Really! Test It!
December 27, 2010
Are you really living within your means? Are you sure? Following is a simple test for you to try.
Make an accurate comparison of your monthly income versus your monthly expenses. This is a very important number. Of course you already know what this number is, don’t you?
Once you’ve finished, take another look at your expenses. Did you include everything? This is an area where a lot of well intentioned people get tripped up.
I call it “painting the picture” of where you are at. It sounds simple. But for many it isn’t.
My observation is that the hard part is to completely list all of your expenses. As the expenses get closer to equaling and even exceeding the income level, there is a tendency to go into denial mode.
In the denial mode, we decide that not every expense really counts. For example, we decide that gifts (regardless of how much we spend on them), subscriptions, trips to the specialty coffee shop, or some other things don’t really count – even though we spend money on them.
Everything counts if you are really spending money on it. If you aren’t sure what your average monthly expenses are, track them for a period of time until you know what they are. Just make sure that you do an accurate job.
Clearly “paint the picture” of your current financial situation – even if it makes your current situation look worse that you thought that it was. Why is this so important? Because if you don’t have a clear picture of where you are (and then combine this with where you want to be) how do you know what steps to take next?
I believe that once you get to this point, you will find hopefulness and encouragement. Because now you have a clear picture and you can generate your alternatives and make your plan.
Question: What is your average monthly income versus your average monthly expenses?
A lot of people don’t know the answer to this. Generally they simply don’t know where their money went. They made money but it is gone now with nothing to show for it.
Solution step: If your monthly expenses exceed your monthly income, ask yourself the following questions. Am I/are we actually borrowing money to pay for this item? Am I/are we going into debt in order to support our lifestyle (even if our lifestyle involves living beyond our means)?
Am I willing to keep borrowing money and going further into debt for this _______? Fill in the blank with whatever it is in your situation. For example, am I borrowing money to eat out tonight?
Finally, think about these questions. If I/we keep going further into debt and living beyond my/our means, what are the consequences of doing this? Is it worth it? If not, what am I willing to do about it starting right now?
Copyright Kevin Drum 2010
Permission is granted to reprint this article provided it is reprinted in its entirety including this copyright information and it is attributed to
Kevin Drum
Titan Solutions, LLC
Merry Christmas
December 23, 2010
Merry Christmas! Have a safe and wonderful holiday season.
Knowing Versus Doing
December 20, 2010
I speak with a lot of people that struggle with their personal finances. Unfortunately these struggles lead to difficulties in all areas of life.
One problem is getting in debt and getting overwhelmed. This leads to lots of stress and worry. In marriages, financial problems can lead to marital struggles as well.
Some struggle because they truly don’t understand how to manage their money. For them it is a lack of knowledge that leads to their problems. More knowledge and more understanding can be very valuable to them.
But there is another category of people that struggle financially beyond those that don’t understand. This is the category that knows what to do but doesn’t do it. I don’t have a scientific count on this but I suspect that this may be the larger group.
They struggle financially because of the choices that they make. Getting more knowledge and information probably won’t help this group very much. They don’t act on the knowledge that they have now.
Do you or someone that you know fall into this category? Do you have all of the knowledge that you need but you struggle to do what you need to do?
If so, are you willing to do some things differently in order to get the results that you want? Also, if you don’t do something different and take the right actions steps, what will it cost you?
Would you like to be the person who not only knows what to do but who actually follows through and does what needs to be done? If so, what steps will you take today to become this person?
Copyright Kevin Drum 2010
Permission is granted to reprint this article provided it is reprinted in its entirety including this copyright information and it is attributed to
Kevin Drum
Titan Solutions, LLC
Diligence
December 16, 2010
Proverbs 22:29 – “Seest thou a man diligent in his business? He shall stand before kings; he shall not stand before mean men.”
Diligence is an important virtue. To me diligence is staying on the right track and doing the right things. This applies to all areas of life and it is important whether it is easy or difficult to remain diligent.
If you are trying to put your finances in order, it is important to remain diligent. If you are trying to get a business going, it is important to remain diligent.
In difficult times, remaining diligent can be challenging due to frustrations, lack of results, discouragement, etc. I’ve talked with many who now are finding that achieving good business results is difficult in the current economic environment. More are working harder for lesser results.
Unfortunately, this can bring about the temptation to say “what’s the use?” and to even cause us to quit trying and to give up. We hear examples of this when the government reports the unemployment numbers and talks about the percentage of the population that isn’t counted anymore because they got discouraged and gave up.
We need to consider what end result we really desire. Then we need to decide if this end result is really important to us or not. If it is important and we view it as something that we MUST achieve, then giving up isn’t really our option. It is important to remain diligent
In good times, distractions, leisure pursuits, and apathy can keep us from remaining diligent. We can easily get off course if we lose our way on other things.
The book of Proverbs provides great lessons on how to go about our daily lives and our business. Proverbs 22:29 in particular is one of my favorite verses. It applies to our personal as well as our professional business lives.
Every so often consider asking yourself the following question – Am I currently remaining diligent in all areas of life
In good times and in bad times we need to remain diligent if we want to succeed.
