Home Mortgage Leverage SUCKS!

By: Roshawn Watson

An article was circulated last week where the author lamented losing the leverage benefit of having a home mortgage; he paid off his mortgage in less than 2 years and regrets his decision. He wishes he would have invested the money instead, so it would have doubled like his other investments. Now, from my few interactions with the author, he really seems like an insightful guy who has done some wonderful things in his former career and currently as a money coach. I’m also a subscriber and a personal fan of the blog that it was published on, so I have some inherit bias. Nonetheless, my reason for writing this post is simply to provide you with a counter-perspective: home mortgage leverage sucks!

I Would Have Paid Off My Mortgage Rather Than Invest More Because Opportunity Costs Are Part of The Costs Of Doing Business

Barb Friedberg made a particularly insightful comment on 4 Things To Stop Doing With Your Finances. She wrote that it’s important to “ignore sunk costs,” as they are “part of doing business.” With that framework coupled with one of the most important lessons in Rich Dad, Poor Dad, which is “Mind Your Own Business,” there is a powerful and relevant takeaway: since your household finances are your business, there will likely be some opportunity costs necessary in order to ensure sustainability. Thus, these lost opportunities are indeed expected in most healthy businesses, including your household. This is the very same reason it is pointless to bemoan maintaining an adequate emergency fund (EF). Yes, it is true, keeping an EF means you forgo the opportunity to put those dollars to work (i.e. in the market), but the EF also provides you a better foundation to withstand the storm.

I Would Have Paid Off My Mortgage Rather Than Invest More Because I Consider Risks When I Compare Returns

If you are going to use a hypothetical scenario as a basis to justify keeping a mortgage so that you can invest more aggressively, then why wouldn’t you incorporate the risks associated with indebtedness into the model? It’s only fair because a paid off home is inherently less risky than a mortgaged home. Without a mortgage, there’s less concern for foreclosure, fewer issues with cash flow, significantly more money to invest, etc. Thus, financially speaking, risk matters, so it should be mathematically accounted for (i.e., a risk-adjusted rate of return). That’s certainly how insurance companies do business, and they don’t lose money. It’s a numbers game, while one policy may be “costly,” in aggregate, there are thousands more policies that more than make up for the few times the insurance company pays in excess of the premiums they take in for any given policy. Additionally, this is why companies have risk management divisions (for a great movie example of how important Risk Management is to a business, watch the new movie Margin Call). Properly accounting for risks means that one would have to downwardly adjust the rate of return if he or she chose to keep a mortgage so that he could invest more. This isn’t pessimism as much as it is due diligence. Eighty percent of families WILL have a major financial expenditure within the next 10 years. Now, imagine the risks incurred by keeping that mortgage for 30 years. A plan that only works if everything works out well, is not much of a plan anyway.

I Would Have Paid Off My Mortgage Rather Than Invest More Aggressively Because I Don’t Know the Future

There’s an old saying that if you want to be rich, figure out where everyone is trying to go, and get there first.

Depending on when you run the numbers, the market could have easily been significantly up or down. This lack of reproducibility is perhaps the biggest limitation of using a single case study to substantiate a point, such as using mortgage leverage to invest more aggressively. There’s a preponderance of evidence suggesting decreasing your debt-to-income ratio will improve your overall financial health, but is there solid data supporting short-term speculation in growth stocks? Moreover, any perceived advantage obtained using debt as leverage is often mitigated once risk and taxes are accounted for.

I would also argue the market is getting hard to predict, as the volatility index has increased in recent years. The cyclical and volatile nature of the market are the reasons investments are for the long-term. It’s always easy to say in hindsight that if I would have invested in stock XYZ, I would have tripled my money. That doesn’t mean that it was a mistake to avoid stock XYZ. Your total financial picture is relevant because you don’t know what stock XYZ will do, and it is your responsibility to allocate your resources to the best of your ability. You may suspect outcomes and be armed with your best data, but in the end, there’s no certainty about stock XYZ’s future performance. In contrast, one could say with certainty that nearly all homes that are foreclosed on have a mortgage (or at least a lien).

Being clear about what I do and do not know, my values, and what financial stress I do not want in my life makes paying off the mortgage an easy choice for me.

