Pardon me while I rant for a moment …
I encounter numerous people who believe that their financial situation is solely an income issue. In nearly every case, they are wrong.
For example, Eddy Curry is an NBA basketball player who has reportedly made $57,267,294 in his career and is being paid $11,276,863 this season alone. He is in financial trouble. According to THIS ARTICLE from the NY Daily News, Eddy has defaulted on a $570,000 loan with 85% interest. Read that again. A huge loan for 85% interest.
Call me crazy, but this is not the result of an income issue.
While Eddy’s situation is an extreme case, I know many people who make ordinary amounts of money who genuinely believe that the answer to their financial struggles is more money.
Two cases in point:
Individual lost job and is in the financial ditch
- They worked for 20 years and managed to save up exactly $0.
- They earned $25,000/year for 20 years – that is $500,000, yet they managed to save exactly $0.
- I wonder what their situation would have been if they had saved up $10,000 or $20,000 of that money over that 20 year period
- If one saved $19.23/week for 20 years, they would have $20,000 – with no interest growth!
- CONCLUSION: NOT an income issue. Definitely a planning/saving issue.
- SOLUTION: Make SAVING a top priority!
Individual makes good money, but has no extra money.
- Their non-house debt load is $600/month in payments (car, student loan, credit card, and furniture)
- If they eliminated the debt, it would equal about $800/month in a gross income pay raise!
- That is $9,600/year
- CONCLUSION: NOT an income issue. Definitely a planning/spending issue.
- SOLUTION: Plan every dime earned. Refuse to sign up for more debt starting immediately.
Here is how to win with what you have:
- PLAN every dime
- GIVE some
- SAVE some
- INVEST some
- SPEND some