Budgeting 101

Is there ‘too much month at the end of the money’?

The wise have wealth and luxury, but fools spend whatever they get. – Proverbs 21:20 New Living Translation (NLT)

If you’ve been paying attention so far,  I’ve already touched on the importance of having an emergency fund and avoiding credit card debt in earlier blog posts. There is a reason for these two steps being essential as part of any successful plan to get out of debt.  An increasing percentage of the populace lives paycheck to paycheck, lacking an emergency fund, and using credit cards to fill in the gap. This is a recipe for disaster. You cannot spend your way into prosperity.   The first thing you need to understand is that you and you alone are in control of your finances. The responsibility belongs to you alone, and if you have chosen to shirk this responsibility your finances will be in total chaos. Now is the time to take action and learn to budget.      

What is a budget?

A budget is a saving plan. It is not ‘punishment’, but if your finances are out of control and you’re living beyond your means, you will need to budget very tightly and stick to the plan to break the cycle of debt that you have fallen into. The good news is that it is possible. The bad news is that it will take time and effort, but I promise that if you do the work, it will pay off in the end.

Extra means extra!   

 Does your job pay enough for you to live on? Your paycheck is your biggest source of wealth. Social welfare programs trap you at the poverty level by doling out a meager subsistence and they should be avoided as a main source of income, preferably avoided altogether . Likewise, extra money earned from a second job, or from working overtime should not be essential to make ends meet. If you are starting out in a position of debt, you will need to increase  your regular income stream in addition to budgeting. Trust me, I know from experience.  Due to a series of unfortunate events from December of 1999 through January of 2002, I ended up $50,000 in debt, and it took 8 years of budgeting and working all the overtime I could endure to erase that mess. Overtime was extra income, earmarked for the specific purpose of eliminating my debt. It was never considered part of my regular monthly expenses. I have too many coworkers  who have trapped themselves into working mandatory overtime just to make their monthly expenses. This is a terrible way to live.

Step one :  Analyze

Do you get paid on Friday, only to be broke on Monday,  wondering where your paycheck went? Successful people work from a list and write things down. Get into the habit of tracking your spending, because you’re spending way more than you realize. Write down everything you spend, and always ask for a receipt. If a receipt is not available, (like buying a soda from a vending machine) jot down a quick note and create your own receipt.  Organize your receipts and record them in a journal of some sort listing the date, the store, the purchase, the amount, and the method of payment.  You don’t need a fancy financial ledger for this purpose, I recommend a spiral-bound notebook. I buy these on sale at my local Wal-Mart during the back-to-school sales by the dozen, usually for the low price of just 25¢ each!  Track your spending for about at least a month or two to get an accurate account of where your money goes. After this initial period, continue tracking your spending to see how it lines up with your budget.

Step two : Categorize    


After you’ve collected your initial spending data  break it down into categories.

Suggested categories and percentages are :

  • Living expenses 50% total– Housing 25 to 35%, Utilities 5 to 15% (heat, light, phone, maybe internet and cable but those last two are questionable necessities ), Groceries 5%-15%, Transportation 5 to 10% (Bus/train fare,  or parking fees, tolls if any, and gas.) You’ll need to adjust those four sub-categories based on your individual circumstances. The combined total cannot exceed 50% of your income.
  • Savings 10%
  • Charity 10%
  • Dining and Entertainment 15%
  • Clothing 5%
  • Medical  5%
  • Miscellaneous 5% (this can include gifts, shopping, or anything out of the ordinary)

Step three: Organize

A great way to organize your spending categories is to use the envelope system.  Divide your  cash into the various categories using the suggested percentages.  This is all the allotment for each category.  When the envelope is empty, you have no money for that expense. If at the end of the month there is unused money in any envelope, put it into an EXTRA CASH envelope, and save this for emergencies.  

Step four: Follow the rules

  • First rule of Budgeting –  50% of your income MUST be able to cover 100% of your living expenses. This is absolutely essential! If you get paid bi-weekly like most people, you average 2 paychecks a month, and one of those paychecks should be able to fully cover your rent, utilities, groceries, transportation, medicines etc.  If you can’t achieve this with your level of income, I’m sorry to say you’ll need to find a better paying job, or cheaper living accommodations.   Living in your parent’s basement forever is not a viable option either. You need to stand on your own two feet. Man up!
  • Second Rule – The remaining 50% of your income should be as 20% Financial (savings and charity) and 30% Everything Else (dining, entertainment, misc.)  
  • Third Rule – Did you notice I didn’t include contributions to a 401k Retirement Plan in the two rules? That’s because you should be contributing 10% of your salary to one automatically BEFORE you even get your paycheck, and  this should never ever be thought of as part of your budget. You don’t consider any other payroll deductions like taxes or FICA as part of your budget, and you should likewise think of a 401k contribution as just another in the list of payroll deductions to your check before you even get paid. If you don’t plan for your future, you won’t have one!

 Cash is King!

