The Bottom Line is BS

The bottom line is BS. It’s not important. I know, that’s quite the statement. Contrary in fact to everything you’re taught I’m sure. But it’s true. The bottom line on your financial statement is not the important line. Why? Because there is nothing you can do with it. I mean, you can make adjustments to things in the middle so that the number, maybe, gets a little bigger. However, At the end of the day, there will only be so much you can free. It’s a value with a fixed range and to make it bigger requires you limiting or constricting yourself to do it. Therefore the bottom line is BS and instead, your focus should be at the top.


Focus at the top

Where your focus should be is at the top. This is the line with infinite possibilities. This is the line that can make a real difference in your financial freedom. Now, if you’re on salary you may say, “But wait a minute! That line is also fixed!” And indeed if you don’t have any plan or intention to change it then yes, it will be. If you have a plan, if you have the intention to change it, however, then you’re playing a different ball-game. First and foremost you could always ask for a raise, but this would be limiting, if your tying to get out of debt or make a significant increase to your income this is a very unworkable way to approach it. You can only ask for so many raises before your boss is just flatly going to say no. You could go for that promotion but again, it is unlikely you will get them every year. Instead what you need to do is look at what activities you can do that will have a more direct and dependable impact on that top line.


A Dependable Impact

A dependable impact means something you can do that you know will yield a certain result. To give an example of the opposite, if you are a salaried exempt employee, working overtime will not yield additional income. Maybe it will help you earn a bonus for meeting that target or hitting that deadline, but that’s not dependable is it? If you are paid the same whether you work 16 hours or 8 in a day, what’s the point? You love what you do? That’s fine, but shouldn’t you be paid for it?


So then what would be a dependable impact? It would be an activity or action that you know will yield a certain result every time. In the context we are speaking, an action that you know will yield a certain monetary return for it’s performance. For example lets say you can make $100 for building a webpage, so then earning more money in a month becomes a very simple problem right? Simply build more webpages until you’ve covered what you need. Heck, then build more so that you have more than you need. Working more will have a dependable impact on what you make. The problem then becomes one of scaling.



Scaling, specifically how to, completely depends on what your dependable impact is. In most cases though it will be one of two scenarios.  You either hire someone to help or you devote yourself to the dependable impact full time (which most likely at some point will still require you to hire someone later.) In the webpage example above, as your experience and reputation grows, you can charge more. Or, it could be getting someone else to help and cutting them in on some of the profit. The point though is to push what is working and to push it hard.


Final Thoughts

If you are in debt, or looking to earn more. The solution to both is to look up. Put focus on that top line, find something you can do to make a dependable financial impact and then once you have found that, scale it. The reality is the bottom line is BS, it is merely a reflection of what you have done, but don’t make the mistake of believing it is all you can do. Your potential is unlimited and this world has no shortage of money to be earned, so find out who has yours and collect it.


Have a question on getting out of debt? Or Earning more? Comment!

Best Rewards Cards To Get Out of Debt 2019

When you are in debt, credit cards are often villainized as the ultimate evil. The first advice almost always given is to destroy all your credit cards! Fill a bag with water, put your cards in it and throw it in the freezer! I particularly like that one, it seems the most useless of all the ones I’ve heard. Look, when you’re in debt credit cards are not the source of all your troubles. They may be greatly contributing to it, due to their high interest rates, but they are not the reason you went into debt. You are. I would argue in fact that when you are in debt, the best rewards cards can actually be a blessing in disguise. No, not because you can use them to pay for bills you otherwise can’t afford. But because if you have a solid budget in place, they can become a treasure trove of savings.


Hidden Savings

If you are wondering what hard liquor I’ve been downing or deep-end I fell off of, rest assured I’m as sober and sane as can be. What I am talking about are credit cards known as rewards cards. The concept is very simple, for using the card, you get rewarded in return. These rewards vary from redeemable points to cash back or both. Once you have a budget worked out and you are making more than you spend, a rewards card can be a very smart move.


