TheMoneyGeek Unplugged

Even as the economy begins its slow crawl back, college costs are continuing to rise.  That means parents are continuing to fight a tough battle between funding college and funding their own retirement.

In October, the College Board reported that the average published price of tuition and fees for in-state students at four-year U.S. public colleges was $7,020 for the 2009-10 school year, up $429 or 6.5 percent from a year ago. After adjusting for inflation, the average net price paid for tuition and fees by public four-year college students is lower overall in 2009-10 than it was five years ago, but higher than it was last year.  Private four-year colleges saw a smaller increase of $1,096 or 4.4 percent, but for a much higher average annual tuition of $26,273 for the school year.

Also in October, the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) also reported in October that American workers who held 401(k) accounts consistently from 2003 through 2008 suffered a 24.3 percent average drop in their account balance during 2008’s bear market.

Despite these huge challenges, it’s particularly important for parents to make retirement their first priority. Kids can always take on loans and search for scholarship and grant funding to tide them over.  Parents can offer help in a better economy, but the momentum lost in saving for retirement is much tougher to replace.

And there are serious financial consequences to breaking into 401(k) and other tax- advantaged retirement savings to pay for college.  Parents tempted to do so should look for other alternatives.

A July 2007 Country Insurance and Financial Services survey found that not only did 25 percent of respondents think it would cost less than $50,000 to send a child to a four-year college, but that nearly half believe that saving for college is more important than their retirement. Most qualified experts  (including me) advise against. On average, public colleges have surpassed $50,000 in total costs when you add in books, room and board.

Before you choose between yourself and your child by raiding your retirement accounts, here’s what you should know:

You’ll escape an early distribution penalty, but…

Any withdrawals from an IRA you might take for your child or grandchild’s education (as well as your own or your spouse’s) can be withdrawn without the usual 10 percent penalty on early distributions before age 59 ½, but you’ll owe regular tax at your incremental tax rate on the withdrawal.  Ultimately, you really need to talk with a tax advisor or Certified Financial Planner™ (CFP®) professional (like me) to determine how your IRA withdrawals affect your tax liability and how they have to be reported on your Form 1040.

You might hurt your kid’s chances for financial aid:

The entire withdrawal from an IRA — whether taxable or not — must be included as income on the following year’s application for the Free Application for Federal Student Aid, or FAFSA. Family income does more to influence financial aid than the size of the family’s assets, and dipping into your IRA can potentially damage your child’s potential financial aid. Check with a trained financial planner who is well versed in financial aid strategy before you make such a move.

Most middle and upper income folks assume that they make too much money to qualify for financial aid.  I urge all students to apply for aid whether they think they qualify or not.  Many students whose parents report a six-figure income may qualify for grants, loans work-study or other financial assistance.

A ‘hardship withdrawal’ or loan from a 401 (k) plan should be a last resort:

Earlier this year, the Transamerica Center for Retirement Studies reported an increase in workers taking loans from their 401(k) and other work-based retirement savings. Eighteen percent of those surveyed reported that they took loans from their retirement plans in 2007 compared to 11 percent in 2006.

Keep in mind that while most retirement plans provide an option for hardship withdrawal for emergency medical or funeral expenses, the IRS restricts use of those funds for home purchases or tuition expenses. In any case, you’ll pay the tax on the withdrawal plus a 10% penalty on most financial hardship withdrawals.

So what do you do?  Besides talking to a tax professional, it makes sense to find time to speak with a CFP^® professional to take a look at your overall financial situation so you can possibly find alternatives to raiding your retirement.  A trained planner can help you look over all the spending, saving and investment decisions you’ve made so far and seal up the leaks.  Then you can discover whether you have smarter options to pay your child’s tuition. They include:

Starting a search for scholarships and grants with your kid:

See if there are grants and scholarships not only in your community (think community foundations, high schools, local chambers of commerce), or within your industry or trade associations.  Understand what a prospective student’s college choices might offer in terms of aid from its endowment funds.  Also, some employers offer scholarships for their employees’ kids. Start searching online, at the office and by phone for such aid.

The website http://savingforcollege.com provides lots of information about strategies for saving for college, finding scholarships and applying for financial aid.

Negotiate a college work schedule for your child:

No one says that you have to pay 100 percent of your child’s education costs.  In fact, most students work harder when they have “skin in the game.”  A college sponsored work-study arrangement or just a regular full or part-time job while going to school is a great way for students to learn responsibility and how to manage money.

