If you’ve got a whack of debt – and our debt levels are rising faster than our incomes – you know that buying pretty much anything you want even when you don’t have the cash to pay for it comes with a huge price-tag: stress. Spending the credit you have on plastic or through a line of credit is only delaying the consequences of “not enough money.” Ultimately you’re going to have to pay back all that money you borrowed. So rather than stressing out about it, do something: create a debt repayment plan; find a way to make more money to pay off the debt; stop spending money.

If your PSR (personal savings rate) is smaller than a gnat or completely non-existent you’re in plenty of company. Not good company, mind you. Saving nothing now is a sure way to have nothing later. Sadly, you won’t even know how tight a spot you’ve put yourself in until you’ve got no space left to turn around. The only way to shake off the inertia of not saving is to start saving. And it doesn’t have to be a lot. I’m sure if you really put your mind to it you could come up with $50 a month. It’s a start. Get started.

If you have no emergency fund, or if you’ve bought that Tall Tale that a line of credit can be an emergency fund, it’s no wonder you can’t sleep at night. Since most people live to within a hair’s breadth of their income, just a small slip would be enough to put you into a fix. One in four people say they couldn’t deal with a $5000 emergency. One in ten couldn’t handle a $500 emergency. And two-thirds of people 18-34 say they’d be in trouble if their paycheques were delayed by a week. Wow! Talk about stress. The only way to cope with life’s unforeseen miss-steps is to have some money in the bank. I’m talking cold hard cash.

If you’re all tied up in knots about the gyrations in the stock market, maybe you should be in the stock market. Investing comes with risks. Some of them seem less frightful, but every single investment has some risk attached. You have to gage how much risk you can manage and then choose investments that don’t leave you holding your breath. My new book, Never Too Late, which will be out in January can help you to decide exactly what types of investments best suit you. If you can’t wait until then, read everything you can lay your hands on about risk tolerance and investment time horizon.

If you’ve bought into the demographic scare – boomers are a huge demographic force and their retirement will put the economy into a tail-spin – I can help assuage some of that fear right now.

Yes, the boomers are a huge force – almost 10 million large in Canada. But the Baby Busts born between 1967 and 1979 (5.4 mil) and the Echoes born between 1980 and 1995 (6.9 mil) aren’t exactly small potatoes. Between them they are bigger than the Boomers.  So chill out. There will be plenty of economic power spread across our kids and their kids… and their kids’ kids. Don’t get all gloomy and doomy about this. There are some things you have control over, and some you don’t. Focus on the things you CAN do.

The cure for stress is “action”. Do something. Don’t just sit, wringing your hands and staring at your navel. Learn. Plan. Act. Take control of your money and your life. Develop some good financial habits and you’ll reap the peace of mind that comes from doing the right thing.

If you’re financially responsible but have relatives who are not, it can be hard to watch them constantly battling with the consequences of their mistakes. It’s sometimes a case of “the child becoming father to the man.” And it’s sometimes a case of “I ain’t going down that road baby. No way.”

It doesn’t matter how you came to see things so differently, it can be tough to watch the people you love totally screw up their lives. Sadly, that’s all you can do. If  you’ve got the resources to help, no doubt you’ll do your best. But for many people, helping parents or other relatives means doing less in your own life – be it less saving or less enjoyment from your money – and that can be a hard pill to swallow.

If this is something that you’ve been thinking about, the place to start is by asking yourself what it is you fear for you parents. Do you worry about them running out of money? Becoming frail and dependent on you? Asking you for money when they just end up blowing it on dumb stuff? Think about it. Talk to your partner. Face the fear(s) and you’ll find it easier to deal with whatever comes next.

Sometimes parents can be remarkably closed when it comes to their money. That’s fine if they’re planning to remain independent. But if they tap you for money every time they run into trouble, or because they don’t have a plan, then you have the right to know what’s going on.

If your parents have assumed you will take care of them – after all, they brought you into this world and supported you for the first 16+ years of your life – are you on the same page as to how you will do this?  Will you assume full financial responsibility for them? Will they live with you? And how will you balance the need to care for your parents with your children’s needs and your own retirement savings needs?

If one of your parents has had all the control over the money, how will the other deal when the money manager finally kicks the bucket? Your mother won’t be the first woman left high and dry because her husband didn’t have a plan that took into account her longevity. And if your father has left it all up to your mom, will he have clue one when she’s not there to do the detail anymore?

Have your parents made any plans for when they may need help physically or financially? Do they have advisors you trust? Do they have enough and the right kinds of insurance?

It’s not easy to have this conversation with parents, particularly those who are financially private or those who are financial nit-wits. But you must. At the very least you should have a sense of your parents’ expectations, and they yours.  If everyone knows where everyone else stands, there won’t be any surprises down the road. And that should cut down on the whining.

At the very least, make sure your parents have wills and have executed both financial and personal care powers of attorney. If they haven’t, and the worst does happen, you won’t be able to help because they will have tied  your hands behind your back.

1. Establish WE INC.
Hopefully you started talking about the money before you got hitched, but if you didn’t today is the day.

Once you get married, get back from the honeymoon, or get the boxes unpacked, it makes sense to take some time  to have another chat, perhaps creating a mission statement that reflects your joint goals. Sure, you have individual goals, but this is where you talk about what you want to achieve TOGETHER. When will you buy a home? How much downpayment will you save? How must house will you buy? When will you have children? Who will stay home? For how long? How will you cover the income shortfall? How often will you go on vacation? Who gets to make the big purchase decisions? With or without the other guy’s input? You get my drift.

If one or both of you brought debt to the relationship, now that you’ve combined households your individual expenses should have gone down. Before you get used to spending that money, make a plan for using it to dig yourselves out of the hole.

You’ll also want to talk about how you’ll manage your money now that you’re a team, which will lead to…

2. Combine Your Cash
I’m not a big proponent of giving up your financial individuality, but I do believe managing joint expenses together makes more sense than just divvying up the bills. Making a budget together and having a joint account forces you to be accountable to each other, and keeps both people in the loop at all times. How much you put into that account and what you put through it is something you’ll have to negotiate.

3. Talk to Your HR Department
Will you add your partner onto your benefit plan? Can you claim from both? Do either of you have to pay? Assess what’s available to you now that you’re a family and make it work, as opposed to just carrying on cluelessly. You will also want to update your beneficiary designations for your insurance policies and retirement accounts.

4. Check Your Insurance
Very often marriage indicates “stability” and this can have a positive effect on your auto insurance rates. If you combine all your insurance with one carrier (for vehicle and home) you’ll pay less too. You’ll also want to change your beneficiary designations on your private life insurance. If only one of you has insurance, it’s time for the other one to get with the program!

5. Make or Update Your Wills & PoAs
Wills made before you were married carry no weight unless they were made “in contemplation of marriage”… Willsy Language for “you took your new mate into account.” If you don’t have a Will, its time to make one. Ditto Powers of Attorney for both financial and personal care. If you can’t speak for yourself, your mate should be able to voice your wants on your behalf.

Now that you’re firmly committed to each other — living together is a big step and getting married adds a ton of paperwork — you can no longer afford to have secrets, squash your little voice, or pussy-foot around. These aren the final few steps you need to take to make sure you’re covering your new family’s financial needs as you step off together on a new adventure.

