How To Get Rich Part 2
Sunday, August 29th, 2010Author Tony De Maio
Of course, with a little algebraic manipulation, all of the formulas can be used to find any value if the others are known. If you know the payment and interest, you can find the time of the loan; if you know the final amount and interest, you can determine how much you need to invest (compounding). If your algebra is a bit weak, you can just plug in various numbers and solve for the value you need by “trial and error”.
Those are the formulas needed to “get rich”. If you purchase a scientific calculator, they will be in the instruction book that comes with it. Let’s move on to the books you need.
The first book is a book on personal finance. It’s a strange thing in this country that we send our kids to school, teach them sports, music, art, crafts, driving, sex, drugs, dancing, and dating, then tell them to go out in the world, be average, earn $25,000 a year for 40 years (a million dollars) and give half to the banks in interest and the other half to the government in taxes. (Usually, the first major purchase of a youngster when he gets his first full time job out of school is a car—on credit. Many do not get out of debt for many years—some never.) We do not teach them how to spend a million dollars. If they get married, they get to spend (waste?) TWO million dollars. (Wot’s the old saw? I spent 80% of my money on women, booze, and gambling—the rest I wasted.) The goal of this paper is to teach VALUE. Get what you want; get it for a fair price; use what you don’t spend to invest.
Those with a family will probably want to protect that family with some insurance. If you allow the insurance salesmen to determine the type of insurance you get, they will sell you that which will give them the greatest commission. Generally, TERM insurance is best for a young family. You can get a great amount cheap, and use the remainder or the rest of the premium for an investment program (as seen in the demonstration of an annuity previously). My family could have provided far more than $5,000 of life insurance for me under a term plan (Today, one can purchase $100,000 worth of term life insurance for less than $5/mo for a 22 year old.) If the “extra” money had been invested, it would be worth far more than $45/mo today. (Note: There is usually no reason to insure a child—as you will find out if you read a book on personal finance.)
Consider a light bulb. How much would you save by changing a 100 watt light bulb to a 40 watt light bulb? The strange thing about this question is that few have ever considered it—or others like it. Is it worth it? Who knows? Let’s go through the steps to determine what is going on. First, as with most things, you have to make some assumptions and gather a few facts. My bill shows that electricity costs about 8 cents a kilowatt-hour. Let us assume that the bulb is on an average of 12 hours a day. Clearly, the difference between 100 watts and 40 watts is 60 watts. If the bulb is on 12 hours a day, that is about 720 watt hours, or .72 kilowatt hours. The cost of the difference is about 6 cents a day, $1.80 a month, or about $21/yr. If there are five such bulbs, that would be about $100/yr. The savings would more than pay for a $100,000 term life insurance policy. Is it worth it to change? Your call! The important thing to note is that you are capable of doing the computations and reaching a decision. YOU decide if you want the light or an insurance policy. You will not always make the RIGHT decision, but you WILL be taking control.
Reading a book on personal finance will give you many insights into ways to get control of your personal finances. For the most part, it will give you ways to avoid unnecessary expenditures and get value for the expenditures that you do make. Most folk think that because they can spend money, they understand it. Most folk are wrong. One might just as well assume that one knows about food, nutrition, and health simply because they can stuff a Big Mac into their mouth.
The second book you should read is a book (or books) on tax avoidance. I am NOT proposing that you attempt to evade taxes. It can be said that the difference between “tax avoidance” and “tax evasion” is 5 years. There are MANY ways to structure your finances to take advantage of the tax breaks the various governments have enacted for their own benefit. I suggest to you that the average American pays quite a bit in taxes. Consider: “Tax freedom day” is around May 15—that’s just a little over 40% of the year. That implies that the AVERAGE American pays about 40% of his income to the federal government. That figure includes everything from federal park fees to luxury taxes to import duties. (Most Americans look at their income tax bill and believe that is all the taxes they pay.) Add to that figure 6% property tax, 10% state income tax, 2% sales tax, 5% payroll tax and you end up with about 63%. Factor in the various fees of library fees, drivers license, hotel tax, motel tax, telephone tax, building permits, dog licenses, parking meters, car registration, traffic fines, marriage license, death taxes, etc. and the AVERAGE American is probably paying about 70% in taxes. If you could save only 20% of your tax bill, that would give you a 14% salary raise—effectively more, since you would not be paying taxes on that money. If you are “average” and make $35,000/yr, that is about $5,000—more than enough to fund a comfortable retirement.
