After all, isn’t that what the smart piggy used, bricks? Yea, I think so, and so will we!
In order to have that life, you need to know what can stop you from getting it. We all know life is not perfect, but don’t forget neither are we! As you may have read from my previous post, I’m not into sports. However, The concept of offense and defense in sports can be related to finances. We must have a way to protect our money, as well as grow it. That’s defense and offense, in case you follow sports less than me. There’s a lot of info on how to make, invest and grow money. We get excited about these ideas and start to lay our bricks down, then realize, maybe we should have something to hold this together when a strong wind comes. So with that in mind. Lets get into it!
The first key is pretty obvious…
Spend less than you make…
That’s it, next…
Just playing, but this is important. If you find yourself with bills at the end of the month you can’t pay, you seriously need to evaluate the problem. There’s only two factors. Either your income is near or below poverty level or you spend to much in a certain area in your life. Both can be fixed with a plan and dedication. At one point in my life, with a new born and my wife( fiance at the time ) not working, I worked over 80 hours between two jobs for almost four years. No days off, no life and still no way out financially… so I thought. I’m not saying or wishing for anyone to go through that, but if anyone is serious about changing there situation, drastic measures may be what you need.
- Income is below or at poverty level… There are way to many people trying to support a family making close to minimum wage. This income (and usually the job associated with it) is ideally for kids still in school, going to college or possibly a second income for a working family. If you are one of these people, keep doing what you must to complete the task in front of you. If you are trying to support a family, you have to take a fork in the road decision. Do I keep trying to make lemonade with sour lemons or do I add some sugar and water to this crap! If you haven’t done so already, you should be on every government program available to you in your area. However, don’t get complacent with this. Use this to your advantage to leap forward with a small business idea or help pay for school. I know a lady who was on food stamps (snap now); she made food from scratch, allowing the budget they gave her to go further. She was able to feed her house and sell plates to friends and neighbors. Now she doesn’t need the help and still sells plates for extra money. Making more money is as easy as re-selling items on Ebay, offering to clean or baby sit for someone and can be very flexible with kids tagging along (just be sure to disclose that when making deals), get creative, this is America after all! What ever you do, don’t go spend the money on anything that’s not essential to your needs. In later keys I’ll explain what to do with any extra money you can find…
- If you make any decent amount of money, you need to be honest with me… I need you to take a look around your lifestyle. What’s there that you know you didn’t need, do to much of, or could even be a bad habit that drops the bottom line? Drive through any city and you can see what most people spend there money on. As Americans we’re obsessed with convenience. It’s supposed to make life easier that we don’t have to cook with so many types of restaurants nearby or go to a big box store for our favorite chips and ice cream. Yet the name convenience has it’s own premium built in. We know this yet we still go. So in order to fix this I suggest the envelope system. Set a reasonable amount of money you want to spend on these things every pay period and have it in cash. If you run out of cash, you don’t get anything else. The goal will be to realize how much you spend on these items and reduce or even eliminate what you are paying a premium for. If your into bars, night clubs, buying rims, new cars or anything else you might want to pay with a credit card so you don’t have to think about how much it is, STOP doing it. At the very least minimize it. Go to the club or bar when your friends want to celebrate your homeboys birthday or second marriage, not ‘ cause I got paid!’ You can find used rims, for cheap or a slightly used carat discount. Let someone else take the ‘new’ price hit and you get the real deal price of slightly used. You get the point? If your struggling with any money issues, and these are present, correct it! If this isn’t you, we need to get our hustle on. Either a second job or a side hustle. In my opinion, there are more options for women than men. Not to many people are willing to let a man babysit or clean there house, but these are two of my favorite ways to make a quick boost of income. For a quick 2 or 3 hours four times a week you could add $200 a week or $800 a month with very little overhead!!! If this can’t help your budget, you don’t need to eat out EVER!
The Next Key Is Our Defense, An Emergency Fund…
Ok, your spending less than you make, but for what, to save for that vacation? Hell NO! If you do take a trip it better be to put that extra money in the bank!
Stuff is going to happen in our life. We need a cushion to fall back on. I call it the bed made of bricks. Not really, but I’m trying to keep a theme going here. You can’t prepare for everything but you can shield yourself from the home repairs, car repairs, stuff breaking, needing replacement or even if you lose your job. In the last section we talked about earning extra income, that’s what you’ll use to build the emergency fund (E-Fund).
