Iron Out Your Money Ebook


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A guide to financial stability.

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Iron Out Your Money Ebook

  1. 1. w w w . W o r k W i t h R a n d a . c o mIron Out YourMoneyBeginning Steps to Creating The Life of Your DreamsBy: Randa Manning-JohnsonWeek 3 of The Four Weeks To Fabulous Challenge
  2. 2. 1www.WorkWithRanda.comInspiration -There is no other person who is smart enough, or experienced enough, or informed enough orinsightful enough to tell you how to live. Thats up to you.Certainly the advice and guidance of others can be extremely valuable. Yet when it comes toexpressing and fulfilling the best of who you are, you are the worlds foremost expert.It feels good to be praised and it hurts to be criticized. Always keep in mind, though, thatthose who offer their opinions of you cannot possibly see the whole picture.Your life is your responsibility. That is simultaneously a sobering obligation and afantastic opportunity.Successful living is difficult work and yet you are absolutely qualified to do it. You areworthy and capable of creating and enjoying whatever it is that truly fulfills you.Make the commitment, do the work, accept the responsibility that is necessary for thatfulfillment. Live the outstanding life that is yours to experience.-- Ralph MarstonEnd of the Week Journal Writing - Have you gained a better understanding ofyour financial situation? Do you see where you have gone wrong and are you able to see change inthe future?Daily - Review your budget sheet daily. Make any additions or subtractions needed. This willbecome easier once you read the attached worksheets. They will give you ideas on how to cut backon things. Use your task tracker to track your progress. By the end of the week you should be ableto change at least 3 money habits that you have accumulated.(Cut out one day of Starbucks and opt for regular coffee...YOU CAN DO IT!!)
  3. 3. 2www.WorkWithRanda.comWeek Three“Iron out your Money”OK, so your house is clean, your mind and spirit are at peace, what’s next? It’s time to getyour finances lined up with the rest of your new found way of life.Better ways of thinking make it easy to make better financial decisions. This weekwill help you with the decision making process.We will work on realistic budget strategies, developing discipline, ways to cut backand save as well as small investment strategies for the future.It is a known fact that Cash is King! You can’t consider yourself a player in the chess gameof life if you don’t have any....Unfortunately you are considered a pawn and will be treatedaccordingly......Don’t misunderstand me; this is not designed to make you think that you are aboveanyone else if you have more money than them. This is merely an exercise to helpyou properly manage what you have now, so that in the event you are given thatdreamt about increase, you will know how to properly handle it.Your financial growth should never surpass your personal growth!Now with that being said...$how me the Money!
  4. 4. 3www.WorkWithRanda.comMonthly Budget Worksheet for ___________________________________________Most of us don’t take the time to actually sit down and calculate what expenses we have each month.We know how much we have coming in, but often times have no idea what we actually have goingout. This worksheet will help you conceptualize why you may or may not be living paycheck topaycheck. Or in some cases, you may not even be making it to the next paycheck.To calculate your monthly budget simply print this budget worksheet and write down how much youcurrently spend for each of the budget categories per month below. Then add up all your budgetedexpenses and compare that to your net monthly income.BUDGET CATEGORY AMOUNTAllowances: (Your Name)Allowances: SpouseAuto: Gas & OilAuto: RegistrationChildcareClothingDebt/Payment To: Credit Card #1Debt/Payment To: Credit Card #2Debt/Payment To: Credit Card #3Debts: Car Payment #1Debts: Car Payment #2Debts: MortgageDonationsEntertainment: Cable & InternetEntertainment: Movies & EventsFinancial Plan: College FundFinancial Plan: IRAFinancial Plan: InvestmentsFood: Dining OutFood: GroceriesHealth: Co-pay & SuppliesHouseholdInsurance: AutoInsurance: HealthInsurance: HousingInsurance: LifeSavingsTaxes: Property TaxesUtilities: ElectricityUtilities: GasUtilities: Mobile PhoneUtilities: PhoneUtilities: Water/Sewer/TrashOther Expense #1
  5. 5. 4www.WorkWithRanda.comOther Expense #2Other Expense #3Other Expense #4Other Expense #5Total Monthly ExpensesMonthly Net IncomeMinus Expenses (from above)Available IncomeAre you surprised at what you see?(You didn’t forget to add in that Starbucks did you?) At those prices.....It is definitely an expense!
