There is a pyramid scheme running rampant through my hometown at this moment (called L.I.F.E. or Living Intentionally For Excellence). Even my own husband was roped into it! His friend called him and told him he had a ‘business opportunity” he wanted him to be a part of, but that he (my husband) would need to attend a meeting to become better acquainted with what the opportunity was. My husband, in one day, went from telling his friend that he would attend the meeting but wouldn’t be able to sign up for anything without discussing with me, to joining up and telling me my opinion didn’t matter! The people involved in this pyramid scheme told him, that he would encounter negative people with closed minds that would try to talk him out of this, so when I wasn’t on board, I was labeled a negative person with a closed mind! It wasn’t until he got his credit statement that showed his credit card maxed out…..and not a penny earned (although the guy who signed him promises to be retired after one year!) that he saw this scheme for what it really was. Now, even after hearing our story, my brother is falling for it!

I can’t believe these things are still around and people are still gobbling them up hook, line and sinker. Pyramid schemes date back to Joan Rivers’ first facelift. When a company or an individual recruits investors who then have to recruit other investors, this is usually a pyramid scheme. New recruits provide the funding, or so-called returns, given to the earlier investors/recruits pushing them up the pyramid.

The only way the pyramid scheme can generate returns is to bring in more suckers to feed the bottom tier. When the scheme loses steam, the pyramid collapses. Now this scheme seems to have added the additional dimension of putting credit into the mix. What a recipe for disaster! And if that’s not bad enough, it’s divisive as well.

If you’re approached with a “great deal” and a promise of “fabulous returns” or a “sure thing”, ask these questions before you swallow the hook:

Do you have a brochure? No paper should be a big tip-off.

What exactly am I buying? If you can’t touch it, you shouldn’t buy it.

Who is in charge? That’s the person you want to talk to.

What do I get back for the money I am investing? If the return sounds unbelievable, ask more questions.

Why do I have to recruit someone else? No other investment relies on recruitment.

How is this investment taxed? If it’s not taxed, it’s not an investment.

Why do you need access to my credit card? Don’t be a dope. No one should be able to charge stuff to your credit card that comes as a surprise to you!

How long can I think about this? The sooner you have to make a decision, the more time you should take to think about it.

The old adage is, “There’s a sucker born every minute” has been incorrectly attributed to P.T. Barnum. While the attribution may be incorrect, the sentiment is dead on.

People, there’s no magic to making money, no matter how many get-rich-quick schemes you see out there or how many testimonials there are to a new way to “make money easy and fast”. Having lotsnlotsa money takes hard work and careful management. If you’re looking for an easy way, you’re a sap. It’s only a matter of time before you get taken.

So I was clicking around online recently for savings accounts’ rates. There’s a site called RateSupermarket.ca that purports to be a one-stop shop for things like mortgage, credit card, savings and insurance rates. I clicked on savings, put in my province and asked for the rate comparison.

The first thing I noticed was that ING Direct didn’t show up on their list. Strange, I thought. ING has always offered better rates than traditional banks. I wonder why they aren’t here.

The day I went online (April 26, 2012), the highest paying account was being offered by FirstOntario Credit Union. Their high interest eSavings account was offering 2%. That’s better than everyone else out there, beating Ally who sat at 1.8% and my own ING account at 1.35%. So I clicked on through.

Imagine my surprise when I arrived at FirstOntario Credit Union’s site to find that their high interest eSavings account was paying only 1.85%. Seems the rate quoted at RateSupermarket wasn’t the right rate. If I’d let myself get all hot and bothered over the higher interest rate I would have been disappointed.

All this is to say that if you want to be sure you’re getting a good deal, you can’t rely on anyone else to do the legwork for you. You must be prepared to put some time and effort into doing the research so that when you make your decision, it is an informed one.

Enough already with being lazeeee. You work hard for your money, dragging your sorry butt out of bed when the weather is crappy or when you feel like a piece of dirt. If it’s worth that much effort to make it, shouldn’t you put a little bit of effort into managing it?  Quit trying to find a short-cut and do the damn legwork.

———-

Zsanett in Winnipeg wants to know if there are any “financially awoken followers, here in Winnipeg and area who would be interested in getting together and discuss and share their stories.” If you’re interested send an email to getgvo@gmail.com with Zsanette in the subject line and I’ll forward on to her.

