Ignorance is not bliss. However, there are too many of us who are ignoring the discussion about a legislative maneuver known as “Sequestration.” This is also known by a more descriptive term — the “Fiscal Cliff” (Federal Reserve Chairman Ben Bernanke coined this phrase). Unless this is updated, all financial rules and budgeting will come to a halt on December 31, 2012. Let me tell you about a few of the programs that are at risk.

One program is the funding of our military. If we don’t fix the Fiscal Cliff, our forces will have to let go about 300,000 military personnel. America would then have the smallest troop size of our military since 1940. That was tempting to Nazi Germany and Imperial Japan and led to World War II. Putting troops in the unemployment lines and reducing our ability to defend ourselves may quite easily put us into a serious war with a major opponent.

Another vital program is the Transaction Account Guarantee. This FDIC program, which is fully paid for by the banking industry, provides insurance for checking accounts. If Congress fails to extend the TAG coverage beyond its December 31 expiration, approximately $1.4 trillion in deposits will become uninsured overnight. This could be devastating to our local communities. Imagine all the small business owners, households and others having its cash flow at total risk. Abruptly ending this deposit coverage will disproportionately affect minority-owned businesses and their local lenders.

Small banks make more than 60 percent of all small-business loans and use this coverage to support local lending. Because our slow economic recovery remains fragile, allowing this coverage to expire carries the risk of countless unintended consequences for small businesses that are just regaining their footing from the past recession. A high percentage of our banks will close their doors and reduce capital access even further.

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Failing to write legislation will have global implications. Nations holding our debt such as China, Japan and Great Britain will start panicking. Our dollar will start shrinking.

Besides the banking industry all corporations and individual stock owners will lose value. If the Fiscal Cliff occurs, the current tax rate on stock dividends will increase from 15 percent to over 49 percent. This will quickly cause personal investors to put their money somewhere else than straight stock purchases. Wall Street will do the same.

The value of many of our corporations, pension plans and local governments will drop immensely. Plants, jobs, retirements plans will begin to shrink and many will go away. Many headquarters will leave this nation for a more business-friendly environment. Every community and household will feel this pain.

If you are on Medicare, the pain will hit there also.  The amount of payment going to your doctor will decrease by 30 percent. You are going to be responsible for paying that portion of the bill.

If you do business with the federal government, you are at serious risk. Invoice payments will be extremely delayed. You may not get paid at all. A noticeable amount of federal vendors may get ruined and have to close down. For those surviving, plan on going into other markets such as private business and international trade.

All we have to do is for Congress to come to agreement, but that hasn’t happen in over a decade. I pray that they snap out of it and start realizing that this nation’s future is on the line. Sometimes I get confident that they will, but then I realize that the Senate has been operating without passing a budget in three years.

According to Wikipedia, if there is no legislation, come January 1 we will see:

1. The expiration of the two-year extension of the Bush tax cuts provided for in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

2. The expiration of a Social Security payroll tax cut, most recently extended by the Middle Class Tax Relief and Job Creation Act of 2012.

3. Across-the-board spending cuts to most discretionary programs as directed by the Budget Control Act of 2011.

4. The expiration of federal unemployment benefits.

5. New taxes imposed by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010.

6. The expiration of measures delaying the Medicare Sustainable Growth Rate from going into effect.

7. The reversion of the Alternative Minimum Tax thresholds to their 2000 tax year level. That’s just January 1. The rest of the damage will all occur by the end of March.

Failing to write legislation will have global implications. Nations holding our debt such as China, Japan and Great Britain will start panicking. Our dollar will start shrinking. Our economic growth will slow to about one percent during 2013. It all sounds very frightening — it is!

If they (Senate and House) do act, they will do it during the “lame duck” session after the elections. We should all pray that they do.

Alford is the co-founder and president/CEO of the National Black Chamber of Commerce. He welcomes reader responses to halford@nationalbcc.org, or go to www.nationalbcc.org.

