Watch Your Spending - Pack Your Lunch

I'm a true believer that you can get rich simply by changing just a few of your habits. The easiest way to demonstrate this for yourself is to keep a log of your everyday expenditures. Carry around a small pamphlet and document everything that you purchase. Every time you pull out your wallet or dig into your purse, make a note of it on a chart of some sort. When you've lacked awareness of your spending habits for so long, you will be shocked at how much money you truly spend. Simply creating a paper trail of your spending habits is enough to jar you into changing some of your habits. Here is what my list looks like,

(click the image to enlarge)

Here is a good list of 100 things you can do to cut back on spending.

This pay period I've decided to cut back my spending on fast food and eating out. I went to the grocery store on Tuesday and spent $101.15. By having a frequent shopper's card, I saved over $16. I haven't spent an additional dime on eating out otherwise, and I don't plan on spending any money eating out for at least the next 10 days or so.
I challenge others out there to do the same. Determine a way in which you could dramatically decrease your expenditures by first identifying where you are spending your money, and secondly, finding ways to shrink these expenses. By implementing this in my life, I will save over $100 just this pay period. Now, that's real results, right now!

Personal Development Wednesday - "Making Other Money"

Personal Development Wednesdays (P.D. Wednesdays) will be showcased as the day to embark on personal development! (. . . obviously) This will be my way of showing the world that education should never stop. People should continue to learn more and more about the things that they care about. Education is a never ending journey, that I love to be apart of.
I will showcase a book every Wednesday. Befittingly, I will start with a book that opened my eyes to the way in which I think about earning my income. A good book to begin your journey to financial freedom is Rich Dad Poor Dad, by Robert Kiyosaki.

Kiyosaki has enlightened millions with his unique way of enlightening folks to the rich way of thinking about money. While sometimes quite jarring (breaking the monotony of average thinking), Rich Dad Poor Dad is a tremendously useful tool to learn some new ideas about money. Once you read this book, you will never look at your financial situation the same. Rich Dad Poor Dad is the first of a series of books about attaining financial freedom by Robert Kiyosaki.

This week's theme is "Making Other Money". By other money I mean money outside of your job. People rarely brainstorm other ways of generating income besides that of which they are used to. The most common way of earning a living is working a job. As I've discussed previously, this is an extremely wasteful way of utilizing your time. Your time is the most valuable thing that you have to offer. Use your time wisely and you can accomplish anything.

This week I will focus on learning more about generating other forms of income. I set a small goal of making an extra $75 dollars within a month.
Set a low monetary goal with a date by which you'd like to accomplish it. Write it down. Brainstorm ways in which you can accomplish this goal. Once you've accomplished this goal, set a higher goal. Learn from your previous experience and repeat.

Happy P.D. Wednesday!

Budgeting

I'm learning the importance of a budget more and more as I look at the shape of the American economy and see so many families struggling to hold on to their homes and jobs. More importantly, I'm realizing the advantages and the truly gratifying security created by maintaining a budget. Personally, I don't keep a tight budget. I definitely don't keep as tight of a budget as I should. (I eat out nearly 90% of the time!) I do, however, make it a point to plan my bills 6 months ahead of when they are due. My budget dictates my check months before I receive it, which protects my money from any impulse shopping or emergencies that may occur.
In order to keep track of my budget, I created a simple spreadsheet using Microsoft Excel, which acts as my own personal simplified version of Microsoft Money. I crafted my spreadsheet to fit my own personal style, making it easier to use for me and my situation. I simply input the value of my check, which happens to stay the same, followed by a list of my monthly bills. Each bill pretty much follows the same cycle. The amount stays the same (or there about) and I have to pay it every four weeks or so. So, swapping bills out every other pay period, my budget looks the same every four weeks. For example, if I paid my rent this pay period, and skipping the next pay period, I would be paying my rent again in four weeks. The same thing repeats for all of my bills. Following this cycle, I can plot my bills out for the next 6 months (or 26 weeks). I then subtract my bills from my check amount (including the $150 I plan to save from each check). The remainder of my check is what I use for food and everyday spending.
My spreadsheet is very simple and to the point. I keep track of it on my computer as well as keep a hard copy, a long with hard copies of my bills, in a 3-ring binder. My spreadsheet for this week looks like this,


(You can click the image to enlarge)

Notice my saving tally. I plan to use this savings to help generate more income as it grows.
It's amazing how much of a difference was made once my budget was written down and I could see it on paper. Saving was allot easier once I started and saw how much money I actually had to work with. Also, my bills got paid ahead of time and my credit card balances stayed at a minimum. This year, school will be paid for without a loan, and I will be paying for my summer vacation if January! Anyone, who's planning on becoming financially free should make it a habit to keep some kind of budget plan.

