3 Money Smart Tasks I Want You to Do This Week

If you’ve been following the #MoneySmartMedics series, you have seen articles on how to get caught up on bills, write your first budget, master the art of budgeting, save for emergencies, plan for the future and even some tips on saving money while on shift. I’ve had a lot of positive feedback from readers, and that’s awesome! What I haven’t seen, is anyone saying that they’re actually trying any of the money management strategies that I’ve laid out.

Trust me, I completely understand.

If you’re anything like me, it takes a lot of time and a lot of reading before you actually jump in and try something. For me, it took some time before I really dived in and started getting serious about finances. It’s like looking at myself in the mirror knowing that I need to start working out, but for some reason lacking the drive to actually show up to the gym and do it. We come up with all kinds of reasons to delay these things. We say things like “I’ll start this next month” or “I’ll wait until I get paid again”. I know this because I do it all the time.

Well, let’s make this week different. Let’s jump in and take action! Nothing huge, nothing impossible, just action. I want you to do these 3 money smart tasks THIS WEEK. That’s right, starting TODAY. I don’t care where you are financially, or how much you have in your bank account. These are 3 tasks that anyone can do and they will be a great starting point in your journey to becoming a Money Smart Medic.

Step 1 – Write Down Your Debts

Yes, this can be painful, but it has to be done! Don’t be afraid of the truth. We can’t fix our problem until we know where we stand. So here’s what I want you to do:

  1. Gather up your bills, credit card statements, loan statements, etc and put them in a stack from smallest to largest. This doesn’t cost anything!
  2. Write them down on a piece of paper from smallest to largest. I really want you to put this on paper and not just a spreadsheet or Word document. It needs to be in physical form.
  3. Post that paper on your fridge or somewhere that you’ll see it every day. Every time you pay off a debt, you’re going to cross it out with a big red marker. Trust me, this is really motivating and it’s a good reminder to stay focused on your goals!

If you want, you can download this free “debt snowball” calculator spreadsheet that I found. Unfortunately, the free version only allows you to list 10 debts, but it will give you a date that you will be debt free! If you’re looking for something more comprehensive, then you’ll have to shell out a few bucks. You can try Dave Ramsey’s online debt-snowball tool for free by going to: http://www.daveramsey.com/specials/mytmmo-gazelle-budget/?ictid=hp.myt&income=Choose+an+income 

Free debt snowball spreadsheet: http://www.vertex42.com/Calculators/debt-reduction-calculator.html

Step 2 – Budget the Money You Have on Hand

Whether you have $5 or $500 in your account, you can do this step. I want you to create a budget for the money that you currently have in your possession. If you get paid in 2 weeks, write a 2-week budget. If you get paid Friday, write a 5-day budget. I don’t want you to spend another penny unless you have a written plan for it!

Let’s face it, you’re not going to have any more money until you get paid, so why not try telling it where to go? If this is your first time writing a budget, you probably won’t perfect it, but that’s OK! It takes practice.

Now here’s the thing…

I want you to have something left over when you get paid. You need to put SOMETHING away for emergencies, even it’s just one freaking dollar. You have to start somewhere. Find a jar, shoe box, penny bank or savings account and just start putting whatever money you can away. Like I said, it doesn’t matter how small the contribution, just start doing it.

Step 3 – Switch to Cash for One Week

I know, I know, I love my debit card, too. But if what you’re doing isn’t working, it’s time to change. Take the money you budgeted for food, entertainment and anything that normally requires you to swipe a debit card and put them in separate envelopes. Now, you don’t have to carry all that cash with you. You can leave it at home and just take what you need with you when you leave the house. Try leaving the debit card at home for a day. It won’t kill you!

I’m confident that you will find that you spend a lot less when you put your cash in envelopes and only spend what you have budgeted. It’s a week, people! You can do this!

If you need help with writing your budget, you can use Dave Ramsey’s free budget forms by going to: http://www.daveramsey.com/tools/budget-forms/

You can also download YNAB (You Need A Budget) IF you have the money to spare in your budget. If you head to http://www.medicmadness.com/youneedabudget you will get $6 off your software purchase.

Let Me Know How You’re Doing!

I’m here to help! I want to encourage you every step of the way and be there for you if you need anything. I’m serious! Post pictures of your cash envelopes, tag me in posts, send me e-mails, or just get my attention to let me know that you’re on your way to becoming a Money Smart Medic!

You can do this, I promise.

How to Fit EMS into Our Budget

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When I talk about fitting our jobs into our budgets, I’m usually met with looks of confusion. Yes, it may seem counterintuitive being that we come to work to make money, but let’s face it, this job comes with expenses. Licensing fees, continuing education, meals and transportation costs are all expenses that we often overlook when writing our budgets.

In this week’s article, we are going to address some of the common expenses we see in EMS, talk about how to prepare for them and save money while we’re doing it.

Start Meal Planning

It’s no secret that bringing your meals to work will save you money. The problem is, it’s not always practical in EMS. If you’re working in system status management, you probably don’t have access to a refrigerator, and if you’re pulling station shifts, you never know when you’re going to get a chance to cook or sit down to eat. When working these kinds of shifts, it’s usually easier to just grab a quick meal either between calls or while sitting at post. Unfortunately, this usually leads to excessive spending and before we know it, we’ve spent over $300 for the month on fast food just while we’re at work!

Before we even get into planning for meals, we need to budget for it. I don’t recommend tying your work meals into your regular monthly food budget. You need to get a handle on what you spend while you’re at work and it’s hard to do when your work and home food budgets are combined. I recommend setting a work-spending budget for each pay period. If you find yourself working a lot of last-minute overtime, then set your budget assuming that you’re going to work extra hours. Any money that’s left over can either be carried into the next pay period or applied towards debt-reduction.

Meal planning when working EMS shifts can be a bit tricky, but it’s not impossible. We just need to understand the challenges that we face in order to adequately prepare. If you’re working station shifts, you simply can’t go wrong with a crock pot, sandwich materials and anything that heats up quick. Also, be sure to either keep a small pack of snacks in the ambulance, or keep a $5 bill clipped to your medic license in case you find yourself away from the station for extended periods of time.  For system status shifts, invest in a decent cooler and pack a couple sandwiches, some fruits, and various snacks.

