THAT MESSY WALLET, DESK OR HANDBAG IS MORE THAN JUST AN ANNOYANCE (It May Be Costing You Big Time)

Can you relate?

I remember a very hectic and dark time in my life when I was facing bankruptcy, paying child support up the wazoo and getting by with actual financial help from my parents each month.  Back then I needed every dollar I could lay my hands on.  I was so deep in debt and stressed out though, that I would take mail that came in, assume it was a bill and then just toss it in a drawer or on yet another pile of paper.  In this particular case, the mail that I thought was a bill was actually a check for $300!  Had I opened it then and there, I would’ve known.  And boy, could I have used that $300 then.  I didn’t find out until about 8 months later when I was going through my papers and decluttering.  When I opened it up, my heart sank.  I had a limited time to cash it or I forfeited my claim in this particular case.  Needless to say, I was pissed and vowed never again to let clutter cost me a dime!

We’ve all paid the price for clutter at one time or another.  A junk drawer, a cluttered room, a disorganized desk at work.  Whatever your particular brand of poison, you know what it is.  But what you may not know is that it’s costing you in ways you might not suspect.  Clutter is the enemy of clear thought, productivity and financial freedom.  Having clawed my way out of the clutter hole and experienced its terrible costs, I am sharing with you just a few ways I’ve known clutter to cost me or others I have coached in various ways.  Listen up, it might save you some cash and some grief.

Misplaced Funds.  In addition to the personal example I related above, I can’t tell you how many times I have decluttered a home with a client and found at least a hundred dollars in the form of change, cash dollars and uncashed checks.  One way to fix this is to have a landing pad for your mail.  Always put it in that designated spot and sort through it as soon as it comes in or as soon thereafter as you can schedule the time.  Have a trash can and shredder nearby to dispose of any excess and unneeded paper.  That way you can stay on top of your mail and it doesn’t get sucked into a black hole that costs you.

Wasted Time.  How many times have you wasted time looking for something?  Each and every day, people lose time looking for things.  And sometimes those things are right on their heads, on their feet or in their pockets.  I recently had a friend who posted that she spent something like 20 minutes looking for her socks only to find they were, you guessed it, on her feet!  My clients constantly tell me they waste 20 minutes or an hour looking for stuff every day.  You can easily waste 15 minutes or more each day looking for things.  This can make you late for important events or take away time from other more pressing things you should be doing.  Eliminate this time waste by setting up zones for items and always putting them back there when you’re done.  One thing I do is I have a tray on my dresser and every night I empty my pockets and put my change, wallet, gum, business cards and keys in that tray.  The next time I need to leave the house, I know where to go to get that stuff.  I’m never wasting time looking for those basic things.  Try it, you will like it.

Peace of Mind.  Why do we go away on vacation?  Isn’t it to get away from it all?  And isn’t some of the things we’re getting away from is a messy environment?  When you put that key card in your hotel room door and open it, you expect to be greeted by a nicely made bed, a well-arranged room and a neatly arranged bathroom.  Even the toilet paper is finished with a nice design!  There is a reason for this.  An orderly environment relaxes the mind.  In the absence of clutter there is peace and rejuvenation.  When you come home and open your door, are you greeted with peace or disorder?  If it’s the latter, you are robbing yourself of peace of mind.  Don’t you get irritated when you have to step over junk on the floor or see dirty dishes in the sink?  Do yourself a favor and get started decluttering your home.  Turning it into an oasis of peace will make a huge impact on your peace of mind.

One tip to get started is to pick a spot in your target room and start decluttering, working in a clockwise fashion, 15 minutes at a time, or more if you can spare.  Keep working in a clockwise direction until you come back to where you started.  That way you can see the progress you make and use those little victories to spur you on.  Get bins to sort things into Keep, Sell, Donate, Trash and Shred.  When you are done move on to the next room and repeat the process.  By dedicating just a few minutes each day to decluttering you will be surprised at how much you can accomplish in a relatively short time.

