rebeccas nail

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TABLE OF CONTENTS
1- INTRODUCTION: GETTING STARTED
What is an economic shutdown?
What can you achieve by doing an economic shutdown?
What’s in the e-book...
pg 4
2- BEGIN THAT SHUTDOWN!
pg 10
3- TRACKING YOUR PROGRESS
pg 17
4- NEXT STEPS
pg 20
5- WHAT CAN WELA DO?
pg 25
In this section we’re going to refer Eddie and
Rebecca’s experience and tackle any internal conflicts you may
have adjusting to your cleanse and ways to stay on track.
NAIL IT DOWN, track that progress.
Analyze your success and RELISH IN IT!
WHO is WELA?
1
Introduction:
Getting Started
“
So what is to be done?
How do we reset our spending habits?
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What is the
Economic
Shutdown?
It’s saving money on steroids. It’s a juice cleanse for your finances. This is not
a budget. This is your first step to making a budget and getting back on track.
This can also be a way for you to destroy your debt faster than you ever thought
you could. The Economic Shutdown can actually be whatever you want it to be.
There are several different reasons to go on a household economic shutdown.
-
Destroy Debt in hyper-speed
-
Save for something big (vacation, engagement ring, a new car)
-
Get your over-spending, under-saving way of life back on the right path
-Because you’re a boss and you never turn down a good challenge
Whatever your reason for the Economic Shutdown, we’re here to help you
dominate it. This e-book will outline how to prepare for your shutdown, give you
tips on maximizing your savings, and show you what to do with the mountain of
cash you saved once it’s over.
Meet Eddie and Rebecca Goepp
Eddie is a managing partner at Wela and his wife Rebecca
is an office manager for a real estate developer. They
decided to take on the Economic Shutdown in May of
2015 and capture their experience in a 5 part series
on the Wela Blog. At the time Rebecca was 6 months
pregnant so the Goepp’s had plenty to save for. We’re
going to use their experience as a point of reference for
you in this e-book but we also recommend you read about
their journey over on the blog www.blog.yourwela.com.
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“
So what is to be done?
How do we reset our spending habits?
FIRST
you need to understand your spending.
WHERE DOES YOUR
MONEY GO EACH MONTH?
Review your spending from the
60-90 days. Categorize your
expenditures and determine how
much you’re spending in each
category.
Wela has a great tool to help you do
this a bit faster. Create an account
on yourwela.com if you don’t
already have one. Link your bank
accounts and credit cards with (any
accounts that you use for making
regular purchases).
Once you’ve linked go to http://www.
yourwela.com/ budget. This tool will
categorize your expenditures based
on your previous transactions. You
can change the categorization if
need be!
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L
et’s look at “typical” month in the Goepp household. This does not include
their savings towards our retirement plans as this is a net take-home pay
exercise (after all taxes, deductions, 401(k) contributions, etc.).
What
are the takeaways from this pie chart?
The Goepps eat. A LOT. They spend almost as much on
groceries and dining out as they do on their house. This is
definitely an area where they can cut back significantly.
TIP:
Very simply put, if you don’t need it to
live, don’t buy it (within reason).
Determine
the areas where you MUST spend money such as your
mortgage, your bills, etc. Here’s what Eddie & Rebecca’s list looks like
What We MUST Spend Money On
• Mortgage
• Car payment for Leaf
• Dog Food (but my wife
• Utilities
(my wife drives a Nissan
has promised to skip the
• Cell phones
Leaf on a two-year lease,
treats while on Economic
• Food (grocery store, not
and yes the tax credit is
Shutdown…this in and of
real)
itself will save us an un-
dining out)
• Gym membership (local gym, it’s reasonable
• Gas for my truck
sightly amount of money,
• Cable / Internet (justify-
sorry honey!)
and investing in health is
ing this as my wife and I
important)
both are expected to be
• Medical expenses
available from home for
• Medicine
our jobs)
What We Will NOT Spend Money On:
(The Pleasantries of Life)
• Gifts (sorry friends and family – get ready
for some crafty homemade gifts)
• Grooming (pedicures, manicures, etc.
Please continue showering)
• Starbucks
• Housekeeper
• Clothes
• Alcohol
• Eating out (outside of a gift card of
• Landscaper
course!)
• Movies (including renting movies and
on-demand / iTunes, etc.)
• Dog Daycare
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To take things one step further
think about some expenses that could be “negotiated”
during the economic shutdown. You can’t cancel your
cable package for just a month or two but some of your
expenses might be more flexible.