Setup a per-Meal Budget

For some of us, bringing our food to work just isn’t going to happen. Whether we’re running on a tight schedule each morning, or just lack the motivation to do meal planning, we sometimes find ourselves slipping back into our old habits of just swiping our debit card 3 times a day for meals and feeling bad about it at the end of the paycheck. While I strongly recommend bringing your food to work, I also understand that it isn’t always an easy task. If you’re going to be spending money at work, at least set a cap on what you’re going to spend each meal. Even if we are going to spend the money, we can still be intentional by setting per-meal budgets.

This simple strategy will save you tons of money (although not as much as bringing your food). Actually, the savings from this strategy alone could fund your retirement plan. Every time we swipe our debit card at a fast food restaraunt, we easily spend anywhere from $7 to $10 dollars. On most EMS shift schedules, that will easily exceed $300 a month. That’s way too much money to be spending at work considering that we could easily feed ourselves for the month on that kind of money if we were to shop smart.

I recommend setting a maximum $5 per-meal budget when you’re at work. This will exclude just about every “value meal”, so you’re going to have to be creative when you order. With the exception of McDonalds, the drink is what would break your per-meal budget. To beat this, bring your own drinks. Try investing in one of the 64-ounce travel mugs that most of the gas-station markets offer. You might be surprised to find that just about every gas station and truck stop has a standard refill price of under $1. That includes drinks of all sizes, including the kidney buster that I just mentioned. Trust me on this, I own a 100-ounce one and I’ve never paid more than $1 to fill it up. These mugs are really well insulated and will easily last you an entire 12-hour shift. I just don’t recommend filling them up with soda for obvious reasons.

To help develop the habit of sticking to a $5 per-meal budget, leave your debit card at home and bring just enough $5 bills to get you through the shift.

Plan for Work Expenses

While meals are usually our biggest expense when it comes to working EMS, we still have other things to plan for like transportation, continuing education and license fees.

Fuel costs are easilly overlooked when writing a budget which typically causes us to under fund that category and put us in a tight spot towards the end of the pay period. It’s not uncommon to see EMT’s and paramedics travel long distances to report for work so it’s important to plan accordingly. I completely understand this challenge as my station assignment changes every month. Depending on the month, I’m driving as little as 3 minutes and as much as 45 minutes to get to work. To prepare for these expenses, I did the math and figured out how much gas I use to get to each station. This makes it really easy for me when I sit down to write my fuel budget each pay period.

License renewals and continuing education are due the same time every 2-4 years. Don’t let these expenses sneak up on you. Create a “license and continuing education” budget and put money aside every pay period for these expenses. Schedule CE classes regularly so you aren’t cramming at the last minute to keep your license current and aren’t having to shell out excessive fees for last-minute roster spots. I use Google calendars to send myself reminders of renewal dates and to remind me to schedule regular CE classes. Planning for these expenses should be one of your top priorities being that your job is what provides you and your family with an income.

Conclusion

Healthcare and public safety are unique in that we have a lot of costs associated with our jobs. While most of these expenses are tax-deductible, that doesn’t do us a lot of good when we’re down to the wire and don’t have enough money to pay for a license renewal or a tank of gas to get to work. Just like everything else, we need to be prepared and make sure we have enough money set aside so these expenses don’t catch us empty-handed at the last minute.

I want to hear from you guys. What are some expenses that you have when it comes to working in EMS?

Money Smart Medics Part 6: Life After Debt

freedomSo far in the #MoneySmartMedics series, we’ve talked about getting caught up on bills, writing our first budget, mastering the budget and getting out of debt. So what happens when the smoke clears and you’ve achieved what you once thought was impossible?

Try to imagine a life with no car payments, no credit card bills, no past due accounts, and having plenty of money saved for emergencies. Think your outlook on your EMS salary might be a bit different?

Once your debt is paid off, there are all kinds of neat things that we get to do with our money that we never imagined. Setting up retirement, planning for emergencies, paying cash for vacations and truly breaking the “paycheck-to-paycheck” cycle are just a few. It’s now YOUR money, you can do what you want with it. Having said that, it’s going to be extremely important that we continue to be intentional with our money and continue to live on the budget. We have to remember what got us into our financial troubles and make sure that we don’t slip back into our old ways. We also need to make sure that we get the most out of our money.

This is one of the best parts of the process, because the pain is over. We won the battle and now it’s time to enjoy the rewards of a debt-free life!

Building Up an Emergency Fund

Remember the $1,000 we put away for emergencies in our sinking fund? Well, that was just a small amount to provide us with some security while we paid off debt. That was for things like unexpected car troubles, ER co-pays, etc. That doesn’t really last long if you lose your income or have a truly catastrophic event. Once our debt is paid off, we can really prepare for the worst. Now we can plan for a potential loss of income.

While I’m sure you will want to treat yourself to something nice after paying off all your debt, we will need to get back on track soon to build up a nice reserve of cash for emergencies. This step in the process is going to alleviate stress and anxiety that you never knew existed. The majority of us live our lives literally one missed paycheck away from hitting rock bottom. While we tend to accept this as normal, we can’t really understand the toll this takes on our mental and emotional well being until we finally get to experience life without it.

If you’ve read Dave Ramsey’s baby-step process, you can see that he recommends saving up 3-6 months worth of expenses. Due to the high risk of injuries that we face in EMS, I would strongly recommend that you save up closer to 6, if not more. If you’re still in debt as you’re reading this, that number may seem impossible to you. Just remember that anything is possible when it comes to money. By using the same intensity that we used to pay off debt, we can easily fund our emergency fund in no time. Before you become discouraged, actually do the math and see for yourself. Be reasonable with yourself. Add up all of the monthly expenses that you would need to be reasonably comfortable. Add up essential items like rent, utilities, transportation, insurance and food. You can even throw in some luxury items like internet. Add up the total amount, multiply it by 6 and BAM, you’ve got yourself your first major savings goal.

