Deprecated: Assigning the return value of new by reference is deprecated in /nfs/c02/h06/mnt/26996/domains/ on line 36

Deprecated: Assigning the return value of new by reference is deprecated in /nfs/c02/h06/mnt/26996/domains/ on line 21

Deprecated: Assigning the return value of new by reference is deprecated in /nfs/c02/h06/mnt/26996/domains/ on line 540
The Butler Project » Money Tools

Entries Tagged 'Money Tools' ↓

What Would You Do With $1,000,000?

Snowy Mountain

Let’s say you have a rich uncle. You probably don’t, but let’s say you do. And let’s say your rich uncle dies, and since you’re the favorite niece/nephew of your rich uncle, he lives you $1 Million in his will. No, let me rephrase that - he leaves you enough money in his will that you have $1 Million left over even after you pay taxes. Incredible, right?

I know this is a stretch, but stick with me. This is a mental exercise that will help you learn something about yourself and your financial personality. And hey, it’s not a bad fantasy.

So you have the money, but there’s one problem…what are you going to do with it? I’d say most people don’t have any idea what they’d do with a million dollars if they had it. Work through this exercise with me. You’ll learn something about yourself, I guarantee it.

Discover Your Financial Personality

I’m not going to answer any of the questions below for you today. In a series of future posts we’ll take them on one at a time, but at this point I want you to do the work yourself. Sit down with a piece of paper and a pen and do your best to answer each of the questions above. Think of it as the beginning of your financial autobiography. After you’ve answered them, you need to justify your answers to yourself.

Here are a few questions to think about as you decide what to do with your million:

1. Would you pay off your mortgage and all other debt?

What would be the upside of paying off all debt? What would be the downside? Could there ever be a downside to paying off your debt?

2. Even if you paid off all your debt, you’d probably have some money left over (I hope!). What would you do with the remainder?

Would you buy a new car? Would you buy some toys?

Would you invest some or all of the remainder?

3. If you decided to invest the money, how would you invest it?

Would you buy stocks, mutual funds, or real estate? What about bonds? Do you know the difference?

If you were going to buy real estate, what kind of real estate would you buy? Rental property? Commercial or residential? Raw land?

Make Decisions According to Your Values

I’m guessing a lot of you won’t be able to answer the questions with any confidence. You may be able to answer the questions, but could your decisions stand up to direct attack? They’d better be able to, because your financial choices will be attacked every day - directly by the media and indirectly by the decisions you see other people make.

A big key to becoming financially independent is the ability to identify your financial values, make decisions according to your values, and then stick to those decisions no matter what you see your neighbors do or what the media tells you.

Take an hour to write down your answers to these questions. If you don’t write your answers down, you’ll forget your thoughts within minutes, and they’ll be of no value you to you. By writing them down, you make them concrete in your mind. This will pay off!

*Image credit: g.naharro

Funding Your Life: part 2

The Hard Work

Yesterday’s post was the warm up, today comes the hard work. Putting your budget on paper is difficult. Not only is it detail work that requires time, the process of putting your income and expense on paper dredges up a lot of emotions. There are two things you can do about that:
1. Keep reading this blog and find some books to help you work through the emotions of money.
2. Dive in and get to work.

Putting together a budget is not something that can be completed in one evening. Not even a long weekend, for most people. It’s going to take a good two weeks to a month to really get an accurate budget, and you will find it will still need some tinkering. That’s OK. Set aside some time to get started, and then work on it as the data becomes available.


Sit down with a pencil and paper or an Excell spreadsheet and start with your income; I always list income before expenses to remind me the money needs to come in before I can spend it. Here you include your salary/wages, dividends, interest, rent, pensions, gifts, and any other income you take in. Total your income.


To make your budget realistic, you need good data on your spending habits. Write down the categories where you spend money. Dig into your checkbook register and credit card statements and pull your expenses from there; if you have all of last year’s spending data, great. If you only have 3 months or even just 1, that’s a start. If you use a lot of cash, you’ll be looking through receipts or estimating. Be as accurate as you can be, and remember expenses that come less frequently, such as registering your car, trips to the dentist, insurance payments, and Christmas shopping. Take the next two-four weeks to keep track of every income and expense. For lists of possible expenses, scroll down on this page. Finally, total your expenses.


