');} ');} ');} ');} ');} ');} ');} ');} ');} ');} ');} ');} ');} ');} ');} ');}

Archive for the ‘Debt’ Category

Apply Occam’s razor to your finances

Thursday, August 5th, 2010

I have always gotten along well with math.  I guess being an engineer by trade and writing a financial blog lends itself to at least tolerating math.  Math is one of those things that I profess to know little about, but actually am quite good at.  Philosophy on the other hand I profess to be an expert on, but know very little.  So just for fun, lets mix the two together.  As my son likes to say “Ready, set, gooooo…”

A decade or so ago I had a class in college on philosophy.  I attended half of the classes.  Of those I attended I slept through half.  Of the half of those that I was awake for, I thought that half was boring.  Of the half I did not think was boring, I thought half was BS.  Of the little bit that was left I learned two things:

1) Philosophy professors have no grasp of real life

2) There were actually some pretty smart guys in history that came up with some pretty smart things.

Revolutionary, right?  Well one of those things that I thought was smart was a little logical exercise called Occam’s Razor.  To put it in simple terms it is the principle that everything usually boils down to the most basic fundamental things.  One other way to state it that will be relevant to my eventual point is: do not complicate things unnecessarily.

You might now be asking yourself: “what on earth does this have to do with personal finance, my career, or any of those other things Jesse likes to ramble on about?”

The answer is: everything.  Using a completely unscientific poll of my contemporaries, I’ve found that the vast majority of people reading personal finance sites, listening to personal finance podcasts, watching personal finance TV shows, and making people rich by buying personal finance books are most concerned with getting out of debt and saving money.  Does this sound familiar to you?  I know it does to me; its how I discovered I enjoy staying up late working on blog posts while listening to my eclectic music collection and drinking diet pop.  We are now going to apply this concept to getting out of debt:

1) Am I spending less than I earn?
If yes, continue until debt is gone.  If no, go to question 2.

2) Do I have a budget?
If yes, go to question 3.  If no, create a budget and come back after a month.  Ok ok, come back tomorrow, but come back to this article in a month.

3) Am I following my budget?
If yes, go to question 4.  If no, follow your budget and then come back.

4) Are there things I can cut out of my spending?
If yes, go back and remake your budget, removing that which can be removed.  If no, go to question 5.

5) Can I increase my income?
If yes, do so and then come back to these steps.  If no, go to 6.

6) Something big needs to change.

If you got to question six, then there is nothing further to boil down, you need to make some sort of life altering sweeping change.  It really is that simple.  If you need help with any of those steps along the way, search my site and there will be answers.

You do not need to buy 10 personal finance books, listen to David Ramsey 24/7, or meditate for clarity.  I just saved you doing all of that.  Now, instead, you can go get out of debt, make more money, and send me an email about how you are killing it and you’d love to treat me to a scotch tasting on your new yacht.

Don’t Lose Your Faith in Debt Management Services!

Monday, May 3rd, 2010

It is extremely important for anyone with a large amount of debt to seek professional help and advice. If they do not, then the whole situation can (and often will) get far worse. However, for many people, looking for help has recently become a bit of a worry in itself… The Office of Fair Trading has just ordered 129 debt management companies to clean up their act after accusing them of giving out poor advice to their clients and of using misleading advertising campaigns.

But the worst part of this news does not concern those 129 shady firms offering a substandard debt advisory service; it is the negative image that is being given to the entire sector. There are far more than 129 other companies out there who are totally genuine and these help thousands of people every week to manage their debts!

For those people running a proper debt management service, this news will all be extremely frustrating. There are good and bad products or services in every area of life and they will all be hoping that their customers are aware of this. The whole situation has been made far worse by the fact that the names of these 129 firms cannot be made public. If they could be, then it would help to clear the names of a great many more!

The help and advice offered by debt management companies is invaluable to an enormous amount of the population and anyone who has found themselves in a poor financial situation should not be put off from using these excellent services. Ninety percent of companies on the World Wide Web are completely above board and it is just a terrible shame that such a small amount of firms can cast such a long shadow of doubt across everyone else in the industry.
Article supplied by Abacus Finance who are part of the Cleardebt Group.

