That’s right, YNAB 2.0 is flying high right now. I’ve already mentioned it a bit here, but if you want to check out some more info on 2.0 (including much awaited screenshots), check this out.

I was listening to the Dave Ramsey Show the other day. He took a few minutes to rant about the importance of a budget. I don’t want to say much else about it. He does it best:

I’ve had several calls this hour from people who just couldn’t seem to get things moving. You know, there just is - sometimes when you’re overwhelmed, whether it’s with money or life - you, you just get paralyzed, you get this deer in the headlights thing - even though there’s an 18-wheeler coming right straight at your face, you know, at 65 miles an hour, you’re getting ready to be a speedbump, you still freeze in the headlights. You freeze in inaction.

And I gotta tell ya, inaction is sometimes a purposeful decision. But most of the time, inaction - status quo- in whatever you’re facing, if you don’t like where you are, most of the time, inaction is not your answer. Most of the time, you gotta raise up and smack something! Just get something started!

I love that scene in “Braveheart” where William Wallace is walking out, “Where you going?” “I’m gonna pick a fight.” You know. The way this is going is not working. I’m gonna go pick a fight! You know, you gotta decide that.

Now I don’t know if your fight is with yourself in the mirror - and you go, “Hey Stupid, you need a budget. Hey Stupid, you can’t keep using these credit cards. Hey You, straighten up. Hey, You need to get outta the house! You’re sitting around knowing that this is not right in your brain. But something about, you know, we don’t like change, we’re like a toddler sitting in a poopy diaper. “Yeah, I know it smells bad, but it’s warm and it’s mine. I’m just gonna sit here.” Get up outta the mess!

Now I gotta tell ya, a whole lotta ya that call this show over and over and over for 14 something years now, we’ve been telling you to get a budget, get a budget, get a budget, get a budget. And you think when I say that, “Yeah that sounds like a good idea.” But you don’t go get a budget. And then you keep going and you have no win. You have problems. You can’t get outta debt - “Yeah I can’t get this debt paid off.” - but you still didn’t go get a budget.

People - you have to freakin’ write it down! You have to write it down, on paper on purpose. You cannot win the money game EVER without a written gameplan. Every month, on paper, on purpose - every dollar has a name. You have to take action!

You keep doing what you’ve been doing you’ll keep getting what you’ve been getting. 12-steppers say continuing to do the same thing over and over again and expecting a different result IS the definition of insanity. And that’s if you’re sitting in there when your husband’s a crack cocaine addict, that’s if you’re sitting there and you have 80 million gajillion dollars in credit card debt, that’s if your’e sitting there and you have a back problem. That’s if you’re sitting there and you have too much car debt. That’s if you’re sitting there and your spouse won’t get on the page with you and work with you. If you keep doing the same thing you’re going to keep getting the same thing. You’re going to look up six months from now and go, “I’m still sitting in a poopy diaper.” Because you didin’t do something.

It’s about action! It’s a Nike™ thing. You gotta just do it! You gotta DO something. This is not theory. You see, that’s the difference in this show and 98 percent of your financial shows out there. Financial people talk about ideas, and concepts, and math, “Well here’s the, here’s the…” BULL. Let me tell you, it’s a behavior issue. 80 percent of personal finance is behavior. Only 20 percent is head knowledge. YOU already know what to do. And yet you call this show and you already know the answer. Now sometimes you don’t know the answer and I’m here to help you. Don’t misunderstand. I’m not going to fuss at you just for calling in with a question I’ve already answered. that’s not the point.

The point is to do a written plan, just start there. Because when you write down ninety-thousand dollar income, eighty-thousand dollar income, twenty-thousand dollar income, and you say, “Alright, what’s my take-home pay Friday? What’s my take home pay the next Thursday? What’s my take-home pay the rest of this month?” In writing on paper and now you start going: “Okay I take a house payment outta that, I take a car payment outta that, I take some credit card bills outta that, I take some medical bills outta that, I take some food outta that, I take some lights outta that. Wow, where’s the rest of this going?”

You’re WASTING it because you don’t have a plan! That’s where it’s going! You need to write it down! Because you’re wasting 25-30 percent of your income and you have NO clue where the money went. NO clue where the money went. If you worked for me I would FIRE your butt because you’re inept and you’re incomepetent! Write it down! Really, it’s that serious. You gotta write it down. You have to wirte it down.

I havent’ been broke in years. But I’ve had a written budget every single month. You come to my house right now I could pull it out and show you the written budget for this month - exactly where every dollar’s going to go. And my wife knows what the budget is. We’re on the same page, and we have been for years.

