Put Each Dollar To Its Best Use

All of us get only so much time on this planet which is unknown.  We also get only a limited amount of dollars to work with in our lifetime.  Some get more than others, but it's never unlimited for anyone.  The question is what do we do with the resources that come our way?  It's not an easy question to answer.  There are a million different things you could spend your money on.  Spending money is easy.  Getting it in the first place is not.  It's hard to lose weight, and it's hard to build wealth.  Society totally works against the wealth builder.  This world wants you to spend and go into debt.  Success is in another direction though which is building capital.  I think the whole goal of personal finance is getting to the point where paid work is optional and no longer needed for survival.  This is extremely difficult to achieve especially with companies and the government doing less and less for the average citizen.  These leaves each one of us more on our own to figure things out.  We are not taught about personal finance in school which is a shame.  If there's one subject that should be taught it's how to handle money efficiently.  So we're left to fend for ourselves in this dog eat dog world.  I can tell you that it is possible to accumulate capital even on the poverty end of income levels because I have successfully done it.  I'm of the opinion of not squandering money.  It really is a precious resource that can earn more money.  Remember that every expenditure of money does matter.  We all have to pay living expenses and survive, and those are non-negotiable.  But if and when we can build a surplus of money from our income we absolutely have to do something smart with it.  It's for our own individual good.  Where I live there are payday lenders and title loan companies everywhere.  It makes me mad really to think about what these businesses do to make money.  The prey on the weak and vulnerable with what amounts to loan sharking.  And they are absolutely thriving.  This is not a good reflection of a healthy citizenry.  It's better not to owe anyone and have investments throwing off cash to pay your bills.  So yes as I observe it the whole system is against each and every one of us.  That's no excuse though.  It's time to take control and think of each dollar as something finite and valuable.  We all have to spend money so put each dollar to its best function.  Don't squander your seeds.  They just might give you fruit to live on someday.  

Electricity is a best buy

Shelling out money to pay bills is no fun.  One bill where I feel like I get a lot of value for the dollar is electricity.  If you stop to think about how much you're able to do with electricity it is amazing.  Compare paying your car insurance bill to paying your electric bill, and I think you'll agree you get much more from electricity for possibly less money.  Lets talk about 3 ways that electricity helps you to live a better life:  cooking, refrigeration, and air conditioning.

Eating is something we absolutely have to do.  Sometimes I really don't like that my body gets hungry every couple hours, but it's non-negotiable.  Using a microwave, toaster oven, regular oven, or stove top gives you so many options on how to heat up your meal.  I pretty much have a bagel or muffin every morning warmed up in the toaster oven.  No electricity no bagel.  I could eat it cold, but it wouldn't be as good.  I don't use the regular oven that much.  Now the stove top is a different story.  I'm often cooking something in a pot or pan.  I also use the microwave several times a day.  I'm glad I have electrical current to prepare my food.  Oh and making coffee requires power too.

Refrigeration is very cheap for what you get.  To keep your food cold and frozen is very important.  Butter, eggs, milk, meat, and ice are just a few things that need cold temperatures to stay in their ideal state.  What if you didn't have a refrigerator?  Life would be a lot different wouldn't it?  Think of all the things you couldn't eat.  So to keep that big box cold it really doesn't require much money on an annual basis.  It's more than worth it.  I've heard of some people not having a refrigerator to save money.  Dumb.  Not worth it.  I just bought a bag of ice yesterday, and I had to get that thing home quickly.  Once it was in the freezer it was safe though.

Air conditioning makes life so much more enjoyable in the summer.  Where I live it gets into the 100's which is miserable.  I have two window ac units that I run all the time.  I keep them on the energy saver setting which causes them to turn off when the desired temperature is reached.  I have heard of some electric bills getting into the hundreds of dollars because of ac and heat.  That's definitely a lot of money.  The space where I live however is small which means there's less space to cool.  At one time I didn't run my ac to save money.  I've since changed my mind and have concluded it's worth the money to stay comfortable.         

Compared to most of the bills you pay I bet you'll agree that electricity is one of the best deals.  Don't feel bad when your electric bill comes due.  Look at your payment as a way for the electric company to keep its very expensive operation going.  If you had to produce all your electricity yourself it would be a very costly proposition.  Be thankful for electricity because it truly is cool.  

Money dominates our lives

Like it or not money controls our lives.  There are very few things you can do without it.  I wish the world wasn't this way.  Since the planet we're born on runs on money it's good to respect it as it comes into our hands.  It is possible to be job-free if you get your expenses low enough and find a source of income other than a job to cover them.  It's all about freedom and choices really.  Society teaches us to get a job working for someone else then spend all or more than we make to keep us working.  I think having a purpose or work is good.  All of us have talents and gifts the world can use.  The problem is most of us are forced into something we don't like and aren't good at because we need money.  How do we escape this pressing need for money?  Watching every dollar as we spend it is a good foundation.  When we realize that money is limited and hard to come by it will give us a respect for it we might not have had before.  I really don't like that we need money for everything.  I wish we could just get our needs met effortlessly.  The plan for freedom is to keep expenses low, avoid debt, and build a source of non-employment income.  I find joy and a challenge in not needing much money to survive.  Having a big income can make life too easy I think.  It has the potential to detach us from the suffering of those in poverty.  When we live close to the bottom we're more in touch with the majority of human beings on this planet.  I have no desire to live lavishly even if I was rich.  The thing about keeping expenses low is you then have less of a need for money which makes life less stressful.  We are taught to apply for jobs and be employees, but jobs are hard to come by these days.  It is a very discouraging process to apply for jobs.  That's why I think creating less of a need for money also creates less of a need for a job.  Money represents our effort and time on this earth.  The conclusion I draw from our economic system is to have low overhead and pursue something that gets us excited to do it.  The world would be a better place if people were more educated on how money works however I think the most important thing is discipline.  Without discipline all the knowledge in the world won't help.   

