You know, the objective to the prudent money project is to educate you on how money works, to show you how to make better decisions when it comes to money. So we cover everything, from investments to insurance to spending plans. I don't believe in budgets, I mean, you name it, we're covering it. In this entire series of teaching courses. I've been often asked if you could take everything that we've looked at and talked about in these teaching courses, and funnel it down to one simple principle. That's the key to making everything else work.

What would that be? And it's simply this and it very simply, is to live within your means. I think everybody's pretty much familiar with the formula of living within your means. You have X amount of dollars coming in, you're going to spend X amount of dollars and you got to make that salary that income last as long as possible to cover all of your spending during a month. And I got to tell you that there are cup families and couples in their 30s or 40s, or 50s, even into their 60s, who still cannot get this right who still have not grasped the concept of living within your means. And what ends up happening is that you create a gap, X amount of dollars comes in, you spend X amount of dollars, you spend more than you make you live with outside your means, and there's a gap and that gap is filled with loans.

It's filled with debt. And that's how a lot of people start to increase the levels of debt that they hold in their financial life. Now, I gotta tell you when I was in my 20s, just graduating from college, going into the financial services industry actually started real estate first but to do that couple years, going into financial services. I gotta tell you, I was horrible at living within my means I could always justify why I needed to spend extra money on the car, why I needed the the better apartment rental or why I needed to go ahead and buy a house. I was constantly living within without outside of my means. And the problem is, is that you do that for a certain amount of time, and then you create a problem.

And that's why it's always amazed me is that people can live without side of their mains for a lot longer than I would think. They compensate. They work around it. They create debt, they get more loans, they create debt. We talked about this in some of the teaching videos of how this happens. And all of a sudden, one day you wake up and the half twos, and those are the bills that come month in month out have to be paid to have to include the rent the mortgage, the car payment, if you don't pay a half two bill, you get something taken away from you.

Well, what ends up happening is you increase that amount of debt that have to start to increase because now you're adding debt payments. The more debt The bigger the payment, the more debt and you're have to grow larger and larger and you wake up one day, no amount of realization of rationalization is going to get you out of this mess. You've got a problem, the overnight debt problem turns into the overnight debt nightmare. And now you've got a problem. So one of the things I wanted to do is to talk about how we can get that back into balance because it is it will talk about this. It is a balancing act of the half twos, the values and the wants.

And it's just so extremely important because without this foundation, you can't put together a good spending plan without this foundation you it's really tough to plan for all your financial goals and balance those out and prioritize them and make them work. You've got to have this is the single most important thing to do now, I've talked to on teaching courses about advice I would give to somebody in their 20s boys advice I wish someone had given to me. I talked about the millennials and how the advice that I would give to them as far as starting out and it always comes back to living within your means. This is geared to Just in general, what no matter what your age, is, no matter where you are in life, you've got to start to develop this talent. And this this habit, excuse me. And here's the the the interesting thing about it, you've got to come to grips with reality, you got X amount of dollars coming in, you got to make it work.

There's no more income except for that extra amount of dollars unless you decided to work a part time job, you've got to deal with what you got coming in. And the problem is, is that the longer you wait to correct this problem, the longer that you live without, with without side, your means the bigger problem that you create, and then you are forced to do it. you're forced to take the steps. And I gotta tell you that if you're not in that spot right now, that's great. You're like concerned maybe that you're living with outside of your means. And that's okay.

But we're going to correct that going forward. And that's the thing about the theme, with a lot of these teaching courses in Pretty much the project is that if you're not there yet, we have time to correct it. Now if you're there, come on let's go together, we'll correct that as well, it's just gonna be a little bit harder. It's just like with the the debt series, no matter what stage that you're in, we have a solution for you. The solutions are better in the earlier stages. But as you get to the late stage five of the debt crisis, there's not as many options but hopefully you're not there as far as living outside your means.