Calculating Income vs Expense

Sunday, February 15th, 2009

I know what you are thinking…Sounds easy right? It’s just one number divided by another. In reality, it requires detailed bookkeeping to track all of your income, investments, loan accounts, and bills. But what about your mortgage–is the principal really an expense? How about that employer stock grant program that awarded you 50 shares for a price of $26.22 but withheld 18 of the shares to pay taxes, that you then sold the remaining 32 for $28.19 two months later? Not so easy, is it?

To properly compute the ratio, you need to build an income statement. An income statement is a document that tracks the inflow and outflow of cash over some set time period – usually a month, quarter, or year. For personal finance issues, a month is a good resolution to use.

The income statement contains two main parts – one for all the cash that comes into your household, and one part for all the cash that leaves your household. Transfers don’t count. So if you contributed some of your pay to a retirement account, it really doesn’t belong on an income statement. What does belong on the income statement is gross pay, not your net. Remember to include interest from bank accounts, dividends from stock, 401(k) employer match, and realized capital gains. Unrealized capital gains will affect your balance sheet, but should not show up on your income statement. All numbers should reflect pre-tax amounts. We can account for taxes in our expense column.

This second part – expenses – is usually the longer column in the balance sheet. Aside from your regular bills, be sure to include all of your monthly insurance costs, income tax, and payroll taxes that were deducted from your paycheck (even if they were in the form of stock); and any interest you paid on a loan. This brings us to an important point:

If your car payment was $460, then only the $60 or so that went toward interest on the loan was really an expense. The payment to principal was simply a transfer of your cash into equity in your car. Remember that transfers don’t count. The same concept applies to your mortgage and student loans of course. Keep in mind though, equity you build in a home tends to stay put or grow, but the equity that’s put into a car tends to evaporate over the next 5-10 years. It’s like filling up a bucket with a big hole in the bottom.

So after you’ve tallied up all of your gross income and all of your expenses for the month, you’re finally ready to divide one by the other. Hopefully, the ratio is greater than 1. Otherwise, you’re living well outside of your means and eroding your existing net worth.  It seems like its simple, but its amazing how difficult most people find it in practice.

Christmas Credit hangover?

Monday, December 29th, 2008

Here is an interesting question: how many of you used your credit cards at Christmas?  And how much debt did you incur?

Christmas Shopping

In years past I used to rack up huge debts at Christmas which I would then proceed to pay off for the next 4 or 5 months.  If you avoided that this year, congrats, give yourself a pat on the back.  If not, try a few things to get yourself back on track:

1) Transfer that credit card balance to a 0% interest card
If it is going to take you a while to get things paid off, try and pay as little interest as possible.

2) Find little things to cut back on and put that money directly toward the debt.
For example if you always get Starbucks in the morning, make the sacrifice and brew your own coffee for a while and take that to work.

3) Resolve yourself to not do it again next year

Buying presents is fun, but going overboard and paying for it later is not.  I hope everyone had a great Christmas!

If you liked this, you might also like Christmas Spending can hurt your Credit Score from Spendonlife.com

A reader makes 180k but can’t afford groceries – consolidation loan dangers

Thursday, September 4th, 2008

I had a reader write in with a  story that happens all too often…I myself have been guilty of it at one point.  Its a little thing I like to call “good intentions gone bad.”  So what exactly am I talking about?  Consolidation loans.  Particularly consolidation loans as they relate to budgeting and money habits.  Ive had a few emails along these lines but never someone with so much debt….and so much income.  Here is the reader’s letter:

“Hi Jesse,
I admit I feel kind of weird writing to a guy on the internet that I dont know (but I know a lot about your life at least, does that count?) but I feel like I need to.  I have been reading financial websites for a while and I find you to be the most down to earth and real of most sites.  Some of “huge” financial sites seem sort of idealistic.  Anyway whatever.  I am writing because my wife and I are in a very difficult situation that we take full responsibility for but we do not know what to do from here.   We are both in our early 30s and we both make about 90k per year, so you would think that we are living large, but quite the opposite, we can’t even afford groceries.  See, a few years ago when we both were promoted.  We bought a house here in California for 600k.  Its by no means a mansion, housing is just very expensive here.  Then we went on a vacation that cost about 8k, which we put on credit cards.  It just spiraled out of control from there and we found ourselves with 40k in debt + 30k in student loans.  We did a consolidation loan and got one fixed payment on the 40k at a good rate.  The problem is, we have charged our credit cards back up to about 10k.  Should we get another consolidation loan?  You have everything, houses, a nice car, and now a baby.  We make a lot of money but our minimum payments take up most of our income!  I called some hot line and ended up hanging up because first I felt stupid then after sitting through a fairly humiliating interview they told me they could help at a cost of $20 an hour!  How is that helping, I need $20 for food and gas right now.  We would like to sell our house to get rid of that but housing prices have dropped it I don’t even think we can get out of it what we bought it for.  I have to tell you, Im hopeless right now.  My wife and I fight about money every day.

Thank you for your website, I am depressed when I see your stock picks because I know I will probably never be out of this debt to even try investing in any of them.  But I appreciate it anyway.


PS you can publish this if you want, I know sometimes you tell reader stories.  I guess I can be what not to do.

Before I respond I am going to give a little bit of a primer for anyone who needs it:

Consolidation loans are loans that are supposed to work like this: Take one of these loans out. Pay all of your different credit card debt and other debt down with the loan. Pay one monthly payment with a lower interest than what you were paying before. Its all good then, right?

It’s only a good deal if you create a budget and stop spending. Grant has fallen into the most common trap in with consolidation loans: consolidating and then spending like its business as usual and running the credit cards back up. So now they have their new credit card debt AND their consolidation loan debt.

Getting back on track, here was my response to Grant:


Thanks for writing, I appreciate you taking the time to write in.  There is no shame in talking about money issues, money is still a huge worry for me, especially with all of the things I have going on that you mentioned.  I appreciate the compliments, but Im sure my fiance would tell you I do not always have everything together 🙂  That being said, there are people that subsist on 1/10 of your income so I am glad you realize that this is your responsibility to take care of.

You have one major problem:

You HAVE to alter your spending habits.  That is the only way that anything will change.  Trust me, I know how hard it is.  I still have problems locking down to a budget.  It’s a tough thing to do but it is necessary, especially in your case.  Thats #1.  Cut up every one of those credit cards, right now.  Every consolidation loan in the world can’t stop you from spending more than you earn.  That is your job, and your job alone.

Next step: time for some drastic measures.  The absolute first thing to do is to pay down that credit card balance.  Do you have anything you can sell?  Time to start.  You mentioned gas money, well, when you are in that big of a hole, its time to stop driving if its possible.  You are in “bike 10 miles to work” territory…or public transportation if possible.  Since you do not have kids to worry about yet, you need to go to some extreme measures to get that debt down, especially if you can barely afford groceries.  If you have to get a second job on the weekend doing manual labor even, do it.  I assure you, being burned out from working all the time will be a much better fate than defaulting or filing for bankruptcy.

I want to stress something else too: you sound pretty hopeless, and let me tell you, there is hope.  If there is one thing I have learned in life its that things always get better and there is always hope.  The key is taking charge of your situation and doing whatever is necessary to get the problem fixed.  You can do it.  In fact, send me your paypal address and I will buy you 1 share of stock in one of my picks.

As far as the credit counseling goes, remember, credit counseling is code for “fraud” and is just another thing to siphon money.  Good luck man, if there is anything I can do to help, let me know and keep me updated.  Im sure readers will appreciate your story so I am going to post it, not as an example of what not to do, but to show what can be done.


