording every penny that you spend. It won’t takelong for the lights to come on about where your money goes and howyou should cut back.

Step 4: Take aim at the debt

Research by the The National Marriage Project at the University of Virginareveals the more consumer debt—especially credit-card debt—you have,the greater the stress, which leads to more arguing and fights over otherthings that are not even related to money. Your goal is to stop adding toyour debt. Together, put the credit cards away in a safe place so you’renot tempted to use them. Then use my Rapid Debt-Repayment Plan Cal-culator, which creates a payoff plan for you to follow each month untilyou’re debt-free. You may be surprised at how quickly you can pay it offonce you stop adding new purchases.

Step 5: Give yourselves a break

No matter how hard you try, getting and staying on track is difficult—andwatching every penny can build tension. So negotiate a compromise likethis one that Dr. Harley recommends: From now on, each of you gets$50 per week to do with as you please. No accountability, no reports.Agree that anything beyond that weekly allowance must first show up inthe spending plan, and be subject to your policy of joint agreement.

“Successful negotiation creates a solution to every problem that benefitsboth spouses without hurting either one,” says Dr. Harley.

By following these steps that’s exactly what you’re doing.


Better Than Fast Food,Cheaper Than Eating Out

If you find it’s too expensive to eat out but you don’t have time to cookat home, “semi fast food” might be the fabulous way to combine the

best of those two worlds. We call it “semi fast food”—combining quick-service food with home cooking.

Pizza

The take-out pizza store in my neighborhood sells ready-to-roll pizzadough. I can buy a large ball of dough for $2.50, which makes a sixteen-inch pizza. That’s more than it costs to make dough from scratch. Butwhen time is of the essence, this is a fast, cheap, reliable alternative.

Using my own sauce and toppings, I can have really great pizza on thetable in no time at all. I do rely on this option quite often, particularlywhen we have last-minute guests. It is impressive to turn out such a high-quality delicious pizza so quickly. It is my little secret.

Not all pizza stores sell their dough (the national chains in my area lookat me as if I have three eyes when I inquire), but independents are typi-cally more than happy for the business—any business. In fact, one storenear me even lists this on their menu board.

Hint: You can freeze the dough and use it to make breadsticks and calzones, too.

Chicken

Just because you don’t have an entree for dinner doesn’t mean you haveto replace the entire meal. You can supplement a supermarket deliroasted chicken at home with your own salad and bread. Or maybe youhave the chicken but no sides. Large cole slaw and corn plus fresh bis-cuits from the drive-thru will turn that into a complete meal for far lessmoney than buying the entire meal.

Rice

As easy as it is to make at home, it pains me to suggest buying rice at aquick-service or other restaurant. But this is a great solution that can re-


duce an otherwise expensive meal replacement.

All Asian restaurants, even the quick-service variety, offer plain white riceas a menu option—usually dirt cheap. I can pick up a large container ofwhite rice for $2 or $3 in my neighborhood. It’s hot, fluffy, and perfectlycooked. At home I can serve it plain or enhance it by adding scrambledeggs, soy sauce, left-over chicken, peas, carrots, and so on.

Soup du jour

The fanciest fish restaurant in my community has a pricey menu. I meantake-your-breath-away expensive to the point that getting the check allbut ruins an otherwise fabulous meal.

However, their to-die-for New England clam chowder is renown andavailable for take-out at a reasonable price. I can only imagine they aretrying to discourage the annoying customers who come in on a cold win-ter night, take up space at a lovely linen-covered table, and linger overbig steaming bowls of hearty chowder, turning down the complete mealsand dessert.

That’s fine with me because picking up a quart of steaming hot chowderand sourdough rolls (also their specialty) is a terrific way to avoid a hugerestaurant tab when needing a meal replacement.

Lots of restaurants serve homemade soups that are available for take-out. Check around and then put that on your list of options when youneed to fill out or replace a meal inexpensively.

