Debt is Dumb

There are a lot of myths out there regarding debt and credit.

Dave Ramsey debunks some of those myths in this next article.
I hope you find it useful.

Extreme Makeover: Personal Finance Edition

My wife and I like to watch TV together.

One of our favorite shows is ABC's Extreme Makeover: Weight Loss Edition. I admit, initially, our interest was purely voyeuristic.

It was crazy. The show's host, Chris Powell, would take these people who were massively overweight and, over the course of a year, he would help them lose an entire other person worth of pounds.

It's hard to describe. You're not getting it. I can tell. 

You need to see a video.

See? It's crazy!

In every episode, ABC paints the picture and tells the story. You feel attached to the character. It's like it isn't even real.

It's an addicting show, which I suppose is ironic.

I caught myself doing something the other day as we were watching one of the episodes. I became hyper-critical and hypocritical simultaneously. The words came out of my mouth, and it was like someone else was saying them.

"How do these people let themselves get to this point?? I just don't understand living this way!"

I've never let myself become that obese. That much is true. But that doesn't mean I've never let myself get in a mess that spiraled out of control before I'd even realized it had happened.

Haven't you? Haven't we all?

I guess my point is that all of us who have suffered with debt and credit problems can identify with every person who's ever appeared on Extreme Makeover: Weight Loss Edition, if we're honest (and we probably are not).

We may not have eaten uncontrollably and stopped exercising, but we've maxed out credit cards.

We might not be addicted to fast food, but we were addicted to something that got us in the mess we were (and maybe are still) in, even if that something was "stupidity."

The first thing these obese people have to do to attack their weight issue is simple. They have to admit they have a problem.

I know. It sounds very Alcoholics Anonymous. It's true though. Until you admit you have a problem, the effort won't stick. No one else did this to you. YOU did this to you!

It is no fun to hear that. You might never agree. You may go to your grave clutching onto the idea that life is just unfair and that there was no possible way for you to have avoided your downfall.

If you do that, you will go to your grave an unhappy person, and you'll probably be leaving problems for your next of kin to deal with.

Everything you did before today hasn't worked. Admit you have a problem. Admit this was your fault. Say the words out loud. Tell people you love. Cry it out.

Then move on.

You can beat this. You will beat this. Take the first step!

Dave Ramsey Talks About the Envelope System

In keeping with the current series of posts about budgeting, I decided to let someone smarter than me tell you about something that may make the whole process easier for you.

I'm sure, by now, you've figured out that I'm a big fan of Dave Ramsey's. Is he perfect? Of course not. Are there things he teaches that are off the mark? I don't know. Maybe. I just know he hasn't steered me wrong yet.

I can't and won't try to make you a disciple of Dave Ramsey. If you like his stuff too, fantastic. If you don't, that's fine too.

At any rate, here's Dave talking about the Envelope System.

Enjoy.

You deserve a vacation

A few minutes ago, I saw this tweet from The Dave Ramsey Show's official Twitter account:

Blake: 54% of Americans said they are not willing to cut back on summer vacation plans to save money. -USATODAY (How about you?)less than a minute ago via CoTweet Favorite Retweet ReplyThe Dave Ramsey Show
ramseyshow

This stat makes me feel sad for two reasons.

1) Our priorities are in the wrong place if going to Disneyland is more important than paying the power bill.

and

2) If people would just wake up and get on board, they'd realize something amazing: YOU DON'T HAVE TO GIVE UP VACATIONS!

Don't get it twisted (that's me being "street"). It doesn't mean that you can go to Cancun for two weeks and not feel the hurt.

What I'm saying is that you don't have to give up everything. If you do the difficult things, you get to do the fun things later.

Scrimp and save. Cut coupons. Make and keep a budget. Stop going out to eat so much!

Do all those things (and do them religiously!) and not only will you be able to take a smartly-budgeted vacation...you will deserve one!

