Taking Charge of Your Outflows

“You wanna blow money? Put it in a ‘blow’ category in your budget. But at least admit it on paper!”

- Dave Ramsey

“To look at all the things we have- from iPhones to custom suits to new cars every year- it would seem as though we are rolling in dough, even in these tough times. But are we really rich, or have we just been acting the part?”

- Thomas J. Stanley in Stop Acting Rich…and Start Living Like a Real Millionaire

“Chains of habit are too light to be felt until they are too heavy to be broken.”

- Warren Buffett

“Beware of little expenses: a small leak will sink a great ship.”

Benjamin Franklin

Statistics:

  • “Total U.S. credit card debt is 866 billion—more than $9,000 per family, up from $2,966 in 1990.”-Kiplinger June 2007, pg. 24
  • “In 2003, teenagers spent $175 billion, or $103 per week.”- Teen Research
  • “People spend 12-18% more when using credit cards than when using cash”- Seeking Alpha
  • “More than $70 trillion in realized or reported income was generated by U.S. households between 1997 and 2006, yet only 3.5 percent of these households were in the millionaire category.” -The Difference between being Rich and and Acting Rich, pg. 7

The Basics:

In Thomas J. Stanley’s Book “The Millionaire Next Door” he talks about how the average millionaire is good at offense (income generation), but excellent at defense (controlling spending). Stanley notes how there are many high income generating individuals in our society but fewer achieve wealth because they do not master the art of defense which he defines as frugal living and disciplined spending.

To further motivate you, here’s Dave on Big Spending:

 

Ready to get started? Here are some resources to help.

1. This article gives elemental understanding of outflow and management: Investopedia

2. Have you ever wondered what the envelope system is and how it works? Dave Ramsey breaks it all down right here:

3. These steps and tips for controlling spending break things down simplistically. This article is excellent at helping you overcome traps in your spending patterns and gives a few practical steps on how to avoid it.

4. Returning to frugality is the name of the game. To put it simply, living simply and cutting down is probably what will be required, read more here.

5. Here is another excellent method to try with spending, the 30-day rule. It’s all explained and broken down right here.

6. Can I afford it? Suze Orman gets real with her viewers about their financial positions and advice on purchasing.