Tag Archives: debt

The Blind Spot

Each workday I travel a busy highway system to and from work. If you are a driver, you already know that there are blind spots that prevent you from seeing and knowing all that is happening around you. It seems that, like magic, cars on the side of us materialize out of thin air. I usually turn my head and check behind me when I am changing lanes, but even then, things might be happen in front of me while I am checking.

Another type of blind spot are the things that keep us distracted. Some of us are engrossed with entertainment media, others with hobbies and activities. There is nothing wrong with escaping the daily grind and enjoying distractions, but there are times we need to check our blind spots and pay attention to what is going on around us.

I am concerned about what is going on in our world. I am very concerned with the success of ISIS. I am also concerned with the growing debts, not only of individuals, but of countries around the world. Greece is just the first example of the debt problems that will soon face other countries. Puerto Rico, our protectorate, is finding it difficult to pay its growing debt. These events should warn us to what might happen with the USA debt that is growing out of control and eventually will have to be dealt with. Austerity, whether voluntary or enforced out of necessity is the only solution to debt. How will our citizens handle the evaporation of government handouts? I believe they will handle it as well as the Greek people, with riots, protests, bank closures, and account seizures.

I believe there are lots of warning signs as to what may lie ahead. We are seeing more and more terror inspired attacks all around the world. It could easily become much worse here. If you are a bible believer, you may have noticed signs such as the blood moon tetrad, the Bethlehem Star, the end of the Shemitah year and the beginning of a Jubilee year, which all points to a fulfillment of prophecy. I also understand that there is a red heifer that can qualify as a proper sacrifice in a yet to be constructed new temple.

I will say that, even though ISIS and other threats, such as Iran, North Korea, and others are popular in the news, as well as horrible events that happen here at home, the vast majority of people are good. I wish that each night the news would highlight and celebrate the contributions of the many people that make our community better. They could highlight an ambulance driver, a soup kitchen volunteer, an afterschool activities director, a police officer, a nurse, a social worker, and so many others. It would remind us that there are great people in our world. That our world is not just full of murderers and terrorists. Of course, I doubt if the media would ever move from its “if it bleeds, it leads” but I definitely hope they will.

So when we are distracted by life, let’s remember to stop and check our blind spots, because we just may never know what we might find there.

Government Budget Blame Game

Who is to blame for the budget troubles our nation faces? It is not an easy question. The current budget problem took decades to create. It is a result of mostly good intentions, compassion and over-promised services. It is easy to blame politicians but the will of the people generally dictate how they act. They hear what we say.  We say, “I want cuts in the budget as long as the things that benefit me aren’t cut. I think taxes should be raised just not my taxes. I want things to be different just not different for me. I don’t want less, I want more.”

We reward those politicians that promise us more, that give us more. We punish those that might want to take anything away. Politicians know this. It is the nature of the beast, they do what needs to be done in order to be re-elected.

There is new talk about making tough decisions, but yet I am still unsure. The entitlements will demand more and more of our budget until there is very little for anything else. The government will have to borrow more and more until it is unable to even pay the interest on the money that it owes. Our government will loose the respect and admiration of the global economy. I am very much afraid that the U.S. dollar may fall away from being the reserve currency of the world. That would be devastationg to our economy and lead to runaway inflation.

I sincerely hope that it never comes to this. I believe that we should gradually reduce entitlement provisions over the next 20 years. It will be painful but not as painful as the implosion of our economy if we do not take action soon. I hope that we will have some young, idealistic leaders who will manage to make tough decisions regardless of the political fallout, or maybe it will be the mature politician who wants to leave a mark on history and save the world from itself.

We are a resilient people. I believe our leaders will make the tough decisions and preserve the future not only for ourselves but for our children and our grandchildren.

New Year, New Budget

As the new year quickly approaches, it presents a good opportunity to look back at the previous year and examine the actual spending. Depending on your record keeping, this could be an easy task or a daunting one.

