The Mistake of Reducing Expenses

English: Ways that Where's George Bills can be...

See if this sounds familiar to you. Your personal or business finances get tight, you have more bills at the end of the month than you have money to pay for them. And what do you do? You decide its time to cut expenses. You try to save money by eliminating unnecessary bills, those things you can cut back on, and those things you can accept in lesser quantities or lesser quality. Pretty soon you find out, it doesn’t work. All you’ve done is lower your standard of living, but months or even years later you’re in the same position that caused your austere spending to begin with; too many bills and not enough money to pay them. This is the trap faced by many in today’s economic world. And unless something changes nothing will change for you and your family. And if you’re the bread-winner in your home its time to recognize an ugly reality…you’re failing your family.

The solution is easier than you think. But if you’re like me you took the austerity road first before realizing what that simple solution is.

Maybe you’ve done some of this:

Cancel all Newspaper and Magazine subscriptions.

Check.

Cut back your TV cable or Dish service; maybe change service providers.

Check.

Reduce your auto insurance coverage…possibly down to the legal limit of only Liability Coverage.

Check.

Refinance your home mortgage to take advantage of near record low-interest rates.

Check.

Stop buying clothes for yourself and for your children, unless absolutely necessary.

Check.

Sell your car and buy an older cheaper one.

Check.

Eliminate vacations.

Check.

Buy store brand grocery items at a discount store.

Check.

Reduce your thermostat to cut back on heating bills.

Check.

Turn off lights…unplug unused appliances…

Check.

Did you find it’s not enough?

You know why?

It’s not enough because things you don’t have control over but need to spend money on are going up at a faster rate than your income or your austerity measures.

  • Health insurance premiums have climbed already, and will climb even higher when Obamacare takes full effect in 2014. Forbes reported this month that rates in California alone could climb as much as 146%.ObamaCare Bear
  • Increased employee expenses in industry, as a result of increased health-care costs will drive up the cost of manufactured goods.
  • Gas prices are and have been consistently over $3.00 per gallon for the past couple years, and the periodic dips into the $2.00 range and especially the $1.00 range (as happened during the Bush years) are a distant memory. The price of crude oil is over $94-per-barrel. Gas prices are more likely to exceed $4.00-per-gallon and stay there than they are to fall.
  • Trucking is still the primary method of moving food in this country, and the increased gas prices will add to food costs.
  • Mortgage interest rates have been held down by the Federal Reserve’s low or no interest short-term financing for 4-5 years. But this week
    Official portrait of Federal Reserve Chairman ...

    Federal Reserve Chairman Ben Bernanke.

    Fed Chair Ben Bernanke suggests that time is coming to an end by the end of this year or the beginning of next year.

  • Taxes on the local, state, and Federal levels have all increased in the past year and will only go higher in the next four years. President Obama was re-elected promising to raise taxes.

There is more of course. But the point is you and your family have no choice. These things you will pay for and you will have less to spend on other matters. It’s simple math. Even if you can count on a pay raise, which have been few and far between for most workers in recent years, there is no way any employer is going to keep your compensation increasing fast enough to keep up with these known mandatory expenses and their increases.

If you’re like me. Your austerity efforts have proven worthless. And my wife and I make a good living. For the past 20 years our income has placed us in the upper 5-25% of income earners in this country. And, no; we didn’t make the mistake so many other Americans made and buy too much house. Even with 4 years of declining home values we’ve never been upside-down in our mortgage and have always maintained a healthy level of equity.

But for years I always thought we could simply cut back and get ourselves out of the tight conditions in which we found ourselves. Like so many others. It didn’t work. The solution I finally realized was we need to make more money. We need a Plan B income. And so do you.

Take a look at your situation. Where are you going to be in 2 years? In five years? 10? What is going to happen to make things better?

For too long I fooled myself, and patted myself on my back for making an above-average income and being so much better off than most other people. But most other people live lives of quiet desperation. Most people are a lay-off or a single medical emergency from financial ruin. Does this describe you?

