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Who Is Responsible For Your Personal Finance?

February 19, 2012 By Kathryn Leave a Comment

“People are always blaming their circumstances for what they are. I don’t believe in circumstances. The people who get on in this world are the people who get up and look for the circumstances they want and if they can’t find them, make them.” - George Bernard Shaw

Create Your Budget

The cash flow plan or budget is the best way to change your circumstances for the better. By knowing exactly what is coming as income and telling your money where to go during the month, you decide where your income goes by spending on paper, first, before you begin each month. Do this without the outside pressure from creditors or marketing experts using commercials. Make a situation for yourself where you are in control of the spending and you can set your own spending priorities.

Prioritizing Your Budget

Your cash flow plan should have savings at the top. If you don’t save money, there isn’t anyone else out there that will do it for you. Your next priorities are food, shelter, utilities, basic transportation and basic clothing. Having these necessities covered in your plan will allow you to work through your debt from a position of strength. With your basic necessities covered, you can prioritize paying off of your debts. List them from smallest amount owed to the largest amount owed and then pay the minimum payments for all of them. If you have any extra money, apply it to the smallest debt to pay it off the fastest. With the smallest paid off you can take its payment and any other extra income that you can make and apply it to the next debt payment.

Get Up and Look For a Better Life

You are in control of your life. Married couples must talk together about your hopes, dreams and goals for your family. Getting on a plan and paying off debt is a means to those goals. But you have to know WHY you are sacrificing your life-style and living differently than the rest of society. You have to know where you are pointed and have a plan to make your dreams a reality.

The best way to have a great outlook and future in your money management is to create it

By having a budget, prioritizing your spending and working a debt payment plan to accomplish your goals and dreams you will change your circumstances to fit your life, without living a life of circumstances dragging you down. Get off your couch, turn off your television and take control of your life and get pointed in the right direction today.

Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA. They serve their community in the greater Seattle area by teaching classes and speaking for groups as well as coaching.

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Name Your Income Tax Refund

February 7, 2012 By Kathryn Leave a Comment

Many people have already filed their Federal Income Tax Return for 2011. Many more are in the process of filing. Are you getting a refund this year? If you are, you can track your refund here . If you are getting a large refund you should consider adjusting your withholding. You could be taking more money home each month to add to your budget rather than letting the government hold onto it without interest until April of next year.

For budgeting purposes, a tax refund should be considered as extra income or irregular income. Other funds that fall into this category are bonuses, stock sales, and even raises at work. If you can maintain your current level of spending, assuming that you are not over spending your income, then a raise could go toward debt, emergency savings or retirement depending on which step you are on. It is very important to name the extra money that comes into your life, before you get it. Make a list of spending and savings priorities that you would like to do, but don’t have the money for. List them in priority order. Then when you receive extra money, you know exactly where that money should be spent. If you don’t name it, your windfall will blow away on who knows what.

Take a few minutes, make a list and get pointed in the right direction to put you in a position of strength when you receive extra income.

Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA. They serve their community in the greater Seattle area.

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Income Crisis

January 31, 2012 By Kathryn Leave a Comment

Did you find that when you put your income on a budget and spent it on paper before the month began that you had more expenses than income?

Let’s look at some ways to reduce expenses or raise your income.

Part-time or overtime work: It might be that until you get your debts paid off that you will need to take an extra job or work overtime in your current job to make ends meet. This will be a temporary situation if you concentrate on paying off debt as quickly as possible.

Sell Stuff: Is there anything around the home that could be sold to pay on debt or to pay extra on debt. How about your car? If  your vehicles, boats, etc. all add up to payments of more than half your take home pay then you may need to sell something.

Reduce Expenses: While you can’t reduce fixed expenses like your insurance, you can look at ways to make payments lower or at least more predictable. Does your utilities company have a monthly budget plan? Do you really need the cable or internet services that you currently have or could they be reduced. Do you have a land-line and a cell phone? Do you need both? Look at your expenses and ask yourself if you could do without, or reduce them some how. You may even try to et your interest payments reduced, if you have credit card debt.

