Search Results for: budget

Financial Gluttony

December 16, 2009 By Shane Ede 3 Comments

Gluttony is all around us. I’m as guilty of it as you likely are. The most classical example of gluttony is the act of eating much more than you need. It leads to obesity, which is a rampant problem in this country. Gluttony is described as the excessive indulgence in food and drink.

But, since this is a personal finance blog, let’s expand that description a bit and talk about financial gluttony. In fact, lets get down right philosophical about it.

The excessive indulgence of money. It may not be an official one of the 7 deadly sins, but it certainly is one of the deadly sins of personal finance. It’s the rampant consumerism that often runs wild in our society. Especially around this time of year. We spend and spend and only stop when our credit runs out. We give little thought to what the resulting consequences will be of our spending. Over spending, over extending, gluttonous use of money.

The excessive indulgences of finance. I’m going to go out on a limb here and guess that many of you have probably not thought of this side of the argument. What I’m talking about is the gluttonous use of financial maxims to save and perform frugal acts. Moderation is good for all things, even the stuff that is good for us. You’ll garner no argument from me that saving money and being frugal are good things. But, it is possible to take it too far. Making soup by boiling your old belts, not because you can’t afford food, but because it’ll save a buck or two is finance gluttony. Ok, that’s a pretty extreme example, but you get the point.

What I really want to get at here is that there are extremes for everything. If we eat too much we get fat. If we spend too much we get broke. If we save too much, we fail to appreciate what our money can do for us. So, the next time you’re doing your budget or even just balancing your checkbook, take the time to think about that. Are you being financially gluttonous?

Are Your Personal Finance Skills Holding You Back?

October 24, 2009 By Shane Ede 3 Comments

One of the reasons that I started this site was because it forces me to learn new personal finance skills. Sometimes, the tree is sitting there in the forest and you need someone to point it out and make it stick out from the forest. The more skills that you learn in any given subject, the closer you are to what could be considered an expert on that subject. There are a few subjects that I consider myself to be an expert, but personal finance is not one of them. But, I am trying.

It occurs to me, however, that in our journey to become experts at personal finance (even if it’s just our own finances) we can sometimes hold ourselves back. We can sometimes become so focused on the topic and that one slice of our lives that we forget that there are other parts of our lives that must also be taken care of. For many, personal finance is a deeply religious topic. As a Christian, there are many places in the Bible that specifically mention money and the manner in which we should handle it. In fact, you might notice the tag line here at Beating Broke as being a quote from the Bible. But, nowhere in the Bible does it say that I must be perfect in the handling of my money before I should begin to work on any other aspects of my life.

If we focus too long on any one aspect, many of the other aspects can quickly fall behind. Baker, from Man vs. Debt, recently called himself a hypocrite. Why? Because he’s been a crusader for paying off debt and doing so unrelentingly. He has preached a very die-hard approach to debt retirement that is based in the teachings of Dave Ramsey. But, Baker and his family have put their debt repayment on hold while they travel and experience foreign living and working.

If you only glance at the situation, you can’t help but agree with Baker’s assessment of himself. And in a some ways, he is a hypocrite. However, he also is not entirely a hypocrite. He and his wife planned for this trip. They budgeted for it and saved for it. Yes, they put some of their goals on hold, but they did so to take advantage of an opportunity that may have never reappeared for them. If he and his wife had passed up on this opportunity, they would have been kicking themselves for it for the rest of their life. They’d be debt free, but at what cost.

It is a lifetime opportunity. If they had to choose between debt repayment and a trip to Disneyland, I would say that they would be stupid to not skip it. After all, Disneyland isn’t likely to go away anytime soon and they’d be able to visit at a later date. Yes, you have to maintain your vigilance and do whatever you can to meet your goals. But you also have to live your life. If your goals are holding you back from living your life, then you really should rethink your goals, because they may be causing more harm than good.

Baker is a very skillful personal finance person. He’s been writing about the subject for quite a while now. He and his wife have made great strides towards their goal of being debt free. But, Baker didn’t let his personal finance skills hold him back. He didn’t let them keep him from living passionately. And he didn’t let them keep him from taking advantage of a once in a lifetime opportunity. He and his family will have a wonderful story to tell and experiences that you just can’t buy. If that makes him a hypocrite, then so be it. I don’t think it does. After all, if he hadn’t been walking the walk, he wouldn’t have had the ability to take advantage of the opportunity. If anything, he’s an example of why you need to stick to your guns. If you do, you will be able to take advantage of opportunity instead of having to let it pass you by.

Review: I Will Teach You To Be Rich

April 24, 2009 By Shane Ede Leave a Comment

I Will Teach You to be Rich
By: Ramit Sethi

I’ve been a reader of Ramit’s blog (iwillteachyoutoberich.com) for several years now, so when I heard that he was writing a book (and publishing one) I knew it would have to find a way onto my list of books to read. Which it did, and I did read it.

If you aren’t familiar with Ramit’s writing style, it’s some what irreverent. Light and joking, it’s as if he were talking to you over a beer. Which, of course, works pretty well for a book that is meant to be read by a twenty-something single person. There’s a reason it’s on the New York Times Bestseller list!

Ramit takes you through a 9 chapter, 6 week journey of personal finance. He covers everything from credit cards, savings and checkings, investing, budgeting, and saving for goals. For the person who finds themselves fresh out of high school or college and overwhelmed by the amount of credit offers and spending temptations, this book is a must read. Ramit did a very good job of pointing out and explaining some of the very common pitfalls of personal finance, and he does it in a way that makes sense.

There were only a few things that I found I disagreed with. The biggest of these was what he calls Conscious spending. As he describes it, it is the act of consciously setting limits and goals for spending so that you don’t overspend. Where I disagree is when he says that it isn’t a budget. It certainly sounds like one to me. While it may not be a budget that accounts for every penny and every category, it still is a budget. Maybe I’m giving budgeting too broad of a description, but to me any ordered system that sets limits and goals for spending and saving is a budget. What conscious spending is, is a very high level budget.

Anyone who has read this site for very long will know that I am not a fan of credit cards. I’m not really a fan of debt at all, but credit cards (to me) are one of the worst offenders. So, it was with some trepidation that I began the chapter on credit cards. It was somewhat refreshing to have someone actually explain how they use cards, and why. Because of my stance on credit cards, however, I couldn’t help but disagree with several points.

Overall, this is a spectacular book for it’s intended audience. Seasoned personal finance students will surely find a few nuggets, but the rest is likely review. If you know anyone that is just stepping out on their own personal finance journey, I suggest you get them this book. Ramit does an excellent job of laying out a wonderful foundation for successful personal finance management. And, yes, it may even teach you to be rich.

You can pick “I will teach you to be rich” up at Amazon, or just about any corner bookstore. As of this writing, the book is less than $11 at Amazon, which is likely better than you’ll see it anywhere else.