Dr. North and Dr. South – A Case Study on Wealth

Dr. North and Dr. South – A Case Study on Wealth

As many observers have noted, Americans tend to confuse income with wealth. If you have a high income, that makes you wealthy, right?

Let’s ask this another way: if you earn $500,000 a year, you’re rich, right?

Not necessarily, no. Even with such a high salary, if you spend $500,000 or more per year, you’re not rich. You’re broke.

Enter the story of Dr. North and Dr. South.

Bittersweet Symphony

 
On the way home from work yesterday, The Verve’s “Bittersweet Symphony” blasted out over my car speakers. I forgot I had added it to my playlist.

In case you’re not familiar, the song has a very melancholy feel. It’s quite catchy, but the lyrics and vocal delivery are both melancholy…wistful…basically, it’s like it was written and sung by somebody who’s weary with the drudgery of everyday life.

The first line begins, “Cause it’s a bittersweet symphony, this life / Trying to make ends meet, you’re a slave to money then you die.”

Like I said, melancholy.

But relevant, given that this is a personal finance blog.

Is $3 million enough to retire? [updated 7/6/19]

How much do you really need in order to retire comfortably?

I was inspired by this article at www.theretirementspt.com, so I left my reaction in the form of a comment, which I've quoted below: 

Links for June 2017

Links for June 2017

-We need basic financial literacy in every high school. And we needed it 30 years ago! http://themoderatevoice.com/217566/

• Here's one article to help: http://www.debtdiscipline.com/financial-literacy-millennials/
• On the topic of education, an interesting hypothesis as to why mediocre students, not valedictorians, change the world: https://www.entrepreneur.com/article/295095

http://maverickphilosopher.typepad.com/maverick_philosopher/2012/10/friday-cat-blogging-the-debt-ceiling-cat.html

Is your retirement in jeopardy?

Due to severe budget problems, Puerto Rico will have to slash its budget, as announced in February 2017 (see http://www.businessinsider.com/the-board-has-spoken-puerto-rico-to-be-hit-with-painful-austerity-measures-2017-2). This includes cutting 10% from the retirement system for government employees, since that system is on the verge of running out of money completely. Sound familiar, U.S. residents?...

When Your 'Friends' Spend Your Money...

As excited as I am about the imminent return of NFL football, I'm heartbroken to see family and friends taking advantage of players: http://ftw.usatoday.com/2016/08/trent-richardson-money

Photo credit Matt Detrich of the Indianapolis Star, from http://www.indystar.com/story/sports/nfl/colts/2016/06/08/trent-richardson-has-designs-yellow-jacket/85626540/

This ties into the fact that there's an alarming lack of financial literacy in this country! If you don't watch your business and make a plan for what to do with your cash, you'll look up one day and wonder where it all went! However, as the #3 overall pick in the 2012 NFL draft, he signed a rookie contract for over $20 million guaranteed, plus a $13.3 million signing bonus. So the lost $1.6 million shouldn't destroy his finances, as long as he didn't blow through the other $13 million that should be left after taxes.

A reminder that if you want to avoid being broke, you have to keep up the right mindset--whether you're an NFL player or a grad student!

This article was originally published at 

http://weapone.blogspot.com/2016/08/that-feeling-when-your-friends-spend.html

Links for March 2016

The Simple Life: would you rather spend money on that thing that caught your eye...or not have to work? The choice is yours.

Along those same lines...Stepping away from the rat race can bring you true, lasting joy that a fancy purchase will never induce. The Frugalwoods have their heads on straight!

My grandmother kept a newspaper clipping that was similar to this powerful list on her refrigerator. It concluded that you can have the husk of everything for money, but not the kernel. This quote is attributed to Norwegian writer Arne Garborg.

Flipping Rich - a TEDx talk on the power of generosity by John Thornton, a professor of accounting ethics

How your money situation influences your mind - Natalie Bacon (The Finance Girl) talks about how money often influences us without our awareness. She's also got some important money lessons for college students!

