There’s a “stealth expense” that chews through budgets and often leaves us with an empty bank account or even a little deeper in debt each month; its called entertainment expense, and at least part of the problem may lay in the fact that we’re usually reluctant to even view it as an “expense”.
Maybe this is the case because entertainment has a way of defining us—it’s often who we are, which has to be something more significant than just an ordinary expense, doesn’t it?
We can be meticulous about budgeting for housing, groceries, utilities and a host of other expenses, but entertainment is often—to borrow a political phrase—“off budget”.
If you have teenagers who play musical instruments or if you’re into instruments yourself, your wallet will love a company called Musician’s Friend.
My son got into playing drums when he was ten years old, not just through the school music program, but as a personal hobby and passion. If your kids are musical types, you know only too well the heavy costs involved in sustaining their hobby: musical instruments aren’t cheap!
Not only are the instruments themselves pricey, but the cost of accessories and replacement parts can rate a line item in your budget by themselves.
In the beginning, we followed the herds into the local music shops and paid top dollar for instruments for our kids. As one example, our daughters’ violin cost $1100; that was four years ago, and now she’s ready to give it up! We originally rented the violin just in case she did decide to quit, but after a couple of years when it looked like she’d keep at it, we converted the lease to a purchase.
Let’s be honest, most retirement posts in the personal finance blogging world are aimed squarely at people in their 20s and 30s. Those over 50 are presumed to not exist. It’s almost ironic, isn’t it, talking about retirement to people who are so far away from retirement that it’s very nearly irrelevant while ignoring those for whom it’s right around the corner?
Maybe it’s that the vast majority of people on the web are under 35, or maybe it’s just easier making multi-decade projections to a group of people so far from retirement that they’ll never remember any bad advice they’d gotten early in life. And in a different direction, all things are possible when your time horizon is 30, 40 or 50 years. Those magical retirement projections that’ll turn us all into millionaires just wouldn’t work without all those decades!
But what if you don’t have decades to accumulate a retirement fortune? What if you’re over 50 and retirement is just a few years away? If you don’t have at least a healthy six figure portfolio, how do you prepare for retirement now that the luxury of time is no longer available to work in your favor?
Newsflash: You can’t get out of debt until you stop being broke!
By Kevin M
Some argue that if you’re in debt the priority needs to be to payoff your debts before attempting to build a savings account. Many call for the establishment of a small emergency fund—typically $1000—to handle contingencies, and then to pour all extra funds into the pay down and eventual payoff of debt. Only when your debts are paid will you have the cash flow to truly build substantial savings.
While there is some merit to that advice, I believe it fails to address the basic reason a person might get into debt in the first place: a lack of savings, forcing the use of credit as a savings substitute.
Until that cycle is broken, it’s doubtful you’ll ever payoff your debts or accumulate substantial savings. Life has a way of throwing contingency after contingency at us and unless we’re fully prepared to deal with that reality, getting out of debt is little more than a fantasy.
That was a theory question in a sophomore level accounting course I took in college way back when. After some debate among the class, the professor confirmed what we all knew, that the technically correct classification is “asset”, but felt compelled to add, “Of course, in the real world, we all know that automobiles aren’t assets at all, they’re liabilities that cost money and continually drop in value from the moment you drive them off the dealer lot.”
Most of us know this to be true intellectually, but does that reality guide our decisions at buying time?
Cars represent a structural expense, that is, an expense that’s mostly a consequence of an underlying cost structure created at the time of purchase. Once we’ve made the initial purchase, we’re largely stuck with the expense level over a period of years. It’s in our best interest then to make the most intelligent decision at the time of purchase.
With that thought fresh in our minds, I believe used cars are the better choice for most people in most cases.
Buying a new car has never been one of my favorite things to do. It’s not that I don’t absolutely love the idea of having a new car, I sure do! But the flaming hoops you have to jump through at the dealership to buy a car takes some of the fun out of what should be one of the most exciting events of your life
Car dealerships offer an attractive and convenient package of services that make the car buying experience much easier:
They have the new cars we want (aaahhh, the new car smell!)
