- August 2, 2008 at 7:10 am #261044
I’m a newbie. Ownership is better than loanership. Never consider
renting even if it is temporary. Renting means throwing away money.
Money being paid for rent to help build equity in your home. Beware
of large salaries. The economy is bad and companies are closing
their doors – going out of business. This is an article I’ve written
that you may find interesting.
Living on Half
Budgets help you identify goals and help you plan for the future.
People generally spend every dime of their take home pay. But, what
would happen if you established a goal of living off of half of your
take home pay?
This is not an impossible task. It takes planning and commitment.
Planning requires you identify a budget that only uses half of your
take home pay and commitment requires you to stick to the plan.
Needs and wants dictate how we spend money. The goal of treating
your basic expenses such as rent/mortgage, food, utilities,
allowance, and insurance as your primary needs will help you
understand how you are wasting money on your wants. Your needs can’t
change but your wants can be adjusted.
Theoretically, let’s take $300, assuming this is half of your take
home pay, and see how we can acquire more when we incorporate
disciplined savings into our budgets. First we will have 6 accounts
and allocate $50 to each.
Vacation – $50 Emergency
Fund – $50
Major appliance – $50 Child’s
College Fund – $50
401(k) – $50 IRA – $50
Managing and redirecting your current wants will enable you to have
greater accomplishments. Your current wants are also known as your
short term goals. They are usually are inexpensive to obtain and
only provide temporary satisfaction. A new purse or a new pair of
shoes may satisfy a current want but it will only be replaced by a
similar want in a very short period of time.
Saving half of your take home pay allows you to acquire bigger
wants. Defining and classifying saving goals help you achieve short
term and long term goals. Discipline will be learned when you
allocate money to multiple savings objectives.
Taking the monies saved for vacation. Based on a biweekly pay
period, you will have $1300 for vacation. This may not be enough to
take the vacation you currently want. You know that if you save for
a few more years, this vacation is attainable. A vacation is a
luxury that is never planned for in the average budget.
You will not only have your money working for you, but you will also
gain by accruing interest, dividends, and capital gains. If you open
an account in a bank, you will only have compound interest. This may
be adequate for your vacation and emergency fund saving objective.
However, if you purchase a mutual fund, you will gain more by
receiving dividends and capital gains. Your child’s college fund,
your 401(k), and an IRA may not be used for 20 � 30 years later.
Saving half of your take home pay may be a bridge too far at this
time. It can, however, become an aspiration. Setting high goals
that are unattainable gives you something to work toward. When you
fall short of reaching this bigger goal, you will be that much
farther ahead. In other words, your objective is to save half but
you were only able to save 30%. That’s still good. It’s better than
setting a goal of saving 10% and only saving 3%. The higher you set
you goal, the better off you will be.
Most people have encountered a problem that required them to live off
of half of their money.
Wife quitting to raise family
Continue living as if the income was not there.
— In Budget101_@yahoogroups.com, “Charlotte”
> I would rent the 1st year, then buy. Work on the student loans,
> are rally low interest, so take your time with them – don’t rush
> off – maybe pay $50 extra a month.
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