Whatever portion of college costs you decide to pay for your child, I generally suggest that parents let the children first pay for tuition and books and the parents pay for room, board and spending money.  This way, children will think twice about dropping or performing poorly in a class they know they’ll have to pay for again. Also, parents can incentivize kids by agreeing to pay for a larger percentage of college costs based on grades achieved.

Consider attending a commuter college:

Many local colleges and universities offer the same if not a better educational opportunity for students as going away for college.  If money is tight and the student qualifies for little in the way of grants or scholarships, living at home while attending college can be an excellent way to get an education while saving 40 to 50 percent of the total cost.

Fine-tuning your negotiating skills:

Parents need to become more aggressive about negotiating tuition, room, and board at colleges where either their children or they have been accepted. A financial planner with expertise in college planning can train parents to understand where those savings might be and how to ask for them.

Please feel free to get in touch with me or leave your comments or feedback here if you have any questions.  You can find more information about our services and how we can help at http://ydfs.com.

Sam H. Fawaz CFP®, CPA is president of YDream Financial Services, Inc., a registered investment advisor. Sam is a Certified Financial Planner ( CFP ), Certified Public Accountant and registered member of the Financial Planning Association and the National Association of Personal Financial Advisors (NAPFA) fee-only financial planner group.  Sam has expertise in many areas of personal finance and wealth management and has always been fascinated with the role of money in society.  Helping others prosper and succeed has been Sam’s mission since he decided to dedicate his life to financial planning.  He specializes in entrepreneurs, professionals, company executives and their families. This column was produced by YDream Financial Services and the Financial Planning Association, the membership organization for the financial planning community. All material presented herein is believed to be reliable, but we cannot attest to its accuracy.  Investment recommendations may change and readers are urged to check with their investment advisors before making any planning or investment decisions.  Opinions expressed in this writing by Sam H. Fawaz are his own, may change without prior notice and should not be relied upon as a sole basis for making investment or planning decisions.

It’s hard to ignore all the buzz about gold lately and how it’s going up to $1,000,000 or more an ounce from here.  If you look back at the history of gold over the years, you’ll quickly see that gold as a long term investment has not even kept up with inflation, much less the risk-free treasury bill rate.  In fact, despite all the talk about gold, I personally hesitate to call it an investment and I’ve never invested $1 in gold (other than the obligatory jewelry for my significant others over the years, but those were not investments).  Gold as a commodity has few industrial uses and, for most of the developed world, provides little beyond intrinsic value.  Central banks around the world hold a percentage of their currency in gold as a hedge, and you may have heard that a few countries have recently increased their holdings in light of the weakening dollar and global economic uncertainty.

The fact remains that gold investments have gone up significantly in recent months, and I’m loathe to shun an asset class that may continue to go up (though I’m not endorsing investing in gold.)  Uncertainty about the value of the dollar, the global regulatory environment, a slow economic recovery, future inflation worries and the growing deficit have all contributed to the worldwide craze over gold.  Near term estimates have put an ounce of gold at $1,300, with some longer term estimates up to $3,000-$5,000 an ounce.  As of today, gold is at its highest levels in years, around $1,148 an ounce.  I hesitate to invest in gold at its current highs, but it looks like it may be going higher.  By the same token, investor appetites for gold can wane quickly, and so the price can drop quickly as well.

If you have more than $250,000 in your already well-diversified retirement account, and you have an appropriate investment choice for gold, you may consider adding  a small portion to your portfolio.  The investment should be in the form of a highly liquid mutual or exchange traded fund (for example, the SPDR Gold Trust or GLD which  buys and houses the physical gold for all of its investors.)  I view an investment in gold as more of a “hedge”, but would look to liquidate it once the prices started dropping.  If you are serious about investing some of your money in gold, then I would wait for a short-term pullback of 3-6% in the price before buying (assuming that a pullback occurs), and would invest no more than 3-5% of your total portfolio value in gold.  The investment in gold should be made in your retirement accounts due to the less favorable ordinary tax treatment gold gets as a collectible, rather than as a capital gain asset.  If you invest in the GLD or other exchange traded funds, be sure to put appropriate stop loss provisions in place to protect your investment.

Another somewhat less risky way to “play” gold is to invest in the stocks or funds of gold mining companies, many of which may already be in your existing mutual and exchange traded funds.  Looking up the funds you own on http://morningstar.com will reveal many of your mutual funds’ holdings.

