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Time for a Change

December 29, 2010 By Leave a Comment

Not until the pain of the same is greater than the pain of change will you embrace change. ~Dave Ramsey

The coming of the New Year is always a time that people evaluate the past year and plan for the future. We may make promises to ourselves to change our habits in the New Year, but change is always painful and the majority of New Year’s Resolutions fall by the wayside by mid-February. We really have to be sick and tired of the way our life is going in order to change our habits. If the pain associated with changing is outweighed by the pain incurred by the status quo then change will not happen.

A household budget and finances are really no different than a diet or exercise program that might stick around for a few months before being cast aside or forgotten on the way back to old habits. What we need is a long-term vision that incorporates why short-term pain is worth it! Get Mad! Get intense! Unless you have the kind of intensity and commitment needed to change your habits now to get out of debt quickly you will only wander about wondering where the money  went. It is easy to wander into debt. It comes from not paying attention; the kind of attention that happens when you have a written plan for your money. While you can wander into debt, it is impossible to wander out. You have to have a specific goal, a strong plan and quick intense action items.

Make a change this year and get mad at the way you are living. Get intense and embrace the change. Make a budget and stick to it. The average family can get out of debt in 18 to 24 months. Get an accountability partner if you and your spouse need one, but get with it and have an awesome new year on your way to your new financial freedom!

Kathryn Gerken is a financial coach in Newcastle, WA along with her husband Tim. Their website is www.GerkenFinancialCoaching.com

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The Perfect I.C.E. Storm

December 1, 2010 By Leave a Comment

In our area of Washington State, we had our first snow fall of the 2010-2011 season before Thanksgiving. This is very unusual, but a pleasant diversion from our regular activities. Being house-bound would have been much more uncomfortable had it not been for some planning in advance. I went to the store for holiday food early and filled the gas tank up before the roads became dangerous. Planning around your finances should take a similar path. In homage to our early winter storm, let’s talk about ICE, which stands for Intensity, Communication/Cooperation and Execution. All three of these should be in place in order to have a comfortable safety net of cash for emergencies and a plan to get out of debt.

This week, would like to discuss Intensity. This is the drive that you need, short-term, to see your goals and plans for your finances come to fruition. You and your spouse, if you have one, can not keep intensity going forever. It is a short-term, 18-24 month commitment to sacrifice your lifestyle in order to get out of debt and have some financial breathing room. This takes us back to our G.P.A., goals, plans and actions.

In order to maintain intensity you must see progress towards your goals of becoming debt free. To reach those goals you need a planned timeline and specific action steps. If you can keep up the intensity of your actions steps to follow your plan and see progress, then you become more intense about reaching your goal.

Plan your Christmas shopping this year with a specific budget that you can afford to pay cash for, so that in January you are not set back in your financial plan and goals. One easy way to do that is to put your Christmas shopping list on the outside of an envelope. Next to each person’s name put a dollar amount, total that dollar amount at the bottom and put that much cash inside the envelope. From there, only buy Christmas gifts out of that envelope. When the envelope is empty, you are done shopping. Get and stay intense through this season and it will bring you out of the perfect Christmas ICE storm.

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Financial Wellness: Do you have a 4 point G.P.A?

October 11, 2010 By Leave a Comment

In high school, we all saw students striving to achieve a 4.0 grade point average. You may have been one of those people. These students were largely self motivated and had a goal of college scholarships and entrance in mind. In order to accomplish this feat the students had to have a study plan and be driven enough by that plan to follow it through with the action of completing daily work assignments, seeking help from the teachers and peers and studying for tests.

The same is true for your personal finances. You may have wandered into debt over the years, but in order to get out of debt and build wealth you will need to have a four point G.P.A. In this case, G.P.A. stands for Goal, Plan and Action. Dave Ramsey’s baby steps help to get the process started. He lists his first four steps as: Building a $1,000 emergency, debt snowball, building a 3-6 month emergency fund and saving 15% towards retirement.

Should you be doing all of these things at once? Definitely not. First, you need to establish your goals for your future. This is your time to dream about the why portion of your getting out of debt plan. What is it that you would like to do with money if you were out of debt and building wealth? Would you travel, give to a charity, fund your child’s college, save for a future wedding for your daughter? Sit down with your spouse and make a wish list. This list will be your long-term goals. Your short-term goal is to be out of debt with a 6 month emergency fund.

Next you will need a plan. This is where the baby steps come in. With a detailed road map of where you are going and why, it takes the average family 18 to 24 months to get out of debt. You will need to have focus, and drive to complete this step quickly. Most families are only willing to sacrifice for a short period of time to reach a goal. Be intentional about getting out of debt. You can’t wander out of the debt trap; you will need a plan and be willing to stay with that plan to reach freedom from debt.

The Action step to fulfill that plan is based on your road map and your goals. Remember the student who did daily assignments, sought out extra help and studied for the test? It is the same with personal finance. A family needs to participate together in daily budgeting and the planning of where each dollar is going to be spent or saved. You can seek encouragement, empowerment and advice from professional coaches, counselors and personal mentors. As major purchases in life come up you will have to have a plan of action spend some time saving for that purchase so at the end of the day you can purchase it with a plan so that you do not go further into debt.

After you have gotten out of debt and built a 6 month emergency fund you will be ready for step four of your plan, saving 15% of your income for retirement, so that you can build wealth and have hope for your future.

Begin today to establish your family’s G.P.A and change your future for the better.

Kathryn Gerken is a financial coach in Newcastle, WA along with her husband Tim. Their website is www.GerkenFinancialCoaching.com

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Your Personal Economy: Is it affected by the national economy?

October 5, 2010 By Leave a Comment

For the past two years now, if you have watched the media or read the newspapers, you have been inundated with the bad news about the state of the national economy. Unemployment rates are up and everyone has known someone who has lost a job or had a decrease in hours or pay scale. But does all the gloom have to affect your personal economy? That depends on how you have managed your assets.

If you have goals that are connected to a plan that you are implementing with an action then your GPA is probably pretty high. If you are letting your money and bills run your life instead of telling your money what to do you are probably being tossed around with most of America.

Interest rates for home mortgages are low now and it is a great time to invest because stock is on sale! However, if you are in debt you were not ready when the “blue light special” came on.  People who have a goal, plan and action, even if they are not out of debt, were not affected by this recession as much as those without a plan. If you were out of debt and had a 3 to 6 month emergency fund, even if you were laid off, it became less of an emergency.

How do you set financial goals? Start to dream of your future. What could you do if you were out of debt and had a 3-6 month emergency fund set aside? Where would you go, where would you work, where would you give? Dream big and then devise a plan and follow it so that when an “emergency” comes into your personal economy it becomes an inconvenience instead.

Kathryn Gerken is a financial coach in Newcastle, WA along with her husband Tim. Their website is www.GerkenFinancialCoaching.com

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