Get into the habit of paying cash for everything! Credit cards are a tool, and can even offer benefits like cash back, but it’s way too easy to overspend and blow your budget due to impulse spending. Using cash creates a visceral reaction that credit cards lack. You really weigh your spending decisions when you leave through the dwindling banknotes in your wallet.  If you elect to use credit cards for payment, you should be fully prepared to pay the balance in full each month. Paying interest is like throwing away money.  If you lack the discipline to keep your spending in check, eliminate the temptation and get rid of those cards now! You’ll be happier in the long run. As always I wish you happiness and success! 


Who wants to be a millionaire?

Just double $1000 ten times!

There are over 6 billion people on Earth.

John D. Rockefeller became the world’s first official billionaire in 1916 as a result of his ownership of Standard Oil.  Just over a century later, there are now 2,043 billionaires in the world as of 2017 according to  Forbes Magazine. This means the odds of the average person becoming a billionaire are quite slim, almost non-existent.

However, according to a 2016 report by global consultancy firm Capgemini there are around 16.5 million millionaires in the world! A million is one thousandth of a billion, but it’s still a large number and you’ve got a far greater chance of joining the exclusive ‘7 Figure Club’ especially if you are fortunate enough to live in the USA, the Land of Opportunity and home to 10.8 million millionaires.

The current population of the United States of America is 325,316,130 as of Tuesday, November 14, 2017, based on the latest United Nations estimates. With that in perspective the odds of a US citizen becoming a millionaire are roughly 1 in 325. So what’s stopping you? 

The longer you wait to do something you should do now, the greater the odds that you will never actually do it.” — John C. Maxwell

A few blogs ago, I covered the Rule of 72 and the miracle of compound interest.

If you take $1000 and double it ten times you end up with $1,024,000!  


Initially the compounding effect barely registers on the above graph, only to skyrocket at the sixth doubling.

Putting off retirement saving until your 30’s or 40’s practically destroys your potential retirement nest egg! 

Dave Ramsey, Tony Robbins and just about every wealth adviser worth their salt will tell you that the S&P 500 has yielded a historical average of over 10.5%. Low-cost index mutual funds allow the average investor to capture those same rates of return. (All 401k plans offer mutual funds in their investment portfolios and I’ll discuss this more in detail in a later blog.)

Coincidentally, (or not) both Dave Ramsey and Tony Robbins each have a chart in their books showing the effects of compound interest on the life savings of two friends. I’ve even seen several other versions online. The names, ages, and savings amounts are different , but the end results are the same. The person who started saving for retirement earlier always invests significantly less money, yet beats the friend who starts later and invests much more. The first time I saw this it blew my mind, but it illustrates the importance of saving for retirement early in life. According to almost every financial expert I’ve consulted, you’re going to need a minimum $1,000,000 to retire comfortably. It is possible for ANYONE to attain this goal provided they begin investing at the earliest possible age.

Dave Ramsey has his version of the aforementioned chart in his book Financial Peace on page 120. The Tony Robbins version appears on page 24 of his book Unshakeable.  I’m going to use Robbins’s version,  because it has a larger annual investment. The assumption is $3600 invested per year, with 10% interest.  Basically,  Joe and Bob are both the same age . Joe begins investing $300 in the stock market every month from age 19 to 27, saving a total of $28,000 and then he decided to quit saving altogether and let it sit and collect interest. Bob doesn’t even start saving until he’s 27 but keeps investing every year until he’s 65, for a total of $140,000. When they both retire at 65, Joe has $1,863,287 and Bob has $1,589,733. Because Joe started earlier, he invested $112,000 less, yet he earned $273,554 more than Bob! This is because of the power of compound interest.


In 2018, the maximum annual 401k contribution allowed will be $18,500. Imagine being a 16 year-old teen living at home and being able to invest  that amount annually for 5 years. You could have over a million before you were 45! So what are you waiting for? Go and take steps to establish your retirement nest egg today, because you’re not getting any younger!  As always I wish you happiness and success!  


The Best Part of Waking Up !

Could I have a little more coffee in my coffee?

By now, you may have been wondering about the title of my weekly blog. Instant Coffee Wisdom seems counter intuitive but I chose that name for two reasons. First it’s a bit of a play on words. Have you ever observed someone make a painful mistake that had an instant penalty? Like for instance, missing the nail when you swung the hammer and hitting your finger instead? Or maybe pulling a prank that backfired? I could go on, but the point in doing something like that is you instantly realize the error of your ways and take steps to ‘never do that again’. Some people refer to that as a dose of instant wisdom, or instant karma. Take your pick. Pain is a teacher and painful  lessons are rarely forgotten.

“The master has failed more times than the beginner has even tried.” 

