Home Budget – How to Live Within Your Means

Spending a little time creating a home budget will help you live within your means and live a better life. Unfortunately few families view this as an important part of their lives – those same families are finding it more and more difficult to make ends meet.

I read lots of experts that recommend that you track every penny that you spend, that you develop a budget that has 50, or 60, or more categories for everything from postage to pasta, from envelopes to electricity.

I don’t know about you but that seems like an awful lot of work to me! I tried this method back in my 20’s but could never stick to it, I found it wasn’t any fun and was overkill.

A am a big believer in home budgeting, you can’t improve what you can’t measure is a business axiom that I think fits when it comes to using a budget to improve your personal finances.

Here are some tips to help you with your budgeting:

Keep it simple: Start out by creating a budget uses a dozen or so main categories that fit your lifestyle and that you want to understand where your money is going. By starting simple you can build the habits you need to succeed, and begin the process of learning.

Make it fun: Let’s be real…for most of us tracking where our money goes is not very exciting. I found that finding ways to make the process fun helps me stay on track, and provides incentive to continue. Try rewarding yourself for accomplishing a certain goal, or look for creative ways to reduce your spending.

Make it meaningful. This is your money we are talking about, your life. Simply because someone recommends you budget for electricity does not mean you have to or should. Electricity might be a very small portion of your monthly expenses because of the part of the country you live in or your lifestyle. Why spend the time and energy tracking a small item when you are spending $300.00 a month on a coffee habit.

Make change. A budget is a plan. It is a road map for getting from where you are to where you want to go. It is meant to change, and you need to accept this fact. If something is not working, or you need to create more detail…then do it. Develop a process and routine that works for you, and then continue to review what is working for you and what isn’t…then make the necessary adjustments.

Budgeting requires that you take personal responsibility for your finances and that you are disciplined. Like anything that is new, it takes time to learn. If this is your first budget it will probably be a mess, that is ok…it is supposed to be. Allow yourself to make mistakes, make changes from what your learn and get a little better the next time. With home budgeting, in a years time you will not only have more knowledge about the process of budgeting but you will also have more money in the bank as a result of living within your means.

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Five Ways to Stop Creating Debt

Most of us have been there – incurring credit card debt and seeking ways to consolidate the debt by utilizing another credit card. The “borrowing from Peter to pay Paul” syndrome is alive and well and as a result consumer debt is higher than it has ever been.

The current economic crisis has produced a credit crunch that is wreaking havoc on credit card interest rates. Even though the Federal Reserve has lowered interest rates dramatically, it has not decreased the interest rates on credit cards. To the contrary; because of the increased burden on consumers, many individuals are either going into default or declaring bankruptcy. Moreover, the banks are raising interest rates for those who have been making late payments and/or skipping monthly payments. People are scrambling to consolidate student loans debt

If you are concerned about your current debt, here are five ways to help you deal with the situation:

1. Debt Consolidation. When you receive a credit card offer in the mail stating that you can pay off other credit cards by applying for the card with a 0% APR – read the fine print. The 0% APR is applicable for a short time only. Unless you can pay off the new card within the time frame given, you are just creating additional debt.

2. One Card Only. If you have more than one credit card, save one for emergencies only and cut up the rest. If you cannot afford to buy an item with cash, don’t buy it at all.

3. Pay Down Debt. The next few years are going to be difficult during this recession. Start paying off credit cards using the Snowball Method. Make a list of the credit cards, with the highest interest rate card at the top of the list. Instead of paying the minimum for the card on top of the list, add additional money to the payment. Once the first card is paid off, use this same method with the second, and so on.

4. Credit Card Checks. Every month you may receive credit card checks, one of which is probably made out to you for the amount of $1000 or more. The rest of the checks can be used for purchases or transfers. Rip them up! It is very tempting to deposit the check and use the rest to make purchases.

5. Department Store Credit Cards. No doubt you have been asked by the cashier at a department store if you wish to apply for instant credit in order to obtain a discount on your purchases. Do not apply. Department store credit cards have the highest interest rate among all credit cards.