Big Salad

Pizza restaurants are notorious for offering big salads on their take-outmenus. It might be called a large antipasto salad. Typically it’s a big bedof lettuce and other greens plus a variety of pizza toppings, such asonions, olives, peppers, tomatoes, pepperoni, and cheese. Fantastico!

Toss it at home with your favorite dressing and you have a large, satisfy-ing, family-sized salad at a side-dish price. In fact, you could make thesalad the dinner entree by adding your own ingredients at home, such ashard-cooked eggs, garbanzo beans (chick peas), left-over chicken, beefand so on.

Now is the time to start planning how to replace a regular meal moreeconomically. You’re smart, so I am confident you will come up with ideasand strategies I’ve not considered.


But don’t get too excited. You want meal replacements to be as rare anevent as possible. Otherwise, all of the money you are not spending ongroceries will get sucked into the big black hole of fast food while thefood you buy at the grocery store goes to waste.


The Season of Giving

During the Christmas holiday season it seems everyone wants yourmoney. If you’ve felt a pinch from the current economic downturn,

imagine what it’s done to charities. Donations are down and expensesare up—just when most charities are facing increased demand for theirservices.

While charitable giving in the U.S. has experienced a certain level of re-covery, it is nowhere close to what it was prior to the beginning of TheGreat Recession.

Let’s get personal

Fundraisers and requests from charities used to bother me. So did thecollection plate at church. I felt guilty because no matter how muchmoney we made there was never enough to give away. And with all thedebt our family had (we had plenty!), how could I be expected to helpothers when I couldn’t even help myself?

Then our financial house of cards came tumbling down. It was ugly. Los-ing our business, our income and getting notice that our home wasscheduled to go into foreclosure was a huge wakeup call. When I was atthe darkest point, I made a promise: If I ever see another dollar, I’mgoing to give some of it away. First. Then I will do the best I can with therest. And I meant it.

Another chance

I did see another dollar, in fact many dollars in the following years. And Icould not wait to give to others and to myself. “Give and save first, thenspend” became my money management philosophy. We were not givinglarge amounts, just a few dollars at first, but when given from a heartbursting with gratitude, those gifts became powerful—for both me andthe recipient.

Giving from a heart of gratitude—not a sense of guilt—was the catalystfor turning my life around. Coming this close to losing everything mademe really appreciate what I didn’t lose—my family and my home. I wasshocked by just how good it felt to give to others—not because I had to,but because I wanted to experience that joy again and again.


Was it foolish?

From time to time a financial planner will argue with me that it was fool-ish to contribute to charity, my church and others while paying exorbitantinterest rates on credit-card debt. I disagree. Perhaps we could have paidthe debt down faster—it took 13 years—but I know myself. Giving gaveme a grateful heart.

The power of giving

Gratitude gave me the stamina and discipline to keep going all the wayto paying off the very last debt. Giving felt so good, it made paying offdebt and living on less possible. I could have never made it without somany blessings along the way.

If you don’t have money you can give right now because you want to de-vote all of your spare cash to getting out of debt, or you and your incomehave parted company for a season, don’t let that stop you. Give yourtime as a volunteer to help out in your community. Use your talents tohelp a school, church, public library, local hospital or other organizationwho would otherwise have to pay for that work to be done. Share thosegreat supermarket bargains (especially the buy-one-get-one free deals)with a local food pantry. Grow a garden next summer and share thebounty.

Your giving plan

Make a commitment. Giving is a very personal thing, so there are norules. The secret is to start somewhere, knowing you can make adjust-ments to your giving plan. We decided to give away 10 percent of our netincome. You might want to start with five percent, or two. Sign up for aspecific schedule if volunteering at a school or hospital. Mark your calen-dar for the days you will visit the food pantry. Whatever you decide togive, commit to it so giving becomes a habit. No amount of money or ef-fort is too small. Once you catch the giving bug you will be anxious to in-crease your commitment.

Pick your charity. Giving to a cause that you feel passionately about addsa special meaning to giving. If teaching is your passion, perhaps there isa needy classroom in the inner city that needs help. Love pets? Give toyour local animal shelter. Are you concerned for children? Find a shelterfor battered women and children that could benefit from your generosity.

