There are always many ways to accomplish any goal or task hence the title to this post (even though I don’t like the image that saying creates.)

Here I am going to present a few ideas that I have used, my clients have used, or I have read about to help you live within your means or spend less than you make.

You need to find actions that work for you.

Everyone is different so what works for me, may not help you. These are just ideas. If you are struggling with your cash flow I recommend that you try something (maybe a few of them) and see what happens. See which ones are helpful and which are not.

1) Start saving automatically as soon as possible.
Put your savings somewhere that you don’t have easy access to.
Try to view savings as a requirement in your budget.

It is a requirement if you ever want to not depend on working for money to live. The younger you are when you learn this important lesson the easier it is to do.

I recommend that when young people start their first job they sign up for the retirement plan as soon as possible. I understand why companies have a waiting period but I also wish it was more common to start putting money away immediately at new jobs because we quickly learn to spend the money we have / see.

If you don’t see the money in your paycheck or your bank account most peple will adjust their spending to match that level. (It is similar to time management. Most of us will use the time we have allocated to a job. (Please see the Big Rocks story.)

Even if it is a small amount start saving something because it will gradually build.

This is something that I do. I have set up automatic monthly withdrawals to make my savings happen without me having to take an action. I do not see the money in my bank account so it is not considered when making decisions.

2) Use Cash
There are some people who overspend and it doesn’t matter how much money they have or what the bank statement says. This is one of the issues with credit cards. You are allowed to charge something and you do not have to have the money to pay for it. This can get you into trouble.

If you have this issue, I recommend that you get rid of your credit cards or stop carrying them around with you and go to a cash system. Studies show that a different part of our brain is activated when we have to give cash in exchange for buying things. It makes you think twice.

Take out the money you are allowed to spend each week and use this to help control your spending.

I do not personally do this. I like using my credit card to track my spending. BUT I do not have an issue of credit card debt or of spending money I don’t have.

3) Track your spending
I expect that you have heard this before. Yes, it can be an effort but if you are truly struggling with your finances this does make a difference. Just like keeping a food diary does too.

Most of us are “unconcious” about how we spend our money. We honestly don’t know where it goes. It is easy to track the big ticket and consistent items (rent / mortgage, insurance, food, going out to eat etc.).

I cannot tell you how many times a client has presented their budget to us and it shows they should be saving a large sum of money. We ask if they are saving anything and the answer is no. So money is going towards things that are not on that list. The way to get answers is to track your spending and go back and see what you actually have spent over the past year.

The only way to fix this is to take the time and effort to become concious of your spending and see where your money is going.

With information comes power.

When you see that you are spending $3 a day for coffee it doesn’t seem like a big deal yet when you see the cumulative numbers it becomes more real for you. $15 per week on coffee is $780 per year. Can you think of a more worthwhile way you would like to spend that money? You may love your coffee and not want to make a change, but it helps to have the information to help you make better decisions.

Saving the $780 per year for 30 years growing at 7.2% will become over $76,000. This is just from saving your $3 per weekday coffee.

In the book, “Your Money or Your Life” they want you to convert the money spent into hours worked to earn that money. This helps you see the time value of money which is a topic for a whole other post.

I am not very good about tracking my spending. I have recently started working with Quicken to see what I learn from this experience. The issue is that my husband likes to use cash and does not (and will not) track how he spends that cash so it is a challenge for us to get a full picture of our spending as a couple. I am still working on this and will share my learnings in the future.

OK, I can see this topic will have to be broken out into multiple posts.

I would love to hear from you what you have done and what works and doesn’t work for you.

Many people think there is some magic pill or “secret” information that will help them achieve financial independence. (They also keep looking for the magic pill that will keep them thin or help them lose weight.)

We all want easy answers without having to work at it or make any changes. My experience has shown me that this is not how it works. You do have to make changes and take some consistent action to acheive a goal.

Even when things are dropped in your lap, like winning the lottery, that rarely solves the on going problem because the pattern over the long term will eventually take you back to the same situation again and again.

If you ask me, the key to financial success or financial independence, is living within your means.

