Get Ready, Set, Plan!

I hope you all had a wonderful Christmas; I certainly did.

Now, it's time to get back to our money matters. With the dawn of a new year quickly approaching, I feel compelled to reiterate the need to plan and prepare a budget that will focus on accomplishing short-term and long-term financial goals for 2012. At the very least, I ask you to exit December with January in mind. Close out this financial year with a plan for the next one.

I can't tell you how constructive is to see what you did with your money over the course of an entire year. You'd be surprised by how well your past actions can prepare you to reach new financial heights in the future. Believe it or not, the realization that you spent over $2,000.00 at Starbucks but only knocked off $800.00 of your credit balance this year could motivate you to change that habit next year. Knowing where and how you've wandered off the beaten the path can help you to become more focused and deliberate with your financial movements in the future.

If you haven't done so already, schedule a financial planning day. This will be a day in the very near future when you'll sit down with all of your financial information (i.e., bank statements, receipts, bill statements, checkbook register), and record them as best as you can. You can do this with pen and paper, using finance software, or even Microsoft Excel. Record your income and expenses by month and tally your totals.

I've provided the following example of financial information for January - May:

		JANUARY	FEBRUARY	MARCH	APRIL	MAY
Income							TOTALS
	Xerox	$ 1,784.00	$   1,784.00	$ 1,784.00	$ 1,784.00	$ 1,784.00	$       8,920.00
	Logan's Roadhouse	$    685.00	$      720.00	$    330.00	$    504.00	$    435.00	$       2,674.00
Total Monthly Income		$ 2,469.00	$  2,504.00	$ 2,114.00	$ 2,288.00	$ 2,219.00	$     11,594.00
Expense
	Mortgage	$    729.00	$      729.00	$    729.00	$    729.00	$    729.00	$       3,645.00
	Electric	$    139.74	$      145.99	$    160.01	$    155.77	$    133.00	$          734.51
	Water & Sewer	$      48.96	$        48.96	$      48.96	$      48.96	$      48.96	$          244.80
	Cable	$      65.00	$        65.00	$      65.00	$      65.00	$      65.00	$          325.00
	Telephone	$      60.00	$        60.00	$      60.00	$      60.00	$      60.00	$          300.00
	Auto Payment	$    380.00	$      380.00	$    380.00	$    380.00	$    380.00	$       1,900.00
	Auto Insurance	$    104.00	$      104.00	$    104.00	$    104.00	$    104.00	$          520.00
	Credit Card Payment	$      75.00	$        75.00	$      75.00	$      75.00	$      75.00	$          375.00
	Grocery/Household Supplies	$    200.00	$      200.00	$    200.00	$    200.00	$    200.00	$       1,000.00
	Eating Out	$    208.00	$      120.00	$    132.00	$    255.00	$    200.00	$          915.00
	Gifts	$    100.00	$      240.00	$            -	$            -	$      85.00	$          425.00
	Miscellaneous	$    259.30	$      236.05	$      60.03	$    115.27	$      39.04	$          709.69
	Savings	$    100.00	$      100.00	$    100.00	$    100.00	$    100.00	$          500.00
Total Monthly Expenses		$ 2,469.00	$   2,504.00	$ 2,114.00	$ 2,288.00	$ 2,219.00	$     11,594.00

What if this was your financial history? Would you be happy with what you see here...more money spent on miscellaneous items than on eliminating your credit card debt, and almost twice as much money blown on eating out than invested in savings? How would you allow this revelation to provoke you to change your habits and priorities for the new year?

Let's say that the above was a copy of your income and expenses, and let's pretend that your regular income and expenses for 2012 will remain the same. Allocating these funds for next year's expenses, I made a few adjustments (see the chart below). By reducing the amount of money you spend on eating out, gifts, and miscellaneous items, you will be able to pay $1,200.00 towards your credit card debt instead of the $375.00 paid in 2011, and your savings plan will increase from a total of $500.00 to $1,000.00 in the same amount of time.

