Section   4

Implementation   &   Recap   Process

IF you have arrived at this point,  you truly are serious about your future.  I commend you.  By having started this Life Finances ... Made Simple, you said that you were serious.  Arriving at this point, you not only talk the talk, but walk the walk.  You  ARE  special and  READY  for this next section.    Congratulations!!!

A Quick Note - Before we start this important section, have you taken each of the  previous  sections of the Table of Contents on the left first - "7 Days' Outline to Perfection", "Welcome", "7 Steps to Success" and "Taking Stock" -  as previously directed?  IF you have arrived at this point, without having done the other sections first, ... then ... please go back and read those sections first.  Please follow directions or the system won't work.  I know what works and what does NOT work, so please pardon my bluntness in stopping you from continuing with this section without the proper foundation of the previous sections.  YOUR success depends on you following directions and I want you to be successful so then you will refer others to this valuable program.  Build on a solid foundation and it will be strong and weather ANY storm that  may  AND  will  come along.  Expect rocky roads and when they come, they won't be as bad.

This   Step  is   the

Implementation   Process

of   what   YOU   proposed   as

YOUR   CASH   FLOW   PLAN

As an introduction to the Implementation Process portion of the Life Finances ... Made Simple, you may want to remember that this Income and Spending Plan process system is only an "assistant" or a "guide" to help you in your healthful quest for your own financial well-being and your own peace of mind towards life and financial independence.

Please also keep in mind that  "budgeting"  or an  "income and spending plan"  is also known as a  "Cashflow" Spending Plan  which monitors both the income and the spending as you learned in an earlier section and I will now use to get the focus on the  flow  of your  CASH.

This next step of  IMPLEMENTING  the plan that you proposed in the last step is equally important as developing that proposed plan.  The question is - how do you get from your  Proposed  Cashflow Spending Plan  to   reality?

This system was designed to be an all-purpose system to help focus, guide and educate you in the financial decision-making process of life.  And best of all, WITHOUT casting blame on past or present situations.  As my dad used to tell us boys, "Don't cry over spilt milk.  Learn from the past and move forward."  So, that is what this program is all about.  Moving forward irregardless where the past has been or the present is and why education is soooooooooooooo important.  Did I say education is important?   RIGHT  education!  Do you remember as a kid, you kept asking the why questions?  Keep that mind of a child continuing to ask why hungering and thirsting for a true solid foundation in education and watch your progress shoot forward.  Obey first, but continue to ask why and the answers will come.

Please keep in mind that a Cashflow Spending Plan is only a financial planning guide.  It can be an excellent tool to get you from Point "A" - where you are now - to Point "B" - where you want to be.  It is like a street map, the tail of an airplane or the rudder of a ship.  All key elements determining the outcome of the traveling experience.

Do you feel you are traveling in this world called life without direction?  Just by living life?  As others dictate to you or "spoon-fed" you with their pre-made determinations?  Your parents, school or college or educational system, neighbors, friends, acquaintances, work superiors or associates and/or your environment?

Stop and ask yourself questions.  The basic who, what, where, when, why, how and other thought provoking questions.  For example, there may be several methods - walk, taxi, bus, train, car, airplane, ship, etc. - to arrive at your physical work or pleasure destination, each with its own set of pros and cons.  Without  direction  and  guidance  and  planning,  how and when do you expect to arrive at your chosen destination?  And ... how much is it going to cost?  

You could also ask yourself these same type questions about life and its direction and everything that confronts you.  Why not be a child again thinking of the "why" questions?  Why not use this program / system to crystallize your thinking process and return to the basics?  As Tom Hopkins a national motivational speaker and lecturer and trainer said, "Return to the basics once a year."   When is the last time that you asked these same basic questions?

This Cash Flow Spending Plan tool canNOT be thought of as cast in concrete and be so rigid that it is not flexible.  It MUST be flexible for on-going changes in situations, life-styles and everyday choices that you make and will make.  It must also be flexible in the sense of averages.  During some months, some categories will have nothing spent in them, whereas, other months that same category may exceed the Cash Flow Spending Plan expectation.  The same principle applies to the income categories.  Over the year, the total per month should average out.  Without knowing this secret, many people fail with budgeting thinking  "it ain't working!"  Understanding the principles BEHIND budgeting can make all the difference in the world - failure ... or ... success...  This is one reason why I spend so much time explaining or teaching more than just the details.  More than just supplying the forms.  For forms, you can obtain those on the internet in many formats, many of which are free.  I supply the  EDUCATION  behind the forms ... teaching you how to  THINK.

A good Cash Flow Spending Plan not only provides direction and maintains flexibility, it is partially based on the value system of the participants.  That is why an imposed budget rarely works long term.  However, some knowledgeable assistance  (i.e. your financial advisor or your tax advisor, etc.) can be extremely beneficial.

Over the decades, I’ve found that even though it takes 2 to 3 years to fine-tune a Cash Flow Spending Plan really well, the first year that a Cash Flow Spending Plan has been established is the most critical.  That is the year of taking stock,  planning,  monitoring,  making adjustments,  and fine-tuning.  And ... also... changing of habits.  Some destructive and some not so positive hindering the outcome.  Anyway, the more effort that is done  in the beginning  the easier the process will be later.  And the greater the results are more often noticed.  Just like a wood stove.  You must put the kindling and the wood in the stove and light it before any heat will come from it.  Then to maintain the desired level of heat, all it takes is periodic additions of wood.  

