How I Accidentally Became A Marriage Counselor In One Month

"Relationships require an equal amount of effort from both people."

- Unknown

I currently have 15 clients that I meet with every month. Every month, at the beginning or the end of the month I meet with people to go over their financies, budgets, plans and progress. Out of the 15 people, most of them are couples. There is an exercise that I make everyone go through during the planning phase of our sessions. I ask everyone to do two things: (1) draw a picture of what you imagine your future looking like, and (2) write down your short-term and long-term goals. 

In many cases, I ask the couples to do this assignment separately so I'll have the guy on one side drawing his picture and the lady on the other side drawing her picture. Shortly after, the couples share their picture and their goals. As of lately though, I've been thinking that this assignment is a bit intense for some couples. Sometimes the pictures are completely different, the goals aren't aligned and the conversations turn from a simple conversation to a heated argument. I guess that conversation just never came up. I then spend the next hour or so trying to mediate and help the couple cope through this discussion.

Although I jokingly say that I became a marriage counselor, I found it fascinating that certain conversations have not happened with certain couples that have been together for a long time. In no way am I being judgmental or think that my relationship is better than others. However, I do think that you can tell the strength of the relationship by the type of questions you ask each other or the type of conversations you have. This was evident when my girlfriend and I won the Valentine's Day game against the married couples (Read Relationships: One of the Best Investments). I hope I still remember by girlfriend's favorite color!

Conversations apply to other types of relationships beyond marriages. It's the same concept when dealing with your boss or your co-workers. It's the same concept when you interact with your friends or family. As I mentioned yesterday, relationships take work to build and maintain (Read Want To Build Strong Relationships? Listen to Ben Affleck). One of the best ways to strengthen relationships is by gauging the questions and conversations that you have. Are you only talking about work with your co-workers? Do you only talk about hanging out and partying with your friends? Or do you have more intimate conversations about life, your future and your struggles?

My role in all this was just to give couples financial advice and set them up with a plan to achieve their goals. It look as though I became more than that. On a positive note, I guess it's best that these conversations are happening now than never, or now than later. What type of conversations are you having with those around you?

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401K? IRA? What Does It All Mean?

"Retirement is wonderful if you have two essentials: much to live on and much to live for."
- Unknown

At some point in your career (if it hasn't happened already), you'll be glad to hear that your company offers a 401k plan. Afterwards, you jump on that opportunity because you're supposed to have a 401k and because you're supposed to start putting money away for retirement. Then you hear things such as, "you have to start young so that you can retire with a lot of money." Yet, no one will tell you how much money you really need to retire or how it all works (Read How Much Money Do You Really Need to Retire?).

I sometimes feel as though the goal of an investment firm who is trying to have you sign up for their 401k plan is to try to confuse you even more. Think about it. If you're super confused about retirement and what it all means but you know that you 'need' a retirement plan, you'll most likely get frustrated and conclude that you don't want to deal with any of this and you just want someone to do this for you. So, you sign your life away because the sales person, or financial expert, told you that they'll take care of your retirement fund and that you need not to worry. Some of you might already have a retirement plan and some have not even thought about this yet. No matter where you are in your life, it's always good just to get a little bit more information. Therefore, today I wanted to explain very simply what the difference is between a 401k and an IRA.

Both a 401k and an IRA are intended to help you save money for retirement. Both a 401k and an IRA have legal terms, tax advantages (and some disadvantages) and a lot of jargon that confuses people. Other similarities include when you can take out funds and the availability of the funds for medical expenses, a first home purchase and education expenses. In other words, depending on your plan, you can use some of the funds in your account for certain expenses only. There are quite a few differences though:

• A 401k is typically set up by an employer (or a self-proprietor); an IRA is set up by an individual, not by the company
• In a 401k the employer typically sets the terms of the plan and can select to contribute to the employees plan; for an IRA there are no matching contributions available and the terms are selected by the individual
• A 401k plan allows you to take out loans from your account if needbe; an IRA doesn't have this feature
• A 401k makes it difficult to rollover the amount to another plan (which they might typically only allow you a rollover to another 401k plan); for an IRA, it's much easier to rollover the funds to a different account
• A 401k doesn't typically include beneficiaries; an IRA does allow beneficiaries to be included 

Tomorrow, I will go over the differences between the different types of 401ks and IRAs. The question most people ask me is: which one should I choose? My answer: keep doing research until you find the right plan. Some people are so selective when choosing a TV, a house or a car but when it comes to a retirement fund they're quick to sign a piece of paper without knowing what they're signing. Here are some resources to get you started:

IRA vs. 401k - Which Is Better For You? - an article from iravs401kcentral.com, a blog that strives to educate ordinary folks on retirement plans.

Retirement Basics: IRA or 401(k)? - a Q&A-style blog from U.S. News

Comparisons of 401(k) and IRA accounts - A wikipedia table that makes it easier to make a side-by-side comparison of the different types of plans

What are the differences between a 401(k) and an IRA? - an article from investopedia.com, a website for those interested in investing

Happy research!

Don't forget to share this blog so you can encourage others: family, co-workers, friends. Give them something to get motivated! You never know what they might be going through. A few words of encouragement can go a long way.

How Much Money Do You Really Need To Retire?

"Don't simply retire from something; have something to retire to."
- Harry Emerson Fosdick

The picture are all the same. You and your spouse are older with white hair and a big smile. You are at a beach wearing white walking around with no problems. I'm not quite sure why you would be wearing white. Do people all of a sudden decide to wear white after they retire? Maybe that will be my next research project.

