FINANCIAL GROWTH AND MANAGEMENT
Instructions
1.
Realize that every dollar you don't spend is another dollar you can add to your piggy bank. Small amounts can add to a large sum and it's important to use that mindset if you want to spend less and save more money.
2.
Evaluate everything you spend money on. Go over your bills one at a time, and cut where you can. Do you really need all of those TV channels? Cut back to a cheaper cable/satellite package, or get rid of it all together. Most libraries offer free DVD and VHS rentals and you can watch thousands of shows online for free.
3.
See if you can save money on your insurance. Make sure you are getting all of the discounts you are entitled too, for example if you have a home security system you can often get a discount on your homeowners insurance. If you have taken a defensive driving course, you may qualify for a discount on your auto policy. Raising your deductibles will lower your monthly payments as well.

4.
Save energy where you can. Use CFL bulbs, unplug things when you aren't using them, lower your thermostat, make sure your home is well insulated, close off rooms you aren't using so you can only heat the rooms you need, wash your clothes in cold water etc. See more energy saving tips in the related article in the resources section below.
5.
Stop throwing away money. Use reusable cloth bags when you go shopping - many stores give you a discount for each of your own bags that you use. Buy cloth rags to use for cleaning instead of paper towels. Make your own cleaning supplies. See if you can cut down on your garbage bill by having fewer pick-ups and take advantage of recycling programs. Quit buying bottled water. Install a water filter and you will quickly recoup the costs and will have less waste.
6.
Cut back on your food costs. Make more things from scratch, for example dried beans are much cheaper than canned. Eat more vegetarian meals. Consider growing some of your own food. You'll find doing these things can be healthier as well. Use coupons! Coupons are money in your pocket. Get free samples in the mail. You can get free samples for shampoos, food items and more.
7.
Do other things such as paying your bills online whenever possible. You will save on the cost of postage and the cost of checks. Get your hair cut less often and consider using a less expensive salon. Be sure and look for coupons for this and any other service you use in your local newspapers or mailings.
8.
Evaluate your own spending habits and see what you can cut out or spend less on. Every dollar adds up and you might find it can be quite simple to spend less and save more money.

Budget Isn't a Bad Word
When you hear the word “budget”, what does it mean to you? If you’re like most people, you probably think of it as an unpleasant activity that means you have to financially deprive yourself. This couldn’t be further from the truth, yet this is the typical reason that most budgets fail.

Think of it as Managing Money
Your budget isn’t created to make your life miserable; it is simply a guide to help you manage your money. We all have income, and we all have expenses, and without proper allocation of the money something may fall short. The goal when creating a budget is to lay the foundation for allocating what portion of your income is required to cover each expense.
A Budget is Like a Recipe
If you are going to bake a cake from scratch, you’ll probably want to use a recipe to ensure it bakes properly and tastes delicious. A recipe is simply a list of required ingredients along with the quantity, followed by instructions on how to add them together. If the recipe is followed properly, you will be rewarded with a tasty final product.
Your personal finances aren’t much different. Your income is the sum of ingredients, and your expenses are the quantities to use, while the budget tells you how to put it all together. With a cake recipe, if you short an egg or put in too much flower, the cake will not taste right or even bake properly at all. The same goes for your finances. If you spend too much money on one expense it may make you short on another expense, which would yield results that are less than expected.

Take Control of Your Money
When you create a budget, you take control of your money so that it doesn’t control you. Don’t let the negative image of a budget making your life miserable keep you from taking control. You can still enjoy yourself and even include discretionary or “fun money” in your budget. The goal is to simply create an outline for your money that puts you in control so that it doesn’t control you.

HOW TO GROW RICH WITHOUT A LOT OF MONEY

Want to grow rich over time but don't make a lot of money? Well look no further, this article will give you tips and advice on how to end up with a lot of money even with a regular job.
Difficulty: Moderately Challenging
Instructions
            THINGS YOU'LL NEED:
·                                 A PLAN
·                                 PERSISTENCE
·                                 DISCIPLINE
1.
You simply must be disciplined with your money. I cannot stress how important this step is. You have to spend less money than you make. You should be striving to put as much money away for your future as possible, ideally 10-15% of your salary.

2.
If you do not already do so, sign up for your 401K at your job and max out your contributions every year. Put as much money as you can into your account as you can every year.

3.
Open your own retirement account for you to put money into. The best choice would be to open up retirement account and invest aggressively in this account.
4.
Protect some of your assets by investing in more stable investments like gold and treasury bonds. You want to have some money in these types of investments to protect some of your assets.
5.
Look to create as much passive income as you can for yourself. You want to strive to have investments like real estate, royalties, inventions, websites, and products, all of which earn you money every month.

Tips & Warnings

·                                 These tips will help you grow rich over time even if you don't make a lot of money. Just stay disciplined and focused on the goal.

The most popular savings accounts
THE SAVINGS ACCOUNT
THE CURRENT ACCOUNT
THE FIXED DEPOSIT ACCOUNT

Savings accounts are a great way to establish a “rainy day fund” in the event of emergencies. The best savings accounts are from banks that offer high interest rates and friendly customer service. By establishing a savings bank account, you can rest assured that you will have money in case of emergency. Whether someone loses their job, is unable to work for a long period of time, or has to take care of someone ill, these bank accounts will help steady their finances for a specific period of time.

The best savings accounts available are those that offer competitive interest rates. Some of the other bank accounts may offer incentives for saving so much per month, year, etc. Many money market accounts are available with high interest yield to up your savings just because you leave your money alone in your account.

How do Bank Interest Rates Work?
Take for example, a savings deposit of $1,000 when opening the account, and $50 each week after. After 3 months, you would have $1,600. Most banks pay interest on a quarterly basis. Let’s imagine your interest rate is 5.3%. Your quarterly interest on your $1,600 would be $84.90. After 1 year of keeping the same savings routine, you would yield $4,408.28. That’s only 1 year of savings. This demonstrates how important finding one of the best savings accounts out there is to your financial health.

Features of Savings Accounts

Some financial institutions such as Bank of America have created “Keep The Change,” a savings feature on their account. Each account holder can choose to implement this program with their account. Every purchase that is made is rounded to the nearest dollar and that difference is transferred to their savings accounts. This is another great way to save yet even more money and helps managing a check book even easier for those math deficient individuals.

Another way for help with savings is by finding a bank that allows direct deposit within your account from your paycheck. Some people simply cannot save, however by choosing an amount from each paycheck that will be placed in their savings. They are able to do so with the help of their bank.

Best Ways to get the Best Rates

Ask bankers for the best ways to find the best savings accounts. Ultimately, each person’s needs vary. From the spending habits to monthly bills and salary, all of these factor into how much money someone can save comfortably within their life time. The best savings accounts allow you to yield large amounts of money by placing minimum amounts within an account. By finding a high interest rate account, you are giving yourself more money in the long run. What could be better?

No matter where you live, the best savings accounts out there can be found. Do a quick online search or simply walk into any bank and ask for their rates. Be sure to talk to many banks before committing to one account. Great deals are out there, without savings accounts, banks would go broke! They need our money, so find the bank that is most serious about helping you because you helped them. Find the best savings account today!

Make Money Online (Without Spending a Dime)

Even with no product and no website,

you can get paid for what and who you know

Making money online used to pretty much require you to have your own Web site, products to sell and some marketing savvy. But a new generation of dot-coms have arisen that will pay you for what you know and who you know without you having to be a web designer or a marketing genius.

But it's hard to tell hype from the real deal. I did a search on "make money online" and "making money online", and much of the information out there is just promoting various info products, mostly about Internet marketing. I see why people sometimes ask, "Is anyone making money online besides Internet marketing experts?"

So I put together a list of business opportunities with legitimate companies that:

· Pay cash, not just points towards rewards or a chance to win money

· Don't require you to have your own Web domain or your own products

· Don't involve any hard-selling

· Aren't just promoting more Internet marketing

· Give a good return on your time investment

In the interest of objectivity, none of the links below are affiliate links, and none of them have paid or provided any other consideration for their presence here. These are legitimate companies with business models that allow you to get paid for a wide range of activities.

Help friends find better jobs.

Sites like ReferEarns, Zyoin, Who Do You Know For Dough?, Bohire and WiseStepp connect employers with prospective employees, many of whom are already employed and not actively job-hunting, via networking - the people who know these qualified candidates. Rewards for referring a candidate who gets hired range from $50 on up to several thousand dollars - not chump change. If you know a lot of job-seekers (and who doesn't these days?), this is a great way to break into the recruiting business with no overhead.

Connect suppliers with buyers.

Referral fees are a common practice in business, but they haven't been used much in online networking sites because there was no way to track them. Sites like Salesconx, InnerSell and uRefer now provide that. Vendors set the referral fees they're willing to pay (and for what), and when the transaction happens, you get paid. uRefer also allows merchants to set up referral programs for introductions and meetings, as well as transactions.

Write.

A growing number of sites will pay for your articles or blog posts. Associated Content and Helium will "pay for performance" based on page views for just about anything you want to write about. Articles on specific topics they're looking for can earn direct payments up to about $200. The rates are probably low for established writers, but if you're trying to break into the field and have time on your hands, they're a great way to start. Also, a lot of companies are looking for part-time bloggers. They may pay per post or on a steady contract. Our Weblogs Guide posts blogging jobs weekly in the forum.

Start your own blog.

You don't have to have your own Web site, or install blogging software, or even figure out how to set up the advertising. At Blogger you can set up a blog for free in less than five minutes without knowing a thing about web design, and Blogger even automates setting up Google AdSense so you can make money off your blog by displaying ads and getting paid when people click on the ads. To make even more money from it, set up an affiliate program (see below) for books, music, etc., and insert your affiliate links whenever you refer to those items. You'll have to get a lot of traffic to become a six-figure blogger, but pick an interesting topic, write well, tell all your friends, and you're off to a good start.

Related: Monetizing Your Blog

Create topical resource hubs.

Are you an expert on a particular niche topic? Can you put together an overview of the topic and assemble some of the best resources on the topic from around the web? Then you can create topical hubs and get paid through sites like Squidoo, HugPages and Google Knol. Payments are based on a combination of ad revenue and affiliate fees. You'll get higher rates doing it on your own, but these sites have a built-in supply of traffic and tools to make content creation easier.

Advertise other people's products.

If you already have a Web site or a blog, look for vendors that offer related but non-competing products and see if they have an affiliate program. Stick to familiar products and brands - they're easier to sell. To promote those products:

· Place simple text or graphical ads in appropriate places on your site

· Include links to purchase products you review or recommend in a blog, discussion forum or mailing list you control

· Create a dedicated sales page or Web site to promote a particular product

They all work - it just depends on how much time you have to spend on it and your level of expertise with Web design and marketing.

Microstock photography.

You don't have to be a professional photographer to sell your photos for money. People are constantly in need of stock photography for websites, presentations, brochures and so on, and are willing to pay for the right image. People generally search for images on stock photography sites by keywords, not by photographer, so you have the same chance as anyone else of having your image picked. Just be careful that you don't have images of trademarked brands, copyrighted art or people's faces that are readily identifiable (unless you have a model release), but just about anything else is fair game, and I promise - you'd be amazed what people need pictures of, so don't make any assumptions. If it's a decent photo, upload it. Some sites to get you started include Fotolia, ShutterStock, Dreamstime and iStockphoto. The great thing about this is that it's truly "set it and forget it".

The above list is by no means comprehensive, but it highlights some of the new and interesting ways to make money online without investing any money, without having a product of your own, and without having expert sales and marketing skills. Most of all, unlike taking surveys or getting paid to read e-mail, the potential return on your time investment is substantial.

HOW TO GROW RICH WITHOUT A LOT OF MONEY

Want to grow rich over time but don't make a lot of money? Well look no further, this article will give you tips and advice on how to end up with a lot of money even with a regular job.

Things You'll Need:

· A plan

· Persistence

· Discipline

You simply must be disciplined with your money. I cannot stress how important this step is. You have to spend less money than you make. You should be striving to put as much money away for your future as possible, ideally 10-15% of your salary.

If you do not already do so, sign up for your 401K at your job and max out your contributions every year. Put as much money as you can into your account as you can every year.

Open your own retirement account for you to put money into. The best choice would be to open up an IRA or Roth IRA and invest aggressively in this account.

Protect some of your assets by investing in more stable investments like gold and treasury bonds. You want to have some money in these types of investments to protect some of your assets.

Look to create as much passive income as you can for yourself. You want to strive to have investments like real estate, royalties, inventions, websites, and products, all of which earn you money every month.

Tips & Warnings

These tips will help you grow rich over time even

if you don't make a lot of money.

Just stay disciplined and focused on the goal.

BONDS

One of the best ways to protect and invest your money is to buy bonds. In some cases, buying bonds can provide better security and higher rates of return than buying stock. In general, they are an important part of your portfolio in both down markets and up markets.
Not all bonds are the same and most will vary in risk and return. Determining which bonds to buy and how many to own can be quite daunting. Follow these steps to ensure you buy the right bonds and maximize your investment returns.
Make sure to click on the links within each step. They will help you learn to invest and become wealthy.

Difficulty: Moderately Easy

Instructions

Learn More About Bonds
When you buy bonds you are loaning money to a company. In return, that company pays you interest on the amount you let them borrow. At the end of the loan period they will give back the full amount they borrowed.
The amount of interest you get paid varies for each bond. Some bonds pay 10-15% a year; other bonds may only pay 1-4%.
For example, you buy a bond for $1000 dollars at an interest rate of 10%. The bond matures in 10 years. The company will pay you 10% ($100) a year, for ten years. At the end of the tenth year they will return the $1000 you originally gave them. Your total earnings is $1000 dollars!
Simple math, the interest for 10 years is $100 per year multiplied by 10 years = $1000 bucks.

Diversify Your Bond Portfolio
Buy bonds from different companies and municipalities. Buying bonds is much like buying stock; you need to diversify to avoid risk. Invest in municipal bonds, treasury bonds and investment grade corporate bonds.

Buy Foreign Bonds
Don't forget about foreign bonds. They are an important part of your investment portfolio. The easiest way to invest in foreign bonds is to buy Exchange Traded Funds (ETF) or mutual funds that focus on buying foreign bonds. Foreign bond funds often provide exceptional returns.

Buy Bonds For The Short Term; Not The Long Term!
Bond prices are inversely related to interest rates. If interest rates go up bond prices go down and if interest rates go down bond prices go up.
What does this mean to you? If you buy a $1000 bond today that earns you 5% you earn $50 dollars a year. If the next year interest rates go up, similar bonds will offer higher interest rates, say 10%. The bond you bought will be paying $50 when you could be buying a new bond paying $100 or 10%.
To avoid loosing out on these types of opportunities, buy bonds for the short term.

Quick Tip
If you can't decide on a good mix of bonds, trying using this model to determine a safe blend of bonds to purchase: 30% Municipals, 20% Treasuries, 20% Foreign and 30% Corporate Bonds.

Tips & Warnings

· Your Portfolio shouldn't consist of just bonds.

· Buying stocks is equally important as buying bonds.

TWO EQUAL EQUATION THAT LEAD TO

FINANCIAL SUCCESS

Income – Expenses – surplus
Surplus x Many years = Wealth

LEARN TO GROW YOUR NET WORTH

GEORGE E.N.

Two Simple Equations that Lead to Financial Success

Last night I spoke to several hundred people on the basics of personal finance success. The following post is a summary of my opening comments. If you enjoy it and would like to receive free, daily suggestions on how to grow your net worth, you can subscribe to Free Money Finance using your feed reader and this link.

Nigerians today are in need of financial help. And for the life of me, I can't figure out why. Ok, actually I can, but it is still puzzling to me that so many people are having so many financial problems when the keys to success are so simple. And this was BEFORE the economic downturns too, so don’t think people are in trouble only because of a poor economy. Granted, the slump hasn't helped, but things were bad before things were really bad.

How bad are they? According to a survey of 5,000 people highlighted in the book The Difference: How Anyone Can Prosper in Even The Toughest Times by Jean Chatzky, 54% of People live paycheck-to-paycheck, barely getting by, and are one financial problem away from money trouble. Another 15% are what the survey calls Further-in-Debtors – people who are going backwards financially every month. So between these two groups – almost 70% of people are either struggling or going backwards financially.

And what makes these results so perplexing is the fact that the principles to succeed in managing your money are pretty simple. They are both easy to understand and few in number. You don't have to be Einstein to succeed financially -- anyone with normal intelligence and a bit of self-control can prosper.

You have probably heard of the 80/20 rule, right? Also known as the pareto principle, it states that, for many events, roughly 80% of the effects come from 20% of the causes. In finances that would equate to getting 80% of the results out of 20% of the advice or tips. But in money management, the rule is more like 90/10 or even 95/5. Following a few steps will get you almost all the results you need (and certainly enough results to make you wealthy.)

Personal financial success ultimately comes down to two very basic financial equations. There’s no doubt about it – if you master these two equations alone, you will become wealthy and be far ahead of most People:

Income – expenses = surplus
Surplus x many years = wealth

Yep, that’s it. It seems pretty simple, doesn’t it? In fact, these seem to be “common sense.” But remember that these are two equations that 70% of People can’t get right.

If you look at these equations, you’ll see that all efforts to improve your finances come down to two things: increasing your income or decreasing your expenses. The more you do of each of these, the better.

So why can't most people get these two equations to work in their favor? Many would say it's simply because they don't earn enough money. And for a small portion of the population, this is the reason. But the survey above also identified why so many people are in tough financial shape: they spend too much. They can't control themselves and they simply over-spend. So they live paycheck-to-paycheck or worse, are falling more behind every month.

I've covered all this information previously when I wrote How to Be at the Bottom of the Financial Barrel. I also posted thoughts from the book above on What Makes Wealthy People Wealthy, The Difference Between the Wealthy and Everyone Else, and How to Be Financially Comfortable. But for those of you who don't want to read all those articles, here's the short version of how to be financially successful:

Spend less than you earn (the bigger the [positive] gap between the two, the better)
Do it for a long time

And for those of you who want a ton of suggestions on how to make and save more money, check out Thousands of Ways to Make and Save Money.

You might also like:

· A Simple Example of Why Spending Less than You Earn Works

· How to Be at the Bottom of the Financial Barrel

· The Ten Worst Money Mistakes Anyone Can Make

Do Financial Journalists Really Know Anything?

Call me picky, but articles like this rub me the wrong way. In particular, get this quote:

For those of you making more than $250,000, I regret to inform you yet again: Yes, you are indeed rich—any way you slice it.

Well, not exactly. And it makes me want to read nothing else this guy has to say. Why? Because he doesn't understand the difference between income and wealth (or "being rich.)

Now I understand the point he's trying to make -- that if you earn $250,000 per year, you are among the top earners in this country. So why doesn't he say that? No, he has to say that because you're making $250OOO a year you're rich. The term "rich" means "wealth" or, in personal finance terms, "net worth." And as we've seen over and over and over again, just because someone has a high income doesn't mean they are wealthy.

Sure, someone with a high income has more potential to become wealthy, but potential often counts for zilch.

In short, "income" and "wealth/rich" are two different things, any anyone who writes a snaky, opinionated piece on how they are the same, needs to check his facts a bit more before he gets published in Newsweek.

I'm already suspicious of most of the TV, print, and web "reporting" that I see, and this piece is simply another reason I'm getting more and more leery every day.

Why a High Income Often Doesn't Translate into a High Net Worth

Here are some interesting thoughts from Stop Acting Rich: ...And Start Living Like A Real Millionaire on why a high income doesn't often translate into a high net worth:

Within the high-income population, occupational status is negatively correlated with net worth. How can this be possible, given the fact that people with high occupational status tend to generate high incomes? The reality is that income is not wealth. Often high occupational status dictates high consumption. What if you live in or even near a geographically defined high-consumption environment? It is where most people with high occupational status live. In such environments, it is easy to deplete even substantial income through consumption. It costs a great deal to live among those clusters of people who have high incomes and high status. Call it high overhead.

A few thoughts on these comments:

1. They detail a few pages later in the book what "high occupational status" means but the short version is that it's those occupations that society tends to associate being "upper class." Examples: Doctors, lawyers, business executives. Non-examples: farmers, mining engineers.

2. I've covered this topic over and over but I'm doing so again because I am still getting comments like, "Yeah, but doctors earn more, so they have more potential to be wealthy" and "I know a doctor/lawyer that makes a great income and is very wealthy, so I'm not sure these conclusions are right." I guess I have not been clear before on what the author is saying, so let me try and be so now:

· Just because someone earns a high income doesn't mean they have a high net worth. How can this be? Because they spend all they make and even more. It's that simple.

· Yes, maybe a higher-income person has more POTENTIAL to be wealthy, but if they never capitalize on that potential, they will never become wealthy. The proof's in the pudding as the old-scholars used to say. Potential doesn't show up on a net worth statement.

· The author is not saying that every doctor/lawyer/high income earner is spending all they make and more and/or not generating a high net worth. That would be ridiculous since we all probably know (or think we do at least) exceptions to the rule. But he's saying that it's GENERALLY true (or true ON AVERAGE, if you prefer) that those with higher occupational status/income don't generate high net worth.

3. One of the main reasons those with high incomes spend all of what they make and thus don't grow their net worths is that they live in expensive homes in expensive neighborhoods and they try to keep up with their neighbors (that have expensive tastes.) If you want to grow your net worth, live in a house that's far below what you can afford. Note that I'm not saying "live in a dump." In the book, they talk about the fact that most millionaires live in a home that's worth $300,000 or less. In most of the country, that buys you a pretty nice place (I realize, $300,000 in NYC or LA is "a dump", but that's a choice you make by living there. And don't say "well I earn more than enough to compensate for the high cost of living." If you look at the facts, this argument does not pan out (on average.))

4. In the end, it's all simple math. No matter how much you make, you have to spend less than that if you want to grow wealth. Turns out that people that make a lot of money are no better (and may be worse) at controlling their spending than the average guy making an average wage. The former may make a bundle, but he spends it all and is no better off financially (though maybe he has more "stuff" than the other guy). The latter spends less than he earns and grows wealthy. Again, pretty simple concept.

You might also like:

· More Thoughts on How to Have a High Net Worth

· How to Have a High Net Worth

· What Professions are Likely to Have High and Low Net Worths?

The Worst Money Stories I've Heard

About 15 years ago or so my wife and I became financial "coaches" for a church-based organization designed to help people having financial trouble. Through the year's we've probably helped a couple hundred people/couples manage their finances -- mostly simple stuff like setting up a budget and working to pay off (usually high) debt (mostly credit card debt.)

Over those years we've seen and heard some pretty strange stuff (as you might imagine.) I thought I'd share a few of the more unusual stories that have stuck in my mind. Here goes:

As we were digging through one couple's finances with them, we kept finding new purchases they had made and owed money on and yet had neglected to put into their budget (this happens a lot -- we usually have to ask "is this everything" several times in a meeting.) After putting the pieces together, we found out that this couple had $50,000 in credit card debt, had another $50,000 or so debt in a business gone bad, and that the husband had lost his job a month earlier. "Oh, and after I lost my job I bought a new boat," the husband told us. "You WHAT????????????" was the only response we could eek out to the "I bought a boat" cherry on top of the mountain of bad financial moves.
After we had discussed the difference between needs (I have to have it to survive -- food, clothing, shelter), wants ("I'd really like a new TV"), and desires ("I'd like a new 52 inch state-of-the art LED TV with 500 cable channels and the ability to beam down graphic images from NASA") with one couple, we then spent 15 minutes trying to convince the wife that her weekly $50 pedicure was NOT a need (and showing her how much it was costing them.) Mind you she had no medical reason for this -- but she insisted that she had to have a pedicure every week at the cost of $50 a pop. Ok with us, but it was a $2,600 annual cost that wasn't really a "need" in any way we could see it.
I got a call one day from a guy I'd never heard from before. He wanted me to meet him at the courthouse in a couple hours and speak during his bankruptcy hearing. I had no idea what he wanted me to say, but I declined as you can imagine. I did offer to meet with him later in the week to work out a budget and get his finances back on track. He declined, as you can imagine.
One guy came to us making $130,000 a year, but he was spending even more -- much more actually -- than what most people would consider to be a very high income. When we suggested that maybe his four high-end cars (BMWs and Mercedes) -- all leased for each member of the family (him, his wife, and two kids) -- were killing him, he blew us off. Nope, he had to have those and we needed to cut elsewhere. Ok, how about the expensive vacations he was taking each year. Nope, couldn't cut those either. How about the over-the-top clothing spending the whole family enjoyed? Nope, couldn't cut there either. In the end, he wasn't willing to cut any spending but wanted to balance his budget. We left the meeting two hours later -- us frustrated that he couldn't do simple math (spending more than he earned) and him frustrated that we couldn't solve his problems quickly, simply, and with no changed spending habits on his part.

