If you don't read anything else today...

I ran across a couple of old posts in another blog that I wanted to pass on today. These are excellent in many respects and I wanted you to read them and apply them to your life.

http://www.leadingsmart.com/leadingsmart/2006/08/it_just_makes_c.html

http://www.leadingsmart.com/leadingsmart/2007/03/lets_give_1_mil.html

By the way - thanks for reading. I should post more often or in a predictable pattern...maybe I'll set that as a goal in the next few months...maybe! I appreciate your involvement in this blog by reading, considering, applying, and occasionally even commenting. I just wanted to say, THANKS!

There Are Always Options

So it's Thanksgiving Day and my family is driving to Wichita to celebrate the holiday. We are getting close to my parents' home when I hear a clatter under the hood. I pull over thinking something has come unclipped and needs to be reattached, but no, it is the serpentine belt coming apart. The outer two edges are flopping wildly, slashing at vacuum hoses, etc., under the hood. Doesn't look good, but at least it didn't break!

We made it to my parents' home. My brother-in-law came out to pick up our family (he has a minivan, too!) to take us to the place of our Thanksgiving celebration (not feeling so festive at the moment). He loaned us his van after taking his family home so we could get back to my parents' and return for a visit the next day. Instead of visiting my sister, my dad, my brother, and I worked on the van, replacing what seemed like everything on the passenger side of the motor (including the water pump for you Dave Ramsey fans). Total cost: $140 and a lot of inconvenience on a holiday weekend.

The advice I want to pass on today is simple, but we often bypass it in the stress or emotion of the moment.

Consider your options

But what do I know about repairing a car? It is so cold and this is a special weekend. I should spend it with family, not repairing the car. Again, consider your options.

Who do you know that could help? My brother-in-law was willing to help with a ride and a temporary vehicle. My dad and brother were willing to help with the repairs (both time and expertise). All I had to do was lay down some pride and frustration to allow for the blessing of their generous gift. More than likely you know someone who could help. You just have to ask. Whatever happened to neighbors and friends helping each other? Don't let the spirit of giving lapse. Look for opportunities to help others and ask for help when you need it.

What must be done and what can wait? I am often tempted to do things that are unnecessary for convenience. "While I'm at it, I might as well..." Thankfully, I don't use credit cards. Back in those days, I would have not only rationalized the repairs to the van, but probably a new set of tires as well! While a new set of tires might be nice, and even needed in the near future, they were not necessary to fix the problem at hand. So, if they weren't in the plan for the month, they should wait. Especially when facing something unexpected, stick to the necessary. Times of crisis are not the best to make decisions - especially financial ones.

What can you really afford? You can afford whatever you can fit into your budget for the month! But isn't this what an emergency fund is for? Yes - and no. I could have coughed up several hundred dollars that Friday to have a shop do the work. It would have been well within the $1,000 baby emergency fund we have in the bank. It was VERY tempting. Don't use the emergency fund unless you have an emergency - and almost nothing is really an emergency. If everything is an emergency, you won't have an emergency fund left when a real emergency comes along! Try, if at all possible, to find it in your budget.

What are you willing to do to win? Stay focussed on the goal. Remember, there are times when we "live like no one else so later, we can live like no one else." Even though it was in my emergency fund, I am closer to my goal of being debt-free because I didn't spend the money on labor. It took some effort, some discomfort, and inconvenience, but in the end it was worth it. I got to spend some great time with my dad and brother, fixed the van, and was actually able to budget the repair into my December budget rather than tapping the emergency fund. Remember, it's your behavior that leads you to win.

This post is not to toot my own horn, but to give a real-life example of how it is done. I run into people all the time who have lots of excuses why they are not getting traction financially. They "don't have a choice." They refuse to consider their options.

You may have to take your car to the shop because you truly cannot do the repair yourself and don't know anyone who can help. That's okay IF you truly have no options. It may not even be your car that is the concern. But whatever you are facing, always consider your options.

Make exploring and utilizing the options you have a habit. If you are willing to do a little extra work, suffer a little inconvenience, and allow some people in your life the opportunity to help, you will find there are many different ways - many options - to solve the problem you are facing, whether it is financial or otherwise.

On taxes, the wealthy, and spreading it all around

Join me, if you will, on a little anecdotal jaunt... On second thought, let me warn you that you may not want to. This could be painful or even maddening to you. Ok, if you aren't up to reading the tough stuff, just skip to the end.

There has been a lot of talk in the news lately about these implicitly selfish wealthy people and the weak middle class. Now I fit firmly within the middle class category, so nothing I write is from pure self-interest. But I have been thinking...