While it may be tempting to skip over this step, trust me, you need to stay focused and do this. Remember, you’ll never regret saving money, but you will certainly regret not doing it.

Start Contributing Toward Retirement

I’m going to briefly touch on this subject as this is a huge topic and I’ll be covering it extensively in later articles. Pension plans and employer-contributed 401k plans are awesome, but we aren’t going to depend on them. Remember that whole financial independence thing I keep telling you about? Well, it’s kind of hard to consider yourself independent if you’re tied down to a pension plan. We need to setup a plan for retirement that’s completely separate from what our employer provides us. We’ll consider anything we get from pension plans and 401k matches to be extra.

There’s all kinds of investment options for you depending on how many years you plan to stay in the workforce and there’s simply no way to cover them all in this section. What I will say, is that you need to start putting away 15% of your income to invest for your future. I HIGHLY recommend putting the maximum allowed amount into a Roth IRA. One of the benefits of a Roth over a traditional IRA is that your funds go in after-taxes, which means you won’t be paying whatever astronomical tax rate our lovely government comes up with by the time you retire. The other HUGE perk of the ROTH IRA is that you don’t pay capital gains taxes on your earnings. You’ll understand why that’s so awesome once we dive into investments and compound interest.

While I’ll be able to give you the basic knowledge you need to make investment choices, you will really need to sit down with an experienced financial adviser to make sure you get the most out of your money.

Start Saving for Your Child’s College

This may or may not be easy depending on how old your children are. If your children are still very young, then I would recommend speaking to a financial adviser to get you setup with a college fund. There’s a lot to cover here as well, so I’m not going to dive into the specific options that are available until a later article.

I will say that you should be planning to send your child to a college where he or she will pay in-state tuition and get the most for your money. Ivy league schools are like brand new cars. They’re great if you can afford them. You know as well as I do that the workforce will care far more about skill sets and experience than they will about which school your child attended.

We’ll be doing some serious discussion later about furthering education not only for ourselves, but for our children as well. Until then, I would highly recommend reading “Smart Money Smart Kids” by Dave Ramsey and his daughter Rachael Cruz.

Learn to Live off Last Month’s Income

This can be confusing at first, but I promise you that it will make sense soon. For most of us, money leaves our hands shortly after it lands there. Living on last month’s income is where we truly break the “paycheck-to-paycheck” cycle.

When I explain to people how living off last month’s income works, I like to compare it to owning a spare battery for your cell phone (sorry iPhone users) or a portable battery bank. If you only have one battery in your phone, you’ll find yourself having to plug it in at the end of every day to keep it running. Well, our paychecks are no different. If we live off our current paycheck, we run the risk of running out of money and having nothing until we get paid again.

If we have a spare battery charging at home, we can swap out the batteries when we get home. That way we have a fully charged phone to get us through another day while the other battery charges. When you live off last months income, your budget is your battery. Still confusing? Hang in there, it will make sense soon.

Getting to a point where we are living off last month’s income isn’t as easy as just buying a new battery. It’s going to take a little of bit of time. What we have to do is figure out exactly how much we make every month and work to save up that amount in a “buffer” category or envelope. That is going to be our spare battery. Now once we get it saved up, we write our next month’s budget for that amount and use that money to fund our categories or envelopes. Now as we get paid throughout the month, we use our paychecks to fill that envelope back up, just like the battery that’s sitting on the charger at home. Starting to make sense?

If it’s February 1st, we should have every dollar we made in January sitting in our bank account or in our envelope. We will have budgeted that money to spend throughout the month and use our paychecks in February to fill the account or envelope back up. We repeat this process every month. When we do this, we are essentially 1 month ahead on our finances. This means the days of wondering what bills come out of which paycheck are a thing of the past! You’ll find this to be huge relief if you’ve been working a 24-hour shift pay cycle when you have short and long pay periods.

Conclusion

I want you to really take some time to think about what it’s going to mean to be at this step in the process. A month ahead in your finances, a fully funded emergency fund and a plan for retirement and your children’s education. Now I want you to ask yourself if finding a job with a pension plan or higher pay is really going to be what’s important to you, or if you’re going to be more concerned with finding or staying in a job that you love and that makes you happy?

This is what financial peace is all about folks, and it can be achieved by anyone.

iOS 8 Brings New Medical ID Feature

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Apple’s latest version of iOS brings a new feature that could be very useful for EMS providers. Now, iPhone users that upgrade to version 8 can enter their medical history, allergies, medications, emergency contacts and various other pieces of information that could be handy to EMS providers. The best part is that it is accessible from the lock screen.

To create a “Medical ID”, you simply open up the built-in “Health” app and click on “Medical ID”. The health app can also be used to collect data like calorie intake, vital signs, sleep habits and exercise history from various other health and fitness apps. However, for the purposes of this article, I’m just going to be focusing on the “Medical ID” feature.

Accessing Medical ID

To access the Medical ID from a locked iPhone, push the “lock” button (top) or the “home” button (bottom). Then swipe the screen to the right and push “Emergency”.

This will bring you to the emergency dialer. Once here, select “Medical ID” at the bottom-left corner.

This will bring you to the Medical ID screen. From here, you can access all the medical information that the iPhone owner has made available.

And that’s it!

Now all that’s left is asking the patient what version of iOS they have….

 

Money Smart Medics Part 5: Getting out of Debt

who-gets-paid-first-bankruptcy-bakersfield-caSo far in this series, we have talked about getting caught up on bills, writing our first budget and then mastering the budget. Where we really start to make progress is when we start paying off our debt, and that’s where this article comes in.

Before we go any further, I’m going to have to break some bad news to you: You have been lied to your entire life. You have been told things like “You’re always going to have debt” and “Not all debt is bad”. Then to top things off, you started working in EMS where it’s commonplace to see people driving a $40,000 vehicle on a $30,000 a year salary. We have been trained to believe that being able to afford payments equates to being able to afford the purchase. That’s a lie, and until you realize that, you’re never going to get ahead.