I tell you these stories not only for your amusement, but to also let you know that I've "seen it all" (or at least a very large part of "all".) Many of my thoughts/comment/posts on this site are a reflection of what I've seen in people's finances over a long period of time. And believe me, what I've seen is usually pretty scary!

Stars Who Have Lost Fortunes

Here's a list of stars who have lost fortunes. Or, in other words, people who have earned a ton of money, spent all of it and more, and are now in financial trouble. They list 19 celebrities in total, and here are some of the highlights:

Nicolas Cage - In response to the suit, Levin maintains that Cage brought about his own financial ruin by living above his means, and that he had warned the actor to scale back his lavish lifestyle. The actor's purchases included said castles, 15 palatial homes, a large collection of yachts and a fleet of Rolls Royces.
Joe Francis - The 'Girls Gone Wild' creator reportedly owes over $34 million in back taxes. Francis tells TMZ that the feds have frozen his various accounts amounting to more than $100 million and that he's planning to file for personal bankruptcy ASAP.
Mike Tyson - The famous boxer reportedly earned $300 million in his career, but it wasn't enough to support a lavish lifestyle that famously includes pet tigers. He filed for bankruptcy in 2003, owing $27 million.
Kim Basinger - Alec Baldwin's ex came across financial problems after reportedly buying the town of Braselton, Georgia for $20 million, then selling it for $1 million. Basinger filed for bankruptcy in 1993 when a judge ordered her to pay Main Line Pictures $8.1 million after backing out of a commitment to star in 'Boxing Helena.'

Other stars profiled include Lorraine Bracco, Randy Quaid, Don Johnson, Michael Jackson, Dorothy Hamill, Gary Coleman, Corey Haim, Burt Reynolds, Meat Loaf, Zsa Zsa Gabor, Wayne Newton, Mickey Rooney, MC Hammer, Willie Nelson, and Donald Trump.

To be fair, not all of the financial problems noted in this series were due to overspending. Some were simply poor management (like trusting the wrong person -- a crook in most cases) or business deals gone bad. And some of these people have popped back as well and are now doing fine. For instance, Trump seems to have fully recovered (and more) from his financial troubles.

That said, many in this group simply spent more than the tremendous amounts they earned. I know, it's hard to believe, but it can be done -- and they're proof of it.

I know I've said it a million times, but let's go for a million and one: if you earn a ba-zillion dollars and spend a ba-zillion and one dollars, you're going backwards financially. That's why I list spend less than you earn as my best piece of personal finance advice.

Mindless Spending 2: You'll Get By with a Little Help from Your Friends

The following is a guest post from Marotta Wealth Management.

Both mindless eating and mindless spending rely on our subconscious need to follow scripts to pace our consumption. Community plays a huge role in regulating our financial destiny--either a path of savings that builds real wealth or a path of spending that leads to impoverishment.

In one study cited in Brian Wansink's book "Mindless Eating," people were invited several times to a lunch of pizza, cookies and soft drinks. They were watched both eating by themselves as well as in groups of four or eight. When the subjects ate alone, researchers used a baseline that allowed them to categorize people as typically light or heavy eaters. Interestingly, when people dined in the groups, the quantity they ate changed.

Light eaters ate more in a group, and heavy eaters ate less. Both kinds of eaters conformed somewhat to the average pace and quantity of the group's consumption. Mindless spending works the same way.

If you tend to be a conservative spender, shopping in a group can easily entice you to buy more than you would normally. Conversely, if you have trouble saving money, taking along a frugal friend will help you resist. In fact, following the lead of penny-pinching friends or family can help you evaluate your own lifestyle and change the way you view money.

Millionaire couples may have very little in common except that they all answer "yes" to these three questions: "Are you frugal? Were your parents frugal? Is your spouse even more frugal than you are?" A culture of frugality builds a lifestyle of wealth. You subconsciously learn an appropriate lifestyle from those around you.

My wife and I formed our spending habits right out of college. Our first community of friends earned very little. Their lifestyle made even ordering pizza an extravagance. Combined with the example of my parents' depression-era thrift, we started saving and investing early.

In contrast, if your parents golf at Farmington or play tennis at the Boar's Head Country Club, you may struggle to maintain a frugal lifestyle. If your friends live rich, you will too. Your spending scripts will be based on comfort and convenience. You will get the deluxe model with all the features. And you will invariably buy the added service, protection and accessories.

Spending money just to socialize with friends is an especially common trap. Teenagers who work all day for minimum wage and then go out for dinner and a movie can easily end the day having spent more than they earned. Meals out in expensive restaurants with elaborate appetizers, drinks and desserts add both to the bottom line as well as to your waistline. Consider inviting friends over for potluck and a game night, and everyone might afford to send their children to college.

Spending money is contagious. If you go to the mall and a friend is hunting for the perfect purchase, it's easy to get caught up in the excitement. If you want your turn in the spotlight, you have to be shopping as well. Even if what you buy is small, the expense still depletes your finances.

And if you don't spend money or you resist going to the fancy restaurant or the full-priced movie, you risk being perceived as cheap. You may even worry that your friends won't invite you because you spoil the party.

By voicing your concerns, however, you may allow others to agree without feeling as uncomfortable. Truth be told, the person most worried about the expense is often the most secure financially. After all, wealth is what you save, not what you spend. And if your friends won't adjust to help you meet your financial goals, maybe you need different friends.

A life of country clubs, facials and galas will obligate you to spend money. If your social life includes such activities, budgeting will be difficult. Your financial stability may ultimately require developing relationships with people who are more fiscally conservative. It's your choice either to live rich or actually be rich.

Spending habits begin very early as we follow the lead modeled by our parents. In many homes, financial matters are a well-kept secret. Children are left to guess and infer from their elders actions and cryptic remarks. As a result many children learn habits that threaten their ultimate happiness and success.

George Kinder, author of "The Seven Stages of Money Maturity," asks his clients to write an autobiography that focuses on their relationship to money and the beliefs they have acquired. This exercise can help you examine your ingrained assumptions about money. Belief is powerful. As people think, so they will act.

And if everyone around you is doing something, it seems normal. Consequently, one person in a family can't single-handedly change the family's financial DNA. Deeply entrenched traditions generally will overwhelm any one family member who tries to question them.

So galvanize the whole family behind budget changes. It takes explicit communication. Children as young as four years old can contribute and learn from the process. There's no stigma attached to living within your means. If a budget isn't a team effort, then one family member will end up holding the purse strings and everyone else will be resentful.

Both spouses must start on the same page and with the same degree of humility. Every financially struggling family has one partner who believes he or she is the careful one with money and that any financial problems are the other person's fault. Most of the time, this generalization is untrue. It is relatively easy to be frugal by comparison if you abdicate all the spending decisions to your spouse. That way you can enjoy the results of spending without any of the guilt.

Serving as a role model in the family includes setting the pace and nature of spending. Learn to regulate when and how much money gets spent. Norms are set in the trenches of everyday spending, not in criticizing the number of presents on Christmas morning.

Even the most reclusive among us relies on spending scripts and norms to regulate when to open their wallet and when to refrain. If you are happy with your spending scripts, that's great. But if you are trying to change them, you need a little help from your friends.

Behavioral changes are best reinforced when you ask everyone you know to help you make the change permanent. It takes explicit thought and energy within your social network to overcome mindless spending scripts. And it takes a consistent effort for at least a month or more before new habits begin to take root.

The task is challenging but certainly not impossible. And small behavioral changes can result in building significant long-term wealth. The reward of financial peace and security is worth developing a prudent and thoughtful lifestyle.

Another Wealthy Athlete is Broke (and Nick Cage Update)

Here are a couple related situations -- people making a ton of money, spending like crazy, and going broke. The first one is former Boston Celtics star Antoine Walker. The details:

In 12 years, Antoine Walker made more than $110 million playing professional basketball moderately well. Take away taxes, throw in some Adidas endorsement money and a "NBA Live 99" cover, and he's left with, what, $60-to-65 million?

The once multi-millionaire athlete has been pursued by multiple financial institutions for unpaid debts. In fact, according to Shira Springer of The Boston Globe, "Employee No. 8" owes more than $4 million to his creditors and is facing felony check fraud charges in Las Vegas.

Just how did he get into debt with this sort of income? He spent it all -- plus some:

"[Walker] liked to move in an outsized entourage; his mother estimates that, during his playing days, he was supporting 70 friends and family members in one way or another. And speaking of his mother, he built her a mansion in the Chicago suburbs, complete with an indoor pool, 10 bathrooms, and a full-size basketball court.

Living at the Bishops Forest condominium complex in Waltham during the Celtics season, Walker turned the pavement surrounding his home into a virtual luxury car lot — two Bentleys, two Mercedes, a Range Rover, a Cadillac Escalade, a bright red Hummer. Often, the vehicles were tricked out with custom paint jobs, rims, and sound systems at considerable added expense. He also collected top-line watches — Rolexes and diamond-encrusted Cartiers."

But Walker's lavish lifestyle wasn't all "me-me-me." He was also a generous friend and teammate who had custom suits made for coaches, routinely picked up giant team dinner tabs and, when there were funds to spare, gave to underprivileged youngsters. He was basically spending money like it was going out of style.

I think that last sentence says it all -- he simply spent way too much. Antoine Walker is another example that even if you make a boatload of money, you can spend it all (and more!). That's why you need to keep control of your spending no matter what your income. Because if you can't do that, no amount of money you earn will get you ahead financially.

And here's an update on our discussion of actor Nicolas Cage. According to Yahoo, he's had a decades-long spending spree. The details:

An article in The Daily Beast says that Nicolas Cage's recent financial problems are, at least in part, due to outrageous, eccentric spending that puts even his most flamboyant fellow celebrities to shame.

If you can dream it, Nick Cage bought it: yachts, a jet, a castle, over 50 cars, over a million dollars' worth of comic books, multiple (supposedly haunted) mansions in New Orleans, two Bahamian islands, shrunken heads that may or may not have been human, and, famously, a $500000k Lamborghini once owned by the Shah of Iran. Most amusingly, Cage spent $276,000 on a dinosaur skull in a "heated auction with Leonardo DiCaprio." And though the article has details about Cage's many pets -- claiming that he kept antidote serum on his wall for the poison of his two King Cobras -- it neglects to mention at least one: Cage's pet octopus.

Ok, this guy makes somewhere between $10 million and $20 million per movie. But somehow, he's managed to spend it all (along with mis-managing some of it -- or so he claims in a lawsuit against a former business manager.) The combination of too much spending and poor money management has now left him in financial trouble -- and yet another example of the fact that if you spend more than you earn, you're going backwards financially.

One Example of Living Paycheck-to-Paycheck

In my post titled From the Ugh Files, I asked the following questions:

How does living paycheck to paycheck happen? (I've never done it, so I honestly don't know.) Is it an ever-increasing lifestyle as salaries increase? Or maybe it's an income hit that takes away all the slack in an otherwise decent budget? Or maybe something else? Anyone have any insights here?

Now since that post, I've detailed a bit more on people who live from paycheck-to-paycheck, but one reader sent me an inside glimpse of how it happened to her. I thought the story was worth sharing with all of you, so here goes:

I knew some basics of money, but I don't remember as a kid ever really having a talk about such things or having money spelled out. My parents did make me pay for my own stuff when I was old enough for a job, including my college and wedding. However I managed it I knew enough to try and not over spend, I also grew up with frugal parents. They did not spoil us with gifts and we needed to do our chores to get an allowance.

When I was in college, I had a little savings and a combination of that, work and scholarships paid my way through College. I went to a state school and lived pretty cheaply. I could have done better on a few fronts but hindsight is 20/20. I would have picked a different university, done better about applying for more financial aid and tried for internships instead of working my summer job all through college. The go to another school option would have involved moving to another state at 18 for a year so get in state residency, probably a bit ambitious for an 18 year old.

Even though I was mostly broke but not in debt in College, I was too trusting. One of the worst things I did was my choice in relationships. I got involved with people who were not good about their money and let it affect me. I would get pulled out of my default good habits. For example, a boyfriend borrowed money from me to buy stuff for his business. I put something on my card for him (He didn't have one) at some online retailer, and for whatever reason they kept letting him buy more stuff from the number on file. Once it got to $800 and no sign of him paying me back, I called my credit card company and told them I lost my card and needed a new number. This behavior was passive aggressive, I suppose I should have talked to him about it. We broke up and most of college was uneventful.

At the end of college, I ended up getting involved with some really bad news. Talk about an 8 year old in a 25 year old body. I was seduced by someone paying attention to me, I was geeky and never attracted men. Anyway, call it whatever you will but I was stupid, I moved in with this guy because "I was in love". He was totally bad news and had the typical abuser personality (I read up on this later). Although he had a good job at the time we met, and treated me nicely he got fired soon after. Somehow things ended up being my fault and I was guilted and abused physically, mentally, verbally you name it. This guy was extremely controlling. Not only that but he sucked me dry on credit and debt. I wasn't able to stand up to him with the person I was at the time. If he wanted something he bought with my money, exactly what you were talking about a possible issue for the lower 15% with an entitlement mentality. Once when I said "I don't have any more money" after he sucked up all my savings, he said something along the lines of "If you have credit and can spend it, that is money." This guy had no credit cards of his own as you can understand from a view like that, he also didn't like to pay credit cards even though he used their credit. I HAD (past tense) perfect credit up until this time and he forced me to buy all sorts of crap.

Eventually my parents were able to help get me away from him. They got him arrested, he had some misdemeanor and they told the police where he was and the nice police people locked him up, just 1 day free from him I packed my stuff and ran off with my parents. After going through everything with him, I was in enormous debt and had a bunch of collectors hounding me. I don't remember how much debt I had, but it was over $150k if I am in the ballpark. Luckily I didn't have any college loan debt and was still able to graduate despite missing the last semester of classes. I didn't know what else to do so I filed for bankruptcy. This was 9 years ago, thankfully it is almost off my credit.

After I got back to normal, I got a job, worked, lived modestly and started saving again. I managed to save up what I thought was a decent nest egg of about 6-7k and had put 4k into a Roth in E-Trade, this was my early to mid 20's. For me, working a 30k a year job I thought I was doing great. I got involved with another guy, ended up marrying him and we bought a house we could barely afford using my savings as the down payment and as a result I was living paycheck to paycheck for years. I felt chained to the house and to my husband towards the end. Although we were not stupid enough to get an ARM, we did leverage ourselves in to a house and all the extra money went to paying the house and living. Because of this, we could not save any money and any little bump could send us over. I suppose we bought into the "you are married, you should have a house" and the thought that our income would only go up over time.

My husband was also irresponsible but not as obviously as the other winners I had picked. I'll admit I was stupid, and I'll give the warning if you want to re-post this (anon please) that who you get involved with definitely has a huge financial impact. The big way my husband was irresponsible was that he decided he hated his job, quit because he thought his boss hated him, was going to fire him anyway and decided to go into business for himself. We talked this over and I said something along the lines of "OK if that is what you feel is best and what you need to do". I also put a but statement in that that he always forgot about, which is "but we need to be able to afford to pay our bills, you need to figure out how to do the self employment and get the bills paid because I can't do it alone on my income." The result is that he sat around at home, poked at selling stuff on E-bay a little, went riding with NASA to try and convince someone to give him a region and to support the house I borrowed money.

Yelling at him about the money flow issue didn't work, telling him we needed to sell the house because of cash flow issues didn't work, begging him to get a job, do consulting, do anything didn't work. In general talking to him rationally about this didn't work, there was always an excuse. I still don't entirely understand what was going on in his head, to me numbers are numbers, if there is less coming in than going out it is a problem. Perhaps because he didn't feel it till the end the money problem wasn't real. I ended up taking the hit on borrowing to keep the house from being foreclosed but even when I was borrowing and had "money" I felt it, the debt and obligation felt like walking around with 100 lbs on my back. Some of my favorite excuses were "working a low paying job isn't worth my time", "but I thought you would make a lot of money at a better job after you finished your Masters and we would be OK." and something along the lines of "You said I could do this" in regards to quitting his job, forgetting my but about being able to afford him jobless. He also said something along the lines of I was a looser because I couldn't get a better job.

Yes, I could have done better getting a job, but as a recent college graduate I didn't know a lot of the things you need to do to separate yourself from the pack, also I was tied to a narrow location due to him and the house. I did better with a wider search, I'm in a different state than the one my former husband and house occupy. Hopefully I'll do better next time I have a job search, more self confidence and better presentation of why I'm such a hot cookie you would be lucky to have me working for you. I also realized after going through the third guy with these types of traits that I needed to do better at picking a relationship next time, I went to a therapist to help with that issue.

Although it really does not matter at this point, I derive some satisfaction from knowing I was right and he was wrong about the money part. It is cold comfort as I don't see why he couldn't do the math, we were spending more than we earned and this was bad. Honestly, living with him unemployed and dragging me down financially was the most sustained stress I've had in my life. I was constantly stressed and felt trapped by the house, that my husband was not working, and I couldn't sell the thing by myself (two to sell!). If we had sold the house when I wanted it would have been near the peak and I would have been able to afford to support us both in a small apartment. My best guess is he felt entitled to what he wanted. At this point I am truly thankful I'm divorced and without children and probably lucky he didn't listen to me. If he had, and we had sold the house when I first wanted after he quit his job in 2006 I would probably still be married to bad news.

Long story short, I ended up with a lot of debt that I have been repaying from my marriage. I divorced him after I made it abundantly clear to myself that he loved himself more than us or me, and he wasn't willing to be what I considered to be a responsible adult. After getting divorced I got my finances into high gear, I was determined to save for retirement and get an emergency fund. Two years later I have 10k in an emergency fund (liquid, once I get it o 6 mo worth I plan rolling 6 mo CD's with 1 mo at a time), 25k in my 401k from work and my poor old E-Trade account is about 2.5k after he took his cut from it. I have approximately 5.5k of the debt remaining giving me a net worth of about 33k. I could pay off the rest of the debt in one fell swoop to avoid paying the interest on the loan, but I think it is more important to have the emergency fund as a cushion. I also track my expenses in a worksheet. I bought Quicken and tried it a few times to try and automate expense tracking and will see how that works instead of the spreadsheet. I also donate some money from every pay check to charity directly through work and I donate to a local women's shelter. I have been matched up with a single woman and will be getting her gifts for Christmas. Honestly, I probably don't donate enough, I am lucky not to be in a terrible situation personally and financially.

In summary, I got into trouble because of relationships and lifestyle inflation. When left to my own devices I am fine so I get back on track OK, meaning in my normal financial habits I don't spend more than I earn.

I think I've learned from this, I live in a 2 BR apartment now that I share to try and keep costs down although I can afford a 1 BR by myself, where I live it would likely be at least $300-600 more a month for a 1BR or more depending on how good of a deal I got. I spend some of the extra money on myself and have fun, but save some of it also and use a 401k contribution to force a minimum savings every month. I also save by having $600 come out of my paycheck to the emergency fund every month. I could always do better cutting expenses, but I don't feel the need to frugal the fun out of my life. This is different than before where I felt guilty whenever I bought something plus feeling angry at my husband when I was living paycheck to paycheck. Truly, the learning that I was making me unhappy and I was letting him was great. Once I decided to take control of my life I was and have been much happier.

How to Be at the Bottom of the Financial Barrel

The past three days I've talked about the book The Difference: How Anyone Can Prosper in Even The Toughest Times by Jean Chatzky. We reviewed the 20 factors that separate the wealthy from the not-so-wealthy, have detailed who the wealthy actually are and how that got that way, and have covered the next-highest group, the Financially Comfortable, and what got them to their lofty position. Today, we'll cover the majority of people in the US -- those barely treading water financially and those in the midst of drowning.

The book classifies these two groups as Paycheck-to-Paychecks (54% of the population) and Further-in-Debtors (15% of the population.) We'll cover each of these groups separately, starting with what makes the Paycheck-to-Paychecks what they are.

The book says that both personality attributes and financial habits contribute to locking the Paycheck-to-Paychecks where they are financially -- living from one paycheck to another, barely getting by, and one financial problem away from money trouble. This said, the book notes that the habits are the keys -- what really locks them into a dismal financial life. Take a gander of what goes into making a Paycheck-to-Paycheck person:

· Overspending is the key reason that people slip from a position of financial security into a paycheck-to-paycheck existence. It's a vicious cycle. Once you overspend, it's tough -- if not impossible -- to tap into the habits that move people into the range of the financially comfortable. Once you overspend, you cannot save habitually. Credit card debt is a savings killer, and only 22% of paycheck-to-paychecks can pay off their balances every month.

· Paycheck-to-Paychecks have investable assets, on average, of $83,000. That number is skewed by what I like to call the "six-figure Paycheck-to-Paychecks." These are the high earners who still can't seem to make ends meet. The folks who feel broke despite the fact that they're bringing in $100,00-plus a year. Fully half of paycheck-to-paychecks, however, have less than $25,000 to put to work to grow their financial futures.

And here are a few tidbits that typify the Further-in-Debtors -- people who are already in a hole and are tunneling down further:

· Less than 1/4 save anything each month or make a contribution to a retirement plan.

· 56% have less than $10,000 in investable assets.

· They're both unhappy and insecure.

· Nearly half get physical symptoms like insomnia, heartburn, stomachaches, or headaches when they think about their finances.

The book goes on to say that Further-in-Debtors blame bad luck for their financial situation. The author blames "hubris," commenting the following:

The Paycheck-to-Paychecks overspend and know they're doing something that's not in their own best interest. The Further-in-Debtors overspend without a thought because they feel entitled. They deserve the nights out, the new clothes, the latest technology. How do I know? Our research gave me a peek into their budgets. A full third devote a decent chunk of their budget to entertainment or extras -- nonessentials as far as I'm concerned. Far fewer devote any money at all to saving for tomorrow.

Here are my thoughts on this subject:

1. I often get ridiculed for saying that spend less than you earn is my best piece of financial advice. After all, the hecklers note, this is "common sense." It's not common sense for 69% of the US population!

2. Yes, if you're overspending, you don't have any surplus to help build your net worth. The only solution is to create that surplus by increasing your income, decreasing expenses, or both.

3. Notice how high-earners can also be in a less-than-stellar financial group? Yep, because even if you make $100k per year, if you spend that much or more you're going nowhere financially (except perhaps backwards.) We've profiled many of these people over and over again here.

4. On the flip side, wealth doesn't require a high income. Even if your income isn't as high as many others, you can still save if you simply spend less than you earn. It works!

5. The Paycheck-to-Paychecks and the Further-in-Debtors are doing the opposite of what it takes to get rich. Is it any wonder they are not making financial progress?

6. Interesting to see how money problems impact people's health. Maybe I should write a piece on "how to become healthy by becoming financially secure."

7. The entitlement (or "I deserve it") mentality is alive and well in the US today. Unfortunately it's invaded our government big-time over the decades and hence we overspend as a nation since everyone "deserves" certain "rights." (Certainly there are people that need legitimate financial help to survive, but this group is much smaller than the one that actually gets aid, IMO.) If the US government was a person, it would be a Further-in-Debtor. Interesting point to consider.

From the Ugh Files

Here are some statistics I found recently that give us a lot of bad news on how people are managing their money. The highlights (or lowlights if you prefer):

· 61 percent of workers report they always or usually live paycheck to paycheck to make ends meet. This is up from 49 percent last year and 43 percent in 2007.

