Do you know your A.B.C.s to money management? Are you able to make dollars and sense out of your personal finances? Does your family have financial independence? If you answered "no" to any of these questions, then "A.B.C.s that make cent$" is just for you. It is essential for everyone to apply these A.B.C.s to their own money management system. You and everyone in your family will learn how to apply the knowledge and translate it to your own personal life; it's as simple as 1-2-3. If you do not learn this NOW, then you and your family could miss out on various opportunities needed in order to survive and succeed financially in these challenging times. There is hope! "A.B.C.s that make cent$" will provide ways for you to manage your finances, enforce budgeting and saving and set goals to build wealth. The instructions provided are for you to carry forward and follow daily. The direction is to have funds for rainy days, emergencies, special occasions, big events and retirement. As a family, you will learn special techniques that will be amusing for the adult and entertaining for your children of all ages. These tools are crucial for your future well-being and for the name sake of your youngsters. Allow "A.B.C.s that make cent$" to help you get up, stay up and initiate ascending to higher financial grounds. This book is definitely a Godsend. Stop stumbling at base level zero and start climbing to financial wealth by using the A.B.C.s detailed in this book. Quotes regarding the book: You are about to embark on a voyage into monetary enlightenment. Enjoy your journey. You will be rewarded. J. David Spiceland, Ph.D., C.P.A., Professor of Accountancy. Cynthia's publication comes at a great time when people are in need of professional advice concerning their finances. She has hit a home-run. Laurence V. Plummer, Sr., President, Plummer Financial Services, L.L.C. . Cynthia has done an excellent job of capturing my weakness w
ABCs that make cent$
Tools needed to successfully climb your financial ladder to wealthBy Cynthia ElliottAuthorHouse
Copyright © 2011 Cynthia Elliott, CPA
All right reserved.ISBN: 978-1-4634-3811-1Contents
Acknowledgements......................................................................vIn Loving Memory of my Mother.........................................................viiForeword..............................................................................ixThe Author's Personal Corner..........................................................xviiMy Finance Journey: starting Friday, 8 May 2009.......................................xxvIntroduction..........................................................................xxixSub-Chapter A: Analyze your family's lifestyle!.......................................3Sub-Chapter B: Diminish buying, begging, biting and borrowing.........................8Sub-Chapter C: Obtain Cash, Credit and Capital........................................10Chapter D – How money is delivered!.............................................12Chapter E – Too many expenses – reduce some of them.......................21Chapter F – Financial affairs should be in order!...............................29Chapter G – GOALS are very important............................................34Chapter HI – High-valued Inventory (or worthless)...............................38Chapter JKL – J-Just K-Keep L-Levelheaded!!.....................................42Chapter MN – Monitor your Net-worth.............................................46Chapter O – Standard Money Operation............................................51Chapter P – Peas in the Pot - pray, plan, pay and play..........................60Chapter Q – Quiz to spend.......................................................64Chapter R – Release the old; build a road map...................................72Chapter S – Save, Save, Save!!!.................................................76Chapter T – Stop focusing on the taxes..........................................81Chapter U – Are you Uninsured or Underinsured?..................................84Chapter VW – Victory to Winning.................................................89Chapter X – X out the negatives!!!..............................................92Chapter YZ – Year-round plan; must be followed with zeal........................97Summary Chapter of the ABCs to do list................................................98Afterword – My Personal ABCs....................................................105Bibliography..........................................................................109Appendix – sixteen steps to climbing the ladder.................................111Step 1. Two (Financial) Our Daily Bread...............................................112Step 2. Your Pledge to Stop...........................................................114Step 3. My Personal Financial Contracts...............................................117Step 4. My Personal Payoff Contract...................................................118Step 5. A Piece of the Pie............................................................119Step 6. Minor Purchase Pass...........................................................120Step 7. Permission Slip to Spend......................................................121Step 8. Spending Identification Card Instructions.....................................122Step 9. Balance Sheet.................................................................127Step 10. Home Contents Inventory List.................................................128Step 