For the first time in my life, I am personally considering an investment in the GLD fund, but I have not done so yet.  So far, none of my clients’ assets are invested in gold directly either.  I should emphasize that I consider a bet on gold to be a speculation, so it should only represent a small portion of your portfolio, and only if you have a large enough portfolio.  While you could buy gold coins or any number of gold trinkets hawked on late night TV, I recommend that you weigh your decision carefully and consider other investment options if you have a small portfolio.  Well diversified growth mutual funds are always a good bet.

Sam H. Fawaz CFP®, CPA is president of YDream Financial Services, Inc., a registered investment advisor. Sam is a Certified Financial Planner ( CFP ), Certified Public Accountant and registered member of the National Association of Personal Financial Advisors (NAPFA) fee-only financial planner group.  Sam has expertise in many areas of personal finance and wealth management and has always been fascinated with the role of money in society.  Helping others prosper and succeed has been Sam’s mission since he decided to dedicate his life to financial planning.  He specializes in entrepreneurs, professionals, company executives and their families.

All material presented herein is believed to be reliable, but we cannot attest to its accuracy.  Investment recommendations may change and readers are urged to check with their investment advisors before making any investment decisions.  Opinions expressed in this writing by Sam H. Fawaz are his own, may change without prior notice and should not be relied upon as a basis for making investment or planning decisions.  No person can accurately forecast or call a market top or bottom, so forward looking statements should be discounted and not relied upon as a basis for investing or trading decisions.

Here’s a letter that we shared today with our clients, friends and prospects.  I’m posting it in hopes that you might find some value in it.

As the summertime fun draws nearer to its final days, I hope that you’ve been able to take some time to get out there and relax with your families.

The markets have been kind over the summer and have given us much to be optimistic about.  But if you’ve heard or listened to the never ending supply of prognosticators out there, you’d think that the market was about to fall out of the sky any day now.  As I’ve mentioned before, while it seems that the market may have gotten ahead of itself a bit, and the fundamental economic factors may not fully support such a bullish run, I don’t see anything that supports a return to anywhere near the March lows.   However, there’s a “but” to be mentioned.

A few technical signs have developed over the last few days that signal that the current market may be a bit overbought, and therefore may be ripe for some profit taking.  I therefore want to caution you that we may see a correction of sorts come September, perhaps in the range of 3-5%, maybe more.  However, I believe that based on all of the improving economic reports, we will eventually resume our uptrend and I predict that we will see double-digit gains come year-end.  The funny thing is though, my crystal ball did not come with a money back guarantee, so please accept my prediction solely for its entertainment value rather than anything to rely or invest on.

The month of September traditionally has not been kind to the stock markets, so please be prepared for some bumpiness.  Should we see an overall deterioration or any hint of a so called double-dip recession, we will take appropriate protective action for our client portfolios.  But right now, all signs point to a very slow economic recovery over the next year.

Some Money Saving Tips:

Now a Doubly Great Deal: You may recall that I touted this cash back deal from Bing last month.  This month, Microsoft is doubling the cash back for a limited time.  If you’re shopping for anything online, try the price comparison tool at http://Pricegrabber.com, then look for that merchant on Microsoft’s new search tool at http://bing.com. Click on “Shopping”.  Enter the item name in the bing search box, and look for merchants offering “Bing cash back” of 2-40%.  Compare the prices on the two sites (PriceGrabber and Bing) and, if the price is less after the rebate on Bing, then buy it there and have the rebates deposited into your PayPal account. Ka-ching!

1^st Time Home Buyer’s Credit: If you know of a 1^st time home buyer (anyone who hasn’t owned a home in the last three years), they have until November 30 to close on a home and get a refundable 10% tax credit up to $8,000.  They get this money back even if they owe no federal income tax.  But since banks are taking upwards of 60 days to close a deal, getting to an agreement by the end of September is essential so the buyer does not miss out on the tax credit. See http://www.federalhousingtaxcredit.com/2009/index.html for more details on this credit.

Would you like free fries and drink with that?: McDonald’s is offering a free medium fries & soft drink or tea with the purchase of any Angus 1/3 Pound Burger-coupon expires 8/31/09. http://bit.ly/f4M7E

Funny Quote: “The United States has developed a weapon that destroys people but leaves buildings standing. It’s called the stock market.” -Jay Leno

Please enjoy the last few days of summer and your Labor Day weekend.