Go to a bookstore and peruse the tax section. Look for a “cookbook” or recipe type of book that will give you a quick description of the tax and how to avoid it. If it applies to you, check with an accountant or IRS to confirm it is “real”, then structure your expenses to take advantage of it. Here is a typical example of what is available:
Suppose you own a business (gas station, Amway, etc.). Also, suppose you have a child of 5 years old that you wish to go to college. If you were to PAY that child to advertise on the radio for your business (or perform some other chores), he would have earned income. (Don’t forget to deduct the cost of the radio advertisement.) As such, the amount you pay him would be tax deductible to your business, and the child could open an IRA account so that the earnings would be tax deferred (and the income will not appear in the family’s income tax statement). If the money is used for college, he will probably pay no penalty on it and since he will be a college student with limited income, will probably pay no income tax. Thus, the taxes on that (college education) money have not been deferred—they have been avoided. Note: Even if you do not own a business, you may pay the child for household chores. Such expenses will not be tax deductible, but will qualify the child for an IRA.
Here is another example of “knowledge is power”. Many people save for their children’s college education in the stock market. Each year the child goes to college, they sell some stock and give the money to the child for college expenses. It SOUNDS like a reasonable thing to do, but it is actually quite treacherous and I cringe every time I hear the story. If the parent sells $10,000 worth of stock, the parent will (probably) pay about 30% of the money in taxes (federal and state), leaving $7,000 to give to the child for expenses. On the other hand, if the parent gives $10,000 IN STOCK as a gift to the child, and the CHILD sells the stock, the child may keep the entire $10,000. No taxes are due.
It is not unusual for savvy folks to save (at least) half of their tax bill. Note this: If you go to work at a part time job because you need an extra $100, you must make about $200 in order to have $100 left over to spend. If you save $100 in taxes, that entire $100 belongs to YOU—and you can use that deduction year after year after year. If you don’t have time to research the tax structure because you are working too many hours in order to make money, I suggest that you make time.
The third book you should buy addresses “investing”. Unfortunately, to many folks, “investing” means “stock market”. There are MANY aspects to “investing”— the stock market is but one. One can invest in a business, education, real estate, precious metals, stamps, coins, cars, tax liens, and/or even baseball cards. The “essence” of “investing” is putting money somewhere such that it will grow and be available in the future; essentially deferring today’s consumption in order to be able to consume far more in the future. (In 1975, a friend of mine inherited $5,000. He went on a trip to Ireland. Had he simply put that $5,000 in a stock market index fund, today he would have about $150,000. He could now use the investment income to travel to Ireland once each year, have money left over, and never deplete the principal.)
I would not presume to tell anyone how to invest. The only advice I would give is to find an investment that you are comfortable with and don’t mind spending some time learning about. Regardless of the vehicle you choose for investment, you should be aware of certain principles of investing on two dimensions: 1) many of the principals are contained in the formulas already studied; 2) many are contained in various laws regarding trusts, IRA, KEOUGH, Roth IRA, wills, tax efficiency (deferral, avoidance), etc. If you go into “the market” know if you want dividends vs growth; buy and hold vs trading; etc.
Consider the following question:
A person invests 10% of his salary and obtains 10% interest on that investment. How long will it take before the investment income is equal to his salary? This looks like the annuity formula. Since the investment earns 10%, the amount of the investment must be 10 times the person’s salary in order to generate the amount of the salary. Hence:
It takes some algebra and/or trial and error, but the answer comes out to be 25. That tells me than anyone can start out at 18 years old and retire at 43 years old at FULL SALARY if they can get 10%. If they do some studying and get more than 10% or can save more than 10%, they can retire sooner. If one could achieve 12%, he could retire in 20 years at full salary. The stock market has averaged more than 12% over the past several 30years.
Consider another example. Jack is 20 years old and works at minimum wage for 40 hours a week. Jack decides that he is going to “retire in style”, so he gets a job at a fast food restaurant on Saturdays, where he earns $50 per shift. He deposits that $50/week in a 10% account every week. How much money will Jack have when he is 60 years old (40 years hence)?
To keep the computations simple, we will use yearly figures–$2,600/yr for 40 years, and 10% interest. Again, it is the annuity formula:
$2,600 * 442.6 = $1,150,760 or over a million dollars.
