From daveramsey.com on 11 Mar 2010

In an age where calendars are computerized, photos are files, and documents are downloaded, the humble checking account register is often ignored. But, if you’ll take 15 minutes to balance your checking account, you’ll stay on top of your budget and avoid bounced checks and overdraft fees.

Keep Track

The point of balancing or reconciling your checking account is to make sure you and the bank agree on how much money is in your account. That means you have to keep a record of your spending. The easiest way to do this is to write every transaction in your checking account register when the transaction takes place and keep a running balance.

Another option is to save all your receipts, and either enter your transactions into your register or, if you want to be super-nerdy about it, a spreadsheet. You’ll still need to keep a running balance every day.

The next step is also up to you—you must actually open and read your account statement from your bank. Whether you get your statement by mail or online, you can no longer ignore it. Open it up, and get to work!

The Balancing Act

Start by comparing transactions on your statement with your register. Make a checkmark in your register for every transaction included on your statement. Be sure all entries on the statement are written in your register, including any bank fees or service charges.

If you’ve been keeping good records, you’ll notice transactions in your register that aren’t included on your statement yet. Good job! Start with the ending balance on your bank statement and add the deposits that aren’t on the statement. Then subtract any transactions that aren’t on the statement. The total should match the running balance on your account register.

If the numbers don’t match up, you’ve probably forgotten to record a transaction. Look over your statement and try again. If it’s been a while since you balanced your checking account, you’re probably not going to get it balanced this month. Just total things up the best you can and continue keeping your records. Next month, if you’re off by the same amount, you can assume you’re on track. Just make the correction in your register.

Some Tips

Don’t use ATM receipts as a method of checking your balance. The balance printed on your receipt is just a snapshot of how much is in your account at that moment. It will not reflect any checks, debits, fees or deposits that haven’t posted to your account.

You may find it easier to balance your account a couple of times a month if you have online access to your checking account. The important thing is that you actually do it.

Balancing your checkbook is a lot like working on your budget. It can be difficult to get all the numbers to work right when you first start, but the process gets easier the more you do it. Once it’s done, you’ll feel much more confident.

Budgeting your money also helps you keep control of the money in your account. Check out Dave’s online budgeting tools that you can access at any time!

March 10, 10:38 PM Newark Financial Planning and Strategy Examiner

By William Jiggetts

Money is not wealth. High income is not wealth. Of course, you need those to grow wealth but they are just tools for empire building. You also need credit, leverage and know-how. With those and other tools, you create comfort and peace of mind for your family and your legacy.

By definition, wealth is multi-generational so no matter how much money you have, it’s not wealth until it’s secured for your legacy. Therefore, in order to create wealth you have to prepare future generations to be wealthy.

For example…

Bill Gates is wealthy. He famously dropped out of college to start his company. What’s often missed is that Mr Gates dropped out of Harvard and borrowed money from his father to start his business. The senior Gates had prepared the way by seeing to his son’s education, supporting his ambition and by having the assets to support his son’s dream financially. Now, the Gates’ are very wealthy.

Donald Trump is another example. He did his first deal with money borrowed from his father. Dad got the cash by mortgaging his real estate holdings. The senior Trump was a developer. He had assets, credit, experience, connections and a belief that his son would make good on the opportunity with what he had learned about the business of real estate development.

The Graves Family wealth no doubt has a similar track. The Graves family runs a Media Empire of which Black Enterprise Magazine is the crown jewel. Earl Graves Senior and his wife have not only worked really hard and made a lot of money; they have prepared their family and their estate so that the earnings from his efforts will result in generations of wealth.

Again, money is not wealth…

Money goes away but wealth stays and grows. After you have planted the seed of wealth there needs to be a protected environment where wealth can grow. This is where estate planning comes in. Wills, trusts, income, asset and cash-flow protection, liability protection all have to be in place in order for money to grow to wealth.

There is no end of stories of lost fortunes and people who had money but are now broke. On the other hand, there are the estates that just don’t break no matter what. The Hilton Estate for example: Those girls couldn’t break that estate if they tried. Some say they have been trying.

