Income

With the exception of those with substance abuse or mental issues who through choice or circumstance have opted out of the system, nearly everyone has access to an income source. It could be in the form of Cash Assistance, Unemployment Benefits, Disability Income, Social Security, etc. While the income provided by social programs can be minimal, it is none the less income. The point being where there is income there is opportunity. The source and size of the income is not what matters, but rather how the available income is managed.

Although we live in difficult economic times prior generations have struggled with far greater perils and yet found ways to prosper. Living on marginal means is not without challenge. The trick is to find a way to create surplus regardless of circumstance.

                                             Roger L. Caron

Cars & Cash

The American Automobile Association does an annual car-ownership cost study based on seven cost elements: fuel, tires, maintenance, insurance, depreciation, license/registration/taxes and financing. Here are Triple A's most recent per-year costs for various types of vehicles: Small sedan: $7,619 Medium sedan: $9,717 Large sedan: $14,241 Minivan: $10,716 and 4WD sport utility vehicle: $12,598.

It is every so easy to under estimate the true cost of getting form point A to point B. The cash demands of the vehicle choices we make can have a major impact on our ability to save and invest for a more prosperous future.

                                                   Roger L. Caron

Savings Data

Goverment statistics indicate the average US household headed by a person in their 40s has typical retirement savings in the $20,000 range. As age increases to 55, average retirement savings steadily increases to the $60,000 range. While Baby boomers ages mid 40s to mid 50s have retirement savings in the $30,000 to $40,000 range. The data further indicates half of all workers age 55 and up have saved less than $50,000 for retirement, exclusive of any home equity. With one third of workers in the same age group having less than $25,000 set aside for retirement. And notably, one in five workers age 50 to 64 have less than $5,000 in retirement savings.

It is important to use caution in drawing conclusions when dealing with averages. Yet it is safe to say such data has to be viewed as a real eye opener for those serious about their future financial well being.

                                              Roger L. Caron

Mind-Set

The massive deprivation and rationing brought about by World War II left a deep impression on the American psyche. Making things last and saving money for a “rainy day” was viewed by most folks as both necessary and prudent. In order to buy a house, a 20% down payment was typically required. Likewise, substantial down payments were necessary to purchase an automobile or a major home appliance, with most day to day needs paid for with cash. However rampant inflation of the 1970s and a new generation mind-set evolved, leading to the debt driven, consumption culture that exists today.

Over the past three decades American household debt in relationship to income has more than doubled. With debt fears assuaged by rising real estate values. Causing many homeowners to use rapidly growing equity to finance lifestyle enhancements inconsistent with their actual incomes. The end result the housing bust, collective massive debt “hangover” and our current stagnant economy. The answer to our economic malaise, both as individuals and as a nation, is a return to living within our means. As thrift, and the financial where-with-all it breeds, generates the confidence to know we can indeed control our fate.

                                               Roger L. Caron

The Bottom Line

In order for a business to succeed it needs to make a profit. At year end revenues either exceed expenses or they don't, and if not the doors close … end of story. The same thing holds true for our personal finances. When payday comes along the question remains the same ... is there any money left over after paying the bills, our profit, or are we broke?

The question is the same month in month out, year in year out. The key to creating profit within our money management business is not as so often stated “live within our means”, but rather “live beneath our means” … a distinction of immense import.

                                             Roger L Caron

Debt Dilemma

As a nation we have racked up more than 14 trillion in debt, much of it owed to foreign countries who may or may not be friendly to us. And a large percentage of American consumers have done the same via plastic. The result of this decades long credit binge are enormous both for our nation and our citizenry. Sooner or later the piper will have to paid with crushing interest.

On a personal level consider what occurs when minimum payments are made on a charge card, a common practice by many cardholders. On a balance of $3600 at 18 percent interest, it would take 22 years to pay off the balance. The interest alone would total $8000 bringing the total payments to $11,600 ... over three times the initial obligation. The urge to live beyond our means both as a nation and as consumers is indeed a “Siren Call” to fiscal disaster.

                                         Roger L Caron

Time & Money

Saving for a secure retirement takes time. Wealth is rarely created over night and those who come into easy money often squander it. Given sufficient time small amounts can add up, with minor adjustments in spending habits yielding awesome results.