Spend less than you make and save money for the future.

It is that simple. Even a little bit of savings will accumulate and grow into significant savings over the long term.

It is the trend over the long term that makes a difference. It is called the magic of compounding interest for a reason!

You don’t have to know everything or much of anything about financial planning to be financially successful. You can have an expert help you with some of the challenging questions that are specific to your situation. There is no “hot” stock tip that is going to help you make millions.

The “hot” tip is to pay attention to how you spend your money and create the habit of saving.

Yes, it is simple but it may not be easy to spend less than you make.

My next post will present some ideas on HOW to spend less than you earn.

Often clients come to us without much money saved for retirement.

YET, they want to save money for their children’s college education. I applaud their intention but often this is not the correct prioritization.

This is a common example where parents truly do put their children before themselves. They are willing to save for their children but not for their own retirement.

Maybe it is because they have a deadline or known timeline for when their children will go to college and this makes it more real while “retirement” is a vague idea further in the future and people assume they will figure something out?

I am not sure of the reasoning but as a financial planner I often have to tell people they need to worry about themselves and their retiement first. You can get loans and scholarships for college but there are no loans for your retirement.

I believe one of the best gifts you can give your children is to be financially secure in your retirement so you are not a burden on them.

You also have to do a reality check on what is feasible for you. Of course everyone WANTS to pay for their children’s education but that may not be practical and you need to be honest with yourself and your children if that is true.

I don’t believe anyone is “entitled” to a college education paid for by their parents. I know others do not agree with me on that.

One of the easiest decisions for your retirement is if your company matches a certain amount.

This is literally “free” money.

Companies match different amounts and have different rules so each situation is different but you should know
1) if your company matches,
2) how much the match and
3) how it works.

If you don’t contribute to your 401K or 403B, and your company matches, you are losing out on this FREE money.

This is the MINIMUM you should be contributing so you don’t lose out on the matching contribution.

I say you need to understand how it works because we have seen some weird situations especially with 403Bs. I remember one company would only match if you contribute above a certain amount.

Can you imagine how upset you would be if you found out after working somewhere for 5 years and contributing 3% to your 403B that if you had contributed 4% that the company would have matched that 4% but they didn’t match anything because you below their contribution threshold?

If it is not practical for you to contribute the full amount for a match, I recommend that you contribute something and then gradually try to increase that amount so it is not such a shock to you and your finances. Often we can adjust to living at new income levels gradually.

1. Neither has a magic bullet or instantaneous fix. Both take time to see results. (For example, even the magic bullet of winning the lottery has not helped the majority of those that struggled financially and won the lottery. Most all still struggled with money and bankruptcies after the lottery win.)

2. Both require good long term habits and discipline (working out one time or saving money for only one month will NOT get you to where you want to be)

3. If you starve yourself with food or with spending money, most of us eventually splurge or binge.

4. Both are related to knowing what is “enough”

5. They both are easy to procrastinate taking action on

6. Tracking what you eat and tracking what you spend both surprise people with what they truly do. This action alone is very successful for helping keep people on track with weight management or money management.

7. Consistency is key

8. Both are a balancing act – living within your means and not eating more than your body needs or is burning

9. There are multiple ways to accomplish both. You need to find a sustainable system that works for you.

10. Both are helped with some level of knowledge and understanding

11. A consistent extreme of “too much” or “not enough” is not sustainable in the long term
Weight Management
Not Enough-Anorexia (many health issues/death)
Too Much – Obesity (health issues/death)

Money Management
Not Enough – Ultra Saver (doesn’t enjoy the present or using money for things they enjoy and want)
Too Much – Ultra Spender (credit card debt / bankruptcy)

12. Both money management and weight management deserve to be paid attention to.

13. Food and purchases both trigger the same pleasure center of the brain.

14. Both are requirements for living. You cannot live without food or money in some form.

15. Both are key to living a happy enjoyable life. Although being healthy and / or rich do not necessarily buy happiness.

I would love to hear your thougths on the similarities or differences between money management and weight management.