		JANUARY	FEBRUARY	MARCH	APRIL	MAY
Income							TOTALS
	Xerox	$   1,784.00	$   1,784.00	$   1,784.00	$   1,784.00	$   1,784.00	$       8,920.00
	Logan's Roadhouse	$      685.00	$      720.00	$      330.00	$      504.00	$      435.00	$       2,674.00
Total Monthly Income		$  2,469.00	$  2,504.00	$  2,114.00	$  2,288.00	$  2,219.00	$     11,594.00
Expense
	Mortgage	$      729.00	$      729.00	$      729.00	$      729.00	$      729.00	$       3,645.00
	Electric	$      139.74	$      145.99	$      160.01	$      155.77	$      133.00	$          734.51
	Water & Sewer	$        48.96	$        48.96	$        48.96	$        48.96	$        48.96	$          244.80
	Cable	$        65.00	$        65.00	$        65.00	$        65.00	$        65.00	$          325.00
	Telephone	$        60.00	$        60.00	$        60.00	$        60.00	$        60.00	$          300.00
	Auto Payment	$      380.00	$      380.00	$      380.00	$      380.00	$      380.00	$       1,900.00
	Auto Insurance	$      104.00	$      104.00	$      104.00	$      104.00	$      104.00	$          520.00
	Credit Card Payment	$      350.00	$      350.00	$      100.00	$      200.00	$      200.00	$       1,200.00
	Grocery/Household Supplies	$      200.00	$      200.00	$      200.00	$      200.00	$      200.00	$       1,000.00
	Eating Out	$      100.00	$      100.00	$        50.00	$      100.00	$        50.00	$          400.00
	Gifts	$        50.00	$      100.00	$             -	$             -	$        20.00	$          170.00
	Miscellaneous	$        42.30	$        21.05	$        17.03	$        45.27	$        29.04	$          154.69
	Savings	$      200.00	$      200.00	$      200.00	$      200.00	$      200.00	$       1,000.00
Total Monthly Expenses		$   2,469.00	$   2,504.00	$   2,114.00	$   2,288.00	$   2,219.00	$     11,594.00

Isn't it amazing what your money can do when you give it a plan and a purpose? That's the goal for the new year - to work our money so that we can appreciate how hard we had to work to earn it and how well we can use it to manage our freedom as we invest in the freedom of others.

If you hadn't been planning to take inventory of your financial past (2011) or prepare a budget for next month or next year, I pray that today's blog post has changed your mind. Ringing in the new year is about celebrating our perseverance and victory over past obstacles with clear intent to move forward towards our utmost, God-given potential in the future. That's what I want for you, and that's what I want from me, so let's get to it and do our part to make sure that 2012 is the best financial year of our lives!

Six Days 'Til Christmas

'Twas six nights before Christmas when all through the house, 

     not a wallet was stirring...not even a spouse. 

All purses were hung in their places with care, 

     in hopes that all money would remain unused in there.

Okay, so it's Monday and Christmas is only 6 days away! What does this mean to you? Hopefully, it means you've done all of the shopping you planned to do when you created your Christmas Spending Plan (you did create one right?). I pray that it means you've overcome the pressure to buy things you can't afford for people who probably already realize that fact. I'd be excited to learn that it means that the Christmas gifts you've prepared to give away are more creative and innovative than last year's, and less expensive than the gifts you've given over the past five years.

This week, I'd like to adjust the focus of the blog from talking about money and Christmas to considering our time and Christmas. Most of our children are or will soon be out of school and on Christmas break. Our friends and relatives are planning trips to visit with us for the holidays. And as much as our loved ones will appreciate the presents they might receive from under our Christmas trees, one of the best gifts we can possibly give them this week is our time...our undivided attention...priceless, quality time.

I know you have a lot going on this week. Whether you are closing out your business year, prepping your home for guests, or packing for your own trip, I realize that there's a lot left to be accomplished. Still, time is a gift God gives us each day, and it's a gift we need to appreciate by giving it at its best to the people in our lives. So, today I'm asking you to put a little thought into the days ahead and execute a plan that will allow you to give away one of the best gifts we'll ever be able to share with the ones we love...our time.

Christmas on Credit

13 days 'til Christmas, and with countless gifts still left to be purchased for friends and loved ones, many people are running out of cash and relying on credit to finish their shopping. Far too many consumers are stressing and sweating over their incomplete gift lists. They are set on swiping their credit cards to accomplish the mission. Giving more thought to the days ahead than the coming months, shoppers are relying on credit cards to have themselves a very Merry Christmas.

Is it the 50% off tag that's persuading you to swipe that card? Did you lose your job two weeks ago and yet, feel pressured by an obligation to your family that has convinced you to rely on credit? Are you charging purchases as a result of your relentless decision to follow former Christmas traditions?