Immediate gratification, lack of information, and lack of discipline have forced many of you into a tardy start with several missed financial opportunities. This mindset probably started young. Think back to when you graduated from high school: How much graduation money did you receive? I got roughly $900 cash that I was allowed to spend. Surprise, I spent it on crap!

Hindsight being 20/20, I would have saved that money in a Roth IRA (I had a job also). The benefit of a Roth is that after age 59½ the money can be withdrawn tax free provided that it has been in existence for at least five years. Now, if I never added any additional contributions (just the $900) and I am assuming that this investment would average eight percent over time, by the time I would have turned 65, I would have seen a return on my high school graduation money of just over $38,000.

This return factors the ups and downs of the market. One year you may earn 12-15 percent and another year you may earn only five percent, over time anticipating an average of eight percent. Now that is serious compounding, and like long-term investment time is your best friend.

Many graduation parties are underway and monetary gifts for the new graduate are a common congratulatory offering by friends, family and well-wishers. Encourage your teen to be wise with their windfalls. This generation can change the future generations by getting a jump on their relationships with money. Good habits are much easier to adopt at age eight or 18 rather than 38. Not only will there be a much lasting effect, but also your children will have real potential to create lasting wealth.

As you begin to think about summer plans, vacation to relatives, camps, and college in the fall, sending your teen away with cash is very scary and incredibly inconvenient. My oldest has gone away every summer since high school freshman year, too young for a checking account/Visa check card and not ready to take on the responsibility of consumer debt with a credit card. After summers and summers of insane out-of-state ATM fees, enough was enough. Online bank ING began offering the MONEY card, which is designed for teens — love it! For the younger child, they offer a kids’ savings account (www.ingdirect.com).

Don’t make money and the cost of living a foreign or scary concept to your children. All ages can benefit from and practice good habits. One day they will leave the nest, and how comforting it will feel knowing that you provided your little darling(s) a solid foundation in financial acumen.

Consider the following:

1. Let children practice managing small amounts of their own money with a weekly or biweekly allowance or stipend.

2. Whether you’re running a business or working a nine-to-fiver, let your children see you in action and how you make money.

3. Talk early and often about college cost and how you’ll pay for it. This encourages your child to have a vested interest in their future.

4. Teach kids to divide up money into spending, saving, and giving categories. Let them spend their money and learn that they have to save for larger ticket items. They will experience wasting money and making wise purchases.

5. Give children a hands-on education about stocks, bonds and/or mutual funds. Open a custodial investment account, and let them pick companies they are interested in learning more about and purchasing stock in.

6. Teach teens to responsibly use debit and possibly credit cards. A spending journal is great for teens to track where their cash goes.

7. Reward their discipline to save and give them a percentage match monthly or quarterly. They will really see their savings grow and motivate them to continue.

8. The moment your kid gets a job, have them open a Roth IRA. They must have earned income to open this account. Earned income can also come from the family business if you hire your kid. Check with your tax advisor for the specific requirements and guidelines.

Freelance writer, financial consultant, entrepreneur and mom, Tamela Saulsberry brings a combined 16 years of experience in business, finance, sales and coaching. She is delighted to receive your questions and feedback. She can be contacted at tamela@liveshero.com or 612-269-2341.

The term “American Dream” was invented in 1931 by writer and historian James Truslow Adams. He coined the term in his novel The Epic of America where he states, “The American Dream is that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. That dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement… A dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”

Many of you are products of the generation that was told and sold on the idea that home ownership, a proxy, was the American Dream. Basically, you had arrived once you owned your own home as a result of your hard work. The discussions were limited around the perpetual mortgages owned by the bank that also came with the deal.

Nevertheless, equity meant leverage and leverage equated to financial muscle. Then, as predicted by many experts, the real estate bubble burst and many Americans living this pseudo-dream were swallowed whole by the financial crisis that swept the nation in 2008.

