by WayPoints Admin-JBM | Apr 23, 2015 | Your Cash Flow Journey
In the six years I’ve been guiding people along their Financial Journey, I’ve heard a dozen interpretations for the definition of the word “Budget”. Not many have been able to nail down the true definition and proper use of a personal budget.
Here are some of the comments I receive when I ask a client if they use a budget: “I keep close tabs on my checkbook.”, “My checkbook balance never hits zero.”, “I know what bills are due.”, “I have all my bills written down.”, “I check my bank statement every month to see how much I spent.”, “My bank breaks down my budget categories for me and lets me know what I’m spending my money on.”
Not one of these methods is the correct approach to proper budgeting. A budget or cash flow plan (preferred term) is a detailed plan that allocates your income into a number of categories that make up your spending profile and allows you to give every dollar you bring home a category name. The categories will fall into several major segments which include: expenses, debt, savings, and giving.
A perfect plan will allocate ALL you income into categories that fall within the four major segments. When properly done, your income will be spread across many different categories within the four segments with nothing left over. This is the first stage to budgeting. The second stage, which is not often taught, and not well understood, involves tracking the individual categories. If you don’t track your expenditures, then there is no way to determine if you are hitting your mark and staying within the category limits you have set. Once you understand how to properly track, you WILL see great success with your cash flow planning.
by WayPoints Admin-JBM | Apr 20, 2015 | Your Cash Flow Journey
I want to take you on a Financial Journey of an average American with their lifecycle of debt. As shocking as it sounds, many High School students are already being inducted into the Hall Of Debt Fame by their parents who are authorizing them to apply for, carry and use credit cards. Most minor age students carry a rotating debt of $1,500. And to make matters worse, these cards carry very high interest rates. Sadly, many students are taught that owning their first credit card is a step toward adulthood and responsibility.
As these students move toward adulthood and higher education, they continue to take on additional debt via their student loans and the credit cards they are now dependent upon. The average undergrad has accumulated $3,200 in credit card debt upon graduation. It is estimated that 12 Million Students owe an average of $27,000 in student loans for their four year degree.
Many of these students will accumulate an additional $17,000 of debt for their graduate studies, and those continuing on for their doctorate work will add another $29,000 to their total debt mix. Medical graduates on average possess $113,000 in student loans and $8,600 in credit card debt. The sad part of it all is that most students have no idea how their debt will negatively impact the rest of their life.
And of course, upon graduation, many of these new workforce professionals will finance on average a $30,738 car for 6 years at 8%. This is a 40% rise over the last 10 years. Most Americans use credit to finance every vehicle they will ever own and most households own two or more cars.
As these students get established in their careers and settle down in relationships, many will buy their first home for an average of $240,000. After 30 years of making payments, they will have paid over $580,000 for their home.
The average credit card balance for an American household is $10,637. Refinancing a mortgage is often a futile attempt to consolidate an overwhelming amount of debt from a variety of sources. On average, about half of all refinances result in a higher overall loan payment.
Over a lifetime, the average American household will pay over $600,000 in interest to service their debt.
It’s time to begin a crusade to stop this devastating life-cycle of debt. WayPoints Financial Services can show you how.
by WayPoints Admin-JBM | Apr 1, 2015 | Your Cash Flow Journey
When I took my first Ocean Cruise, I was mesmerized by the vastness of the sea and the visible horizon that spanned 360 degrees around the ship’s deck. I was taken aback by the fact that my journey, although plotted and pre-planned, was taking me across an immeasurable abyss. My journey was in the hands of the ship’s navigation crew and their high tech GPS equipment that would plot our journey from one WayPoint to the next.
How similar is this to our financial journey? Over a lifetime we can expect, on average, $1,000,000 to pass through our fingers. If we voyage through life without a financial plan, we will get lost in the vast abyss and lose any chance of holding on to even the smallest fraction of that money. It will be lost and never regained. Our journey will be turbulent, hard to navigate and we may never even reach our financial destination.
Your voyage can be free of obstacles, and smooth sailing by deploying a logical plan that will guide you with making sound financial decisions from embarkation to disembarkation.