Aileen wrote:  Hi! The best way I feel to ask my question is to first give you a readers digest version of my story. 2 1/2 years ago, I entered into a debt repayment plan. I was single, working all sorts of jobs(a contractor), new owner of an acreage and ready to do anything to make ends meet (even if it meant not eating lol). January 2008 I became pregnant after being with Ron for a very short time. We both worked together to prepare for our child (Quaid now 9 months). We both kept on top of our bills and readied for baby with mostly second hand items (huge money saver). Now, I am at home with Quaid every day, while Ron is out working.  I don’t qualify for maternity leave, and I’m doing what I feel possible for work at this moment. (Quaid just started sleeping through the night 2 days ago) so the only time I have to get any work done is in the middle of the night, and usually by then I’m totally drained! We have a room mate who’s rent covers one mortgage payment ($650). But there are still bills, food, the other mortgage payment and then of course my $1100/month debt repayment. I feel like Ron is still expecting to pay only half of the bills? Every time I try to talk to him about it I feel like I’m hitting a wall. Is this something I’m doing wrong? There MUST be other’s in this similar situation? There is probably a lot more to tell, but I already feel I’m outstepping the simple question thing here. My question is this… How do I get Ron to be on the same page with me with money issues??

Aileen, I’m not sure what page you are on. It sounds like you expect Ron to foot the total bill while you are at home with Quaid. Did you and Ron have a conversation about how you were going to deal with the finances once Quaid arrived? Is there anything you can sell to pay down the debt so that it isn’t gobbling $1100 a month? Have you considered putting Quaid into childcare and getting back to work full time? How about doing the majority of your work when Ron is home so that he can care for Quaid while you earn your share of the expenses? I strongly recommend you both sit down and discuss this and come up with a plan to make it work.

J wrote: I have been a longtime fan of yours and absolutely adore you…. I watch your show regularly and when I cannot, I tape it…I have been having a dilemma for the past few months. I work two jobs just to get the mortgage paid off and pay for the kids’ extra-curricular activities that would not be possible with one job. Between my husband and myself, we make around $110K per year. I am very diligent about paying into our RRSPs, the kids’ RESPs, savings, emergency funds, TFSA etc. so much so that sometimes I find it hard to live becuase the money has been allocated to all these categories and there is nothing for “entertainment”. The kids take piano, taekwando, soccer etc. I have been blessed with everything I could have asked for. My problem is that between the two jobs, I work a total of 53 hours. I work one job during the day and one at night. One of the days I work is a Sunday night. I find that my only day at home is Saturday and this day is spent in laundry, cleaning etc. I would like to spend more time with my son who is 10 years old but it would mean giving up the Sunday night. My husband thinks that I should hang on to it until we pay off the mortgage in 3 years but I feel that my son will be 13 and may not want to spend as much time with me then as he wants to now. I am torn about the loss of income and the gnawing desire to spend time with my son – I would like to go to the park on a Sunday evening, just sit and read with him,etc. – things I dont have time to do now working 4 days at each job (on two days of the week I work 14 hours per day). Gail, what do you think I should do? Maybe if I told you that I was 47 years old it might help. I strongly feel that I can make money any time but my son’s childhood will pass me by and then I will regret it… Gail, please help !! I trust your judgement… Thanks so much for always being the voice of reason…

J, I’m not sure why you are so hell-bent on getting the mortgage paid off that you would sacrifice time with your child to do so. I could understand if you had a lot of consumer debt that you’d prioritize debt repayment because of the risks associated. But there’s no risk with the mortgage. Slow down and breathe girl. You’re moving too fast and when you get to the end you might find it’s not what you expected. I’ve always put my children first. I’ve lived debt free except for a mortgage, and I’ve given a lot of time to them. They are the most precious thing to me. Now you have to decide what’s more important to you: to be mortgage free or to have time with your son.

M wrote: My husband and I are able to live on what we earn. We have a car loan which will be paid off in 3 years. No other debt. I manage the household expenses and he contributes proprtionately to his income. But I am not able to save more than $100 a month (plus a $200 pension contribution that I make through work). I just discovered that my husband has $5000 in savings that he has not told me about. I have given him several opportunities to mention it and he is silent. Should I confront him about this money, or should I assume that it is a cushion that somehow, he needs to have privately to himself, and let it go? I feel it is an issue of trust, more than an issue of dollars…. and I feel kind-of betrayed right now, since I am pouring everything I have into “our” lifestyle, but he has this secret stash that he feels the need to keep away from me.

M, it can be very hard to discover that a partner is keeping secrets. I hate secrets! I find them destructive in the extreme. I will tell you first to count your blessings that his secret isn’t a $5,000 owed on a credit card you don’t know about. As for why he’s keeping this money hidden from you, he may be saving it for something special he doesn’t want you to know about: it could be his F/U account or it could be for a surprise trip to Paris! There’s no telling.

I think what you need to get your head around is that you made a “deal” about how you would handle the finances. If he is contributing proportionate to his income and hasn’t renegged, he’s kept his part of the deal. You now need to back away and let him be. If you feel you’re being “cheated” in some way because he has more money than you, then you may have to renegotiate the “deal.”

You are doing a good job of saving: $300 a month adds up to $3,600 a year. Does your husband have a pension? How long has he been saving to acquire his $5,000? If he has been diligent, doing without things he would like to have to create this pool of money, he should be applauded.

If your only concern is the fact that the money has been kept a secret, then you need to ask yourself how important that really is? Do you love this man? Do you trust him? Has he been a good partner, responsible and caring? If the answers are all in the affirmative, you need to let this go. But you should not keep the “secret” that you know. That’s another sticking point. You should say something along the lines that you’ve found out about this money (if you were snooping where you should not have been, you’ll just have to explain that too), and clearly he must have a good reason for having kept it a secret… it’s his money, he worked hard to save it, and you just wish there were no secrets between you.

J wrote: Gail, Everything we save for, invest in, live, breathe, etc in the opinion of my spouse is for our young teenage daughter’s future. We recently went house hunting and purchased a property to accommodate my disability (I am a paraplegic), but of course – it really wasn’t about me, it is about how this investment will benefit my daughter in the future (you know, when we’re in the old aged home). I was injured at work, busting my butt working two jobs to ensure all our needs were met. Now, I can’t work and I am at home. This home will need hundreds of thousands of dollars in renovations to become accessible (thankfully insurance is paying for it). My spouse thinks these renovations will dramatically increase the value if we sell it in a few years (you know, in the event our daughter goes to university out of the area and we have to move). I feel that my daughter is beginning to feel she is “entitled”. Is this normal? Is my spouse suffering from perceived separation anxiety, Or am I just a selfish bastard.

J, it’s hard to say what’s what from where I’m sitting. But if you have one child, and your partner is fully invested in that child, what you’re experiencing isn’t unusual. It may have some negative consequences — like that sense of entitlement — but I’m not sure how you go about offsetting that if your partner is hell-bent on instilling it. I have found a lot of parents try to make up to their kids for what they think may be missing by focusing too heavily on the stuff money can buy. If your partner is determined to do whatever it takes to provide for your daughter, in light of what she feels may already be missing, that’s not a bad thing. If your daughter sees her mother’s effort as what you do to take care of those you love, that’s an important lesson. If, however, she sees it as her entitlement, no one will end up happy. Have you talked to your daughter about your expectations of her: what you — as a family — are prepared to do to support her, but also what you expect back from her? Why don’t you try having that conversation as a family to see where everyone stands. It may be a great jump off for some very interesting and enlightening discussions.

A wrote: Before we were married four years ago my husband was often too kind to his sister offering her “payday loans” where he would give her money up front and she would repay when her cheque arrived… sometimes she actually managed to pay him back, but the total she owes him currently is ~$10,000 !!! We recently had our first child and have debt ourselves that we are trying to get out of. She hasn’t been able to honor any of the cheques to repay the $500 he lent her for Christmas shopping for her three kids and we just found out they are purchasing a $400 purebred puppy next week… he called her to ask her when he could cash the cheques and all she says is “soon”. How can we ask her politly to avoid too much family tension if she is ever going to pay him back???