Think about it for a second, everywhere we turn we are being told that debt is just a way of life. When you go to purchase a car, the salesperson immediately starts talking about monthly payments and does everything they can to avoid discussing the actual price. You see commercials telling you that you can get 0% interest on the [fill in the blank] that you deserve. You even see ads where “small business owners” are talking about how their “Chase Ink” card somehow made them successful. Yeah, right. Go ask any successful business owner if they attribute their success to borrowing money on a credit card. Likewise, go ask every person drowning in debt how they feel about their credit cards.

By using credit, it delays the consequences of your actions. Unfortunately, we usually don’t feel those consequences until we have maxed everything out and can barely pay the minimum payments. Even then, we are still trained to pay those credit card payments on time before anything else. Because, you know, we might need that FICO score to borrow more money. It’s so bad that people will actually pay their credit card bills before feeding their family in fear of “ruining their credit”.

Do you see anything wrong with this?

Cause and effect is a very simple thing. If I spend my entire paycheck on a new set of golf clubs, I’ll have nothing left over until I get paid again. Talk about immediate consequences! How many pay periods of having absolutely nothing would it take for me to figure out that I need to be smarter with my money? With credit, we don’t have that immediate consequence so we continue to do things like this until we hit a brick wall later down the road.

Debunking the Myths

Like I said, people have been lying to you your entire life. I could write an entire book on this section alone, but for the purposes of this article, I’ll just lay out a few of the biggest debt myths out there.

You’re always going to have a car payment.

This one irritates me more than anything. It amazes me that we are so quick to accept the idea that we’re going to throw $400 a month away on something that will start to depreciate in value the second we drive it off the lot. But if you suggest that we put that same money into investments and grow it to well over a million dollars over the course of our career, we act like you’re speaking witchcraft.

No, we don’t have to have a car payment. Cars can be bought with cash. Of course, this means buying a car that we can actually afford which most likely means buying a car that’s 2-3 years old. Why 2-3 years, you might ask? Because cars lose the majority of their value during the first couple years. Let someone else take that hit for you. I’m sure plenty of people are going to respond by saying that “buying a used car means buying someone else’s headache”. Well, by that analogy, when you buy a new car, you’re buying your own headache. If you can’t pay cash, you can’t afford it. Get used to it.

You need credit cards to build your credit score.

You only need a credit score to do one thing: Borrow money. Sure, some employers look at credit reports and some services require a small deposit if you don’t have a solid credit history. However, I can guarantee you that any employer will be just fine with an employee that carries no debt and has a 6 month emergency fund. As far as the deposits go…so what? I would rather pay a deposit up front than accept the risk that comes with debt.

You need a credit score to buy a house.

NO YOU DON’T. There are plenty of mortgage companies that do manual underwriting, which means they actually look at things like your income, job history, savings, and expenses when determining how much money they are going to lend you. In other words, they actually make sure you can afford the house.

This part might seem a bit confusing as I just went on a big rant about how debt is bad. Yes, debt is bad, but paying rent for the rest of your life is bad too. You won’t see me complain too much when it comes to mortgages, only because you will have monthly rent payments if you don’t have a paid off house or a mortgage. Now, having said that, your ultimate goal needs to be owning a house that is 100% paid for.

There’s A LOT to cover when it comes to buying a house and that comes long after we start paying off our debt, so I’m going to save that information for a later article. The important thing to take away from this section is that you don’t need to worship the “almighty” FICO score in fear that you won’t be able to buy a house. You’ll be fine. Focus on getting out of debt and living within your means.

Why Get Out of Debt?

This section may seem a little redundant given everything we just talked about, but I think it’s extremely important that I drive this message home. The 2 following example scenarios will help to put the risk that comes with debt into perspective:

Employee A

“Employee A” is a paramedic that works for a private ambulance service. He has a $400 a month car payment, and typically carries a balance on his credit card. He does not set aside money for emergencies and he lives “paycheck to paycheck”.

He is seriously injured one day while riding his dirt bike (that he financed) and is unable to work. He can’t sell his dirt bike because it’s completely wrecked and the value has dropped far below the loan amount. He barely scrapes by enough money to make his rent payment and has nothing else left. He puts his utility bills and his daily expenses on his credit card. He tries to make his car payment on his credit card but realizes that his limit is too low. After 1 month of no income, he can’t even make the minimum payment on his credit card. His card is maxed out and now he can’t pay his utilities. After 2 months, he’s living in the dark and facing eviction and repossession of his car. You can probably imagine where the story goes from here…..

Employee B

Employee B works for the same service and makes the same amount of money. He drives a 5-year-old vehicle, but it was paid for with cash. He doesn’t have any credit cards and he maintains an emergency fund to cover 6 months of expenses and sets aside money in investments for retirement. He also started setting aside $200 a month last year to achieve his goal of replacing his vehicle within the next 2 years.

He is injured in a car accident and is unable to work. I could go on explaining how his scenario turned out, but I’m sure you can imagine. Did anyone show up to take his car? Did he have to go into debt to pay his bills? No. He has 6 months (and probably much longer if you factor in the money he had originally set aside to replace his vehicle) to focus on getting back on his feet before income becomes an issue.

With debt comes risk. Being able to “afford” payments is completely contingent on your ability to produce an income. The second that income goes away, your life gets turned upside down. Debt and income can mask bad financial decisions and can actually give the appearance of financial security, but you’re walking a thin line when you accept that much risk. Think about this when you wonder how your friends are “affording” nice cars and taking vacations all the time. It’s like Warren Buffett said: “Only when the tide goes out will you know who’s been swimming naked”.

Snowball Your Debt

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There are a lot of ways to pay off debt, but none of them will work until you STOP BORROWING MONEY. I mean it. Cut the credit cards, close the accounts and get serious about only buying things that you can afford.

I’m a big advocate of Dave Ramsey’s debt snowball method. Some people argue that you should pay off the accounts with the biggest interest rate first. Yes, that works…if you can stick with it. Being smart with money has very little to do with head knowledge and everything to do with behavior. The problem with paying off the highest interest rate first, is that it can be easy to lose motivation if you’re not seeing quick results.