Lost Opportunity.  There are people who say successful people are just “lucky.”  They are lucky, in a sense, but they make their own “luck.”  You see, luck is simply when preparation meets opportunity.  If you are disorganized, disheveled and lacking clear focus, you cannot possibly be prepared when opportunity comes knocking.  In fact, opportunity might be staring you in the face right now, but you can’t even see it for all the clutter you have accumulated in your life in one form or another.  Can you think of any opportunities you may have missed to improve your life because you simply were not organized enough and ready to take advantage of them?  If so, shake off the clutter and get your life in order.

Relationships.  I have seen actual relationships strained to the breaking point because one spouse or the other refused to let go of tons of unnecessary junk.  I’m talking magazines, books, collectibles, rusty old tools that no longer serve a purpose and all manner of other things.  And when you ask them when was the last time they used it, they couldn’t tell you.  Or when you ask them if it’s such a valuable keepsake, why is it buried at the bottom of all this junk, they look at you like a deer in headlights.  And all the while the other mate is threatening to end the marriage if they can’t get it together.  This is serious.  Don’t be the unfortunate soul who is willing to sacrifice a loved one for material things that can burn up tomorrow and have no lasting value.  Learn to let go and you will open up your life and your home to peace and rest.

These are just a few ways clutter can cost you.  If you saw yourself in any of the above examples, you are not alone.  But the good news is you can fix it since you caused the mess in the first place.  The Max Money Mind is dedicated to providing timely advice on how to organize your life and finances so that you may gain financial freedom and peace of mind.

Join our email list and you will immediately receive your copy of our free eBook “The Max Money Guide To Building A Bulletproof Budget.”  It will show you how to quickly build a budget that actually works, even if one hasn’t worked for you in the past.  So what are you waiting for?  It’s freeClick that opt-in button and join our growing community dedicated to Maxing Out Their Money!

5 WAYS TO JUMPSTART AN EMERGENCY FUND (Without Getting A Second Job Or Working Overtime)

I remember back to the days when I was living hand to mouth and I didn’t know how I was going to make the rent or buy food, much less actually save anything.  When the financial screws are being put to you and you are in survival mode, the last thing on your mind is saving.  You’re too busy trying to eat.  So I know the feeling.  But as bad as things may seem, they are probably not actually that bad.  There are always opportunities to stash away cash, especially when you need to build a $1,000 emergency fund.  An emergency fund can save you from most things that pop up.  And trust me, Murphy seems to stop by more often when you don’t have an emergency fund!  It’s almost like he can smell your vulnerability.  So here are 5 ways to get you going on your savings stash that won’t be so painful in the moment and will pay off big time down the road.

  1. Sell, sell, sell! Americans have more excess junk per capita than anyone else in the world.  We are a society of consumers.  And we consume to the point that we don’t even have enough room to store all the stuff we go into debt buying.  Just look at the booming self-storage industry and you can tell.  So you can turn your past shopping sprees into a cash jackpot.  Go through your home and find any duplicates of things you don’t need or any items you haven’t laid hands on in at least a year.  There’s a high probability you don’t need that stuff.  You can have a garage sale and advertise it on Facebook.  There are also a plethora of sites out there that make it easy to sell your junk to someone else who will think it’s a treasure.  Try eBay, Craigslist or letgo, to name a few.  Take the cash you make and use it to grow your emergency fund.
  2. Use your tax refund. This is a no-brainer, as they say.  First of all, if you’re living paycheck to paycheck with no cushion in savings and you want to blow your tax refund, you really need to examine your priorities.  Another inclination may be to use it to pay off a bill.  That’s not in itself a bad thing, but if it leaves you broke afterward, with no cushion, you’re back in the same situation you were before.  Take your refund and use it instead to build your emergency fund and gain some stability.
  3. Enroll in automatic savings. Setting up a simple monthly transfer from your checking account to your savings account at your bank is one way to do this.  Another way to do this is to split the accounts your paycheck is direct-deposited into at work.  All you need to do is set this up with your payroll department.  They usually give you this option when you first join the company.  Putting aside as little as $25 each month will yield $300 in your savings account in a year.  That may not seem like a lot, but when you combine that sum with the savings you get from the other methods suggested here you can find yourself with a tidy sum a year from now.  One thing is sure.  A year from now you will be a year older.  Question is, will you still be as broke as you are today?
  4. Adjust your withholding. So many people get excited about their tax refund.  Wealthy people don’t.  That’s why they’re wealthy.  They don’t get ecstatic about loaning the government their money interest-free for a year.  So if you are in the habit of getting a fat refund every year, make this your last year.  Take your refund, divide it by the number of payroll periods you have in a year and play with your deductions until you regain that amount in your take home each check.  Then DON’T SPEND IT ALL!  Put it all towards your emergency fund.  The average American can gain several hundred dollars a month by using this one simple trick to boost their take home.  For more on this, see my other post titled “Why You Shouldn’t Get All Happy About A Refund.”
  5. Reduce or stop your 401k contributions. When people start a job, they often take advantage of matching contributions that may be offered by their employer.  They set it and then forget it.  When you are in survival mode and need to build your emergency fund, don’t feel like reducing or even stopping 401k contributions is not an option.  At this point, becoming financially solvent is your priority.  You will be in a much better position to contribute to retirement once you are debt-free and have a nice emergency fund.  So, march down to payroll and reduce or stop completely your 401k contributions until you become more financially stable.  You will more than make up for those temporarily lost contribution dollars later on.

