Penny Wise and Pound Foolish?
Americans are Penny Wise and Pound Foolish!
People know that standing in line at Target at 3AM on Black Friday will assure them a "good deal" on too many iPods and Flat Screen TVs that they should never buy in the first place. Americans think they have a "Right" to have whatever they desire. And they just don’t. They may save pennies on the products they buy, but in the end they are just buying TOO MANY products. It's the BIG things that YOU and ME need to really worry about and take responsibility on – not the little things like saving a dollar a day by not buying a latte…In fact the latte argument (one less latte a day and you'll be fiscally free) is complete horse crap. Here are the Big things: YOUR INCOME and your TOP 3 Bills. That's what YOU and ME need to focus on, not penny pinching at Starbucks. If YOU manage the big things well, you can have all the frappuccinos you want.
FIRST of all, make sure the really big bills are not pushing you to the edge of financial Armageddon…Your monthly mortgage payment should be WELL within your means – no more than 30% (all in – taxes, principal, and interest) of your TAKE HOME income. Lots of loans were made in the past few years that ignored that rule. Once that is under control, the next biggest payment should be tame as well; namely YOUR car, which should be no more than 6 to 8% of your take home income. Third should be the rest of your necessities – utilities, gas, insurance, and food. This should run you around 25% - then an absolute minimum of 10% in the 401k. That leaves you with more than 25% for entertainment, vacations, childcare, and whatever else turns you on. I've done this budget for my family and I KNOW it works! Next, YOU need to focus on MORE income. Everybody tells you to spend less. Spend less. Spend less. I'm telling you to MAKE MORE. YOU need to put more energy into finding a job with an incentive pay structure or into a new position with a higher income – then you can increase your standard of living – not before. It's never too late for people to figure this out. I don’t care if your 50 years old and you've never saved a penny. Chances are you'll live until your 80, 90, or even 100. You can't retire at 60 in this case, but you can certainly work another 20 years and make your retirement plan work. It's just a matter of sitting down and mapping out the right course of action. Be penny foolish and pound WISE and you'll be fine. Get started with a "BIG 3 Budget" and work on MAKING MORE, and WORRYING LESS. For GEN X and GEN Y, who cares if your parents have failed and been a financial disaster? First of all you'll be taking care of them – you're never going to let MOM live on the street and secondly – YOU'VE learned exactly what NOT to do.