So how about instead of focusing on numbers you focus on choices you must make instead. Let’s say, for example, you’re heading off to buy a new coat. You’ve got a budget of $80, but when you walk into that fancy schmancy store you love to “just browse” in you fall in love.

The coat is on sale. It looks fabulous on you. It’s $320. That’s four times what you planned to spend, three times more than you have. So you rationalize. Hey, that’s just an extra $240… what’s $240… not all that much, right? You can find $240 to have this fabulous coat that you can wear for the next ten years. Hey, that’s just $24 a year… so worth it!

Stop.

Don’t look at the numbers in terms of numbers because being the delusional fool that you are, you can talk yourself into anything. Instead look at the choice you’re going to have to make between two sumthin’ sumthin’s that you want.

On the left side of the scale is the $240 extra for the coat. On the right side of the scale is the ________________________________ (what’s your pleasure?) Fill in the blank with lunches out, daily designer coffee, drinks with friends, the concert tickets you were planning to buy.

You have a finite amount of money so you have to make a choice.

Will you give up coffee on the way to work for 48 days? Is that gorgeous coat worth it to you to make your own cuppa at home and avert your eyes as you walk past the coffee house?

Will you pack your lunch every day next month so you have the money for the coat? Will you forgo the baseball game, the theatre tickets, seeing your favorite band with your old roommates from university? What will you give up in real tangible terms to have that coat?

Believe it or not, money really isn’t about numbers, it’s about choices. Do you know what you’re willing to give up in order to get what you THINK you want?

Why?

Well, young people like being carefree about their money. After years of being broke, having some change means buying all the stuff they had to defer while they were poor students. Or maybe, because they are poor students, there’s a sense that debt is inevitable. Sure seems that way for parents. And you know what they say, “The apple doesn’t fall far from the tree.”

Hmmm.

That’s you they’re talking about there Ms. Apple. It seems you’re destined to walk in your father’s footsteps, to make all the mistakes your parents made with their money, to end up just like ‘em. How are you feeling about them apples?

Or you could do it differently.

But that would mean figuring out what to do.

And that would mean being conscious about how you deal with your money, instead of letting it slip through your fingers like so many mommies and daddies did.

You can climb on the consumer bandwagon and, like your parents, put style before substance. You can ignore common sense and shop using credit like there is no tomorrow. Hey, you can do anything you want.

Including…

• Deciding that life is to be lived, not to be spent paying for stuff that keeps you on track with the If-you-don’t-have-it-you’re-not-cool crowd.
• Choosing to use money to make dreams into reality instead of buying more crap.
• Opting for awareness instead of blindly following the path of the latest (and soon to be forgotten) trend-setter.

You can choose the  path your parents took, consuming yourself to debt. Or you can carve your own path.

It’s your life. You decide.

There’s a big difference between being poor and being broke.

People who are poor don’t have the resources available to improve their financial situations. They may face a personal challenge, such as a learning or physical disability. It may be because they became ill or disabled, and unable to work they must rely on meager benefits. It may be because life has kicked them hard and they haven’t found their way back to their feet: divorce can do it; widowhood can do it; unemployment can do it.

Being broke, on the other hand, means you have resources available to you and you can improve your financial situation, you just may not know how. It may be that you’re financially illiterate. It may be that you have no will power, no ability to defer gratification, no time management skills. Or you may simply be LAAAAZY!

The only solution to being poor is to find a way to make more money. If there’s no way to make more money, then poor you will remain, and you must figure out how to make the best of the scant amount of money you do have. I’m sorry if your life feels like it sucks. However, I do believe that you have control over how you deal with your day-to-day experiences and that your perception of your life can change if you change the way you think.

Poor means you must focus on finding ways to stretch your dollars. Never mind trying to save; forgedaboutit. Your goal is to make do and make a life. You’ll shop second-hand, find fun on the cheap, and live simply. You’ll know you can’t have all the stuff the not-poor people have, and you’ll make peace with your circumstances so you aren’t bitter and miserable.

The solution to being broke is to get your head out of the sand and fix the mess you made. If debt is your problem, look around this website or get a copy of Debt-Free Forever and work through the process. If it’s savings you lack – no emergency fund, no curveball account, no long-term savings – figure out how to trim back on what you’re spending so you can come up with the money to save. Get your hands on a copy of Never Too Late and you’ll see that with as little as a dollar a day you’ll move from being Not a Saver to being a Saver.