The debt snowball method is simple. You list out your debts, smallest to largest. Then you start attacking the smallest debt with as much money as you can while continuing to pay the minimum payments on everything else. As you pay off the smaller debts, you get to cross them off your list and now you have even more money to attack your larger debts. It’s a process that has quick results and is very motivating. Yes, it slows down as you reach the larger debts, but having seen the immediate results of paying off your smaller debts, it’s going to be easier to stay on course. If you started with the largest debt first because it has a higher interest rate, you might find yourself giving up because it feels like you’re not making any progress.

If you’re making minimum payments on everything, continue to do so. Where things can get tricky is if you have debts that you already stopped paying on. I was in this situation. I had a bunch of accounts that I defaulted on that I hadn’t made payments on for in years. It didn’t make a lot of sense for me to start paying on those just because they were small, or “next in line”. I needed to get my monthly expenses down as fast as possible, so I actually created 2 debt snowballs. One with active debts (accounts I was still actively paying) and “stale” debts (accounts that had sat dormant for a while). Just pay off the active debts first, and then attack the inactive list with insane intensity.

Remember when we talked about budgeting? Well, a big part of your budget needs to be debt reduction. Add up all of your monthly debt payments and create a “debt reduction” category. Now, add anything that’s left over once you have cut your expenses down as much as you can. As you continue to pay off your accounts, smallest to largest, you’ll find that you have a lot more money to throw at the debt with each account that you pay off.

I highly recommend checking out Dave Ramsey’s debt snowball method on his website or in his book. It’s really an easy process and it does wonders for creating good habits.

Conclusion

Don’t believe the lie that you need debt. There is nothing in this world that can’t be paid for using cash. You just have to discipline yourself to be able to wait until you can afford what you want. The good news is, when you’re debt-free and not having to pay ridiculous payments every month, you don’t have to wait very long. You’ll be amazed at what you can do with your life when you’re not held back by the chains of debt.

If Dave Ramsey Was a Paramedic

Our Celebrity Medic this week has made an entire career out of helping people. From finances to spiritual health, he is no stranger to doing good deeds. While he certainly has the ability to never have to work another day in his life, I simply can’t see him ever hanging up his hat. But what happens when his message has spread as far as it can go? What would he do in a truly debt-free world? Would he enjoy a peaceful retirement? Or would he seek other ways to help his fellow man? I think this would be the perfect opportunity for him to seek a new career in pre-hospital medicine. So without further delay, let’s ask ourselves the question of the week:

What Kind of Paramedic Would Dave Ramsey Be?

Dave would most likely run his new ambulance service out of his current office in Nashville, TN, where disease is dumb, health is king and the paid off medical bill has taken the place of the elective cosmetic procedure as the status symbol of choice.

While traditional EMS systems automatically respond paramedics to the homes of patients, Dave would seek a different approach. Instead of doing several house-calls every day, he would have his patients call into his show and describe their current health problems to him. When it comes to minor injuries and illnesses, he would most likely be able to guide them through taking care of themselves. Patients whose issues that couldn’t be resolved over a phone call would be sent a copy of his latest book: “The Total Medical Makeover”. Any serious issues that required extensive treatment would have a paramedic from his service dispatched for one-on-one care. This of course, would be assuming that they were local. Residents outside of his immediate service area would be referred to one of his endorsed local ambulance providers.

Treatment strategies would differ from traditional EMS systems. The patients would be taken care of in a baby step process:

Step 1: Build up an emergency fund of blood, oxygen and glucose.

Step 2: Symptoms and injuries would be treated from the smallest problem first to the largest. This is a system called the “treatment snowball”. These treatments would continue to be applied until the patient was feeling “better than they deserve”. Patients that were treated by Dave and his team could come back to the office after their recovery to do a live “injury free” or “illness free” scream.

Step 3: Save up 3-6 months worth of oxygen, blood, glucose and medicine.

Step 4: Setup a long-term care plan for medical problems that might arise when they get older.

Step 5: Start saving for children’s medical expenses.

Step 6: Purchase and pay off their own clinic or hospital.

Step 7: Volunteer as a care giver or donate blood.

Transitioning from financial coaching to emergency medical services could prove to be challenging, however with the help of Dave’s talented and dedicated team, they would likely create one of the most cost-efficient and effective ambulance services in the nation. Dave’s daughter, Rachael Cruz could handle family medicine and pediatric issues while his current phone screener, Kelly Daniel would function as the 911-operator and ambulance dispatcher. And of course, Blake Thompson would work as a field supervisor.

On a final note, it should be known that Dave would apply his financial principles to building and running his ambulance service. Unlike most providers, he would NOT go into debt to buy ambulances. All of his ambulances would be slightly used and would be purchased with cash.

Conclusion

With the #MoneySmartMedics campaign in full swing, I felt that Dave Ramsey would be the perfect fit for this week’s Celebrity Medic. Anyone that follows his show knows that he would be an excellent care giver and would give 100% to any career he had. If this were to ever happen, I would be first in line to work for him.

Money Smart Medics Part 4: Mastering the Budget

budgetingIn Part 3 of the #MoneySmartMedics series, we discussed how to get started on your first budget. In this article, we are going to discuss fine tuning your budget to plan for the future, prepare for emergencies, and not fall victim to the curse of the short pay period (for those working on a 24-hour shift cycle).

This is where things start to get fun. As you do this, you will find that the more you separate yourself from the number “zero”, the more stress-free your life becomes. Remember, all you need is a pencil and paper to write a budget, so there’s no excuse not to jump and start!

Let’s do this…

Get Your Spending at Work Under Control Using Micro Budgets

Let’s face it, we spend money while we are at work. We spend a lot. Whether you’re working 24 hour shifts in a station, or 12 hour shifts on a street corner, you’re constantly faced with the temptation to swipe your debit card. For me, the biggest at-work expense was fast food. I was terrible about bringing my meals because, let’s be honest, it’s a real pain to do when you work long-hour shifts. It’s simply human nature to follow the path of least resistance. I get it. However, it’s GOT to stop.

Obviously, the best solution here is to just bring your own food to work. However, I know that’s easier said than done, and many people simply aren’t going to do it. If you are going to be spending money on food at work, you AT LEAST need to set a work-spending budget.

