Planning For Wealth

I’ve pretty much ignored this site the last several months. Between changing jobs, some family problems, and just being incredibly busy I haven’t had much time to spend on this site. Things have settled down some for me so I’ll have time spend here. I have been doing a lot of thinking about this site; what I want to do with the site and what my focus is. I pretty quickly realized that I am not suited to writing a financial blog. I do know quite a bit about financial management but there are so many bloggers on the web that do a much better job of writing than me.

With that said, I plan to change the focus of this site and its intended audience. I’ve programmed in various languages since 1981 but am still a beginner when it comes to web site development. I am also a beginner when it comes to internet marketing, niche store marketing, affiliate programs, ecommerce, and making money on the internet. I’ve done a lot of research on these topics and found that the amount of information is overwhelming. I’ve decide to use this site to help me organize and keep track of the information available. I’ll be writing for my own personal use. Others are welcome to follow along and I always welcome any constructive comments or criticisms.

Before you can start making specific goals and plans for getting out of debt you need to know where your money is going and how much you’re in debt.  To do this you need to gather several pieces of important information.  Gather your latest pay stubs, banks statements, credit card statements, and other bills.  Also gather together all those recipts you’ve been keeping since you started tracking your spending.  From these bills and statements you will get a good idea where our money is going and how much you are in debt.

First, you need to know where your money is going.  The image to right is a spending plan I made up to determine where my monthly income goes.  I set this form up using Excel so I didn’t need to worry about doing the math myself.  Using this form as a base it’s easy to see how much you spend on housing, groceries, credit card bills, or auto fuel.

Start by determining what your income is.  Write all your sources of income and add them up.  Use the monthly average of any income sources that change from month to month or are received only every 2 or 3 months.  Then using your bills and statements divide your monthly expenditures into various categories.  Its a good idea to break each category into several sub-categories to help you better determine where your money is going.  Now write down the total amount for each sub-category.  For items like auto insurance that you pay every 6 months, use the total payment amount divided by the number of month covered.  Add up the total for each category, then add up all the categories to get your total expenses.  The last step is to subtract your total expenses from your total income.  This will give you an idea of how much extra cash  or short fall you have at the end of the month.

If you have extra cash at the end of the month you’ve got a good start at finding cash to pay down you debt.  If your expenses are greater than your income then some extra work will be needed to reduce your expenses. 

Now that you have a better idea where your money is going every month you need to find out just how much you’re in debt.  For every credit card you make payments on, every loan, charge account, or personal debt write down who you owe, when the payment is due each month, the minimum payment amount, and the total remaining balance making a separate column for each item.  Add up all the values in the minimum payment column.  This lets you know what the minimum amount is you need to payout each month to stay current on your debt.  Then add up all the values in the total remaining balance column.  This amount is your current total debt.  The due date column is there as a  reminder of when each payment is due.  At this point it does not matter what order your debts are listed in since we’re just wanting to determine your total debt.  I’ll discuss different ways to order your debts when paying them off in an upcoming article.

You’re at a good point for determining how to get ride of your debt now that you know where your money going each month, your minimum monthly debt payments, and your total debt.

I just ran across this article and wanted to share it with everyone - Girl Power.  Ashley Qualls is 17 years old.  Her online business Whateverlife.com attracts more than 7 million visitors and 60 million page views per month.  She brings in about $70, 000 Adsense revenue each month.  Her very first Adsense check was for $2,790.  What Ashley has done is just incredible.  Congratulations Ashley on you amazing success.  And I wish to continued success as you and your business grow.

Between work and traffic this week has been crazy for me.  I haven’t had much free time but I did want to share a few posts I enjoyed this week.

Is 2X Your Salary a Good Retirement Goal? from Lazy Man and Money
How To Create A Budget If You Have Irregular Income from No Credit Needed
A Few Changes Made a Big Difference in Our Electric Bill from Blogging Away Debt
Wills - Supporting your Spouse from Dual Income No Kids
Use “Wasted” Time (Such as Driving)Learning from Free Money Finance
Nest Egg Index from The Sun’s Financial Diary

Last time I list 10 ways I waste money.  Now I’d like to mention a few of the ways I save money.

