No, using an emergency fund to pay off credit card debt isn’t a good idea

It seems like I’ve been finding a lot of financial questions online lately. I guess that’s good–it means people are thinking. The best question I’ve found this week is whether you should use your emergency fund to pay off credit card debt.

Mathematically, it makes sense to do so. But one thing I remember hearing time and time again as we were paying off massive quantities of debt was not to empty bank accounts in order to do it. The reason for it was simple: Life is unpredictable. Read more

Feeling poor on $100,000 a year

Yahoo! Finance! has! a! first-person! story! about! struggling! on! six! figures!

Silliness aside, you might be surprised to hear I–an infamous stingy Scottish miser–am at least a little sympathetic. Read more

How to become a millionaire in 10 years (safely)

I saw a blog post today called How to become a millionaire in 10 years. The majority of commenters dismissed it outright.

I don’t like that attitude. The plan makes some assumptions that aren’t always true. But having the plan is an important first step. What’s impossible now might not be impossible in a few years, so it makes sense to do what you can now.The plan, in brief, is this: Invest $996 a week, get a 12% return, and in 10 years, you’ve got a million bucks.

Let’s look at the first objection. It is optimistic. Unfortunately, the guy who floats that figure the most frequently is exaggerating. But you can come close by tweaking your strategy a bit. Twelve may be a bit optimistic, but it’s probably close enough. If you’re pessimistic, use a figure of 7% and adjust the rest of your math.

It may be tempting to try to do better. I suggest not. Average returns are all you need. Warren Buffett has said repeatedly that it’s better to spend your energy increasing your earning power rather than trying to outperform the market.

The second objection was that the numbers were just too unreasonable, so how do you become a millionaire in 20 years?

That’s easy. Save less. According to this handy calculator, $1,100 a month for 20 years at 12% more than does the trick.

Or you can save $2,000 a month for 15 years and pass the million mark.

So the math is sound. Let’s tackle that really big objection: How in tarnation do you come up with $996 a week to save? (And no, you don’t have to already be a millionaire in order to do it.)

The key is the same as paying off debt quickly. Don’t try to do it all at once. Take some baby steps. If the best you can do is half that, you still reach the goal in 15 years. Start by saving what you can, then ratchet it up when you can.

I set out to find a large number of common ways that people can save $996 per week (or more). Step one is the big kahuna, which will save most people a cool $24,000 a year right off the bat.

Step one: Pay off your cars and your mortgage. Between a house and two cars in the driveway, it’s safe to say most families are spending $2,000 a month. Some are spending a little more, others a little less. The trick here is the debt snowball. Look at your statements, pick the car you can pay off the soonest, then scrape together whatever extra cash you can and pay that much extra every month until you have that car paid off. Then take what you were paying on that car, and apply all that money to the other car. After that, apply all that money to the house.

Chances are very good that you can pay all of that off in less than seven years. The biggest reason why is because banks generally won’t loan you more money than you would be able to pay off in that timeframe. The reason for the subprime mortgage crisis was because banks started ignoring that rule and giving loans to pretty much anyone.

If you are a middle class family that manages to pay the bills somehow, some way every month, I’m reasonably confident in saying that you can pay off all your debt in seven years, then dump that car and mortgage money into an index fund and be a millionaire in another 20.

What about cars in the meantime? Drive the paid-off cars as long as you can, then replace them with the least expensive vehicles that are practical. Given a choice between driving a Lexus and looking like a millionaire, or driving a Toyota Corolla and being a millionaire, personally, I’d choose the latter.

So this gets you roughly halfway there. Let’s see if we can nickel and dime our way to the other half.

Step two: Live off one salary. If you’re married and your spouse works, try as much as possible to live off one salary and bank the other. This was the strategy my in-laws used to pay off their debts (rather than the debt snowball). If one of you brings home $26,000 a year or more after taxes, that gets you the other half immediately. Congratulations.

If step two is impractical or impossible, or doesn’t quite get you there, here are some smaller steps to get you there.

Step three: Put your raises and windfalls towards savings, rather than lifestyle changes. Someone I know was talking just yesterday about a job opportunity that paid a cool $30,000 more than he makes currently. “Lifestyle change!” he said excitedly.

Personally, I’ve never been able to make that kind of a jump, although I’ve made a couple of much smaller jumps since 2006.

Unfortunately it’s often difficult to get much of a raise from a current employer–the money comes when you change jobs. If you’re able to, say, move to a new employer and get a raise of around 10 percent, that takes care of a few of your 52 weeks. Do that every 2-3 years, and you can work your way towards the goal.

This strategy can take care of about four weeks.

Step four: Bank your tax refund. If you get a tax refund every year, instead of using that money to buy something, put it towards the goal.

In most cases, I would think the tax refund takes care of anywhere from 1-3 weeks.

Brown-bag your lunch. Early in my career, I ate out pretty much every day. My day started with a cup of coffee and a doughnut in the cafeteria ($2), and on a good day, lunch cost another $5. Eventually I realized these habits were costing me almost $1,400 a year. Brown-bagging isn’t free, but I figure brown-bagging every day costs less than $400 a year.

