If You Can’t Afford to Pay Cash…

By John Ingrisano

When I was a young-pup, wanna-be freelancer back in Indianapolis in 1978, I would take on any assignment I could get.  Two were memorable. 

The first that tickled me (years later) was with a start-up pair of morning drive-time radio disc jockeys called Bob & Tom.  They were a great interview, but nobody knew (even them, I suspect) that they would become nationally known.  Good guys.

The second was with a money-management advisor.  Though I’ve long since forgotten his name, I remembered one key thing he said he told all his clients:  “If you can’t afford to pay cash, you can’t afford to buy it!”

Those words played into something I had suspected and was already trying to practice with my young family.  You could say they launched a writing career on money management topics. 

The advice is the cornerstone of effective money management.  Yes, today, it is more difficult to go plastic/credit free.  But it is possible.  Try it.  If you do …

• You’ll find that you will have to make money decisions – some of them tough – each and every day.  Should we buy a case of soda or just a few cans?  Can we afford to go out for a movie, or wait until next week?  Should we pick up that impulse buy or hold off, choosing to spend our money with forethought?

• You’ll find that you have more money for the things you truly want and need than ever before because you will waste less money on stuff that gives you no value.  Yes, it will be tough at first as you adjust to reining in your spending.  However, in the end, you’ll be living better and less (or no) debt.

Tip:  Decide how much cash you will allow yourself to spend each week and list all the items that it must cover.  Then start your week on a Wednesday.  That’s right, Wednesday.  That’s because you will be sure to have money to spend on Wednesday, Thursday and Friday, and probably Saturday (we do tend to spend more money on the weekends).  So, you may end up pretty much sorting through the lint in your pockets or rifling through the couch cushions for spare change on Monday and Tuesday.  However, those are the easiest days in which to spend less.  Try it.  It works. 

How the Tortoise Won the Race

By John Ingrisano

Slow but sure wins the race.  That’s the moral to the story about the tortoise and the hare.  That same approach, when applied to wealth accumulation, is known as dollar cost averaging.  Though not the most glamorous way to increase your net worth, dollar cost averaging can, nonetheless, be an effective asset-building strategy.

You do not need large amounts of “seed money” to achieve financial goals.  A number of men and women — many who think of themselves as money amateurs, with limited experience and limited resources — use a technique called dollar cost averaging.  It has also been referred to as building wealth on the installment plan…sometimes only a few dollars at a time.  However, this slow-but-sure approach can pay off handsomely, with assets growing steadily over the years. 

Dollar cost averaging is a simple concept.  You purchase a fixed-dollar amount of a given financial product — such as mutual funds — on a systematic, ongoing basis.  You select the amount and the frequency of purchases.  Some people start with as little as $50 or $100 a quarter; others may prefer several thousand dollars a month.  This makes it ideal for the person with long-term goals who wants to budget a set amount from every paycheck — perhaps through payroll deduction — for long-term accumulation.  The key is to stick with your strategy, pretty much ignoring market shifts, changes, booms and corrections.

Why is this method so effective?  Let’s face it, dollar cost averaging doesn’t sound like much.  In reality, however, while there are no guarantees when it comes to gains, the results can be highly rewarding.  That’s because, by purchasing a fixed dollar amount of an asset at regular intervals, you will get more shares when the price is low and fewer when the price is high.  As a result, the average price you pay over the years often works out to be lower than if you tried to time your purchases.  Hence, the name: dollar cost averaging.

For example, let’s say you allocate $100 a month to purchase shares in a mutual fund that offers long-term growth potential.  After a year, you have put $1,200 into your program.  The following chart shows how this (purely fictitious) mutual fund has performed.

Over the year, the average market price per share is $10.02 ($120.25 divided by 12).  Your average cost per share, however, comes to $9.51 ($1,200 divided by 126.14).  Just as important, by budgeting $100 a month, you have increased your net worth by $1,627.21 (126.14 total year-end shares X year-end share price of $12.90).  Over time, depending on returns and other factors, you have the potential to amass a significant sum of money.