I welcome your comments and feedback.  If you have any questions, please feel free to get it touch with me and be sure to share this message with your friends and colleagues.  And please be sure to let your friends know about me if you think that they might benefit from my services.  As a CFP® and NAPFA registered investment advisor, we have a fiduciary responsibility to always put your interest ahead of ours and avoid conflicts of interest.  Most brokers and advisors cannot say this nor do they adhere to this very high standard of care.

Please follow me on Twitter at http://twitter.com/TheMoneyGeek

Sam H. Fawaz CFP®, CPA is president of YDream Financial Services, Inc., a registered investment advisor and can be found at http://www.ydfs.com.  All material presented herein is believed to be reliable, but we cannot attest to its accuracy.  Investment recommendations may change and readers are urged to check with their investment advisors before making any investment decisions. Opinions expressed in this writing by Sam H. Fawaz are his own, may change without prior notice and should not be relied upon as a basis for making investment or planning decisions.  No person can accurately forecast or call a market top or bottom, so forward looking statements should be discounted and not relied upon as a basis for investing or trading decisions.

As you are probably aware, Bernard Madoff, former NASDAQ Stock Market chairman and founder of Bernard L. Madoff Investment Securities LLC, has recently pled guilty to all charges against him and will be in jail for a very long time.  Incredibly, I’ve recently spoken with several individuals and they seemed to not be aware of Madoff’s most egregious offenses.

What did he do?  Madoff collected money to invest from clients, made up false statements to show that they were doing well, and used new clients’ money to pay interest and withdrawals to existing clients.  This is known as a Ponzi scheme and is estimated to involve more than a $50 billion loss for his investors.

Bernard Madoff’s Ponzi Scheme stands as an example of how the financial services industry has failed to protect the best interests of consumers. It highlights the increased need for consumers to proceed cautiously when working with an advisor and the importance of asking pointed questions before hiring a professional.

His clients didn’t see this coming.  Could they have?  Let’s look at three key safety tips that would have prevented this from happening:

Know what you own.  Stay with traditional investment vehicles such as stocks, bonds, Exchange Traded Funds (ETFs) and mutual funds that are publicly traded and listed on major exchanges like the New York Stock Exchange.  They are valued independently at least daily, if not minute-by-minute, while the exchange is open.  With the exception of common trust funds, you should be able to access pricing and performance of your individual investments in the newspaper or the Internet.

Use an independent custodian.  Madoff held his clients’ assets, managed them, and priced them via internally generated investment statements.  Naturally the investment performance will look better if the prices reported to clients are manipulated, which is allegedly how Madoff showed winning year after winning year despite market turmoil.

For example, as a registered investment advisor, we have selected TD Ameritrade Institutional as the custodian for our client accounts.  TD Ameritrade Institutional, as an independent third party, prices the investments owned and provides monthly statements to clients.  We have no control or input on investment pricing.

Each money management client of ours signs a Limited Power of Attorney on their TD Ameritrade accounts.  This limited power of attorney only allows us to:

• Place trades in the account on clients’ behalf;
• Receive copies of monthly statements, tax documents and trade confirmations;
• Deduct our investment management and financial planning fees directly from the account.

While we can request a distribution on a client’s behalf (which must be mailed to their home address or transferred to another account in their name), our ability to withdraw funds from client accounts is limited to the payment of our financial planning and investment management fees.  Clients are always free to pay their fees by check and are never obligated to use direct deduction from their accounts.

Inquire about insurance.  Our clients benefit from fraud insurance.  Each client is insured with the Securities Investor Protection Corporation (SIPC) with coverage of $500,000 per account.  Keep in mind that fraud insurance does not protect against market declines; but it does protect against theft of securities or related fraudulent transactions.

Now as the post-Madoff era begins and the federal government and industry regulators decide the best course of action to protect consumers, people need to ask the right questions of an existing or potential advisor.

As a member of the National Association of Personal Financial Advisors (NAPFA), the country’s leading association of Fee-Only financial advisors, I encourage consumers to take the time to get to know an advisor and gauge his or her commitment to placing clients’ interests first.

Find out how the advisor and his or her firm are compensated.  Fee-Only compensation has the fewest conflicts of interest, but there are other acceptable methods as long as full disclosure takes place up front.  It’s important to know if an advisor will make additional money if you follow certain recommendations.