This is a time of year when many retailers and banks are offering almost irresistible introductory rates and additional savings on purchases made with credit cards. It's also a time when parents feel the pressure to give their children as much as they were able to give them last year even though their income has dropped significantly since then. Thefts and robberies become prevalent during the Christmas season...all because people believe that they HAVE TO place gifts under the tree.

Please be reminded that Christmas lasts one day but credit card debt has a tendency to be around for months and years down the road. For those of you who use your credit cards for Christmas shopping but have consistently paid off the balance within the cards' grace period, I commend you. Unfortunately, this is not the norm for most folks. The reason banks and retailers are so generous with their rates and extra discounts in December is because they know that shoppers will be even more generous to them in the the coming months (and years) as they receive interest payments in addition to the principle payments consumers owe for these purchases.

If you haven't pulled out that credit card you've been stashing in-between your mattresses yet because you know the trouble you would get yourself into, I urge you...don't do it now! I know those boots you saw yesterday are absolutely gorgeous but if you don't have the extra cash you need to buy them now, save up to buy them when you can afford them. I'm sure your niece would love that new doll that girls are raving about but again, if you can't afford it, you shouldn't allow access to a credit card to trick you into thinking that you can.

You have to know yourself. Look back at your track record. If you have a tendency to pull out your card with a plan in mind to quickly pay off the balance on new purchases but don't follow through with it, then don't lie to yourself now. Don't count on credit to buy when you can't count on yourself to pay it back. If I had my way, no one would use credit cards but I do realize that there are disciplined consumers who handle credit cards well. To all others, I'll end by saying this:  if your reason for maintaining a credit card is for emergencies only, then remember that the next time you're in Old Navy or Macy's and fall in love with a pair of jeans...I doubt very seriously that such a credit card purchase constitutes as an emergency.

Gift Cards vs. Prepaid Debit Cards

What You Need to Know

For a person who hates to shop or the person who is hard to shop for, money tends to be a gift favorite. Giving money as a gift saves the time, energy, and decision-making skills that buying tangible presents require. Each year, millions of gift cards and prepaid debit cards are purchased and distributed as a more sophisticated way of giving family, friends, and co-workers financial gifts.

Plastic presents can be used as the perfect way to be generous to people who typically mismanage cash or use it to feed unhealthy addictions. For example, a gift card to Target might be the perfect gift for your otherwise picky aunt who will give a cash gift away to her son who refuses to get a job. A prepaid Visa debit card could prove beneficial for the co-worker who drinks too much.

During this holiday season, many of you will give or receive at least one such card as a Christmas gift so today I'd like to offer a little insight into purchasing and using gift cards and prepaid debit cards. Before you purchase gift cards or prepaid debit cards, make sure you understand what your money is buying.

The Similarities:

• They are prepaid cards that allow you to determine the amount of the gift, although some are predetermined (i.e., $25.00, $50.00).
• They are accepted at millions of locations, including online (check the back of the card for more information).
• Some are activated at the time of use while others require you to activate them via a phone call or online registration.
• Each time you make a purchase, the amount is automatically deducted from your available balance.
• Not all receipts will include your balance, but you can check them online (see the back of the card).
• Keep the card even after it has a zero balance because it will be needed if you return items purchased using it.

The Differences:

• Gift cards are typically non-reloadable (although some merchants are changing that). Once the balance is zero, no more money can be added to it. Prepaid debit cards are reloadable.
• Gift cards are accepted at very specific locations (i.e., Red Lobster, Lowe's), whereas prepaid debit cards are accepted at a variety of businesses.
• Most gift cards work in the same way as credit cards; instead of providing a pin number, your signature is provided in order to complete transactions. Prepaid debit cards come with pin numbers or can be used like a credit card, allowing you to use your signature at the time of purchases.
• There are usually no fees associated with purchasing and/or using gift cards, however, prepaid debit cards may charge activation fees, monthly maintenance fees, ATM fees, balance inquiry fees, purchase fees, and even inactivity fees.
• If you make a purchase that is more than the gift card balance, the transaction may be denied until the difference is paid in cash first unless you notify the cashier in advance. Prepaid debit card purchases that are more than your remaining balance will incur overdraft fee.
• Gift cards are typically meant to be used short-term for purchases while prepaid debit cards are meant for long-term use.   
• Purchasing gift cards requires no personal information; purchasing prepaid debit cards will require identifying information (i.e., name, address, birthdate). 

