All Of It

Are you human? Good, I was hoping so. This post is for all the humans out there. We humans have a knack for playing little tricks on ourselves to get what we want. In today's piece, I'm going to discuss "extra." Specifically, extra income. We're not good at managing extra income. Tax refunds, bonuses, extra paychecks, commissions, gifts, etc. We love treating these irregular cash inflows as extra, and by extra, I mean we don't have to be responsible with it.

You know what happens to extra, right? Of course you do! For most of us humans, we waste it. I use the term waste not as a reference for spending on wants, but rather as an indictment of our lack of intentionality.

I'll use the example of a typical family. They know when their paychecks arrive each month. That income, whether budgeted or not, is largely allocated for life's various expenses. It's rhythmic. It's normal. But the extra? If we receive extra income, the typical outcome is to mentally and emotionally carve it out from our normal income and impulsively spend it. We forget context, goals, and priorities. Instead, we just act. It's a little Jedi mind trick we play on ourselves. We convince ourselves this income doesn't count, so we just willfully ship it wherever our emotions tell us to.

Here's the alternative. I'm a big believer that all income is created equal. Every penny that comes in, whether a normal paycheck, bonus, tax refund, or any other surprise we might receive, should be woven into the plan.

I recently met with a client who is a textbook version of what it looks like to get it right. They received an inheritance. As soon as they knew how much it would be, it went into their budget alongside their normal income. His income, her income, and inheritance. One big pot of money. It was just like every other month, except this month had a lot more in the pot.

They negotiated where this month's income would go, including the extra. A handful of categories received some extra love due to this larger income. Their decisions were proactive, measured, made in context with the larger situation, and aligned with their goals and values. Once they negotiated the plan, the next step was easy (and hard): They executed the plan. When the money arrived, they did exactly as planned. Money was physically moved into each respective destination, ensuring they honored their past selves' plans. Perfect.

It might sound like I'm splitting hairs with this one, but trust me, it makes all the difference in the world! When we allow all income to be created equal and take responsibility for it as such, we make different decisions. Better decisions. I could tell they had a ton of peace and unity with their plan. Nothing was impulsive. Every decision made sense. It moved them closer to their aspirations.

This is a model to follow. Regardless of where the income is coming from, treat the same as the rest. It can make all the difference in the world.

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Normalizing Your Normal

I recently broke the news to a family that spending $5,000/kid on Christmas presents doesn't jive with their family's finances. They have five kids…..

They were appalled by my audacity to suggest this amount of money is unreasonable. "That's a normal amount to spend," proclaimed the wife. My response: "Just because it's your normal doesn't make it reasonable. You're the one who normalized your normal."

"No, what we do is totally reasonable and is a completely normal amount to spend." Then, much to my delight, she suggested I blog about it to prove just how normal it is. I'll be looking forward to your collective responses.

This brings up a broader point, though. When we refer to something as "normal," we're glossing over the question of whether it's right. Normal does not equal right. We can (and often do) normalize bad behavior:

• It's normal to go tens of thousands of dollars into student loan debt.

• It's normal to live at or above our financial means.

• It's normal to give away very little, spending all of our resources on our own desires.

• It’s normal to live without an emergency fund.

• It's normal to stay in jobs that make us perpetually miserable.

Just because something is normal, it doesn't make it right. Further, we tend to live in little bubbles, surrounding ourselves with people who practice the same habits, values, and rituals we do—an echo chamber of sorts. I agree; there is a sub-culture of people inclined to spend $5,000/kid on Christmas. It's normal within that group of people because they collectively normalized it.

This blog is a different version of that. I'm trying to normalize meaning over money. I'm trying to normalize the pursuit of work that matters. I'm trying to normalize ridiculous levels of generosity. I’m trying to normalize intentionality with our finances. I'm trying to normalize a lived experience far more rewarding and fulfilling than fantasizing about retiring into a life of leisure.

Here’s my call to action today: Question what you perceive as normal. First, is your definition of "normal" normal? Second, if so, should it be? Perhaps it's time to turn normal on its head, draw a line in the sand, and normalize something better. I'll leave it open as to what this applies to in your life, but you probably already know the answer.

Side note: $200. That's how much Sarah and I will spend on each of our two kids for Christmas gifts. That's "normal" for us.

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I’ll Have One Christmas, Hold the Guilt

'Tis the season! The lights are going up, the movies are coming out, the weather is turning cold, and my Chicago Bears are melting down into season-ending turmoil. It can only mean one thing: Christmas is coming!

I absolutely love Christmas, but do you know what I don't love? Financial stress, unforeseen debt, and guilt. This is the annual season where millions of families will throw away their measure and discretion for just one more taste of the holiday spirit. Between the decorations, travel, gifts, food, and hosting, it's not uncommon for families to rack up thousands of dollars of expenses (often with debt).

Unfortunately, these expenses are often unbudgeted. They are impulsive, reactionary, and unplanned. But the magic of the season is intoxicating, so we just go along with it. Come early January, it's not uncommon for people to feel significant stress, tension, resentment, and guilt. By the time the Christmas spirit lifts, we're left with a nasty hangover. Have you ever been there before?

Multiple times in the last week, I've talked to families equally anxious as they are excited for the holiday season. On the one hand, they can't wait to share those special moments with the kids, but on the other hand, are dreading the seemingly unavoidable consequences.

I think you deserve better than the most wonderful season of the year to rob you of your peace, freedom, and sanity. You deserve to experience all the joy, without any of the guilt. So today, I'm going to give you a few ideas on how to do Christmas differently:

• Remember that Christmas joy is not derived from money, stuff, or status. Joy is joy.....period.