(The careful reader will reconsider the meaning of saving $5,000 in taxes each year and investing that amount.) It is somewhat disconcerting to me that the American public, for the most part, does not even THINK of performing such computations. After performing the above calculation, Jack can now think about whether or not he wishes to work on Sunday also—and get TWICE as much; or whether he wishes to work Sundays for “awhile”, then quit week end work altogether and let SIMPLE COMPOUNDING do the work for him. He will also consider living on the interest of the million dollars ($100,000/yr) and leaving the principal to his children—after carefully teaching them the “secrets” of money.
The last phase of “getting rich” is to construct a plan. It has been said that a dream without a plan is merely a wish. If you truly want to get rich, you must plan carefully and realistically. I might also point out that buying lottery tickets is NOT a realistic plan.
My advice is that your plan should consist of three parts. The first part is to get control of your spending by reading books on personal finance. That should take a few months and free up some money for investment. I recommend that you put the extra money into some fairly liquid bank account (6 month CD) and leave it there in case of emergency. Stabilize your life around your new philosophy—whatever it may be.
The second part of the plan should be to plan your tax bill. You should read books on taxes and decide how much tax you wish to pay, then stabilize your life around your new philosophy. Saving on taxes will also free up some money. I suggest that you add that money to the previous sum.
If parts one and two are successful, you will have a certain amount of money left over each month. It is YOUR choice to spend it or save/invest it. If you continue to allow your expenditures to rise to meet your income/money, you will never “get ahead”. If you maintain the same standard of living and save the “excess”, you (like Jack) will soon find that your “nest egg” has grown beyond your wildest imagination and dreams.
While your nest egg is growing, you should be reading books on investing. As I said before, the stock market is only ONE place to invest. Pick a subject you are interested in and study it while growing your nest egg. Study several subjects—there is no real hurry. Determine an investment strategy, and calculate how long it will be before you realize your goal (retirement, college education, second home, or whatever you are striving for). Use the formulas to make a chart that shows how long it SHOULD take to reach your goal, and update the chart each month on where you are. If you are falling behind, determine what is wrong; if you are ahead, determine what is right. Constantly monitor your progress until you reach your goal.
In summary, you do not want to deprive yourself of so much that you lose interest or abandon the project. The essence of the above plan is that you maintain your present standard of living, and use the “excess funds” from saving on household expenditures and taxes to invest and grow rich over time. It’s a long trip and it’s a slow trip—but it can be a fun trip. I recommend it highly. You’re probably going to be alive a long time; it’s a much easier life with money. The sooner you start, the sooner you will arrive.
Related posts:
Tony says:
August 29th, 2010
9:30 pm
Folks,
This was written several years ago. An update in terms of taxes follows:
===========================================================
Cost of Government Highest Ever in 2010
American workers spent the first 231 days of this year toiling to pay off the costs of state, local, and federal governments, leaving just 4 1/2 months to provide for themselves and their families.
Each year, the Americans for Tax Reform Foundation and its Center for Fiscal Accountability calculate the day on which average Americans have paid off their share of the cost of government spending and regulations. This year that day fell on Aug. 19, eight days later than last year and the latest Cost of Government Day ever recorded, according to Mattie Corrao, government affairs manager for Americans for Tax Reform.
=================================================================
That’s 63%. I don’t know if they counted the various licenses, permits, fines, bridge tolls, fees, parking meters, etc.
always,
tony
Desertrat says:
August 30th, 2010
6:00 am
I spent a goodly number of years as a salaried guy, but did other work during evenings and weekends. When I discovered Schedule C, I thought I’d died and gone to Heaven!
My 10% system was simple, suited to my simple mind. I’d find a hundred acres in a rural area. Divide it into ten-acre tracts. Make some road improvements and take advantage of the fad of “five acres, five miles from town”. Okay, so I was nice; I’d sell ten. $1,000 an acre; 10% down, 10% interest, ten years to pay.
That way I made 10% on my money.
That beat working for a living, so I gave up work for Lent, back twenty-some years ago. Never got it back…
Tony says:
August 30th, 2010
7:28 am
Rat,
Schedule C is proof that God loves us and wants us to be happy.
always,
tony
Steve Foste says:
August 30th, 2010
7:47 am
Ok,
So one of you guys is going to have to write a good article on how to use the schedual C, I have printed it, studied it, and still have not figured how to use it to may advantage. Of course I am not self employed in any way.
Tony says:
August 30th, 2010
8:13 am
Steve,
Check out
http://whiskeyandgunpowder.com/starving-the-tax-beasts/
The big question is “What is a business?”