That’s another week, or possibly two.

Cut the cable and phone. My local cable provider charges up to $70 per month for some of its packages. Basic cable costs $40, which is still outrageous. If you can live without cable altogether, you can get anywhere from half a week to 3/4 of a week right there. If not, cut back as much as possible.

So how do you live without cable? My wife and I rent movies from Red Box about once a week. It costs a dollar. Other than that, we watch over the air TV. Sometimes there’s nothing on, but when I visit people who have cable, a lot of times there’s nothing on at their house either. The DTV changeover means there’ll be more local channels–many PBS stations are broadcasting on several frequencies, and DTV stations have a range of about 120 miles, so there’s a decent chance you’ll be able to pick up stations from nearby cities that you couldn’t get before.

So try it. If you can’t live without it, cut back as much as you can.

The same goes for your phone line. Are you paying for Call Notes? Cancel it and get an answering machine. Call waiting? Cancel it unless you can’t live without it, but in this day and age when everyone has cell phones and e-mail, I’ll bet you can. Call forwarding? Cut. If you buy everything Southwestern Bell tries to sell you, you can easily pay $50 or more per month for your phone line. When I ordered phone service, I asked for just a dial tone, and repeated the request every time they tried to upsell me. I pay just a shade over $20 a month for my dialtone. I can receive all the calls I want for free, and make all the local calls I want for free too.

By cutting back on cable and phone, most people should be able to save another $996 a year.

Take a long, hard look at the cell phone. Do you have two cell phones with $99 ulimited talk plans? Do you really need two?

Cricket offers an unlimited talk plan for $35 a month. But you may be able to save even more by cutting down the number of cell phones you have, or just getting pay as you go phones for emergency use and sharing phones as much as possible.

And keep in mind that a landline lets you make all the local calls you want. Ditching the land line and going all cellular may be trendy, but it’s not always economical.

My wife and I have one cell phone with a plan that costs us $30 a month, plus a pay-as-you-go phone that we refill as needed, for $25 a pop. It ends up costing us $10 a month, on average.

I can see how someone could potentially save another week’s worth by getting stingy with the cell phones. Maybe more.

Save on your utilities. Buying a programmable thermostat and setting it to not work as much at night and to minimize heating/cooling during the hours when we’re not home saved us a bundle. To the tune of $100 a month.

Weatherproofing the house helps too. Put film on the windows during the winter, and put weatherstripping on all the doors. I also went into my basement, where the utilities come into the house, and found a number of holes for wires that are much larger than they need to be. I filled those in with putty to keep the elements out.

If you really want to be a stingy Scottish miser, invest a few hundred dollars in a whole-house fan. These fans can replace all the air in your house in a matter of minutes. So in the morning when it’s coolest, you can open some doors and windows, run the fan for a few minutes, then shut off the fan, close the house back up, and give your air conditioner a big head start.

Also, for some reason society says we should keep our houses at 70 degrees in the summer and 80 degrees in the winter. Why? We keep ours at about 75 during the summer and between 70 and 75 in the winter. Once you get used to it, it’s comfortable. The savings aren’t exactly peanuts.

Using fans can help keep the air moving, making those temperatures more tolerable.

Squeezing the utilities ought to take care of another week or two.

Go out less. I know some people who easily spend $100 a week going out on Friday nights. Rent a movie from Redbox, have a couple of drinks at home, and save the difference, which is five weeks’ worth.

Cut the Starbucks habit. Do you start off your day with the stereotypical $5 cup of coffee at Starbucks? That’s $1,050 right there. Bank $996 to cut off another week, and you have $54 left to buy a coffee maker (if you don’t have one) and a year’s worth of reasonably good coffee.

Cut the bottled water habit. If you drink three bottles of water a day, that’s commendable because it’s healthy, but you’ve also fallen for the biggest scam in recent memory. Cut the bottled water, buy a water filter, and bank a thousand bucks.

Cut back on expensive hobbies. I’d rather not think about what I used to spend on my Lionel train habit. I know some people spend five figures a year on theirs. I was never that bad, but at its peak I know I was spending more than $1,000 a year on it. I’ve cut back, and the last two or three years I’ve probably spent a couple hundred.

I think it’s safe to say that most households have at least one or two expensive hobbies that could be cut back and still be enjoyable. Buy less and try enjoying what you have. Or buy used instead of new.

Or perhaps they could (gulp) be eliminated, for the time being at least.

Call this one another week’s worth.

Use the library. I know someone who is a voracious reader, which is admirable. She reads a couple of books a week, easily. That’s admirable, but the problem is she buys all these books at retail. A book collector might perk up and call it an investment, but there’s very little collectible interest in Nicholas Sparks and Nora Roberts. She buys the books, reads them once, and then they sit on the shelf until she gives them to someone.

She probably could save $1,000 a year by using the library instead.