Do you subscribe to Netflix, Hulu or a similar service?
Many of these services will allow you to suspend your
account meaning you don’t have to cancel them but
you can put them on pause for the duration of your
economic shutdown. Same goes for some monthly
subscription boxes (Julep, Birchbox, etc.) See if any of
your other monthly subscriptions like gym memberships
allow you to freeze for a brief period of time.
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Begin That Shutdown!
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LET’S BEGIN THAT SHUTDOWN!
In this section we’re going to refer Eddie and Rebecca’s
experience and tackle any internal conflicts you may have
adjusting to your cleanse and ways to stay on track.
2 basic principles...
1
BE MORE DELIBERATE WITH WHERE
YOU SPEND YOUR MONEY.
What does this mean? It means being consciously
aware of what you’re about to spend, why, and if it’s
really necessary. No more absent-minded swiping of
the cards.
2 PLAN AHEAD.
-Plan your meals
-Plan for situations where a need to spend might
arise: Here’s an example. Ever been driving from
one thing to another and your stomach starts to
rumble? You’re headed to soccer practice or a PTA
meeting so you swing by fast food to satiate your
grumbling stomach.
Plan ahead, bring snacks with you and stash them in
your desk and your car...
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Tackling the
food situation
As we’ve already seen, Eddie and Rebecca’s biggest challenge was
reducing their spend on food. This may not be the case for your
family but we’re willing to bet there’s room for cutbacks. So let’s
tackle the food dilemma.
Rule #1 Plan your meals for the week and make
one trip to the grocery store.
Why are you doing this? Often food is sold in sizes you won’t
use up in a single meal. Planning ahead allows you to pick out
dishes where you can overlap ingredients. It also shows you
where your opportunities are to plan a meal of leftovers.
Rule #2 Get your groceries for the week in one visit.
Now that you have your plan, make your list. When you head to the
store you know exactly what you need to get and you avoid the chance
of hitting the store again and succumbing to temptation or impulse
purchasing.
TIP:
You probably already know this but
don’t forget to check the internet and
your newspaper for coupons before
you head to the store. DO NOT USE
COUPONS AS AN EXCUSE TO BUY.
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Here’s a look at Eddie and Rebecca’s meal planning:
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Here was the first week’s grocery list & total cost:
Rebecca’s Aha! Moment
“
ALMOST EVERYDAY. Say we BOTH spent $8 at lunch every
week day… That’s $320 out the window. Breakfast or coffee
out, even half the time tallies another quick $100 very easily.
Throw in a couple of dinners out (I counted 3 in March…) and
that very quickly adds up to close to $1,000 of easily
trim-able cost.
Now is a good time to take
a moment to talk about
wholesale clubs like Sam’s
Club and Costco. If you’ve
been thinking about joining
one now is the time to
do it. The savings can be
pretty big here, especially
if you have a large family.
Even if it’s just you or you
and your significant other
there are still ways to reap
the benefits of wholesale
membership. Here’s what
Rebecca had to say about
her wholesaling during their
economic shutdown.
One of the biggest
challenges to me was
making Costco work well for
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a household of two. I didn’t
want to buy items in bulk
that might go to waste, and
so I found it very helpful to
plan out the entire week’s
worth of meals to see
exactly where I could use
the ingredients repeatedly.
(For example, I bought the
Organic Grass Fed Beef 3
pack at Costco, and used it
in the chili, stuffed peppers,
and burgers.)
I also wanted to use
organic produce as much as
possible. It was important to
me to demonstrate that you
can eat healthy on a budget.
The organic frozen veggies
and berries at Costco were
a huge win for me in this
category. I don’t typically
buy frozen produce, but was
pleasantly surprised and
would certainly purchase
these again. (They’re going last
us another week or two for sure!)
The other big improvement
area – Entertainment
A common area of excessive
spend for just about
anyone is entertainment
and figuring out how to
decrease that or even cut it
out completely during your
shutdown can leave you
thinking “I’m going to be so
bored! My kids are going to be
so bored!” Relax. We’ve got
you.
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SOME GREAT WAYS TO BEAT BOREDOM:
1
2
Tackle all those things you’ve been meaning
to get to like cleaning out your junk drawer or
Anything you’ve been outsourcing, bring
it in. Cleaning people, manicurist, landscaper,
running those bags of clothes over to Goodwill.
personal trainer. Going on a cleaning spree or
Try to think of even bigger projects like cleaning
giving yourself a pedicure can take up quite a
out the shed or emptying the mass of boxes
bit of down time.
in the basement. Sure you probably haven’t
gotten to them because they’re tedious but
turn on some music and revel in your new
found sense of accomplishment!