Your circumstances do not define you. You can achieve anything you put your mind to. At the very least, you have control over how you see your life and what you make of what you see.

You know Make Do Month: It’s the month when you stretch everything a little farther so you spend a lot less. You’ll scoop the last drop out of every bottle or jar. You’ll dig to the back of your food cupboard to use up the noodles, the soup, the bag of beans. And you’ll go through your freezer and eat everything that’s been sitting there for the past six months. (Hey, don’t let a little freezer burn scare you off. Turn it into soup!)

January is also a good month to experiment with a new routine as you make do. Used to buying coffee every day as you head to work? Start brewing your own at home or work and save big-time. Go out for lunch? Pack one from home four out of every five days and you’ll be able to pay off that holiday debt.

If you have family or friends whose birthday falls in January, committing to Make Do Month mean you won’t rush out and buy a present. Instead, you’ll find a way to give something of yourself instead of something you’ve bought. Make their favorite cookies, offer to cook them a meal or a bunch of meals for the freezer for those extra busy workdays, or create a coupon for three nights of free babysitting. Maybe you’re a computer genius and can offer to do maintenance or repairs. Perhaps you’re a mechanic and can offer a tune-up. Substitute your energy for spending money.

While you’re being frugal and using up all your stuff so you don’t have to spend money in January, why not inventory the things you seem to have a lot of: screws, magazines, nail polish, face creams, shampoo, books, yarn, scrapbooking supplies. Measuring your abundance and committing to buying nothing more until you’ve used up what you have is a great way to take Make Do Month and make it a year-long way to save money.

After the buzz of the holidays you’ll no doubt be happy to stay home for the first couple of weeks. Then you may start feeling itchy. You’ve got to get out. You can feel the walls closing in. Before you hit that great new restaurant that just opened up or head out to the clubs, remember that January is Make Do Month. Call up a couple of friends and throw a pot-luck dinner instead. My girlfriend Annie asked all her invitees to bring a dish from their cultural heritage. I showed up with Oxtail Soup (stay tuned for a new recipe) and partook of everything from cabbage rolls to Lebanese.

January is a great month to start a tradition of once a month game or poker nights and rotate from one friend’s home to another. No one says you can’t have fun in Make Do Month. You just can’t spend gobs of money.

Make Do Month is a conscious decision to stretch every dollar as far as it’ll go. Try it and see if just becoming conscious saves you money. I’ll bet you’re pleasantly surprised.

There are good reasons for women’s sense of financial insecurity. One factor that affects women’s income is their family status. Women make up the large majority of lone parents. Women head up 80% of all one-parent families and single-parent households headed by women have by far the lowest incomes of all. According to  the Canadian Research Institute for the advancement of Women, “51.6% of lone parent families headed by women are poor.” It’s no wonder we fear for our children and ourselves. The statistics are frightening. And if you are one of the statistics, your whole life can be frightening. What could be worse for any mother than wondering how she will put food in front of her children, keep them housed and provide for their well being?

Divorce treats women and men very differently. According to the Vanier Institute of the Family, in the first year after divorce, women’s household income plummets between 20-40%. Three years after divorce, women’s income remains far below what they had during marriage and far below their ex-husbands’ incomes. According to the Canadian Women’s Foundation, 21% of single-parent mothers are poor, compared to 7% of single parent fathers.

The most frightening statistic of all is the fact that approximately 30% of all support orders are in default nationally. And some of those support orders are a joke! I had one mom say to me with tears in her eyes, “How could they say my child is only worth $50 a month?” So, not only do women have to face the full emotional responsibility of raising their children, they often receive little, if any, consistent financial support from their children’s fathers. It’s no wonder women are scared.

Not only do women have less money to deal with the challenges and crises that arise, they are also more likely than men to encounter these challenges. Our longer life expectancies put us in the position of having to cope for more years on less money and it also makes us more vulnerable to disabilities, since physical deterioration increases with age. Thirteen percent of Canadian women and 42% of women 65 and older had disabilities.  And the unemployment rate among women with disabilities is 75%.

