Archive for June, 2009
Can’t Make a Budget Work?
Try Filling Buckets!
Whether you are trying to save money or lose weight, there is no one-size-fits-all solution. However, as with dieting, sometimes the financial strategies that work the best are a little bit offbeat, even fun. Consider, for example, the success of Bank of America’s “Keep the Change” program where your debit card purchases are rounded up to the closest dollar and the difference is transferred from your checking to savings account. Another savings strategy found to be effective is the “bucket concept.” Rather than adhere to the traditional budgeting chore of writing down your expenses and tracking them each month, the bucket concept requires you to divide your spending into six categories and assign a specific percentage to each bucket.
The bucket approach was first encountered in Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth by T. Harv Eker. He suggests dividing your income this way:
50% for necessities such as your mortgage payment or rent, car payments, groceries, utilities, gas, internet, cell phone, etc.
10% for long-term savings to fund vacations, car repairs, house maintenance, clothes, etc.
10% for retirement accounts such as your 401(k) plan or IRAs.
10% for fun.
10% for education, from repaying student loans or funding your continuing personal development to saving for your children’s college education.
10% for charity.
When making your allocations to each bucket, consider 100% of your total after-tax income. This means, that in addition to income you earn, you also divide inheritances, bonuses, even your tax refund into six categories. The key is that this money should never be commingled. That is, you cannot borrow from long-term savings to fund a dinner out or forgo your regular deposit into the education bucket when your charity bucket is empty and you want to contribute $100 to your friend’s bike-a-thon.
The easiest way to fund each bucket would be to open separate checking accounts and have the appropriate percentage of your paycheck deposited into each account. This may not be feasible with your employer and could involve significant banking fees. Of course, you can open a 529 college savings plan and an IRA and have your education and retirement accounts funded directly from your checking account. Also, if you have a 401(k) at work, that account is funded automatically before you receive your check.
Interestingly, however, many people report success with substituting jars for checking accounts, particularly for the fun account where it is easy to spend cash. Perhaps that’s because by actually placing money in a jar it encourages them to think about finance more often than at bill-paying time or during an annual review with a financial advisor. Using a jar also can be especially effective if you are trying to save for a family vacation. For example, as your family sees the savings accumulate, they may be more inclined to make sacrifices to stay within your food budget. Of course, if you’d rather keep your long-term savings in a money market account to earn interest, putting a piece of paper noting the amount you invested in that account could also serve to motivate your family.
In discussing the bucket concept with clients, there are some common reactions. Most notably, many say that they spend far more than 50% of their income on necessities. In fact, given the high cost of living in particular parts of the country, surviving on half of what you make may be an impossible goal. Naturally, you can adjust the percentages to reflect your own circumstances. For example, if you need 65% for necessities, you might drop education, charity, and long-term savings to 5%. However, you are encouraged to at least reflect on the possibility of living on 50% of your income. Often, simply considering the idea can help you to start to prioritize your expenses and to think more proactively about what you are spending your money on each month. In fact, quite a few clients have come to the realization that they were living in a house that was too expensive for them.
Debt is another issue that can throw a wrench into the ideal percentages. If you have significant consumer debt, you may need to direct more than 50% to your necessities bucket in order to help you dig out of that hole as soon as possible. However, once you are out of debt, funding your long-term savings account can help you stay debt-free. That is, as your long-term savings account builds up over time, you’ll have a cushion so that you won’t have to pull out your plastic to manage an unexpected car or home repair bill. In that sense, your long-term savings can also function as the traditional “emergency account.”
Finally, it is important that your fun money be spent on a regular basis. Arguing that most budget plans fail because they create a spending plan that is too tight for comfort, fun money cannot accumulate for more than 90 days. Think of spending money on yourself as both a reward for saving in other buckets and as a means of re-energizing yourself to save more.
If you are considering implementing the bucket theory, it is suggested you keep in mind another piece of advice. What we focus on expands and grows. Accordingly, for at least seven days after implementing any financial self-improvement plan that you do absolutely no complaining – not out loud, not in a whisper, not even in a passing thought. The positive energy you create – in combination with the structurally sound bucket approach to budgeting – may be just what you need to move further down the road to financial freedom.
What’s given me the biggest boost in living my life powerfully?
The “Curriculum for Living” course offered by Landmark Education. 
