So you want to be broke and stay in the economic trap? Here are the top 7 Money Management Mistakes you can make to insure you have NO MONEY and are living in poverty.

Money Management Mistake #1. Spend every dime you make and deny yourself nothing; buy stuff whether you need it or not.

Money Management Mistake #2. If you have any money in the bank or room on your credit cards, go out and spend it. Don’t worry about emergencies that may come up. When they do, borrow more money to handle it.

Money Management Mistake #3. Work to make just enough money to barely pay your bills and be sure to spend your free time out spending money. Don’t stress over the yearly increase in the cost of living.

Money Management Mistake #4. Use your credit cards to pay for essential items like gas and groceries, and to do impulse shopping for things you want but don’t need. Max out those credit cards.

Money Management Mistake #5. Pay only the minimum payment required on your credit cards each month, and don’t worry about the extra charges for paying late or spending over your credit limit.

Money Management Mistake #6. Never put any money in savings, and if you do, feel free to tap into those funds when you can’t pay your bills.

Money Management Mistake #7. Rely on the Government and Social Security to take care of you when you can no longer work.

These actions will guarantee that you are being controlled by the money and are broke and living in poverty.

If you don’t care that you’ll constantly be worried about money and plagued with money problems, then you’ll be able to spend those sleepless nights out spending more money on credit cards or shopping on-line on the computer for entertainment. Heaven forbid that you should be working on ways to take responsibility for your own financial survival instead of relying on someone else to take care of you financially. Isn’t that what friends, family and the Social Security system are for?

Now that I’ve given you all this advice about how to live broke and die penniless, I should also tell you that there is a money management system that you can use to control your income and debts to get on the road to financial freedom. Just in case you change your mind and decide you want to take responsibility for improving your own financial condition, visit www.moneymgmtsolutions.com.

I recently received an email from a visitor to my Money Management Solutions website who wants to learn how to pay off her mortgage quickly without having to attend expensive seminars or buy expensive software to do this trick.

I realized that this was a question a lot of people might have, especially during this current economic crisis. I decided to share my answer here for that reason.

Brenda asked Sandra Simmons:

Is there some sort of “mortgage accelerator” program where your mortgage gets paid off in a fraction of the usual 30 years time? I want to learn how I can do this myself for my mortgages. — Brenda B.

Answer:

Brenda: You can do this yourself by making extra principal payments each month.

Example if your mortgage payment is $2,000:

 If, when you make the payment for 8/1, you include an extra payment for the principal due 9/1 of $302 then you don’t ever have to pay the interest of $1,698 that was due 9/1.

Your next payment due, which you will pay on 9/1, is actually the 10/1 payment.

Then on 9/1, when you make the 10/1 payment, if you also pay the principal payment from the 11/1 payment, then you save that interest. If you do this you will cut your mortgage payoff time in half.

Write on your payment coupon “Extra Principal Payment $302” so there is no question of where you are directing the funds, and keep a copy of the coupon and the check for your records.

If you want to accelerate it even faster, say cut it by 2/3rds, if on 8/1 you make the payment and include the principal amounts for the payments due 9/1 and 10/1, then you don’t pay the interest on the 9/1/and 10/1 payments.

Then on 9/1 when you make the next payment you would pay the payment for 11/1.

Ask your mortgage lender for an amortization statement of your loan so you can actually see the correct principal and interest amounts broken down for each payment. They may not want to give you one so you can’t do this as they lose interest income, but you have a right to have it. Even if you have to pay them for it, it is worth it. Typically they charge $25 – $75 for an amortization statement.

Sandra Simmons is the President of Money Management Solutions, Inc. She specializes in helping business owners and individuals manage their money to achieve financial freedom. Claim your FREE Debt Reduction Solutions Guide.

Despite the ongoing efforts to save the U.S. Economy from disaster, the financial road ahead is going to be difficult for the vast majority of us. Instead of going into desperation and despair, however, one financial expert says there is much that can be done to protect yourself and contribute to an economic turnaround.

A short time has passed, and the only thing certain about the U.S. Economy as of this writing is that there is still a lot of financial uncertainty. This is being reflected in yet another big drop in the Dow Jones for the first day of trading. Commentators, Financial experts, and some of the smartest economic thinkers in the world still do not have a guaranteed fix for what is going on. As confidence plays a very large part in economic growth and stability, the lack of it could easily lead to despair and desperation.

But this does not have to be the case. Every single one of us, to a greater or lesser degree, all play a part in the health and stability of our economy. Although it is easy to get lost in the mind-numbing figures floated by Congress and Administration officials, the truth of the matter is that behind all of those facts, figures, and statistics, is a human being who is going to play an important part in our economic future.

