MoneyMinding Monitor

Protecting Yourself When Using Debit or Credit Cards

Many MoneyMinding members and advisors attribute their success, at least in part, to the money-management systems they learn to implement in the MoneyMinding program – including day to day spending and banking activities

When the banks all give different answers about consumer protections for credit or debit cards, you know it’s time to take matters into your own hands and put some systems together so you protect yourself. 

Most people have just one bank account which they use for all their transactions.  You can easily limit your exposure to theft or fraud by having a separate bank account for your debit card, and by having a low-limit credit card for day-to-day spending.  The low-limit credit card and its corresponding bank account work well for on-line purchases as well. 

A debit card account is handy because it simplifies your money tracking to have that account separate from one where automatic deposits and withdrawals take place.  You will keep better track of your balance, and should a thief swap the PIN pads and gain access to your account, it’s only a portion of your money that is at risk, even though the bank usually guarantees against theft. 

Higher-limit credit cards are excellent for major purchases and investments that benefit from the warranties and insurance provided with credit cards

Finally, you can give yourself first-class protection and control of your money by developing a specific strategy for using your cards (i.e. type of purchase or particular retailer such as gas or groceries) and using cash for everything else.   Cash is tangible in a way that cards are not, and there’s nothing like a wad of bills in your pocket or purse to add to your wealthy mindset.

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How I Avoid Burnout in My Home-Based Business

MoneyMinding is an incorporated, international company with several employees and contractors, and with hundreds of clients and “Certified MoneyMinding Advisors” – and it’s still operating from my home office after several years.

Avoiding burnout is an understatement:  it’s easy to blur the boundaries between work and home when the office is right below your bedroom.    I’ve responded to emails at 3 in the morning, and done business deals in my housecoat.  What keeps me going, even when growing the business seems to take more hours in a day than a person can stay awake for, is the following:

• Clear vision of where we’re going and the purpose for the work and involvement in this vision by the family
• An open door policy for family.  I will always take phone calls from them and answer and homework questions or take time for a midday mom-daughter talk
• Asking for help (employees, investors, mentors, peers, friends, and my very supportive husband)
• Healthy living where possible (a good lunch, water jug on my desk, exercise in the evening, involvement with the church)
• And, a mid-day play with the dog always helps too.

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Income planning so you can be at home with your baby

If your goal is to live on one income so the children can have their mom at home, start from there and make the finances work by committing to that goal.

Next you research your existing spending patterns by documenting all the details of your current lifestyle. With baby coming you need to add to this amount the expected costs of raising the child. The exercise of gathering the information is not to judge the spending; it is to make sure you know what amount of monthly income will be required to support your family in this new lifestyle.It will not work simply to say you need to replace the pre-working income of the mother.

I had a multiple 6-figure income to replace when my daughter was young, and it wasn’t until I realized that I was jealous of my nanny that I got committed to finding a way to make the finances work so I could stay home. I first put a plan together to give us some extra cash in the bank that we planned to draw on while I invested in developing a writing and teaching business. This meant preparing detailed financial projections so we could make informed decisions that balanced lifestyle spending with business and investments to enable our desired stay-at-home lifestyle to be funded.

The options available to earn income outside of going to work full-time are endless. It takes a commitment, a very specific monthly financial goal, a documented plan, and a supportive and knowledgeable financial professional to help put all the pieces together.

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Helping Your Grandchildren Make Money

We love finding ways to help people make money, whether they are 7 or 70.  Here are a few innovative ways that grandparents can encourage their grandkids to make money this summer – without chores or gardening!

• Get a game system that works for all ages – a Nintendo Wii comes to mind – and have your grandchildren set it up for you and give you lessons in how to play.

•  Invite over friends and neighbours for a summer barbecue – your grandchildren would learn a lot by being the caterers: planning a simple menu, making a budget, shopping, preparing the food, serving the guests and cleaning up.

•  Enlist their help as you write – or record – your memoirs.  Get a digital recorder and have the kids put the files onto a computer.  Or if they can type, they can transcribe your written pages.  If they are crafty, you could sit down together and put your pictures into a beautiful scrapbook.

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So What’s A “Bad Spending Habit” Anyway?

Many people who spend time and effort teaching others about money want to cure “bad spending habits”.  That’s an intriguing point, because spending is not “good” or “bad” necessarily… even compulsive gamblers, at least in Canada where the government regulates gambling, have the results of their spending benefit many charities.  It’s all in the values we attach to our spending, and when you come right down to it, how intentionally you spend it. So for argument’s sake, let’s say you open your closet door one day to find some shoes, and you realize you have so many that there are some you have never worn – maybe you don’t even remember buying them.  That lack of awareness while you were accumulating all those shoes might be a sign of a spending habit you want to change.  In order to change the habit, it’s not enough to stop what you have been doing – you need to exchange that habit for something with some more value to you.  My tip: Why not take the shoes you haven’t been wearing, and donate them to a charity that outfits low-income women re-entering the workforce?  Your habit now has a great benefit to others, and a tax receipt for you.  If you want, keep that charity in new shoes for as long as you like.   

The bottom line is to learn to spend in line with your core values by starting off using cash (not credit or debit) as your payment vehicle, and keep your overall big picture – your goals – in mind.  The MoneyMinding Makeover teaches a whole module on spending.

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Just “Saving Money” Will Keep You Broke

I actually posted an early version of this just as Tracy was getting fired up about the topic.  Since then we have put more effort into getting this message out, and polished up the message even more.  Please send your comments!