A, are you familiar with the old saying, “Neither a borrower nor a lender be”? I have always been of the philosophy that money lent to family and friends is money that has been gifted. Trying to collect causes so much heart-ache. (After she was $5,000 into you, did you not think that this might be an unresolvable situation?)  I suggest you recognize that your SIL will likely not repay her debt. The lending should end and so should the expectation of repayment so you can get on with your life.

As for your own debt, with a baby on the way it’s time to get out of debt, no matter what it takes and get busy saving sor that baby.

Kate wrote:  My husband and I have a joint chequing acocunt and while I like the idea of keeping a notebook to keep on top of my balance day to day, I find one of our biggest money mangement problems is we both have access to the account and therefore don’t know what the other has removed for day to day purchasing. What do you suggest?

Kate, when two people have access to the same account, there is no way to reconcile on a minute-by-minute basis. The best you can do is:

a) agree that you have a certain amount you can spend each month that doesn’t need to be “agreed upon”; everything else has to get the nod of approval from both,

b) update your notebook each evening, and

c) make sure all your “must pays” are deducted from your notebook first thing so you don’t end up spending the rent money on something else “by accident.”

Have y’all voted on this week’s blog poll? Go to the first page of the blog (where the picture shows up) and scroll down until you see the poll on the right. I’m very interested in seeing your responses to this question, so vote!

It usually takes between two and three days of analysis to get a good picture of how the money has been used, their perception of how they’re using their money, and the gaps that have grown over time. It’s an interesting process, a little like putting together a jigsaw puzzle. And it tells me a lot about how people are behaving. Once I’m done the “financial” analysis, I have a look at their casting tape – done prior to my meeting them – and that fills in many of the gaps. Now I’m ready to tell them what I see.

So, what does your money say about you? When you look at how much debt you’ve built up, where your money goes every month, and how you’re doing on the whole, what picture do you see?

If you’ve racked up a wicked amount of debt on consumables – that’d be debt on your credit cards and lines of credit, or debt you’ve hidden in your mortgage when you consolidated consumer debt the last time you renewed – that may speak to a lack of self control. Or maybe you’re just way bad at planning. Or you’re a gambler, a drunk or a junkie. Maybe food is your drug. Maybe shopping is your aerobic workout.

If you haven’t ever looked at how you’re spending your money, maybe you’re an ostrich in huge denial about the mess you’re making of your life. Maybe you’re refusing to take a good hard look because you’re so afraid it’ll mean that you’re going to have to do things differently and you just don’t wanna.

Maybe you’re doing a great job: your budget balances, you’ve got little or no consumer debt and you’ve dotted all your i’s and crossed all your t’s when it comes to creating a sound financial plan. You pat yourself on the back and keep on keeping on.

How we manage our money is often a reflection of who we are in life too. I’m a planner, so I don’t do anything, including spending, without a plan. And I’m a buttoned-down, detail-oriented girl, so I don’t like to guestimate. I’m organized 25 out of 30 days and that shows in my money management. When I go off track, I give myself a stern talking-to and fix what I messed up PDQ. And I’m completely risk-averse so I don’t carry debt, I’m well insured and I’ve got my Will in place.

What does your money say about you? And if you’re not happy with what you’ve done so far, what are you going to do differently?

It’s all well and good to say, “Hey, I’m not a planner, that’s just not who I am. I can’t do this budget thing.” But if the rest of your life has gone to hell in a handbasket because you refuse to do any planning, this may be the time to take stock and make some changes.

I know its hard. It’s always hard going against our “nature” to do something differently. But if your child’s nature was to only eat sweets and never touch a vegetable with a ten-foot pole, would you say, “Oh well, that’s just how she is?”  Or would you teach her how important it is to eat well, and give her incentives to add a couple of bites of vegis to every meal?

“That’s just not me,” is a very childlike thing to say. It’s how teenagers respond to things they can’t imagine because they have very limited life experiences. But grown-ups know there are lots of things we must do that wouldn’t be our first choices. From cleaning up puke to wiping dirty bums, from washing the kitchen floor AGAIN because of the gravy slopped on the way to the dinner table to rewashing the sheets we just washed because the cat peed, we do thousands of things we wish we never had to do. We do it because we know we must.

The same holds true for how we deal with our money.

So, when you look at the picture your money paints of you and your life, what do you see? And are you happy with the picture?

In 2004, Employment Insurance started providing up to six weeks of compassionate care benefits for employees who take time off to care for gravely ill family members with a significant risk of death within 26 weeks (6 months). You can get up to 55 percent of your average insured earnings, to a maximum of $413 per week following a two-week waiting period. However, the benefit is taxable and deductions are taken off the top.

Make sure you claim the Caregiver Amount on your tax return if you provide in home care for parents or grandparents who are 65 before the end of the tax year, who live with you. You can also claim the Caregiver Amount if you’re caring family members between the ages of 18 and 65 who are dependant due to mental or physical infirmity.

Don’t be surprised when you have to get involved in your parents’ financial lives. As parents’ physical and mental health becomes more of an issue, caregivers often need to step in.

Find out where they bank and where their investments are held, along with the names of their financial advisors. You don’t need to know what’s in the will, just where the will is. If one isn’t already in place, make sure your care-receivers execute a will and powers of attorney so they don’t lose their ability to name a trusted representative to be in control of their financial and medical affairs. Even if you have joint ownership of assets such as a home with your parent, you won’t be able to make changes until someone is appointed to represent your parent’s interest.

Manage the cash flow. Arrange for automatic payment of expenses such as utility and insurance bills and for direct deposit of pension and benefit checks. Set up a joint account with telephone or on-line banking privileges so you can do a quick check to make sure everything in the account is going smoothly (no overdrafts!).

Get Tax-smart. Many health and age-related expenses can be claimed. Know what they are since certain items can only be claimed if prescribed by a medical practitioner (including doctors, naturopaths and dentists).

By 2010, sixty percent of people over 50 will have a parent living so it’s a good bet that you and at least one parent will be retired at the same time. So, how do you deal with the financial crunch of caring for your loved ones just when your income has stagnated? You might want to consider arming yourself with some Long Term Care (LTC) insurance.

LTC provides coverage for people with a prolonged physical illness, disability or cognitive disorder (such as Alzheimer’s disease) who are no longer able to function independently. This can include care at a nursing home, help at home or care at an assisted living facility such as an adult day care center. Without insurance, these services can hit your wallet hard. A year’s stay in a nursing home averages around $36,000. In-home nursing care visits three times a week, two hours a visit, will run to about $9,500 a year.  LTC is meant to defray these costs to avoid depleting your savings.

All LTC policies are not created equal. Some pay benefits to cover a period of stay in a nursing home. Others cover nursing home and home care. Some cover services in adult day care centers or other community facilities. Most companies will not allow the benefits to be used to pay a natural caregiver: your wife, husband or children — anyone related to you; benefits can only be used for professional services. Some companies like Desjardins will not penalize a natural caregiver so that if you must take time off work to look after your dad, his LTC benefits could help you make ends meet while you’re not being paid at work. Shop around!

Benefits are based on an inability to independently perform various activities of daily living (ADLs) including bathing, eating, dressing, toileting, transferring (moving in or out of a chair, wheelchair or bed), and continence. Policies specify an “elimination period,” which can be from 0 to 100 days. Choosing a policy with a zero-day elimination period will cost the most. During the elimination period, you’ll have to pay the cost of care out of your own pocket.

LTC is less expensive the younger and healthier you are. If you have an impairment, you likely won’t get coverage for your lifetime. Assuming you even get coverage, you’ll have to make do with benefits that last somewhere between two and five years. That’s the main reason why you want to buy LTC (or get your parents’ covered) sooner rather than later.

Long-term care policies offer a number of optional provisions such as inflation protection, waiver of premium or discounts when two spouses buy policies at the same time, so shop around.