Eat out less. Eating out once a week at $20 a pop easily works out to $1,000 a year. Cut that back, whether it’s by eating somewhere less expensive or just eating out one less time, and you’ve got another week’s worth of $996.

Use public transportation to go to work. The average person commutes about 20 miles a workday. That’s $2,436 a year if you go by the IRS standard mileage rates, which factors in depreciation and maintenance on top of gas. The savings wouldn’t quite get me a full two weeks’ worth due to the cost of a monthly pass, but it would get me close. Call it two weeks.

Buy used and generic when possible. I’ve read that the poor are less likely to buy generic than the wealthy, out of fear of being ripped off. The fear is usually unfounded. Generics usually are made in the same factory right alongside one of their brand name competitors, and the only difference is the label that gets put on in the end.

But let’s talk used. Last week my wife and I bought my son about $80 worth of toys, but we paid $4 for them. They came from a church rummage sale. They were a bit dirty, but we ran them through the dishwasher to clean and sanitize them (they’re plastic). The swing was missing the strap to strap him in, but we replaced it with a belt from a thrift store, which cost another dollar. It fits perfectly.

At the same rummage sale, I bought myself a button-down shirt for a dollar. It looked new. I remember paying $20-$25 in a store for something comparable.

I bought the shoes I’m wearing right now at an estate sale. They didn’t look like they’d ever been worn, and I checked the fit before I bought them. I’ve been wearing them for more than a year now. I paid $3 for them. They would have cost me $50 in a store.

Most people buy a new computer every three or four years. I buy off-lease business computers every three or four years instead. They’re better built so they’re less likely to break (I’ve never had one break on me), and a $100 business PC that’s a few years old will be about as fast as a new computer that costs about $500. So I figure this practice saves me about $400 every three or four years.

I once saw someone in line ahead of me at a department store try to drop a thousand dollars on new clothes. He had several nice shirts, some nice pants, socks, some nice ties. I was pretty impressed with his haul. The problem was he tried to buy them on credit, and was denied. My work clothes mostly come from secondhand sources. They don’t look as nice as what that guy had, but what good does it do to look nice if you can’t pay your bills?

I figure it’s pretty easy to save a thousand or two a year by buying generic and used stuff.

Be careful with the flex-spend account. Back when I was single, I was annoyed because every year HR made us attend a meeting trying to coerce us into signing up for a Flexible Spending Account (also known as a cafeteria plan). These plans made no sense for me whatsoever. Some years my medical expenses were $100. Some years they were $200. Other years they were $20. So if I put $1,000 in, as they tried to convince me to do, I would have been wasting a lot of money. Being in the 14% tax bracket, at best I stood to save $28 if I had a $200 year. But if I put in $200, then I might turn around and have a $20 year and waste $180.

Now I’m married and my wife is diabetic. In this case it’s a no-brainer. We sat down and figured out how often she goes to the doctor, and what she spends on supplies in a given month. Her expenses are predictable, and high enough to make it worth doing. Between her expenses and having a son, I put the maximum in, since babies are always needing various FSA-eligible things, and they go to the doctor on a regularly scheduled basis.

If you’re in the 28% tax bracket and you put $3,000 into an FSA, being able to use pre-tax dollars for those medical expenses saves you about $840 a year. Not quite a week’s worth, but close. You can probably scrape up the other $156.

But if your medical expenses are always really low, you can save a bundle by not putting anything in such a plan. Employers love these plans because people frequently don’t track them very well, and anything left in the kitty at the end of the year goes to the company. It’s a great way to steal from your employees, frankly, and that’s why HR departments push them so hard. If you don’t need one, don’t put the money in, and pay yourself instead.

I think it’s safe to chalk up judicious use (or non-use) of an FSA as another week’s worth.

Be careful with AFLAC. AFLAC is a similar thing. My employer’s HR loves to push AFLAC on us. “I have three kids. I know I’m going to make at least one trip to the ER every year, and that pays for my AFLAC,” the pitch goes.

Think it through. I have a peculiar talent for injuring myself with sharp objects. But I’ve found that my best bet is to go to urgent care when it happens and put it on my FSA. Urgent care always gets to me faster than the overburdened ER, and it costs half as much. I did the math, and AFLAC just didn’t make sense. One trip to the ER didn’t cover a full year’s worth of AFLAC.

Maybe when my son gets older and starts playing sports and stuff, AFLAC will make sense. I’ll revisit it then. But do the math yourself, rather than just taking HR’s pitch. They’re salespeople. Their job isn’t to help you, their job is to make the company money by taking back as much of your salary as possible.

Making the right decision on AFLAC isn’t going to save you a full week’s worth, but it can make up for a shortfall.

Get a side gig. I’ve come up with more than 26 week’s worth of common ways to save $996, but not all of them will necessarily apply to everyone. Having a side gig is a good way to make up the shortfall. I can tell you to mow lawns or fix bicycles or make quilts, but I’d rather let you find something more ideal, since the best thing for you to do probably isn’t the best thing for me. Here’s a series of questions to ask yourself to help you find a side gig.