― Stephen McCranie

One thing I learned early on is that it’s much better to learn from the mistakes of others and avoid doing what they did. It was the driving force I used growing up poor that led to my current state of success. I’ve made a few mistakes along the way, and I’ve learned from them. I’ve also learned a lot by studying success experts, and their methods have helped me avoid many other errors. I’ve been poor and now I’m richer than everyone in my family, and most of my peers. Trust me, richer is better. Now I’m trying to distill what I’ve learned to help pass that knowledge unto you so that you too may grow and prosper.  The reason it’s ‘lonely at the top’ is because so few strive to reach the peak of their potential.  According to research by the University of Scranton, only 8% of people who set goals each year achieve them.  92% is a pretty large failure rate.  Success takes work,  and never happens instantly.  So that covers the instant wisdom. Next up the instant coffee.

Two sugars, extra cream!

Coffee is the most traded food or drink commodity in the world. The first successful method of creating a stable, soluble instant coffee was invented in 1901 by Japanese-American chemist Satori Kato. Growing up, my mother loved Taster’s Choice. I think Folgers has a better catch-phrase though it’s still inaccurate. The best part of waking up is not the coffee, especially if it’s instant coffee. The best part of waking up is waking up!  Have you ever drank instant coffee? No matter what anyone says,  instant coffee is NOT good coffee. It’s cheap, and it’s fast. You don’t need any equipment to make it. All you need is hot water, a cup and a spoon to stir it with. My mother never even boiled the water, just ran the hot water tap for a minute. It’s NOT good coffee, but as far as I’m concerned, even bad coffee is better than no coffee and you can kill the aftertaste with copious amounts of cream and sugar.

All good things take time!

 Better coffee requires better beans, better roasts, fresh grinds, and better brewing methods.

I’ve had many different kinds of coffee drinks in my life made by many different methods including the now popular cold brew method that’s sweeping the nation. One of my favorite methods for making coffee is campfire coffee, (also called cowboy coffee) which is boiled to perfection on an open flame.  That’s one strong cup o’ joe that will put hair on your chest!


I’m not even going to acknowledge hyper expensive exotic refinements like Kopi luwak or Black Ivory. You want to throw away a day’s pay or more for a cup of ‘so-called coffee’, go right ahead.

That cup of coffee cost how much?

I had my first cup of espresso in the 90’s at a long defunct cafe called The Munk’s Tunic. Needless to say it was a wake up call to a kid raised on instant.  Compared to most ordinary restaurant coffee at the time, it cost twice as much,  was severed in a tiny demitasse on matching sized saucer, with a sliver of lemon zest. From there I sampled cappuccinos, lattes, iced coffee drinks. It became quite the expensive drinking habit.   I quickly realized that if this was going to become my new life-long obsession,  I would need to start learning to make these drinks at home. So I brought my first espresso machine. It paid for itself the first year.

Home espresso machines range in price from a $50 Mister Coffee,  to certain Breville and De’Longhi models that run in the hundreds of dollars. Not one of them can hold a candle to a Nuova Simonelli Aurelia Semi-Auto Espresso Machine, but you’re not going to spend $9000 to buy one unless you are going into the cafe business. That’s why customers go to their favorite cafes, because you can’t get the same coffee at home.  So the reason you actually buy lattes at cafes is because they have the specialized equipment, the training  to operate it,  and ‘hopefully’ the freshest beans available.  And that’s why the coffee tastes so good. The very best coffee will never be instant coffee,  and now you are wise to that.

So think of Instant Coffee Wisdom as an easy reminder that the best things in life never happen instantly. Happiness, success, and wealth all take time to ‘brew’. Don’t settle for instant. There are no shortcuts to success, and if you settle for ‘good enough’, you are cheating yourself, because ‘good enough’ is NEVER ‘good enough’.  As always I wish you happiness and success!


Be all that you can be!


Live Boldly like you’ve never lived before!

“All successful people are big dreamers. they imagine what their future could be, ideal in every respect, and then they work every day toward their distant vision, that goal or purpose.” ― BRIAN TRACY

Are you living your life to its fullest potential? If the answer is no, what is stopping you? Life is not a dress rehearsal,  we each get one life to live and it is up to us to get it right. We each must make our own decisions , and take responsibility for our actions. It’s very easy to blame others, or our circumstances, but ultimately it boils down to ‘the man in the mirror’. The good news is that as long as we have air in our lungs it’s not too late to make a change.

“Small disciplines repeated with consistency every day lead to great achievements gained slowly over time.” ― John C. Maxwell

First, decide what areas of your life you wish to improve. Everyone has at least ONE thing that they need to work on, and admitting it is half the battle.  Write a list of goals you’d like to achieve in the coming year, then formulate a plan to achieve those goals. If it’s a very big goal, you may need to set smaller sub-goals. Then discipline yourself to do whatever is necessary to achieve those goals.  Each day, motivate yourself to do something to get you further along your path to achieving success. Baby-steps are okay, small progress is still progress.  Even two steps forward and one step back is progress. The key is consistency! Do not give up! As the old adage goes, “quitters never win, and winners never quit!”. Keep a chart of your progress to motivate you, and maintain a good attitude regardless of any small temporary setbacks which may occur. Rome wasn’t built in a day.