What to Look For

I will give my recommendation on worthwhile rewards cards as the end of this article. In general however here is what you should look for:

  1. Large cash back for purchases Or
  2. Rewards for everyday purchases
  3. Redeemable for things you will be able to use

So why are these three things so important? Large cash back for purchases should hopefully be pretty self evident. Finding a card with the largest cash back for purchases that you can just means more in your pocket for normal purchases. Alternatively, rewards for everyday purchases is important because that just means you will accumulate more rewards for things you normally buy already. To give you a an example of cards that do not fit this bill, some will reward you for spending on travel activities like eating out or paying for hotels. If you are saving your money to get out of debt, it’s a pretty safe bet these kinds of purchases should not be your everyday norm.


Lastly, what you can redeem your points for should be for things you can and will use. Things that will either give you money or save you money elsewhere. The best of these would obviously be a credit directly to your account as is the case for cash back rewards for purchases. For other rewards, however, a visa gift card can be equally as beneficial. Things like an Amazon gift card  also works if you make purchases there frequently. What you don’t want are reward redemptions that just wouldn’t make sense for your situation. For example a great mileage rewards card will be pretty useless to you if you can rarely afford to go anywhere. So make sure the rewards for the card make sense to your situation and what you are trying to achieve.


The Best Rewards Cards

As promised, here are my personal recommendations based on the information I provided above. The below cards I either presently have and use or have used so I have actual experience with all of them.

1. Amazon Rewards Visa

If you are an Amazon Prime member then this card just makes sense on so many levels. Depending on if you already have a Prime membership, which this card requires, it either does or doesn’t have an annual fee. If you are not already a Prime member then you shouldn’t get it. If you do however, then this card should just be a given. You receive 5% cash back on Amazon purchases. That alone is astounding. You get 2% back at restaurants, gas stations and drugstores, and finally you get 1% back on all other purchases. As an avid Amazon shopper and a gasoline consumer, this card hits points #1 and #2 above perfectly. Because it is also a cash rewards card, it nails #3 as well. An added treat, at the time of this writing, the card is also made of metal. You do need good credit to qualify for this card so keep that in mind. Also, it is issued by JPMorgan Chase Bank so their 5/24 rule applies (you can read more about that from The Points Guy here.)

Get it here*


2. Chase Freedom Unlimited®

At 1.5% cash back on all purchases, it’s hard to go wrong with this one. Once again hitting the one, two, three combo above, and no annual fee of any kind, it’s probably one of your best options on the market right now.

Get it here*


3. Chase Freedom®

This one is a quarterly category card. This means every quarter there are specific things that when purchases with this card will give you the largest reward benefit. For this card the reward benefit is nice, 5% cash back on anything purchased in the category for that quarter! Buying something not in the category? No problem, get 1% cash back on everything else. Similar to the Freedom Unlimited, there is no annual fee. The only caveat with this card is that the 5% cash back for a category is only good for the first $1,500 spent. If you are trying to get out of debt, you won’t be spending that kind of money each quarter anyway, or at least you better not be!

Get it here*


The Golden Rules

Unfortunately the way our (American) credit scoring system is designed, requires you have credit of some kind that you utilize. This makes credit cards a necessary evil. When you are in debt, there are two golden rules you should follow with credit cards. The first, don’t purchase anything that you don’t have money for in your checking account. Second, whatever you buy with them, transfer that money to that card the same day. Don’t wait for the next bill cycle, don’t sit on it to do it later.


Final Word

When you are in debt, common conception is to throw away your cards! Shreddem! Keep them as far away as possible! However, these are all just gimmicks. Especially in an age where they are all easily digitized anyway (Eg. Apple Pay.) Truly getting out of debt starts with yourself, changing your own viewpoints on how you handle and perceive money. It is about being smart with your cash flow and how you use it and in that vein credit cards can actually be a blessing in disguise. This is especially true for cash back cards. You end up paying less than the cost of what you purchased. It is like having a coupon for anything and everything you buy, including bills. Just remember the golden rules, because if you are in debt, there will be no faster way to stay that way than to break them.