What do you enjoy?
Is there some service that you can provide at a better value than your potential competitors, whether it’s because you’re cheaper, or because your work is higher quality?
Is there some product that has resale value that you know how to find and then resell some way, after making any necessary repairs?

Basically, you need to find a product or a service that you already know well and enjoy that allows you to add value to it. Don’t quit your job to do it; do it on weekends or evenings with the goal of making a bit. If you can make $50 a week, that works out to $2,500 a year. That’s a reasonable early goal, then build it up from there. Some side gigs grow into full-time jobs but others don’t. Your chances of succeeding are much better if you don’t try to rely on it as a full-time job.

Start small, then let it grow (hopefully) to fill whatever number of $996 shortfalls you have in a year. And as you gain skill and experience, it could potentially grow beyond that, either allowing you to reduce some cutbacks, or achieve the ultimate goal more quickly.

So there you have it. Not everything in this list applies to everybody. But I would say the majority of these things do apply to anyone who can call themselves upper middle class. Such a family can take this list, find 52 things, and join the ranks of the wealthy in a decade or two, if they’re willing to let savings take priority over keeping up appearances.

But I also suspect that pretty much anyone who owns a home and two vehicles can probably take this list and find lots of things they can cut. They might not be able to find a full $996 a week for all 52 weeks of the year. So it will take them longer, but it’s possible. Making some sacrifices now in order to have financial independence later is worth it.

The most important thing is to put everything on the table. The year 2005 was my turning point. I lost my job, and it seemed like everyone who needed IT people couldn’t afford them. Stretching the pennies was necessary for us to stay afloat when I was in between jobs. Eventually I found one. The cutbacks that allowed us to make ends meet while my best source of income was doing odd computer jobs also allowed us to pay off our house early after I regained steady employment.

With the house out of the way, financial independence certainly is my next goal. I’m not sure that this formula is precisely what I want to follow in order to get there. But it’s important not to dismiss such formulas immediately just because they seem difficult or nearly impossible.

The key to success, financial or otherwise, is to take difficult problems and find solutions, rather than dismissing them immediately as impossible. One strategy is to break the problem down. This problem conveniently breaks down into 52 smaller problems. I’ll admit I had to sit and think a very long time to come up with 52 smaller answers.

I just have one more thing to say. Please try. I’m currently reading a financial book written in 1975 that said the average U.S. household headed by someone aged 24-34 had $2,500 in savings. In today’s dollars, that’s a shade over $10,000. Today, the average household has zero savings and around $10,000 in credit card debt, on top of car payments and rent or a mortgage. That has a lot to do with why our economy is such a wreck right now. We can’t buy any more stuff because we’re paying too much in interest.

It’s not too late for one or two generations to rise from these ashes and buy our country back. So let’s do it.

Why I never kept up with the Joneses

I had a bit of a financial epiphany over the weekend.

I have a well-deserved reputation for being a tightwad. Part of it is in my blood; I’m largely of Scottish descent, and Scots just tend to act that way. But I think part of it is what I observed growing up.My wife and I were sitting at my mom’s kitchen table, and for whatever reason, we were talking about my teenage years. In 1988, we moved to a new subdivision in Fenton, Mo. Fenton is a boomtown today, thanks in part to urban sprawl and also because of its first-rate school district, but in 1988 it was still largely an industrial town. Lots of people worked there, and not many wanted to live there. But in the late 1980s, the McMansions started sprouting up like weeds, and lots of families started moving there, ours included.

We talked about our neighbors, and something immediately occurred to me. Most of them were in their early 30s. They were the same age I am now. Not only were they my age, but they drove new cars, and most of them had at least two kids. Meanwhile they were trying to make payments on houses that cost $125-$150,000 at the time. According to inflation, they should cost a quarter million today. Not only that, though, in 1988, interest rates were a lot higher–10 percent wasn’t uncommon according to my quickie research.

Dad could afford that lifestyle–barely. He was a doctor and had been practicing medicine for 15 years. But even we made sacrifices in order to afford to live in that house.

The problem is, I shouldn’t say "even." Most of our neighbors had nicer furniture than we did. Some of them drove fancier cars. And their kids had bigger, costlier toys.

The absurdity hit me. I wouldn’t even try to compete with the lifestyle of a 45-year-old doctor. Not at 33. I make enough that a bank probably would let me have a mortgage of a quarter mil. I could lease cars that don’t depreciate quickly in order to keep my monthly payments down. But there wouldn’t be much of anything left at the end of the month, and I could probably forget about retiring any earlier than 73 (which is what Social Security is saying my retirement age should be). Just because I could make the payments doesn’t mean I should.

I wondered why so many of them got together every weekend and drank themselves senseless. And I don’t think I consciously ever realized I was living in a neighborhood full of people living way over their means–even the family next door, headed by a young dentist trying to establish his practice with five kids and a wife who insisted they needed a Jaguar.