Take a look at what worked and what didn’t. If it didn’t work, why not? We are all faced with increased food and fuel prices. How did rising prices effect your overall budget? Did the rising prices lower your discretionary spending or like many, cut into the heart of the budget? In my family budget, we were hit with a dramatic increase in medical insurance costs. I am sure that we are not alone in this. These increases have left very little wiggle room.

My family will have to look for more ways to stretch our dollar. This will include shopping at the “selective item” stores such as Aldi, Save-A-Lot and Price Rite, prior to going to the bigger supermarkets to get specialty items. We will also have to think twice about driving out of town to the stores for items that can wait to reduce fuel costs.  Many of these things we are already doing, we are just going to have to look harder at how we can do more.

With busy work lives and hectic schedules, it is easy to fall back on restaurant meals. This is an area that can easily be reduced. For a family of 4, a restaurant meal can easily cost $40 to $70, so it is easy to see how that can interfere with the budget. Frozen pizza and generic soft drinks can easily reduce the expense of a pizza night.

If you are doing better or expecting more income in 2011, consider paying down debt or saving the extra cash or both. If you are already comfortable at your spending level, it would be a great time to put some aside for your future. As witnessed these past couple of years, the future is an unknowable creature, so it is prudent to plan.

I hope that you had a wonderful holiday season. I pray that your coming year is a prosperous one for you and your family, filled with love and attention. Take care, stay well and be safe.



Changes, Changes, Changes

We are all faced with changes, little changes almost daily, but sometimes we are faced with major changes. Changes in the major area of our lives, such as employment, residence, relationships, and health, can cause much stress and even joy. All changes cause us some stress, both good and bad. Not all stress is bad. Stress is what can give us the ambition to move forward, to conquer the challenge in front of us. Stress can also wear us down and, if we aren’t careful, can defeat us.

   Like everyone else, I have had significant changes in my life. Joining the Army was a great thing for me. When I first experienced basic training, it was a shock to my system, a cultural shock. I survived. There was a time I wanted to give up, but I was forced to muddle through. I had to find the courage to get through the technical brainwashing of tearing a person down and then building that person back up in the form of a soldier. Sure, that sounds terrible at first, but I am the better for it.

   Then there was the transition of moving from a structured life of the Army back to the civilian life. You see, the soldiers have to give up the rights that civilians enjoy in order to protect those very rights for others. When I entered the Army, I don’t think I really appreciated the freedoms and privileges that I had. When I came out, I knew just how important, just how bloody important, those rights and privileges were, paid for by the sweat, life and blood of soldiers long before I had the honor to serve.

   The next change was marriage. I married a wonderful girl from Upstate NY, as this was the place of my final assignment in the Army. Another big change came when my oldest son was born on my 26th birthday. Oh, what a wonderful birthday present! Married life was hard. Relationships are hard work. I know that I didn’t get it all right, but I did my best to support my wife and children. It is my opinion that I had a good marriage that ended badly. I will be forever grateful to my loving wife who spent her time and energy to that most noble profession of wife and mother. I will always love her.

   Another change that affected me very deeply was the final days of my father’s life. You can read all of that in my blogs concerning Lessons from Death.

   Now, I am faced with many, many changes. I pray fervently for direction and that God reveals his will to me. This is all happening close together. My challenges are:

  • Employment: After a reorganization at my  workplace, I kept my job but the responsibilities have increased and changed. I am still trying to sort out priorities and procedures that will lead to daily success in my job.
  • Residence: I plan to move to another town, leaving my home to my son and his new bride. I will miss my home of 12 years. I just love my kitchen and master bathroom. But I look forward to experiencing a new chapter of home, building memories and comfortable, loving surroundings.
  • Relationships: I am moving from romance toward a marriage-minded romantic situation based on Proverbs 31. As well as working to stay connected to my, now married, son. My other son is still with me. I recently experienced the death of a loved one, who I often think of and I miss her.
  • Health: I am dealing with the ever-growing pain of arthritis and inflammation, and the daily stiffness and challenges that come with controlling chronic pain.
  • Financially: I have willingly increased my financial burdens by promising to help my sons, my girlfriend, and my favorite charities even more than before and also increase the amount that I pay towards debt.
  • Spiritually: My prayer life has increased with the diverse changes and stresses that are presented everyday. Luckily, someone who loves me dearly, reminds me of my own words to look on the bright side and trust in God.

