Archives For March 2012

What if a few simple questions could help look at your problems and difficulties differently? What if these question could help find solutions and gain a glimmer of hope?

It can. It starts with The Miracle Question that comes out of solution focused therapy  or brief therapy and has been used across different cultures with a high degree of success.

Solution Focused Therapy

Solution focused therapy was developed by a husband and wife team from the Brief Family Therapy Center in Milwaukee. It focuses not on the history of a problem, but on where the problem is today and what solutions can be found.

You won’t find a solution focused therapist digging around asking questions about your childhood or placing the blame on your parents. Having knowledge about a problem doesn’t always point to a solution. The knowledge is true, but useless. We need solutions, so let’s be solution focused.

The Miracle Question

There are several forms of the miracle question. This example I found in the book Switch: How to Change Things When Change Is Hard and we’ll gear it towards finances since that’s the core of what this blog is all about.

“Can I ask you a sort of strage question? Suppose that you go to bed tonight and sleep well. Sometime, in the middle of the night, while you are sleeping, a miracle happens and all the troubles that brought you here are resolved. When you wake up in the morning, what’s the first small sign you’d see that would make you think, ‘Well, something must have happened-the problem is gone!’?”-The Miracle Question as written in Switch p. 36

An alternative shorter version of the Miracle Question:

A. What if a miracle solved your overspending and debt problems, what would you be doing differently the next morning?

B. Well, I guess I’d be less stressed and anxious since I didn’t have money problems.

A. What is the first small sign that your money problems are gone?

B. The phone wouldn’t be ringing with creditors calling.

A. Exception Question-

The Exception Question

The Miracle Question helps a person to begin to have hope and begin to see solutions. The Exception Question is a key follow up to continue towards solutions.

“When was the last time you saw a little bit of the miracle, even just for a short time?”-Switch p. 38

Examples of the Exception Question applied to finances

A. When was the last time you stayed on budget and didn’t overspend?

B. Two years ago I went 3 months without overspending.

A. What did you do during those three months that were successful?

In most cases there is a bright spot  in the person’s past where they were successful with the problem they are trying to overcome.

By looking at these exceptions and bright spots, we can learn the who, what, when, where of what was going on then and replicate those behaviors. Solution found.

If you’d like to try your hand at Miracle and Exception Questions, here is a downloadable PDF to get you started.

Keep in mind that these techniques are best used by a trained counselor or clinical psychologist, but could be used for self discovery of your problems and finding solutions.

Ask yourself the miracle question and exception question for a money related problem and see if any solutions can be found. 

Photo Credit algo (Creative Commons)

As a financial coach, I speak with a lot of people who ask, “Should I declare bankruptcy?”

Many come with the idea that they are bankrupt and want validation to proceed, when in fact they’ve just lost hope and the will to keep fighting.

First let’s realize that a bankruptcy is a huge decision and I can only give recommendations on what I would do based on the known facts. Second, there are a lot of emotions involved like fear and embarrassment; along with loss of hope and perhaps denial. Third, a consultation with a bankruptcy attorney might be in order to discuss the state specific laws.

I usually try to talk the person off the bankruptcy ledge, but ultimately it is up to the person or couple to decide if a bankruptcy is something to explore.

Bankruptcy is Not A Cure

Bankruptcy is not a cure, but usually a symptom of other financial issues. What can a bankruptcy not do?

  • A bankruptcy can not discharge: student loans, IRS debt, mortgages, criminal restitution, or alimony and child support.
  • A bankruptcy does not deal with the spending habits, lack of communication about money in a marriage, or low income.
  • It is not a quick fix and in the case of a Chapter 13, will be 3-5 years of a repayment plan.

Keep the 4 Walls

When facing a lack of income, mounds of debt, creditors calling, and possible foreclosure or bankruptcy it is important to keep a clear head and focus on the important things.

1. Family, Faith, and Friends are more important than money or material possessions. Stay connected. Love your spouse and kids. Pray. Call your family. Be honest.

2. Keep the 4 Walls:

  • Food
  • Shelter
  • Utilities
  • Basic Transportation
3. Pay Everyone Else Last- Implied in keeping the 4 walls is that you pay everyone last, creditors including no matter how much they scream.

Should I Declare Bankruptcy?

For many people I encourage them to keep fighting until they are forced into bankruptcy by lawsuit.

