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What are YOU Working For?

September 28, 2012 By Shane Ede 12 Comments

What are you really working for?

We all work, in some way, shape, or form.  Many of you, when asked the question, “what are you working for”, will likely give the easiest answer.  Money.  That’s what we all work for, right?  We need it to pay our bills, buy our food, and do many of the things that we choose to do.  But, one of the things that I’ve contemplated for some time, and that helped me make the decision to quit my job last year, was the furtherance of that question.  Sure, we all work for money.  But, is that all we work for?  And, if so, should it be?

The conclusion that I came too, as you can probably guess, is that money isn’t everything.  We do need some, but if that’s all we’re working for, it quickly becomes less of the tool that it should be, and, instead, becomes something that makes us feel trapped where we are.

Not All Work

Primal Money

One of the popular diets, recently, is the Primal Diet.  It’s a diet of foods that our primal ancestors (the hunter-gatherers) would have eaten.  Mostly meat, and readily available nuts and fruits.  The idea is that the human race has been around for thousands of years, but only been farming, and eating what we farm, for a fraction of that time.  Proponents think that we haven’t evolved sufficiently enough to properly handle the abundance of grains and other “farmed” foods in our diets.  (sidenote: the increase in Celiac disease over the last few decades might point to them being correct)  Because of that perceived evolutionary gap, they’ve taken up eating what our kind would have eaten before the rise of farming.  The movement made me think, though.  What of money?

For centuries, we’ve used money as a means of trade.  I give you a coin, you give me goods and services.  If I run out of coins, I have to find a way to make more.  I trade my surplus goods and services to someone, and they give me coins.  We repeat that cycle, and we have an economy.  Slowly, coins become the only way to attain goods and services, and we all depend on them.  And the more we depend on them, the more of them we need.  And the more we need, the more we have to sell our goods or services to get more.  Eventually, we end up where we are now.  We all work in order to gain more coins.  Our economies have evolved.  But, if that’s the case, what were they like in the Primal era?

Before we all became obsessed with coins, and money, our ancestors hunted for their food.  They didn’t need to buy it, they just went out and trapped or shot it.  Or they scavenged it off of the tree it grew on.  Or dug it out of the ground where it grew wild.  The work they did wasn’t for a new tv, or a new car, it was for survival.  If they didn’t do the work, they would starve.

If you don’t do the work, you get fired (if you work for someone), or you just don’t make any money.  And, yes, you still might starve.  Eventually.  But, food wasn’t the only thing that many of them worked for.  They worked to help their family survive.  They worked so that their children would grow up healthy and strong.  Their children were their legacy; what they would leave the world when they passed on.

Legacy.

Now, we’ve found the real purpose of work, I think.  That’s why I work, now.  It isn’t about the money, although money can have a place in legacy, but about what I leave the world when I leave the world.  The example that I set for my children, the good works I do, the changes I make in my world that make it better, and the life I lead, are my legacy.  Money is merely a tool, like the bow and arrow for our primal ancestors, to help me do those things.  And, here’s the funny part.  Looking at that list of things, it’s a tool that I don’t need that much of.  I set a better example for my children by being conscious of the things that I do, and by what I teach them.  Donating money to charity is a good work, but there are just as many good works to be done through volunteering your time and skills.  And, I can certainly make changes for the better in this world without money.  My legacy doesn’t need money.  I’ll use what money I have to give it a boost now and again, but it doesn’t need it.

I’m working for my legacy, not for a new tv or a new car, or even a new house.  The realization of that is what helped me make the decision to leave my job.  There will always be other jobs that I can get that will help me pay the bills and put food on the table, but I don’t need one to help me do my work.

What are YOU working for?

photo credit: The Marmot

Filed Under: General Finance, ShareMe Tagged With: legacy, primal money, work

Saving on Home Loans

September 26, 2012 By Shane Ede 4 Comments

One of the biggest purchases you will make over your lifetime is the purchase of a house.  Some will argue that purchasing a house is an investment.  But, if it’s your primary house that you intend to live in, it’s not an investment.  Sorry, it just isn’t.  If you intend to rent the house out, that’s another story, but your primary residence is just a purchase.  Even so, it’s a very large purchase.  It makes sense, then, that we will want to find as many ways as we can to save money on the purchase of our home.

Saving before a home purchase

I’ll discuss how to save on your home once you’ve already purchased it a bit further down, but you’ll find yourself a good bit ahead of the game if you start thinking about how you can save money on your home purchase before you make the purchase.

