Reset Your Finances During Black History Month

According to Pew Research Center, approximately 40% of Black adults say they have an emergency fund that would cover their expenses for three months. One of the main reasons people go into debt is because they lack the necessary cash to pay for the unexpected in life.

If you began 2024 with a New Year’s resolution to get your finances in order, but have not made much progress, consider investing in some form of coaching. If Al and Lesia, who aren’t that different from you, were able to get their financial house in order, chances are you can too. Here’s the secret: You must be intentional about how you invest your time on the front end to get a return on your investment on the back end.

Let’s assume, during their first year of marriage, Al and Lesia spent 3 hours each month (36 hours per year) perfecting, more like arguing about, their spending plan. Now, they spend approximately 5 minutes each month (1 hour per year). Here’s another way to look at it. They saved over 700 hours (35 hours/year x 21 years) by being intentional with money early in their marriage. What would you do with this much extra time? Answer: Have more fun!

When people make the choice to let money happen to them instead of them happening to money, it causes more stress. Do yourself a favor and start counting your money then giving every dollar you earn instructions to make sure it behaves. If, after a few months, you are not satisfied with the results, go back to your old way of doing things.

Read Pew Research Center article

Riddicks Celebrate 16 Years of Debt-free Living

The expression “Happy Anniversary” can often be applied to more than just weddings and years of employment. On December 21, 2023, Al expressed these words to Lesia and her response was, “For what?” Al was acknowledging their accomplishment of living another year debt-free. In fac, over 75% of the couple’s 21 years of marriage has been lived without any consumer debt.

Making the decision to buy your life back is one of the most difficult challenges people face as they strive to achieve a debt-free lifestyle. After looking back on their journey, here are a few tips that helped the Riddicks:

  • Marry the right person: Financial disagreements are bound to happen, however, when both parties can come to a mutual agreement, it reduces stress.

  • Understand your spouse’s relationship with money. Questions that begin with what, when, or how usually produce the best answers. Avoid using the word why because most people find it offensive.

  • Spend money on what you value as a couple.

  • Implement simple and easy-to-duplicate systems for saving, investing, and debt reduction.

  • Determine a monthly allowance that represents each person’s fun money.

  • Select a consistent day and time each month to review your spending plan for the next month.

  • Track what you plan to measure: projected spend versus actual spend, debt reduction, change in net worth.

  • Plan for predictability. Many aspects of your financial life are predictable and planning accordingly helps with cash flow management.

  • Rinse and repeat!

You Already Have Enough Discipline

  • One of the comments people often say when trying to figure out why they might be underperforming in the area of personal finance is, “I wish I had more discipline.” The funny part about this statement is that people already have discipline, but it usually has never been focused on money. How many ways can you think of in which discipline is displayed in your life on a weekly, if not daily, basis? Here are a few clues:

  • Going to work when you don’t feel like it

  • Keeping your barber, hair and nail appointments

  • Deciding what to eat for breakfast, lunch, and dinner

  • Making an effort to work out

  • Locking your car and house doors

  • Closing your garage door

  • Helping your children with their homework

  • Driving your children to and from school

Recently, Al proved to himself that he could be disciplined with something besides money. He went to Red Lobster for lunch and the waitress placed this in front of him:

During his past visits to Red Lobster, Al would have eaten all five biscuits and asked for more. In a previous newsletter, Al mentioned how he was able to get his cholesterol down to 183 from 221. Notice the one biscuit that is sliced in half. That is all he had.

When his meal came, he couldn’t take his eyes off the remaining 4.5 biscuits. Every time Al thought about giving in, he said to himself, “I have the power. These biscuits can’t control me!” One of the most difficult things a person can do is come face to face with one of their greatest temptations and not give in. That requires discipline. Al has it with money and now he has proven to himself that he has discipline with food. What one financial behavior can you modify during December to prove to yourself that you can control your behaviors with money? Remember, every journey begins with the first step and today could be your day.

If you need some inspiration, here’s a 30-second video featuring 7-time Grand Slam singles champion Venus Williams and her thoughts on discipline:

https://www.tiktok.com/@elenacardoneofficial/video/7264910022222564650

Financial Questions Most People Don't Answer

Discussing personal finance can be a sensitive topic for many individuals. Some questions may make people uncomfortable due to their financial situation, beliefs, or lack of knowledge. Here are five personal finance questions that some people might find challenging to answer:

 What is your current credit score, and how did you achieve that score?

Credit scores can reveal financial habits, debt levels, and past financial mistakes. People may be reluctant to disclose this information due to concerns about judgment or embarrassment.