*Disclaimer: I am not being paid a penny for promoting these cards. The views expressed in this post regarding them are entirely my own.

The Ideal Account Setup

What is the ideal account setup? How does one structure their accounts for success? For the former the answer is simple, as many as you need. For the latter, that’s a bit more subjective. Here I will explain how I set things up and why and you can make your own judgement call from there. Regarding number of accounts, most people have two, a checking and a savings account. In terms of what is needed for receiving, spending and saving money this setup does serve that purpose, but it could server that purpose better.


The Setup for Failure

Let’s assume that today is the 18th of the month and that you have a checking account with a monthly direct deposit. On the first day of the month $1,000 dollars was put into this account. $500 of that was withdrawn from this same account for rent on the third. You spent $200 on groceries on the 17th so you are already down to $300. Now, Netflix and YouTube TV were withdrawn on the 10th for $45, Adobe Creative Suite will be deducted on the 20th for $55 and your gym membership will be deducted on the 25th for $49.50.


You are out on an anniversary date with your significant other, a nice restaurant with a 7 course dinner sampler & wine pairing for $90 dollars a person. (yeah, I wouldn’t actually do this either, but just roll with the example…) You check your account and see you have $255, everything looks good so you and your S.O. enjoy a nice dinner. Everything is good right? …Not quite. Were you tracking everything that happened? If not that’s ok. I’m not great at word problems either. lets look at the same information above in a spreadsheet format:


Do you see what happened there? The day you went out dinner you did have more than enough to cover the dinner, (which… side note: please don’t spend that much per person on a dinner. I promise you no food on this planet is that good) but, Argh!! You forgot about a couple of bills that still needed to be deducted! Many of you may have experienced a situation like this once or twice. It happens, but with the ideal account setup, it doesn’t have to.


The Myth

Before I start getting deep into this, I want to dispel a myth in regards to checking and savings accounts. This is that opening many checking and saving accounts will hurt your credit. This is not true, you can have as many savings and checking accounts as you like. There is no sort of penalty for having multiple accounts.


The one thing you should be mindful of when opening accounts is that some banks, like for example Charles Schwab, will run a hard check on your credit before they will open an account. Running a hard credit check can affect your credit score. (See The Difference Between Hard and Soft Credit Checks) The only thing to be mindful of are any bank requirements like minimum balance requirements, direct deposit requirements and any related fees. Ideally if you are going to create multiple accounts, you’ll want to chose financial institutions that do not have fees or requirements for their accounts. Ok, with that out of the way, lets continue…


The Ideal Account Setup

So what would be the ideal account setup? An ideal setup would be one in which one account receives all income, and from which all incoming money is then re-allocated (aka, your primary checking). This basically means the money that goes into this account does not stay there. It either goes to a bill or is transferred to another account and that’s it. This account is like a central transit hub, everything goes there but nothing stays there.


You should have a savings account in which you keep 6 months worth of living expenses. (why? Because apparently everyone says so.) Realistically I don’t think you need 6 months worth. The point is to have enough that if you hit real trouble, you’d be set for a long time. How much you should have in this account is based on how confident you are in how long it will take you to find another job should you lose it, even if the economy is doing poorly. Then add a month or two buffer to it. This account will be your emergency fund account.


If you don’t have enough to cover 6 months of expenses, that’s fine, the important part is setting up an emergency account and then flowing some money towards it. Even if you can only flow $5 a month toward such an account, it’s worth it. For a truly ideal account setup, I highly recommend a high yield interest account for this. I personally have a Marcus account for this purpose.


