Most people today spend more money on needless junk than they do on living expenses. In that reality, people complain that they are always broke. What's worse is people eventually set themselves up for a major crisis. Planning ahead is the last thing people do.

I re-evaluated my true living expenses a few years ago and came up with approximately 29% of my incoming earnings at that time. After I did this, I added up all my payments to every thing I'd owed. It calculated out to be approximately 77% of my earnings. If you ad these figures up you realize I was heading in a negative direction. I wasn't broke. I was below broke.

Being broke is one thing. Being in debt was far worse than being broke. Naturally, if any disaster comes my way, I'd be even worse off. I was totally stressed out. I figured that if I get sick or if I slip and fall, I'd start losing material goods faster than I obtained them.

Yes, I had insurance and sick leave, but I didn't have the deductible. Lucky for me I was strong, energetic and I could get overtime when I got behind. Luck is what I was living on.

Now, when a bill got paid off, you'd think I was relieved. I was, but for some strange reason, I knew I could finance something else. That something else always came around. I filled that extra income up with another bill. There was too many things out there that I needed. I thought.

“Keeping up with the Jones's” was not what I was doing. I wanted to out-do the Jones's. I wanted to be like most people that had money. I wanted to buy what ever I wanted when I wanted. I just had no ideal I was spending twice or three times the price as some others. I'm talking about the interest.

Alright, I admit, I could have fixed the dryer, but the color just didn't match the rest of the appliances any more. You have to have matching appliances. You do have to admit, I needed a new car. Mine was not the most popular one on the block. It was also 3 years old. My payments will only change a few dollars more per month if I extend the payments.

My theory made sense. You're always going to have a car payment. It's a fact of life, because your car is going to wear out before it's paid off. You're always going to have a house payment because no one lives in the same house very long. You have to trade up.

Does any of this sound familiar? You could say I was one of the millions that did this. What's worse is the ease of financing. Almost any where I went, my credit was checked. Creditors were happy to see me. I had an outstanding credit line.

I knew all about OPM ( other peoples money). The lessons I've learned above almost destroyed me.

Do you know what most people do when they get a raise? They spend more. Now, I'm not talking about inflation. They spend more on needless garbage. Most likely, that same garbage will be in a garage sale a few months from when they bought it. If it's out of date, it usually goes in the trash.

Most people in America that I know are not only wasteful, but they are throw away experts.

Now, do you know where the phrase “easy come easy go” came from? It's money unexpected. If you get it by not working for it, you spend it faster. It could mean that it's just easier to spend. Most people that either win a small lottery or get money unexpected, will have plans for spending it just because it's been so long that they've had a vacation. Work is all they know by now.

Well, I've changed my methods. I don't think I will ever reach the point where I can meet the phrase “a penny earned is a penny saved”. I will be able to save money now. I do not allow my outgoing expenses to take all my income.

If you live the kind of life that I've lived and you are still doing it, you are practicing failure. I believe you have to learn to be successful at home before you can become successful at business.

I was spending $247.16 on house payments in 1976. It was killing me. In 1992, I was spending $1300 a month on house payments. I traded up. I should have done my research. It's wiser to pay off and save for another one than to trade up. I don't really care if you want the deduction or not, you'll be better off to pay cash.

People are always asking other what they'd rather have. The choice is a “penny a day doubled for a month” or 1 million dollars. This is stupid. Why don't they tell you the deductible is far less than they'll save if the house was paid off. Interest payments is always greater than the deductible return.

I'm not going to insult your intelligence on mathematics but I want to show you something. If you had a house of $150,000 at 6% interest, 2 cars financed for $60,000 at 8%, credit cards averaging $25,000 at 13%, and that's all you owe, you'd be paying in excess of over $1420 dollars per month. If you didn't pay any interest on that house and you could place the $1420 per month in savings plus the payments on the principal you'd be able to buy that house in 55 months instead of 360 months.

Incidentally, your argument is that you had to have a car now. You had to have a house now. Sure, but you could have bought a used one till you could save.

I tried an experiment the other day for my wife. She wanted new furniture. The fast talking salesman told her she could finance the furniture that she wanted. She came home and told me about it. I place a coffee can on the table and told her to place the payments in the coffee till she had the money. After 3 months, she lost interest in saving for the furniture. She had already found something else she'd rather have. Hmmm! I suppose we didn't need that new furniture after all.

That is how I live my life now.

I read a small book or article as it may be called the other day from P. T. Barnum. One of the most fascinating parts of the story was where he quoted Dr. Franklin. Dr Franklin said, “It is the eyes of others and not our own eyes which ruin us. If all the world were blind except myself, I should not care for fine clothes or furniture.”

If you've ever wondered why you're always spending more than you're bringing in, you must read that article. It is called “Art of Money Getting” by P.T. Barnum.

If you truly want to change your ways and become successful in your own finances, you may want to read “Rich Dad, Poor Dad”.

If you are having trouble finding either of these books, let me know and I will sincerely respond.

Randall Stafford
http://www.twincitymarketing.com