It all comes down to paying attention to what you are spending and trying to find ways to increase your income, while paying off debt, so that you will get pointed in the right direction to become debt-free! In this way your income will work for you, and not the other way around.

Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA. They serve their community in the greater Seattle area.

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The Basic Budget

January 28, 2012 By Kathryn Leave a Comment

Last time, we covered the general rules of conduct for budgeting. Now, let’s move on to the nuts and bolts of getting numbers on paper. You might have downloaded the budget form from last week. This will help you to start thinking about and organizing your basic expenses. Once you have a good ballpark of where your money is going, it is time to get into some more detailed planning.

Spend the money on paper or a spread-sheet, before the month begins. As I write this, we are heading into February, so let’s concentrate on February’s budget.

Step One
Write the amount of your take-home pay at the top of the paper.

Step Two
Prioritize your expenses for the month. Food, shelter, utilities, basic transportation and savings should be at the top of the list.

Step Three
Estimate how much you will spend for the month on each expense. You can look at your quick budget from last week to help you out. Then spend your income as you work your way down the priorities. When your income runs out, you are done spending.

So, what happens if you still have expenses left? Well, either those items won’t get paid this month or you need to go back and adjust non-fixed expenses to free up more money to allocate to the other expenses. At the end it should read zero, which means that you have allocated all of your income into categories of giving, saving and spending.

This is not an easy process. You may need to go back and adjust your numbers on paper during the month so that you come out even. As the months progress you will see that you are learning to live within your means and begin getting pointed in the right direction for financial success in 2012.

Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA. They serve their community in the greater Seattle area.

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Goals For Cash

January 24, 2012 By Kathryn 1 Comment

This year the typical American household will have somewhere around $50,000 run through their bank account. Most will look up in December and wonder where it went. Don’t let that be you. Now is the time to get organized and establish a spending plan for your income. This is better known as a budget. A budget will help you to establish the goals for your cash. You can download a basic zero based budget form here.

Before we get into the nuts and bolts of budgeting, I want to establish some ground rules that you and your family can follow.

  1. Both spouses have to participate in the budget process. The person who is more numbers friendly can make the budget, but both partners must agree to the numbers
  2. The spouse that did not prepare the budget must look the budget over and change a few things. This does not have to be an arguing point, it is so that both partners are participating and can agree on the spending plan. If you can not agree, the plan will fail. The most important piece of a budget is the agreement to live by the numbers on the paper.
  3. Both partners can change the budget during the month if the need arises, BUT, you must agree and the budget must still BALANCE.

If some type of emergency comes up or if you begin to spend more in a certain category than planned, come back together and lower another category so that you can raise the category that needs more money.

A zero based budget is when you start with the money that comes into the house at the top of the paper. Then you spend that month on paper, before you spend it for real. The bottom of the paper should equal zero, which means that you have allocated all your money for the month. We will discuss how to fill out this form in the next blog. Get pointed in the right direction today and begin to budget, so that by the end of the year you know that your money went where it could benefit you most.

Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA. They serve their community in the greater Seattle area.

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Emergencies You Can See Coming

January 21, 2012 By Tim Leave a Comment

For a week, the local weather forecasters were hyping what was threatening to be the worst snowstorm in the Seattle area in at least a decade if not longer. Names like “Snowmageddon” and “Snowpocalypse” were bandied about as the front of the storm approached in seeming slow motion. The forecasters were right and the storm developed pretty much as they predicted. Schools closed, the streets covered with snow. At one point there were more than 200,000 people without power. The governor declared a state of “emergency”.

I think the use of the term “emergency” in this case is funny. Everyone knew (or should have known) it was coming. There was ample opportunity to get out and stock up on necessities before the storm arrived. Had the unprepared folks been ready, the emergency of this storm would have been at worst an inconvenience. It could even have been an adventure.

Real emergencies in our lives are those things we can’t see coming, but we know they will come when least expected. Things like the loss of job, extended illness or even car trouble can happen “out of the blue”. There isn’t the equivalent of Doppler Radar to tell us that kind of storm is on the way. What we do know is that in any 10-year period, the chances of suffering from a major negative event approach 80%. The time to start preparing for that event is now.