Other Considerations

1. If your cash flow is large enough that you can eliminate a pay off your entire mortgage in less than two years, 1) the mortgage likely represented a small part of your financial world and 2) since the mortgage payoff period is relatively short, you have a long time to financially recover from the alleged “mistake,” assuming your income doesn’t decline. During this recovery period, you can invest mortgage free!
2. The “mistake” paying off one’s mortgage is easily rectifiable. If you want a mortgage on a paid off home in a nice area, there are plenty of bankers who would be more than willing to oblige. While you did miss a bull market or two, there’s surely another one coming alone.
3. There’s no guarantee that the money used to pay off the mortgage would have gone into investments anyway. While we have the best intentions, sometimes having an unrealistic goal, such as paying off a mortgage in a ridiculously short time, is enough to correct behavior that would otherwise not be as disciplined.

Closing Thoughts

In summation, regardless of whether you are a traditional worker, self-employed, or a business owner, you are in business for yourself. Minding your own business doesn’t just mean investing for growth, it also means controlling risks, including debt. Leveraging yourself for the next 30 years, which for most people represents 25-33% of their income, is a decision that has serious financial implications. In fact, housing expenses of those with mortgages are approximately 3.5 times the expenses of those without mortgages; that affects opportunity too!There’s a reason it’s emotionally difficult to go from a paid off home to a mortgaged home with a volatile portfolio. Your heart is leading you to prosperity and safety. Are you listening?

Lastly, if you like this article, please subscribe to my FREE email updates or RSS feed (reader), Retweet it, Like it on Facebook, Tipd it, Fark it, Stumble it, and tag it on Delicious. Also, click here to receive my eBook for FREE.

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4 Reasons You Should Set Unrealistically High Goals

By: Roshawn Watson

Goal setting is extremely powerful and can have a dramatic impact on your personal finances, productivity, career, relationships, health and life. Motivational speaker, Zig Ziglar, often admonished salespeople to set goals to achieve their peak performances. In fact, he reportedly went as far as saying “a goal properly set is halfway reached.” However, sometimes setting large lofty goals may seem like a waste of time, or worst. After all, shouldn’t goals have a strong basis in reality? Let’s delve into this issue. Here are 4 reasons you should set unrealistically high financial goals.

Setting Unrealistically High Goals Raises Your Performance to the Level of Expectation.

When you are around the best, read about the best, think about the best, eventually you begin to expect the best in your own life. Even if it is entirely subconscious, there’s something that will click internally and begin to move you towards excellence. This is why your associations matter. Your environment influences your expectations about yourself. How many would-be entrepreneurs, scientists, physicians, and peacemakers have failed to realize an authentic utilization of their gifts, personalities and passions because they never became aware that THEY could do great things. Greatness was never modeled by their associations. Eagles who hang out with chickens too long may forget how to fly! By setting phenomenal goals, you are intentionally focusing on the best, and your behavior will follow suit.

Setting Unrealistically High Goals Encourages You To Draw On Your Creativity

Success for you is dependant on your capacity to believe.

If you are placed in a situation that forces you to draw on dormant potential, your performance will change accordingly. In addition to normal goals, I personally advocate setting stretch goals: goals that will deliberately pull one out of his comfort zone. With respect to finances, I have seen people adopt this in various ways, such as a recent pledge by many online bloggers to make $30,000 online in 2012. Perhaps you’re trying to get your business in the black or are up for a big promotion. Don’t just settle for a common “been there, done that” mediocre goal. Choose something that inspires awe in your observers, and then develop a creative plan to MAKE it happen. Remember, the Rich Dad, Poor Dad lesson for those who desire to be rich: the quintessential question isn’t “can I afford it?” but rather “how can I afford it?”

One contemporary business example of this point is beautifully illustrated in Crush It by Gary Vaynerchuk. He writes about how he was challenged with redefining the wine industry, an industry that is known for being stodgy and conservative, as he took the helm of his dad’s company. He was a rule breaker, was passionate, and he enthusiastically embraced technological advances that allowed him to spread his message, virally. Consequently, he found his unique voice, established a loyal following, and tremendously built that brand to heights few expected and in record time. His goals helped him prove the skeptics wrong.

Setting Unrealistically High Goals Motivates Yourself

I read that the median response for a recent Gallup poll was that a person would need to make at least $150,000 per year to be considered rich, which caused me to reflect on when I was most recently challenged on my definition of rich by Felix Dennis, founder of Maxim. He claims that a household with a net worth of less than $2 million is uncomfortably poor. He was one of the few people that I know of who would classify someone with a net worth of $1.7 million as not just “poor,” but “uncomfortably poor.” Something about that is revolutionary and motivating.