Our solution is already working. After loving the health and nutrition and weight-loss products from Advocare, we decided we couldn’t pass up the opportunity to represent this fine company and its products and help other people realize the benefits we each realized. Our friends who introduced Advocare to us have been representing the company for less than 4 years and no longer work outside their home. They have a growing income of $25-$30-thousand per month. We are paying off debt and will record our highest family income in close to ten years, thanks in part to AdvoCare.

Cover of "Rich Dad, Poor Dad: What the Ri...

Author Robert Kiyosaki, Rich Dad Poor Dad, calls the business plan used by Advocare “the perfect business plan”.

I let go of all my prejudices and suspicions about direct-selling businesses and realized AdvoCare was different and better. And my family is repeating the benefits.

Be it AdvoCare or some other vehicle, read the writing on the wall. The only way things change for your family finances, is if something changes. A secondary or Plan B income is the only way to thrive in the world of today. If you want to learn more. Contact me. I can help. And would love to help.

Thanks for visiting. Comments are welcome.

Click to go to our AdvoCare website.

Click to go to our AdvoCare website.

US Housing Crisis – Negative Equity Infographic – Zillow

Peoria - My House from the Air

 

You think you got it tough? You think, how am I ever going to get out from under this crushing debt? You are not alone.

 

Click on this link for the Zillow Negative Equity Infographic. It shows in startling detail the percentage of homes by county throughout the U.S. that are Underwater and delinquent on payments.

 

US Housing Crisis – Negative Equity Infographic – Zillow.

 

At the peak of the housing crisis over 40% of homeowners owed more on their houses than the houses resale value. According to the most recent information (I could find) from September 2012 over 22% were still underwater. In a healthy housing market only 5% of homes are underwater, or have negative equity.

 

The effects on the economy are enormous. When a family has negative equity their ability to borrow money is extremely limited, preventing wanna-be entrepreneurs from using seed money from their homes, their largest investment, to start a new business. Families can’t refinance in order to take advantage of record low-interest rates. And they can’t sell their house and buy a new one because in most cases they won’t have money left over after the sale to use as down payment on the new home.

 

Snowcapped peaks are a backdrop to many Puget ...

 

In the Puget Sound 26% of King County homes are underwater and 10% are delinquent on their mortgage payments. In Snohomish County it’s 40% and 11%. Pierce County is the worst; 45% and 12%. Throughout the Puget Sound and south to Portland, OR not one county is below 21%. Most are above 30%.

 

Since a decade low of only 60% of Americans own homes we can then do some simple math to determine a majority, over 53%, either don’t own a home or have negative equity in the homes they do “own”. 

 

As someone who isn’t underwater on our home (in fact we have pretty descent equity) but is extremely familiar with the suffocation of debt let me tell you I can relate. A recent ABC News report indicates that a majority, 55%, of Americans have more credit card debt than money in savings. Sadly, I would be among the majority.

 

Getting out of debt is one of my families top priorities. And for this economy to flourish all Americans should make that a priority.

 

As an AdvoCare Advisor Distributor I’m happy to have the award-winning DebtBuster program provided to me for free by AdvoCare. The methods for getting out of debt are simple to understand and follow. If great nutrition, weight loss, muscle gain, and great financial opportunities are not enough to compel you to get happily involved in this great company perhaps the kind and generous help and advice AdvoCare provides FOR FREE to get the stress and suffocating burden of debt off your back will allow you to make this wise decision.

 

We’re following the DebtBuster program and we’re making more money thanks to AdvoCare. I invite you to contact me to learn more. And based on statistics…a majority of you need to do so.

 

Thanks for visiting. Comments are welcome.

 

Go to our website, read our story and try some AdvoCare. You won't regret it.

Go to our website, read our story and try some AdvoCare. You won’t regret it.

 

 

 

War on the Middle Class is all Friendly Fire.

“Those who ignore history are doomed to repeat it”- George Santayana, 19th Century writer, philosopher

Have you ever driven through an old neighborhood where the houses were mostly constructed in the 1920’s?

Old Neighborhood

Seattle's Queen Anne Hill

What did you see? What you saw from that era of American consumption is very large homes; Bungalow styles, Colonial revival, Ranch style and others. In Seattle the Leschi neighborhood and the area east of Franklin High School give adequate representation of the kind of opulence home owners enjoyed in the time of Prohibition,

Calvin Coolidge, President of the United State...