So, before you purchase or use a gift card or prepaid debit card, keep in mind what you've learned today and make the most of these plastic presents. Don't give them as gifts to people who don't like them, won't use them, or have a tendency to forget they have them. Most of all, remember that gift cards and prepaid debit cards aren't the same as cash and are only as useful to recipients as the merchant and amount on them.

Time for a Christmas Spending Plan

Okay, so Thanksgiving Day is gone and all hearts and minds have shifted towards Christmas. I'd like to take time to encourage you to approach your Christmas shopping with both wisdom and an intentional plan. Sit down and brainstorm. Ask yourself the following questions and then jot down your answers:

• What is my Christmas budget?
• Who is on my Christmas list?
• What are my gift ideas for each person?
• What is my spending limit for each person?
• How often will I shop for gifts (i.e., every day for a week, weekly, the weekend before Christmas)?
• Where am I planning to shop for gifts?
• What measures am I willing to take to stay within my budget?
• Who will I recruit to hold me accountable to sticking to my budget?
• What will I do if I run out of money to buy Christmas gifts?

The holidays have a way of revealing the best and worse in people. Overall, we tend to use our energy and money to focus on others, whether through charitable endeavors, volunteerism, or giving gifts. However, so many get lost in the shuffle and consumer-pressure to give what we honestly don't have to give or that which we cannot afford to give.

Christmas can't be about the depression that is awakened by an inability to do or give what we'd like. It can't be about beating ourselves up because we aren't further along financially, or because we cannot buy our loved ones the gifts we originally had in mind. Christmas isn't about leaving bills unpaid in order to bank our children's happiness being tied to what's under the tree on Christmas morning.

If you're bent on shopping for Christmas gifts, approach it strategically. Have a plan and know who you have in mind, what you can afford to do, and how you'll meet your goals. Don't put yourself in a financial bind by allowing external pressures to drive you to spend money you don't have for gifts you can't afford. The idea is to wake up the day after Christmas without remorse over financial decisions that were within your power to avoid.

Remember, a free mind understands its purpose and accepts the responsibilities that come with that. So, let's devise a plan and maintain our righteous minds, okay? Okay!

A New Interest in Interest

In this day and age, interest is almost synonymous with purchasing. We have come to accept the notion that we should pay interest on purchases, such as:  homes, vehicles, electronics, clothing, and even the pursuit of a higher education. We have short and long term goals that we believe require immediate finances, so we pursue loans from banks and other financing organizations that promise to loan us money as long as we promise to pay them back more than what they've lent us.

Most of our grandparents, and even some of our parents reserved their spending for items and ideas they could afford in cold, hard cash. Those who were able to use store credit did so on the basis of trading goods for services or because their integrity provided the confidence a business owner needed as evidence that they would settle their accounts. Therefore, it was unnecessary for businesses to charge them interest.

The concept of paying interest for something today that could be saved for and obtained later was a foreign concept to many of our forefathers. So, why have we decided to think about money and handle it differently than our wise ancestors? There are many reasons, but the most important one is the fact that we have come to believe that interest is an expected and acceptable part of our purchasing power. We are willing to pay simple interest to have items today that we could easily purchase outright if we were to budget for them over the course of a few months, and we volunteer to pay compound interest on substantial purchases that would otherwise necessitate exercising discipline to work hard and save for them over the course of a few years.

Let's take a closer look at how simple interest and compound interest works. Remember the twins, Michelle and Morgan from last Monday's checkbook register game? Well, today I'd like to use them in this exercise. Take a look.

Simple Interest

Simple interest rates allow companies to make a profit on the amount that is borrowed from them based on the principle value. For example, Morgan borrows $1,000.00 at a rate of 15% per year on simple interest. This requires her to pay an additional $150.00 at the end of each year she still owes on the loan. Suppose it takes her 5 years to pay the loan in full? Look what happens:

Year 1 - $1,150.00 owed
Year 2 - $1,300.00 owed
Year 3 - $1,450.00 owed
Year 4 - $1,600.00 owed
Year 5 - $1,750.00 owed

At the end of that loan, she will have paid $750.00 in interest for the $1,000.00 she initially borrowed. Would her immediate need to make a purchase be worth paying 75% more for it in the long run? Absolutely not! Even if she paid it off at the end of 2 years, it's highly unlikely that Morgan couldn't have otherwise avoided shelling out $300.00 in interest. Lack of planning and refusing to deny herself are the more likely culprits.

