What this Money Coach actually does!!
February 14, 2013
Have you ever wondered just what a Money Coach does? If you have, well you are certainly not on your own! It is the number 1 question I get asked! Here comes an explanation:
Recently one of my clients, the inspirational Sally Feinerman, from www.fitnessfix.co.nz, made me a very generous offer. I could blog about her journey to financial clarity and simply having a better grasp on her finances, both personal and financial.
This is the first part of that story.
JP :- So Sally, can you tell me what drew you to seeking my help with your finances?
SF:- “Well I’m very goal driven and I wanted to be really clear about my finances so that I could set some goals. I had some debt with an overdraft, which I wanted to pay off. I also wanted to get my credit card bill under control. Basically, you actually helped me pay it off altogether. Also I went from having three credit cards to just one. I now only use it for my business. This has been so fantastic. My spending is now much more in the moment, rather than retrospective. Now, I am much more conscious of what I am spending and whether or not I can afford something. Before I just put it on the credit card and dealt with it later. So the really great thing is, that now it looks as though I will have all my debt paid off this year, which is just fantastic! It also looks as though I will be able to start saving this year and have a safety net, which is just awesome. So I just feel that I will be really on top of my finances and knowing exactly where I’m sitting. I think that the discipline of going online and updating my MoneyMinder, every day just shows me visually what I’m spending and that really helps me as well. Also with my spending plan, when I do spend money I don’t feel guilty about it. I had planned to buy that and the money has already been allocated for it and is sitting there ready. Rather than if you don’t know what you are spending then you always feel kind of guilty about spending.
JP:- also, equally, even if you did spend on something that you hadn’t planned it has a great mechanism, which allows you to go back and revise the plan to account for that purchase and still stay within the plan and not go into debt.
SF:- Yes, I find that when I have done my spending plan, I know that if I stick to it , this is where I’ll be at the end of the month. If I don’t spend it all I can also see how that will make me better off.
JP:- Do you update your spending plan most days?
SF:- Yes, I do. At the beginning I did a 30 day challenge where I had to do 5 things for 30 days and 1 of them was my MoneyMinder. So that got me into a really good habit of doing it everyday. I like to get up and just do it in the morning. I also find if I do it everyday it takes no time at all to do. We’ve just been away for a long weekend, with out internet access, so it took me a bit longer this morning!
JP:- In Financial Recovery we talk a lot about conscious spending and many of my clients say that the thing they most value about the process is how aware of their spending they’ve become. Did you find this?
SF:-Yes absolutely. We find we are making different choices too. We have just been away for a long weekend road trip and instead of eating out all the time we made lots of our own food and had picnics etc. We just loved it. It saved us money, but also we were enjoying nature and could stop and eat where and when we liked.
JP:- we use the term “spending plan” rather than “budget” as it tends to have a more positive connotation. Just as in Weightwatchers – they use food plan rather than diet for the same reason. When I was at the peak of my overspending, if anyone mentioned that I should be on a budget, I heard deprivation. That I was going to have stuff taken away from me. Since I have been on the Financial Recovery programme I don’t feel that, as I can choose to spend my money on anything I want. It’s my choice. As Mikelann Valtera says “you can have anything you want but not everything you want”, but it’s your choice! Did you have any sense of being deprived when you started on this programme?
SF:- In the beginning, to be perfectly honest, I probably did, but I think now we do need to question what we spend. We have become such a consumer society that when you look at life more holistically as well and get back to grassroots you don’t need half of the stuff you go and buy and so I have to say that I don’t now and it is more rewarding now to look forward and see where I’m going rather than to look back and think about what I might be missing out on.
JP:- Fantastic. It is really key to have some mechanism that draws you away from the negative behaviour. It is great when, like you, people can have goals and focus on the positive even if it is further in the future, rather than the deprivation.
SF:-If you can get yourself into, or see yourself getting into, the positive that is really good. If you have done all the planning and tracking and can see your progress you can see where you are going and be looking forward to that.
JP:- The other thing which is very linked to that is..well I’ll give you a hypothetical situation. What if you were walking along somewhere and you saw a really nice top or dress or pants that you really liked, but you had not planned to buy any clothes this month? Can you tell me how you might deal with that situation? Or how it might be different from how it would have been before?
SF:- Well, before I probably would have just got them anyway, if I really liked them. Now I would have to justify them to myself, that I could afford them or that I had them on my plan. If they weren’t on the plan then I wouldn’t get them.
