Quote for the Week of 02/17/2007

In preparing for battle I have always found that plans are useless, but planning is indespensible.

— Dwight Eisenhower

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Week 4 Homework

This lesson is titled ‘Buying Only Big, Big Bargains’. This is critical information on how to use your money wisely to ensure that you have enough to do the things that you want (and need) to do.

The homework for week 4 is:

  1. Read Chapter 13 in Financial Peace Revisited (it came in the kit with your materials, no need to purchase again).
  2. Keep working with your the zero-based budgets. Stay flexible and keep making adjustments, it will get better each week.

Lastly, we have some additional reading on this subject, if you are interested.

Week 2 Homework

This lesson is titled ‘Cash Flow Planning’. This is critical, the only way to get your financial house in order is to understand where your money is coming from and going to.

The homework for Week 2 is:

  1. Read chapters 19 and 21 in Financial Peace Revisited.
  2. Complete your zero-based budget and be ready to show it next week.

Lastly, we have some additional reading on this subject, if you are interested.

Week 3 Homework

This lesson is titled, ‘Relating With Money’. This is absolutely critical, as we believe that personal finance is 80% behavior and 20% math. Just knowing the numbers isn’t enough to win!

The homework assigned for week three is:

  1. Read Chapters 14, 15, 16, 17, 18 in Financial Peace Revisited (it came in the kit with your materials, no need to purchase again).
  2. Finish off and start living by the zero-based budgets you have been creating over the last week or so. It is very common for your budget to be off for the first three months or so, don’t worry if your assumptions were off or you get an unexpected bill. Budgeting is an an iterative process and one that will become easier over time, I promise.
  3. Fill out the 1st column of the Financial Snapshot form. A copy came in your materials, or you can do it at the FPU Member Resource Center. If you do it online, you are entered in a drawing to win an iPod.
  4. Start tracking the information for the FPU Progress Check.

Lastly, we have some additional reading on this subject, if you are interested.

Thriving on $12K/year

MSN Money provides some inspiration from a true story on surviving and thriving on $12,000 per year. Donna Freedman decided to go back to school to better herself and her future, and in doing so she had to make some radical lifestyle changes. She is now a full-time student with a grant that covers her tuition and books.

In order to make ends meet, Donna:

  • Works doing baby-sitting, mystery shopping, freelance writing, paid medical research, and as the manager of her apartment complex.
  • Takes a brown bag lunch every day.
  • Gives money to those less fortunate than herself.
  • Donates regularly to her church.

I found it totally inspiring to see someone who is making their future better and thriving in a difficult situation. She has totally taken responsibility for herself and is making it happen. Donna is going to sacrifice to graduate from school completely debt free, and be able to live like no one else. It isn’t going to be easy, but it isn’t going to be forever either.

The next time you are struggling with making a financial sacrifice, measure yourself against what the Donna Freedmans of the world are doing.

Million Dollar Habits

Michelle Singletary (from the Washingon Post) has some very wise advice having to do with the the true cost of smoking. She looks at the habit from a couple of different perspectives:

  • The potential cost of getting sick.
  • The daily or weekly cost of tobacco.
  • The cost of spending a few dollars a week instead of saving for retirement.

Michelle is counselling Carl, a 38 year old man with a $100/month habit. She figures (with conservative estimates) that channeling this money into a 401K would translate to $100,000 at age 65. When confronted with the numbers, her client has decided to quit smoking and instead focus on saving for his families future. Good for him! I am sure that armed with knowledge and willpower he can improve his life.

Million Dollar Habits

Carl isn’t really different from the rest of us, we all have our million dollar habits. It could be Starbucks, McDonalds, Marlboros, or even iTunes, but a few dollars spent here and there can be the difference between steak and Alpo at retirement.

Michelle gives us a great example of the power of compound interest, and how spending with a purpose can change our lives. Remember, if someone saves $100/month between ages 25 and 65 it will be worth $1,000,000. That is $3/day!

Now, can you change your life like Carl?