8 Eight.docx

Eight One of the major questions everyone has regarding their income is, am I making enough money to support my lifestyle? Why am I living paycheck to paycheck? Perhaps, they should be asking themselves, am I living beyond my means? The term ‘beyond your means’ refers to, you are spending all of or...

Eight One of the major questions everyone has regarding their income is, am I making enough money to support my lifestyle? Why am I living paycheck to paycheck? Perhaps, they should be asking themselves, am I living beyond my means? The term ‘beyond your means’ refers to, you are spending all of or more than their paychecks, with nothing left over for savings. You may be debt financing the amount of money you are spending over your income and creating debt. Many times, some of you may find it hard to understand the definition of ‘living within your means’. It just means you can’t have everything you ‘want’ therefore you have to sacrifice and manage with only the things really need. ‘Living within your means’ means you are spending less than or equal to the net income you bring home monthly and there’s money left for savings. Many of you feel entitled to have all the material processions you desire even if you must purchase them with credit cards. But can you really afford them? You may need a vehicle for work but don’t need a luxury vehicle, this is a ‘want’. You may need a purse, eyeglass frames, clothes, or shoes but you don’t need the designer version of these items, any reasonably priced item will work for you. The cost of designer shoes, purses, and celebrity or Pro athlete sneakers can be over thirty times the price of an acceptable functional priced item that you ‘need’. For example, if you spend $3,600 on a pair of designer shoes or a purse you ‘desire or want’ you can purchase a pair of acceptable shoes or a purse on sale for only $60 to $125. The designer shoes could represent fifteen payments on a car lease of $200 per month or a set of tires and two months’ rent. So, when you go out to dinner, why order steak or lobster when chicken or fish will satisfy your hunger ‘needs’ for 70% less cost? This is what and how ‘living within your means’ is and how it works by making the best choices while saving money. The designer is probably a multi-millionaire or a billionaire. Trust me they don’t need you struggling to make them wealthier. However, it’s ultimately your decision and choice. Make the best choices that work within your budget and lifestyle. Another example would be when you go purchase a vehicle. Focus on the vehicles you can afford, don’t test drive any vehicles you cannot afford no matter how much you like them. The salesperson will try to upsell you to a luxury vehicle by having to look at a pre-owned or two–three years old with 32,000 plus miles on it. He will do this by stretching your loan payments to 84 months, that’s seven years. Most luxury vehicles come with 4-year 50,000 miles, you only have one or two years or only 18,000 miles left on the manufacturer’s warranty. He won’t tell you this nor will he tell you that the hourly service rate on the luxury vehicle is over $200 per hour versus the vehicle you intended to purchase of only $125 - $145 per hour, that’s 30% more for service labor. Doing the math, a three-hour service visit will cost you $600 versus about $400 for a non-luxury vehicle. Please stay focused, and don’t make the common emotional purchase mistakes that will bust your budget and cause you to continue struggling and living beyond your means. This is how you create more debt than you intended. Remember, this will not be the last vehicle that you purchase in your lifetime, so stay within your planned budget. This way you’ll be able to make your payments on time every month. This may be hard to accept, but when you are purchasing designer or luxury items before you can really afford them, you are making those companies richer, while you are making yourself poorer by having to struggle to maintain your ‘wants’. One of the goals of is to have you start, revisit and reset your relationship with money to show you that with planning, budgeting, discipline, and patience that you will be able to accumulate enough savings to purchase a few of the designer or luxury items you may ‘want’. There’s never a real need for these items, they are considered emotional and ego items that you are willing to deplete your savings for things you don’t really need. Only you have the ability and can control your purse strings and therefore your budget and your savings. You can spend your paycheck on the things you ‘want’ and then wonder at the end of the month where all your money went. When it’s time to pay your monthly overhead expenses, you may be challenged to come up with the money to pay all of your bills. Or you can plan, budget your paycheck, and make the necessary sacrifices to cover all your monthly overhead expenses before spending money on things you don’t need. The choice is always yours to use any of the suggestions presented! The chart in the next chapter is an illustration of what your monthly overhead budget may look like. Please consider using some type of ledger or software solution that will allow