The tax rebate checks under the Bush administration’s economic stimulus plan won’t do any good if people simply put them in the bank. 

Last week, an online article in the Wall Street Journal claimed that we need to save more money – even if the interest on the savings won’t keep up with inflation.  This same article also restated the obvious:  “we live in a culture fueled by spending and credit.” 

This is double talk and misses the whole point of why America is headed for recession.  Wealth is created with credit.  The government knows it, the banks know it, corporations know it and the wealthy know it.  With credit, there is access to money to spend which increases corporate earnings, which increases tax revenue, both of which provide jobs and, therefore more income for workers to spend which continues this profit cycle. 

When you remove access to credit, spending decreases which means earnings drop, which means jobs disappear, which means people stop spending and the problem gets worse and worse.  This downward spiral is the recession the government is trying to thwart with the stimulus checks. 
If you, and everyone else, takes their $600 average family rebate check and sticks it in the bank then no one is buying the products and services you, or your company, sells to earn the money to pay you your salary.  When you lose your monthly income and can’t pay your bills, that is when you end up losing your home and your security. 
If you and everyone else stop spending then there won’t be much left of Corporate America.  People in other cultures have learned to do what North Americans seem to be ‘too afraid’ to do; that is, find ways to earn a living besides going to work for someone to get a paycheck.  Just look at the growth of micro-lending companies in India as people start businesses on even less than what the average American is getting in his or her “stimulus check”. 
If we don’t wake up and learn how to earn an income that pays for the freedoms and luxuries that we’ve bought on credit, then being broke will be the least of our worries – it will be our freedoms we’re losing as emerging, strong foreign companies and banks who already own more than half the U.S. debt move in to take over struggling American ones. 
Saving money is what people do when they are afraid of losing – not when they expect to win.  It comes from the scarcity mentality that keeps people from stepping out and finding ways to earn the income they need to live, the way they want to live.   
North Americans are able to start and run a business of just about any kind using credit.  We can even use that money to invest in a variety of wealth building ventures that others have started – both of which create more income which enables more spending. 
If you had planned to invest your stimulus check in a growth mutual fund or stock, your investment returns would give you about 7% as suggested in the Wall Street Journal article.  On a $600 stimulus check that works out to only $3.50 a month.  However, without spending, those returns would drop because the companies wouldn’t be earning the returns they had in a strong and growing economy. 
For $600, you could buy a bolt of cloth and make dish towels and your profit would be much more than $3.50 a month.  Make cookies, make anything and sell it! Alternately, if you don’t know how to sell what you’d make, then take a course to develop your financial and entrepreneurial skills.   
Please spend the money from your stimulus check, and while you’re doing it, make sure you start learning how you can earn even more money on an ongoing basis. 
And, be sure to pass on this important message!

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When a Property Investment Cash Flow Dries Up

What happens when you have an investment that has been bringing in income, but then stops?  Like a real estate property that the tenant does not renew and you are having trouble finding another tenant.  And can’t, or don’t want to, sell the property. Or after buying a real estate property as an investment, but can’t find a tenant?

Answer:  It’s always difficult when our investment dreams don’t go exactly as planned, but as in any undertaking you are going to have some losses as well as some wins.  The issue is how do you take your “lemon” and make lemonade?

Another option is to lessen your exposure to short-term loss by bringing in a partner. This isn’t as impossible as it sounds - with the market downturn, there are people looking for opportunities to buy in at a good price.  Their “bargain” might be just the financial inflow you need to take that money and look for a brighter option somewhere else. 

With your current investment, and with all future investments, go into it with an “exit plan” in mind. There’s more information on this in MoneyMinding Step 10 on Building Wealth: The Foundation. Basically, it’s up to you to decide in advance how much money you are willing to lose - and when you reach that point, follow through with your decision, tracking your loss and using it against your gains in other areas.
 

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How to make a Stimulus Check pay, month after month

Right now, as people in the United States receive their refunds from their tax returns, they are also getting a one-time “gift” from the government, which is meant to give the flagging US economy a boost.  It’s called a “stimulus check”, and for average income Americans, the amount is $600 each and $300 for dependent children. A PR Lead came in from a journalist who wanted some insight whether these stimulus checks would have their desired effects.  What would people spend the money on?  Better yet, what should people spend the money on??

The stimulus checks are just large enough that the average American would notice a difference to the bottom line when received.  Not all of it is going to sink into “general household revenue”.  Nor should it.  This could be an opportunity for people to take an action that would continue to pay them in the long run.   Here are some great ways to make your Stimulus Check pay month after month:

• Use it as seed money for a business idea – whether you use it to buy some software, get some business planning advice, license a product for resale, or purchase the raw materials for a product you make, thriving businesses have been started on a lot less.
• Use it to advance your education – particularly in wealth building books and study programs.
• Join a networking organization or club where you can meet and interact with others who are supportive of your goals.  Or,
• Buy something – anything – that you wouldn’t normally buy, and that will give you a lasting and significant ‘thing’ that will inspire you to earn that additional money on an regular basis – use it as your personal motivation to do more – and more often.

Putting it into savings and forgetting about will be the least efficient use of the money – bank accounts don’t even keep up with inflation, and if you want to accumulate a pile of money to live on later, $600 isn’t going to make much difference when ”experts” say that you need around $1.5 million saved up to “retire” in comfort.  Planning for ongoing income is rarely taught, and it’s the very thing that Americans need to stimulate the economy on an ongoing basis.   

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