Thursday, January 9, 2014

2014 New Year's Resolution - Budget? No? How About a WAM(D)?

I gave my tenth speech out of my Toastmaster's manual today and I felt really good!

I enjoyed the material and had a lot of fun presenting.

I received some positive feedback, which is always a bonus.

I had so much fun...that I decided to share it here!

(Maybe in the future I can record the presentation - it works even better with my quirky voice inflections and planned pauses.)

Yours in exploiting life!

P.S. I pronounce WAM(D) so that it rhymes with Sam and spam.

Here it is...


It’s another new year, but are you sticking with the same old resolutions?

Get healthy, eat better, travel more.

How about trying something new?  How about kicking the year off with a good, solid financial foundation?

In 2014, I want to challenge everyone to start a monthly WAM(D).

You know, capital “W”, capital “A”, capital “M”, silent capital “D”.

You might know it as “Where’s All My Dough?”...or possibly as a “budget”.

The word “budget” has become a four letter word.  It’s associated with punishing yourself and constricting your spending.  That’s not what I think it is, so I decided to call it a WAM(D).

I’m going to share a little about building your WAM(D), the benefits of a WAM(D), and a financial success story which used a WAM(D).

So what is a WAM(D)?

A WAM(D) (Where’s All My Dough) is a look at all the income and expenses you have in a month.  This includes wages, side income, mortgages and rent, telephone bills, food, travel.  Anything that comes in and goes out of your bank account.

How many of you here already have a detailed monthly WAM(D)?

How many of you review your WAM(D) at least monthly?

According to a recent Gallup poll, just 32% of Americans have a monthly budget (or WAM(D)).  

But what does that mean?  Well, according to the same Gallup poll, just 30% of Americans have a financial plan for savings and retirement goals.  Summary - if you don’t start tracking your money, how can you plan with it?  You can’t!

You’re probably thinking, “I don’t want to do that.  It’ll take way too long.  I make enough money to pay my bills and that’s enough.”  Those are fair, but unfortunate thoughts.  This line of thinking is what the other 68% of Americans are thinking.  Soon they’ll be thinking, I’m planning to retire and I don’t have enough money!  Where’d all my dough go?!

Yes, this can be a daunting task, at least initially.  Preparing your first WAM(D) may take a few hours and multiple reviews a month.  Possibly even a fight with your spouse.  But once it’s established, it should only take you 15-30 minutes a month to review and tweek.

How to go about building your WAM(D)?

Some people like a lot of details.  I know one couple who keeps their WAM(D) on an Excel spreadsheet.  They have 60 lines of detail, breaking out every type of expense.  They like to know exactly what categories they’re spending money on, so they can set limits accordingly.

Some people like simple.  My wife and I fall into this category.  We don’t like a lot of limits, we don’t want to stress about the pennies, but we do want to know how much we’re spending.  We use to track our transactions.  Our monthly costs (rent, phone, internet) are categorized, our financial priorities are categorized (retirement, travel, savings), and then we leave a lump sum for everything else.  The lump sum is food, entertainment, coffee, treats, bar tabs, dry cleaners, dog baths.  We take this amount out in cash, weekly.  This reduces the transactions that we have to track in our budget.  We don’t need to know the details for this money, but when it runs out, we’re done spending for the week.  Pull out the leftovers…

Those of you with WAM(D)s already, do you like details or simple?

What type of tools do you use for your WAM(D)?

What’s the benefit of a WAM(D)?

The benefit is a strong financial foundation.

How much can you afford to spend on your next vacation?  How much can you afford to put into retirement?  Can you afford a new car?  Why is your credit card balance always increasing?  Can you pay off your student loans early?  How are you going to pay for that coffee?

Having a WAM(D) can answer all of these questions.

With a WAM(D), you’re at least educated on your spending.  Whether you take additional actions is your next choice.

I’d like to take these last few minutes to share a story with you, a story about exploiting life.

It began a couple of years ago with a beautiful woman and a devilishly handsome man.

My wife and I were living the proverbial paycheck to paycheck life.

We were playing the credit card game, transferring balances from credit card to credit card.  We were making the minimum monthly payments to our car loan and our student loans.  We didn’t worry about buying groceries, eating out, or taking a few trips here and there - that’s what credit cards are for, right?!

We were making all of our payments and meeting our obligations, but we always felt broke.

We were having a lot of fun.  But we stressed about our finances.  We were constantly stressed out about our financials.

At one point, we were over $70,000 in debt!!

You might be thinking, “Wow, how typical.  The average American life.  No one can afford to live without taking on debt.”

But the most amazing part - at least to me looking back - was that we were earning over $70,000 a year!!  We had no excuse!

Where’s all my dough?!

Two years later?  Here we are.

We’re debt free.  Completely debt free.  Over $70,000 of debt paid off!

Even better?  We took our first international trip during this time - a dream of ours for years - and paid it off!  We even took a second international trip!

We added to our savings accounts.  We added to our retirement accounts.  

We felt comfortable enough to take financial risks by seeking new jobs, which brought in additional income.

We funded a side business.

Even though our rent went up, our weekend activities actually increased during this time.

We didn’t sacrifice any of our fun, we just knew how much we were spending on the fun!

We were exploiting life!

All of this because we finally we broke down and decided to confront our demons head on.

We made our WAM(D).

It all starts with this one simple question.

Where’s All My Dough?


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