Foreclosures, short sales, and desperate pleas to lenders for debt modifications were thick in virtually every neighborhood in every city. That American Dream slowly became a nightmare. The dream as you came to know it changed. Mindsets, financial situations, short-and long-term goals, job statuses, trust and hope in the future were met with skepticism and uncertainty.

Fast-forward to today: Economic recovery continues across the masses. Updated philosophies and new ideas around family economics is the new norm with a newly defined American Dream. Sure, the common denominator in its modern definition still rings true; happiness and prosperity can be achieved through one’s own abilities and hard work. But that certainly isn’t the whole story.

Raising two children today, I am focused on teaching them that home ownership can be sensible and favorable as a diversification strategy in your overall investment portfolio. However, in our home, education and quality time trump all. I’m encouraging conventional and unconventional learning through camps, travels, books/biographies, life skills, financial and political literacy laced in good old common sense and realism.

There are no guarantees in any futures, but an esteemed education can assure one’s ability to compete with confidence in a society of political and fiscal uncertainty. There are several social and economic indicators that prove obtaining a higher education will afford a lifestyle that supports the upswings and downturns.

With college cost in excess of three to four times the costs during the previous generation, scholastic excellence, creativity, determination and hard work are essential ingredients to one’s ability to obtain a solid education. This is the real arrival point.

Education is the winning recipe and the real American Dream. Once you obtain it no one can take it from you. It’s the surest result that can propel you into fulfillment, freedom, prosperity, self-satisfaction, and the confidence to take your economic, philanthropic and social status to the next level.

Freelance writer, financial consultant, entrepreneur and mom, Tamela Saulsberry brings a combined 16 years of experience in business, finance, sales and coaching. She is delighted to receive your questions and feedback. She can be contacted at tamela@liveshero.com or 612-269-2341

With all the hype and chatter of Facebook’s Initial Public Offering (IPO) and Mark Zuckerberg’s intent to raise $5 billion — one of the larger IPOs in history — Facebook’s financials have already been released, so the questions are now looming across all the airways. What will be the offering price — overpriced hype or a good value? What are the future global plans and growth for the company — privacy policies and web security?

Once the company goes public, at some point in the next few months it will be available to all of its 800 million users for trading on the public stock exchange. So with the mass popularity of Facebook, could this mean a grand slam for Junior’s college funding, or will the history of social media stocks prove, once again, to be a flavorless clique? Less we forget, LinkedIn and Groupon are both down 20 percent since their initial public offering. Zynga Inc. has finally pushed pass the $12 mark from its $11.50 price in the beginning.

With this, I thought it was the perfect time for an article on basic investing in the market. Over the past 100 years, the stock market has outperformed every other investment. Over the long haul, most investors will tell you that several small gains are much better than having one grand slam.

Whether bearish or bullish, investing comes with significant risk and volatility. But jumping head first into the deep end is not necessary. Based on your comfort level and investable dollars, dangling your feet in the shallow waters with just a few dollars each month to invest is a great way to get a feel for individual stocks.

It is wise to take full advantage of the wealth of information available right at your fingertips. From books written by professional investors to simply reading financial articles every day, educate yourself and your children on the basics of investing and the terminology. You will quickly come to find that the abundance of information and opinions are quite overwhelming. You will grow to like particular websites and business journals that offer reliable content.

Leaving your personal investing to the professionals (brokers and financial planners), may be a good idea for those of you with limited time for ongoing research or simply don’t have the desire to learn a new trade (beyond the recommended due diligence).

Below are a few musts prior to investing:

1. Learn the lingo: Read financial news tickers, the major stock indices (NASDAQ, NYSE, S&P 500, etc.), market trends and types of trade orders.

2. Start from the cornerstones that you are either an owner (company stock and equities) or lender (debt or bonds).

3. Understand your tolerance for risk: conservative, moderately conservative, moderate, moderately aggressive, or aggressive. Also, what kind of investor do you plan to be: active (day trader) or passive (buy and hold).