And we're going to get that corrected, and get you on on the road to getting a balance in your financial life. And let me let me say this too, is that I know that can seem daunting. I know that that can seem a little scary, a little fearful, a little it can be a little bit fearful, because you're going to have to change you're gonna have to change your habits. You get a lot of maybe you get a lot of joy from overspending. It brings you some some short term happiness. Well, let me tell you, this will bring long term happiness if you stick to the principles and the steps I talked about in this program.

You Get there and make sure that you are creating a balance in your life. I love this picture of the scale because it is a balance. The reason that people don't live within their means is there's a conflict between the half twos, which we've talked about being rent, mortgage payment, car, car insurance, the things that if you don't pay, you get taken away from you. The wants the things you really want to spend your money on, you'd rather spend your money on this and that have to and then your values. Now here's it here's a key principle is that all you have to do is pull open, the American Express card, the credit card, whatever you use as your spinning vehicle, maybe a debit card through your bank account, look at where the money is going. That is what you value.

I always say that Money Follows the heart and the values are extremely important. And this is what I think is missing today when it comes to developing a an appropriate spending plan is the value aspect. But when a husband and wife come together and they create their own set shared value system, some great things happen. And that's what I want to encourage you about as you go on this journey with me through the steps of living within your means. Now, the first one obviously, is you and your spouse you have to commit. Now, let me go through an illustration with you.

You walk into your financial house, there's this closet, that you've got all the things you don't want anybody to know about you. You've got the debt, you've got the overspending. You've got the fact you're not even close to prepared for retirement. I mean, all the things that you wouldn't go and just sit down and say, hey, let's have coffee. Let me tell you about all the things I've done wrong with my money. Right?

So you will lock that closet up, and we thought we put the key in a safe place. And so visitors You know, Friends can come over they can walk through the house, they can see your financial house, they can see the things they can see the All the goodness of what you've done, but boy, there is a dark side and it's on the other side of that closet. Now introducing a man and a woman and a couple trying to come to grips with the shared value system over the toxic subject to value. That's a whole nother set of closets. I get that, okay. And I'm not trying to be unrealistic about the the challenges that go into sitting down and committing to this process.

That's why I created the 1010 commandments, of communication. And I got to tell you, there's few things and that I can guarantee and doing what I do, but I guarantee if you can follow those steps, and you can really commit to those steps you can leave your ego at the door, you can seek first to understand then to be understood, I mean all these great principles. You will change communication between you and your spouse forever and That's a process. It's not done overnight. That's always one thing that I stressed is that all of this is a process. But the The objective is to get better at it day by day by day.

So you and your spouse have got to commit, not to what I want, not to what she wants, but what you want to gather. And that you're going to, you're going to commit to this process and live within your means. Make a list of the half twos each month. Now, this is a very critical, critical process to go through. Because once you look at the half twos, and let's start with the basic formula, that means the income that comes in, let's say that it's $6,000 a month, they have to come up to $4,000 a month, and you have $2,000 left over now that $2,000 leftover is going to chase what you value. And we're going to talk about that in a second about the value hierarchy.

But you've got to make a start with the list of the half because those are the non negotiables you got to pay those costs. Men each month, month in, month out. And so you got to look at, okay, how can I reduce it now, some of the half twos are bad commitments that you made, you made that bad commitment to buying that expensive sports car when you really couldn't afford it. And you're paying about three to $400 more a month, and you need to be, and you're just gonna have to wait it out until you can either sell it, or you pay off that debt one or the other. It's there, it's done can't do anything about it. So you'd have to kind of wait and see, but things like the electricity bill, you can shop your electric rates, you could also go through and see what you could refinance, maybe debt wise to lower those payments to lower those have nots to create more discretionary income.

And so it's important to be able to identify together you and your spouse, this is the list of the half twos, the non negotiables How can we get this down in total overall cost so that we have more discretionary managed to go chase are better values. The third one is create a value hierarchy. Now, as I said, we spend money on basically what we value. And I've told this story before in one of the teaching courses is probably out of almost 26 years of doing this probably my favorite story is favorite illustration. I'm going to, I think it brings value to bring it into this course as well. I had a couple come into see me one time.

