What Tools Should I Use?
I get questions from my readers and students all the time ranging from, “Where do I start?”, to “How do I get my spouse on the same page with me?”. There is one question that I get more often than most, and that is “What tools do I use or recommend to help me in my financial recovery?”.
I usually try to stay focused on the 12 steps in my program “BreadCrumbs To Financial Freedom”, so as to not overwhelm someone that is just starting out their financial recovery. So you start at step one and don’t worry about later steps until you get to that step. What I find with financial recovery is more often than not it is mostly a mental change and requires focus. The actual actions of getting out of debt and building wealth is mostly a mechanized follow the steps process. So once you get done with steps one setting goals, and step two developing a written budget, or what I call “Making A Play”, it is just a matter of following your plan or what I call “Working The Plan”
“Make A Plan – Work The Plan”
BreadCrumbs to Financial Freedom:
Just as a quick reminder of what the 12 steps to financial freedom are, here is a quick recap.
- Setting Goals: Mapping out your life and financial future
- Developing a Written Budget: Plan where each dollar is spent and stick to the budget
- Starting a Rainy-Day-Fund: $1000 in your rainy-day-fund
- Increase Income/Reduce Expenses: Extra vs Residual Income / Wants vs. Needs
- Debt Reduction Ripple Effect: Pay off your debt from smallest balance to largest balance
- Expanded Rainy-Day-Fund: Build a nest egg of six months+ of expenses
- Pay Off Home: Pay off your home in lightning speed
- Family & Insurance Planning: Life, LTC, Disability
- Retirement Planning: Take action today, for what is to come tomorrow
- Kids College Funds: Save via 529 funds for children’s college
- Investment Strategies & Building Wealth: The Power of Compounding interest
- Live & Give: Be free, live life fully, and retire with dignity
Financial Recover Tools:
Are you ready for financial recovery? Here is a list of some of the tools I use often in helping myself and others eliminate debt and build wealth. I prefer that when you are first starting out with your financial recover that you stay focused on the step you are on, and don’t worry about the steps ahead so you can stay focused on the task at hand. With that being said I will list these following tools in the order they might be used and in what step you can use them.
Here is the quick list of the financial recovery tools I will talk about below
- WLID Budget Calculator: to create a written budget and track your debt
- Acorns: Automated round-up investments to store your rainy-day fund
- Betterment: Automated online brokerage for long term wealth building
Financial Recovery Tool #1 – WLID Budget Calculator: BreadCrumb step #2
In BreadCrumb step number two we work on creating a written budget, by starting out with a list of all your debts from smallest to largest balance. Next we move on to my favorite part creating an income and expense (I&E) sheet, putting your financial picture in plain view. Finally we take your I&E and create two “What-If” budgets. This is where the real work begins because now that we have made a plan, now we must work the plan. The hardest part of this whole process is retraining your mind to stick to the plan, and don’t stray from the path of breadcrumbs you are following.
The WLID Budget Calculator was created on Microsoft Excel, but a printable PDF version is also available during the download process. The easiest way to get through step two is to use Microsoft Excel and let the spreadsheet do the math for you. I have also included all of the instructions in the spreadsheet and have made it as easy as possible to use. If you don’t have an application that will open this spreadsheet, you can download the PDF version, which can be printed and manually manipulated with a pin and calculator. All of the instructions have also been included in the PDF version.
Financial Recovery Tool #2 – Acorns: BreadCrumb step #3
If you are anything like me, up until the past three years I had a very hard time saving even a penny let along $1000 for a rainy-day fund. So in step three in the BreadCrumbs we kick the financial recovery into high gear and save up $1000 for your rainy-day fund. To many this sounds like a daunting task, but with the help of the many creative ideas you will find in my book BreadCrumbs to Financial Freedom you should have your rainy-day savings funded in no time.
The next hurdle is where to store your $1000 until the rain starts to fall, and let me tell you it will fall. You want easy access to your money, but not as easy as putting it in a coffee can in the refrigerator. Many people starting out on the road to financial recovery have very little will power, and will grab that money for a quick weekend getaway, or some new smartphone with good intentions of putting the money back in a few paychecks. The only problem is the rain will fall sooner if you use the money for something other than an emergency and the fund will never get put back.
I have found the perfect place to store our rainy-day funds, with a company called Acorns.
What Is Acorns?
Proclaimed the first mobile investment application that lets you open an account via your smartphone, or from your computer. Acorns is an up-and-coming platform that allows you to invest your spare change using the “round-up” method, with the goal of either building wealth or reaching short-term savings goals.
Using your mobile phone, you simply connect your bank accounts and invest the change from purchases you make every day. Small amounts of money — usually less than a dollar — are added up over time and invested into your account with Acorns.
Here are a few videos to watch about Acorns
Acorn Sign-Up Video
Acorn What Are Round=Ups Video?
Signing up with Acorns is very easy and the Iphone or Android app are very simple to use. There are three easy steps to signing up from your desktop or smartphone.