· 30 percent of workers with salaries of $100,000 or more report that they too live paycheck to paycheck, up from 21 percent in 2008.

· To get by financially, 21 percent of workers say they have reduced their 401(k) contributions or personal savings in the last six months.

· Twenty-three percent of workers who earn six figures or more report that they have also reduced their 401(k) or savings.

· Thirty-six percent of workers say they do not participate in any programs such as 401(k), IRAs or retirement plans, up from 31 percent in 2008.

· One-third of workers (33 percent) report that they don't put any money aside into their savings each month, up from 25 percent in 2008.

· Thirty percent set aside $100 or less per month for savings and 16 percent save less than $50.

Ok, so here's what I get from this:

1. The majority of people are on the brink of big financial trouble. One month without a job and they're in deep do-do.

2. A large portion of people who make a great salary are in this boat. It's unbelievable to me that 30% of people who make over $100k (or more!) are living paycheck to paycheck. Maybe they live in ultra-expensive cities? If so, that's just another reason to move.

3. Reducing savings is never a great option. Isn't there something else that can be cut (like cable TV, expensive vacations, etc.)?

4. Obviously the economy has a part to play in these numbers since things have gotten worse since the last survey. That said, the results weren't all that rosy in 2007 and 2008, were they?

The Biggest Barrier to Becoming Rich

I always like reading what Knight Kiplinger has to say. Why? Because 99% of the time, he and I are on the same page financially. For instance, here's a thought of his that Kiplinger's recently ran that I couldn't agree with more:

The biggest barrier to becoming rich is living like you're rich before you are. Why? Because all that discretionary spending -- the chic apartment, frequent travel and restaurant meals, consumer electronics, fancy clothes and cars -- crowds out the saving that will enable you to be rich someday.

He goes on to talk about how people spend so much on lavish lifestyles, then wonder why their net worths aren't increasing and why they can't even do the basics like save for a house. The reason is that they're spending their savings! Duh!

As I've said before, the first step to becoming rich is to spend less than you earn. If you can't do this, no matter what your income is, you won't be making any headway financially.

BTW, is anyone starting to connect the dots on this advice? Seems like a lot of reputable people are giving it out these days.

Another Case from the Clueless Files

Why are all these people from Pittsburgh? Sheesh, it gives one of my favorite places a bad name.

Anyway, here's a story about a couple that's been "hounded by debt collectors". Here's a quick review of their great personal finance decisions:

After paying about $12,000 -- using their savings and credit cards -- for the wedding and reception in May 2008, they settled into married life with $10 in the bank and thousands in debt. The weeklong honeymoon in Virginia Beach didn't seem extravagant compared with the exotic getaways in St. Lucia and Bahamas some of their friends had enjoyed.

After graduating with a bachelor's degree in liberal arts and $88,000 in private student loans, she took a job as a home health aide making between $300 to $500 every two weeks. She thought it would be temporary while she planned for the wedding.

Three years later, she's still underemployed. She has never made a full payment on her $700-a-month private student loan. Her mother makes the $160-a-month payments on a separate federal student loan.

Meanwhile, Mr. Obringer, 29, was laid off from his $64,000-a-year job in April. The couple has no health insurance, and they are $500 short each month even before buying groceries or gasoline for their cars.

In addition to the student loans, both of them have car loans of about $6,000 each. Mrs. Obringer has another $6,000 in credit card debt, and Mr. Obringer has about $5,000 in credit card debt, a $650-a-month mortgage and a $250-a-month payment on a home equity line of credit.

The piece is written as a "here's why we should feel sorry for this couple" sort of article, but when you look at the facts, they made some really poor financial decisions and are to blame for their own mess. For instance:

1. They spent $12k on the wedding and reception. I bet that money would come in handy now, wouldn't it?

2. Looks like the honeymoon in Virginia Beach was on top of that.

3. "Home health aide" and "$88,000 in private student loans" do not compute. She didn't match her expected earnings with the amount she borrowed (translation: she borrowed too much) and now she's in a world of hurt.

4. Ok, he lost his job -- that wasn't something that was his fault (probably, but who knows?) Still, if he was making $64k before, can't he find something for $40k? Seems like this would be better than doing nothing.

5. Look at all that other debt. Ugh -- there's no control here. They've been spending like wild.

In the end, I actually do feel sorry for them because they are clueless. Obviously, no one taught them the basics of personal finance and they are now suffering for it. That said, did they ever stop and think about how much they made versus how much they spent? It seems unlikely that they considered it at all until it was too late.

Wealth Doesn't Require a High Income

I've been reading Grow Your Money!: 101 Easy Tips to Plan, Save, and Invest, a great personal finance book IMO. Over the next week or two I thought I'd share parts of it with you and add my comments to what the author says. Today, I want to highlight a paragraph where he refers to studies about millionaires and says the following:

Wealth doesn't require a high income. Most millionaires don't have million-dollar incomes. They accumulated their wealth the old-fashioned way -- by living beneath their means and giving their money time to grow.

I'm a believer in this general idea (that people can get rich without a high income), but to be fair I need to point out that the statement above doesn't make the point clearly. It says that "wealth doesn't require a high income" and that "most millionaires don't have million-dollar incomes", which can be contradictory. For instance, what if we found out that most millionaires had incomes of $200,000. This certainly isn't a million-dollar income, but it is a high income. Maybe I'm being picky, but I wanted to point out the discrepancy before someone else did. :-)

That said, I'm 100% with him that spending less than you earn and giving your money time to grow are the keys to becoming wealthy. Of course it's a lot easier to spend less than you earn while making $100k per year than it is when you make $50k per year (that's why I focus so much on growing and managing your career -- so you can maximize your earnings), but anyone that makes a decent income (like $50k+) can do very well by applying the two principles above. We've seen it work again and again and again.

Why Do Some Wealthy People End Up Broke?

US News covers the recent Annie Leibovitz debt problem that I highlighted awhile back. At the end of the piece they grapple with the question of why so many famous, high-earners spend so much more than they earn and eventually go broke:

In all three cases, the celebrities in question spent far more than they earned, and eventually, those habits caught up with them. What is it is about fame that seems to render people's financial decision-making skills inoperable? Do they feel the need to keep up appearances and live the high life, even when they can't afford it? Or are they just as likely to go into debt as the rest of us, it just happens to them on a bigger scale?

I think it must be a little of both. Most people can't get so deeply embroiled in debt because lenders refuse to give them so much money. In Jefferson's case, his reputation kept creditors from coming after him, and American Express made a special exception to get Leibovitz, whose application had previously been turned down, a credit card. At the same time, celebrities live in public, and might feel more pressure than the rest of us to live large. But wouldn't it be great if they didn't, and if they showcased their frugality, instead?

Here's my take on what's going on:

1. Most of these people are excellent at one thing (art, politics, sports, entertainment, etc.) -- and this one thing makes them a TON of money.

2. What they aren't excellent at is money management. In addition, these people seem to always hire "advisors" that make poor financial decisions (usually investments) for them.

3. They think that the money is flowing in endlessly, that it will always flow freely, and they spend accordingly.

4. Then something happens -- the sports star is hurt or retires, the singer isn't as popular as before, or they simply spend so much over what they make that someone (like a bank) calls in the loans.

5. Now, they're in a world of hurt financially.

Anything I missed? Agree or disagree?

Another Story of Too Much Spending

We've covered this story a bit in the past, but it's coming up again (I heard it talked about recently on NPR). It's a classic case of someone making a boatload of money, spending it all and then some, and having tough financial times as a result. The details from NPR:

A New York-based company that loaned $24 million to photographer Annie Leibovitz is now suing her, claiming she has failed to pay the associated fees.

"She has a contract with Vanity Fair that's worth supposedly tens of millions of dollars during the course of her lifetime."

So, she has a very high income, but is in the process of defaulting on a $24 million loan. How did this happen?

Details are a bit sketchy, but here's what the NY Times has said:

Friends and colleagues said that despite her many successes, Ms. Leibovitz has been shadowed by a long history of less than careful financial dealings. Public records show that in the last two years, Ms. Leibovitz has faced tax liens of $1.4 million and two lawsuits claiming that she has not paid more than $700,000 in bills for photography services.

It's not clear what's exactly going on (for instance, she's disputing the lawsuit) but here's what appears to be the case to me:

1. She makes a ton of money every year. No one is questioning this fact.

2. In addition, she has a very valuable asset in all the photos she's taken in the past.

3. She appears to live a modest lifestyle personally.

4. Where she's not great is managing her business finances. They appear to be out of control on several fronts.

5. As such, she's had to borrow against her biggest asset to free up cash.

6. Since then, she's kept up the bad habits and has gotten into worse trouble.

7. Now there's nowhere else to turn other than possibly outright sale of her photo library.

8. Even then, if she keeps burning through cash at the rate she is, she'll be bankrupt sometime soon.

In the end, no matter what the reasons, the points remain that:

1. She has a high income and big assets.

2. She's spending all her income plus some, which is forcing her to take on debt.

3. As a result, she's going backwards financially.

The reason I bring up this story is because I often hear the comment that spending less than you earn is both 1. too simplistic and 2. not the key to financial health (they say making more money is.) While the concept may be simple, it's also a powerful one and is the foundation to solid finances IMO. If a person can not spend less than they earn, no matter what their income, they'll be going backwards financially. But if someone can spend less than they earn -- especially if they have a low income -- then they can REALLY grow their net worth as they keep spending in check while concentrating on growing their income. This is why I list spending less than you earn as priority #1, and making more money as financial priority #2.

God's Stimulus Plan and Living Below Your Means

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

Here's a piece by Robert Morris (author of the excellent book The Blessed Life: The Simple Secret of Achieving Guaranteed Financial Results) called God's Stimulus Plan. In it he says that for Christians, God is our source of life, not the economy, not the government, and not our money.

You can click through on the link above and read the specifics you like since today I won't be covering most of it. Instead, I wanted to highlight what he says well down the article about what you can and should be doing to get control of your finances. His thoughts:

Live below your means. Most people mistakenly think they understand what it is to live below their means, but I have news for them: Living on 90 percent to 95 percent of your income is not living below your means.

Truly living below your means requires living on about 70 percent of your income. For example, if you tithe 10 percent, put 10 percent in savings, put 10 percent in retirement or other investments, and give something in offerings above your tithes, you’re going to be living on 60 to 70 percent of your income at the highest level.

Yet rather than living below their means, many people live above them.

Because I’m a pastor and love people, my heart is burdened when I meet believers who are experiencing financial difficulties. But when I see the homes they’re living in, the vehicles they’re driving and the clothes they’re wearing, I know many of them are supporting their lifestyles by living entirely on credit. They’re digging a hole of debt for themselves that may take years to dig out of.

Here are my thoughts on this subject:

1. I love the advice. It's the best advice I can give anyone.

2. He's right about the percentages -- you have to be way under 90% to be living below your means. We are roughly 1/3, 1/3, and 1/3 -- living on 1/3, saving 1/3, and giving 1/3. It fluctuates a bit from year-to-year and it's not exact, but these are decent ballpark numbers.

3. He's also right about how many people live. They get all the toys they need -- a nice big house they stretched to get into, a couple new (leased) cars, all the electronics someone could want (big screen TV, iPods, computers, gaming systems, etc.) -- then round these out with things like full cable TV, cell phones, and nice, expensive vacations every year. Some (but not most) kick it into over-drive with something like a boat or a summer vacation home. Then when asked about giving, they say they "can't afford to give." I'm not making this up. I've counseled people and seen their budgets. I've also asked others to donate to charitable causes. And I know the comments I get here. For most people, giving is an after-thought and something done if there's anything left over after they spend like crazy (which there usually isn't.)

A couple verses to end this post. Let's start with my favorite one about spending less than you earn found in Proverbs 21:20:

In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.

And a good one about giving/helping others (to the poor in this case) from Proverbs 19:17:

He who is kind to the poor lends to the LORD, and he will reward him for what he has done.

I Stand Corrected

Found this piece this morning that says Michael Jackson's net worth in 2007 was $236 million. So he either died wealthy or spent a TON of money in two years (who knows, maybe he had stock losses too). That said, it seems unlikely that he ended up $400 million in debt, though the piece says he had little cash on hand and was known to go on lavish spending sprees, certainly not the picture of financial restraint.

How to Spend More than You Earn When You Make Millions

Here's a story a reader sent me about past NFL quarterback Bernie Kosar and how he's fallen on tough times. Despite the fact that he's made a boatload of money, he recently declared bankruptcy. Yes, you can spend it all.

The article doesn't say how much he made during his career, but it leaves hints that show it was a good amount. For instance:

Kosar was one of the smart ones. He graduated from the University of Miami in 2 ½ years. Smart enough to help build several businesses after football, with a 6 percent interest in a customer-service outsourcing company that sold for more than $500 million.

How much has he lent teammates over the years without being repaid? ''Eight figures,'' he says.

Friends and family? ''Eight figures,'' he says.

Charities, while putting nearly 100 kids through school on scholarships? ``Well over eight figures.''

Ok, so he made enough to hand it out without much problem. But in addition to being generous, he was quite a spend-thrift. This sentence summarizes the situation:

And even the live-in maids had assistants.

Plus, he's surrounded himself with people with people that seem less than honest:

He says financial advisors he loved and trusted mismanaged his funds, doing things like losing $15 million in one quick burst. There's a $4.2 million judgment against him from one bank. A failed real-estate project in Tampa involving multi-family properties. A steakhouse collapsing with a lawsuit. Tax trouble.

And despite the fact that he's a smart guy, it seems he didn't really know or care much about handling his own money:

His finances have never been something he controlled. Dad would handle the bills; the son had to handle the Bills.

And now, to top it off, there's an expensive divorce:

He says the divorce has cost him between $4 and $5 million already.

''That's just fees,'' he says. ``And they keep coming. Attorneys charge $600 an hour just to screw things up more.''

So, despite the fact that he made tens of millions and had some good business dealings that brought him even more, he managed to go through all of it. You certainly can spend more than you earn, no matter how much you earn. This story is simply another one to add to my ever-growing list illustrating this fact.

But at least Kosar still has a good attitude and he had a fun ride while it lasted:

''Let me tell you something, bro,'' he says. ``It was all worth it.''

More High Income Celebrities Who Spent More than They Earned

Here's a new list of celebrities who spent more than they earned to add to the one I already have. Here are the highlights on this group that can't control their spending:

· Mick Fleetwood - Filed for bankruptcy in 1984. He blew millions on real estate, failed restaurants and drugs. Fleetwood estimates he spent $8 million on cocaine.

· Meat Loaf - Meat Loaf's 1977 album "Bat Out of Hell" earned him millions of dollars, but his managers were stealing most of it before he could see it.

· TLC - The album ended up selling more than 11 million copies, but it wasn't enough to save the band from bankruptcy. They were on the hook for $3.5 million of debt from Lopes' arson, Watkins' medical bills (she suffers from sickle cell anemia), and a bad record deal.

· Marvin Gaye - The Motown legend lost his fortune like a lot of dudes...in a divorce. He filed for bankruptcy in 1979.

· Willie Nelson - Long before Wesley Snipes decided he didn't need to pay the IRS, Willie Nelson was dodging the tax men.

· Cyndi Lauper - Cyndi Lauper got her bankruptcy out of the way before she made a bunch of money.

· Andy Gibb - Gibb was drug-addicted and reduced to playing gigs in hotel casinos. He went broke in 1987 and died within the year.

· Isaac Hayes - Despite the sales, Hayes' record label, Stax, was in dire financial straits and not paying him. Hayes, in turn, was not paying the bank that loaned him money.

· Tom Petty - Tom Petty's 1979 bankruptcy became a negotiating ploy against The Man.

So, what are the few factors that killed these people's net worths? A summary:

1. Bad decisions. Doing drugs and trying to cheat the IRS are not good net-worth-building moves.

2. Poor relationships. Divorces, setting boyfriend's home on fire, etc. is usually not a pathway to financial success.

3. Trusting the wrong people. If you make a ton of money but your manager and/or record label don't manage it properly, you're in trouble.

Still, in the end, it all comes down to two factors:

1. They made a bundle of money.

2. They spent all they had and/or made terrible financial decisions that wasted their fortunes.

As I say, even if you make a ba-zillion dollars, if you spend a ba-zillion and one dollars, you're going backwards financially. These people are certainly examples of this.

The King of Debt

I really liked Michael Jackson (the younger, pre-creepy version.) His record Thriller was sensational and I remember listening to it over and over again. I think it was the reason my parents got me my own phone -- hoping I'd retreat into my room and talk to friends rather than play that record for the 17th straight time that day. :-)

Unfortunately, we all know how the story progressed from that time. So much talent. So much strangeness. Such a waste. And such a mountain of debt.

How much did Michael Jackson owe? A boatload according to Fox News:

Yet after selling more than 61 million albums in the U.S. and having a decade-long attraction open at Disney theme parks, the "King of Pop" died Thursday at age 50 reportedly awash in about $400 million in debt, on the cusp of a final comeback after well over a decade of scandal.

$400 million in debt. That's a hefty sum for someone who sold a ba-zillion records, owned rights to the Beatles' songs, and had a 2,500-acre primo home in California.

How could someone with so much spend it all PLUS another $400 million? Easy. He simply spent more than he earned. Like I say, even if you make a ga-zillion dollars, if you spend a ga-zillion and one dollars, you're going backwards financially. Michael Jackson spent money left and right, as fast as he could, so that while he lived his life as "The King of Pop", he died as "The King of Debt."

This is why I say that spending less than you earn is my most important piece of financial advice. Because you can always spend everything you make and more if you can't learn to keep your spending under control. And if you can't control it, then you're not going to make financial progress no matter how much you make. There are examples on both sides of this equation: people who have a ton and still spend more than they have and people who have little and yet do very well financially. The key is always controlling or not controlling your spending.

Of course, it's best to do both -- grow your income AND keep spending in check -- but spending less than you earn is fundamental. Unfortunately, Michael Jackson's life is a sad illustration that if you break this principle, you become broke.

Best Advice for Graduates

The Wall Street Journal asked several prominent people about the best and worst financial advice they received—and their guidance for this year’s grads. Here's what each of them said their best advice was for those graduating this year:

· David Bach, author of the best-selling FinishRich books - Don’t give up if you’re not finding a job. Ask someone for an informational interview. At the meeting, get three more names of professionals to meet. That’s how he eventually landed a job.

· Paula Deen, restaurant owner, author and Food Network host - Get all the experience you can and be persistent.

· Robert Kiyosaki, businessman and author of the best-selling “Rich Dad, Poor Dad” books - If you’re going to be an entrepreneur, find a successful one who will teach you.

· John W. Rogers Jr., chairman and CEO of Ariel Investments - You want to be known as the best teammate in whatever organization you join. Look out for your teammates every step of the way. Be a good listener, teammate and friend, and live up to the commitments you make. Whatever you promise you’re going to do, you’ve got to do that.

· Mary L. Schapiro, chairman of the U.S. Securities and Exchange Commission - Live within your means. People need to know how to manage debt so don’t borrow without understanding the implications of the debt and how you’ll repay it.

· Carrie Schwab-Pomerantz, president of the Charles Schwab Foundation - Live off 90% of your income. Save the other 10%, first as a cash cushion. “When you’re young you don’t need all the bells and whistles in life,” she says.

Not bad advice, huh? All of these basically boil down to two thoughts: make the most of your career and spend less than you earn. Hard to argue with those two, isn't it?

BTW, this is not only good advice for graduates, but for all of us.

Are You Tempted to Spend MORE When Money's Tight?

The following is a guest post from Dr. Bonnie Eaker Weil.

If you answered yes to the above question (or thought you might be inclined to answer yes, but didn't really want to admit it to yourself) you're not alone. A Stanford University study identifies one in twenty Americans as compulsive shoppers, and a recent survey determined that 80 per cent of women would go on a spending spree to cheer themselves up.

This survey, conducted by Professor Karen Pine, from the University of Hertfordshire, concludes what some of you with one-too-many pairs of “retail therapy shoes” may already know: that some people use shopping as an emotion regulator, “a way of anesthetizing themselves to negative feelings or dissatisfaction with life.”

So here's what it boils down to – some of us are actually spending MORE during this recession. Or at least, spending more in proportion to our income. In other words, if we've lost a job we may not be spending more, dollar for dollar, than we did when we had a full time job. But if you fall into the above-mentioned one in 20, or 80 per cent, you could be spending more, proportionally to what you're bringing in, than you were before we hit this financial crisis. That's sobering.

But I guess the good news is: if you find yourself wrecking the budget - or even fantasizing about wrecking it! - when you should be more concerned with keeping money matters in check, you're not alone. I'm referring to this phenomenon as a “pent up purchase.”

This type of purchasing is actually allowing us to participate in different stages of the grief process: anger and denial. Out of denial, Americans have awakened to a new emotional response to the economic collapse. We might be in denial about our financial situation, or we might be really upset about it. Either way, we're looking for a way to feel better about it. Of course, our rational, calculating minds know that the way to feel better about a tight budget is not by spending more! But in the moment, it makes sense: our addiction to spending to get that “high” is a common response to spur dopamine production (feel good hormones).

If you're indulging in spite of your budget – or worse, because of it – you may be headed down a dangerous path that will be unhealthy both financially and emotionally. Work to re-wire the pattern of thinking that leads you to shopping, opting instead for spending time with friends, trying something new like taking a class, head to the gym, or use your energies to volunteer. Work to divert your energy and attention into something positive – the possibilities are nearly endless!

How to Save $10k in 10 Months While Making a Low Wage in an Expensive City

I get all sorts of "I can't save that much" comments quite often here. That's why I post examples of how people have gotten rich (or at least well off) despite the fact that they didn't/don't earn very much money. The key? Spending less than they earned. And if they can do it, so can others (including you, Mr. Excuse-opotamus.)

Here's yet another example of how someone can significantly grow their net worth if they're willing to control their spending. There are the details:

He saved $10k in 10 months.
His monthly pay was $2,400 (I'm assuming this was take-home pay)
He lived in LA, a very expensive market

Here are the steps he took to do this:

#1: I Tracked Every Expense
#2: I Opened a High Yield Savings Account & Paid Myself First
#3: I Saved on Rent & Utilities
#4: I Saved on Food (I bagged my lunch to work, I had a meal plan, I followed the deals, I ate out sparingly.)
#5: I Saved Huge On the Commute
#6: I Saved On Entertainment
#7: I Read Personal Finance & Travel Blogs Daily

So, what's the "secret" to his success? He controlled his spending. He did all he could do to create the biggest gap possible between his earnings and his spending. Note that he didn't earn any more money -- he just cut expenses to generate the largest amount of savings possible.

But he had to make sacrifices. It wasn't easy. But he had a goal and the discipline to make it happen. Good for him.

I can hear the nay-sayers already -- "how do you know this is true?" I don't. How do you know it's not true? besides, it doesn't really matter, the point is that if you can create a big gap between your earnings and your spending, you can save a ton of money and dramatically grow your net worth.

How can you do this? For some specifics, see these posts:

· 11 Great Ways to Earn More Money

· The 10 Most-Hated Money Saving Tips

· A Simple Example of Why Spending Less than You Earn Works

· And Yet Another Millionaire Says the Same Thing

· How to Have a High Net Worth

· More Thoughts on How to Have a High Net Worth

· How to Make Money and Save Money

25 Traits Of The Not So Well To Do

I LOVE this list from Free from Broke. It's listed as "25 traits of the not so well to do", but to me it's more of a "you're probably poor the more you do/have of these things" list. But either way, it's a great list IMO, really a tribute to people paying for stuff they really can't afford (and thus the reason why they aren't so well off.) A few of my favorites:

6) TV in every room (with cable).

11) Tons of gifts for the holidays when you can’t afford it.

13) Don’t take care of their stuff.

14) Tons of gadgets.

17) Doesn’t budget.

20) Hates job but won’t do anything about it.

22) No financial priorities.

25) No personal responsibility.