4. Develop the goal for investing and a strategy for picking stocks (one example, invest in companies that you patronize frequently or stable companies with longevity).

5. Research your stock picks, company organization, annual reports, news headlines and websites frequently. Organization restructures, mergers, acquisitions, IPOs are common occurrences in business.

6. Diversify across the industry sectors (telecommunications, financials, utilities, transportation, etc.). If you ever watch Mad Money on CNBC, Jim Kramer has a segment called “Am I diversified.” Callers will give Kramer their top five or so stocks in their portfolios, and Kramer will hopefully offer the caller a “Hallelujah — nicely diversified.”

If you decide to go at it alone, here are the most common sites that offer very easy online trading. Check opening and minimum balances: TD Ameritrade ($9.99 per trade), ING Direct Investing ($4 per trade), E*Trade ($9.99 per trade), Scottrade ($7 per trade), and Zecco ($4.95 per trade). Good luck!

Freelance writer, financial consultant, entrepreneur and mom, Tamela Saulsberry brings a combined 16 years of experience in business, finance, sales and coaching. She is delighted to receive your questions and feedback. She can be contacted at tamela@liveshero.com or 612-269-2341.

“I can bring home the bacon, Fry it up in a pan, and never let you forget you’re a man…’cause I’m a woman.” http://www.youtube.com/watch?feature=player_detailpage&v=jA4DR4vEgrs

Do you remember this 1980 Enjoli jingle that advertised a 24-hour woman’s fragrance? Has this become the new normal, wives becoming the family breadwinner?

It is certainly sparking continuous discussions. Over the past two weeks or so, local radio station KMOJ-FM discussed this very topic on one of the evening drive-time shows. The outcome proved to be loaded with unfair judgments and very strong opinions between the sexes, as well as couples that are embracing this shift and making it work.

This is an uneasy discussion for most, as our society is steeped in earning-power anticipation and specific household role traditions. This inevitable shift in earning potential leads to the “new age” question of who should make more money in the household, women or men.

This will undoubtedly continue to be up for debate as long as the economic conditions are forcing families into dual-income households just to make ends meet and unemployment percentages are above the average. The upward trend in earning power between the sexes can also be attributed to more women enrolling and earning college degrees, an increase of women executives and an increase in entrepreneurship. Even though the 2003 Census Bureau states that women make only 77.5 cents for every dollar men make, women make up approximately 46 percent of the total U.S. labor force.

Women will always have to contend with personal decisions around child rearing, the need for flexible scheduling and personal fulfillment, which may prolong the income disparities. But measuring the entire family/household contributions by the amount one deposits into the joint bank account is totally unreasonable and does not address the whole story.

The message Western society has instilled: Money is power, status, and control. The new message should communicate that self-worth and contribution can never equal salary. In my world, I certainly can recall the cliché, “It costs to be the boss,” a frequent quote of my aunt (rest in peace) each time she had to write the check, and she was responsible for writing many checks over the years. As a current solo provider and independent parent, this is not a discussion in my household.

Nevertheless, when I was married, the amount of money brought into the household and by whom was not the source of our money problems; it was more about how the money (or lack thereof) was spent, invested and saved and who decided this. This obviously led to priority discrepancies and common-goal distortions.

Change is never easy, and growing pains are expected. Moreover, changes and adjustment around money and male/female expectations are that much harder to swallow.

After listening to and reading both points of view, the households dealing with this phenomenon seem to be lacking basic human respect; but the many households that are embracing this trend are continuing to propel their families forward by any means necessary.

One major opportunity we all have is to alter the language we chose. You know, the choice words and phrases like breadwinner, out earner, sole provider, Mr. Mom, etc? Each of these terms suggests that someone must be inferior.

In order to confidently accept any financial and role shifts, keep your financial goals in the forefront, constantly communicate them, and let go of other’s (neighbors, parents, friends, societal) pre-determined male/female ideals. Life is not one size fits all, and neither are households.