JP:- that’s very good. Don’t let me put words into your mouth here, but before might you have just got them and put the expenditure onto your credit card if you couldn’t afford them at the time?
SF:- Yes, absolutely.
JP:- You said at the beginning that you are only using one credit card now. Has that made a real difference?
SF:- absolutely. I think that just knowing what I spend every day rather than just spending and then dreading the credit card bill coming in at the end of the month and then going “Oh my God, look how much money I spent last month!” Knowing that I’ve got to pay it and sort of being in fear of that bill coming in. Now that only one bill comes in a month and I know what I have spent because I have recorded it all, it’s never a shock.
JP:- Thanks for that Sally. I think that next time we should talk about how you now deal with things that come outside the normal monthly expenditure. I know, for example, that you have recently had a big overseas holiday. It will be really interesting to find out how you handled that and if it was any different from how you would have done it before.
Thanks, Sally, this has been really great. It will be useful for others who might be wondering how the process of working with me goes and if it’s for them.
Rainy day savings
I wrote this very early Monday morning and then had HUGE internet problems! Trust me you don’t want me to start on the saga!! Anyway this post was referencing Sunday’s Sunday Star Times. I think it has survived the few days even if it isn’t quite so topical:)
http://www.stuff.co.nz/business/money/7200255/Kiwi-families-trapped-by-debt
I don’t know how many of you read this article in yesterday’s Sunday Star Times(SST), or read it on the Stuff website, but it makes scary reading.
There were lots of horrifying statistics eg. “What has buried so many families is the level of household debt. In 1980, it accounted for 47 per cent of a family’s disposable income. Today, the debt mountain is equivalent to 143 per cent of disposable income.” That’s some shocking statistic!
However, I’m going to focus on the sidebar piece, from the SST “Sudden health scare sends family to the edge” The couple featured had been earning $130,000pa so were not poor. However, they had a mortgage, had two cars, and were sending their 3 children to private schools so their outgoings pretty well took care of their income!
Then, the husband became ill and had to reduce his hours, so they were now having to pay those same outgoings on $600 less a week! Unsurprisingly they couldn’t do it. They borrowed from family and began to use their credit card, which was ” …kept for emergencies in case their children got sick or injured started to be used for the weekly groceries.” …and so they were, and still are, trapped in the debt cycle merry-go-round.
The debt is now so high that they really don’t have enough to really live on, and I’m sure, are having to rely on more borrowing. And sadly, so it will go on until either they earn more money, or reduce their outgoings. That is, plainly, hard!!
Now there is a lot of information is this sidebar and lots I could comment on, but I want to focus on the emergency plan being a credit card! Simply put, that is a disaster waiting to happen, especially as with this couple, the disaster was a serious reduction in income.
I advise all my clients to have three savings accounts, one for Periodic savings, one for a safety net, and lastly and often later, one for investments. The periodic savings account should be used for all those payments that don’t occur monthly and even if you don’t know when they are required you know they will be. In this case “…if the children got sick or injured…”. Now I don’t have children but my general knowledge, combined with my nursing background tells me that this is not an “if” but a “when”!! Another example is when the car breaks down, you don’t know when it will happen, but if you own a car you know that one day it will! Usually at the most inconvenient time too! As Federation of Family Budgeting Services chief executive Raewyn Fox said, “…. easy access to credit was a trap that too many people fell into, without giving thought to the future and something tipping the balance and leaving them in a financially dangerous position. They organise their finances so tightly that a little shock can be a major thing – the car died, the fridge breaks down or the house needs repair. People might have been sensibly paying the regular bills, they haven’t allowed for the irregular ones.”
My colleague, Mikelann Valterra wrote an excellent blog on periodic savings. You can read it here http://www.seattlemoneycoach.com/creating-gloriously-boring-savings-and-a-money-ninja-trick-to-pull-it-off
There are a couple of other things that I think this couple, and anyone reading this and identifying with them, could and should do. The first is get help early; as soon as you think you might be getting into trouble. Send me an email, or find another Financial Recovery℠ counsellor here http://www.financialrecovery.com/?p=find-by-area. Help is also available from a number of community organisations, eg Federation of Family Budgeting Services. The other one is to look into insurances. I cannot advise you on this at all, but there are a variety of people who can. I did however write a blog on my own personal experience http://jillporter.wordpress.com/2011/03/23/do-you-really-…tion-insurance.
So, if you haven’t already, at least set up a periodic savings account and regularly put money into it, so that when it does hit the fan, you are ready for it!
Do you have a periodic savings account? How do you operate it? Do you have a safety net account? How much do you think should be in that?