Disability in later years puts more pressure on financial resources. At a younger age, a disability can completely wipe us out because it eliminates or severely hampers our ability to earn an income. Even here, men and women play on different fields. Of all disabled men and women with an income, while men’s average income was $26,890, women’s average income was only $17,230.

As a woman, do you worry about your financial security? Do you think things are different for men and women? What are you doing to ease your fears?

If you’re tired of transfering money back and forth between numerous accounts, often incurring overdraft fees it’s time to get organized. Disorganization is one of life’s great stressors. Visual clutter makes us feel uncomfortable. Mental clutter keeps us awake at night. Taking the time to get your stuff organized, including your finances, will pay in time saved, reduced stress and a clearer path to being financially balanced.

1. Build an Office in a Box. One of the most popular tools to come out of Til Debt Do Us Part is the whole idea of an Office in a Box. People love this and I’ve had more than a few letters asking how to get one. Well, the best way is to build your own Office in a Box. You probably have lots of this stuff just sitting in a drawer somewhere. If not, you can take this list to your local office supply store and stock up. You’ll need:

Box of file folders (approx 50)

Box of hanging folders + tabs (approx 50)

Box to hang folders in

Lables (1 box)

Pens coloured (1 pack)

Pencils plain (1 box)

Eraser

Small stapler

Staple remover

Scissors

Scotch tape

Paperclips

IN box tray x 2

Post-it notes

Calculator

Envelopes (letter sized)

Stamps

Accounting book (or any notebook) to use as a Spending Journal

2.  Gather all your paperwork and create a file folder for each of your accounts, forms of credit, home, insurance, estate, and taxes. You can use a filing cabinet or a box. The folders have to be able to stand up on their own, or you can use hanging folders to keep them straight.

3. If you don’t already have it, set up online banking. If you don’t have a “free” or almost free transaction account, you can reduce fees by setting up a buffer? If you can afford it, transfer $1,000 float to your chequing account (pretend it isn’t there) and use that to minimize your banking costs. If you’re paying more than $10 a month for your banking, you’re a sucker!

4. Create an auto-debit from your chequing account to a savings account that will not be touched. Most people won’t put money into a savings account on a regular basis, opting to wait for a tax-refund or bonus before setting aside some money for the future. Establish an automatic savings deposit every month and your nestegg will accumulate faster than you think.

5. Create a Monthly Bill Summary. List your bills in the order they need to be paid by date to prevent you from missing a bill. If you have bills that are paid automatically from your account, write an “A” beside these bills and remember to deduct them from your Spending Journal at bill payment time each month.

6. Create two Unpaid Bills folders labeled “1-15? and “16-31? (or match your pay cycle.) As soon as you open a bill, look at the due date on and put it in the appropriate folder.

7. Set aside the time in your schedule to pay your bills about four days before they are due (so you’ll pay everything due by the 15 on about the 11th) to allow for processing time. You’ll need about 30 minutes twice a month to manage your money, including paying bills, looking over statements and filing.

When you pay a bill, write the cheque or confirmation number, amount paid, and the date you paid it on the bill. Put the paid bill in the appropriate “bill’s paid” file. Deduct the amount you’ve spent from your Spending Journal. If a bill has not been paid in full (property tax bills are paid over several months, for example) put it back in your Bills Folder so you don’t forget to make the next payment.

8. When you get your bank statements

review your statements to make sure there are no mistakes

Cross check your statement with your Spending Journal; clearly mark the cheques that have gone through your account and highlight the ones that haven’t yet cleared the bank. A cheque that is taking a long time clearing the bank can lull you into thinking you have more money than you do. Go back at least a month to make sure all previous cheques have cleared.

talk with your partner about anything unusual

8. Don’t let the filing pile up too high. Once a quarter, file all your paperwork to keep your system current.

9. Every six months, review your budget using last years credit card statements and bank statements to see what you actually spent. If you spent more on a particular category, make sure you know why, or look for ways to trim.

10.  Go through your files at the end of each year and throw out bills and receipts no longer needed for tax auditing/budgeting purposes.

Ultimately you have to deal with the increases in costs by trimming some other part of your budget.

But what if your costs have gone up because you’re embracing things as needs that are really wants? How many people are walking around with smart phones and big fat data plans, which they are using strictly for pleasure? Hey, if you take your wants up by $120 a month for a phancy phone, what drops off your list so you can afford to pay for that phone?