Most people by now surely have heard that the top 1% of taxpayers pay around 35% of all federal income taxes; the top 5% pay around 55% of the whole; the top 10% pay around 66%; and the top 25% pay around 84%. No matter on what the latest or most precise percentages are because the general idea is clear, and this post is all about general rules. They do, after all, become general rules because they generally are the rule.

There is no reason in the United States today that everyone cannot be a millionaire. Well, there is a reason, but I'll get to that later. The formula is very simple.

Like I said, I have been thinking. What makes rich people rich, middle class people middle class, and the "underprivileged" poor? In general terms, the same reason everyone is not a millionaire. Follow with me...

When wealthy people make lots and lots of money, what do they do with it? Let's see...they buy nice homes (except for Warren Buffet), they buy expensive cars (except for Sam Walton), they buy other stuff, they invest, they save, and they give. I notice their names on university buildings, hospitals, and church wings (for those churches that put names on wings). No, it seems the wealthy spread their wealth voluntarily to accomplish a number of charitable purposes. So why does the government need to get involved? And anyone in nonprofit work knows how most organizations are able to do extraordinary things because of the extraordinary generosity of a few, to whom much was given. Interesting.

So I'm curious, would raising taxes on the wealthy beyond the great amount they already pay be an attempt to shift those dollars away from charity to the government? Would the government be better at determining how to use those dollars for social good than the donors who actually earned the money? I am envisioning foreign countries I have visited. They have a "strong" middle class that relies on government to do and build everything. There are no names on hospitals or other "institutional" buildings. The wealthy are those in the government bureaucracy or with close ties and they don't do much charitable giving except with public money. Government is strong. Charity is weak. Okay, so that was admittedly a rant. But it's my blog and you had fair warning.

What about the middle class? What might we do with a raise, a bonus, or a tax refund check? Move toward becoming wealthy? WE PAY OFF DEBT, right? Now that is a great answer. But it begs the question, where did the debt come from? The answer to that question can often be found in another question. Why does the middle class stay the middle class over long stretches of time? Ouch. We stretched on the home purchase, filled it with nice furniture, kept up on the latest gadgetry, and entered the process of either leasing or making perpetual car payments. Middle class neighborhood are filled with all the stuff of wealthy neighborhoods but lack one fundamental similarity - the money to pay for it all. We have no savings, our giving is pathetic, and investing is out of the question.

This one could be touchy. The "underprivileged"? I have seen many people face insurmountable odds, but make wise choices, and press through to thrive. These were most often uneducated and certainly underprivileged folks. For example, most of our immigrant populations. And the Jewish communities that have faced persecution and discrimination that have thrived with little intervention. I recently heard of a local country club that opened up membership to Jews within the last 7 - 10 years. Astounding. Anyway, so what keeps poor people poor over long periods of time? And I could ask along with that, who has seen the greatest success in actually combating poverty in the United States - government or charity (so should we raise taxes or incentivize wealth and charitable giving)? When poor people receive a windfall, they rarely know exactly where it went, but certainly it is gone. It might go to the retail shopping outlet, a car dealership, or any number of places. I would venture to say it never goes to charitable giving, saving, or investing.

Poverty is a curse. The way to fight it is to get people out from under the curse, not to throw money at them. Studies have shown that if the world's wealth were evenly distributed, disparities would return within 6 years I believe. As the old proverb says, "A fool and his money are soon parted."

Thank you for letting me get all that off my chest. I feel better now.

Now for the reason everyone in America today is not a millionaire...

Yes, if you have read many of my posts you might have guessed it - BEHAVIOR - and that starts with you, not the government (not even the president).

So let me give you a little formula for success that I may have previously shared.

Give.
Save.
Then spend.

Or, as financial expert Ron Blue testified before Congress, "Live on less than you make. Then save and invest the difference over a long period of time."

You can do it. It is up to you. When your behavior follows these steps, mathematics takes over and abundance is automatically created. No matter who is president and no matter what the tax rates become, following these principles will naturally lead to wealth and success. And what do you do then (besides pay more taxes)? As Dave Ramsey says, "Once you have lived like no one else, you can live like no one else and you can give like no one else."

Don't wait on government. And don't worry too much about government (but DO get informed, think it through on your own - don't just listen to campaign rhetoric - and VOTE!). I could go on for hours, but I'll stop. Let me leave you with this verse that stretches out over this whole discussion-

"11Your power is great, and your glory is seen everywhere in heaven and on earth. You are king of the entire world, 12and you rule with strength and power. You make people rich and powerful and famous. 13We thank you, our God, and praise you. 14But why should we be happy that we have given you these gifts? They belong to you, and we have only given back what is already yours." 1 Chronicles 29:11 - 14 (Contemporary English Version)

Read it in several versions to let the truth get planted deep within you. And remember what my Dad told me right about this time of year in 1992: "That's why we put our trust in God instead of men." Wise words.