[This is a second and more detailed look at the goals and rules of the Women's Finance Group. My group is now in month 7 since its formation. Just recently some of the ladies and our mothers visited my family cabin in Sun Valley to celebrate having met our goals, sit in a hot tub, enjoy the beautiful scenery of mountains and wild life, and generally to get away after months of slim wallets and less than usual socializing. To say the least, the retreat was much more satisfying after months of work and dedication.]
In general, the Women's Finance Group has the following goals:
- Find Zero (get out of debt)
- Have 3-6 months of living costs in liquid savings
- Create and/or expand an investment portfolio (passive income)
- True financial independence
- Financial and personal growth and awareness in general
"Finding zero" was the first and only solid goal when we started the group. Sure, we had vague future direction, but nothing was really defined beyond knowing we did not want to owe anyone anything and we wanted financial security and independence.
Every Wednesday night at 7:30 the ladies gather to socialize. We rotate whom is hosting and tend to bring our own snacks and wine though usually we share. It was important we recognized among the 5 of us that bringing snacks and wine to share was strictly optional. We are after all trying to save money and we all have our own taste in snacks.
It is important, when you finally decide to have your first meeting, you establish the ground rules for trust and respect. Everyone in the group needs to understand you are each about to disclose the intimate and sometimes messy details of your finances. Often these details are tied to a deep-rooted sense of pride and various insecurities or strengths. By being honest with your girlfriends about your spending habits, saving habits, investing, or deep dark pits of collections and bad loans, you will be extending trust and gaining trust among your girlfriends. These are the rules we established as we worked on this first goal:
Rule 1:
Never discuss the sensitive details of your meeting with anyone outside the meetings. If you need to discuss some details in order to communicate to others about the group and what you do there, use very general terms and never put a name with those descriptions. Violating this trust not only lets down your girlfriends and may get you ousted - you could potentially hurt them financially. Your girlfriends' financial lives should never be a topic of discussion unless they choose for it to be. And lets face it, discussing the details of a friends finances with people who shouldn't know is simply not okay even without the group.
For example, it is perfectly acceptable to say "A couple of the girls have cut their spending in half already!" or "Some of us had such bad loans we were paying 150 bucks every two weeks in interest!" These statements easily convey the success and turn around of the ladies in your group without saying who specifically or how any of them acquired their financial woes.
Rule 2:
Be honest. When you hide things about your finances in a group like this you simply do nothing good for yourself and undermine the group as a whole. You are there to help and be helped. Don't be afraid to be shocked - if you want anything to really change you have to take a long honest look sooner or later. So gather your loans, your I.O.U.s, your monthly bills, anything you stopped paying, your current bank statement, your investments...all of it. Don't forget to include what you spend in gas, groceries, eating out - all the non-bill spending you do. Divvy it out into what you owe, what you spend during a week, and what you are saving - even if you're not saving right now. (See my previous entries, 'Credit Cards - The Basics' and 'Automate Where you Can,' as supplements as well. )
For many of us this group was the first time we were honest with ourselves about our finances let alone others. While its a little intimidating, it is quite powerful to 'stare in the face' how much you spend and where you would like to be.
Not coming clean with your details while others are trusting you to come clean with theirs undermines your trustworthiness. Your girlfriends likely know you better than you think they do and will sniff this out eventually.
Rule 3
Respect. Its harder than you think. Respect is not just taking turns and listening politely or showing up on time and being prepared. If you truly respect your lady friends you will not pander to them when they start to slip. Holding each other accountable for your goals, aspirations, and financial stability is difficult but one of the most loving and supportive moves you can make.
It can be uncomfortable to tell a friend in front of 4 other peers, "It looks like you aren't taking your goals seriously." or "Hey, you really blew your budget this week." Say it ladies, be nice but call it as you see it.
Respect doesn't stop there. If you want this type of honesty out of your friends you have to be able to receive it. Which means: pull up your big-girl panties and stop getting defensive or taking it as a personal slight. Your finances are not something to beat around the bush about.
Aside from the meetings, this level of respect has grown among my group. We are more honest and truly supportive of each other now then we had been since we met years ago. The finances were just the beginning and the group has profoundly affected other areas of our lives from spirituality, emotional maturity, non-financial goals, and closeness to other ladies in the group. (But lets not get too out of hand, you will likely find things about your friends you don't like as well. Its all a part of it.)