Compound Interest

Compound interest rates work quite differently from simple interest rates because these rates build dramatically over time. Compound interest rates allow the financing company to not only charge interest on the principle value, but on the value of any previous accrued interest as well. Using the same scenario from above, Michelle would not only be responsible for paying $150.00 after the first year of the loan. Every year after that, she would be responsible for paying 15% on the entire loan. Look closely:

Year 1 - $1,150.00 owed
Year 2 - $1,322.50 owed
Year 3 - $1,520.88 owed
Year 4 - $1,749.01 owed
Year 5 - $2,011.36 owed

So, at the end of 5 years, Michelle will have paid a total of $1,011.36 to borrow $1,000.00. She will have paid back more than double the amount she initially borrowed! Does that make sense to you? Yet, we are choosing business deals like this one every day because we fail to budget, fail to save, and refuse to deny ourselves what we want right now.

ONE LAST THOUGHT

Go back and look at the 2 scenarios I've provided above. Now, suppose we weren't talking about interest payments Morgan and Michelle made on loans from institutions, but rather, suppose we were focusing in on interest deposits made to these girls from savings and investment organizations? In that case, Morgan will have earned $750.00 on her initial investment of $1,000.00 in 5 years, and Michelle will have earned $1,011.36 on her initial investment of $1,000.00 in 5 years. Now, who would have a problem with that?

So, on the one hand, simple and compound interest can have an adverse effect on your financial portfolio, and on the other hand, they can have a positive effect on it. It all depends on which one you're more interested in. If you're more interested in paying more for purchases than they're worth (which I don't believe you are), and working hard for your money, then keep using those credit cards and leaving balances on them. However, if you're more interested in making your money grow (which you should be), and watching your money work hard for you, then put your money where your interest is!

I really hope you've learned something new today about your money and the way you think about interest. Let's stop investing it in quick, credit purchases that yield profits for our lenders, and instead change our focus and start investing it in savings and other long-term, wealth building transactions that will enable us to receive interest rather than to pay interest. I believe in you and I know you believe in me, so let's challenge ourselves to change how we handle our money and other people's money RIGHT NOW!

Have a Mind-changing Monday!

Think About Saving

Savings. What is your immediate thought in connection with that word? Can you relate to having a savings or are you discontented by not having anything set aside? Do you have a savings account? Are you at least gathering and stashing loose cash in a safe place as a part of your savings plan?

Perhaps you’re one of those people who find it impossible to set income aside to save for a raining day. Today, I’d like to encourage you to think about your approach to saving money. If you’re committed to saving and disciplined at building your financial reserves, I admonish you to step it up a notch…challenge yourself to save 5-10% more each pay period, or to save a certain portion of each financial gift you receive. If you’re working with a substantial surplus in your savings, consider taking a small portion of it out to help someone else establish a savings account. It could be your son or your niece, a student or a child in your neighborhood.

Finally, if you feel like you’re barely making it and are living paycheck-to-paycheck, I encourage you to look again. I know you think there’s no way you can save money, but even you have the ability to do so. Here are a few suggestions:

1. Every time you break a dollar or receive change for a purchase, put it in a jar, candy dish, or a tray of some sort (try to refrain from counting or using it until it is absolutely necessary). 
2. Take $20.00 out of your checking account or from your pay each period and place it in an envelope labeled, Savings. Put the envelope in a location that doesn’t provide easy access and don’t open it until it is time to add another $20.00 to it. 
3.  Recruit a close, trustworthy friend or family member to save cash for you. Commit to giving them say, $10.00 per pay period to put away for you. Have them sign a statement to confirm receipt and responsibility for stashing your money for your future use. 
4.  Sign up for a savings program with your local bank. For example, Wells Fargo has a Way2Save program for its customers’ use. Every time they use their debit cards for purchases, $1.00 is automatically transferred into a savings account from their checking account (just remember to deduct these transfers in your checkbook register).

For some of you, it might be necessary to start small. Begin by challenging yourself to save a specific amount of money for a week. After you’ve succeeded at consistently doing that, slowly increase the amount you commit to savings and the length of time you will be disciplined not to use it.

The bottom line:  we are all capable of saving for the future. Whether we have to start small or immediately sacrifice a large sum in order to establish a savings plan, it is in our power to do. So, stop saying you can’t, choose one of the suggestions above (or implement one of your own), and join me on this journey to building and saving money!

Income versus Expenses

Income versus expenses – which one do you think about most? Income represents money that is credited to you and expenses signify the financial obligations you are responsible for paying. Income is typically provided as a result of your own hard work and expenses are usually created by your decision to purchase certain products and/or services. 