We are a nation in debt - over a trillion dollars’ worth. Since we do not know how long this recession will last nor how it will affect our income and retirement savings, it would be prudent to resist any temptations that may come your way inviting you to spend more than you can afford.

Join others taking control of their financial lives at http://www.my-small-life.com and sign up to receive our FREE report Wealth Crushers.

Frugal Living Tips - A Beginners Guide to a Simple Lifestyle

More and more people are looking for a beginners guide to frugal living as they face tough economic conditions, or from their desire to have a more positive personal impact on our planet. For those just starting out, learning to live a simple lifestyle may prove challenging. It may be rough going at first, but eventually you will get the hang of it.

Frugal doesn’t necessarily mean cheap – at least not the way it was thought of years ago. It simply means living within one’s means and not going overboard. It is about setting a personal gauge as to when enough is enough and using this as a benchmark or foundation from which to make decisions.

Living a frugal life allows you to save money for important things such as a child’s college education, or health care, or getting through hard times.

Being frugal offers a valuable lesson to children by showing them that one can live a modest lifestyle and still come out ahead. It teaches children the value of a dollar and, by witnessing how mom and dad conduct the financial area of their lives, sets an example that the children will utilize in their adult years.

Sometimes it’s the lessons of the past that come back to remind us of just how lucky we are. Our parents made purchases with cash only, rarely had debt, and certainly never used credit cards. If you think back to your childhood, you can probably remember instances where your parents didn’t buy anything unless they could afford it.

It seems we have come full circle. As adults and parents, we too are finding alternative ways to save money. You can label it any word you desire, but the bottom line is that family is important. We will do whatever we can to make our loved ones comfortable. We will feed them, clothe them, and keep them healthy and happy. That’s all that matters.

When frugal living tips are applied to your life as part of an overall plan, tremendous growth and change is possible. Frugality combined with sound personal finance basics and personal growth principles can propel your life forward and help you achieve financial independence. More and more people are choosing to adopt a frugal lifestyle more in harmony with their personal values and as part of living a more balanced life.

Join others taking control of their financial lives at http://www.my-small-life.com and sign up to receive our FREE report Wealth Crushers.

Coaching

If you have spent any time reading our blog or website, you know that we are committed to helping as many people as possible achieve financial freedom. It is through our personal coaching and our seminars that we get to meet and interact with our clients and friends, and this is where the real fun and purpose comes to the forefront for us.

Learn more about COACHING and how we can help you achieve your financial dreams !

What is the Definition of Sabbatical and Why Do You Need One?

The definition of sabbatical is an extended break from work.

While they have been around for a long time, there is reference to taking breaks from work in the bible, and many professions such as professors, and artists, and clergy take sabbaticals…they have recently gained popularity again in the U.S.

The term “extended break” is a vague term, and generally means longer than is typical for your workplace or profession. Teachers typically get a summer vacation of 3 months, so a sabbatical for them would exceed 3 months in length. For the rest of us, we may consider a sabbatical longer than a month. It seems to me that 6 months or longer would be an appropriate amount of time for an extended break from work.

Typically a sabbatical is for a specific purpose, to write a book, conduct research, travel, or simply to re-charge your batteries. This might be an option if you are showing signs you need a career change.

Sabbaticals are discussed in the context of “asking permission” from your place of work to take time off, however, a sabbatical could also be the time in between jobs. If you are contemplating a career change, with a little planning you might be able to extend the time between jobs to learn a new skill, travel, or rest.

Why you need a sabbatical

You may need a sabbatical if for any reason you need an extended break from work, and whether you are self-employed or work for someone else.

A sabbatical is a great choice if you love your work and your employer, but just need time to focus on activities other than those related to your job.

Maybe you would like to learn a new skill that would improve the quality of your work, or maybe you have a Novel just waiting to get out if your only had the time to spend working on it.