 What are your total monthly expenses, and how much do you save each month?

Revealing one's expenses and savings can be uncomfortable, as it may expose financial vulnerabilities or demonstrate a lack of financial discipline. People might fear judgment or comparison with others.

 Have you ever declared bankruptcy or faced a financial crisis, and how did you overcome it?

Admitting past financial struggles can be difficult, as it involves discussing failures and setbacks. People may feel ashamed or judged for their past financial decisions or circumstances.

 How much debt do you currently have, and what are the interest rates on your loans?

Sharing details about debt can be uncomfortable, as it exposes financial liabilities and potential financial stress. Many individuals may worry about being perceived as financially irresponsible.

 What's your net worth, and how did you calculate it?

Calculating and discussing net worth involves sharing details about assets, liabilities, and financial accomplishments. People might hesitate to reveal this information due to concerns about being compared to others or feeling inadequate.

 It's essential to approach these questions with sensitivity and respect for individuals' privacy and comfort levels when discussing personal finance. Financial discussions should prioritize empathy, understanding, and providing helpful guidance rather than making anyone feel uncomfortable or judged.

Ever Think About Your Annual Physical and Personal Finance? You Should!

Getting an annual physical and personal finance strategies may seem unrelated, but they share several similarities in terms of the importance of regular assessment, proactive planning, and long-term well-being. Here's how they compare:

 Regular Assessment and Monitoring:

  • Annual Physical: An annual physical involves a comprehensive health check-up to assess your overall well-being, detect any potential health issues early, and monitor your progress.

  • Personal Finance: Regularly reviewing your financial situation, budget, and investments allows you to track your financial health, identify areas of improvement, and make necessary adjustments.

 Preventive Measures:

  • Annual Physical: Doctors may recommend preventive measures such as vaccinations, screenings, and lifestyle changes to avoid potential health problems.

  • Personal Finance: Implementing strategies like building an emergency fund, having adequate insurance coverage, and maintaining a budget can prevent financial crises and minimize the impact of unexpected events.

 Long-Term Planning:

  • Annual Physical: Doctors help you develop a long-term health plan based on your current health status and risk factors, focusing on maintaining or improving your health over time.

  • Personal Finance: Creating a long-term financial plan involves setting goals (e.g., retirement, education), saving and investing strategically, and adjusting your plan as circumstances change.

 Early Detection and Correction:

  • Annual Physical: Catching health issues early allows for prompt treatment and a higher chance of successful recovery.

  • Personal Finance: Identifying financial problems or oversights early lets you address them before they escalate, potentially saving you from larger financial challenges later on.

 Proactive Lifestyle Changes:

  • Annual Physical: Doctors may recommend lifestyle changes (e.g., diet, exercise) to improve your health and prevent future health problems.

  • Personal Finance: Making positive financial changes like cutting unnecessary expenses, increasing savings, and avoiding debt can lead to improved financial health and future stability.

 Expert Guidance:

  • Annual Physical: Healthcare professionals provide expert advice and guidance based on your individual health needs.

  • Personal Finance: Financial advisors or experts can offer personalized advice to help you make informed decisions, manage risks, and achieve your financial goals.

 Consistency and Discipline:

  • Annual Physical: Regularly scheduling and attending annual physicals demonstrates a commitment to your health and well-being.

  • Personal Finance: Consistently following a budget, saving regularly, and sticking to your financial plan demonstrate discipline and contribute to your financial success.

 Both annual physicals and personal finance strategies emphasize the importance of proactive measures, planning, and ongoing evaluation to ensure your long-term well-being. Just as regular check-ups contribute to a healthier life, consistent financial management contributes to a more secure financial future.

Quitting Helps Improve Personal Finance Results

Most people have routines in their lives and personal finance is one area where good habits should be developed while bad ones are eliminated. This may seem simple at first; however, modifying a behavior that has existed for five, ten, or sometimes twenty years is one of the most difficult challenges a person can face. Just because a task is difficult to do does not mean it is impossible. Here are some habits to stop that could help the average person have a better relationship with their money:

Not setting financial goals: Without clear financial goals, it is challenging to stay motivated and make progress. Imagine driving a car without a specific destination in mind. Not only does this waste money in gas, it also decreases the likelihood that the journey continues because it is pointless. Define your short-term and long-term goals and develop a plan to achieve them.

Impulse buying: Avoid making unplanned purchases on a whim. Instead, practice spending with intention and only buy things that align with your financial goals and priorities.

Failing to track expenses: Monitoring expenses on a weekly basis helps identify areas where a person can cut back and save more. Most banks and credit unions allow people to download their transactions into a spreadsheet. Budgeting apps can also help with monitoring spending. Having access to this information is worthless if it is not used to make your money behave.