When I started budgeting, I found that I was spending anywhere from $200 – $300 a month at work ($8-$10 per meal x 3 meals per day x 10 work days). That’s insane! By using “micro budgeting”, I was quickly able to cut that down to $90 a month!

Anchorman-2-Say-What

Yeah, you heard that right! Here’s how it worked:

Setting an all-encompassing fast-food budget simply didn’t work. I initially told myself that I would cut my fast-food spending down to $200 per month. While on paper it seemed like a great plan, it wasn’t practical without a system in place to keep me disciplined. I used to put $100 in an envelope every pay check, and that was supposed to be all I would spend. The problem was, I burned through it too fast. I continued spending $8-$10 per meal on the “value menu” (I use that term loosely) and before I knew it, my envelope was empty. After a couple pay cycles of running short, I knew I had to come up with another system.

I ended up creating a separate budget / envelope exclusively for fast-food spending while at work. I then set a per-meal budget of $5. On a 24-on / 48-off work schedule, this meant that I would need a max of $45 per week to cover my meals. The $5 per meal micro-budget virtually eliminated “value meals” as an option. I had to get creative, which meant choosing what and where I ate wisely. I became quite the connoisseur of the dollar menu and quickly found that $5 was actually more than I needed. After a few days, I ended up cutting that down to $3 per meal. That cut my per-week budget down to $27.

While a $2 savings per meal may not seem like much, try looking at it from a larger perspective:

$2 in saving per meal x 3 meals = $6 a day. $6 x 10 shifts in a month = $60 a month. $60 x 12 months = $720 a year.

Now, invest that $720 a year over the course of a 30-year career and you would have nearly $200,000. That’s a PAID FOR HOUSE.

Now, let’s take it step further and look at what happens when we invest the money we saved by lowering a $300 fast food AT WORK spending habit to $90 a month.

$300 (old spending habit) – $90 (new budget) = $210 a month. $210 a month x 12 months = $2,520 a year.

$2,520 a year invested = nearly $700,000! The interest alone on that amount would top your current annual income FOREVER. That’s an awesome retirement plan ON IT’S OWN!

The examples I just gave you can be applied anywhere. Imagine the savings when you apply these principles to ALL areas of spending? Get creative and make it happen!

Using Sinking Funds to Plan for the Future

I believe it was Benjamin Franklin that said “By failing to prepare, you are preparing to fail”. This quote is so simple, so true and SO applicable to our everyday lives, so why can’t we grasp this concept? Well, by following the principles in this section, “we” no longer has to apply to YOU.

You’re probably asking yourself: “what the heck is a sinking fund?” The unofficial version is: The best thing to come to personal finance since budgeting. The official version is: The act of setting aside increments of money to achieve a long-term savings goal. Translation? The cookie jar!

OK, so it’s a little more complicated than a cookie jar, but not much…

Sinking funds are a super easy and effective way to save for planned events, and even emergencies. For example: Christmas. It’s not an emergency, folks. It happens on the same day every year. Plan for it and set aside money in your Christmas fund every payday. Here’s how it works:

Christmas Budget = $1,000. Number of bi-weekly pay periods in a year = 26. $1,000 divided by 26 = $38.46.

This means you set aside $38.46 every paycheck into your Christmas envelope, cookie jar, etc to meet your savings goal.

You can do the same for things like vehicle maintenance / repairs, birthdays, car registration, taxes, vehicle replacement and yes….VACATION!

Be creative and start using sinking funds wherever you can. Don’t be caught off guard!

Preparing for Emergencies

I am writing this section with the assumption that you still have debt. As most of you know, I am a HUGE proponent of Dave Ramsey’s “Baby Steps”, so the advice I offer here will closely mirror what he already teaches. If you haven’t read about Dave’s baby step process, go check it out and then come on back.

Until your debt is completely paid off, you need to set aside $1,000 and LEAVE IT ALONE unless you have a real emergency. Remember the sinking funds? Get that $1,000 saved up AS QUICK AS POSSIBLE before you start saving for anything else.

If you’re following Dave’s baby steps, this should be done in step 1. If you find yourself having to use any of this money, revert back to step 1 and build this fund back up as soon as humanly possible.

Beating the “Short Pay Period” Curse

If you work 24-hour shifts, you know exactly what I’m talking about. On my 24-on / 48-off schedule, I have 2 “normal” pay periods, followed by 1 “short” pay period. This used to cause SO many problems for me if I didn’t work overtime. Planning for large expenses like rent and my car payment were difficult if the due date landed anywhere near my short paycheck. There’s a simple way to avoid this…

Add up all of your monthly expenses (or at least the large ones) and divide them by the amount of shifts you are scheduled to work each month. This way, you know exactly how much to set aside each pay period. Here’s an example:

Rent ($700) + Utilities ($300 total) + Car Payment ($400) = $1,400 a month.

$1,400 / 10 shifts per month = $140 per shift.

Regular pay period = 5 shifts (Set aside $700)

Short pay period = 4 shifts (Set aside $560)

You may have to add extra if you’re starting this budget during a short pay period. However, once you get through the first month, it will even out.

As you can see, the math works just like the sinking funds. Trust me, such a simple technique will save you tons of stress.

Conclusion

As you can see, there is no “magic formula” to being a Money Smart Medic. These budgeting practices are simple and very easy to implement. It’s all about behavior and very little about head knowledge.

Regardless of how much you make, you can apply these techniques to your budget. Quit making excuses for yourself. Get on the budget and find financial peace!

If You Like Your 24 Hour Shift, You Can Keep Your 24 Hour Shift

Yes, I shamelessly lured you into the this article using the Obamacare promise……

I’m going to preface this post by saying that I currently work 24 hour shifts, and I enjoy them. Throughout my career I have been assigned to 10’s, 12’s, 24’s, 48’s and even 72’s. I even pushed the envelope a few times and did a couple 7-day stretches (Disclaimer: It’s a bad idea. Don’t do it). For the most part, long-hour shifts are all I’ve known for the majority of my adult life. I don’t want to see them go away, but realistically I know they will.

