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Planning for 2022. Getting a Good Start to a Fantastic Year.

Okay. Let's be real here. Just because 2020 was a year everyone wants to forget, and while 2021 was better than 2020 for many people, 2021 was a difficult year for others. I know a relatively large number of people who lost or quit their jobs due to the "vaccine mandates." Losing or quitting you job can make for a lot of difficult life choices and changes.

While we're at it, let's acknowledge something. Yes, I said it. "Vaccine mandates." I may have offended some of my readers, but there's really no way around that at this time in society. Rather than spending time on that hot topic, I'll let you do your own research and figure things out for yourself.

Regardless of where you stand on the "covid vaccine" issue and what financial situation you find yourself in, planning for your future is a must if you want to move yourself in a positive direction in 2022!

First - Audit Your 2021

You can't really create a plan if you don't know where you stand. How did you do in 2021? Did you waste too much money? Did you waste too much time? Regardless if you used a budget in 2021 or not, it's a good idea to do an audit to see how you spent you money and your time.

Audit Your Time

As a parent and a spouse, I'm constantly having conversations with the family about things they need to do or things they want to do, and the standard answer is, "I don't have time." To which I reply, "you always have time to do the things you want to do. Just manage your time better." The same applies for me. I know there are many things I need to get done around the house, but don't get to them. No excuses. I just need to manage my time better.

When you audit your time, first try to hit the big blocks of time. In most cases, you don't need to recall every minute of every day. Just hit the bigger things that you might have mismanaged your time. In the past, entertainment (movies, netflix, etc.) and video games have been big problems for me. When I first became a netflix subscriber, I would receive DVDs via mail and watch them immediately and mail them back the next day. I watched 6-10 movies a week! Video games were an even bigger problem for me. Just ask my wife!

How you spend your time is a big contributor to your future failure or success in life. Make sure you're using your time properly.

Audit Your Money

Whether or not you used a budget in 2021, there's a good chance you let some money slip through your fingers. We all develop bad money habits. Even if we are good money managers, we can slip back into some bad habits. Before planning for 2022, spend some time reviewing where all your money went in 2021. You'll probably discover a few areas where you spent money that you could have invested and multiplied!

A few of the big areas for myself and my family are eating out (it costs me 3x-4x more to eat out than to eat at home!). And normally, the meals we make at home are as good or better than what we eat at the restaurants! What are we paying for? Not to mention, the bonding time in the kitchen with the family. We usually cook in teams of 2 or 3.

Next up on the list is impulse buying. My wife and I are a bit guilty of it, and it's amazing how fast things can add up at $10-20 or even $100 items. If you impulse buy four $100 items in a month, that's $400 for only spending $100 per week! And it's quite easy for you and your wife to do it if you're not careful! $800 on things you probably don't even need in the long term.

Although, my wife and I slip up on the impulse buying, we're pretty good on being frugal where the kids are concerned. I grew up in a family where I could beg my mom to buy things at the store, and that sometimes put the family into a financial bind. The wisdom I learned from that is that if you're kids want something, make them buy it!

When auditing your money, I find it helpful to identify the big buckets of spending first. Some of those are...

  • Housing

  • Insurance

  • Food

  • Eating out (treat this as a different category for tracking)

  • Entertainment (Hulu, Netflix, movies, etc.)

  • Vacation

  • Big item spending (car, boat, 4 wheeler, furniture, etc.)

  • Medical expenses

  • Wealth Money / Investments

  • Giving (church tithing, non-profit giving, etc.)

Once you cover those groups and any others you think necessary, you can compare that to your income / take home pay to see how well you've done overall. There are times when I've felt i did a poor job with my money in a year, but doing the audit helped me realize I had done a good job. Of course there were areas I could have done better, but don't sweat the small stuff too much. It's all about forward momentum.

Planning for 2022

Now it's time to do some planning. Just remember, the best laid plans are often going to change. You just need a decent blueprint to get things moving in the right direction for 2022. Less waste. More growth. And by growth I mean in your life. 2022 should be a year where your time helps build your health, relationships, career, finances and builds you spiritually. For now I'm only mentioning time and money, but I suggest you think about the others as well.

Maximize Your Time

To maximize your time, you need to do 2 simple things. 1) Minimize your time wasters, and 2) Pick out some things you need to that will move your life forward.

As I mentioned earlier during your time audit, figure out the things that are sucking up big blocks of your time. For 2022, cut those back to reasonable amounts. For 2021, I totally gave up video games and cut back on entertainment by 90%. At other times in my life I throttled both of those down, but not as drastically as I have done in 2021.

Warning: As I discovered, once you start reducing or eliminating your time wasters, new or past time wasters will emerge to try to replace them. Case in point, I cut back on entertainment, and reading fiction replaced it. I've had this happen several times in my life, so I'm more ware of it now. Once you've done the hard work of cutting your time wasters, make sure you use the time for something productive for your future!