 “The longer I live, the more I realize the impact of attitude on life. Attitude, to me, is more important than facts. It is more important than the past, the education, the money, than circumstances, than failure, than successes, than what other people think or say or do. It is more important than appearance, giftedness or skill. It will make or break a company… a church… a home. The remarkable thing is we have a choice everyday regarding the attitude we will embrace for that day. We cannot change our past… we cannot change the fact that people will act in a certain way. We cannot change the inevitable. The only thing we can do is play on the one string we have, and that is our attitude. I am convinced that life is 10% what happens to me and 90% of how I react to it. And so it is with you… we are in charge of our Attitudes.” ― Charles R. Swindoll

If you experience a setback:

  • Treat it as a learning experience.
  • Try to determine what went wrong, and why, then try again.
  • Ask for help from more experienced individuals.
  • Look for the positive part, and be thankful it wasn’t worse.
  • Maintain a positive attitude and move on.  

“Knowledge is power.” Francis Bacon

Get into the habit of reading self-improvement books, and educational texts. We all enjoy a good novel, but if you’re only reading fiction, you are stunting your potential. You can become a leader in your field by spending one hour a day reading the latest information pertaining to your job. Leaders are readers! Studying a foreign language can make you more marketable. Learning new skills can lead to new careers and opportunities. The more skills you learn, the more knowledge you have, the more potential you unleash.   

Time is the currency of life.

With the exceptions of the day we are born, and the day we die, every day we live has exactly twenty-four hours, no more, no less. Successful people learn to maximize every second and are highly productive. Multitasking can be an effective tool, if and only if the tasks are complimentary. Conflicting goals lead to failure.

If you find that you are biting off more than you can chew:

  • Focus on one task at a time.
  • Schedule your tasks.
  • Work during your peek times.
  • Remember that trying to do too much at once will lead to burn-out.

“There is no substitute for hard work.” ―Thomas A. Edison

Remember, don’t quit. Self-improvement is a process. It will take time, it will take work. It’s not going to happen overnight.  As long as you keep working at it, you will move further along the path to achieving your goals, and you will feel the satisfaction with each new milestone you reach.

You can do it! As always, I believe in you, and wish you great success!

404 – File Not Found!

Organizing your life for maximum efficiency


Time is your most precious resource; make every minute count! – Brian Tracy

Have you ever been late for work because you couldn’t find your wallet or keys first thing in the morning? Everyday millions of people lose valuable time hunting for lost items. One of the key habits of highly successful people is that they’ve organized their lives for maximum efficiency.

A place for everything and everything in its place

Get into the habit of always putting items away in a designated area as soon as you are done with that item. As soon as I walk into my home, I have a designated spot where I immediately place my keys, wallet, access badge, and hat,  the moment I enter the door. I’ve made a habit of doing this for years. I never have to waste time looking for them, and it saves me unnecessary stress. This is an easy habit when you live alone, but it can be complicated if you have family, or roommates.  In such cases you must make sure that the people you live with don’t mess with these. In the case of children or pets, it’s best to kept these items out of reach.

Write it down

All successful people are highly productive because they are organized and work from lists. Always work from a list and cross off items as they are completed.  

  • Keep lists of important items or tasks which must be done written down.
  • Keep a grocery shopping list on the fridge with a magnet. Add items to it as you run low so you can take this list when you go shopping. Remember to start a new list after each shopping trip.
  • Write important dates and appointments on a large monthly calendar, and  refer to it each morning and  evening.
  • Keep a list of anniversaries and birthdays to add to new calendars and planners.
  • Keep a personal planner book.  
  • Keep a fitness log to record your progress.
  • Keep a list of important phone numbers and addresses.
  • Print hard copies of important paperwork.

Work from a clean desk!

Never work from a cluttered desk, it cuts down on your efficiency significantly, and if you have visitors or coworkers, a messy desk makes you look very unprofessional. My work station is a model of efficiency.   

File it!

I have a file cabinet where I keep all my important papers such as tax returns, financial documents, newsletters I’ve written, and other personal papers.  

One cleaver file has copies of the mail-in portions all my recurring bills. Sometimes the post-office misdelivers or delays mail. It happens. I know when all my bills are due, and if I don’t receive my statement early enough, I make a copy from my file and mail that out. This avoids late fees.

Keep in mind that whenever you file paperwork, 80% of the time it is never referred to again. Always think about what you are storing and why. If you are storing very old files that you haven’t looking at in years, you may want to consider transferring them from the file cabinet to the ‘circular file’ a.k.a the waste basket.

Electronics fail!

Have you noticed I keep stressing the importance of physically writing things down? This is because electronics fail! There’s nothing wrong with keeping this info on your smart phone or laptop, but if these items break you will lose all your data.

It’s even happened to me twice.

