Prosper Newsletter: January 2007 > Financial
You understand that the following information is educational in nature and is not intended to be legal, accounting, or tax advice. You are responsible for your own financial decisions and should consult your own legal, accounting, and tax advisors before making your financial decisions.
Overdue Decisions
On January 23rd, 2006 Jen and I had our first coaching session. At that time, we had 10 monthly bills: a first mortgage, a second mortgage, a home equity line of credit, a van, a car, a school loan, and 4 credit cards. We were barely surviving week to week; we were spread out so thin. Taking the kids for ice cream was a huge deal. We were both always stressed at how we were going to make ends meet month to month. Retirement savings was almost non-existent. In short, we were beginning to feel the situation was hopeless. Then in December of 2005, I ordered John's free tape on his debt into wealth program and decided to purchase it. We had spent $300 dollars on worse things in the past!|! 10 months later we are down to 5 monthly payments, and will be down to 4 by years end. Our cash flow is really starting to change. We are able to pay cash for everything, including a few emergencies that have come up. Our accelerator margin is really starting to take shape and in the future will be much more regular and consistent than the first 7 or 8 months. The program is helping us in so many ways. The biggest way is it has changed our whole attitude and outlook on our financial situation. We have made some decisions recently that were a long time coming. We were avoiding them because they were based on our financial situation and most of the time it was just easier to avoid everything. We still have some work to do, however, but we are much less stressed about our financial situation and we are very hopeful of our future. Our path has us totally debt free, including our house, in 5 to 6 years!!!! This is all thanks to Prosper Inc. and our coach. We have learned so much in such a little time it's actually hard to believe we are where we are. Thank you.
- Dan and Jennifer O.
Lakewood, OH
Question Every Expense
As you are looking at your cash flow, question every expense. Look carefully at your necessities as well as your discretionary expenses. Make a list of areas where you can conserve money. Try to find at least six ways to cut back.
Let's say you've done these exercises and have only managed to free-up three dollars a day. The only thing you could find to give up was your cappuccino and donut every day before work. That's $15 a week, $780 a year. Over ten years, that coffee and donut could become $13,315 if you earn 10 percent interest per year in a low fee, stock mutual fund. Now that's motivating! Who said budgets were boring? It's especially exciting when you turn that cash into a new car or a second honeymoon.
Peace of mind is living slightly below your means. Misery is living slightly above your means. One is the recipe for contentment. The other inevitably leads to disaster. You will find the freedom to accomplish your financial goals if you can develop the discipline to direct your cash towards what matters most to you.
Resolutions, Goals, and Time Management
As 2006 comes to a close and we prepare for the New Year, most people have the established habit of setting resolutions for prospective acts to accomplish in the coming months. In other words, most people will set verbal goals in various aspects of their lives, only to come up short time and time again as they forget the most basic steps that are imperative in order to achieve success.
A goal is defined as the end toward which effort is directed. And a goal is not real unless it is written down. By knowing precisely what you want to achieve in a written format, you will know what you have to concentrate on in order to achieve your desired results. Many people are not specific and detailed in their planning or in their resolutions, thus the high rate of failure. People who find themselves in this situation often lack focus, detail, and having the end result in mind.
In the book Alice in Wonderland, this point is made very well. When Alice meets the Cheshire Cat in the fork in the road, Alice asks, "What path should I take?" The Cheshire Cat responds, "Where do you want to go?" Alice answers, "I don't know". The Cheshire Cat says, "Then it doesn't matter which path you take".
One common form of goal setting in order to cut a clear path is done by incorporating the "SMART" method:
S — specific.
M — measurable.
A — attainable.
R — realistic.
T — timely.
Goals can and should be set on a number of different levels, including the physical, mental, financial, spiritual, and emotional. First you decide what you want to do with your life in each area for the coming year and what large-scale goals you want to have achieved by the time the next holiday season rolls around. Second, you break these desires down into the smaller targets that you must hit on a monthly basis in order to reach your goals for the whole year. Finally, once you have your basic plan in place, start working towards achieving your objectives on a daily or weekly basis by creating and utilizing a task list. By using this well-thought out method, you will find that you are more successful in your overall achievement.
Many people also lack the primary daily organization that is necessary for reaching the best possible results. Time management is another area where many people fall short and is one of the keys to victory in achieving any goal or in simply completing a necessary task. Once you have identified the tasks and goals that you want to accomplish, you will definitely benefit from some sort of scheduling program. Many people use a day planner or a palm pilot in order to have a record of the daily tasks at hand. The idea is to have a prioritized task list, including a daily calendar for appointments. This will aid in efficiency and organization. It will also help out in putting an end to the habit of procrastination.
As you organize, plan, and prioritize your days and break down your goals into tasks, and check them off with each accomplishment, you will find not only a greater sense of accomplishment, but also a boost in self-esteem and personal pride. So have some fun: take the bull by the horns and set some resolutions for 2007. Just remember to be "SMART" in your planning, and prudent in your execution.