Other advantages of dollar cost averaging include:

1.     It helps build discipline.  Many accumulation plans are like diets: We start out with conviction, but tend to fall off over time.  Dollar cost averaging involves putting a fixed money aside on a regular basis, without excuse or exception.  For those who would rather not test their discipline, they can arrange automatic deductions from checking or savings accounts. 

2.     It sidesteps the hit-or-miss practice of market timing — attempting to buy when a security hits its lowest point and selling when it peaks.

3.     It is simple.  Once the appropriate vehicles are selected, everything becomes automatic.

4.     It allows you to build wealth on a limited budget. 

Is dollar cost averaging right for you?  Dollar cost averaging is the slow-but-sure strategy used by many men and woman to help them achieve their goals and cross the financial finish line as winners.  It isn’t for speculators going for quick gains.  Instead, it is tailor-made for the who individual who may not have large sums of money, but who appreciates the advantages of accumulating assets on the “installment plan.”  Some people think of dollar cost averaging as a way to get started and develop experience.  Others see it as ideal for all situations, and many seasoned investors capitalize on the benefits of dollar cost averaging.

Want to learn more about how to get the biggest bang for your money? Check out The Back to Basics Book of Money! A Couple’s Guide to Financial Peace.  The book contains 10 valuable Couple Money Skills.  Plus, the Back to Basics Book of Money Workbook (which dovetails with the main text) offers 31 practical, hands-on Wealth Builder activities that can help you and your partner build financial and domestic stability.  Both the book and workbook, which retail for $31.98 plus S & H, are available at the Family Finances Conference Center website for $27.99 total.

The Family Finances Conference Center tailors programs to the unique and individual needs of client organizations and their members and employees, based on the principles of the book and workbook set, The Back to Basics Book of Money!  A Couple’s Guide to Financial Peace. 

For more information, contact me at the Family Finances Conference Center by email (john@b2bbookofmoney.com) or my direct phone line (920-559-3722).

John Ingrisano

Director

Family Finances Conference Center

204 Lakeview Drive

Algoma, WI 54201

(920) 559-3722

john@b2bbookofmoney.com

HOW TO GIVE WITHOUT GETTING TAKEN

By John Ingrisano

Most charities are reputable organizations that use donations wisely.  Unfortunate­ly, there are also some less-than-trustworthy operators out there.

Here are a few smart-money tips on how to get the best value from your donation, how to make sure it goes to the right cause…and how to give with­out getting taken:

1.     Stick with your favorite chari­ties, those with which you are familiar and that represent your values.

2.     Distinguish between the cause and the charity.  Just be­cause you care about the environment and endangered species doesn’t mean you should contribute to the “Whales ‘R Us Foundation.”

3.     Check out charities that sound good, but….  Be especially alert for sound-alike frauds that ride on the coattails of legitimate charities.  For reports on charities, con­tact the Better Business Bureau’s Wise Giving Alliance at www.give.org. 

4.     Make sure your contribution is deductible.  Only donations to qualified organizations are tax-deductible. IRS Publication 78 lists most organizations that are qualified to receive deductible contributions.  You can get a copy at www.irs.gov.  

5.     Don’t be afraid to say “no” or ask to be called back later when a solicitor phones during dinner or while you are relaxing in the evening. 

6.     Ask four questions when contacted by phone:  (1) “Do you work for the charity directly or are you employed by a professional solicitor?” (2) “What percentage of donations goes to administration?” (3) “What percentage of donations goes to fundraising?”  (4) “Would you please send me information by mail, verifying what you have just told me, and I will decide then?”    

7.     Be wary of emotional and high pressure appeals…especially if your contribu­tion is “urgently needed today.”

8.     Pay by check … credit card is even better, since your liability is limited in case of fraud.  Never give cash unless you get a receipt. 

9.     When donating goods, ask for a receipt that reflects the fair market value of the items if you plan to take a charitable deduction on your federal income tax form. 