Here’s some great ways to beat boredom
(some might even do some good for your soul!)
3
Get out and get some family time! There are
so many ways to enjoy the outdoors, play games,
4
Watch videos of cats riding Rumbas on
Youtube!
and have new experiences with the kiddos or your
extended family. This is the best way to never feel
bored without spending money on entertainment.
Eddie’s suggestions:
“
Coaching baseball has been one of the outlets I’ve gotten involved in. Our baseball team finished
the season last week and despite having a great time, the final record was a bit disappointing. But,
it kept me busy and didn’t cost a dime. This will be my first week since 6 months with no baseball
commitments, so I’ll be hitting the books preparing for my CFP Board exam in a couple of months.
Another great way to be productive and save. We were sure to take our pup, EB, to the park almost
every day last week. Rebecca is always diligent to get EB some outside playtime, and I join them from
time to time.
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3
TRACKING YOUR PROGRESS
Take time to track your progress. Not only does it serve as an excellent source of
motivation but it will show you any areas you might be inadvertently slacking off.
Breakout your spending just like you did at the beginning and compare it to your
original chart. Do this weekly, halfway through, whatever keeps you motivated.
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Take a look at how Eddie and Rebecca were performing 3 weeks
into their shutdown:
Eddie:
We are now over 75% (77% to be exact) of the way through our “Financial
Cleanse” and despite tightening the belt figuratively, I, alas, don’t think I can claim
that it has helped tighten my belt literally. Either way, through 2.5 weeks in, we
have only spent about 60% of our take-home pay. This includes paying for all
major household expenses (mortgage, taxes, insurance and utilities). Just 60%!
The next week will be the home stretch, and we’re encouraged by the progress
thus far. Here’s a rough estimate of where our money has gone:
Expense Breakout
Category
Total Net Income
Total Expenses
Mortgage / House
Utilities
Cell Phones
Food
Gym / Club
Medical
% of total
100.0%
60.2%
28.1%
2.2%
0.5%
4.5%
1.5%
1.8%
(incl. medicine)
Car Expense (gas, lease)
Cable Internet
Necessary Pet Supplies
Miscellaneous
8.3%
1.5%
0.5%
1.9%
Charitable
9.4%
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what we have learned...
These numbers are exciting to review
and very revealing. Our home expense
is 28% of our take-home pay… for those
who have purchased a home before,
you’ll recall that lenders typically like
to see the PITI ratio (principal, interest,
taxes and insurance) at 28% of gross
income, and we’re in-line on a net
basis. Our next largest outflow is in
the charitable category followed by car
expense. There’s more to come on the
car expense as we had an unexpected
(and unfortunate) event take place over
the weekend. But have no fear, there is
a lesson to be learned!
“
Thus far, we’ve spent $363 on food
and nothing on dining out. Assuming
our spending holds steady through the
end of next week, we are on track for
a huge savings in the grocery category
alone, not to mention the substantial
savings from not dining out. Before I
make this comment, let me just say that
this exercise is IMPOSSIBLE unless
all parties in the household are on the
same page. I’m very appreciative that
Rebecca has been 100% on board for
our “financial cleanse.”
These numbers are exciting to review
&
very revealing!
TIP:
If you’re finding it difficult to keep
from spending move 10-20% of your
take-home to a savings account (one
you can have immediate access to in
case there’s an emergency.) Out of
sight out of mind can be a very
effective strategy.
3
Next Steps
When you’ve reached the end of your economic shutdown first
give yourself a big pat on the back then let’s hit those numbers.
ANALYZE YOUR SUCCESS
(AND RELISH IN IT).
From Rebecca:
“
We’re happy to report that we ended up saving over 35% of our
take-home pay! It was 35.3% to be exact! That doesn’t include
our 401(k) contributions, which we’re both maxing our employer’s
match and we contribute to a Health Savings Account (HSA). We
also set aside about 3% each month to a cash savings account for
our 1 – 3 year expense fund. This account is above and beyond
our emergency reserve fund. Sorry, enough financial planning.
Back to the results, that 35.3% was previously being spent! As
many of you are now well aware most of that was spent dining out
sporadically or just generally slipping through the cracks. And we
weren’t blowing it out at Ruth Chris every week either. The little
decisions that we make each day add up in a big way. This
month has been living proof of that for us.