The how of preparing for that event is with an emergency fund. An emergency fund  is a sum of money equal to between three and six months of expenses. It is not an investment, rather it is insurance. Your emergency fund is kept separate from all other funds in a place where it is easy enough to get to should the need arise. A good choice might be separate savings account and a better choice might be a money-market account with check-writing privileges.

What will you do when an emergency comes? Will you go into debt “to cover it”? Do you have an emergency fund? Are you prepared for your own personal “Snowmageddon”?

Tim and Kathryn Gerken are Personal Financial Coaches in Newcastle, WA. They serve their community in the greater Seattle area.

Filed Under: Budgeting, Crisis Management, Financial Goals and Habits, Our Blog, Personal Finance Tagged With: , , , , , , ,

Three Ring Circus is Coming!

December 27, 2011 By Kathryn Leave a Comment

Thank you to the families that we have worked with this year! We have been privledged to serve you both through our coaching and through the Financial Peace University classes that we have facilitated. We hope that your lives have been changed for the better. Working with each of you has changed our lives as well. One of the many things that we have observed this year is that a budget or spending plan is only one part of a healthy financial plan. It is similar to a three ring circus. You have to have all three rings operating at once in order to have a great plan. Let’s look at these rings.

RING #1:

Time management!

So often we hear that our American lives are too busy to pay attention to our finances. We must set aside time to plan and dream. Without a set time on your calendar to make spending plan and prioritize your monthly spending, you will never get ahead. Carve out the time for your family’s future. It is the best gift that you could give them and yourself.

RING #2

Communication!

Talking to your spouse about priorities, dreams and money is also very important to do every month. One of you may not like to talk about money, but if you can dream about what you would like to do with the assets that you have, it will help you to focus your spending plan in one direction instead of many. A focused plan is easier to maintain and will take less time. (See ring #1) Keep your meetings brief and to the point so that you can both have some input. Talk often and it will become a refreshing habit.

RING #3

Spending Plan!

Some people know this better as a budget. Again, it is important to do this every month. Since you spend money differently each month, each month’s budget needs to be different as well. A lot of the numbers will stay the same, but not all of them. Once you establish a budget routine, it will get easier and take less time each month to prepare.

So who is the circus master in your household? Rememeber that even if one spouse is better at budgeting, communication and time management that does not mean that the other spouse is off the hook. Many hands are needed to run a great circus. Assign tasks together, talk continually and watch the bear dance!

Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA. They serve their community in the greater Seattle area.

Filed Under: Budgeting, Financial Goals and Habits, Financial Planning and Priorities, Our Blog, Personal Finance, Relationships & Communications Tagged With: , , , , , , , ,

Can You Afford Coaching?

December 12, 2011 By Kathryn Leave a Comment

At GerkenFinancialCoaching.com we have many new visitors each day looking at our website and the services we offer. The first words out of many potential client’s mouths when they contact us is, “how much do your services cost?” This is always a difficult question for us. We started Gerken Financial Coaching after completing Dave Ramsey’s Counselor Training Program*. We want to be able to help as many people as possible in our community become stronger managers of their assets. One point that we learned from Dave is that if clients are not willing to sacrifice to make a healthy change then coaching most likely will not work for them. This is true whether is it s a 13 week class of Financial Peace University, where the participants pay $100 for a church facilitated class, or for a 3-6 month coaching relationship. The consumers of these services need to perceive value for the cost before they are willing to sacrifice to change their situation. We provide that value.

In most cases, we find that we save clients more money during the coaching process then they invest in our coaching services. At Gerken Financial Coaching, we have several coaching packages each with different options and time frame. We don’t list prices in our site because our services are based on your unique needs and your income level. So, until we find out more about your situation and assess your need for our service, we can not quote you a price. It is different for each client! Our clients appreciate the thoughtful input and assessment of their individual needs and usually agree to the price that we quote. So don’t let the new year begin without a plan. Contact us today and get pointed in the right direction for 2012!