You should always know where your money and securities are actually held. As discussed above, most reputable advisors will use an unaffiliated custodian for the safe keeping of your assets.  This simple check and balance could have saved the Madoff investors millions by bringing the problem to the forefront earlier.

Legally, all clients are entitled to a copy of the firm’s Form ADV Part II or brochure.  It’s a compliance document that can be pretty dry reading, but it contains a lot of important information and ultimately shows that the firm is registered with the SEC or the state(s).  For an example, see our Form ADV Part II.

NAPFA and the Fee-Only advisor community are hopeful that the new administration, the SEC and other regulatory bodies will enact thoughtful regulations to protect consumers.

Consumers can access a Financial Advisor Checklist and Financial Advisor Diagnostic on the NAPFA website by visiting www.NAPFA.org and clicking on the Tips and Tools button in the Consumer Information section.  The Diagnostic tool includes an answer key to help consumers understand NAPFA’s recommendations for the most appropriate answers to the questions.

One final thought. One of the statements most widely used in basic investment course work is “if an investment sounds too good to be true, it probably is.”  Reportedly, Madoff claimed consistent annual returns of 10-12% with little volatility and no quarterly or annual losses.  I am not aware of any legitimate and reputable portfolio manager that can make that claim.  There simply is no investment available that doesn’t carry risk; certainly, any investment that pays those levels of return have inherently high risk.

Have you or anyone you know been a victim of Madoff? Please share your story and comments below.

Last week’s continued rally on Wall Street was welcome news for weary investors.  The 10%+ rise in the stock market was not sufficient to erase year-to-date losses, but any upside is welcome. The catalysts for the rally included positive reports from the financial institutions taking government help, talk about changing trading rules for short sellers, and the possibility of an accounting change in how assets are valued on company balance sheets.  Also, the markets were heavily compressed on the downside, so just like a spring, they had to give a little to the upside.

Unfortunately, the fundamentals of the economy still do not support a long term rally, so this secular bear market is not over.  What we’ve seen this past week is likely not the bottom and we are therefore approaching the markets very carefully.  There is more bad news to come from 1^st and 2^nd quarter poor earnings reports as the weak economy hits more and more companies.  From exporting companies to the big international firms, the global slowdown is hitting almost everyone.  Even hospitals are being challenged, and unemployment is sure to rise.  We’ve seen the effects of the sub-prime mortgage mess, and I don’t think we’re nearly done as more of the next tier of (higher quality) adjustable rate mortgages adjust upward.  Add to that the lagging commercial real estate markets which are no doubt feeling the effects of lower property prices and lower occupancy.

A lot of you have stayed in the market the whole time it has been falling and are wondering what to do.  If you have a ten-year time horizon, you can probably buy now and not worry.  But I wouldn’t make any big moves right now based on this short-term upturn.  If you are making regular contributions to your IRA or 401(k), you should continue to do so to help offset some of the past losses and buy companies at ½ off (or 2 for 1 depending on your favorite shopping term).  As I’ve said before, there is just no substitute for regular and big savings.  We could see this real bear market rally lure investors back in, just to crush their hopes soon thereafter.  As always, each person’s individual situation and goals are different, so you should talk with your own financial planner about what makes the most sense for you.

I believe that we have awhile to go in the current secular bear cycle. While we will see a “bottom” in stock prices at some point, maybe even this year, many believe that stocks are still overpriced relative to their future earnings potential.  No doubt, there is another bull market in our future  But I would rather be patient and rely on a cautious style of investing for now.  If I see opportunities to make short-term profits with some tactical moves for my clients, I will make them while limiting our downside risk.  But if I miss the first part of this run-up, so be it.  I see more risk than reward in this latest run-up.

And if you thought this posting was all bad news, then I’ll remind you that (my favorite season) spring officially arrives this Friday at 7:44 AM Eastern Time.  I know that most of you have had enough of the snow and cold and welcome the anticipated change in weather.  Me too.

Sam H. Fawaz CFP®, CPA  is president of YDream Financial Services, Inc., a registered investment advisor. All material presented herein is believed to be reliable, but we cannot attest to its accuracy. All material represents the opinions of Sam H. Fawaz.  Investment recommendations may change and readers are urged to check with their investment advisors before making any investment decisions. Opinions expressed in this writing may change without prior notice.  You can find out more information about YDream Financial Services at http://ydfs.com.