On Princess, I use a pie chart that shows 10% savings, 15% debt repayment (you remember this from TDDUP), 50% needs and 25% wants (that’s the new part.) If you can trim your needs down, you get more wants. But if you only have 25% for wants, and your cell phone bill is taking a big bite out of that pool of cash, what else are you prepared to give up to keep the phone?

All too often we let our expenses go up without giving any thought to the fact that the amount of money we have to spend is limited. And because we haven’t thought it through, we end up carrying the balance on credit cards or sliding it on to our line of credit. Then we wonder why we’re in debt.

Each time you add a new expense to your life – or each time an expense increases – it’s a reason to revisit your budget and look at where you’re going to take the money from to cover the new cost.

Money is a finite resource. If we treat it like it’s unlimited – using credit to make up the difference – we end up paying hugely in terms of both interest and future options. If we’re constantly aware that a dollar spent today means one dollar less tomorrow, we’re much more likely to keep on the right side of the balance sheet.

Whether you’re adding daycare to your budget, working a new car payment into the plan, or adding hockey, soccer or swimming to your children’s activity lists, have you looked at your budget to see where you’re going to get the money to pay for it? And what are you prepared to give up to have the next fancy whatever that comes along and catches your eye?

People who have taken my message to heart are writing me to tell me all about how much better life is with an emergency fund at hand. I got this letter recently that made me cry:

Gail, I have to thank you. Before I watched your show, I didn’t have any money saved for, as you say, when the caca hits the fan. But I’ve been diligently putting away money every week and thank heaven’s I did. My husband died suddenly five months ago. He was riding his motorcycle to work and got hit in an intersection. I have four children and I’m three months pregnant. I had just been to the doctor that day, so he died not knowing we’re having another child. I felt like someone had reached inside me and dragged my stomach up out of my mouth.

I’m very lucky because I have a family that loves me. And I’ve got great friends. They all came. They brought food. They brought love. And they wanted me to know that if I needed any money, they’d help.

My husband and I bought life insurance about two years ago after I watched you tell a couple on TV how important it was. Thank God. But it would take time to get everything settled. In the mean time I had to make a mortgage payment, buy food, and pay for the kids’ daycare. I work but it wouldn’t be enough to cover everything.

I was able to tell my family and friends that I’d be fine. And it’s because of you. I told my husband just how important you thought it was to have an emergency fund (he had a bit of a crush on you) and we had been diligently setting aside some money every pay to build it up. It hadn’t reached the max, but it was enough to see me through until the insurance kicked in and I could pay off the mortgage and do some planning for the future.

So my mortgage is paid off Gail. My children can eat and sleep in their own home. I’m still crying about my husband being gone, but I’m not stressed out because, as you say, I had money in the bank so I had options.

Thank you, thank you, thank you. You have no idea how you saved us. The baby is almost here and we have something to look forward to as a family. A joy in among the sorrow. Bless you Gail.

People always seem to think that bad things don’t happen to good people. It isn’t true. Crap happens all the time. Thank goodness the message is getting out and people are starting to take this part of their financial plan more seriously.

The question to ask yourself is this: How long could you last without a paycheque? If you were to get sick, or if someone you loved needed to be cared for, how long would you last without a paycheque? If you were downsized, right-sized or wrongly dismissed, how long would you last? If you tripped and fell, broke your wrist, your leg or your back and couldn’t work, how long would you last?

Remember, when we talk about emergency funds, we’re talking about the most basic costs being covered: rent/mortgage payment, property taxes, utilities, car payment, insurance of all kinds, food, debt repayment. You can cancel the cable. You can find free fun.

Some people consider their lines of credit to be an emergency fund; that might even have worked for the woman who wrote this letter because she had a substantial life insurance settlement coming. Most of us don’t have a pool of cash ready to flow in and pay off a line. So using a line means digging a debt hole. Short-term solution; long term problem.

If you haven’t started to save your emergency fund yet, I hope you never have need of one. But if you hit the wall and have no money, you can’t say you weren’t warned.

Everyone needs a budget. Even if you’re a Richy Rich, knowing where your money goes makes good sense. But you know that. That’s how you got to be a Richy Rich.