Here's the toll that student debt can take on retirement - Uh-oh. That's not good for millennials and our finances. Better adopt the Millionaire Mindset and learn to live like a college student! If you're in college right now, these tips can help reduce that debt load!

Lance Cothern of Money Manifesto gets it! With quotable quotes like "Money will no longer dictate what you do with your time," and "The freedom of financial independence is the ultimate financial goal," this article is well worth your time!

Great advice from Will at Growing the Green, especially if you're in a dead-end job with lots of free time! Some hustle and smart time management can get you far!

Ever wonder why financial professionals drive BMWs and Porsches, but their customers don't? See this fascinating interview with a very successful fund manager! Also, the Evidence-Based Investor is a great investing-focused site to follow!

A very astute parable from Mr. FIRE Station (FIRE is capitalized because it's an acronym for Financial Independence, Retire Early. But you already knew that.) The parable can also be found on jlcollinsnh, another good source for personal finance information! The parable is probably older than the hills and twice as moldy, but its relevance will never expire...

A modern parable can be found at Forever Financial Freedom.

Speaking of literary devices like parables, this metaphor works pretty well!

Excellent advice for 20-somethings!

Income-based repayment plans are a good way to keep your monthly payments low when you're just beginning your career. This infographic clearly explains common student debt problems, and how income-based repayment plans can help.

Want to dress like a billionaire? The founder of IKEA says he wears clothes from flea markets!

An interesting take on the approaching mass retirement of baby boomers (Caution: vulgarity herein! Also not sure if I agree with the gloom-and-doom approach, but it will surely resonate with some.)

How Investing Can Make You Rich

Wish you could see the power of money? Wonder how the rich make their money work harder than they do?

Ever felt overwhelmed by some decision, and just picked an option so you didn't have to think about it anymore?  It can be easy to get lost in numbers. And when your head is swimming, you won't make the best decisions! 

It helps to see this kind of junk displayed in a graph. As hard as it can be to imagine how compound interest works, graphs like this can make it easy to understand!

The importance of financial literacy

A recent article published online by Forbes (http://www.forbes.com/sites/nealegodfrey/2015/04/12/why-dont-our-kids-have-the-money-smarts-to-live-in-the-real-world/) laments the lack of financial literacy in America today, reporting the alarming finding that 40% of Americans grade their own understanding of personal finance with a C, D, or F! Moreover, over half of American adults don't have an emergency fund big enough to cover 3 months worth of expenses.

The author joins in the recommendation that parents and schools combine to teach fiscal responsibility to our children--but first, adults need to understand it themselves!

Until everyone is financially savvy, we will all need to keep up the fight and advocate the Millionaire Mindset!

Happy saving!

Tax breaks for college grads

In a post on the helpful TwoCents blog at Lifehacker (twocents.lifehacker.com), Kristin Wong shares a couple ways to get some tax relief. For example, if you're paying interest on your student loan, you're eligible for up to a $2500 tax credit, based on your income and marital status.

If you've already graduated, this is a good way to help ease the burden of your student loan payments. As always, however, I promote living the 'broke college student lifestyle' that Kristin mentions in this article, even if you don't have to.

A link to her article is here: http://twocents.lifehacker.com/common-tax-breaks-available-for-recent-college-grads-1648308796

More helpful links, 9/29/14

As always, I try to bring you the best content! Sometimes, other writers make a point so well that I have nothing to add!

Without further ado, here are some of the best articles I've found recently:

Financial Freedom

I want to take a moment here to defend the Millionaire Mindset that I've described before. The point of this approach is to be satisfied with having a few nice things that you can truly afford, guilt-free!

Example of the Millionaire Mindset

Keira Knightley apparently understands the Millionaire Mindset. According to an article at (of all places) Us Weekly, she only pays herself around $50,000 per year!

Free laptop-cooling mat!