While we can argue over arbitrary classifications, such as who is rich or who is middle class, a more productive use of time is to determine what goals inspire you. What is worth spending the next 3-5 years realizing? What goals are worth emptying yourself into, fully? When I wrote about the senior and founding partner at a law firm who only made $30 his first month in his practice but now earns $30 million per month, I am speaking about someone who emptied himself into his practice. It is very likely that had he given up on his goal to be in business for himself and fight corporate conglomerates, he would not have realized considerable success. When I listen to him describe the high-stakes litigation that he was involved in and the many obstacles he had to overcome, I can tell that he not only had a strong sense of self but also knew precisely what his objectives were. Otherwise, it would have been too easy to waiver, fold under the pressure, or settle before he it pay dirt. Quite honestly, he still has even loftier goals (beyond his Gulf Streams). That’s what keeps him striving for excellence. It keeps him relevant.

When you set goals that are beyond what you think are realistic, you are bringing those enormous dreams into the reality of your mind. You are speaking to those dreams and declaring that they have deadlines to be realized in your life. This is significant because whether you think you can or think you cannot, you’re right!

Give more consideration to what pursuing grand goals effects in you. Jim Roth said it this way

The major reason for setting a goal is for what it makes of you to accomplish it. What it makes of you will always be the far greater value than what you get.

Setting Unrealistically High Goals Motivates Others

Of all the things I've done, the most vital is coordinating those who work with me and aiming their efforts at a certain goal. - Walt Disney

Lame goals don’t inspire!

Has anyone tried to motivate you to achieve an uninspiring goal? Me too. Did it work? I didn’t think so. Daniel Burnham said “make no small plans; they have no magic to stir men’s souls.”

There’s something very powerful when someone sets a goal so awesome that it causes you to reevaluate what’s possible in your own life. In Your Do Over Guide, I shared the story of a venture capitalist who by his mid-twenties had already retired twice, was one of the youngest CEO’s of a publicly traded company, and was making phenomenal investments that returned more in a day than most people got in a year. When I heard his next goals, I got motivated for myself. I began to remove limits that I didn’t even know existed in my own life. Moreover, I began to enlist the help of like-minded individuals, and they were kind enough to oblige me. Now, their help was fully voluntary, so what was the draw for them? It was the goal: the goal was big enough engage others meaningfully.

Let’s be very serious: if your goal is so small that you can achieve it on your own, then it’s likely not big enough. However, if you dare to dream bigger, you stand to accomplish a fraction of your potential.

Closing Thoughts

People often caution dreamers. They tell us to “get back into reality. It’s not that simple. We haven’t accounted for all of the variables. What if we FAIL?” Here’s my response to every Eeyore:1) ”I love and believe in the beauty of my dream,” 2) in fact, the only way that I will achieve my dream is to stop being realistic, 3) everyone starts somewhere, 4) over-analysis can create paralysis, 5) failure is a matter of opinion, 6) failure is temporal, 7) failure is instructive, and 8) failure unleashes creativity. I’m not afraid of trying and failing. I’m afraid of not trying. Sometimes the greatest risk is not taking one.

He who refuses to embrace a unique opportunity loses the prize as surely as if he had failed. - William James.

Lastly, if you like this article, please subscribe to my FREE email updates or RSS feed (reader), Retweet it, Like It on Facebook, Tipd it, Fark it, Stumble it, and tag it on Delicious. Also, click here to receive my eBook for FREE.

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4 Things To Stop Doing With Your Finances

By: Roshawn Watson

Often personal finance writers discuss what we need to do, particularly with respect to saving and investing. However, it is also what you are willing to walk away from that will determine your future prosperity. After years of providing advice, comforting friends, and dealing with my own issues, here are 4 disastrous behaviors to stop doing with your finances.

Obsessing Over Reasonable Purchases

You have worked hard. You have your emergency fund. You have eliminated consumer debt. You have invested aggressively over the years. In fact, you are on track to be financially independent 15 years earlier than the experts said was possible, so why do you obsess over minutia?

I advocate fiscal responsibility, but I don’t support deprivation for bragging rights. Recall when you began your financial journey and decided your priorities. Remember when you decided that financial abundance was worth pursuing. Remember why you started to save to begin with. Self care is not selfishness. In fact, one of the best gift you can give someone is a better you. That’s because you can help them from a position of strength rather than one of weakness.

Last week’s discussion of value-oriented purchases is particularly relevant here. When purchases that are in line with your core values give you pause because of sticker shock, remember that if you have built a solid enough foundation and have performed due diligence, such occasional splurges can enhance you by improving your productivity, your motivation, and your overall quality of life.