When I was working on my first book 15 years ago, my hard drive crashed. I had a back up from the prior month, but recent work was trapped on the drive. Fortunately with some guidance from Frank Hayes of Computerworld and help from my pal Dan, we were able to recover the info by painstakingly searching the drive with a recovery program that worked, but took days!  I was very lucky!

I print an annual Christmas Newsletter which I circulate among close personal friends and family. One year, the computer files from the prior newsletter vanished into the ether. I keep hardcopies of every newsletter, but for some reason  that year I neglected to put one in my file cabinet. Fortunately one friend and my aunt Joyce had copies so I did not lose anything.

My late friend Harvey W. Kimble used to write all sorts of articles on his computer which he would print out and circulate among his friends. One day his daughter wiped his hard drive. Completely reformatted it. All his writing was gone, especially this one article which he was quite proud of. He asked friends and family if they still had copies. Believe it or not, I was the ONLY person who had copies of EVERY article he ever shared with me, and he was so grateful that he gave me $50! I tried to refuse, but he insisted. I miss Harvey, he always had a smile that lit up the room.

When you organize your life, you simplify your life and free up time to live your life to the fullest! As always I wish you happiness and success!




Oh No, not again!

Life happens when you  least expect it!


 “Curiously enough, the only thing that went through the mind of the bowl of petunias as it fell was Oh no, not again. Many people have speculated that if we knew exactly why the bowl of petunias had thought that we would know a lot more about the nature of the Universe than we do now.”― Douglas AdamsThe Hitchhiker’s Guide to the Galaxy

You live life  best when you’re prepared for the worst.

As I stated last blog the debt situation in the USA is at an all time high because people use credit cards for things they don’t need. But what if there’s an emergency? The average person today has no savings in place for the unexpected should it occur. They just think ‘oh no, not again!’ and just dejectedly swipe their ‘magic money card’. This usually makes the situation worse when the next unexpected event occurs. Trust me I know! From November 1999 through January 2002 I got hit with one disaster after another and I could not recover fast enough to prepare for the next time. I began to associate myself with the Biblical figure Job.

The main time to prepare for an emergency is before it happens, NOT after it’s occurred.

“A prudent person takes precautions. The simpleton goes blindly on and suffers the consequences.” –Proverbs 27:12

According to a 2017  GoBankingRates survey, 57 percent of Americans have less than $1,000 in their savings accounts, and 39 percent have no savings at all.

This is very foolish because without an emergency fund, you only have credit cards to fall back on, and each time you dig yourself deeper and deeper into debt.  As your financial situation deteriorates, your FICO score drops, the amount of credit available decreases, and the interest rates of those willing to extend credit to you (if any) quickly skyrockets.

“If you’ve no debts and have $10 in your pocket, you have more wealth than 25% of Americans. More than that 25% of Americans have collectively that is,” — Tim Worstall of the Adam Smith Institute  (from a 2011 Forbes op-ed.)

Trust me, it’s not a good feeling when you have no cash, your credit cards are over the limit and declined, and the bank won’t loan you money.  It’s demoralizing to have to borrow money from friends. It felt awful, and a few of them made me feel rotten for having to do it. The lowest point was when I was still struggling and omitted the sad fact that I had no money for my share of the hotel during a planned trip to Canada in 2003 while we were driving to Canada! We were an hour from the border when I finally confessed the ‘bad news’.  It almost destroyed our friendship.  I promised Lawrence I’d pay him back in a month.  Fortunately I am a man of my word and I’ve never reneged on a loan from a friend.  After I clawed my way back up to prosperity from my pit of despair, I lost several other friends because I tried to help them with personal ‘loans’ which they NEVER paid back. Loaning money to your friends and family is a terrible idea.  Just like you are the only person who can fix your problems, they are the only ones who can decide to change their ways and fix their problems. I want all my friends to be happy and successful, but they are the only ones who can decide if they want to be.

“In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.” –Proverbs 21:20

This is where having an emergency fund will keep you from being knocked to the ground the next time an ill-wind blows your way.

The Emergency Fund-Your first line of defense!

First off, your 401k retirement plan is NOT an emergency account, and I’ll discuss 401k’s and why you must have one in a future blog.

There are two types of emergency funds: cash and resources. Both are very important. Both take time to build.

  • Resources

Consider the devastation caused by hurricanes Harvey, Irma and Maria in 2017, as well as past hurricanes like Andrew, Katrina and Sandy to name a few.  Electricity was knocked out for weeks or even months. Buildings were destroyed. People went hungry due to lack of food and water. Medical supplies were short or non-existent.

In your home you should always keep a rotating stock of groceries. Not just frozen or refrigerated goods. These spoil fast when the electricity is off. You should have about a month’s supply of canned and dry food, as well as a few cases of drinking water. I would also recommend a supply of basic medical needs.  Survivalist preppers will go way overboard and claim you need a year’s supply of everything,  but that’s overkill.  A month’s supply is more than the average person needs, and keep it rotated! New foodstuffs in back, oldest items up front to be used first! Expired groceries do not help anyone.