In short, this is a list of people who don't make the time and effort to manage their finances and they likely don't have the discipline to carry out a plan if they did develop one. As a result, their spending is out of control and they're on the train to financial nowhere Ville. Now I'm not saying you need to save every penny, but you have to have a bit of control!

It's a shame, really, because becoming wealthy (or even financially stable) doesn't take that much time, effort, or discipline. If you have just a small amount of these three, you can follow a few simple steps that will ultimately make you wealthy.

Then again, a TV in every room with cable is hard to beat, isn't it? ;-)

A Simple Example of Why Spending Less than You Earn Works

It's simple math really, spend less than you earn and you have a surplus and are growing your net worth. Spend more than you make and you're going backwards no matter what else you do. This is the reason that my best piece of financial advice is to spend less than you earn. It's also the first step to becoming rich (or growing your net worth if you prefer.)

Today we have an excerpt from Trent Hamm's free ebook Everything You Ever Really Needed to Know About Personal Finance On Just One Page that deals with this subject. It's a simple example that gets the point across very quickly:

In the end, this is the fundamental rule of personal finance: spend less than you earn. It's the one point that comes up time and time again in almost every personal finance book you read or talk that you hear.

It's easy to see it when you look at each side of the coin. Let's say you earn $30,000 a year and you spend $31,000 a year. That extra $1,000 has to be borrowed, often from sources like credit cards. The following year, in order to maintain your lifestyle, you still spend $1,000 a year more than you make, plus you spend $300 more than that just making the minimum payments on your debt, leaving you a total of $2,200 in the hole (the $1,000 extra you spent the first year plus the $1,000 extra you spent the second year plus the $300 extra you spent repaying that debt minus the $100 you actually managed to pay off). The debt builds - after the third year, you’re $3,600 in debt. It keeps growing and growing and growing until that debt is eating up all of your income, leaving you in misery.

On the other hand, let's say you only spend $29,000 a year - only $2,000 less in spending. That extra $1,000 goes into your savings account and earns 3%. The next year, you drop another $1,000 in the account and now you have $2,030 in there. The next year, another $1,000, bringing you to $3,060.90. That money builds up and soon you have a house down payment or the seed money to start the small business of your dreams - or even something as simple as the ability to easily pay for a car repair without your heart skipping a beat.

The difference between these two stories is only $2,000 a year. There are two avenues to achieving this goal: spending less and earning more. By working on either (or both) of these areas, you can increase the gap between those two numbers - and that gap is your ticket to freedom. The harder you work on either spending less or earning more, the bigger that gap will become and the quicker that train to your dreams will arrive at the station.

As I've documented again and again and again (and even more than that), these same principles apply even if you're making a boatload of money. If you spend more than you earn, you're going backwards financially -- period!

And Yet Another Millionaire Says the Same Thing

I'll probably get a ton of flack for this post (as I do on many around this subject), but at some point people need to start listening to people who are where they want to be. For instance, if you want to be a millionaire (or multi-millionaire), who do you listen to, someone who's not even close to that goal or someone who's already surpassed it and knows what works? Seems like the answer to that is pretty clear to me.

That's why I loved this post -- it's an interview with a real life millionaire -- someone who isn't speculating on how to get rich, but someone that is already rich. It's really great stuff IMO.

And just to set the scene, this guy never made a bundle of money. He was a shop teacher at a junior high school, a carpenter, and worked in the juvenile court system. Certainly not a recipe for making a fortune. Sure, his family was rich, but there's no indication he got any of that wealth. Nope, he just applied simple principles over time and became rich. Oh, and he retired at the age of 58.

What's his advice for becoming a millionaire? Here are the highlights -- all quotes from this man:

· The real secret is to spend less than you earn. I don’t care how much you earn, you spend less than you earn. Spend less than you earn. This is true whether you’re on welfare or a millionaire.

· No smoking or alcohol consumption. This has nothing to do with morals and health — okay, maybe health — it’s all about the money.

· No-load mutual funds are the only way to go. To give anybody 3-4% of your money off the top is insane.

· Volunteer to help others.

· I can buy whatever I want. Not need, but want. I just don’t want very much.

· Wealth is created by investing money, not by working longer and harder.

He also shares various ways to save money. It's obvious that he's frugal, and that he's built his wealth from simply making sure that the difference between what he's made and what he's spent has been as big as possible.

A few more thoughts from me:

1. Told you.

2. Funny how this guy who's never made a ton, contrasts so positively (from a wealth standpoint at least, though probably in many other ways as well) with those we assume are rich.

3. Index funds are as no-load and least expensive as you can get.

4. Again, a wealthy person talks about giving back. Must be a relationship between giving and wealth, huh?

5. The road to wealth really is pretty easy.

Ten High Income Celebrities Who Spent More than They Earned

My spend less than you earn category is becoming testimony that no matter how much money you make, you can spend it all. A few examples of this come from Nicolas Cage, athletes, Annie LeiOvitz, and a bunch of others.

Now you can add the following to the list -- 10 celebrities who are poorer than you:

Willie Ames
Kim Basinger
Anita Bryant
Gary Coleman
Corey Haim
MC Hammer
Don Johnson
O.J. Simpson
Mike Tyson
Michael Vick

If you like, you can click through and read all the details on each of these, but they all have a very similar story:

1. They made a bundle of money.

2. They spent all they had and/or made terrible financial decisions that wasted their fortunes.

As I say, even if you make ba-zillion dollars, if you spend a ba-zillion and one dollar, you're going backwards financially. These ten people are surely evidence of this fact.

Another Example of Getting Rich on a Low Salary

Get Rich Slowly points to a story of a social worker that amassed a $1.4 million net worth. How did she do it -- amass a fortune way above what most Americans will ever own while earning an "average" salary at best? A few of the details:

She drove a 30-year-old car, watched an ancient TV, lived four decades in a house bought with cash in 1969, and just kept stacking charity donation envelopes in her sun room, until, once a year, she sent them all in.

[She] saved because spending more just didn't occur to her.

She dressed plainly. She wore costume rings. She dyed and permed her own hair.

The house furniture was her parents'. She resisted replacing the old TV and icebox. And when she went out with friends, they nearly always split the bill.

When she died, coupons waiting to be clipped still covered her dining room table.

"Always, always. She'd reach into her purse, pull out a handful of coupons, and ask me where I wanted to go to lunch," said Bridgeman, her co-worker.

Burin even looked for deals within deals. For instance, she would buy five sandwiches for $5.95 from Arby's. She'd eat one and freeze the four others for later.

Nor did she deny herself small indulgences. Some weeks, she ate out three meals a day, friends said. She traveled to Europe, and to the Rose Parade in California. She bought a baby grand piano. There was nothing she wanted and didn't buy, said Bridgeman, the co-worker.

"She was frugal because she didn't need anything else," she said. "She wanted that old car. She dressed the way she wanted to dress."

There are a few things that hit me from this piece:

1. She was able to spend less than most people because she was more content with the "simple things in life" than most people are.

2. Despite the fact that she never had a huge salary (as far as I can tell from the story), she ended up with a HUGE net worth (compared to the net worth’s of most people, that is.) She serves as yet another example that you can become wealthy on almost any salary as long as you spend less than you earn. Of course if you keep your spending low AND grow your income, you'll be even better off.

3. Want some more examples of people like this lady? Here are a few:

You wouldn't believe the excuses people come up with for why their finances aren't in better shape (for example: they just can't make ends meet on a six-figure income and they just can't imagine where all their money goes. Well, after reading this maybe some of them will give up their excuses and start to work at getting their finances in order.

This story from the Christian Science Monitor tells of a young man who started with only $25 in his pocket to see if he could pull himself out of poverty. The details:

Alone on a dark gritty street, Adam Sheppard searched for a homeless shelter. He had a gym bag, $25, and little else. A former college athlete with a bachelor's degree, Mr. Sheppard had left a comfortable life with supportive parents in Raleigh, N.C. Now he was an outsider on the wrong side of the tracks in Charleston, S.C.

But Sheppard’s descent into poverty in the summer of 2006 was no accident. Shortly after graduating from Merrimack College in North Andover, Mass., he intentionally left his parents' home to test the vivacity of the American Dream. His goal: to have a furnished apartment, a car, and $2,500 in savings within a year.

To make his quest even more challenging, he decided not to use any of his previous contacts or mention his education.

So, did he make it? Yeah, he did pretty well:

Ten months into the experiment, he decided to quit after learning of an illness in his family. But by then he had moved into an apartment, bought a pickup truck, and had saved close to $5,000.

The effort, he says, was inspired after reading "Nickel and Dimed," in which author Barbara Ehrenreich takes on a series of low-paying jobs. Unlike Ms. Ehrenreich, who chronicled the difficulty of advancing beyond the ranks of the working poor, Sheppard found he was able to successfully climb out of his self-imposed poverty.

I'll comment on all of this in a bit. For now, here are a few quotes from Sheppard that are worth considering:

I had to make sacrifices to achieve the goals that I set out. One of those was eating out. I didn't have a cell phone. Especially in this day and age, that was a dramatic change for me.... I was getting by on chicken and Rice-A-Roni dinner and was happy. That's what I learned ... we lived [simply], but still we were happy.

I think it's the attitude that I take in: "I've got child care. I've got a probation officer. I've got all these bills. Now what am I going to do? Am I going to continue to go out to eat and put rims on my Cadillac? Or am I going to make some things happen in my life...?" One guy, who arrived [at the shelter] on a Tuesday had been hit by a car on [the previous] Friday by a drunk driver. He was in a wheelchair. He was totally out of it. He was at the shelter. And I said, "Dude, your life is completely changed." And he said, "Yeah, you're right, but I'm getting the heck out of here." Then there was this other guy who could walk and everything was good in his life, but he was just kind of bumming around, begging on the street corner. To see the attitudes along the way, that is what my story is about.

We don't need "Scratch Beginnings" to know that millions of Americans are creating a life for themselves from nothing.... Just as millions of Americans are not getting by. There are both ends of the spectrum.

From the beginning, I set very realistic goals: $2,500, a job, car. This isn't a "rags-to-riches million-dollar" story. This is very realistic. I truly believe, based on what I saw at the shelter ...that anyone can do that.

A few thoughts from me:

1. If someone who starts with virtually nothing can make such substantial progress, then certainly someone earning even a lower level salary can as well.

2. What's the key difference makers? Attitude, determination, the willingness to work hard, and keeping your expenses as low as possible.

3. I've read Ehrenreich's book. The difference between her and Sheppard is that he wanted/tried to succeed. She wanted to fail in order to make a political statement and/or a more compelling book.

4. For more on this guy, you can read his interview at Get Rich Slowly.

For related thoughts on this issue, see these links:

Personal finance is easy. It’s simple. There is one fundamental law that governs your money. If you master this, you have mastered the entire game: To gain wealth, you must spend less than you earn.

In David Copperfield — one of my favorite books — Charles Dickens wrote:

Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.

That’s all it takes. Think of it another way. Think of it like an arithmetic equation:

[WEALTH] = [WHAT YOU EARN] - [WHAT YOU SPEND]

If you spend more than you earn, you are losing wealth. You are accumulating debt. You are heading in the wrong direction. However, if you are earning more than you spend, you are accumulating wealth. The greater the gap you can create between earning and spending, the faster you will accumulate wealth. There are only two things you can do to gain more wealth: spend less and earn more.

Spending less is something that you can do right now with little or no effort. Just stop spending money. Seriously. That’s it. Don’t buy things. Sure, you need to buy some things, but if you learn to pay less for the essentials (food, shelter, clothing), and if you can learn to reduce your wants, you can trim spending by a shocking amount. Learn how to shop for groceries and to make your own food. Develop a frugal mindset. Live simply.

Earning money is the other half of the wealth equation. If you can increase the amount you earn, you will accumulate wealth more quickly. Because earning money is so important, many personal finance books stress that your career is your most important asset. Your most important asset is not your house; it’s not your investment account; it is not — heaven forbid — your car. It’s your career. This is why a college education is so important: it can help you land a better job, can increase your earning power. This is why your professional reputation is so important: what your employer thinks of you, what your co-workers think of you, what your customers think of you all play a role in your success. If you treat your career like a prized possession, you’ll have greater success at finding better paying, more-fulfilling jobs.

This may seem petty or obvious. But smart personal finance really is this simple: spend less than you earn. Everything else — the paying yourself first, the investing ten percent of what you make, the emergency fund, the debt snowball — everything else is simply done in support of this fundamental law. When you grasp this concept, most financial decisions become obvious.

I’m sometimes asked, “Which do you think is more important: saving money or making money?” They’re both important, equal factors in the wealth equation:

[WEALTH] = [WHAT YOU EARN] - [WHAT YOU SPEND]

Which is most important to you depends on your current financial situation.

If you have a good income, then the most important thing you can do is to control spending. If your family earns $100,000 a year and is unable to make ends meet, or is subsidizing an affluent lifestyle with credit, then it’s more important to scrutinize your spending habits than it is to make more money. Try the following:

Track every penny that you earn and spend. This is an excellent way to change your behaviour. The act of tracking your spending makes you more aware of your money habits. The key is to track everything, even the $2 you spend on coffee every morning. You want to develop money sense, an awareness of where all of your money is going.
Reduce expenses. Find areas where you’re spending out of habit, and reduce these costs. For example, in 2004 I spent $200/month on books. Even I could see that this was foolish. I made a goal to cut my book spending in half for 2005. By using the library, I met this goal. My goal for this year has been to cut my book spending in half again, to $50/month. Because I’ve decreased my spending on books, I have money available for more important things, such retirement savings.
Consider a budget. Budgets are not for everyone. (I do not keep a budget.) But for some people, they’re magical. They impose an order that helps to clarify their financial goals. If you know that external structure helps you, then examine your spending records to create a budget. (Check out the budgeting category for some ideas on how to make a budget that works.)

If, on the other hand, you don’t make much money, then the best thing you can do is to increase your earning power. If you’ve already reduced spending to the bone, then you must increase your income. Minimum wage sucks — no question — but there’s no reason you have to settle for a lifetime of low pay. The younger you are, the more chances you have to improve your situation.

Get a second job. What’s worse than working one job? Working two jobs. But sometimes that’s the best option. Many of us have worked multiple jobs in order to earn enough to get by, or to save to improve our situation. You can too. But recognize that this is a short-term solution. Your goal should be to shirk the shackles of debt, or to escape minimum wage, so that two jobs are not necessary.
Get a promotion. One way to break free is to move up in your current company. Hard work and a positive attitude pay dividends, and usually sooner rather than later. I have never seen an instance in which hard work and a good attitude have gone unrewarded, either through increased pay or a better position. Persevere.
Get an education. Do not underestimate the value of education. This is the most important step you can take to increase your earning power. If you’re still in school, make the most of it. If you’re older, take classes in a field that interests you. After nine months of computer classes on evenings and weekends, I was able to land a programming job that paid $25/hour.

If, like most people, your family is middle-class, then it’s important to work on both earning and spending. Live a frugal lifestyle, but also take steps to improve your earning power. If you can cut spending while increasing income, you’ll be startled by the change in your financial situation. And remember: frugal tendencies help everyone — both those with high incomes and those with low incomes.

The most popular savings accounts

How do Bank Interest Rates Work?
Take for example, a savings deposit of $1,000 when opening the account, and $50 each week after. After 3 months, you would have $1,600. Most banks pay interest on a quarterly basis. Let’s imagine your interest rate is 5.3%. Your quarterly interest on your $1,600 would be $84.90. After one year of keeping the same savings routine, you would yield $4,408.28. That’s only 1 year of savings. This demonstrates how important finding one of the best savings accounts out there is to your financial health.

Features of Savings Accounts

Best Ways to get the Best Rates

FOURTEEN (14) MONEY RULES

A reader asked me if I could break down my ideas into a handful of principles. After some careful thought, I came up with a list of fourteen basic “rules” that summarize my money and life philosophy. I’ll be presenting these as a weekly series.

If there is a single rule that underlies everything I’ve written about on The Simple Naira, it’s this simple sentence:

Spend less than you earn.

It sounds so simple, doesn’t it? Yet there are many people out there burying themselves in debt (spending more than they earn) or living purely paycheck to paycheck (spending exactly what they earn).

Simply spending less than you earn has a cascade of positive effects.

First, you begin eliminating your debts. Spending less than you earn frees up the money you need to make larger payments on your debts. Over time, they begin to disappear, reducing your monthly bills and giving you even more breathing room.

Second, you begin to save. First, you build up some cash savings in your savings account, enabling you to roll through emergencies (like a car breakdown or a job loss). You’ll also have the breathing room to start saving for retirement, paving yourself a great future for your golden years.

Third, your stress level falls. Knowing that you have fewer debts, your emergencies are covered, and your retirement is being planned for reduces your stress level. You sleep better, your overall health improves, and you feel happier about life.

Finally, you are now able to explore possibilities closed to you before. When your debts are gone and you are spending far less than you’re bringing in, you suddenly have many more career possibilities. You don’t have to stick with your high-stress job – you have the financial freedom to move on and chase your dreams. You can live where – and how – you want to live.

All of that comes back to one basic principle – spend less than you earn.

That statement actually has two parts, though.

Spend less refers to the fact that you do need to cut your spending. The first step doesn’t need to be anything drastic – nor should it be. Many of the more extreme money-saving tips come from people who have already tried out the basic tips and love them, so they seek out more intense strategies to further cut their spending. I do this myself – I’m always trying out new money-saving strategies, discarding the ones that don’t work for me and keeping the ones that do.

Here are five big ways to get started.

First, go through every monthly required bill. Ask yourself if you really need that service at all. Do you really use Netflix enough, or could you just rent a movie once in a while from Red box? Do you really use your cell phone much at all, or could you just replace it with a pay-as-you-go phone? Then, go through each bill and see if there are any optional services you can eliminate. Do you really need premium cable? Do you really need unlimited text messages?

Second, keep diligent track of your spending. Keep a notebook in your pocket and write down every expense you have. The simple process of doing this will make you think twice about unnecessary expenses. When you do have a month’s worth of expenses written down, take a careful look at them. Ask yourself whether or not each of these expenses actually contributed to the value and joy of your life. That process will offer a lot of insight for you as to where your spending is going to waste.

Third, look carefully at your routines. Watch what you do every day (or most days). Are there things you do each day that cost money? Those things are the most powerful ones to adjust, as trimming just N1 from your daily spending saves you N365 a year. Do you stop at a coffee shop each day? Why not cut down your daily order a bit, or switch to a different shop, or start making your coffee at home? Do you eat out every day? Perhaps you can start brown bagging it a few days a week. Look at every regular expense you have.

Fourth, get a better bank. The vast majority of Americans are with banks that don’t treat them very well. No interest at all on their checking accounts. Tons of fees for ATM use. Draconian overdraft policies. A tiny interest rate on savings accounts. Monthly usage fees of all kinds. All of these things are a waste of money. Switch your accounts to a bank that respects you. From my own personal experience, I use ING Direct for both savings and checking. I get great customer service, interest on my checking account, a solid interest rate on my savings account, and I’ve never had a fee of any sort.

Finally, do some one-time energy improvements around your home. Replace some of your light bulbs with CFLs and LEDs. Install a programmable thermostat. Air seal your home. Blanket your water heater. Install some SmartStrips to cut down on electricity use. These tactics will cut down your energy bill significantly, directly reducing your bills.

Want some more tips? Dig into my list of 100 great money saving tips for people just getting started, as well as 100 free things to do during a money-free weekend.

The rest of the phrase, than you earn, though, points to the other part of the equation: increasing your earnings. Increasing your earnings gives you more money with which to get rid of your debts, save for your big dreams, and build a foundation for whatever future moves you may want to make.

There are countless ways to earn more money, but there are several tactics almost anyone can apply in their life. Here are five key ways to get started increasing your income.

First, don’t waste time at work. The time you spend sitting idle, browsing the web, or chatting on IM or Twitter with your buddies is time you’ve effectively lost. Instead, invest that time in something devoted to your career, even if it’s not directly on a work project. There are lots of things you can always be working on – see the other things below, for example.

Second, work on your transferable skills. I’m a big believer in transferable skills – skills that one can utilize in almost any career path. Work on mastering such skills. Jump on any and all opportunities to speak in public. Hammer out an effective time management scheme for you. Get into a routine of organizing and filing your paperwork. Brainstorm ideas for things going on in your office. Write clear documentation for the standard procedures of your work. Step up to the plate, take charge of a work project, and get the ball moving forward. All of these things push you towards developing skills that are genuinely useful no matter where you’re heading in life.

Third, build strong relationships with as many people as you can in your field. Join services like Twitter or LinkedIn and start conversations with people in your career. Send emails to people you’ve interacted with a lot in your career and keep up with what they’re doing. If you have an opportunity to connect people that can help each other, do it immediately, without hesitation. Share what you know and be valuable to others.

Fourth, start a side business. I don’t mean filling out surveys or other things you can use to burn a few minutes during the commercial breaks on Lost and earn a few pennies. I mean actually devote serious time and effort to turning a passion you have into a money-making enterprise. Don’t know what that could possibly be? Here are fifty ideas to get you started.

Finally, step up to the plate at work in little ways. There are lots of simple ways to stand out. Speak up at meetings. Show empathy for the problems that others have. Take on only projects you can handle, but do them well. Get to know the support staff – and treat them well. Don’t burn bridges when you move on – make an extra effort to maintain good relationships when you leave. These little things add up to a huge difference.

Keep that rule in mind: spend less than you earn. Each move you make to maximize the gap between what you earn and what you spend will put you in a better place in your life.

Yesterday, I discussed how anyone can turn their financial life around if they just take that first step – the first step is always the hardest one. After that, you start taking more and more little steps and before you know it, your financial life is getting better and better.

What follows is a list of 100 more steps to take. Each of these tactics are simple little moves you can make to improve your financial situation. Some of them take just a few minutes, others might take an hour or two, some of them require a bit of regular effort, but they’re all incredibly simple – anyone can do them. Each of them also save significant money, especially over the long haul, and when combined together these tips can save you a lot of money now.

Obviously, not all of these tips will apply to everyone. Just go through the list and find ten or fifteen that do apply to you and use them in your life – you’ll quickly find yourself saving some serious scratch.

1. Switch your bank accounts to a bank that respects you. You shouldn’t be spending your hard-earned money on maintenance fees – you also should be earning some serious interest on your checking and savings accounts. I use ING Direct as my primary bank – I earn roughly 3% on my checking account and 3.4% on my savings account and they’ve never dinged me with a fee. Here’s a guide on how to make that switch.

2. Turn off the television. One big way to save money is to watch less television. There are a lot of financial benefits to this: less exposure to guilt-inducing ads, more time to focus on other things in life, less electrical use, and so on. It’s great to unwind in the evening, but seek another hobby to do that.

3. Turn a critical eye to your “collections.” Most people collect something – what do you collect? Is it something that consistently brings you joy? Or is it something that you just do out of habit at this point? Does the collection itself have value? Could you perhaps “trim the fat” from this collection by getting rid of duplicates or getting rid of the items you no longer use? Also, could you perhaps cut down on your spending on that hobby? Focus on trimming the things you don’t feel strongly about – if you dig into things that bother you, you’re going to eventually relapse.

4. Sign up for every free customer rewards program you can. Even if you rarely shop at that place, having a rewards card for that place will eventually net you some coupons and discounts. Here’s the basic game plan for maximizing these programs: create a Gmail address just for these mailings, collect every card you can, and then check that account for extra coupons whenever you’re ready to shop.

5. Make your own gifts instead of buying stuff from the store. You can make food mixes, candles, bread, cookies, soap, and all kinds of other things at home quite easily and inexpensively. These make spectacular gifts for others because they involve your homemade touch, plus quite often they’re consumable, meaning they don’t wind up filling someone’s closet with junk. Even better – include a personal handwritten note with the gift. This will make it even more special than anything you could possibly buy down at the mall, plus it saves you money.

6. Master the thirty day rule. Whenever you’re considering making an unnecessary purchase, wait thirty days and then ask yourself if you still want that item. Quite often, you’ll find that the urge to buy has passed and you’ll have saved yourself some money by simply waiting. If you want, you can even keep a “thirty day list” where you write down the item and the day you’ll reconsider it, but I prefer just to keep this one in my head – that way, I often just forget about the unimportant things.