For example, having a Cappuccino every other day, rather than daily, could put an extra seven dollars a week toward retirement savings. It doesn't sound like much, but compound over 30 years at 8 percent and the result is $45,000. As an alternative bring lunch to work one day week and achieve a like result. Saving money can be a lot of fun when approached with a bit of creativity and an eye on the future.

                                                        Roger l. Caron

Saving & Spending

The first year the Bureau of Economic Analysis began to track saving data was 1959. The personal savings rate was then 8% and remained in the 7% - 8% range through out the 60s. In the early 70s, the rate spiked, hitting a peak of 14% in 1975. The sharp up-tick coincided with a deep recession during the same time period. Then in the early 80s, another recession brought about high inflation accompanied by weak economic activity, referred to as "stagflation". During this period the savings rate climbed above 10%, then fell back again as the economy began to recover.

Yet another recession occurred in the early '90s. The savings rate held steady during this recession and then proceeded to plummet over the rest of the decade. By January 2000, the average savings rate was 3% and would fall to 1% or less multiple times from 2000 and 2010. With the economy near collapse in 2008, the savings rate began to trend higher, moving from 1% in January of 2008 to 4% in December of 2009.

What caused the dramatic drop in the savings rate between 1990 and 2008? The psychology of the US consumer took a dramatic shift due to a surge in credit availability. The proliferation of easy credit made people want to spend like there was no tomorrow. Interest rates were low, the real estate market was sky rocketing and people were in a mood to spend rather than save. And spend they did, abandoning the thrifty mindset of earlier generations. The savings rate dropped to zero, leaving many over extended as the housing bubble burst,  and the economy went off a cliff in 2008.

The bottom line, when folks feel good about their circumstances, they spend more. When their worried about their futures, they save more. Hence the book title: Save and Grow Rich "How to turn Small Change into Large Fortune".

                                                                     Roger L. Caron

Save & Thrive

The incomes of most Americans make us among the richest people on the planet. In spite of this apparent largess,  most  folks never manage to accumulate significant wealth. In reality large numbers of US workers are only a few paychecks away from insolvency.

Even more distrubing, many with annual household incomes of $100,000 and up have surprisingly small amounts saved for retirement. The reason for this paradox is a lot of folks have simply lost sight of the virtue of saving. Success with money is not complicated. It is easy to believe more income is the answer, when in truth the solution is to learn how to better manage the income one already receives.

                                                       
                                                                                                       Roger L. Caron 

Spending and Wealth

 

When spending is viewed as an ongoing opportunity to save, it can turn necessary expenditures into thrift adventures. The mobile nature of urban society and frequency of relationship transitions can lead to great opportunities for those with a discerning eye and love of a hunt.

A substantial number of financially well off individuals routinely shop classified adds, frequent swap meets, garage sales and yes even thrift shops. What many folks don't know about the latter venue, is some  merchandize is purchased by the pound after estate sales, with no regard to value, and thus lead to amazing pricing for an astute shopper.

                                                    Roger L. Caron

                                                    

Scarcity Myth

The myth of scarcity runs deep in human psych, yet we are surrounded by evidence to the contrary. For in truth abundance is a natural condition. For all things, material and mental, have a bent toward multiplication ... from seed to garden and sapling to forest, proliferation rules. So too does positive thought lead to positive outcomes and negative thought their counterpart.

It has been said to be “broke” is a state of mind, whereas being out of money merely a temporary situation. It is an aberration to believe we where meant to live in a continuing state of want and worry. Scarcity is but a myth ... cast aside when recognized as falsehood.

                                             Roger L. Caron

Pocket Change

The idea that significant wealth can be derived from small change might sound fanciful. Yet a handful of coins can yield immense rewards. Set aside four quarters daily starting at age twenty-five, compound it at eight percent, and it will increase to more than one hundred thousand dollars by age sixty-five. The time is considerable, but then so is the result. It’s rather amazing when you think about it.

