Budgets: Putting it on Paper, Defining Priorities, and Doing what it Takes

In the previous budget post detailing an organized way to set up monthly and yearly budgets (Budgeting Tool #1), I briefly mentioned the importance of getting that budget on paper so that everything can be seen in "black" and "red."

Putting it on Paper
The reason I believe that it is so important to get everything down on paper is because I firmly believe that financial discussions for families should be about the meeting of minds, defining priorities, and working as a team to ensure that those goals are met. Without solid information, it is more difficult to come to that all important meeting of the minds that needs to take place. Without solid information and data, it is much more likely that accusations will fly and parties privy to the budget will feel unfairly attacked, disenfranchised, and patronized. In short, the budget should be used as a tool to monitor and control the finances of the household, not monitor and control each other.

A poster in the comments section of my last post, "Sleep Deprived," demonstrates just how important a written budget is to achieve a meeting of the minds. He states:

I used to do create a similar budget in MS Excel. It didn't take long to realize we were "in the red" every month. Convincing my wife to help make lifestyle changes was thought at first. But when I showed her that she had spent $1,500 on clothes (for herself) for 2 consecutive months, she got with the program. Within 2 months, we were able to achieve positive cashflow.

Defining Goals
Preferably before a budget is created, but certainly by the time a budget is created, a family should define their priorities so that appropriate adjustments can be made. But since goals change as circumstances change, I have decided to place the defining goals as a second category.

Obviously, financial goals will be as diverse as the families defining them. But, it is important to know your goals and be able to state them. Having a goal in mind makes the sacrifices that come with achieving those goals much easier to handle.

Whether your goal is to lessen your debt load, eliminate your debts, stay out of debt, build your savings, buy a home, make a major purchase, or achieve long term financial security, chances are that you cannot "have it all." No matter what your financial goal is and no matter how different it is from your friend's financial goals, the commonality is that something will have to go.

MominIsrael points to a column in Maariv dedicated to fixing a couple's financial issues. In the case that MominIsrael highlights, the couple find themselves in a monthly overdraft (translation for non-Israelis: they are debt financing their current lifestyle). The wife does not want to sell their apartment, which is eating up 40% of their take home incomes. However, it seems that they have a myriad of other expenses.

If I was consulted, I would suggest that they define their top priority and focus their budget around that goal. If keeping their apartment is their top goal, there are plenty (and I mean plenty! Just follow the link) of adjustments that can be made to help them achieve this goal. Of course, the couple might find that cutting out the expenses to achieve this goal are just too much and may choose to redefine their goals and work their budget around those goals.

Goals need not be etched in stone. But, they should be clearly defined so all involved parties know what they need to do to achieve their goals.

And, one more note on goals: I believe it is wise to include older children in defining and prioritizing goals. Of course, parents still need to maintain a high level of control as they are the heads of the household, but it is perfectly acceptable to let your children

Doing What it Takes
There is not much to say regarding doing what it takes, as it should be self-explanatory. What is hard is "saving face" in front of the neighbors who oftentimes seem to have no problem letting you know that you should be providing x, y, or z for you family. The "Ortho" part of the "nomics" is that we live in communities that more or less have rigid expectations of what is a must. Here, we must define what is a need and what is a want, for your own family. Ultimately, you will be much happier because you will be achieving your own goals, rather than feeling like a failure because you can't keep up with the Goldberg's, and you will feel in control of your pocketbook, rather than feeling disenfranchisement.

(More on these topics later).

A Blog Roundup: Tuesday, October 24, 2006

It has been a while since I've run a blog roundup and I've missed linking to plenty of interesting conversations. But I just wanted to point everyone to some posts I find interesting. If I left you out, just put a link in the comments section and I will try to add a link.

Shidduchim:
Ariella of Kallah Magazine has questions and is looking for input regarding shidduchim. Check out her questions and add your thoughts.