Tim and Kathryn Gerken are Financial Coaching in Newcastle, WA, where they serve the greater Seattle area.

*Completion of Dave Ramsey’s Counselor Training does not create an employment or an agency relationship, or give any Counselor the right to speak for or bind Dave Ramsey or his company, the Lampo Group, Inc., nor does it constitute an endorsement or recommendation by Dave Ramsey.

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Can You Really Save Money at Big Box Stores?

December 10, 2011 By Kathryn Leave a Comment

I have noticed a trend in our family’s spending recently that I would like to share with you today. Many of us have a membership to a big box wholesale store because the things we buy there in bulk are often many times cheaper than buying the same thing at a chain or mom and pop grocery store. But, does buying in bulk really save money?

Let’s look at a few ideas:

  • At a box store you usually pay an annual fee to be allowed the privilege to shop there. And if you sign up for their credit card it makes spending there easier.
  • It is more expensive to impulse shop at a box store than a grocery store, because the items are larger or you have to buy two to get the deal.
  • Have you ever noticed how long some of these things remain, unused, on your shelf or in the freezer? Do you still have that bag of meatballs in the freezer from last Christmas?
  • What is the opportunity cost that is lost by buying in bulk? Where else could that money have been spent? If you have things sitting on your shelf for months, you are tying up resources that might have been better used someplace else.

In this culture of big box everything how do we navigate to be the wisest spenders? Here are a few tips:

  • Pay cash, it hurts more and will help you to stay on budget.
  • Shop around and find out which store has the lowest yearly basic membership. Don’t fall into the upgrade trap!
  • Analyze your spending habits. How long do you have all those paper towels or cans of tomatoes? Would buying these items in smaller quantities reduce your monthly food budget?
  • Shop with a list and buy only what is on the list! Don’t go shopping when you are hungry.

Thinking about the opportunity cost of storing bulk items is an important part of budgeting and getting the most out of your resources. Just because an item is less expensive does not necessarily mean that you need to buy 24 and store them for a year. Be thoughtful, be deliberate and get pointed in the right direction towards improving your spending habits.

What do you think? Please share how you navigate these stores with a budget.

Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA, where they serve their community in the greater Seattle area.

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Is Your Money on a Roller Coaster?

November 26, 2011 By Kathryn Leave a Comment

It doesn’t really matter whether you live on a commission based job, a salary, are paid hourly or are living on a retirement income, by living below the level of what is brought in and by “fixing” your expense needs to that level then anything over that amount becomes a tool for wealth building.

Let’s look at three different scenarios to illustrate my point.

Joe makes an annual salary of $60,000. He has the potential to get bonuses and raises yearly. He is out of debt and has an emergency fund that would cover three months of expenses. If Joe is able to keep his expenses to a reasonable level and stays out of debt by saving for his purchases, he can easily invest any bonuses and future raises in salary that come his way and build wealth faster.

Rebeca is retired and receives an income of $40,000 per year from investments and Social security. Should she have a car payment, house payment and credit card debt? Obviously not. Being out of debt, she can live on $35,000 per year. She can save some of the remaining $5,000 of her income for health care emergencies and invest the rest to leave a legacy to her family. By living on less that she has, she creates options for her life instead of emergencies.

Chris is a real estate broker with a good track record for selling homes in the area. Even though he makes a good income, the commissions come in sporadically throughout the year. By living on a fixed budget, he knows how much he can spend each month. If one month is more prosperous, he can save the overage for a less prosperous month. This helps even out the financial roller coaster that comes with a commission based job. Doing so gives him an emotional peace because he knows he will be able to make his bills each month. If he lives on less than his yearly income he can invest and build wealth for downturns in the economy, when the housing market may not meet all his financial needs.

By living on a fixed budget, it stabilizes our financial lives and gets us pointed in the right direction to build wealth, have financial freedom and the options to use our income to help others.

Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA. They serve their community in the greater Seattle area.

Filed Under: Budgeting, Crisis Management, Financial Goals and Habits, Financial Planning and Priorities, Our Blog, Personal Finance Tagged With: , , , , ,
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