1. Play online computer games- My wife and I are both casual gamers.  We enjoy a wide variety of games but mostly we play the online game World of Warcraft.  Our choice to play is economical as well as for entertainment.  We’d each easily go through a new game each every month.  That would be about $100 plus tax every month.  World of Warcraft only costs us about $26 for both of us.  That’s a pretty substantial savings for daily entertainment.
2. Driver slower - As I mention earlier I like to drive fast.  I used to push 80 mph on my commute to work.  Over time I’ve gotten into the habit of only doing 75 mph.  This is still fast but my average gas mileage went from 30 mpg to 35 mpg.  I’ve’ tried other speed and found my mpg  to be about 34 mpg at 65 mph and 36 mpg at 70 mph. 
3. Telecommute - My long commute to work can be a real drag.  Especially since I spend most of it on the 2 worst freeways in the Bay Area.  But luckily my boss does not care where I work as long as I get my work done.  This mean I telecommute whenever possible which is 2 - 3 times a week.  This reduces my gas bill by about 25% and keeps me under the 12,000 mile per year limitation that most auto insurance companies have for standard auto coverage.
4. Use online bill pay from my bank - My bank provides me with free online bill pay.  We have 10 - 15 bills to pay every month.  With bill we just log onto our banks website, select when vendors we want to pay and fill in the amount.  Once we hit the send button the bills are as good as paid.  The bills are usually paid electronically the next day.  If the vendor does not except electronic payment the bank mails them a check at no additional cost.  No having to mess with writing checks, making sure everything is in the write envelope, or ensuring everything has the correct postage.
5. Buy lunch from the lunch truck - I can get lunch from the lunch truck for $5.  They have a wide selections the quality is decent and there is plenty of food in every serving.  If I went out to eat someplace it cost be more.  Even fast food in the are cost more than $5 per meal.
6. Auto deposit savings into high interest account - Every paycheck I have half my mortgage payment, my monthly savings, and the monthly portion of long term bills auto deposited into my savings account.  This saves me time and increases the interest I receive because I don’t have to do it myself.  I rounded the amount I need to set aside every paycheck up to the nearest $10 dollars.  This means I am saving a little extra every month. 
7. Use the local library - We check out books from the local library instead of buying books.  The kids enjoy picking out a different story or project book every 2 or 3 weeks.  And we can find finance, self help or reference books when we want them without having the expense for storing a bunch of books at home or the cost per book what can be considerable.
8. Eat dinner at home- We used to eat 3 - 4 times a month for around $120 per month.  Several month ago my wife found out she had Celiac Disease so we had to stop eating out.  Her reacts like she’s been poisoned whenever she eats anything with wheat glutton.  Our grocery bill went up about $25 per month when we stopped eating out.  But I’d gladly payout $25 per month instead of $120.
9. Do my own home repairs - Doing our own home repairs is easy and has saved use thousands of dollars.  Contractors are expensive and can be unreliable if you have not worked with them before.  We even managed to buy our home for about 10% below market value because we traded our labor in remodeling the house for a lower price.
10. Pay mortgage on time or early - Like most other home owners in the Bay Area we have a large mortgage.  Interest on our mortgage costs use about $59 a day.  Mortgage interest is based on the total unpaid principle remain on your loan.  When you make your mortgage payment the unpaid principle is reduced which decreasing the interest cost of the loan per day.  The decrease is at most a few cents but only time these pennies add up.  The savings is not substantial but it does help in the long run.
11. Pay off credit card every month - We pay for nearly everything on our rewards credit card.  The credit card is paid off every month without exception.  We have a simple rule.  If we can’t pay for something right now we don’t buy it. 
12. No magazine or newspaper subscriptions- We do a lot of reading of our house but none of us like magazines or newspapers.  We used to get the local paper and a magazine or two but found we rarely read them.  They would also clutter up the house.  So we cancelled all our subscriptions.  Now we get our news and info of things of interest from the internet. 

Here are a few posts I enjoy this week:

The High Cost of Low Risk Investing from fivecentnickel.com
September is a Bad Month For Stocks from AllFinancialMatters
12 Secrets Your Car Insurer Won’t Tell You from Beachgirl’s Budget Blog
What Do You Do If A Credit Card Employee Calls You? from Blogging Away Debt
Emotionless Investing from Growing Money
What I Learned from the 2001 New England Patriots from Lazy Man And MOney
Interest Rates For Dummies from Money, Matter, and More Musings
Free Cold Stone Ice Cream On Your Birthday from My Money Blog

We all waste money one way or another.  I thought I’d list some ways I waste money.  The list was actually pretty hard to come up with because I am very careful how we spend out money.  But I’m sure I could come up with a few more.