Suddenly, sitting there at the table, telling old stories, I realized why that woman was such a psycho. She couldn’t pay her bills.

And that was also probably why another neighbor wouldn’t go anywhere without a thermos full of wine, and why another young couple who lived nearby smoked pot every Saturday night.

They had everything any reasonable person could dream of having at 32, but if anything at all ever went wrong–a layoff, an extended illness, or a serious injury–they would be in serious danger of losing it.

For whatever reason, I never measured my lifestyle against them. My first few jobs didn’t make me a lot of money, but they let me do pretty much anything I wanted. I had a nicer apartment than Dad had at a comparable age. I could go out to eat any time I wanted. I could buy a new computer every year if I wanted to, as long as I didn’t go overboard on it, and for a few years I did. I drove small cars, but there were always at least two or three cars in the parking lot that weren’t as nice as mine, so I was content to drive my 1992 Dodge Spirit. When it died, I got a 2000 Dodge Neon. It wasn’t a status symbol, but it had power locks and windows, which were two things Dad’s 1981 Chrysler LeBaron didn’t have. It had a nicer radio too. And that LeBaron was supposed to be a luxury car.

My lifestyle was far ahead of where Dad’s had been at my age. And not only that, I had money left over at the end of every month.

There were two things I wasn’t happy about. At the time, I didn’t have a steady girlfriend. And my apartment rent was going up by about $50 a year but the management company wasn’t taking care of the place. When stuff broke, they fixed it halfheartedly, and I didn’t want to pay $575 a month to live in a slum.

When my rent hit $575, I told them I wasn’t going to pay it. They offered me a seven-month lease at about $550. Conveniently, I had enough in the bank for a down payment on a house, and I figured I could afford to pay a couple hundred more every month for a mortgage. I just didn’t want to throw that kind of money away on rent.

So I bought a house. There was a neighborhood about a mile away that reminded me a lot of the neighborhoods I grew up in. I found a house about the size of the house we lived in before we moved to St. Louis. It cost more than I had planned, but it was big enough that I could get married and have a family there and not have to move again. I hate moving. Plus, it was (and still is) in a good school district, all the schools are close by, and anything I could need was close. I didn’t know it right away, but in an emergency, the nearest grocery store AND the nearest car repair place are both walking distance.

For an extra $100 a month, it just made sense. I bought the house. And every night, I filled up that Dodge Neon with everything that would fit, drove to the house, and unpacked. Several friends with vans or pickup trucks helped me move the stuff that wouldn’t fit in my tiny car.

Even though my 1-bedroom apartment was stuffed to the gills, it wasn’t nearly enough to fill a 3-bedroom house with a living room, family room, a study, and a basement. But it didn’t take long for that problem to solve itself. Several people offered me some nice furniture. They were hand-me-downs, but there wasn’t anything really wrong with any of it. Before I knew it, the house was full.

A couple of years later, the right girl came along too. At first she wanted me to get nicer stuff. The problem was, even though I’d gotten promoted to a server administrator at work, they were still paying me my old desktop support salary. The house had wiped out my savings, and I couldn’t really take on another monthly payment on anything. We fought about it a little. I showed her how little was left at the end of every month, and I argued that everything in the house was nicer than anything my parents had at my age. For that matter, most of it was nicer than the stuff they had when I was a kid.

She relented. I don’t know how happy she was about it then. But she didn’t complain.

A few months after we got engaged, I lost my job. I was mad about it. I was convinced I would lose everything I’d worked for. I guess for a minute I thought I was like those neighbors.

But because I’d lived within my means, I survived and soon I ended up with a job with a competitive salary for the first time in my professional career.

Something else came out of it too. The day we got married, neither of us had a job. We started a small business out of necessity. Our final paychecks made the mortgage payments during that summer, and we used our wedding gift money to get the business going. Soon it was bringing in enough to make our utility payments and buy groceries. When I got a full-time job, she took the business over and I helped out at night and on weekends. It allowed her to not have to work outside the home. There are probably things she could do that would make more money, but she doesn’t have a lot of stress, and she enjoys the flexibility.

The odd thing is, we’ve been able to upgrade our lifestyle on the cheap. For example, there are three light fixtures we’ve been wanting to replace for a long time. This weekend I found two light fixtures at a yard sale for a buck apiece. My sister rolled her eyes when I told the story, but these fixtures don’t fit the yard sale stereotype. A sticker on them says they were made in February 2005. Home Depot still sells the same fixture (or something extremely similar) for about $30. That’s not terribly expensive, but $1 is a lot less than $30. The third fixture we need to replace is smaller. We can get something that will look fine with them, and look much better than what we have, for under $20. The result will be a significant upgrade in how the kitchen and living room look, at well under 1/3 the price.

That $60 savings may not sound like a lot, but we’re constantly finding ways to save a few bucks here and there like that. We’re never the first to have anything, but it seems like we always end up getting whatever it is we want or need, and meanwhile we’re socking money away and whittling down on that house payment.