No matter what happens, whether we have a Recession or in a worse case scenario, another Great Depression, our behavior and the way that we manage our money is going to have to change, and change in a big way.

Following a successful money management philosophy is going to determine how fast and how successfully we are going to weather this fiscal storm and come out the other end as an enduring economic power.

Although this may seem like a daunting task, the good news is that you can begin to take action, right now, to protect yourself against a bad economy and play your part in turning the situation around.

Well known money management expert and financial advisor Sandra Simmons has seen the economic writing on the walls for a few years now. She has written and lectured on the bad economic indicators long before it became fashionable to do so. Fortunately for her many clients, they are already well insulated against this current economic crisis. Her formula for protecting you against the next potential Great Depression is something everyone can do with a little fiscal willpower and discipline.

“The first thing you need to understand is what the word ‘economics’ means in terms of thinking about your personal or company finances, and how you can use what it means to your financial advantage,” says Simmons. “Forget what the media says about ‘economics’ when they report on the gyrations of the stock market, the banking industry, the mortgage defaults and unemployment statistics. Those are ‘economic representatives’ that gauge an area that is bigger than you can personally control.”

“What you do have control over is your own business and household economics,” she continues. “The definition of economics I am using is the original one: ’the art or science of managing a household or business.’ And those are things that you, as an individual, can control.”

According to Simmons, managing a business or household is an art. She maintains that it requires specific skills and abilities, like putting in organization so things run better. There is a science of managing a household or business, especially in the area involving money.

The following money management strategies are things that Simmons says you can do to guarantee that the economics of your household or business are strong and unshakable, despite the fact the general economy may be on the slippery slide to disaster.

Money Management Strategy #1 – Use CASH Not Credit

“Each time you buy something using lines of credit or credit cards because you don’t have the money to pay for it, you are promising your future income to the credit card company,” says Simmons with emphasis. “Those future earnings will undoubtedly be needed to pay your regular household or business operating expenses. That’s when you end up in the pay-for-life program known as the credit trap.”

The only exception is buying property that increases in value, like buying a home instead of renting, or investing in a commercial building that puts more income in your pocket. Using your money to make more money is smart money management.

Important Money Management Tip: Be sure you negotiate a big discount when you pay with cash. When the rest of the world is on the downhill run to economic disaster and credit is difficult to obtain, the guy who has the cash is king. In addition, figure out how to purchase items wholesale instead of paying retail prices to keep even more of your hard-earned money.

Money Management Strategy #2 – Don’t Spend More Than You Earn

Learn from your grandparents who earned little, but managed to live well. Reduce expenses to a rate that is less than your income. The most direct route to financial disaster is spending more than you make. You can keep a good quality of life while reducing optional spending. This can be accomplished by acts such as buying used equipment rather than new, and eating less often in restaurants. Don’t buy something because you only want it but don’t really need it. It’s just a plain good money management practice.

Money Management Strategy #3 – Money Must Be MADE Before It Gets Spent

“If there is some future large purchase you need to make, begin by setting aside small amounts of cash in a savings account for that purchase and keep that up until you can pay for it with cash,” Simmons says in reference to the safest way to make larger purchases without using credit or going into debt.

On a household level, if your child will be entering college in 10 years, then figure out what the tuition costs will be and work out how much money you have to set aside every week to have the full amount just before they graduate from high school. Plus turn in applications for each student financial aid package, scholarship and student grant you can locate.

On a company level, if you will need to purchase or upgrade equipment for your office, then figure out what the costs will be and work out how much money you have to set aside every week to have the full amount the month you will need to make that purchase. Plus look for each place you can locate to get the best deal possible.

Money Management Strategy #4 – Put Away Some Cash for Emergencies and Living Expenses

“You will sleep much better at night with the financial security of knowing you have money stashed away in a savings plan for emergencies like needing to repair the car or an office machine, having to have some unexpected dental work or experiencing a big drop in income,” Simmons says. “When you have a cash cushion you can get your hands on immediately, then magically, you don’t even worry about money, and your focus returns to living life and enjoying it, and earning money suddenly gets easier.”

In reality, the primary thing you have to be afraid of should there be another Great Depression is not having enough (or any) cash reserves tucked away in a savings plan you could immediately get your hands on.

Out of every bit of income that comes in the door, immediately set aside 10% and stash it in an interest bearing account that you have designated for your cash cushion.