• Go into the season with a plan. If you're the budgeting type (and I hope you are!), ensure you have money allocated for each component of the season: gifts, travel, decor, food, hosting, etc. Name each and put a dollar figure on them.

• Speaking of budgeting for gifts, make a list of every person you want to buy a gift for. Then, assign a dollar amount to that person. Shop with boundaries.

• Commit to NOT using debt. There's no need to whip out the credit card. I know it's tempting, as it always is, but there's so much peace that comes from knowing everything you paid for is actually paid for.

• Follow the plan. If you said you would spend $500 on gifts, spend $500 on gifts. Don't spend $700, $800, or $1,200. Once you commit, commit. I don't care what the number is for any category, but you must honor yourself by honoring past you's decisions.

• Remember again that money, stuff, and status don't bring joy.

• Slow down your schedule, not speed it up. Embrace the time with your loved ones. Savor it. Don't cram as much in as possible.

• Remember the reason for the season. In our house, that's Jesus.

I hope this is the beginning of a beautiful holiday season for you and your family. It's been a crazy year. Enjoy this final chapter of it.

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Trust the Process

Whenever someone is talking about how a loved one needs to improve their finances, they often blurt out statements such as, "They just need to pay off their debt," "They should just save more money, or "They just need to stop spending."

Those statements make a generalized assumption that there is some magical switch that can just be flipped, like a toy doll. The doll stands motionless until you flip the little switch on its back, then it comes alive. Unfortunately (or fortunately), that's not how humans work. It's not as simple as "just pay off debt."

In my now-well-tested opinion, there's not one step to getting right with money. It's not as simple as "just do _____." Rather, there are three critical steps, each as important as the next:

1. Gain awareness

2. Gain control

3. Gain traction

The first step to getting right with our money is to develop an awareness of where we stand. We need to understand the lay of the land, clearly see our current situation, and gain a firm grasp on our current reality. It's the hard look in the mirror.

Once we've gained an awareness of our reality, we can begin to gain control. Slowly but surely, we shift from reactive to proactive. From being a victim of our impulses to the author of the story. We learn the art of telling our money what to do, and then doing it.

Once we've gained control, that's when we can begin to gain traction. When we become the conductor of the symphony, we get to decide what goes where and when. That's when this entire thing unlocks. We earn the right to start making progress in our finances and move the needle in that area of our lives. We get to prioritize and focus, then watch the momentum actually build.

We can't just skip to gaining traction. Traction doesn't happen on accident. First, we need awareness, then control, then the much sought-after traction. Don't put the cart in front of the horse; one step at a time. It may seem like things are moving slowly at first, but then, it accelerates much faster than you could have imagined. Trust the process!

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Opening Eyes, Escaping Traps

I'm going to start today's post with a correction. In yesterday's piece, I shared the story of a young couple who wanted to buy a car without debt. I explained how they planned to buy a $20,000 car by saving $500/month for 20 months. Blog reader Ryan pointed out an error, as $500 x 20 = only $10,000. That was a fat finger on my part. This couple planned to save $1,000/month for 20 months. It required them to significantly pare back their budget and sacrifice, but they did it and paid cash! **I’ve since corrected this error on the website.

On the heels of yesterday's post, I received some expected pushback. Specifically, I was accused of exaggerating the monthly car payment this couple would need if they decided to buy a new car. The exact words were, "A $580 car payment seems over the top. That doesn't even seem like a realistic number. Car payments aren't that high."

One of my favorite aspects of my podcasting and blogging is the opportunity to share a broader perspective with people. Understandably, most people's context regarding many of these topics is singular: theirs. They know their life, and it's hard to see things through the lens of other people's situations. That's why some people think our economy is fantastic, and others believe it's trash. We don't know what we don't know. We see the world through our one-of-one reality.

I'm grateful that in my work, I get to walk alongside hundreds of people and try to put myself in their shoes. With that preface in mind, back to the car payment. Some see a $580 car payment and think that sounds outrageous. I see a $580 car payment and now think to myself, "Oh, theirs isn't so bad." I remember when I saw my first $1,000 car payment. It was startling. Now, I expect it. Further, I now regularly see $1,500 car payments. It's bonkers!

I often get accused of beating this car topic into the ground......guilty as charged! I believe cars are the single biggestcontributor to our modern-day financial struggles. Our cars are literally killing our finances. Here are a few stats to show where we're at (second quarter 2024 data):

• The average new car loan is now $41,000

• The average new car loan term is 68 months (more than 5.5 years)

• The average new car loan interest rate is 6.8%

• The average new car loan payment is $734/month!!!!

• The average new car insurance payment is $194/month!!

• That means, on average, the monthly cost for a new vehicle in America is $928/month.

It's an epidemic, but it gets worse. Since cars depreciate in value by about 15% per year, and we're extending the loan terms out longer and longer, nearly 1/4 of vehicle trade-ins have negative equity (meaning people owed more on the car than it was worth). This causes people to perpetually borrow more than their newly purchased car even costs.

This trap is killing millions of families! At least 25% of people reading this are probably experiencing high monthly car payments. The opportunity cost of those payments is tremendous, and I have enormous empathy for everyone in that situation.

But we don't have to play these games! It's 100% possible to escape the car loan debt cycle. It takes sacrifice, humility, persistence, and dedication. But you can absolutely do it!

