Just when you thought it was safe to go back in the water…oh wait, that was a different movie. Well, the video clip below has nothing to do with sharks, but it’s almost as scary. Boy, am I glad I don’t live “across the pond”. The U.K. government seems to be ready to take the debt bull by the horns and are no longer willing to allow out-of-control spending be the norm.

If the U.S. government doesn’t do something do get our spending under control, we are going to be starring in our own economic horror show very soon. If you think the economy IS a horror show, then to borrow another very familiar line, “you ain’t seen nothing yet.”

The hardest part of financial planning is planning for the things that you have no control over. Things like the downturn in the economy, housing prices falling and natural disasters (think Hurricane Katrina and the BP Oil spill). Although you can’t account for 100% of the bad things that happen, you can prepare yourself to deal with some of the unexpected.

I recently received a newsletter from Edward Jones and one of the articles listed four things that the average investor should be concerned about and how to deal with them in today’s economy. For full disclosure, I use Edward Jones to manage my Roth IRAs, my college savings through 529s and my wife’s 403B rollover.

Economic Unknowns

• Tax Increases - limit your taxes by fulling funding pre-tax retirement accounts
• Rising Interest Rates - when interest rates go up, the value of long-term bonds can fall. That doesn’t mean you should sell them, but you will want to monitor your bond investments to ensure your portfolio remains in balance
• Inflation - stocks have traditionally offered better protection than bonds, when inflation begins to rise. Short-term stock investing is risky, but over the long run, they generally outperform bonds
• Weak U.S. Dollar – seems like every country is struggling with their own budgets, so don’t overact every time you hear the dollar has fallen. It is a good idea to include international stocks/funds as part of your overall portfolio

Common Sense Actions

From an everyday personal finance perspective, our advice remains the same. Spend less than you make, establish an emergency fund and pay off your debt. When things get tough, if you have little to no debt, you can survive a lot easier than if your monthly income has to support your and your creditors.

I don’t usually link to articles that don’t somehow relate to personal finance, unless it is an article/post that deals with the national economy. Today I came across a very good article written by Lance Burri at Right Wing News. The title of the article, “Keynsian putzery“, almost caused me to skip to the next post. I don’t even know what Keynsian putzery means, but I am glad I didn’t skip this one, and I hope you will read the article also.

The best quote from the article:

what we’ve done over the past couple of years has had great bearing on our long-term problems. What we do “over the next couple of years” most certainly does have bearing “on our ability to deal with these long-run problems.”

Mr. Burri hits the nail on the head with this one, but I want to inject that this is not a Democrat or a Republican problem. This is a United States of America problem that both Democrats and Republicans have had a hand in making.

However, the problem isn’t unique to the Federal government. The majority of families that have found themselves in trouble financially took years to accumulate the amount of debt they have. Some will say the hole is too big to get out of and simply give up. They need to understand that years of bad mistakes can’t be corrected overnight, but correcting the problem does begin today.

It begins with sacrifice. It begins when we realize that the government can’t (and won’t) fix our problems. It begins by deciding today that you cannot continue living like yesterday. The decisions you make today will influence not just your own future, but the future of your family.

When the government realizes that correcting the broken economy means that we can no longer spend money we do not have, we will begin the journey, as a country, to correcting our broken economy.

I am not an economist, and I don’t play one on TV, but I am pretty sure that the current economic plan being laid out in congress isn’t working. The primary reason we as a country are in the mess we are in is because we have become a country that has little to no self-control when it comes to the area of spending. As a family unit or individual, the propensity to impulse buy is outrageous. We don’t save for things anymore, we “pay them off”. We have no emergency fund, we have an emergency “credit card”. We don’t save for retirement, we have Social Security (or at least you think you do).

A budget gives you a direction

Our federal government can’t even establish a budget for the upcoming year. This is the first year since the current rules were put in place in 1974, that they haven’t been able to establish a guide line on how they plan on spending our tax dollars. Without some sort of plan on where our money is going, we have no idea of where we as a county are going or how our future is going to get any better. However, just because the government won’t work on a budget doesn’t mean you can’t.