A cross between a financial post and a shidduch post is Harry Maryles' post "Looking for Mr. Torah." I don't know much about the seminary circuit or curriculums offered. I do know that many young ladies return from Eretz Yisrael with a very rigid expectations of their future husband. And, this certainly makes arranging shidduchim difficult, to say the least. Harry estimates the cost of the year in Israel at a minimum of $14,000. I'd say that if parents agree to fund the life of a young kollel couple and all that the future entails, the cost increases exponentially.

Financial:
Ariella asks, what is the average cost of a frum wedding? I'd like to know the answer myself. She posts some averages on non-Jewish weddings and non-Jewish weddings in the NY/NJ/PA area and elsewhere.

A brief look through the websites sighted shows that these astronomical figures include some of the pre-wedding activities, like the "rehearsal dinner" which is absent in frum weddings. But, of course, we manage to find a way to spend a ton with the vort(s) or l'chaim(s). And, the figures seem to include wedding jewelry, including the engagement ring. But, the average amount for those costs is nowhere near what I believe the average frum couple spends on the ring alone, much less the myriad of "required" engagement gifts. And, of course, non-Jewish couples aren't buying custom sheitels or having sheva brachot. So, I imagine the average cost of a frum wedding is at least 150% of the average overall costs, if not more. What is your guess?

Evanston Jew makes an accurate observation that the economic issues of frum life are made worse because we are a "face-to-face" society, where everyone knows each other and standards are set. I've made the same argument. It is unique to live in a society where there is tremendous wealth and tremendous poverty side-by-side. (I'd argue that the discrepancy in incomes is found in very few tight knit communities outside of the frum community, if any). Evanston Jew also contemplates the minimum income needed to afford a frum life. He starts at a figure of $100,000. What do you think?

Ezzie critiques my last budgeting post and adds some very important points geared toward young couples. Thanks Ezzie!

Chinuch:

My friend OutOfTown posts about a new program at her son's school to teach middos. I am generally skeptical about programs designed to teach middot, since I believe that they are best learned through "osmosis" and by creating appropriate environments, but more about that another time. (Note: Certainly hashkafic concepts can and should be taught through Torah sources.) But, this program looks really unique because it involves not only the Rebbes/Morahs, but the entire staff including the limudei chol staff. Hopefully it will be a success and hopefully OutofTown will give us regular updates on the program.

And speaking of chinuch (crossed with financials), MominIsrael tells us about how some pre-schools are marketing to pre-schoolers. The subject of marketing to pre-schools I believe is loaded with halachic and ethical issues. It reminded me of a post I made long ago about schools adding to the already large financial burden placed on parents by involving them in financial issues.

Looking forward to seeing your insightful comments on these links. My apologies if I left anyone out.

Budgeting Tool #1: Monthly Budget Tracking and Budget Summary

As promised in Budgeting, Credit, and Debt II, I will be blogging about three budgeting tools that I think are very helpful: 1. Monthly budget tracking and budget summary. 2. Cash Flow Analysis. 3. Assets and Liabilities monitor. When tool #1 (the topic of this post) and tool #3 are used in conjunction, I believe a very solid analysis of one's financial position can be drawn.

Chances are most people know how much they spend on their rent or their mortgage. And, chances are that most people know how much they spend on car insurance, or a car payment. But, what about other expenses? Do you know what you spent on food last month? Two months ago? Three months ago? And what about consumer goods? Or gas? Or utilities? And, what about tuition or camp? Most people probably know their tuition obligations. But, do they know how much the "extras" cost them? Expenses add up and they add up quick. $5 here, $10 there, and $20 someplace else quickly can become $100 dollars, $200, and more.

I've found the best way to stay within a budget and make appropriate adjustments is to monitor the budget closely by careful tracking and monitoring. Your budget should provide you will information on where your income is coming from and where it is being spent. This tool alone will not provide a complete picture of your financial situation, but it should provide you with the information that can be used to make adjustments to your expense patterns.