Artists and other creative individuals can use sabbaticals to get their energy and creativity back if they are suffering from a creative block. Sometimes instead of trying to force and push through a space, it is best to take a step backwards and let it “come to you”.

When Sean announced that he was leaving his job, many people suggested a sabbatical in lieu of quitting. This was certainly an option, but we did not feel that even IF a leave was granted that it would address the bigger questions we were asking ourselves.

There are several good books on the subject, some of which you can purchase below.

Improve Your Personal Finance through Frugal Living

The current economic crisis has gotten the attention of many families, and more and more people are looking for ways to reduce their expenses and stretch their dollars. Our family has not made the “sacrifices” so often associated with cutting expenses because we practice frugal living.

For many the term Frugal brings up an image of a miserly, Ebenezer Scrooge type of character that is tight with a dollar, and downright cheap. Frugal doesn’t necessarily mean cheap, far from it actually, it simply means to maximize value and minimize costs. It simply means living within one’s means and knowing when enough is enough.

Growing your own vegetables for example is a “back to basics” approach to frugal living. Not only do you save money by growing your own food, you improve the health of your family by eliminating harmful pesticides from their diet and replace processed foods with fresh, raw foods.

Being frugal offers a valuable lesson to children by showing them that one can live a modest lifestyle and still come out ahead. It teaches children the value of a dollar and, by witnessing how mom and dad conduct the financial area of their lives, sets an example that the children will utilize in their adult years. We have been concerned for years with the lessons and values we were instilling in our children by participating in the consumer society, lessons that we felt were unhealthy, unsustainable, and at a cost that was too great for our family.

Sometimes it’s the lessons of the past that come back to remind us of just how lucky we are. Our parents made purchases with cash only, rarely had debt, and certainly never used credit cards. If you think back to your childhood, you can probably remember instances where your parents didn’t buy anything unless they could afford it. A novel concept for sure, but one that is sadly forgotten today.

It seems we have come full circle. As adults and parents, we too are finding alternative ways to save money. You can label it any word you desire, but the bottom line is that family is important. We will do whatever we can to make our loved ones comfortable. We will feed them, clothe them, and keep them healthy and happy. That’s all that matters.

Being frugal is about asking questions and being conscious of your buying decisions. It is about asking whether there is another way, a way that feels better and costs less, and still meets our needs. Frugal living is not about pinching pennies, but about making responsible financial decisions and enjoying those decisions.

Changes for a Life in Balance

Putting our life in balance was one factor we considered when deciding to sell everything and begin our adventure. If we were to view our lives supported by the foundation of Financial health, Emotional health, Physical health, and Relationship health…our foundation sagged in 3 of these 4 areas.

Careers, 50-hour work weeks, and rush hour commutes took precedence over other aspects of our lives. The walk from the front door to the car in the morning, my office to the coffee pot during the day, and from the car to the front door in the evening constituted a physical fitness program. The balance of our time was spent shuttling kids from one activity to another, resulting in a family that rarely ate meals together and interactions amounted to hello/goodbye at the doorway as one group headed into the house and another headed out.

There are certainly more reasonable ways than ours to re-align the order or our lives, but for us we are afforded a blank slate in which to determine what is important and what is not. Each day we are able to determine our priorities and to choose which activities to pursue for the day, and which to forgo.

For more than 20 years a primary focus of ours was money, both earning a living as well as saving for retirement. I am not saying that these things are not important and that providing for one’s family and the golden years is not a worthwhile pursuit, but for us they felt consuming.

The pressures of leadership positions within large corporations to deliver more with less, to spend more hours at the office, take less vacation, attend the dinners and meetings, and weekend retreats exceeded the value our family was receiving from our careers. Further, all of these factors on top of one another added weight that eventually led to an unbalance.

We still worry about money. It costs money to feed kids and clothe them, and pay for hotel room and plane tickets. But the time we use on these activities is much less than previously and the stress and pressures are reduced as well. Now we spend 5 hours a week managing our money, the other 50+ hours free to pursue other activities.