11. Debt Schedule................................................................130Step 12. Detailed Income Items (Budget Part A)........................................131Step 13. Expense Items (Budget Part B)................................................132Step 14. Working Capital and Net-Worth................................................139Step 15. Statement of Cash Flows......................................................140Step 16. Cash Calendar................................................................142Website Flyer.........................................................................143Glossary of Essential Terms...........................................................145Table of Figures......................................................................159Note-taking Sheet.....................................................................161Meet Cynthia Elliott, C.P.A...........................................................163
Chapter One
Attitudes, Behaviors and Characteristics
Before you jump in and work on that budget with an effort to manage your family's total income and expenses, you first need to understand your spending habits. It is very difficult to change your habits without recognizing your wants and needs in life. Your spending habits tell you and everyone around you what's important to you. Your heart is where your money is. This is a good time to understand why you must have what you must have. Sometimes when I have a stressful week, I have that urge to buy something special and it does not matter if I have the money or not. I will go to the store and pick up the first outfit that can make me smile and/or make me forget about my troubles. To avoid giving in to my weakness for a cute outfit, especially when I had a bad week, I developed an alternative plan by going somewhere that is cheap, safe and fun to relieve the stress. Also, I would consider doing something that will at least in my mind release the tension. I would set aside available things to do just in case I have an unpleasant week. The list may include, but doesn't have to be limited to the following:
• Going to a funny and entertaining movie
• Walking in the park while enjoying the scenery
• Dancing to some music in the living-room
• Soaking in the tub with sweet smelling candles
Now, I suggest that you come up with a ready-made list of things to do in place of going to the store to spend money on items that you do not have a need for and do not have the money to buy. Before you develop that list, you must first recognize what makes you spend more than the funds you have. What makes you spend money over and above the bare necessities? Start with that big house and/or that expensive car; meditate on why you have all that stuff. Is there a need that was not met when you were a child? What makes you spend more than the funds you have available to you? There was a time when I would purchase expensive cars because I was convinced the cost was linked to safety. I thought an expensive car was costly because the manufacturer used expensive parts so that the car would never malfunction. And, I thought expensive parts would never need to be fixed. Well, with time, I recognized that expensive cars also break down and the parts were expensive to replace. So, instead of buying an expensive car over and above what my household could manage at the time, I obtained a 24-hour automobile service for unexpected breakdowns. Now, when my car breaks down, I just call the 1-800 service number and they will either tow my car or jump start it so that I can get to my destination safe and sound. Buying a 49.99 yearly tow service was cheaper than spending an extra $49,999 on a car that would still break down. Now, I want you and everyone in your family to sit down and discuss every major item in your possession. For example, discuss:
1. Why did you pay $850 for a microwave, when you could have purchased an adequate one for $150?
2. Why do you have 50 pair of shoes, more than the number of days in a month? Is it necessary to have 4 cars when there are only 2 drivers in the household?
3. Why do you go to the store to buy one item, yet you leave the store with several shopping bags totaling to more than $275?
Everyone must crawl before they walk; therefore, you must know your ABCs (that is your attitude, behavior and characteristics) before you complete the remaining alphabet chapters related to financial planning. It is imperative that you must take the time out of your busy spending schedule and analyze your spending habits. No one can conduct this better than you. This adventure is not necessarily to share with others, but to understand your makeup in the area of spending. This is your starting point to improve your financial management.
SUB-CHAPTER A: Analyze your family's lifestyle!
The "A" represents, alpha, the beginning of your life in regards to spending. Analyzing your family's lifestyle is the start of good financial management. You have purchased this book to launch or rebirth your efforts toward money management. It is my intent to guide you through this book by using the letters of the alphabet to simplify the process. The aim is not to tell you what to do with your money; I just want you to analyze what makes you spend the way that you do. Once you recognize what makes you spend and why you spend, then you (and only you) can change those ways. If this is your desire, you can move forward, once you realize what triggers you to purchase those goods and services.