Ignoring budgets: Stop neglecting budgeting or not having a budget altogether. Creating and sticking to a spending plan is essential for understanding where your money goes and making informed financial decisions. Imagine running a business and accumulating expenses without ever comparing that total to the amount of revenue being created on a monthly basis. This behavior is not sustainable. It never has been and never will be. Click here to download the GTB cash flow planning tools to Google Drive

Not saving for emergencies: Avoid the mistake of not having an emergency fund. This basic step in the journey to financial wellness is what prevents people from achieving their potential. Instead of aiming to save at least three to six months’ worth of living expenses to cover unexpected financial setbacks, set a goal to save one months’ worth of grocery. Repeat this process every pay period and prove how simple it is to achieve a four- or five-figure emergency fund balance.

Using credit cards in a random manner: Relying heavily on credit cards without a plan to pay off the balance each month can lead to debt and interest payments that keep going and going like the Energizer Bunny. Instead of getting excited about earning cash back or reward points, focus that energy on increasing income to ensure the balance is paid in full.

Not investing or saving for the future: Failing to invest or save for long-term goals like retirement can hinder your financial growth and security. Start early and contribute regularly to retirement accounts and other investment vehicles.

Ignoring debts: Ignoring debt or making only minimum payments can prolong your financial stress and lead to higher interest payments. Develop a plan to tackle your debts strategically. Reference the GTB Debt Blitz form in the cash flow planning tools. 

Comparing yourself to others: Avoid comparing your financial situation to others. Focus on your own goals and progress. Most people only show you their spending habits. A person’s real financial truth can be answered with one question; How long can you survive without working for money?

Ignoring financial education: Personal finance is a lifelong learning process. Invest time in educating yourself about money management, investments, and financial strategies.

Breaking these habits requires discipline and consistency which everyone already has. The opportunity lies in replacing old bad habits with new positive habits like regular saving, investing, and budgeting. Over time, these changes will help build a strong foundation for better personal finance management.

Three Things Money Can't Buy

Money is an essential tool that allows people to provide for themselves and their families by having access to basic necessities like shelter, food, clothing, transportation, and insurance. Although it is vitally important throughout life’s journey, money cannot buy everything. When thinking about some of your most enjoyable life experiences, the first thing that comes to mind is probably not money.

In addition to the most often heard things money cannot buy —­­ time, health, and happiness — there are three additional items which belong on the list:

Passion: The probability is quite high that there is at least one thing you enjoy doing despite the fact that money might not be your driving motivation. Passion can show up in many ways. Some people have a passion for cooking, landscaping, teaching, volunteering, or traveling. Your passion could be something you are genuinely interested in doing. It might cost money to do, but the enjoyment you get from that particular activity is far more valuable than money. Money can’t buy your passion; however, it can help unlock the door by providing more opportunities to try new things.

Knowledge: Not everyone has a quest to obtain knowledge through real-life experience. There may be people in your life who routinely make the same mistakes (e.g., financial, relationships) despite the fact that you believe they know better. Just because people know better does not mean they will automatically do better. This is the main difference between education and knowledge. Education can be a formal process like attending school or college. Knowledge is based on accumulating information gained through experience. A good education can lead to a high paying job, but that doesn’t mean a person who earns a high income has mastered the art of personal finance. This skill can only be gained through experience or the willingness to emulate the behaviors of someone who has experienced financial success.  

Genuine relationships: When people only want to be associated with you because of your status, possessions, or influence, RUN! These types of individuals are looking to gain something from you. Beware of Takers! They are easy to identify because their normal pattern of behavior is to be in a position of receiving because they rarely, if ever, give. Unfortunately, this often shows up more in family relationships than friendships. Authentic relationships can’t be bought and, more often than not, are formed through time and effort. Real friends usually act in a way that shows they do not mind spending time with you, sharing your interests, or showing up in your time of need. The same can be said of familial relationships as well.

Money cannot buy everything and it does not have the power to make you happy and fulfilled; however, it is important. If you had $100,000 more today than you did yesterday, your relationship with each of the previously mentioned topics would not change much in the short-term. In addition to some of your needs and wants being met, you might find some temporary fulfillment and satisfaction. To achieve long-term happiness, something not as tangible as money can give you that. Success in life rarely has anything to do with having a five- or six-figure bank account balance. Money is only a tool.