Judged against the standards of my neighbors in 1988, one could argue I’m a failure. I drive a five-year-old car and most of the time I use a six-year-old computer, and the four shirts I bought in 1998 to comply with my then-employer’s dress code are still in my rotation today.

But let’s look at things another way. Not only do my wife and I have nicer stuff than my parents had when Dad was 32, we also have an easier time finding money for necessities like groceries. She can shop at the health-food stores even though they’re more expensive. As long as nothing unexpected happens, we’ll own everything outright and have absolutely no debt–no student loans, no car payments, no mortgage–well before I turn 40. I stress over some things, but money isn’t one of them.

In my early 20s, I watched some of my friends from high school rack up massive credit card debt. At least it seemed like massive debt at the time. I knew then I didn’t want to be like them, at least not in that regard. Now I know that the average American family has $9,900 in credit card debt. That’s about what one of those friends owed, and about twice what another one owed.

I know who I want to be like. I want to be like my wife’s parents. They paid off all their debt sometime in their late 30s or early 40s. Today, when my mother in law sees something she wants, she doesn’t think about it. She can just buy it. Not only that, she’s retired, and she’s nowhere near 73.

I’m not saying I want to buy anything and everything I see on a whim. But not having to think much at all about money seems really nice.

And I guess on some level I’ve known that for almost 20 years, since I was in my early teens.

How to make more money, but more importantly, keep more of what you earn

Most GenXers don’t spend their money wisely.

That’s not an insult on my peers; there’s plenty of blame to go around. Yes, we want what our parents had at 50 and we want it at 25, but part of the problem is the images all around us tell us we have to have all that. And if my education is any indication, the only financial education I received in school was an aside in a U.S. History class.

Let’s talk about how to earn more to dig out of financial ruin, and how to stay out.First and foremost, usually when people get to the point where they start typing “earn more money now” or something similar into Google, usually they need immediate help. A year ago, I was in that situation. Talking it over with the higher-ups didn’t help–a few months later I lost my job. Ouch.

I’d be lying to you if I told you I wasn’t bitter. I still am. But in a way it was the best thing that could have happened to me, because it forced me to look for opportunities. I already had been, but it forced me to find others that I probably wouldn’t have, otherwise.

There are a few ways to make a little money but it won’t necessarily happen immediately. If you have a web site, put Google ads on it. Click my link to find out how. Whether you get your first check in a month or in a year depends on how much traffic you get. A faster way to make a little money is to sign up for some online surveys. You won’t get rich, but a dollar here and five bucks there adds up. Sometimes you’ll hit the jackpot and qualify for a $25 survey. That won’t pay the mortgage but it will pay for a few meals.

Here’s another idea: Become a mystery shopper. Google for it. But don’t pay anyone to become a mystery shopper, not when there are legitimate outfits who are willing to pay you. Just keep in mind some of them want references. That’s actually a good thing. It protects your reputation and theirs. Again, it’s not big money, but it’s fairly easy money.

But I’ll be blunt: If you’re in some real trouble and there’s a bill that’s due in two weeks and you can’t pay it, then it’s time to make some sacrifices. Do you have any recent video games? Any collectible CDs or DVDs or VHS tapes? Collectible toys, such as Star Wars figures? There are lots of places that are willing to buy things like that, but to get top dollar you have to sell it yourself. Search eBay, find out what your items or something similar are selling for, and think seriously about liquidating some stuff. Don’t sell your family heirlooms, but if there are things that you can sell now to get you out of trouble and replace later when you’re out of trouble, consider it. While collectibles do increase in value, I’ll let you in on a dirty little secret: Most of them are doing well to keep up with inflation. None will increase as quickly as your debt–not for a sustained period of time, at least. If you have something that is, sell now. The bubble will burst, and you’ll be able to buy it back cheaper later.

And something sobering will happen as you research what some of the things you own are worth. You’ll find a lot of them aren’t worth anywhere near what you paid for them. There’s a lesson there. It’s much better to spend your money on things that hold their value than on things that have bling factor but have no value once the 14-day return period is over.

So when you have money again, spend less on worthless things so you have more to spend on things that do hold their value. A big truck turns heads and lets you bully people on the road (and the ads to some degree encourage it) but can you really afford $40 a week to keep gas in it? Do you have to haul stuff often enough to justify that expense? For the majority of people, it’s much better to drive an economy car and put the money you save on the lower payment and less gas towards paying off debt. Borrow or rent a truck those occasional times when you need to haul something. So skip the Hummer and get a house. You need a house anyway, and while a Hummer will lose value when you go to sell it, a house usually will gain.

Let’s go back to the eBay thing for a minute. Ebay does a lot of good things. Once you’ve sold your stuff, you have the option to go buy more stuff to sell. Buy what you know and only what you know, and only if you can buy low and sell high. If you can’t either double your money or make $10, don’t bother. It’s best to find something that lets you do both. But if you have the ability to do that, you have an asset that stands a chance of turning your financial situation around within a few years.