This is an important example. The Hilton family does not live parsimoniously. They live like Hiltons. Having millions in the bank or under the mattress and being afraid to touch it for fear of running through it is not wealth. I don’t know what to call that, but it’s not cool. Wealth affords your life-style and continues to grow and leaves a legacy.

So, what do you need to do?

Develop a mind-set of planting a tree for someone else’s shade. If you are not wealthy already, you won’t be. You can get rich though. Do that. Use your assets and whatever else you can to plant wealth seeds for your legacy. Confucius said, “The best time to plant a tree is forty years ago. The second best time is now.” Remember, “Now” is going to be forty years ago in forty years. It shouldn’t still look like now.

Make and save a lot of money. See to your children’s education. Teach them what you know and support them in learning what they want to know. Send them to great colleges so they can learn what you can’t teach and so that they can meet the people who will be their important contacts later when it’s time for them to make a lot of money. Plan your estate now. Wealth grows within a protected environment. Even if you’re not wealthy now, set up the estate anyway. Investments, life insurance, etceteras should be held in trust. Outside of that, it’s just stacks of cash waiting for a wealth-eroding wind to blow it away. Get professional help with the details and minutiae. It’s important.

Simple. Not easy.

This is a repost from the Examiner.com

Save Thousands by Converting to a Roth IRA

I was recently reading a story in the Wall Street Journal about consumers that have credit cards with major retailers (e.g. Gap, Macy’s, Best Buy, etc.). Due to federal regulations, consumers will no longer be able to get instant credit when they are at the cash register. The Federal Reserve is forcing retailers to gather more information about customers including pay stubs and income information before providing them with credit. In this world of instant gratification that would be a huge blow to the retail industry. For years retailers have been able to convince consumers to apply for store credit to receive an additional 10-15% off their first purchase. In many cases, consumers would accept the store credit and retailers would provide an upfront discount in hopes of making money off of the consumer on the backend. If the consumer does not pay off the balance in 30 days, interest will be charged to the customer, thus off-setting the upfront discount. Most store cards have interest rates that start at 21.99%, regardless of your credit score.

I was surprised to learn that in the third quarter of this year all of the sales at Macy’s were rung up on store branded credit cards. With unemployment as high as it is right now and economic uncertainty surrounding the country, how many people do you believe will be able to pay off their balance in 30 days? I suspect not that many, which will make the upfront discount null and void.

Getting back to the new proposed regulations, I think this is a good thing. As Americans we are so dependent on credit, maybe it will force retailers to go back to the basics. I remember when you could have Gap coupons mailed to you to use in-store. The Gap corporation does not offer coupons anymore. You have to use your store card to reap the benefits of the discounts being offered. Retailers make their money off of the interest that customers are paying for their purchases. I think it is good that the government is willing to watch out for the consumers that are spending recklessly. Generally I am in not in favor of government intervention. Overtime I suspect that if these proposals are made law, instant credit will decrease because customers will be less likely to share financial information.

Okay, when I started this blog, I wanted to create something that would enrich people’s lives and empower them to do something different. My financial mentor always says, “live like no one else, so you can live like no one else.” I normally participate in Black Friday every year or at least the last 6 years. I enjoy going out and standing in line for the sales and the doorbuster deals. This year was different, I did not participate in an effort to be more frugal with my money. It looks like nobody missed me because Americans spent $10.66 billion. That is an insane amount of money in one day. Most retailers are in the red until Black Friday and then they make a resounding resurrgence back to the black. Now maybe I missed something because I thought unemployment was at a record high and homeowners were struggling making payments on their homes.

Perhaps I may be naive about what’s going on in the marketplace, but I don’t think so. I believe that people are using their credit cards again. That report won’t be available until the middle to end of January. The fact of the matter is that Americans are continuing to use credit for the short term and pay for it on the backend. People are not gaining jobs at the same rate that they are being lost, so where is the money coming from? ShopperTrak, a sales and tracking firm, reported that the increase in sales from last year’s Black Friday is only a 0.5% increase over last year. The only area where spending decreased was in the Northeast according to the report. Some shoppers resorted to using the internet to shop and spent an average of $170 per transaction up from $126.00 in 2008. Approximately 5,000 people waited in line to get into the NY flagship Macy’s store to take advantage of sales and discounts at 5 am. Overall, it looks like electronics were the big winner as consumers spent the most amount of money on ipods, LCD televisions, and video console units like the Nintendo Wii.