By using these 5 simple steps you can get an immediate infusion of cash that can be used to quickly get to that first $1,000 in your emergency fund.  When you have it, you will breathe a lot easier and walk with a little more pep in your step.  Then you can put things back to the way they were if you are so inclined.  I wouldn’t if I still had debts to pay off though.  You can also tell Murphy to move out of your spare bedroom and stop making your life miserable!

To get more helpful tips and hacks to help you Max Out Your Money and gain financial freedom, opt in to our email list and get the free bonus eBook “The Max Guide To Building A Bulletproof Budget.”  It will show you how to build a budget that works even if you tried before and didn’t get results.  Thanks for reading!

WHY YOU SHOULDN’T GET ALL HAPPY ABOUT YOUR BIG FAT REFUND (Or, Congratulations! You Just Loaned Uncle Sam Your Money Interest-Free For A Year!)

So you got a big refund this year, huh?  Whatcha gonna do with it?  Pay a bill?  Save it?  Buy some shiny new toy?  Newsflash!  Whatever it is you plan on doing with it, it doesn’t matter.  Because you’ve already lost a lot of dough in the game of personal finance.    Sorry if I busted some bubbles, but I’m not here to make you feel good.  I’m here to tell the hard truth so you can max out your money.  Let me tell you what I mean.

I remember back to when I was much younger, about 19 years old.  I was working in an investment bank at the time.  As you can imagine, there were a lot of wealthy VP’s and such there.  I used to rub shoulders with them every day in the course of my job function.  Anyway, I’ll never forget what one guy told me one day.  He told me he had to pay the government about $4,000 when he filed his taxes.  I was like “What???  Are you crazy?  Why didn’t you make sure you got a refund?”  It was at that point that he literally sat me down and educated me in the ways of the wealthy and how they view paying taxes.  What I’m about to share with you stems from the lessons I learned that day.

To start, according to IRS.gov the average refund was $3,120 in 2016.  That means the average taxpayer over-payed the government by $260 each month!

What could you do with an extra $260 in your pocket each month?  Get that debt monkey off your back quicker?  Save for a vacation or a used car?  Or maybe you could build a wicked emergency fund so you don’t have to resort to Visa or Mastercard every time some unexpected expense pops up.

Let me show you another thing you could do with it.

If you just took that $3,120, never added another dime, and put it into a mutual fund returning a decent 8% annually, in 30 years you would have $31,395.38.  In 40 years guess how much you would have.  $67,780.27!  Mind you, that’s without adding one more dime to it.

But hold on Wilbur, cuz here’s where it really gets insane.  Let’s say you’re 35 years old.  If you were to take that same $260 each month and invest it in a mutual fund returning, say, 8% annually for 30 years do you know how much money you would have at the age of 65? $381, 719.11.  And if you were to get on the investing bandwagon earlier at the age of 25 and did that for 40 years, by the time you reached age 65 you would have $872,916.87!  Do you think that kind of dough would have a major impact on your retirement?  Darn skippy!