7. Write a list before you go shopping – and stick to it. One should never go into a store without a strong idea of what one will be buying while in there. Make a careful plan of what you’ll buy before you go, then stick strictly to that list when you go to the store. Don’t put anything in the cart that’s not on the list, no matter how tempting, and you’ll come out of the store saving a bundle.

8. Invite friends over instead of going out. Almost every activity at home is less expensive than going out. Invite some friends over and have a cookout or a potluck meal, then play some cards and have a few drinks. Everyone will have fun, the cost will be low, and the others will likely reciprocate not long afterwards.

9. Instead of throwing out some damaged clothing, repair it instead. Don’t toss out a shirt because of a broken button – sew a new one on with some closely-matched thread. Don’t toss out pants because of a hole in them – put in a patch of some sort and save them for times when you’re working around the house. Simple sewing can be done by anyone – it just takes a few minutes and it saves a lot of money by keeping you from buying new clothes when you don’t really need to.

10. Don’t spend big money entertaining your children. Most children, especially young ones, can be entertained very cheaply. Buy them an end roll of newspaper from your local paper and let their creativity run wild. Make a game out of ordinary stuff around the house, like tossing pennies into a jar, even. Realize that what your children want most of all is your time, not your stuff, and you’ll find money in your pocket and joy in your heart.

11. Call your credit card company and ask for a rate reduction. Take any of your credit cards that are carrying a balance, flip them over, and call the number on the back. Tell them that you want an interest rate reduction or you’ll take your business elsewhere. If the first person you talk to won’t do it, ask to talk to a supervisor. If you have a N5,000 balance, even a 3% rate reduction saves you N150 a year.

12. Clean out your closet. Go through your closets and try to get rid of some of the stuff in there. You can have a yard sale with it, take it to a consignment shop, or even donate it for the tax deduction – all of which turn old stuff you don’t want to use any more into money in your pocket. Not only that, it’s often a psychological load off your mind to clean out your closets.

13. Buy video games that have a lot of replay value – and don’t acquire new ones until you’ve mastered what you have. My video game buying habits have changed quite a bit since my “game of the week” days. Now, I focus on games that can be played over and over and over again, and I focus on mastering the games that I buy. Good targets include puzzle games and long, involved quest games – they maximize the value of your gaming dollar.

14. Drink more water. Not only does drinking plenty of water have great health benefits, water drinking has financial benefits, too. Drink a big glass of water before each meal, and not only will you digest it better, you won’t eat as much, saving on the old food bill. You’ll also find yourself feeling a bit better as you begin to get adequately hydrated (most Americans are perpetually somewhat dehydrated).

15. Cut back on the convenience foods – fast foods, microwave meals, and so on. Instead of eating fast food or just nuking some prepackaged food when you get home, try making some simple and healthy replacements that you can take with you. An hour’s worth of preparation one weekend can give you a ton of cheap and handy meals that will end up saving you a lot of cash and not eat into your time when you’re busy.

16. Give up expensive habits, like cigarettes, alcohol, and drugs. Those habits cause money to flow away from you with nothing in return. Call up your fortitude and work hard to kick the habits and you’ll find that money staying in your pocket instead of burning up and floating away.

17. Make a quadruple batch of a casserole. Casseroles are nice, easy dishes to prepare, but on busy nights, it’s often still easier to just order some take-out or eat out or just plop a prepackaged meal in the oven. Instead, the next time you make a casserole, make four batches of it and put the other three in the freezer. Then, the next time you need a quick meal for the family, grab one of those batches and just heat it up – easy as can be. Even better, doing this allows you to buy the ingredients in bulk, making each casserole cheaper than it would be ordinarily – and far, far cheaper than eating out or trying a prepackaged meal.

18. Be diligent about turning off lights before you leave. If you spend one minute turning off lights before a two hour trip, that’s the equivalent of earning N50 an hour. That’s some impressive savings, particularly if you do it before longer trips. The key is to use less energy, particularly when you’re not using the device.

19. Swap books, music, and DVDs cheaply on the internet via services like PaperBackSwap. You can very easily swap the books and CDs and DVDs you’ve grown bored with via the internet with others. Just use sites like PaperBackSwap, clean out your media collection, and trade them with others online. The best part? You’ll get a flood of new books (or CDs or DVDs) to enjoy, mailed right to you – for free.

20. Maximize yard sales. I like to stop by yard sales if I see them, but I recognize that often the stuff there is junk. Thus, I’m careful about what I buy and I use clever tactics to find it – and lower the prices. That way, I wind up with a really big bargain – or else I can just walk away with the money in my pocket, having been entertained for a bit.

21. Install CFL (or, even better, LED) bulbs wherever it makes sense. These bulbs might cost more initially, but they both have a longer life than normal incandescent bulbs and they both eat far less electricity. CFLs tend to use about 25% of the electricity of an incandescent – LEDs use about 2%. CFLs are cheaper than LEDs right now and produce better light, but not quite as good as incandescent bulbs. My policy? Put LEDs in closets and out of the way places, use CFLs for hall and some room lighting, and use incandescent bulbs (until the other bulbs get better) where you read and do other eye-intensive activities. This will trim a significant amount from your electric bill.

22. Install a programmable thermostat. These devices regulate the temperature in your house automatically according to the schedule that you set. Thus, when you’re not home, it allows the heating or cooling to turn off for several hours, saving you on your energy bill. A programmable thermostat can easily cut your energy bill by 10 to 20%.

23. Buy appliances based on reliability, not what’s cheapest at the store. It’s worth the time to do a bit of research when you buy a new appliance. A reliable, energy efficient washer and dryer might cost you quite a bit now, but if it continually saves you energy and lasts for fifteen years, you’ll save significant money in the long run. When you need to buy an appliance, research it – start with back issues of Consumer Reports at the library. An hour’s worth of research can easily save you hundreds of dollars.

24. Clean your car’s air filter. A clean air filter can improve your gas mileage by up to 7%, saving you more than N100 for every 10,000 miles you drive in an average vehicle. Plus, cleaning your air filter is easy to do in just a few minutes – just follow the instructions in your automobile’s manual and you’re good to go.

25. Hide your credit cards. Take your credit cards and put them in a safe place in your home, not in your wallet where it’s easy to spend them. If you argue that you need it for “emergencies,” just be sure to keep a small amount of cash hidden in your wallet for these emergencies. Don’t keep plastic on you until you have the willpower to not use it even when you’re sorely tempted.

26. Plan your meals around your grocery store’s flyer. Instead of just planning your meals based on a cookbook or whatever you can dream up, plan all your meals around what’s on sale in your grocery store’s flyer. Look at the biggest sales, then plan meals based on those ingredients and what you have on hand, and you’ll find yourself with a much smaller food bill than you’re used to.

27. Do a price comparison – and find a cheaper grocery store. Most of us get in a routine of shopping at the same grocery store, even though quite often it’s not the one that offers the best deals on our most common purchases. Fortunately, there’s a simple way to find the cheapest store around. Just keep track of the twenty or so things you buy most often, then shop for these items at a variety of stores. Eventually, one store will come out on top for your purchases – just make that one your regular shopping destination and you’ll automatically save money.

28. Challenge yourself to try making your own things. Before I tried it myself, I thought homemade breadmaking was complicated and a waste of time and money. I came to find out that it was pretty easy and it was actually much cheaper, healthier, and tastier than buying a loaf from the store. Now, we rarely ever buy bread products at the store – and we save money by making that choice.

29. Don’t spend money just to de-stress. Quite often, I used to spend money just to wind down from a stressful day at work. Instead, I’ve found that I quite often feel much better by going home and taking some quiet time just to stretch and then meditate. I end up feeling much more together, happy, and ready to face an evening with the kids in the right mindset than I ever would by just blowing some cash after work. Instead of spending to de-stress, try some basic meditation techniques, stretching, or yoga and see how you feel.

30. Talk to your loved ones about what your dreams are. This seems like an odd way to save money, but think about it. If you spend time with the people you love the most and come to some consensus about your dreams, it becomes easy for you all to plan for it. If you’re all planning and working together towards this dream, it becomes easier to stay focused on it and reach it. Set a big, audacious goal together and encourage each other to be financially fit – soon, you’ll find you’re doing it naturally and your dreams are coming closer than ever.

31. Do a “maintenance run” on your appliances. Check them to make sure there isn’t any dust clogging them and that they’re fairly clean. Look behind the appliances, and use your vacuum to gently clear away dust. Check all of the vents, especially on refrigerators, dryers, and heating and cooling units. The less dust you have blocking the mechanics of these devices, the more efficiently they’ll run (saving you on your energy bill) and the longer they’ll last (saving you on replacement costs).

32. Cancel unused club memberships. Are you paying dues at a club that you never use? Like, for instance, a gym membership or a country club membership? Cancel these club memberships, even if you think you might use them again someday – you can always renew the membership at a later date if it turns out that you actually do miss it.

33. When shopping for standard items (clothes, sports equipment, older games, etc.), start by shopping used. Quite often, you can find the exact item you want with a bit of clever shopping at used equipment stores, used game stores, consignment shops, and so on. Just make these shops a part of your normal routine – go there first when looking for potential items and you will save money.

34. Keep your hands clean. This one’s simple – just wash your hands thoroughly each time you use the bathroom or handle raw foods. You’ll keep yourself from acquiring all kinds of viruses and bacteria, saving you on medical bills and medicine costs and lost productivity. That’s not to say you shouldn’t explore the world and get your hands dirty sometimes – that’s good for you, too – but basic sanitation does help keep the medical bills away.

35. Remove your credit card numbers from your online accounts. It’s easy to spend online when you have your card information stored in an account – just click and buy. The best way to break this habit is to simply delete your card from the account. That way, when you’re tempted to spend, you’ll be forced to spend the time to dig out your card – and really think about why you’re spending this money.

36. Give a gift of a service instead of an item. For new parents, give an evening of babysitting as a gift. If you know pet owners, offer to take care of their pets when they travel. Offer up some lawn care as a gift to a new homeowner. These are always spectacular gifts for anyone – I know that, as a parent of a toddler and an infant, I love receiving a babysitting gift, probably more than any “stuff” I might receive.

37. Do holiday shopping right after the holidays. Most people use this technique for Christmas, but it works for every holiday. Wait until about two days after a holiday, then go out shopping for items you need that are themed for that day. Get a Mother’s Day card for next year the day after Mother’s Day. Get Easter egg decorating kits the day after Easter. Get wrapping paper and cards and such the day after Christmas. The discounts are tremendous, and you can just put this stuff in the closet until next year, saving you a bundle.

38. Join up with a volunteer program. It’s a great way to meet new people, get some exercise, and involve yourself in a positive project that can lift your spirit. It also comes without a cost to you and can provide a lot of entertainment and a fulfilling day when you’re in the right mindset. I’ve come to spend more and more of my time volunteering, serving on various committees and groups in the community – and it’s the best thing I’ve ever done.

39. Reevaluate the stuff in the rooms in your house. Go into a room and go through every single item in it. Do you really need that item? Are you happy that it’s there, or would you be just fine if it were not? If you can find stuff to get rid of, get rid of it – it just creates clutter and it might have some value to others. You also improve the perceived value of your house – and you’re likely to get a lot of cleaning done in the process. It’s a frugal win-win-win.

40. Try generic brands of items you buy regularly. Instead of just picking up the ordinary brand of an item you buy, try out the store brand or generic version of the item. Likely, you’ll save a few cents now, but you’ll also likely discover that the store brand is just as good as the name brand – the only difference between the two, often, is the marketing. Once you’re on board the generic train, you’ll find your regular grocery bill getting smaller and smaller.

41. Prepare some meals at home. Get an accessible and easy-to-use cookbook (my favorite “beginner” cookbook is Mark Bittman’s excellent How to Cook Everything) and try making some of the dishes inside. You’ll find that cooking at home is much easier than you think – and way cheaper and healthier than take-out or dining out. Even better, you can easily prepare meals in advance – even handy fast food type meals.

42. Switch to term life insurance. Repeat after me: insurance is not an investment. Switch to term insurance instead and use that difference in cost to get yourself out of debt and start building some wealth. Universal and whole policies are much more expensive and offer a sub par investment opportunity – you’re much better off getting yourself free of a debt burden than spending extra on such things.

43. Go for reliability and fuel efficiency when buying a car. A reliable and fuel efficient car will save you thousands over the long haul. Let’s say you drive a vehicle for 80,000 miles. If you choose a 25 miles per gallon car over a 15 miles per gallon car, you save 2,133 gallons of gas. At N3 a gallon, that’s N6,400 in savings right there. Reliability can pay the same dividends. Do the research – it will pay off for you.

44. Don’t go to stores or shopping centers for entertainment. Doing so is just an encouragement to spend money you don’t really have on stuff you don’t really need. Instead, find other places to entertain yourself – the park, the basketball court, a museum, a friend’s house, or even in your own home. Don’t substitute shopping for entertainment and you’ll be way better off.

45. Master the ten second rule. Whenever you pick up an item in order to add it to your cart or to take it to the checkout, stop for ten seconds and ask yourself why you’re buying it and whether you actually need it or not. If you can’t find a good answer, put the item back. This keeps me from making impulse buys on a regular basis.

46. Rent out unused space in your home. Do you have an extra bedroom that’s not being used? Rent it out. In our home, we could, if times were tough, rent out our entire basement – it has a “living room,” a bedroom, and a bathroom and has a stairwell right by the kitchen. If we found the right person, this would bring in a lot of extra money.

47. Create a visual reminder of your debt. Basically, just make a giant progress bar that starts with the amount of debt you have and ends with zero. Each time you pay down a little bit, fill in a little more of that progress bar. Keep this reminder in a place where you’ll see it often, and keep filling it in regularly. It keeps your eyes on the prize and leads you straight to debt freedom.

48. Get rid of unread magazine subscriptions. Do you have a pile of unread magazines sitting around your house? Likely, it’s the result of a subscription that you’re not reading. Not only should you not renew that magazine, you should give their subscription department a call and try to cancel for a refund – sometimes, they’ll give you the prorated amount back. I’ve had to cull my subscriptions in the past, but I’ve never regretted it.

49. Eat breakfast. Eating a healthy breakfast fills you up with energy for the day and also decreases your desire to eat a big lunch in the middle of the day. Not only that, breakfast can be very healthy, quick, and inexpensive. A bowl of oatmeal in the morning is often the one thing that keeps me from running out to eat an expensive lunch later in the day – and it keeps me peppy and full of energy for the entire morning instead of in a coffee-laced daze.

50. Swap babysitting with neighbors. We live in a neighborhood with an army of young children out and about. Because of that, there are a lot of parents out there who are quite willing to swap babysitting nights with us, saving you the money of hiring one for an evening out. A few families even take this to incredible extremes. Try to find another set of parents or two that you trust, and swap nights of babysitting with them. That way, you’ll get occasional evenings free without the cost of a babysitter, saving you some scratch.

51. Don’t fear leftovers – instead, jazz them up. Many people dread eating leftovers – they’re just inferior rehashes of regular meals, not exactly enjoyable to the discerning palate. However, there’s nothing cheaper than eating leftovers and with a few great techniques for making leftovers tasty, you can often end up with something surprising and quite delicious on the other end. My favorite technique? Chaining – using the leftovers as a basis for an all-new dish.

52. Go through your clothes – all of them. If you have a regular urge to buy clothes, go through everything that you have and see what you might find. Take the clothes at the back of the closet and bring them to the front and suddenly your wardrobe will feel completely different. Take the clothes buried in your dresser and pull them to the top. You’ll feel like a brand new person who doesn’t need to spend money on clothes right now.

53. Brown bag your lunch. Instead of going out to eat at work, take your own lunch. Lots of people think that this means “nasty lunch,” but it doesn’t. With some thoughtful preparation and just a few minutes of time, you can create something quite enjoyable for your brown bag lunch – and save a fistful of cash each day, too.

54. Learn how to dress minimally. Buy clothes that mix and match well and you’ll not need nearly as many clothes. If you have five pants, seven shirts, and seven ties that all go together, you have almost an endless wardrobe right there just by mixing and matching. This is exactly what I do in order to minimize clothes buying and still look professional – I just mix and remix what I wear by using utilitarian clothes options to begin with.

55. Ask for help and encouragement from your inner circle. Sit down and talk to the people you love and care about the most and ask them for help. Tell them that you’re trying to trim your spending and you’d love it if they offered any suggestions and support they might have – and pay attention to what they tell you. They might have some personal insights for your situation that will really help.

56. If something’s broken, give a fair shot at repairing it yourself before replacing it or calling a repairman. Get a handyman’s book or advice from the internet and give it a shot yourself. I’ve fixed clocks, air conditioners, and VCRs by doing this before, saving significant cash by saving on a replacement or on a repair person.

57. Keep an idea notebook in your pocket. I’ve wasted countless amounts of time and money simply because I’ve forgotten things in my head. Instead of relying on my memory, I keep a small notebook with me to jot down ideas and things I need to remember, then I check it regularly throughout the day. This keeps me from forgetting to pick up milk and having to backtrack ten miles, for starters.

58. Invest in a deep freezer. A deep freezer, after the initial investment, is a great bargain. You can use it to store all sorts of bulk foods, which enables you to pay less per pound of it at the market. Even better, you can store lots of meals prepared in advance, enabling you to just go home and pop something homemade (and cheap) in the oven.

59. Look for a cheaper place to live. The cost of living in Iowa is surprisingly low, enough so that I’m quite happy to give up the cultural opportunities of other places to enjoy Iowa all year around. When I want to enjoy the cultural opportunities of another place, I’ll travel there – after all, I can afford it. Take a serious look about moving to a less expensive area – if you can find work there, then a move can definitely put you in better financial shape.

60. Check out what your town’s parks and recreation board has to offer. My town has several wonderful parks, free basketball and tennis courts, free disc golf, trails, and lots of other stuff just there waiting to be used. You can go have fun for hours out in the wonderful outdoors, playing sports, hiking on trails, or trying other activities – and it’s all there for free. All you have to do is discover it.

61. Air up your tires. For every two PSI that all of your tires are below the recommended level, you lose 1% on your gas mileage. Most car tires are five to ten PSI below the normal level, so that means by just airing up your tires, you can improve your gas mileage by up to 5%. It’s easy, too. Just read your car’s manual to see what the recommended tire pressure is, then head to the gas station. Ask the attendant inside if they have a tire air gauge you can borrow (most of them do, both in urban and rural settings), then stop over by the air pump. Check your tires, then use the pump to fill them up to where they should be. It’s basically free gas!

62. Start a garden. Gardening is an inexpensive hobby if you have a yard. Just rent a tiller, till up a patch, plant some plants, keep it weeded, and you’ll have a very inexpensive hobby that produces a huge amount of vegetables for you to eat at the end of the season. I like planting a bunch of tomato plants, keeping them cared for, then enjoying a huge flood of tomatoes at the end of the summer. We like to eat them fresh, can them, and make tomato juice, sauce, paste, ketchup, pasta sauce, and pizza sauce. Delicious (and very inexpensive)!

63. Dig into your community calendar. There are often tons of free events going on in your town that you don’t even know about. Stop by the local library or by city hall and ask how you can get a hold of a listing of upcoming community events, and make an effort to hit the interesting ones. You can often get free meals, free entertainment, and free stuff just by paying attention – even better, you’ll get in touch with what’s going on around you.

64. Take public transportation. If the city’s transit system is available near you, take it to work (or to play) instead of driving your car. It’s far cheaper and you don’t have to worry about parking your vehicle. When I lived in a larger city, I bought an annual transit pass that actually paid for itself after less than two months of use compared to using an automobile – and after that, for ten months, I basically could ride to work (and to some events) for free. That’s money in the bank.

65. Cut your own hair. I can cut mine myself with a pair of clippers, for example. I just cut it really short every once in a while and don’t worry about it too much. Just put a garbage bag over the bathroom sink, bust out the clippers and scissors, and get it done. Two or three cuts will pay for the clippers, and then you’re basically getting free haircuts. With a bit of practice, you can make it look good, too.

66. Carpool. Is there anyone that lives near you who works at the same place (or near the same place) that you do? Why not ride together, alternating drivers each day? You can halve the wear and tear and gas costs for your car – and for your acquaintance as well.

67. Design your “debt snowball.” Everyone needs a plan to help them get out of debt, so sit down and plot out what debts you’re going to pay off and in what order. Simply having a plan goes a long way towards bringing that plan into action, and paying off debts early is one of the surest ways to put money in your pocket over the long run.

68. Get a crock pot. A crock pot is perhaps the best deal on earth for reducing cooking costs in a busy family. You can just dump in your ingredients before work, put it on simmer, and dinner is done when you get home. There are countless recipes out there for all variety of foods, and every time you cook this way, you’re saving money as compared to eating out.

69. Do some basic home and auto maintenance on a regular schedule. Instead of just waiting until something breaks to deal with it, develop a monthly maintenance schedule where you go around your home (and your car) and perform a bit of maintenance where it’s needed. This little activity, taking you just an hour or two a month, will keep things from breaking down and help you see problems before they become disasters.

70. Pack food before you go on a road trip. Have everyone pack a sack lunch for the trip. That way, instead of stopping in the middle of the trip, driving around looking for a place to eat, spending a bunch of time there, and then paying a hefty bill, you can just eat on the road or, better yet, stop at a nice park and stretch for a bit. Plus, you’ll save a lot of money and a fair amount of time this way.

71. Go through your cell phone bill, look for services you don’t use, and ditch them. Sit down and go through each item on your bill and see if there’s anything there that you don’t use, like a surfeit of text messages or web access or something to that effect. Then call your cell phone company and ask to have those services eliminated. Boom, you’re saving money.

72. Consolidate your student loans. Interest rates are quite low right now, so it might be worthwhile to consolidate your student loans into one low-rate package. Look into the various student loan consolidation packages – even a 1% reduction on a $10,000 loan saves you $100 a year – and your loan is probably bigger than that (and the rate cut you could get is probably bigger).

73. When buying a car, go for late model used. These are typically cars coming straight off of leases, meaning they were cared for by reliable owners. My truck was purchased with this criteria and has lasted me several years already with only one significant issue – and I saved a ton of money on the purchase price over buying new. Only now is it beginning to show significant signs of aging – and with the money I saved on that purchase, I was able to get out of debt that much quicker.

74. Hit the library – hard. Don’t look at a library as just a place to get old books. Look at it as a free place to do all sorts of things. I’ve used it to learn a foreign language, meet people, use the Internet anonymously, check out movies and CDs, grab local free newspapers, and keep up on community events. Best of all, it doesn’t cost a dime.

75. Use a simple razor to shave. I’ve been a big advocate of the basic safety razor for a long time, but that’s just one piece of the puzzle. For “normal” shaves, I just shave in the shower and dry off the blade afterwards, using just soap for lather – incredibly cheap, since I only swap blades once every few weeks. The real moral of the story? Use a simple razor – not an expensive electric one that stops working in three years – and shave your face when it’s wet. You can get a very good shave with some practice and save a lot of money over the long haul.

76. Find daily inspiration for making intelligent moves. I’m usually inspired by my children. Perhaps you’re inspired to make changes by your spouse – or even by someone in the community you respect. Maybe it’s just a personal goal, like an early retirement. Find something that makes you want to make positive changes, then use that person or thing as a constant reminder. Keep a picture of it in your wallet, in your vehicle, and on your bathroom mirror. Keep it in your mind as much as you possibly can.

77. Find out about all of the benefits of your job. Most people aren’t even aware of all of the benefits available to them. Spend some time with an HR person finding out about all the benefits of your job – you might be surprised at what you might find. I found free tickets to sporting events, free personal improvement opportunities, and an optional employee match on some retirement funds that maximized the money I was socking away. This not only cut down on my own spending on things like sporting and community events and educational classes, but also improved my retirement plan.