Here are the things that could trigger you to make certain purchases:
a. Your hunger and thirsts for an item
b. Your children making their desires known (with those sad faces)
c. Your mood (physical & mental)
d. Your environment (status symbol)
e. Your education/background
f. Your upbringing
Below are some additional influences that may have an effect on you making that purchase:
a. TV/Radio commercials
b. Newspaper sales and ads
c. Neighbors and/or work acquaintances
d. Family and/or friends
e. Internet pop-ups and emails
f. At leisure shopping
Take the time out upfront to analyze your family's spending habits. If you know your triggers, then you can control them ... use them to your benefit. For example, my weakness is my daughter yelling out her desires in the store and telling me how she will be teased by her classmates if I do not purchase those items for her. Since I recognize that I most likely will appease her, even though I know that she does not need that item, I tend to shop without her. Also, I cannot window shop without spending some money. Generally, when I shop leisurely, I am bored. When I am bored, I see things (lots of things) that I want and because I am leisurely shopping – I buy just about anything that appears to be cheap and I buy everything that I see and like. I cannot leisurely shop, ever. Whenever, I have extra time on my hands, I will go to the movies and buy popcorn (if it is within the budget) or do a puzzle. And, when I am forced to go to the mall, I keep a puzzle that I will enjoy completing while everyone else is shopping. I have recognized my spending habits and triggers, now I strongly recommend that your family unit individually analyze, acknowledge and accept their own spending practices. Encourage and groom your family to change to a new and improved spending style that is pleasing for the whole family.
To analyze your family's spending life style you must document your daily spending. This is performed on each item spent from dawn to dust, which includes all internet shopping to personal store visits, from low-cost (bubble gum) items to high-ticketed items. I recommend conducting this project for at least a month to three months if you have the energy. Also, document the triggers that encouraged you to make that purchase.
Now that you have finally figured out how you spend your money. The next step is to figure out what you spend your money on. There are three simple categories:
a. High ticketed items
b. Multiple low cost items
c. Both – just spend money If you know "what" you spend your money on, then you can hone in on
your "shopping behaviors" and sharpen your skills on how to manage your finances. To improve the way you spend, you must answer these five pertinent questions:
1. How do you spend money?
2. What do you spend money on?
3. Where do you spend the most money?
4. When do you spend a significant amount of your money?
5. Why do you spend money?
Based on prior analysis, there are individuals that are enjoying life too much and care nothing about their future. Are you that person? Have you considered how you are going to pay your mortgage or rent if you are laid off from your job next year? Have you thought about retirement, death or other long-term concerns? Honestly, do you care whether or not you leave your loved ones in debt? These questions explain your ABCs towards money, spending and financial management. The "A" for attitude, the "B" for behavior and the "C" for characteristics - explain how you manage your routine expenses. Whether you have a penny or a million dollars your ABCs personalized framework is the same. Whether you just got paid or you are low on funds, your ABCs will show off and show out in the same matter. So, if you spend money as if there is no tomorrow, with no "cents" then you will spend money as if there is no tomorrow, with a million "cents". Remember, your no non-sense spending will follow you until you are able to make some "sense" on how you spend, re-learn your ABCs and channel your family for a change. Therefore, before you inherit that million, I recommend that you obtain the necessary tools to learning the financial alphabet and perfect it with constant practice through budgeting.
Here are the definitions that may help you understand how and why you spend the way you do.
Attitude is a complex mental state involving beliefs and feelings and values and dispositions to act in certain ways. For example, "he has the attitude that spending money is fun." Your attitude on spending is usually based on your upbringing.
Behavior is the action or reaction of something (the substance is money) under specified circumstances. For example, "the behavior of XYZ family is studied by their spending actions; give them some money and watch how they spend it." I cannot go to the store when I am hungry; I just cannot think clearly when I have not eaten in awhile. Sometimes I will end up buying more things in haste to get out of the store to eat.
Characteristics is the integer part (positive or negative) of the representation when confronted with money; typical or distinctive (quality). For example, his character is to spend in order to obtain whatever he wants and it does not matter whether or not he has the funds. This gentleman's character is to impress those who may cross his path. He has a top model car with a distinctive suit on in order to come across first-class. You cannot tell on the outside that he is penny-less; he looks good with all of his treasures. His character shows that he is worth something by his possessions. Here's another example, a guy's character is to spend only if the item is in the budget. This is the best way to be, to only spend when the expense has been considered in advance and you can afford the purchase at that particular time. My character is to spend when someone does something special for me or I am pleased with their actions. For example, when my daughter makes good grades I tend to take her out to eat at her favorite restaurant. My character says to spend money on her even when I do not have the money to do such a kind gesture. I want to give back for her excellent conduct in school. My character is to treat people with a "good meal" when I feel good about them. This is my way to show appreciation to them. If I could treat all of my family, friends or anyone that has had a positive effect on me, I would definitely do so at a first-class rate. I cannot do this for everyone I come in contact with; therefore, I must set up a budgeted line-item called `appreciation - dinner out.' What I do is look back at my previous month's experiences and I recognize those special folks to a grand meal that is strictly within my budget. Always remember that when you spend more in one expense category, then you must spend less in another category in order to meet the budget in total.
