DOES MONEY HAVE YOU BY THE THROAT?

Did you travel for spring break? I know it’s come and gone for most families and college students. Maybe you traveled, maybe you didn’t, or maybe the nice weather has you planning for summer.

You know when you’re returning home from a road trip and you start seeing the signs that show how many more miles you’ve got to go before reaching home? And you sort of tune them out because there are so many and the distance seems so far. Then suddenly you’re right there and relieved that you can get out of the car and close the door on all those miles.

Think of tax season like that.

Because that’s where we are… at the end of the regular 2023 tax season. (That’s Tuesday of this week, April 18th, if you happened to forget

We’re also already thinking about next year’s road trip… I mean tax season. You should too.

If you didn’t like where your tax filing landed you this year, we can take a thorough look at things and figure out how to improve that outcome before January rolls around again.

I know what you’re thinking: That’s 8 months away! I’ve got time.

But actually… you don’t. Because you have to change things *now* in order to reap the tax benefits *later*.

Now, making a plan for your tax burden isn’t the only way you can take command of your money. There are other ways, too. Whether you’re dealing with the effects of inflation or trying to smooth over some past money mistakes, there are some straightforward principles that really work when you’re trying to make headway with your finances.

Let’s take a look at what that could look like for your situation…

Janet Behm's
"Real World" Personal Strategy Note
Taking Back Command of Your Money
“To err is human, to forgive divine.” - Alexander Pope

You’ve heard it a trillion times, but it’s still true: Everybody makes mistakes. Sometimes that’s you… and sometimes those mistakes are with money.

Spend too much? Not save enough? End up badly stuck in a deep financial sinkhole?

Don’t beat yourself up. Money mistakes happen.

Instead — recover. Here’s how.

You are not alone

Nobody else is as stupid as I am, you might be thinking. Nope. One in three people had a financial regret in just last year, almost three out of five live paycheck to paycheck — and more than had at least one misstep with money since 2010.

Money goofs often involve careless spending — especially for big purchases, but also for the little ones that snowball quickly. It can be hard to tell a “want” from a “need,” but it would blow your mind how fast a few spins through a fast-food drive-thru add up.

…Maybe you forgot about all those unused online subscriptions and have been automatically shelling out for them without even realizing it. Maybe you’ve been a little too quick to whip out the card and just kick expenses to the end of every month. Maybe you dipped directly into savings to pay a few too many bills. We haven’t even touched on life’s upheavals like divorce or a rattly stock market and economy that can lead anybody to a wrong choice.

Forgive yourself, and keep moving.

Your road back

It can be hard to know where you’re going until you know exactly where you are. Start your recovery by taking complete stock of your finances right now. And we mean complete: Every penny that’s come in and gone out for the past three months until today. Don’t worry if it takes a little time and keyboard clicking to get your pay and bank records and your online accounts for bills (old-fashioned paper works, too). Then, accumulate your bills going back a half year at least.

These records might actually show where you went off the beam. Write down when you discovered it and what you did right afterward — this will come in handy for avoiding similar goofs down the road.

Start your first draft of a budget using goals that are both short-term (ex: whittle the debt that comes with interest or that’s most in arrears) and long-term (save for real estate investments, for a better car to get to work, or for a savings fund for unexpected opportunities or troubles).

A note about paying off debt that has interest: There are three popular strategies for paying off interest accounts.

1. The Snowball Strategy is for unsecured debts(credit cards). You must be able to pay the minimum payments on all of them. Pick the lowest amount due and make extra payments on that. Pay it off and add all the extra to the next lowest. This is actually a good “Starter Strategy” because you get some quick wins.
2. The Avalanche Strategy is similar to the Snowball but you Pay the highest interest first.
3. Cash-Flow Strategy (my favorite) is a quick calculation. Put extra money on the lowest number (least efficient loan-this strategy includes secured loans like your mortgage). Divide Loan Balance by the Monthly Payment. The lowest number under 50 gets the maximum payment. Numbers from 50-100 may need to be negotiated. Anything over 100 is left in place.

The point is to get rid of as much interest as possible, and free up cash-flow, ASAP.

REMEMBER TO KEEP THE ACCOUNT OPEN WHEN IT IS PAID OFF. THIS GIVES YOU THE DOUBLE BENEFIT OF ACCOUNT HISTORY AND UNUSED CREDIT FOR THE CREDIT REPORTING AGENCIES.

Outside assistance

Accountability helps you steer clear of financial problems in the future. Accurate record-keeping and monitoring what you spend make an excellent accountability system. Set realistic spending goals and time-frames — and stick to them. Let us know if we can help you with this.

Think about an accountability partner — someone you trust and someone you can tell anything about your finances — who can be a non-judgmental sounding board for your money moves. This person should respect you and understand what you’re going through with money. You want them to be someone whose advice you will actually take to heart.

You can try a financial coach who, with a broad understanding of finance, will guide you in basic money management and help you develop good long-term habits. (This is different from a financial planner, who works on wealth management). Your coach should be a good listener and be able to objectively motivate you. They should also be willing to track your financial moves to establish a history that you two can later discuss. No, this person won’t be free: Fees can be up to three figures an hour. Ask for recommendations from friends or family members. We’re happy to help, too.

While we’re on the subject, remember about maybe getting a therapist. You may be using (overspending) money to cope with some deeper issues. Health insurance often covers much of the cost for this.

Personal finance software is another good tool for you. Initially, look for one that does budgeting and will immediately track how much comes in and how much goes out. Popular software for this includes Quicken, Mint, and YNAB, but there are scads of others.

Above all, you want to set — and stick to — a time-frame for each of these steps. That’ll start your recovery even before the next bill comes crashing in.

BE THE ROAR not the echo®

Rooting for you,

Janet Behm