Sadly, it’s usually the Poor Richards who think that having a budget isn’t worthwhile. Yet they are the very people who most need one. Keeping track of your monthly income and expenses lets you make sure your hard-earned money is being put to best use. With limited resources, knowledge is power.

If you only knew how much you were spending eating out, you might decide to pack a lunch and cook at home so you can save up to take that incredible vacation you’ve been talking about.

I’m no good at math so I can’t make a budget. Give me a nickel for every time I’ve heard this and I could buy Saskatchewan. Just because you add one and one and get three is no excuse to give up on managing your money. Buy yourself a calculator (or use the one on your phone). With all the great budgeting software available, you don’t have to be good at math, you just have to follow the instructions and type in the numbers correctly. Or you can use a spreadsheet to create your own budget.

There’s always more money. If you think that having a “secure” job is the solution to having a budget, you’re a dope. No one’s job is truly secure. People lose jobs every day. You could be downsized. You could have your hours cut at work. Or you could get sick. Being prepared for having less money means saving up at least six months’ worth of essential expenses. Now, how the hell are you going to know how much money you need in that emergency pot if you don’t have a budget? As for all the folks who bank on those annual raises or bonuses that come fast and furiously during the good times, might I remind you that the bad times inevitably bring disappointments. Sometimes even pay cuts. Banking on something that “should” happen is a sure way to put yourself at risk.

Unemployment will tide me over. Have you ever looked into what unemployment insurance pays? Talk about having to adjust your expectations! And, besides, getting a cheque isn’t a sure thing. If you haven’t worked enough hours to qualify your SOL. And if you hate your job – or the boss ends up chasing your around the desk – and you quit, you’re SOL. Whatever reason you may have for “voluntarily” leaving your job, it’s very likely you won’t see a penny. And don’t think getting yourself fired is the cure… you likely won’t see a penny either since being turfed for bad behaviour will disqualify you too. Never mind the fact that no one else will want to hire you. And then there’s the EI wait period; whatcha gonna eat for those weeks while you wait for your first cheques?

It won’t happen to me. From the glorious dream-world of eternal optimism comes the belief that bad things don’t happen to good people. Are you kidding me? If you think unexpected bills and misery simply can’t come your way, you’re delusional. All kinds of things go wrong in life: cars break down, lovies get sick, companies go belly-up. Hoping for a great life is one thing. Banking on nothing ever going wrong is just plain dumb. If you want to live like an optimist, you have to plan like a pessimist so all your bases are covered and you’re ready for the next curveball life throws at you. 

I hate depriving myself. Oh grow up! First off, it’s not “deprivation” if you’re making the choice to spend your money on things you’ve planned for.  Budgeting is not synonymous with feel guilty about every purchase. Nor does it require that you spend as little money as possible on yourself. The point of budgeting is to make a conscious decision about where your money is going, not letting it just slip through your fingers. If you discover that you don’t make enough money to cover your expenses, save something for the future and have all the fun you want, that’s a wake up call to find a way to make more money.

As for all the people who have a limited income and must live on a very tight budget, tracking your expenses doesn’t change the amount of money you have available to spend every month, it just tells you where that money is going. If you choose to remain ignorant so that you can spend money you don’t have with no hope of ever paying it off, you’re an idiot.

You do have control. If you accept the fact that you have control, your next step will be to exercise that control. I know that there are days when you don’t want to do it, when you say, ‘I just can’t be bothered.’ But you must. You work hard for your money. It’s time to take control of it.

Tracking what you earn and what you spend doesn’t have to be hard. Get yourself a notebook and a pen. Those are the simplest tools to use. If you’re more ambitious, you can create your own spreadsheet, find an app or signup with an online financial aggregator. (Careful about choosing one that doesn’t require your PIN numbers since handing them out is a big no-no.) No matter how you choose to track your money, these are the steps:

1. Write it down: Keep a spending journal where you write down every penny you spend and deduct it from how much you have left in the bank. This will help you keep track of all your spending and figure out which expenses are unnecessary.

2. Deduct your fixed costs automatically: At the beginning of every pay period, deduct exactly how much money is coming out of your account to go toward fixed costs. Those might include mortgage payments or rent, insurance, heat, hydro and all your other fixed expenses. Then you’ll know exactly how much money you have left to spend on your variable costs.