But it also does something else. It teaches you how to sell. There is no better, more useful ability than how to sell. Not everyone sells merchandise for dollars, but everyone has to sell ideas. If you regularly find that people don’t listen to you, then that’s a good indication that you need more salesmanship ability. Yeah, but those people are idiots, you say. Even better. There are more idiots out there than smart people. Most rich people got rich by getting idiots to buy their junk.

I remember reading a line in a book once that asked me if I could make a better hamburger than McDonald’s. Of course I can. So why did Ray Kroc have more money than me?

By the way, I don’t mean any insult by any of this if people don’t listen to you. There are a lot of people who don’t listen to me either. I need to work on my sales skills as much as anyone.

I did something else before I started selling my stuff. I took a walk. I walked at least once a day. But I didn’t just walk. I was picking up aluminum cans. At 40 cents a pound, an aluminum can is worth about a penny. There’s no way I can pick up 100 cans in an hour, so it’s a lousy way to make money. But nobody else was paying me to do anything else during that time. I made sure I didn’t walk during working hours so I wouldn’t be out if the phone rang with a job opportunity. At least I felt like I was doing a little something. It was very little, but it kept my mind off things so I didn’t get as depressed. It also helped me watch for opportunity. Those cans aren’t worth anything, but the ability to quickly spot things of value from far off is worth something. It made a few house payments when I didn’t have a 40-hour-a-week job.

That’s enough talk about making money. I’ll admit that they’re just general ideas. I can’t give specific advice because something that works where I live might not work 100 miles away. Something else works there. The nice thing about the United States is that there always is an opportunity, no matter where you are. Although politicians seem to be trying their best to destroy that, they can’t destroy opportunities as quickly as you can find them.

I read a study this past week that said 70% of college graduates today can’t balance a checkbook, and when presented with a 20-ounce jar of spaghetti sauce for $1.99 and a 32-ounce jar for $2.49, they don’t know how to figure out which one is the better deal. That should scare some people.

But it occurred to me that I didn’t learn how to do that in school. I learned it from my mother. And I think she learned it from her mother, who must have known it because she managed to raise 11 kids and her husband didn’t have any money.

They don’t teach that kind of thing in school. To me, that’s the only thing math is good for. But I don’t know how old I was when I realized math was useful for that. Before that I thought math was just something teachers used to prove they knew something I didn’t.

There are lots of books out there that try to teach you how to make more money. But a more valuable skill is learning how to spot the good deal. Learn how to calculate the cost per ounce and use it. Carry a calculator with you if that’s what you have to do. There’s no shame in that. A calculator is also a useful tool for keeping a running total of the cost of the stuff in your cart. So it might be a good idea to carry two calculators. They’ll pay for themselves the first time you use them.

And if you have any influence with math teachers, please hand them this word problem. It’s the only good use of math I can think of for a non-engineer:

A television costs $199 at a store two miles from you. The sales tax rate in your town is 5.75%. The same television costs $179 at a store 100 miles away. The sales tax rate in that town is 6%. Your car gets 25 miles to the gallon. Gasoline costs $2.00 a gallon. Is it cheaper to buy the television at the store two miles away, or is it cheaper to buy it 100 miles away?

I’ll conclude with the secret of getting rich. The secret isn’t to make lots of money. It’s human nature to spend more money as soon as you make more money. The secret is to spend less.

I remember when the first of my college classmates bought a house. He told me that at the end of the paper, it told him how much money the loan was for, and how much money he would pay between then and the end of the term. “Am I really going to make that much money?” he asked. Then he laughed it off.

He will. So will I. So will everyone. Most people living in the United States will make a lot more than a million dollars between their first job and retirement. The question is whether Nike and General Motors and Phillip Morris and Coca-Cola get to keep most of it, or whether the wage-earner gets to keep most of it.

I really don’t like the tone of this rant–and it basically is a rant–because it sounds like someone who made it looking back. I’ve only started the journey myself. I started 14 months ago. But my wife and I already have something to show for it. We have no credit card debt, we own two 2002 Honda Civics outright, and if we can keep up our current pace, we will own our house outright in a little over three years. Five years is probably more realistic.

Remember, around 12 months ago there wasn’t enough money to pay the bills. So if I can do it, lots of people can.

A journalist\’s take on how to eliminate snoring during sermons

First things first: I am not a pastor. While I have nine years of Lutheran primary and secondary education, my degree came from the University of Missouri and I have exactly zero days of formal, master’s-level theological training.

But I am a published author, I spent four years and thousands of dollars (and thousands more of scholarship money) studying journalism. So hopefully what I lack in Bible knowledge, I make up for in writing knowledge. And if denominations are to grow, especially the more conservative ones, I think more of the latter is going to be a necessity.I am writing this because I heard a sermon today that was relatively good. It disappointed me mostly because it could have been one of those sermons that people remembered for the rest of their lives. So let’s get down to business.