Are you more concerned with earning more money, or with having less debt? Have you been trying to figure out what to do with the finances you make, or have you been working on a plan to properly allocate funds to cover your present expenses? What do your income and expenses look like when weighed on the scale of your financial reality? Are you presently earning more income than you are shelling out cash to cover your expenses, or are you trapped in the juggle game because you have more household bills than dollar bills? Do you even keep track of your finances to know exactly what you have and what you need to take care of this week or this month?

Tracking your income and expenses is a key foundational principle to establishing, maintaining, and improving your personal budget. So, before I ask you to track your finances or inquire about how you are currently track them, I’d like to encourage you to take a stab at a short financial resource I have created and use with my clients. It may look extensive but it is really just a short game that will allow you to see if your tracking skills are at their prime, or if you need to dust off that blank checkbook register you have sitting idly on your desk.

THE CHECKBOOK REGISTER GAME

Instructions:
Morgan and Michelle are twins who have had identical financial experiences. However, one of the girls has properly recorded her financial transactions while her sister’s checkbook register reveals errors that are causing inaccuracies in her account balance. Your job is to find out which sister’s register is correct, as well as the four errors in her sister’s register.

Summary:
Morgan and Michelle began with an opening balance of $50.00. On April 15, 2009, the girls both received and deposited their weekly paychecks from Macy’s in the amount of $213.00. On that same day, they transferred $100.00 to their savings accounts. On April 18^th, the girls used their debit cards to purchase sneakers from Footlocker for $54.99. On April 25^th, an automatic payment in the amount of $65.00 was deducted from their accounts from State Farm for their automobile insurance. Finally, the girls wrote check# 500 in the amount of $20.00 on April 28^th to give to their cousin, Ann Smith for her birthday.

Morgan

D-Deposit   AP-Automatic Payment   ATM-Cash Withdrawal   DC-Debit Cards   FT-Funds Transfer   SC-Service Charge   TD-Tax Deductible    BP-Bill Payments

NUMBER OR CODE	DATE	TRANSACTION DESCRIPTION	PAYMENT FEE WITHDRAWAL (-)		DEPOSITS CREDITS(+)	$ BALANCE
						.00
D	4/15/09	Macy’s			$213.00	$213.00
		payroll deposit				$213.00
FT	4/15/09	SunTrust (Savings Account)	$100.00			$100.00
		transfer to savings				$313.00
DC	4/18/09	Footlocker	$59.94			$59.94
		new sneakers				$253.06
AP	4/25/09	State Farm Insurance	$65.00			$65.00
		automobile insurance				$188.06
500	4/29/09	Ann Smith	$20.00			$20.00
		birthday gift				$168.06

Michelle 

D-Deposit   AP-Automatic Payment   ATM-Cash Withdrawal   DC-Debit Cards   FT-Funds Transfer   SC-Service Charge   TD-Tax Deductible    BP-Bill Payments

NUMBER OR CODE	DATE	TRANSACTION DESCRIPTION	PAYMENT FEE WITHDRAWAL (-)		DEPOSITS CREDITS(+)	$ BALANCE
						$50.00
D	4/15/09	Macy’s			$213.00	$213.00
		payroll deposit				$263.00
FT	4/15/09	SunTrust (Savings Account)	$100.00			$100.00
		transfer to savings				$163.00
DC	4/18/09	Footlocker	$54.99			$54.99
		new sneakers				$108.01
AP	4/25/09	State Farm Insurance	$65.00			$65.00
		automobile insurance				$43.01
500	4/28/09	Ann Smith	$20.00			$20.00
		birthday gift				$23.01

So, how did you do? Did you immediately recognize that the transactions in Michelle’s checkbook register were properly recorded? Were you able to locate the four errors in Morgan’s checkbook register? They were:

1.       Morgan forgot to record $50.00 in her opening balance.

2.       She recorded the funds transfer to her savings account as a credit instead of as a deduction from her account balance.

3.       Morgan deducted $59.94 instead of $54.99 from her account to record her purchase of sneakers from Footlocker.

4.       Morgan recorded the wrong date for check# 500. She wrote 4/28/09 instead of 4/29/09.

Morgan's checkbook register provided her the false security of thinking she had $168.06 available for her use when the reality was that her account had been reduced to $23.01. Can you see how small discrepancies can make all the difference in your financial world? Good! Now, allow this short exercise to move you into action.