Seriously, no more excuses for racking up debt

Wednesday, August 13th, 2008

Ok so this is starting to drive me absolutely crazy. Every day I hear a new excuse for reasons that people are in debt, and a few are even things I have told myself at one point or another in my life but it is starting to get absolutely crazy.  People are racking up debt like Mike Tyson in a tiger store.  Here are some typical excuses:

debt cartoon

Excuse #1: I never learned how to handle money
There are a ton of things that may or may not have been specifically taught to you as you grew up. At some point in our lives we have to learn things that we are completely unprepared for, so suck it up, read The Penny Saved every day, and get on track. Wow, I feel like just gave out medical advice. Dr Jesse to the rescue.

Excuse #2: Ads and media are all around me
Do you buy EVERYTHING you see? Didn’t think so. Having trouble with commercials? Turn off the TV. How about the radio? Shut that bad boy off and throw in your favorite CD. Or book on tape if you’re my dad, though I think he might possibly be the last person on earth to actually have a tape player in his car…let alone books on tape.

Excuse #3: I have to spend it going out
This one I myself am guilty of. When I go out, I like to really go for it. My favorite marg is the Patron marg, my favorite dinner is steak. The key here is moderation, make yourself a budget, stick to, and stick to it some more.

Excuse #4: I need to have nice stuff
Im not even going to preach you shouldn’t have “nice stuff” even though that kind of thinking has me more and more disenfranchised every day. You don’t have to spend a lot to have nice stuff. My mother-in-law is the bargain shopper of the century, she can find stuff that should be $100 for $10. Its actually really impressive, it just comes down to knowing where to find deals, and being patient.

Excuse #5: College put me in debt
Me too. Thats not an excuse to rack up more debt.

Excuse #6: I have no self control
Good point

Other excuses: shutup.

Here was the turning point for me: if you are having trouble with your self control its time to do mitigation. Get rid of the credit cards (see my credit card cutup series). Next I want you to think of everything in terms of how many hours of work it will take to earn that. Suddenly those things that may have seemed irresistible before are not quite as appealing.

Secured Debt vs Unsecured Debt Explanation

Thursday, August 7th, 2008

I have talked to a lot of people trying to get out of debt. They try to find ways around debt, sometimes doing the right thing…many times not. Other times, people try to ignore the problems, hoping they will simply go away. Ignoring debt and credit problems is not a solution. Instead, it is important to prevent problems by understanding how loans and credit work.

When you borrow money, from either a bank or a credit card lender, there are two ways to do so. The first way is known as a secured loan which is when you put down collateral for your debt. If you fail to pay this loan, your collateral, often your home or car, is taken from you. The other loan type is known as an unsecured loan. For this type of loan, there is no collateral securing the debt. The most common type of unsecured loan is credit card debt. Credit card companies offer loans of a certain amount of money made available to the lendee. The lendee takes advantage of this loan by using the card issued by the company to charge against a set credit amount issued. If the lendee fails to make payment on the loan, the credit card company has a few options when trying to collect. They will raise interest rates, lower the lendee’s credit rating and, in extreme cases, send a collection agency after the lendee or take him or her to court in order to collect the money owed.

Which loan type is better?
It depends on the need. A secure loan will have lower interest rates, and the lendee pay less money over the course of the debt. Credit cards and other unsecured debt tend have very high interest rates. Unsecured debt can lead to problems as a lendee does not always have to prove they can pay the full amount before making use of it. The lendee can then spend years paying back the cost under higher interest rates. Unsecured loans will also often have variable interest rates instead of the lower, fixed interest rates offered by secured loans.

Why would anyone take an unsecured loan?
Generally people with no collateral or who have poor credit histories have no choice other than unsecured debt and loans. If someone does not have the collateral to secure a loan they are going to have no choice other than to pay for an unsecured debt. The good news is, paying back the debt in a timely manner will help restore a potentially poor credit history and help with potential future loans.