The pictures look really nice. All institutions that sell you 401ks or IRAs have a picture of this sort in the brochure or folder they give you. The crazy thing is that when we think of retirement, that's pretty much the first picture that comes to mind. However, there's a lot to consider when thinking about retirement. Most people automatically get a 401k from their job because they offer it, but there is no set plan or idea about what retirement really means. The most important element about retirement is knowing how much money you actually need to retire comfortably. 

According to US News Week, the federal government estimates that 12% of women and 7% of men over the age of 65 live in poverty. Why would this be? How could this happen? The research didn't necessarily say why, but according to the Transamerica Center for Retirement Studies, only 1 in 10 people have calculated how much money they need in the bank to comfortably retire. I want us to be that 10% so let's start making some calculations. 

Financial advisers recommend that after retirement you should be able to replace 80% of your income. This means during the year that you retire, if you make $65,000 annually, let's say when you're 65, then you will need  $52,000 a year for the rest of your years. This means that you will need some money coming from somewhere that equates to $52,000 a year or $4,333 a month. If you want enough money to last you for 20 years of retirement, then multiply that by 20 and you'll need roughly about $1 million dollars. I haven't even accounted for inflation which is about 3% a year. For those that might get a bit confused with my math, I found a great retirement calculator from CNN money. 

My goal is not to scare you at all. My goal is to have you face reality if you haven't yet made these calculations. My goal is also not to make you believe that it is impossible to retire with $1MM. The way I think about it is simple. I am currently 30 and have 35 years to figure out how to generate enough consistent cash flow to last me through retirement. It all starts now. We need to plan the seed now rather than later. We need to have our money working for us now if we really want to enjoy our later years without any financial worries. Whatever dreams ans aspirations you might have for retirement, I believe you can achieve them. The question is: do you believe you can achieve them?

Although I am definitely thinking and researching about retirement plans and options (which I will discuss in my next blogs), I would personally want to be on the beach with my loved one (with our black hair) living comfortably now. That's why I stress the importance of money management, cash flow, investments, budgeting and discipline. I personally love to work. The question I ask myself is more: what would I like to do for work when I'm 65? My goal is not to have to work for a paycheck, and that can start now. 

This way, my love and I can wear our white clothes now instead of later. Any thoughts? Share. 

Don't forget to share this blog so you can encourage others: family, co-workers, friends. Give them something to get motivated! You never know what they might be going through. A few words of encouragement can go a long way.

Avoid These Mistakes When Trying To Pay Off Your Debt

"Debt is the worst poverty."
- Thomas Fuller

Today, I will complete our discussion about debt by suggesting to avoid certain mistakes when trying to pay it off. Before I give the actual list of suggestions, I ask you, once again, to look back at why you wouldn't even need to borrow money in the first place.

Most people borrow money for the wrong reasons. Did you borrow money to have enough cash to invest so that your money can grow and you can start generating passive income? Did you borrow money because you wanted to open up your business and you just needed start-up capital? Or did you borrow money because you wanted a nicer car? Did you borrow money to buy a new TV, get a fancy phone and live above your means?

My goal is to make you reflect on your decisions. Some people might be struggling to pay off the money they borrowed and are caught in a hamster wheel, just trying to make ends meet. Depending on your situation, I would advise you to avoid these four traps when trying to pay off debt. 

Don't use any payday loans
If you like to be caught in a trap, get a payday loan. Before I met with a few of my clients, I honestly never knew what a payday loan was. It's a very clever lender, however, if you're the lender's customer you will be trapped for some time. The payday loans give you quick cash but they charge you a fee to take out that cash and they have access to your bank account so they will take your money regardless. Most people who get payday loans think it will only be a 'one time' thing. They believe they will only take out a loan just once, pay it off and forget that it ever happened. However, most people will get caught trying to get more cash and it becomes an endless cycle. Most people don't have the discipline to only borrow once. If you don't have the discipline to borrow money, don't borrow money. 

Don't get caught up with 0% interest
People love free stuff. When people see '0% interest,' it's like they're getting something for free. People get excited knowing that they have a whole year to pay off a loan before it begins to accumulate interest. However, going back to my first suggestion, most people aren't that disciplined. If you take out a $5,000 loan and you're trying to pay that off in six months, before the interest kick in, you'll have to pay on average $833.33 a month to make that happen. Before you take out a loan of any kind, work out the numbers. Don't be afraid of doing some math on your own. Educate yourself before you get yourself in a whole.

Avoid getting loans to pay off other loans
Let's say you owe some money to a few credit card companies. You think the best solution is to take out another loan to pay off those credit cards. Your idea gets even better when you find out that you don't have to pay interest for the first 6 months on the loan you're planning on taking. This is a huge trap! Again, most people don't have much discipline and will continue to take out loan after loan to pay off other loans which they took to pay off other loans and this cycle won't stop for a very long time. At the same time, do the math. If you owed a total of $5,000 on those two credit cards, and now you're thinking of getting a $5,000 loan with no interest for six months to pay it off, guess what you're getting yourself into. A trap. 

