Tuesday, August 19th, 2008
It’s simply amazing how people sacrifice so little to sacrifice a lot. Millions of people around the country are living the American dream and the mountain of debt that goes along with it just because they don’t want to start a (GOD forbid) budget. Check out this story I simply had to shake my head at:
Mary earns an after-tax weekly salary of $675 and gets weekly child support of $142; her income averages $3,462 a month.
Her monthly expenses: $1,485 for rent, $175 for utilities, $275 for a car payment, $361 for car insurance, gasoline and maintenance, $415 for her son’s college tuition, $124 for cable television and Internet service, $350 for grocery bills and $100 for dining out. That’s a total of $3,285 — and it doesn’t include incidental costs for clothing, hair care, gifts or entertainment.
She’s also overdue on several bills, including $282 for medical costs, $233 for a student loan and $80 for 2-year-old phone charges.
In a nutshell, Mary spends close to or more than she earns each month, and she runs out of money before she can make payments on her existing bills. That means there’s nothing left over to pay down her growing debts.
Mary is the first to admit a lot of her financial problems are in her head. She’s always had trouble with money, so her financial woes have become part of her identity — so much so that she carries her folder of bills with her wherever she goes, like a security blanket.
She says she wants to have the means to take vacations and buy presents for her grandchildren, even have a little in the bank for emergencies. But her self-sabotage has stopped her from attacking the real problem: her attitude about money.
Mary, like most people, dreads the “B” word: budget. But budget is not a dirty word. It’s the secret to financial freedom.
Without reading the article any further I immediately so ways to improve her situation in a matter of months. Instead Mary, would rather sacrifice budgeting instead of her attitude about wasting money.
Off the top of my head, I see she could lose some cable television programming and possibly opt for cheaper internet services. She could sell the car and buy something older while at the same time being reliable. Doing so would also lower her car insurance rates.
So lets say she creates a budget and is able to milk $200/month (on the low end) out of the deal. The $80 phone charges would be pai off the first month. That leaves $120 left over for the month. Next month add that up with the $200 and pay off the $282 medical costs. Take the rest and pay off the $233 bill the next month.
After 3 months those debt collectors are paid off and now she has $200 to spend on more debt in order to get the debt reducing snowball rolling.
Life shouldn’t be that hard people. Sacrifice your laughing now so that you won’t be crying later. Reverse the trend!
Posted in Generate income, Informational, Personal debt, education, relapses | 1 Comment »
Wednesday, July 23rd, 2008
I sometimes get lost in my quest to become debt free and liberate my family from the debt monsters of the world while trying to change my family’s legacy. With that in mind, I’ve never thought about “How much money is enough”, until I checked my email today and saw the article topic staring right back at me.
Needless to say, I clicked the link and within the article there’s a 4 step process to figure out how much is enough. For me, I’m thinking I have a more simple formula.
Short Answer: Being debt free is enough money for me because without debt our lives tend to change. No longer are we FORCED to go to work on dreaded Monday’s. No longer are we bound by legal contracts to credit card, mortgage, and loan companies. Instead we can focus our attention on PAYING OURSELVES (which we should do anyways).
In the previous blog entry I wrote of a goal of mine. To be at a point to where I don’t have to work if I don’t want to. If we pay off our home and her student loan payment, I’ll quickly be at that point. The beauty of it is… after those are paid off, it’s smooth sailing. Income will be just that… INCOME!
But for the lazy (which I tend to be) here’s the 4 steps from the article:
Link
Step 1: List your top five goals or desires.
In contrast with the hundreds or even thousands of cravings and urges you feel each day, your deepest desires may include benefits to others and not solely to yourself, may be characterized by patience rather than a childlike urgency and may carry a sense of profound importance: “I yearn to do or have this before I die in order to feel truly fulfilled.” You may wish to begin by listing all the desires you can in 60 seconds and then select the five which most fit this definition.
Step 2: Put a price tag on each goal.
If your deepest desires include things like buying a home, you (or your financial planner) can fairly easily convert that goal into a monthly or lump-sum financial requirement. But if your goals include states of being — such as a desire to work half time and spend more time with your kids or volunteering for a cherished cause — you’ll need a replacement income source.
For these types of desires, list the amount of annual income you’d need to replace. Our rule of thumb is that you’ll generally need an investment portfolio equal to about 20 times your annual withdrawals. So if you’re hoping to have your investments cover $25,000 a year of expenditures, for instance, you’ll need to have or save $500,000 to cover it.
Step 3: Calculate your “enough for life” number.
By adding up the total of all the lump sums needed, you can calculate how much is enough for you to achieve your deepest desires.
Step 4: Create a financial plan to get there.
If your financial net worth exceeds your “enough for life” number, great news: You can stop worrying and live the life you most want to live. I don’t mean to be glib, but if you know you have enough to take care of your deepest desires, as well as your basic necessities and retirement savings, it may be time to stop chasing each extra dollar. Instead, solidify your sense of abundance by sharing your good fortune with others, through philanthropy (or just plain old-fashioned generosity).
Posted in Generate income, Informational, Inspirational, Personal debt, education, goals | No Comments »
