How to Go From Poor to Not As Poor. Part One:
How to Go From Poor to Not As Poor. Part Two:
Friday, March 5, 2021
Thursday, February 11, 2021
Thursday, January 28, 2021
Frugality is Freedom!
Many people, when they think about frugality think of an austere, miserable existence. They perhaps envision huddling beneath a blanket in a cold room, eating an unheated can of beans. To me, this is not what frugality means at all. To me, frugality means........FREEDOM!
There are many ways in which frugality can mean freedom, but the way I think of it most is in time. Basically, when you work a job, you are selling your time for a fixed rate. Many people don't think of their jobs in this way, but in actuality, that is exactly what people do. Some people sell their hours for $10.00 an hour....some sell their hours for $26.00 and some sell them for $76.00. But no matter what you do for a living, you are selling your time for a fixed rate. Let’s say you need a new refrigerator and it costs $1000.00. Let’s say you make $15/hr. You may believe that that would take you 67 hours of your life; about a week and half working at your job to make that money. After that, if you are paying 16% interest over 5 years and you make $24 monthly payments you may think $24 a month isn’t bad! However, when you figure out what you will pay at the end of that 5 years, you will have paid a total of $1488.00. So, instead of it taking you 67 hours of your life to pay back this loan, not to mention just having a loan on your neck for 5 years, it will take you 99 hours of your life so…..that’s 2 and a half weeks of your life and that isn’t even taking out the income taxes you pay before you get your paycheck. It might be hard to do this at first because sometimes it takes time to turn things around a bit but if you buy a used refrigerator for $400 and you pay cash, that’s only 27 hours of your life to buy that refrigerator. You have to figure out if buying new or used is better for you but in the end, buying with cash is always better.
When you think of your life as hours selling time in order to pay for things you want or need, and turn these thoughts around, you can see that any time you save money on something, those are hours of your life you do not need to sell in order to get what you want. You can use that extra $488 dollars for anything you want. Paying down other debt with that $488 dollars is a great idea and gets you closer to financial freedom.
Once you get your head wrapped around this idea, you may find yourself wanting less. Wanting less is one way to having more freedom to do what you want. Another way is finding ways to save money or make money. If you make $10.00 an hour in your day job and you save $30.00 clipping coupons and the time it took clipping coupons was 1/2 hour, you save $25.00 or 2.5 hours of your time that you would have had to otherwise spend on your job making money for the same things.
I read a book recently that said "We can't retire, we went out to eat instead". The same concept applies with frugality and freedom. The more money you save, the less you have to work and the less you feel stressed about the money you don't have. This means freedom to perhaps work a part-time job instead of a full-time one. It could mean staying home with your kids. It could mean the freedom to start your own business. It could mean the freedom to retire early.
Frugality truly is freedom. It means options. It means empowerment and taking your life into your own hands rather than feeling like you have to do things a certain way. It all adds up and when it adds up, it means you have the power to do what you want more than you thought. Change your Think into a Thunk and Change your Life!!
Friday, January 8, 2021
Book Bites: The Millionaire Next Door
There is an interesting book called The Millionaire Next Door all about the behavior of millionaires AND you can read it for free!!
Who is the prototypical American millionaire? What would he tell you
about himself?)
- I am a fifty-seven-year-old male, married with three children. About 70 percent of us earn 80 percent or more of our household's income. (* Our profile of the typical millionaire is based on studies of millionaire households, not individuals. It is, therefore, impossible in most cases to say with certainty whether our typical millionaire is ahe or ashe. Nevertheless, because 95 percent of millionaire households are composed of married couples, and because in 70 percent of these cases the male head of the household contributes at least 80 percent of the income, we will usually refer to the typical American millionaire as "he" in this book.)
- About one in five of us is retired. About two-thirds of us who are working are self-employed.
- Many of the types of businesses we are in could be classified as dull-normal. We are welding contractors, auctioneers, rice farmers, owners of mobile-home parks, pest controllers, coin and stamp dealers, and paving contractors.
- About half of our wives do not work outside the home.
- Our household's total annual realized (taxable) income is $131,000 (median, or 50th percentile).
- The typical (median, or 50th percentile) millionaire household has a net worth of $1.6 million.
- On average, our total annual realized income is less than 7 percent of our wealth. In other words, we live on less than 7 percent of our wealth.
- Most of us (97 percent) are homeowners. We live in homes currently valued at an average of $320,000.
- Most of us have never felt at a disadvantage because we did not receive any inheritance. About 80 percent of us are first-generation affluent.
- We live well below our means. We wear inexpensive suits and drive American-made cars.
- Most of our wives are planners and meticulous budgeters.
- We have a "go-to- fund." In other words, we have accumulated enough wealth to live without working for ten or more years.
- We have more than six and one-half times the level of wealth of our nonmillionaire neighbors, but, in our neighborhood, these nonmillionaires outnumber us better than three to one. Could it be that they have chosen to trade wealth for acquiring high-status material possessions?
- As a group, we are fairly well educated.
- Only 17 percent of us or our spouses ever attended a private elementary or private high school.
- As a group, we believe that education is extremely important for ourselves, our children, and our grandchildren.
- About two-thirds of us work between forty-five and fifty-five hours per week.
- We are fastidious investors. On average, we invest nearly 20 percent of our household realized income each year.
- We hold nearly 20 percent of our household's wealth in transaction securities such as publicly traded stocks and mutual funds. But we rarely sell our equity investments. We hold even more in our pension plans. On average, 21 percent of our household's wealth is in our private businesses.
- As a group, we feel that our daughters are financially handicapped in comparison to our sons.
- I am a tightwad.
https://lyohnk.wixsite.com/freedomfc
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