Don't use all your tax return to pay off your debt
A few years ago I had a great idea: I'll use the money I receive from my state and federal tax returns to pay off my debt. So one year, I used that money immediately to pay off some debt. By the end of the year, I was living paycheck to paycheck trying to figure out where all my money is going. It was still going to paying off debt! So then, I got another genius idea: I'll use the money I receive from my state and federal tax returns to pay off my debt. This happened so frequently for a few years, that I no longer was living paycheck to paycheck. Instead, I was living refund check to refund check! (Read Before You Spend Your State Or Federal Refund Check, Read This!). Although it might seem like a good idea to use this money to pay off debt, it is not. Pay yourself first and read all my blogs so that you know which route is best for you. 

Most of what I recommend is really from experience and research that I had to do. In other ways, I had to learn the hard way. Some of you  might be learning the hard way right now. For those that aren't in any trap, follow my advice and don't try to learn anything the hard way. Good luck to all and enjoy your weekend. 

Don't forget to share this blog so you can encourage others: family, co-workers, friends. Give them something to get motivated! You never know what they might be going through. A few words of encouragement can go a long way.

When Is The Right Time To Pay Off Your Debt?

"Bad debt is sacrificing your future day needs for your present day desires."
- Suze Orman

Yesterday I gave a few reasons why paying off debt at once is the wrong way to go (Read Don't Pay Off Your Debt and Read This Instead). I figured the question would come up on when would it be the best time to pay off all debt and this will be the topic of today's discussion. 

Before I give my reply, I want you to take a look back on why you attained debt in the first place and ask yourself a few questions:

• Did you put yourself in debt because of necessity, or was it for pleasure?
• Was it worth it?
• How much in debt do you currently owe now?
• How much stress has it caused you?

These questions are important to ask because I'm sure you don't want to make the same mistake twice. These questions should apply to any kind of debt: your house mortgage, your student loan, your car loan, etc. The final question to ask yourself is: would you do it again?

As I meet with multiple clients a week, I find out a few interesting things. First of all, most people don't know what is the total amount of their debt. Secondly, the debt is not a small number, its typically tens of thousands of dollars. Finally, most (and in some cases all) of the money from someone's paycheck goes to pay off bills and debt with hardly any money to put in a savings account. So when is the best time to pay off the debt all at once? My simple answer is never, but the answer I'll give today is 'it depends.'

The only time where I believe it might be wise to pay off some debt is when you have negative cash flow on a consistent monthly basis. In many instances, the only solution some people see is to take a bigger loan to pay off the smaller loans. Debt is a complicated thing that requires an even more complex solution. In a blog last week, I gave some tips on how to change your negative cash flow to positive cash flow (Read How To Turn Your Cash Flow From Negative to Positive). The only complex solution I can give you consist of two words: sacrifice and discipline. 

If you are experiencing negative cash flow and it's mainly due to high amounts of debt, it's time to make some personal sacrifices. Sell your possessions. Sell your car, your big screen TV, your clothes, but start selling something so you can have cash in hand. Stop borrowing money and make money. Last year, I made $1,300 in 4 months just by selling my stuff on ebay. I sold DVDs, a broken guitar (yes, people will buy broken things online), mariachi attire that hasn't fit me since high school, and books that have just been collecting dust. I sacrificed my possessions. However, the hard part was the discipline. I took pictures of almost all things I had and tried to make them look nice. I was careful in my descriptions and tried to make the ebay pages look professional. I made sure that the items were shipped withing 48 hours. Was it a lot of work? Not really, it just seems like a lot of work when you list it out but my end result was there.

In conclusion, stop borrowing money and make money instead. Any thoughts?

Don't forget to share this blog so you can encourage others: family, co-workers, friends. Give them something to get motivated! You never know what they might be going through. A few words of encouragement can go a long way.

Don't Pay Off Your Debt and Read This Instead

"I invested all my money in debt."
- Hamish Linklater

I recently had a conversation with a relative of mine and was sharing information in regards to my student loan. It turns out that I finally owe less than $2,000 in my student loan and in a few years I will no longer have that loan under my name. 

"If I only owed $2,000 on my student loan," my relative said to me,"I would pay it all off right now and get it over with." Most people would probably say the same to me. The 'peace of mind' that comes after paying off your car loan or your student loan is priceless, right? Well, it's actually not priceless, it cost you the amount of the loan plus interest. 

There's a few reasons why I won't be paying off my student loan this upcoming month. I do have $2,000 in one of my accounts, but that money won't be going anywhere near the Department of Education. Here are my reasons:

My focus is positive cash flow

Throughout my blogs, the theme on positive cash flow is evident (Read Why How Much Money You Make Doesn't Matter). My goal is to pay myself first and then pay 'the man.' For the last few years I have cut down on my expenses and focused on maintaining a positive cash flow every month. I was able to achieve that without having to pay off all of my loans. I currently now pay $78 a month for my student loan. If I pay off the $2,000 of my hard-earned money to the US Department of Education so that I won't have to worry about my loan again, I only increase my monthly cash flow by $78. In my eyes, that's not where I want my money to go. I'd rather put that money to work so that my cash flow increases a lot more with my $2,000 investment. 

If I have $2,000, why would I give it to someone else?

There's a few things that are coming up in my life. One of them has to do with a few investments I have and the other 'thing' is a trip I'm planning. I have three options: Option 1 - add $2,000 to my current investments; Option 2 - use the $2,000 for the trip I'm planning in the fall; Option 3 - pay 'the man.' 

If I pay off my student loan, I will have $2,000 less in my hands. I already have a positive monthly cash flow, so a $78 increase might be nice, but it's not something I have my heart set on. I'd rather pay myself and choose one of the first two options. I don't mind paying $78 for a few more years. I do mind, however, giving $2,000 off-the-bat with very little return.