Here is a more eliquent and detailed post about the same topic that I enjoyed.

(I wish they had titled the article “Slow and Steady: More Thoughts on Physical and Fiscal Fitness.”)

No matter what you think about money, the fact remains that money is a requirement in our society. You must deal with it in some form every single day.

This article is about when to seek assistance from a financial planner or financial advisor.

Do you:
•spend too much time worrying about your financial situation?
•feel overwhelmed and unsure of what to do with regards to your savings, taxes, investments etc.?
•not have the time to stay on top of your finances and investments?
•not have the desire to take care of the details with regards to your financial plan?
•continue to procrastinate in dealing with your finances?
•not save enough money nor have a plan for your saving?
•and your spouse fight way too much about money and finances?
•hate talking about and dealing with money?
•have a history of making poor investment decisions on your own (buying at the highs and selling at the lows)?
•want to retire in the next few years but you don’t know if you can or should
•own a small business and are not sure how to maximize your choices and what is legally required by you for your employees?
•not know the state of your finances?

Saying yes to even one of these questions can mean you should seek financial assistance.

Play to your strengths

This means you should do what you are good at and what you enjoy. Yes, we all need to do some things with regards to money to be financially responsible yet having assistance can pay off in so many ways – financial, time, less worrying and emotional well being.

Let the experts be the expert

For example, I hate doing my own taxes. Yes, I am capable of doing it but it is something I don’t enjoy doing for myself. It causes me too much angst and my accountant (hopefully) does a better job than I could. Plus I like knowing I have someone else in my corner if anything on my income taxes is questioned.

Another example of this relates to investments. We here at Main Street Financial Solutions are not big fans of investing in individual stocks. We do not have the time or the resources to research stocks like the experts who do it all day, every day. We believe in diversifying your risk with ETFs and mutual funds. We research and select mutual fund managers who have performed well in the past and that we trust. They are the experts at selecting the investments for their funds.

Here are some of the advantages of having a financial advisor and not doing it yourself:
•They help you see your blind spots
•They are objective and not too emotionally involved
•They help you know the different options so you can make a more informed decision more quickly and easily
•They can help hold you accountable so action is taken
•They are (hopefully) experts who you can trust
•They keep you on the right path and take care of details you don’t have the time or desire to do
•They help you clarify your goals and set up a plan for achieving them
•They help you know the relevant facts. With knowledge comes power.
•They can teach you and answer your questions so you feel more comfortable
•They have access to tools and information that you do not.

The Key Is:
How do you FEEL about your finances and your financial plan?

If you don’t like where you are financially and are having issues taking care of it yourself then I recommend you take some different actions. One option is to call an expert or your current advisor if you already have one.

Most people do not take action until they are so uncomfortable or unhappy that they finally do something about it. You don’t have to wait that long.

Many people don’t work with financial planners or advisors because they are afraid of being taken advantage of, don’t like sharing their situation with others and are afraid of judgment, or they think it is too expensive.

You should be able to find a financial planner or advisor you trust.

Whoever you work with should make you feel comfortable with their knowledge and demeanor. They should answer your questions and listen to you and what you want. Listen to your gut and work with someone you like and trust.

How much would you pay to have someone help you accomplish your goals if you knew that would GREATLY increase your chance of success?

We all waste so much money on things we do not need. Dealing with your finances is something you need to do. It is a wise investment to have a good financial advisor so you know you are taking smart actions and doing the right things. This will pay off in more ways than you can possibly imagine.

It truly is priceless.