78. Make your own items instead of buying them. I like to make my own laundry detergent and my own Goo-Gone, for starters. I also like making Glade, Windex, and Soft Scrub. In both cases, it’s way cheaper than buying the commercial version. Hunt around for recipes – it’s amazing how many things you can make at home in just a few minutes that saves a ton of money compared to the commercial version.

79. Encourage your friends to do less expensive activities. This is often a tricky thing to do, but there are a number of techniques you can try. My favorite one is to be the first one to suggest something – that often gives you the power to steer the group towards things that are cheaper. If you can convince your friends to go to the park and shoot hoops instead of going golfing, those green fees are going to stay in your pocket.

80. Don’t speed. Not only is it inefficient in terms of gasoline usage, it also can get you pulled over and cost you a bundle, as I discovered a while back. It’s highly cost-efficient to just drive the speed limit, keep that gas in the tank, and keep the cops off your tail.

81. Read more. Reading is one of the cheapest – and most beneficial – hobbies around. Most towns have a library available to the public – just go there and check out some books that interest you. Then, spend some of your free time in a cozy place in your house, just reading away. You’ll learn something new, improve your reading ability, enjoy yourself, and not have to spend a dime. Here are some more techniques for getting into the reading flow.

82. Buy a smaller house. I currently live in a 2,000 square foot house with my wife and two kids. Frankly, it’s just the right size for us – if anything, it’s a little big. We often find ourselves in the same room in the house, just surrounded by empty space. You don’t need a giant place to live. Instead, buy something more modest and you’ll find yourself with plenty of room – and still plenty of cash in your pocket.

83. Drive a different route to work. This is an especially powerful tip if you find yourself “automatically” stopping for something on the way into work or the way home. Get rid of that constant drain by selecting a different route that doesn’t go by the temptation, even if the new route is a bit longer. You’ll still be time ahead (because you’re not stopping) and you’ll definitely be money ahead.

84. Always ask for fees to be waived. Any time you sign up for a service of any kind and there are sign-up fees, ask for them to be waived. Sometimes (but not always), they will be – and you save money just by being forthright about not wanting to pay excessive fees. I did this with my last cell phone sign-up and got part of my fees waived, cutting down significantly on the bill.

85. Don’t overspend on hygiene products. For most people, inexpensive hygiene products do the trick – for example, I just buy whichever toothpaste is the cheapest, and the same goes with deodorant and the like. The key is to use this stuff regularly and consistently – bathe daily, keep yourself clean, and you’ll be just fine. No need to buy a $40 facial scrub if you actually scrub your face properly.

86. Eat less meat. For the nutritional value, meat is very expensive, especially as compared to vegetables and fruits. Simply change around your regular meal proportions to include more fruits and vegetables and less meats – eat a smaller steak and a bigger helping of green beans, for example. Not only is this a healthier way to eat (saving on health costs), it’s also less expensive.

87. Use a brutally effective coupon strategy. Here’s the trick: wait a month before using the coupons. Save your coupon flyer out of your Sunday paper for a month, then bust it out and start cutting anything that might be of interest. For a bonus kicker, use the coupons in comparison with your grocery store flyer that week to find out ways you can use a coupon to reduce the cost of an item already on sale – you can wind up paying pennies for some things and, on occasion, actually get food for free (I’ve came home with a ton of free yogurt containers before, for example).

88. Air seal your home. Most homes have some air leaks that make the job of keeping it cool in summer and warm in winter that much harder – and that much more costly for you. Spend an afternoon air sealing your home – the DoE has a great guide on basic airsealing.

89. Make your own beer or wine. If you enjoy an occasional drink, this is a great way to enjoy some of the beverages that you love at a very cheap price. You can easily make five gallons of beer or wine at once and it doesn’t take that long, either, once you have the basic ingredients. Even better, it’s a great activity to do with friends – you buy the equipment, they bring the juice and you both get a few bottles of delicious homemade wine out of the deal. A nice entertainment, plus some free beverages – that’s a great frugal deal.

90. Make sure all your electrical devices are on a surge protector. This is especially true of your entertainment center and your computer equipment. A power surge can damage these electronics very easily, so spend the money for a basic surge protector and keep your equipment plugged into such a device.

91. Get on an automatic debt repayment plan for any student loans you have. Many student loans offer a rate reduction if you sign up for their automatic debt repayment plan. This way, not only do you save a few bucks a month, you don’t have to go to the effort of actually paying the bill. Our automatic plan saved us about $60 a year.

92. Cut down on your vacation spending. Instead of going on a big, extravagant trip, pack up the car and see some of America some years for vacation. One of the best vacations I’ve ever taken was when my son was an infant – we just packed up the car and drove around Minnesota, eventually camping for a few days along the north shore of Lake Superior. For a week long relaxing vacation, it was incredibly cheap and quite memorable, too.

93. Cancel the cable or satellite channels you don’t watch. Many people with cable services often are paying for a premium package but rarely watch those extra channels. For the longest time, my wife and I were subscribed to HBO, Starz, and Cinemax, yet we would only tune in once a month at best. We argued that it was worth it because we could watch a movie or a great drama whenever we wanted, but it would have been far cheaper just to rent a movie. Get rid of the excess channels and put that cash back in your pocket.

94. Exercise more. Go for a walk or a jog each evening, and practice stretching and some light muscle exercise at home. These exercises can be done at home for very little, meaning you’ve got an activity without a lot of cost, and the health benefits are enormous. Just set aside some time each day to get some exercise, and your body and wallet will thank you.

95. Utilize online bill pay with your bank. This serves two purposes. First, it keeps you in much closer contact with your money, as you can keep a very close eye on your balance and be in much less danger of over-drafting. Second, it saves you money on stamps and paper checks by allowing you to just fill in an online form, click submit, and have your bill paid. Try it out – and take advantage of it if you’re not already.

96. Buy staples in bulk. We buy items we use a lot of in bulk, particularly items that don’t perish – trash bags, laundry detergent, diapers, and so on are purchased in the largest amounts possible. This cuts down on their cost per usage by quite a bit and, over the long haul, begins to add up to some serious money. Even better, we don’t have to shop for these items very often, saving time and a fraction of the cost of a trip to the grocery store.

97. Connect your entertainment center and/or computer setup to a true smart power strip. A device like the SmartStrip LCG4 basically cuts power to all devices on the strip depending on the status of the first item on the strip. So, if you have your workstation hooked up to this, every time you power down your workstation, your monitor powers down, your printer powers down, your scanner powers down, and so on. You can do the same thing with your entertainment console – when you turn off the television, the cable/satellite box also goes off, as does the video game console, the VCR, the DVD player, and so on. This can save you a lot of electricity and significantly trim your power bill.

98. Don’t beat yourself up when you make a mistake. Even if you make ten good choices, it’s easy to beat yourself up and feel like a failure over one bad choice. If you make a big mistake and realize it, think about why you realized it now instead of then, and try to apply that later on. The memory of that mistake can end up being very valuable, indeed.

99. Always keep looking ahead. Don’t let the mistakes of your past drag you down into more mistakes. Look ahead to the future. The choices you make now won’t affect the past – but they definitely will affect the future. Think back, and remember how the bad choices you made earlier are costing you now, and constantly remember to not make those mistakes now so that they don’t cost your future self.

100. Never give up. Whenever the struggle against debt feels like it’s too much, go read a personal finance blog and remember that there are a lot of people out there fighting the same fight. Read around through the archives and learn some new things – and perhaps get inspired to keep going, no matter what.

MONEY-FREE WEEKENDS

For the last few months, my wife and I have been doing something every other weekend or so that we call a “money free” weekend, in an effort to live more frugally. It’s actually quite fun – here’s how we do it.

We are not allowed to spend any money on anything, no matter what. In other words, we can’t make a run to the store to buy food, we can’t spend money on any sort of entertainment, and so on. Since we often do our grocery shopping on Saturdays, on a “money free” weekend, we delay it to Monday or Tuesday.

We can use our utilities, but no extra expenses on these utilities. No renting movies on cable, no text messages that aren’t already covered by our cell phone plan, and so on.

I followed this up with fifteen things to do during such a weekend, fifteen more things to do, and fifteen deeply fulfilling things to do during such a weekend.

Since then, lots of people have sent me ideas for activities for money-free weekends, plus we’ve uncovered a bunch of our own. At the same time, many readers have asked for a master list of all of these ideas.

So, here we go – one hundred fun ways to spend a money free weekend. The list below includes the first forty-five (with duplicates removed), plus about sixty new ones. Print this off and use it as a checklist or a thumbnail guide for your own money-free weekend. Please note that everyone’s interests are different – you probably won’t find everything on this list fun and neither will someone else, but the two lists won’t overlap (I can think of countless things other people find fun that I find utterly dreadful). Anyway, here goes!

1. Check out the community calendar. Look at your town’s website (as well as those of cities and towns nearby) or stop by city hall to find a list of events going on in the community, many of which are free. You’ll often be surprised at how many interesting (and free) activities are going on right now in your area.

2. Visit your community library. Not only is a library a warehouse of books, most libraries also have extensive CD and DVD collections you can check out. Many libraries also have “story time” for young children, film nights, book clubs, and many other events that you may be unaware of – completely for free. Stop in and check out what they have to offer.

3. Get involved in community sports. Many towns have community sports fields where both youth and adult sports leagues and activities are regularly going on throughout the weekend. Stop by, watch a game or two, and if something intrigues you, look into joining either as a participant or as a volunteer.

4. Get your financial papers in order. This may not sound like a fun activity up front, but the peace of mind it gives you will make your life a lot more relaxing. Spend an hour or two organizing all of your statements and other financial documents. This is a perfect time to start your own filing system. If you’re more adventurous, try initiating an electronic filing system, as it will save you significant space and make information retrieval easier (though it’s more of a time investment up front).

5. Check out some podcasts. Podcasts are wonderful things – top-notch audio programs available for you to listen to for free. Give some a sample – you can do it easily by using iTunes. Visit the Podcast section of the store and check a few out. My favorites include The Splendid Table (on food topics), Marketplace (on economics and business), Speaking of Faith (on religion), Fresh Air (interviews of general interest), This American Life (quirky general interest stuff), and This Week in Tech (technology news), among many others.

6. Play board games. We have a pile of board games, mostly received as gifts, that we often pull out and play, plus our closest friend has a few choice ones. Classic games like Monopoly and Pictionary can be great fun, but our favorites are Settlers of Catan, Cartagena, Puerto Rico, and especially Ticket to Ride. Just dig through the recesses of your closet, find an old board game you haven’t played in ages, and bust it open!

7. Bake a loaf of homemade bread. You probably have everything you need to make a loaf of bread in your kitchen right now (except for maybe the yeast). Anyone can do it, and the bread turns out deliciously. Here’s a detailed visual guide for making a simple loaf with minimal ingredients and complexity.

8. Learn how to juggle. All you really need is three balls and a video showing you how to do it. Not only is it a fun activity to learn, it’s something that’s fun to bust out as a party trick on occasion (trust me, you can always get people to smile if you juggle three fruits in the kitchen while preparing something).

9. Teach yourself how to change the oil in your car. If you’re due for an oil change, just bring the oil you need home with you and teach yourself how to do it. All you really need is an old pan to catch the wasted oil and a funnel to pour the old oil back into the canisters for later disposal. Just use your car manual as a guide for the procedure and you might just find that not only is it a lot easier than you thought, but it’s a useful skill to have and it’s cheaper than taking your car into Jiffy-Lube (or wherever you take your car for oil changes).

10. Meet your neighbors. Make an effort to introduce yourself to your neighbors if you don’t know them well. Invite any interesting ones over for a cup of coffee and a chat, just to get to know each other better. Your neighbors can not only become friends, but can also be a valuable resource – a friendly pair of eyes on your property when you’re away or a helpful set of hands when you’re trying to complete a challenging task.

11. Have a “cupboard potluck.” Go through your cupboards and find any items that might have slipped to the back over time. Invite some friends to do the same, then get together for a potluck dinner prepared from only these ingredients and whatever else you have on hand. It makes for a “free” meal and a lot of fun for everyone involved.

12. Clear out your media collection – books, DVDs, CDs, etc. Just go through what you’ve got, determine which ones you’d actually like to keep, and get rid of the rest. You can either sell them at a used media shop or swap them online using services like PaperBackSwap, SwapTree, and SwapADVD. In either case, you’ll get rid of stuff you don’t watch or read or listen to any more in exchange for either some money or new media to enjoy.

13. Make a 101 Goals in 1001 Days list – then start on some of them. A 101 Goals in 1001 Days list is a very effective way to codify all of the ideas of things you’d like to do all into one place, so that when you have spare time, you can just turn to the list and do what’s next on it. Spend some time thinking of things that belong on this list, then when it’s finished, you’ll have an excellent list of potential accomplishments and be ready to go with lots of activities.

14. Make decisions about and write out your will. This is a thought process that many people put off, but it makes you feel quite relieved when it’s done, adding to your peace of mind and relaxation. Spend some time thinking about what you want to happen to your personal assets when you die, particularly in terms of the personal mementos that you want others to have and where you want the value of your estate to go. Do you want it all to stay with family members? Do you want to remember a charity? Then, when you’ve figured it out, sketch out the basics of a will. Later, you’ll likely have to have a lawyer prepare it for you, but just having the decisions made doesn’t cost a thing and is a big mental relief.

15. Do a household maintenance walkthrough. Just go through your home and look for any little maintenance tasks that need to be done. Do filters need to be replaced? Are there any burnt-out light bulbs? Here’s a maintenance checklist that might give you some ideas as to what to look for. It might not be the most fun activity you can think of, but it’ll add subtly to your enjoyment of your home when it’s done – cleaner air, light bulbs in place, and so on.

16. Organize a walking tour. Find out about the interesting historical and cultural sites in your town, then go on a walking tour of it. Pack a lunch in your backpack and have a picnic on the village green or in the park. You can easily turn this into a full day if you live in a compelling area.

17. Teach yourself how to knit. Knitting requires two needles (a dollar, or probably free if your closet looks anything like ours), some yarn (extremely cheap and also likely laying in the closet if your home is like ours), a lot of patience, and an instructional video or two. Try making a scarf or two for your friends or a small blanket for a new baby in the home of a friend or a family member. While it’s not quite free, if you stick with it, you’ll make things much more valuable than the input cost of a bit of yarn, plus you may learn a compelling new skill.

18. Take some digital photographs. Take your digital camera out with you and take pictures of anything you find interesting. Take lots of them, then go home later and see if you’ve taken anything beautiful and compelling. Great images can make for the basics of homemade greeting cards (yep, keep going downwards for more on this), nice desktop wallpaper, screensavers, or many other interesting uses.

19. Share those digital photographs with others. Sign up for a free Flickr account, then upload some of your most interesting pictures to share with others. Spend the time to title them appropriately, add interesting captions, and allow them to be used under a Creative Commons Attribution license so your images can be enjoyed by as many people as possible.

20. Start a blog on a topic that interests you. You can get a free blog at Wordpress or Blogger. Join the service and start a blog on a topic that interests you. Not only can it be a ton of fun, it also helps you improve your communication skills, reach out to others, and perhaps earn a bit of income as well.

21. Organize a potluck block party. Get permission from the city to do this before you try it – ask if you can block off a street for a block party on a certain date. Then throw yourself into organizing it. Go door to door, telling people about the block party, and inviting them to bring something. Ask if they have tables and/or chairs that can be used for it. Then, on the day of the party, set out the tables and chairs you borrowed and dig in. Since you’re the host, just contribute one of the “cupboard potluck” dishes you made from idea #11.

Flusspferd - Albert im Kölner Zoo by marfis75 on Flickr!

22. Visit a free museum or a zoo (or find out when you might be able to get in for free). Many cities have free educational attractions, such as zoos or museums. Make an effort to enjoy these free attractions. If your community doesn’t have free zoos or museums, call them and ask about opportunities for “free to the public” exhibits or “free days” or even free passes upon request. Quite often, you’ll find that there are many opportunities to enjoy museums, zoos, science centers, and the like without any cost at all.

23. Learn the basics of a new topic. Just go to MIT’s OpenCourseWare, find a topic you’re interested in, download a bunch of mp3s of lectures on the topic, and listen to them while you’re doing household chores. Some great suggested starting points: microeconomics, macroeconomics, basics of philosophy, western philosophy, and introductory physics. Another great option: fire up iTunes, then click on the “iTunes U” option on the left hand side. You’ll find tons of material there to teach you the basics of countless topics.

24. Cook some meals in advance. If you already have a bunch of basic food staples on hand, spend some time cooking some meals in advance to store in the freezer. It’s easy to prepare casseroles, soups, pasta meals, and many other items all at once, then store them in portion-sized containers in the freezer for eating later. Not only is this way cheaper than eating out or buying convenience foods, it’s also healthier and also far more social. Missing some ingredients but have an abundance of others? Team up with friends and make it a social event – share ingredients so that you can all take some casseroles or other dishes home for the freezer.

25. Build a basic net worth calculator for yourself. One great way to ensure that you’re consistently making financial progress is to build your own net worth calculator. Once you have it set up, updating it is easy, and it can provide a great snapshot of your financial situation as well as show off your progress. Here’s a detailed guide to making one with any basic spreadsheet program.

26. Have a quilting bee. All you need is a bunch of spare cloth (old shirts will even work, as will old curtains, old sheets, and so forth), some needles (in a lot of closets), some thread, some scissors, and some friends. Just get together, cut out squares of interesting cloth, and start sewing. You can stuff the inside with soft excess cloth, like tee shirts and such, instead of buying batting, and you’ll create a warm and interesting quilt over time.

27. Try out some great open source and free software. Ever wanted Microsoft Office but didn’t want to foot the bill? Spend some time downloading and setting up OpenOffice. Want a good scheduling program? Try out Sunbird (a program I really like). Want to design a nifty newsletter or lay out some pages? Try out Scribus (which I’m actually currently using for a future Simple Dollar-related project). Your computer can do so much more – and it’s free!

28. Practice origami. All you need is some scrap paper and a bit of time. The simple things, like cranes and frogs, then you can try harder stuff like an origami iris. A well-made origami piece constructed from interesting paper can be a beautiful decoration.

29. Make a how-to video for YouTube. Share your knowledge! All you need is a digital camera that captures video and (optionally) some video editing software. Just create a video to demonstrate how to accomplish something interesting and useful. Start off by making a script to follow, then turn on the camera and follow it. When you’re done, upload it to YouTube and let others enjoy it. If it’s useful and entertaining, people will come.

30. Do a “bill reduction.” Spend a few hours trimming your monthly bills. Find ways to reduce your regular bills. Ask for credit card rate reductions. Think about what monthly bills you can completely eliminate, then do the footwork to get rid of them. This might be a boring task now, but if you can trim $50 from your monthly bills for free, your future self will be very happy.

31. Play football / soccer. All you need is a ball, some open space, and some friends. Designate whatever is available as goals, then kick the ball around. Don’t worry about being terrible at the game – as long as everyone’s just having fun, it really doesn’t matter how bad you are. Trust me – I’ve played football with Europeans who spent their entire life playing while I’d played perhaps an hour of serious football in my life, yet I had a lot of fun (albeit with a lot of falling down and jumping out of the way).

32. Scan your old pictures. If you have a digital scanner laying around somewhere, bust it out and scan in the piles of old prints you have laying around. If you have a screensaver of pictures, scanning in old prints and adding them to the rotation will make your screensaver all the more amazing. Plus, it becomes easy to just attach them to emails and send them to friends and family.

33. Have a film festival. Invite some friends over and have them each bring one of their favorite DVDs. Then just settle in with some snacks (whatever you have on hand) and burn a lazy afternoon and evening just watching movies together. It’s a ton of fun and it doesn’t cost anything at all.

34. Seduce your partner. Really, is there any way to really have more fun than that for free? It’s fun, romantic, great exercise, and can really help heal any relationship problems you might be having. An afternoon in your partner’s arms will make both of you feel better, and it won’t cost a penny.

35. Do some networking. Spend an afternoon writing emails to professional contacts, just to see what they’re up to and letting them know what you’re up to, setting them up to send en masse on Monday morning. While it might be boring for some, it can open countless doors for your career if you do it consistently, help you build new relationships and friendships, and all it takes is a little bit of spare time.

36. Practice yoga – or try it for the first time. All you need is some floor space and a blanket to do most yoga poses. Try out a basic yoga session to see if you like it. It increases flexibility, improves concentration, and holding some of those positions for long periods can be a powerful workout.

37. Cut your own hair. I have a pair of hair clippers in the bathroom and every once in a while, I take them out and just whack away at my hair. Not only is it a free way to get your long hair cut, it can also make you look a lot more presentable, plus the act of cutting your own hair is a really powerful experience.

38. Do a neighborhood cleanup. No need to organize a formal activity. Just walk through the shared spaces in your neighborhood (parks, sidewalks, etc.) with a trash bag and pick up the trash. Not only is it a pleasant way to get your blood rushing, it also beautifies the area around you, not just for your enjoyment, but for the enjoyment of everyone. If you want to really get into it, invite people that live near you to get involved as well and make it an event.

39. Build some paper airplanes. Design and build a bunch of different paper airplanes, then have a competition in the back yard to see which one flies the best. This is a great way to use up some scrap paper, particularly old newspapers. You can easily turn it into a contest – the winner gets to pick what activity to engage in next, or gets to choose what you’re having for supper.

40. Rearrange the furniture in a room. It’s amazing how much a room can be refreshed just by moving the furniture around to a new position. Try moving the couch to a different wall, then moving the entertainment center elsewhere. Take your bed and turn it ninety degrees, then moving the dressers to match the new configuration. It’ll refresh the look of the room and give you a good workout to boot.

41. Read an entertaining book. Look around your house for a fun book to read, perhaps something loaned to you by a friend or something you received as a gift, and curl up and let yourself be sucked into the story. I’m a sucker for Stephen King novels – I can just pick up any one and quickly be sucked straight into the plot for a fun afternoon’s read.

42. Build a giant blanket fort. If you have kids, there are few things more fun than an afternoon spent building and playing in a gigantic fort in the living room. Use chairs, blankets, and tables to make an enormous hidden structure, then hide in there and play games and read books. If they’re a bit older, build two forts (on opposite sides of the room) and have “fort wars” – toss small beanbags and pillows back and forth. No cost, but an afternoon that’s a ton of fun.

43. Call a family member or a friend you haven’t spoken to in a while. Not only does it provide you a chance to catch up and firm up a relationship with another person who is important to you, it can also be a very entertaining and enjoyable way to spend an hour or two.

44. Start a natural collection or an observation notebook. In other words, spend some time in nature collecting items of interest (like particular rocks) or observations of things. Perhaps you’ll want to look for birds, or maybe your passion is rocks or feathers. Whatever it is, get your hiking boots on, get out there, and see what you can find. Here’s some advice on how to get started.

45. Start a compost bin. All you need is a barrel or a large bucket (or, if you live in the country, some open space). In that bucket, just keep vegetable waste, coffee grounds, and eggshells. On occasion, scoop in a bit of dirt from the ground. Move the contents around regularly and keep it a bit moist. Over time, the compost will turn almost black. At that point, you can let it dry out and have perfectly natural fertilizer for your lawn or garden.

46. Have a yard sale. A yard sale is a very lucrative way to spend a money-free weekend. Not only does it provide you an excuse for cleaning out unwanted stuff from your home, it can also bring in a nice little wad of money as well, plus give you a weekend’s worth of entertainment and activity. This is really a great way to spend a money-free weekend.

47. Learn a foreign language. Doubt this can be free? There are a lot of ways to learn a foreign language online, from podcasts that teach language skills to YouTube videos and many other free language learning opportunities. Search around for resources for any language that you might want to learn – you’ll find tons of materials to help you.

48. Deep-clean the room in your house you spend the most time in. One great afternoon project that will provide aesthetic value for years is deep cleaning a single room in your house, ideally the room you’re in most often. Getting that room pristine will subtly add to your enjoyment of that room for quite a while. This means going the full nine yards – moving everything out, scrubbing the walls, thoroughly cleaning the floor, cleaning all of the items in it, and so forth. When you’re done, the room will feel fresh and new in a very subtle way.