I present to you an outstanding example of The Millionaire Mindset:

http://lifehacker.com/keep-your-laptop-cool-with-an-egg-carton-1587234841

Being inventive with stuff you already have around is both thrifty and eco-conscious. (Note: this does NOT mean you should be a hoarder and collect everything in case you might possibly use it for something someday. It's merely making use of something that would otherwise be thrown away, to solve a problem you have now. If you don't have an overheating laptop, don't use this trick).

It's a great alternative to purchasing a laptop-cooling mat for $5, $10, or $30 (the prices of some such mats that I've seen).

This is a true "lifehack," in the best spirit. Gawker Media should be proud of this (and similar) posts!

Got any of your own lifehacks that you'd like to share? Leave a comment below--I'd be happy to share any other great ideas!

Helpful links, 6/5/14

I've included a roundup of good articles relating to money management for young people, obviously with a focus on college students--in line with the purpose of this blog.

"How to live on $20,000 per year."
This is a great illustration of living below your means, as I advocate in The Millionaire Mindset, but it doesn't necessarily apply to current college students.
https://thecollegeinvestor.com/12961/live-20000-per-year/?utm_campaign=coschedule&utm_source=twitter&utm_medium=CollegeInvestin&utm_content=How%20to%20Live%20on%20$20,000%20Per%20Year

"Before I Knew, I Bought It New."
A great post on the virtues of buying used.
http://cashcowcouple.com/life-lessons/bought-it-new/

"Financial Independence and the College Lifestyle"
This is a post on how difficult it can be to establish yourself as an independent (in the government's eyes, for financial aid purposes). Very apropos for a lot of college students wondering how to make ends meet.
http://www.modestmoney.com/financial-independence-college-lifestyle/

"What Americans Don't Know About Student Loans: A Lot"
An article describing what people don't know about student loan debt. What you don't know CAN hurt you! Be informed!
http://www.businessweek.com/articles/2014-06-05/what-americans-dont-know-about-student-loans-a-lot#r=read

"Top 3 Ways to Make Your Money Work for You"
This post describes how rich people approach money. Once you have money, it can be leveraged into various types of investments that earn you more money--so think of money (if and when you have some) as a tool.
http://moneyfor20s.about.com/od/makethemostofyourmoney/tp/3-Ways-to-Manage-Your-Money.htm?utm_source=facebook_sp&utm_medium=sm&utm_campaign=shareurlbuttons

"Life After Graduation--Advice to My Past Self 5 Years Later"
A brief, thoughtful look at what the writer thought she should have done differently after graduating college.
http://momoneymohouses.com/life-after-graduation-advice-past-self-5-years-later/

Any other suggestions? Let me know in the comments below, and it'll make my next "Helpful links" post!

The "Don't buy stuff" budget

This SNL skit is both funny and accurate: https://screen.yahoo.com/dont-buy-stuff-000000884.html

I'm tempted to say things are more complicated than that, but it really isn't. Unless you're buying a house, if you can't pay for it--right now--and still have money left over to pay your bills, don't buy it!

How 'saving money' really works

Along the same lines as my post on the Millionaire Mindset, I want to make the notion of saving quite clear. What a lot of people do to save money is actually doing the opposite! Despite what retailers will tell you, buying a product at a discount does not mean you are saving money!

How to $ave big on your phone bill

*For an up-to-date list of my smartphone recommendations, please see this link.*

As promised in my earlier post on The Millionaire Mindset (http://froogalstoodent.blogspot.com/2014/05/the-millionaire-mindset.html), here's a tip for those of you who are paying too much for your cell phone bill (pretty much everyone!): get a prepaid monthly plan.

More great sources of information

I found two links that have great information, and I found them to be very helpful, so I figured I'd pass them along.

They're both written by Kraig Mathias of Create My Independence. He's promoting the same lifestyle I am in my post on The Millionaire Mindset.

The links are here:

The Millionaire Mindset

The Millionaire Mindset

I want to get this idea out there now: your mindset is far more important than your income level. Many people think a large income leads to financial security...and they're dead wrong. I'll show you why.