If you have to evacuate an area, I’d also recommend having a bug-out bag that you can grab as you load your car. I’d Google bug-out bags and emergency preparedness suggestions for more info to tailor needs for your unique situation.

  • Cash

You’ve got to have a supply of ready cash on hand. Remember  what I just said about no electricity after power lines go down from a hurricane or similar disaster?  You can’t use an ATM or swipe a credit card with no electricity. If the power’s out for days what will you do? Cash is king! I recommend always having $1000 physically on hand in your home. Keep it hidden of course, but have it! It could be the difference between life and death.

If you’re living paycheck to paycheck, drowning in debt, this could take you a few months, but it’s imperative that you start saving towards it, even if it means putting pocket change in a mason jar on the kitchen counter after work each day.

Once you’ve gotten the emergency fund started with the $1000 in cash, you should next work on beefing-up your bank savings account.

A good rule of thumb is to have three to six months of living expenses , or $5000 (whichever is greater)  saved. Once you’ve achieved that benchmark, you want to keep building your savings until you have saved up two year’s worth of living expenses. It’s easy to do if you’re debt-free and living modestly and within your means. I actually pay my rent by the year now. It’s a great feeling to know that my highest financial obligation is taken care of for 12 months, I’m debt free, I’ve got plenty of food and resources, and life is good!

As always I wish you happiness and success!

Those whom the gods would destroy…

The insanity of having Credit Card Debt

“All the lessons of history in four sentences: Whom the gods would destroy, they first make mad with power. The mills of God grind slowly, but they grind exceedingly small. The bee fertilizes the flower it robs. When it is dark enough, you can see the stars.” — Charles A. Beard

Charles Austin Beard was an influential historian in the early 20th Century.  In the above quote, he referenced a line of dialog from an ancient Greek play by Sophocles,  Antigone written around 441 BC. The first time I ever saw the phrase, it was the title of a 3rd season episode of Star Trek.  Years later when I was a college student I used to collect pin buttons which I’d display on my denim jacket. One day, I found a pin that read “Those whom the gods would destroy are first issued credit cards!” This is my all-time favorite button and I still have it in my collection.


Americans are addicted to credit cards, and the resulting levels of debt have caused much heartache and suffering in our society. Debt is a form of slavery that can last for decades.  Like most forms of addiction the young and stupid are usually the easiest to hook. 

My first credit card was from SEARS and I applied for it in college. The very first item I purchased was a silver metal $50 Phasar watch very similar in style to the  black plastic Casio watches I’ve worn for the last 25 years.  By the time I left college, I had 19 different credit cards.

The problem with credit cards is that the average person tends to use them for everything, especially non-essentials that they really didn’t even need in the first place. Before long, one card is maxed out, an new card is applied for, and the vicious cycle of mindless consumerism continues. 

“Scientists have developed a powerful new weapon that destroys people but leaves buildings standing — it’s called the 17% interest rate.” — Johnny Carson

 The average credit card has an interest rate of between 17% to 22% and can easily rise to 29.9% when you start having late or missed payments.  At 17%, your debt is doubling just over every 4 years according to the Rule of 72, discussed in last week’s post. When you add to this the fact that the average monthly minimum payment is only about 1% of the balance, by paying the minimum on a high balance you can spend decades to pay this debt off! Keeping a balance on a credit card is rarely a good idea.

 “The rich rule over the poor, and the borrower is slave to the lender.” — Proverbs 22:7 (NIV)

When a lender is issuing you credit, they are NOT doing it because they like you and you deserve it. They intend to profit from your debt. Credit cards are the WORST form of debt, and it’s very easy to hit many of the traps that are outlined in all the fine print on the application form.  Often you will be presented with a low introductory rate to encourage you to run those balances up, so that you can be charged insane amounts of interest as you struggle to pay back the debt after the promotional rate expires.

Most people do not consider this , they just ignore the fact, and continue to charge additional debt until they eventually hit the limit on one card, then  just apply for another until they’ve manage to trash their FICO credit score so badly that only loan sharks will lend money to them.

Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it. — Albert Einstein  (No, not really, but I made you laugh this is REALLY an anonymous quote! )

In 2009, the government passed the Credit Card Accountability Responsibility and Disclosure Act of 2009. the law states that credit cards statements must contain the following info:

  • The warning: “Minimum Payment Warning: Making only the minimum payment will increase the amount of interest you pay and the time it takes to repay your balance,” or a similar statement.
  • How long it will take and how much it will cost to repay your balance if you only make minimum payments.
  • How much you must pay in order to pay off your balance in three years or less.
  • A toll-free number where you can get information about credit counseling and debt management services.



24 years if you pay only the minimum! And even if you paid 3.625% instead of 1%, it will take 3 years and cost $2659.36 in interest! No thanks, I’ll pay the balance in full and pay $0 in interest. It’s always best to pay your balance in full each month. If you can’t afford it, don’t buy it! 

