Your Life Their Life

February 20, 2012

Are you ready to take control of your money?  If so, then follow the 20% rule to determine how much car you can afford.

If you haven't seen my previous rant on why new car sucks, you won't understand the reason I'm so against them.  In summary, I took out a huge loan on a new car that brought me to my breaking point.  At the time, I made $45,000 a year and bought a car with a $28,000 loan!!

Ok, so I don't actually mean all new cars sucks; only new cars you can't afford.  If you can afford a brand new Benz, then good for you.  However, you need to figure out how much car you can afford.

February 16, 2012

With the recent high-profile deaths of Michael Jackson and Whitney Houston, it brings the question to mind - why do celebrities overdose and kill themselves?  Is it done purposefully as a way out, or is it an unintended consequence of a bad path.  Note:  I'm not jumping to the conclusion that Michale and Whitney killed themselves, but working off of the assumption.

Charlie Munger said, "Addiction can happen to any of us, through a subtle process where the bonds of degradation are too light to be felt until they are too strong to be broken".  I've written previously about gambling addictions and how it can hurt us.

I think it's safe to say that Michael Jackson and Whitney Houston both died from a form of addiction.  Maybe it was the pain killers - an addiction to the high, or an addiction to the numbness it brings.  Or maybe it was an addiction to taking things just a little further.

February 13, 2012

When faced with a dilemma, one so tough that our backs are against the wall and the only options are to surrender or fight, what do you do?

Would you burn the ships as fabled in Cortes' capture of the Aztec Empire?  As the story goes, Cortes' men were far outnumbered in a country thousands of miles away from their home.  Their backs were against the wall and their options were death or fight.  Cortes burned the ships to give them the last bit of motivation they needed to conquer an entire empire!

That's exactly what we should do when faced with a tough problem… annihilate any options of turning back by taking extreme measures that force us to act.  I'm tired of going to work, so I'm going to burn my car!!

February 9, 2012

Do you know how much you spend on food?  As a follow up to the cash budget article, I'll take a deeper look into how much we spend on food each month.  Food is obviously a necessarily expense, but we don't all spend the same amount. 

The graph above represents the total amount we spend on food and compares the amounts across income brackets.  The BLS does a good job of not revealing the exact amounts for each income 'quintile', but I did find the top tier is a pretax income greater than or equal to $93,358.  From that, I'll guess the following for the other tiers:

Lowest 20 percent = less than $24,000

Second 20 percent = $24,000 - $46,000

Third 20 percent = $46,000 - $70,000