you to easily customize your budget to reflect your income and overhead expenses. This type of ledger system may be the single most important and easiest money management tool you can use to access and keep track of where you spend your money. The benefit that this knowledge gives you is the power to make immediate necessary adjustments and changes to eliminate monthly overhead expense shortfalls, and debt and handle emergency expenses. Article: The number of Americans who are forced to live paycheck to paycheck has been increasing over the past years. They are finding it more difficult to pay their monthly expenses on time. This means they are not putting any money into --savings accounts nor are they saving for their retirement, and they are highly stressed out and may be experiencing some form of depression. Are we living and spending beyond our means? Regarding all of the monthly expenditures, is there any room for reducing expenses or improvements? Have you created a monthly budget that prioritizes your reoccurring overhead expenses? These are rent/mortgage, utilities, groceries, cell phone, Internet, cable, and transportation. Can any of these expenses be reduced: for example, cell phone, cable plan, or the type of vehicle you drive? How much disposable income do you have left over after overhead expenses are paid? This income can be used to pay down credit card debt, student loans, savings, and retirement. This is the income you may use at your discretion or for your wants like shoe and apparel shopping, attending sporting events, dining out, and or golfing. Article: According to the 2017 survey, CareerBuilder, a leading job site, found some startling statistics related to debt, budgeting and making ends meet. CareerBuilder found that 78% of U.S. workers are living paycheck to paycheck. For example, here are some findings from the survey: Nearly one in 10 workers making $100,000+ live paycheck to paycheck More than 1 in 4 workers do not set aside any savings each month. Nearly 3 in 4 workers say they are in debt - and more than half think they always will be in debt. More than half of minimum wage workers say they have to work more than one job to make ends meet. 28% of workers making $50,000-$99,999 usually or always live paycheck to paycheck, and 70% are in debt The survey also found that 32% of the nearly 3,500 full-time workers surveyed use a budget and only 56% save $100 or less a month. Article by: Zack Friedman - Forbes Article: If you’re working like crazy and still just squeaking by you might be relieved to learn you are far from alone. A couple of months ago, CareerBuilder released a report claiming as many as 78 percent of American full time workers are living from paycheck-to-paycheck — three percent more of us than last year. What’s more, 71 percent of us are in debt — again, three percent more of us than last year. The parameters of what constitutes a livable wage varies greatly; these staggering statistics show just how few of us have the means to make ends meet. Depending on where they live, even people who earn $100k per year say they’re living paycheck -to-paycheck, and 59 percent of people making that kind of money admitted to carrying debt. Of those 59 percent, 56 percent say they’re heavily in debt. And that emergency stash of six month’s pay that experts keep saying we should put away? For more than half of us, it’s just not feasible. According to this survey, 56 percent of us can barely save $100 per month. All things considered, when you break it all down, most of us are just one misfortune away from financial oblivion. They say money can’t buy happiness — but it can buy you better physical and emotional health. Why? Living paycheck-to-paycheck is incredibly stressful. -According to the American Psychological Association (APA), financial stress is the top cause of stress for Americans. And it’s a well-known, scientific fact that stress has many negative ramifications on your health. Article by Vivian Manning-Schaffel Working middle-class Americans earning over $100K a year, are usually earning ‘Living Wages’. If they are having financial challenges, it’s probably because they are not planning, budgeting, and or being financially irresponsible. They may be overspending their income and ‘living beyond their means’. They may feel they have a ‘right’ to buy more luxury items that require a much higher percentage of their net income. Before they realize it, they need to put more and more purchases on credit cards and end up paying interest on monthly balances. Here are some examples of overextending yourself; buying or leasing a vehicle they really can’t afford, excessive cable bills, eating out too frequently, gym memberships, music, or vehicle radio subscriptions. Then there are those with expensive taste in designer clothing and shoes, gambling debt or the frequent attendance of professional sporting and or theater events. All these types of expenditures may be considered luxury expenditures. They are not needed in order to have a good quality of life. They are considered luxury purchases such as entertainer and sporting events which many people spend a huge percentage of their ‘disposable and discretionary’ income