You see, based on a GoBankingRates.com survey from September of 2016, more than half of all Americans don’t have $1,000 saved to deal with an emergency!  And according to a CNBC article from the same time period, the median household retirement savings was just $5,000!  So if you were to make this simple change of putting an end to lending your money interest free to the government, you could beat both those statistics in less than two years.

So now that you know the cost of getting a tax refund from the government, how do you fix it?  March right over to your payroll or human resources department, get a fresh W-4, and fill it out.  First you need to know your average annual refund amount.  Divide that by the number of paychecks you receive.  That will be the golden number you’re trying to get back in your hands each pay period.  What you’re looking to do is tweak your witholding allowances until you get to a point where the amount gained back equals your golden number.

So in the average refund case of $3120 we used above, if you got paid every other week, you would be looking to adjust your witholding until your take home rose $120.  If you got paid every week, you’d shoot for an extra $60 in your take home.  Don’t worry if you have to try it a few times.  There’s no limit to the number of times you can submit a new W-4.

And once you get that money in hand you could start investing it in a mutual fund or index fund.  Set the transfer on autopilot every check so you don’t have to worry about it.  Then just lean back, relax and let time and compound interest work it’s magic.

So if you take away only one thing from this lesson, it’s that getting a refund is bad!  If you are getting a fat refund every year, you need to fix that problem.  Be smart, don’t lend Uncle Sam your money and get nothing in return.  Now go forth and max out your money!

P. S.  If you enjoyed this little nugget of financial wisdom, there’s more gold where that came from. Just subscribe to The Max Money Mind email list and you will get regular deposits of financial wisdom in your inbox.

DON’T BELIEVE THE HYPE ABOUT WHOLE LIFE OR TERM INSURANCE

There are two diametrically opposed schools of thought out there.  One believes Whole Life is the ultimate protection and bullet-proof investment tool.  The other thinks Whole Life is a scam and Term Life is the only way to go.  Well I happen to have an opinion on that (as I often do!) and since I spent some time working for both MetLife and New York Life as a registered investment rep, I will drop some knowledge on the topic, minus the hype.

First of all, let’s talk about the 3 main characteristics that identify both:

Period of Coverage:  Whole, or Permanent, life covers you for your WHOLE LIFE as long as you keep paying the premiums.  Term life only covers you for the term (or, time period) stated in the policy.  That can range from 5 to 30 years typically.  Some policies are renewable, but at a higher rate than initially paid.  Annual renewable term will automatically renew each year premiums are paid, regardless of health but rates will increase each year up to a maximum age limit, while the face value of the policy will remain the same.  That can get pretty expensive.  At a particular age limit insurance company policies or state laws will prevent you from further renewals.

Cost of Premiums:  Typically, a whole life premium will be higher than a term policy for the same face value, especially in the initial stages, but you will always pay the same amount for as long as you live.  Term policies are much lower than whole life because they only cover you for a limited time, so the insurance company has a much lower risk.  The flip side is, the older you get, the higher term premiums will climb until they become prohibitive.

Cash Value:  A portion of your whole life policy goes into an investment instrument and increases in cash value over time.  You may use this cash in different ways, including borrowing against it or using it to pay the premium for your policy, in effect, causing it to become self-sustaining.  In the vast majority of cases, term policies have no cash growth.

Now, please allow me to debunk the hype about both.  The term lovers will tell you that whole life is a rip-off because the premiums are very high and you can get the same amount of coverage with term for a fraction of the cost and you can invest the rest in the market.  This is true.  But what they conveniently leave out is the risk involved in investing on your own and the potential tax liabilities of said investments.

They also don’t tell you that many people drain their investments in the run-up to death with the medical expenses that come along with a chronic and terminal illness.  So what good are those investments going to do you if you spend them all on your medical bills and leave your family destitute and without the means to even put you in the ground?  The death benefit from life insurance is untaxable and unattachable.  That means neither the government nor your creditors has any claim on it.

They also ignore the fact that at some point your term will expire and if it does and is not renewable without proof of health, you can find yourself up that brown creek without a paddle if you are in ill health, such as having diabetes, cancer or heart disease.  The company can at that point deem you “an uninsurable risk” and deny you a new policy.  And even if they do insure you, it will be at a rate so high your eyes will bleed!  You never have to worry about that with whole life.  As long as you pay the premium, you’re good for as long as you live.