Your Perspective of Money

You ever wonder what factors change our circumstances and lifestyle?

I'm here to tell you that our income isn't the only major factor that determines our financial situation. The super rich didn't start off making millions of dollars a month. They started right where you and I did. The only difference between the super rich and the average family is their perspective of money. The super rich's perspective of money is vastly different than that of an average person's.

The average person doesn't take time to even focus on how money works. It's not that they don't care, but that when you are placed in a society where there is always a connection to money (meaning there is never a lack of opportunity to earn it), your mind can't help but to take that connection for granted. You don't apply definition or importance to something that is constantly available. In our society, despite the financial storm that we are apart of, there still exists the mentality that there will always be a job, some job, any job, out there for me. (And if there isn't, all I have to do is go to school, learn a trade or a skill, and someone will hire me.) This constant connection to money is crippling to your actual earning potential. Now, a job is not a bad thing. In fact we will always need folks out there who don't mind working. Someone will always have to drive the bus, collect the trash, become a doctor, ect. No matter what financial plateau you reach, you will always need society to function.
The rules of a job are simple. You show up to work, and someone compensates you for your time. Or even if you've got it good and you work from home, make your own schedule, and earn commission and bonuses, you still have to answer to someone else and prove that you are being productive. Your boss is looking for results through the use of you. This is the ideal situation for the average adult because they don't know any better. We're told to grow up and become productive members of society by going to school and getting good jobs. The biggest problem with a job is it takes up your time. It takes time to go to school. It takes time to be productive and earn raises and promotions. It takes to time to retire, if you've prepared for retirement, and by then much of your time is already used up. There is no leverage in working a job.
Leverage is the biggest tool in the world. Leverage is the ability to utilize your time efficiently. If you spend your time working a job for 8 hours a day and in return your boss gave you a $20,000 check, maybe this was very good use of your time. But for most of us, this is not the case. Let's say, you did make $1,000 a day. I'm sure we'd all agree that this is a fairly good salary. Would it not benefit you, the employee, to find someone else to do the same job for a fraction of your salary? If you could hire someone to do your job for say $800, would it not be worth your while to not work for $200 a day, while you went and got another job? The only problem with this equation is your the employee. You don't do the hiring and negotiating. If you could find someone to do your job for cheaper, why would your boss need you? This lack of control of your time is the reason why most people don't live up to their highest earning potential while performing a job. Additionally, the lack of time leftover for everything else, leaves little time to earn money else where.
You would be hard pressed to find many people that have thought even this deep into the process of becoming financially free. Thinking about your income is important, but that's not what gets you to the top. It's the out-come (defense), not the income (offense), that's important. Financially, your defense is the money that you spend. For most people, you give up about as much as you take in. If you earn $1200 a month, you spend $1200 a month. You can get rich just by strengthening your defense. Instead of spending $1200 of your $1200, spend $1000. Saving that $200 would put you far ahead of the pack. How much of your income have you saved in your working career? I didn't start saving until this year (besides my 401k). Does that make the 8 years prior worthless?

How much money do you really make an hour? Ponder this. Could someone prove that your expenses for your car, your house, your clothes, your food, ect. were necessary in order for you to be a productive member of your company? If those expenses are necessary, how much money do you really make an hour? At the end of the month, how much money is left over? If you divide that by the time that you put in at work, you've got your answer. For many of us, our job doesn't look all that savvy anymore. I personally save $150 from every check. I get paid every 2 weeks. So in a good month, I may get paid 3 times. The most that I can save, at this rate, in a month is $450. Suppose I work only 8 hours a day for 21 days out of the month (for a total of 168 hours). That's about $2.67 an hour. I make, ultimately, less than $3 an hour in a good month. In the median month, I make about $1.79 an hour. How much do you make?

Taking this perspective to money is what has brought me here today. I can analyze my situation and see where I can make some major changes. This week I plan on showing you my budget- where all of my money is being spent, and where I plan on making improvements overall.

In the meantime, check out one of my buddies stories of how he went from rags to riches in the DC Metropolitan area. His name is Anthony "Von" Mickle.