Level Up Your Financial Life Today

One of the lessons most often heard by young people new in their careers is, “Start saving now for retirement.” Unfortunately, it can easily fall on deaf ears because it is difficult for youth to imagine themselves growing old and living off money they’ve saved for decades. Not to mention how they have to deal with the FOMO (fear of missing out) or YOLO (you only live once) mindset.

 If you can’t imagine the older version of yourself, try the aging booth app. After you snap a photo of your face and see yourself age 10 or 20 years, answer two questions: 1) What kind of life do you want your future self to have? 2) What behaviors with money do you need to improve or modify to give yourself the best chance at making your future life a reality? When Al and Lesia answered these questions many years ago, learning about investing was one of their action steps.

 Once you understand the basics of what to do with your money, the biggest challenge is taking action and having the discipline to duplicate the appropriate behaviors over and over for years. The second biggest challenge is resisting lifestyle creep (i.e., the more you make the more you spend). This is where most people experience self-inflicted financial pain. It can be hard to put off spending a dollar today with the calculated hope of being able to turn that $1 into $4 in the future. Usually, once this task is mastered, the process becomes easier.

 Accumulating new stuff throughout your life is almost second nature, but the excitement attached to the new stuff quickly fades away. You might thank yourself, later in life, if you learn early that time and money can be the best of friends. Or better yet, if you have an affinity for acquiring new things, why not figure out more ways to acquire new money. There are many ways to do this: business ownership, entrepreneurship, investor, real estate. The key is to determine which way is best suited to your behaviors.

 Al thought it would be fun to look at how he and Lesia’s finances have changed throughout their 20 years of marriage. To answer this question, he opened an Excel file which captures two decades of their financial lives at a glance. There were two times when their net worth decreased from the previous year (10% of their marriage) and 18 times where it increased (90%). Those are pretty good odds. The largest decline was $134,972 and the largest increase was $698,734. Despite the ups and downs, their monthly behaviors have remained the same.

 Life happens no matter how much you try to plan and prepare. Nobody is immune from situations that might make them tap into their emergency fund. Here are a few examples of unexpected expenses for the Riddick household from Al’s 20-year snapshot: basement flood, replacements of the AC unit, furnace, hot water heater, oven, refrigerator, dishwasher, and roof. On top of all that, Al was laid off in 2010. Whenever a new obstacle comes your way, the only rational thing you can do is meet it head on and figure out a way to get through it or over it as quickly as possible.

Spend some time, after reading this post, to determine what you want out of life and then begin devising a plan to get it.

Getting Fired Can Save You Money

People who enjoy yard work have always been a mystery to Al Riddick. While growing up in Littleton, NC, he mowed lawns so he could afford to buy brand-name gym shoes and clothes. Today, he hates the scent of freshly cut grass because it reminds him of all the hours he spent in the sun mowing lawns in his youth.

His wife does not believe he once entertained the idea of having a yard full of dirt and rocks instead of grass like normal homeowners. Luckily, when Al was searching for a home pre-Lesia, his realtor convinced him that idea would hurt his resale value. Because they do have grass, Al prefers that it look nice so he gets the lawn treated and mowed. One of his neighbors once mentioned that their grass looks like carpet.

 

Because Al loves making a deal, he pays for lawn care in a lump sum to receive a discount. Here’s the December 2022 bill:

Instead of paying the discounted bill, Al called the lawn care company and talked with a customer service representative. Eventually, they agreed on a lower price which represented a 10% discount.

 

Recently, Al received a check in the mail from the lawn care company for $459.46. To resolve his confusion, Al contacted the company and learned that his service had been canceled by accident. After resolving this mystery, Al was instructed to deposit the check. He was then billed $433.44 for the remaining services. After crunching the numbers, Al saved a little over 14% for getting fired as a customer.

 

Paying for routine services in a lump sum can usually create opportunities to save money. The additional cash flow generated by the cost savings can be put toward building wealth or paying for something else. More cash flow equals more options; the choice is yours.

An All Too Familiar Financial Story

From an early age, the value of a good education is drilled into the minds of most youth. Based on this information, the process of going from elementary, to middle, to high school begins. Along the way, learning different types of arithmetic and math is expected: ABC’s and 123’s, decimals, ratios, percents, Algebra I, Geometry, Algebra II, and Calculus. Throughout this system of indoctrination, the connection between addition, subtraction, multiplication, division, emotions and money is rarely taught.

When people understand the importance of four simple calculations, it is easier to make quality financial decisions. Remember when you were finally in a position to borrow enough money to finance your first car or house? How much of your purchase was based on emotion and how much was based on math? Or better yet, remember the feeling you had after receiving the new car or new house keys? Isn’t it funny how quickly excitement seems to fade after you’ve made a series of monthly payments?