The Results are In

Now, hopefully your expenses are less than your income. Or, they are the same because you have already included your savings and investments in your expense categories. If you are spending more than comes in, you definitely need to start adjusting your expenses and think about increasing your income. Spending more than you make is absolutely unacceptable.

As you look at your budget, are you surprised by any categories? Did you know you spent that much on clothes or eating out? Can you believe how much you are spending on fuel or rent compared to the amount of your income? Are you saving as much as you could be?

This is where budgeting becomes so powerful! Right in front of you you can see where all your money goes each year. Do you like how those numbers look?

This is probably the part that people hate about budgets. Because the “happy/fun” things they spend their money on each day are the things that they think they “should” cut back on. If there are things, “creature comforts” perhaps, that you want to cut back on, be reasonable, know thyself, and act accordingly. Don’t cut back so drastically that you feel completely deprived and end up going on a spending spree and spending more than you would have before the budget.

It’s OK to include expenses in your budget that make you feel good. Budgeting is not about depriving yourself; it’s about using your money to give yourself the life you want, now and later.

The important thing right now is that you have your budget and you are not spending more than you are earning. as you keep learning, particularly about topics such as budgeting, investing, goals, retirement planning, saving, and making more, your budget will change as your priorities change. So get your budget on paper, and make some judgments about if your spending and earning is consistent with who you want to be.


1. Budgets are good things. Use your budget to make sure you are using your money to create the life you want to live.
2. Don’t listen to the “shoulds.” It’s your life and your money. Make it work for you.
3. Sit down and do the hard work of budgeting. This includes
recording all your income.
recording all your expenses.
making sure you are not spending more than you are bringing in.
making sure your expenses match your values and your goals in life.

Funding Your Life: part 1

Budget. There I said it. If we had a “report inappropriate content button,” would you use it? Do you hate the word “budget” or do you just hate the idea of living by one?

easy budget

Why do people hate budgets?

If you think of a budget as financial shackles or the proverbial ball and chain, think again! A budget is one of the essential tools of personal economic growth. Unfortunately, the term “budget” has so many bad connotations because people don’t understand and aren’t willing to face the emotions that come with budgets. I’m here to tell you I have a budget, I use a budget, and budgets are good things!If you are the one who makes up your budget, you can allocate your money wherever you want. It’s all about funding your life. And by life, I am not talking about you getting up and going to work, getting through the day, and then grabbing take out on the way home. I’m talking about you deciding who and where you want to be and making sure your spending lines up with those goals.

Control, Freedom and Peace

Your personal budget is your plan for how to use your money. It helps you make sure you reach your goals instead of frittering away your hard earned cash on things and experiences that don’t take you closer to your goals. A budget is a huge part of being financially responsible and it allows you to TAKE CONTROL.

Freedom, control and peace

Ironically, you will actually find freedom in using a budget. The freedom comes from the fact that in following your budget, you are actually working towards your goals instead of just hoping you’ll achieve them.

In using a budget you will find peace. The peace comes from knowing everything is taken care of. Depending on your situation, this peace may take a little bit of work to find, but setting forth a budget is the first step on the road to taking responsibility and controlling your financial future. The Peace will come.

The Shoulds

The problem comes in then if you don’t know your goals or where you want to be. If you’re not confident and passionate about your goals, then you start listening to the “shoulds,” The “shoulds” are what other people tell you you ought to do with your money.

“You should have a college account for each of your children.”

“You should be saving 10% of your income.”

“You shouldn’t have spent that much on your house.”

I hate the word “should” and I’ve just about removed it from my vocabulary. You could do the same. (Doesn’t that sound better than “You should do the same”?) Your budget is not about what other people, even experts tell you “should” do with your money. Your budget is about how you want to use your money for your life. Of course, once you learn more about financial planning and decide where you want your life to go, you may take a lot of the expert advice, but it won’t be because you think you “should,” it will be because you’ve decided it’s the right thing for you.

Take Action Today

Today, start to come to terms with the idea that a budget is an essential tool for creating wealth and directing your life. Your budget, if you stick to it, can take you where you want to go. Think about where you’re going to start spending your money. Think about how you are going to start funding your LIFE.Tomorrow, we’ll look at the steps involved in putting it all on paper.*Be sure to check out the other great posts at the Carnival of Personal Finance