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ICFE eNEWS #17-02 - January 12th 2017

Ask Mr G's "You Are Here"

By Jim Garnett, a/k/a Ask Mr.G, a member of the ICFE's Board of Educational Advisors

You Are HereFor their vacation, the Johnsons decided to take a cross-country trip from Alabama to Wyoming. Everything was going fine until the afternoon of the second day when they realized they were absolutely, totally lost. They pulled their old maps out of their glove compartment and tried to get their bearings, but soon realized their maps were of little use because they did not know their present location.

A few minutes later, they pulled into an Interstate rest area and saw a large map hanging on the inside display. On that map was a big red arrow reading "YOU ARE HERE." It pinpointed their present location, and that's exactly what they needed to know. Now they could chart a course to their destination.

Charting a destination always begins by knowing our present location. Unless we know where we are, there is no way to know how to get to where we want to go.

I counseled a family that was in a similar situation as the Johnson's. This family was discouraged because they could never make a budget work. They told me how, in their last attempt, they had designated $100 a month for savings, $100 a month to pay down debt, and $100 a month to start a retirement account. All these goals were honorable goals, but from the very beginning, their plan was destined to fail.

Why? Because, in similar fashion, they tried to reach a destination without first knowing their present financial status. If they would have started by determining their "cash flow" (the difference between their expenses and their income), they would have known they were already spending 110% of their monies every month.

As it was, there was no way that an extra $300 per month was available to fund their projects. So, after several months of trying to ram a square peg into a round hole, the family finally gave up in despair, thinking they were "just not smart enough" to set up a budget.

I told them that their problem was not an intellectual one, only one of flawed planning. They failed to start their plan from the proper starting point - that of knowing "where they were" financially. Trying to reach a destination without first knowing where we are is impossible. We must know where we are in order to get where we want to go.

We had them fill out a simple budget worksheet listing all their monthly expenses, then we compared that to their monthly income. Now they could see where their money was going each month, and how they had been spending more than they were making. They needed this information to decide where to make spending cuts. Eventually, they adjusted their spending to the point that the $300 they needed was available. As long as they stayed within their spending boundaries, their financial plan would work fine.

This time of year many families implement some plan to better control their finances. If they do not begin that plan by knowing how much they spend in relation to how much they make, their plan will fail before it gets off the ground. They will soon get discouraged and quit... again. The map to our financial goals must have a "YOU ARE HERE" arrow to pinpoint our present financial situation. From that starting point we can decide what changes we must make in order to accomplish our goals.

If you are in the process of setting up a plan to gain more control over your finances, remember to begin your plan by knowing where you are before trying to chart a course to where you want to go.

To help you get started, you are welcome, at no charge, to download the budget sheet I have used for years. Click here, and on the page entitled "Monthly Budget Sheet," click the download tab. If that sheet is not to your satisfaction, Google "budget sheet," and you will be given numerous options.

Ask Mr. G
Jim Garnett, The Debt Doctor
AskMrG Consulting, LLC
2216 SW 35th Street
Ankeny, IA 50023

Paul S Richard PhotoICFE eNEWS is available FREE upon request by visiting our Web site and filling out the contact form, and selecting "Yes" for "Add to Mailing List. Please pass this eNEWS on to your peers and interested others and invite them to subscribe for free. Also, visit the ICFE's new Web site: StudentDebtHelp.org

Sent by:

Paul S. Richard
President - Executive Director
Institute of Consumer Financial Education (ICFE)

About the ICFE:

The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation and founder of the College for Financial Planning in Denver, CO.) The ICFE is dedicated to helping consumers of all ages to improve their spending practices, increase savings and use credit more wisely.

The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its financial continuing education courses programs and resources. In addition to eight Certification courses covering identity theft, credit files, credit repair and credit scoring, among others, it also publishes the Do-It-Yourself Credit File correction Guide, which is updated annually. The ICFE has distributed over one million Credit/Debit Card Warning Labels and Credit/Debit Card Sleeves world wide.

The ICFE is a partner with the national Jump$tart Coalition for Financial Literacy and the California Jump$tart chapter. The ICFE staff is also active with San Diego Saves and Military Saves, both offshoots of America Saves.

The ICFE is also an on-line help for consumers who spend too much. ICFE's spending help was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from the ICFE's Money Instruction Book, our course in personal finance.

The ICFE helps consumers and students with mending spending, learning about the proper use of credit, budget and expense guidelines, how to set up and implement a spending-plan and also how to access financial education courses and how to teach children about money. Other ICFE services include: Ask Mr. G library, a free eNews service, and an online resource center for students, parents and educators, plus financial education learning tools in the ICFE Book Store.

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