The next time you see a penny on the ground stop to pick it up and consider this; if a Single Penny were to earn six percent interest from the time of Columbus; it would compound into more than a Hundred Billion Dollars, stated numerically in excess of $100,000,000,000.

                                            
                                           Roger L. Caron

Fuel Shock

Today's post is a cost saving tip written by David Muhlbaum of Kiplinger magazine. With the skyrocketing cost of gasoline, and depending on the amount you drive, this idea could lead to a significant decrease in your overall fuel expenditures.

According to Muhlbaum,“Even if your car says premium fuel recommended, or even required, few really need it. Most late-model cars can adjust to regular fuel because engines are now equipped with knock sensors, which adjust the engine's timing automatically when they detect tell-tale 'pinging'. You may experience a slight decrease in power and fuel economy, but no damage to the engine. A key exception: If your vehicle is turbocharged and specifies super, follow the manual. You're doing neither your car nor your wallet any favors by putting higher-grade gas in a car that calls for regular.”

                                 Roger L Caron

Simple vs Easy

A good coach knows fundamentals are what counts when it comes to performance. Lose sight of the basics and things quickly go off track. Your finances are no different. Without exception always pay yourself first, live beneath your means, save and invest the difference over time and prosperity will ensue. It sounds simple and it is. However just because something sounds simple, does not imply it is easy to do.

One could pile up everything ever written about weight loss and it would reach the top of Mount Everest. Yet it can be summed up in one sentence. Eat lots of fruits and vegetables, cut down on sugar and starch intake, and weight loss will follow. Simple in concept, yet often a big challenge ... as anyone who has ever battled their waistline can attest.

The important thing to remember is success in any endeavor, be it money management or weight control, is far easier said than done.

                                Roger L Caron

Wet Your Whistle

Have you ever been on a restaurant's waiting list, yet observed open tables? Sometimes its done by design. A ploy to get you to sit in the lounge where there is a higher probability of selling you drinks ... since beverages have the highest profit margins in eateries. Which is why successful restaurant owners train their wait staff on the importance of suggestive selling. And with good reason beyond improving the owner's bottom line, as the higher the total bill, the larger the tip the server stands to receive. Can I get you started with an ice tea, or a glass of wine a typical opening remark. A legitimate invitation to be of service coupled with vested interest.

Since you're reading this blog you know I'm a frugal guy who enjoys saving a buck or two. So here's a little tip you can use to do the same, if you like lemonade as I do. Simple ask your server for some sliced lemons when taking your order. When it arrives squeeze the lemons in your water glass, add sweetener to taste and walla! A tasty drink and more money in your wallet or purse when it comes time to pay the tab.

                                                    Roger L. Caron

Downside of Debt

According to a recent study by the National Foundation for Credit Counseling. A substantial percentage of Americans give themselves low marks on their knowledge of personal finance, expressing doubt about their ability to make sound financial decisions. Even more worrisome, is the fact that fully one third of adults have no emergency savings. And nearly forty percent of all adults carry credit card balances from month to month.

The downside of living on the financial edge and use of high cost credit can be enormous, as illustrated in my recently published book, Save and Grow Rich How to Turn Small Change into Large Fortune ... to read an informative excerpt from the book simply click on the cover photo at upper right.

                                                           Roger L. Caron

Right Thinking

The average worker spends decades toiling for wages. All this effort should bring financial security, but it seldom turns out that way. As only a small percentage of folks can sustain themselves comfortably solely from their own resources. Why does it happen? No one sets out with the intention of working their life away with little or nothing to show for it. It begs the question … how does one achieve long term financial success in our increasingly complex world?

The answer lies in developing the ability to discern the important from the trivial. Looking first and foremost to fundamental cause, for once discovered things tends to fall into place. Success with money is not happenstance. Its the result of right thinking and behavior consistent with such an end. What a person earns is of far less important than you might think. Its the way we use our resources over time that determines the outcome.

                                             Roger L Caron

Mentality

When you think about saving, do variety, satisfaction and prosperous living come to mind? Or do you have a “sacrifice mentality”, thinking instead, deprivation and limitation? A sacrifice mentality is the belief you need to deprive yourself in order to save. With thoughts focused on what you don't have rather than what could be in the future.

