How to use the 'first car' as a great financial lesson with your kids….

There are many 'teachable' moments in terms of 'finances' that we can use in guiding our children. The 'first car' is one of them.   Putting your kids on a 'commission' at an early age and paying them once a week for their chore list,  instills that they earn when they work.  They gain a sense of 'ownership' and 'pride" in their efforts. They get to watch their efforts accumulate and they can set goals for how they will use THEIR money.

I wrote a blog post just about one year ago and TODAY there is a new car sitting in my driveway! My son Alex had diligently saved HIS money for his first car. I had established early on (age 12) that I was not buying him his car (same with his sister 5 years ago so he knew I was serious) I will 'match' what he saves up to $3000. I had to set a threshold, because Alex would have worked and saved diligently to get the car he wants which could have turned out to be a $14,000 'first car'.   Let's face it, when it's their funds they are using, they make more calculated decisions, versus when we are picking up the tab. So he sifted and sorted over the past three months to find what his money could get him. He found a 2009 Dodge Avenger with just over 130,000 miles and got it for $1000 under book value at $4000! (trust me when I tell you he seemed more concerned about not using up his entire 10 years of savings in one spending spree!) When we let our kids know that we aren't paying for all they want because we already provide what they 'need' they may at first seem slighted, but they come around eventually.

Through this process HE learned patience. HE learned goal setting. HE learned contentment. HE learned to negotiate. HE learned to shop and research.  And most importantly HE learned he was capable.

I believe these qualities are so important and if I can use the 'first car' as a way of invoking them, it's a win win for both of us! Have you thought about milestones that you can use to raise financially responsible young adults?

WANT TO RAISE FINANCIALLY HEALTHY KIDS? GIVE UP IGNORANCE AND KEEPING UP WITH THE JONES'S...

• Living in a bigger house
• Driving more expensive cars
• Wearing designer clothing 
• Birthday party for Billy and his 15 friends 

All of these are great to have but I'm an advocate for having what you need before having what you want. I teach my clients the tools of building and protecting the '4 walls' (food - shelter- transportation- clothing) and building a solid foundation BEFORE you put the roof on.

Many families today "feel" (yes emotion drives 80% of our money handling) as though their children will suffer if they don't have the newest bat, the UGG boots, and the party for 15 at Chucky Cheese. I truly believe this started with our 80's generation because I don't remember my parents being focused on making sure I had $100 pairs of NIKE's, and a birthday party that cost as much as a monthly car payment. They knew better.  Sure, they had there set of 'keeping up with the Jones's too' but the credit frenzy was just beginning when I was a teenager. We had the Sears and JCPenney cards (didn't everyone?) but I didn't watch my parents charge the washer/dryer on 90 days same as cash. They didn't finance our childhood pet. They did what most American's did before credit became a 'normal way of life" they paid CASH and only when they could afford it. 

So how is this new credit action affecting our children? Really think about the long term effects our buying decisions and behaviors have on our kids. If you are using credit cards to get your nails done, take the family vacation, and stopping at Panera, Papa Gino's, and Outback for dinner this week, these are the behavior patterns our kids see AND become accustomed to.  They don't SEE cash leave your hands. They don't SEE half of the weekly paycheck going out the door for the family cell phone plan with unlimited minutes, texts, and data. They don't SEE the cable bill came in $70 higher because it snowed for three days and school was canceled, and the added cost of 'hitting the rent movie button' actually takes away from the normal budget.  Unless you are talking to them about what it takes to run a household and modeling the things you know will create healthy adults down the road, you are missing out on an opportunity to teach your children what Mastercard & Discover will teach them if you don't. Start using an 'envelope system". I'm a huge fan of what this one tool provided in terms of my kids SEEING a change in my behavior. When we stopped for a bite to eat at a drive thru for example I had my son pull out the envelope and the unfamilar cash to pay for the order. Same at the grocery store, if they are with me, they open up the envelope and can see the $$ leaving .. they also are quick to count what's left and tell me 'that's it? we better be careful!"  I'm proud of this because I know there is a huge difference in their awareness (not just mine) that has benefited them with my changing my pattern from ignorance to understanding. 

