One of the things that frustrates me about being an adult is trying to be responsible with money. In this day and age, nothing seems to be secure. What seems to be a smart money move one day can come crashing down around you the next.
To me, a 401k is nothing but a gamble, but I contribute to it anyway. I’ve cut down my expenses over the past year and a half by making some sacrifices. Building up a cash savings has still proven to be difficult. I can be an emotional shopper, when I’m not being an emotional eater, that is. But, I have been saving up some money…of course, it’s never as much as I’d like it to be. I’m just impatient.
So, I surf the web looking for ideas and tips on what to do to diversify my savings strategies. Tonight, I was reading this article on Yahoo about how some guy was broke at 40, but suddenly changed his habits and then was able to retire at 60.
Sounds too good to be true? I think it might be. Read the article. There are a few holes in it.
My income was $40,000 a year I was 40 which was a net of around $2,500 month. However, I charged everything. When I tore up my credit cards I put myself on strict budget: rent $440 per month, car note $275, and credit card $400 a month. I took all the extra cash and paid off my lowest balance credit card first, then second. I also put over 20% of my gross into the 401(k) and profit sharing programs and stock options at work.
Now, I’m not that familiar with Los Angeles real estate, but where in the hell can you live on just $440 a month for rent? Also, if you add up the bills he lists, they come to $1,915 a month. That means he only has $585 left over to pay off his credit cards, buy gas, pay for utilities, food and any other bills that may come up.
Then he goes on to say:
At 40, I was able to purchase my first rental property in Pennsylvania for $8,000. With my wife we paid cash for the house. As an old Victorian home split into three apartments it grosses over $1,500 a month.
Where did this $8,000 come from? And where in Pennsylvania can you buy a Victorian for that cheap and still have it be livable?
Before I turned 40 I had never been married, but meeting my wife was my best decision ever. My wife is thrifty and our combined incomes were well over $100,000 a year. With her spendthrift abilities we were able to pay off all of our credit card debts.
Spendthrift? Um…that is the opposite of thrifty.
In 2006, we downsized and sold our home in Pasadena, Calif. along with a few of our rental properties and moved to a less expensive area in the Republic of Panama.
What the hell is going on in this story? First he’s renting, now he owns a home along with a few rental properties? How is this good financial advice for anyone? Did his wife own the house? Everyone isn’t lucky enough to be married. Why didn’t the dude just get a roommate? Maybe he had one while he was out wining and dining himself throughout the greater Los Angeles area. Who knows? It seems more like a tale of how not to write an article.
I have struggled with spending and saving my whole life. I think most people do. Isn’t there some statistic that most people in the U.S. are living paycheck to paycheck? Money management seems to be like everything else in life. You just have to have common sense. Then again, a little good luck doesn’t hurt either.