The term lovers will also tell you that the rate of return in a whole life policy on the investment portion is weak.  I agree, it is relatively paltry.  But it is there nonetheless and it is safe.  I’ll give you an example.  One of my clients back in the day who had a whole life policy needed to borrow cash to expand his business.  This was during the Great Recession when banks were not loaning any money to small businesses like his.  He turned to the $40,000 in cash value of his whole life policy.  It was there when he needed it and it was his to take without filling out a bunch of income verification  and credit check paperwork.

One more thing about my client and others like him.  While the investment accounts of others around them were dropping like stones, his was safe inside his policy, due to the very nature of the laws governing insurance policies.  So he wasn’t ripping his shirt apart and throwing ashes into the air like the other people who were freaking out about the slashed value of their accounts.

While all that is true, let me make one thing very clear.  Insurance is just that, insurance.  It should not be viewed as an investment.  Investments are investments.  Insurance is insurance.  One is intended to grow your money.  The other is intended to protect your life.  Don’t mix the two purposes up and don’t let someone try to convince you otherwise.  Some unscrupulous insurance agents will try to sell you on the idea of overpaying on whole life for the investment advantages.  There are no advantages when you abuse whole life this way.  So give the boot to anyone who tries to sell you that bag of goods.

Term serves a good purpose.  It provides cheap coverage in your younger years when you typically have greater responsibilities such as a mortgage or a growing family to provide for financially should you die.  You can lessen the amount you carry as you grow older to reflect your lessening financial liabilities.

And some term policies are convertible.  Meaning, you can convert a portion to whole life with or without proof of health, depending on your individual terms within the policy.  Usually this has to be done within a certain time frame or you forfeit that right.

What I recommend is that you use a wise mix of both.  Carry a respectable amount of whole life for what you feel you will need through to your later years.  In addition, carry term policies in the amounts you feel you will need for the more immediate future and over the length of the term.

When you use them both as they are intended, they will serve you well.  So don’t get caught up in the hype.  Be an educated consumer and make your own wise decisions on what kind and how much life insurance you will need.  Now that’s Maxing Out your money!  For more helpful tips like these, subscribe to The Max Money Mind email list and get regular nuggets of financial wisdom deposited directly to your inbox.  Good health to you!

THE 3 BIG REASONS WHY STICKING TO A BUDGET DOESN’T WORK FOR MOST PEOPLE (And How You Can Fix Them!)

Maybe you’ve been here before.  You’re sick and tired of not being broke so, in disgust, you vow to put yourself on a budget and stick to it.  Then you sit down and scribble out a budget that you think will fix YOU and then you…  put it away somewhere and never look at it again.  Or, you try to stick to it, but after a few days you get frustrated trying to keep track of everything, so you give up.  Or, maybe you’re this person.  You see that shiny thing that you just GOTTA have!  It’s on sale.  It NEVER goes on sale.  Screw it, the budget can kick rocks.  It’s time to shop!

Sound at all familiar?  If it does, you’re not alone.  Millions of your fellow Americans suffer the same challenge.  It’s a vicious cycle and this is how it generally goes:

  1. Frustration (I just got paid, where did all my money go?)
  2. Anger (Enough of this crap, I need to do something to fix this!)
  3. Resolve (I’m getting on a budget and this time I’m sticking to it!)
  4. Joy (Yay! It’s a new day!)
  5. Frustration (This is harder than I thought)
  6. Justification (Oh well. Most of the people I know are broke too, so I don’t feel so bad)
  7. Surrender (This is never going to work, I give up)
  8. Despair (I need to fix this but I just don’t see how I ever will)

Until the next time, when a major pain trigger hits you, then it starts all over again.  Or maybe not, because you’ve failed so many times in the past that you’ve just stopped trying.  Is any of that striking a chord with you?  Again, you’re not alone.  Here’s the thing:  There are reasons why budgets don’t work for most people BUT there are also tools and systems you can use to address those reasons so that they don’t remain in the way of you achieving financial stability.  And the good news is, I’m about to break down the reasons for failing and the solutions.