Freelance writer, financial consultant, entrepreneur and mom, Tamela Saulsberry brings a combined 16 years of experience in business, finance, sales and coaching. She is delighted to receive your questions and feedback. She can be contacted at tamela@liveshero.com or 612-269-2341.

Increase your chance of winning the financial game by choosing the best players

It’s been said that if you cannot handle $10,000, then you will not be able to handle $100,000. There is certainly some wisdom behind this comment, but the majority of people feel that the more money you have, the better life is. There is certainly some wisdom behind this notion as well.

So how do you explain the couple living on a very modest income who have accumulated substantial wealth and are living a very comfortable retirement with plenty of assets to leave their heirs? Or the multi-millionaire living “the life” who ends up poor, with nothing to show for the mass wealth once accumulated?

It has been proven that mismanagement of money is often the reason for financial turmoil or financial freedom failure. Therefore, a wise consumer/person surrounds himself with a dream team of talented, resourceful and experienced professionals to help plan and strategize a successful financial future.

To be successful at most things, it generally requires some outside influence and expertise. To stay on top of your health, you seek a medical professional. To parent well-rounded and confident children, you seek guidance through books, previous generations, prayer, etc. And if you are running a business, you may have an advisory board of sorts to assist you in execution and implementation.

Your personal financial matters are no different.

Although you probably handle many of your own financial affairs, sometimes you may need the services of a financial professional. Financial professionals include financial planners, attorneys, securities brokers and tax specialists. Selecting the right financial professional means evaluating the services they can offer and their credentials.

Finding someone whom you can rely on to give you sound advice and/or service when you don’t have the time or expertise to completely handle these issues on your own can really make the difference in your future.

A financial planner is a professional advisor who can help you set financial goals and who can write and implement an objective and comprehensive plan to manage all aspects of your financial picture, including investing, education planning, retirement planning, estate planning, and protection planning.

A financial planner can give you information and advice on a wide range of other topics as well, like buying a home and managing your cash flow. An essential benefit to hiring a financial advisor is the added value they provide by coordinating with a team of specialized experts in the fields they are not certified or specialized in. The complexity of your situation will dictate how hands-on or hands-off your financial planner will be.

KRC Research, in partnership with the Certified Financial Planner Board of Standards, Inc., conducted a study of just over 1,100 adults over the age of 18 in June 2011 and found that 86 percent of respondents believed that everyone should have a financial plan in place, but only a few had a documented official plan.

The other professional to consider in your “dream team” is a CPA or tax professional. The goal of income tax planning is to minimize your tax liability. A professional stays current on tax law as legislated and can offer you a host of tax benefits that apply to your specific situation.

Reducing your taxable income, perhaps by deferring your income, shifting income to family members, and implementing year-end strategies can be identified by a tax expert. You may be surprised by a lower overall income tax burden.

It is still your responsibility to keep the federal tax rates at the top of your mind as you consider your situation, regardless of hiring a tax professional. The federal tax rate will continue with the same six federal income tax rates in 2011 and 2012. So, depending on your taxable income, you’ll fall in either the 10, 15, 25, 28, 33 or 35 percent rate bracket (see www.irs.gov).

It is also advantageous to have an understanding on how and at which rate your taxable income is taxed. It generally increases as your income increases. Other rates to know are long-term capital gains and qualified dividends rates that continue through 2012 at a maximum of 15 percent.

Finally, the 2010-2011 AMT (Alternative Minimum Tax) Relief for Middle-Class Taxpayers has been extended for two more years. In a nutshell, about 20 million taxpayers are no longer subject to AMT.

Knowing and comprehending various financial strategies and current tax laws takes time, diligence and expertise. No one person can do it all. But having a “dream team” of professionals in your corner that are aware of your situations and goals will help you prepare for a bright future.

Freelance writer, financial consultant, entrepreneur and mom, Tamela Saulsberry brings a combined 16 years of experience in business, finance, sales and coaching. She is delighted to receive your questions and feedback. She can be contacted at tamela@liveshero.com or 612-269-2341.