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How to get started with creating a monthly budget (if you haven't already done so):
1. Record all expenses for a month on paper, in Excel, or using another software program. How you record expenses depends a lot on your current situation.
-->If you always pay your credit card in full every month, I recommend recording credit card expenses in the month that they are paid in, even if the expense took place in an earlier month. This minimizes bookkeeping.
-->If you do not pay your credit card in full every month, I recommend recording expenses (and accumulating interest) in the month that the expenses occur. If you were to only record the expenses that are being paid, you may not get an accurate idea of what you are spending.

2. Categorize those expenses and calculate total in each category. Chances are you will adjust categories over time as your spending patterns change and as your need for information changes. I recommend broader categories over more narrow categories to start with. Information overload will just make the budgeting process more arduous.
--> Some suggested categories: mortgage or rent, homeowner's association dues, tuition, extracurriculars, day care, food and supplies, gas and tolls, utilities, communications, tuition, consumer goods, dining or take-out, insurance, car payments, vehicle maintenance, medical, tzedakah, etc.

3. Organize your expense categories by "fixed" and "variable" to isolate areas you want to concentrate on reducing. For ease, let's define "fixed" as something that would require great difficulty to change, like rent/mortgage or tuition obligations and "variable" as something that could be changed with more concentration.

4. Record all income that is not "off-limits," i.e. income that you (and your spouse agree) is available to spend (although actually spending every penny probably won't prove to be a smart way to manage that money).
-->We record only "take home" income, tax refunds, and other small cash inflows such as reimbursements from our Health Savings Plan, product rebates, small birthday gifts, and "cash back" from our credit card.
--> We do not record interest income from our savings account, as we view this income as "off limits at this point in our lives. Nor do we record pre-tax income that went straight into the retirement account, or any unrealized gains (don't count your chickens before they hatch).
--> We do not record any gifts (or income) designated for our children. It is our view (which I have discovered is not shared by all) that we have a fiduciary duty to safeguard their assets at least until they have the capacity to make informed decisions for themselves.

5. Once you have recorded your monthly income and expenses for about 3 months, you can set the expense side by side and calculate an average amount for each category for each month to budget around. Knowing when your expenses fall is important for cash flow (tool #2) which we can discuss later.

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Seeing a budget on "paper" is extremely important. It lays everything out in "black" and "red" and lets an individual or a family deal with the reality. Hopefully the picture can inspire a family to get to work, rather than argue.

Some notes:
--> While most expenses should be categorized and "public," not every expense needs to be accounted for. Couples need to have some individual freedom. So it is wise to designate an amount for each spouse that can be spent without questions. (Hopefully this is tenable.) I've heard of husbands giving their wives an "allowance." This is a subject for another post. But, I find the idea of an allowance degrading and much prefer a team effort with two informed parties.
--> When you set out to make adjustments, don't give up. It may take a few months to see the adjustments pay off.
--> Set aside a regular time to go through the budgeting process so that you don't fall behind. Once you are behind, catching up can seem impossible.

The Rudest, Most Unsolicited Advice You Have Ever Received

Although I prefer pen names or John Hancocks, I welcome anonymous posts for this topic: Have you ever received completely unsolicited advice from someone, stranger or not, that was so rude that you have yet to come up with that snappy comeback? If so, feel free to share.

I'm slow with the comebacks, since they aren't really my style. But, usually when I receive really, really rude advice, I brush it off and think up a snappy comeback in my head an hour or two later that makes me feel better. Not so with this unsolicited, and downright rude, advice.

So here is my story:
I'm in a well known health food store, standing at the checkout line with only one child. And, I'm visibly expectant. Yes, just one child, not 4, or 5, or 6 children. But, as you will see, I hope the rude lady that I met never has occassion to meet anyone passing through with a large number of children in tow!

Said child is being just a cutie-pie and we are having a fun time together. We are joking around and giggling together quietly, when he turns to the lady in line next to us and says with a big smile, "oh, you are buying bananas." I'm not sure if it was a statement or a question. This kid is really inquisitive and observes everything. The lady then asks him if he would like to hold the banana, and I smile and politely tell her, that we will pass on her kind offer, since we would prefer her banana stay in one piece (another story, possibly for another time).

