Overspending and wasteful consumption

Wishing you a Merry, Jolly and Blessed Christmas!

Just like the Magi, we give honor and praise to our Lord bearing gifts for Him that we deliver to others.  Didn't He say,  'whatever you do to the least of my brethren, you do unto me'. What might you do?  A good turn, a kind word, a thoughtful gesture, provide a meal to the less fortunate and so much more. For most people, such acts of kindness are represented by a gift.

If you don't have a list, like Santa does, we tend to overspend and buy stuff that are not useful to or appreciated by the recipient.

It's a couple of days before Christmas. If you do not have any idea of a present to give thanks, show appreciation or make peace, get one of those nicely-designed money envelopes designed to hold cash.  There are also those novel creations that hold gift cards. No wasteful consumption, overspending and best of all, no returns and no exchanges.

A few things to keep in mind about gift cards-

• There are limits on expiration dates: The money on the gift card will be good for at least five years from the date the card is purchased. Any money that might be added to the card at a later date must also be good for at least five years.
• Replacement cards: If the gift card has an expiration date you still may be able to use unspent money that is left on the card after the card expires. If your card expires and there is unspent money, you can request a replacement card at no charge.
• Check your card to see if expiration dates apply, fees are disclosed and there are limits on fees.

Get more information at http://www.federalreserve.gov/consumerinfo

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Has Christmas become synonymous with spending?

Say 'Christmas' and people across generational lines think 'presents'. Christmas is a birthday celebration after all. The Magi brought the baby Jesus gifts of gold, frankincense and myrrh. Today, the real message of Christmas gets lost amid a flurry of activities that include shopping, putting up decorations, parties, homecoming visits and more shopping that all come to an end the day after Christmas (or some time thereafter). There are lots of wonderful memories for sure but in its aftermath most people are saddled with debt.

Oh, the convenience offered by a credit card... just lovin' it! You are satisfied. You got your wants and needs covered without shelling a dime. Do you realize that you now have a loan that must be paid back in 30 days? You don't have to but if you do not pay the full amount due, the finance charges can quickly throw you into a pit that is designed to make it difficult for you to climb out.

Be smart and shop for the lowest APR on credit cards. The annual percentage rate (APR) is the cost of credit on an annual basis expressed as a percentage rate. When stated in dollars, the finance charge is the total dollar amount shown on your credit card statement and includes interest and other fees. Interest is the price you pay for using the credit card company's money. Here are a few tips:

1. Use no more than 28% of your credit limit
2. Read the terms of your credit card agreement
3. Minimize the interest costs by paying as often as allowable within the billing cycle
4. If you are not able to pay the full amount due and must carry the balance forward, do not make any additional purchases until the balance is paid in full.

The new Card Act that was signed in 2009 provides credit protection for consumers. The highlights are on page 58 of Destination Points - A Values Driven Journey available here http://www.viacompass.com/financial_stability/limited_copies_-_order_today

Take charge - don't spend money you don't have!
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Where is the money?

A two-income family of four lives from one paycheck to the next. The bills get paid but there is always the insecure feeling about the what-ifs in life. These are the curved balls that come your way when you least expect them. Is this the life you want? For a lot of people, the cushion they fall back on during times of emergency is the mighty plastic - credit cards. Car repairs, out of pocket medical expenses, replacement costs for household necessities such as the furnace, water heater, washer, dryer are some items that go on the card. Unless you pay your credit card balance in full each month, the amount you put on the card for an asset that depreciates costs more. Think about that.

The solution is to build your emergency cash reserves. It is recommended that you have liquid savings equivalent to at least three to six months of living expenses. With the high unemployment rate in the aftermath of the financial crisis of 2008, it is best that you save up to nine months to a year in living expenses. Most people on Main Street do not have an adequate emergency fund and others hardly have any savings at all.

What must you do? If you do not maintain a monthly income and expense statement, now is the time to do it. It is important that you keep track of your expenses to know where the money you earn goes. Doing it for a six-month period will benefit you the most. You can view the template at our companion website, http://www.viacompass.com/  and request a copy to be emailed to you. Make copies for future use.

Your monthly income minus your monthly expenses is your discretionary income. Strive to increase this discretionary amount each month to build up your savings or pay down debt. Unless you are the beneficiary of a financial windfall, your journey starts with saving all you can and putting your money to work using various financial and investment products that are suitable for your unique situation.

Know the difference between discretionary income and disposable income? You can find the answer on page 33 of Destination Points, A Values-Driven Journey. More on the book here http://www.viacompass.com/financial_stability/limited_copies_-_order_today

Are you in an inverted pyramid?

If you are, the journey to your financial destination will take longer to reach. What does that mean?

In Chapter 1 of the book, Destination Points - A Values-Driven Journey is a picture of a pyramid that encases the blueprint of a secure future.  At a glance, the path to your destination is clearly spelled out in only three steps. It starts with a foundation that is rooted on a clear purpose and set of values made stronger with education, financial discipline and good money management.

Your values shape your goals. If goals are not aligned with your values, your journey will be a struggle. I was privileged to practice in the insurance and financial services profession. [I am retired and do not sell insurance and financial produts but continue to be a resource to anyone who needs help]. I have come to know a lot of people who live inside an inverted pyramid. They have good-paying jobs and find great satisfaction to live in the moment. It's a choice they make - but sooner or later - a certain kind of restlessness sets in and they face the inevitable question - where am I going?

They realize they're not getting any younger, their job is at risk, health concerns develop, and other life events occur as they always do. These are eye-openers that lead us to question our purpose. You work hard for the money. Why? Whatever the answer may be, ask yourself again. Why? On pages three and four of the book is a short, simple exercise to help you identify your values. Go there now.

You just might find that it is time to re-affirm your sense of purpose and values.

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Picking up where I left off

Moving forward, my focus is on financial education. Archived posts were about Main Street, its people and their financial concerns and challenges.  The financial crisis of 2008 was an eye-opener for all of us. The devastating impact it had on personal finance triggered an awareness and urgency for people to take charge of their financial health.

Sadly, most of them do not know how. Why? Financial education was absent and financial discipline was silent in their lives. I addressed these concerns in my book, Destination Points - A Values Driven Journey. The book serves as your compass in your financial journey. The topics are wrapped around real-life situations that allow you to identify with and learn from other people's experiences.

How often have you skimmed through a book to find that only a small part of the content is applicable to your situation? Destination Points delivers essential financial topics in a cohesive, chunk-style learning designed to stimulate your interest and encourage you to learn more. It will be released on December 21, 2011 and available for pre-order at our companion website http://www.viacompass.com/

Writing the book is a start. Welcome to my blog, Destination Points - are you there yet?

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