Tough Question

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      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.


      Child Support

      Job lay-off

      Wife quitting to raise family

      Continue living as if the income was not there.

      Jo Ann

      — In, “Charlotte” wrote:


      > I would rent the 1st year, then buy. Work on the student loans,

      but they

      > are rally low interest, so take your time with them – don’t rush

      paying them

      > off – maybe pay $50 extra a month.

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