Every time I bring this topic up, it is usually hit with some pretty fierce opposition. 24 hour shifts have been a staple in our industry since it’s creation and like many other things we enjoy, we hold on for dear life. Working 10 days a month on the right shift rotation allows us to do a lot of things that most people on traditional 8-5 schedules couldn’t dream of.

Here’s the problem….

Too many employers (and employees) don’t take the issue of fatigue and safety seriously. Virtually every branch of commercial or public transportation has very strict rules on hours that their employees can operate, except EMS. I can literally be on the tail end of a 48 hour shift with absolutely no sleep and legally operate an ambulance or fire engine. I’m fortunate enough to work for a service that takes work hours and safety seriously, but I wasn’t always so lucky. Many services subscribe to the “suck it up” mentality and actually punish employees for “tapping out” or blowing the whistle when they’re too tired to take a long distance transfer or run a call.

The “on your feet from 8-5″ policies are also killing the 24 hour shifts. I completely support station duty and equipment maintenance requirements. However, once the requirements are met, I feel that it’s very foolish not to allow your employees to lay down and get some rest during the day to reduce fatigue in the night hours. Setting “break hours” only works when the pieces fall into place and no calls go out during that time. If you’re dead set on “not paying your employees to sleep”, then switch to 12-hour shifts. Quit putting your employees and your patients at risk.

I have never understood the practice of discouraging employees from requesting down time to rest. Yes, I understand that needs of the service and community have to be met, but at what cost? We don’t encourage our employees to enter unsafe scenes – regardless of how critical the patient is – so why aren’t we doing the same when it comes to fatigue? If a loved one called me and told me that they were exhausted while making a long drive, I would tell them to immediately pull over and sleep. If it isn’t good enough for ourselves or our loved ones, then why is it good enough for our employees? Nothing is worth a human life…not even staffing requirements.

My wake up call happened several years back when I was working as an EMT-Basic. I was working a 48 hour shift in a rural community and we were up running back-to-back calls for the majority of this particular rotation. I was driving to a hospital in a town that was an hour away from the scene location. Shortly after hitting the interstate, I started feeling the affects of fatigue and I started fighting to stay awake. I wanted to say something, but I was afraid that I would be sent home without pay if I tapped out. I tried rolling down the window, cranking on the air conditioner, listening to the radio, and even attempting to engage my partner in conversation. I had a brief period where I blacked out and the next thing I remember was waking up 3 lanes over from where I remembered and nearly striking a guard rail. I played it off like I was moving out of the way of an animal that ran out on the road. Thankfully, nothing else happened and we made to our destination safely. Yes, I showed up to work with plenty of rest that shift, but that didn’t do me a lot of good at hour 37 with no sleep.

Yes, I still work 24 hour shifts and I enjoy them. The difference is, I work for an employer that is serious about how many hours we work consecutively and encourages us to rest whenever we can. If I’m working a 48-hour shift, I’m not required to be awake at a specific time to perform a pointless “log-on”. I’m typically able to catch a decent nap during the day, and I know that if the time came where I couldn’t safely operate the ambulance, I could notify my supervisor without fear of punishment. In other words, they’re doing it right.

As far the title goes, yes we can keep the 24-hour shifts, but we are going to have to be serious about the risks from fatigue. If employers continue dangerous practices then it will just be a matter of time before we start to see legislation that restricts our work hours. I don’t want to see that, but my confidence in the industry to do the right thing is nearly non-existent when it comes to this issue.

I would love to hear what you have to say on the subject. Comment below to let us know your thoughts on 24 hour shifts.

Money Smart Medics Part 3: Starting the budget

If you’re anything like me, you probably cringed a little when you read the title. If you’ve never lived on a written budget, it can seem kind of scary. I used to think that budgeting meant that I would lose control of my finances. What I wound up discovering is that budgeting is the only way to take control of your finances. The truth is, we all live on a budget. It’s just a matter of how many categories we chose to setup.

Trust me when I say that setting up a budget is one of the most liberating feelings when it comes to managing money. My version of budgeting used to be swiping my debit card until it stopped working. I used to get anxious every time I paid for something because I was never 100% sure that the transaction was going to be approved. That’s no way to live. Once I took control of my spending, all of that stopped. My stress level became nearly non-existent.

I remember hearing Dave Ramsey say that I will feel like I got a pay raise once I start budgeting. I wasn’t sure what he meant by that until I actually started doing it myself. Within a month of living on a written budget, I quit both of my part-time jobs. I had previously believed that these jobs were absolutely essential to my survival. Budgeting and being intentional with my money actually allowed me to start focusing on balancing my home life with my work schedule.

List Out Your Monthly Bills

Before we can even start writing our first budget, we have to figure out exactly what we are bringing home and how much we are spending. Grab a note pad and add up your average monthly household income WITHOUT overtime. Now add up all of your monthly bills. This doesn’t include food, fuel, etc. We’ll get to that later. I’m talking about anything that requires a monthly payment like your rent / mortgage, cable TV, car payment, etc. Ideally, your income without overtime should be more than your monthly bills. If it’s not, don’t panic. We’ll be OK.

If your bills exceed your income without overtime, then you are living beyond your means and something has to change. We have 2 choices: We can either reduce the money going out or increase the money coming in. I strongly recommend taking a serious look at what’s going out every month and start eliminating non-essential items using the process I described in Part 2 of the #MoneySmartMedics series. Our goal is going to get all of our monthly expenses below our income amount without overtime. I understand that everyone’s situation is unique and you may not be able to accomplish this depending on your financial obligations. However, do your absolute best to get this as low as your possibly can.

Once you list everything out, grab a calendar and mark all of your due dates with the amount of money owed. This will be extremely useful when it comes time to creating your budget.

Figure Out What You’re Spending

Unless you make a habbit of writing down every dollar you spend, this step is going to take some time. Before you begin, try your best to figure out your basic categories of spending. You don’t have to be extremely detailed, but try to separate things like fast food from groceries. Try using the following as a starting guide:

Food
-Groceries
-Fast Food
Fuel
Entertainment
Household items
Clothing

Once you have your basic categories laid out, start pulling up your bank statements and add up the numbers. I would recommend doing a 3 month average in all of the categories, but using only the previous month will also suffice. This part is painful and eye opening, but it’s the only way you’re going to get a grasp on what your spending.