TO ORDER DAVE RAMSEY'S DELUXE ENVELOPE SYSTEM CLICK HERE: 

DON'T LET A "TREAT" SCREW UP YOUR PLAN TO CRUSH YOUR DEBT!

Sometimes, when you're working your plan to pay off debt and get to your debt free dream, you feel the need to treat yourself to something!  I came across a really neat budget tool to help decipher the 'cost' of opting to buy yourself a 'treat' while you are working your plan to pay off debt.

For those of you who know my personality or work with me one on one, I'm a FACT based decision-maker.

I ask my clients to look at both the pros and cons  of decisions BEFORE making them. It's easier to 'own' your final decisions knowing the impact it has on your goals/plan.  It's so important to look at the 'treat' and know HOW it will affect your debt pay down plan.

For example,  if you currently are on task to pay off all of your debt within the next 46 month, a 'treat decision' can actually delay you by many additional months, maybe even a year. For example if you are currently paying down $22,000 of debt at an interest rate of 12.99%, making normal monthly payments, a $4800 Disney Vacation 'treat' would actually become a $6119 vacation!

Click the link and try it yourself…

http://www.whatsthecost.com/treats.aspx


Treating yourself occasionally can be a good way of keeping motivated or rewarding yourself while dealing with debt. This calculator isn't designed to convince you not to treat yourself, simply to give you an idea of the real cost!

CURRENT STUDENT LOAN DEBT IN THE U.S. IS $1.3 TRILLION (and counting)

How can this be?

The student loan debt in the USA has creeped up to over a TRILLION DOLLARS and now we are starting to pay attention?!  Many people sign up for college, knowing that to advance in careers education is key. What they don't always do is 'weigh' out the reality of what these future loan payments will look like when 'life after college' begins.

I'm all about helping clients PLAN. Planning is how we succeed with money.

Here's a great tool to help you understand your student loan repayments in relation to your possible starting salary https://bigfuture.collegeboard.org/pay-for-college/tools-calculators

Don't make decisions about your future without preparation and knowing the facts!

YOU CAN'T WISH AWAY YOUR DEBT! YOU MUST HAVE A WRITTEN PLAN!

Many of my clients sit with me during their first session and say they just CAN'T cut their spending in certain areas, but we all know it comes down to wanting to get out of debt bad enough to make some serious changes.  Sitting down and filling out a basic budget is the first place to start. If you continually chose not to look closely at what is coming IN versus what is going OUT you can't possibly know what or where to cut.  It not just about cutting spending, its about DIRECTING your money.  If your goal is to get out of debt you must direct dollars TO the debt in order to crush it and make it go away.

       You can't wish it away.

       You can't dream it away.

And while you may think you can 'earn your way' out of debt, I find many people get raises and still can't tell me where that money went this year. For many of us, the more we make, the more we spend.

It takes a PLAN. A WRITTEN PLAN.

This is where a financial coach comes in. My job is to sit down and help people establish and learn how to plan, decipher and WIN WITH THEIR MONEY.  It takes a few sessions for us to get your money plan in order but once it's written you can start implementing and working your plan.  The accountability helps for sure. The guidance as well.  Take the first step towards winning with money and hire a coach!

Check out my coaching 101 package at Sick of the Hustle Coaching Services

It’s time to stop thinking of college as a right and start to realize it’s a major purchase!

It's that time of year when families are anxiously awaiting college acceptance letters for their kids!

I know because we have been waiting as well.  It's an exciting (and stressful) time for these young adults and their parents as they await the 'word' about their child's future.  

Most families have made sure that their children have submitted to multiple schools to ensure that they are given at least two or more options to ultimately sit down and finally consider in the end.  The hardest part is the 'aftermath' of the letters?  CHOSING!  

For some it may not be an issue but for the average American family today, the cost of college has risen so high that the choice should not be easy. It should be a calculated decision process with finances being one of the leading factors. Why? Because the average college student today graduates with $30,000-40,000 of student loan debt. And that's the 'average'. Some graduate with loans in the range of $80,000-100,000!  This is debt that will weigh them down and delay them from starting a family, saving money, or buying a house.  And remember, if they meet their 'special someone' during or shortly after college, the odds are that their 'special someone" has a similar scenario! Multiply by 2 and these young adults are starting their adult lives shackled by $80,000-200,000 of student loan debt to pay back!