Manage and Multiply Your Money

It's been my experience that if you don't have a plan for your money, you're money mysteriously disappears! Not only does it disappear, but it can also bring you some debt as well!

At 25, my plan was simple. Stop being broke. Start building wealth. Financial plans don't have to be complicated. A few simple changes to your money habits can get you on the right track.

When i first realized I was broke, not only had I spent 100% of my paycheck, I had overspent my paycheck by $16,000! I spent 40% more than i made that year and would need to pay on that debt for the next 4 years! I had borrowed against my future and the banks/lenders benefitted from my stupidity!

To correct my situation, I needed to learn a little bit about money and I needed a plan. My financial plan was pretty simple; I looked at 3 things.

  • How much income did I have?

  • How much debt did I need to pay off?

  • How much could I invest and where should I invest it?

I was netting about $3,000 per month after taxes. My plan was very simple.

  • Live on $1,000 per month ($200 to my parents for rent)

  • $1,000 per month for debt payoff (car, computer, and credit cards)

  • $1,000 per month for investing ($500 for stocks, $500 for mutual funds)

In the early days, I kept things ultra simple, and got my finances moving in the right direction.

With what I've learned over the past 25 years, financial planning looks a bit different. By following a few basic principles you can accomplish some amazing goals.

  • Income: How can you boost your income? $10,000 is a good goal for your first year thinking this way. What can you make, sell, or earn? Many people try direct sales companies like Melaleuca where I've known people quickly raise their income to $500 or even $2,500 per month as a side hustle. My wife is learning how to do woodworking and will try her hand making bowls and other things with my woodshop. Whatever you choose the important things is to shift your mindset to growing your income. Don't let yourself be "income stagnant."

  • Debt: It's always a good idea to lower your debt. By lowering your debt, you're lowering your financial risks and raising your family's security. However, some people believe in good debt vs. bad debt. Personally, I'm a no debt guy. I haven't used credit cards or consumer debt on cars since 2002. I paid off my first house in 2007 before moving in 2009. In 2009, I took on some housing debt which I paid off in 2012. Being debt free brings a lot of security of mind, heart and family. However, if you're going to use debt or leverage as part of your financial plan, understand the risks. Everyone loves leverage until the system turns on them and they lose. When the economy downturned in 2008 and 2009, many leveraged people filed bankruptcy. When the economy turned again in 2020 due to covid, unemployment, etc., people have struggled, and we've yet to see the full impact. It important to note that many of the wealthiest people in the world use leverage debt to build wealth. Robert Kiyosaki, Grant Cardone, and many others. How much debt should you or can you pay off this year? What's your number? Are you going to carry that mortgage for 30 years? 20 years? or are you going to craft a plan to pay your house off in 5-7 years? I find that many people can pay their house off in 7-10 years if they plan for it. Note: While paying off debt can be very attractive and is an important part of your annual financial planning. Consider the opportunity cost of your money. Money tied up in paying off a house debt at 2-4% could be invested in something delivering 10-20% annual returns. That's a 6-18% growth in your money/assets and you could always sell the investments if you needed to service your debt, pay medical expenses or something else.

  • Investing: If you want to break free financially and build some wealth, you have to develop your money mindset to an abundance and growth mindset. Instead of spending your money on various things, train your mind to think about how to multiply your money first. With each new dollar you make, think about where you should put it so that it can grow. For 2022: How much of you income can you invest? 10%? 20% 30%? Wealth minded people think about how they can invest more of their money. They know that every dollar invested will multiply itself several times. $1 invested becomes $10 or in some cases even $100 or $1,000 over your lifetime. Develop your investing mindset. Where will you invest? Invest at the level you have competency, but also grow your competency. If you're a new investor, mutual funds, Index funds, or dividends stocks or funds are good options. Making sure your 401k or IRA are fully funded are also good ideas. It's good to diversify your investments. Some financial advisors will tell you that mutual funds is diversification and it is a diversification across stocks, but your money is still in the stock market. It's not diversified out of the stock market. Diversification beyond the stock market and mutual funds can include VC (venture capital) companies, cryptocurrencies, gold and silver. Real estate investing has proven to be reliable for 1,000s of years, and it will continue to be a good investment for 1,000s of years. You don't need $100,000s of dollars to do real estate investing. You can start with a REIT (Real Estate Investment Trust), real estate syndication, Air BNB, or even pull a group of friends together and jointly buy a property for renting or for flipping. In 2022, set some BIG investing goals. If you're new to it, see if you can invest $10,000 this year. If you've been doing some investing, what would it look like for you to increase your investing to $20,000? $30,000? $50,000? $100,000 or more this year?

Regardless of 2020 and 2021, I believe 2022 can be an amazing year! Believe it!


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