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They Ate the Elephant

A young couple scheduled a coaching consultation with me. They had questions. They needed wisdom. Here was their dilemma: They needed to buy a replacement vehicle soon, but they didn't have any money. Everyone in their lives told them to get a car loan. Their parents told them. Their friends told them. Their co-workers told them. Their neighbors told them. The cultural undercurrent was clear: they should just get a big car loan and quickly buy the vehicle they want. Yet, all the while, this idea didn't sit well with them. They had this wild inclination that a big, fat car payment would somehow hinder their ability to live a free and meaningful life. Thus, they scheduled a meeting with me.

The car they were considering cost $35,000 (new). A six-year loan would cost around $580/month. This felt heavy, and understandably so. My first question was why that particular vehicle. They talked about reliability, longevity, and common practice. After reading some reviews and discussing alternative options, we concluded we could find a suitable alternative in the $20,000 range. It was a different model, slightly used, with some miles on it. That step alone was a game-changer.

Next, we needed to figure out how to pay for it. They could easily go to the bank and get a loan, but they wanted to avoid debt (and perpetual payments) if possible. They had very little cash, so $20,000 still seemed unattainable. There's an expression that goes something like this: "There's only one way to eat an elephant: one bite at a time." Thus, we needed a plan. Given their existing car situation, we decided they could push this decision off for upwards of two years. Therefore, they set a plan to pare down their budget and save $1,000/month for 20 months. If they could do that, they would have enough cash set aside within two years to buy the vehicle.

This still felt insurmountable, but they were crazy enough to try. It took intentionality and persistence, but they ended up doing it in 19 months. $20,000 of cash in hand! They eventually decided to save for a few more months and ended up with about $22,000.

You know what they did next? They did exactly what everyone else told them they shouldn't do. They paid cash for a car. A car they could afford. A car that would suit their needs while also allowing them to live a free life. They ate the elephant!

Don't fall for the trap. There are better ways to live out our finances. Harder ways, but better ways. Patience. Delayed gratification. Humility. This young couple is so glad they took the path less traveled. They are living for meaning first, and it's a joy to watch. You deserve the same!

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Growing Into It, Not Out of It

Over the years, I've come to understand a universal understanding about budgeting: It's something you do when money is tight, and then eventually grow out of it. It manifests through various comments:

"My kid doesn't make much; they need to budget."

"We make a lot more than we used to, so we stopped budgeting."

"I make plenty of money now, so budgeting is pointless."

I probably hear a variation of this comment at least once per week. To me, it's one of the biggest misunderstandings about budgeting. Actually, I do think income and the need for budgeting are correlated......but the opposite of conventional wisdom. The more money someone makes, the greater the need to budget.

I'll use two examples to illustrate this point:

• Family A: This family has a limited income. Finances are tight, and most of their income goes toward needs and debt. When they budget, the primary objective is to ensure there's enough income to meet these basic needs.

• Family B: This family has a stout income. Their needs are met, and a bunch of discretionary income remains. They don't "need" to budget.....they are fine. However, without a budget, there's a high likelihood that they squander their opportunity to give, save, invest, and spend on things that add value. Without a budget, their impulses and lack of intentionality will waste much of their upside. But with a budget, the sky's the limit.

Family A has a narrower range of outcomes. During this season of life, money is going to feel tight. The difference between budgeting and not budgeting ranges from barely making ends meet (and possibly accruing credit card debt) to making ends meet with a bit of discretionary income left over.

Family B's range of outcomes is like the Grand Canyon. Without a budget, they can essentially squander all of their upside and somehow manage to live month-to-month, feeling significant financial tension every step of the way (this is common). With a budget, they have the power to harness this beautiful financial blessing for so much good. They can give generously, save for future wants/needs, spend money on things that actually add value, and invest meaningfully and intentionally.

It's sad, but LOTS of Family B's will squander their opportunity. I've had the privilege of working with many of them, and when they understand this principle, it's game over! Here's one example. This family had generated a fantastic income for over a decade. Yet, over that time, they'd experienced minimal positive momentum. They didn't have much saved, they gave practically nothing, and their investment portfolio was significantly behind schedule.

Then came the budget. They pushed back against budgeting because they "make too much to need one." Eventually, though, they trusted me enough to try. Fast forward just a few years, and they were giving away more than 20% of their income, had adequate savings, invested in creating memories, and built a million-dollar portfolio......which triggered a desire to ramp up their giving even more. All because of a simple budget.

Budgets change everything! ESPECIALLY if you "don't need one."

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But What Will You Give Up?

One of my friends reached out, wanting my input about a big decision he and his wife are considering. They own a house that roughly fits their needs, but house fever is setting in. In a weak moment, they cracked the door open and started looking at houses. Surprise, surprise.....they found an amazing one! Fortunately, though, they are taking a measured approach to the decision; hence, they sought my feedback.

I asked for a handful of numbers to understand the lay of the land. What's the current house worth? What's the current mortgage balance? What's the breakdown of the current mortgage payment? What does the new house cost? After a few simple calculations, I derived one critically important number: $1,700. That's how much their monthly payment would increase if they green-lit this decision. There are many other variables worth considering, such as furnishing the house, higher utility bills, additional maintenance considerations, etc. However, that $1,700 number is vitally important.

We talked about a few of these nuances before I asked THE most important question: "But what will you give up?" In other words, where will this extra $1,700/month come from? Oh yeah, I also added one caveat: "And you can't say, 'We'll just make more income.'" He laughed and said he was about ready to say, "We'll just make more income."

"More income" is a terrible answer to this type of question, as it just stacks additional pressure and tension on us. While this new house might increase their standard of living, taking the just-earn-more-money approach will inevitably lower their quality of life.