In order to break this mentality, think of saving not as restrictive living, but as a total management plan designed to dramatically increase your total life income. A management plan offering flexibility, not rigidity. It should allow you to choose from a variety of options, and include some of your favorite activities. The key to success in saving is moderation … not deprivation.

                                          Roger L Caron

Penny Wise

The idea that significant wealth can be derived from small change might sound fanciful. Yet a handful of coins can yield immense rewards. Set aside four quarters daily starting at age twenty-five, compound it at eight percent, and it will increase to more than one hundred thousand dollars by age sixty-five. The time is considerable, but then so is the result. It’s rather amazing when you think about it.

                                             

                                  Roger L. Caron

US Debt

Our national debt currently exceeds $14 trillion dollars, with much of this money owed to other countries and foreign investors. The interest payments on this debt are immense, exceeding $200 billion in 2010 alone. Over the course of the next decade our payments are expected to quadruple, with ever more tax dollars flowing to our overseas creditors. Debt be it public or private, is akin to an old time prison “ball & chain” ... for it shackles the debtor and impedes forward progress.

                                                        Roger L. Caron

Financial Cushion

What would happen if you lost your job? Would the bank foreclose on your house? Would you get evicted from your apartment? Could you afford to keep the utilities on? How long could you afford groceries? What would happen if you got hit with a big bill for an unexpected expense? If you are on solid financial footing ...  you can bear the burden of a short term loss or major unexpected expense because you are prepared for it. 

For example could you afford to replace a failed transmission in your car. If such an unplanned expense would throw your life into disarray, it's time to take a hard look at your present lifestyle. While you may be doing fine today ... if a single expense is all that stands between you and financial disaster, now is the time for action. 

Creating an emergency fund is a critical part of sound planning. Putting several months' worth of income in the bank so that you have it on hand should you need it, provides an essential cushion for unexpected events or a temporary halt to you income.

                                                                                                   

                                       Roger L. Caron

Retirement Savings

The Employee Benefit Research Institute conducts an annual retirement confidence survey to gauge how prepared Americans are for retirement. Their 2010 survey found that 54 percent of workers have less than $25,000 saved, excluding the value of their home and any pension plans.

The good news is Americans are squirreling away more of their hard earned money, with saving rates rising from near zero to six-percent over the the past few years. The ramifications of this shift in saving, can be immense ... as illustrated in my new book: Save & Grow Rich “How to Turn Small Change into Large Fortune”. 
                                                     

                                                    Roger L. Caron

View Point

A lot of folks are experiencing distress as a result of the financial meltdown. Loss of a job, home or business are traumatic events and most disheartening. Yet if we pause to think about it, folks living in America have so much to be thankful for. Consider that upwards of a quarter of the worlds population lives in poverty and a third lack access to the basic necessity of safe drinking water.

The way we look at things really does make a difference. The media knows bad news sells so most of their focus in on the negative. Our nation has survived and prospered in the face of Revolution, Civil Divide, Economic Depression and World Wars. Thus the challenge is one of shifting our attention away from negative events toward uplifting thoughts and positive actions in our daily lives.

                                                       Roger L. Caron

Financial Fantasy

The odds against winning the lottery are astronomical, yet a lot of folks plunk down hard earned cash in hopes of instant riches. Single state lottery odds are about 18 million to 1, and multiple state lotteries have odds as high as 120 million to 1. Even so, as many as one in three people in America think playing the lottery is the only way to become financially independent.

In reality there is a greater chance of being struck and killed by lightning, or meeting one's demise in a commercial airplane, than winning a lottery jackpot. Spending a buck or two on occasion for entertainment is one thing ... viewed as the  means to financial salvation is fantasy.

                                                      Roger L. Caron

Perspective

What you see as you drive down the street in an up scale neighborhood can be illusory, due to debt. A lot of people who live in those expensive homes don’t really own them. They may be indebted for the house, the furnishings and automobiles in the driveway. If their income were disrupted, even briefly, it would all disappear. While the residents may enjoy substantial incomes, they are frequently burdened by high expenses. The point being ... “It’s not what you make that matters, but rather what you keep that counts.”