So when should you pay off your debt entirely? That will be our next discussion.

Don't forget to share this blog so you can encourage others: family, co-workers, friends. Give them something to get motivated! You never know what they might be going through. A few words of encouragement can go a long way.

Keep The End In Mind: Remember Your Dreams

"Begin with the end in mind."
- Stephen Covey (author of The Seven Habits of Highly Effective People)

When I was a little kid, I used to love science. I use to look up at the sky and stare at the stars and the moon for hours. I owned a toy telescope and imagined that one day I would be an astronomer and would discover a meteor that I would name "Allen." By the time I got to college, I hated science. During my years at UC Riverside, I tried to avoid any science classes. My interests seemed to change as I got older.

One of my earliest blogs (Read What Do You Want To Be When You Grow Up?) discussed the difficulty many adults still have when deciding what they want to do in the near (or not so near) future. During the first financial planning session I have with my clients, I typically ask my clients what are their goals and many of them have difficulty answering me. During my upcoming blogs, I will continue to write about money, but will elaborate more on cash flow, retirement plans and investments. However, before I continue with the 'money discussion,' I want to make sure that we back up a little and think about our goals, our dreams.

A picture is worth a thousand words

"The first thing I want you to do," I ask my client (who we will call), William, during our first financial planning session, "is draw a picture of what your future will look like." I then give William a box of crayons and leave him alone for a few minutes. Williams gives me a look of disbelief, but moves forward with the assignment as soon as he realizes that I wasn't kidding. 

I recommend that everyone who read my blogs does the same assignment. Hang it on your fridge if you want to, but draw out what you envision your future looking like. If you have a spouse, I recommend that you and your spouse do this assignment separately, and then come together to discuss your picture. You will be surprised how the conversation about your future just 'never came up'. I see this all the time when I meet with couples.

What would you do with your time if money wasn't an issue?

Most people think their dreams are silly. After drawing their picture and explaining to me what they drew, they'll follow up with comments like "but this was just an assignment," or "these are just dreams, you said I can draw anything." Most people think their dreams are an impossible thing. They give up on their dream before they even begin dreaming. I say, keep dreaming and imagine money wasn't an issue. Strive to keep dreaming and don't forget that dream. You can overcome the 'money' obstacle if you really try, but you must believe that your dream is a possibility. As soon as you believe that your dream is a possibility, 'money' will no longer be an obstacle. 

Write down your goals

Many people keep their personal goals in their head and a few might share them with someone here and there. Write down your personal goals and I will guarantee that they will align with your financial goals. Most of the goals people write down have a dollar sign attach to it (i.e. traveling, buying a home, etc.). After you write down your goals, put a deadline on it. Napoleon Hill once said, "A goal is a dream with a deadline." Writing your goals will help you remember what your shooting for. 

There will be people that will help you along the way. There will be challenges you will face. There will be times when you feel you'll never get to the end result. Just keep believing in yourself, in your ability to make your dreams happen. Your ability to make your dreams come true are strongly tied to your will to make things happen and the will to believe in yourself.

Share your thoughts and good luck accomplishing your dreams. 

Don't forget to share this blog so you can encourage others: family, co-workers, friends. Give them something to get motivated! You never know what they might be going through. A few words of encouragement can go a long way.

Remember...You Can't Take Your Money With You When You Die

"You'll never see a U-Haul behind a hearse...I can't take it with me and neither can you. It's not how much you have but what you do with what you have."
 - Denzel Washington

Recently, I had a conversation with someone who reads my blogs. This person asked why I talked about money so much in my blogs. This person was under the impression that I was completely obsessed with money and he confirmed this when he told me, "Allen, you can't take your money with you when you die."

I completely agree with that statement. It is definitely true, you won't be able to take any wealth with you when you die. So why try, right? Perhaps it might be better for me to explain why I even write these blogs on money in the first place. Secondly, I want to explain why I truly feel that money is important. Finally, I want to explain what, I believe, you do take with you when you die.

Why do I write blogs on money?
I am not rich. I don't consider myself wealthy, either. However, I do consider myself blessed. God has given me the strength to learn quickly, apply what I learn, be brave, work hard, persevere, believe and achieve. Although I have not yet accomplished all of my goals in life, I have accomplished most of them. Although I am not financially independent yet, I have made great strives to get there. Over the last three years I have read books, watched videos, attended conferences and was mentored by others about money, finance, leadership, management, investments, etc. I have accumulated (and am still accumulating) an abundant amount of knowledge about many topics - money being one of them. I write blogs on money to share information and knowledge to those that might be struggling personally. I write about money because I know there are many people around me, people in my family, close friends that do struggle financially. I write about money to help people. I write about money to teach people how they can change their situation. I write about money to share my experiences with others. I write about money because I care about you. I don't want to live in a world where I achieve all my dreams and those that I love do not. 

Why is money important?
Unfortunately, we need money. We need money to provide for our family. We need money to pay rent, bills and our debt. We need money to attain the things that we really like. We need money almost every day. However, my philosophy on money is different. My intention is not to get rich. My intention is not to become the next top billionaire and buy a private jet. I believe money is important because it can lead to financial independence. If I am able to make proper investments, have a consistent positive cash flow and control my expenses, then I can achieve financial independence. To me, financial independence simply means that you do not have to depend on a paycheck or someone or something else to have money in your pocket. Instead of working for money, I would rather have money working for me. The only reason I want to achieve financial freedom is to have the ability to design my lifestyle. What would you do with your time, with your life, if you never had to worry about money? What would you do with your life if your investments took care of you? If I achieve financial independence by having enough passive income, I would spend my days helping people, spending time with my loved ones and trying to make a difference in the lives of others. I would wake up on Monday morning ready to go take care of my niece's kids so that she can take care of her errands. On Tuesday, I would go to an orphanage and spend time volunteering. You get the point. To me, money is a way to get to that ultimate goal.