Many moons ago I designed and built a food dryer in my garage. Some of my friends wanted one, so I built about 10. The ratio of the square footage of the garage to the house was about 1/5. Didn’t make much money selling them, but I DID deduct some tools, 1/5 of my rent, insurance, telephone bill, mileage, home repairs, (natural) gas bill, water bill, electric bill, etc. I even depreciated 1/5 of the value of the house. I made sure to spread out the construction over two years. THEN, I started making book cases.
always,
tony
Oldmanriver says:
August 30th, 2010
9:35 am
If you go down that path it also might be a good idea to start a good relationship with an accountant. Someone you respect and trust. It dosnt cost as much as what people might think but it does help when you have questions and need an expert to explain things. I knew an old farmer who was very successful. He always said if he didnt get audited by the IRS his accountant wasnt doing their job.
Tony says:
August 30th, 2010
10:40 am
OMR,
Two views on that.
1. Get an accountant and make sure “it is done right”. However, know this–it is in the best interests of the accountant to NOT be aggressive. If he’s right, he gets no points; if he’s wrong, he looks foolish. Even if he’s right, he has to go to IRS and defend it. MUCH easier to say “no, you cannot do that”, buy you a drink and commiserate about the IRS.
2. On the utter hand, you can be as aggressive as you wish. If “caught”, you say, “Hell, I’m just a dummy. I THOUGHT I could do that.”
Here’s the story:
If there is any doubt about taking a deduction, TAKE IT. Wot can happen??
1. It “slips through the computer” no problem
2. It kicks out of the computer and reviewed by a human. The human says, “This is O.K.” no problem. The human says, “This is NOT O.K., I’ll write to him and ask about it.
3. You respond and explain it. The IRS guy says, “Oh, O.K. I understand.” no problem. The IRS guy says, “This is NOT O.K. Pay up.” So you pay up. All you’ve lost is the interest on the money.
NOW, I am NOT suggesting you commit fraud. That’s a different story. However, it is not “fraud” to put your dog down as a dependent, identify him as a dog, and take the deduction.
always,
tony
Oldmanriver says:
August 30th, 2010
10:59 am
LOL of course you are assuming the IRS goes “ohhh ok I understand” They might do that a few times with a person but if you rub them the wrong way it could turn out much worse. It just always helps to have someone in your corner who has a good understanding. To keep you out of that situation to begin with.
Oldmanriver says:
August 30th, 2010
11:09 am
The situation could be that you got away with a deduction for many years and the IRS only recently throws up a red flag. They go ooooh I understand now, but then hand you a bill for back taxes plus interest. Im not talking about going to the nearest H+R Block and getting someone fresh out of school. I mean to find someone that can be trusted and has good expirience to be an advisor. Everyone should have a tax preparer on their team as well as a lawyer, an investment guru, a doctor and assorted other experts. By team I mean a loose association of experts that are acquantences that you can go to for advice that you may or may not have to hire.
Tony says:
August 30th, 2010
1:20 pm
OMR,
I personally have had little luck with “experts”–including lawyers, doctors, financial advisors, etc.
My first financial advisor opened up my 401(k) plan late (it must be opened in the same year you make the first deposit. Fortunately, it slipped through), put all of my deposit into a limited partnership (which eventually went bankrupt), took the distributions and put them in a money market fund (during the eighties when the market was going crazy, where they sat for 15 years.
I don’t know how old you are, but back in the eighties, capital gains were taxed at 1/2 your salary rate. Hence, folks would put money into real estate, take the deductions (e.g. depreciation) at the “high” rate, then when they sold, they would take their profits at the reduced rate. Thus, even if the partnership “broke even”, the investors still made (usually) 25%. (50% income tax rate; 25% capital gains rate.) The only “problem” is that there ARE NO TAX SAVINGS IN A 401(K).
I won’t go into my experiences with lawyers and doctors–but they are similar. (After my last operation, the doctor released me from the hospital without anti-biotics. I got a massive infection–damn near killed me.)
The major difficulty/dilemma dealing with “professionals” is that if you know enough to determine their competence, you know enough so that you don’t need them.
always,
tony
Tex Norton says:
August 30th, 2010
2:09 pm
In one of my former lives, I spent 35 years as an investment adviser and financial planner. I taught adult school classes in personal financial planning for over 20 of those years. Of all the folks attending adult school classes at my school, I got maybe 1/2 of 1 per cent of them to attend my specific classes. Of those attending my classes, perhaps 20% actually took some action. Of that 20% that took some action, perhaps only 20% of those folks actually followed through and became wealthy. So the final-success results were perhaps 4% of the 1/2% that even bothered to investigate my classes. (This is formally known as Pareto’s Law). Now you know why most Americans fail miserably when it comes to managing their financial affairs.