Some comments in this article were based on author John Mauldin’s recent and fine “Thoughts from the Frontline” newsletter. You can subcribe to it by clicking on the above link.

Two of the most hated words in the English dictionary are “diet” and “budget”.  Whether you call it a diet, counting calories or eating smart, you know deep down what that means.  When you think about it, the first three letters of diet spell “die”, so how could it be a good thing?

Similarly, whether you call it a budget, fiscal responsibility or a spending plan, deep down you know it means that you have to cut back on spending.  Fortunately, you don’t have to go hungry just because you are on a spending plan.  And just like weight loss, developing a spending plan can yield significant financial and non-financial benefits:

• Being in control of one’s finances reduces stress. Stress can make people eat more and spend more.
• Having a spending plan in place means you’ll have already prioritized the key activities, expenditures and projects you’ll need to make for the year and the money you’ll need to afford them.
• Spending less time worrying about money means you’ll have more time to think about the people in your life.
• Fewer money issues means lesser strains placed on your relationship with your significant other.

Here are some ideas you may want to incorporate into that process:

Don’t be afraid to ask for help: Do you know where you need to be? A financial planner can ask the right questions and develop a customized plan to help you figure out your starting point and where you’ll finish based on your age, earnings potential and the new habits you’ll develop.

Start tracking every dollar  you spend: Whether you do it with a pen and a notebook or a computer program (like Quicken or Microsoft Excel), make a concerted effort to track your everyday spending.  Physicians say that overweight people should track every morsel of food they eat; with money, it’s a similar thing.  Knowing where every dollar goes gives a quick picture where certain dollars can be saved or invested.  Some say that you should track each and every penny, but that’s not always necessary unless you want to.  What is mandatory is that you write it all down somewhere.  Doing it in your head doesn’t work.

Prioritize… When it comes to spending, there are needs and wants.  Try this exercise: You can do this on a big 2009 desk calendar (or an electronic calendar that allows space for lots of notes to yourself).  Mark down at the appropriate dates and times of the year items for which you need to spend and those for which you want to spend.

What are needs?  In part, food (not carryout or restaurant meals), the monthly mortgage, tuition, auto or rent payments; monthly utilities; home, auto, life or disability insurance; retirement savings; property taxes and credit card payments (for past purchases).

What are wants? Wants are non-essential items like vacations, non-essential home improvement projects, restaurant meals (you can cook at home, cant you?) or treats like clothing splurges, jewelry or electronics.  Compare these total expenditures to your total income.  What will this crowded calendar tell you?  That by attacking debt, making certain sacrifices and spending and saving smarter, you can eventually “un-crowd” that calendar and take control of your financial life.

…then zero in each month: There has to be a living, breathing side to budgeting that accommodates change.  Do this: Near the end of each month, make a list of the specific “needs” and “wants” you’ll face next month and figure out how much money you’ll have for wants after needs are addressed.  For example, if your car needs a necessary repair, that’s certainly going to boost the “needs” side of the page.  If you find, due to a one-time event (paying off a particular credit card, for example), that you have more to spend in the “wants” column, then it’s time to decide whether it’s time for a treat or to throw more into savings, investments or attacking any other debt.  Every treat that you put off gives you much satisfaction of getting closer to your financial goals, but, just like a diet, you don’t want to deprive yourself and get so frustrated that you go on a spending binge.

Identify and plan for long-term goals: You must think about the things that you really want to do with your life and what those things will cost.  Putting goals in writing gives them a formality and a starting point for the planning you must do.  If these goals require saving, make sure that you put those savings dates on the financial calendar you made.

Build failure and recovery into the plan: How many diets have evaporated with the words, “I blew it?”  The fact is, with food or money, everyone goes off course at times.  The important thing is to have a plan for corrective action.  If you’re about to make an impulse purchase, implement a three-day spending rule.  That means you should give yourself three days to check your budget and think through the purchase before you make it.  If you can minimize the damage and get back on course, your progress will continue.

My experience with those who adopt a spending plan is that they feel a certain sense of freedom that mirrors the feeling of fitting into a pair of jeans that haven’t fit in years.  Anytime you take control of important life decisions makes you feel empowered and ready to tackle new challenges.  Good luck with it!

Note: This post is based in part on an article produced by the Financial Planning Association of which I am a member.