Chill Maadi

A few weeks ago, I was looking over previous years’ tax returns with a view to preparing for this year’s taxes (I expect a refund). Those numbers never seemed that big and significant before but now, with a more modest income, it finally hit me how much money I once brought home each week. You see, I have been lamenting a recent change in career which resulted in a significant pay cut, further resulting in significant debt and a serious lifestyle change. This realization, combined with my new reserved lifestyle, was actually quite upsetting. It meant that I spent it all. It meant that, while I had arguably been considered “rich”, I had no wealth. This meant that I had let ten years of great opportunity to establish wealth pass by in favour of designer clothes, a big house, a couple of Mercedes’, a BMW, extravagant vacations, big parties, plasma TVs, and the list goes on. I had, in fact, blown almost $500,000 in four short years.

Now, I do take some comfort in my new ability to live conservatively and happily. My assets are minimal, with the bulk having been sold to cover my debts, and I’m learning new ways to save money from day-to-day and, more importantly, I am overcoming my desires to “display” apparent wealth through material items. In fact, I have two new mantras – “less is more” and “quality over quantity”. The problem with money, however, like food with an over-eater, is that you still need to make it, spend it and deal with it on a daily basis. And, while that old adage may ring true that money does not buy happiness, it does certainly help deflect misery. An alcoholic can, at least, cut his or her addiction completely from their body.

Wealth vs. Riches

To learn to deal with money, I have been trying to accept the different between being rich and being wealthy. Being rich is easy – it means having the means to acquire whatever you want, when you want it. It ends there. I was no longer rich and that has ended too. Being wealthy, on the other hand, incorporates a whole lot more.

True wealth, first of all, is a culmination of daily love, respect, good living, laughter, joy, contentment and, yes, money. And each one of these areas is a separate component of wealth and complicated in their own unique ways. For example, do you both love and feel loved each day? Are you respected by others and do you show others respect?

Money is no different. It much be treated severally and seriously. The purpose of money is to provide the means to acquire the necessities of life, to alleviate the stress of providing for ourselves and our family, and to create a financial foundation which can be passed along from generation to generation. Does your money help to alleviate your worries? Are you successfully working towards this end? Money does not cure all ills, but it plays an important role in creating an environment in which your mind can turn to practical solutions for them. Therefore, money does play an essential role in acquiring true wealth.

So how can a population, so visibly concerned with outlandish displays of their riches, turn their mind to turning their money into a real element of wealth?

Steps to Creating Wealth

Remember my mantras, “less is more” and “quality over quantity?” It sounds really silly and, probably self-fulfilling anyhow, but once I thought long and hard about what I had done to myself…I become quite frightened of slipping back into old habits. What I didn’t like about my old lifestyle had become a question I thought of daily. Mostly, I just felt bogged down by my possessions, physically, emotionally and financially. Here are the steps I have taken or am taking to creating wealth:

• Minimize – keep consumer debt to a minimum or non-existent; think long and hard about what you need (vs. what you want) to make you happy; look for alternative options (repair vs. replace); treat your inanimate possessions with care and value them to get the most return from them;
• Learn the difference between need and want – (for example, do you really need a new car or are you looking for reasons to get one because you want one?)
• Spend extra money on quality – quality items that are taken care of can last a significantly long time.
• Pay cash for everything – consumer credit has, unfortunately, earned a rightful place in our society, but learning when to utilize it responsibility is not a skill that most people have honed. Keep consumer debt limited to necessary and big-ticket items – most obviously a house and unexpected repairs – and keep it clear and available for unanticipated expenses or those for which you have not had adequate time to prepare for – such as the funeral of a loved one, a law suit, etc.
• Spend less than you earn – this is a really difficult concept to understand. Most people, and until recently myself included, do not fully appreciate how much they rely on their credit as part of their income. The end result is that many people actually suffer a large deficit in spending each month – charge a few new outfits ($500), weekly dinners out ($400), a movie for two ($50), order pizza ($50) – that’s one thousand dollars you need to bring home each month on top of your regular bills and expenses. That is a substantial amount of disposable income on items that may or may not be part of your budget.
• Keep track of money – but don’t become too obsessed. Money comes and goes, so get used to it. But, you can do your part to keep it from waving good bye.
• Set goals – life is in the details and, by no means, should some luxuries and experiences be forfeited but understanding the ones that you value personally goes a long way. Set a goal for these items such as an amount, a date and a regimen to reaching your goal. A soupcon of sacrifice makes the rewards even sweeter.
• Pay on time – getting on track and staying on track sometimes means sacrifice, but saves an enormous amount of money in late fees and interest. Once you have established that you can stay on track, it will no longer involve sacrifice.
• Give – give generously of your time, talents and money. This is important because people remember your generosity and return it one day.
• Learn to ask for help and learn to graciously accept it. Other people have time and talent to share – from physically demanding or how-to jobs around the house to teaching you to stick to a budget.
• Learn things for yourself – helping yourself is the most rewarding return on investment there is so learn some things, be open minded about financial planning and budgeting and look for ways to make your knowledge save you money.