- Choose a Round-Up Account
- Connect Your Checking Account
- Create an Investment Account
After the signup process is complete, you will be asked a series of questions and recommended one of five portfolios, which you can take the recommendation or select any one of the five.
The five portfolios are as follows
- Moderately Conservative
- Moderately Aggressive
That is it and only takes about five minutes to complete the whole process. Now you just spend with your attached debt card and or credit cards and the system will monitor your transaction and use the round-up method to deposit small amounts of change from your checking account and into your Acorns account.
The Round-Up transfers come from monitoring your linked account and rounding up the purchases to the nearest dollar.
For example, I spent $20.51 at a big box store this week, and $0.49 was added to my Round-Up balance. Once the Round-Up balance total reaches $5, the money is withdrawn from my bank account and added to my Acorns investment.
Another great feature which I use is the ability to set a daily, weekly or monthly recurring investment. In my case I have the system withdraw $25 once a week on top of my round-ups to increase the speed and amount I invest each month.
When the rain starts to fall, it is very easy to gain access to your money. Just go into your app and instruct Acorns how much money you wish to withdraw and in a few days your money will appear in your attached checking account.
Click here on your smartphone, or computer to sign-up for Acorns
Financial Recovery Tool #3 – Betterment: BreadCrumb step #6 & 11
Once you have used the Debt Reduction Ripple Effect to pay off all your debt and you are well into your financial recovery, it is time to kick your rainy-day fund into high gear, and save up six months of expense money. You can continue to save in your Acorns account, and I still let the round ups continue to flow into my Acorns account. But once my $1000 was reached in my Acorns account I stopped my recurring $25 per week and used that $100 per month to help pay my debt down faster. Now that my debt is gone I have a ton more money to invest.
I found this other company called Betterment that I’m using for my extended rainy-day fund, as well as saving for vacations and other big items such as my next car (used of course).
Betterment is an online brokerage just like many others, but it takes the view that fees eat into long-term investing account returns. So Betterment lowers fees by using ETFs (exchange-traded funds) that diversify like mutual funds, but are tradable like stocks. ETFs carry very low expense ratios. Betterment also uses software to create a low-cost, diversified plan for you, and then constantly manages your account through:
- Portfolio rebalancing
- Tax loss harvesting
- Goal setting
- Automated deposits
Betterment allocates your investment portfolio based on your needs, goals, and market conditions.
Types of Accounts Supported
- Roth IRAs
- Automated portfolio rebalancing
- Tax loss harvesting
- Goal setting
- Choose your risk level
- Customized portfolio
- Fractional share investing
- Automated deposits
- Builder: 0.35% of average balance, with $100/mo. direct deposit
- Better: 0.25% of average balance, $10,000 minimum
- Best: 0.15% of average balance, $100,000 minimum
- Five-minute account setup
- No minimums for withdrawals or deposits
- No account minimum
- Automatic deposits
The Betterment sign-up process:
- Can be done from your desktop or smartphone
- The system will make portfolio recommendations after you answer a few simple questions
- Set a goal
- Connect your checking account
- Verify your checking account
- Make Initial deposit
- Setup at least $100 per month recurring deposit to avoid the $3 per month fee
Make sure you have completed BreadCrumb step five before you open this account, because you will need to be able to deposit at least $100 per month into your Betterment account to avoid the $3.00 per month fee, and you need that money in early BreadCrumb steps to pay off your debt.
How Can You Take Action Today, To Start Reducing My Debt:
Here are a few things you can do now to reduce expenses and get started in your quest for a new debt free way of life.
- Imagine yourself debt free and making wise financial choices.
- Don’t wait, start your financial recovery TODAY!!!!!!!!!
- Wake up, like I did and stop living in denial. Acting like you don’t have a debt problem does not make it so. Check out my blog, Why Live In Debt: Denial
- STOP SHOPPING NOW!
- Fill out a monthly income and expense sheet and get a handle on what your financial picture is right now. CLICK HERE to download our excel spreadsheet that will help you see where you stand. Believe it or not, as painful as it is to see it in writing, it is also liberating to know where you stand.
- Sets some realistic financial and life goals
- Start working our time tested methods in our course Breadcrumbs to Financial Freedom.
Let me and my team help you to help yourself reduce expenses, and become financial free. Taking our on-line, video-on-demand, step-by-step course Bread Crumbs to Financial Freedom. Don’t be scared to ask and seek out help, and imagine the possibilities of getting out of debt, building wealth and changing the way you live, work and play.
I look forward to working with each and everyone one of you in the near future, and remember, each new day is another chance to change your life – you just have to find the right path.
P.S. Please don’t forget to browse to http://whyliveindebt.com/first100 and sign up for our newsletter, and the first 100 people to sign up for the newsletter will get $15 off our exciting new on-line video-on-demand course, Bread Crumbs to Financial Freedom: 12 Easy Steps to get out of debt and build wealth.
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