My fellow frugal readers, if you’re in this position, simply ask yourself the following question: “Why do we save anyway?”

Trivializing Pathology

Debt is not the Problem. Debt is the symptom of the problem.

The suspicious gambling charges on the credit card may be a clue to something sinister, and I don’t mean identity theft.

Beneath the surface, smiling facades, and Under Armour sportswear, there could be someone dealing with pain. I wish there was a quick answer for every money problem, but sometimes there are real emotional, psychological, and even biological issues that require professional help, such as a financial counselor, a therapist, a psychiatrist, etc.

This is not about creating excuses for financial misbehavior but getting to the root cause. Money problems often mask other pathology. For example, reckless spending could be used to compensate for negative self-worth. Cutting up the credit cards without addressing the disconnect leading to the budgetary malfunction may only provide a temporary reprieve and prove ineffective. That’s because addressing the misbehavior while ignoring the underlying problems prolongs the sickness.

Simply put, the essence of every financial problem is NOT financial mechanics. In fact, over 80% of money problems are BEHAVIORAL. When there’s dysfunction, get the help that’s needed.

Comparing Yourself to Others

There are numerous reasons that may account for someone else’s apparent prosperity, and I sincerely hope that you will concern yourself with none of them (unless you are just looking for ideas to improve yourself). Quite simply, you do not know the circumstances of others. Just because you may be able to approximate their earned income doesn’t mean you know what their passive income, portfolio income, and expenses are like. For example, the person who some may shake their heads at for taking two luxurious vacations annually could own 10 rental properties outright and be completely financially independent. The coworker with the McMansion may have delayed (or decided against) having kids. The friend whose second home is Neiman Marcus could be receiving financial help (economic outpatient care) from the bank of mom and dad. Often you just don’t know.

What I can tell you though is that most financial “short-cuts” lead you down a road that you don’t want to go. Additionally, comparing yourself without taking action to improve your life is a futile exercise at best.

If the people you compare yourself with truly have their acts together, simply wish them well, glean all the wisdom you can get from them, and reassure yourself that there are plenty opportunities for you to achieve the life of your dreams. Don’t let jealousy and envy rob you of enjoying your journey or the opportunity to learn from someone who possibly is operating at a higher level.

Don’t hate, congratulate!

Berating Yourself Over Past Financial Mistakes

Regret is usually a waste of time.(Thomas Crown)

Don’t berate yourself over past money mistakes. If you are over 18, you have made money mistakes. We all have. That doesn’t justify being miserable over what decisions were made 20 years ago. To be perfectly honest, this section is a little bit of a challenge for me to write. I am certainly a fan of a do over. I firmly believe that we can learn, draw inspiration, develop resilience, and create remarkable change all from yesterdays’ mistakes. However, drawing wisdom from the past is not the same as punishing oneself because of regret. Yesterday is in the tomb. Tomorrow is in the womb.

Letting go may be emotionally difficult, especially if you are analytical or really did your absolute best at the time. However, being a slave to past mistakes can rob you of future victories and joys. You are destined to do greater things, but if you refuse to open your hands to let go, you are simultaneously blocking your ability to receive.

Closing Thoughts

In summation, the comfort in holding on to some behaviors is not worth the danger. The power in relinquishing the familiar can be just as revolutionary as more traditional personal finance advice. Recognizing when professional help is necessary and letting go of envy, jealousy, regret, obsessive comparisons to others, and overly scrutinizing reasonable purchases will increase our financial peace as we develop healthy relationships with money.

What you are willing to walk away from that will help effect a significant change in your life. Decide what you will release today!

Lastly, if you like this article, please subscribe to my FREE email updates or RSS feed (reader), Retweet it, Tipd it, Fark it, Stumble it, and tag it on Delicious. Also, click here to receive my eBook for FREE.

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Great Attributes Round Up

By: Roshawn Watson

It's been a few weeks since I have done a round up. Here are some uncommon articles and carnivals that I have participated in. Interestingly, two of these 11 articles were written in direct response to content published here.

Thanks to all of my readers, subscribers to this site, and followers on twitter. I also thank the  sites that have featured posts from here in their round ups and those that accepted my three guest posts last month. To be perfectly honest, I'm overwhelmed by your faithful support and appreciate all of you so much. Thanks for helping me champion financial literacy!

Uncommon Round Up

1. Trent from The Simple Dollar wrote a nice article on the seven attributes that matters. The premise is that great people share common characteristics. This is interesting to me because one of the things that I appreciate about great people is that they typically are different! They often march to a different beat. This would fall in line with Trent’s observations that great people have Self-Belief and are Self-Reliant.