“We’ll you’re just lucky to be successful.” Luck had nothing to do with it. I’ve been kicking butt and taking names for a huge number of years - making every one of those dollars behave. Don’t talk to me about luck. It wasn’t luck. We busted it. We made every dollar SQUEAL! We lived like no one else - on paper on purpose. WE had a plan. That’s how you win!

Action!

Action!

Take Action!

Step into it!

This is the Dave Ramsey Show.

Yes, that is the Dave Ramsey Show. Thank you Dave, for that call to action.

Everyone’s always looking for some simple ways to save money, and there are plenty of ways to do it. The fact of the matter is, saving money - by its very nature - is simple. You don’t have to explain some deep concept to someone, then whip out a powerpoint presentation to visually illustrate how saving money works. You don’t need to get a formal education to understand the vast depths of the saving-money concept. Nope, you just have to do something. And that is why it’s hard.

I ran across some simple ways to save money in an article in Fortune Magazine today. I thought I would share the basic thrust of the article.

The first thing the article mentions is the U.S. “dismal savings rate” - which stands at less than one percent. We can’t save beans. We are consumers. And we’re going to consume ourselves right into retirement poverty if we don’t give ourselves a swift kick in the pants - now.

Fortune outlined four problems and their respective solutions, regarding saving money. I will - logically - begin with the first.

PROBLEM: If you see money in your checking account, you spend it.
SOLUTION: Pay yourself first.

Here Fortune pushes the idea of automatic savings plans that can be implemented by pretty much any bank or investment institution. Basically, you tell them, “On the 5th of every month, take $100 out of XXXX account, and transfer it to my XXXX mutual fund.” And it happens. Fortune relates the story of a doctor who “regularly outspent his $200,000 salary” - but once he got on an automatic deduction plan of 5%, he said he didn’t even notice the difference.

I wouldn’t be able to sleep tonight if I also didn’t mention the power that comes from living on a budget that you have made before the month begins - where you tell the money what to do. Then once you (and your spouse if applicable) have committed to the budget, it tells you what to do.

Alright, back on track. Fortune’s idea can work for the guy making 40k also. A simple way to save money? Have it auto-deducted. THEN DON’T TOUCH IT. Just wanted to make sure that was clarified!

PROBLEM: You spend “windfall” money whenever you get it.
SOLUTION: Treat all money the same.

Now here I thought Fortune had a great idea when it came to this little problem. Let’s say you get a tax refund of $1000. You see the money as something “extra” that you normally don’t count on. So you immediately think that you can just blow the money somewhere. Now, I agree that sometimes it’s healthy and smart to blow a bit of windfall money - but with a savings rate of 1%? I just can’t justify it.

If you’re trying to get out of debt, you can’t afford to think of any extra money as windfall money. It’s debt money. It’s part of the key to your financial freedom. Fortune suggests:

Put the “found money” into a savings account for just one month and consider how to spend it later. By the time the month is up…the dough will likely feel more like savings… and you’ll be less likely to use it on a shopping spree.

Now that seems like a pretty simple way to save money. Elegantly simple. I love it.

PROBLEM: You throw good money after bad.
SOLUTION: Don’t let past decisions dictate future ones.

Fortune used the example of a couple that bought a $250,000 yacht and had three years of maintenance on the sucker before they finally decided to sell the money pit. Maybe we can scale that example back about - oh, $249,000 - What if you invest in some stupid multi-level marketing gimmick and burn $1,000 buying super guava juice made by the rain people in the deepest parts of the African Congo? (It doesn’t taste good, but man is it good for you!) You have sunk one grand into the project. Not wanting to admit your stupidity, you continue pouring your time, and even some extra money, into distributing fliers, building a website, etc. It still doesn’t produce. You should cut your losses and walk away. So another simple way to save money is to walk away from a bad deal - even after you’ve invested time or money into it. (This is not to imply that you give up trying to earn money. Notice that I said you walk away from a bad deal.)

PROBLEM: Saving money feels like depriving yourself.
SOLUTION: Visualize something concrete your savings will buy.

This is another elegantly simple way to save money. If you find you’re lacking the motivation to really sock away the requisite amount for retirement and security, practice visualizing what that savings will earn for you later in life. Can you imagine getting a check from your mutual fund holder every month for several thousand dollars? And all you did that month was visit grandkids, play golf, and volunteer at your church?

The sheer idea that my savings could work for me all the time is motivation enough to want to save. But find whatever you need to visualize that your savings will buy for you - then use that visualization to motivate yourself to save, save, save! If you need to, start small, then work up to a necessary amount of consistent savings.

Remember, how much you save and what kind of life you will live ultimately depends on you. Take the necessary steps to attain the financial security you desire.