Focus on being wealthy and wise, of developing a total wealth package for your life. Typical financial advice is only one portion of true wealth accumulation that must be considered in conjunction with healthy values and attitudes towards yourself, others and the role money plays in contributing towards total wealth. Ignoring money matters is a poor decision but keep money in perspective and you will be rewarded with peace of mind, better health and greater security.

When I changed jobs a few years back, I also took a very large pay cut. Having earned a very good income for many years, I soon found myself swimming in debt and devoid of savings as I had not been able to adjust my lifestyle to my new lower income. After learning several ways to curb my spending, I still had the daunting task of dealing with the debt. I found I could live within my means and service my debts, but I could not reduce them.

First, I approached the bank. The bank is not your enemy if you are upfront with them. I owned my house (with a reasonable mortgage) and had been able to keep my credit rating in good shape so I was not too surprised when they were happy to help me. I applied for a new low interest credit card to consolidate all previous cards. It was cheaper than a standard consolidation loan and it still afforded me the flexibility to pay more or just the minimum each month. I took this one step further. My banker estimated that I was saving about $300 per month in interest, so I increased my mortgage payment by $100 each month, set up retirement savings plan contribution of $100 per month and set up an automatic payment against the new credit card of $100 per month.

Then the banker changed my mortgage payments from monthly to every two weeks to coincide with payday. This has the effect of making one whole extra mortgage payment each year which is applied directly to the principal. Because I had only a few years left on my mortgage, these extra measures meant I could expect to own my house free and clear within two years.

My banker looked at my insurance portfolio. I had my mortgage balance insured at a cost of $35.00 per month. A few phone calls to some outside insurance agents and I discovered that I could get a better and bigger policy for $35.00 per month elsewhere that even had a small savings component.

Next, at my banker’s prompting, I looked at my personal assets. As it turned out, she was right. I had quite an inventory of stuff that was of value but not particularly important to me. I arranged with some friends and family to consolidate items and we hired an auctioneer, instead of a garage sale, to get rid of it. This little exercise was not only fun and cleansing but earned me $3300 after paying the auctioneer. This money was used to purchase a good used car and my leased car was returned, saving me $479 per month. I allocated $150 per month some of this savings for incidental car repairs to the used car and still had an extra $329.

I directed $200 into a new account for vacations and holiday shopping and the balance of $129 was reapplied back to my credit card balance. At the end of the year, I had paid off about half of my original credit card debt of $16,000, and reduced the remaining life of my mortgage to 2 years. Surprisingly, my cheap used Toyota Corolla did not cost me anything in repairs and at the end of the year I decided to apply the money I had stashed away against the credit card debt instead.

By the end of the following year, I was debt free, including my mortgage. The best part about this learning experience was that if aside from the auction proceeds, this was all done by reviewing my current spending and reallocating everything in a more appropriate manner.

Do not be afraid to let your banker review your financial situation. Another set of eyes can see things completely different and if you are open minded enough to let them help, you can be pleasantly surprised.

If you are a teen, here are a few ways too save some cash so you can have a lot of money when you are in your 20s.

• First get a job and put half of it in a bank account. Do not touch this money. You might want nice things but it will be worth it when you get older.
• Keep putting money away when you get paid and when you turn 18, do not get any credit cards and I wouldn’t even get a loan to get a car. Trust me, the banks will screw you over with payments.
• Wait till you are 21 too get loans. If you start saving $100 a week when you are 17 and save and do not touch your money by the time you are 21 you will have over 16,000 dollars and you will be able to buy a lot of things and if you haven’t gone to college and you want to, than you will be able to afford it.
• So if you save when you are 16 or 15 and you do 100 dollars a week, than by the time you are 21 you could have enough money to buy a small business or a franchise and by the time you are 40 you might be able to retire.
• You never know, so try to start saving now and think about how good the future could be for you.

Utility bills can be a drag, but trying to save on bills by using less electricity, water, or gas can be inconvenient and discouraging—it takes a lot of willpower to consistently keep your home ten degrees colder than you like it all winter long when you know sweet warmth is just a dial’s turn away. Here are some steps you can take now that will help you save on bills in the long run without sacrificing comfort.