Fear sells insurance

Most people need several types of insurance coverage.  Health, life, disability, and auto are a few examples.  Insurance has a purpose in any good comprehensive financial plan.  Most of us can't handle the big unexpected misfortunes that could come our way all by ourselves.  What I've noticed though with TV commercials, and in particular with car insurance, is they come up with scenarios that would almost never happen in regular old boring life.  What these commercials do is act out these far-fetched things that would almost assuredly never happen.  I look at insurance as a pain.  You pay money every month for something for which you see little real benefit.  Take car insurance for example.  No one would want to get in an accident in the first place, but if you do the insurance is supposedly there to help make you whole or indemnify you.  You pay the money every month, don't get in any accidents, and the insurance company pockets all the money as profit.  It's hard to think of another business like that.  I carry pretty high limits on my auto for the most part because of our legal lottery mentality society.  I don't like paying the bill every month though.  I don't even like that I'm forced to have a car by society's structure.  When I pay money for food I actually get something physical and useful.  Not so with insurance.  I do not have comprehensive and collision coverage because if I was at fault and my car was totaled the amount I would get would not be worth the premiums I would be paying.  Then of course there are the advisors and sales people who combine insurance and investing.  I have never been for this course of action.  The way I see it is the fees are way too high for the investment and commission portion of it.  I look at insurance as protection and investment as a vehicle to grow your net worth.  It's best to keep them separate.  This is one of the problems of the "financial planning" field is that a lot of times it's just sales people hawking products.  That to me is not planning it's sales.  The two biggest words in the insurance business are what if.  Life has a lot of what ifs.  There's no doubt about that.  I say it's best to make sensible insurance policy purchases and not be driven by fear.  And remember you have to get the money from somewhere to pay for the insurance.  It usually comes from working a job.  Respect your one life you have to live.  Do your research and don't buy insurance you don't need.  Don't let these fear driven advertisements peddled by the insurance companies push you to do something that's not in your best interest.

Financial independence should be your first priority

Being financially independent is not achieved often by human beings.  I would define financial independence as meeting all expenses from income not based on employment.  Most of us have to trudge off to work full-time to a job we don't like for the vast majority of our lives.  This is not freedom.  We live in a system of wage slavery.  Most people need their wages from an employer to put food on the table and have a roof over their heads.  How did it come to this?  We used to provide most of our needs ourselves.  We built our own house, grew our own food, and didn't have much need for transportation.  Those days are long gone.  Everything is money now.  So we need money.  I don't like it really, but it's a fact.  These are three ways to speed along the process of financial independence: reducing expenses, increasing income, and building income that is not employment based.

Reducing expenses is my favorite of the three.  It gives you less need for money.  That means financial independence can be achieved sooner.  If you focus on reducing expenses for housing, food, and transportation you will be doing very well.  Another thing about expense reduction is it's tax free.  If you earn more money it will be taxed.  Making expenses lower is not subject to tax.  There's no doubt that we all need some kind of money to survive.  You can lower your expenses though if you're determined to do it.  There are people living at all kinds of levels in this world.  Some live in mansions, some live in a shed or even the woods.  Those are the two extremes, but somewhere in between there are many choices.  Public transportation and walking can save money over car use.  And if you eat most of your meals at home that saves money as well.

Increasing income is not as easy as reducing expenses.  As I said most of us have a full-time job that pays the bills.  That's fine.  Under that system the two ways that I see to raise income is to work more hours or get a higher rate of pay.  You could also get a part-time job on the side.  Another idea is to rent a room in your house if you own one.  Some kind of self-employment is yet another way to generate more cash.  You could mow lawns, walk dogs, blog, take surveys, or clean houses.  These are just a few of the thousands of ways there are to make an extra buck.  Remember that more income means more taxes.  And self-employment is taxed more than being an employee in the U.S.  It's kind of dumb if you ask me, but it's our system in America.  Be on the lookout for ways to increase your income, and then you'll have more money to employ for your ultimate freedom.

Building non-employment based income is the end goal.  This means money comes in without you having to get up, get in your car, and go to work.  My favorite type of this kind of income is stock dividends.  I buy shares in companies that pay at least three percent in dividends and have raised their dividends for a considerable amount of time, say 25 years or more.  This is not the only kind of non-wage income by far though.  You could start a little real estate rental empire, buy annuities, buy bonds, earn a pension, earn royalties, or have some kind of business that runs itself or is run by others.  These are just a few ideas.  This kind of income frees you from wage slavery.  It's very hard to build this to a sufficient level, and there are many distractions along the way.  You have to be determined to escape this rat race system so you never have to work again out of necessity.

So remember:  reduce expenses, increase income, and build non-work income.  We all would like to be free.  It's what we pride ourselves on in America.  Most of us aren't free though.  You're free when money comes to you in a sufficient amount without having to be employed.  We're always dependent on something for money, but the goal is to need the job less and less.  It's a worthwhile thing to shoot for.  Most people won't do it though.  They'll take their wage and blow it on some tv or cell phone and be no closer to freedom the next week when they show up to work.  Don't be one of them.