Cash flow planning is the key to true financial success. With a well defined plan, every dollar you make will be given a title and will be used for its own function. Credit card purchases will be eliminated, emergencies covered, and long term goals secured. Your plan will include crisis intervention, debt elimination and avoidance, short term savings goals, and retirement savings.
Take control of your financial journey and develop a plan today so your tomorrow will be smooth sailing.
by WayPoints Admin-JBM | Mar 30, 2015 | Your Cash Flow Journey
Not every Expense or bill we encounter comes due on a monthly basis. Expenses that are paid out on a Quarterly, Semi-Annual or Annual basis are called Periodics, because they only come due on a periodic basis. Other expenses like home maintenance, an upcoming vacation or a wedding are also considered periodic and should be treated as any other periodic expense.
When you prepare a monthly budget or cash flow plan, you must include any known future periodics in your plan. Those people who don’t include these expenses in their monthly plan find themselves unable to cover the expense without experiencing a hardship or charging up a credit card.
All periodic expenses need to be treated as if they were a monthly expense. When you develop your plan, you may want to look out several years ahead so you can be assured every possible periodic expense is covered.
As you develop your plan and determine what all your periodics are, you will need to take each periodic separately and divide it’s total cost by the number of months that remain before it comes due. This amount will become your monthly set aside for that upcoming expense.
Once you determine what all your monthly periodic set asides are, you will then add them all up and move the total sum to a separate checking account that will be used strictly for the periodic expenses once they come due.
When you include all your future periodics into your monthly plan, your plan becomes stable and consistent with little to no variation making it easier to manage your monthly income.
by WayPoints Admin-JBM | Mar 22, 2015 | Your Cash Flow Journey
We are now deep into College Basketballs March Madness Tournament. Hundreds of thousands of people nationwide sat down prior to the tournament tipoff and spent hours strategizing their bracket winners and losers in hopes of being crowned the King or Queen of guessing the most winners and ultimately the overall champion. The gain…for fun or maybe to win the pool of money that was bet to make it competitive. What if this kind of energy and enthusiasm was put into planning and strategizing how to spend your money? Would you like to ‘WIN’ with money? Do you desire freedom with your finances? Do you want to retire with dignity knowing that your plan was executed and your efforts will be rewarded? With a little effort and know how, you can master your money, give every dollar a name and develop a plan that will ultimately bring you to your financial destination. Many people avoid a plan because they are afraid of being limited and restricted to their money. The truth is, with a well-developed plan, the opposite is true. Freedom is achieved when you take control and decide to tell your money where to go. Be a WINNER…make a plan.
by WayPoints Admin-JBM | Mar 19, 2015 | Your Cash Flow Journey
What’s in your wallet? If it’s credit cards, you are gambling with RISK! Credit is not a substitute for cash. They carry high interest and allow ease of purchase wherever you go. Unlike cash, there is no emotional attachment to swiping your card…at least until the bill arrives in the mail. Credit card users will ultimately pay 10 -20% more for an item than their cash carrying friends. Credit card carriers risk potential default if they find that they cannot afford to pay their bill. Defaulting will cause a series of events to occur that will not be pleasant for the card carrier. Many Credit cards carry various fees.
Some credit cards charge an annual fee just to have the card. If your payment is late, you will be charged a late payment fee. If you go over your spending limit, you will be charged an over-the-limit fee, even if you go over the limit because of another fee that was tacked on to your account. Some credit cards use two-cycle billing, which calculates your interest based on the prior two cycles’ average balance. This means that if you carry a balance, you cannot take advantage of the grace period for your new purchases. In addition, when you make your payments, most credit card companies direct the payment toward the least profitable portion of your debt. For example, if you have a balance transfer that is charged at 4 percent interest and other spending debt is at 19 percent interest, your payments will first pay off your balance transfer, and only after that portion is paid off will you get to pay down the amount charged at 19 percent. All this RISK can be avoided by cutting up your cards and developing a Cash Flow Plan that will allocate funds for those purchases you had previously used cards to buy. Once you are free from the credit card bondage, you will find peace in your financial journey.