Let’s hope that as the deals disappear, so do the buyers because if not, things could get a lot worse. The only way to change your future is to learn how to budget and make money work for you, not the other way around.

With the credit crunch that is hitting the markets at this current time, be careful if you are still using credit cards. Most issuers are trying to figure out ways to remain profitable by increasing rates and adding miscellaneous charges. One charge in particular is the new annual fee charge. Annual fees on credit cards are not new, however consumers are being hit with annual fees at record rates. In fact, 28% of all new solicitations have an annual fee. In addition, the average annual fee is now $82.00. What I find interesting about this is that credit card companies are imposing these annual charges is that they penalizing you if you don’t spend over approximately $2,400 (See Citi Group’s new policy). Let’s do an example, You have a credit card with a $5,000 balance. You currently owe $500.00 and pay a minimum payment of $25.00. The credit card companies will charge you a fee of $80-$90 a year if you don’t spend $2400 a year. How asinine is that?

Citi spokesman Samuel Wang said in an e-mail statement:

“We have adjusted pricing and card terms for some customers as part of our regular account reviews. This is an ongoing process to ensure we offer terms, interest rates, credit lines and products based on individual needs and risk profiles. These changes also reflect the dramatically higher cost of doing business in our industry as we work to preserve the broad availability of credit.”

My advice is not to use credit, change your blueprint because after this credit crisis that we are in, I predict things will only get worse. Credit card use is up 6% for the year compared to last year. Most companies want you to continue drowning in debt. I was in Target recently, which happens to be my favorite store, but what I saw made me sick to my stomach. On the front of the cart is a message that says, “charge it, The Easy Way To Pay” (See Image Above). The Gap will only give you a discount of 25% if you are a cardmember. The goal is to keep you down. I encourage anybody reading this to seek change and to restore the original blueprint of using cash. Don’t take my word for it, check out the CARD Act for more information and read your terms and conditions.

If you are in need of help with credit cards, please call me for a free financial counseling session at 888-882-3058 or you can email me at ag@agthecoach.com.

Source for this post: Leslie McFadden, Bankrate.com

At first glance this Cash-for-Clunkers bill seems like a good idea. It follows the European legislation to increase the number of environmentally friendly and safe vehicles on the road. This year the European program is expected to yield 400,000 to 500,000 new vehicles. I am sure that the Obama Administration had good intentions when they evaluated what this program could do for America. Here is how the program works:

• The government will send up to $4500 to the selling dealer on your behalf, if you:

1. Trade in a car that — this is a key point — has been registered and in use for at least a year, and has a federal combined city/highway fuel-economy rating of 18 or fewer miles per gallon.
2. Buy a new car, priced at $45,000 or less and rated at least 4 mpg better than the old one (gets a $3,500 voucher). If the new one gets at least 10 mpg better, you get the full $4,500.

• Source: USA Today

Sounds great doesn’t it? In my opinion, I do not like this program. This program will create millions of dollars of new car debt for people that can’t afford it. We have been conditioned to think that we need a new car every 4-5 years. The average car payment in America right now is about $440/month. Most families have 2 cars with payments, spending well up to $900/month on car notes alone. That is insane. We have to change our blueprint. In these economic times, we need to get smarter and spend less.

I will be the first to tell you that having a new car is really nice. I love the new smell and the thrill of driving it off the lot and showing it to friends and family. It is a great feeling. That feeling last approximately 2 years until the next model comes out or if there is a heavy maintenance bill. The value of the car may not be anywhere near the original purchase amount. My family and I have changed our blueprint and would rather do something else with that money.