49. Make some homemade greeting/birthday/Christmas cards. All you really need for this is some card stock or some cheap blank cards from your local dollar store, plus some photographs (or a desktop printer). You might also want to have some other creative printed materials on hand – I like to keep old New Yorker covers for purposes like these. Just use pictures and other elements to create unique greeting and holiday cards, then save them for the appropriate occasion. Here are some tips on what to write on the inside.

50. Take a nap. Seriously. Most people do not get adequate sleep during the week. Why not just kick back and take a snooze for an hour or two. It’s the ultimate free energy refreshing technique.

51. Get things done. Almost everyone has a long list of things to do “when they have time.” Use the fact that you’re intentionally spending a money-free weekend to in fact get some of those things done. Clean up the house. Dust the front room. Fix that old toaster. Go through the stuff on the garage loft. At the end of the weekend, you’ll have accomplished something useful, plus your wallet will be fully intact.

52. Dig up your family tree. Take a peek at genealogy.com and see what you can find out about your ancestors. Try to assemble a family tree, and see if you can link to any distant cousins or long-lost family members. Doing this can give you a much clearer picture of your heritage and help you get in touch with your family roots.

53. Sit down with your partner for an afternoon and talk about your goals. Spending some time with your partner discussing goals can go a long way towards getting you both on the same page in your relationship. Find out what your partner wants out of life and what you can do to support it, then share your own desires. Find areas where you’re working in concert towards something bigger. Doing this can only lead to more clarity in your relationship. Here are some tips for getting started.

54. Play Calvinball. You need a ball (or a few balls) and some number of children and some open space. Just kick the ball around (or throw it) and make up rules as you go along. With three or more kids, a game of Calvinball can go on for a good hour with everyone having a good time.

55. Do some puzzles. I enjoy doing both sudoku puzzles and crossword puzzles. You can find a huge number of these puzzles online for free. They’re a great way to stretch your mind a bit at the kitchen table for a half an hour or so, solving a problem with just your intellect.

56. Volunteer your time. There are countless volunteer projects out there that need nothing more than your time. A Saturday spent working for a volunteer cause is a Saturday well spent – it gives you a full day spent making a positive contribution to society, working your body and your mind for the benefit of others, and leaving you at the end of the day knowing you used your gifts to provide for others.

57. Turn on the water sprinkler. This is another great one for family fun with kids. Just run out a hose in the backyard, attach a sprinkler to the end, and turn it on, jetting the water up in the air. Then run around in the water. Lots of fun for the kids – and it can be a ton of fun for the parents, too, if they run through the sprinklers.

58. Try a basic meditation technique. Meditation is a spectacular way to push stress out of your life and calm yourself. Knowing how to meditate effectively and doing it regularly can be a major part of your stress management, and it costs nothing. Here’s a wonderful basic meditation technique to get you started – there are countless others out there. Try a few and see which ones work well for you.

59. Get involved in an open source programming project. If you’re a computer programmer, there are few more intellectually stimulating ways to get involved in your passion than to be involved in an open source programming project. One role that almost every project can use is a person that is willing to fix mundane and boring bugs – finding that one line of code that’s causing a minor issue and fixing it. Look for a project that’s compelling for you and dig in.

60. Teach yourself a card trick. There are many card tricks out there that rely on knowing a specific pattern, some basic sleight of hand, or some combination of the two. Learning a clever one and mastering how it’s done can be a great way to spend an afternoon, especially since the skill can be used again and again as a party trick. Here’s a great one to learn – it’s really clever and can utterly baffle people.

61. Attend a religious service. Even if you’re not a believer, attending a religious service can be a worthwhile educational experience. I really enjoy attending services of different faiths, as the varieties of religious experience are quite fascinating and incredibly insightful. Plus, most religious services – if you pay careful attention – offer a ton of intellectual food for thought no matter what your beliefs are. A religious service is always a worthwhile experience.

62. Start a workout routine. Most basic exercises – push-ups, sit-ups, jogging, and so forth – require no extra equipment at all. Spend some time doing research into fitness and figuring out a basic workout routine that will work for you, then do the basic “stress tests” you’ll need to do to figure out where you’re at. For example, the one hundred pushups routine is very useful, but you need to couple it with other exercises, such as leg lifts, prone lifts, and jogging. You can also try out the lifetime fitness ladder for a more diverse workout routine.

63. Read a “great” book. By this, I mean a book that genuinely challenges both your beliefs and ideas as well as your language skills. Reading a great book is always a good mental workout. I recommend trying out any of the Pulitzer Prize winning novels or any essential work of philosophy to get started. Try hitting the library and checking out A History of Western Philosophy by Bertrand Russell, The Executioner’s Song by Norman Mailer, Sophie’s Choice by William Styron, or Invisible Man by Ralph Ellison – all of which deeply challenged and moved me. These books are deep, challenging reading – read them slowly and you’ll grow as a person.

64. Go swimming. Almost every town has a community swimming pool or some sort of area where the public can swim – lacking that, go to a state park with a public swimming area. Swimming is wonderfully invigorating and often makes me feel very peaceful – best of all, it’s something you can do for free.

65. Get involved with public access television. If you’ve ever wondered what goes into the process of producing a television show, most communities offer the resources for you to do just that. Stop by your local public access station and see what opportunities are available there. You can usually get involved for free in an ongoing program as an extra hand and learn a great deal about the whole process.

66. Blow bubbles. Just mix one part liquid dish detergent with 15 parts water – one quick way to do this is to just mix 1/4 cup detergent with 3 3/4 cups of water. Use filtered and fairly soft water if you can. Then, take a wire coat hanger, bend and twist it into a small loop or two, and you’re ready to go. Another idea – take tin cans or coffee cans, remove the top and bottom, and hammer down any sharp metal edges, then dip the end in the solution and wave it in the air. Blowing bubbles works even better if you have small children who love to chase them or are just learning to blow them.

67. Start a journal. A journal can be a powerful way to recall the events that happened in your life previously. Getting in the habit of writing the events of the day down at the end of each day is a great way to remember the specifics, plus writing entries on what you’re thinking about now can be the basis of powerful memories and reflections in the future. Plus, it can often be a release from the tensions of the day. All of that for just a pen and an old notebook – a great free way to spend some time.

68. Write a letter to your future children or grandchildren. All of us have some advice or some stories inside of us that we want to someday share with our children, grandchildren, or other loved ones. Take some time to write these things down with the intent of giving them to that person some day. In the event that you pass on, you can be sure that they’ll still receive the things you want to tell them. This can be a very powerful way to consider your feelings and memories as you format them in a way that they can be shared with the ones you care about the most.

69. Make Christmas gifts in advance. If you know already that some people will be on your Christmas list, why not spend some time now making them interesting gifts and saving yourself some money over the long haul? Make them some homemade soap, some homemade hot chocolate mix, and maybe a bottle of homemade beer as a gift. Prepare all of these items, then go ahead and box and wrap them, since they’ll stay good for months. Not only is the gift less expensive than what you’d spend at your local department store, it’s also more thoughtful, and it’ll save you time during the harried Christmas season.

70. Go “coupon scavenging.” If you get the Sunday paper, scavenge the coupons out of it, see if there are any for products you normally buy, and chuck the rest. If you find several coupons, then it might be worthwhile to scavenge. Stop by any friends or neighbors who also get the paper and ask if you can have their flyers when they’re done with them, then clean out the coupons in those, too. For example, if you buy V8 Fusion as the default fruit juice for your kids (it’s far healthier than almost anything else like it you could give them) and you spy a $1 off coupon for a bottle, every coupon you scavenge is like finding a dollar bill, and it costs you nothing.

71. Pick up a musical instrument and learn it. Yes, you can find an instrument for free and learn how to play it for free as well. Just hit Craigslist and Freecycle looking for freebies, then utilize YouTube and other resources for tutorials. Here’s a detailed guide to learning an instrument for free. With a bit of diligence and effort, you can go from nothing at all to being able to play an interesting song on your own instrument for no cost.

72. Plan next year’s summer vacation. Figure out what you want to do in general, then use the internet to find specifics on the area. Do some detailed comparison shopping for travel and even set up alerts for cheap tickets. Gather up all of this research, then have a family meeting about the trip. Not only will this save you a ton of money, it can actually be a lot of fun researching a potential trip and thinking of the enjoyment you might get from it.

73. Hone all of your kitchen knives. I actually consider this to be a lot of fun, so I do it on a very regular basis. If you don’t, it’s an even better idea because your knife blades are likely in very bad shape. All you need is a honing steel – a long piece of somewhat rough steel in the shape of a rod with a handle on the end that probably came with your knife set. Just draw your knife blades along this a few times as shown in this YouTube video. Before you know it, you’ll have much more useful knives for your next kitchen experiment.

74. Pick up (and read) a copy of the town’s free newspaper. Many cities have a free newspaper that you can snag at the grocery store – some cities have quite a few of them. I love them – they’re free reading that keeps me informed about the local area and also lets me know about free upcoming events. Around here, we have several free newspaper options – Toons and Cityview are both well worth reading. Try looking in the front lobby of your local library for your free newspaper, or in the front of your local grocery store.

75. Play with a pet – even one not your own. An hour spent scratching a dog’s belly and playing fetch or frisbee with it is an hour well spent, as can be some time spent curled up petting a cat. Spend some quality time with your pet or with the pet of a neighbor or a friend – every pet loves attention and a bit of exercise and interaction.

76. Go on a wandering walk. Just head out your front door and go in whichever direction looks the most interesting. As long as you have some basic navigational skills, you won’t get lost, and you can turn around or backtrack whenever you get bored or hit a dead end. Along the way, who knows what kind of interesting stuff you might find?

77. Hold a baby. To me, there are few things more enjoyable than holding a very young baby. They smell wonderful, are usually warm and soft, and often drift right off to sleep in your arms. I don’t even mind the crying ones, as some whispering in their ear can usually calm them down. There’s nothing better than sitting all relaxed in a chair with a soft, sweet-smelling newborn in your arms.

78. Exchange massages with your partner. A great massage is incredibly relaxing and enjoyable, but they can also be really expensive. Instead of shelling out the cash, just stay at home and exchange massages for free with your partner. Agree to spend fifteen minutes or a half an hour massaging each other deeply and you’ll find that you’re both quite relaxed and happy – and perhaps ready to try other free and fun activities.

79. Help out an elderly or disabled friend or neighbor. There’s always a person or two in your life that could use a helping hand, but often are too proud to ask. One great way to bridge this gap is to just stop in and visit and pay attention – if they need something, you’ll usually find out. Then just volunteer to do it and get started on the task. Quite often, you’ll find that it’s the simple things that really help – reaching something on a high shelf or managing a simple household task. And that little effort can make all the difference. Few things can make you feel more fulfilled than helping someone you care about in their moment of need.

80. Start a book club – or find one to join. If you like reading and know other friends that enjoy it, too, consider starting a book club with them where you all read the same book for a week then meet to talk about it. It can transform reading from a solitary activity into a more socially oriented one, and with a library at your disposal, it can be a free activity as well.

81. Play a card game. A deck of cards and a few friends is all you need for a fun afternoon. Games like bridge, canasta, pinochle, pitch, euchre, hearts, spades, and 500 are not only intellectually challenging, but are intensely social activities as well, drawing you out to interact with others around you. This is a perfect activity for an afternoon with friends and relatives and it costs basically nothing at all.

82. Have an “entertainment swap” with a friend. This one’s pretty easy. Just have a friend bring over a pile of their own DVDs, CDs, books, video games, etc. that they own that they think you’d like. When they get there, have a big temporary swap – swap them an item for an item. This not only will refresh your media collection for a while, but can provide a great opportunity for you to talk about your interests with a friend.

83. Take a child to a playground – and actually play with the child. Take your own child, or a child of a family member or a friend, to the local park, but instead of just watching the child play, dive in and participate, too. Go down the slide. Swing in the swings. Climb across the monkey bars. Not only will the child adore you for it, you’ll find that playing like that is simply exhilirating – a little taste of childhood all over again.

84. Explore a blog you like. If you’re reading this, you’re probably at least a casual reader of at least one blog. What you might have forgotten, though, is that most worthwhile blogs have tons of useful and entertaining stuff in their archives. Dig deep in the archives of one of your favorite blogs. You can start with The Simple Dollar by visiting the chronology – a listing of all of the articles ever posted here in chronological order – and clicking through to the ones you find interesting. Most popular blogs have a similar feature.

Campaign sign for Margaret Barrett by lordsutch on Flickr!

85. Work for a political campaign. Really involved in politics? There are a lot of ways you can work for a campaign from your own home whenever you have the spare time (like during a money free weekend). One great way to do it is to get involved with a phone bank – basically, you call up people to provide information about your candidate of choice. You can do this using the free weekend minutes on your cell phone or by using software provided by the campaign. Just contact the campaign you’re interested in helping.

86. Clean out a closet. We’ve all got spaces in our living areas that accumulate junk, and it’s often a small psychological burden – we dread going in there and digging for something we need. Well, get rid of that burden – clean out a closet in your home. Find out all the stuff that’s in there and get rid of the unimportant items. Not only might you find some interesting things, you’ll feel a lot better about your organization when you’re done.

87. Play Frisbee at the park. Just get a friend (or a pet) and dig that old frisbee out of your closet, then head out to an open field and toss it around. It’s a lot of fun, a great excuse to run around and stretch and jump, and it doesn’t cost a dime.

88. Take a long, soaking bath. Just fill up a tub with warm water, strip down, get in, and relax. I like to do this with a bottle of wine, and I’ve even read a book while doing it. Just stretch out and soak for a while and your stress will melt away – it feels fantastic!

89. Play Desktop Tower Defense … or some other great free online game. There are tons of deeply engrossing and completely free games to play online – Desktop Tower Defense just happens to be one of my favorites. Try Peggle for a very simple action puzzle game, or any of the mountains of free games available at Yahoo! Games, Kongregate, and PopCap.

90. Visit a magazine room. Most libraries have a “magazine room” where you can read all of the latest issues of many popular newspapers and magazines for free. Just grab a few, settle in a comfy chair, and read. Don’t like the library environment? You can usually do the same thing at most bookstores.

91. Attend a dress rehearsal. Many performance groups have dress rehearsals that are open to the public if you call in advance, particularly if you have young children. Give the theater a ring and ask if there are open dress rehearsals for a particular show and then enjoy the show for free! It’s a great way to give your kids a taste of theater without any cost.

92. Attend a free community class. Many institutions and stores offer free classes on the weekends on all sorts of topics. Stop by a local food store and catch a free cooking class, or a hardware store to learn about a home repair topic. Got kids? Try something like the Home Depot Kids Workshop, where they offer free how-to clinics for kids ages five to twelve – these can be a lot of fun (I’ve seen them ongoing when stopping by a Home Depot on a Saturday morning).

93. Donate some unwanted things to charity. If you’ve gone through your stuff but don’t want to have a yard sale, consider giving the stuff to charity. Not only will you have a clean house, you’ll have the good feeling of knowing your items are going to be used by someone who actually needs them, plus you’ll have a pile of receipts to use for tax deductions next April.

94. Discover new music that you like. Download last.fm. It’s a program that allows you to enter the name of your favorite musical artist and generates a radio station for you that plays songs similar to that artist. The songs are selected based on the enormous last.fm database, which collects information on what people listen to in iTunes and sorts it in different ways, finding songs by other artists that are popular among fans of a particular group. Give it a whirl – you’ll be surprised at the good music you’ll find for free.

95. Build a cardboard castle. This is a great one if you have kids. Stop by an appliance store and ask if they have any extra appliance boxes you can get, then flatten them and load up your vehicle. Get home, then use them as pieces in building a giant cardboard castle in your living room or in your back yard. Cut out doors and windows, and attach them together to make rooms. This can be a great afternoon of fun for free!

96. Dig an old video game console out of the closet and play some of your favorites. A lot of families have old video game consoles in the closet – an ancient PlayStation or Super Nintendo, long forgotten about, with a controller and a few games. Dig out that old console and hook it up to a television, then relive some of the memories of the games you used to play for hours. I did this not too long ago and found myself replaying a good chunk of Final Fantasy IX.

97. Do some amateur stargazing. Go outside on a clear evening, preferably away from city lights, and look up at the sky. Use some handy star maps to know what you’re looking at. Spread out some blankets on the ground, lay flat on your back, stare upwards, and realize how magnificent the universe is around you.

98. Go on a hike or a long walk. Go to the local hiking or walking trails and just take off. Let yourself get absorbed into nature and simply enjoy the journey. Go at your own speed – this is for your own personal enjoyment, after all.

99. Take a stab at writing poetry (or other forms of creative writing). The basics of poetry are easier than you might think – just try writing down what’s on your mind. Whatever you’re thinking about, just write it down. That can provide the basics of any poem. Then, just read through the stuff you’ve written down, choose the words that seem beautiful to you, and assemble them until the whole work means something. This can be a deeply enlightening and personal experience, actually, and one that really stirs the creative juices.

100. Go on a bike ride. If you’ve got a bicycle and a helmet in your garage or closet, you already have everything you need for some good exercise and some good fun. Head outside and bike away. Almost every town and every state park around here has an extensive array of bike trails, so you can almost always find somewhere new and interesting to ride, plus it’ll help get you into shape really quick.

Check out this couple profiled on CNN Money. A summary of their financial situation:

They currently make $133,000 combined.
They recently had a second child and wife wants to work part-time.
This will bring their income down to just over $100,000.
They can't afford to do this because they have too much debt (mortgage, home-equity loan, auto loan, and credit cards.)
They need to cut debt by $500 a month and other expenses by $1,300 to make the finances work.
The mom says, "We really have to think about it."

What????????!!!!!!!!

Let me be a bit more clear: these two make a great income -- over $100k even with the wife's salary reduction -- but they can't afford to live on that amount. Now their hopes and wishes for their family are put on hold because they haven't been able to control their spending and show no signs of wanting to start.

This is just one more in a long line of examples of why over-spending is the worst money move anyone can make.

Now the one thing not mentioned is what part of the U.S. they live in. As we all know, $100k in St. Louis goes a lot farther that $100k in New York. That said, if cost of living is beating them down, I just have three comments:

1. See, I told you that where you live can have a big impact on your finances.

2. No matter where you live and what you earn, you still have to spend less than you make. It's simple math.

3. $100k is a decent salary even if they live in a costly city. Granted, it's not a wonderful salary for people living in costly cities like Boston, San Francisco, etc., but it's certainly not poverty level either.

In short, they have over-spent and now have so much debt that they can't live like they want to. And unfortunately this seems to be more of the rule than the exception in America today -- people simply spend way too much. Don't believe me? Then check out the low median net worths in America today and then tell me what you think.

Posted on September 23, 2010 at 04:29 AM in Spend Less than You Earn | Permalink

Comments

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Touch'e

They made there choices and now they have to live with them. They will not change until they are forced to. Even then they might not change.

They may wake up one day and say "How did we get here"

Posted by: Matt | September 23, 2010 at 06:39 AM

My fiance and I live in DC and make a hair over 100k combined. This is one of the more expensive cities to live in the country. Yet we own a home, and are still able to save somewhere in the range of 40% of our take home pay.

This just meant that we saved longer and harder for our down payment, and bought less house than what we were told we could afford. And you know what by saving for a 20% down payment, our housing payment is actually less than we were paying in rent. While we see some of our friends who used 3.5% down payments on FHA loans, and bought more expensive houses and we see them struggling month to month.

Posted by: Rich | September 23, 2010 at 08:41 AM

This couple should get a grip; that is, a grip on their spending.

Posted by: Carol | September 23, 2010 at 08:49 AM

"It's simple math."

It is and it isn't.

In an objective sense what you say is certainly so, FMF. These people should be planning for early retirement rather than struggling to keep their heads above water and it is their own bad choices that have caused their problems. All that I sign onto.

I don't agree, though, that it is ONLY math that is at issue here. As you note, there are MILLIONS who have caused this sort of pain to themselves. Those people cannot all be dumb or they wouldn't be able to hold jobs paying six-figure salaries. And they cannot lack willpower or again they wouldn't have those jobs -- it takes willpower to get and keep a six-figure job.

So what is going on? It's not an intellectual deficiency that causes this sort of problem. It is an EMOTIONAL deficiency evidencing itself here. Lots of people are scared to even look at their personal finance numbers. That's a reality.

The personal finance field needs to focus less on numbers and more on emotions. That's where the real action is, in my assessment.

Rob

Posted by: Rob Bennett | September 23, 2010 at 09:09 AM

Moving to a low cost area may make financial sense, but that seems a little extreme. Why not take the argument all the way and move to a third world country?

I have roots where I live. Friends, family. The things that make my worth living. Yeah I could pick up and move to the plains of Iowa, but then what?

Kevin --

Iowa is actually a nice place. ;-)

The "move and save money" issue has been debated here many times (including moving to a foreign country.) It's just one option for people to consider and especially those looking to make a dramatic change -- like one parent quitting/reducing work.

Posted by: FMF | September 23, 2010 at 09:23 AM

I wouldn't bash the couple in question too much. The article seems a little contrived. It says they "live comfortably" currently, that they "They pay their debts, save for retirement, even have room to splurge on [stuff]." It says they have a "$3,600 monthly debt load" for a current $11,000 monthly income which is really not bad.

I don't see the couple quoted as saying they can't live on the reduced income or making excuses or whining or anything at all. The just have the one quote ""We really have to think about it," which is not in any context.

The couple in question lives in Fairfax county Virginia which is greater DC area and one of the highest income counties in the nation.

Posted by: Jim | September 23, 2010 at 09:25 AM

easy for me to believe, and anyone who follows the national statistics on debt. the American economy has piled up $4.3 trillion in consumer debt, not including debt backed by real estate (mortgages). that is bigger than most economies of this world. wow . . .

Posted by: Sunil from The Extra Money Blog | September 23, 2010 at 09:28 AM

Kevin -

I know personally how hard it is to relocate. I would say start "roots" in a cheaper state (I live in Kansas) so that your future generations can be rich.

Posted by: Tristan | September 23, 2010 at 09:35 AM

I'm one of those folks who lives right outside NYC and works in NYC. I make a very good salary, for sure. But I totally agree with the where you live issue. I often say to my wife that it would be nice if our families were from cheaper areas of the country where we could have a higher standard of living. But I don't let it get in my way.

Too many people let "where they live" cripple their finances. They use "it's expensive to live in NYC" as a crutch to spend too much. Sure, housing is way more expensive in and around NYC than almost anywhere in the country, but other financial decisions can help offset that - at least partially (like when my wife and I moved right outside of NYC to avoid the 3% NYC income tax. After offsetting the commuting costs and reduction of housing costs that savings alone paid for 3 months of rent.

I do think it's just math. There is income and spending. If you spend more than what comes in, you're in trouble. Also, too many people are focused on what the "payments" are, not what the "price" is - with cars for example. That's a great way to be broke.

Posted by: Nick | September 23, 2010 at 09:45 AM

You do have to admire that they thought about this problem before having the kid.

@Kevin: I had never heard of cities with income taxes until you mentioned it. Thanks for bringing that to my attention. One more thing to keep in mind when I pick places to live in the future.

I love that we pay a 33 yr old assistant principal 78k per year in salary alone and a literacy coach 65k per year in salary. Annualized and benefit adjusted, these are inspiring incomes.

She clearly can’t cut back her work schedule until that debt is paid off. Get rid of the 63k line of credit and the credit cards. Should take her about 2 years of working full time to get those debts paid off. Then they are in a position to make a decision.

This couple seems to be living for today, and not thinking about the future except nominally, perhaps. The tone of this whole issue seems to be centered around cutting their expenses at the expense of the lifestyle they want.

My take is that they should pay themselves first, live on the remaining money, and avoid debt. I wonder if these people even think of things in these terms!

Do not even get me started on the NYC income tax. That said, if I moved to NJ, it would not be any gain, because I'd have to pay extra to commute each month -- that alone equals the tax. Right now my transportation costs are less than $100 a month. So it kind of evens out.