In the course I learned the tools to have NO STRESS in my life. I became UNSTOPPABLE. I now have the tools to NEVER BE UPSET unless I choose to be upset. I COMMUNICATE on a much higher level, which now allows me to create the relationships I really want, and have always wanted with my family and friends that I wasn’t sure how to obtain before. I am able to CREATE LOVING and CONNECTED RELATIONSHIPS with those I love. I’m NOT SCARED of anything, which makes me POWERFUL, and allows me to BE A PLAYER in LIFE instead of just standing in the sidelines. I became very clear on what my PURPOSE is in life, and how to consistently be at PEACE.
My INCOME SKY-ROCKETED after taking this course, because I was able to FOCUS my time and energy to what was going to MAKE the BIGGEST DIFFERENCE, instead of wasting time, with upsets, drama, complaints and other rackets I had going on with others and within myself. These are just some of the things I got out of the course. I don’t even think it’s half of what I got out of it.
I thought it was a vital piece to share with you in order to live your life powerfully. I highly recommend this course to anyone who wants to be completely fulfilled and satisfied with every area of their life that isn’t extraordinary. I guarantee you will get everything you want for yourself and your life. Whatever that may be for you. They have a 94% success rate for those that complete the course, which is pretty phenomenal.
The Curriculum for Living Course is comprised of 3 parts. The first part is “The Forum”, which is an intensive weekend and one evening. This is the beginning. It’s all about possibilities. The second part is “The Advanced”. This was the absolute best! It’s about clarity, purpose and completion. After taking the advanced was when things really took off for me. The final part is “The SELP” Self Expression and Leadership course. This was all about making a difference, and community. It’s also about creating something big out of nothing. It’s perfect for those that want to be an Entrepreneur but aren’t sure how to go about it. You could take an idea you’ve had and see how big you can make it, while getting coaching along the way to see it through.
I’ve taken many courses over the years, and I’d have to say, this one was definitely the best value for the money. I still use all of the tools today and it’s been over 5 years since I’ve taken this course. The great thing is, that once you learn them you never lose them. It’s like riding a bike. One day you don’t know how, and then in one instant, you know how and you never forget! Amazing! Landmark Education offers over 50 courses and has books, CD’s DVD’s, etc. and I’ve taken some other courses by them as well, and listened to a few things here and there, but to me, their other courses just don’t compare to The Curriculum for Living. It still astounds me that I could learn so much, and have it make such a difference in my life, for the amount of time that it took and the amount of money it cost.
landmarkeducation.com
My charity of choice
People often recommend that if you’re going to be active charitably, you should act locally. You’ll see the benefits in your community, and your hard work will be immediately visible to you. If people care for their communities all over the world, then things will surely get better. This is a wonderful sentiment, and often correct, but we live in a global community since the advent of mass media, inexpensive travel, and the Internet. I believe that one thing proponents of local charity have failed to consider is the relative worth of charity vs. the effort consumed on the part of the giver. Imagine if you could change an entire village’s life with a $20 loan! With kiva.org, you can.
Kiva is riding the crest of the coming wave of person to person charity. Most of us donate to charity, but feel left out of the process. With Kiva, you are directly involved in helping individuals based on your personal decision. When people need of small loans to further their business, get an education, or some other venture, they will fill out a profile on Kiva and explain what they’ll use your money for. You can browse or search these entrepeneurs and choose any one you’d like, or as many as you can afford. Once you’ve chosen a project, you will send Kiva the money, and they will forward it on to the recipient for you via their partners in various locations. You can receive status updates, and here is the unbelievable part…they actually pay you back.
You can make a difference. You can change the world and STILL be in a win/win situation. This is hardly charity in the traditional sense; this is giving people the help they need to pull themselves up by the bootstraps.
Many of the people applying for loans are looking for some seed money to expand their businesses, so you’re supporting a person who is going to generate wealth in their community and improve the lives of everyone around them. This is what people mean when they say “teach a man to fish, and they’ll eat for a lifetime” but amazingly, you don’t have to teach anyone anything, just get them a net and let them pay you back. You get all the warm feeling of making the world a better place, connecting with people, and being partners in a capable person’s success, and you only need to let them use your money for a short period. When they’ve paid you back, you can donate it to Kiva to cover their operating expenses, invest the money back into another entrepreneur, or take your funds back.
This really is the charity method of the future, as it cuts all the red tape and allows people to make a big difference with a small investment and remain in complete control of how their money will help the recipient. Check Kiva out today!
This was a speech made by Pulitzer Prize-winning author, Anna Quindlen at the graduation ceremony of an American university where she was awarded an Honorary PhD.