Secured loans are an easy way to put the equity to work. They are also common for car purchases or for purchasing a home. For these more expensive purchases, it is unlikely a buyer will be able to make the purchase of the full amount without the loan. A secured loan will have a lower interest rate and better payment terms than an unsecured loan. The downside is if the loan is not paid back in a prompt manner, the collateral can be lost. If the loan is for a risky venture, then it might be better to take unsecured debt.

There are pros and cons to both types of loan, and which type is best relies on many factors personal to the potential lendee. Whichever type of loan is chosen ought to be done with due diligence. Taking any kind of debt which can not ultimately be repaid will have negative effects on credit histories. As such, it is important to be careful when taking out any sort of potentially unnecessary loan. Even credit card purchases should be considered carefully. If credit card payments are not affordable, then perhaps that new television is not as necessary as first thought.

What is a good way to get out from under unsecured debt?
One way is to start a new business.  An example might be doing an at home business selling something like Gold Canyon Candles or Amway or one of the multi tiered marketing techniques.  A better way is to find ways to cut back on spending.  If you have a lot of unsecured debt its a sure sign your spending is higher than whatever income you have coming in is.

Own a piece of me (literally) and get a great return

Monday, June 23rd, 2008

I have posted a loan application on prosper for a 16% rate:  pretty sure bet considering I am putting it up on my blog as a matter of insurance for people.  Long story short the debt I collected while unemployed has been transferred around to 0% interest credit cards and opening accounts + revolving credit + inquiries (to do transfers) has hurt my credit score…down to about 700 plus score, and 678 on the lender scale.  So I need all of you guys help to get my credit score up by transferring that revolving to a fixed loan .  Sign up with the link on the left and then go here:


and fund my loan.  You get free $25 just for signing up there so you get to lend me money AND get free money.   Ive got some great posts coming this week, just need the time to finish them off and post them.    Thanks for the help guys, and drop me an email if you decide to do it, Id love to see who all out there is helping!

David Ramsey Hypocrite – David Ramsey hypocrisy? (a thorough investigation)

Friday, May 2nd, 2008

David Ramsey Hypocrite. It keeps popping up as how people get to my site. I really can’t understand that considering I have mentioned David Ramsey exactly once (maybe twice). I seem to remember a few other people tackling this subject; five cent nickel and debt free revolution come to mind. Well I have no loyalty to Ramsey though I do like his debt snowball technique so I am going to dive into this David Ramsey hypocrisy issue. Of course I have a feeling I am opening up a Pandora’s box but here goes:

David Ramsey hypocrisy allegation #1: David Ramsey filed for bankruptcy and now he is a financial advisor

When I was in grade school I remember as part of the I think now defunct D.A.R.E program they brought in a speaker who was a former alcoholic and drug addict. If anything someone who has been through the absolute worst in a particular situation is in a good position to show the evils of that situation. I just don’t find a lot of credibility with this argument.

He even describes the time as the worst time in his life full of fear, desperation, etc. I think the fact that he has made it his life mission to help others avoid the same mistakes he made is noble, not hypocritical.

Score: Not Hypocrite view 1, Hypocrite view 0

David Ramsey hypocrisy allegation #2: David Ramsey rejects credit cards and ‘forbids’ their use, but he accepts them on his website

I had to do some personal investigation into this one and I was surprised to see that he does, in fact, accept credit cards. There is a disclaimer:

We understand what is running through your mind right now. “I can’t believe Dave Ramsey is accepting credit cards! This can’t be true! He’s sold out on his principles!” But before you shave your head and run outside on your front lawn screaming, “The world is coming to an end, save yourself!” let’s clear up a few things:

Number 1 – We are NOT accepting credit cards! Never have and never will. I mean, come on, do you listen to the radio show at all? Have you ever heard of a plasectomy? Please understand that accepting credit cards is something that will NEVER happen as long as Dave is still alive (and even forever after that!)

Number 2 – We are accepting DEBIT cards. We know that some people will go nuts when they hear that, but one factor is being overlooked. Debit cards do not work unless there is CASH available.

