Friday, February 29, 2008

How Ordinary People Can Survive the Tough Times

What people can do to survive the tough times is to develop the lifelong financial habits that will get them through this storm and every one that comes in the future. Here are some specific ideas:
1. First of all, junk the word "budget." For most people, it is worse than "diet" and means lack, scarity, crummy choices, deprivation. Instead, decide to have a spending plan, which is telling your money where to go instead of wondering where it went. If you study people who handle their money well, one of the things that pops up regularly is that they track their spending. Two steps are involved: first, decide how much you will spend in each category, then track your actual expenses. The easiest way to do this is on an index card you carry with you everywhere, either in your wallet or your purse. When you go to the ATM, enter ATM cash and forget tracking every cent. That is what really makes people crazy.
2. Saving v debt payment. In my opinion, go for paying down debt. You still have the capacity to "reborrow" later. Most people waste so much money on paying interest, particularly for credit cards! Right now credit cards carry an interest expense of typically 9-20% while savings accounts only pay 2-4%. Not only will you save on interest, but the psychological benefit is HUGE! You can't believe what a relief it is when people can say, "I paid off all my credit cards," or "I am out of debt completely except for my mortgage," or best of all, "I don't owe a cent to anyone for anything!! I am completetely financially free!" Debt really is slavery.
3. Most people spend double on grocery shopping what they have to spend if they would get serious about it. Shop from a list, never randomly walk the aisles. Pick generics, so long as they taste good (which is true about 95% of the time now.) Shop from the store specials, available in newspaper flyers and at the door of the grocery store. Plan your menus from the specials, not from what you are in the mood for. Stock up on things on sale. There's a great book called "The Grocery Store Game" by Janine Bolon that details all the ways people can cut their grocery bills in half. I recommend this book frequently.
4. The best protection in hard times is to do the little things right, day after day after day. Make sure that you are living on less than you make so that you can stay out of debt and save money every month. Learn to say no if saying yes means you have to take on more debt. Buying things with debt (credit cards or loans) simply means you are buying things you cannot afford. Participate in your employer's retirement program, whether it is a 401(k), a 403(b), a 457 plan or a SIMPLE IRA. At the minimum, contribute whatever your employer will match. Do a Roth IRA if you are eligible, particularly if you have no company plan.
In my opinion, the top of the list for getting on top of your finances is to track your spending. The reason this is so powerful is that most people are unconscious with their money. Their brain never gets in gear. They truly are not aware of how much they are spending or where they are spending it. Once someone begins to track their spending, the lightbulbs start to come on. You cannot change what you are completely oblivious to! Most people are oblivious to their spending choices until they start tracking their spending.
I have lost track of how many clients I have who have begun to track their spending after we began to work together. Without fail, within a year, every one of them has said it was the most powerful thing they have ever learned about handling money and that they feel like they are in charge of their money for the first time in their life. If you want much of the financial stress in your life to go away, start tracking your spending!

Thursday, February 14, 2008

How to Stop Friends and Relatives from Borrowing Money

I'm Jan Dahlin Geiger, CFP®, MBA , author of "Get Your Assets in Gear! Smart Money Strategies." A Certfied Financial Planner™ practitioner since 1988, I've been quoted in the Wall Street Journal, MSN Money, USA Today, Reader's Digest, and SmartMoney Magazine. I have been on the board of directors of the Financial Planning Association (Atlanta chapter) and practice as a fee only planner with a Registered Investment Advisor firm. Additionally, I am the financial expert on the cable TV show, "Living Life With Style" on WCTV-24 in Atlanta and the internet radio show "Wall Street Chic."

Preventing friends and family from asking to borrow money is really, really easy. Just say no. It is no different than training children. Children will always ask for what is going to bring immediate gratification. They only way they stop doing this is to hear no over and over again. Friends and family will only ask to borrow if you say "yes" and reinforce that behavior.

If you have been saying yes in the past and now want to start saying no, here are some ideas to try to get through the transition.

1. Joe and I (Mary and I) have discussed this and we have agreed that we are not yet in a financial position to be providing loans at this time. (Then shut up! Do not explain, do not get them to buy into your logic. Just say no politely.)

2. I'm sorry, we can't do that, but I'll be happy to help you prepare a loan application for the bank/credit union.

3. I'm sorry, we can't do that, but I'll be happy to help you find a reputable credit counselor who can help you set up a plan to get out of debt.

4. I'm sorry, we can't do that, but I'll be happy to help you work on a spending plan that will work for you.

5. I'm sorry, we can't do that. I understand you are desperate right now, so we'll be happy to help you find a soup kitchen that can feed you or a church that could provide clothes or emergency shelter (or whatever the need is).

My husband and I are the most affluent in our families (by far) and no one asks for loans any more because they already know the answer is no. They already know we will offer to help them learn to fish, but we will never hand them a fish.

Monday, February 11, 2008

Wall Street Chic

Coming up next on Wall Street CHIC Live Talk Radio Show on www.WallStreetCHIC.com

Tuesday, February 12th, 2:30-3:30pm ET
Get Your Assets in Gear:
Smart Money Moves for Women

Listen live at WallStreetCHIC.com and call in with your comments or questions on money! Get answers from Wall Street CHIC's Personal Finance Coach, Jan Dahlin Geiger, a Certified Financial Planner and multimillioniare.

Jan Dahlin Geiger
Multimillionaire
Certified Financial Planner and MBA
Bestselling Author
Wall Street CHIC Personal Finance Coach