Reader Question: What qualities do you think make someone great?

2. Amanda Morrall wrote about 5 money themed mistakes. Financial mistakes have been a recurring theme of mine lately. I’m convinced that failure is only temporal. Don’t discount your future based on past mistakes, but do learn from them. One example that she gives is particularly concerning to me. My next post is also on a similar topic.

Two Fabulous Readers Wrote Posts Responding to Articles Published Here
3. When the Former Banker read my post entitled Too Frugal For Your Own Good, he was all ready to set me straight. However, as he read the post, he found that we agreed more than we disagreed. Read his passionate response here.

4. In response to one of my post entitled Young People are Avoiding Investing Their Money in Record Numbers, Kevin from Invest It Wisely wrote an interesting article about his own financial education. His post is: I Didn’t Know Squat About Finances When I Was In College.

Other Interesting Reads
5. Money Cone asked a provocative question: “If you are happy with your big bank, should you still switch to a credit union?” The old saying is: “if it isn’t broke, then don’t fix it.” Will you feel like your big bank is “broken” after reading this post?

6. “When is there a right time to do the wrong thing?” That was the question that Andrew (101 centavos) once asked a potential candidate for employment. I found the examples used in this career tip post insightful.

7. Does $150,000 per year or $1,000,000 net worth make you rich? I don’t think so. Neo from Net Worth Protect intentionally stirs the pot with this post regarding recent Gallup poll findings.

8. Many people agree that real estate is a great long-term investment, particularly if you are receiving passive income (i.e., you are a landlord). Miranda (at Free From Broke) asks a very relevant question though: Are You Cut Out To Be A Landlord?

9. If you decide to become a landlord or a business owner, one important skill needed is knowing how to read financial statements and basic ratios. Otherwise, how can you really say you understand your solvency, cash flow, cost of goods sold, etc. Betty Kincaid highlights a cautionary tale of a young baker who lacked those very fundamentals and decided to offer a Groupon deal. It wasn’t pretty.

Honorable Mentions
10. Emily Starbuck Gerson wrote about how successful women she knows have trouble finding men who are not intimidated by their money, beauty, and brains. Thanks for the link!

11. (bonus) Suzanne highlighted the 3 S’s of the holidays: spending, splurging, and stress. Since I just wrote on decreasing financial stress last week, there was a natural connection with the content. Thanks also for the link.

Carnivals
Best of Money Carnival
Best of Money Carnival #130 (Editor’s Pick!)
Best of Money Carnival #132

Carnival of Personal Finance
Carnival of Personal Finance #333 (Editor’s Pick!)
Carnival of Personal Finance #334 (Editor’s Pick!)
Carnival of Personal Finance #335 (Editor’s Pick!)
Carnival of Personal Finance #336
Carnival of Personal Finance #337 (Editor’s Pick!)
Carnival of Personal Finance #338
Carnival of Personal Finance #339

Festival of Frugality
Festival of Frugality #307
Festival of Frugality #308 (Editor’s Pick!)
Festival of Frugality #309

Yakezie Carnival
Yakezie Carnival (No edition specified)
Yakezie Carnival (No edition specified)
Yakezie Carnival: Just Another Day Edition
Yakezie Carnival: San Diego Edition
Yakezie Carnival: Might Ducks Edition

Carnival of Financial Camaraderie
Carnival of Financial Camaraderie #7
Carnival of Financial Camaraderie #9
Carnival of Financial Camaraderie #11

Totally Money Carnival
Totally Money Carnival: Thanksgiving Edition
Totally Money Carnival: Building Wealth Edition

3 Powerful Ways To Decrease Your Financial Stress

By: Roshawn Watson

These days people are fraught with economic stress. The mere thought of aspiring to financial peace seems radical and even delusional for some people. Sixty-one percent of people live paycheck to paycheck, meaning it does not take much to push them to the brink of financial cataclysm. It certainly doesn’t have to be this way, but somehow we have been convinced to accept this foul bag of goods. Here are 3 powerful ways to decrease your financial stress.

1. Decrease Financial Stress By Knowing What You Really Value

What do you really value?

All too often we pursue and stress out about financial matters that don’t matter, at least not in meaningful way. That’s because they don’t reflect our true values. There is nothing wrong with wanting nice things, but things don’t define us.

In fact, if your contentment is based on materialism, then money is the least of your worries.