So, back to the real question. What will you give up? Buying this house will require them to reallocate $1,700/month away from one or more categories. But which ones? Their giving? Their saving? Their investing? Their fun? All of these have substantive consequences. Buying this house isn't inherantly bad, but they must be clear and honest with themselves first.

That's why we must answer this question when making big financial decisions. There's no such thing as a free lunch. Every time we create a financial obligation in our lives, that money has to come from somewhere. We ought to think about that before making such decisions.

Ultimately, they couldn't think of a good answer to that question. They loved the house, but not give-up-$1,700-of-other-things-we-care-about love. Thus, they passed. Good call; very good call. I suspect they will thank their former selves in due time.

Whatever decision you have on your plate that involves the increase of financial obligations, always ask yourself, "But what will I give up?" Your answer will be telling.

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It’s Hard to Overcome Our Structure

Someone contacted me with a problem. A couple in their mid-40s, two kids. They believed they were being responsible with their money, but it felt nearly impossible to make financial progress. As they put it, they didn't waste money, spend money frivolously, or buy nice things. Yet, they lived month-to-month and had much financial tension in their marriage.

I sat down with them to review their numbers. Here's what I found (shared with their permission):

• Combined Take-Home Income: $8,200

• Mortgage Payment: $3,600

• Car Payments: $1,600

• Other Debt Payments: $700

Do you see a problem here? Just their house payment is 43% of their take-home income. The house plus the cars account for 63%. Then, when you tack on the rest of the debt, these three categories account for 72% of their take-home income.

That means they only have $2,300 left for all other needs, wants, giving, and saving. That's not nothing, but wow, it's tight. So when they say they don't waste a bunch of money or spend frivolously, I believe them. There's no money to waste!

Here was their question: "How do we find margin? Where do we cut?"

These are tough situations. Unfortunately, it's hard to overcome our structure. This family had created a really expensivefinancial structure for their household. Based on THEIR choices, more than 70% of their income was already spoken for before it hits their bank account. No amount of trimming or cutbacks can help this family remedy what ails them.

Whether we want to admit it or not, these are OUR choices. The cities we reside in. The residences we choose. The cars we buy. We can cry foul all we want, but at the end of the day, we have choices to make; and these choices will dictate our structure.

Here's what happened. I pointed out that there are very few options to help this family without them significantly altering their structure. They can't cut groceries, utilities, dining out, clothing, entertainment, or any other budget items enough to move the needle. It's hard to overcome our structure! I couldn't let them go home empty-handed, though. Here are the options I floated by them:

• Increase their income

• Downsize their residence

• Sell one or both vehicles (and replace them with cheaper alternatives).

• Use some of their assets to pay off their non-car and non-mortgage debt.

Outside of these four levers, very few options exist to help them. Their structure is their structure, and it must be addressed for what it is. It's tough, but reality.

I hope this family takes a hard look in the mirror and decides to take drastic action; only time will tell. I sincerely believe their life will unlock if they are willing to humble themselves and make difficult choices.

The same goes for you....and me. We can trim around the edges all we want, but our financial structure significantly impacts our journey. For some of you, it may be time to alter your structure.

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Being Responsibly Irresponsible

As is the case most days, I opened my Daily Meaning e-mail inbox yesterday to find a message from my friend Randy. Randy consistently responds to my blog posts, including words of encouragement, a representative story, additional wisdom, or alternative perspectives. Yesterday's was a bit different. He pointed out that some readers might find yesterday's post (about not impulsively wasting extra money) incongruent with my typical message of using money on "spending for memories and meaning." He didn't personally find it incongruent, but he suspected others would......and he was right. I subsequently received a handful of questions and responses indicating such.

On the one hand, I repeatedly beat on the drum of values-based spending, investing in memories, and finding meaning in our finances. Then yesterday, I leaned into this idea that we shouldn't impulsively spend "extra" money that comes into our lives. Instead, we should apply all extra income to wherever we are in our plan. See the possible incongruency here?

Here's the bridge for this perceived gap: responsibility and intentionality. It all comes down to those two things. If we don't take responsibility for our finances (pay for needs, save for future expenses, and give), our finances get disjointed.....and stressful! Yes, we should use some of our money for fun and memorable things. However, having our financial ducks in a row is a must. If we're behind on rent, can't put food on the table, and the utility companies threaten a shut-off, we probably shouldn't be dumping our money into lots of wants (today). We need to solidify the foundation. Responsibility is critically important!

Second, intentionality. As I often mention, I don't personally care where you choose to allocate your money. People have different values, priorities, passions, and situations. It's inevitable that your "right" is different from my "right." Here's the second part of my slogan. I don't personally care where you choose to allocate your money......as long as it's intentional. It's planned. It's purposeful. It fits within the context of our broader finances. With intentionality comes peace; with impulse comes regret.

Three of my clients recently traveled to Europe for some epic summer trips. Believe me, I've been living vicariously through them all summer!!!! The pictures are beautiful, and I suspect the memories are much sweeter. Each of these trips cost them anywhere between $6,000-$14,000. That's a lot of money, but they put a ton of intentionality into it. Some of these families have been saving this money for years. Month after month after month of saving. Then, the planning. They got the flights, then the hotels, then started filling the days with museums, trains, tours, and restaurant reservations. So much intentionality! By the time the trip arrived, they had zero financial stress and, carried themselves confidently, knowing their overall finances were intact and thriving.