You need to just accept the fact that you can’t just hire someone to do this for you. You must take personal responsibility for overall financial management. Yes, you can hire professional advisers but the final decisions must be yours. I think I was an exceptional professional adviser but no matter how hard I tried, my client had a much higher proprietary interest in their results than could I. I could come-up with the best financial plan in the world, bar none; but if the client didn’t follow that plan or didn’t feel comfortable with that plan, it was worthless.
Tony notes many varieties of investments from which you can choose. I submit that the best investment you can make is in yourself. Not only invest in your personal education but also in your own business in which you then continue to invest. Comments have already been made about Schedule C. Get to know how to properly use Schedule C for your benefit. If there is a doubt as to whether or not an item is tax-deductible, assume it is deductible. I went for over 20 years making triple the income of other folks my then-age but legally paying zero income tax simply because I took the time to learn and apply the tax laws. Those laws have been changed and it’s much more difficult now to reduce your taxes; but it’s NOT impossible, and it’s totally legal.
To this day, I spend a great part of my day reading about the economy and current investment ideas. Circumstances change and I adjust accordingly. Most folks lost money overall during the past 10 years since the 2000 collapse of the Dot.Com bubble followed by the real estate bubble. I more than doubled my net worth during that same time frame simply by adjusting my investment portfolio as external circumstances dictated. And I’ve been retired for over 13 years meaning I have no earned income to supplement those investments. I’m living proof that it can be done. I didn’t say it was easy. Anything worthwhile takes work. But you CAN do it if you put your mind to it.
The textbook I used for my adult school classes was written by Venita van Caspel entitled “Money Dynamics.” She subsequently wrote a series of updates of that title. To this day, it’s still a great reference book for your permanent library since it explains most investment categories in simple, understandable English. If you’re a newby, this is certainly a good place to start your education.
The choice is yours. You can remain dependent on the government or you can become financially independent in all respects. You already know my preference.
Oldmanriver says:
August 31st, 2010
5:47 am
True, some experts are better than others. You are better off doing it all on your own.
Tony says:
August 31st, 2010
7:44 am
OMR,
“Some experts are better than others.”
Aye, dat’s the rub. In modern society, you cannot know enough to “do it on your own”–at least not all of it.
However, you can follow the 80-20 rule, in that 80% of the benefit can be achieved with 20% of the effort. The problem arises when you get to that remaining 20% that you don’t know how to do. It’s been my experience that the “expert” doesn’t know how to do it also–but you don’t know that until it is too late. (I’m always amazed when someone tells me that they have a “good” dentist, doctor, mechanic, etc. How can they possibly know? I once told my dentist that I didn’t know if he was any good or not. He looked startled. I then said, “How can I know? I don’t know enough to judge. I have confidence in you, but I don’t know why.”)
The other aspect is that nobody knows your problems like you do. It is incumbent upon YOU to tell the “expert” what the problem is. You have to know enough about the subject in order to be able to communicate with the expert. Hence, if you don’t tell the expert pertinent facts (which you do not know are pertinent), can he be blamed for not probing sufficiently to ask? For example, if you don’t tell the financial advisor you are making food dryers in your garage because it “isn’t important”, can you blame him for not probing and showing you how to take the tax deduction?
Tex says that you have to take some responsibility. Tex is correct.
always,
tony
Oldmanriver says:
August 31st, 2010
11:33 am
Thats true lol. When I think about it I have heard two people talk about the same mechanic/lawyer/Dr and one have a glowing opinion and the other not so glowing. Its relative when it comes to experts.
Tony says:
August 31st, 2010
12:07 pm
OMR,
What’s even more “interesting” is that if you have a “problem” and you take the trouble to research it, YOU will probably know more than the expert about THAT PARTICULAR PROBLEM.
I used to run into this when I was employed by gubbermint. If I had a personnel problem, I would go to the State Administrative Manual and Personnel Manual and read as much as I could on it. THEN, I would go to the personnel office/analyst and try to resolve it.
It caused all kinds of problems. The personnel analyst knew FAR MORE about PERSONNEL than I knew or cared to know. HOWEVER, I knew FAR MORE ABOUT THAT ASPECT than they did. Many times they got quite hostile and defensive.
always,
tony
Steve Foste says:
August 31st, 2010
4:49 pm
Read that article Tony,
What a great article, I see you have been studying the issue for many years. Alot of information there, I will begin looking for the books for some additional information.