So after this very brief and friendly exchange, the lady says to me: "You should get your tubes tied." I just stammered, "huh." And, she repeats herself, "You should get your tubes tied now." Then she goes on to explain that it is best to have your tubes tied while you are pregnant and how I better have this procedure done NOW.

Whoa! I've never met this lady at all and she is telling me this. Talk about invasive. Talk about rude. Talk about personal. And, talk about unsolicited advice. I probably turned as white as a piece of typing paper. I just looked away and got myself through the checkout as quickly as possible. (I hope I said thank you to the nice clerk at the checkout).

Fortunately, on the way out of the parking lot I met an Israeli lady and her husband who was a real Savta type. She was entertained by my son's renditions of Shabbat that she had witnessed throughout the store. She wasn't the only one. :) She wished me nachat, hatzlacha, mazal, beracha, and a b'sha'a tovah and shared with me that her daughter-in-law was due with twins at any minute. I was briefly uplifted after my previous exchange. We shared in her excitement, and wished her a happy life as a new Savta.

But, a week later, I still cannot shake the most rude experience I have ever had with a stranger in my life and there is no snappy comeback to wipe away the shock of the experience. I'm just glad that my son was able to share in the excitement of a soon-to-be Savta and had no idea that there are people out there that just hate life so much that the mere image of a mother with children makes them unable to control themselves.

Feel free to share your terrible experiences involving completely unsolicited advice.

Interesting Financial Insight from Rabbi Nachman

In an interview with Shuli and Michal Rand, of Ushpizin fame, that appeared in the latest Jewish Action, Shuli Rand shared an interesting insight from Rabbi Nachman that I find rings true. And so, I thought I'd share that insight:

"Rabbi Nachman claimed that overcoming one's desire for money, despising money, is a prerequisite for attaining the highest spiritual levels (Likutei Maharan, part A, chap. 60). It may seem paradoxical, but he argued that only people who actually possess money are capable of genuinely overcoming the desire for money."

I believe there is something to be said for financial comfort (which I will loosely define as not having to worry about how to pay the upcoming bills, not be beholden to creditors, and having the ability to enjoy some luxuries if one chooses). I believe being financially comfortable has the ability to keep the yetzer hara further away.

I hope that this thought will contribute to the spiritual end of some of the discussions on the Orthonomics blog.

Back with more thoughts on budgeting, spending, debt, and credit later.

Guarding The Lulav

This morning when my husband returned from the Shachrit of Hoshanah Rabbah, I breathed a sigh of relief. With a small home and a toddler in that home, we have been standing guard over the arba minim like hawks all week, ensuring that only those who are authorized to shake the lulav (that wouldn't include me) actually handle the lulav.

Unfortunately, we don't have any safe place to keep this prized possession, and it cost more than a set of our china. Our very curious toddler has been eyeing the arba minim set ever since it was picked up. And, he has been trying to sneak a shake of his own.

So, when my husband came home from the Beit Knesset and we told him it was finally his turn, the simcha was tangible. So, what happened next? He asked Mommy if he could get a red lulav of his own, or maybe a black lulav. I've never considered buying a chinuch set. But, I imagine that if we left the arba minim outside until next year, he might be able to have a black set of his own.

Chag Sameach.

Mentschlekeit in the Sukkah

My family and I were just sitting down in a restaurant sukkah to enjoy a seudah in honor of the chag when we were joined by a group of young boys, probably between the ages of ten and thirteen, who were traveling from "in town," through "out of town" on a Chol HaMoed trip.

I was a bit nervous. We had already paid for our meals. We were seated. And, we were really looking forward to enjoying a seudah in the sukkah to celebrate the chag, when a sizable group of boys whose fathers were inside ordering entered the sukkah.

Sadly enough, we've become so accustomed to less than acceptable behavior that we expected the worst, or something like that. We were gearing up for what looked like it might become a less than pleasant experience. But, the food was on the way, so there was no turning back at this point.

But, we were very pleasantly surprised!

Not only were these boys quiet and well-behaved in the sukkah, enjoying their meal and making conversation amongst themselves and their fathers who came later. But, their mentschleikeit went above and beyond what might be expected of pre-teen boys.