The Consequences Of Overspending — RamonaCreel.com
June 14, 2012
This is a great piece on overspending….a subject, which you know, is pretty close to my heart!
Whilst this is written from an American perspective, I think that, apart from the numbers the story is pretty much the same, no matter where you are in the world!
I had lunch with a friend, and fellow former overspender, today and we discussed the “now” generation. In our parents’ day ( and I’m a generation above her) they saved for what they needed or wanted, and the range they had to choose from, was much more limited than it is today. I think their expectations were much lower than ours are too. I hasten to add that I think the “Y” generation have much higher expectations and the need for even greater immediacy, than ever before.
What are your thoughts on this?I’d particularly love to hear from you if you disagree! Let’s get the discussion happening!
Or have you had any consequences of overspending, which Ramona hasn’t thought of?
4 Reasons Why Having “nothing to wear” is NOT a Disaster! ….nor a Justification to go out and Buy Something!
May 11, 2012
You know the one… You’ve been invited to a wedding, birthday party, company dinner, or in fact just about anything… and the first words out of your mouth are…”But, I’ve got nothing to wear!”
Now, that is patently not true, because:
a) you have not spent the whole of your life in bed, naked, and hiding under the covers nor
b) walking around in public naked. This is not acceptable behaviour in most modern societies and you would probably have been arrested or taken to see a doctor!
What you really mean is: I don’t know what to wear, or, I don’t want to wear what I have,
and this seems like a justifiable excuse to buy something new!
It is not a disaster for the following reasons:-
- Firstly, the definition of disaster from Dictionary.com is: a calamitous event, especially one occurring suddenly and causing great loss of life, damage, or hardship, as a flood, airplane crash, or business failure. No mention of not having anything to wear!
- At most functions you attend, you are not the centre of attention…( unless of course, it’s your wedding)…and very few people will notice what you are wearing. (NB If it is your wedding, that is a justifiable excuse to buy something new. I am assuming that you will have been planning it for some time and have the savings to go out and buy it!)
- The occasion is not a fashion show …well not usually anyway…and almost always, it is about people celebrating the occasion. That means that you have been invited for your company not your clothes! Therefore, “that old thing” is probably going to be perfectly suitable.
- Unless you are the Queen, or Catherine, Duchess of Cambridge, chances are that nobody will realise that you have worn the outfits in your wardrobe before! People are just not that observant. More importantly they are pleased to see you, not your clothes.
Of course, if you have planned to buy a new outfit, because you truly need it ,and not just want it, it is lovely to be able to wear something new to a special occasion. We all love that.
However, if it is not in your plan, especially if you are trying to stop overspending or reduce your debt, an invitation to an occasion does not justify buying something new to wear. Remember it is about the people and the celebration, so “that old thing” will be just perfect.
Tell us about any creative ideas you have, that gets around this common situation.
Have you ever opened your credit card bill and been absolutely shocked at how much it is? Worse still, have you ever been too scared to open it, knowing you were going to be shocked? How about going into your wallet and going “where did that $100/$200/$300 etc go? We call this being in the “money fog”! Essentially not having any clue how much money we are spending or have spent.
The money fog is almost always worse when we’re using credit cards, because the spending is often unconscious. In other words, you don’t really have to think about it, you just hand over your card without even considering what the balance already is. Provided you’re not at your limit you can easily do a day of retail therapy, or compulsive shopping, without giving the total amount spent another thought! You can just shop until you drop! Whilst you can also be in the money fog when using cash or debit cards, reality is closer at hand! You will either run out of money, need another trip to the money machine, or your debit card or EFT POS card will be rejected. Your spending therefore has to be, if not completely , at least partially, conscious.
Conscious spending is being aware of, not only how much you’re spending, but also being aware of what you’re buying! Do you really need it, or have you just seen it and want it, RIGHT NOW?
I know that when I was at the peak of my overspending, I could have a day out shopping without giving a thought to how much it was costing, or if I really needed what I was buying. As I was a very regular Internet banker ( I had to be, to keep juggling my money!) my shocks at how much I’d spent came pretty early on! The unneeded purchases were often obvious very early on too! I might have “needed” a painting but did I need ten?
As the reasons you overspend, or shop compulsively, are many and, often, complex there isn’t a quick cure. However, if you only use cash or debit cards, the harm you can do is minimised. The other key is tracking your spending, that is, write every single cent you spend down.