Being smart with your money doesn't mean you can't have fun anymore. It does mean less fun (for now anyway), and it does mean getting your priorities in order.

How are your priorities?

Debt Guru: Combating Debt’s Emotional Effects

Being in debt sucks.

It impacts your relationships. It impacts your self-esteem. It is the 800-pound gorilla in the room, but it's a gorilla that follows you even when you leave. 

If you are in debt, you think about it when you try to sleep at night. You think about it when you wake up in the morning. 

Especially if you have no plan to attack your debt. If that's you, debt might as well be a gorilla that volunteered you to give him a piggy-back ride and has no intention of getting off.

DebtGuru.com had a good article about the emotional impact debt can have on us. I found it useful. I hope you will too.

Combating Debt’s Emotional Effects

Trying to keep a good attitude while in debt is like trying to keep dry in a rainstorm.  But, when those intimidating rain clouds open up on you, it’s important to remember it’s just water.  And when debt bears down on you, it’s just money.  Certainly, you’ve heard your fair share of financial advice on how to get out of debt.  But, now, we want to address how you can handle some of the crippling emotional effects associated with debt.

No one enjoys the feeling of owing money.  Frustration, anger, and anxiety can arise from even the slightest bit of debt.  Okay, maybe you won’t be too angry over the $5 you owe Johnny for lunch yesterday.  But, you might get a little angry when you have trouble paying the minimum on your credit card.  As debt increases, the emotional effects increase.  Of course, it’s important to take financial initiatives in combating debt, but it’s also important to combat the emotional effects which can take a serious toll on your physical health.  Everyone should agree that debt is certainly not worth dying over.  So, here are a few tips to help reduce the emotional effects of debt.

Avoid Denial

Putting something out of your mind might seem like a good idea at first glance.  But, stress and anxiety have a funny way of creeping right back into our brain.  Believe it or not, facing your debt problems head on will make you feel exponentially better.  The first thing someone with a drug or alcohol problem does is admit that they have a problem.  The same should go with an individual with a financial problem.

Find a Friend

The first person you talk with about your debt problem doesn’t have to be a financial advisor.  Don’t let your debt be a secret.  Talk with a family member or a friend—anyone who will be non-judgmental.  Being honest with someone else will help you be honest with yourself.

Don’t Beat Yourself Up

Of course, you’re mad at yourself for making a few purchases you couldn’t afford.  But, like any other mistake, it’s in the past.  You should learn from a mistake but never dwell on one.  Dwelling on a mistake will result in procrastination whereas learning results in productivity.  You’ve made a mistake.  Now move on.

Go Do Something

Your debt won’t disappear overnight and neither will the stress.  But, there are plenty of free, or at least cheap, ways to subdue stress. Take 30 minutes or an hour and go exercise.  Go for a run. Go hit a punching bag. Do something to get those endorphins—your body’s feel-good chemical—pumping.  Take some time to meditate and do some breathing exercises.  You might be surprised as to how good these activities can make you feel.

Make a Plan and Make it Known

Once you get your head on straight.  It’s time to make a plan. If you can’t do it yourself, seek out a friendly debt management program.  But, regardless of how you set your plan up, make sure people know about it.  This will help you stick to it.  If you’re being pestered by creditors, call them and let them know your plan.  Tell them how much you can pay and when you can pay it.  This will get them out of your hair and reduce some of the stress.

For more articles and info from Debt Guru, check out their site at: www.debtguru.com.

How I budget (since you asked)...

Last week, I wrote a blog post about the importance of doing and keeping a budget. I received a couple emails afterwards asking for specifics on the budget that I and my wife actually use.

Again, I refer all of you to the Quickie Budget that Dave Ramsey offers on his personal website. If you're just getting your feet wet in the waters of budgeting, Mr. Ramsey has a ton of good resources to help you out.

Everyone learns differently. Some of us are visual learners. Some of us need to hear things. Some of us are tactile and really need to do things so that we can get the feel of it. 