Shortly after the boys had joined us in the table (their fathers were still inside at this point), the wife of an older couple we know walked in the sukkah. The "in-town" and "out-of-town" crowds couldn't have looked more different. The pre-teen boys were all in black and white. Some had a few light pinstripes on their shirts, certainly nothing loud. The wife wore short sleeves and had her hair uncovered. We were holding the "middle ground:" suede kippah, hair covered with a hat, and colorful plaid shirts for the boys.

As soon our friend, the "wife" entered, the boys got up, offered her a chair, and then carried the chair over for her to sit on. And, when her husband entered the sukkah carrying the food, they brought him another chair from their table.

It was so heartwarming to see (completely unprompted) chivalrous and polite behavior from such young boys. I'm sure that their parents have a lot of nachas from them. And, G-d willing, we will all instill such mentschleikeit into our own children.

And, next time we are joined by a group of young boys, I will just try and relax and expect only the best. Why should we expect less anyways?

Baby Bargains

My blogger friend MominIsrael put up a post entitled "How to spend virtually nothing when you have a baby." It is a great post and you should check it out. There might be some ideas that could work for you there.

In the meantime, I thought I'd add some of my own "Baby Bargain" ideas and have readers contribute their own ideas. Not everything will work for everyone (I don't use cloth diapers, and as much as I would like to be able to exchange occasional babysitting with other mothers, I've found it a near impossibility), but the more information people have the better.

We too have found that babies are not nearly as expensive as they are made out to be. However, mothers have to be strong because the marketing for children is INTENSE. I know the first time I set foot in a baby superstore, in preparation for my own baby, I was OVERWHELMED. I couldn't figure out what I needed, what was a nice product to have, and what was completely extraneous.

And, did everything need a baby label to be appropriate for a baby, or safe for a baby? Did I need to have special laundry detergent for my baby at $10 a pop, when I normally bought laundry detergent on sale for $2.50. Was my bathroom stool good enough for a baby, or did I need a special stool designed for a baby? (The answers: not everything needs a baby label. Babies that don't have super-super-sensitive skin don't need special detergents, and my bathroom stool is just fine).

Like I said, the marketing is intense. And even a frugal wife (that would be me!) can get confused. My best piece of advice: talk to experienced mothers before you pull out your credit card and listen to their advice. While I'm not as experienced as MominIsrael, I think I have enough experience I can offer some of my own advice. And, I'd love to hear your tips! .

Feeding a Baby:

*Nursing: Nursing is fantastic and virtually free. I have found nursing to be great on so many levels: cost, convenience, bonding, and more. But, if you choose not to nurse, the formula companies will send you "checks" that you can apply to formula purchases. Some of these checks have significant value. And, nearly every mother ends up receiving these coupons, whether they are using formula or not. So see if you can take the checks off your friend's hands.

*Baby Food and Table Food: Like MominIsrael points out, babies can often go straight to table food. A walk down the baby aisle in any grocery store will make you believe that you are depriving your child when you skip the tiny jars of baby food. But under ordinary circumstances, you should be able to skip the baby aisle. On top of the savings involved, the convenience of feeding table food is huge! Nearly everything that you make for the rest of the family can be adjusted for your baby. Vegetables can be pulled from the soup and mashed up, pasta can be set aside from the regular dinner for the baby, and frozen vegetables can be shared.

*Baby Labels: Nearly every food with a baby label has a replacement. YoBaby yogurt costs an arm and a leg. But, if your pediatrician insists on whole milk yogurt, look up and look down Chances are you will find a whole milk replacement that is a lot less expensive. (The cost of food marketed to babies rivals the cost of sushi). If you are really lucky, the doctor will not insist on 4% and you can just serve the same yogurt everyone else is eating. My rule of thumb is that if the product is being marketed for babies, it is time to search for an alternative.

Portions: Toddlers are notorious for wanting everything their eyes see. And, after you have served up a full meal, they get distracted by something else. So, try not to overdo the portions. Serving more later will mean less waste now.