Fun Money Account

You may be wondering at this point that if all the money in your checking account is being redirected elsewhere so that it can’t be spent, how do you buy other things like your morning coffee and bagel before work? How is that an ideal account setup?! Well, glad you asked. One of the places your money should be redirected to is a checking account meant for general spending. The idea being that the money in this account is money that you can use to buy anything. This is your “fun” money account. It’s the money you can spend completely guilt free because you know it’s not needed for or tied to anything else.


Once your fun money account is established, you should set up savings accounts for any other longer term items you may need money for. An example account I would recommend you create is one for gifts. Every year someones birthday always seems to sneak up on me at the most inconvenient financial time. How much simpler life would be (and now is) if I had a saving account where I put some money in each month specifically to cover the purchase of gifts for all the birthdays in a year!


Ideal Account Setup Review

Ok, that was a lot of information. Let’s review and simplify how accounts can be handled to avoid the scenario of spending money you don’t actually have.

  1. Create a primary checking account. This account is where all money earned is deposited and from which all the deposited money is then immediately moved to other accounts or used to pay all bills. Setup correctly it would be expected that at the end of each month, this account would reach a zero balance.
  2. Create an emergency savings account. This account, as the name implies, is only used for dire emergencies. As far as daily life goes, this account does not exist. You put money in and it never comes back out.
  3. Create a “fun” money checking account or what some call a slush fund (such a negative connotation though…) in which general spending is made from. This is things like your morning coffee or the pedicure that Susan just invited you to join along for.
  4. Create additional savings accounts for longer term items that you will need money for.  An example of such an account would be a savings account for birthday gifts.


The Final Word

If you’re curious how I personally have setup my accounts, I will write about it at a later time. So that’s about it! This may seem like a lot of work and the initial setup can be. When it’s done, the amount you have in your spend account is exactly the amount you have to spend. When you need to buy gifts, the money sitting in your gift account is exactly what you have. What you see is what you get. There is no need to wonder if you paid all your bills yet or if there was something you forgot about.


10 Step Guide to Creating a Budget

Creating a budget may sound like a daunting task, but there are a lot of ways to create a budget and a lot of apps and websites to help you do so. Links to them are available below. What you use to manage your budget is entirely personal preference. The important part is selecting a tool and method that works for you. I have personally used a number of apps from You Need a Budget to the Quicken desktop software. Are you a fan of Dave Ramsey? Even he has his own app. In my case Quicken turned out to be far more complex than I needed and YNAB turned out to simplify things a bit to much.


In the end, the thing that ended up working best for me was Google Sheets. I know, “that’s so much work!” you say, but that turned out to be exactly what I needed to truly grasp what my finances were doing. So, I will guide you though the basics of creating a budget. If you want to use a fancy program that is fine, but I ask that for at least your first iteration of this, you stay basic. Bust out Excel, or Google Sheets, or even a piece of paper and lets get down to business.



Setting up Your Budget


Step 1:

If you skipped the intro paragraph, grab a piece of paper or open up a spreadsheet and at the top right of it, write your net income a month. Remember that your net income is the amount you get to take home after taxes and any other deductions you or your employer make for things like medical coverage or company benefits.



Step 2:

Put down every bill and recurring expense you have. This is an important step in creating a budget. Things falling under this would be your phone bill, car payments, rent/mortgage, insurance, Spotify, Netflix, etc. Done? Next, right down next to it the date each are due.



Step 3:

Review your most recent statements across all your accounts. Checking, savings, credit cards, all of them. Make sure you correctly noted every recurring expense you have. Then order them by date. This is one of the most important steps you can do when creating a budget as it will allow you to see the expenses that you know will always come in and that are fixed or mostly fixed costs.


Step 4:

Now, using your statements, categorize all your other spending. For example if you are a frequent coffee drinker, find all the coffee purchases you made. Create a Coffee label on your paper or your spreadsheet and write the months sum of all coffee purchases next to it. Do this for all other purchases you have made. How exactly you break this out is up to you, the important part is to remain consistent with how you track things in the future. Here is an example of how your paper/spreadsheet should now be looking:


Step 5:

This one is really simple. Sum all the values under cost, this is your total monthly spending, and compare it to your net income you wrote at the top right of your spreadsheet. You did do that step right?