…

I received this letter recently and told the mom who wrote that I’d post it for your comments and guidance. If you can provide advice, please do so… this is where the “community brain” really kicks in:

We have a son who is considered technology dependant. Basically it means that he needs a lot of medical and therapy equipment to help him live his life. We’re talking about expensive stuff – $8000 for a wheelchair, $5300 adjustable bed, $13,000 for a platform lift to get him to his accessible bedroom, $3000 for a bipap (breathing machine), $600 for a seating system, $5000 for a stander, and $29,000 for adaptations for the van. These are just examples of the items that he needs (and they are needs not wants). Can you advise us on how we can incorporate items like these into a budget? When you find out that a piece of equipment or therapy is recommended, you can’t wait until you save up enough. Our savings account does build up and then gets emptied back to zero on a regular basis. Almost nothing is covered by insurance and I am very good at begging service clubs for financial assistance (unfortunately there are a limited number of them to approach). Thanks,

Here was my response:

Oh K, I wish I had some magic for you. I know that working with a disabled child is horrendously expensive, and I would love to be able to give you some insight into what you can do differently, but this is not my area of expertise. You don’t mention where you’re located in the country, but I know there are provincial and federal programs that will help, not just community-based programs.  In terms of incorporating your big purchases into your budget, just make sure you’re not overextending yourself to the point where you can’t deal any more.

K wrote again:

Thanks for your response. We live in Winnipeg, MB. E (her son) is a client of Special Family Services (provincial). They do help with certain costs (ex: good nites and wipes), but funding applications are turned down more often than not. E’s formula (he’s tube fed) is provided through Manitoba Home Nutrition and lots of his day to day medical supplies are provided through Winnipeg Regional Health Authority (WRHA). Are the provincial/federal programs that you are aware of different? Oh, E also received $78.36/month from the “new” disabled child assistance program (federal).

Okay, it’s your turn. Do you have any advice for K on how to get more help dealing with her son, E?

I have two systems that I use together to keep track of my money. They’ve worked for me for years, so I’m sticking with them. First, I have a cash flow excel spreadsheet.

In the first column is my monthly budgeted amount, and then across the page are each of the months of the year. This excel sheet does two things for me:

1. It allows me to see if I’m on budget for the month overall and within each category, and
2. At the end of the year it shows me what I’ve averaged in each category.

There are some numbers that I fill in right across the board for every month like mortgage payments, for example. I just fill each month’s mortgage payment amount in right off the bat. Ditto my other fixed expenses. If something changes, I can change the amount, but that seldom happens so copying it across all the months saves time.

The category that sees the most action on my budget is “groceries.” Each time I shop, I bring home the receipt and enter the amount in my grocery category so I have a running total of what I’ve spent.

There are some categories that don’t get spent very often: home insurance, property taxes, home maintenance, clothes, gifts. These are auto transferred to my ING account called “budget overflow” so the money earns some interest. Then, when I need that money, I transfer it back to my transaction account.

My savings and emergency fund money are auto transferred every month to their respective savings accounts so I don’t even have to think about them.

The other system I use is a notebook and pen. I put my balance at the top of the first page and every cent I spend is tracked manually so I always know exactly how much money is in my account. Whether I use a debit card or a credit card, I deduct it from my balance in this book so that I’m not tempted to spend the same money twice. When the credit card bill comes it, I check it against my book, label all the transactions covered by that statement with a letter of the alphabet (I’ll only need 12 for the year) and when I pay the bill, I make a note of the letter of the alphabet I’ve used. So when I pay my March bill, it’ll cover all the transactions on my credit card that I’ve labeled “C”. If something didn’t come through on my March bill, I know it’ll be on my April bill. But the money has already been deducted from my balance, so I won’t delude myself that I have more money than I owe.

I have a list of auto-deductions at the front of the notebook so that I can enter those each month without worrying about forgetting one. I also have a list of all the bills that I get each month so that if one doesn’t arrive (like the hydro bill last month) I can call and see whazzup.

I’ve had more than a few people tell me my system is anal. “Button down” is how I like to think of it. And I’ve had more than a few people tell me there’s no way they have the time for such a complicated system. Really, you have time to watch TV, play hockey, go shopping, entertain family and friends, schlep your kids to their events, but you don’t have time to manage your money? Hmmm, must not be that important to you. I’ve also had people tell me that they can’t: can’t remember, can’t keep track of their receipts, can’t deal with all the numbers. Grow up! You bust your butt making the money that’s leaking out of your hands. “I can’t” is a cop-out. “I can’t” is a lie. It’s not that you “can’t”, it’s that you “won’t!”

There are loads of ways to keep track of your money. I’m not about to tell you what you MUST do. You’ll have to figure it out for yourself. My way works for me. Other people have ways that work best for them. As long as you have a system that works, you go with that system. If your way isn’t working, you can whine about it, or you can make the effort to come up with a better system.

Okay, it’s your turn. What are your best ideas for tracking your money on a day-to-day basis?

I meet a lot of people who have expectations that are completely unrealistic, and it makes me wonder where they got their life pictures. Why would a woman who has just graduated from university and hasn’t even got a good job yet think it’s okay to have a baby, buy a house, and throw herself a big wedding? Why would a young couple believe that the beautiful house they bought (that they could barely afford) isn’t good enough and buy a bigger one? And when did the kind of car we drive, the clothes or shoes we wear, or the neighbourhood we live in become such a reflection on us that we’re willing to pretend things are fine when we’re neck-deep in debt?

We’ve grown up with more STUFF than has ever been available before for consumption. TVs get bigger and flatter with better resolution and more fabulous sound. Houses get bigger, with more bedrooms, bathrooms, kitchens. Cars get fancier (I want the one that knows how to parallel park itself!) with leather seats, in-car communications, and more cup-holders!

With all the STUFF just waiting to be bought, the question becomes this: Are you really willing to spend whatever it takes to have it all right now, regardless of the impact on your financial health?

It may be that the lifestyle you have, or want to have, is shaped by what you had when you lived with your parents. Their hard work made it possible for you to grow up in a house, and you can’t imagine living in anything but, despite the fact that you haven’t saved a downpayment. For while it took our parents 10 or 15 years to come up with the money to get into a house, many of us think we’re entitled RIGHT NOW.

Unless you come out of school earning as much as your parents, with the savings to back it up, you can’t buy the same lifestyle they had. Putting yourself into debt and not leaving any money for savings mean you’re setting yourself up financial failure.

I meet a lot of people who want to indulge their every whim either because they were indulged as children and it’s their norm, or because they weren’t and it’s their due! Talk about no way out. Delusional Debtors can always find a good excuse for spending money. That’s a no-brainer. The fact that we’re spending money on credit – spending money we haven’t yet earned – is down-right dopey, particularly when it’s for consumables. Sure, that $200 dinner was great. But once you go home and have a good poop, all you’re left with is the debt on your credit card.

And then there are the people who spend money they know they shouldn’t, experiencing buyers remorse and slapping themselves upside the head for being stupid… who then go out and do it again. What will it take to stop?

It may take revamping the picture you have of your life. If you have painted a picture for yourself that you simply cannot afford, it’s time to paint a new picture – one that  you can feel good about.

It’s lovely to think that a beautiful home, a late-model car, and a cottage, boat, basement full of entertainment equipment is ours for the having, but the reality is that for many people our grasp exceeds our reach. I can’t afford that car that parks itself and I know it. To go out and lease one would mean I’d have to scrimp in other areas – most likely on my saving and my emergency fund – and I’m not prepared to do that.

Ditto an annual vacation. While it’s a lovely idea, and it may be hard to watch others head south while I’m stuck shoveling snow, the reality is putting it on credit isn’t an option for me. So I’ve painted myself a picture that includes a family vacation somewhere wonderful about every three to five years, depending on how I’m doing financially. I save up the money and come back with no regrets.

