#7. Life ebbs and flows. Life takes you in one direction, then things shift. These shifts are the backdrop for the choices you make in life. As circumstances change, you make choices and those choices mold your future. Len Penzo shared a great list of suggestions for how to make the most of your decision process when Navigating Life’s Crossroads.
#6. What does it mean when municipalities start filing for bankruptcy? When the government goes bankrupt, who bails them out? And what happens to all of us? I never thought I’d have to ask that question. And I don’t have a good answer. But it’s apparently a reality. I’m not much of a doom and gloom kind of guy. I’m not interested in stirring up fears of a dark financial future in the near future. But this is something to think about.
#5. Successful personal money management is about keeping little expenses from growing into big expenses (like the $1 coffee that costs you $36 because that one charge overdraws your account and incurs an overdraft fee), building resources to accommodate big expenses (like buying a home, unexpected medical procedures, etc.), and financing all the things you want to do in life. In my experience it wasn’t the things I focused on that caused problems. It was always the expenses around the edges of my main expenses like rent, car, education, etc. The difference between your income and expenses is your margin. And if you don’t plan for all the peripheral expenses (with or without a budget), then your margin is what gets eaten up by those expenses. For better or worse, your margin is also your opportunity to really get ahead with savings, investments, etc. David J. Garcia at The Frugality Game did a great job this past week with a video explaining margin. I recommend it. Learning to utilize your marginal funds will make the difference between getting by and getting ahead.
#4. Poverty isn’t something most people would choose. But it is something that many people allow themselves to endure through laziness. It’s absolutely something that can be thrust upon you as the result of fraud or misfortune. But it’s not always someone elses fault that you’re living below the poverty line, or even if you’re just broke (i.e. have no savings or living paycheck to paycheck). To understand more about the causes of poverty and want to know what you can do to protect yourself against it, read 4 Reasons For Poverty.
#3. Needs vs. wants. Can you tell the difference? Many people avoid making the distinction. If you’re in debt or living paycheck to paycheck, refusing to make the distinction is choosing to stay broke. Like getting a shot, taking your medicine, or asking out that man or woman you’ve been flirting with, it’s only scary until you actually do it. Once it’s over, it’s not scary anymore. And after you’ve done it, you’re almost always better off. Take a few minutes to read FreeFromBroke’s comments this week on Turning Monthly Financial Waste into Debt Reduction.
#2. Many people dream of being their own boss. It can be a wonderful, empowering, enriching experience. But if you do it wrong, it can ruin your life. Being the owner means that you’re responsible for everything. Customers and employees takes their cues from you. Having a great product or service isn’t enough. Managing your business to put the odds in your favor in every aspect is the job of a successful business owner. This encompasses everything from providing outstanding service, to having a great product, to keeping cash flow strong to knowing when to say no. The list is long. Thankfully, OutOfDebtAgain put together a great list of 15 Stupid Ways to Run Your Business. Don’t quit your day job before reading this list.
#1. If you’ve been living for a long time without financial freedom you will need to convince yourself that you can achieve it. But all the enthusiasm and conviction in the world won’t produce change without a plan to make it happen for you. There’s no one-size-fits-all plan for financial success. You’ll need to develop a plan that’s a good fit for you. Even developing a plan though requires motivation. So we’re back to motivation. There are only two types of people when it comes to motivation. Some people get up in the morning, early and eager to explore what the world has in store for them that day. Other people lie in bed, repeatedly hitting snooze as long as they possibly can. The first group is motivated by opportunity. The second group is motivated by consequences. Both groups can be successful.When it comes to personal finance, the first group is motivated by maximizing their financial strength. The second group is motivated by fear of being broke. This week Jennifer Derrick from SavingAdvice shared her thoughts on thinking positive. If you’re motivated by opportunity, this should really resonate. If you’re motivated by consequence, this will give you some insight into how the other half lives.