Pay yourself FIRST

When we do not have extra money coming in, and barely enough to even pay the bills, how are we to build a savings? In the last blog it was said that we should keep an egg in our basket, What if you don't even have enough eggs for breakfast?! How can you leave even 1 if you need more?!
The answer to this is to pay yourself first! What do I mean by this?
Many of you reading this blog are faithful members of some sort of christian religion, what ever it be. We are expected to pay tithes. Would you go with out paying your tithes if things get tight financially? Of course not. You believe that if you pay, then you will receive blessings. And right you are.
The same is true for paying ourselves. The fist thing you do with your money is pay your tithes, then immediately pay yourself. I prefer the 10% method as well for myself as I do tithe. Put your money somewhere safe, and DON'T TOUCH IT!!! You will quickly find that you do not miss the money, and for some reason things seem to work themselves out.
We are prone to spend all we have. By paying ourselves first, and keeping that money "sacred", we will not spend it. We can begin our savings. We will be able to keep an egg in the basket with out missing it at the breakfast table.
I have a friend who is committed to saving a certain amount of money. He told me just recently that he has added over $2,000 to his account in just over a month. No big deal, anyone could do that, right? The kicker is that my friend does not have a job, has an empty tank in his truck, and is looking for his next meal any where he can. However, he has kept his commitment to himself to save a certain amount each month. My friend may be the extreme example, but a good one to follow.
What is keeping us from reaching our savings goal?



as a side note: if there is a topic you would like to discuss, please let me know and I will do my best to cover it.

The "B" word

What makes it such a foul word? Why do we shun the very thought of it? Why must it torment us so much? How can we conquer the fear of it? Yes, my friends, I speak of a BUDGET...
Budgets are so restrictive, they control us, they don't let us have any fun. They are kind of like a nagging wife, always there in the back of your head telling you how you need to improve (I speak not of my wife, of course. She is far from a nagger). Can a budget be something else? Can it be a teacher, a helper, or even a friend? I say YES!
What does a budget do for us? A budget helps us to see where our money is at all times. If we know how much money we have then we know how much we can spend, and on what it should be spent.
A budget helps us realize our priorities. By knowing how much money we have we can make better decisions on what is important to us, and on what we would like to spend our money. For example: I will NEVER have cable tv. I don't own a tv worth watching, and I think it is a waste of time and money. But you may never own a truck that gets only 10 mpg and runs on expensive diesel fuel. We each have our priorities, and a budget helps us realize them.
Who should budget? I had a close friend tell me the other day that she will budget when she has enough money to budget. She doesn't have enough income, and to many bills to worry about it right now. While I agree that only people with money have a budget, it is also true that only people with a budget have money.
Money is a funny creature. It can be very controlling. However it can also be very controlled. It has been written that one will never have enough money if he does not control it well. We are programed from early in life to spend and borrow on everything we want, and somethings we don't want. We are prone to spend every penny we have. Unless we take aggressive action to be in control of our money, it will control us.
The big secret to having money is that you have to spend LESS than you make. Wow! what a concept. George S. Clason said in The Richest Man In Babylon that if every day we gather a basket of eggs, and take out all but 1, that with in a short period our basket will be full of the left over eggs. Our money follows suit, if we keep but a small portion we will build a reserve.
As we develop a budget we will begin to control our money. We can begin to keep a portion of what we earn and use it to fill our own baskets. We will realize our priorities, and set them in place.

Is it an Investment?

We often hear people talking about their newest investments. These range from gold to houses to automobiles, and beyond. The other day I had a brother-in-law tell me his new camelback was one of the best investments he has made. A friend told me, as he was moving into his new home, that he thought he would invest in cable t.v. While I agree that a camelback is a great tool to have while riding, hiking, etc.. my understanding is that neither of these are investments. In fact my brain tells me that cable is more than just not an investment, but that it is a WASTE of money.

So the question is, what is a an investment?
According to Wikipedia it "is the active redirection of resources/assets to creating benefits in the future; the use of resources/assets to earn income or profit in the future."
A popular website says: "in general terms, investment means the use of money in hopes of making more money."
Clearly camelbacks and cable are out.

What would be considered YOUR biggest investment? Your house you say? WRONG!! Lets play with some numbers. You payed $170,000 for this "investment" and in 5 years you are going to sel it for $200,000. Way to go! you made $30k right? wrong again. lets say you got a great rate at 5% on you loan. your payment is just over $912/month (not counting taxes and insurance) you lived there 60 months. you paid $54,720 to earn your profit of $30,000. Sure you may have paid of a few thousand during the 5 years so you make more like $36k, but you still paid $19k more than that to live there!! A home in not an investment if you live in it. -unless of course, you paid with cash...
I once spent $4,500 on an "investment" in the form of a 900rr Bullet bike powered sandrail. Why was this an investnment? Because the value was much closer to the $10,000 range! If I had not broken the self imposed "don't ride the investment" rule, which is about the same as living in your "investment", then the motor would not have been sucked full of sand and I could have sold it. Instead I ended up with a broken $4500 piece of metal :{

Lets talk about a winning "investment". I purchased a 4runner a while ago. (but wait Brian, you said automobiles were not an investment?) -good you listened- I paid $150 for this non running car. I made it run, and sold it for $550. profiting $400. I then bought a broken jeep for $330, made it run, sold the tires for $400, bought tires for $50, and kept the jeep (for now). in total I turned $150 into a running Jeep (worth about $1,000), and $420 in cash. that's a 940% return!