Tag Archives: Saving

LBYM: LIVE BELOW YOUR MEANS

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

-Charles Dickens

Living below your means or (LBYM) is not a sexy headline. It is safe to say it is pretty much the opposite of sexy. However, it is one of the most fundamental and most important concepts to grasp in personal finance. If you ran a business and consistently showed expenses that were greater then income month after month you would eventually run that business into the ground. No one that is rational would keep a business like this running because it would be costing them money every month. The same thought process should be applied to your personal finances, this is obviously easier said than done.

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DO YOU HAVE A FREEDOM FUND?

What is your freedom worth to you? Is it worth giving up nights out at fancy restaurants? Not upgrading your car when the one you have still runs just fine? Is it worth eating ramen noodles for months? The answer to this question is different for everyone. To your average American employee, most people would not be willing to give up much. These are very real trade offs that many will not make in order to save money to ensure their freedom.

A “freedom fund” is much different than an emergency fund. The freedom fund is set up so you can be proactive while an emergency fund is set up so you are able to be reactive. An emergency fund is more of a need, it allows you to keep food on the table, a roof over your head, and other livelihood necessities if worst comes to worst and you are out of a job.  The freedom fund I think is a conscious choice that is not necessary at all stages in life or for everyone.

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OUR MOST PRECIOUS ASSET IS LOSING VALUE DAILY!

There is one fact in life; no one is getting out alive! Yep, everyone dies it’s a fact of life we are living longer which is fantastic, but everyone will meet their maker one day nonetheless. That is why the most valuable asset of all is TIME. This is not to be taken lightly as no one has any guarantees, although this article is focusing on the TIME VALUE OF MONEY, it is important to foster friendships, be there for family, and seize every day we can.

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LET’S CELEBRATE TAXES

Congratulations! On April 18th you have the honor of filing your taxes to formally pay the government. If you are a single taxpayer and have made more than $10,350 within the calendar year ending 12/31/16, you will pay some amount of federal taxes. Don’t worry though if you are in the same boat as many millennials, your tax bill will be minimal. If you are truly upset about how much you are paying in taxes, you must be working too hard.

Taxes are not all that high in the USA compared to many other countries. Yes of course if you are earning income and making a large sum of money it starts to hurt, but there are strategies to lower your tax bill. For all the complaining our generation does about the low wages they are able to earn starting their careers no one should be whining about taxes. To dive into this a little deeper let’s get a better understanding of how your FEDERAL tax bill works.

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THE CASE FOR AN EMERGENCY FUND

Life is unpredictable, we can have great intentions but then “life” happens. This “life” stuff can prove to be pretty frustrating. Let’s say you just got done completing your net worth calculation and are fired up to make a change this year. You have some debt on your credit card, and you are sick of paying the minimum balance for what feels like a never decreasing balance, so you decide to start paying down your debt…not a bad intention, but it should not be the only priority.

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