Thursday, January 3, 2008

Is one of these 5 Disorders Making You Poor

Cathy Lawson has an excellent post on five "disorders" people have that make them poor. Check out her blog

Wednesday, January 2, 2008

8 Tips to Accomplish Your Financial Goals for 2008

A recent Denver Post article discussed tips to meet your fitness goals over the next year. They also apply to meeting your financial goals as well:

1. Be Prepared

Get all of the information you need to help your financial situation. If you need a handwritten ledger, buy one. If you prefer to use a computer, get quicken, MS Money or whatever program you like to use. You can also get open source financial software at If you need investment advice, find an adviser or financial planner. Start early by laying the groundwork for your financial plan.

2. Give It Time

Don't expect immediate results. If debt reduction is your goal, remember that you probably didn't get in debt overnight, and you are unlikely to get out overnight either. Remember, you have to live along the way. If you try to change too much at one time, you will not be able to stick to your plan. With the proper debt management plan, you can dramatically cut down your repayment times, sometimes to only a few years.

3. Set a Goal

Don't think of it as a resolution, rather break your financial goals down to a series of smaller goals. You should set what are known as SMART goals. Specific, Measurable, Attainable, Realistic and Timely. Write your goals somewhere and refer to them often.

Specific - A specific goal has a much greater chance of being accomplished than a general goal. To set a specific goal you must answer the six "W" questions:

*Who: Who is involved?
*What: What do I want to accomplish?
*Where: Identify a location.
*When: Establish a time frame.
*Which: Identify requirements and constraints.
*Why: Specific reasons, purpose or benefits of accomplishing the goal.

EXAMPLE: A general goal would be, "Get Rich" But a specific goal would say, "Open a savings account and deposit $10 per week"

Measurable - Establish concrete criteria for measuring progress toward the attainment of each goal you set. When you measure your progress, you stay on track, reach your target dates, and experience the exhilaration of achievement that spurs you on to continued effort required to reach your goal.

To determine if your goal is measurable, ask questions such as......How much? How many? How will I know when it is accomplished?

Attainable - When you identify goals that are most important to you, you begin to figure out ways you can make them come true. You develop the attitudes, abilities, skills, and financial capacity to reach them. You begin seeing previously overlooked opportunities to bring yourself closer to the achievement of your goals.

You can attain most any goal you set when you plan your steps wisely and establish a time frame that allows you to carry out those steps. Goals that may have seemed far away and out of reach eventually move closer and become attainable, not because your goals shrink, but because you grow and expand to match them. When you list your goals you build your self-image. You see yourself as worthy of these goals, and develop the traits and personality that allow you to possess them.

Realistic - To be realistic, a goal must represent an objective toward which you are both willing and able to work. A goal can be both high and realistic; you are the only one who can decide just how high your goal should be. But be sure that every goal represents substantial progress. A high goal is frequently easier to reach than a low one because a low goal exerts low motivational force. Some of the hardest jobs you ever accomplished actually seem easy simply because they were a labor of love.

Your goal is probably realistic if you truly believe that it can be accomplished. Additional ways to know if your goal is realistic is to determine if you have accomplished anything similar in the past or ask yourself what conditions would have to exist to accomplish this goal.

Timely - A goal should be grounded within a time frame. With no time frame tied to it there's no sense of urgency. If you want to save $5000, when do you want to have it by? "Someday" won't work. But if you anchor it within a time frame, "by June 15", then you've set your unconscious mind into motion to begin working on the goal.

"Mark McCormack reported in his Success Secrets newsletter that 83% of Harvard School graduates had no goals 10 years after graduation; 14% had goals, but not in writing. The remaining three percent had written goals — and were earning 10 times as much as the group with no goals. Even the 14% whose goals were not in writing were earning three times as much as those graduates who had no goals at all."

4. Think Small

If you make your goals too big, you will get discouraged and give up. Pick one debt to pay off, when it is paid, choose another. Decide to save a certain amount of money each day, week, or month. Over time, these small changes can and do add up.

5. Eat Colorfully

Start cooking and entertaining at home. Your food will be healthier, because you have prepared it yourself and you will save money. (I couldn't think of a financial equivalent -- so this is the best I could do). Over Christmas, I saw a $900 imported Italian espresso machine for sale. The display said that by making espresso drinks at home versus going to Starbucks, it would pay for itself in less than one year.

6. Be Inspired

What will your life look like when you reach your financial goals. Will you have a new car, a large house, a vacation? Whatever it is, write that down. Better yet. Get pictures. Put them in a place where you can see them often. Use them for inspiration. Studies have shown that by simply looking at the pictures or your written description you can literally reprogram your brain to motivate yourself to achieve your goals.

7. One Day At A Time

What you do on a day by day basis is what matters. If you earn more money than you spend you will always end up ahead. I think that you should calculate how much money you earn and spend on a daily basis. Simply take all of your bills and expenses for the month and divide them by 30. Take that number and add 1/3 to it as a fudge factor for unforeseen expenses. That is your daily "burn rate". Then take your monthly income and divide it by 30. That is how much you earn daily. As long as the daily earnings exceed your burn rate, you will end up ahead. If you are spending more than you earn, you will always be behind and losing financial ground. Tim Ferriss has a spreadsheet for doing the burn rate calculation. Go to and look for his dreamline spreadsheet.

8. Make a Date

Find other people who are trying to achieve their goals. Meet with them regularly and discuss your progress. It is easier to accomplish your goals if you have someone to hold you accountable. You can find accountability-buddies through your church or temple, on the internet, or through other support groups.

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