July 2010


Since both of us love to read, we decided to do some regular book recommendations on Ironclad Finances. We’ll be sticking with non-fiction, since Keith doesn’t read anything else, and Dawn’s taste in fiction probably runs a little too far off topic than most would appreciate (The Name of the Wind by Patrick Rothfuss – very good!). Not every book will have to do with finances though; just any good read we happen to come across.

We’ll start off with the book that got us interested in writing this blog, The New Rules of Marketing & PR by David Meerman Scott.  As we’ve mentioned, we work in the financial services industry, and we’ve long wanted to use our knowledge to help as many people as we could.  We’ve toyed in the past with the idea of seminars, which is still a path we may take, but when we picked up this book at the end of 2009, we fell in love with the idea of blogging. The New Rules of Marketing & PR explained it very well to our novice selves, and we started following the steps in the book to get involved and got hooked!

This book is an interesting tell of people who tried their hands at different Social Media Marketing and succeeded—not only with blogging, but Facebook, Twitter, YouTube, and many other types of social media. The stories are great in helping you see how everything can come together when you’re just starting out.

The New Rules of Marketing & PR is great for anyone working for a company (small or large) that wants to get their message out there, or even anyone who is interested in getting involved in the different types of social media for personal reasons.

If you have any good non-fiction books you’d like to recommend, please let us know. We’d love to see other recommendations.

Do you know your personal cash flow? How much do you bring in each month and how much goes out? What happens to the rest, if any?

If you’ve spent the time getting organized, it will be a much easier task to look at your income and expenses. You’ll already have everything organized and filed neatly away, right? It may not be quite so simple for some, but it’s a step in the right direction.

Income is much easier to determine than expenses. How much is your paycheck? How much do you receive after taxes? It get’s a little more complicated if you start involving issues like Social Security, Pension payouts, or income distributions off portfolios, but you should be able to add up a fairly accurate number based off a few months information.

If you have a more variable income (seasonal, free lance, etc.), figuring out your income may not be an easy task.  All the more reason to get a firm grasp on your cash flow! Try looking at your annual income and averaging it per month or based on your seasonal work. If there’s been no change in employment, try looking at last year’s income for a good estimate.

Once you determine your income as close as you can, take a look at your expenses. This is much more tricky. Most people pay for expenses from many different accounts and in many different ways (checking accounts, credit cards, etc.).  First, list all of your fixed monthly expenses (mortgage, utilities, auto loans/leases, etc.).  Next review every account you have and pick out your normal monthly, more variable expenses off the statements (groceries, dining out, etc).

Scour all the accounts you may use to pay for expenses, including bank accounts and credit cards. Once you think you’ve covered all your bases, look again. Did you count your trip to the pet groomer every other month, or the $20 cash you withdrawal to fund your hobby a month? Try to be as thorough as possible so that you can get a realistic look at your cash flow.

Once you feel you’ve accounted for as much as you can, add it all up. If it’s more than you were expecting, you’re not alone—many people lose track of their spending, especially when it comes to credit cards.

Monthly vs. Annually

The simplest answer to figuring out your cash flow is to subtract your expenses from your income annually, but you can look at both the monthly and annual numbers.

If the number is positive, you have a surplus and are spending less than you earn. The question in this situation becomes what to do with the extra money. If it is negative, you have a deficit and are spending more than you earn. The question here would be how to cut back your spending so it is under your income. How to budget will be a topic for another day’s discussion.

Your annual number is what really counts here. Monthly cash flow numbers can vary due to changes in expenses and one time expenses. You can have both positive and negative monthly cash flow and still come out positive annually. However, it can still help to look at the numbers monthly. It may be able to show you where you could use some work.

This method can be used without aid, but if you’d like a program to help you sort it out, there are many to choose from, such as mvelopes.com or quicken.com. However, be sure to do your research before choosing help to make sure you find the right fit for you.

Starting out, both for our blog and your finances, we’re going to begin with some basics you may or may not know.

Whether you’re just starting to figure out your finances or you want to overhaul your entire financial situation, one of the most important things to do is get yourself organized. There are questions you will need to be able to answer to move forward. Do you know where all your money is (banks, mutual funds, stocks, etc)? Do you have all the relevant information you should have about your money (statements, account numbers, balances)? How much debt do you currently have?

If you are looking to get a hold of your financial situation, getting organized is a simple first step, especially when you don’t know where to begin. If you don’t know the ins and outs of what you currently have, you won’t be able to plan for the future. Also, if you’re not a naturally organized person, it will be even more important to take this first step.

Start by collecting the information about where your money currently is. If you receive statements, all the relevant information should be included on them. If not, call the financial institutions or find them online and retrieve the info that way. Do the same for the debt you have. You may be surprised at what you find. Also, you may find this first step easier if you start with the current month’s information. You can always work your way through the rest of your financials as you move through the process.

Once you gather all the information, decide on a filing method. Do you have a filing cabinet or a plastic filing bin? File folders? A three ring binder? If not, buy yourself some supplies, which can be found for cheap at any office supply store or large retail outlet.

Then decide on an organizational method—some way of easily distinguishing sections. Maybe it’s color coding and labeling, maybe just labeled dividers.

Create files for important receipts and warranties, and for unpaid bills. If you pay bills online and don’t receive paper statements, create reminder notes about when the bill is due and for how much. How many files you create is a personal decision. The important thing is that you create a filing system that makes sense to you and that can be maintained for the long run, but not “organized clutter.”

One of our favorite ways to organize financial papers is a three ring binder. A binder is a great choice because it is easily accessible, easily updated when changes are made, and you can fit a lot of information in a small space. Just make sure you have a three hole punch before you start!

Make copies of important documents (insurance policies, wills, trusts, etc.) and place them in the binder for reference. Originals of these types of documents should be kept in a safe place, like a safety deposit box or fireproof lock-box. Also, gather information on all the bills you pay, receipts on any major purchases, and warranties. Information on accounts (companies, account numbers, etc.) can also be kept in this binder.

Obviously, how difficult this task is going to be is based on how much information there is to organize.  Just be sure you gather all the information relevant to your financial life. Once you know what you have, it becomes much easier to decide what to do next.

Hey, welcome to Ironclad Finances! We just wanted to introduce ourselves on our very first blog post.

Ironclad Finances is made up of two (amateur) bloggers who have many years of experience working in the financial services industry. We’re a father/daughter team, and while still inexperienced at blogging, it was a mutual decision to enter this new world (to us) where we hope to be able to share our knowledge to help as many people as we can better themselves financially.

Keith is the one with the most experience. He has several certifications in the industry, including a CFP™, and has the technical knowledge we hope to share with readers. Dawn has a degree in economics and has learned a lot in her years in the business, and she’s still learning (from the best!). She is the writing half of the team.

We’re located in Michigan in a small city called Northville where we own a personal financial planning firm.

We’ll be posting to Ironclad Finance every Monday, and next week we’ll start with some financial basics.

Please contact us with any comments, questions, or suggestions to make our blog better. Also, let us know if there is a specific financial topic you’d like to see us write about. We’d love to hear from you!