If you are concerned about your spending or any of this, please seek help. The Financial Recovery℠ Institute has a list of counselors http://www.financialrecovery.com/?p=find-by-area. If you cannot find one in your area I, and a lot of my colleagues, offer counseling by phone or via Skype.
Do you have a story of being too scared to open your credit card bill? Please share it with us below in the comments section.
Don’t you love to see things, reduced in price, just when you need or planned to buy them? This is a true bargain.
But what about the stuff you didn’t plan to buy? You know the ones… “It was such a bargain, I couldn’t pass it up”,
“but it was on sale”. I’ve done it more often than I’d care to admit and justified it. I’m sure, many of you have too. We’re lured into the purchase by the sale signs!
However, there is a saying:
“You can’t have too much of what you don’t need”. In other words if you don’t need it, you probably shouldn’t be buying it, no matter how much of a bargain it is!
This comes into play particularly, when things are on sale. Retailers know that most of us are attracted to bargains; valued items which we see reduced to “sale price”.(That is the price which the retailer knows will get it moving out the door, as fast as possible!) This appeals to our psychological side. We get an extra emotional “hit” when we think we are getting something cheaply. It makes us feel good. For those of us who use shopping or buying “stuff” to fill some unmet emotional need, this is mana from heaven! Not only can we buy it, but maybe we could buy two (for the price of one!) or buy this AND something else (two hits for our buck!).
You may have an earlier post of mine http://wp.me/pDpjD-10 “Do you REALLY need it or just want it?”, which tackles this issue in more depth. Suffice to say, it is very important that we differentiate between our needs and wants when making buying decisions. I know that I used to buy things and tell myself I “needed” them; the reality was that I just, at that moment, “wanted” them. Sometimes I’d get them home and know almost immediately that I’d never wear that colour, style or whatever! I was purely lured into the purchase by the item being on sale, or just my need to buy something to satisfy some other unmet, often unrecognised, need. The retailer had won again.
So, if you really do NEED something and find it on sale, well done, you’ve truly got a bargain! However, if you have just bought something because it was on sale, you could have saved yourself more money, by simply not buying it!
I’d love to hear your stories about some real and imagined bargains you’ve got, in the comments below.
Are you attracted to advertisements for savings accounts?
April 16, 2012
For a few weeks now I have been watching an ANZ bank ad on television, and questioning it.
You know the one with the young woman and the bubbles above her head… which say ” I deserve a little splurge”, “I’ll buy myself an early birthday present” “It won’t be on sale for ever” and “I’ve had a couple of hard weeks”.This is a link to the web version. https://comms.anz.co.nz/serioussaver.html?pid=mkt-pbr-ad-hp-jan12-serioussaver
This bit I really get. I used to use variations of each and every one of those statements, as justifications for my overspending and putting more “stuff” on my credit cards. I knew a whole lot more I can tell you. So too do my clients now, those who are overspenders and/or chronic debtors! They know these excuses and variations of them eg. “I should be getting a bonus next month” ” I need this as I haven’t got anything to wear to Jo’s party, Sue’s wedding…” or whatever.
They are all examples of justifications or excuses for spending money when, on some level, we know that we shouldn’t, we know we can’t afford to and/or we know that other people probably wouldn’t be doing it if they were in the same place as us, financially that is.
The bit I don’t get is, that the person using those excuses would be drawn away from their overspending habits, by a savings account with a good interest rate and some other positive benefits.
Maybe some would see the error of their ways and start saving instead of spending, but I know I wouldn’t have and nor would most of my clients. The reality is, that if you are an overspender or chronic debtor and using those justifications for your spending, in almost all cases you are struggling to pay your bills and debts and there is little money left over to save, if any.
The ANZ ad says ‘Saying no to temptation has never been so satisfying”. They may well be right; saving instead of spending is very satisfying. I just need a lot more convincing that the young woman in the ad, if she is using all those excuses for her spending, will be tempted by the prospect of saving and earning “up to” 4.5% interest. Taken altogether, those excuses spell to me a problem with overspending, which is not insignificant and requires some expert assistance.
I would be interested to hear your comments.
Paying off your credit card….once and for all!!
April 12, 2012
From my last post you have seen I recommend that, unless you pay your cards off in full each and every month, you use debit cards.
Now that’s all very fine but, what if you already have a credit card, or cards, which have balances on them which you can’t pay off in full. What do you do then?
The first thing I recommend is, stop using your credit cards immediately. There is a saying which is very pertinent here:
” If you wan
t to get yourself out of a hole, first you have to stop digging”.