What do we take with us when we die?
Nothing. Nothing tangible, that is. We can't take our money with us. We can't take our wedding rings with us. We can't take anything. Yet, we have been given life. Life is not a video game where we have 5 lives to live and then we can press the 'restart' button. Every minute is precious. Every moment counts. My goal is not to get rich. My goal is not to try to make a fortune so I can take it with me. My goal is to touch as many lives as possible while I'm alive. I can't take my pride, my glory, my accomplishments with me when I die either. I can, however, leave many things behind for others to have - from smiles, to money, to knowledge and assets. I'm not worried about what I'll be taking with me when I die. God will take care of that. I'm concerned with what I will leave behind. 

My intention was not to try to defend myself in this blog. My sole purpose for writing this piece was simply to give you an idea of what my true goals in life are. It's all embedded with a purpose. What is your purpose in life? Have you thought about it? Share. Comment. Have a great three day weekend. 

Don't forget to share this blog so you can encourage others: family, co-workers, friends. Give them something to get motivated! You never know what they might be going through. A few words of encouragement can go a long way.

How I Survived With $11 In My Pocket

"The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy."
- Martin Luther King Jr.  

I humbly write these blogs to help encourage others and help people understand that whatever financial situation they might be in, whether they're in a hole or not, that they can improve their circumstances. Yesterday I received great feedback from my Interested In Improving Your Monthly Cash Flow? Follow These 5 Steps... blog. I received a few emails and some text messages about this blog with a few folks wanting to know more about my story. I decided to take a quick detour with my blogs and introduce to you my story as it pertains to my finances. This is not a "How I got rich quick" story. It's more of a survival story.

Most financial planners that I have met might know a great deal about 401Ks or investments. However, most of them might have never struggled to make ends meet, had to live paycheck to paycheck or had bill collectors calling them every day. Therefore, many of them might not be able to tell you how you can get out of your tough financial situation. I feel as though most people can relate to my story and this is why I encourage others to keep pushing. Here's my story...

During the recession of 2008 I found myself jobless. After working for multiple education companies and trying to become a substitute teacher, I was once again applying for unemployment and applying to jobs only a teenager would apply for during the summer. I was a college graduate with a business degree and a huge appetite for success but at the time no one gave me a chance to prove myself. I had two bill collectors harassing me, a warrant for a failure to appear in court (which to this day I still can't remember why I had to go to court in the first place) and a car that kept breaking down.

One day, in late May, I closed my bank account before they charged me again with overdraft fees. I decided that I would just live off of the $300 or so I had left and whatever I received from unemployment I would use for rent. At the time, I lived in a small two bedroom house in Fontana with my nephew. That day I told my nephew I couldn't pay rent anymore so I called the landlord and gave the 30 day notice. I had no clue where I would go or what I would do. In the meantime, my goal was to find any job to have enough money to last me through this.

I took any job that came my way. At the time I also played in a band but we were lucky if we even got money for gas when we performed. I painted a house (or tried to paint a house) for a few bucks, I put strings on guitars for a music store for a few dollars and I babysat here and there. Once a week I tutored my friend's daughter in reading and since she didn't have money to pay me, she blessed me with shrimp tacos every time we ended a lesson. On Tuesdays, I drove to San Bernardino to teach a kid's mariachi group how to play mariachi music. The families would pitch in to give me $20 for gas. In no way did I complain about my situation. Yes, it was tough and I would get sad at times but my mom taught me to be happy for what I do have. I cheered loudly even if I only received $20. 

Shortly after, my cash was low and I had to move out of my house so I began to sell my possessions: microwave, toaster oven, TV, etc. I made a few hundred dollars but now I only had four boxes left with my name on them filled with books, clothes and a few memories. I was close to selling my guitar but some of my bandmates didn't let me. I was lucky enough to have a brother that let me stay with him. I was happy to just sleep on the floor so that I didn't have to sleep in my car. I stayed with my brother for a few months as I continued to apply for jobs every day. I interviewed with so many companies but felt as though I had the worst luck in the world. I didn't have a suit to properly present myself so I always wore the nicest shirt I had (which had a small hole that I had to cover during interviews). I didn't know why no one would hire me. 

I finally received a call in early August from a company that called me a week before to tell me that I didn't get the job. This was an education company that did SES tutoring and they offered me a 3-month assignment as an independent contractor. If I met certain targets in three months, I would be able to stay with the company. If I failed, I was out. I had no choice. The day I received that call I only had $11 and had to decide whether I used those $11 for gas or for food. I used the money for gas and hoped that I would somehow survive until I received a paycheck. I started work on a Wednesday and, by an act of God, I received a small paycheck on Friday for my first three days of work. At that point, I knew things were going to change...

To be continued...

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Interested In Improving Your Monthly Cash Flow? Follow These 5 Steps...

"Do not save what is left after spending, but spend what is left after saving."