Copyright Kevin Drum 2010
Permission is granted to reprint this article provided it is reprinted in its entirety including this copyright information and it is attributed to
Kevin Drum
Titan Solutions, LLC
Little Expenses
December 13, 2010
“Beware of little expenses. A small leak will sink a great ship.” – Benjamin Franklin
Benjamin Franklin is remembered for many contributions. These include his work as a statesman, an inventor, and a philosopher. He also wrote about virtues and successful living.
He wrote on how to accumulate wealth and how to manage money effectively. Even though he lived in the 1700’s, the principals that he wrote on are still valid.
Consider his quote above. Many people struggle today because they keep spending money that they don’t have. For some it is on big things. But for others it is on lots of little things.
Do you keep regular tabs on your little expenses? Do you have a maximum amount that you will spend on little things each month?
Little things can come in many different categories. Maybe it is a specialty coffee drink each workday – five times per week. If each drink is $4 each then this is $20/week. In round numbers this is $80/month or $960/year.
We may get a lot of enjoyment from these drinks, but $960 is a lot of money for most people.
Maybe your little things come in areas such as magazines, snacks from vending machines, fast food, or video games.
I am not saying that there is anything wrong with and of these things in general. The thing to determine is whether or not you can afford the amount that you spend on them. If you keep spending the same amount on them are you able to live within your means?
My experience is that most people don’t do a very good job of tracking their expenses. They have a lot of money pass through their hands but they don’t know where it goes?
Do you know where your money goes? Do you have the little expenses under control so that they can’t sink your bigger ship?
Copyright Kevin Drum 2010
Permission is granted to reprint this article provided it is reprinted in its entirety including this copyright information and it is attributed to
Kevin Drum
Titan Solutions, LLC
Giving
December 9, 2010
Do you consider giving to be an important part of good money management? I believe that giving something back from what we have is a part of good money management and an important part of a happy and successful life.
It is a biblical principal and a life principal. And yes this is important even in difficult economic times.
Certainly life and circumstances may cause us to have to adjust our giving at times. But even in our own difficult times, there are others who are in greater need.
What if you never have enough left over to give? Maybe it would be wise to ask yourself if you are really living a lifestyle that is within your means
Whether you give at your church, to a charitable organization, or directly to someone in need, giving is important. When we give, we get back blessings in our own life. These may be money blessings or something such as peace of mind and happiness.
Although we shouldn’t give because we expect to get blessings back, giving is an important part of taking care of our own personal finances. Is giving is a part of your happy and successful life?
Copyright Kevin Drum 2010
Permission is granted to reprint this article provided it is reprinted in its entirety including this copyright information and it is attributed to
Kevin Drum
Titan Solutions, LLC
Money Magnifies
December 6, 2010
A friend of mine once told me that “money magnifies”. My take on this is that money simply brings out what is already there in someone’s character. And as more money is obtained, what is already there is magnified more and more
If someone that is prone to waste their money ends up with a lot more money, they are likely to waste a whole lot more.
If someone is prone to taking good care of their money and ends up with a lot more money, then as money magnifies, they are prone to taking better care of more money.
If someone is prone to being generous and charitable with their money ends up with a lot more money, then as money magnifies, they are prone to do more generous and charitable things.
Certainly there could be exceptions to this where people deviate from this pattern. But what would happen if you ended up with a lot more money? What would be magnified?
Think about is for a minute? Can you picture it? Do you like what you see? If no, what are you willing to do about it?
If money magnifies what is already there, are there any changes that you need to make right now? Or do you just need to do more of what you are already doing?
Copyright Kevin Drum 2010
Permission is granted to reprint this article provided it is reprinted in its entirety including this copyright information and it is attributed to
Kevin Drum
Titan Solutions, LLC
Accomplishment Budget
December 3, 2010
Do you have a budget? Do you use a budget as a tool to help you manage your money? To help you control your spending? To ensure that you are saving? To ensure that you know where your money is going?
Beyond just having a budget, do you have an “accomplishment budget”? Here’s what I mean by an accomplishment budget.
Suppose that you want to pay down credit card debt completely within 18 months. You put together your budget. Then you determine how much money you have available to accelerate your debt reduction?
Next you do some quick math. Does your budget enable you to accomplish your goal of paying off your debt in 18 months?
If not, what are you going to do about it? What are some of your choices? You could change your goal and take longer to pay off your debt. You could work on ways to increase your income. You could work on ways to reduce your expenses?
It really comes down to making choices and then dealing with the end result. In this example, how important is the goal of paying debt off in 18 months? Is it important enough to make some real changes? What if the changes include cutting out some things that you really enjoy – at least for a while?
Have you ever asked yourself if your budget really enables you to accomplish your goals? If it doesn’t, is there anything that is important enough to make you want to make changes and turn your budget into an accomplishment budget?
Copyright Kevin Drum 2010
Permission is granted to reprint this article provided it is reprinted in its entirety including this copyright information and it is attributed to
Kevin Drum
Titan Solutions, LLC