An important part of becoming debt-free is learning how your credit score and credit history can affect your financial health.

Do you know your credit score? Is there anything on your credit history that could harm you?

Because the credit reporting system in the U.S. is complex, several misconceptions about how credit really works are constantly floating around, confusing people and in some cases scaring them unnecessarily.

You can learn about how credit really works by going toMyMoneyPlan.net and subscribing to this online community.  Your first 14 days are free.  From there, go to the “improving your credit” section of the site. Review the information on How Credit Bureaus Work, Your Credit History/Score, and Credit Repair Strategies.

Contrary to what you may think, spending is emotional, not mathematical.

Ask yourself the following questions and you’ll see why:

How much did you spend last year on dining out? How about on clothing? Do you even know how much taxes affected what you have to spend?

Finding how much money you spend and where that money was spent is always a shocking and emotional revelation. Until you identify what you really value and realize how your spending relates to those priorities, it is very difficult to make significant changes to your financial life.  You may feel that mathematically if there’s money to spend, it shouldn’t matter what your emotional values and priorities are.  But it does matter. When you don’t know what they are, you will spend all the money you have and even some you don’t.

Spending IS emotional, and that’s what we want to help you learn.

Go to MyMoneyPlan.net to learn more about the emotionality of money.

Sometimes my clients ask me how they should spend their money (even though I have been trying to teach them how to make those choices for themselves!).

As people get their spending under control they begin to be more conscientious about spending money more responsibly, but they’re still in a phase where confidence is being built, so they’re not always sure they’re making the right choices about how to spend.

I like to point out to them that the Spending Plan (Money Mastery Principle 2) will always reveal what they “should” or “should not” do with their money. Of course it’s still okay to go on vacations…these should be planned into your spending plan as a category, if at all possible.  Sure, go…But you may have to downsize the vacation, just as your income might have been downsized with changes to the economy.  Always adjust as needed.  Live within your spending plan.

Sometimes a vacation can be setting up a tent in back yard. Keep things simple and inexpensive.

Why can’t we stay within our budget? We keep getting surprises!  Why?

When I hear this question, the first thing I try to help my clients understand is that if they’re “budgeting” they’re always going to have “surprises.”  That’s because a budget is based on the idea of splitting up income into strict categories of spending and hoping you don’t need to go beyond any of those categories (because if you do, obviously you’ll be out of the allocated money and go over your budget, i.e have spending surprises). Read More

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“Should I buy my teenager a car? I can’t afford it but I feel like it’s expected.”

As I’m coaching clients, I often get questions like this.  Such questions come up because as people begin to work with the Spending Plan, they realize that a lot of things they did in the past without thinking they really can’t do anymore…they need to ask themselves some good hard questions first.

I always advise them that it’s a matter of balance.  If they can afford it, which is questionable unless the Spending Plan proves it, then that leaves the question of ownership, the insurance, impact on school work, etc.

I have an associate whose 16-year-old daughter ran into a woman on a horse, leaving the woman permanently disabled.  The associate’s total financial circumstances and emotions are totally up in the air.  For sure now, the other side is coming after them for everything they have.  In other words, the ownership of the car, the insurance status, and other factors could have been structured differently such that the financial consequences of the accident would have been more limited.

“Affordability” is not limited to the cost of the car. You need to ask yourself if you and your child can really afford this decision.  That goes for other things you feel you need to buy your children as well.  Ask yourself:  Can I really afford this?  The only way you’ll know is to begin by getting spending in balance using a Spending Plan.  There really is no other way, even if you want to let your child talk you into thinking otherwise.

If you don’t know what a Spending Plan is (P.S. it’s not a budget), I urge you to find out:  www.mymoneyplan.net or call me:  (888) 292-1099.