 - Warren Buffet

Yesterday, I wrote about the concept of Cash Flow (read Why How Much Money You Make Doesn't Matter). For those of you that might not have had the time to read my blog and are in the dark of what Cash Flow is, let me quickly explain it. Cash Flow is what you have left over when you calculate what you earn (i.e. your income) against what you spend. Your monthly Cash Flow might be positive or negative depending if you make more money than what you spend or you spend more money than what you make on  a monthly basis. 

If you think that I'm going to give the top five secrets on how to make more money or how to reduce your expenses, you are wrong. Realistically, yes, there are only two ways to increase your Cash Flow: Either you have more money coming in or you have less money coming out. Instead of going over how to make more money or how to spend less, I decided to go over something a lot more valuable. 

Before I continue, I definitely wanted to let you know that in no way do I currently have a crazy amount of positive monthly Cash Flow. Although my monthly Cash Flow is consistently positive, it's important to note that for many years my monthly Cash Flow was consistently in the red. I share this with you because I hope to encourage you a bit more. I hope that you feel as though your situation is not unique and that things can turn around just like they did for me. Below are five things I wanted to share about how I was able to turn my monthly Cash Flow from negative to positive.

Enjoy The Hard Work
People are always looking for a quick way to make money. They prefer to hear the stories of someone who won the lottery and became rich instantly instead of the true stories of those who have worked hard with their blood, tears and sweat to become wealthy over a course of many, many years. Most successful people that I know never got rich immediately. It was their hard work that paid off. They happily worked more than 60 hours a week to move up the ladder in their company. They worked tirelessly day and night because they opened up their own restaurant and they had no time to sleep. In fact, I met a guy at a conference once who said he's working hard because he doesn't like to work. His goal was to retire by age 35. Hard work will pay off. Enjoy the ride. 

Get Educated
If this is the only blog you read, then you're in trouble. Most people think of education as a plan to go to a university and get a degree. However, you can almost learn anything through books and now that we have YouTube, you can practically learn how to do anything on YouTube. Be proactive. Learn about controlling your expenses. Learn about how to accomplish your goals. Learn about investing, how to play the guitar, how to sing, whatever it is, but learn. A few years ago I decided to read a book every month. That type of education was relatively cheap and it helped me learn more about improving my Cash Flow. 

Give More
You're probably thinking, "Wait a minute...if I give more, how will I be able to keep more of my cash flow?." It's the law of life. I'm just not talking about money, but anything that you might have that you can share or give to others. Give your time to someone in need, or give more time to spend with your children. Give your heart to more people and you will see how it will open up doors you never knew existed. Even during times of struggle, I tried to give what I could to others. I had no money to give to anyone at the time, but I gave away my knowledge by volunteering to teach kids how to play mariachi music. I also tutored kids and got shrimp tacos in return. Eventually, everything worked out for the best. Give. 

Make Better Decisions
Most people would rather not think about money and convince themselves that money isn't important. They base their decision on this philosophy and they find themselves struggling consistently to make ends meet. A spontaneous trip to Vegas means nothing to them although they might have spent $800 on the trip that they are now trying to work hard to make up for. Eating out every day and spending almost $900 a month on fast food doesn't matter, right? Take responsibility. Start now. Put down your phone as you read this blog and start making changes immediately. 

Believe
Nothing is impossible in this life. Most people get discouraged because they 'don't make enough money.' Others decide that it's impossible to become as wealthy as the people they see on TV. Your mentality is half the battle. If you think the worse will happen, then it will. If you don't believe in yourself, then why should anyone believe in you? If you truly want to change your situation around, whether it's a financial struggle or something else, you must believe that it is possible. Don't defeat yourself before you try. You'll be surprised how strong you are inside and how believing can come a long way.

This article might not have been what you expected, but I felt I would be doing you a disservice if I continued to give you tips that you wouldn't put into action. Do you really want to change things around or is it just a nice thought? As I mentioned before, half of the battle is setting your mind to it. The other half is really just doing something about it. 

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Why How Much Money You Make Doesn't Matter

"It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for."

 - Robert Kiyosaki

Do you sometimes feel like you don't make enough? Do you sometimes think that if you just made a little bit more money you would be better off? If you answered yes to these questions or have ever thought about these questions, then you're in for a real surprise. Making more money will not solve your problems. Many times, we're stuck just getting by because of how we spend, not because of what we make.

Let me give you an example. Let's examine this person that we will call Robert. Robert works as a warehouse manager and makes about $40,000 a year. If  you break that down monthly, he makes $3,340 a month. If you look at Robert's monthly expenses, you'll see that by the end of the month, Robert has a total of $3,040 that he spends on rent, bills, shopping, gas, food, etc.

Robert, Warehouse Manager
Monthly Income: $3,340

Monthly Mortgage: $1,050
Monthly Bills: $650
Other Expenses: $1,340
Total Monthly Expenses: $3,040

By the end of the month, Robert actually has $300 left over. This is is his monthly Cash Flow. Robert can choose to put these $300 in a savings account or he might just leave it in his checking account. Regardless of what Robert decides to do, he is making more money than what he spends at the end of every month. 

Let's look at another example. If you see below, you'll see that Stephanie makes about $90,000 a year. This equates to $7,500 a month. However, if you closely examine Stephanie's expenses, you'll see that her total monthly expenses add up to $7,715. This could be due to high school loan payments, more debt, etc.