A word of caution here – Be careful to protect your cash. There are many banks that are in trouble, and while some have failed, many are on the government’s “likely to fail” list. How safe is your bank? You owe it to yourself to find out.

While your bank probably won’t reveal their rating if you ask, you can find out for yourself how safe you bank is by signing up to get my FREE Bank Ratings Report right here.

“Perhaps you’ll have to cut expenses AND work an extra job to build your cushion of cash,” concedes Simmons. “Now, no moaning about how you can’t, JUST DO IT!” she exclaims. “As the weeks and months roll by you’ll find you are sleeping better and are walking through life with a lot more confidence knowing you are on your way to financial freedom and have protected yourself from The Great Depression looming on the horizon.”

Why is controlling the flow of your money so important? It is the energy and life blood of a household or business. It is vital to channel some of it through the income producing areas first to keep it running smoothly, and also to save some of it for future survival. Everything runs better when adequate cash is available.

Vice President Joe Biden stated that it is patriotic to pay more in taxes. That statement caused quite a stir and is certainly a point of debate. What is less controversial, however, and what truly would help your country get back on the road to wealth and financial security is following the money management points outlined above. If each and every financially responsible person in the United States got themselves out of debt, relied less on credit, and built savings and wealth, the American economy would be stronger than it has ever been.

This is the road map out. The rest is up to you.

What are you doing to stay financially healthy? Leave a comment.

Sandra Simmons is the President of Money Management Solutions, Inc. She specializes in helping business owners and individuals manage their money to achieve financial freedom. Claim your FREE Debt Reduction Solutions Guide.

Can You Help Me Turn Around My Construction Company?

Service professionals like construction companies can find themselves in the financially tough position of running a lot of projects, but still barely making it financially. Without proper money management strategies and control of their financial planning and cash flow, a general contractor can actually find themselves in financial difficulty with declining profitability and increasing debt.

The following money management strategies illustrate what construction companies and general contractors can do to improve their financial condition and put their business back on the road to wealth and prosperity.

In May 2007, a construction company called me for help. Despite the mortgage loan debacle, the construction industry continued to be strong in Louisiana after Katrina. However, this company was behind on all of their projects, had no operating capital and had accumulated a lot of debt trying to keep the business afloat. They need a FAST turn around in order to survive.

The challenge was to raise income to keep projects moving ahead, placate materials suppliers and subcontract labor, cut runaway expenses, close sales on new projects and deliver the jobs profitably, while reducing a six-figure debt liability as fast as possible.

Money Management Strategy # 1 – Raising Income & Profitability

Behind the 8-ball, the company’s biggest challenge was to raise income to fund projects to keep them moving forward. Recent project draws from funding banks had been used to keep earlier projects going when money got tight and delivery of projects was coming to a standstill. The income statistic had crashed and personal savings had been drained to try to stay afloat. The debt load had grown to 6 figures.

The Money Management Solutions software program was implemented immediately, and a special “Income Planning Drill” was done with the client to determine what the major problems were. As part of the drill, an evaluation of profitability was done on projects that were running in negative profits. An analysis revealed that the company’s construction crew was making costly mistakes that had to be corrected at the company’s expense. To make matters worse, having to correct poorly installed doors and windows often ruined the materials. Replacing costly materials was an extra drain on the company’s bank account.

Many of the highly skilled construction workers had left the state when Katrina hit, never to return, or to return to locations further from the coastal areas. Less qualified workers were hired both to save money and because they were available for work. In the long run this cost the company more because job mistakes had to be corrected at no additional charge to the client.

The worst effect of this was the owner of the construction company was spending all his time doing quality control checks and correcting and re-working jobs, so he had little to no time to work up bids on new contracts. No bids meant no new projects.

The existing construction crew employees were replaced with half the number of new highly skilled crew who could get it right the first time. One of these had experience as a job foreman, and he was given that hat. Despite the increase in the hourly pay for the higher skills, the work was done correctly and faster than before on existing jobs. This freed the owner up to work up bids and close contracts.

In addition a new company policy was implemented, and bids for new jobs were confined to commercial projects which generate more income than residential jobs.

Money Management Strategy # 2 – Slashing Expenses

With jobs being done right the first time the cost of materials dropped dramatically, but cash was still very tight and materials suppliers who were owed a lot of money were complaining loudly. Money was so tight that one of the weekly financial planning actions was to look for things we could sell quickly to raise cash to buy materials. Now, a construction guy would rather die than part with any of his tools or his truck; but here’s what happened.