There is one problem with this: there is no distinction in Visa processing between debit and credit cards. I find this to be somewhat of a cop out especially considering his militant views on the subject. This is basically akin to leaving a cookie jar on the table around people addicted to cookies and telling them “you better not take a cookie.” It leaves somewhat of a doubt in my mind about how much of his stuff is “for show” and how much is “for real.” He obviously is just trying to make a living like the rest of us but the thing is, he’s gotta know most people are so desperate for his information (and likely to buy) are the ones who use credit. There is no way around the fact he makes money off the people he’s trying to help and that not offering a credit card option would hurt his income.
You could argue the “drop of water in a lake” theory …but what is a lake except a lot of drops of water? I can see both sides here. I lean toward hypocrite here, but I can’t be decisive about it. Point for each side plus a half point for hypocrite.

Score: Not Hypocrite view 2, Hypocrite view 1 .5

David Ramsey hypocrisy allegation #3: David Ramsey pushes “smart” financial decisions but his debt snowball is fundamentally “not smart” because it basically ignores interest rates

As one fellow blogger put it “David Ramsey is bad at math.” That is true, but he is also “Good at motivation.” The argument goes that he is telling people to be smart about finance, but paying off low interest rate small debts before larger high interest debts is decidedly backward as far as the smartest way to pay off a debt. I can see this point of view but I also think he is right in a lot of ways just for the morale boost it provides. This isn’t “hypocrisy” in the pure meaning of the word so this argument is null and void. No points for either side.

Score: Not Hypocrite view 2, Hypocrite view 1.5

The long short of it is that I don’t think he is a hypocrite: he lives what he preaches and thats really what it comes down to. I would definitely say there is some “stage acting” going on but that doesn’t make him an hypocrite, it makes him a showman. A lot of people have used his system successfully which is what I care about here: you the reader. By all means listen to his show and read his books, just don’t become a militant on any issue and keep an open mind.

Live the American dream, fix your problems

Thursday, April 24th, 2008

You wanna live the American dream?  You wanna fix your financial problems? Don’t live beyond your means.

There was such a positive response to our failing article that I decided to follow up on a little more direct and slightly less sarcastic take about living beyond your means.

Here is the US Savings rate historical graph, its a nasty thing to behold:

savings rate

Sadly, what you see above is true for a good portion of us. The U.S. Department of Commerce’s Bureau of Economic Analysis’ statistics suggest that the typical American family sometimes spends all of its cash and then dips into existing cash savings – or borrows cash from others – to keep spending even more. If the government’s personal saving statistics are to be believed (we all know how government statistics go, and many economists believe they are flawed), the typical American family is living beyond its means, choosing to live a lifestyle it truly cannot afford on the income its breadwinners bring home each month.

There is some good news though… your family does not have to live like the typical American family. Your family can choose to be different. You can choose to set aside part of your income each month to build up cash savings. Then, you can invest those savings wisely so that your family can pull ahead of the typical American family over time. After all, why choose to “keep up with the Joneses” materially when you can just as well choose to beat them financially? Is it challenging to do? Sure it is. But, you can do it. You just have to think radically.

Lets get sort of crazy, crazy like a fox, not like Michael Jackson

Let’s think radically for a moment. Would it not be a completely radical idea to do the exact opposite of what the typical American family does with its cash income each month? What would it feel like to save more cash than you spend each month? Think about it. Imagine paying all of your bills out of your monthly cash income yet still having more cash left over than what you just paid out in bills! Can you imagine that? Wouldn’t that be nice?

There is one easy way to do this. Spend a lot less per month! (Gasp)

Hey, I never promised that getting ahead financially was going to be fun, did I? Mentally and financially, cutting back on your monthly expenses is very dull, hard work, especially at the beginning. It requires you to make hard decisions and sacrifices, and to have patience. However, once you get started, your cash savings start to build up. You can then use this accumulation of cash savings to build wealth over time through the commitment of that cash savings to sound, long-term investments. So, the sooner you get started accumulating cash savings, the sooner you can choose to live off the income from your investments instead of the income from your own labor. Or, if you want to, you can choose to continue to work. That is the great thing about doing the opposite of the typical American family: you have greater freedom to choose what you want to do when you want to do it. This is what is meant by achieving financial security and freedom, perhaps the best way to have fun and enjoy life.