I have not been feeling well so here is a quick post of websites I like, recommend and/ or read often. Some are finance related and some are not…

www.getrichslowly.org/blog/
I read this blog every day. Some articles are better than others but I have a similar philosophy and have gotten some good tips.

www.financialliteracymonth.com
This website was mentioned in the Main Street Financial Solutions Newsletter this month. Yes, we missed April being Financial Literacy Month (I assume they chose April because that is when our taxes are due) but this website has a lot of good information for getting your financial house in order.

www.napfa.org/consumer/index.asp
National Association of Personal Financial Advisors (NAPFA) is a great source of information. I believe in fee-only planners since I am one and like the transparency and focus of this organization. This site allows you to search for a NAPFA registered fee-only financial planner in your area.

http://richchicks.org/
I just think this is a super cool site. Fun to read and aligned with my values.

www.tut.com/theclub
I have been a fan of Mike Dooley’s his The Daily Notes from the Universe for years. I love the daily insprirational e mails.

http://www.gravelandrust.blogspot.com/
I read this blog everyday. She is an incredible woman. What she has accomplished and her attitude are amazing and inspiring. I learn a lot from her wonderful words of wisdom and enjoy following her life story.

A reoccuring theme keeps coming up for me:

“Big changes most often occur with lots of little steps.”

I think I have written about this before but it is so true and needs to be emphasized again and again.

As a society we all want the magic bullet or the immediate fix. Things take time. You cannot lose 20 pounds overnight (or in a week) it takes time.

I know for me, I do better when I break a big task or goal down into smaller pieces and commit to doing one action towards that goal everyday. It is important to take consistent action over the long term. Think about Tim Robbins in Shawshank Redemption where he dug his escape tunnel with pockets of dirt every day. Talk about patient.

Everyone says they want more money in their life yet most don’t DO ANYTHING about it.

Having money and being financially responsible is possible and it is something you can and should take action on.

If you don’t know where to start, here are a few ideas for actions you can take to get started on taking control and improving your financial situation:

1) http://www.financialliteracymonth.com/

2) http://www.getrichslowly.org/blog/

3) Read Your Money or Your Life by Vicki Robin and Joe Dominquez

4) Balance your checkbook

5) Start tracking what you spend (really tracking it)

6) Create your net worth statement

7) Meet with a financial planner

8 ) Get your credit score (if you haven’t within the past year)

9) Set a savings goal. Decide how much you want to save and by when. What actions will you take to accomplish this?

10) Talk to your spouse or significant other about money and finances. Where are you and where do you want to be?

I challenge you to decide on a goal and start taking action towards it.

Even if you believe your financial house is in order (I applaud you), I bet there are still somethings you can do to help improve your situation or how you feel about your financial situation. No one is perfect.

Finances are about finding the balance for enjoying the present and planning for the future responsibly.

You control your financial destiny so take some baby steps to changing yours for the better.

As a financial planner I see over and over again people who put off or procrastinate taking care of their finances. Since it is not a fire with a firm deadline like taxes or something most people want to do, they just keep putting it off till another day.

For example I hear, “I will start contributing to my 401k next month” and then years later realize they still have not started contributing to their 401k plan.

(This is why the law changed to make employees automatic be “IN” the plan and you have to take action to not be contributing to the company retirement plan.) The government is try to save us from ourselves and our inertia.

We are all human.

We do the things we WANT to and HAVE to do. Although, even those things that we know we “should” do, like eat healthy, work out or set up a Will often get put off for another day.

We all have seen the charts that show if you put money away at the age of 25 and then start at age 35 or 45 how different the size of the numbers are. These charts are trying to create a sense of urgency. You will be thousands of dollars better off if you start saving when you are younger but I think mentally it still doesn’t feel “urgent.” Or maybe it just doesn’t feel real.

Coaches and financial planners are beneficial because then you have someone else holding you accountable and creating deadlines that force you to take action. Hopefully they also help make the process less overwhelming and painful.

I know from my own experience that having a scheduled meeting with my coach forces me to take action and complete promised work before the meeting or a deadline.

We all need to be financially responsible by taking care of the present requirements and planning for our future.

Most people say they want more money in their life. Why not take some action TODAY that will help make that happen instead of just wishing for it and not thinking it is possible?

What action can you take? What action would you like to take?

How can a financial planner (or anyone) help make this easier or create a sense of urgency so people do take action with regards to their finances?

I would love to hear your comments and ideas.

