Middle Class Finances

The American Dream?
The Center for American Progress recently released a report entitled “Middle Class in Turmoil” that covers the financial troubles faced by the middle class in America. I was reading this report and others on their site and came across some depressing information that many of us are well aware of.

While health care, health insurance, college, housing, and energy costs are rising; Americans are experiencing flat wages and an economy with slow job growth. With more going out and less coming in, many of us have used a mixture of two strategies just to keep up. We’ve increased the amount of money we’re borrowing and have been working longer hours or multiple jobs.

Quality of Life
These strategies of working harder and taking on debt have dramatically decreased our quality of life. They have lead to less time with our families and record levels of household debt as a percentage of our disposable income. With any job or business, to be successful you have to put in the time. The same thing applies to relationships. It’s hard to enjoy time with your family when you’re always at work. It’s also hard to enjoy time with your family when you’re arguing over finances or stressed over bills.

The report discusses one thing that is a definite cause for this stress, the decreasing financial security of the American middle class. Many of us aren’t prepared for the financial drain of a medical emergency or the sudden loss of a job. Even if we’re getting by now, without an emergency fund and financial alternatives, families can have the troublesome fears of “what if” in the back of their mind.

Feast & Famine
One of the sad things is that these families are experiencing this during a time of economic success in our country. The Center for American Progress discusses this in the
“Upside-Down Economy“. The article discusses the feast of the corporations vs. the famine of their employees.

“While business profits are soaring to record levels, income growth is extremely slow and wage and employment gains have lagged significantly. Despite the rise in corporate profitability, these earnings are not being reinvested in the creation of good paying jobs and productive capital. Workers, therefore, have not reaped their fair share of the productivity gains in the past few years.”

What Can We Do?
At a macro level, we can get involved in politics and vote to help change policies. Unfortunately for our families this is a long term solution that will have an eventual trickle down effect. What can we do NOW?

I’ve decided the best way to change my family’s future is to take matters into my own hands. I’ve decided to work for myself. With a family to support, I can’t just quit my job. So mine will be a gradual journey earning money for myself, instead of for other people. I want to work all day on something I’m passionate about. My vision is to help others learn how to live a money smart life and I’m glad I’ve started on the journey.

Get Started Today!
I encourage you to find something you are passionate about and that helps meet your life goals. There is a saying something along the lines of “If you don’t like where you’re headed, change directions.” If you’re worried about the financial state of families in our country today and think you’re one of them, change where you’re headed. Get started today, making the decision to change really is half the battle!

Making Yourself Rich

What is Rich?
To some people, being rich is a dollar amount in a bank. To others being rich is about having security, not having to worry. Accumulating possessions and property equates to being rich for some. Others feel being rich is all about the lifestyle you lead. In my opinion, how you live your life is what defines being rich. The amount of security, money, or possessions a person has doesn’t seem to matter much if they are not enjoying life and following their passions.

That being said, money is a key component of being rich. Money can’t buy happiness, but it can buy freedom. If a person can learn to make and manage money they will be empowered to follow their dreams and live they lifestyle they believe in.

Why Become Rich?
Defining the answer to this question is the first step to being rich. Once you have your reasons to be rich you have the motivation to succeed and your guidelines for getting there. My reasons are simple:

Family. Support my family and allow my wife wants to stay home and raise our kids.
Education. Education on how to make and manage money is lacking in our school system. There are many people in search of these skills and I want to share with them the things I’ve learned from my mentors and through my experience.

What Are You Doing To Make Yourself Rich?
The basic concepts to becoming rich are simple:

  1. Save more than you spend
  2. Increase your savings by paying yourself first. Automate the process of putting income into savings or investments before it even hits your checking account. Reduce your spending by buying what you want or need, not what others are selling.

  3. Make the money you earn work for you
  4. Make sure the money you accumulate is growing at the optimal rate for your risk tolerance level. A financial professional can help you devise a plan to meet this goal.

  5. The more you earn and keep, the faster you become rich
  6. The best way to earn and keep the most money you can is by working for yourself.

Success is Contagious
Although everyone has their own reasons for wanting to be rich, one commonality among most people is they know they WANT to be rich. If you want to achieve something, find someone who has already achieved it and do what they did. Read the post, Making Others Rich – A Different Perspective, to find out how we can become rich by making others rich.

Making Others Rich

We spend most of our time making other people rich. Below are four simple examples that illustrate how we make other people we’ll never even know rich in our daily lives:

1) We roll out of bed when the alarm goes off at dark o clock.
While we’re sleeping we’ve been paying for the roof over our head. If we pay $1000 a month for a home loan or rental fee we pay almost $1.40 an hour over the course of the month. Even if our monthly housing costs are only $400 a month we still about 55 cents an hour. We just spent the night making a landlord, home builder, or bank somewhere a little richer.

2) Off to work, we jump in our car and head onto the highway.
Most of us are still making payments on the car we drive, one that depreciates an average of over 35% during the first year of ownership. Monthly payments cost us from $1.10 an hour ($800 monthly) to 42 cents an hour ($300 monthly). The car that spends most of the time sitting in a garage or parking lot is making an auto maker, car dealer, or bank somewhere a little richer.

3) Gassing up, we swipe our credit card and fill the tank.
Credit card rates are ridiculously high for those of us who maintain a balance. For those who use a cash back card, one slip up in payments will cost us an entire year’s cash back. A fat cat in the upper office of the credit card company is now a little richer. Gasoline prices are soaring but we grit our teeth and pay the price. The world’s largest oil companies are turning in record profits; thanks to our continued business their executives are now much richer.

4) We roll into work, dreading the day, and begin the daily grind.
The total cash compensation of your company’s CEO last year including salary, bonus, and stock options was $2,574,717. Did you get a bonus last year? How much was it for? Does, “Thanks for the hard work”, sound familiar to you? We spend at least 8 hours a day working our butts off, making the people at the top very rich.

As I put these everyday examples into words, I realized how screwed up it is. If I stay on my current path I’ll spend most of my life making people I don’t know rich and will probably never be rich myself. Depressing thought, however, there is hope. Read Making Yourself Rich to hear the good news.

Financial Education

What You Don’t Learn in School
One of the things I find most troubling about our society is the lack of financial education in schools. While math, science, and English are required learning, personal finance courses are either not available or not required.

Blueprint for Trouble
The travesty is we prepare our youth to be competitive in the job market, but we don’t teach them how to handle money once they earn it. We’re setting them up for lives of debt and a difficult financial future.

Entrepreneurial Gap
What’s even worse is the lack of instruction on how to make money for themselves. We teach them skills that employers are looking for. Guidance counselors talk to kids about going to college and finding a career. They help them write resumes and learn how to interview. Youth learn the skills necessary to work for someone else but aren’t introduced to the basics of earning money for themselves.

Making a Difference
The failure to educate America’s youth on finance matters has created a country full of people needing financial guidance. I’ve often wanted to share the concepts of smart personal finance with others but have lacked a method to get the message across without sounding as if I was bragging or nagging. Self-publishing on the Internet is definitely a way for one person to make a difference. My goal is to help others take another look at the way they think about money and they way they use it.

Welcome to a Money Smart Life

This site will document a journey that many of us are on, a search for a Money Smart Life. You can read my story and the motivation behind this site on the My Story page. Hopefully, this will serve as a guide to others on a journey similar to mine. Thanks for reading!

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