How much should it be? How chaotic is your life? If you seem to be losing jobs often, have a car with issues, house tearing apart, your going to want to go higher than my recommendation. To this point you may not have had a significant amount of money before, but you need to build an E-Fund at least 3 months worth of your bills and food. 6 months or more is better. For now we are still getting that foundation strong. So focus on the possible and get it done fast. When you have this your going to feel untouchable because, s&%$ you got money to take care of your problems! If your boss gets on that trip stuff, you can give’em the finger and walk out and still eat with the lights on for at least 3 months! (I wouldn’t recommend all that hard work for that, but send me a vid if you do) The main Thing with this money is now you have options. Do I find a trade school, or finish up a degree for my earning potential to rise? Maybe you have a hobby or side gig you want to see if you can make a decent living from? The foundation you are making is getting stronger to do what you want. Go for it!
The Third Key Is To Cover Your A$$!
That’s right insurance. I think we need another name for them because I’m not sure they care… did you get it? No! Don’t worry I won’t sue you.
When you get your E-Fund, even it needs protection. A simple trip to the emergency room can almost, if not totally wipe out your FU fund quickly. I spent two nights in the hospital after a motorcycle accident and just the room alone was almost $30,000! (hot tub with nurse not included, maybe in Vegas it would be, I digress) So our E-fund works in two ways: The first is any lose of income if we can’t work to keep the lights on at home; The second is to cover the deductibles with the insurance. I hate the deductibles, but I hate the full price even more.
With all that said, if you have a car you need insurance. If you have more than one vehicle or can get around fairly easy without a car I say just get liability. If you need your car if it should go down or use it for work, you need full coverage.
If you have a house, homeowners insurance is top priority, but also consider home warranties for your appliances, HVAC, plumbing and anything else you may be concerned with in the future. These appliances now a days have so many electrical parts that are very expensive. Play defense against what can drain your wallet.
The Fourth Thing…
Finally something you should want! Investing! Winning the game.
Everyone else puts disclosures in these sections, so I guess I should. I’m not an accountant, CPA or investment advisor. These are my opinions and suggestions based off my experiences and interest. Seek financial council from those smart people.
I’m going to be very general on this because each way to invest deserves its own post. Now that we have more money coming in, an E-Fund and insurance to cover our a$$, we can make the money work for us! There are so many ways to do this, but the most important thing is finding one you will like and would want to stick with.
If you are someone that doesn’t want to do that much work, the best ways are 401k’s, IRA’s, REIT’s and some bonds or CD’s for short term. Lately I’ve been getting into the Forex game, but there’s some work involved in that. These, when properly researched, can give you decent returns on you money. Meaning, your money making you money, not you working for it.
If you don’t mind putting some effort in the front end and maintenance on an ongoing investment: Real estate would be my next choice. Buying a house and renting it out or possibly flipping it. There are many ways to get into this, but it’s easier than one may think when you have money saved. Most properties go up in value and you will be paying down the value. This means your net worth will be increasing very quickly compared to the stocks and bonds mentioned above. It’s also a physical property that you control, giving you a little peace of mind that if the stock market crashes, people still need a place to live!
The last investment idea would be in a small business idea. Depending on the type of business you may be interested in the possibilities are endless. You don’t need to start with a lot of experience. You can even start by offering your services for free in exchange for references and testimonials. From dog/babysitting, cleaning homes/offices, catering, car detailing, computer repair or whatever you are confident you can do very well and don’t need expensive equipment; just offer a first time free or half off deal to your first client in exchange for them to help you grow as a reference. You can do all these part time and whenever is convenient for you! Some you can negotiate so you don’t have to travel to them and let them come to you. No commute, whats better than that? The other good thing about these things are you can scale them. If you get too busy ( in a good way) you can charge more to maximize your time with profits or plan to go ‘legit’ and rent out an office space somewhere! Know hows that for a game changer! From, ‘I’m struggling working for the man’ to ‘ Awe man, I think I need to hire someone’! If you think that running it may be more than you want to do, you can always hire a manager to do the dirty day to day grind for you while you continue with your other job and just let that business grow (your investment).
I hope these ideas can get you started on a path to what you want to build in this life. Depending on where you are, some of these things may be easier or harder than how I may have made it sound. If you really want it, I can tell you there is a way for you, you just need to keep trying and if something fails, don’t give up, try something else! There’s nothing holding you back except you. Don’t let another excuse get in your mind. The wolf will come and try to blow your house down, but when you how to lay those bricks down correctly, you’ll have the last laugh!
Average Joe Chronicles 