You may feel more comfortable giving to a large charity that has profes-


sional management like The Red Cross, Salvation Army, Samaritan’sPurse or one of the many charities that benefits women around the worldlike Women to Women International. You’re bound to find a match whenyou open your eyes to all the needs around you.

Know your charity. Avoid getting ripped off by arming yourself with ex-cellent knowledge of the charity you support, if it’s an organization withwhich you are closely familiar. Make sure you have the charity’s correctname and address. Scam organizations will often select a name veryclose to a reputable organization to trick donors.

Next, request to see the charity’s latest IRS form 990—required to be filedannually by all IRS-recognized nonprofit corporations. Legitimate charitieswill be happy to provide information about themselves. Its 990 will showyou how much the organization spends on administrative costs and howmuch of the dollars they collect make it to the charitable cause.

As a donor you should know what they do with the donated funds andhow they do their work. Give to charities whose work you can observe inyour own community, if possible. You can request written literature and acopy of the charity’s latest annual report. As a guideline, the most rep-utable charities spend fewer than 40 cents from each dollar donated foradministrative costs, some a lot less.

Check for free. GuideStar.org has data on more than 850,000 IRS-rec-ognized nonprofits and posts each charity’s IRS required form 990 on itswebsite. Access to 990s is available with free registration at this site. An-other site, CharityNavigator.org rates charities according to their financialhealth and how efficiently they are run.

Keep good records. A fringe benefit of some charitable giving is a po-tential tax deduction if you itemize your tax return, which reduces theamount of your income that will be subject to federal income tax.

Don’t give cash. When donating to an IRS-approved 503(c) with the in-tention to take a tax deduction, do not give cash and do not give yourcredit card number to a telephone solicitor. Give your gift by check ormoney order so you will have a record for tax purposes.

Caution: The IRS requires that you obtain a receipt from the charity (acanceled check will not work) for all tax-deductible contributions of $250or more. If you donate through a charity’s website, make sure it is a se-cure site.

Hint: Before completing the transaction, look at that page’s URL in the


http://www.charitynavigator.org

http://www.guidestar.org/

address bar. It should start with “https.” If the “s” (which indicates the siteis secure) is missing, do not proceed. And if your donation exceeds $250,be sure that you receive a written receipt in the mail from that organiza-tion for your tax records.

Hang up. Generally, charities that rely on telemarketing spend way toomuch of their funds on fundraising. Once you realize the call is from anonprofit organization—they are exempt from the Do Not Call List—po-litely excuse yourself and hang up. If it’s an organization you’d like tosupport, contact them directly. More of your dollars will make it to thecause. Telemarketers work on commissions which eat up donation dollarsquickly.

It’s good for us

Giving makes us happy. It’s a fact. Givers are happier people than non-givers. The Social Capital Community Benchmark Survey, a survey of30,000 American households, revealed that people who gave money tocharity were 43 percent more likely than non-givers to say they were“very happy” about their lives.

Another study conducted by social psychologist Elizabeth Dunn at theUniversity of British Columbia determined that people who donate theirdollars to charities or splurge on gifts for others are more content thanthose who squander all the dough on themselves.

Giving makes us healthy. One study conducted by the nation’s top uni-versities—Harvard, Princeton, Yale and Stanford—and reported in TheChristian Post, revealed people who are givers see the benefits of delayedmortality, reduced depression, increased well-being and good fortune.

“Give daily, in small ways, and you will be happier. Give and you will behealthier. Give and you will even live longer,” says Dr. Stephen Post,bioethicist and co-author of the book, Why Good Things Happen to GoodPeople: How Daily Giving Is the Key to Health, Happiness, and a LongLife.

Giving makes us rich. That goes for individuals and nations, too. TheSocial Capital Community Benchmark Survey provided credible results:People who give charitably make significantly more money than thosewho don’t. More giving doesn’t just correlate with higher income; itcauses higher income. And when people earn more, they give more, sothe wealthier they become.


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