Write on a sixth-grade reading level. Your morning paper is written on that reading level. Newspapers are publications for the masses, so they are unwilling to assume that the majority of people can digest anything more complex than that level. Jesus made a point of demonstrating that Christianity is simple enough that a child can understand it. Therefore, a child ought to be able to understand the pastor.

And I’ve got something else shocking for you. What about the more intellectual publications? They’re written on a 10th-grade level.

So how do you write on that kind of a level? I’ll give you some tools. Eventually it becomes automatic.

Lose the big words. Most Lutheran pastors are academics. When it takes four years to get your master’s degree, you have to be. And if you want anyone outside of your own congregation to listen to you, you almost have to go back and get your doctorate.

But the problem is that while pastors and their colleagues are academics, the overwhelming majority of the congregation is not. The people who most desperately need to be reached certainly are not. And while I firmly believe that the pastor can stand in front of the congregation and read recipes for 20 minutes and God will make sure the person who needs to hear Him will hear exactly what He wants, I also believe it’s better for God to work through the guy standing up front more than in spite of him.

If your English Composition teachers were anything like mine, they required you to use five words you’ve never used before in every piece. But your English Comp teacher isn’t in the audience. Good writers know the rules of writing. Great writers know when to break them. William F. Buckley Jr. isn’t the rule. He’s the one guy who can get away with breaking so many.

Lose the long sentences and paragraphs. Your English Comp teacher probably told you a paragraph is a minimum of three sentences. That should be the first rule you learn to break. Short, punchy paragraphs are fine, and so are short, simple sentences. There’s nothing wrong with an eight-word sentence.

Practice writing on a sixth-grade level. If you use Microsoft Word, you can easily turn it into a tool for checking your writing. Go to the Tools menu, select Options, click Spelling & Grammar tab 4, and tick the box next to “Show readability statistics.” Now run a spelling/grammar check, click ignore on anything it flags, and it’ll give you your reading scores.

Try shortening up on some words and simplifying some sentences to see how the changes affect your work.

Relevance. A single mother of two who has never had a healthy relationship with a male doesn’t care about the original Greek or Hebrew in any given Bible passage. That’s an extreme example, but virtually everyone who walks through the doors of a church comes in carrying some baggage. It’s usually the only way God can get them there. It’s when life becomes its least bearable that people are most willing to find out what the Creator of life has to say about it. Unfortunately, sometimes it seems like the place you’re least likely to hear what God has to say about life is church.

That’s unfortunate. When you read the four Gospels, it’s clear that part of the reason thousands of people followed Jesus instead of the Pharisees was because Jesus talked about the things that mattered to them, while the Pharisees did not. If that contemporary church down the street is growing and your conservative church is not, the reason might not necessarily be the guitars and drums. The reason might very well be that the pastor gives good advice every week on how to get through this life.

I know plenty of people who attend my church for exactly that reason. They have no great love for the electric guitars and distortion–but they put up with it so they can hear how to have a better life every week.

While you don’t want to single out anyone and talk about his or her problems to the whole congregation, speaking about issues in general terms is good. Does the Bible have anything to say about credit card debt? Diet? Spoiled children?

I’m no fan at all of daytime talk shows–I think they’re God’s curse on the unemployed and unemployable–but I do believe that this world would be a better place if pastors would tune in to them once in a while. It gives you an idea of what kinds of problems people think about and face–and may not be willing to talk to you about–and it gives you some idea of what the world is saying about them. Your job is to tell the congregation what God says about those problems.

Get out more. I used to know someone who was required by his congregation to spend some time hanging out in bars. Ostensibly his job was to win converts. But I think it accomplishes some other things too.

First, it gives you a good feel for how people talk. Since these are the people who most need to be reached, you need to sound like them (minus the four-letter words).

Second, it gives you an idea what these people care about. You’ll probably overhear more about women and money than anything else. Significance and security are two very basic needs; if you can manage to illustrate every Sunday how God is the ultimate source of these two things, the size of your church will probably double every five years.

Granted, you don’t have to hang around in bars to hear people talk, but bars are where the broken people are most likely to go, and if your goal is to do what Jesus did and reach broken people, I think it helps to know what one looks for and what a broken person looks like.

The end. Like I said before, I’m not a pastor. I’m just a writer of above-average intelligence. It’s rare that a sermon sails over my head, and that was nearly as true when I was in the 4th grade as it is now.

But I’m not everyone, and the college-level dissertations that are all too common in many denominations every Sunday don’t do much, in my experience, to strengthen the church. Yes, to a degree I am advocating the dumbing down of the Sunday sermon. Hebrews 5 is relevant. You can’t assume anymore, in this day and age, that the majority of the people in the congregation can handle spiritual solid food. The Sunday sermon is the place for milk. The place for solid food is in Bible study, whether it occurs on Sunday morning before or after the service, or on some weeknight. And even then, I believe a lot of studies need to be serving milk.

But if every church serves milk long enough, the general public’s knowledge of the things of God will progress to the point where it can handle solid food on a much more regular basis.

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