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Money Problems – Day 3: What’s Coming In?
Today, I continuing the series, Money Problems: 30 Days to Perfect Finances. The series will consist of 30 things you can do in one setting to perfect your finances. It’s not a system to magically make your debt disappear. Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.
I’m not running the series in 30 consecutive days. That’s not my schedule. Also, I think that talking about the same thing for 30 days straight will bore both of us. Instead, it will run roughly once a week. To make sure you don’t miss a post, please take a moment to subscribe, either by email or rss.
This is day 3 and today, you are going to take a look at your income.
We are only interested your take-home pay, because that is what you have to base a budget on. If you base your budget on your gross pay, you’re going to be in trouble when you try to spend the roughly 35% of your check that gets taken for taxes and benefits.
Income is a pretty straight-forward topic. It is—simply—how much money you make in a month. If you are like most people, the easiest way to tell how much money you make is to look at your last paycheck. Then, multiply it by the number of pay periods in a year and divide the total by 12.
Here’s the formula: Cash x Yearly Pay Periods / 12. Yay, math!
If you get paid every 2 weeks, multiply your take-home pay by 26, then divide by 12 to figure your monthly pay. For example, if you make $1000 every two weeks, your annual take-home pay is $26,000. Divide that by 12 to get your monthly pay of $2166.66. If you get paid semi-monthly, you’ll take that same $1000 x 24 / 12, for a total of $2000 per month.
Now you know how much you make each month. Woo!
Is it enough? Who knows? We’ll get into that later. In the meantime, spend some time thinking about ways you can make more money. Do you have a talent or a hobby that you can turn into cash?
- If you’re a craftsy type, make stuff and sell it on eBay or Etsy.
- If you’re a writer, start a blog, sell articles on oDesk, or start writing for paid article directories. Squidoo has a revenue sharing plan for your articles.
- Facebook maven? Start making Pages for companies. They will pay for it.
- Are you mechanically inclined? Watch your local free market sites for lawn mowers and snowblowers that don’t run. You can fix them up and sell them.
- If you’re a clean freak, start a home-cleaning service on evenings and weekends.
There are always ways to make some extra money, if you are willing. Sit down with a friend or loved one and brainstorm what you can do. Write down anything you can do, you enjoy, or you are good at. Remember, there are no stupid ideas when you are brainstorming. The bad ideas will get filtered out later.
How could you make some (more) side cash?
5 Ways to Help Your Friends Stay Out of Debt
There’s a saying that you are the average of your 5 closest friends. Take a look at the people you hold dearest. Combined, they are you. If they are all in debt, chances are, so are you.
As a corollary, you are a part of your friends. If you become more financially responsible, it will rub off on the people who care about you.
Given these two rules, one way to improve yourself is to help those around you improve themselves. If your influence convinces your friends to move closer to your ideal, it will be easier, almost effortless to move closer to it, yourself.
It sound manipulative, but if you are manipulating your friends, you are doing it wrong. Don’t try to force or trick your friends, just be honest and sincere in your efforts to help. Nobody wants to be in debt. This is you being nice.
1. Suggest cheap activities.
While it is okay to splurge occasionally, don’t be afraid to suggest less expensive activities. If someone suggests going to a movie, mention the dollar theater. If they want to go out for dinner, offer to host a potluck. Trip to the casino? Game night at your house. There are almost always cheaper ways to have fun. As long as you are spending time with the people you love, you’ll have a good time. Do you really need to drop $100 to do that?
2. Don’t flaunt your toys.
If you buy an iPod and immediately run to show it off, you are going to trigger a case of “keeping up with the Joneses”. If your friends spend all of their time around people who are constantly buying expensive toys, buying expensive toys becomes normalized in their minds. Debt becomes the norm. Then extreme debt. Don’t reinforce the destructive debt cycle by showing off the expensive trophies of excessive, unnecessary consumerism.
3. Point out opportunities to save.
This is a fine line to walk. If mention how much money your friend is wasting on 13 shot venti soy hazelnut vanilla cinnamon white mochas with extra white mocha and caramel every single morning, you’re going to get annoying fast. In fact, you are already annoying me, so knock it off. On the other hand, if Caribou is having a sale on the 13 shot monstrosity, speak up. Nobody is going to complain about getting a $15 coffee for less than $10.
4. Give them a side hustle.
If you’ve got a friend who’s into landscaping and you’ve got a neighbor who needs a landscaper, make the connection! If you know a web designer and a business in need of a website, get them together. Do what you can to match the needs of the people around with each other. They will all appreciate it, and everyone will be better off. Be the guy who helps everyone connect with the people they need.
5. Be encouraging.
Put another way, don’t be a dick. Nobody likes being nagged. Nobody likes being told they are doing everything wrong. Be encouraging, not mean.
If you can do all of that, it’s natural that your friends will start acting the way you want yourself to act. The less they want to waste on a trip into debt, the less tempted you will be to do the same.
Kids Are Temporary
Have you ever watched someone go nuts after they have kids?
I mean, even after the I-haven’t-slept-more-than-20-minutes-in-a-row-for-3-months stage of babydom?
These people dedicate their lives to their kids. They sacrifice all of their hopes and dreams and focus on the brats. They can’t have a date night because little Sally might get lonely without mommy and daddy. Can’t have a hobby because Johnny’s on the traveling soccer team. Can’t get laid because it’s a family bed and that’s kind of creepy when the kids are right there.
Everything for the kids.
As they grow, it gets worse. You spend more time helping with homework and less time talking to your wife. More time playing chauffeur, less time playing doctor.
It’s a nasty cycle, and it comes with an abrupt stop.
What happens when school’s out? Little Johnny graduates with a dual degree in Practical Philosophy and Experimental Art History, gets a job at the local Stab-and-Grab, gets married, and starts a family.
When that happens, parents suddenly become “extended family”. The kid has a life of his own and probably doesn’t need his clothes picked out in the morning, a ride to soccer practice, or someone to write his name in his underwear.
This is planned. It is–in theory–the reason we raise our kids. It shouldn’t be a surprise, even if it is a bit of a shock.
Can you survive it? Can your marriage?
If you’ve spent the last 20 years of your life pretending you are nothing but a system for delivering food, rides, and gadgets for your kids, what are you going to do with your time when they are busy pretending they are that system for their kids? If you’ve never developed a hobby, are you going to go extra-special, bat-**** crazy now?
For 20 years, have all of your conversations been about your kids? Have all of your outings been birthday parties? Will you have anything to say to your spouse when the kids are gone?
Your kids are temporary.
They are important. They are your genetic legacy and the people who will choose your nursing home. Don’t neglect them, but you do have to hold something back. Make time for yourself. Make time for your husband or your wife. Or both, if you can make that work.
When your kids are working 90 hour weeks building a new career, or hustling 4 kids to 10 after-school activities, your life doesn’t get to revolve around them.
All you’ve got is yourself and your wife. If she’s not feeling secure about your feelings now, when she loses the distraction of puke in her hair, that insecurity will blossom in unpleasant ways. If you can’t find a conversation that doesn’t involve the kids now, the silence will be blistering when you eventually lose that crutch.
If you don’t have a hobby, get one.
If you don’t have a relationship with your wife, get one. Take her on a date tonight. Your kids are temporary, your marriage shouldn’t be. This is the rest of your life. Make it worthwhile.
The Zombie Guide to Saving
Brains!
Nobody has ever accused a zombie of being smart. The are, after all, dead and rotting. Their primary means of education themselves is eating the brains of the living, which is hardly an efficient learning style. Besides, in a strictly Darwinian sense, their victims are among the least qualified to teach useful skills.
Zombies smell. They are little more than flesh-eating monsters. They are lousy in the sack. Yet, for all their flaws, have you ever heard of a zombie in debt or worried about financing retirement? They are obviously doing something right.
What can you learn from a zombie? That depends on the type of zombie. Not all of the life-challenged were created equal.
There are 3 main types of zombies:
1. Slow shamblers are best recognized by their lurching gait and unintelligible grunting, similar to a frat party at 3AM. They are rarely fresh specimens. Arguably the the scariest of all zeds, due to the sheer inevitability of their assault, they do always get where they are going, even if it takes a while. Trapped in a pit or a pool, they will keep trying to reach their goal. A slow shambler, were he able to effectively communicate beyond the basic “Hey, can I eat your brain?” would tell you to approach your goals like the famous tortoise: slowly. Set aside an affordable amount in savings every week, no matter what. Even if your are stuck saving just $10 each month, you will eventually get your sweet, sweet brains.
2. Voodoo zombies are the still-living, yet mindless minions on a voodoo priest. These unlucky non-corpses crossed the wrong people–usually by stealing or not repaying their debts–and ended up cursed for it. They are forced to do the bidding of their masters until such time as their debt has been repaid, if ever. Their warning is to always pay your debts and do not steal. Honest, ethical behavior is the best way to avoid this fate.
