Judy Lawrence is the author of The Budget Kit (6th Ed.) and founder of MoneyTracker.com. As a money coach, Judy’s goal is to empower people to master their budgets and shift to “thriving” instead of “surviving.” She recently sat down with us to dispense some valuable advice about budgeting, paying off (and staying out of) debt, and saving money instead of wasting it.
Tell us a little about your background. Why are you so passionate about personal finance and money management?
My first passion is finding ways to avoid waste of all kinds, including human potential. When people get stuck in the surviving mode and haven’t learned core money management concepts and skills to move into a thriving mode, their potential for joy, empowerment, and major contribution is lost or diminished. I want people to know they can learn to manage their money successfully; but first, they need to know the tools and the potential are available.
Is managing money and personal finances more difficult today than in past generations? Why or why not?
Yes and no.
Both generations have advantages and disadvantages. The past generations had financially simpler lives because of fewer choices continuously tempting them, less access to credit, and fewer basic needs (cell phones, electronic equipment, etc. didn’t exist). Plus, in some cases they were actually learning about household budgeting in high school (at least with my experience growing up in Wisconsin). However, earlier generations did not have access to the same resources and handy tools of today nor did they make as much money, especially if there was only one income earner in the family.
Today’s generation clearly has more of everything: income, choices, money management tools, apps, software, and unlimited resources on money management. Many past generations have a hard time understanding why the current generation cannot live on the higher income they receive. However, just because a great deal of information exists does not mean people are accessing it, understanding it, or using it effectively. And there’s also the extra debt burden, job challenges, overwhelming stress, and ongoing confusion over money. Even with the plethora of amazing tools and resources available on virtually every aspect of personal finance, you can imagine how personal finances are often more difficult today for many people.
Since you teach an e-course called “Budgeting Without Tears,” could you tell us some of the biggest stressors or challenges people have when it comes to setting up a household budget?
Obviously, not making enough money is the biggest stressor, especially without solid budgeting skills to resourcefully learn to manage that limited income. Yet trying to work out how and where to get started with setting up a manageable budget—even with a decent income—can be extremely confusing, frustrating, and overwhelming without prior knowledge, understandable concepts, and tools.
Also, there tend to be a lot more “moving parts” and chaos in households that might make it difficult to juggle finances, such as blended families, variable incomes, rental properties, investments, and active children involved in a variety of expensive activities. And in many cases, there’s just not enough time or energy to get on top of everything going on with their personal and professional lives.
All of this relates to the whole issue of total life overload. Today’s consumers are completely overloaded with choices: lifestyle, basic necessities, and the media (to name a few). With this ongoing overload, consumers end up completely scattered, leaving them little time to deal with critical decisions, research, and practice for gaining financial confidence and success.
Ongoing practice with a series of mini-successes over time will help build and instill confidence. It will also strengthen the ability to make wise financial decisions, manage daily finances, save money, learn how to invest money, gain better research skills, and help individuals to really own their financial confidence and achieve greater financial success.
Do you have any tips to help people who are trying to pay off debt, stay disciplined, and remain focused on their debt-repayment goals?
- Start by knowing your compelling “Why?” What big-picture desire will help you stay motivated to get into the necessary mindset and make the behavioral changes to stay disciplined and focused?
- Create a reasonable timeline for paying off the debt and an effective plan for doing so.
- Take advantage of various snowball calculators to work out how much you can pay each month and how fast you can pay off the debt.
- Make one or two habit changes to free up an extra $50 – $100 a month and apply that money toward your debt repayment. Maybe it’s bringing your own drinks and lunches to work. Or try reducing your online shopping to “Needs” vs “Wants.” Consider trading, bartering, or doing one-time rentals more often instead of buying every little thing.
- If you’re into apps, find an app you like that helps you track your habit changes and how much you are saving. This will give you immediate positive feedback.
- Consider a non-profit Consumer Credit Counseling Services agency to set up a debt payoff program with negotiated lower interest rates. Just be sure to read Green Dot’s tips for protecting yourself from debt relief scams first!
- Build in little rewards for sticking with your discipline and focus every week—something that is very satisfying and not necessarily expensive or affecting your food plan. Ideas include: more “you time,” pet time, walks, reading, watching a favorite video, or something you wish you were doing more of.
What are some signs which indicate when a person may need outside help managing their personal finances?
- There seems to be more month than money by the last week of every month or a few days away from your paycheck, and this is now a monthly occurrence.
- Your credit cards are now your backup for basic household needs like groceries and fixed monthly bills.
- You can barely pay the minimums on the credit cards and the balances are going up.
- You try to get more money to cover your monthly expenses by resorting to payday loans, stopping your 401(k) contributions, or borrowing from friends and family… or your child’s savings.
- You don’t want to open your bills anymore.
- You can’t sleep at night and get distracted at work because of the financial stress.
What benefits might a prepaid debit card provide someone who is struggling with money management?
Part of money management is staying on top of bills. It’s not always a matter of not enough money, but instead trying to get organized and streamlining the finances. You can set up autopay for each of your bills using prepaid debit cards. Not only will you have more peace of mind, but also a better credit score when those credit card bills are consistently paid on time.
Also, the last thing someone needs when struggling with money management is losing even a cent to unnecessary fees. Green Dot prepaid cards have simple fees—nothing hidden—so you know exactly how much to budget. Plus, having bill payments set up on a prepaid debit card will help prevent late or missed payment fees, which ultimately puts more money back in your pocket.
What is the advantage of using a prepaid debit card instead of a traditional debit card that’s linked to a bank account?
Convenience is probably the biggest advantage. You can use prepaid debit cards to make purchases with or without a PIN, it’s widely accepted nationwide, and you can track your spending online 24/7.
Finally, give us one thing we can start doing TODAY to save money that most people often don’t think about.
Here are three:
- Slow down. The US Department of Energy estimates that for every 5 mph you increase your speed over 60 mph, you’re paying $0.21 extra per gallon of gas (based on a price of $3 per gallon). Do the math and see how much you could save each month!
- Use up all the groceries you buy so you’re not left throwing away leftovers, expired containers of food, and old spoiled produce.
- Borrow(from a friend, library, or other sources) rather than buy… you really don’t need to own books, CDs, DVDs, tools, etc. Borrow as much as you can and only buy what you truly need.