SUB-CHAPTER B: Diminish buying, begging, biting and borrowing
There are four Bs your family should diminish: buying, begging, biting and borrowing. This section will break down the Bs for you here:
1. Stop BUYING stuff that you do not need.
2. Stop BEGGING for free money – nothing is free.
3. Stop BITING more than you can chew – spending more than the cash on hand.
4. Stop BORROWING and getting deeper into debt.
Let's start with the first B: stop buying stuff. This section is to understand why you buy stuff you don't need. Of course, it is nice to be able to buy special things with your money, especially since you worked hard for your money and you sacrificed free time from the family to make the money. But, is it necessary to beg, bite and borrow to BUY the things that you want? Most Americans are constantly buying things to make themselves happy. We are trying to fulfill that gap, yet we are not able to pay-off the items that we have already. It is okay to buy; I just recommend that the family members set limits on spending. Implement a budget plan and set aside discretionary funds in order to buy stuff that you really would like to have and/or need. In essence, only buy stuff that is within your budgeting guidelines. When you are willing to diminish the BEES of buying, then you will reduce the chances of being stung by the "Buying Blues".
On to the second B: stop begging for free money. Please recognize that nothing is free. Sometimes you need to consider why you need the money anyway. Is the need urgent or do you not want to use your own money to satisfy your desire? Why not try to use your "free" card for when you really, I mean really need the money? There are folks that aim to get money for anything they want, such as begging to be able to go to a basketball game or to see a special production show. Some will even obtain funds to get a professional pedicure when the utilities have not been paid. Is that you? What happens when you really need the money? Would you have run out of resources to obtaining the money free? Also, remember that nothing is free. You need to think about what will you have to do in return or what will you have to give up in order to get the money. The general rule is to ask yourself if the person(s) were not available to give you the funds, would it be worth begging for the funds to make that purchase. Is it a want or a need? When you are willing to diminish the BEES of begging, then you will reduce the chances of being stung by the "Begging Blues".
Now, let's talk about the third B: stop BITING more than you can chew. Are you going to the store with a credit card or checkbook to make a purchase when you do not have the money to pay? When the credit card statement arrives, you do not have the funds to pay the bill in full. Sometimes you do not even have the "minimum" payment. Also, when the check is received by your bank, you do not even have sufficient funds to cover the check amount. Oh, what a shame! You are BITING too much and do not have the "teeth" to chop down the substance that you have purchased. Now, you are filling up with bad stuff that you cannot digest. You cannot process the stuff, and it gets worst. You have excess charges, fees and interest costs that will add to your bad debt and credit rating. Here's the solution. Only buy what is absolutely necessary. Other than a house and car, if you cannot pay the balance with 90 days (free of any interest fees), then I would question – do you really need the item!! When you are willing to diminish the BEES of biting, then you will reduce the chances of being stung by the "Biting Blues".
Finally, the fourth B is sometimes the hardest to diminish: stop borrowing. Sometimes, we fall into a deep trap. We buy, we beg, we bite and now to get up and out of a bad situation, we must borrow. Borrowing is similar to digging a ditch from down below. As you are digging the dirt out of the way, where are you shoveling the dirt? Are you getting deeper and deeper with no way out? You are probably borrowing because you want to buy something you feel you need. You are borrowing because you have begged for too much, now the person wants his/her money back so now you have to borrow to pay him/her back. You are borrowing because you have bit off too much and now you have to pay back with interest.
How do you stop doing something? First you start by slowing down gradually and then slowly come to a complete stop. Turn off the vehicle of borrowing; eliminate the opportunity to borrow unless it is absolutely necessary. Continue to pay-off all of the previous debt, starting with the debt with the highest interest rate and loan amount. Slow down the process of borrowing new funds. Ask yourself the question: can the family survive without the item? If this is the case, then do not borrow. Now, when you are willing to diminish the BEES of borrowing, then you will reduce the chances of being stung by the "Borrowing Blues".
(Continues...)
Excerpted from ABCs that make cent$by Cynthia Elliott Copyright © 2011 by Cynthia Elliott, CPA. Excerpted by permission of AuthorHouse. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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