As mentioned before, after initially spending the effort up front establishing the Cash Flow Spending Plan, all the system should take is ONLY two minutes a day just before brushing your teeth prior to going to bed to maintain it.  Two minutes a day!  Less time than it takes getting undressed to go to bed.  Remember only two minutes a day.

It is suggested to do the following step-by-step process completely even if you have a break-even cash-flow, or a positive cash-flow.  Do not go on to the next step unless there is spendable dollars available.  In other words, to keep things simple,

stop when you run out of funds.

Let’s begin the Cash Flow Spending Plan Implementation process step-by-step.  Even though this section is designed to assist those with  break-even  and/or  negative  cash flows those with positive cash flows may learn a few things as well.  Hopefully, by the conclusion of this step, your Cash Flow will be at least break-even if not positive.

Before actually beginning, please consider  "Paying yourself first" as one of your first priorities.  Especially if you don't have any savings or use credit cards as your savings and/or are deeply in debt.

A.)  Paying yourself first  principal is of the highest priority to prevent future problems.  Consider setting aside 20 % of the total gross income to be deposited into a special "out-of-sight-out-of-mind" Cash Reserve Savings Account.  This account is for emergencies and/or opportunities that come along on a periodic basis.  It is NOT for goals such as transportation vehicles, homes, furniture, retirement, vacations, etc.  It is for emergencies and/or opportunities.

How?  Right from the top of all of your income or the GROSS income and not the NET.  To figure the gross income, this is your total earned income or  "increase"  before any taxes or deductions are removed.  If you are self-employed, find your gross income by deducting your expenses from the total gross income.  This is your Adjusted Gross Income or net gross income before deductions and any taxes.  Please refer to line 34 on the brief recap form "AGITaxesForm" by clicking here.

Until this fund is equal to at least 6 months of living expenses may I suggest strongly  DO  NOT  TOUCH  IT  or  DIP  INTO  IT  or  ANYTHING.  Consider it non-existent.  Let it build up!  (Especially critical for those who habitually have never experienced having a Cash Reserve other than the credit available on credit cards which is NOT a Cash Reserve.)

When the REAL emergency or a GREAT opportunity comes along, funds are available without forcing you into a must-do hate-doing-it situation.  Then never allow it to drop below a 3 months reserve without really evaluating how great is the emergency or opportunity in question.  Then re-build it quickly back to the 6 months  minimum  reserve.

It is wise to always maintain at least a 6 months reserve.  Most financial professionals will strongly suggest and/or encourage obtaining that account quickly and then maintaining it.  Talk with your financial advisor concerning the actual distribution of funds inside this cash reserve fund.  He/she may help you make them work as hard as possible for you at all times in what is called a three-tiered Cash Reserve.

Again, this Cash Reserve is NOT a savings account or several savings accounts for various goals.  There are other vehicles for that.  This Cash Reserve is for emergencies and/or everyday opportunities only.

An example of this can be had by clicking on the following:

                          Cash Reserve 3 Tier Outline

Once the six-month cash reserve has been established, keep paying yourself the first 20 % of your  GROSS  income.  (For those that believe in the Bible, 20% is what was instituted in chapter 41 of the first book called Genesis.)  After the Cash Reserve has been built, this 20 % of your gross income amount could then include building funds for your future goals’ programs such as automobiles and other "toys", down payments for a home, college education plans, retirement ... and/or ... that charity wing named after you.  First things first though.  Build your six-month Cash Reserve first, even if you have to stop your 401k or other retirement vehicles as well as those "gratifications now" items.



A digression no professional wants you to hear...

The international huge investors that buy lots of the US debts have started asking why continue throwing good money after bad?  It is open discussion for all the media to pick up at will, which the international media does.  I do too and am sharing it with you right now as it is happening.  For some shocking reason, the US media refuses to alert the public to any of this.  I suggest you strongly consider checking this out for yourself with the free international media websites on the internet.

The US economy is MUCH worse today than just a few years ago ... and getting worse ... daily!

But there are things YOU can do.  Read on and follow directions.  Listen and learn while you consider what decisions you want to make.  Protect yourself.

Those clients that listened to me, got out before the market fell.  The others now listen more carefully.  As I used to tell my daughter, "If you won't listen, you must feel."  Unfortunately, sometimes the feeling won't come for months or years, but regardless, the "feeling" will come.  History shows us certain laws of the universe do exist.



Now back to the 6 months Cash Reserve 

A home equity loan or a home refinancing loan with tax advantages maybe some options worth checking out.  Major word of caution however.  With the economy as shaky as it is and a terrorist attack coming to collapse it, my strong suggestion is don't mess with your home.  You need a place to sleep.  Keep that mortgage separate from all other debt, 30 year fixed rate if possible.  Better still - have your home paid for free and clear with no mortgage.

For those with available credit or credit-worthiness, consider refinancing your high-interest debts with lower interest debt.  Don't refinance just to get some cash to pay off other bills and/or debt.  If that be the situation, address the problem and take care of it first.  Later, as your credit score skyrockets up towards excellent you will have more options available to you.  

"Introductory" low-interest credit cards may be an option as well.  You may have to keep replacing your low-interest "introductory" cards with newer cards every 3 to 9 months until your consumer debt is eliminated, but this extra effort may still be better than an 18% credit card balance.  Do keep in mind that every inquiry or credit application on your credit report may present future credit grantors a negative impression of you.

The Cold Storage Technique ... That Works!

D.)  Go on a date with the family.  Once every 6 to 8 weeks, use a SMALL token amount to take the family out to dinner or a date as a "family recreation and entertainment treat".  The date could also be a picnic in the country with a walk in the fresh air.  Improves the moral, family relations and everyone's health.

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