Yeah it sucks

I can hear the metaphorical room splitting down the middle. Some of you are cheering for me and others are gathering your weapons to come to my house. For the second group, I can hear you muttering to yourself how difficult and unattractive it would be to get radical: “Cut back significantly on my monthly expenses? Forget that, that sucks” Yes, it would “suck.” Significantly cutting back on your monthly expenses could dramatically alter the lifestyle to which you have become accustomed, perhaps a comfortable lifestyle somewhat beyond your means. You might have to move to a less expensive house or apartment in a different part of town. You might have to sell your current car and buy a less expensive, more fuel-efficient car, carpool with someone else, or take public transportation. You might have to stop eating out at restaurants multiple times a week and just eat self-cooked meals at home and at work. You might have to cancel your overpriced (and overindulged?) cable or satellite TV services. You might have to live without the latest gadgets and gizmos and just stick with the perfectly good technology you already own. You might have to forgo exciting vacations overseas and just take cheap road trips here in the good ol’ U.S.A. You might have to do all of these things until you are living well within your means, living a lifestyle you can afford to live on the income you bring home each month.

Trust me, things could be worse

Yes, downsizing your lifestyle would “suck.” But, do you want to know what “sucks” worse than slashing your monthly expenses so that you can save and invest for the future? I’ll tell you:

-Growing old poor, unable to afford to travel and visit your grandkids living with their parents – your grown children – in another city or state

– Having only meager Social Security or pension checks to live off of in your retirement or in the case of our generation, probably no social security at all.

– Living your final decades on Earth as a potentially unwanted financial burden on your grown children’s families and their own futures

-Having no choice but to work up until the day you die because, over your lifetime, you failed to create any personal wealth that enables you to choose to stop working in your old age

-Dying penniless, leaving behind no legacy of financial security for your family’s future generations

That is what “sucks” worse. And, that is exactly what a good portion of the people you know (some estimates put it as high as two in three Americans!) are going to do.


Do something

You do not have to live your lifestyle the way you live it today. Your lifestyle is largely a matter of choice – your choice. With the exception of financial obligations such as government taxes, court orders to garnish your wages, debt payments to creditors, or other payments for which you have a moral, ethical, or legal responsibility to pay, the cash you earn each month is your cash, and you alone choose to whom you hand over your cash each month. In other words, to save or not to save your cash is largely your voluntary choice.

Stash a large chunk of the cash you earn each month into savings – what a radical idea, huh? Well, if the U.S. government’s personal saving statistics are to be believed, saving cash apparently is a radical idea in early 21st century America. Each month, “financial radicals” across America choose to stash a large chunk of their cash income into savings – cash held at the ready to provide financial security and/or to fund sound, long-term investments. These financial radicals demonstrate a strong preference to save and invest for a brighter future than to spend their hard-earned cash on wealth-depleting consumer goods and services in the here and now.

What about you? If you have made the choice to do what it takes to build wealth over the long term, consider living a “crazy” lifestyle. To do so, make whatever lifestyle changes necessary for you to minimize the amount of cash that you voluntarily hand over each and every month to retailers, restaurants, finance companies, entertainment companies, utility companies, grocery stores, and others. Use the cash left over each month to build financial security and freedom for you and your family over the long term. It all starts when you refuse to live a lifestyle you cannot afford on the income you bring home each month.

Expensive cell phone? Cut it. Expensive car? Sell it. Expensive stuff laying around your house that you don’t need/dont use? Sell it and put the money in savings. Eating out every day? Stop. Personal trainer? Motivate yourself (and use resources such as fitnesstitans.com
Buying tons of groceries? Add a garden this summer. Still spending too much on gas? Ride your bike. Cut up your credit cards.

Its a battle, win it. Its the American dream, live it.