3. Runners are almost always “fresh” to the game. As they decompose, they slowly transform into slow shamblers. These fellas can often pass for the living…from a distance. By the time you get close enough to identify them as monsters, your brains are on the menu. They are capable of sprinting for short distances and, on occasion, have even been seen to run up vertical walls. To properly categorize the runners, we have to break them down into 2 sub-groups. The first sub-group is the envy of all zombies still capable of envy. They have used their skills to trap enough prey(that’s us, folks!) that they will feel no hunger for the foreseeable future. They are secure. They are the successful runners. The other sub-group tries to emulate the first, but lack both planning and follow-through. While the first group builds momentum to secure their future, the second group tends to use that momentum to smack face-first into the wall, confused at where their lunch went. Constantly charging from one thing to the next, they never manage to sink a claw into their goals. To avoid falling into the second group, you’ll have to settle on a strategy and pursue it with all the single-minded, decomposing determination you can muster.
You know what they say: “Great minds taste alike.” What kind of financial zombie are you?
Best of Money Carnival #87, the Gold Rush Edition
- Image via Wikipedia
Welcome to the Best of Money Carnival #87, the Gold Rush Edition.
On January 24th, 1848, gold was discovered in Coloma, California by construction overseer James W. Marshall. The following year, one hundred thousand people moved to California to either strike it rich, or profit from those who were trying to strike it rich. The gold rush began 163 years ago today.
10. N.W. Journey presents Business use of Home Deduction posted at Networth Journey and says, “How to deduct your business home expenses.”
Some people recommend stockpiling gold so you’ll have something of value to spend after society as we know it collapses. Does anyone know how to make change from a gold bar for a loaf of bread?
9. Darwin presents Present Value of Money Explained – MBA Monday posted at Darwin’s Money and says, “One of the most important financial concepts is also one of the most misunderstood. Make sure you understand the Present value of Money – with these real life examples. It will save you thousands!”
In 1854, a 195 pound gold nugget was found at Carson Hill in California. It was valued at $43,534. That would be worth $3,160,357.20 today.
8. RJ Weiss presents What Your Optimal Income? posted at Gen Y Wealth and says, “An exercise to find your optimal income level.”
Q: Which weighs more: a pound of feathers, or a pound of gold? A: A pound of feathers. Gold is weighed using Troy Weight, which only has 12 ounces per pound.
7. BWL presents How To Select A Financial Advisor posted at Christian Personal Finance and says, “Find out how to select the best financial adviser for you.”
Until the onset of modern electronics, which use gold because it doesn’t corrode or tarnish, gold had no practical value of its own. Its entire value resided in the fact that it was pretty and relatively scarce.
6. Miss T presents 10 Ways to $ave Energy Comfortably | Prairie EcoThrifter.com posted at Prairie Eco-Thrifter and says, “How great is it to save money and the planet at the same time?!”
Q: Which weighs more: a ounce of feathers, or a ounce of gold? A: A ounce of gold. Troy Weight has fewer ounces that avoirdupois, but each ounce weighs more. There are 31.1 grams in a Troy ounce, but only 28.4 grams in a standard ounce.
5. Craig Ford presents Employers Look at Credit Reports | Ludicrous or Smart Business? posted at Money Help For Christians and says, “Should employers be able to see your credit report?”
Outside of collectible or government-issued coins, gold is priced according to it’s spot price, which fluctuates constantly. Dealers will generally pay a percentage under spot when buying gold, then sell for a percentage over spot. Always know the spot price of gold before you agree to buy or sell any.
4. MoneyNing presents Tax Time: Do I Have to Report that Income? posted at Money Ning and says, “Did you receive any income last year? Do you really have to report everything?”
Gold is the 58th most rare natural element, out of 92.
3. Silicon Valley Blogger presents I Just Lost My Job! How I’m Downsizing My Household Expenses posted at The Digerati Life and says, “I share my story of job loss and what ideas I have for paring down my expenses in order to cope with this loss of income. In the meantime, I’m doing what I can to find a new job!”
Only 20% of the gold from the Gold Rush deposits has been reclaimed. The rest is still out there.
2. The Financial Blogger presents 5 Reasons Why You Need A Partner In Your Business posted at The Financial Blogger and says, “A post outlining the benefits of a business partner.”
As of the end of 2009, more than 160,000 tons of gold have been mined, most of which was done in the latter half of the 20th century.
And the winner is…
1. Amanda L Grossman presents Frugal Lessons from People Who Survived the Great Depression posted at Frugal Confessions – Frugal Living and says, “Have you ever met someone who was alive during the Great Depression? They are changed people. The Great Depression left a great impression on their thoughts, their styles, and their habits. I am fascinated by this time period, and researched the question of what frugal habits these people developed to survive.”
I’d like to thank everyone who participated. Next week’s host is PT Money, so don’t forget to submit your entry!