Here’s a handy chart to show how many payments it will take to pay off your debt at several percentages of the balance with various interest rates:


Number Of Payments

SOURCE:  “Get a Financial Life: Personal Finance in Your Twenties and Thirties,” Beth Kobliner

A credit card is a tool. It can make your life easier if used wisely, but if you misuse it your life will become a living Hell.

As I said in an earlier blog, I went through a tough 18 month period seventeen years ago, ended up $50,000.00 in debt and trashed my FICO score. Bad things just kept happening and my life spiraled out of control quite fast.  It took a lot of work, wise council, and study to get me to where I am today. I am debt free. My credit cards are all reward cards, and the balances are paid in full at the end of each month. I actually get PAID to use my credit cards. It’s a wonderful feeling not to have to live in fear of the monthly bills in the mailbox, because I have enough emergency money socked away that I never need to worry. I hope that through continued reading of my weekly blog, I will be able to distill some of my accumulated wisdom to help you reach the same pinnacle.  

As always I wish you happiness and success!

The Rule of 72

It’s not just a good idea, it’s the law!

I first heard about this powerful financial formula in 1992.  

I was unemployed back in 1992 for nearly the entire year, so I was very bored and I had a lot of free time and very little money.  My savings account was being depleted to supplement the bills my Unemployment Compensation was not covering.   I was watching an episode of The 700 Club, a weekday Christian Talk Show.  Host Pat Robertson was pushing his self-help tape set LIVING SUCCESSFULLY IN THE ’90s. The cost was rather inexpensive, and I needed all the help I could get in my precarious situation.

The ONLY thing I remember from this course was The Rule of 72, or as Pat Robinson referred to it “The Law of Reciprocity”.

This tool is a very simple formula used to give an close approximation involving the amount of time needed for an investment to double from the compounding of interest. Compound interest is a very powerful financial force which will earn you riches if properly used, or destroy you financially if abused.    

A little bit of knowledge goes a long way.

“The thing I have discovered about working with personal finance is that the good news is that it is not rocket science. Personal finance is about 80 percent behavior. It is only about 20 percent head knowledge.”  Dave Ramsey–Author and financial expert.

I’m going to use a little bit of very simple math to explain both the Rule of 72 and it’s relation to Compound interest.

What is Compound interest?

Compound interest quite simply defined is interest on interest. It’s the result of reinvesting the interest so that in the next period, the interest is earned on the principal sum plus previously-accumulated interest. I know sounds complicated, but it really isn’t.  You need to understand this because it’s how deposits, loans, and especially credit  cards work.


$100 with 1% interest compounded annually for 5 years.

72 chart


This is assuming you are leaving the money in a savings account by itself, and adding nothing to it.

Now here’s where the Rule of  72 comes into play.

The rule allows you to approximately determine the amount of time needed for the value of your deposit  or debt to double! Using the above $100 at 1% example, using the rule of 72, it would take you about 72 years before your untouched $100 became $200.

Here’s how the formula works.

You divide 72 by the interest rate and the result is the number of years needed for doubling.

Let’s say you had $10,000 in a  CD (certificate of deposit) at a special 6% rate.


If  you left that CD alone for 12 years,  you would have about $20,000 due to the power of compound interest.

Simple huh?

Now that you understand both the Rule of 72 and compound interest, next week I will explain how both relate to credit cards. Don’t miss it! As always I wish you happiness and success!


“Oh, a wise guy, eh?”

The importance of seeking wise council and discernment.

The title of this week’s blog post is one of the many catch phrases of the late Jerome Lester Horwitz a.k.a. Curly Howard of the Three Stooges. He is considered by some to be one of the funniest men of all time. He portrayed all types of experts from lawyers to doctors to military advisers during his short acting career. Although he passed away in 1952 at the untimely age of 48, he has made an indelible impression on contemporary culture.

Would you go to an actor for medical or legal advice because you had once seen him play a doctor or lawyer in a film? As Curly Howard might say “soitenly not!” Yet today countless individuals place their faith in celebrities like movie stars, professional athletes, or even their favorite singer when seeking  advice, endorsements, or general information of all sorts. This is why it is always important to consider the source!

Just because someone is rich doesn’t make them intelligent.

The average salary of an NFL football player is 2.1 million dollars according to a recent report by Forbes Magazine. Some actors get paid millions of dollars per film. Yet despite this level of wealth, we constantly read about these same celebrities going broke, owing back taxes, or filing for bankruptcy.

Knowledge is power!

Successful people do not find themselves in these types of situations when they have made it their lifelong goal to seek wise council. It is imperative to constantly read and do research in whatever field we are perusing, and especially in the area of personal fiance. It’s not always about what you know, because it’s what you don’t know that’s going to blindside you.

Wisdom does not always come from age.

