Why should I write a blog? What possible insight do I have? At 28 I have a half-million dollar home, successful career, beautiful wife, and money in the bank. Now that you hate me, let me add that there's no secret. I don't make a lot of money. With self-discipline anyone can be or can become secure financially.
The first obstacle is always your spending. People buy things they do not need. Do not buy those shoes, pack a lunch for work, and skip that chocolate bar in the checkout aisle. "It's only a dollar" is no longer in your vocabulary.
- Buy only food that you need, and stop snacking. Pack your lunch. Go out to eat once a week at most. Select your restaurant carefully based on price/return. Is that burger giving you $8 or $1 of satisfaction?
- Buy only the clothes that you need. That perfect pair of shoes that matches a dress you haven't been able to wear? You weren't wearing it anyway. Donate the dress and skip the shoes. Consider versatility in your clothing. Jeans and khakis go with everything. White collared shirts are more versatile than duct tape in the fashion world.
- Buy a condo or house. Paying rent is effectively throwing your money away. Stop it. While more money out-of-pocket, a mortgage is has tax benefits that offset that cost. Stop renting.
If you make $10 per hour, and want to take out your girlfriend, how many hours would you have to spend working to do it? Remember, it's after tax that we care about. An $80 meal will require you to work 8 hours at least, but probably 10 after tax. You also have to cover your fixed expenses, like you cell phone, land line, cable, etc. etc.
Having trouble with your fixed costs?
- Ditch either the land line or cell phone. You don't need both. If you have DSL, consider going dry-loop. It's cheaper, don't let their package deals fool you.
- Turn the heat down 2 degrees, then put on a sweater and turn it down another 2 degrees. Then plastic your windows. Buy insulation. These are short-term costs that pay for themselves. Insulate your water heater. Upgrade your furnace. Switch to natural-gas heating.
- Dump cable and buy a digital receiver for over-the air reception. Unless you're a huge sports fan, TV is a huge cost in terms of time and money. Most of the programs we watch are on network TV. You'll still get Lost and American Idol. Cable is not a necessity, and will give you more time with your significant other, friends, and time to work on projects or read a book. Try solidsignal.com for equipment to receive HDTV over-the-air for free.
- Call GEICO. Packaging your insurance lowers the costs. Proving you use public transportation lowers the costs (submitting bus passes or metro passes to your insurer may lower your rate). Buy a fire extinguisher. Install a fire suppression system. These things lower insurance costs and generally pay for themselves in a year or less.
- Buy a tiny crappy car. Crappy cars are cheaper to maintain because they are easier to buy spare parts for, and are typically cheaper to insure. Further, the initial cost is lower. Gas is expensive, duh.
- Buy energy-efficient light bulbs. Sounds like a no-brainer, but most people still use incandescent lighting. They're not too bright.
- Get timers. Most electronic equipment does not need to be on 24/7. Better yet, throw the fuse, and cut power to everything non-essential (not the fridge!).
- Get honeycomb blinds. They're more energy efficient.
- Ask for generic versions of drugs. Doctors often recommend the name-brand of certain drugs because of their relationships with certain suppliers. Do some research and get the generic. You don't need Benadryl, just a Diphenhydramine tablet. Get the store brand. It doesn't taste much different, especially milk.
- Walks the stairs, buy a jumprope and get used weights on Craig's List. You don't need a gym, just motivation.
Next time: Prioritizing finances.