  6. 6. 5www.WorkWithRanda.comKeys to Financial SuccessAlthough making resolutions to improve your financial situation is a good thing to do at any time ofyear, many people find it easier at the beginning of a new year. Regardless of when you begin, thebasics remain the same. Here are my top ten keys to getting ahead financially.1. Get Paid What Youre Worth and Spend Less Than You EarnIt sounds simplistic, but many people struggle with this first basic rule. Make sure you know what yourjob is worth in the marketplace, by conducting an evaluation of your skills, productivity, job tasks,contribution to the company, and the going rate, both inside and outside the company, for what youdo. Being underpaid even a thousand dollars a year can have a significant cumulative effect over thecourse of your working life.No matter how much or how little youre paid, youll never get ahead if you spend more than you earn.Often its easier to spend less than it is to earn more, and a little cost-cutting effort in a number ofareas can result in big savings. It doesnt always have to involve making big sacrifices.2. Stick to a BudgetOne of my favorite subjects: budgeting. Its not a four-letter word. How can you know where yourmoney is going if you dont budget? How can you set spending and saving goals if you dont knowwhere your money is going? You need a budget whether you make thousands or hundreds ofthousands of dollars a year.3. Pay Off Credit Card DebtCredit card debt is the number one obstacle to getting ahead financially. Those little pieces of plasticare so easy to use, and its so easy to forget that its real money were dealing with when we whipthem out to pay for a purchase, large or small. Despite our good resolves to pay the balance offquickly, the reality is that we often dont, and end up paying far more for things than we would havepaid if we had used cash.4. Contribute to a Retirement PlanIf your employer has a 401(k) plan and you dont contribute to it, youre walking away from one of thebest deals out there. Ask your employer if they have a 401(k) plan (or similar plan), and sign uptoday. If youre already contributing, try to increase your contribution. If your employer doesnt offer aretirement plan, consider an IRA.www.workwithranda.info5. Have a Savings PlanYouve heard it before: Pay yourself first! If you wait until youve met all your other financialobligations before seeing whats left over for saving, chances are youll never have a healthy savings
  7. 7. 6www.WorkWithRanda.comaccount or investments. Resolve to set aside a minimum of 5% to 10% of your salary for savingsBEFORE you start paying your bills. Better yet, have money automatically deducted from yourpaycheck and deposited into a separate account.6. Invest!If youre contributing to a retirement plan and a savings account and you can still manage to put somemoney into other investments, all the better.7. Maximize Your Employment BenefitsEmployment benefits like a 401(k) plan, flexible spending accounts, medical and dental insurance,etc., are worth big bucks. Make sure youre maximizing yours and taking advantage of the ones thatcan save you money by reducing taxes or out-of-pocket expenses.8. Review Your Insurance Coverage’sToo many people are talked into paying too much for life and disability insurance, whether its byadding these coverage’s to car loans, buying whole-life insurance policies when term-life makes moresense, or buying life insurance when you have no dependents. On the other hand, its important thatyou have enough insurance to protect your dependents and your income in the case of death ordisability.9. Update Your Will70% of Americans dont have a will. If you have dependents, no matter how little or how much youown, you need a will. If your situation isnt too complicated you can even do your own with softwarelike WillMaker from Nolo Press. Protect your loved ones. Write a will.10. Keep Good RecordsIf you dont keep good records, youre probably not claiming all your allowable income tax deductionsand credits. Set up a system now and use it all year. Its much easier than scrambling to findeverything at tax time, only to miss items that might have saved you money.Reality CheckHow are you doing on the top ten list? If youre not doing at least six of the ten, resolve tomake improvements. Choose one area at a time and set a goal for incorporating all ten intoyour lifestyle.