There are countless retirees living in poverty because they did not take the proper steps in their youth to ensure a comfortable retirement. My late mother was one of these people. When I was a boy, I heard her brag to her friends on more than one occasion that ‘her son will provide for her in her old age’. There was no reason for her to die in poverty, she had a lifetime to seek  wise council and take steps to invest. In the end I supported my mother for the last few years of her life, and was then burdened with a hefty funeral bill.

Two quotes from success expert Brian Tracy come to mind:

  • “The sad fact is that people are poor because they have not yet decided to be rich.”
  • “Whatever we expect with confidence becomes our own self-fulfilling prophecy”

A good man leaves an inheritance to his children’s children, And the wealth of the sinner is stored up for the righteous. Proverbs 13:22

I did not come from a wealthy family. My father was the financial expert, but he unfortunately died when I was a young boy. My mother did not know the value of money and would spend two dollars for every dollar she had. As a result, I grew up in a roach-infested flat, eating government cheese, and the free lunches and breakfasts provided from NYC public schools. I decided as a teen that I was going to be rich when I grew up.

In 9th grade, I got terrific financial advice from my social studies teacher Mr. Rosenthal. He went above and beyond  to teach about the importance of investing and the  stock market. He had 2 dozen blue VALUE  LINE binders of stock market research on a shelf in his class. He taught us kids how to read the stock reports. One of the first stocks I tracked was United Technologies (UTX). He encouraged us to go to Merrill Lynch and use our ‘allowance, birthday and/or Christmas money’ to buy stocks. I remember going home very excited and encouraged. UNFORTUNATELY about that time there was a friend of the family visiting. The kids all called him ‘Pops’. As a teen, I thought of him as this wise, old guy that knew card tricks and jokes. That particular day he happened to ask what I learned in school, and I told him about my new investment passion. His response was “You’d have to be crazy to invest in the stock market! During the Crash of ’29 people lost all their money and jumped off  rooftops because of investing in the stock market.” So I got talked out of good advice because of a lack of discernment. I didn’t know any better, I was still a kid.

This brings us to an important point made by Dave Ramsey in his book Total Money Makeover:

  • “Don’t take financial advice from broke people.”

“Economic advantages may be created by any person who surrounds himself with the advice, counsel, and personal cooperation of a group of men who are willing to lend him wholehearted aid, in a spirit of PERFECT HARMONY. This form of cooperative alliance has been the basis of nearly every great fortune.”  — Napoleon Hill author of Think and Grow Rich

If you want to be successful, you need to seek wise council from successful people with proven expertise. These people must have your best interest at heart. It’s no good if they are a bunch of self-serving ‘yes-men’ who will tell you whatever your itching ear wishes to hear. You need discernment to weed out those types of parasitic sycophants.

You can be successful and financially stable in the future if you take steps today. As always I wish you happiness and success!



Leigh Mercer published his well know palindrome “A man, a plana canal – Panama!” in the November 13th 1948 issue of Notes and Queries, a long running scholarly journal of English language. A palindrome is a word, phrase, or sequence of letters that reads the same in either direction. I’m using it here as a mnemonic device to help emphasize the importance of having a PLAN.

The Panama Canal is one of the seven wonders of the modern world. It is a series of locks and dams which connect the Atlantic and Pacific Oceans via a 48 mile  artificial waterway and it first opened in 1914 after over a decade of construction. The first Chief Engineer of the project was John Stevens who devised the lock system.

The point I’m trying to make is, without the construction blueprints (or PLANS) the canal could never have been built.

In order to be successful in life at any particular task, you must have some sort of PLAN laying out the steps you need to follow in order to succeed. Every Self Improvement book ever published can all be described as a series of PLANS to help you achieve a particular goal. The problem is, with any advice given the only person who can make you follow the PLAN is YOU! If you fail to heed wise council, YOU are the only one to blame. You will reap what you sow.

 In his book 7 Habits of Highly Effective People, author Stephen Covey states

“It is our willing permission, our consent to what happens to us, that hurts us far more than what happened to us in the first place.”

The first two ‘habits’ are:

  • Be proactive -i.e. focus on things we can do something about.
  • Begin with the end in mind, or in other words, have a PLAN.

Every successful person who has ever achieved a major goal did so by having a PLAN. It goes without saying that if you fail to PLAN, you  can PLAN to fail.

  • A diet is an eating PLAN
  • A budget is a spending PLAN
  • The 52 Week Challenge is a savings PLAN
  • A 401k or its federal equivalent the TSP are retirement  PLANS

Motivational expert Brian Tracy once said that

 “Whatever we expect with confidence becomes our own self-fulfilling prophecy.”

This goes back to last week’s blog post  G.I.G.O.  where I addressed the importance of a positive mindset.  A PLAN by itself without you believing in it, or acting upon it, is useless. Suppose you brought a book on personal finance, read it and never used any of the strategies within. Would you expect to be a financial success?

Whatever you are PLANNING to do in life, you must have a clear vision, and you must act upon it. If you can conceive it, and you can believe it, than you can achieve it!  I wish you success and happiness!