on. These are the purchases you usually lose track of their actual total costs because it has become their outlets for enjoyment or an escape from their life stresses. Consumers feel they need to have a good work-life balance life which includes entertainment. It is encouraged to participate in some of these activities of pleasure in moderation while staying within your budget. Credit cards can become an enabler that increases the user’s ability to engage in these activities without discipline and self-control. This is why it’s smart to keep track by writing down what amounts of money you are spending on almost everything. As long as you are making these choices within a budget, they will always be manageable. Many of your over-extended expenditures could be corrected by better planning, management of your income, and behavior modifications of your spending habits. It would be beneficial for them to review their budgets, and bank and credit card statements in order to highlight and identify those non-essential purchased items which are consuming a huge part of their monthly incomes. This gives them opportunities to make needed changes or continue on the same path. Then there are the rest of you, if you are not earning anywhere near $100K per year and you’re still not living within your means because of your low and limited incomes. You are probably experiencing a ‘boatload’ of debt, financial challenges, and living paycheck to paycheck. If you have a budget plan system and are sticking to it use your credit card only as needed. Then you’re probably in a better position than many of your fellow Americans but still struggling. The ‘Key’ is to have the patience to wait for what you ‘want’ and just purchase the things you need. Let me clarify; if you need a vehicle to get from point A to point B, put aside your desire that you ‘want’ or have to have a vehicle with style to project an image of importance when any reliable vehicle will serve the purpose. Let’s look at the numbers, if you can finance or lease a vehicle, then consider the ones that with MSRPs of $22,000 to $30,000 that lease for $199 to $299 per month. Rather than the vehicles with MSRPs of $40,000 to $60,000 that lease for $449 to $699 per month or more. They both will do the exact same thing for you. Oh, my mistake, the vehicles with the lower MSRPs will save you from $18,000 to $42,000 over a 60-month period. Not too shabby, huh! Plus, the service is much less too. This is how much it will cost you to profile and project an image in the more expensive vehicle. The high-end vehicle will probably require premium gas too at $0.60 to $0.90 per gallon more or a cost of $15 more per fill-up. Oops, this is what happens when you purchase a ‘want’ vs a need. See how easily you create a huge amount of unnecessary expenses and debt. Now, do you see the difference? Let it be said again and just remember, “this will probably not be the last vehicle you will purchase, so it doesn’t need to be one that will create financial challenges to pay for it”. Spend your income wisely, a wise financial planner once stated that, “you should never work to own a vehicle; a vehicle is a tool that should work for you”. Another tip for you is, “every dollar that you spend today on something you ‘want’ and don’t need, is a dollar you will not have in the future to spend on something you may need”. You should save money every opportunity you get. Article: As many as 22 million U.S. workers can be considered “underemployed” that is, they have a job that doesn't put their education, experience or training to work, or they are working part-time when they'd rather have a full-time job, according to a new report from PayScale. By:Catherine Conlan, Source: Monster Contributing Writ However, even for those who plan as best they can to manage their income, everything still comes back to the fact that 22 million of Americans are either underemployed or unemployed. This can keep this group of working-class people living paycheck to paycheck due to no fault of their own. This number is huge, it’s the equivalent to, if you can visualize 70,000 fans at every professional football game stadium at full capacity for ten seasons. These people are involuntary members of the underemployed, they have been drafted into the infantry of the folks trying to survive with less income than they really need to make ends meet. This is an issue that needs to be addressed through the creation of higher paying manufacturing and all types of other jobs paying real ‘Living Wage’ incomes. For those who aren’t over-extended from extravagant purchases can still find yourselves living from pay-check to pay-check because you are not earning a ‘living wage’ income, it’s very hard. Many people who neglect to plan and budget for their monthly expenses will find it very difficult when they attempt to live on their own. If they only work with their ‘Net’ incomes rather than your gross income. Net income would be their take home pay after taxes estimated to be 25% - 30% of their gross income. When you prioritize your monthly overhead expenses and subtract them from your net income, this will provide a more accurate picture of any remaining income. This