Confronting the Brutal Facts of Your Financials

“You must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties, and at the same time, have the discipline to confront the most brutal facts of your current reality, whatever they might be.”

Jim Collins in Good to Great

I love that quote by management guru Jim Collins. It reminds me that neither optimism or doom will change reality. Whatever the situation, it is best to take an unbiased look and figure out what needs to be done to make changes for the better.

This can be painful because many times you don’t know where to start. Especially when it comes to your finances. Mortgage, emergency fund, car payments, debt, college, retirement…all of these critical needs have a way of pressing down on us to the point that we don’t know what to tackle first. Many times it is easier to just look away.

As moms this is an area that weights heavily on us. We are natural planners and care deeply for our family’s future.

The good news is that it is a New Year which brings fresh beginnings and a chance to change your course.

So we are kicking-off our focus on getting your financial house in order. We will try to make it as fun as possible – even throw in some interactive curriculum for the kids on money management.

But to start things off, we need to take a look at the brutal facts. This is not meant to scare or pressure, rather set the stage for what the financial reality families and our country will face.

Know your financial situation so you can prepare for the unexpected…

Faced with an unexpected expense (car repairs or medical bill) half of Americans said they could not pull together $2,000 in 30 days to cover the emergency.

By some estimates fewer than half of Americans have ever figured out how much they need to retire comfortably.

Less that 10% of all US citizens close to retirement have enough money to maintain their current lifestyle.

College costs are increasing – higher than inflation – and expected to continue rising.

The government is in worse shape than you – so don’t expect government health care or retirement programs to be in place forever

You will receive less in social security than you pay into it – this will get worse as the number of workers per social security recipients decreases and people live longer.

Our nation’s debt is in at an all time high at over $17.075 trillion. Yup that is $17,075,000,000,000. When you look at other countries in financial turmoil  (like Spain and Greece) it is obvious that we have two choices: 1) keep borrowing and go into more debt, hurting our children’s future or 2) make tough choices and get our nation’s financial house in order.

What if you have debt or don’t earn enough to save?

It takes work, really hard work but it can be done. Check out Dave Ramsey or Suze Orman for guidance. Use tools like Mint to track your financial situation in real time. But you and your family must have a laser-like focus on your goals.

Where can you find savings?

Eat at home more. According to David Wessel of The Wall Street Journal, Americans “spend about half of their food budgets at restaurants now, compared to a third in the 1970s.”

If you went out to lunch or bought coffee every day it has a way of adding up. Cutting out $35 of additional expenses a week adds up to $1,820 a year. Over a lifetime, you could save $112,000 by bringing your lunch to work.

By putting $250 a month into an IRA you could yield $500,000 when it is time to retire.

Start small…start somewhere…just start!

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