Let's call this living responsibly irresponsible. Do the things other people judge you for. Make them roll their eyes. Let them question your sanity. But behind the scenes, do it with much intentionality and responsibility.

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It’s a Slippery Slope

In yesterday's post, I referenced how money is fungible. All there is is money in, and money out. This money doesn't go here, and that money doesn't go there. We have income, and we have outflows. Period.

Typing that reminded me of a situation that played out early in my marriage. Sarah and I were in the midst of our journey to pay off $236,000 of debt (it sucked as much as you're thinking). We each received a little personal spending each month, plus a few other fun expenses like modest dining out and travel. Then, every other excess dollar we had went toward the debt.

One day, Sarah decided to add a part-time nannying gig to her schedule. As we ate dinner, she started verbally processing what she might want to do with this extra income. Maybe clothes. Maybe nails. So many fun options!

That's the moment, mister fun hater (me), stepped in. I shared with her that money is fungible and, as such, this extra income had to be two things:

1. Ours, not hers.

2. Included in our budget.

She was noticeably annoyed with me. After all, she was the one working extra hours to earn this extra money.

She explained that our paychecks were our budget money, and this new income was "extra." (You know what we do with extra, right?) And since it was extra, it should fall outside of our budget and she should be able to do anything she wants with it.

Me: "Oh interesting. In that case, I'll have to figure out what I want to spend my annual bonus on!!!!"

Her (even more annoyed): "Your bonus is part of your work, so it's different." (I'm paraphrasing here, as I don't remember her actual comment)

Me: ......

See the problem here? Whenever we treat something as "extra" or "different," we undermine our finances and marriage. We go from "ours" to "mine." From being intentional to "screw it." It gets muddy…and messy.

Sarah eventually saw my point. I was grateful for her desire to work harder to help our young family dig out of a hole, but income is income. Ultimately, here's where we landed. We included her nanny income in the budget as income, juiced up her personal spending a bit, and added the to the debt paydowns. It was a win-win.

It's a slippery slope to treat money as anything but fungible. All there is is money in, and money out. Remove impulses. Take out the bias. Don't undermine your relationship. Don't sabotage your finances.

We've never had an issue with that topic since that day nearly 13 years ago. I may make 99% of our family's income, but it's "ours." Never "mine." Never. Don't fall down that slippery slope!

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Let Blessings Remain Blessings

I opened the mail yesterday to two unexpected blessings: two checks I never saw coming. I'm not talking about massive amounts of money here—$250 and $100.

What do you typically do if you receive unexpected extra money? If you're a human (and I suspect you are), there are two typical outcomes:

1. The most common outcome is to simply blow it. It's extra, and most of the time, we don't respect those extra blocks of money. It will likely be impulsively spent before the check even clears.

2. The second most common outcome is to dump it into a general savings account, which will be hoarded in the near term and probably impulsively spent at some point in the future.

I prefer to let blessings remain blessings. First, I don't actually care what you do with it. Whether you spend it, save it, or give it is not what's important in this conversation. Here's what I do personally, and it's how I coach it every single time:

1. Add this as income to your budget. If it's money coming in, whether it's a $100 reimbursement check or a $10,000 bonus, it's income. Add it to the budget as such.

2. Once it's in the budget, you have $x more in the budget than you did before. Let's pretend it's $200. You add the $200 as income to your budget, giving you $200 more to allocate somewhere in the realm of spending, saving, or giving. Treat it as you would any other $200 in your budget. $200 is $200.

3. As such, allocate this money in accordance with your current plan. If you're in the midst of paying off debt, pay off more debt. If you're saving for a big trip, save more for your trip. If you've been working on a financial gift to your favorite organization, give it.

4. Execute the plan. If you say you're going to do something, do it. After all, you promised yourself in your budget. Own that. If you plan to buy a new espresso machine, buy the machine! If you plan to pay off that credit card, pay it off! Don't break your promise to yourself.....or your spouse.

That's the thing about money, it's fungible. All there is is money in, and money out. The moment we try to say this is for that, and that is for this, we've lost the plot. Instead, look at everything as one big puzzle. When we do that, we develop a much healthier and more productive relationship with our money. No guilt, no emotional strings, no sense of obligation. Just wisdom and discernment.

As for us, August has been a kid-expense-heavy month. Activity fees, school supplies, new shoes, and end-of-summer fun have drained that category quickly. I suspect Sarah and I will pad that category with this unexpected windfall. That's our current reality, and we'll live into that.

Meet your money where you are. Don't waste these little (or huge!) opportunities. Let your blessings remain blessings.

____

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Two Is Better Than One

I regularly discuss how married couples must take joint ownership of their finances. It's critically important that both spouses are involved. Today, though, I want to clear up one common misconception.

Ownership and action are two different things. Yes, both spouses need to have ownership. However, couples don't need both spouses to jointly manage the finances. There are so many different ways this can play out.

For example, one spouse may pay all the bills, and the other handles all insurance and investments. Another example is having both spouses jointly pay all the bills and manage the budget together (they literally sit at the table together and work through it together). Both of these approaches are perfectly acceptable, but here's my broader point. It doesn't matter who does what, as long as both spouses have a voice, ownership, and accountability.

I'll use my marriage as a third example. I'm married to a woman who is allergic to numbers. Trust me, it's been scientifically proven. Sarah has zero interest in bills, investments, insurance, or anything else that includes dollar signs and numerical digits. And that's okay! What's important is that Sarah has ownership.

