Monthly Archives: February 2008

My Favorite Articles From The Money Blog Network

Let’s take a look at what my fellow members of the Money Blog Network have been writing about this week -

All Financial Matters asks about the possibility of a National Sales Tax.  (Wow, a tax system that rewards saving?  What a novel idea.)

Get Rich Slowly suggests that shopping leads to more shopping.  (I agree, 100%.)

Wise Bread suggests that you visit one site before you buy anything online.

Mighty Bargain Hunter has interesting thoughts about HELOC temptation.

Five Cent Nickel has several guest posts this week, including mine about intentional living.

Consumerism Commentary suggests adding a food pantry to your emergency fund plans.

Free Money Finance writes about (what I think is a terrible trend) ‘wardrobing’.

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Facing The Frustrating Realities With Which We Must Deal

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As you move away from financial irresponsibility and towards financial stability, you will find yourself becoming aware of certain new realities. First and foremost, you will note that the vast majority of Americans live without much regard for their own financial futures. Supported by a massive government that believes in handouts and bailouts, many folks have forgotten the idea of personal responsibility. Living well beyond their actual means, most have succumb to the pressure to have more, get more, and use more.

Ironically, instead of supporting those individuals who wish to save, our government promotes consumption. Instead of urging people to save for down payments (and thus prove financial maturity), our government promotes even-lower mortgage rates, swelling the supply of money and lowering the value of the dollar. Instead of honoring its budget, our government grows ever larger, competing with private enterprise, entrenching itself in every area of our lives.

We live in strange times, where people have ceded their liberty for (so-called) security. We have abandoned the ideas of frugality, simplicity, and prudence and replaced them with greed, consumption, and excess. I feel that we are moving towards a day of reckoning – A day when the spinning-plates of an ill-advised war, a convoluted tax structure, and a pseudo-stimulated economy shall come crashing down.

I wish that I knew all of the answers – but I’m just beginning to understand the questions. But, I do know this – Things feel uneasy. I talk to folks all the time – good, honest, hard working folks – and they are worried. Many (most?) are living paycheck-to-paycheck. Husbands and wives are working to provide for their families, but they feel overwhelmed. Burdened with the desire to provide bigger and better things for themselves and their children, but unaware of the methods for bringing about true prosperity, many are one misstep, one illness, one lost paycheck away from financial ruin. And so, they depend on credit and the promises of government, instead of their own ingenuity and abilities.

We must gather ourselves – and move in a different direction. We should demand fiscal responsibility – from our politicians, from the people with whom we invest our money, from the companies with which we do business – and from ourselves.

All true change begins at home. We must learn to live within our means. We must seek for opportunities to increase our income. We must teach out children about financial matters and we must talk with our spouses about money. And, above all, we must take personal responsibility for the financial decisions we make. Reversing our course may be difficult – but we must being to turn the wheel.

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

Instead of blaming the rich, we should learn from them. Instead of criticizing profitable businesses, we should thank them for the jobs they provide. Instead of supporting failing policies and practices, we should encourage ingenuity and enterprise. Instead of borrowing from our enemies, we should trade with our friends. Instead of glorifying the excess of celebrity, we should applaud the wisdom of the millionaire-next-door. Instead of promoting laziness, we should reward hard work. Instead of doing what we’ve been doing – we should do something else.

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Breaking The Cycle Of Borrowing Money And Paying Interest

For the first fifteen years of my adult life, I borrowed money for every major purchase. Three years ago, I decided to stop borrowing money and get out of debt. As you can imagine, going from a ‘borrower’ to a ‘non-borrower’ (Is that a word?) can be a difficult process. Here’s how I did it -

1. I created two lists. List A was a list of my monthly expenses – by priority. List B was a list of monthly income. I realized, after making the lists, that I could live without using a credit card or borrowing money, but only if I reduced the number of items in list A.

2. After establishing the fact that I COULD live without borrowing money, I then created a plan to insure that I WOULD live without borrowing money. So, I took the numbers from List A and List B and created a monthly budget.

3. Once the budget had been created, I began to look for additional ways to reduce debt and increase savings. I quickly established an emergency fund of $1000. Throughout the ensuing debt reduction process, I always maintained an emergency fund balance between $800 and $2000. The emergency fund served as my new ‘credit card’. When an unexpected expense reared its ugly head – I would dip into my emergency fund, deal with the expense, and move forward.

4. After creating the budget and establishing the emergency fund, I began to attack my debts. I used the debt snowball and in less than 10 months, I was debt free.

Now, if you’ve made it this far, you’ll note that these four steps cover the ‘financial side’ of the process. But, what about the ‘personal side’? What changes took place, internally? How did a compulsive borrower become a competent saver?

1. I began to consider the longterm ramifications of my spending/borrowing habits. I found a few online calculators and calculated how much money I was paying in interest – and how much money I was ‘losing’ by not contributing to my retirement accounts. Seeing these calculations had a profound effect – emotionally and psychologically.

2. After realizing that ‘something’ had to be done – I sat down with my wife and we talked about what we wanted out of life. We both realized that we had ‘everything’ we wanted – except for financial security. We dedicated ourselves to a life of saving and frugality.

3. I did not cut-up my credit cards or freeze them in the freezer or hide them in a sock drawer. I simply left them in my wallet – and refused to use them. I made up my mind that I would be different. Instead of ‘removing’ the temptation, I faced it head-on. Also, I made a promise to myself (and my readers) that I would do my level best to live without borrowing money. Making this promise ‘changed’ me.

4. Instead of hiding my struggles, I began to seek the advice and council of money-smart folks. I asked questions and I listened to answers. Admitting my failures allowed me the freedom to accept constructive criticism. By the way – Most successful people are happy to share their methods, opinions, and time. All I really had to do was ask.

Getting out of debt feels great. Living debt free feels even better. But, the entire process started when I made some ‘financial’ AND ‘personal’ changes. Instead of continuing the same behaviors – and foolishly anticipating different results – I radically changed my lifestyle – and enthusiastically anticipated progress.

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Saying Goodbye To An Old Friend

I have been a Sirius Satellite Radio subscriber for more than four years. But, yesterday, I canceled both of my subscriptions. Why? Let’s just leave it at – bad customer service.

I really like the service, but I will not miss the expense. I’ll replace the music with free (legal to download) music and I’ll replace the talk shows with various podcasts.

Tonight, I’ll list my receivers on eBay. I doubt I’ll make much money, but selling them will remove a bit of clutter – and it will remove the temptation to reactivate them.

In a strange way, it feels good to get rid of the receivers. Plus, having an extra $20 a month in my pocket sounds pretty nice.

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