Focusing your resources on items, experiences, and relationships that compliment your core beliefs and values is infinitely more fulfilling than simply buying stuff. That could mean taking the trip of a lifetime over buying the dress or flat screen of the minute.

In your quest for great wealth, remember that there are many things that you may value that cost little to no money, such as a warm embrace from a loved one; a phone call from an old friend; kind smiles from your children, nieces, or nephews; attending a religious service or a motivational conference; playing with your puppy etc. Indeed, Thomas Stanley’s data suggest that millionaires are consistently more likely to participate in “cheap date” leisurely activities emphasizing relationship building and wealth building versus more “costly” activities. While I would never suggest that this is always the case, this correlation hardly appears incidental.

In short, by focusing our money on value-oriented spending rather than keeping up with the Kardashians Joneses, we decrease stress by relinquishing the constraints of materialism.

2. Decrease Financial Stress By Stopping The Insanity

Recognize that when someone gives you a loan, he or she is NOT doing you a favor.

We must break the self-defeating cycle of consumer debt in our lives. Borrowing one’s way out of trouble is extraordinarily difficult. People can go on about “good” debt and “bad” debt. After all, labeling debt to make it more palatable is quite common.

My primary concern with debt, particularly consumer debt, is that with it comes risks that typically nullify any leverage advantage received by using the debt in the first place.

Earlier this week, I read about someone thinking that getting a $500,000 loan to purchase 8 rental properties with nonexistent cash flow was a good idea because he was “getting over on the banks through the power of leverage.” With the numbers he shared, he would be a bankruptcy waiting to happen. Remember, a plan that only works if everything goes right is hardly plan at all.

Without belabouring this point, let’s keep it simple:

1. Debt equals risks.
2. Risks cause stress.
3. No debt equals decreased financial stress!

A major shift happens when we stop trying to use debt to solve our problems. The choice is yours, but when I made the decision to live debt free, my financial life instantly simplified and my stress decreased precipitously.

3. Decrease Financial Stress By Rethinking Budgeting

Budgeting is NOT the enemy.

Personally, I used to think of budgeting as limiting, but I now see it as liberating. That’s because budgeting enhances economic productivity, which is something we can all used more of. Regardless of whether one makes $40,000 or $400,000, he can still be broke if his money is mismanaged. This is ignored by those who only focus on the income side of the equation. Perhaps this is the reason most millionaires budget. Budgeting is the tool that helps you reign in your income.

However, I can certainly appreciate that some people find budgeting stressful. Dealing with money can be inherently unpleasant. The very act of budgeting forces acknowledgement of money’s limitations and possibly confrontation of misbehavior. Additionally, despite the fact that we deal with money on a daily basis, there is a lack of personal finance education. Some of the very courses that supposedly aim to increase our financial intelligence are little more than cleverly packaged marketing tools for companies that are far more concerned about their profit margins than serving us well.

Given those facts, it is unsurprising that many find proper money management particularly difficult. If you fall into that category, then perhaps it’s time to rethink budgeting. See it as a mechanism for your freedom, and use it to your advantage. Here are some tips to help you do just that:

1. Pay yourself first. Even if you simply create an artificial sense of economic scarcity by “paying yourself first” and using the remaining money to cover all other expenses, that would be a great improvement over ignoring budgeting altogether. At least this way, your savings and investing would be taken care of.
2. Use technology to assist you. Consider employing tools to make it easier, such as using automatic drafts into your savings and brokerage accounts and using the "envelope system" for groceries.
3. Eradicate the idea of a “perfect” budget. Let your budget change as your life changes. Perhaps you are not yet in a position to allocate funds to every single line item. That’s perfectly okay. Few are.
4. Note, a more detailed discussion on the power of budgeting is available in my FREE eBook.

I think the old adage of “don’t throw the baby out with the bath water” is particularly relevant with respect to budgeting. Embrace a system that works for your household and use it prudently.

Closing Thoughts

Financial peace are two words that typically do not go together. That doesn’t mean that it’s unachievable. When your purchases are aligned with your values rather than the values of clever marketers, when you free yourself from the madness of robbing tomorrow’s prosperity for today’s pleasures, and when you develop and live by a sound spending plan that works for your household, you are taking ground financially. You are on the road to prosperity. You are reclaiming your financial peace!

Lastly, if you like this article, please subscribe to my FREE email updates or RSS feed (reader), Retweet it, Tipd it, Fark it, Stumble it, and tag it on Delicious. Also, click here to receive my eBook for FREE.

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