Wednesday, January 27, 2016

I Will Teach You To Be Rich..... Starting With Conscious Spending



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FACT: You cannot become rich wealthy without controlling your spending....consciously. 

I cross out rich because, in my eyes, rich is temporary and is seldom beneficial long term.  Many athletes, celebrities and lottery winners are rich, but if they do not practice conscious spending, then they are not rich for long.

According to a 2010 study by researchers at Vanderbilt University, the University of Kentucky and the University of Pittsburgh, the more money you win in the lottery, the more likely you are to end up bankrupt.  As a matter of fact, according to this study published in The Review of Economics and Statistics, many of them become bankrupt within 5 years of scoring a big win.

The average professional athlete in the United States will make more in one season than most of us earn in our entire lives.  However, according to Wyatt Investment Research, 78% of NFL players, 60% of NBA players and a large percentage of MLB players file bankruptcy within five years of retirement.

Most people's stinking thinking causes them to assume that they are broke because they don't make enough money.  However, according to my research, more money does not fix financial problems.

What does, then? CONSCIOUS SPENDING
Of course I'm oversimplifying things a bit.  However, if you read any of the articles or books about the habits of wealthy people with a net worth over a million (especially those who had modest income levels during their working years), you will find that one of the main ways they were able to save and invest their way into millions was to consciously spend on the money they earned, so that a large portion of it could be used to build their wealth.


In chapter 4 of I Will Teach You To Be Rich, Ramit Sethi focuses on conscious spending.  Although Ramit calls it conscious spending and says that he doesn't use budgets, the bottom line is that he does.....and you need to, as well, if you want to be rich and win with money.  He says that conscious spending is deciding where you want to spend your money up front, instead of spending it on random things here and there.  Deciding what you don't love and are not that important to you, so that you can cut back mercilessly on those things, in order to have money to spend luxuriously on those things that are important to you.

So here are the steps that Ramit suggests to create a Conscious Spending Plan:

Step 1: Create 4 major buckets where your money will go. 














Step 2: List every expense that you can think of that falls under the 'Fixed cost' category and fill in the dollar amounts for each.  A good rule of thumb is that your fixed costs should be 50-60% of your take-home pay. 

Once you've gotten all your expenses filled in, add 15% for unexpected expenditures or items you may have overlooked.  According to Ramit, a flat 15% will cover you for things you haven't figured in and you can get more accurate as time goes on.

Once you've got a fairly accurate number here, subtract it from your take-home pay.  Now you'll know how much you'll have left over to spend in the other categories.  Plus, you'll have an idea of a few targeted expense areas that you can cut down on to give yourself more money to save, invest and do the other things you love (See how this kind of sounds like a budget to me?).

Step 3: A good rule of thumb is to invest 10% of your take-home pay for the long-term.  For the record, long-term investing typically means 401(k), Roth IRA and other retirement-type savings vehicles

Calculate the amount and automate it.

Step 4: Short-term savings could be things like Christmas gifts, a vacation, a wedding or a down payment on a house.  This should be no more than 5-10% of your take home pay.

Calculate the amounts for the various accounts and automate a separate savings account for each.

Step 5: Feel free to spend whatever is left on whatever tickles your fancy!  If you want to use that money to invest more, do it.  If you prioritize travel over early retirement, hit up every country in the world.  Sky is the limit!  You can spend guilt free because all of your obligations are already taken care of. (Word to the wise: Just don't overdraft)

I should mention that if you don't make enough to fit in these to categories, you need to do one of two things:
  1. Find a way to cut back some of your expenses.
  2. Find a way to make more money.
Ramit offers some great ideas in his book on cutting expenses, negotiating higher salaries and freelancing.

Read my previous blogs for more information about Ramit Sethi's, I Will Teach You To Be Rich.  Below is an outline of the topics covered in previous chapters and a link to my blog post about each chapter/topic.
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Tuesday, January 5, 2016

Get Your Life Right in 90 Days......With Me



Welcome to This is me…..Then!  If you like what you see, subscribe here for free updates, or you can “like” my Facebook page here and receive new posts in your news stream.  Once you like my page, you can choose to see posts in your newsfeed first or receive a notification for each post made.  Thanks for visiting!  This post may contain affiliate links.

Chalene Johnson, the best-selling author of Push: 30 Days to Turbocharged Habits, a Bangin' Body, and the Life You Deserve! , has just released a 90-Day system and accompanying workbook/planner that promises to teach you how to set a PUSH goal and achieve all of your goals in 90 days or less! According to the website, Chalene’s workbook takes you step-by-step through the process of setting goals for the key areas of life as well as how to set a PUSH Goal – a goal that makes all your other goals possible. It will help you map a course of action, so you know exactly what you need to do every day to achieve all of your goals in 90 Days or less!
 
Last week, Chalene provided an overview of the process on Periscope and provided FREE access to a PDF version of the workbook, which also set-up like a 90-day planner. I am excited to start this process and would like to invite YOU to try this 90-day goal achievement process with me! If interested, fill out the form below and I will send you a link to obtain the PDF version of the workbook, as well as add you to my private Facebook group where we will be able to share experiences and encourage one another along the way.  
 





Friday, January 1, 2016

January 2016 Reads

 
 
Welcome to This is me…..Then!  If you like what you see, subscribe here for free updates, or you can “like” my Facebook page here and receive new posts in your news stream.  Once you like my page, you can choose to see posts in your newsfeed first or receive a notification for each post made.  Thanks for visiting!  This post may contain affiliate links.
 
I have one of the same goals in 2016 as I had in 2015. 

Read one book per month.

It worked well for me last year, though I did miss a few months, and I would like to continue this same goal this year.

In December 2015, I started a book called I Will Teach You To Be Rich.  This book is written by Ramit Sethi and is described as a 6-week personal finance program that works.  Needless to say, there are only four weeks in a month, so I still have a few more chapters to finish before I complete this book.  Therefore, one of my reads for January 2016 is I Will Teach You To Be Rich by Ramit Sethi.

BUY HERE

As part of our Christmas tradition, there are two items that the people in my household receives every Christmas eve.
1) Pajamas
2) A book

This year, I decided to get my husband an adult coloring book with colored pencils.  I brought my daughter a Melissa & Doug coloring book and jumbo triangular crayon set.  My husband gave me two books.  One of which is based on T.D. Jakes #1 New York Times Best Seller entitled, Instinct: The Power to Unleash your Inborn Drive.  This is not the actual book, but rather the Daily Readings version of this book that provides 100 insights that will uncover, sharpen and activate your instincts.  Therefore, one of my other reads for January 2016 is INSTINCT Daily Readings: 100 Insights That Will Uncover, Sharpen and Activate Your Instincts. I will be reading this for the first 100 days of 2016, so will not complete this book until mid-April.  Since each reading is only 2-3 pages, I will still be able to add a new book each month, without causing too much of an inconvenience.

BUY HERE

Books Mentioned: