Perry Glasser

PERSONAL FINANCE FOR THE CLUELESS– SAVING #1 TAKE CONTROL

In Economics, Economy, EDUCATION, Finance, Personal Finance on March 9, 2014 at 12:23 pm

motherDozens of professional advice-givers advise on how to aggregate wealth. Dollar$ will tell you that other than being born to rich parents, there is no secret.

It is not your fault you are clueless. Financial and Corporate America WANT you to think this is complicated. How else can they justify fees?  Why do you think your high school does not have a required course in Personal Finance?

Dollar$ is please to fill the gap. Here is the secret:

Spend less than you earn.

Dollar$ has nothing but sympathy for the legions of the Clueless who find that advice hard. If you are victim to the consumer society and believe spending money you do not have is an act of patriotism, your contribution to an economy that needs all the help you can give it, join the revolution.

Perhaps you sail through the mall sustaining a life on plastic as a form of self-help therapy, a feel-good exercise superior to alcohol and easier to accomplish than satisfactory sex.

Perhaps you have no financial goals and live from day to day, free and easy, above it all not un like a monkey swinging from tree to tree in the canopy above a rain forest.

Yes, there is some psychological value to living in the moment, but in the world of finance such people have a technical label.

Typical Consumers

Typical Consumers

They are called poor.

Sometimes they are also known as marks and pigeons.

It pains Dollar$ to give you the news, but more than a few Buccaneers, Weasels, and Wizards have made it their life’s work to separate you from your money.

If when you sit down to pay your bills you feel like Mother Hubbard, start by tracking your spending. Record every dollar you spend, especially those impulse buys that have a way of evacuating your wallet. A gazillion apps will help you do this. If you want to see a larger picture on a single screen, Microsoft has a free template that is comprehensive.

Take Control

Get ruthless. Tracking your spending is not the same as controlling it.  This is your life we are talking about.

Track for three months, and run a triage on your expenditures. Identify necessities, nice stuff, and luxuries.

Necessities

Food.

Eating is not a political statement. If you are paying more to eat local or are depleting your wallet for organic food at Whole Paycheck, be certain you are so dedicated to the cause you are willing to impoverish yourself.

One less $4.30 grande latte at Starbucks each day is $30 per week, $1,500 per year—enough to fund your IRA and start preparing for a better old age if you are in your 20s.

If you live in the USA or most of Europe—but not Mexico– that stuff flowing out of your faucet is potable water. Potable water need not be contained in $1 worth of clear plastic.

For heaven’s sake, if you are dining out or bringing food in, limit that shit. Try cooking your weekly meals on the weekend, freeze them, and defrost your own cooking instead of defrosting prepared foods you bought in the freezer aisle. If you can boil water, you can make your own soup, and it will not only have less salt, be more nourishing, and taste better, it makes the whole house smell good.

Clothing.

Dress decently, but do not be a slave to fashion. Do you need a new wardrobe every season?

For work, look neat and look professional, but remember a woman with more than ten pairs of shoes is not buying footwear, but is engaged in therapy. Gentlemen, you need about 10 days of shirts and shorts to get to laundry day. If you aren’t doing laundry…ewwwww!

Shelter.

This is the hard one. Rent the best you can manage without incurring debt. Consider its proximity to places you need to go, such as school or work. Consider your sense of safety: if you lie awake nights fearful of strange noises outside your door, you will need to either get used to it, or move. Live with a roommate to afford a better place, if you must.

Trade sweat equity for rent: can you paint the place? Repair the roof?   Do work for other tenants?

Pay your rent on time. Every time you haul ass to escape a landlord, unless you are living out of a shopping cart, it will cost you, and eventually your credit rating will be gone.

Nice stuff.

Divide your nice stuff into two piles—the stuff you could not live without and the stuff you are going to hurl out the door. That is, divide this pile into Necessities and Luxuries.

  • Do you need to pay for Cable TV if you are streaming most TV shows from Netflicks at 10 percent of the cost of cable?
  • Is your sense of personal identity tied to your X-Box?
  • Do you really need to upgrade your phone every 18 months? Do you need a smart phone at all? Sure, it is hip and cool, but that sucker can cost you. How about a landline and an answering machine? So what if you are not in touch 24/7?

    dead-1

    It might be time for a new car. Maybe.

  • If you own a car, assuming you need one, drive it into the ground and it turns wheels up. Change the oil every 5,000 miles. If he does not work for a dealer, treasure your mechanic. If he works for a dealer, change mechanics.
  • Never trade a used car for another used car: you already own one! Fix it.

Luxuries

  • You don’t need them. That’s why they are called luxuries. Throw them out and do not replenish.
  • The only exception is decent chocolate.

Reject American consumerism. If you need to feel good, join a library group, volunteer at a geriatric facility, take your kids to the park, fall in love, read a book. Just do not spend money on goods or services you do not need. AND YOU NEED LESS THAN YOU THINK.

Coming to Dollar$ soon:

  • PERSONAL FINANCE FOR THE CLUELESS– SPENDING
  • PERSONAL FINANCE FOR THE CLUELESS– INVESTING
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