Stephanie, VP of Finance
Monthly Income: $7,500

Monthly Mortgage: $1,595
Monthly Bills: $1,080
Other Expenses: $5,040
Total Monthly Expenses: $7,715

Most people who make more money tend to also spend more money. As you see with Stephanie, at the end of the month she actually has a negative monthly Cash Flow of $215. 

If you compare Robert to Stephanie, you would think that Stephanie would be better off because she makes more than double the amount of what Robert makes, but in these examples, that isn't the case. Although Stephanie makes more money, Robert has more monthly Cash Flow than Stephanie. If you annualize these amounts, you'll see that at the end of the year, Robert will have $3,600 left over because he makes more than what he spends. However, at the end of the year, Stephanie is -$2,580, thus spending more than what she makes. This will typically lead a person like Stephanie to attain more credit and get deeper in debt.

In conclusion, you want to make sure that you have positive cash flow consistently every month. It is not uncommon to see someone who makes what Robert makes be wealthier than someone like Stephanie. 

Do you have positive cash flow coming in every month? Comment and share. 

Don't forget to share this blog so you can encourage others: family, co-workers, friends. Give them something to get motivated! You never know what they might be going through. A few words of encouragement can go a long way.

5 Ways To Create A Budget For Yourself - Anyone Can Do It!

"A budget is telling your money where to go instead of wondering where it went."

 - Dave Ramsey

A  friend of mine was sharing with me how much he makes a year but was angry with a realization he had the other day. "Allen," he says, "I just found out that I make $45,000 a year, but that I only have $238.53 in my bank account. Why don't I have $45,000 in my pocket? Or at least half of that!"

When I was in college, I too had this realization. I told my roomate that I felt like I was just a middle-man for companies. I get paid only to hold that money for a few days before I give it to Verizon, the electric company, and other companies that I have to pay on a monthly basis. Although, I won't go over how to stop being a 'middle-man' during today's blog (or getting out of the Rat Race as Robert Kiyosaki would say), I do know that budgeting is the first step to taking control of your personal finances.

The following 5 steps will help you budget a bit better. 

1. Start by knowing how much money you make a month, on average
For some of us, our monthly income is the same every month, but this is not true for everyone. Start by putting down how much money you make a month and if it's not a number that is constant, then just use an average. 

2. Use basic categories to track your expenses
Before you start to jot down all the expenses you have on a monthly basis, first start off with the basics. Below is a list that I use when creating my basic categories:

• Auto & Transportation
• Bills & Utilities
• Education
• Entertainment
• Food & Dining
• Gifts & Donations
• Health & Fitness
• Home
• Personal Care
• Shopping
• Travel

3. Break down the basic categories into subcategories

The more detailed you are with your budget, the more you'll understand where your money goes and where you want to allocate your money. From the basic categories that you created, create subcategories to track each transaction. Here's an example of the subcategories that I use:

• Auto & Transportation
• Gas & Fuel
• Auto Insurance
• Car Wash
• Maintenance
• Bills & Utilities
• Electric Bill
• Phone Bill
• Water
• Internet
• Education
• Student Loans
• Books
• Entertainment
• Movie Theaters
• Music (Yes, I still pay for music)
• Concerts & Shows
• Food & Dining
• Fast Food
• Restaurants
• Groceries
• Gifts & Donations
• Presents
• Donations
• Health & Fitness
• Gym
• Doctor
• Dentist
• Sports Team
• Home
• Rent
• Decorations
• Home Improvements
• Personal Care
• Hair Cut
• Spa & Massages
• Shopping
• Clothes
• Desired purchases (tablet, laptop, etc.)
• Travel
• Timeshare
• Hotel
• Food for Travel

4. Look first at where your money went

Before you begin putting targeted amounts next to each category, first find out what your spending habits look like. Most bills and payments that we make are the same, for the most part, so those can stay constant. However, you do want to find out how much you are spending on clothes, a hair cut, fast food and other expenses that might change every month. You might want to look at the last three months and see how much you were spending on each category. Then, you should continue into the final step. 

5. Decide where you want your money to go

If you truly did this exercise, you might already have gotten depressed before you got to this final step. Most people realize later in life that they are spending more money than what they make. This is the main reason why you might feel that you're struggling to make ends meet every month or every week. This is the same reason why you feel like you never have money. You're probably spending more than what you're true means are. If this is the case (and even if it isn't), you want to place controls and decide how you want to spend your hard earned money. 

As I mentioned in my last blog, this will not happen overnight. Take the time and have the discipline to do this consistently for at least a year and you will start to see positive changes. It's not how much money we make but how much money we actually get to keep. 

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5 Easy Steps To Follow...For Those Struggling With Finances

"Too many people spend money they haven't earned to buy things they don't need, to impress people they don't like."

 - Will Smith

Some people call me the accidental Financial Planner. Well, actually, no one calls me that but I thought it was a catchy name for my informal title. Since last November, I have gladly spent numerous hours helping people trying to get their finances together. My goal has always been to help people control their expenses so they can have enough money to not worry about money. (Don't worry - I won't be disclosing any names!)

Interestingly enough, I found myself giving the same tips to different people over and over again. These tips are essentially very basic and simple and will make a huge difference with the way you handle your money. If you properly follow these 5 steps, you will learn a lot about they way you handle your money, where your money actually goes and what changes you need to make to ensure financial health for yourself and  your family. 