So, what pictures did you paint that are getting you iton trouble? What did you imagine your life would be like, only to wake up to some hard realities that have you scratching your head? And how do you feel about having to change your expectations? If you aren’t willing to revamp your picture, how are you planning to make it work?

Perhaps the hardest part of taking control of our money and our life is the first step: honesty. We must honestly look at the picture we’ve built and the impact it’s having on our financial stability. If we’re balanced and in a good place then the picture’s a keeper. If we have debt, no savings, no EF, no insurance or worry about paying the hydro bill on time, it time to get out a fresh canvas and start painting a new picture.

Do you understand the odds involved in winning a lottery? Lets take the 6/49 lottery that operates all over North America as an example. To win top dollar, you must have chosen the six numbers drawn. Your first number has a one in 49 chance of being right. The second number has a one in 48 chance – ooh the odds are getting better – since there is one less number (the one drawn) in the pool of potential numbers available. But wait a minute. To get both these numbers, the odds go down to one in 2352 (49 times 48 = 2352). Oops.  You have  a one in 110,544 chance to get three correct numbers (49 x 48 x 47 = 110,544), a one in 5,085,024 chance of getting four correct, a one in 228,826,080 chance of getting five correct, and a one in 10,068,347,520 chance of getting all six correct. That’s right, you have a one in 10 billion chance of winning the 6/49.

The lottery has been called “a tax on stupidity” for a good reason. With odds like one in ten billion, a half-wit knows better than to throw good money away on something less likely than getting hit by lightening… since the odds of being struck by lightening are only 1 in 56,439!

So why do we do it? If we are three times more likely to die in a car accident on the way to buying a lottery ticket, than to win the lottery, why do we routinely plunk down our dollars for the blue-moon opportunity to hit it big?

Even if we are aware that our chances are slim to non-existent, when we think about winning the lottery, a warm feeling of optimism surges through us. All the problems would go away. All that money would mean freedom from stress and worry. And hell, a vacation or twelve, maybe some new shoes, goshdangit, we could pay off the house!

There’s big money is selling the dream. According to the Stats Man almost sixty percent of the profits earned by government-owned business enterprise (called GBEs for short), came from lottery, gaming and liquor enterprises. In 2005, that added up to $10.7 billion. Holey Moley!

Naturally, as economic pessimism grabs us and ties us in knots, the need for optimistic relief only escalates. In February of this year, in just one week, $79.5 million worth of lottery tickets were sold across the country. OMG! That’s a whopping amount of optimism, don’t you think? Perhaps lottery as entertainment has morphed into lottery as last resort. Sad.

David Just, an associate professor of economics at Cornell University has been studying lottery sales in the U.S. over the last decade. He and his team found a strong correlation between poverty rates and lottery ticket sales. It seems lower-income earners buy almost twice as many tickets. And as people feel less in control of their own destinies, we are more willing to throw over good old fashion common sense in favour of luck and chance.

Lottery sellers and casino operators say they are in the business of “entertainment.” But the cost of this “entertainment” far exceeds most people’s budgets.  And if every one of those $79.5 million worth of tickets sold in one week last February was money that could be spared, I’d say, hey, it’s your money, dream on. But with record debt, savings lower than a snake’s belly, and unemployment on the rise, I warrant that some of that money came from people who could ill afford it.

I’m getting off my soap box now. I will leave you with this thought:

Spend $20 a week on lottery tickets from age 25 until you retire, and you’ll have blown $41,600 of money that could have been invested.

Put that money in an RRSP, earn just a 5% return on average, and you’ll have a total of $132,744.76.

So, do you want to dream away $41,600, or would you rather have more than three times that when the time comes to hang up your spurs?

Experts have been touting the importance of having an emergency fund since Moses was a lad. So why is it that so many people still don’t have enough (or any?) money set aside just in case? Reasons and rationales abound.

“I’m paying off my debt. That’s the most important thing.”  With the amount of debt people are buried in, it’s no wonder people want to get rid of it as fast as they can. But having a single focus is never a good way to create balance. Money in the bank gives you options – ways to deal – so that you can stay on track with debt repayment even when the caca hits the fan. Having no cash at the ready means you’ll no doubt be forced to use your credit to deal with a broken furnace, unexpected medical bills, or replacing that tire you blew on the highway. Accessible cash means you can keep to your debt-repayment plan and deal with whatever crisis – large or small – that has come knocking on your door.

“I can’t see the point of letting money sit earning next to nothing.”  While it can be a really sad thing to watch thousands of dollars languishing in a savings account, return isn’t the priority with an emergency fund. Access is. Stick that money into the market and it may not be there just when you need it most. Stick it in a high-interest savings account and while you may be irked by the pittance you’re earning in interest, the emergency fund will be at the ready when you hit the wall. The point is to have some wiggle room when the unexpected happens.

“I have $1,000. That’s enough.”  $1,000 may be enough of an emergency fund if you live under a rock. Yes, you’ll need less of a buffer if your home is paid for, you have no debt, you walk everywhere you go, and you’re happy eating ketchup soup three nights a week. If you want a realistic emergency fund – one that actually gets you though the rough – figure our your monthly essential expenses and multiply by six. That’s how much you need.

Unemployment insurance may help fill the gap if you lose your job, but it doesn’t go far. And unemployment isn’t the worst emergency you may face. Get sick and watch your money evaporate. Even if you have good health and disability insurance plans, your cash flow will still take a kicking until your benefits click on.

“Who needs an emergency fund when you can use a line of credit?”  The people telling us to get an LOC is an emergency fund are the same people who let us buy houses without enough money down, offered us ways to satisfy all your whims while spending money we hadn’t yet earned, and continually raised our limits until many of us had enough debt to bury an elephant.

A line of credit is not an emergency fund… it is debt waiting to happen. If you hit a wall and end up racking up tens of thousands in debt on an LOC, how was that diverting disaster?

Perhaps the problem with the whole emergency fund thing is that people don’t like to think they’ll have to deal with “emergencies.” It’s not unlike the folks who won’t make a Will because they don’t want to contemplate their demise, or who won’t buy disability insurance because they can’t imagine becoming disabled.

Maybe we’re just calling it by the wrong name. The whole idea of having to deal with “emergencies” can be a real downer. Maybe what we need is nomenclature that sounds far more proactive and positive. We’ll stop predicting disaster and instead focus on the fact that when you have money at the ready, you also have ways and means to deal with whatever life pitches at you.

Hmmm… a Ways-and-Means Fund… cash in the bank that gives us the means so we can figure out ways of dealing with life’s lumps. Your son breaks his arm playing in the yard, and you have the means – the money – you need to take a day off work, get him to the hospital, and cope in whatever other ways you must. Your partner is downsized and you have the means to pay the mortgage and keep food on the table until he finds new ways of bringing home the bacon. You bang up your car, watch your shingles blow off in a wind-storm, or find yourself in the throes of a divorce, and you have the means to keep the financial boat afloat while you find ways to cope with all the other stress in your life.

Convinced that having The Means offers you more Ways of smoothing out life’s bumps? Now it’s just a matter of coming up with the dough. It takes effort to knead intent into action.

To best way to create your Ways-and-Means Fund is to set up an automatic deduction from your regular account to a high-interest savings account. If you don’t have much to save, it doesn’t matter — the important thing is just to start… to convert your intent into action. As long as you haven’t started, you’re not creating the means for dealing with what life will inevitably throw at you. Commit $25 per pay to your Ways-and-Means Fund. Once you’ve begun, you’re on your way and then it only becomes a matter of how to boost the amount you’re setting aside to grow your stash of cash.