“I’m a novelist. My work is human nature. Real life is all I know. Don’t ever confuse the two, your life and your work. You will walk out of here this afternoon with only one thing that no one else has. There will be hundreds of people out there with your same degree: there will be thousands of people doing what you want to do for a living. But you will be the only person alive who has sole custody of your life. Your particular life. Your entire life. Not just your life at a desk, or your life on a bus, or in a car, or at the computer. Not just the life of your mind, but the life of your heart. Not just your bank accounts but also your soul. People don’t talk about the soul very much anymore. It’s so much easier to write a resume than to craft a spirit. But a resume is cold comfort on a winter’s night, or when you’re sad, or broke, or lonely, or when you’ve received your test results and they’re not so good. Here is my resume: I am a good mother to three children. I have tried never to let my work stand in the way of being a good parent. I no longer consider myself the centre of the universe. I show up. I listen. I try to laugh. I am a good friend to my husband. I have tried to make marriage vows mean what they say. I am a good friend to my friends and they to me. Without them, there would be nothing to say to you today, because I would be a cardboard cut out. But I call them on the phone, and I meet them for lunch. I would be rotten, at best mediocre, at my job if those other things were not true. You cannot be really first rate at your work if your work is all you are. So here’s what I wanted to tell you today: Get a life. A real life, not a manic pursuit of the next promotion, the bigger pay cheque, the larger house. Do you think you’d care so very much about those things if you blew an aneurysm one afternoon, or found a lump in your breast? Get a life in which you notice the smell of salt water pushing itself on a breeze at the seaside, a life in which you stop and watch how a red-tailed hawk circles over the water, or the way a baby scowls with concentration when she tries to pick up a sweet with her thumb and first finger. Get a life in which you are not alone. Find people you love, and who love you. And remember that love is not leisure, it is work. Pick up the phone. Send an email. Write a letter. Get a life in which you are generous. And realize that life is the best thing ever, and that you have no business taking it for granted. Care so deeply about its goodness that you want to spread it around. Take money you would have spent on beer and give it to charity. Work in a soup kitchen. Be a big brother or sister. All of you want to do well. But if you do not do good too, then doing well will never be enough. It is so easy to waste our lives, our days, our hours, and our minutes. It is so easy to take for granted the color of our kids’ eyes, the way the melody in a symphony rises and falls and disappears and rises again. It is so easy to exist instead of to live. I learned to live many years ago. I learned to love the journey, not the destination. I learned that it is not a dress rehearsal, and that today is the only guarantee you get. I learned to look at all the good in the world and try to give some of it back because I believed in it, completely and utterly. And I tried to do that, in part, by telling others what I had learned. By telling them this: Consider the lilies of the field. Look at the fuzz on a baby’s ear. Read in the back yard with the sun on your face. Learn to be happy. And think of life as a terminal illness, because if you do, you will live it with joy and passion as it ought to be lived.”
Break Out Of The American “Numb Zone” and Embrace Your Passion!
I wouldn’t say we are passionless as Americans, because we’re not, but, I would say we can be numb. There, I said it. Let me explain myself before I get the e-mails. I was having lunch with some friends of mine at Chez Black (best pizza ever!)on the Amalfi Cost in Italy. We were discussing some cultural differences between our two countries.
They’re natives of Italy and my friends husband is a doctor, who just wanted to understand what we were all so depressed about in America. I said, “What do you mean depressed”? They said, “Almost every American tourist that I see as a patient notes on their history that there taking anti-depressants. I know that they’re not all chemically imbalanced or bipolar because in every case I’ve asked if a blood test was taken to diagnose and it never was.”
He went on to explain, “In Italy if we love you, we LOVE you, if we hate you, we HATE you. There’s not much middle ground. If we are happy we laugh and cheer, if we’re angry, we cry and yell. In America, if you get too high you’re manic (and you take something to mellow you), if you get too low you’re depressed (and you take something else raise you). In Italy, we call that happy and sad. Those are good things. Feeling really happy and really sad are emotions that serve us and allow us to respond to appropriately. They are not emotions that need to be medicated, they need to be felt. You have so many things to be happy about, what’s the problem?”
It really got me thinking. Is he right? I think he is. How passionate are we really about life? Do our cars embody the passion of a Ferrari? Does American food have the assault on our senses that real Italian food does? Do men appreciate the beauty of woman like our Italian counter parts (or do they just want to hit it)? Are we so passionate about our sporting events that we can’t even be let in the same entrances as the opposing team? In my opinion, the answer to all of the questions above is: nope.
I say excuses are over. It’s time to live! Let’s get out of the numb zone and live like we mean it. Live like we really mean it! Live like tomorrow isn’t promised, because……it’s not. Let’s take a hat tip from my friend, the Italian doctor, in Amalfi and find out what we love to do and begin living La Dolce Vita!