By Tamela Saulsberry

I have received quite a few emails from readers requesting that I go into more detail on the term “found money” strategies. I was introduced to this term long ago from my days as a financial advisor. Found money is anything that you can add back into the inflow side of your spending plan. This article will offer you specific strategies that support this practice.

1. Check with a tax advisor to see if adjusting your tax exemptions makes sense. This could mean more take home pay, ergo giving up a substantial refund at the end of the year.

2. Open an online interest-bearing savings account (I talked about this in my previous article).

3. Scouring for discounts, promo codes and signing up on various coupon or manufacturer websites are great strategies. Whether the goods or services are discounted by $20, 20 percent or 20 cents, it will really add up.

Hello! Have you seen the Extreme Couponing reality television show? Now I’m now suggesting that you adopt such extreme measures, but you can certainly commit to a scaled-down version. The more you incorporate discount strategies into your plan, the more substantial your inflows become. This will lead to abundance and freedom.

4. Learn to negotiate, but first believe that most things are negotiable. This will take practice, and it wouldn’t hurt to read a book on the subject. This skill will carry you far in several financial opportunities.

5. No offense to my two darlings, but children tend to monopolize the outflows (endless expenditures) in your plan but unfortunately for them, they at times may neglect their household responsibilities. In our home, we refer to this as “rights to citizenship” and I will enforce taxes. This simply means less pay in their weekly stipend.

You know what this means; less expenditures to me equates to more inflows. Discipline starts young but so should reward and bonus.

6. Consign or resale items you have not used for a year. There are several stores that will offer you immediate cash.

7. Sell you intellectual property. If you are endowed with writing, tech support, organization, training/tutoring or cooking skills, these talents could make for substantial increases to your cash flow.

8. Omit or pay off quickly those high-interest credit cards. For illustrative purposes, here is a rough example: $20,000 of debt, 13 percent interest rate, $500 minimum monthly payment. The outcome is over $26,000, which is more than $6,000 of interest.

9. Hold dividend income-producing investments.

10. Take advantage of your company’s retirement plan match. Make sure you are capturing the entire match.

11. Go paperless. Many companies still offer discounts.

Personal cash flow strategies will always need to be a part of your financial plan.

“Found money” strategies are always wise and should be part of your financial plan. Regardless of your current income, seeking out these sorts of cash flow strategies will allow for additional monetary freedoms.

Freelance writer, financial consultant, entrepreneur and mom, Tamela Saulsberry brings a combined 16 years of experience in business, finance, sales and coaching. She is delighted to receive your questions and feedback. She can be contacted at tamela@liveshero.com or 612-269-2341.

Whether or not the last 334 days or so have been turbulent, static or somewhere in between, one thing is for sure, December begets a host of consistencies: holiday traditions, religious celebrations, frigid temperatures, bitter or sweet reflections and an opportunity to tie up loose ends around your personal economy.

Even though our elected officials remain at a stalemate and the agendas are more selfish than altruistic, don’t let the cantankerous few in Washington and on Wall Street scribble on your blueprint of financial freedom. Stay on top of your personal and financial targets and fashion wise decisions for your families.

Start by asking yourself two questions: “Where do I want to be one year from now?” and “What could I be doing better?” You should revisit these questions frequently but year-end is a likely time because it’s the time people are rethinking, recommitting and discussing their financial goals.

There are countless articles, expert economic projections coming from all angles but more importantly, there is the renewed energy that comes with each upcoming year. So sprint with this energy and optimism behind you. Once you have gotten enough momentum, shift to slow and steady.

Before the lights go out in 2011 and you suit up for the 2012 sprint, the following ideas and year-end strategies are to assure 2011 can rest in peace:

1. Assess your 2012 income expectations: about the same or moving into a higher or lower tax bracket?

2. Keep your holiday spending in check. A great deal is only that if it fits within your spending margins. Note: Don’t spend your bonus before you get it on holiday shopping.