Each month, Sarah and I discuss, negotiate, and set our budget. Some months are more difficult or busier than others, but that's been our general trend for nearly 15 years. I may make 99% of our family's income, but she has an equal voice (it's "our" money, not my money). Her opinions matter. Her influence is imperative. We negotiate what will happen with our money, and then she turns the management over to me. She has her own role, though. Since she has ownership, she's accountable for living out the plan we set for our family. She must honor the budget we set together and execute whatever life decisions come with it. But I handle 100% of the actual financial management. That approach is okay, too!

That's ownership vs. action. There is no right or wrong. Some couples do everything together, some have a clear delineation of duties, and some are like mine, where one spouse does most (or all) of the management. All of these are acceptable approaches, under one condition: both spouses have ownership.

If your spouse doesn't have ownership, accountabiity, engagement, or a voice, I encourage you to bring him/her into the fold. It will lead to more financial success, an improved marriage, and a reality where your finances become an extension of your values, dreams, and aspirations. In other words, it changes everything!

The Blink of An Eye

A little more than eight years ago, Sarah and I were a mid-30s couple who aspired to one day have children. Just a handful of days later, we were the parents of twin baby boys. We went from “we wish” to “oh crap” in about twelve seconds. We bought car seats, bottles, clothes, and diapers AFTER meeting them for the first time. We didn’t even have a room ready for them. Our lives forever changed in the blink of an eye. 

For as much as we think we have a firm grasp on our lives, reality often plays out differently. Birth, death, job loss, marriage, sickness, career shifts, divorce....all sudden forces that have the power to change our lives in the blink of an eye. There’s a problem, though. When we think we have a firm grasp on our lives, we act as though we have a firm grip on our lives. In the financial arena, it typically means that we create our personal cost structure that works for one reality: the present one. 

I often meet with couples who were feeling fairly confident in their finances for years, until _____ happened last month. As long as their family is healthy, employed, and not making any changes, they can keep the train on the tracks. However, when we structure our life so specifically, it doesn’t allow margin for life to happen.

It reminds me of a situation that still haunts me to this day. Many years ago, I was meeting with a couple. Two strong careers, no kids. They lived in a beautiful home, drove luxury cars, and took exotic trips. Between their hefty mortgage, two obscene car payments, and a glitzy lifestyle, their monthly expenses absorbed most of their income. I asked them about kids. I recommended they start making some shifts in lifestyle to create margin for changing circumstances. Namely, I suggested they consider what-if scenarios that may include one of them working part-time or staying home completely. Before I could finish, the wife snapped at me, “I’m not staying home. Zero chance!” They completely shut that conversation down. Over the next few meetings, I tried to bring it up again, pointing out that sometimes, but not all the time, having children shifts career aspirations and jumbles priorities. Again, they were adamant there’s zero chance of either staying home. Thus, they continued down the same path. 

Fast forward 18 months, and they gave birth to a beautiful baby. Then comes our next coaching session. Wanna guess what the topic of conversation was? The wife, now a mom, was desperate to stay home with her baby. Life changed in the blink of an eye, but they structured a life that works for just one reality. When I visually showed them there was no way she could stay home (or even work part-time) without completely gutting their lifestyle (house, cars, travel, etc.), there were a lot of tears. So sad!

Life can change in the blink of an eye. Knowing that, it’s imperative that we structure our life in a way that allows us to shift with it.

The Three-Month Rule

Happy last day of the month. How in the world is the year half over?!?! Today also marks a special occasion. Being thelast day of the month means tomorrow brings a brand new budget. If you're a budgeter, you know exactly what I'm talking about. It's a day that brings hope, possibility, and excitement. It's a new opportunity to bring our values to life through our finances. For some of you, it's also a great opportunity to close the book on a really crappy month and start afresh. Either way, tomorrow is your day!

If you're not a budgeter, perhaps July is your month to begin. Whenever I talk to people who don't budget, I ask, "Why?" There are a million reasons people don't budget, but there are a few common responses:

• "It doesn't work for us."

• "I suck at it."

• "It was too hard to follow."

• "I didn't like it."

All of these are valid reasons, but on the flip side, they are probably (half) wrong. Budgeting is simple—eventually. Budgeting is powerful—eventually. Budgeting is a game-changer—eventually. Budgeting isn't something we just pick up and are magically good at. After all, if you don't budget, there's a strong likelihood you've operated your finances without one for years....maybe decades. So we can't expect to be overnight experts.

Whenever coaching someone on their first budget, I always add, "you're probably going to fail." Encouraging, I know! But it's true. The first month, or two, or even three will probably be a mess. The goal isn't to crush this budgeting thing in the first month, but rather experiment, learn, and grow. What works. What doesn't. What abc category costs. Why xyz category needs to be changed. How to better track. How to engage our spouse better.

The problem for most prospective budgeters is they don't do a great job the first month, feel like trash about it, and simplygive up. You're supposed to fail! That's all part of the game. I call it "the three-month rule." Those first three months will be tough, but it's the setup for what's to come. Typically, by the fourth month, most people are fairly locked in and confident to execute on their plan.

That's my encouragement to you today. If you don't budget, I encourage you to give it a try, give yourself grace, know you're going to mess up, and know it's going to get better. If you give it at least three months, I strongly believe it will become a valuable tool in your financial arsenal.

And remember, budgeting isn't about spending less; it's about spending better. It's about harnessing every dollar of income you're blessed with this month and aligning it with your values. Spend, save, and give in accordance with YOUR values.

Happy new budget month, y'all!