He was a doctor, a plastic surgeon, I earned a very good living. And he said to me goes, Bob, because we have a problem. I make great money and sufficient money to take care of things. But yeah, at the end of the month, we're always skimming by barely making ends meet until the next paycheck comes. And I looked at them both and I said, Well, that's great. Let's see what we need to do to fix this.

What I want you to do is I want you to go back and take three months, and I want you to track where all your money is going. track what you're spending. Don't Stop, don't spend any differently. Just track where your your money's being spent, and come back and see me. Don't budget I'm not talking about budgeting is you know, I don't believe in budgeting, as we talked about in one of the teaching courses. This is about tracking.

So three months later, sure enough, they come in and I thought somebody had died. They walked in the office, very hung your head hung low, very just hopeless looking, embarrassed, kind of. I thought, boy, white guy can't wait here with just what happened here. And so is they walked in in silence, sat down in front of me at the conference table and say, listen, deep, pulls his head up. He looks at me goes, Bob. We spend 2500 to $3,000 a month on eating out 20 $500 to 3000.

That's horrible. I cannot believe that. That's where a lot of money's going. And I looked at him and I said, That's great. That's great. you've identified what's important.

And he looked to me like I was halfway crazy. But it's true, they value eating out. And they value for a number of reasons that you can probably guess for eating out. And I think a lot, I think a lot of us can relate to this. And that's why I like the stories because I value eating out. And if if I let it get out of control, I would figure out a way to do it seven days a week, because I'm the primary cook in our family, I grocery shop, there's a lot in and I've taken that on as part of my responsibilities.

My wife has a ton of other responsibilities, and we just balanced that. But if I didn't have to cook, I didn't have to grocery shop as much and could eat out every night for that'd be great. That's just not the case. So I think everybody can relate to that how much you spend eating out. But let's look at what could make up a list of value higher of the value hierarchy. And when I say hierarchy, I mean this is our as a couple.

This is our top value, this is our second value, this is our third value fourth, and so on. Maybe getting out of debt is a value. Maybe eating out is a value. Be honest with yourself, don't try to be, this is who we should be, this is who we are. And so you come up with this list of things that you value. And you go, Okay, now what's our number one value?

Well, you know, in order to really make things work, we've got to value at the number one spot, an emergency account, we've got to build an emergency Can't we don't have one. And because we don't have one, when we get into a situation, where we have the unexpected expense, guess where it goes on the credit card, the whole idea is to decrease debt not increased at some point, you got to stop increasing the debt and get on a trajectory of decreasing the debt. So building an emergency fund, which I think is if you haven't done so is the number one should be the number one value. Now I don't want to dictate your values. But in order to make things work, you've got to have an emergency account. Now where does eating out is eating out completely go off of the value hierarchy?

No, it probably not. It probably means that you know what we're going to make all this work, we can make this work by only eating out once or twice a week, or something to that degree or putting this amount of money of the eating budget spending plan, goes towards eating out goes towards buying groceries, and goes towards preparing meals, whatever that is. So maybe the eating out goes from the top spot, which was pretty close in this couples particular situation, down to eighth, ninth or 10th. And you still have the issue and I think you'll appreciate it more if you're only going one or two times a week. And to selected places that aren't that expensive. I mean, you can go out and eat and and you can spend a lot of money or you can be wise and spend very little money maybe even with a coupon but you're still satisfying those, that value that that that you have breathing out.

So take so take make a list. The values that you have as a couple as a family, and then bring into it a hierarchy of priority, prioritizing the first one down to the last one. Steps live within your means figure out how to create extra cash flow, extra cash flow. Now if you are out of balance in a situation and I'll describe what I call out of balance, you've most of the time it is you've gotten to a point where you create a lot of debt. And it's taking up a lot of the have to money and you're out of balance with what's leftover at the end of the month. And sometimes it's just not enough to cover the want to use they're the most important to you.