10. Avoid spending money on purchases and events that primarily benefit fund raisers, not the charity.  If the donation involves buying items — light b­ulbs, calendars, candy, etc. — find out what percentage actually goes to the charity.

Want to learn more about how to get the biggest bang for your money? Check out The Back to Basics Book of Money! A Couple’s Guide to Financial Peace.  The book contains 10 valuable Couple Money Skills.  Plus, the Back to Basics Book of Money Workbook (which dovetails with the main text) offers 31 practical, hands-on Wealth Builder activities that can help you and your partner build financial and domestic stability.  Both the book and workbook, which retail for $31.98 plus S & H, are available at the Family Finances Conference Center website for $27.99 total.

The Family Finances Conference Center tailors programs to the unique and individual needs of client organizations and their members and employees, based on the principles of the book and workbook set, The Back to Basics Book of Money!  A Couple’s Guide to Financial Peace. 

For more information, contact me at the Family Finances Conference Center by email (john@b2bbookofmoney.com) or my direct phone line (920-559-3722).

John Ingrisano

Director

Family Finances Conference Center

204 Lakeview Drive

Algoma, WI 54201

(920) 559-3722

john@b2bbookofmoney.com

7 Tips for Getting out of Debt, Even In a Recession - John Ingrisano

By John Ingrisano

Congratulations, America!

We Are Cutting Our Debt Load

Remember that commercial a few years ago about the guy who is mowing his spacious lawn, cleaning his elegant, in-ground pool, driving his big-bucks car, all the while talking about how sweet the good life is? But then in the end, a plastic smile plastered on his face, he laments, “How can I afford all this? I’m in debt up to my eyeballs. Will somebody please help me?”

Well, there’s good news and bad news when it comes to debt relief and money sanity.

First the good news: According to the Federal Reserve, consumer credit decreased at an annual rate of 7.5 % April 2009. Revolving credit decreased at an annual rate of 11 %, and non-revolving credit decreased at an annual rate of 5.25%.

Good job, America! Yes, some of it has to do with the shrinking economy. But still … more and more of us are realizing that we cannot borrow our way to the good life.

But there is some bad news: The average household with consumer debt (and, no, not everybody owes their heart, mind, body, soul and first-born child to the bank or credit card company) still owes more than $9,000. Ouch!

But wait, there’s more bad news: According to the latest breaking-news statistics (June 11, 2009) reported by IndexCreditCards, credit card rates are climbing and are now at their highest levels in more than a year … and still going up. Double ouch!

Here are the stats:

• Average consumer credit card rate, overall market: 14.67%
• Average credit card rate, non-reward consumer cards: 13.24%
• Average reward credit card rate: 15.28%
• Average student credit card rate: 15.33%
• Average business credit card rate (non-reward): 12.66%
• Average business reward credit card rate: 13.49%

Here is the real problem: If you’re up to your eyeballs in debt, it’s hard to get out of it. Example: If you have $9,000 in debt and your rate is 15%, you are shelling out $1,350 a year in interest. Ouch! Ouch! Ouch!

What to do: Don’t give up. But do get started – and that means TODAY – chipping away at your debt load … a little each day, each week, each month.

1. Put away those credit cards today. Go cold turkey. Cash only. No excuses. No exceptions.

2. Call your credit card issuer and ask for a rate reduction. It may not work … but it very often does.

3. If they say “No way!” look for a new issuer with a lower rate and transfer all your balances to the new card.

4. Then put away BOTH cards. Remember, we’re going cold turkey here.

5. Work out a debt elimination schedule. If you owe $9,000 and pay off $300 each month, you’ll be debt-free in a little over three years. It may be tough, but it will only get tougher if you put it off.

6. Find better uses of your time than spending money. It’s summer. Go for a walk along the beach, on the trail or in the park. Give up one dinner out each week. If you save $25, that alone adds about $105 per month to your debt reduction payment.

7. Once you are debt free, you will have a ton of extra money for retirement savings, college funds for the kids, or just good old-fashion lifestyle enhancement.