I meet with many families who feel they MUST allow their young adult their first college of choice, however when considering which college to chose many things can and should be considered/discussed before the final decision is made. 

You might think college can’t be done without debt, but Rachel Cruze, Dave Ramsey's spitfire daughter, begs to differ. “I believe the two keys to graduating debt free are pretty simple: hard work and preparation,” Rachel says. She shares the secret to making it happen in a new book she wrote with her dad called SMART MONEY SMART KIDS.  Here are a few of the highlights she suggests you consider:

• Choose a College the family CAN afford: It’s time to stop thinking of college as a right and start to realize it’s a major purchase. Treat it like one and shop around. In-state public universities offer a great education for a fraction of the cost of out-of-state or private schools. Kids can save even more by knocking out their first two years of prerequisites at a local community college then transferring to a state university to complete their last two years- If they want to be a graduate of a school they can attend in year 3-4 and BE a graduate of that school. 
• Apply for Scholarships and Grants: Senior year gives Junior the opportunity to earn free money by applying for scholarships and grants. And he doesn’t have to be a straight-A student to take home the prize. Dig deep and you’ll find all sorts of opportunities to save a buck. Encourage Junior to start early and submit as many applications as possible. A little hard work on the front end pays off in the long run!
• Get a Job: If you think Junior’s grades will suffer if he works his way through college, think again. A part-time job could actually help! Research shows that students who work 10–19 hours a week have higher GPAs on average than those who don’t. Being financially invested in his own education just might be what Junior needs to kick it into high gear and graduate in four years!

If you need assistance with getting your financial budget in shape before you broach the issue of college OR if you are already feeling the burden of tuition payments that were added to your budget,  I can help!  Check out my website and coaching packages at Sick of the Hustle Coaching Services 

One of the FASTEST ways to change our spending habits it to change our 'awareness' around them.

How do you do this?  A Written Cash Flow Plan                  

You look at what you have coming IN for the month in advance-that would mean you sit down NOW to figure out what March will look like and what needs to go OUT… you decide in advance of the month, where your money needs to and will go. 

You will find your best success will come from setting a 'limit' on your spending in areas that can get away from us such as entertainment, eating out, kids asking for lunch money, the last minute trips to the grocery store.  For me it was eating out. I'm embarrassed to admit this, but we were spending $1200-$1300  PER month eating out! We were both running businesses and we had kids in after school sports and also on leagues after the school sports ended. Most nights, that meant we were not eating until after 8pm. Most weekends were also spent in another town for most of the day. 

When I actually decided to start getting back to "budgeting basics" two years ago I had to pull my 'records' to see what I was currently spending on each category-for most of us that means looking up all the charges and debit transactions and adding them up. Even though my balance was paid each month, I was SHOCKED at how much we were spending on this one category.  Whether we could afford it or not was not the issue, it just seemed excessive to me.   I became concerned about the expensive 'habit' my children were 'inheriting' from me! I didn't want to be the one responsible for their inability to manage their financial lives because I became oblivious to how much we spent on this behavior each month.  I HAD TO come up with a new 'habit' amount and try to stick to it. This also meant I had to figure out a number for groceries. This took some guessing on my part because I had not cooked more than once or twice a week in what seemed like five years. 

But I was determined!  I established an 'envelope' and set up new monthly spending LIMITS for our family of four (+ 2 every other weekend) in the following areas: 

• EATING OUT - This envelope is labeled "entertainment & eating out' 
• GROCERIES -Keep my coupons in here as well
• GAS - Ha! Been beating this one lately and having extra each month!
• CLOTHING - Keep my coupons in here as well

I started planning my meals, clipping coupons, looking at sales flyers, saying 'NO' we are not stopping and made it a game that I was determined to WIN!

Was has winning this game done for me?  I was able to reallocate that  'excess' spending and pushed that $400 extra per month onto the car loan I had and I was able to pay the car off early!!

That was the last debt on my debt snowball so now those dollars go to the mortgage each month and that will be paid off earlier too!  

It's empowering to win with money. Not to just have it. Not to just earn it. But to really win with it.  I'm going to win at this money game and I'm determined to help other families do the same!

Check out my services at sickofthehustle.com