When I feel like writing or working on one of our websites I devote the time to these pursuits. I have the freedom and flexibility to work when is best for me and my family.

I am not always creative between 9 to 5, if I am inspired at 4 a.m. I can work or if I choose to take a few days off to pursue other activities this is ok as well. I am able to balance work and money with the interests of my family. If everyone would like to visit a monkey reserve in rural Costa Rica I am able to participate.

We have achieved what we set out to do, to find more of a balance in our lives. This is a short-term goal. We will continue to learn and determine what works and is effective for our family and what is not. We will stay open to finding projects that create income utilizing our talents and interests, but that mesh with other aspects of our lives as well.

Steps to a Simple Life

Steps to a simple life

A simple life, also known as voluntary simplicity, was defined by Duane Elgin as

“a manner of living that is outwardly more simple and inwardly more rich, a way of being in which our most authentic and alive self is brought into direct and conscious contact with living.”

There are many more terms or off-shoots of simple living, such as; green living, sustainable living, back to basics etc. Whatever the term used the general idea is to consume less, live more, become better stewards to our environment, and choose to live our lives on our own terms.

We jumped off the proverbial plank into the life of voluntary simplicity in 2008. We sold EVERYTHING we own except for what fit into 4 carry-on suitcases and a few photographs, and set out to travel through Latin America with our kids. We are completely free without any demands on our time other than what we wish to bring into our lives.

We walk or take the bus, we eat raw, fresh foods, our heating & cooling requirements amount to approximately 5 gallons of propane a month, and we have not purchased anything we don’t need during the first 6 months of our adventure. Our time is spent learning, through our readings and through our experiencing other foods, cultures, and people.

We had in mind to simplify our lives as one of the goals of our lifestyle change. And while our approach is not likely to be followed by many…we think there is something to be said for practice a life of simplicity. This isn’t about deprivation, or moving to a remote mountain cabin…it is about making small steps towards a sustainable lifestyle.

Here are some ideas…

• Get rid of stuff: Although the process was certainly emotional at times, getting rid of ALL of our stuff took on a healing or cleansing quality to it. Removing clutter in our lives is cathartic.
• Get your finances in order: We recommend starting with your debt. Having our personal finances in order allowed us to easily change our lifestyle and travel with our children.
• Design your life plan: It is my assertion that most of us do not spend enough time thinking about what we want from life, and then developing a plan to get it. Spend some time thinking about what you want your life to look like.
• Reduce stress: Stress is a killer…literally. Find ways to eliminate those things in your life that are causing you stress. They do not need to be in your life, regardless of what types of pressures society puts on you.
• Be happy: Easier said than done for many of us. I am working on it…and finding that it is a lot of fun as well.
• Get rid of negative messages: One of my favorites. Turn off the T.V. and stop reading the newspapers…there 75% of the work is already done. Now get rid of a few “friends” that have nothing but bad news for you every day and you are home free. It is amazing what impact these steps can have on your overall health.

There is an endless amount of things we can do to make our lives simpler. Our family has spent time working on the ones above.

Share some examples of what you and your family is doing to simplify your lives.

http://www.simpleliving.net/main/ - resource

How do you change your life?

How do you change your life? A life change will mean different things to different people. Our age, gender, belief system, personalities, and cultural and personal values all impact what a change of life would mean for us.

Imagine one day waking up, deciding to quit your job that you had for 12 years that paid very well and provided your family all the stuff they wanted. Deciding to sell your 3.500 sq. ft house…all of its furnishings, and kitchen appliances, and TV’s, and everything else you owned. Packing you, your wife, and your 2 kids “lives” into 4 carry-on suitcases and flying to Latin America to begin an open-ended adventure. Would that change your life?

I suppose that is a life change. Pretty radical? Perhaps. Scary? Nah. Risky? I could argue that not making these changes was more risky.