If you are current with your debt payments, not borrowing anymore, and almost making ends meet then keep fighting. You are close and a slight increase of income would make all the difference in your financial situation.

For situations that are much worse: no to little income for extended amount of time, large unsecured debt, etc…then bankruptcy might be an option, but consult a bankruptcy attorney that will be honest with you.

Keep in mind a bankruptcy attourney only makes money when you declare bankruptcy, so they have a vested interest in mind.

If you’d like to speak with a financial coach in your area that can discuss your specific issues and if bankruptcy is an option click here or if you’d like to speak with me click here.

Photo Credit Joe Gratz (Creative Commons)

Do you have the golden egg?

The Roth IRA is probably the best investment vehicle for retirement to date (except maybe the Roth 401K).

The Roth functions just like an IRA, but one major difference: Drum roll please……qualified distributions are tax free…I meant TAX FREE!

Decades of compound interest can grow tax free. This is great news as no one knows what taxes will look like in 5, 10, 25 years. It’s a good guess that they will be higher than today, so tax free earnings will be a huge bonus.

Who Can Contribute to a Roth IRA?

-If you have an earned income or your spouse did, then most likely you can contribute to a Roth. If you have a question click down to page 55 of this long IRS document.

-There are income limits (2012 stats) for contributing to the Roth:

  • $179,00 married filing jointly
  • $122,000 single
  • $10,000 married filing separately.
-There are no age limits to contribute to a Roth I.R.A. , but children must have an earned income and file taxes on that income.

How Much Can I Contribute?

Contributions for combined Roth and Traditional IRA are 5,000 or $6,000 if you are 50 and over. Your spouse can also contribute the same amount in most cases.

When Can I Contribute?

You have until the deadline for filing your taxes. So before you file, make sure you top off your Roths. This year you have until April 17th (Tax Day) to contribute to your 2011 Roth.

Experts Agree: Roth is the Best

“I cannot repeat this enough: If you are eligible to invest in a Roth IRA, I think it is hands down the best retirement investment you can make.” Suze Orman

“The best way to start investing is with a Roth IRA.”- Dave Ramsey

In fact more than 140 personal finance bloggers are writing about Roth IRA’s today.

Why? Because out of 50 graduating college students 0 knew what a Roth was and this guy  got mad and stirred up the whole personal finance blogging community.

The personal finance community knows the Roth IRA is the best financial product out there for retirement. Read 140+ articles about the Roth IRA and register to win $5,000 for your IRA.

Do you have a Roth? Start one this year or contribute to 2011 if you haven’t filed taxes yet. Remember it’s the golden egg of your retirement. 

Photo Credit  scottwills (Creative Commons)

ATMs Gone Wild

Brent Pittman —  03/26/2012

Make cash with old electronics at the ecoATM.

Today there is an ATM on almost every corner. Cash be be had in a flash and you should beware or the ATM will eat your budget.

The line between ATM machines and fancy vending machine is becoming blurred. Today ATMs will dispense almost anything gold bars,ipods, jobs, and who knows what else to come.

One of new favorite ATMs is the ecoATM. You can trade in your old electronic equipment for cash. I’ve got a few old devices laying around the house, that’ll I plan on making a few bucks with.

If if they don’t accept your device, you can be ensured that it will be recycled and disposed of properly. There is also an option to donate the cash directly to a participating charity.

 

Sprinkles Cupcake ATM

24 hour cupcakes? Yes, a new ATM in Beverly Hills dispenses yummy Sprinkles Cupcakes. Need a classic red velvet cupcake at 3 in the morning? Yep, you’ll be able to get one pending it’s not sold out. I know I’ll be trying it out next time I’m in the BH.

 

What is the newest ATM-like machine you’ve seen?

Budgeting is like potty training your child. For you singles out there,that might not mean much, but experienced parents will understand.

Potty training is hard work, messy, and frustrating. Just when you think you’ve trained your little Einstein, there is another accident and the process begins again.

I was inspired as we will begin potty training our son in the next year. This article has several tips on potty training that can be applied to budgeting.

**Warning there will be bathroom humor and language below, read at your own risk**

Budget Like You Are Potty Training

All About the Bribes- Just like you give your child M&M’s for a successful mission, give yourself a treat every now and then. When you make that $1000 emergency fund goal, give yourself a grownup treat. I like chocolate.

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