  1. Improve your credit, improve your rate – The rate at which you borrow the money to buy your home is a big deal.  A half a point on the rate can translate to thousands of dollars more in interest over the life of the loan.  The best way to guarantee that you get the best rate available is to have excellent credit.  Depending on how far you improve your credit, you could shave as much as two or three points off the interest rate of the loan.  Not only will that reduce the payment you’ll make, but it will reduce the amortized amount of the loan by tens of thousands.  Want to know what makes an impact on your credit score?  Read the Beating Broke Guide to Your Credit.
  2. Compare home loans – I mentioned how this will likely be one of the biggest purchases of your life, right?  Well, why on Earth wouldn’t you compare the loans available to make sure you were getting the best deal?  You’ve got to compare those loans!  Different lenders will have different policies, rates, and even lengths of loans.  Not only will failing to compare the home loans available cost you money, but it could cause you a lot of stress over the life of the loan.
  3. 20% down or more – If you’ve got the savings for it, put at least 20% down on the home.  Why?  Well, it reduces the amount of the loan, for one.  The less you have to borrow the better, right?  More importantly, 80% is the normal cutoff for when a lender will require you to add Private Mortgage Insurance to the loan.  It can add a hefty bit to the monthly payment, and it doesn’t go anywhere but into the insurer’s pocket.

Saving after a home purchase

  1. Refinance – This may not be for all of you looking to save, but with the current rates, it bears looking into for some of you.  Refinancing a higher interest rate mortgage into a lower interest rate loan can save you thousands over the life of the loan.  Refinancing into a shorter term mortgage can also save you thousands, but beware that the mortgage payment is likely to be higher due to the shorter amortization period.
  2. Make extra payments – If refinancing isn’t in the cards for you, make sure that your lender will accept extra payments to principle and then start making them.  Reducing the principle will reduce the interest, and by simply making an extra payment a year, you can shave years off of your mortgage.

Whether you’re looking at buying a home, or already have, saving money on the biggest purchase of your life is always worth looking into.  A few minutes on the phone with your lender can sometimes save you more than you would cutting lattes every day.  With the higher number of defaulting mortgages recently, many banks are much more willing to help you save money on your payments and pay the loan off early.  They like getting their money back too!

What other ways have you used to save money on your mortgage?  What’s the most extreme example that you’ve heard of?

Filed Under: Credit Score, Home, loans, Saving Tagged With: Home, home loans, home purchase, mortgage, saving on home loans

Killing Debt? Have a Realistic Budget

September 24, 2012 By MelissaB 9 Comments

Do you have debt?  Does it drive you crazy?  Do you stay awake at night wondering how to pay it all off?  Does it feel like you will never pay it off?  Do you argue with your spouse about your bills?

While debt can at times be a useful tool (student loans, for example), when it comes time to pay it back, debt can be a heavy burden no matter if it is good debt or bad debt.  Debt can cause marriage problems and even affect your health.

If you have decided enough is enough, and you want to be free of debt once and for all, you might be tempted to slash your spending and put all of your extra money on your debt.  Be careful, though, because this type of plan can lead to a quick crash and burn much like a person on a crash diet will only follow the plan for a few weeks before giving up.

Before you even begin to put extra money on your debt, you must first create a realistic budget.

What Is a Realistic Budget?

A realistic budget is one in which ALL of your expenses are taken into account.  Perhaps you pay your car insurance every 6 months, and it is $400.  If you want to create a barebones budget so you can pay off debt, perhaps you don’t consider this payment, which can be a mistake.  When the car insurance payment is due, where is the money to pay it?

We have been paying down our debt aggressively, and we made the mistake of not having a realistic budget.  We did have a $1,000 emergency fund, but because so much of our extra money was going toward debt repayment, we continually hit months where we had expenses such as the semi-annual car insurance payment and no cash to pay for it.  We would rob the emergency fund to pay it, and then we would have to stop our extra debt repayment for awhile to build up the emergency fund.  This cycle creates its own stress.

A Realistic Budget May Mean Hard Sacrifices

When you add up all of the payments you have to make in a year that don’t come in regular monthly intervals, you may be surprised.  There is car insurance, house insurance, license plate tabs, vet bills if you have animals, car repairs and maintenance, children’s athletics, and clothing for the family to name a few.  Add up how much you spend on these, and you probably easily have a total in the thousands.

That is thousands of dollars that are unaccounted for in your budget.

Almost a year into our debt repayment, we finally made a realistic budget.  We were shocked to see that when we set aside money each month for a portion of our annual or semi-annual payments (like $67 for our semi-annual car insurance payment), we didn’t have enough income to cover our realistic expenses.  As a result, we had to make some hard sacrifices such as cutting cable completely and pulling our daughter out of her expensive preschool.  These sacrifices weren’t easy, but making them did relieve some stress.  Now we no longer have ups and downs in our money flow.  We set the money aside, and when the bill is due, the money is there to pay it.

We may not be able to put as much on our debt every month, but we have a set amount for repayment above the minimum payment, and any extra money that comes in also gets put on debt.

Creating a realistic budget can help you avoid the stress of not having enough money certain months to pay all of your bills when semi-annual and annual payments are due.  However, you will feel more in control of your money, which can create a positive cycle.  The more in control of your money you are, usually the more money you find to pay on your debt.

What irregular expenses give you financial difficulties?

Filed Under: budget, Debt Reduction, ShareMe Tagged With: budget, budgeting, debt, Debt Reduction

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