Equipment:
*Need? Not every piece of equipment is necessary, although it is easy to be convinced that they are. Every piece of equipment will take up valuable space in your home. So, while you will want to buy a new car seat for safety purposes, you might want to borrow other pieces of equipment.

*Market Research: Don't rely on your eyes alone when choosing a stroller, or other piece of equipment. I have a number of friends with expensive stollers that hate their stroller. They complain it is too bulky, too heavy, too unwieldy, etc. But, they were convinced that this stroller was a must have because everyone else had one. So, before buying, talk to friends and find out if they would buy the same thing again, before pulling out your credit card. Also, before convincing yourself that you need x, y, or z, find out if your friends have the same needs as you. If your friend is an avid jogger, it makes sense that they have a quality jogging stroller. But, if your idea of exercise is walking from the parking lot into the mall, you will probably find that fancy jogging stroller a complete waste of money (and space).

*Comparison Shop: Once you know what you want, comparison shop. I've found the internet is a great way to find out who has the best price before heading out. Oftentimes, last year's model is available at a big discount.

Clothing:
*Baby Clothing: Depending on the weather, your laundry situation, your baby's propensity to get sick, etc, you may find that you need quite a bit of clothing. I personally enjoy picking out cute outfits and dressing my dolls (oops, I mean children). But, I have also found that 1) new clothing can be bought at excellent prices (yes, even below consignment store/thrift store prices) if you shop the clearance racks and 2) that hand-me-downs are great for filling in the wardrobe.

*Some other tips: Neutral clothing is great for the basics as it can be passed from kid to kid. Even I'm not frugal enough to put a boy in pink, and my husband would definitely object. :) Unisex socks in one style are a smart buy because the laundry machine eats socks. If you buy fun socks and loose one, the other is trash. Consignment stores are great places to buy baby linens. Even if you want to buy new for the nursery, you will probably still need extra sheets for accidents and extra blankets for sick days.

*Shoes: Talk to your pediatrician before taking my advice, but I have yet to buy a pair of shoes at Stride Rite.

*Maternity Clothing: Consignment stores and gemachs are a good place to start, and you can often find very nice clothing in these places. Borrowing from friends of a similar size is also a good idea, especially for clothing that you will only wear once or twice (like a suit for a simcha). Unfortunately, maternity clothing doesn't hit the clearance rack like other clothing. So, the chances of finding a bargain by walking into your local store are slim to none.

Diapers:
*Some tips: Diapers are probably the biggest ongoing expense of babies and toddlers. Knowing your prices, cutting coupons, and shopping the circulars are key. Once your little one isn't growing like a weed, I highly recommend stocking up (if you can afford to do so) when a really good sale hits. You will save yourself time and money in the long run.

*Generics: Many of my friends will only use one brand of diapers. We have found that some generics are perfectly acceptable, so don't rule out the possibility of generics, even if you have had a bad experience with a particular store brand.

Kids at Play
* Toys: Nearly everyone I know has more toys than they need. Gifts from friends and family, hand-me-downs, and a few purchases of your own will overstock your collection. So, go easy on the toys. Chances are your baby will want to play with your stuff anyways.

*Books: At least in this house, unlike toys, it seems that no matter how many books we own, every one is used and loved. But, buying at your local bookstore will cost you a lot. My advice is to check out garage sales, library liquidation sales, thrift stores, and consignment stores. Chances are you will be able to buy books anywhere from 3 for a $1 to $2 a piece. And, skip ones that are easily destroyed.

Activities:
Before laying out the big bucks for mommy (or daddy) and me activities, or family activities, network and search the internet. There are free public concerts, free reading and music programs at public libraries, and free story and craft times at commercial businesses, and more.

Saving for College:
When it comes to saving for a college education, I like to say there is no time like the present. But, on that note, I will leave this important subject for the future.

Interesting Halacha for Sephardi Ladies:
Beracha Leshev BaSukkah

Here is a link to an interesting halacha regarding Sephardi Ladies and answering Amen to the beracha leshev basukkah which follows boreh pri hagefen and can cause a hefsek for those who are not obligated in this particular beracha.