1. Driver too fast - I like to drive fast.  I try to keep my speed to 75 mph or lower but this still eats up a lot of gas.  At least I’ve only received 2 speeding tickets since I started driving.  Speeding tickets can cost a fortune in some counties in California.
2. Eat lunches out - I don’t like taking a lunch with me to work so I frequently eat out.  I can get a decent lunch for about $5 but it still adds up. 
3. Long commute - I drive 48 miles to work.  That’s 96 miles of driving every day I go into the office.  With my old Saturn SL1 this takes abut 3 gallons of gas to make the round trip.  This means I have to fill up my gas tank every 3 trips to work.  OUCH!!! is all I can say with the current gas prices. 
4. Pay for oil changes- I’m a computer programmer not an auto mechanic.  I ‘ve tried doing my own car repairs before with OK results but I do not like to.  Over time I’ve developed a rather strong dislike to working on cars so I am usually quit happy to pay someone else to do the work for me.
5. Pay for cable TV - I watch TV maybe 30 minutes a day but I still pay for cable TV.  I just get the basic and extended service.  Its nothing fancy but it still expensive.  I just like the variety of channels, the convenience of all the shows available, and clear picture quality. 
6. Buying new cars- The last 2 cars we bought were new cars.  At the time I actually thought I was saving money.  We did our homework on the cars and got real good deals on both of them.  We didn’t even consider a used car at the time.  When someone would mention a used car all we thought about was 15 year beater cars that cost $2,000 a year in maintenance cost to keep running.  We know better now and can thank many financial bloggers for helping to set us straight.
7. Eating ice cream - My who family loves ice cream.  Every month we go through about 2 gallons of ice cream.  It doesn’t matter whether its hot or cold outside.  We’d eat even more but we set a limit on how much we buy and when we buy it.  We get 2 gallons at the beginning of month and can’t buy any more until the next month.
8. Drink soda and juice instead of water- We keep some soda and juice around to have with meals.  With 4 people we can easily go through a full bottle or more in a day. 
9. Don’t exercise enough - Not exercising enough can lead to increased medical problems and bills.  My work is very demanding at times and not exercising enough has lead to a decrease in my bodies ability to handle stress.  Over the last several years I’ve had medical issues at times when my work and life was the most demanding. 
10. Have a computer for everyone in the family - My whole family loves computers.  We spend much of our free time in front of one reading news, playing games, blogging, working, and just goofing off.  Each computers sucks up a lot of electricity which can significantly to our monthly electric bill. 

Tomorrow I’ll put up a list of some ways I save money.  See my post 12 Ways I Save Money.

Last week my youngest daughter’s 1st grade teacher handed every student in her class a sheet of paper with a picture of a treasure chest.  Everyone was to draw a picture inside the treasure chest of something that they treasured or was very special to them.  My daughter drew a picture of her Beary Bear.  Beary Bear is a stuffed bear that she picked out at Build-A-Bear Workshop on her 1st birthday.  Beary Bear goes every where and does everything with her.  Beary Bear is ratty and worn, has missing patches of fur, and has been lost several times but has always found her way back to us.  Beary Bear is her most prized possession.  During recess after the kids all shared what they drew some of her classmates confronted her on the playground laughing and making fun of her because she did not draw money or gems or other items that belong in a treasure chest. 

The other kids reaction saddens me.  In first grade these kids should be valuing their family and friends, their toy truck or marbles or doll.  Instead kids this young are being taught that money is to be valued most.  From the reaction of these other kids I would say some are being taught that money is the only thing that matters.

When you’re done reading this ask yourself “what would I draw in that treasure chest?”  And if you have kids how are you influencing what they draw in their’s.  Our kids watch and learn from us every day.  They will tend to value the same (or similar) things their parents do.  If we behave like money is the only thing that matter then they will learn that same behavior from us.  If we spend our income as soon as we get it our kids learn that from us.  If we tithe, are willing to help other, and are careful with our spending and finances our kids will learn that from us.

What would I draw in my treasure chest?  I would draw my family and friends, my church,  responsibility, integrity, honesty, and love.  I would not draw money or wealth.  Money and wealth are great things to possess but they do not make me who I am.  Whether I’m rich or poor monetarily I will still have all of those thing I drew in my treasure chest.

 What would your draw in your treasure chest?

Here’s a family a could all learn a few things from. They pay for a nice house, 2 cars, furniture, clothes, food, and anything else they need for a family of 7. with a average family income of less than $35,000.

When driving pay attention to what the cars around you are doing and leave sufficient room between you and the car ahead of you to stop safely.  Friday evening my wife, daughters, and mother-in-law were heading to one of the many Harry Potter events that were going on that night.  The car in front of them suddenly hit their breaks hard.  My wife slowed down quickly and managed to stop a safe space behind them.  But the SUV behind her was following too close and had to suddenly swerve into the next lane to avoid hitting our van.  The car behind the SUV was also following too close and hit the back of our van. 

Luckily no one was hurt and the damage to our van was minor.  Just two popped rivets, some scraped paint, and a 1 inch cut on the bumper.  This acident could easily have been much worse.  It also turned out that the driver of the other car does not have insurance. 

Remember that everytime you get behind the wheel of your car other people’s lives may depend on you driving safely.  Whether you’re driving on the busy Bay Area highways or in rural Tennessee you never know when something will come out of nowheres to block your way.  Leave a safety buffer and drive safely!