The bottom line: It’s not brain surgery … just a matter of determination, goal setting and focus. Go for it. Do it. Start today.

Want to learn more about how to manage your money better? Check out The Back to Basics Book of Money! A Couple’s Guide to Financial Peace. The book contains 10 valuable Couple Money Skills. Plus, the Back to Basics Book of Money Workbook (which dovetails with the main text) offers 31 practical, hands-on Wealth Builder activities that can help you and your partner build financial and domestic stability. Both the book and workbook, which retail for $31.98 plus S & H, are available at the Family Finances Conference Center website for $27.99 total.

The Family Finances Conference Center tailors programs to the unique and individual needs of client organizations and their members and employees, based on the principles of the book and workbook set, The Back to Basics Book of Money! A Couple’s Guide to Financial Peace.

For more information, contact me at the Family Finances Conference Center by email (john@b2bbookofmoney.com) or my direct phone line (920-559-3722).

John Ingrisano
Director
Family Finances Conference Center
204 Lakeview Drive
Algoma, WI 54201
(920) 559-3722
john@b2bbookofmoney.com

Stopping Marital Guerilla Warfare - Four Ways to Enhance Money Discussions In Your Marriage

By John Ingrisano

Husbands and wives can be a blessing to each other … or a screaming disaster. Part of it has to do with how they work together (or not) when it comes to money.

I knew a couple more than 35 years ago who engaged in what I dubbed “Marital Guerilla Warfare.” Les and Barb were financially okay … both working, making good incomes, squarely in the middle class. Or at least they should have been.

Instead, they kept each other in a perpetual state of financial devastation and emotional frustration.

Here is an example I witnessed personally. Les got up one Saturday morning and headed out to a rod & gun show. He returned in the early afternoon … with a new bass boat and motor in tow. At around $3,000 (1972 dollars), that was one humongous impulse buy!

But wait, there’s more! Barb took one look at that bass boat and headed out the door. When she returned home several hours later, they had purchased several thousand dollars of new carpeting for their home.

And so it went for years between them, this game of Marital Guerilla Warfare. For all I know, they’re still at it, working single handedly to stimulate the economy.

They’re not alone. Many couples play games with money. Money becomes a weapon. I’ve seen spite spending, secret saving, secret spending and more. Worst of all, this is not all that rare. According to a 2007 PayPal survey, 82% of respondents say they have hidden purchases from their partner.

In the end, they usually end up destroying each other … and themselves.

What to do:

1. Remember that marriage is an economic relationship … a personal business partnership. You must actively manage your family’s financial affairs…not leave them to chance. Most of all, by “joining forces” in a cooperative partnership, you and your spouse can achieve common goals.

2. Analyze and attempt to understand each other’s attitude toward money. Does one of you like to blow a windfall … the other sock it away? Does one of you feel comfortable with a full debt load … the other nervous about a $100 credit card charge? Exchange points of view. The better you understand each other’s thinking, the more effectively you can work together to build a financially solid relation¬ship.

3. Share money decisions and responsibilities. Studies have shown that couples are more likely to remain happy and together when they both take an active role in managing the family’s finances. This requires both of you to come to grips with the financial facts, which in turn leads to increased under¬standing and cooperation on money matters.

4. Identify mutual goals … and then write them down. This imposes order on all other financial decisions and helps you map out a strategic game plan for achieving them. Where do you both want to be one year, two years, and ten years from now? In a nicer home? With children who are debt-free college grads? Retired in comfort at age 60? If you have trouble reaching agreement, look for compromises. Example: One likes to flash the cash … the other likes to stash it. Solution: Save and invest X dollars each month; then blow the rest … go out and have fun, and do it TOGETHER.

Want to learn more about the role of money in your relationship? Check out The Back to Basics Book of Money! A Couple’s Guide to Financial Peace. The book contains 10 valuable Couple Money Skills. Plus, the Back to Basics Book of Money Workbook (which dovetails with the main text) offers 31 practical, hands-on Wealth Builder activities that can help you and your partner build financial and domestic stability. Both the book and workbook, which retail for $31.98 plus S & H, are available at the Family Finances Conference Center website for $27.99 total.