Most people have expenses they can trim to boost the money going to their Ways-and-Means Fund. Do you buy coffee every day on the way to work? Calculate how much you’re spending, cut it in half, and send the difference to your Ways-and-Means Fund. Smoke? If you smoked half as much, how much would you be able to sock away? Pick up the latest magazine at the checkout counter? Subscribe to premium cable? Go out for a drink with your friends after work? Buy your lunch at work? Pick up your favorite “stuff” whenever it’s on sale even though you already have 30 pairs of shoes, white shirts, handbags, DVDs, name your vice here. How quickly could you build your Ways-and-Means Fund by focusing on being safe as opposed to being satiated?

If you’re determined to keep all your small indulgences, try the Tit-for-Tat approach to building your Ways-and-Means Fund. Each time you satisfy a WANT, contribute an equal amount to your Ways-and-Means Fund. Not only will it make you really think about whether you’re going to spend the money –in essence whatever you buy is going to cost your cash flow twice as much – you’ll be giving yourself options for the future while you enjoy yourself today.

After spending ourselves into the hole, there seems to be a major trend to getting all the debt paid off no matter what. While I believe very strongly that you should do whatever it takes to become consumer debt free in three years or less, people are extending the rule to their mortgages, which I think is ridiculous.

I’m all for getting to debt free forever. And being mortgage free by the time you retire is a very good goal to have. But busting your butt and having no fun shouldn’t be the path you take to get to mortgage free. And if you’re in good financial shape and have a partner who wants to have some fun, but you’re always raining on the parade, you may end up splitting all that money you squirreled away in half when your buddy finally has had enough of your miserly ways.

Margaret wrote:

Gail, my husband and I have $100,000.00 left on our mortgage. We will soon be bringing in an extra $600.00 a month since we will have paid off our line of credit. I would like to increase our mortgage payments by $600.00 a month using this money. I am trying to convince my husband that this is the best way to go, but he says he would rather use the money for vacations! Can you tell me how much time we would save on paying back our mortgage if we put in an extra &600.00 a month (we are paying 5.5% interest)?

Margaret, m’love, you would save a lot! But I’m with your husband. If you’re just down to your mortgage, you should be having some fun. Why don’t you compromise. Add an extra $100 a month to your mortgage payment, and set aside the other $500 a month for other things like vacations.

Melanie wrote:

We’re on one income as I left the workforce mid last year to have a baby. A year before the baby was due we planned to sacrifice my whole income into our mortgage (a total of $40K). My husband is still keen to put 50% of our income in the mortgage which means after all fixed expenses we have $1400 for variables. This is ok as it seems enough for us to get by comfortably with our day-to-day living and raising a baby – however as all the extra money is going into the mortgage we don’t have physical “cash” savings. We’ve managed to accumulate over $80k in our mortgage redraw facility due to this commitment. I’m getting concerned now as we are close to paying off the mortgage ($66K to go)… but once it is paid we won’t have the redraw facility in case of emergency. What should we do now? Have we shot ourselves in the foot by being too scrupulous with our mortgage repayments? Also, I’d like to know where/how I should budget for education costs and the associated expenses as I’ve just returned to study?

Melanie, you haven’t shot yourself in the foot and should be very proud of what you’ve accomplished. But it is time to balance your financial foundation. So I would hold off on further mortgage pay-downs… other than regular monthly payments… and focus on building up the emergency fund. Figure out what your essential monthly expenses are (I think you already have a good handle on this) and then set aside six months’ worth of cash in a high interest savings account to cover your butt. As for how to budget for your education costs, I’m not sure what you’re asking me. If you want to know where to put it on your budget, it’s a LIFE expense and you can replace any other LIFE category (like allowances, for example) to make the budget worksheet balance. If you’re asking how to budget for these new expenses, they are planned spending. You need to figure out how much a month it’ll cost and then set aside that amount so the money is available when the payment must be made.

Chloe wrote:

Do you have to ever counsel anyone who is too cautious with money and what would you recommend? I am single, in my thirties and live with a retired parent. I help them financially as they have a very small pension income. I have a mortgage balance left of 70,000 from purchase price $186,000. This was accomplished within 5 years with 25 % down and taking advantage of lump sum payments. I also have an 18-month emergency fund and about 31,000 in RRSP savings. My household income after taxes is about $46,000 so I am not rich. How did I accomplish this? I have not been on vacation in 6 years, work overtime at every opportunity, take advantage of my works RRSP match, limit going out to special occasions only, bring lunches to work, I never grocery shop with out a list and often plan my menu by looking at what is on special that week, saving money is budgeted into my monthly expenses and I shop for new clothes only when needed. I started saving since my early twenties. This probably sounds more like a success post but I have recently started to realize I am missing out on enjoying life. I would love to find the balance between saving and enjoying my self too. I come from a very poor childhood and never went to go through that again so I believe that is what makes me so cautious.

Chloe, the thing you have to do is decide on something you really want to do (or have), set a goal… how long it’ll take you to save the money, how much you’ll set aside each month, etc… and then ENJOY spending the money. You sound like a very responsible girl. What do you do for fun? Do you have a friend who you would like to travel with? Have you ever considered doing something completely out of the blue? Life is not simply duty… there is also beauty to behold. You need to look around and decide what Chloe wants to do and see and hear and experience.

Daphne wrote:

I watch, read and follow your advice and also the advice of Suze Orman. I own a condo in Regina, which was paid in full when I purchased it. (it’s tiny, but it;s mine!) Also, my car is paid in full. However, I have almost $18000.00 in a line of credit. Using the cups idea of yours, I can easily pay $1600.00 a month to debt. (Using your chart of 30% housing expense and 15% debt repayment…because I have little housing, I shifted that over to debt repayment) My question is: lately, Suze Orman has been telling people not to pay consumer debt and instead to put that money in a savings account. You both have always said to pay down credit card and consumer debt as quickly as possible, until now….Should I be more concerned with getting my savings account higher, even if it means longer to pay off my line of credit? (the interest rate is 5.5%).

Daphne, I’m not sure why Suze has changed her tune, but you should still be working hard to get your debt paid off as soon as possible. Your plan makes good sense to me. This assumes you also have an emergency fund in place (you do, right?). If not, then you should be socking away some emergency money every month… start with $500 a month, and once the debt is repaid build your emergency fund to 6 months’ essential emergency expenses. Then have a great life!

L wrote:

My husband and I were in $21000 of credit card debt (some of which was for fertility treatments so we could have our daughter). We really buckled down, due in large part to watching your shows and me basically being totally focused about getting out of debt. This month we we will pay off the remaining balance of this credit card debt. We have a mortgage ($1015 a month), but aside form living expenses we don’t have any other debt (no car payments, loans, etc). I have tracked our budget (using your advice from the shows) and we need $3000 a month to live what we feel is comfortable. This will go down as our ten month old daughter grows and doesn’t need the special $30 16 oz can of formula she’s had to stay on. My husband makes about $4200 net a month and I make $1475 a month. I would really love to be able to stay home with her the next few years and not have to take her to a babysitter. I realize the extra income would further us along financially and give our daughter a better future in that respect, but the maternal and emotional side of me really wants to be home. In your opinion would you think it be possible for me to do this? We currently have $4000 in our emergency fund. Thanks for all your help and advice.

Hey L, you answered your own question my love. His net income is $4200 an your expenses are $3,000. That leaves enough money to save $420 a month for the long term, $120 for your daughter’s future schooling, and $260 a month for emergencies, leaving you with a whopping $400 a month to play! I know that there are a lot of people who are so gung ho on preparing for the future that they are willing to sacrifice everything today. I am NOT one of those people. If you have no debt, if you’re not spending more money than you make, and if you’re saving, in my book you’ve covered the basics and you can make your life anything you want it to be! If you want to be a stay-at-home mom, be a stay-at-home mom. Keep in mind that you don’t have a lot of wiggle room for fancy vacations or expensive toys. And you need to set aside a little money each month to take care of the “big spending” that will eventually creep up… a new vehicle, for example. You should also take the opportunity you have while your daughter is young to build some new skills: learn to sew, build websites, fix trucks, make fancy cakes. Your brain needs to keep expanding, and when you do finally decide you want to return to work, it’d be nice to have some new skills to put to use, wouldn’t it.