3. Dust off your résumé and update it with your 2011 professional accomplishments, continued education and additional roles and responsibilities. Don’t wait until you are actively seeking a new job.

4. Max out your Roth IRA. If you are not systematically saving to the maximum, figure a way to achieve this prior to April 2012. There are huge benefits to funding a Roth IRA.

5. Revisit your spending plan. and plan ahead to increase your cash reserve savings. Even the smallest increment will make a difference to your liquid cash picture.

6. Familiarize yourself on the irs.gov website with the current tax legislation and focus on the tax advantages and incentives that are set to expire on December 31. Hire a tax professional to assure you are capturing all tax credits and deductions you are entitled to.

7. If you get a year-end bonus, and it projects you into the higher tax bracket, it may make sense to defer it (if your employer allows this) until the following year. Self-employed/1099 incomes tend to have more flexibility around this strategy.

8. Increase your pretax deductions if you have not reached the maximum contribution level (i.e., 401K, retirement plan savings).

9. Apply to work at retail stores for some extra income. All retail stores have extended hours during the holidays, plus they would probably appreciate the extra help. Since you’re not going to get rich here with your new part-time gig, make sure the logistics (very short commute, no added costs out of your pocket) make sense.

10. Shrink your outflow column (from November’s article) by checking out www.billshrink.com, a free and easy cost-saving tool that will look for opportunities to save you money on your everyday expenses.

As I draw from my own experiences, 2011 has been a whirlwind of opportunity, growth, major expenditures (crippling my cash reserve) and several proud mommy moments. I look forward to what 2012 has in store.

Freelance writer, financial consultant, entrepreneur and mom, Tamela Saulsberry brings a combined 16 years of experience in business, finance, sales and coaching. She is delighted to receive your questions and feedback. She can be contacted at tamela@liveshero.com or 612-269-2341.

Rigid, inflexible and controlling defines the primitive budget. So from this moment forward, let’s render it obsolete. Conscious, smart, and resourceful defines the contemporary spending plan and it is here to stay.

The spending plan’s rules of engagement are far less inflexible compared to the antiquated budget. Having a spending plan is really about being proactive versus reactive.

The steadiness that comes with a cash-conscious plan is the lifeblood to your lifestyle and is quite empowering. There will be far less random and impulsive expenditures, therefore omitting the need to rob Peter to pay Paul. By the way, who is Peter and why does he always get the short end of the stick?

With this design, it allows you to focus on the things that are most important. Prudence, discipline and priorities are words to live by when it comes to developing your personal spending plan.

I realize that I am sauntering a fine line, and most of these words may be ill-digested because the notion of this article is merely a glorified budget read. And to many, budget is synonymous for “blah, blah, blah,” but hear me out and open your context to the point of view I am offering.

A spending plan is far more sexy than its homely cousin the budget. We are all guilty of spending money on things we don’t need but set your own guidelines and priorities during the spending plan creation, and follow that with some serious fact finding. This will include knowing all take-home income (not what you make). Make sure you include any 1099 sources, dividends, tips and “found money” strategies.

An example: I am also a mystery shopper, so if I consistently complete six-to-eight shops per month, I can count on additional monthly inflows.

Now let’s shift to the outflow side. If you have not made paying yourself and your family first a habit — do it! Put your own hand in your pockets before all other demands arise.

That’s right, no matter your financial obligations, you and your family must be the top priority in your plan. The key is to itemize expenditures by fixed, discretionary, and limited frequency (insurance premiums, property taxes, etc.).

For those limited-frequency payments, open an interest-bearing savings account, preferably from an online bank as they tend to offer the best interest rates with minimal balance requirements. Convert the payment to a monthly amount, and add that amount to your new account.

Once the quarterly or semi-annual payment is due, you’ve earned a bit of interest on your money. Yippee, more cash to the inflow side. The more comprehensive and accurate your fact finding, the more opportunity there is to add positives to your overall spending plan.