Many of you have tried budgeting in the past and for one reason or another felt that is wasn’t worth it or couldn’t figure out how to make it work. Let me be the first to say that setting up a budget is pretty simple. Start with your income and then allocate every single dollar until there is no more money. Pretty simple right? I didn’t say it was easy, I said it was simple. There are a lot of different tools and resources out there that can make it easier, but until you sit down and put pencil to paper (or fingers to keyboard), you really aren’t any better than the people we have elected to represent us. Your personal budget will help you know where your money is going and points you in the direction of financial freedom.

It won’t work for me

The biggest complaint I hear when I talk to people about working on a budget is that they don’t feel they make enough money to budget. If you feel like you have no disposable income, then you are the perfect candidate for a budget. When you actually have a plan on where your money is going to go, you will actually spend your money more wisely and feel like you got a raise. The other big reason people don’t want to do a budget is they are afraid they won’t be able to have any fun. The budget is not designed to turn you into a hermit, it is designed to allow you to make wise decisions with your money, so that you can do more things, not less.

I came across this article at Sound Mind Investing and it has several ideas that can help you have fun while sticking to your budget. Remember, a budget is not a stick designed to beat you up, it is a plan on how you can achieve your financial goals. Unlike the government you can take control of your spending and turn your life around. Go ahead give this budgeting thing a try. I promise you that if after three months of budgeting, if you don’t like it you can go back to having no plan and wondering where all your money goes.

photo by: Will Scullin

Tonight on the way home, my wife and I were discussing how a lot of people are ungrateful for the things that they have. We both agreed that many people no longer feel the need to take care of themselves and expect someone else to clean up after them.

While thinking about our discussion I remembered an article that I found over at Yahoo! Finance that deals with how much you should tip for certain services. Most people do not realize that servers at a restaurant make very little money as a base salary. As a matter of fact, minimum wage for servers is only a little more than $2 per hour. The majority of their income comes from tips. If you are looking for a way to help someone financially, look no further than tipping. Providing a solid tip for a job well done is one way to make someone’s day…not to mention the blessing you will receive from it.

Let me be completely honest about my philosophy on tipping. You do a good job, you get a good tip. Being a Christian, I am always concerned that I not do something that would shine a bad light on Christians. My wife has a philosophy with regard to tipping. If the server sees us praying before our meal and we stiff him or her on the tip, they won’t remember us praying, but they will remember the bad tip. Needless to say I leave the tip amount up to her and when we get really good service the server gets a really good tip.

Below is the list of how much you should tip as provided in the article and to be honest I was more surprised by the explanation of why you should tip someone than I was the actual amount of the tip itself.

• Gas Attendants — Suggested Tip: None
• Shampoo Person — Suggested Tip: $2
• Doorman — Suggested Tip: $1 per Bag
• Skycaps (Airport Porter) — Suggested Tip: $1 Per Bag
• Food Retailers and Coffee Shops — Suggested Tip: None
• Bartenders — Suggested Tip: 15-20% of Tab
• Restaurant Servers — Suggested Tip: 15% of Pretax Bill
• Pizza Delivery — Suggested Tip: 10% of Pretax Bill

For the most part, the list is not very surprising. I guess the one thing that I have never thought about is tipping at a restaurant on the pretax amount. We always tip on the bottom line. I shampoo my own hair so I have never tipped the shampoo person, and I usually take care of my own luggage at the airport. I did think it was interesting that the article gave me a pass on tipping the guy at the coffee shop, even if there is a tip jar on the counter. Here is the thing that I thought was really strange in the article. Again, not how much I should tip for good service, but how much you should tip for bad service. From the article:

Contrary to popular belief, bad service is no excuse to completely skip the tip. Even when the level of service is poor, experts recommend leaving no less than 10%.

I am sorry, you shouldn’t expect a 10% tip for poor service. If you want me to reward you for a good experience then you need to meet me half way. If you are expecting me to tip, then I am looking for a reason. It doesn’t take much to be nice, be efficient and be professional. Those three things will always get you a good tip from my wife.

How do you feel about tipping? Should poor service get a 10% tip? Should they get any tip at all?

Who says that the ecomonic crisis we are in can’t be funny? Tim Hawkins shows that with this administration sometimes you have to laugh to keep from crying.