tightening your belt?

How’s this economy affecting you?  I didn’t think it was, until I took a closer look at our finances.  I started using Mint (www.mint.com) to track all of our accounts.

It’s not pretty.  I’m relying on God as always, but it’s time to start living below our income.  We’re cutting expenses.  We’re going to give up cable TV.  We’ll reduce our driving if we can.  I sold a vehicle I didn’t need.  My wife is considering working (she’s been a stay-at-home-mom).  We may even decide to sell our house.

The odd thing is I have a great job.  My pay hasn’t kept pace with inflation though – especially the inflation in food and gas costs.  Health insurance has also eaten up more of my salary.

What about you?

prosper

Have you heard of micro-lending?  I’m trying it out on prosper.com.  I’ve loaned somebody $100 , along with a bunch of other lenders for a total loan of $13,000 at 24% APY.  That works out to $140 for me if they take the maximum three years to pay it back.

That’s if they pay it back.  But I have to believe that a majority of the borrowers looking for micro-loans are honest.  With the credit crisis, it’s getting difficult to get traditional loans, so I’m all for helping each other out, one person to another.  If this first one goes well, I’ll put more money out there.  Either way, I’ll post here to let you know what happens.

rich dad, poor dad, part deux

I’m a little let down by the last few chapters of Rich Dad, Poor Dad.  The first chapters grab your interest, and you anxiously await Rich Dad’s words of wisdom.  But by the time the author gets into the meat of the subject, his writing (and the editing) fall flat.  He uses incomplete sentences, poor grammar, repitition, and references to material that doesn’t seem to exist.

Putting aside the poor writing, there are three basic messages I got out of this book:

1. The US tax code is structured so that it’s almost impossible to get ahead by working for a living.  Income is heavily taxed, wealth is not.  (This is probably not the most socially equitable arrangement, but it’s what we have for now.  See Warren Buffet’s recent comments.)

2. Given 1., you should put your money in revenue-generating assets.  These include real estate, investments that pay dividends, etc.  Then incorporate and pay all your (legal) expenses out of your corporation.

3. Be creative and take risks.  You’ll never “win” if you never try.

rich dad, poor dad

Okay, so there are probably a million reviews of Rich Dad, Poor Dad out there, and yes, I’m behind the times. (Generally I don’t buy new books or music – I wait until their worth is proved over time.)

I have no idea if Kiyosaki is a Christian or not. But in a book about money, I certainly didn’t expect a lesson from the sermon on the mount.

“Rich dad” taught the author that the fundamental reason people are stuck in bad (or at least stagnant) money situations is that they don’t control two most basic emotions: fear and greed. They allow fear of loss and desire for what they don’t have to control their thinking and hence their actions. They’re afraid of losing the things they do have (the rich are often worse at this), so they keep trying to work harder. And the pleasure of acquiring something soon wears off and they begin to desire something new, so they keep working harder.  They are slaves to their emotions (and money) without realizing it.

I’m not done with the book yet, but it’s fascinating so far…