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A word from the wise

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If there is one word that is on the tip of every financial advisor’s tongue, it would be discipline. There are no secrets, no short cuts and no easy-street ways to financial security. Rather, it all boils down to the one character trait we all struggle with in one way or another. Good, old-fashioned, try-try-again discipline.

Lest you give up all hope of a stable fiscal future, anyone in the business of money will tell you that there are a number of things everyone can do to get on the right track. We called the best in the business to see what they had to say, and fortunately, without knowing it, their advice was much the same.

Lest you give up all hope of a stable fiscal future, anyone in the business of money will tell you that there are a number of things everyone can do to get on the right track. We called the best in the business to see what they had to say, and fortunately, without knowing it, their advice was much the same.

The first step is always the hardest.
If this is the year you’ve decided to trim your fiscal waistline, experts suggest starting with the common sense stuff, like evaluating your finances, creating a budget and paying off your debt.

“It can be painful to take an honest look at your financial situation,” says Mark McKay, co-host of Smart Money Radio on KGNC with his wife, Marcy. “Have accountability, honesty with yourself and your partner.”

The reasons we struggle to maintain a steady growth in wealth have to do with a number of things, like not learning basic money management skills as a child, living in an impulsive must-have-it-now society, and simply, as J. Pat Hickman says, “having champagne taste on a beer budget.”

“This isn’t rocket science. It’s the stuff Mama and Daddy should’ve taught you,” says the Happy State Bank director of banking. “Live within your means, create a budget and pay off your debt.”

Easier said than done, especially when there’s always easy access to credit and buying with borrowed money gets the car, clothes and other deals we don’t want to wait for. However, the resulting financial ruin and crawling out of the pit of debt can be too much to bear.

“Hope always springs eternal,” says Stephanie Hyryck of Hyryck Financial. “We’ve instilled this philosophy that we deserve these things and money will always be there, whether it be parents, credit cards or banks that shouldn’t be lending. We need to start assuming responsibility and not expecting someone to dig you out of the hole you put yourself in.”

The first step to climbing the ladder of financial stability is similar to that of a recovery program. Admit you have a problem and commit to changing your behavior for good.

Save, Save, Save
There are two main purposes for saving: emergencies in the short term and big purchases in the long term. Murphy’s Law states that anything that can go wrong will go wrong. You will eventually get a flat tire, the refrigerator will die and that medical deductible will need to be paid. In some cases, jobs are lost. For those things, experts recommend three to six months savings in an account that is accessible but not so easily that you’re tempted to spend it on “emergency” birthday presents. Rather, have cash available for when the air conditioner breaks. (Because, eventually, it will.)

“You know something’s going to go wrong and the only way to plan for that is to have the money on hand,” says Cindi Eagle, financial advisor at CMMS. “People often turn to credit cards during emergencies, which is understandable because you can’t not fix your car, but that just gets them into more trouble later.”

A regular savings account should be designated for larger purchases, like a long vacation, a car, or a down payment on a house. They are things that you know are coming and can plan for accordingly.

Cash, Not Credit
It’s time to drop the “Buy Now, Pay Later” routine, because we all know that “paying later” translates to exponential amounts of interest and, in some cases, years of payments that seem to never end.

“If you don’t have the money in your checkbook to buy something, wait until you have it, otherwise, you’re committing financial suicide,” says Stephanie Hyryck. “A good saying I heard a long time ago is, ‘Yesterday is a canceled check and tomorrow is a promissory note, but today is cold hard cash.’”

Because the future doesn’t ever work out how we assume, it’s not uncommon that people will make huge financial commitments on credit and then have the inability to pay the money back. When you buy something with cash, money you already have in your hand to spend, not only will you spend it more wisely, you will probably spend less.

“When you see and feel those dollar bills slipping from your hands, your spending becomes real,” says Mark McKay. “It’s still not easy to change spending habits, but when you pay cash, it’s harder to ignore bad patterns in your financial life.”

It’s wise to invest.
Managing your money wisely extends beyond lowering your grocery bill and other household expenses. Once a savings account has been established and you’ve eliminated your debt, it’s time to start making your money work for you.

“Start contributing to your 401K from the very beginning, and if your employer matches, contribute up to what they match,” says Cindi Eagle.

Investing your money now is the best way to have enough money later for your children’s college tuition and your own retirement. It is too much of a gamble to assume Social Security will be there and your kids will get scholarships.

“You can take $100 a month and put it into an IRA, totally tax deductible, and it will grow exponentially,” says J. Pat Hickman. “It’s a great deal, the government subsidizing you.”

In the end, it pays to be patient.
Neither paying off debt nor building wealth happens overnight, but the changes you make today can greatly impact how you will live next year, ten years from now and into retirement age. Starting with the smaller steps, like cutting up credit cards and paying with cash or putting $50 a paycheck into an emergency fund, helps you to realize that financial freedom is within your grasp.

“Read books. Take classes. Watch or listen to money shows on TV and radio,” says Marcy McKay. “The more you learn, the more confident you’ll be and the better decisions you’ll make.”

Part 6 - Kids Eat Free (or Really, Really Cheap)

by Jennie Treadway-Miller

Jennie was a columnist for the Chattanooga Times Free Press for eight years prior to moving to Amarillo in 2008. She is an avid reader, runner and writer.

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