Allesha wrote:

I am 30 yrs old and my husband is 32 yrs. We have a 17 month old son. We were married in 2005 and my husband moved here from the USA. We purchased our firts home in 2008, and from the minute we purhase our home we have being having financal problems. My yearly salary is $35,000.00 my husbands salary is $40,000.00. These are our expenses:

• Mortgage that includes Lnds tax & Life and disability insurance $842 bi-weekly
• Daycare $800
• Car payment $432.00
• Car insurance $250.00
• Rogers $300.00
• Gas$ 400.00
• Grocery $500.00
• RESP $100.00
• Credit Cards $500.00
• Life Insurance $200.00
• Hydro $130.00
• Electricity & Water every 3 months $300.00
• If you calculate, our monthly expenses are $5, 296.00.

My husband is always working, we never spend time together as a family because he is always doing overtime so that we can cover all our expenses. I just really need your help and advice as what should we do now. I consider us selling our home and start all over again but that’s not the route I want to go by. My second option is to get a part time job evenings and weekends but then I won’t have anyone to watch the baby. I am slowly having a nervous breakdown and I don’t know what to do know. I am in desperate need for some financial advice.

Okay y’all, it’s your turn. What would you recommend to Allesha? And if you want to weigh in on any of the other comments I made, I know you’ll have loving and supportive words of wisdom that will help!

You’ve probably heard me say this before; it’s one of my mantras: Plan like a pessimist so you can live like an optimist.

Very often people go through life believing everything is always going to be great. In their world, crap doesn’t happen. No one loses jobs. No one gets sick. No one dies. It’s la-la-la, and off to the mall we go because we’s gots money and they’s shoppin’ to be done.

Sadly, there’s a very real possibility that crap will happen. According to the Society of Actuaries and the national Centre of Health Statistics and Transactions (big title… must mean their know their stuff, eh?) every year one in eight people become disabled. And at age 35, the claim incidence is three times greater for women than for men.

According to the American Cancer Society, in 2008 over half a million people died of cancer. Never mind all the people diagnosed who watched their income shrivel as they coped with their treatments. And while The Big C is the thing we are most fear, the incidences of death by heart disease are higher; 1 in 5 (compared to 1 in 7 for cancer).

Here are some more:

• Stroke Lifetime Odds: 1 in 24
• Motor Vehicle Accident Lifetime Odds: 1 in 84
• Suicide Lifetime Odds: 1 in 119
• Falling Lifetime Odds: 1 in 218
• Firearm Assault Lifetime Odds: 1 in 314
• Pedestrian Accident Lifetime Odds: 1 in 626
• Drowning Lifetime Odds: 1 in 1,008
• Motorcycle Accident Lifetime Odds: 1 in 1,020

Among my immediate friends and family, I have lost dear ones to cancer, suicide, car accident, drowning and a motorcycle accident. I know people die. I can die too.

If you know that crap can happen then you should take the steps to ensure that if it does you and your family are adequately protected. Just worrying about the anvil falling on your head is a waste of energy; using that image to motivate you to plan for the worst – to plan like a pessimist – means you can stop worrying because you’ve done all you can. You’ve got your safety net. Time to have fun!

Every step you take, from building an emergency fund, to buying enough insurance, from saving money for the future to executing a well thought-out estate plan, gets you closer a place where you don’t have to worry.

If it’s been a while since you looked over your financial life, today’s the day to make your checklist and get busy putting your Pessimist’s Plan into place so you can forget about the yuckies and live like an optimist:

• Check credit report; fix errors
• Review savings goals; chart progress.
• Establish/review emergency fund goals; chart progress.
• Review life, health, disability insurance coverage; supplement if necessary.
• Update resumé. Plan for your next job review.
• Review your estate plan: wills and powers of attorney, along with guardianship designations for your children.
• Review Debt Free plan; chart progress
• Set a new goal for increasing your financial knowledge. The more you understand about how money works, the less you have to worry about it.

Once you’ve got all your ducks in a row, you need only do a periodic review to see that you’re still on track.  Semi-annually, or each time there’s a significant change in your circumstances, you can go over your checklist and make sure everything is still ticketiboo. Or you can make the changes you need to put things back in order.

Then you can forget about worrying. You’ve done all that you should, and worrying isn’t going to make a scrap of difference. Get busy being happy.

According to The Stats Man, between 1982 and 2001, 47% of Canadians spent more money than they earned. Imagine. Almost half of us were living on credit. This before the real ramp-up in credit offers and the subsequent crap that’s hit the fan. I shudder to think how many people are spending more than they are earning today.

Meet Dick. He’s married to a lovely lass named Debbie. Both are teachers. Debbie helped put Dick through school, earns more, and just had a baby. Dick thinks playing golf, gambling on-line, and having fun with the boys is the be-all of life.  Dick and Debbie are living well beyond their means. Debbie knows this. She’s distraught. Dick thinks Debbie is a tight-ass and wishes she’d loosen up.

I receive letters from the Dicks and Debbies of the world all the time.  Either Dick wants me to get Debbie to relax or Debbie wants me to knock some sense into Dick. I scratch my head.

Do people really know nothing about each other before they choose to marry? Do people honestly believe that if their partner is a Spendmeister before they marry, that they will become something other than a Spendmeister after marriage? Does anybody think that a conversation about goals, values and predispositions might be a good idea before you tie the knot, move in together, or in some other way make a major life commitment?

While we would like to blame credit cards and lines of credit as the culprits in the Oh-my-gawd-look-at-how-much-we-owe dilemma, the reality is that it is our own pre-disposition to spend that gets us in the hole. Yes, I think lenders have been both irresponsible and rapacious in their policies. But it is we, the consumers, who have allowed this to happen by accepting untruths like:

• you will always make more money, so you’ll be able to afford to pay it back,
•  you work hard, you deserve it
• credit is cheap, use it to get what you want and have a great life.

According to The Book of Gail, the number one rule is, “Don’t spend more money than you make.” Course, you’d have to actually know how much you bring home (not that “gross” number people like to banter about) to know how much you have to spend. You’d also have to know what your “nut” is: the basic monthly essential expenses it takes to keep body and soul together.  I’m astounded at the people who know neither.

It should be easy to bring the lesson home to Dick by telling him to make and live on a budget. But like many other Delusional Dicks, he’ll just leave important categories off or ignore expenses because they aren’t always present. “Medical costs, hey, we get those covered, we don’t need anything in this category.” “Home maintenance, hey, the house is practically new, we won’t have to spend a dime.”

The things Spendmeisters won’t give up are their personal pleasures. “Whaddaya mean I can’t go for beer with the boys after the game.” “Whaddaya mean I can’t buy that dress for the party.” “Whaddaya mean there’s no money.”

Delusional Dicks (regardless of their gender) cannot see the risks because they always believe the pie plate will land face up on the carpet. (While some people call this optimism, it’s delusion when it puts people at risk.) They can’t even conceive of anything bad happening, and they refuse to take any steps to protect themselves, never mind their families. Delusional Dicks wise-crack and rationalize their way through life until the two-by-four finally knocks ‘em flat, and then they blame something else, brush themselves off and move on.

So what do you do if you’ve partnered up with a Delusional Dick?

You could run screaming to the exits. A little money spent wisely with a divorce lawyer today could save you tons of debt.

Or you could say, “Hey, I’m taking control of this, you’re a moron.”  You’d assume the role of Mommy or Daddy, while your partner got to keep on being a child, creating problems you’d have to solve.