Now, is the amount you are spending greater than the amount you bring in? If you then you will have some work to do later. If not, then good for you! This likely means you have money that can be working harder for you.



Step 6:

Now that you have all your expenses listed and categorized, creating a budget is fairly simple. You can basically just rename your “cost” field to “budget” and a good chunk of the work is now done. You know your recurring costs are pretty static, for everything else it’s just a matter of estimating how much you believe you will spend on each category you have created and then make that the budget. So for example, last month we spend $197.35 on Groceries. The month prior lets say we spent $205.67. So for our budget, lets say we will set aside $200 to be our grocery budget. For gas, we will say it will be $110 even and coffee we’ll say we want to set aside $70. Continue in this fashion though all the non-recurring expenses in your list. Here is an example of how it should now be looking.

If in step 5, your expenses were more than your income, continue to Step 7. If your expenses were less then your income, continue to Step 8. Bet you weren’t expecting a choose your own budget adventure were you?!


Step 7:

So your expenses are more than your income. If you are finding yourself swimming in debt, then this is actually good news! Why? Because it means you have identified a key problem to why you are in debt. To fix this, you simply need to adjust your budget until the amount you are spending is under what you bring in. Start this process by first seeing if you can reduce your spending under your categorized items.


For example, can you maybe reduce your coffee spending by half each month? Could you skip the potato chips at the store and reduce your groceries to $150? Don’t just look at your categorized items either, look at your recurring expenses. Do you really need Netflix and YouTube TV? If you find yourself using one more than the other then you can look at cancelling the service you use least. If you are truly in a financial bind, you should consider cancelling everything except the absolute life necessities. This will suck big time short term but can provide much needed financial relief depending on your situation. There are some great hidden tricks you can use on some services which I will write about and link here at a later time.


Step 8:

Congrats! Your expenses are less than your income! This is fantastic, and a major milestone when creating a budget. Now the next step is to utilize that extra money to work for you. While you do want to make sure you are bring in more than you are spending, you also want to make sure that at the end of the month, you have utilized every free dollar you have.


For example, if you are in debt, then this extra money should probably go towards paying that extra debt down. This can be done through various methods such as the Snowball or Avalanche method or my own method which I will detail and link to later. If you are not in debt, then you should look at putting this extra money into a high interest saving account, retirement or investment account. This will allow you to not only put it away somewhere, but allow that money to accrue interest and grow over time.


Step 9:

Check your budget daily! An important part of creating a budget is maintaining it! To truly get reality on what is happening with your finances, check your budget daily. As your recurring expenses come in and you pay them, mark that they are paid by putting the amount paid in the column to the right of them. This basically makes this column your “Spend” column. For non-recurring expenses, as they occur, add this to the running total spend for that category. For example if today I bought chips for $5 and I had already spent $13 under groceries, then I would add the $5 to the $13, so my running total for groceries would be $18.


Step 10:

From here, budgeting is a balancing act between steps six through nine. The goal is to apply self discipline on your spending so that you do not overspend in any category you have defined. If you do, then you will need to rework your budget, reducing how much you will spend in another category to make up the shortfall for your overspending. Remember, your budget is based on the amount you bring in a month, so any overspend has to be either taken from something else in your budget or more money has to be earned to cover it.


Creating a budget this way can be a lot of work, but at least for me, this is what it took for me to really grasp what my finances were doing and how to handle it. However, as I mentioned earlier, there are many websites and programs out there that make this process a lot easier. My only recommendation is do make sure you understand the basics mentioned here so that you understand the principles with which these programs and tools operate.


Websites & Apps:

Personal Capital


Every Dollar

You Need A Budget