As with all things, eventually boredom sets in and the desire to feel good and look good becomes greater than the desire to live below your means. Since most financial transactions are done in secret, the weight of more debt and higher monthly expenses is usually counterbalanced by one self-talk declaration: I deserve this! Replacing that statement with the question, “Can I afford this?” should yield better financial outcomes. Months and then years go by without realizing the financial impact of short-term decisions. It is easy to do because the act of counting money when making a purchase has been replaced with the action of inserting, clicking, swiping, or scanning.

Fast forward another few years and living life without a budget could make a person believe they don’t work. However, the truth is that budgeting, when done correctly, works 99.9% of the time. Budgets are only as good as the level of commitment toward staying within the boundaries of income and expenses. Unfortunately, as a person’s income increases, some of the things that once were considered luxuries incorrectly become necessities. Confusing the two can make the journey to wealth creation long and difficult. 

Rewriting this common financial story can begin tomorrow. Imagine how your life could change if you started using math instead of uncontrolled emotions before making financial decisions. What if you took the time to think about the short- and long-term implications of your spending behavior? How much less stress might you feel if you decided to take 100% control of your financial future from this day forward? There are several possibilities within reach. The only thing you have to do is determine what you want money to do for you now and in the future. Once you have that answer, create a system which produces that result. All systems can be improved, so if you have to tweak yours, that’s what learning looks like. 

AmEx Comes to Al's Rescue

Al returned his rental car to the Philadelphia airport on November 10, 2022 after a trip to NJ. He noticed a crack in the windshield and told the rental car representative. This gentleman used a white crayon to circle the cracks so it could be repaired. The next day, Al received a letter from National with the following words: “Thank you for your recent rental. Our Damage Recovery Unit has received notification of damage or loss to the vehicle you rented.”

The windshield repair was $615.00. Al thought about how he could get this paid and remembered reading about one of his American Express card benefits: Car Rental Loss and Damage Insurance. Al filed a claim with AMEX Assurance Company and was asked to submit the following:

  • Open Rental Agreement

  • Photos

  • Accident/Incident Report

  • Itemized Repair Estimate

  • Car Rental Agency’s Demand Letter

After a few weeks of waiting to hear about the outcome of his claim, Al was thrilled to read an email on December 19, 2022 which contained the following.

Although AMEX Assurance Company would not cover the $100.00 Admin Fee, Al was excited to pay only 15% of the total cost out of pocket. In his mind, it was like paying  a very low deductible.

Do yourself a favor and learn more about the benefits of your credit card. If you carry a balance from month-to-month, the cost more than likely outweighs the benefit.

Jumpstart Your Financial Fitness in 2023

Al and Lesia had their 20th annual financial year in review meeting during the first weekend in January. Here are a few questions from their meeting that might help you stay on track in 2023:

  1. What is your savings goal for this year?

  2. What behavior modifications are needed to ensure you hit that goal each month?

  3. What future non-monthly expenses should you prepare for now?

  4. What automatic transfers need to be created to reduce monthly financial stress?

  5. Since increasing income and minimizing living expenses are two ways to improve cash flow, which one can you do with the least amount of effort?

  6. How much money do you need to start saving each month to ensure your next vacation is paid for in cash?

By December 31, your life could look much different than it does now. What other questions would you add to this list?

The Day Al Lost $462,000

Investing is one of the ways the average American can build wealth. People often say, “I need to make my money work as hard for me as I do for it.” That phrase sounds nice until you feel the term risk tolerance smack you in the face. Your money can work hard for you, but every now and then, it experiences a few sick days. In the current economic environment, it may feel like your most valuable possession is on long-term disability and you don’t know when it will return to work full-time.

Recently, Al became curious to discover how much money he and his wife had lost in the market since the beginning of this year. To his amazement, discovering they now had about half a million dollars less than they did on December 31, 2021 made him pause. The intriguing part about this fluctuation in wealth is that it proves nothing lasts forever.

When everyone was enjoying the bull market run, it would have been easy to think that was a new norm; however, that would have been a huge miscalculation. Now that stock prices have declined, becoming too emotional might make some people deviate from their financial plan. Time in the market usually yields better results than timing the market. The decision to drastically modify your current plan could prove to be catastrophic. Selling when prices have dropped to this extent locks in your losses forever. Alternatively, your emotional sweet spot is found when you can follow a proven plan despite the ups and downs.

Experiencing almost a half million dollar loss in wealth is somewhat intriguing simply because you realize how much time it takes to accumulate that much wealth in the first place. The market does what the market does. Nobody can predict the future and if someone tells you they can, run!