Or you could separate the money, each contributing to their own upkeep, each doing their own saving and investing. There would be no joint credit, no joint assets.  Delusional Dick would stumble eventually and – here’s the really hard part – you’d have to NOT bail him/her out.  It might not end well, but it might be enough to bring Delusional Dick into the real world. Only time will tell.

I have to admit I’m of two minds on the whole issue of adult kids moving home. Termed “Boomerang kids” by the media and these are adult children who have left home only to return to the nest. Whether the cold hard reality of life on their own was too much to take, or they’ve suffered a significant set-back like unemployment, divorce or some other relationship malady, kids are coming home in record numbers. Some stats hold that the Kids-Moving-Back-Home phenomenon has doubled in the last half-century. And according to the National Survey of Households and Families in the U.S., 10% of all children over the age of 25 live with their parents.

Yup, I’m of two minds:

On the one hand, I think it’s terrific that parents are willing and able to help their children, particularly if the set-back those kids are facing is a result of crap happening. Who could foresee that your daughter’s lovely fiancé would turn into a drinking, gambling fool who couldn’t hold a job? Or that the lovely girl your boy brought home from college can’t keep her hand out of his wallet? If divorce happens, and you can help ease the burden by offering a roof and some emotional support, good for you as parents. Ditto kids who find themselves unexpectedly out of work, or dealing with an illness no one could have foreseen.

On the other hand, I think it’s downright dumb the way some parents let their kids move home, do little or nothing to pull their own weight, pay no rent, and still live high off the hog. There are adults living in their parents’ home who think it’s perfectly fine to eat out four nights out of seven, who don’t lift a finger to do anything to help out around the house, and who won’t cough up a penny to help with the costs of living. There are adults living in their parents’ home who get pregnant when they don’t have the money to put a roof over their own heads. There are adults living in their parents’ home who have no plan for how to get the hell out.

I received a letter from a young lady recently bemoaning the fact that she and her husband are still living in her parents’ basement. After moving home with him because she got pregnant and they didn’t yet have their crap together, they proceeded to have four children! Now she wants to know what she should do? Gosh, if you can’t take care of yourself, why would you think it’s okay to have four kids? What ever happened to “grow up” first?

If you have adult children who are planning to move back, you’ll do them no favours if you let them live the life of a teenager: sleeping late, taking no responsibility for themselves, and expecting everything to be done for them. While this is barely acceptable from a kid, it is totally unacceptable from an adult.

I don’t care how much you love your son or daughter. Adults do not have the right to mooch off their parents because the alternative is hard. If your kids have chosen to stay in school for a decade, why do they get to have all the benefits of your (hard working) life while they are students? And if they’re old enough to bring another life into the world, they’re old enough to put a roof over their own heads, and food in that baby’s belly. Enough with the coddling.

That’s not to say that you should turn your children away with a cold shoulder. But if you’re going to let a young adult move home, then you should at least have some rules about what’s what.

Make sure you have an end game in mind.  How long will they live with you? What’s their move-out date? Failing that, when will you sit down again to assess how they’re doing and set the move-out date? Establish a time line up front so your adult children don’t get the idea this is a permanent arrangement. Your kids shouldn’t have to worry about being kicked out on a whim. Nor should they get so comfortable that life at “home” becomes the status quo.

Talk about the money. If your kids are trying to save the downpayment on a home, have them pay you “rent” that not only covers the increased costs of having them under your roof, but sets aside the amount for the downpayment every month. Ditto kids who are paying off debt; make sure the money is going where it’s supposed to go. Unless your child has absolutely no income, they must accept responsibility for some of the household expenses.  And for those who have very limited incomes or who are busting their butts to get debt paid off, exchange what you have to offer for their skills as garbage collectors, cooks, cleaners, laundresses, snow-shovellers, drivers, and whatever else they can do to make your life easier.

One way or another, your adult children need to pay their way to keep their self-respect and not turn back into your “babies.” Let them off the hook on rent and other financial responsibilities – let them spend their income any ol’ way they want – and you’ll be teaching them to live on a disposable income they’ll never again have.  And let them live at home with no expectations for when they’ll leave and they won’t. Why would they? They’ve got it good and they know it.

 Back to the young lady who wrote me…

Sweetie, if you want to have a life, you’ve got to be prepared to pay for it. Life doesn’t come cheap. And it doesn’t come easy. Independence is a sign of maturity. If you’ve finally reached the point where you’ve recognized the importance of becoming independent, then you’ll do WHATEVER IT TAKES to make it so. Thank your parents and get the hell out of their basement!

APPEARANCE ALERT: I will be speaking at the Sudbury Women’s Show on Sunday, June 14, 2009. For more information, click here.  Come on by and get a hug!

If there’s one thing I’ve learned over my experiences with people and their money it is that it doesn’t matter how much you make, you can be broke. I often get letters from people who are living on significantly reduced incomes because of illnesses, changes in life circumstances or job loss. (Hey, that’s why emergency funds were invented, right?) My heart goes out to them because they’re trying to do their best on very little income. But I get just as many letters from people who make gobs of money and are still up to their eyeballs in debt.

One of the reasons people making lots of money can’t seem to make it last is what I like to call We-Make-Lots-of-Money-So-We-Don’t-Have-to-Worry Syndrome! Clearly if we’re bringing home The Big Bucks, there’s no way we can spend it all. Really? And if we have way more money than it takes to cover our nut, then we can buy whatever we want whenever we want too. Hmmm.

Part of this stems from the fact that most people never bother to figure out what their essential expenses are, convinced they make “enough,” there’s no need to watch the money. Unaware of how much of their money is being eaten up by their overheads, they are willing to blithely whip out their cards and charge it whenever they see something they’d love to own because there will always be more money.

As one lass I worked with put it, “I know I can always make more money. There will always be more money.”

WMLOMSWDHTW Syndrome leads people to act like children, satisfying their desires for candy, unaware of the cumulative effect. Later, when the major tummy-ache sets in, they wonder what they did wrong and whimper as they suffer. As soon as the ache passes, back into the candy bag go those fingers, only to create another major tummy ache.

If you’re spending money without keeping track of where the money is going, if you whip out that credit or debit card for everything you see that you want, if you don’t think twice about the money, you’re a tummy-ache waiting to happen. And if after, once you’ve realized you can’t pay the balance off in full, you resign yourself to anything less than a full payment, but keep using the credit card anyway, you’re the kid who just won’t learn the lesson.

Children can come up with all kinds of reason why they should have just one more piece of candy. And most kids will make themselves sick if they feel they can get away with eating the whole bag. People who shop using credit are doing exactly the same thing.

It doesn’t matter how much money you make, if you don’t keep your eye on the bottom line, you’re suffering from WMLOMSWDHTW Syndrome. You can say you don’t have time. You can say you have more important things to do. You can say it’s because money isn’t important to you. Those are all just excuses that will allow you to stick your hand in the candy-bag unfettered by reason or the need to prioritize.

Money is a limited resource and we can run out of it. If we don’t choose wisely, we can find ourselves in deep doo doo without any reserves to help us dig ourselves out. And if there comes a time when the money supply runs a little low, we’ll be kicking ourselves in the butt for having “wasted” all that money when we had it.

According to a recent report called “Where Has the Money Gone: The State of Canadian Household Debt”, one in four of us is $5,000 away from financial disaster, and one in ten of us couldn’t deal with a $500 emergency. OMG!

Save yourself the butt-kicking. Decide today that, regardless of how much you make, you’re going to start watching where your money goes. Get yourself a notebook and every time you spend a penny, write it down. At the end of the money, add it up by category – coffee, lunches, utilities, communication, etc. – to see where your money went.

You might be surprised at just how much candy you’ve been eating!