Key takeaways: Pay yourself first, keep an accurate and frequent log of expenditures, shop around/plan your spending, and incorporate “found money” strategies to your inflows. Adopting good habits and a proactive approach to inflows and outflows will afford you an improved financial lifestyle.

Freelance writer, financial consultant, entrepreneur and mom, Tamela Saulsberry brings a combined 16 years of experience in business, finance, sales and coaching. She is delighted to receive your questions and feedback. She can be contacted at tamela@liveshero.com or 612-269-2341

Under the current tax law, more than 150 million Americans are “enjoying” more take-home pay these days because of the payroll tax reduction. Social Security as you knew it was reduced from 6.2 percent to 4.2 percent for those who earn up to $106,800.

So in real numbers, if you make $50,000 per year, you have seen an extra $19.23 per week or $1,000 for the year. If you are on the higher end, your pockets are bulging with an additional $2,136 per year.

Now, if you follow any of the current legislative debates, news talks, or pundit gab, this raise will undoubtedly remain a temporary moment of indulgence (slated for 2011 only). Let me inject a little cynicism here. Coincidently, during the same time your favorite Uncle Sam was rewarding you for being such a dedicated patriot, the Work for Pay credit (up to $400 if you made less than $75,000 per year) was axed. Windfall or gimmick — you decide.

Now that we are on the downside of the year, what have you done? Feeding the pig with your extra cash, or supporting Congress’ agenda expecting you to use your windfall to stimulate the economy? Buy more, save nothing?

It’s not very logical or prudent to expect the poor and middle class to spend more of their own money. Surely this is not the way out of financial mayhem?

Perhaps I missed that class just like I missed the class on losing 10 pounds by sitting on the sofa watching The Biggest Loser. If consumer spending is the solution, then I think we need to rethink the question.

Let’s ask a monetarily rich person if they got rich by spending more money. I guarantee their extra money was not invested in nondurable consumable goods.

For sure, spending creates a healthy economy, but so does personal earnings and production. This is like a three-legged stool, and when two of the legs are missing — crash.

Here is a bit of economic reality: The Consumer Price Index states wholesale food prices rose 3.9 percent this year, the biggest spike since 1974. Not to mention the skyrocketing energy costs that are having most of you rethinking the layered look in your homes. These costs have risen over 15 percent in the past 12 months.

Consequently, your two percent may feel like it’s gone before you even get to touch it. So, is there really any defense against these rising costs?

Well, the jury is still out, but it ultimately depends on who you ask. An investment banker or broker will tell you that equities are the only defense against rising costs and long-term inflation. A prudent financial advisor will recommend that you increase your monthly savings and diversify to hedge against the economic ups and downs.

Nevertheless, if you follow the government’s philosophy, everyone gets paid — from the inventor to the manufacturer to the retailer to the government (yep, sales tax).

Oops, who’s missing in this equation? You!

So, it’s not too late to be logical with your two-percent bonus. You deserve to have it work for you. Consider investing it in something that could potentially offer a return on your investment (tax favorable, preferably).

Moreover, I am not only referring to stocks, bonds or mutual funds. Get creative. The operative words here are “return on your investment.” This could present several opportunities.

How about seed money for the small home-based business you have been thinking about? Invest the extra in yourself by taking a class or two on a subject that will propel you to the next level in your craft or discipline. My favorite is to invest in your children with things such as scholastic camps, extra tutoring, culturally rich travel, language and imagination software (not Xbox 360 games), and last but certainly not least, an Education 529 Plan.

There are just as many assets as there are liabilities to put your money into. Make a real difference with your two percent.

Freelance writer, financial consultant, entrepreneur and mom, Tamela Saulsberry brings a combined 16 years of experience in business, finance, sales and coaching. She is delighted to receive your questions and feedback at tamela@liveshero.com or 612-269-2341.

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