I decided to go ahead and upload my budget files as downloadable attachments. The numbers are made up, but it's enough to give you the idea. 

Make sure you examine the formulas. Otherwise, this will be more an exercise of me leading you to water rather than me teaching you to fish, which is what I want to do overwhelmingly more than the former of the two.

I'm linking two files.

The first is my monthly general budget. As the name indicates, it is not a super specific budget. It outlines what is coming in and what is going out. 

The second file is a more specific spreadsheet that outlines the items in the sub-categories. It will all make more sense once you actually look over the files.

Without any further ado, here are the files:

General Budget

Specific Budget

I thought about explaining all of it in greater detail in this post, but ya know what? I won't answer everything and I'll leave something out. 

Instead, if you have q's, just email me at: kevinrhaggerty@yahoo.com. I'll do my best to get back to you ASAP.

Thanks for stopping by and checking out the blog. If you find the information useful and enjoy what you've seen so far, I'd love to hear from you via email or Twitter.

Get Busy Living!

I wasn't gonna write anything this weekend. 

I'm on vacation with my family. The goal was to get away for a few days. Get some peace and quiet. Relax.

I was pitching a perfect game of relaxation and ignoring the outside world, but then American Movie Classics (AMC) ruined all of that.

AMC is running an all day marathon today of one of my all-time favorite movies: "The Shawshank Redemption."

For those of you who are unaware, here's a brief synopsis of the film (NO SPOILERS!):

The main character is a guy named Andy Dufresne (DOO-FRAYNE). Andy is a guy who has been wrongly imprisoned for supposedly killing his wife, and serving out a subsequent life sentence. The film is about Andy making peace with the injustice he's received, as well as how Andy is able to bring positive life change to those around him during his time in "the pen."

There's one scene in particular that always grips me. This time through was no different.

In the scene, Andy is having a conversation with one of his closest friends in prison. The focal point of the conversation has to do with the unfairness that Andy has been dealt, and really just how life can be unfair, in general.

"Bad luck, I guess. It floats around. It had to land on somebody. I was in the path of the tornado. I just didn't know it'd last this long."

Andy goes on to talk about his plans for when he gets out of prison. His buddy, "Red", who is played by Morgan Freeman, is a bit incensed by this. They're both in for a life term. Red sees hope as a dangerous thing and discourages Andy from pursuing such nonsense.

Andy's response is really an encapsulation of the entire movie. He simply says:

"I guess you either get busy living or you get busy dying."

I don't want to over-simplify life, or be that guy who makes too much out of a movie. I don't want to, but I might do both anyway.

That line just resounds deeply with me. Think about it. Read it aloud a few times. If you're somewhere public, just read it in your head. We don't want people thinking you're crazy.

Life IS unfair, and excuses are easy to come by. I'm guilty of it. We all are.

I can't tell you how many times I've looked at someone who was better off than me and sarcastically thought: "Oh. Must be nice." They haven't had the obstacles I've had. If I didn't have all these burdens and crosses to bare!!!

The "what ifs" and "if onlys" will consume you if you let them.

Stop for a minute and ask yourself if you're happy. Ask yourself if you're where you want to be. If you're not (and inevitably, you're not), ask yourself if you're on the right track to at least getting where you want to be.

As this blog grows and unfolds, I will make efforts to give plausible and tangible steps to get where you need to be. But the first step is your heart and your attitude.

I don't want to be cheesy about it. I'm not going to "Joel Osteen" you. I'm not going to encourage you to "name-it-and-claim-it." But it is a very true truth that the energy you put out into the universe does come back to you in some shape or form.

That doesn't mean that if you are positive and optimistic all day you will wind up rich. You might not.

It does mean that if you waste your hours being negative, complaining and listing reasons why you shouldn't be successful...you won't be. You will fulfill that prophecy every time.