If you have cash in the bank and can benefit from this new program, by all means, take advantage of it. You have probably been driving your clunker for a while now waiting for a deal to come along. Wealthy people drive unpopular cars until they have assets in place to purchase the car they want. Here is a good idea, start a car replacement fund. Start saving the average monthly American car payment and see where you end up in 10 months.

Prior to this recession, Americans actually spent more than they saved. Our savings rate was approximately -0.6% at the end of 2008 and we have since rebounded to save more than we actually spend. The Bureau of Economic Analysis (BEA) is reporting that the personal savings rate has increased to approximately +4.25%. I’m not sold on this number. It doesn’t mean that people aren’t spending, I just think people are unsure about what may happen in the economy. People are worried about their jobs and their families and they are just saving. Maybe they aren’t saving under their mattress like they did during the depression, but they are putting more earned income into the banks. Our savings rate is still relatively low compared to other countries like China. The Chinese have a savings rate of +40%, which allows them to buy our debt because their financial institutions have more money to lend.

This country’s blueprint has been destroyed by borrowing and it has affected our blueprint. We are slaves to the lenders. The Chinese own us, the Saudi government will own us for energy if don’t spending $1.3 billion a day on importing oil. We have to start saving as a way of life. We need to revert back to lay a way and other old fashion plans. We need to decrease instant gratification for better opportunities in the future. What will we teach our children about money and savings. We need to start saving for them right now and train them to save for what they want.

My oldest daughter is being taught how to save money for the things that she wants as opposed to us buying it for her. We are instilling in her the principle of patience and delayed gratification. She will carry this lesson into adulthood, where she will realize that it is more important to save than to spend. The Chinese teach their children to save, shouldn’t we lead the way?

Where, when, and how do we learn how to manage money? Is it taught in the education system? I think we can all agree that the answer to that is, no. In the 1990′s and the early 2000′s more Americans filed for bankruptcy than at any period of time in history. That surge led former President George W. Bush to sign the Bankruptcy Abuse Prevention and Protection Act on April 20, 2005. Fast forward to 2009 and in May there were approximately 6,000 bankruptcy filings a day. So I ask again, where does our financial blueprint come from?

We tend to learn about money from our parents, friends, and the media. In addition to that we have become a country of instant gratification. We as Americans want what we want on the spot. We no longer have to adhere to Grandmom’s words of wisdom, “save for a rainy day.” Can we all agree that the mess that we are in right now is because we didn’t save for a rainy day? We have heard the saying, live on less than you make? I’ve heard it too and I ignored it and have paid the penalty for it, but never again will I expose my family or I too the risk that I did in the past. My blueprint has been changed!

How do we get out of a rut? How do you change your blueprint? Well the bible says in Romans 12:2 that we have to renew our mind. We need to get the junk out and replace it with the correct information. Learning about managing your personal finances is the same exact thing. When I graduated from college, I cleaned up my credit and my wife’s credit too. I was a man possessed, but I didn’t have understanding behind what I was doing. I read all the books, “Automatic Millionaire,” and “Young Fabulous and Broke,” but I didn’t have an understanding behind what I was doing. My blueprint wasn’t changed until I heard of a man named Dave Ramsey. Dave helped me change my entire thinking about money. I took a course called Financial Peace University that has changed the way my family and I look at money. It is going to save us from making a major mistake moving forward. I now understand that when I use a credit card that, “the rich rules over the poor, and the borrower is slave to the lender.” My blueprint has been forever changed. I am now a certified financial counselor helping people change their blueprint forever.

What can you do right now to change your course financially? First things first, it is never to late to start. Even if you have been through bankruptcy already, there is still hope. You need to have faith that everything is going to be ok. The next step is to work out a healthy financial plan that includes a monthly cash flow plan. After that you need to start saving immediately and get away from the dependency on credit cards and equity loans to survive.

Lastly, we all love our parents and friends, but if our goals and dreams are larger than our friends and family, shouldn’t we invest the time to change our blueprint? Isn’t our blueprint more important to the legacy of our future family members than anything else? We are not exempt from living a prosperous lifestyle, but we can do it without debt attached to our name.

Contact me for more information or if you have questions.

Suggested Reading: My Total Money Makeover