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1
Calculate how much of your take home you were able to
save in the past month using this equation:
$ TOTAL CASH ON HAND
$ MONTHLY TAKE HOME
3
2
Go a step further and compare
that to your previous month and
see how much extra cash you
now have.
Example:
If your monthly take home is
$5,000 and you have $1,500
remaining at the end of the
month your % savings for the
month would look like this:
$ 1,500
$ 5,000
Now let’s say last month your
savings was $500 (10%) of your
take home pay. That’s an extra
$1,000!
= 30%
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FINAL STEPS
So what do you do with that extra
$1,000? Well you don’t spend it
on everything you didn’t buy during
shutdown, that’s for sure.
Here’s some options for you:
-Open a Roth IRA or a brokerage
account
- Put towards a debt (credit cards,
student loans, even your car)
- Add it to your emergency reserve
-Add it to your vacation fund or
something else you’ve been planning
and saving for
Now that you’ve gained an
understanding of where your money
goes and areas where you can cut
back you’re ready to start shifting the
way your family spends, how do you
avoid the trap of overspending?
Eddie and Rebecca tell you how:
Typically, the most expensive day(s)
for us are the weekends. That’s
when we have more time to do fun
things and that often equates to an
expense here or there. Whether it’s
a movie, round of golf, Home Depot
or wherever you prefer to do-ityourself, the days we spend outside
of work are the priciest.
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So, how do we accomplish this?
1
PAY YOURSELF FIRST
o There are various opinions on this
principal and different ways to “jazz it
up,” but at the end of the day, the most
successful savers save first!
o The most common example of this is
to save into your company retirement
plan. It happens before the paycheck
hits your bank account, and you don’t
even have to think about it.
3
PRIORITIZE
2
o We all have things in our daily lives
that we must spend money on to live,
our bills, rent, food, etc. but going
through the Economic Shutdown really
helped highlight what we needed and
what we wanted.
One example is the cable bill.
It’s 100% a want. Rebecca and I didn’t
“cut the cord” as they say, but we are
pretty close to it. However, most people
I talk to add that into their monthly bills
as they do the gas bill or power bill. It’s
really not.
o When we prioritize, it helps us do
two things:
1. It helps you enjoy the
experience/utility of what you’ve
chosen to spend that dollar that you
worked hard to earn.
2. It will ultimately result in you
spending less each month.
SAVE CASH EACH MONTH
o There are various opinions on this
as well. Even if you ultimately end
up investing this cash, it’s important
to save cash into a savings account
(separate from your checking account)
each and every month. This is money
that is above and beyond your
emergency reserve fund.
o This prevents you from getting to the
paycheck to paycheck mentality.
One quick example; while going
through Economic Shutdown, we
caught a nail in the back tire of our car.
We had to replace it (obviously). Since
we hadn’t already spent, or already
obligated every dollar to be spent, this
was a mere blip on the radar for the
month. These are the types of things
that totally derail a perfectly budgeted
month. Hence, the importance to save
a little extra cash into a savings account
each month.
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5
BE FLEXIBLE
o Don’t let “money stress” ruin all of
life’s wonderful experiences. If you
spend too much in one month, don’t
beat yourself up. Just save a little extra
next month. Where many people get in
trouble is they always plan on making
it up next month. That should be the
exception, not the rule.
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FORGET THE JONESES
o No, not your neighbors Jim and Jane,
but the proverbial Joneses. Keeping up
with the Joneses leads to more harm
than good. Everybody has a unique
financial situation in one regard or
another…and it’s a losing game to keep
up. One thing I can guarantee, there will
always be someone richer than you and
there will always be someone poorer
than you –
so just be you!
5
WHAT CAN
DO ?
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Who is Wela?
Wela aims to change the way people
think about and manage their finances.
We are a digital financial advisor which
means we combine technology and
traditional advisors to deliver financial
planning tools and advice. It’s the ease
and convenience of a robo-advisor but
with the comfort and personalization of
a real human advisor.
Wela allows you to see your full
financial picture all in one account.
Users have access to tools that help
you manage your existing finances and
plan for the future. Plus you have access
to tons of original content like blogs,
podcasts, and ebooks to help you on
your journey.
FEATURES:
• Custom Game Plan written specifically for you buy a financial advisor
• 401k Asset Allocation
• Home Buying Calculator
• College Savings Tool
• Net Worth Tracking
• Affordable Investing with Wela Strategies
VISIT US AT:
www.yourwela.com to get started
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CONGRATULATIONS
you earned yourself a donut for reading through
and taking the cleanse!