Search Results for: budget

Are Your Personal Finance Skills Holding You Back?

October 24, 2009 By Shane Ede 3 Comments

One of the reasons that I started this site was because it forces me to learn new personal finance skills. Sometimes, the tree is sitting there in the forest and you need someone to point it out and make it stick out from the forest. The more skills that you learn in any given subject, the closer you are to what could be considered an expert on that subject. There are a few subjects that I consider myself to be an expert, but personal finance is not one of them. But, I am trying.

It occurs to me, however, that in our journey to become experts at personal finance (even if it’s just our own finances) we can sometimes hold ourselves back. We can sometimes become so focused on the topic and that one slice of our lives that we forget that there are other parts of our lives that must also be taken care of. For many, personal finance is a deeply religious topic. As a Christian, there are many places in the Bible that specifically mention money and the manner in which we should handle it. In fact, you might notice the tag line here at Beating Broke as being a quote from the Bible. But, nowhere in the Bible does it say that I must be perfect in the handling of my money before I should begin to work on any other aspects of my life.

If we focus too long on any one aspect, many of the other aspects can quickly fall behind. Baker, from Man vs. Debt, recently called himself a hypocrite. Why? Because he’s been a crusader for paying off debt and doing so unrelentingly. He has preached a very die-hard approach to debt retirement that is based in the teachings of Dave Ramsey. But, Baker and his family have put their debt repayment on hold while they travel and experience foreign living and working.

If you only glance at the situation, you can’t help but agree with Baker’s assessment of himself. And in a some ways, he is a hypocrite. However, he also is not entirely a hypocrite. He and his wife planned for this trip. They budgeted for it and saved for it. Yes, they put some of their goals on hold, but they did so to take advantage of an opportunity that may have never reappeared for them. If he and his wife had passed up on this opportunity, they would have been kicking themselves for it for the rest of their life. They’d be debt free, but at what cost.

It is a lifetime opportunity. If they had to choose between debt repayment and a trip to Disneyland, I would say that they would be stupid to not skip it. After all, Disneyland isn’t likely to go away anytime soon and they’d be able to visit at a later date. Yes, you have to maintain your vigilance and do whatever you can to meet your goals. But you also have to live your life. If your goals are holding you back from living your life, then you really should rethink your goals, because they may be causing more harm than good.

Baker is a very skillful personal finance person. He’s been writing about the subject for quite a while now. He and his wife have made great strides towards their goal of being debt free. But, Baker didn’t let his personal finance skills hold him back. He didn’t let them keep him from living passionately. And he didn’t let them keep him from taking advantage of a once in a lifetime opportunity. He and his family will have a wonderful story to tell and experiences that you just can’t buy. If that makes him a hypocrite, then so be it. I don’t think it does. After all, if he hadn’t been walking the walk, he wouldn’t have had the ability to take advantage of the opportunity. If anything, he’s an example of why you need to stick to your guns. If you do, you will be able to take advantage of opportunity instead of having to let it pass you by.

Review: I Will Teach You To Be Rich

April 24, 2009 By Shane Ede Leave a Comment

I Will Teach You to be Rich
By: Ramit Sethi

I’ve been a reader of Ramit’s blog (iwillteachyoutoberich.com) for several years now, so when I heard that he was writing a book (and publishing one) I knew it would have to find a way onto my list of books to read. Which it did, and I did read it.

If you aren’t familiar with Ramit’s writing style, it’s some what irreverent. Light and joking, it’s as if he were talking to you over a beer. Which, of course, works pretty well for a book that is meant to be read by a twenty-something single person. There’s a reason it’s on the New York Times Bestseller list!

Ramit takes you through a 9 chapter, 6 week journey of personal finance. He covers everything from credit cards, savings and checkings, investing, budgeting, and saving for goals. For the person who finds themselves fresh out of high school or college and overwhelmed by the amount of credit offers and spending temptations, this book is a must read. Ramit did a very good job of pointing out and explaining some of the very common pitfalls of personal finance, and he does it in a way that makes sense.