The purpose of creating this website was twofold, 1) to provide a creative outlet to develop my thoughts and understanding of the issues that we faced and continue to face as we “radically” change our lifestyle. 2) to share this information with others for them to know that they are not alone and to assist them with developing their own questions.

I do not suppose to have the answers for others, nor do I want to. I am willing to participate in the discussion, but each of us must find their own path. I firmly believe that it is the strength of the questions we ask that determines the outcome…ask and we shall receive.

My 7 year old daughter will frequently ask me to help her with an activity that while on the surface is innocent, I believe puts her in danger. For example, we spent this past August at the beach in Southern California. It was a wonderful experience to hear the sound of the surf as we fell asleep, and wake to the fresh sea air in the morning.

Gigi, my daughter, would want me to help her go out further in the waves when we were swimming. On the surface there is little harm in holding her up in the waves and playing with her. Just as we do not learn anything if someone else gives us the answers, so too will my daughter not learn how to handle the pounding of the surf if she is assisted every time she wants to go further out. We grow and develop by finding answers ourselves with the encouragement and guidance of others. We learn little if we are given the answers. We learn and develop more by being given encouragement, guidance and helpful questions.

All of us are subject to “getting lazy” and finding comfort in our routines and habits…whether these actually benefit us or not, or whether they help us grow or not. We go through life with blinders on, comfortable yet hollow inside. We will “go down with the ship” continuing our behaviors until some crisis puts on a different course. Yet unfortunately, the new course is not likely to be of our own choosing, our own design, but rather as a result of circumstances and our desire to find “comfort” in our new routines and habits.

So I ask you again…were our decisions radical, scary, risky? Sure, there were all of these elements and more, however, for us the alternatives were not an option.

I assume that if you read this article that you are searching for your own answers. Perhaps you want to change your life. I congratulate you for your willingness to look at your life differently, and encourage you to keep asking questions. The answers will come…

The Importance of Setting Goals

Setting goals is important for all of us that want to accomplish more with our lives, and that want positive outcomes from our decisions.

Gina and I and the kids were bouncing down a dirt road on a bus somewhere in the Andes when we looked at each other and knew that we could “pull this off”. We knew that we could change our lives, and start something completely different in Ecuador.

On August 1st of that same year, less than 5 months since that bus ride in the Andes, we backed out of our driveway for the last time. We were heading south…first to California, then to Costa Rica, and Panama, and Ecuador, and most likely Chile, Argentina, Uraguay, and more…

In less than 5 months, we quit our jobs, sold our house and all of the STUFF that went along with it, and managed the thousands of details that went along with this. How did we do it? By setting goals!

Setting goals is simply the process of determining what you want, determining what goals will give you want you want, prepare a plan of action, take action and implement the plan, and monitor the plan and make adjustments as necessary.

For me it is the act of spending time thinking about what we want that is the most important. To put an action plan together and executing it is fairly simple, but to determine what you want is difficult. That which is difficult provides the most value.

So, my recommendation is not to rush this part of the process. Spend an adequate amount of time understanding what makes you tick, what are the real issues you are facing, and where you passions and interests lie. The time you spend on this part of the process will improve your results immeasurably.

Studies have shown that those that set goals are more successful than those that don’t. Intuitively this makes sense to me, if a have a plan of where I want to go I stand a better chance of getting there than if I don’t have a plan.

Goal setting works for three main reasons:

1. Gives you a target. You have a specific target to aim for, and a road map to get you there.
2. Provides a focus. This focus allows you to concentrate all of your time and energy for a singular purpose, accomplishing your goals.
3. Provides Motivation. It is easy for us to get sidetracked by our lives. By putting your goals in writing you have a reminder of what is important to you and what you want to accomplish in your life. Working on goals that are important to you gives you motivation to succeed.

I am writing this article sitting in our apartment in Cotacachi, Ecuador…a small town nestled in the Andes. We have accomplished our goals, we have made the lifestyle change that we first thought about on that bumpy bus ride…and setting goals was an important part of the process.

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