One of the most important things you can do to save on bills is to weatherize your home—that is, make its inside temperature more constant even when the outside temperature is extreme or changes a lot. There are a few ways you can do this: caulk the edges of the windows in your home and install weather strips on doors that lead to the outside. This way, it will take a lot less energy to keep your home at a comfortable temperature. You can also install thermal curtains on your windows for another layer of insulation.

You can also save a lot of money on electricity by making a few energy-smart purchases. Replacing your lightbulbs with compact fluorescent light bulbs will save money in the long run; they last longer and use less energy than standard light bulbs. You can also purchase a programmable thermostat—one that can be set to automatically turn off at certain times of the day—so that you don’t waste energy running your heater or air conditioning when nobody’s home, or when everyone is sleeping.

It’s true that these projects aren’t inexpensive, but they have consistently shown to save households significant amounts of money in the long run. Saving up for a bit to take just one of these steps can prove to go a long way towards lowering your monthly bills.

If you’re looking to save even more, there are some other things to consider as well. Ask your employer if you can get a discount on your cell phone bill, or consider downgrading your cable package (or eliminating it altogether) and relying more on NetFlix or other activities entirely. You can even save some money on gas by filling up on Wednesdays, when prices tend to be lowest. Be creative, and don’t be afraid to spend some money now if it will help you save on bills later—your home is an investment, and you should treat it that way.

While car insurance companies differ greatly in their quality of service, their stated benefits are roughly comparable for similar levels of coverage. Therefore, when looking for a certain level of coverage, it can pay to shop around for the cheapest car insurance as long as you do not sacrifice quality of service.

Some brokers or websites provide ratings of insurance companies while others allow for comparison quotes. These generally work by partnering with 3 or more insurance companies for the purpose of allowing a potential customer to choose from multiple quotes.

This approach can be effective, but understand that you are still limited in choice to the partners of that service. There may be many other car insurance companies that provide the same or better service, and many may carry cheaper premiums.

When you are shopping around, consider the reputation of the company. Look for red flags, such as a low Better Business Bureau rating or regulatory action against the company by your state’s Department of Insurance.

Also, when choosing between different companies, make sure that you are comparing similar policies with matching levels of coverage. Look for anomalies that can make a cheap car insurance quote seem like a great deal. There may be missing levels of coverage that you were not aware of that might come back to haunt you later on.

One of the best approaches is indeed contacting individual companies directly to request a quote. This can often be done online in just a few minutes. Expect them to review your driving history and your credit report prior to issuing a quote. Most companies will also investigate a little known insurance bureau that aggregates claims made to insurance companies. If you have made claims in the past, these could increase your quote.

Online sites allow you to obtain multiple quotes for comparison. If you choose to call the company to obtain a quote, understand that the person is required to make an attempt to sell the policy to you, even if you are simply shopping around. While you may indeed choose to go with that company, you will need to make sure there are not better policies out there. Sometimes the cheapest car insurance quotes actually come from good companies, so shop around and make sure that you select the one that you are most comfortable with!

You would think that staying loyal to particular company would make way for discounts and better treatment. However, when it comes to insurance companies, loyal customers seem to be getting taken advantage of. When thought about logically, it does not make sense to for companies to offer lower rates to customers who don’t bother checking alternative auto insurance quotes. This makes it that much more important to do some policy shopping every few years since this could yield in significant savings.

Here are a few tips to make sure your car insurance company is not overcharging you:

1. Shop around for a new car insurance policy. Try to do this every two to three years and you may be surprised with what you find. However, this doesn’t mean that you are forced to switch carriers on a regular basis. If the difference between your current carrier and the new one is only a few dollars, it wouldn’t make sense to switch. Also, try to have good communication with your agent, which goes into the next point.

2. It’s important to find a good agent. It’s been said that independent insurance agents are more likely to value loyalty and be more engaging than agents that are tied to a specific company. Agents are more than just middlemen; they are people who actually care about customer loyalty. They don’t want the company they represent to treat their client poorly.

3. It may be that loyalty isn’t even the big problem. You may just need to eliminate what you don’t need. While it’s important to do policy shopping, it’s also important to review your current policy and make sure it’s up to date. You very well may be paying for insurance that you no longer even need.

Many drivers may think they’re being loyal, but there’s also an aspect of laziness involved. They don’t want to be bothered with turning on the computer, finding a reliable insurance comparison website, and entering in basic information. However, the process only takes a few minutes and by the end, they will know if they’re being overcharged or not. Do your research and find out the information! You could end up saving a lot of money!