Expense Management
 

So you are currently in debt and you can't afford to save a dollar ?

Whoa pardner !!!!!!!!! You ain't got a clue ! And now for all of you out there that are REALLY in this shape, please accept my deepest apology and sympathy. I do not wish to offend you. Its the rest of you that I am after with a vengence !

This section is not for those of you who are really rich, those that can "have it all" and still save plenty. This section is for those of you that DON'T SAVE, DON'T BUDGET, and those that LIVE BEYOND THEIR MEANS. If this fits you, then read on. Else, go back and find a more pertinant section on expense management.

This section is for all of you that CAN save, but have chosen to live above your means. Its for all of you that understand the "money evaporation" principle. Thats when you have $5 in your pocket, and when you get home, you have 87 cents and say, "Where did my five bucks go ?". Its for all of you that have big car payments, big house payments, cable TV bills (with all of the premium channels), the "I like to go out to dinner all the time" crowd, the "I have the best time at bars" crowd, the "I drink a six pack of Heiniken every night" crowd, the "I never clip coupons" crowd, and the basic "I don't plan my finances at all" crowd.

For the record, let me say that "I REALLY LOVE ALL OF YOU". You are helping to drive the greatest low inflation economic expansion in the entire history of the United States of America. My stock portfolio thanks you.

But there are so many of you, that the meager number that I can bring over to the side of Financial Logic will have little impact on me. So here I go.

If you won't afford to save and invest, YOU ARE IN REALLY BIG TROUBLE.

Here are some things you can do:

o    Create a budget that allows for investing. You will find soon enough that a well intentioned first budget will be very hard to adhere to.

o    Determine if you are living beyond your means. If you can't invest, then you are living beyond your means.

o    Always document your expenditures and review them monthly. This helps solve the money evaporation problem.

o    Review your budget adherence monthly. Adjust if necessary.

o    Surgically kill all elements of your expences that keep you from investing. Start living within your means.

o    And again, review your budget adherence monthly !
 

In order to invest, you may need cheaper food, a cheaper apartment, a cheaper house, an older car(s), more meals at home, taking your lunch, a higher paying job, a less expensive boyfriend/girlfriend, older furnature, fewer friends that you have to impress, regular instead of high test, fewer (or no) children, a spouse that brings home a salary too, and most of all, an understanding of what investing can do for you.

Imagine, you are 40, 45, or 50, and you tell your friends that you are now retired ! They will think, GOD, they lived in that cramped house, drove those old cars, hardly would go out with us to those fine restuarants.....my GOD, how could those poor people be retired ??????? Kent, why do we still have to work ?????? Whats wrong with US ????? Maybe we need to sell the Van Gogh  and the Mercedes. Oh GOD Kent, I CAN'T SHOP AT WALLMART !

Now some of you out there may really love to work, and thats fine. But you are in the minority. Have fun, fuel all of our fine companies with your lavish expenditures, and keep my stock portfolios rising while I play.  I LOVE YA"LL MAN !

But for the other 99% of you, those who could save but dont know how, you are my real audience.

YOU MUST LIVE WITHIN YOUR MEANS !!!!!!!!!

Reviewing your rising stock portfolio will give you endless hours of cheap entertainment.

Here are some helpful hints to reduce your expenses and Live Within Your Means:

o    Keep your limits low on your credit card. Sorry, just one allowed per person, folks.

o    Use checks whenever possible. Its a good written record, and its kind of a pain to write a check.

o    Are your car payments killing you ? Take your time and sell that car (for a good price) and shop for a good cheaper car. I drove Volkswagens most of my young life. Beat them to death, never put much money in them, and they always ran great.

o    Are your house payments killing you on that oversized mansion you are living in ? Unless you are smarter than about 90% of the people on the planet as far as real estate goes, you may not be sitting on a really great investment. In general, your house will appreciate as a function of the inflation rate (which in early 1998, is pretty low now folks). If its that great, then see what kind of inflated price you can get for it quickly. Clean it up and put an add in the paper and show it to prospective buyers. See who bites at your inflated price. You don't have to sign anything if you don't want to. Many Certified Financial Planners agree, real estate gains of the olden days are dead and gone. Make sure your house allows you to live within your means. If not, learn exactly what you need to do to it to maximize your profit and liquidate it. A nasty trick is to call a real estate agent and tell them you are thinking of listing with them and then ask them what you should do to maximize your profit. Pull this nasty trick with several agents, then learn how to sell the house yourself. All you really need is a financial attorney for the paperwork.

o    Make all of your financial decisions based on how much they increase your total net worth at your projected death. If investing in that condo in Florida, or buying that Lexus or that big screen color TV gives you an indication that you will die with significantly less money, or even worse, makes it where your retirement plan no longer works, then let that be a big red flag.

o    Review your expendatures and budget monthly. Why could you not invest this month ?

o    MAX OUT YOUR COMPANIES 401k (if its a decent 401k). Tax free money can grow fast. Understand FULLY your companies 401k investment options. About 99% of all 401ks SHOULD BE MAXED OUT !!!!

o    Study investing daily. Is CNBC your alarm clock in the morning. How were corporate earnings last quarter ? (click here for the answer).

o    Save up about $2000 for that next mutual fund and then dollar cost average at least $200/month into it.

o     Is the company you work for listed on the stock market ? Were there reported earnings increases or decreases last quarter ? What is the historical stock price trend of your company ? Chances are, thats where some of your 401k dollars are.

o    Teach your children well. It may greatly minimize your tuition expenditures. I was in college for over 10 years and it didn't cost my parents a cent.