3. Mitigate your risks: You must have both an emergency fund and enough of the right kind of insurance. These are non-negotiable. The idea of not having enough money in the bank to do something I have to do is anathema to me. I can’t even conceive of not being able to buy my kids food or pay my hydro bill.

4. Pay off your debt: Yup, you’ve got to do whatever it takes to eliminate your consumer debt licketysplit. That means three years or less. Forget paying the minimum payment. If you owe $2,500 on a credit card with an 18 per cent interest rate and you just pay the minimum payment, you’ll end up spending more than $4,000 in interest.

5. Stop using credit: Using credit means you’re spending money you haven’t yet earned. If you want something, save up the money and buy it with cash. Once upon a time there was no credit and we were fine. Now we spend gobs of time working to pay interest on crap we bought that we didn’t actually need all because we didn’t have the discipline to say, ‘Not yet. Not until I’ve saved the money.’

6. Save for the future. It’s a’comin’ and if you’re not ready with some money, it’ll be a sad life being old and poor. It doesn’t have to be a lot to start. Just start. Then look for ways to build your savings. And remember, the earlier you start, the less you have to save to have what you’ll need when it comes time to hang up your spurs.

Once you take control of your finances, you’ll be happier for it. Until you have experienced the freedom that comes from knowing you have money in the bank – of knowing that you can cope with just about anything life throws at you — you can’t even imagine the sense of balance that control will give you.

I am looking for a simple way to calculate the ratios of how to set up a budget for all of our household expenses. My husband makes on average $90,000 per year (fluctuates with overtime) and I make $40,000 per year. I have a total of all our fixed expenses, plus our variable expenses- but I’m trying to figure out how much we each pay. If we split them 50/50- based on my income it’s setting me up to fail. Can you help? Thanks! Renee

Renee, you’re right, you should not be splitting the bills 50/50. A proportionate split is far fairer. But you’ve quoted me your income in gross dollars, and since your husband will pay more in taxes, using these numbers isn’t fair either. You have to look at how much you each bring home a month — the money that actually goes into the bank account. Then split the bills by that amount.  First add your incomes together. Then divide YOUR income by this figure and multiply by 100. Ditto his income. So it would be like this:

If you make $2,000 a month, and he makes $4000 a month, when you add your incomes together you get $2,000 + $4,000 = 6000

Divide your income by that $6000 and then multiply by 100 to get a percent: $2000 ÷ 6000 x 100 = 33.33%

Do the same for his income: $4000 ÷ 6000 x 100 = 66.66%

This means you’d split the bills related to your joint living expenses with you paying 33.34% and him paying 66.66%. So if you have a mortgage payment of $1800 a month, you would pay:

$1800 x 33.34 ÷ 100 = $600

and he would pay:

$1800 x 66.66 ÷ 100 = $1200

This, of course, only applies to the bills you agree to split. If you’ve run up a whole bunch of debt he doesn’t want to have anything to do with, or vice versa, then you’re each on your own.

The same goes for individual expenses. If he chooses to drive a fancy car that costs $600 a month, and you choose a car that costs $200 a month, you should each pay your own car costs.

It is important that partners also talk about what they’ll do if there’s a change in circumstances that affects the budget. One of you may be out of work temporarily. How will you even up after? And if you decide to have children and one of you stays home, even in the short-term, how will your manage the bills and ensure the non-working partner has some money of his/her own.

I’m amazed at the people who tell me they’re not smart about money. Well educated, professional, highly responsible, creative and competent people all turn to jelly when it comes to their personal finances. Whazzup with that? I’ve even met people who have to manage their company’s money (accountants, bookkeepers, financial officers) who can’t figure out how to balance their own budgets. Heaven preserve me.

What is it about money that brings even the smartest and most sensible person to their knees? Why do we make such a big frickin’ deal out of something that is, at it’s heart, completely straightforward?

Y’know what really gets my goat? It’s the folks who are so willing to turn a blind eye to the foundations of their financial life only to open up a conversation about “investing” and how smart they are about “putting their money to work?”

Isn’t it after all, way easier to save a dollar than to earn (and pay taxes on) another dollar? So how come we’re willing to spend time and effort reading, learning, improving our knowledge of the sassy, sexy world of investing even as we refuse to take care of our money housekeeping?

There’s the guy who had $6,000 worth of parking tickets. He had to put his car in his girl’s name so he could get it licensed. Hey, the guy had to drive for his living! How moronic is that?