President Calvin Coolidge

Calvin Coolidge, and a rising stock market.

History being our teacher we look back on that time and know what followed; a record stock market crash, increased taxes from the Federal Government and a depression that shook the foundation of our country. So what do you see in the neighborhoods where the houses were constructed in the 1930s? The answer is nothing. There are no neighborhoods built in the 1930s. Like today construction ground to a complete halt because of the depression leaving nothing to look back on.

World War II took us out of the depression, but because of the diverting of resources home construction didn’t recover in this country for five more years. When it resumed in the late 40s and continued through the 50s and 60s what was being built? The Lake Hills community in Bellevue, WA is a fair representation of late 50s early 60s construction. I grew up there.

Small homes from 1950s

With very few exceptions it’s a community made up almost entirely of ramblers with a size seldom exceeding 1200-1500 square feet. They were easy to construct and inexpensive. And the Eisenhower and Kennedy 50s and 60s gave America a universal image of happiness and wealth. In my case I thought my house was a palace growing up. After my parents divorced our single parent home, led by my Dad, became a 1100 square foot rented duplex. The whole neighborhood was duplexes, so once again I didn’t feel deprived.

Slowly through the 70s the houses got bigger, introducing the God-awful split-level

I always hated Split-levels

. But even these were generally no more than 2000 square feet.

By the time the 90s come around everything has exploded.

A 1990s McMansion

Newly constructed homes have to have a minimum of three bedrooms, laundry room, office, play room and foyer. The home I grew up in would be swallowed by my current homes downstairs alone. And with the added size came an awful lot of opulence too. Granite countertops now are staples in even the most humble abode. In the past 20 years we’ve furnished these McMansions with leather furniture and tile floors. And if our home didn’t have the amenities we desired we would refinance our mortgage or get a second mortgage, taking equity out of our personally largest investment. Taking equity out of your home was something our parents and grandparents wouldn’t dream of doing except in the most dire financial emergency. Now we do it to finance a trip to Cancun.

The 2008 financial collapse was largely caused by an increasing number of Americans failing to pay their mortgage; mortgages for big, opulent homes too many flat-out couldn’t afford. But creative financial instruments were put before us and Presto! We could suddenly afford these ridiculous houses. The dreaded ARM loan became a buzz word and the source of all our consternation. Nobody put a gun to anyone’s head asking them to sign these unwise financial documents. But like lemmings lining up for our own fatal plunge Americans from every corner of our nation made the dive.

The expenses our parents faced on a monthly basis included a rent or mortgage payment on a fixed-rate 30 year mortgage. They included heating bills, water, sewer, life insurance, car insurance, phone, food and gas. It included little else. Today all those expenses have exploded. Gas prices have doubled just since Barrack Obama became President. Also now our monthly expenses include all of what’s just been mentioned PLUS cable tv, internet, DVRs, cell phones

English: Mobile phone evolution Русский: Эволю...

, workout-clubs or gyms, video game networking, 50 inch TVs and more. And these are just regular monthly expenses. These are expenses earlier generations couldn’t fathom; nearly all of them unnecessary extravagances. Can you say with a straight face that you honestly NEED 200 different television channels? Is it really necessary that each individual in the household be available for a telephone (cell phone) call 24-7? We have five different telephones in my four person home. We could have six but I fought my wife against getting our 13-year-old daughter her own phone.

When dollars are tight and the bills aren’t being met too many enviously scream at those who have more and shout “No fair!”. But when you look around at what even the poorest in our society enjoy compared to our forefathers, and compared to the rest of the world, for that matter, shouldn’t the finger of blame be pointed at the man or woman in the mirror when cash flow is not there for you? Doesn’t history show us that when you build up and up and up and live beyond your means a correction is inevitable? And doesn’t history tell us that living humbly coincided with happy times and progress for our society?

I don’t wish anyone to live uncomfortably. I want us all to have a rich and fabulous existence. I want us all to thrive. I’m just saying thriving could be a lot easier if we look back from whence we came.

Thanks for visiting. Comments are welcome.

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