The Clamps Are Tightening

Do you ever feel like you make good enough money and manage it well, yet there's simply no margin in your financial life? If so, you aren't alone. Millions of families in this country are experiencing this phenomenon. Inflation has wreaked havoc on so many people. What not long ago felt like a respectable income has turned into "just scraping by." Even though inflation is going down, its consequences are here to stay. This is a common misconception about inflation. When inflation goes down, it doesn't mean prices go down. Rather, it means prices are going up less quickly from their now-inflated levels. It's a mess.

I regularly meet with families that make $8,000, $10,000, or $12,000/month of take-home income, barely making ends meet. Much of this can be attributed to the cost structure established by the family prior to inflation setting in, which is difficult to change. It's embarrassing for people, and they feel alone. After all, it's weird to tell your friends or family members, "Yeah, I know we make $160,000 per year, but we're really struggling." That sort of conversation will make people play their miniature violins with their eyes rolling. Therefore, people suffer in silence.

It feels like the clamps are tightening. We can stave off the financial pressure for a while, but eventually, it starts to add up. The normal life costs keep increasing until they've squeezed out the margin. One-off expenses, such as medical bills, car maintenance, and house repairs slowly bleed people dry. We make purchase decisions that entrap us in debt. We experience shocks to our income. One by one, families are breaking.....it's so sad!

If any of this hits home for you, perhaps what I'm about to say next can help you relieve some of your pressure. Here is a menu of options to help you navigate a tight financial season:

• Find areas of your monthly budget to cut. You may need to trim down on dining out, travel, or other wants.

• If you have assets tied to debt (and hefty loan payments), you might consider selling them. One of my clients sold their vehicle, and it immediately freed up $800/month from the car payment being done.

• Temporarily tone down your investment contributions.

• Temporarily stop saving toward your sinking funds. Yes, these are important, but it's more important to keep the financial train on the tracks.

• Find extra income. A side hustle or side job can relieve a ton of financial pressure.

• If you're not sitting on a cheap mortgage, it might be time to downshift your housing.

You aren't alone! But at the same time, the burden of navigating it is on you. I don't like it any more than you do, and I think we have some major problems on our hands, but it's the reality we're stuck with (for now). We must face it head-on so our families can live to fight another day. It's a tall order, but you got this!

I'm happy to chat if you have any questions about your own situation. This is a scary and prevalent issue, and you don't need to face it alone.

5-Star Dining at a 2-Star Establishment

I hope all the dads and grandpas had a wonderful Father's Day yesterday. We made a quick trip to my parents' house for the weekend, where my dad and I spent Saturday doing body work on my new car. The car is in pretty good shape overall, but 18 years of life has provided a few scrapes and scars along its journey. Here’s an updated pick after removing the chip guard film and restoring the headlights.

We drove home yesterday morning so I could coach Finn and Pax's last soccer game of the season (and they won the league championship!). It was 90+ degrees out, so we grabbed some ice cream afterward, and then took a wonderful nap. To finish the night, we had a little Father's Day dinner out.

IHOP. Yes, IHOP. It's not my favorite place in the world, but the family was craving breakfast, and they have a kids-eat-free special. We had a great time together, and it was the perfect way to cap off a great Father's Day.

While I love a 5-star restaurant as much as the next person, not all meals need to be profound. Sometimes, it's just about creating memories over some simple food. The food was just that: simple. However, we had a blast together, and everyone walked out happy and full.

Over the years, our dining out budget has varied. During our pre-kid debt payoff years, the budget was $100/month. During our pre-kid post-debt years, the budget was at least $500/month (we had a lot of fun dining in that season!). After the twins were born, our dining out dropped to around $200/month (a few nice date nights). After I left my prior career and we took a 90% pay cut to start over, it went back down to about $100/month. Today, we're in the $250/month range.

We NEVER deviate from the budget. If we have money left, we use it. If we don't we don't. It's one of the ways Sarah and I show commitment to our budget, which we negotiate and agree upon at the beginning of each month. We don't exceed it....no exceptions. Sometimes, that sucks. Sometimes, it's frustrating to be 20 days into the month with no dining out remaining. But that's on us. That's our fault. That was our mistake; therefore, it's our burden and consequences.

That level of self-discipline changes things. It forces us to make wise decisions. If we can't bend the rules, then we must find a way to live within the rules. We can always create new rules next month, but this month's rules are this month's rules. Sometimes that means we get to eat at a Michelin-starred restaurant, and sometimes we eat at IHOP. Both are wins, by the way.

That's the beauty of setting financial guardrails in our lives. It's not something we have to do, but rather something we get to do. Once the rules are set, we have the creativity to work within them with no guilt, no regret, and no remorse. Freedom through boundaries.

Good Morning, Bob Ross

Hello, Bob Ross! Yes, you! You're an artist, you know. Today is the first of the month, which means you woke up to a blank canvas. Whatever happened last month is gone....it's on that old, messy canvas. My May canvas was a disaster. We had surprise expenses, mishaps, and oversights. We screwed up. I didn't like the painting we ended up with.

But today? Today we each wake up with a clean, white, beautiful canvas. For the next 30 days, we'll curate a new piece of art. We'll make money, spend money, save money, give money, and invest money. Thousands of transactions and events will slowly paint the canvas, stroke by stroke.

We have two choices today. We can either grab brushes and haphazardly begin tearing across the canvas with reckless abandon, or we can make a plan. Many people attack their clean and beautiful canvas with chaos, reactivity, and urgency, resulting in crazy artwork akin to what my toddlers used to bring home from pre-school. Others will take a few minutes before picking up a brush to determine the objective of this potential masterpiece. Where the trees will go, how fluffy the clouds will be, and where the water meets the horizon. No, it won't be perfect; perfect doesn't exist. But when the painting is complete, it will be beautiful.