There’s the girl who took a pass on her company pension plan for the past eleven years, even though her company is willing to match her dollar for dollar (in essence giving her a 5% increase in income) just because she didn’t want to have to forgo the spending money. And she works for a bank. Lord love a duck!

How about the student who didn’t think twice about taking out all the student loans he’d qualify for, along with every credit and store card he was offered. Four years later he has a very unimpressive undergrad degree, $53,000 in debt, and job that pays $11.27 an hour. Oy!

So why are relatively smart people not so smart when it comes to managing their money?

I think it’s because they haven’t taken the time to really think about what they’re doing. Let’s face it, if you get a parking ticket and you pay it right away, that’s one thing. If you stick it in your glovebox and ignore it, it will double and then triple. If you let it add up to $6,000 you’re in serious denial.

But if you thought about what else you could do with that $6,000 – a great vacation, a serious amount of entertaining, a new bathroom – you’d just kick yourself, wouldn’t you? This is the step that’s missing for so many people: they just don’t think!

If you want to be smart about your money, you have to think about it. When you do something that makes money go away, you have to weigh what you’re getting against what else you could do with that money.  It’s called Opportunity Cost.

The next time you’re tempted to do something boneheaded like miss a payment on your credit card so you can buy a new somethin’ or ‘nother, think about it. Don’t just push the thinking part aside. And if you’re all up in investing, but you don’t have an emergency fund, you’re carrying a balance on your credit card, or you haven’t made a will, quit your smirking. You’re not so smart!

Have you ever seen the movie (or read the book), The Never-Ending Story? The majority of the story takes place in the parallel world of Fantastica, a world being destroyed by the Nothing. As The Nothing creeps across the land, everything is consumed, leaving behind desolation and emptiness. The protagonist is a young warrior, Atreyu, who is charged with finding a way to stop The Nothing.

I’ve met people who have The Nothing in their lives when it comes to their money. They are living in a miasma of inaction, the desperation of their circumstances paralyzing them. They’re afraid to look too closely at the mess they’ve made because that’ll crystalize just how dire their circumstances really are. Sometimes they feel helpless. I’ve actually had people say and write to me, “Gail, help me. I can’t do this myself.” They may even avoid seeking help because they’re too embarrassed by the mess they’ve made to fess up and get help.

If you’re sure that what you’re doing now isn’t working for you then it’s time to face up and make some changes. For as long as you remain mired in The Nothing, you will be eaten by the misery you’re feeling. Be strong like the warrior Atreyu and face The Nothing head on and you will not only overcome the fear and the embarrassment, you’ll no longer feel helpless. You’ll be moving forward.

It won’t happen quickly. It’ll take some time. It took time to make the mess, so it’ll take some effort to fix what’s broke.

And you’re going to have to set aside the excuses you’ve been using for why you’re in a mess. Here’s one of my favs:

“Gail, I want to make things better but I just don’t know where to start. How can I take money out for the jars if I’m always in overdraft?”

I get this questions ALL THE TIME. Hey, just because you’re in overdraft, does that stop you from buying groceries?  I don’t think so. And that’s the money you’re putting in the food jar.  Using the jars isn’t about finding “extra money”, it’s about taking the money you’d normally spend out of the bank (yes, even off your overdraft) and putting it into your jars, and then not spending any more than that.

Eventually, if you’ve done a budget and you’re cutting back on your expenses, you’ll have the money to pay off that overdraft because you’re watching where your money goes and you’re focused on getting ride of the OD.

Here’s another excuse I hear pretty frequently:

“I can’t figure this out.  I just don’t really have a brain for money. It’s too hard. Where can I go to get someone to help me?”

Seriously? You don’t own a pen and a piece of paper, and you can’t add and subtract. (If you really can’t add and subtract, I’m not talking to you.) So many people see the “math” of money as overwhelming. It isn’t. It’s Grade 4 math. That’s all you need. Well, not all you need. You also have to have some self-control.

You can change your life. You can work out your money problems. But you have to want to do it. And you have to be willing to get up off your ass and do the hard stuff it takes to figure out where you are now and where you want to go. If your distrust of the industry, your sense of being overwhelmed, your lack of time or willpower get in the way, The Nothing will eat you.