But, alas, I will survive. These changes are temporary, character building and more of life’s adventures. I know that all of this will turn out for the best. I trust God to guide my course to love, happiness and fulfillment.

   I found a song by Rebelution called Courage to Grow. I thought I would share it here. I hope you enjoy it. My best to all my readers. May you all be blessed with love and abundance. Take care, stay well and be safe.


The Butterfly Budget

   This is the fifth article in the My Second Million series.

   You’ve tracked your spending. You have categorized your expenses so that you have an idea of where you spend your money. Hopefully, you also have an inkling as to how you spend your money and maybe even why. The more you understand your own habits and are honest about those habits, the easier it will be to make plans that work.

   My vision of a butterfly is a creature that changes into something free and beautiful. The metamorphosis from a caterpillar into a winged beauty. The cocoon is made by the caterpillar to protect it while it goes through its transformation. The cocoon that we often find ourselves in is usually a cage of our own making. It is cage that is locked from the inside. I know that I buy too much food and snacks. I attribute that to an existence of lack when I was young. My mother did a wonderful job of making sure we had enough, but I knew that we could have more. My father severely restricted my mother’s budget for food. So that is why I like to have lots of food and snacks around, it is a comfort to me. Sounds like an excuse, and it is. I know I do this and it is up to me to be honest and logical about it. Do I always win? Not at all, but I am trying.

   There is no perfect budget. Life will happen! The car will break down. A child will be sick. You have an emergency home repair. The budget is a spending plan. It should reflect your goals and your values. How do you expect to emerge a butterfly if you are not working towards your goals?

   If you are with someone special, it is important, vitally important, that they are part of the budgeting process. What are your dreams? Not just yours alone, but what is the goal that the two of you have together? Is it to be debt free? Is it to have a bigger home? Is it a safe and comfortable retirement? Do you want to travel? Your goals as a couple will determine the important aspects of the budget. It is, however, important that your goals be realistic. Make several smaller benchmarks that lead to your ultimate goal, that way you will know that you are gaining ground and succeeding.

   One of you may be better with finances or figures, the other more aloof or even uninterested. But it is important to at least know the direction you both want to move in. Money and arguments about money can bring incredible strife to a relationship, but working together with your partner in respectful and thoughtful discussion can move couples closer. If you live alone, do not dismiss your future. Where do you want to be in the future? How do you want to get there and what do you want for that someone special that may come into your life?

   The mechanics are simple but the implementation takes conviction. Begin with your income, your net income. If you tithe, that should come off the top, if not automatic. Know what you owe. Know when your bills are due. This simple information will create the basic structure of your budget. Define bills that are stable, such as mortgage and car payments. These are fixed amounts.

    Then define your bills that are variable, the ones that change each month, such as energy bills, grocery bills, etc. These bills are usually somewhat controllable. You can find some savings here.

   Then decide what your discretionary spending looks like. Much of your savings can occur here. Subtract your bills from your income. This is your discretionary funds. Your savings and goals come from here, as well as bills that can be cut or reduced. Don’t be afraid to set up multiple savings accounts. Maybe one for vacation, another for gift giving, but the priority should be a well maintained emergency fund. Or maybe some of the discretionary funds become extra principle payments on other bills. The choice is up to you. It won’t work if you don’t decide and follow through.

   You should be able to take these amounts and decide how much you can save. Once you decide a reasonable amount for saving, then mark that amount a fixed liability. Pay yourself first! Your first goal should be to have an emergency fund. It is best to have an amount automatically withdrawn from your checking to an online savings account that pays higher interest. Once your emergency fund is fully established, you can concentrate on other goals. Knowing that your emergency fund is there for life’s little surprises will relieve a great deal of stress and worry.