Side Note: The first time I did this, I found that my biggest expense was overdraft fees. Don’t be ashamed or discouraged. Knowledge is power. 

Building Our First Budget

Now that we have all the information we need, we can start putting it all together. We are going to start assigning categories to dollars until our “available funds” hits zero. This is going to take practice. Actually, it’s probably going to take a few months to really get it right. That’s OK! Don’t give up.

We need to lay out our categories, just like we did in the previous step. Only now, we are going to add in our monthly bills as well. You can use the following example to help get you started:

Rent / Mortgage
Utilities
-Electric
-Gas-
-Water
-Phone
-Internet
Car Insurance
Debt
-Car Payment
-Credit Cards
-Student Loans
Fuel
Food
-Groceries
-Fast Food
Entertainment
Spending Money
Clothing
Household Items
Emergency Fund

Now imagine that each of these categories is an envelope and your monthly income is a pile of cash (we’ll use real envelopes in a later step). Now we just have to fill in the envelopes until there’s no more cash on the table. This part is a bit tricky and it’s going to take practice, but trust me when I say that it gets easier with each time you do it.

We have to place priorities when we budget to make sure that our essential needs are met. If you wind up with a short paycheck, you may not be able to fill all of your envelopes, but that shouldn’t mean that you don’t eat. Here are my top 3 priorities that I make sure are met every paycheck:

Life Sustaining Items: Food, Water, Medicine
Shelter: Rent / Mortage, Essential utilities
Transportation: Fuel, Car Payment, Vehicle Insurance, Public Transit Costs

I used to make the mistake of placing debt collectors, cell phone providers and even the trash company above my essential survival needs. Yes, ideally you will pay everything on time. However, if you get into a pinch, your credit score shouldn’t take priority over feeding yourself and your family. Remember, Experian isn’t going to keep your lights on or take your kids to school.

Once your top 3 priorities are met, you can then decide what gets taken care of next. This part shouldn’t be too difficult to figure out.

Making Your Budget Work For Your Pay Cycle

Writing a monthly budget can be tricky when you’re on a bi-weekly pay schedule. It gets even more tricky when you work 24 hour shifts and have “short” and “long” pay periods. This is where your calendar that you created is going to come in handy. Take the time and mark out every pay period with the hours you are going to work. I use Google Calendars to do this automatically, but anything you have will work just fine.

By looking at your calendar, you should be able to determine which bills will be paid with each pay check. When it comes to larger bills like rent, mortgage or your car payment, you have 2 choices: You can either use one paycheck to cover the large expenses, or fill up half of your “envelope” with each check. Either way, it’s going to be easier to budget on a bi-weekly basis. Here’s an example of how you can set up categories to work with your pay cycle:

Rent:
-
Pay Period 1
-Pay Period 2
Groceries
-Pay Period 1
-Pay Period 2
Car Insurance
Utilities
-Electric
-Water

…you get the point

Start Stuffing Envelopes

I’m a huge fan of the cash envelope system. Just like we discussed when setting up your budget, you can use real envelopes to separate the cash for your spending categories. Once the envelope runs out, you’ve reached your budget.

This isn’t going to be practical for things that are typically paid out of your checking account like utilities, insurance, etc. But for all of your everyday expenses, this will work wonders. Keep your envelopes somewhere safe and only carry with you what you need.

I highly recommend checking out Dave Ramsey’s article explaining how the envelope system works: http://www.daveramsey.com/blog/envelope-system-explained 

Factoring In Overtime

Hopefully we have made it this far without having to factor in overtime shifts. But like I said, it’s not the end of world either way. I like to put a price tag on my overtime shifts so that I know exactly what I’m going to be bringing in. I accomplish this by doing the math to figure out exactly what my gross income is for a regular shift vs an overtime shift. Using Paycheck City’s online payroll calculator, I figure out exactly what my take home pay would be with no overtime, 12 hours extra, 24 hours extra, etc. I have a chart in my notebook that looks something like this:

No Overtime: $1,400
12 Hours:
$1,750
24 Hours:
$2,100
36 Hours: $2,600
48 Hours: $3,000
(These are made up numbers for the example)

Like I said before, knowledge is power. By placing a price on every shift, you can work towards balancing your work and personal lives and take complete control of your finances.

Make It Easy

All of the things I mentioned in this article can be done with nothing more than a pencil and a piece of paper. However, if you’re willing and able to spend a small amount of money, you can purchase a program called YNAB (You Need A Budget) that does the bulk of your budgeting work for you. Actually, YNAB is the only true “virtual envelope system” that I could find. I’ve never been a huge fan of carrying cash so YNAB really allowed me to continue using my debit card while holding myself accountable. If you’re going to use something like this, you need to make sure that you can discipline yourself to stick to your budget and keep YNAB up-to-date. If you think using your debit card is going to cause problems, stick to cash and real envelopes.

There are some free alternatives as well like Mint.com, however nothing I have found actually holds you accountable like YNAB does. While many people entering the the budget world seek full automation, YNAB forces you to manually enter all of your transactions. This is a good thing because learning how to budget is about developing good habits. Having a program “nag” at you in your e-mail when you have reached your budget isn’t going to accomplish that. I’ll be posting video tutorials on how to use YNAB in the coming weeks.

Fortunately, I was able to work out a deal with the folks at YNAB to give you a $6.00 off discount if you purchase it through the link on this article. Yes, I will receive a small commission on your purchase as well (just trying to be honest!). You can download their program and use a 34-day free trial if you just want to check it out.

YNAB

Click here to download YNAB and receive your $6.00 off discount.

Conclusion

If there is one thing to take away from this week’s article, it’s that being intentional with your money is the only way to gain control of your finances. Cut the credit cards and start paying with cash or debit. If you don’t have the money on hand, you can’t afford it. Breaking the credit card cycle can be tough and trust me, we’ll cover that in detail in a later article.

Don’t be afraid to budget. It’s the only way to take complete control of your spending, and taking control is the only way to achieve financial peace.