They’ll buy our old cars from us, sparing us the trouble of selling them ourselves
They provide financing, saving us from having to shop at banks
One stop shopping at its best—but with this ease and convenience comes a high price. Because dealers have all the car buying bases covered, they also have the upper hand at the bargaining table. The minute we walk into a car dealership, we’re at a built in disadvantage. We want a certain car, and the dealer has it—along with everything else necessary to help us get it. How could THEY ever lose?
They can’t, unless we take steps to remove the power from the dealer and stack the deck solidly in our favor.
I am really into setting an objective, quantifying it, putting together a plan, and then going after it with everything that I have.
That is cool to me. It gives me energy and excitement. Provides purpose.
When I was in elementary school, I set a goal of being 6’3” tall. I am 6’2”. Not bad. Almost got there. Betcha didn’t know height is controlled by goal setting! Are you short? Raise the bar, set a higher goal!
Sometimes, though, it makes me do goofy things. Take for example, “Gonzo’s Great Gold Quest”. This was my attempt to achieve my goal of qualifying as a Gold Medallion member of Delta Airlines Sky Miles program.
You may be employed at the moment; in fact you may even be well-employed. But look at many others around you and what do you see? With millions unemployed, millions more under-employed, and hundreds of thousands of jobs being outsourced to lower wage countries, what does the future of employment hold? Is it possible that the sun is setting on the traditional one man/one job model of employment and income?
Before dismissing the possibility, consider that only 40 years ago tens of millions of workers were employed in largely high paying, mostly unionized factory jobs. Just over 100 years ago the majority of Americans were employed in agriculture. Where are all of those jobs now? And if one man/one job is going the way of the factory job, what are our options?
Developing multiple income streams may become a necessary reaction to an environment where the unemployed often return to the work force in lower paying jobs.
We’re not going to talk today about the best deals on widescreen TVs or the most cost effective cable packages. Instead, I want to focus on what I’m certain are the far larger affects of TV on our finances in the form of time, opportunity cost, and influence.
Time. According to Adweek adults in America average 309.1 minutes watching TV each day. That works out to be more than five hours per day! If we spend eight hours each day sleeping, another eight working, plus five hours watching TV, that eats up 21 of our 24 hours, leaving just three hours each day for virtually everything else we have going on!
What if the economy isn’t turning the corner? What if the “Great Recession” isn’t a recession at all, but the early stage of a longer term economic devolution?
I consider this as more than a reasonable possibility. As much as we might cling to the notion of “business as usual”, the history books tell us that long term cycles are periodically broken by the onset of a new eras. The fall of the Roman Empire was one such turn; the onset of the Industrial Revolution was another. Closer to our own time and place were the Civil War and the Great Depression. All of these events changed not only the rules of the game, but also the way the majority of people lived. And they were hardly isolated incidents.
I’m reading Survival+, Structuring Prosperity for Yourself and the Nation, where author and website host Charles Hugh Smith spells out the “Great Transformation” that we may well have entered already. The evidence to support his claim isn’t hard to find.
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Radical Self Reliance in the New Economy
By Kevin M
What if the economy isn’t turning the corner? What if the “Great Recession” isn’t a recession at all, but the early stage of a longer term economic devolution?
I consider this as more than a reasonable possibility. As much as we might cling to the notion of “business as usual”, the history books tell us that long term cycles are periodically broken by the onset of a new eras. The fall of the Roman Empire was one such turn; the onset of the Industrial Revolution was another. Closer to our own time and place were the Civil War and the Great Depression. All of these events changed not only the rules of the game, but also the way the majority of people lived. And they were hardly isolated incidents.
I’m reading Survival+, Structuring Prosperity for Yourself and the Nation, where author and website host Charles Hugh Smith spells out the “Great Transformation” that we may well have entered already. The evidence to support his claim isn’t hard to find.
Continue reading Radical Self Reliance in the New Economy →