It will help to understand the situation if we use an example.  Let’s take dieting.  According to the Boston Medical Center, 45 million Americans go on a diet each year and spend $33 BILLION on weight loss products.  Yet obesity levels continue to rise!  It’s not for lack of information.  There are literally THOUSANDS of diet options out there and an infinite number of books, videos, websites and companies ready to help.  So why do so many people fail?

Here’s the first reason:  They lost their WHY along the way.  What do I mean by “why?”  The thing that motivates us, that keeps us going when the pain gets to be unbearable is your why.  The marathoner whose legs are about to give out and lungs are about to burst keeps pressing forward.  Why?  Maybe it’s to prove something.  Maybe it’s to conquer something.  Maybe it’s to win some prize.  Whatever it is, the why is strong enough to keep them moving.  It’s when the runner asks “Why am I even doing this?” that they give up when the going gets tough.

Until you identify your particular WHY, you will never be motivated enough to stick to the path when the going gets tough.  When it comes to budgeting you need to identify your why.  Not just “I want a new car,” but the deeper why.  Is it to change the trajectory of your life?  Provide a better environment for your kids?  Feel better about yourself?  Leave a legacy behind?  Get rid of the soul-sucking pain that comes from being in debt?  Whatever the reason, you need to identify it and burn it into your mind like a red-hot branding iron on the skin.  When it’s that strong, you won’t lose it and it will drive you forward through the toughest of times.  The last time you tried to budget, did you sit down and really identify your burning why?

The second reason people fail is they don’t make themselves accountable.  Here’s what I mean.  If you make a decision within yourself to do something and keep it to yourself, when you don’t follow through on it who knows?  Only you.  So there’s no big loss of face.  Big deal, right?  It’s not like you’re going to grab yourself and hold you up to public embarrassment.  It’s not like you’re going to fine yourself.  On the other hand, accountability means being held answerable for accomplishing something.  It’s been demonstrated that people who use accountability partners are more likely to accomplish a given goal than someone who doesn’t.

I ask again.  The last time you resolved to go on a budget, did you call a friend and involve them in the process, letting them know what your goals were and asking them to hold you accountable for not reaching them and then attaching a cost to it if you didn’t?  Next time, try being held accountable and attach a cost to it.  It will change your mindset and your determination to succeed.

The third reason people fail to carry through successfully with a budget is it’s too restrictive.  The word itself hints at scarcity.  You think, “I don’t have enough to go around.”  So you start cutting this out and cutting that out until you’re on the budgetary equivalent of grapefruit and water.  Budgets shouldn’t be about what you can’t do.  Budgets should focus on what you can do and have.

In working with clients over the years, whenever I ask them to work out a budget there is often something key missing in it.  Them.  For some reason they feel there is no room to care for them in that budget.  They remove entertainment.  They remove manicures, facials and the salon.  They remove planning for vacations or other things that bring them joy.  These are the “cakes, bread and pizza” that keep you going so that you don’t have a constant cloud of deprivation hanging over you.

So when you budget, include entertainment.  Include clothing.  Include all the things that you do to bring yourself joy, in moderation of course, because going without those things will suck all the motivation out of you to stick to this thing that is now robbing you of all your happiness.

In the Max Money Mind, we show you how to overcome those 3 obstacles so that you can not only budget, but thrive in the process.  We show you how to identify your burning WHY.  We help you set up your own accountability system, one that works, so you can stay on track through the tough times.  And we show you how to set up a budget that delivers abundance and not poverty.  We give you so many tools to help you succeed that you have no other choice but to do it.

Yes, we give you the tools to keep you from going to steps 5-8 in the cycle of failure.  We show you how to be able to buy more, not less.  How to save more, not less.  How to live a life of abundance, not scarcity.  And we show you how to put protections in place for those days when things don’t go exactly according to plan.  If you’re ready to start living The Max Money Mind life, sign up for our free tips to be delivered directly to your inbox so you can learn how to gain The Max Money Mind and have the kind of financial success that others will be envying for the rest of your life.  So, what are you waiting for?  Go ahead.  Max Out and prosper!