& IN-PERSON | 10:00AM

Got Bench, Mark?

By: Allen Gunter

Isn’t that supposed to be “Got milk?”, Budget Guy? And by the way, my name isn’t Mark…


How about if it said, “Got benchmark?” That’s what I really want to talk about, but don’t you think “Got bench, Mark?” is kind of catchy?


Okay, maybe not. But if everyone followed some key financial benchmarks, we’d be in a lot better shape than we are now. The economy may have recovered from 2008, but “we the people” haven’t – the personal finance situation in this country is worse now than it was then! 

Consumer debt continues to hit record highs and is now over $14 trillion!                                                             


That ain’t good, folks! What’s it going to be like when the next “2008” comes along?

Because it most definitely will!  


What can you do to protect yourself and your family? Check your finances against the following benchmarks. And if you’re missing on any of them, start working to change that – NOW!


Start with how much you pay each month on all your debts – mortgage or rent, car loans, credit cards, student loans, store loans, medical bills, etc.

 The total of all your monthly payments shouldn’t be more than 35% of your gross monthly income.


So how’d you come out? Under 35%? The lower the better! Over 35%? Time to take a step back and take a good, hard look at how you’re managing your money.


Such as how much you’re spending on housing. If you’re renting, that includes your utilities as well as your rent. If you own a home, it includes principal, interest, property taxes, insurance and maintenance.

 Don’t spend more than 28% of your gross monthly income on housing.


Homeowners – don’t gloss over maintenance costs! They’re tricky because they’re not regular so it’s easy to forget about them in months when you don’t have any. We think about the cost of fixing the air conditioner or replacing the water heater, but even buying some plants for the yard, fertilizer for the lawn – these are all part of your maintenance costs, too. 


Maintenance costs can vary quite a bit from month to month, but guess what? There’s a benchmark for that, too!

 Take 1% of the value of your home and divide that by 12.


Some months you’ll spend less, some months more. But set that aside each month and when those big ticket repairs some along, you should be in good shape to deal with them.


While we’re talking about houses, here’s one to keep in mind when it comes time to buy your next, or maybe your first, house:

 Don’t take out a mortgage for more than 2½ times your gross annual income.


And for your next car or truck?

 Don’t take out a loan for longer than 42 months.


Yeah, I know. You can get car notes now for as long as 84 months! The lower monthly payment looks good, and you just got a more expensive car than you thought you could. But watch out – all you’ve really done is set a financial trap for yourself, just waiting to catch you when you need to replace that car.


Something important to keep in mind about these benchmarks — they’re limits, not targets or goals. They don’t mean that carrying a debt load of 35%, for example, is smart. 


Think of them like the fence around a playground. It keeps you from running out into the street, but the fun stuff is in the middle, well inside the fence. 


How about some rules for building financial security? That starts with saving:

 Keep three to six months worth of living expenses in savings for emergencies.


This gives you a way to cover larger, infrequent expenses without increasing your debt. That air conditioner, for example, or car repairs. The key is to build the reserve back up as fast as you can each time you tap into it. 


And with respect to saving:

 Save 10% of every paycheck.


Not enough! This was a good benchmark once upon a time, but 10% just isn’t enough anymore. So that rule needs to be updated to 15% if you start early, and 20% or more depending on how old you are when you start saving.    


Two final benchmarks – a couple of my favorites! First,

 If it sounds too good to be true, it is.


Anymore there are so many who are looking for ways to separate us from our money. But there’s no magic investment, no secret programs our credit card companies don’t want us to know about, no miracle cure of any type for whatever financial issues we might have. 


You either take charge of your money, or the banks, credit card companies, bill collectors…they’ll end up taking charge of you.


And now for the most important one of all:


  Give 10% to God. 


What makes this one tough is that giving to God can seem so, well, discretionary. It just doesn’t have the immediacy that other things do. But God gives us life, both now and eternally. And all God asks is 10% – a pretty sweet deal, if you ask me!