The Family Finances Conference Center tailors programs to the unique and individual needs of client organizations and their members and employees, based on the principles of the book and workbook set, The Back to Basics Book of Money! A Couple’s Guide to Financial Peace.

For more information, contact me at the Family Finances Conference Center by email (john@b2bbookofmoney.com) or my direct phone line (920-559-3722).

John Ingrisano
Director
Family Finances Conference Center
204 Lakeview Drive
Algoma, WI 54201
(920) 559-3722
john@b2bbookofmoney.com

Money Saving Tips for You and Your Family - John Ingrisano

By John Ingrisano

Simple Savings Add Up Fast!

Tired of wondering where your money goes? Check out some ways to put a ton of it back in your pocket each week. In the coming days, actively look for less costly activities. For example (and the following numbers are all estimates):

Imagine putting $12,428 back in your pocket each year? Okay, I admit, you cannot/would not/do not want to do this every week. How about if you saved that $239 each month in smart spending rather than each week? That still adds up to $2,868 a year. Not bad, eh?

Here’s the premise: You are not a “consumer.” That term is an insult. (More on that in a future post.) You are a citizen of this country and a producer of goods and services through your work. You do not have to spend money every time you walk out the door or surf the internet.

It’s your money. You work hard for it. Imagine if you earn, say, just $30 an hour. If you save $240 in smart spending this month, that is the equivalent of eight hours of work, an entire day’s wages you have saved.

Want to learn more? Check out The Back to Basics Book of Money! A Couple’s Guide to Financial Peace. The book contains 10 valuable Couple Money Skills. Plus, the Back to Basics Book of Money Workbook (which dovetails with the main text) offers 31 practical, hands-on Wealth Builder activities that can help you and your partner build financial and domestic stability. Both the book and workbook, which retail for $31.98 plus S & H, are available at the Family Finances Conference Center website for $27.99 total.

The Family Finances Conference Center tailors programs to the unique and individual needs of client organizations and their members and employees, based on the principles of the book and workbook set, The Back to Basics Book of Money! A Couple’s Guide to Financial Peace.

For more information, contact me at the Family Finances Conference Center by email (john@b2bbookofmoney.com) or my direct phone line (920-559-3722).

John Ingrisano
Director
Family Finances Conference Center
204 Lakeview Drive
Algoma, WI 54201
(920) 559-3722
john@b2bbookofmoney.com

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Help Your Employees Get Through These Tough Times - By John Ingrisano

By John Ingrisano

Employees are seeing the handwriting on the wall: They’re not expecting year-end bonuses this year or big raises for 2010.  Yes, many will be grateful just to keep their jobs; they may even accept do-or-die wage cuts (something once unheard of) without too much fuss.

Still, don’t expect them to be happy about it. Morale and productivity are likely to take a tumble.  If this happens, no one wins, and those extreme steps you may be forced to keep your company afloat could come back to bite you in the butt.

That’s why a growing number of employers are helping their employees get through these challenging times. They’re turning to less expensive benefits and morale boosters, everything from half-day Fridays (alternating between with pay and without, so everybody shares the pain) to reducing the workweek to four days while keeping hours the same.  Example:  Employees can work four ten-hour days instead of five eight-hour days.  This also can reduce some of your overhead costs such as utilities.

They are also helping them manage their money better.

One of the things I do at my mini-workshops is explain to attendees how easy it is to “leak” money from their financial buckets, and how they can fix the problem … immediately and painlessly.  (For example, if a husband and wife can find a way to reduce their expenses by just $2 each every day, they will have plugged a $1,460 leak each year in their financial bucket!)

These are just some ways employers can help their employees better manage their money and, as a result, better cope with the financial pressures we are all enduring these days.

Need help helping your employees?  Let me know.  We can customize workshops for your company and create a win-win environment at your business.  Contact me at john@b2bbookofmoney.com.  There is no cost or obligation.

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