   Your first few budget months will probably not seem to work as you like, but this is normal. It takes time for the budget to be made reasonable, and it takes hard work on your part to make it work. Soon, there should be a balance between the needs and wants of today and the responsible planning for tomorrow. Some people like others to create the spending plan and provide structure. If that is what you need, then find someone you trust that you know is already financially responsible. If you have the courage to do it yourself, then establish an accountability partner, whether that be your partner, your kids, your parents, your friend or even a professional to keep you on track and hopefully give you lots of guidance and encouragement along the way.

   I hope that at least in this area of your life, you emerge a beautiful butterfly from a restrictive cocoon into a comfortable nest from which to take flight.


How are you spending?

This is the fourth article in the My Second Million series.

 So, how are you spending your money? Where are you spending your money? And finally – how much are you spending? This is the next step after you take your net worth snapshot. You know where you are, now its time to seek direction.

 Money slips out of our hands so easily: a dollar in the vending machine; a cappuccino on the way to work; the $6 value meal; and pizza night or two or three. Sometimes we don’t realize where the money goes.

This exercise is to show you how you are spending your money. How you track this is up to you. You can carry a small notebook and record every transaction like a check register. You can simply note the category and the amount. You can track it in a hand held computer, or even use an online service. The important thing is that you track every spending transaction for 30 days and I mean every transaction. Yep, even that 75 cent bag of chips from the vending machine.

 Fast forward; 30 days have gone by and you have your notations. Now we find out where you spent your money and how much. How much did you spend on vending machine snacks? How many times did you eat out? How much did you spend of lunches? How much did you spend on gas? Did any of this surprise you? I bed it did. Isn’t it surprising how quickly these expenditures add up? A ten here, a twenty there, a dollar over there, soon it adds up to hundreds of dollars.

OK, now that you know where you are spending your money, you can now change how you spend your money. Don’t put yourself on austerity budget right away. You will end up feeling deprived and go on a spending binge. Kinda sounds like dieting doesn’t it. In a way it is like dieting. Dieting is usually not successful unless you change the way you eat as a life change. Financial fitness requires the same kind of commitment. You want the changes to last for a lifetime. So change incrementally and develop new spending habits, positive habits that will grow your net worth and give you financial freedom.

 Look for simple ways to cut back expenses, such as: bag lunches, ride sharing, reduce energy usage, seek lower interest transfers of credit debt, combining errands to save gas, buy non-perishables in bulk, seek value as well as price, etc.

Knowing these things gives you control. This gives you power. Now you know where and how you spend your money. How you continue to choose to spend your money is up to you. You might even ask yourself why you spend money in a certain way. Is t to impress your coworkers? Are you buying friendship? If so, then understand that these are false relationship builders. Do you buy comfort foods? I do, but I also look for other ways to relax. You can too.

 Where are you financially? How are you spending? These questions are the beginning of your financial fitness journey. Your answers will determine your success.

I wish you much love and abundance. Take care, stay well and be safe.


Where are you financially?

This is the third installment  in My Second Million series.

   Before you can get where you want to go, you first need to know where you are. One quick way to do that is to determine your net worth. I recommend that you do a rough and simple net worth calculation.

   Write down and add up your assets: home, vehicles, retirement accounts, checking, savings, etc. You can even add the value of antiques and jewelry if the item is valued at $500 or more. I do not add values of life insurance policies or accounts dedicated to college funding, as this is not my money. Life insurance is for your heirs, and school savings is for your children.

   Then write down and add up your liabilities: mortgage, car loans, credit card balances, student loans, etc. Now, subtract your liabilities from your assets. The result is your net worth. It can be large, small or even a negative number. The larger the number the better but don’t worry too much if it’s negative. Persons just starting out will usually have a negative net worth. They have had little time to build assets and could be settled with mortgage and student loan debt.