It’s really one of those things where you learn how to turn pennies into dollars.
Thanks
Tony says:
August 31st, 2010
6:13 pm
Steve,
Glad you liked it.
I don’t know how old you are, but if you’re young enuff to take a “long range view” of money, and you DO take a “long range view”, you will be “rich” someday.
I’ve done a bit of finanial consulting in my life.
When folks in their 20′s came to me and asked what to do, I told them, “Put a hundred bucks a month into two or three good mutual funds. You’ll be fine.”
When folks in their 30′s came to me and asked what to do, I told them, “Put a couple of hundred bucks in two or three good mutual funds each month. You’ll be fine”
When folks in their 40′s came to me and asked what to do, I told them, “You’ve got some problems. Get a part time job or work overtime and cut back your expenses. Put some time into studying the market. Maybe buy some fixer upper houses and fix them up and sell them. Maybe you can start a business on the side. You’ve got to get a plan together, and do it quickly.”
When folks in their 50′s came to me and asked what to do, I told them, “That’s easy. Cut your expenses to the bone each month. Take the money that’s ‘left over’ and split it into two equal piles. Take one pile and give it to the church. Take the other pile and buy lottery tickets–and pray.”
For wot it’s werth, I can claim to have made (at least) six millionaires. I state “at least” as I’ve lost track of many of the folks I’ve counseled. They did it “my way”. The “nice” thing about “my way” is once you’ve got your plan going, you put it on the back burner and keep it there. You can try all kinds of crazy schemes to “get rich quick”, but if you have your reserve plan in play, you know that you’re gonna be O.K. If something materializes sooner (you win the lottery), that’s fine, but you’re not dependent on it.
always,
tony
Steve Foste says:
September 1st, 2010
3:42 am
Tony,
Let me help ya out Tony, 56. Running out to the long term, compouning time. I think I bought one lottoy ticket in 2009, and I doubled the risk this year, I have bought 2 maybe 3. As you can see I am getting desperate.
I will admit for a variety of reasons I have not done well financially. So I revamped my plan. I have a ittle time yet, so the main goal is quit the typical American plan of borrow and spend. I am close to being debt free for the first time since I went to college. I pay cash for everything now, and am working to save enough to buy my retirement place with cash. What that will be I am not sure just yet. But minimal. Kids are grown, but still tap into Dad from time to time.
Though it is not alot I figure if in 10 years I can save at least 200,000 yet, the plan was 300,000 but the wipe out of the 401(k) in 2008 changed that, and own my Shelter, and be debt free, I can still work and will be just fine.
My biggest fear is a layoff from work, so I keep storing up food, and keep saving as I move to be debt free to prevent anything devastating from happening fincially if that were to happen. It is so much easier to live without the burden of debt.
If I can accomplish a couple of things, debt free, a place to live that is debt free, may be a 5th wheel and truck, I may be able to live on earned icome until age 70 and let the retirement funds continue to grow.
Lot’s if’s there, economy, government intervention, government theft, health, etc. but I know it will all work out.
The real key is debt fee cash living, and continue to save and invest safely. And find some extra income to work with.
PeterPansDad says:
September 14th, 2010
7:16 am
Tony’s book list:
Personal finance
Taxes
investing
My addition:
Philosophy.
Most personal finance books I read deal with not spending more than you make and squirreling a bit of it away consistently. That’s a good start. Next you should ask why you are even spending as much as you are. Sure you can afford it but do you need it? Why do you want it? Is there something else you could do with your money? Soon this thinking will bleed over into the rest of your life. “I only have so much time. Am I spending it correctly? Why do I spend it this way?”
Tony says:
September 14th, 2010
8:41 pm
PeterPansDad,
Total agreement here. You might check out my post on “Should you pay off your house” when it goes up (if it goes up). We work to buy the things we need and want. Most earn more than enough to pay for food and shelter. After that, we purchase the things we want. Hopefully, some of that “want” is a secure retirement.
Many folks do not have an earning problem, they have a spending problem. I no long give the advice to “refinance your house, pay off your credit cards and other debt. That way, at least you get to deduct the interest you are paying and you will pay a lot less interest.” Invariably, the folks would refinance, pay off their credit cards, and a year later would have the higher payments and again have their cards maxed out.
Peach Tree City Garage Door Repair says:
January 10th, 2011
3:03 am
Intriguing method. I’m suprised I would not notice this on your large news sites 1st. Nicely played!