allows you to plan with the correct information as you plan to ‘live within your means’. Hopefully, this will help you eliminate many of your overzealous impulse purchases. But the bottom line always comes back to the fact, many of you may not be earning ‘Living Wage’ incomes which is a major contributing factor in creating your financial challenges. Your households are like individual small business entities that are successfully operating independently. As the household executive officers, you must also run and manage your household businesses from the revenues generated from selling your labor to your employers. The successes of the home business models are dependent on a steady ‘cash flow’ or bi-weekly influx of revenue or paychecks. Any disruption in the ‘cash flow’ or if the business is not able to generate enough revenue to meet its expenses the operations will end up in the ‘red’. This means businesses are headed toward financial hardships purely because of the lack of revenue. All working Middle Class Americans want to, deserve to and should be able to trade 40 hours of their labor, expertise, skills, and time for ‘Living Wages’ that will generate enough income to support their family household. You have become dependent on those annual employee raises which are critical in managing your increasing household expenses. Many times, you don’t feel the amount of your raises are enough to keep your household running efficiently. You feel you are worthy of, have the desire and right to live a life with a ‘Work Life Balance’ of work and relaxation and still have the ability to save for your future. You should be able to save a four-six months cushion of your monthly expenses so that you are better prepared for a fortuitous or unplanned income crisis. Americans living paycheck to paycheck is just one major income disruption or unexpected expense away from financial devastation. This could be caused by a layoff, uninsured, or uncovered medical expenses. Any disruption or reduction in their cash flow would have huge negative repercussions and challenges to their ability to pay monthly overhead expenses. And of course, this would negatively impact their credit ratings many times beyond their ability to ever recover. So many people are looking for additional income sources and will resort to trying one of those many available schemes that promote, ‘if you work hard, you too can build a lifetime of residual income’. The most popular is the Pyramid, Multi-Level Market (MLM), and Ponzi schemes. A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. Multi-level marketing, also called pyramid selling, network marketing, and referral marketing is a marketing strategy for the sale of products or services from where the revenue of the MLM company is derived. A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Wikipedia Please research all these type of businesses or employment opportunities that promise you great financial returns before you decide to participate in one of them. Many people have ended up spending a lot of money they didn’t have on high priced products and never see any residual income chasing a dream. If you do the math a Pyramid scheme where each member is required to recruit five new members and so on and so on. After thirteen tier levels recruited you would have over 6,103,515,625 members. That’s more people than the entire world’s population and may not be a true opportunity for success and residual income. Now for a more realistic issue, there is no reason to settle for any product that doesn’t meet your expectations. If you have a problem with a purchase or there’s a recall of any consumer product such as food or baby product, please contact the manufacturer to let them know about your experience. It could be something as simple as the cookies in the package are all broken into pieces, or the sole of a shoe has come apart. Return all recalled products to the store for a full refund. Manufacturers value your input in determining if this is a production or recall issue and are very accommodating in helping you resolve your concerns. Many will supply a coupon to replace the item. For all recalled or faulty products call the manufacturers and/or return the item to the store for a full refund. If you throw the items away, then you will incur a monetary loss. You don’t want to take the loss for recalled products, they happen way too often. The manufacturer and the retail store don’t need to make any profits on bad products. They have billions of dollars and have much more money than you do and can afford the losses. You will need to provide information from the original packaging such as UPC, Best by Date and production code and they may ask for the receipt. One solution to make this information available would be to staple the receipt to the packaging, put it into labeled envelopes and save them in empty shoe boxes in your closest. This is a crude record-keeping system, but it doesn’t take up much space. Simply by implementing some of these strategies, solutions and managing your budget will allow you to have many more options other than living paycheck to paycheck. The goal is to enable you to increase your income’s purchasing power.