Another weekend brings entirely different concerns. There is a joke about the UK, which many British people don’t seem to know or remember. It is about the newspapers, several decades ago, publishing a report according to which ‘…because of the fog the Continent is isolated’. It seldom occurs to many people here that they may be isolated. Well, after last week’s events and the considerable political foresight and maturity demonstrated by our Prime Minister, the Continent appears to be isolated again.
We just came back from a weekend away; the drive up was dark, wet (after all we are in England) and the roads were frightfully busy. Obviously many people had the same idea as us: to drive around and visit with friends. Did you know that Flaubert was very much against trains? You may think that he hated trains because they were noisy and smelly but you would be wrong. He disliked trains because, as he put it, they ‘…will make it easier for people to get together and be silly together.’
It is Sunday again and a dark, rainy one at that. In anticipation of a nice, wet and cold run I am building up my expectations for a stimulating discussion. Expectations may be high but the reality is even better: intelligent and provoking posts are plentiful (well, there are some exceptions but I don’t see it as my job to deal with those; may be one day…). Choice was hard again but here are some posts that made me think and question. Let’s play.
It is Sunday again and after the breathless speed of the week it is time for reflection. I am finding it harder to decide which posts to include: most blogs I follow publish interesting, well written articles. My experience with difficult choices tells me that when the going gets tough a good way out is to make the criteria more stringent. Today, the principled money posts of the week are the ones that made me think most and/or made me change my perspective on things. Let’s rock, peeps.
We were thinking that in light of our mission to provide a resource for people to ‘stuff hedonism’ and ‘take charge’ there is something missing. Blogs are enormously helpful and these are also enormously time consuming to follow. Hence, we decided to start this new feature to provide a summary of the posts on personal finance we found most useful (read, most thought provoking). We will run this weekly and it will be an addition to the three usual posts.
In Nice Girls Don’t Get Rich there are ten statements that are unfinished; completing these may go some way towards supporting you to figure out your money blueprint. The statements are:
I am not rich because…
And that is because….
Being rich would make me feel…
When it comes to rich people, my parents always told me…
If I focused on getting rich, it would make my partner/spouse feel…
A rich woman is one who…
What keeps me from taking more risks to get rich is…
When it comes to handling money, I….
I feel money is…
A rich woman strikes me as…
Last week I told you about my scores according to the test in Nice Girls Don’t Get Rich. I also told you what the verdict of the test was and that I did ‘get moving’ as instructed in no uncertain terms. What I didn’t tell you is what my reaction to the score was, what I discovered and where I am today. This is what I’ll do in this post.
I am an avid reader and until recently I, like most people around, read paper book. I hardly ever write on the book – for me this is disrespectful to the author of the book and to the book. I like my books in good condition, read but not shabby and used. Having this attitude, you may imagine what strength of emotion and speed of thinking can make me write in the margins of a book? Very strong! I have written in two books in my entire life – and this, as it happens is one of them. When I opened it last week to write the post I saw the following:
‘Tragedy!’ – written after the interpretation of the test results.
This budgeting frame is particularly appropriate when paying off ‘negative wealth’. When people have
debt negative wealth, the customary advice is ‘don’t save; throw everything to pay it off’. I happen to disagree with this and from the very first days of my financial awakening I set myself two goals: one pay negative wealth and pay it fast; and two build up an emergency fund and savings. As it turned out I am in good company and Arkad, the richest man in Babylon, also agrees with me. Arkad’s advice to people who have negative wealth and wish to become wealthy was the following:
Ten percent of all you earn should be saved and invested.
Twenty percent of all you earn should be used to pay
debts negative wealth– if the amount is insufficient one should negotiate with their creditors firmly and convince them that this all that they can afford but that they will pay diligently.
Seventy percent of all you earn should be used to cover all living expenses.
Today I looked at my shelf and there was a modest book peeping shyly back me. The title of the book is Nice Girls don’t Get Rich: 75 avoidable mistakes women make with money by Lois P. Frankel, PhD. I remember buying this book; it was shortly after I became…
The Balanced Money Formula was suggested by Elizabeth Warren and Amelia Tyagi in their book All Your Worth: The Ultimate Lifetime Money Plan . I have already mentioned that budgets don’t do much for me – this is not a budget. The Balanced Money Formula is a guideline for exactly ‘what it says on the tin’ – for achieving financial balance that will allow you to live a life of abundance and also ensure that you save towards your dreams and your future. Applying the Formula assumes that you know your net income (income after tax) and have detailed, itemised knowledge of your expenditure.
Warren and Tyagi’s Balanced Money Formula consists of three elements: needs, wants and savings. ‘Need’ is everything that you absolutely have to pay and will include shelter, facilities, cars and insurance, food and basic clothing. ‘Want’ is everything above the basic needs that we have in our lives like eating out, going out, holidays etc. This category can include the things that you can cut out but this will cause temporary discomfort. Savings includes also ‘negative wealth’ repayment till it is gone.
This review was written by Jan Armitage from Renovation and DIY: the green path . Thank you, Jan, for being my first guest contributor. I hope you are the first of many.
Timothy Ferriss is a thirty something American – this is important, because the culture he’s writing for, and most definitely the sub-culture he comes from, is very different from mine. And yet here we are, meshing happily away…. His assumption, which I think is correct, is that everyone who’s interested in reading his book in the first place will be able to benefit from some of the ideas in it, whether self employed or not, traveller or not. It covers four sections, with the handy little acronym of DEAL.