While the Rav recommends explaining this halacha to your wife slowly, so they may understand, I just finished explaining it to my husband and it seems logical to me. But, maybe when a man comes to me in shul begging me to to take his lulav and etrog into the sukkah to make a beracha lest I miss out on such an important mitvzah (happens every year), I will slowly explain to him that not only do Sephardi women NOT say a beracha on lulav and etrog (fairly common knowledge, I assume), but we also do not answer Amen to the beracha of leshev basukkah. . . unless we already made our own kiddush and therefore do not need to hear kiddush and have no issue of making a hefsek.

Redundancy and Tuition: A Link

Jewish501c3 has posted a published article where he takes a second look at redundancy and tuition. I've made some of the same points here and still believe that our schools function inefficiently by design. (See the first post too).

There is a lot more to say on this topic. But, I'll refer you to 501c3's post and let you comment there.

Budgeting, Credit, and Debt II

One of my readers, "indebted college kid," who tackled a developing credit issue early, has lead me in the direction for this next Budgeting, Credit, and Debt topic. I would say her approach to a developing problem was an inspiration. And, I would like to thank her for moving this topic series forward.

In brief: "indebted college kid" had a unique situation in which she became ineligible for student loans when a grandparent kindly paid off her student loans. When she realized that she would have no money to live on, she turned to credit card, only to realize shortly later that she had a debt problem on his hands. So, she changed course. She took a semester off of college, worked in heavy labor, and became debt free in seven months.

--> Rule of Thumb: You have the power to change your situation. Following Yom Kippur, we start anew, so to speak. Forgiven for the deeds of the past year, we are free to move forward and concentrate on the challenges of the new year. And, it almost seems appropriate to write a post about changing one's direction today, as we all have a new slate.

I am a believer that financial issues can be tackled and one's direction can be changed, with a great deal of desire. However, just how one should go about fighting their own battle is as unique as each situation. Some battles are far more complicated (especially when the "Ortho" part of the "nomics" is the major issue), other battles easier.

But, every challenge requires:
1) A recognition that the status quo cannot remain,
2) A desire to change the situation at hand,
3) A (written) plan of action,
4) A ton of self-discipline, and
5) A monitoring plan.

--> Rule of Thumb: A person need not be in debt to have a potential issue. From the outset, I should say, that while it appears that this post is only for those with current credit and debt issue, those who face potential issues in the area, need not actually be in debt.

In future posts I hope to address budgeting issues, and some of the topics will be about building a cushion into one's budget and starting an emergency fund. Unfortunately, an increase in utilities (check), an increase in gas prices (check), or an increase in any other area of regular spending (check), can spell disaster without a cushion in one's budget.

When I hear some of my friends and neighbors (who do not carry much debt, if any) say that it was an open miracle, that they were able to pay their rent for the month, I worry for them (somebody has to worry, right?). While it admirable to be able to see Yad Hashem one's financial life (those of us who do not live "on the edge" can probably admit it is easier to see your own hand, rather than Hashem's hand, in our own financial dealings), it also means that you face a number of potential issues-financial and halachic-should you find yourself in a cash crunch.

For example, who do you withhold payment from, or what business do you withhold payment from, when you don't have funds to pay? Do you borrow to cover payment even though doing so will propel you downwards?

--> Rule of Thumb: There is no time like the present. Allowing financial issues to fester, by shoving them under the rug and praying that they will go away, is disastrous. Chances are, not only will they not do away, but they will increase. There is no time like the present to start monitoring one's financial situation and making changes where necessary.

I hope to address a few tools that can be used to monitor one's financial situation in the next post(s):

1. Monthly budget tracking and budget summary.
2. Cash Flow Analysis.
3. Assets and liabilities monitor.

And, now for the discussion question. Based on the now infamous "Jewish Debt" AskShifra post, credit and debt issues, as well as exhaustion of resources, appears to be widespread. For those who are (or have) faced debt issues: when did you know that you were heading in the direction of financial trouble?