Survival+
Structuring Prosperity for Yourself and the Nation
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By Paul Williams
Budget. It’s a four-letter word to many people. We hate the
restriction, the deprivation, and tracking all the little details.
But personal finance experts continue to tell us we need a budget.
Don’t get me wrong. Budgets are very useful tools. I think everyone
should try to use one (or something like it) if they really want to
have control over their finances. But I wonder if we don’t go about
it the wrong way when we try to implement budgets.
For someone who’s never had a budget, the whole process can seem
daunting and mysterious. What’s the right way to budget? Why should
I even do it? How do I track all my expenses? While budgets are
quite simple (a list of income and expenses with goals), there are a
number of questions that can come up for the uninitiated. They find
some answers from people who seem confident and knowledgeable and away
they go. They make up their first budget and set high goals. Maybe
it looks like this:
| Take-Home Pay: |
$2500 |
| |
|
| Savings: |
$500 |
| Giving: |
$200 |
| Rent: |
$1000 |
| Groceries: |
$200 |
| Auto Insurance: |
$100 |
| Gas: |
$200 |
| Phone, Internet, & Cable: |
$100 |
| Utilities: |
$100 |
| Eating Out: |
$50 |
| Personal Expenses: |
$50 |
Total
Expenses: |
$2500 |
Continue reading A Better Way to Budget? →
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.
Continue reading Build Savings or Payoff Debt – Which Comes First? →
By Kevin M
Last Saturday night, we decided to go see Avatar, a highly acclaimed movie that lived up to its billing. It was the first time we’d been to the movies this year, and I’m almost embarrassed to admit that the reason we decided to go at all was that our daughter was at a weekend sleepover, which meant that only my wife, my son and myself would go, saving us money on the fare (OK, she wasn’t really excited about seeing the movie anyway).
Now we live in the Atlanta area, which is a region nearly famous for having a very reasonable cost of living. Despite this, here’s the run down of what it costs to take in a movie in these parts:
Movie ticket: $10.50 per person (seems to go up a dollar every year)
Medium popcorn: $7
Medium soft drink: $5
Box of candy: $5
I can only imagine what it costs to go to the movies in “high cost” areas.
If each person in the family goes for the “full package”—movie, popcorn, drink and candy, the cost is an astonishing $27.50 per person, or $110 for a family of four (a 12 year old is an “adult” at the ticket window)! And we haven’t even added dinner!
Continue reading How to Save Money At The Movies →
Low Cost/Debt Free lifestyle as part of retirement planning
Kevin M
Most articles on the subject of retirement planning focus completely on growing tax sheltered retirement savings plans like 401k’s and IRA’s. It’s an effort to build a large capital base as a way of creating a strong retirement income to enable us to maintain the lifestyle we’ve become accustomed to during the course of our lives.
Few pundits ever deal with the flip side of that effort—establishing a low cost/debt free lifestyle early in life. For a generation addicted to McMansions, late model cars, eating out, vacations at five star resorts and the like, no amount of money salted away may ever be enough.
Continue reading Good Retirement Planning Should Include a Low Cost/Debt Free Lifestyle →
By Kevin M
Question: is a car an asset or a liability?
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.
Continue reading New Car or Used Car – Which is the Better Deal? →
By Kevin M
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.
Continue reading 10 Ways to Buy a Car Without Getting Ripped Off →
IS CONVENIENCE OUR SERVANT OR HAS IT BECOME OUR MASTER?
By Kevin M
For most of the 20th Century convenience was pursued as a means to make life easier and to eliminate undesirable chores from daily life. To the World War II generation, the 1950s brought a surge in time saving devices that were a welcome relief to the difficulty they knew well from earlier in life.
Today’s generations however know little of the hardships faced by that generation. Worse, most of us don’t know life before convenience. In our world today, convenience is a given; the only real issues are how much of it we incorporate into our lives and which specific methods we choose among the many options.
More often than not, we’ll pay extra for convenience—anything that will move us along faster, spare us from handling menial tasks or prevent us from being uncomfortable. Though people have always sought ways to avoid drudgery and make life easier, in our own day and time convenience has become an expectation, a norm, and even a right.
Continue reading The High Cost of Convenience →
By Kevin M
Has this ever happened to you? The arms (technical term “temple arms”) of your eyeglasses break at the joint forcing you to purchase a brand new pair of glasses? It’s happened to me three times in the past five years!
OK, if you’re not an eyeglass wearer, and no one in your immediate family is either, this post will hold little interest for you. But looking around at the general population it seems that despite the acclaimed shift toward contact lenses and radial keratotomy, the number of the bespectacled in the population remains substantial.
Perhaps like me, millions of one time contact users were forced to abandon them either by choice or necessity. Or, again like me, they find one-in-a-thousand chance of surgical error in RK to be too high on a sense as precious as eyesight. Either way, millions of us remain eyeglass users, and a substantial industry has been built around us.
But back on topic…obviously I’m doing something wrong in the way I’m storing or handling my glasses. I’ve been told to remove and hold them by the bridge, not by the arms, which I’ve been doing mostly, but they still break in the same place. I’m beginning to sense a conspiracy by the optometry world as some sort of plot of planned obsolescence to force me and other eyeglass wearers to buy a new pair at regular intervals. From an economic standpoint it’s a brilliant plan.
Continue reading Save a Bundle By Repairing Your Eyeglasses →
By Kevin M
Conventional wisdom holds that once a car reaches a certain age and book value that the collision coverage portion of an auto insurance policy be canceled. But I may have stumbled upon a compelling reason why you might not want to drop the coverage no matter how low the book value of your car.
My wife and I own two cars, both of which have long since been paid off and at least one of which has a book value low enough that most financial advisors would recommend dropping collision. However, as both cars are of advanced age, we’ve been renting vehicles for the two or three long distance trips where flying doesn’t make financial sense. This saves a small fortune over the purchase of four round trip air fares and gives us use of a late model vehicle a good distance from home.
When renting a vehicle, one of the requirements of car rental companies is current and adequate auto insurance coverage, including collision and comprehensive. Had we dropped our collision coverage, we would be required to pay for coverage through the rental company.
Continue reading One Good Reason NOT to Cancel Your Collision Coverage →
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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 →