I saw and liked this post so much I created my own list…

50 Simple Pleasures
1. Feeling the sun on your face
2. Soft luxurious sheets
3. Comfy bed
4. A restful night’s sleep
5. A really good hug
6. Kisses that give you butterflies in your stomach
7. Singing at the top of your lungs
8. A beautiful sunrise
9. The satisfaction of a job well done
10. Trying a new recipe and loving it
11. Reading a book that you don’t want to end
12. A child’s laugh
13. A child’s picture / drawing
14. Snuggling on the couch
15. A great run or walk outside
16. Feeling strong and healthy
17. Being in the zone
18. A back massage
19. Watching a thunderstorm come in
20. Beings silly with a friend
21. Getting a love note
22. Feeling the wind on your face
23. Pictures of loved ones
24. Sleeping in late
25. A lazy morning doing whatever you want
26. Learning something new and interesting
27. A good hair day
28. Admiring the beautiful big sky
29. Clothes that fit perfectly and you feel fabulous in
30. Finding what you want
31. Expressing yourself clearly and confidently
32. Interesting and meaningful conversations
33. Typing super fast
34. Laughing so hard your stomach muscles get sore
35. An answered prayer
36. Autumn leaves
37. Spring flowers
38. My teddy bear
39. Holding hands with a loved one
40. Feeling connected
41. Accomplishing a goal
42. Seeing someone shine with happiness
43. Driving fast on a curvy road
44. A beautifully set table
45. A delicious meal you remember for weeks
46. Easily finding a parking space right in front of where you need to be
47. Peaceful silence
48. Feeling grateful
49. Catching up with an old friend and feeling like not a day has passed (you are so comfortable together)
50. Someone saying exactly what you need to hear

I have been out of touch for quite a while. I apologize. I am getting back on the bandwagon with the intention of posting consistently once per week.

You have my permission (and encouragement) to call me out if I fall down on the job again.

This week’s topic is dealing with the uncertainty in Estate Planning in the US.

There are both federal and state estate taxes. For the majority, Estate Taxes are not an issue. For the wealthy or those with Estates over the Estate Plan limits, good estate planning can save you some serious money (with 2009’s estate tax rate at 45% and 2011’s currently scheduled to go to 55%).

For 2010 there is currently no federal estate tax.
No one can believe that the government has allowed this to happen since it is a significant source of revenue to the government.

There is talk of passing an estate tax law that will retroactively go back to January 1, 2010. I personally wonder if that will hold up in court and do not believe it should be allowed to go back retroactively.

So currently, in 2010 you can pass away with a billion dollars and you will not owe the federal government estate tax on this money. (State Estate Tax is different and separate.)

The Limited Step up in Basis
The kicker is that in 2010 you must designate what assets will get the step up in basis and there is a limit to the amount of assets that will get the step up in basis.

Go here if you are asking “What is a step up in basis?”

You are currently (in 2010) only allowed a step up in basis on $1.3 million if the assets go to a non-spouse or $4.3 million of assets are allowed to get a step up in basis if a spouse is inheriting the assets.

This is a logistical nightmare because many people do not know the basis of their assets. Many older people have stock certificates in safety deposit boxes and have no record for when they bought them.

No one knows exactly how this limited step up in basis will be handled in the future but we are told you must choose and designate which assets get the step up in basis.

Currently, the Estate Tax exemption reverts back to $1 million in 2011 with a 55% tax rate which means LOTS more people will be paying federal Estate Tax. In 2011 you will once again get a an unlimited step up in basis.

In 2009 the Estate Tax exemption was $3.5 million with the top estate tax rate being 45%. (Yes, I am over simplifying many things here and no I am not an estate attorney.)

My point to all of this is to bring your attention to the craziness and uncertainty with the Federal Estate Planning Tax laws.

As a financial planner or Estate Attorney it is impossible to plan when you don’t know what the rules will be. Everyone is waiting to see.

I feel it was grossly negligent for the government not to take care of the Estate Tax issues before 2010.

I understand that the government needs money and this is a great source of funding from the ultra wealthy. Having a $1 million exemption is too low in my opinion and would impact the middle class. I hope that the $1 million exemption will get changed. The rumor is that they expect the limit to go back to $3.5 million.