So think of it from the stamp. I always talk about debt getting out of debt is a season it takes a season of four or five years or whatever the time period is to get out of debt. Once you're out of debt, then your options open up to you You have you have different routes you can take with your finances, and your have nots decrease, right. So, it's important to consider that maybe you need to get a part time job to bring in an extra money just for a season. It's not obviously what you want to do for the rest of your life. Maybe it's just, you and your family sit down and agree that, hey, we're going to balance out we're going to balance out our values and balance out our, our finances, and I'm gonna get a part time job and work.

Just I'm gonna commit to this for three years and we're gonna take all that money and put it towards paying off the debt and see what kind of effect that has. Maybe it is that you know, one of the the other things I talked about are tax refunds. If you're getting a tax refund at the beginning of the year, stop getting a tax, refund or arrange your payroll deductions to where you're breaking even and you're not giving the IRS extra money to live out to use natural IP offer to use tax free and then they pay it back to you. So don't over Give to the IRS give just enough. If you do that maybe you increase your, your monthly income by 200 or $300. That can be in put into the balance of everything.

And I think it's a better use of your money than getting that lump sum what ends up happening the majority of the time when you get that lump sum tax refund, you spend it, you justify it, you spend it. audit your spending, audit your credit cards, audit your electricity bill, see if you can get get that down in cost audit your credit cards, audit your at&t or Verizon or whoever using for cell phone. I gotta admit, I've gone through that process and not been too happy with what I found. I was being billed for things that I didn't ask for. I was had subscriptions that were still charging to my account that I never took care of. The problem is is we don't slow down long enough to do the audit but you could create an extra hundred 200 maybe dollars just from getting rid of spinning you don't need to be doing obviously getting the kids off the payroll, getting them on their own creates extra money that can really go towards the season of retirement, coupon clipping I had a guest on the pre money radio show, who was the queen of coupons.

And I was amazed at how much money that she has saved in grocery shopping just by clipping coupons, and saving money. So look for ways to save money and look for ways to increase the discretionary income so that you can really attack those values and get things back into balance. Steps to live within your means create a savings account for a backup plan. I've already mentioned this but I thought I would make this a step because I think it's important that you make sure that the whole goal is not to spend up to the last penny is to have some leftover and if you have some leftover then it's not that's not to to spend that is to go into a savings. Count. So the whole idea is to have some leftover.

We talked about this about building a spending plan on another teaching course, but just to have left money leftover to start building to add to that emergency account to build that cash account. Because once again, the whole idea is not to increase liabilities when something happens, that unexpected expense, but to have a sufficient emergency account to pay to make sure that you're not increasing debt. So emergency fund makes a great backup plan. Steps to live living within your means. Step number six, create an overall spending plan and monitor we won't go into a whole lot of detail on this because we've taken an entire teaching course to go through that we go through and talk about how to create a spinning plan. But it's so very important that after you get things in balance and you work to get things in balance along the way create the spinning planets a process, you got to monitor it, but once you get this like a well oiled machine you get to a point that it's it's automatic, and you and your spouse are monitoring this together.

You're looking at where money's going, and you have a lot more control over the whole process of staying within your means. List of personal expenses. Now what I mean by this is that you have your half twos, non negotiables got to spend those each month, you have your ones that are going to your values. Now you've got those unexpected expenses. One of the things to talk about in the boundary planning, spinning plan system is that you want to anticipate expenses coming up. So for instance, if it's January, you gotta look 12 months down the road and realize Christmas is coming 12 months down the road, you got 12 months to plan for it.

And that's something that you anticipate, but maybe it's that you have Tires need to be replaced next two or three months, what's going to pay for that, or you can start setting money aside for that, start making a list of that and keep constantly reviewing that list. So that you know, this is what we've got to prepare for. So we don't get caught off guard once again, it's about decreasing debt, not increasing debt. It's about decreasing the half twos, not increasing the half twos to get you back into balance. living within your means. Very simple formula.

You increase your means you decrease your Living Arts a combination. Like I said earlier on in the teaching course. It's coming to grips with reality. It's really understand where the money is going. It's monitoring it, it's getting involved in your spending. It's not falling for the human nature trait which which I will call avoidance, or just hope that everything's going to work out.

It's actually getting into the numbers and facing the reality of your finances.