Personal Finance Interview with Mitch Mitchell on Creating a Budget

When it comes to money management, plenty of people would prefer to stick their head in the sand and pray that their financial woes disappear. But according to Mitch Mitchell, the man behind Top Finance Blog, that's not going to yield any positive results.

"No one can fix anything without addressing it. Problems never go away," says Mitch. "One has to know where they stand, so they either have to sit down and figure out whether they have enough money to pay all their bills by -- gasp -- looking at ways to start a budget, or getting some kind of professional help to evaluate their financial situation."

"Instead of running away, individuals and families dealing with a lot of debt should be aware that almost everyone is willing to help you pay your bills in one way or another, you just need to be ready to reach out and ask for help."

We recently checked in with Mitch for more money management advice; here's what he had to say:

Tell us about yourself ... what's your professional background?
I basically have two businesses. I'm a health care finance consultant, which means I help hospitals make money and bring in more money. I'm also a leadership and diversity trainer and speaker, having written one book on leadership.

How did you come to create Top Finance Blog?
I actually didn't create it. I bought it from someone else who created it, wrote a few articles, then wasn't sure he had much more to say. I know a lot about personal finance and have opinions on things that go on and I thought it would be fun to write for while also being able to give financial tips.

Who should be reading your blog?
I try to reach a wide audience of people who mainly want personal finance tips or want to know what's going on in the country. I also have many articles on things such as investing, insurance and certain types of products people have in their homes that can help them spread their dollars better. There are also articles for small businesses; that's a pretty good cross section of the type of audience I hope enjoys the blog.

What are some of your favorite posts from the site?
My favorite posts are those that give what I hope is real information instead of what people "think" things are.
My top three are:

We here at Mint are passionate about helping people manage their money. What's your best piece of advance for someone trying to get a handle on their finances?

No one can progress without some kind of budget, which either helps them pay down debt or helps them start putting money away. A telling story is seeing how many people who've made lots of money end up going broke because they didn't know how to manage their money. Another is seeing how many people who made little ended up being millionaires later on in life. We all get to choose which direction we'd like to go in.

What do you think are the biggest myths about creating a family budget?

That there's no way they can follow one. Truth be told, for some people it could be tough to get used to early on. I had a client who I helped with a personal budget only be allowed to spend $30 a week for almost a year because she was in great distress. To alleviate some of her problems she worked a part-time job for most of the first year. Years later she's been able to pay off many loans, gets a much larger allowance than in the past, and is able to indulge herself here and there while building up a nice savings account and investing in some IRAs. Without taking the plunge and calling me, she might have declared bankruptcy at some point; that would have been more depressing long term.

What do you think are some unexpected ways people can save money?

I'm not one of those people who tells others to cut out small things they enjoy, like coffee or dessert (that's my issue). Instead, I tell people to do some shopping around for the best prices on foods they like and buy whichever is less costly. I also recommend signing up for grocery store cards since many of them offer not only discounts weekly on some items but, as a member, you'll probably get special coupons in the mail that others don't get. Also, be sure to shop properly by looking at those little tags on the shelves to make sure you're getting the best deal. So many people think that when you buy more you'll always save money but the truth is that store prices are often set by what sells better, and many times it's the item that offers you less where, if you buy 2, will cost less than the more voluminous item.

What are the biggest mistakes you think people make when it comes to managing money?

I'll offer three since that's my favorite number.

The first is not evaluating what's more important, paying down bills or saving money. If your credit card interest rate is 24 percent and your savings rate is only 3 percent, it's smarter paying down debt.

The second is thinking that name brands are always the way to go when it comes to clothes. Without mentioning the name of the store, I can tell you that every once in a while they have sales where you can buy T-shirts for around $3 each in multiple colors that will last as long as any name brand item I've ever bought for three times that amount. And they offer multiple sizes instead of only going up to XL.

The third is not paying attention to the reality that if you save part of your change every day or at least every week that it builds up enough most of the time so that, if you wish, you can have one really nice weekend to splurge without worrying that you're killing your budget. If you don't find ways to put money aside for enjoyment that doesn't destroy your budget you probably won't stick to the budget.

You seem like someone who's pretty passionate about all things finance. Why do you think it's important for everyone to stay up to date on financial news?

I'd like to answer this one in a slightly different way. I think it's important to stay up to date on news that you can actually do something with or that possibly affects you.

For instance, this sequestration thing has irritated me just knowing it's going on, but it doesn't affect me and there's nothing I can do about it so I'm not paying any attention to it. But the Affordable Care Act affects everyone in some fashion, at least it appears to be doing that, so it's very important to know what's going on and what you might qualify for if your income isn't all that high.

At least every other day I take a quick look at the financial headlines to see if there's anything that might impact me; if not I move on, if so I'll read it and determine how important it is to me. Like almost everything else in life, it's better to be informed than ignorant about things that may affect you.