The owner walked his property and found a riding lawn tractor he could sell. The cash went to pay a supplier. That wasn’t enough for me, so I asked about vehicles. It wasn’t easy, but the sale of the second pickup truck the owner rarely drove was agreed upon and that cash was used to pay suppliers as well. I asked the owner to walk his property and see what else he could find. Sitting in a shed were some very expensive doors and windows he had forgotten about from a project done long before. They happened to be from one of the suppliers who was making threats. The doors and widows were washed clean of accumulated dust, loaded onto a truck and delivered to the supplier for a healthy credit on the bill owed. That was a real win for all of us!

The company had not had good luck with hiring competent bookkeepers, so a good replacement was found and trained on the Money Management Solutions software system. She was easily able to input the information into the MMS software program to prepare for my weekly planning meeting with the owner. The accounting chart of accounts was cleaned up and simplified, and the correct entry and reconciliation of credit card statements was implemented.

Just by having the accounting cleaned up and entries corrected allowed the owner to view a correct Profit & Loss statement and review past job profitability. Each line item was reviewed and red-flag items were investigated. The spending faucet was turned off in some areas and turned down in others so available income could be used to maximum advantage to buy time and move current projects forward while income and profitability was being strengthened.

Money Management Strategy # 3 – Turning the Ship Around

With projects moving forward the owner was freed up to spend his time working up bids and closing new contracts. One area that was a drain on profitability then came to light. Past bids were hurriedly prepared due to lack of time, suppliers were not called for current prices, old pricing was used to make up the bids and the increased prices of materials were missed. Consequently jobs were bid with little profit built in.

A new policy was implemented to get current materials and labor quotes before writing a project bid with clauses to cover unforeseen materials increases. With the owner getting price quotes good for 30 days from suppliers and writing bids that were profitable, the cost of materials was adequately covered and that drain on profitability was stopped cold. The bids on the more lucrative commercial jobs that were closed opened the income faucet and the ship started to turn around.

Money Management Strategy # 4 – Putting the Owner Back in Financial Control

Using the money management software, funds were allocated to job materials and labor on a weekly basis which kept projects moving. Funds were also allocated to past due bills while keeping up with current operating expenses. That kept suppliers happy. A set aside account for cash reserves was funded weekly to cover unexpected emergencies.

The company owner had plenty of time to work up bids and close projects. He landed several big contracts and sold a spec house he had been building which enabled him to pay off a large chunk of debt. Faithfully following the money management system, the weekly financial planning meeting included income planning for closing new projects out on bid, promoting for new projects, and allocation of funds to keep digging out of debt, keep current projects moving, and paying current operating expenses. Here is what the client had to say about the Money Management system:

Less than 3 months ago the likelihood of paying off a huge debt without borrowing money seemed impossible, much less figuring out how to continue running our business without any money, except what we were making week to week. Our stats [production statistics] were down, the quality of our work was poor, jobs were not profitable, acquiring new contracts was at a stand still and we were BLOCKED.

Using Money Management Solutions, with help from Sandra Simmons, we did our financial planning faithfully. It brought us understanding of what caused our financial difficulties in the first place, peace of mind through a very stressful period, and the ability to get through each week with a plan of action that allowed us to systematically work ourselves into a better condition in just a short three months. Now the contracts are flowing in, we have qualified personnel, great profitable work, haven’t had to borrow a penny to pay off debts and now have a very simple and workable technology to flourish and prosper, which we are.

Using the Money Management software in this construction company, the weekly allocation of income included percentages to pay for job costs, reduce debt, pay regular expenses on time, promote the company and even set-aside funds for a long-term retirement savings plan,” she says. “The increase in income from cost cutting measures, promotional activities and weekly income planning was immediate and profitability was on the rise.

The success of the plan was driven by owner’s decision to fully embrace the money management program and keep the discipline in. Once that decision was made, the rest was easy. As part of the plan, statistical graphs are being charted weekly and the decrease in debt and increase in cash reserves are proof that the weekly planning continues to work. Keeping the action in to keep a tight control on job costs, raise income and pay off debt is handled in less than an hour each week using the money management software, and the company owner spends the rest of the week with his attention on writing bids and closing projects.

He isn’t worried about the money any more and he’s having fun doing what he loves to do, constructing new, beautiful buildings. He actually beat my 8 month estimate of how long it would take to turn the company around by a couple of months. That is a testament to the power of the money management software program when it is kept in and used as intended.

If you would like a consultation regarding your construction company or general contracting company, contact Sandra Simmons at 727-448-1011 or email her at info@moneymgmtsolutions.com .