@David - just don't move to any city or village in Ohio, then.

Posted by: Josh Stein | September 23, 2010 at 01:17 PM

It's just a matter of priorities. This couple prioritizes their current lifestyle over the idea of having the wife stay at home part time. Most Americans in general prioritize what they want over staying debt free. Until they consciously change their priorities, they will stay in the exact same situation...

My wife stays home with the kid on 50k a year. I wouldn't trade that for any car payment, home equity loan, boat payment, CC debt, etc. Kinda have to scratch your head on this one.

"The personal finance field needs to focus less on numbers and more on emotions. That's where the real action is, in my assessment."

I totally agree with Rob. If people were to rely just on the logic of the math, people would simply have to look at the numbers to be motivated not to spend more than they earn.

However, "I want" and "I need" are driven by emotions, and therefore people get into financial trouble. It's amazing how difficult it can be for a grown-up not to give in to his or her inner child.

The looked young, perhaps they should start calling Suze Orman's "Can you afford it" segment of her show (lol).

No, really, since they are young, perhaps whey will mature with respect to their finances! There exists a good number of blogs out in the blogsphere where the bloggers have done exactly that. That being where they have dug themselves out of (sometimes) massive levels of debt...

I live in Boston. If you stick to conservative 3x income limits, then 100k won't get you a livable home in a decent school district in a commutable lot (commute costs usually make up for savings). Frankly, I see it hard to live here in under $200k, which is unfortunate because my household income isn't anywhere near that (and I'm an Ivy engineer with double masters). Moving to cheaper part of country is often times not an option (my wife is in grad school) but ironically enough people around here seem to strongly support policies that encourage high costs of living like restrictive zoning and backend taxes, despite living under financial distress. Daycare costs are out of control here.

My advice for them is: you dug yourself a hole and you have to dig yourself out the hard way. Moving to a cheaper area is one option. Part time work, cooking more, dropping one car, selling house and renting, etc - that's your life for several years.

People do spend too much and they have an entitlement attitude. They do this their whole lives, drive cars which in actuality they cannot afford if they are to save for retirement at the same time and generally live for decades beyond their means.

All the while I forgo the nice car, which, like many of you reading this, I could easily go out and pay cash for. I forgo the pricey vacations, the huge TV with options and do-dads that I will likely never use. I buy at garage sales, use coupons, eat at home, etc.

Then, the government comes along and tells me that I have to support those people through higher taxes and other transfers. I will lie to avoid this -- I will conceal assets from this thieving government -- and so should you.

Check out this couple profiled on CNN Money. A summary of their financial situation:

They currently make $133,000 combined.
They recently had a second child and wife wants to work part-time.
This will bring their income down to just over $100,000.
They can't afford to do this because they have too much debt (mortgage, home-equity loan, auto loan, and credit cards.)
They need to cut debt by $500 a month and other expenses by $1,300 to make the finances work.
The mom says, "We really have to think about it."

What????????!!!!!!!!

This is just one more in a long line of examples of why over-spending is the worst money move anyone can make.

1. See, I told you that where you live can have a big impact on your finances.

2. No matter where you live and what you earn, you still have to spend less than you make. It's simple math.

Boats and Cottages

A couple of interesting situations have occurred in my life recently. Since they are related and deal with money, I thought I'd share them in one post.

The first is the number of people I have run into that have "cottages." For those of you who might not be as familiar with the term, here's a brief review:

In Michigan, there are about four (maybe five) months of really great weather. As such, when the weather is nice, people want to be outdoors.
Many people prefer to be outdoors in a wooded or semi-wooded location that's at least somewhat remote.
As such, a good portion of the population here owns a "cottage."
Contrary to my initial thoughts, a cottage isn't (usually at least) a 50-year-old, one-bedroom shack without running water or indoor facilities. Quite to the contrary, a cottage is more likely to be a "regular" house -- just one that is located in the woods, on a lake, or in some other scenic location, generally "up north" (in northern Michigan.) It's likely that this house is smaller than the home they live in most of the time (perhaps it only has two bedroom and one bathroom rather than four bedrooms and three bathrooms.) But make no mistake about it, it's a house.
Some people inherit their cottage from family (or even use a family-owned cottage.) Others buy one outright. Both spend most of their summer weekends "up at the cottage."

Now think of the financial implications of owning two homes (not to mention the time commitment). Even if someone gave you the second home (like a family member), you still have maintenance, taxes, utilities, etc. associated with another home that you have to deal with. And for those who have to BUY a cottage, this might mean TWO mortgages. Yikes!

Now throw this into the mix. Over the last few months, I've had several people who either are: 1) in financial difficulty, 2) have been in financial difficulty, or 3) who could be in financial difficulty (because I know what they make) tell me that they have recently purchased a cottage (i.e. a second home) or have mentioned that they have a cottage. Each time I've thought "how can these people afford a second home?" The likely answer, "They can't." (Some will say they got a "great deal" on one due to the poor economy, but who can afford two homes even if the second one is 40% off what it once was?)

Thomas J. Stanley recently discussed owning two homes. Some of his key findings:

Most millionaires can afford to purchase and maintain a vacation home. Yet, as I mentioned in Stop Acting Rich, 64% of the millionaires surveyed never owned a vacation home, beach bungalow or mountain cabin, not even a lean-to or a tree hut in the woods.

In 2006, the second home buyer had a net worth of approximately $380,000 and a median annual household income of $80,600. Are you thinking of buying "an affordable second home" because you want to emulate the behavior of most millionaires? Be careful. Most people who own second homes are not millionaires. Most millionaires rent instead of buying vacation homes.

Within the same age and income cohort, who is better at transforming income into wealth? Overall those who don't own vacation homes are more productive than those who do.

No doubt some second home buyers have enhanced their wealth by having another home. Yet far too often even investment driven buyers of second homes grossly underestimate the real costs in terms of buying, furnishing, maintaining, commuting to, renting and possibly selling a second home. Time is money. Place a high price on your time, all that time it takes to shop for a second home, set up utility related services, pay bills and hire people to maintain your home. Even renting your home takes time. And if you have a property management company handling and renting your home, you may pay up to 50% of the gross rent for this service.

There are a variety of reasons why millionaires don't own vacation homes. Most self made millionaires don't need to collect "things" to define and demonstrate their achievements. Also, most wealthy people have a wide variety of interests and activities. There is a substantial correlation between the number of interests and activities that people are involved in and their level of financial wealth. Some wealthy people feel that owning a vacation home would restrict them, obligate them to spend a lot of time there. And if they do not spend much time there they feel guilty spending lots of dollars on something that is underutilized. Most millionaires realize this without having to make the first mistake of purchasing a second home.

That's exactly what I thought.

Now look at the issue of spending on things most people can't afford in another way. My wife and I spend many summer evenings walking around our neighborhood. It's a nice, middle class neighborhood with several hundred homes in it. What do you think we find in driveway after driveway (other than multiple cars)? Yep. Boats. And I'm not talking row boats. I'm talking big power boats -- some so big that they barely fit into the driveway.

Again I'm thinking, can these people really afford these big boats (and all the expenses that go along with them). In many cases, I think the answer is "Not really."

Of course people can spend their money on whatever they like. It is their money after all. But I find it interesting that Americans have such low levels of net worth, are struggling with saving for college, are worried about whether or not they can retire (or if they'll have to work until they are 75) and yet they are bleeding money left and right on second homes and big boats.

And what's more sad is that fact that those of us who are financially responsible will be called on to care for many of these over-spenders later in life when they can't provide for themselves (have failed to save for their needs.) After all, it's only "fair" to help others, isn't it (at least that's what many in our government say)? I'm all for helping those who need help and are in trouble through no fault of their own, but I'm not too excited about helping someone who could have provided for themselves and chose instead to own a cottage, boat, or some other extravagance.

Or maybe I'm just becoming a grumpy, cynical old man... ;-)

The Biggest Secret to Becoming Wealthy

Yahoo lists the five secrets of self-made millionaires. But the real gem in this piece is at the end where they share the "biggest secret" of self-made millionaires. Want to guess what it is? Simply "stop spending." Their thoughts:

Every millionaire we spoke to has one thing in common: Not a single one spends needlessly. Real estate investor Dave Lindahl drives a Ford Explorer and says his middle-class neighbors would be shocked to learn how much he’s worth. Fitness mogul Rick Sikorski can’t fathom why anyone would buy bottled water. Steve Maxwell, the finance teacher, looked at a $1.5 million home but decided to buy one for half the price because “a house with double the cost wouldn’t give me double the enjoyment.”

Hmmmm. Sounds familiar. ;-)

Again and again we see wealthy people talking about how they simply spent less than they earned and, over time, they became wealthy. And we've seen this happen to people who don't earn a tremendous salary. Of course, it's easier to become wealthy when you make a good income AND control your spending -- that's why I talk as much about making the most of your career as I do keeping spending low.

Fortunately, success in personal finance boils down to a couple simple concepts (or several if you want to expand them a bit.) Apply these (and avoid the major bad money moves), and you WILL be wealthy.

Unfortunately, it's not that easy to become wealthy. Because while the concepts are simple to understand, they are not easy to implement. They require patience, time, discipline, persistence, and self-control, qualities that many Americans have either given up on or can not muster in themselves. Yes, most people have the ability to become wealthy (assuming even a moderate salary), but they can't (or won't) implement the steps needed to become financially independent. Perhaps they are happier the way they are.

But my experience is that you don't need to choose between happiness and wealth. If you work to grow your income, keep your expenses low, and over time make the gap between the two bigger and bigger, you'll have plenty to do the things you enjoy as well as an ample amount left over to save and invest. Yes, you can have your cake and eat it too.

The Seven Pillars of Financial Success, Pillar 1: Spend Less than You Earn

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

The Bible discusses the keys to personal finance success quite plainly. If you read the book of Proverbs in particular, you'll see that the path to financial success isn't that difficult or extensive. In fact, the wisdom to be prosperous can be found in a few simple steps.

Over the next few weeks, I'll be sharing what I consider to be the seven pillars of financial success from the Bible. I picked up on the number seven from Proverbs 9:1 where it says:

Wisdom has built her house; she has hewn out its seven pillars.

Today we'll be discussing Pillar #1: Spend less than you earn.

In Proverbs 21:20, the Bible says:

In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.

Let me paraphrase and expand this passage:

Wise people have plenty left over because they don't spend all they make. On the other hand, fools spend all they get (and maybe even more).

As I've said numerous times, the core principles for personal finance success are fairly easy to understand -- you need to spend less than you earn for a long time and you'll more than likely be wealthy. Notice what's VITAL in this success? It's spending less than you earn. Without this one, simple step, you're dead in the water financially -- you're going nowhere. With it, you have extra amounts left over that you can save and invest -- and thus grow your net worth. This is why spending less than you earn is the one, main key to financial success (and thus my best piece of financial advice).

If you spend more than you earn, you're going backwards financially -- whether you're making $40,000 a year and spending $41,000 or making $4,000,000 a year and spending $4,100,000. No matter what your income is, if you spend it all and then some, your finances are doomed (yes, I've collected lists of many "rich" people that have spent all that they've earned despite making a boatload of money). So having more income isn't the main issue. It's important, that's for sure, but spending less than you earn is crucial. That's why it's Pillar #1 on the road to financial success.

Do you agree or disagree?

Come back next week as I discuss Pillar #2!

An Example of How to Get Rich on an Average Salary

Here's another example of the fact that anyone can become wealthy with even an average salary -- as long as they spend less than they earn. This story comes to us from the Wall Street Journal. The summary:

Jimmie Dean (not to be confused with the sausage magnate) worked for 33 years as a technician at Phillips Petroleum. The most he ever earned was around $50,000 a year.

But he scrimped and saved and invested in mutual funds. When he died in 2008, he had more than $2 million in the bank. His bequest was to set up a scholarship fund.

“He did it through being frugal with his money,” said Mr. Dean’s nephew, Bob Boyd, who now runs the Jimmie Dean Foundation.

Let's forget the "he deprived himself just so he could give the money away" comments for now and focus on the facts:

He didn't have a great income -- it was average at best. Remember that $50k was the MOST he ever earned in a year. I'm guessing many years were well below that amount.
He lived frugally, had an excess, and saved/invested it.
All this effort ended up generating a net worth of $2 million.

Not bad, huh? And if he can do it, so can the rest of us.

In fact, many, many people become wealthy this way. Check out these posts for details:

You might also like:

· How to Spend More than You Earn When You Make Millions

· The Seven Pillars of Financial Success, Pillar 1: Spend Less than You Earn

· How to Save $10k in 10 Months While Making a Low Wage in an Expensive City

Seven Costly Pro Athlete Screw-ups

It's been awhile since we've covered fabulously wealthy people who have spent all their money and then some, so when a reader sent me this piece covering seven costly pro athlete screw-ups, I knew I had to run it.

Here's a summary of the athletes and their screw-ups:

Scottie Pippen - Former Chicago Bulls star Scottie Pippen lost $120 million in career earnings due to poor financial planning and bad business ideas.
Evander Holyfield - Four-time boxing champ Evander “The Real Deal” Holyfield reportedly made over $250 million in cash during his boxing career, but despite this he reportedly is flat broke.
Lenny Dykstra - According to Dykstra’s July 2009 bankruptcy filing, he owed more than $30 million to creditors, including his $18.5 million purchase of Wayne Gretzky’s home.
Latrell Sprewell - Sprewell, who made over $96 million during his career, lost his $1.5 million dollar Italian yacht, named “Milwaukee’s Best”, in 2007.
John Daly - Two-time PGA major champ John Daly gambled away between $50 and $60 million in career earnings, according to his 2006 autobiography.
Jack Clark - Former professional baseball slugger Jack Clark was driven into bankruptcy in 1992 by his appetite for luxury cars.
Mike Tyson - The king of them all is boxer Mike Tyson, who squandered a $350 million to $400 million dollar fortune.

It's amazing to read these stories. These guys had more money than they ever needed, more than enough to live several lifetimes, and they still blew it all!

Just goes to show you that it's not how much you make, but how much you spend. No matter how much you earn, you MUST control your spending or else you'll end up flat broke.

The Best Ways to Quickly Improve Your Cash Flow

In Seven Steps to Get Out of Debt, step #3 was listed as "look for ways to improve your cash flow." I just listed a few basic thoughts on that post, and I want to add some details for those interested in improving their cash flow. In particular, I want to focus on how to improve your cash flow QUICKLY if you're in a tight spot and need extra money to pay off debt.

Just so we're all on the same page, let's start with what I mean by "cash flow." Quite simply, it's the difference between what a person makes and what they spend. In this case I'm talking about monthly cash flow -- what someone earns in a month versus what he spends that month. It's his "surplus."

We all know that there are only two ways to improve your cash flow -- increase income or decrease expenses. Do either of these things and you will grow your cash flow.

In the short term, it's much easier to decrease expenses than it is to increase income. If anyone could have easily increased their income, they would have probably done so and it would already be part of their cash flow. It's a fact of life that money making efforts usually take a decent amount of time to develop and show results. I'm NOT saying that you shouldn't start working on money making ideas -- just that it will take some time for these to noticeably improve cash flow. Therefore, if you're looking to improve cash flow NOW, you'll need to focus on decreasing expenses.

I have a whole host of suggestions for saving money, so if you're really serious about cutting costs, check out that post. But here's a list of areas where many people can cut costs quickly to improve cash flow -- especially those who have never had a budget and are looking to get into financial shape. I've counseled scores of people just starting their budgets and looking to improve cash flow so they can pay off debt, and these are the most common spots to "find" money:

Premium TV packages - Does anyone really need 500 channels? Or 250 for that matter? Cutting from a premium cable or satellite service to a basic one can improve cash flow immediately in a big way ($50 to $75 a month.) Want entertainment? Read a book (free at the library) or watch one of the 30 channels on basic TV.
Eating out - We all know that it's a lot less expensive to eat at home, right? So why is it that people with money issues always seem to eat out three or four times a week? Hmmm, maybe there's a connection here. At $30 a pop, eating out once a week (or even a month!) versus three times a week will add $240 per month to anyone's cash flow.
Movies - A family of four going to the movies and wanting snacks can easily drop $50. Instead, stay home, rent a movie ($5 at most), and pop popcorn. Do this a couple times a month and save $100.
Vacations - Many with money troubles seem to take very nice vacations -- a lot nicer than the ones I generally take. So how about staying home this year and pocketing the $3,000 to $5,000 you're forking over for a cruise or trip to Europe?
Hobbies - I'm all in favor of turning a hobby into an income, but most people do the opposite -- they sink a ton of money into a hobby that never makes a dime. Now I'm not saying you shouldn't enjoy life, but can't you do something for fun that's not so expensive?

Looking at this list, you're probably thinking I'm the biggest kill-joy alive. But if people are in financial trouble and need to pay off debt, the fact is that they have been having too much "fun" (and spending accordingly) for their income. They need to back it off a bit -- not everything, just some things -- so they can come into balance and get out of debt. Then, as the do that and also increase income, they can slowly add back the things they enjoy doing which they can now afford.

Do you have anything to add to my list? Any ways you've noticed to cut spending and improve cash flow quickly?

You might also like:

Seven Steps to Get Out of Debt

The Ten Worst Money Mistakes Anyone Can Make

A Simple Example of Why Spending Less than You Earn Works

Why Do We Try to Keep Up with the Joneses?

This article about how rich friends can make you feel poor really got me going. Why is it that we put so much emphasis on what people think about how we're doing financially? I know it's part of human nature (just like we care about how people think we look), but does it really matter that much with money? Do we really care so much what friends and family think of us that we need to lie to avoid the issue?

And what gets me even more is the whole "keeping up with the Joneses" mentality. As we've seen, when people live around others that appear to be wealthy, they spend more to appear wealthier themselves. And as a result, they get into financial trouble. When will we learn that the Joneses are not people we want to model our financial lives after? Why? Because the Joneses are broke! They're in debt, spending more than they make, and are living paycheck-to-paycheck. You don't get to be successful financially by trying to emulate someone who's not financially successful. And yet we often spend, spend, spend to keep up appearances. It's frustrating to me!

HOW TO GROW RICH WITHOUT A LOT OF MONEY

Want to grow rich over time but don't make a lot of money? Well look no further, this article will give you tips and advice on how to end up with a lot of money even with a regular job.

Difficulty: Moderately Challenging

Instructions:

Things You'll Need:

· A plan

· Persistence

· Discipline

If you do not already do so, sign up for your 401K at your job and max out your contributions every year. Put as much money as you can into your account as you can every year.

Open your own retirement account for you to put money into. The best choice would be to open up an IRA or Roth IRA and invest aggressively in this account.

Protect some of your assets by investing in more stable investments like gold and treasury bonds. You want to have some money in these types of investments to protect some of your assets.

10.

Tips & Warnings

These tips will help you grow rich over time even

if you don't make a lot of money.

Just stay disciplined and focused on the goal.

BENEFITS OF FIXED DEPOSIT WHEN U WANT TO GROW MONEY

Fixed deposits are loan arrangements where a specific amount of funds is placed on deposit under the name of the account holder. The money placed on deposit earns a fixed rate of interest, according to the terms and conditions that govern the account. The actual amount of the fixed rate can be influenced by such factors at the type of currency involved in the deposit, the duration set in place for the deposit, and the location where The most unusual characteristic of a fixed deposit is that the funds cannot be withdrawn for a specified period of time. In most cases, fixed deposits carry a duration of five years. During that time, the money remains in the account and cannot be withdrawn for any reason. Individuals, corporate entities, and even non-profit organizations that wish to set aside funds and limit their access to the funds for a period of time often find that fixed deposits are a simple way to accomplish this goal. As an added benefit, the monies in the account will earn a fixed rate of interest regardless of any fluctuations in interest rates that apply to other types of accounts.

However, both these benefits can also turn into disadvantages under certain circumstances. Because the money cannot be withdrawn until the duration is complete, the funds cannot be used even in emergency situations. Changes in the going interest rate may also rise to a point above and beyond the interest rate applied to existing deposits. This means account holders are actually earning less interest with fixed deposits than with other types of loans and accounts.

While the interest rate on fixed deposits cannot be changed, there is sometimes a way to work around the issue of obtaining use of funds in an emergency situation. At times, the lending institution where the fixed deposit is placed may be willing to extend a separate loan to the account holder, using the fixed account as collateral. While not ideal, this can at least make it possible to deal with the current financial crunch.

Fixed Deposit Interest Rates

Bank Fixed Deposit Interest Rates

Highest Fixed Deposit Interest Rate

Bank Fixed Deposit Rates

Compare Fixed Deposit Rates

Fixed Term Deposit Interest Rates

Fixed Term Deposit Rates

Fixed deposits are a credible way to make a return on investment that is somewhat higher than a standard savings account. The use of fixed deposits can also be helpful when working with various types of currency. By establishing what is known as a Foreign Currency Fixed Deposit or FCFD, it is possible to choose the type of currency involved in the deposit and lock in a rate of interest. If the choice of currency is a good one, this means the investor can enjoy a healthy fixed deposit currency rate for the duration of the deposit and earn more than with a standard fixed deposit strategy. However, going with an FCFD does contain a slightly higher amount of risk, since the funds deposited must be converted to the currency of choice and then converted back when the deposit is fulfilled. If the currency did not fare well in the interim, there is some chance of obtaining a loss, due to the changes in the rate of exchange from the time the fixed deposit was activated until the time the deposit is considered complete.

STANBIC IBTC BANK WAYS OF GROWING YOUR MONEY

FIXED DEPOSIT ACCOUNT: This is an investment account, which attracts interest rates higher than savings account. The bank operates ordinary fixed deposit accounts for different periods that are 30, 60, 90, 180 and 364 days. It is subject to withholding tax.

CALL ACCOUNT: A call account is an interest bearing account to which funds can be deposited and called back on demand. Funds are transferred electronically over accounts in the same name but third-party payments are not permitted. Interest rates fluctuate daily along with market forces and interest is calculated on a daily balance and paid monthly.

DOMICILIARY ACCOUNT: This is an account operated with foreign currency by both individuals and corporate bodies e.g. Dollars, GBP, and Euro etc. Current account holders who have operated their accounts for over six months can operate it. However approval may be obtained for reputable and long-standing savings account holders with references in their records that wish to open the account and also new clients who wish to open both records that wish to open the account and also new clients who wish to open both current and domiciliary accounts together.

Follow steps under current account for opening requirements. For an existing customer previous record must be reviewed to ensure completeness of documentation.

BONDS

Instructions

Learn More About Bonds
When you buy bonds you are loaning money to a company. In return, that company pays you interest on the amount you let them borrow. At the end of the loan period they will give back the full amount they borrowed. The amount of interest you get paid varies for each bond. Some bonds pay 10-15% a year; other bonds may only pay 1-4%.
For example, you buy a bond for $1000 dollars at an interest rate of 10%. The bond matures in 10 years. The company will pay you 10% ($100) a year, for ten years. At the end of the tenth year they will return the $1000 you originally gave them. Your total earnings is $1000 dollars! Simple math, the interest for 10 years is $100 per year multiplied by 10 years = $1000 bucks.

10.

Quick Tip
If you can't decide on a good mix of bonds, trying using this model to determine a safe blend of bonds to purchase: 30% Municipals, 20% Treasuries, 20% Foreign and 30% Corporate Bonds.

Tips & Warnings

· Your Portfolio shouldn't consist of just bonds.

· Buying stocks is equally important as buying bonds.

Friday, January 14, 2011

Instructions

Budget Isn't a Bad Word

HOW TO GROW RICH WITHOUT A LOT OF MONEY

Instructions

THINGS YOU'LL NEED:

Tips & Warnings

Make Money Online (Without Spending a Dime)

Even with no product and no website,

you can get paid for what and who you know

HOW TO GROW RICH WITHOUT A LOT OF MONEY

Things You'll Need:

Tips & Warnings

Instructions

Tips & Warnings

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HOW TO GROW RICH WITHOUT A LOT OF MONEY

Instructions:

Things You'll Need:

Tips & Warnings

Instructions

Tips & Warnings

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