   OK, so now you know your net worth – now what? Now you know where you are. You can begin tracking your progress. I recommend you recalculate your net worth at the end of each month. This will show you your progress. You want this number to grow. Guess what? Life happens. Your car might break down, your furnace quits, the stock market dives, or some other emergency occurs. Your net worth will be impacted, so don’t get too upset if it doesn’t grow every month. How does your net worth grow? Simple, when debts go down and assets go up.

   Now where are you going? That is a question best answered by you, but at least you have a starting point. You also have an overall picture of what your financial state looks like. It is easy to lose track of where you’re going without this picture. Knowing where you are also gives you a sense of control. Regardless of the value of your net worth, you have the power to determine your future. You do this now without even thinking about it, use this knowledge to improve your financial fitness.

   If you don’t have an emergency fund, start one now. Put away just $40 every paycheck, if paid every two weeks. It is best to set up recurring automatic transfers into a separate savings account. Your emergency fund account will have $1,000 in one year. This is for emergencies, such as car repairs and home repair emergencies. Redecorating the kitchen is not an emergency. Vacationing is not an emergency. Birthdays and Christmas are not emergencies.

   Great online places to save your money are listed below. This is not an all inclusive list and rates change quickly. These online banks are FDIC insured, which protects up to $250,000 per depositor per individual account until Dec 31, 2013. If no federal intervention occurs, the extension expires and the coverage reverts back to $100,000 on Jan 1, 2014.

Ally Bank 1.44% APY
FNBO Direct 1.40 APY
HSBC Direct 1.35% APY
ING Direct 1.20% APY
Emigrant Direct 1.10% APY

    May your net worth grow throughout the year. Take care, stay well and be safe. 


My Second Million – Part Two

You can find Part 1 here: My Second Million – Part One

   When should you start saving?  NOW!  It is never a bad time to start.  If you already started, then great, if not, why not start now.  Of course, the younger you are, the greater impact your savings will have since time allows for the magic of compounding interest.

    The first priority is to save $1000 as a starter emergency fund.  Then accelerate your debt payments (except for your mortgage, which comes later).  You can use some of your savings to continue to build your emergency fund to a level that is equal to three months expenses or more.  Then concentrate on retirement savings and mortgage reduction.  If your employer offers a 401k with a match, then fund your 401k enough to get the full match.  That is free money – take it.

 Spending Tomorrow’s Money Today

   I am going to use myself as an example.  I am very nearly 50 years old.  That is five decades on the planet, five decades of experience and still learning each day.  According to the latest Social Security retirement tables, I will be eligible for full benefits at age 67, just 17 years from now.  Normally that would seem like a long time, but since the last 50 years flew by, I suspect that my retirement date will soon be upon me.

    TVM (Time Value of Money) says that for every dollar that I invest today at an assumed earnings rate of 8.5% per year, that dollar would grow to be $4.  My savings factor is four.  Therefore, if I buy that burger meal for $6 then I have forfeited $24 of my future savings.  Now, I am not saying that you should never buy a burger meal.  However, if I really love burgers and bought that meal five days per week for a year (250x$6), I would be spending $6000 of my future dollars.  Those burgers just aren’t that good and certainly not good for me!

    We each can find ways to save money, whether it is to save for our future or pay off debt.  The younger you are, and its never too late, the greater your savings factor is going to be.  If you are 25 and retire at 67, your savings factor is 30.76 @ 8.5%.  Now there is an expensive burger meal.  Time allows the magic of compounding interest to grow your dollars.

    Keep in mind that as your money grows so does the cost of living.  If we assume an average inflation rate of 3%, the cost of living would double every 24 years.  That means our 25 year old would have to spend $3.46 for every dollar spent today.  Therefore, you can see where savings is vitally important.

    My favorite investment site for people just starting out is http://www.sharebuilder.com/ because it demands no minimum deposits; allows you to automate your investments; and allows you to buy incremental shares.  It is one among many great sites.

 Take care, stay well, and be safe.