Here's my encouragement for you today:

• Reflect on what happened last month: the good, the bad, and the ugly. Learn from it. Celebrate the wins and forgive yourself for the losses.

• Put the past behind you. You can't drive forward by staring into the rear-view mirror. That's a recipe for a disastrous crash. Eyes forward!

• Take 15 minutes to create a plan for your money money. How much is coming in, and from where? What are your needs? What debts need to be paid? How much will you give? Make sure to add some fun in there. Determine which saving initiatives need attention. Make sure every dollar of income has its marching orders. No soldiers left behind. Each is important.

• Commit to yourself (and if relevant, your partner) to follow your plan. After all, it's your plan.

• Execute with confidence and conviction. Paint that canvas!

• Repeat the same process next month.

This money stuff can suck. It can be the source of so much pain, suffering, turmoil, and tension. But if done well, it can also lead to some beautiful places. Perfect, no. Beautiful, yes. Instead of viewing it as dollars and cents, see it as bringing your values, aspirations, and meaning to life. Treat it like a blank canvas, just waiting for a Bob Ross masterpiece to be painted. Your masterpiece.

Just Move One Piece

Finn recently decided to be a chess player. It was an unexpected development in our household, but I dig it. I'm not good at chess, but it's fun to compete with him and watch his little brain work. In the first few games, I had to remind him, "just move one piece." You move one, I move one.

With as complicated as our finances can become, there are a lot of moving pieces. Sometimes, families feel the need to adjust every number every month. They try to focus on all the categories and prioritize everything, then get overwhelmed. Instead, I encourage people to "just move one piece." If there are one or two categories that we need to get better control of, focus more dollars to, or gain more intentionality on, put your energy there.

We shouldn't try to do everything. If we can hone in on one or two things this month, then maybe we can grab another next month. Music lessons and cell phone replacements are two categories for us. After a trial run for drum and electric guitar lessons for the kids, it's time for Sarah and I to build that expense into our budget for the foreseeable future. That's a priority for us, and we need to create margin and consistency with it.

Second, Sarah's phone is in hospice care. We need to make quick decisions, or she'll be living in 1994 again. Therefore, we'll lean hard into this category and find a way to replace her phone quickly.

It's the power of the just moving one (or two) piece(s). We can't move the needle on every goal, every category, and every habit. But we can move the needle on a few, then next time a few more, then eventually a few more.

As one more visual, let's say you have five different priorities, each costing $500. Let's also pretend you have $500 of monthly discretionary income after all needs, wants, and giving have been accounted for. If you prioritize them equally and try to do everything at once, you'll contribute $100 to each of them. At that pace, it will take five months to achieve a win. On the flip side, if you decide to prioritize just one (and contribute all $500 to it), you accomplish a goal in the first month. If you do the same in the second month, you achieve another goal. Constant momentum.

Many financial situations in our lives involve this principle. If we just move one piece, we can move the needle quickly while gaining confidence from the wins.

The new month is quickly approaching. What one (or two) piece(s) will you move?

One At a Time

Yesterday, I faced the same challenge many of my clients regularly encounter. After a few weeks of travel, sickness, and the Northern Vessel car crash sequel, my personal finances have taken a back seat to life. This is a natural consequence when life gets busy. It's not a matter of if, but when. Life WILL get crazy, and when it does, our finances may be a temporary victim. 

Upon finally having a little spare time on my hands yesterday, I popped open my budgeting app to see what things looked like. Much to my despair, I was met with 68 uncategorized transactions. Crap! Few things cause anxiety and overwhelmingness quite like realizing you've fallen that far behind on tracking your finances. 

At that moment, I triggered my motto, which I find helpful when these anxious feelings creep in: "One at a time." I can't categorize 68 transactions at once, but I can categorize one....then one.....then one. Here's how my brain works when starting my one-at-a-time process:

• First, I start with the most recent transactions, as they are most likely fresh in my mind. I quickly categorize each item that's immediately familiar. 

• Second, I scan the transactions for vendors that are obvious categories. MidAmerican Energy is electricity. PureBarre is Sarah's fitness. Leaning Tower Pizza is dining out. Simple and clear. 

• Third, I choose a vendor that has multiple transactions popping up, and systemmatically knock out each transaction. Amazon is a great example. I had about a half dozen Amazon transactions. I logged into my Amazon account, scrolled through my recent orders (to determine what categories each transaction entailed), and categorized each transaction accordingly. I repeated this process for Target and Wal-Mart transactions by using their respective apps. 

• Fourth, after working through the first three steps above, my unallocated transactions shrunk from 68 to 15. These remaining transactions take a bit more work. They may involve a quick conversation with Sarah, an e-mail search for receipts, or logging into my bank account to see if there's an expanded transaction description. These are never fun, but it's a lot easier when there are only a handful of them. 

One at a time. This is such an important perspective when dealing with our finances. Things can get complex and overwhelming. It's the nature of money and numbers, which is why so many people flounder or just give up. But when we take a one-at-a-time approach, nothing is overly intimidating. Just keep moving forward. Sure, we'd love to be sprinting every step of the way.....but even a crawl is still progress. Putting one foot in front of the other.

Apply this to all areas of money—heck, apply it to all areas of life! Break things down into digestible chunks. Make it approachable. Create opportunities for small wins. Execute. Repeat.

It feels good to get caught up on my budget tracking and again have clarity on where we stand. I'm sure I'll get derailed again at some point, but when I do, one at a time!