There were only a few things that I found I disagreed with. The biggest of these was what he calls Conscious spending. As he describes it, it is the act of consciously setting limits and goals for spending so that you don’t overspend. Where I disagree is when he says that it isn’t a budget. It certainly sounds like one to me. While it may not be a budget that accounts for every penny and every category, it still is a budget. Maybe I’m giving budgeting too broad of a description, but to me any ordered system that sets limits and goals for spending and saving is a budget. What conscious spending is, is a very high level budget.

Anyone who has read this site for very long will know that I am not a fan of credit cards. I’m not really a fan of debt at all, but credit cards (to me) are one of the worst offenders. So, it was with some trepidation that I began the chapter on credit cards. It was somewhat refreshing to have someone actually explain how they use cards, and why. Because of my stance on credit cards, however, I couldn’t help but disagree with several points.

Overall, this is a spectacular book for it’s intended audience. Seasoned personal finance students will surely find a few nuggets, but the rest is likely review. If you know anyone that is just stepping out on their own personal finance journey, I suggest you get them this book. Ramit does an excellent job of laying out a wonderful foundation for successful personal finance management. And, yes, it may even teach you to be rich.

You can pick “I will teach you to be rich” up at Amazon, or just about any corner bookstore. As of this writing, the book is less than $11 at Amazon, which is likely better than you’ll see it anywhere else.

Realized Benefits of Emergency Funds

April 10, 2009 By Shane Ede 3 Comments

Here and on other PF blogs, you’ll hear us all talking about the need for a well stocked emergency fund. And, unless you have one, you likely don’t know that we aren’t just saying that because we think we should. They really do have the benefits that we claim they do. These last couple of weeks, my wife and I realized those benefits.

Early on March 26th, my then pregnant wife told me that I should probably stay home from work as it was appearing very likely that we would be having a baby that day. Less than two hours later, we were checking in to the hospital to do just that. If you’ve been there, I don’t have to tell you that it was incredibly exciting.

The excitement waned as we waited for the labor to progress and then quickly disappeared altogether when the baby began having decelerations in it’s heart rate. The doctor began making preparations and the birth was expedited. Rather than wait for the labor to progress as it would normally, my wife was instructed to push with all she had to get that baby out. Quickly afterwards, the baby (a girl!) was born, and just as quickly was taken to a warming table to be intubated and have her lungs and stomach suctioned and checked.

It turns out that sometime in the weeks leading up to her birth, she had *ahem* pooed in her amniotic sac. To the medical world, it’s called Meconium. And it’s pretty bad. It affects the lungs in that it acts as a stopper for the little sacs that do the oxygen intake. It also acts as an irritant to the lungs that can lead to infections. It can be very serious, and can take days, or weeks, or months to completely clear out.

In our case, luckily or not, our little girl was able to kick it in a week. Pretty average recovery time we’re told. Now, she’s home and all is well. There won’t be any lasting effects and we shouldn’t be able to tell the difference.

Here’s where the benefits of an emergency fund come in. For that week that our little girl was in the hospital, the last thing we wanted to think about was bills, work, or anything not related to the well-being of that precious baby. We had friends watch our dogs, and my wife’s mother came up for a couple of days to watch our son. And we spent as much time as we could watching our little girl fight the fight in an incubator.

We didn’t have time to balance our check book, or check our budget to make sure we were within bounds on something. And now that it’s all over, I can honestly say that if we hadn’t had an emergency fund, it would have been much, much worse.

One of the touted benefits of an emergency fund is the peace of mind that it affords you. When you know that you have that money to fall back on in an emergency, your mind is free to worry about the things that it should be. In this case, it was our daughter. Maybe it would be the car you just wrecked or the house that just burned down. No matter what the emergency is, you know that you’ve got that extra cushion of money to help pay any bills or expenses that might come up.

I cannot tell you how wonderful it was to not have to worry about that during the week that she was in the hospital. We certainly didn’t expect to have any problems, but we did. You may not expect any problems, but they can happen. If you’ve been putting off the funding of your own emergency fund, don’t wait any longer. We’re glad we didn’t. You never know when you’ll need it.

Photo Credit: forwardcom @ sxc.hu