The point of this blog is not to perform or induce miracles. I don't claim to be the most profound thinker or typer. I just hope I can help you get started.


Get busy living!!!

How do you do your budget?

For years, I made excuses. If you're here reading this blog, you've probably done it too.

"I just am not making enough money to pay my bills!"

That might be true, but it usually isn't.

"I could have sworn I had more than that in my account!"

You didn't.

We do stupid things like checking our online statement when we feel like funds might be getting low. We'll call the bank every so often just to do a double-check on things. We feel like we're being so responsible.

We're not.

One of the first things Dave Ramsey tells his pupils in the Financial Peace University course is that you have to "give every dollar a name." 

That really resonated with me. It makes a ton of sense.

The rationale behind it all is that you don't buy a single thing without accounting for it. No matter how small the purchase. Every dollar has a name.

You stop using words like "about" and "approximately." Broke people use words like that. People who overdraft on their bank account use words like that.

That used to be you. It isn't you anymore.

You need to make a decision. Are you content with living the way you have been? Is what you've been doing working?

If you've never done a budget before, I mean a real budget, the task can be daunting. Dave Ramsey has some good forms you can download HERE that will help you get your feet wet.

The point is this: It doesn't matter how you do your budget. If you're not a big numbers person, use the Dave Ramsey forms, or find some other sample budgets online. 

Some of you will want to keep things written down. Some of who are more computer savvy will want to do it all electronically.

I personally prefer to use Microsoft Excel. I'm a huge nerd. I have one spreadsheet file that tracks our monthly bills down to the penny. I have a second spreadsheet file that tracks the sub-budget items.

Here's an example of what I mean.

Every month, my wife and I budget a certain amount of money for certain categories, such as: 

- Eating out

- Medical Expenses

- Car Maintenance

So on and so forth.

But it isn't good enough just to know that much. I need to account for the sub-items as well. 

Let's say we have allotted ourselves $60 a month for eating out. If we go out to Red Robin on Friday night (I love Red Robin!) and spend $25, I need to log that amount in the sub-items spreadsheet. That way, I know where it went and that we've now got $35 left in the budget for eating out this month.

You might think that's extreme, but guess what? I'm never surprised. I never have to approximate how much money we have left. I might not always know off the top of my head, but with a quick look at my spreadsheet, I can give an immediate and exact answer.

I started my budget right when Kim and I got married in October of 2009. I've been faithful to it ever since. If I can do it, you can too.

The spreadsheet method is what works for me. I geek out on numbers and formulas. I enjoy it. If you don't, you need to find the method that works for you.

Remember, you're going to be doing this for the rest of your life. This isn't a trend or a bandwagon that you're hopping on. You're making a life change.

Stop making excuses and start making a budget!

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My Blog Vision Statement

When I set out to begin this blog, I originally intended to name it: "Facing Your Failures." It's good, right? It sounds grandiose. I can imagine a motivational speaker getting up in front of a massive crowd and telling them: "Today, I'm going to help you face your failures."

The problem is that that is disingenuous. It doesn't represent me or the message I'm trying to deliver.

The title, as you can clearly see, is: "Facing Our Failures."

In my life, I've made a series of financial mistakes. I've mishandled credit cards, amassed debt and overall made a big mess of things.

As a result of my mistakes, I've had to kick, scratch and claw my way back into a sane financial situation that was manageable.

I don't have all the answers. I'm just a guy who has made some bad decisions and is now trying to rectify the situation.

The thing is, I might know more than you do. When I was walking through the shadow of the "Valley of Death," I wish I had people around me who had gone through what I was about to go through. It would have been nice to have someone who was on the other side of the chasm, reaching their hand out from the other side. I hope I can be that for you. I also hope that this website may, eventually, build a support system of people who can be that for each other.

I'm not trying to sell you on anything. The only thing I want you to buy into is that there is hope.

I was at a point where I thought my life was over. It wasn't. It isn't.