Posts Tagged ‘ savings ’

Happy New Year – It’s Time for a Financial Luggage Check!

By Kevin M

Okay, the holidays are over—and the free spending with it! It’s time to clean up the mess before it becomes an even bigger one!

Despite everyone’s best intentions, overspending at the holidays is pretty standard. It isn’t until January when the bills come in that the extent of the damage is fully realized. There’s always an extra gift or two (or three or more) that we forget about, a holiday dinner out with friends or co-workers, some extra heavy travel expenses not budgeted for—it all adds up, but heck, we’re human. But not to worry, we have an entire year to get things back in order before…the next holiday crush.

And maybe we can even make some permanent changes for the better along the way.

Try a few of these in the next few months and see if they help…

OR…Is Saving Money Bad for the Economy?

By Kevin M

I came across this article a few weeks ago, Industrial output falls as consumers cut back spending, and have been trying to decide what it is about it that I find so disturbing. I’m not targeting it as some sort of special case; in fact it’s one of hundreds of articles I’ve read saying pretty much the same thing. News program talking heads trumpet it all the time. Loosely, what’s good for your bank account is bad for the country.

Do we actually believe that line of thinking, or do we just politely tolerate it? Surely we have to know better!

Now, I try not to do macro economics on this site, but it seems to me that this idea that the citizenry saving money is bad for the economy is some sort of article of faith that no one questions, at least in higher circles. And I don’t buy any of it!

From where I sit, it seems that the absence of savings is at the heart of our economic troubles. When a person has no savings, he lives paycheck-to-paycheck and is forced to borrow or turn to the government when he needs money in excess of his regular cash flow. In most households, this will happen most of the time—life’s just that way I suppose. But that conundrum is what gets the debt treadmill going, and once you’re on it, default is just a matter of time.

Multiply that by millions of households and you get…about where we are right now.

Ten Financial Mistakes You Can’t Afford to Make

By Kevin M

There are strategies we need to put in place that will help lead us where we want to be in life, but just as important is problem avoidance.

When making our plans, we can project working in a certain career, earning a certain income, investing and having X amount of money by age Y, living in a certain size home, and even planning out a career for our children. But few of us ever give serious practical consideration to the things we don’t want to do!

Two or three major mistakes can derail the most well intended plans so it’s best to play devils advocate from time to time and seriously consider the question “what can go wrong here?” It should be done with the same level of intensity that we give to the plans that we hope will move us forward.

Below is a list of ten financial mistakes I’ve culled over the years from my experience in public accounting, from working in the mortgage business and from a few dives into an empty pool I’ve taken on my own road of life.

Making Money-Goes-to-Money Work For You

By Kevin M

How do we define rich and poor? The dividing line is more subjective than real in that we tend to think of rich as anyone with substantially more than we have, and poor as anyone with substantially less. Since we always see ourselves as more or less in the middle, how do we determine at what point we might transition into “having money”?

Trying to fix a dollar amount that moves us into that status is probably a waste of time.
A more useful metric might be the point at which:

we earn more money than we need to live,
we have savings in excess of predictable contingencies, and
we’re debt free.

For example, a middle income person living beneath his means, and having above average savings with zero debt probably has more economic options, more day to day freedom, less stress, and probably even more unencumbered cash flow than a high income person living above his means with below average savings and an excessive level of debt.

In this example, the middle class person has reached the all important tipping point where money is now working in his favor, rather than against him, often described by the term “money goes to money”.

Build Savings or Payoff Debt – Which Comes First?

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.

Imagine Being Owned By No One…

By Kevin M

Back on July 30th, Trent Hamm of The Simple Dollar ran a post John’s “Campground” – Some Thoughts on Investing with Added Personal Value. Rarely in my life have I been so intrigued at the life and philosophy of a person I don’t even know, but John is a virtual revolutionary against the backdrop of the world as we know it in the 21st century. Not a throw back mind you, but a man or ordinary means charting his own course in a world that’s going in the opposite direction.

Trent has many interesting observations about his best friend, all well worth reading on his site, but my take on him veers in a somewhat different direction. What ever anyone’s observations of him, John is a compelling person, and there is much to be learned from his story.

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Posts Tagged ‘ savings ’

Happy New Year – It’s Time for a Financial Luggage Check!

Is Borrowing “The American Way”?

OR…Is Saving Money Bad for the Economy?

Ten Financial Mistakes You Can’t Afford to Make

Making Money-Goes-to-Money Work For You

Build Savings or Payoff Debt – Which Comes First?

Imagine Being Owned By No One…

Financial Management