1. Track Your Expenses
The first question I typically ask someone when I meet with them is, "what do you spend your money on?" The most common response I get from parents is: "on the kids." However, after fully reviewing all expenditures, it always turns out that perhaps less than 15% of the total expenses are spent on the kids. Other people can't remember or don't even know how much they spent on their phone bill or that they had a gym membership. It is important for everyone to track their expenses. There are many free tools out there that will actually do this for you. Most banks have online banking but a great tool for those that might have multiple accounts, and my favorite tool, is mint.com.

2. Use Less Cash
Cash is bad for a few reasons. One reason: if you have cash, you will spend it. If you don't have cash, you won't have something to spend. Another reason cash is bad: most people who heavily use cash to make transactions, payments or to buy things don't track their expenses. Many people have the habit of cashing their paychecks or going to the ATM frequently to take out cash. Unless you are writing down why you took out $100 on July 2nd of 2014, you will never know where your money went. Use your debit card to make transactions instead so that your transaction can be tracked and you can truly find out what you're spending your money on. 

3. Tag Your Expenses
Most people are lazy. They want a program or their online banking system to track perfectly what they spent when they went to Target. I have yet to find a system that will read your mind. It's impossible for a program to know that on August 2nd, you went to Target to buy groceries and that on August 8th you went to Target to buy clothes. Most people don't want to tag the expenses appropriately. Spend two to three days a week looking at your account and making the appropriate adjustments to your transactions. 

4. Review Your Expenses
Usually, after I meet with someone for the first time to go over their finances, the individual is excited about making changes to their financial habits. They leave with a mint.com account and with some financial knowledge about where their money went. However, when we meet a month later, I ask the question, "how many times did you look at your mint.com account?" The typical answer is one to three times. If you're only looking at your bank statements or checking your budget one to three times a month, you are doomed to repeat the same financial mistakes. It's of no value if you have online banking or a program that tracks for your expenses if you're never looking at your numbers. Try looking at the numbers at least once weekly, and then get in the habit of looking at them twice a week. I personally look at my mint.com account three times a week. 

5. Create a Budget
Most people are scared of the word "budget". When I told a certain individual that we needed to get her on a budget, her response was, "A budget? A budget will just tell me that I can't spend my money!" This is actually not true. A budget is a way for your to plan how you want to spend  your money. So, if you deemed it valuable to spend your money on video games every month, then you can definitely do that as long as you create a budget and a plan to execute that budget. I personally love going to the movies so I have a budget every month allotted to going to the movies. A budget really helps you decide where you want to put your money. 

Taking control of your finances will not happen over night. This will take time and discipline. Many of us were never taught about budgets, expenses and money. I hope to educate those that might be struggling taking control of their money. Am I an expert? Absolutely not. However, those of you that know me well, also know that at one point, I was also living pay check to pay check, getting deeper in debt, having collections calling me and a law suit from a credit card company. If you're in a hole - trust me - you can get out. Anything is possible. 

Don't forget to share this blog so you can encourage others: family, co-workers, friends. Give them something to get motivated! You never know what they might be going through. A few words of encouragement can go a long way.

A Deeper Look Into Our Habits

"Successful people are simply those with successful habits."

 - Brian Tracy

Last week, I disclosed some results from a study that compared the habits of the rich and poor. I wanted to spend some time going over these results and giving everyone more insight into the numbers and what this all really means. 

"I maintain a daily to-do list" 
The rich have the tendency to have a set plan for the day and follow the plan as closely as possible. Many of us might have one or two things to do for the day, and we might get lucky if we accomplish one of those things. 67% of the rich complete at least 70% of their daily tasks. 

"I love reading"
Although 86% of the rich love to read, they don't like to read for pleasure. 88% of the rich read self-improvement books at least 30 minutes a day. The rich heavily focus on improving their skills, their business, their finances and their happiness. Only 2% of the rich read self-improvement books more than 30 minutes a day. 63% of the rich actually listen to audiobooks during their commute to work, whereas only 5% of the poor listen to audiobooks. The rich strategically use their time to improve, even if it's in the car. 

"I do more than my job requires"

A job is just a job - right? Well, the mental aspect of what we do many hours a week is crucial for our daily lifestyle. 86% of the rich work an average of 50 hours or more a week, compared to 43% of the poor who work as much. Yet, when surveyed, only 6% of the wealthy individuals found that they were unhappy because of work. 

"I focus on my goals every day"
Goals are one of the key differentiators between the rich and poor. Remember - a goal is not a wish. It is not something that you hope will happen but something that you need to make happen.  Interestingly enough, 67% of the rich put their goals in writing.  The wealthy set daily, monthly and annual goals. 

"I watch reality shows on TV"
Looking deeper into this comment, I found out that 67% of the rich spend one hour or less a day watching TV! No wonder they don't watch Keeping Up With The Kardashians. The rich don't watch TV because they're against it, they would just rather use their time doing something more productive and they don't think much about watching TV. Instead, they created a daily habit of reading. 

"I play the lottery regularly"
The rich decided not to play the lottery, not because they don't want to risk their money on the jackpot, but because they would rather not rely on luck. Besides, most people that win the lottery lose their money within a few years after hitting the jackpot. Instead, the rich spend their time building their knowledge and taking other risks with their businesses, purchasing businesses, taking over investments and managing risks. 

In the end, no matter what you want to do in life, many of what we succeed or fail to do will be determined by our daily habits. Where are you spending your time? With who? Are there any habits you need to get rid of or be more consistent with? Share your thoughts.

Don't forget to share this blog so you can encourage others: family, co-workers, friends. Give them something to get motivated! You never know what they might be going through. A few words of encouragement can go a long way.