In other words, you can’t hope to get your credit cards paid off, whilst you are still using them and increasing your debt. Once you stop using them, the amount you pay off them then actually starts to make a difference. How you go about paying them off was the topic of another post of mine http://wp.me/pDpjD-2p. Essentially I recommend that you pay the minimum off them, until you have savings that will cover all periodic expenses you have, or will have. As I say it is the subject of another post!
For those of you who are now saying ” This doesn’t help me, because I have to use my credit card just to buy my groceries or kids’ clothes”
OK, what I suggest for you is that at the beginning of each month, you sit down and draw up a spending plan for the month ahead. Now if you are really serious about paying off your credit card(s) for good, this plan should address all the real needs of your family, namely, shelter, food and essential clothing, but not include wants eg new flat screen TV etc!! Once you have this drawn up, if there is a gap between the money you bring in and the money required to fulfill those needs, that is the amount you may put on your credit card. This amount is planned, which is the key word. This does not mean that you can see a dress that you just love and buy it with your credit card. The dress is not a need, and it’s purchase is not planned. You would also benefit from seeking the assistance of a Financial Recovery℠ Counsellor. You will find a list of them here:-http://www.financialrecovery.com/?p=find-by-area
Do you draw up a spending plan or budget at the beginning of every month? Do you stick to it? I’d love to hear your experiences.
Debit Card or Credit Card??
March 27, 2012
For my money, debit card all the way!
Why….I hear you ask?
When using a debit card the money comes straight from your cheque account, therefore if you don’t have the money, you can’t buy it! It makes all of your spending conscious and eliminates the money fog! Even if it doesn’t eliminate it completely, it certainly doesn’t allow it to hang around! If you hadn’t planned the purchase, the next time you update your bank account and tracking ( you do track your income and outgoings, don’t you??) you will have to record, and adjust your budget or plan for the purchase.
On the other hand, if you use a credit card, the pain of the payment is delayed and the spending is more often than not, unconscious. You don’t feel as though you are using “real money”, it doesn’t cause any immediate reflection or reaction and allows the money fog to close in, big time!! Most credit card companies allow you up to 55 days before you make a payment, so until that day comes around, or at least until the bill comes in, you can forget all about your purchase, and probably will.
A debit card still allows you to shop online, or over the phone; excuses people use for needing a credit card.
When I discuss the issue of debit card versus credit card with clients, most say “But I get airpoints, when I use my credit card”. That is great if you are paying off your credit card, in full, every time you use it. If you aren’t, then the interest you are paying would more than buy you the airpoints, or flights or whatever!
If you pay off your credit card every time and in full, this probably doesn’t need to apply to you.
However, if you don’t, then I strongly advise using a debit card.
Make sure to discuss any money problems with your other before they become your significant other!!
March 22, 2012
One of the most common reasons couples come to see me is disagreements over money. This is not surprising as it is one of the leading causes of divorce.
So the statistics are against you to start with….imagine how they escalate if the issue is something you have hidden from your significant other, especially if it was an issue before you committed to one another!! This is particularly if your problem is with debt. Discovering unknown debt, particularly if it is a large amount, can be a real honeymoon stopper! It can even be a marriage stopper.
I know that when I got together with my partner, my overspending very quickly became an issue between us. In fact, it was really why I finally found help to deal with it. Now, whilst we still have very different attitudes to money, they’re out in the open and we can discuss money with that knowledge. Now, I’m not saying it makes it easy!! It is however, less fraught than it would be, if it had come to light once we had committed to one another.
So, if you are just developing a relationship with someone who, you think, might be “the one”, find a time when it is just the two of you, maybe over a quiet drink, meal or coffee and begin to talk. You can start by simply asking ” Do you think of yourself as a spender or a saver?” Ask them about their money goals, do they have any? Inquire about their debts – do they have a student loan, how big is it? Do they have credit card debt, again how big is it? Do they save for something or just put it straight on a credit card. Obviously it is better if this is a two way conversation and not an interrogation!! Share with them your goals and attitudes towards money and if you have any debt. It is better to be out in the open.
If you’re reading this and thinking ” Great, but it’s too late for me, we’re married and he/she doesn’t know that I have $15K of credit card debt” Tell them NOW! The sooner the better. It is always better if you tell them than they somehow find out on their own. The deceit then somehow just seems worse and is more damaging to trust in the relationship. Your partner could then be thinking “What else have they hidden from me?”
So, be proactive and discuss your attitudes to money before your move in together or get married….trust me it can save a lot of heartache!
If you have been in either situation, please share your experiences in the comments section below.
