Howdy, everyone. I’m writing to you from my sleeper compartment aboard Amtrak’s Empire Builder train, which runs from Chicago to Portland. Chris Guillebeau and I have been traveling westward for 24 hours now, and have passed through Wisconsin, Minnesota, and North Dakota. We’re now entering Montana (our train is behind schedule), and have another day or so left to ride. It’s fun, and surprisingly productive.
Chris is using this trip to launch his Empire Building Kit, which is designed to help motivated people build a “lifestyle business” — as a photographer, a personal trainer, a web designer, a dog walker, whatever — by taking a small step everyday. I’m using the trip to work on PR for Your Money: The Missing Manual (I’ve spent most of the time writing guest posts for other blogs).
I’ve also had time to look at some of the stories you folks have sent me, such as:
First of all, you folks know I’m a fan of setting financial goals. It’s one of the cornerstones of my financial philosophy. Squawkfox has put together a nice post that explains how to set financial goals, which includes three handy spreadsheets for goal-setting.
Next, Money Saving Mom is challenging her readers to stop making excuses and start saving. She says she’s tired of complaints that about why people can’t cut their spending at the grocery store, so she’s started a new series: 31 days to a better grocery budget. If you struggle to keep your food spending in check, you may want to check this out.
Over at The Simple Dollar, Trent has a great post about the mythology of spending and mental anchors. “If you spend all of your time comparing the major things in your life to others based on their cost or their perceived value,” he writes, “you’re saying that what others want is more important to you than what you want. Never let any important choice in your life be governed by what others want.”
Finally, Adrian sent me this ESPN story about how pro-basketball player Antoine Walker went broke: “Walker’s lavish spending was legendary, even by NBA standards. He had closets full of custom-tailored suits. His driveway was a showroom for Benzes, Bentleys and Hummers. He never did quite appreciate just how much they depreciate.” I’ve written before about the lifestyles of the rich and stupid. I used to mock folks who made millions and lost it all. I’m more sympathetic now, because I understand how easy it is to blow through money if you don’t have any sort of financial education.
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Whether it’s a $100, $1000 or millions, if you don’t use common sense, learn principles of wealth management, it can all disappear.
John Daly and Mike Tyson are two other infamous examples.
A girl I know was married to a guy who got in the NFL. Not a whole lot of money his first year,($250,000), but he figured out how to throw it away. She wizened up and left him, knowing even though he made that kind of money and even better, he was a loser.
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I remember reading that Antoine Walker story and thinking “Another one bites the dust”
It’s unfortunate that people spend so much time trying to make more money and forget that the increase in income usually includes an increase in expenses. I’m also not a fan of focusing so much on spending less as the only way to financial independence. As you mentioned before, incrase income and decrease spending will ultimately lead to independence.
Not trying to sound like an a**, but I am thankful for examples of people like this on how not to live.
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Pro athletes provide an example of how people deal with sudden wealth, which is generally “not well.” No matter how much you have, you can always spend more. However, I think the second and perhaps larger lesson is how to deal with temporary income. A lot of athletes don’t get into trouble until they retire, because even though they’re spending millions of dollars they’re earning millions of dollars too, and even if they get in debt they can at least service the debt.
This is where lifestyle inflation hits you. It’s really really hard to go backwards in lifestyle. If you get used to eating at 5-star restaurants and driving $200,000 cars, it’s hard to go back to cooking at home and driving a five-year-old Civic. Which is what you have to do when you spend all your millions. Athletes have a lot in common with lottery winners in that regard.
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SO bizarre! This must be the week of blogging about price anchors. Here I had really never seen it on a blog, so I wrote a blog post about how to set anchors in a customer’s mind. Then I saw the mint.com blog had published a post on price anchoring the same day. Now I see Trent wrote about anchors, too! Okay, freaky weird.
-Erica
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I like the words “financial education” and even though I took some economics classes at college but they didn’t teach anything related to real life financial matters. I think this education comes easy to those who are lucky enough to have parents that focus on financial responsibility from an early age but for the rest of us it’s a lifelong struggle at the best. I have learned a lot from this blog and am reading you book. I also hope that you can come up with “101/basics type online financial education classes” at some point of time or can refer to ones that are already there.
- Tahira
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Thank you for the link and mention J.D. Hope to see more videos of your book launch activities, travels, and meet-ups with Chris Guillebeau. Watching bloggers is just as fun as reading their words. Safe travels.
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