  8. 8. 7www.WorkWithRanda.com8 Financial Tips For Young Adultsby Amy FontinelleUnfortunately, personal finance has not yet become a required subject in high school or college, soyou might be fairly clueless about how to manage your money when youre out in the real world forthe first time. If you think that understanding personal finance is way above your head, though, yourewrong. All it takes to get started on the right path is the willingness to do a little reading - you donteven need to be particularly good at math.To help you get started, well take a look at eight of the most important things to understand aboutmoney if you want to live a comfortable and prosperous life.1. Learn Self ControlIf youre lucky, your parents taught you this skill when you were a kid. If not, keep in mind that thesooner you learn the fine art of delaying gratification, the sooner youll find it easy to keep yourfinances in order. Although you can effortlessly purchase an item on credit the minute you want it, itsbetter to wait until youve actually saved up the money. Do you really want to pay interest on a pair ofjeans or a box of cereal?If you make a habit of putting all your purchases on credit cards, regardless of whether you can payyour bill in full at the end of the month, you might still be paying for those items in 10 years. If youwant to keep your credit cards for the convenience factor or the rewards they offer, make sure toalways pay your balance in full when the bill arrives, and dont carry more cards than you can keeptrack of.2. Take Control of Your Own Financial FutureIf you dont learn to manage your own money, other people will find ways to (mis)manage it for you.Some of these people may be ill-intentioned, like unscrupulous commission-based financial planners.Others may be well-meaning, but may not know what theyre doing, like Grandma Betty who reallywants you to buy a house even though you can only afford a treacherous adjustable-rate mortgage.Instead of relying on others for advice, take charge and read a few basic books on personal finance.Once youre armed with personal finance knowledge, dont let anyone catch you off guard - whetherits a significant other that slowly siphons your bank account or friends who want you to go out andblow tons of money with them every weekend. Understanding how money works is the first steptoward making your money work for you. (To find out how to have fun and still save money, seeBudget Without Blowing Off Your Friends.) (Article can be found in your “Extras”)3. Know Where Your Money GoesOnce youve gone through a few personal finance books, youll realize how important it is to makesure your expenses arent exceeding your income. The best way to do this is by budgeting. Once yousee how your morning java adds up over the course of a month, youll realize that making small,manageable changes in your everyday expenses can have just as big of an impact on your financialsituation as getting a raise. In addition, keeping your recurring monthly expenses as low as possible
  9. 9. 8www.WorkWithRanda.comwill also save you big bucks over time. If you dont waste your money on a posh apartment now, youmight be able to afford a nice condo or a house before you know it.4. Start an Emergency FundOne of personal finances oft-repeated mantras is "pay yourself first". No matter how much you owe instudent loans or credit card debt and no matter how low your salary may seem, its wise to find someamount - any amount - of money in your budget to save in an emergency fund every month.Having money in savings to use for emergencies can really keep you out of trouble financially andhelp you sleep better at night. Also, if you get into the habit of saving money and treating it as a non-negotiable monthly "expense", pretty soon youll have more than just emergency money saved up:youll have retirement money, vacation money and even money for a home down payment.Dont just sock away this money under your mattress; put it in a high-interest online savings account,a certificate of deposit or a money market account. Otherwise, inflation will erode the value of yoursavings.5. Start Saving for Retirement NowJust as you headed off to kindergarten with your parents hope to prepare you for success in a worldthat seemed eons away, you need to prepare for your retirement well in advance. Because of the waycompound interest works, the sooner you start saving, the less principal youll have to invest to endup with the amount you need to retire, and the sooner youll be able to call working an "option" ratherthan a "necessity".Company-sponsored retirement plans are a particularly great choice because you get to put in pretaxdollars and the contribution limits tend to be high (much more than you can contribute to an individualretirement plan). Also, companies will often match part of your contribution, which is like getting freemoney.6. Get a Grip on TaxesIts important to understand how income taxes work even before you get your first paycheck. When acompany offers you a starting salary, you need to know how to calculate whether that salary will giveyou enough money after taxes to meet your financial goals and obligations. Fortunately, there areplenty of online calculators that have taken the dirty work out of determining your own payroll taxes,such as Paycheck City. These calculators will show you your gross pay, how much goes to taxes andhow much youll be left with, which is also known as net, or take-home pay.For example, $35,000 a year in California will leave you with about $27,600 after taxes in 2008, orabout $2,300 a month. By the same token, if youre considering leaving one job for another in searchof a salary increase, youll need to understand how your marginal tax rate will affect your raise andthat a salary increase from $35,000 a year to $41,000 a year wont give you an extra $6,000, or $500per month - it will only give you an extra $4,200, or $350 per month (again, the amount will varydepending on your state of residence). Also, youll be better off in the long run if you learn to prepareyour annual tax return yourself, as there is plenty of bad tax advice and misinformation floatingaround out there.
  10. 10. 9www.WorkWithRanda.com7. Guard Your HealthIf meeting monthly health insurance premiums seems impossible, what will you do if you have to goto the emergency room, where a single visit for a minor injury like a broken bone can cost thousandsof dollars? If youre uninsured, dont wait another day to apply for health insurance; its easier thanyou think to wind up in a car accident or trip down the stairs. You can save money by getting quotesfrom different insurance providers to find the lowest rates. Also, by taking daily steps now to keepyourself healthy, like eating fruits and vegetables, maintaining a healthy weight, exercising, notsmoking, not consuming alcohol in excess, and even driving defensively, youll thank yourself downthe road when you arent paying exorbitant medical bills.Guard Your Wealth If you want to make sure that all of your hard-earned money doesnt vanish, youllneed to take steps to protect it. If you rent, get renters insurance to protect the contents of your placefrom events like burglary or fire. Disability insurance protects your greatest asset - the ability to earnan income - by providing you with a steady income if you ever become unable to work for anextended period of time due to illness or injury.If you want help managing your money, find a fee-only financial planner to provide unbiased advicethats in your best interest, rather than a commission-based financial advisor, who earns money whenyou sign up with the investments his or her company backs. Youll also want to protect your moneyfrom taxes, which is easy to do with a retirement account, and inflation, which you can do by makingsure that all of your money is earning interest through vehicles like high-interest savings accounts,money market funds, CDs, stocks, bonds and mutual funds.A Financial Basis for Life Remember, you dont need any fancy degrees or special background tobecome an expert at managing your finances. If you use these eight financial rules for your life, youcan be as personally prosperous as the guy with the hard-won MBA.