Rule 4
Keep the meetings to 2 hours. Anything beyond this and the group starts to drift, people need to get home, and the meetings in general will start to feel tedious and laborious. On the same token, your group generally should not be larger than 6 or 7 ladies. If your group does grow beyond this it becomes difficult to get to each person in that 2 hours or discuss new topics.
At 8pm we officially start the meeting. Taking turns, we go around the table and discuss openly our own spending for the week. This is generally broken down into bills, food, restaurants and bars, brazen shopping, and of course debt. It is important to actually tally this money spent and write it down explicitly. This way, as we read off the amount we have spent, we are able to say how this fit or blew our budget for the week. In addition, we discuss progress on goals and savings, and often trade suggestions and tips for progressing closer to them.
Rule 5
Don't be a sucker. Skepticism leads to research which leads to knowledge. Sharing that knowledge leads to greater success - not just because to share information you have to understand it but because it is informing the ladies of something they may not have considered. In the famous words of annoyed technical support people around the world - "Google it." In a nut shell this means you should question everything about your finances, look it up, get second opinions, ask lots of people the same questions, and learn to question your assumptions, especially before sharing any advice with the people you love. If you ever catch yourself saying "I've heard that..." stop talking and look it up because those words mean you are missing something.
Moreover, our society has done a pretty good job of training us to always call an "expert." This means we have been trained to not trust ourselves to do much of anything. From fixing a squealing fan belt, unclogging a drain, selecting a facial product or choosing how we want to diversify our portfolios, we have atrophied our own ability to make smart choices and be capable women. This isn't to say people who have spent time and money to be specialist aren't worth consulting. On the contrary, specialists have a lot to offer but should not be the end-all-be-all to your research.
As an example, you might walk into your local bank and ask what you should invest in. Someone there may have training to convince you that an actively managed fund is a great way to go. While this is true for some people, as Gregory Berns, author of the 2008 book Iconoclast, has pointed out: "Once transaction fees are taken into account, actively managed funds rarely beat the market as a whole." In other words, the fees/percentages taken for having a bank or firm manage a fund like this can make any potential earnings close to worthless. So, again, do your research. Not all experts are trained with your interests at heart.
A note on goals: Symbology plays an important role - more important than I had initially expected. While on retreat, my own mother had put together pendants as symbols of our goals in the group. The pendant is a Susan B. Anthony dollar ringed in silver with a little loop of silver for a chain. For those of you unfamiliar with Susan B. Anthony's accomplishments and trials with Women's Suffrage..."Google it", its an inspiring life she led. The symbol of such a motivated and inspirational women immortalized on a coin makes for a perfect symbol of accomplishment in this group. I wear mine with pride - because I know it was worth $10, 024.00 of my debt now paid in full.
I recommend your group have something similar, be it the Susan B. Anthony or otherwise. These symbols help remind us how far we have come, how hard we have worked, and where we want to be. Don't underestimate their strength.
After Finding Zero - The next Step:
Goal #2: The Emergency Stash
While you will get differing opinions on which to do first, pay debt or save for 3-6 months of living, we mostly agreed that we were paying debt first. It can be difficult to save money in the daunting midst of knowing exactly how much you owe. In some cases doing both is the best by splitting your money between those bills and savings. I went the hard and fast route, dumping a high percentage of my net income onto my bills, but I don't have children so this was easier for me to do.
None the less, the next step or hurdle is to save that 3-6 months of your living costs. This of course means everything. Don't be too restrictive or too over compensating for what you know you need to live should you lose your job. Hopefully if you have been able to reign in your spending to pay your debt you can now keep the reigns similarly tight to save.
Keep it liquid! This is not the money you keep in CDs or investments. You may need this money quickly and in the case of most investments pulling your money out for emergencies will often take time and cost you in taxes and fees - or both! So keep this in a savings account with a bank who can offer you the highest interest rate. And if this takes you a year to save, so be it. This is a goal all in itself.
In the mean time you should be preparing for goal three - your entry into passive income. Your investment portfolio is not something you just walk into a financial advisors office and say "Do this for me." Not at this level anyway. Now is the time to research, learn , listen, look it up, track the trends. And I am not talking just the Stock Market.
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