  11. 11. 10www.WorkWithRanda.comBudgeting Without Blowing Off Your Friendsby Amy FontinelleYou and your friends may have shared a similar economic situation when you were kids or while youwere in college, but now that you are adults, your incomes might diverge widely. Perhaps youvechosen to join the volunteer corps or pursue a Ph.D. while your friends are already working high-paying jobs. Differences in spending habits can destroy a friendship when they result in wildlydifferent lifestyles or feelings of resentment, but if you approach the money situation with care andyou have good friends, you can avoid blowing your paychecks on luxury cruises and sushi dinnersthat you cant afford.1. Dont Assume You Can Afford It Too Just because all your friends recently purchased new luxurycars doesnt mean you should follow suit. If youve always been on similar spending levels in the past,your inclination might be to think that nothing has changed. However, your friend might be earning abigger paycheck, or be willing to make sacrifices in areas that you arent, like living in an inexpensiveapartment or giving up vacations, in order to afford his or her new wheels. Of course, for all you know,your friend cant afford it, either. Most people dont volunteer information about how much they make.Stick to purchasing decisions you know you can comfortably afford, regardless of what the otherpeople in your life are doing.2. Be Honest People who are your true friends wont drop you because you cant afford to dine atfour- star restaurants. You may have to miss out on some pricier outings, but good friends will beflexible and incorporate inexpensive activities into their social lives that you can join in on.3. Suggest Alternatives If your friends invite you to a restaurant you cant afford, suggest meeting upat your favorite coffee shop instead or offer to host a potluck. If they want you to join their gym,suggest going hiking or taking a stroll around the block. If they want to visit San Francisco and stay ina pricey hotel, suggest camping on the outskirts of the city or getting enough friends to come along sothat you can share the room bill and make it affordable. When you give your friends options instead ofturning them down outright, theyll know that you care about spending time with them and maintainingthe relationship, even if you cant always afford the things they want to do.4. Plan the Activity Instead of taking the defensive position of trying to steer your friends plans indifferent directions, go on the offensive and start coming up with the plans yourself. You couldsuggest a volunteer activity, a movie night at your place, playing Frisbee, or a museum visit. Goodfriends will understand that spending quality time together doesnt have to cost money.5. Spend on What You Want This is an important life lesson. Whether youre making a smallpurchase or a large one, you should be the one to decide how your money is spent. If you want topay off your credit card more than you want to go clubbing, dont go clubbing just because yourfriends are doing it. Let your friends in on why you are turning down their invitations so theyll knowthat youre rejecting the expense and not their company. As mentioned previously, always follow up arefused invitation with a new invitation.
  12. 12. 11www.WorkWithRanda.com6. Save So You Can Spend If your friends really want to fly to Spain for a trip and you really want togo, dont automatically turn down the invitation just because you cant afford it as easily as they can.Make it a priority to save for the trip ahead of time. Sometimes stretching your budget doesnt seemso bad when its for an experience youll value for years to come.7. Minimize the Cost If you do take your friends up on an expensive outing or trip, leave the plastic athome and take with you only what you can afford to spend Then, think about ways you can minimizethe cost of the outing. Eat before you go to the restaurant and order an appetizer as your meal. If youarent driving, have a drink or two before you go to the bar, then order a soda while youre there. Ifyou must drink while youre out, drink beer or wine instead of pricier cocktails.ConclusionHaving friendships isnt supposed to be costly, and it doesnt have to be. If you make a consciouseffort, you should be able to stick to your budget without losing your friends.
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  14. 14. 13www.WorkWithRanda.comList the major goals you hope to accomplish or the assignments you plan tocompleteList the major goals and or assignments that you actually completedDay OneDay TwoDay ThreeDay FourDay FiveDay SixDay SevenList Two (2) things that you are grateful for