                                                      Roger L. Caron

Money & Matrimony

According to Bride Magazine, the average total wedding cost in 2010 was $19,000. An amount viewed as reasonable or outrageous depending on a couples resources, and who is actually paying the bill. Special occasions can and should call for reasonable expenditures consistent with means. That said ... getting hitched can be an expensive proposition in more ways than one.

Assume a couple pares their wedding expenditures by a modest ten percent. Then redirect the savings toward long term investment where it could morph to a sum many times greater than the initial expense. The point is not about being pecuniary, but rather to illustrate how minor adjustments can render major outcomes. For in a real sense the true expense of the union, sans a bit of discretion, could run to six figures ... taking into account potential lost opportunity costs.

                                                           Roger L. Caron

   Save and Grow Rich 

According to Thomas Stanley's book, The Millionaire Next Door: The Surprising Secrets of America's Wealthy, only 20% of millionaires inherited their money. Most millionaires didn't get their wealth overnight when a rich relative died … they worked for their money. The other 80% are first generation millionaires. More often than not regular folks who lived within their means, saved and invested long term, to achieve financial independence.
                                                                                              Roger L. Caron

Secret to Wealth

"There is no secret ... wealth comes to those who plan, save and invest. It doesn’t happen by accident. There are only two ways to make money: people at work and money at work. When you save a portion of your income, you begin to reap the rewards of money at work. The key is to earn interest ... not pay interest! Very few people become wealthy overnight. There are no shortcuts, it requires both discipline and time."

                                                             Roger L. Caron

Credit Card Barrage

According to a recent report, American households received 640 million credit card offers by mail during the second quarter of last year. An 83 percent increase over the previous quarter when lenders sent out 349 million offers. With some major banks tripling mail solicitations.

The report went on to say more than One Billion credit card offers were sent out in a recent six month period. 71 percent of the solicitations contained an introductory offer of some kind. The highest percentage in the 22 years the data has been tracked.

                                                                          Roger L. Caron

Magic Penny

Would you rather have a million dollars today ... or a magic penny that could double itself every day for thirty days? Its a trick question of course, designed to fool those unfamiliar with the awesome power of compounded growth over time. The financially astute option is to take the Magic Penny. Why? Because a penny doubled thirty times over exceeds five million Dollars. Here is how it arrays out on paper.

Day 1 = $.01  Day 2 = $.02  Day 3 = $.04  Day 4 = $.08  Day 5 = $.16  Day 6 = $.32

Day 7 = $.64 Day 8 = $1.28 Day 9 = $2.56 Day 10 = $5.12  Day 11 = $10.24 Day 12 = $20.48

Day 13 = $40.96  Day 14 = $81.92  Day 15 = $163.84  Day 16 = $327.68  Day 17 = $655.36

Day 18 = $1,310.72 Day 19 = $2,621.44  Day 20 = $5,242.88  Day 21 = $10,485.76

Day 22 = $20,971.52 Day 23 = $41, 943.04  Day 24 = $83,886.08 Day 25 = $167,772.16

Day 26 = $335,544.32 Day 27 = $671,088.64  Day 28 = $1,342,177.28  Day 29 = $2,684,354.56

Day 30 = $5,368,709.12 ... amazing is it not?

                                                                             Roger L. Caron

Golden Years

Many folks believe the "ball game" is over when they reach retirement age when its not. Increased longevity for many seniors could lead to decades spent in retirement. Sufficient time to build significant wealth during post-work years. How? by living a wee bit below actual retirement income.

The key to prosperity is the same regardless of chronological age. Income is income and if you're not saving a portion of what is received, its not possible to advance. The bottom line .. its not what you receive that matters, rather what you keep that counts.

                                                                 Roger L. Caron

Wallet & Wheels

Be very cautious when driving and make certain your auto registration and insurance are current should you be stopped by the CHP. As you know California is in a deep financial hole, and trying hard to to collect more money from wayward drivers. For example: failure to use a seat belt $148, roll through a stop sign $214, run a red light $436, pass a school bus with a flashing red signal $616,  park in a handicapped zone, sans permit $976; second offense $1876.  Highway Patrols are under pressure to issue more tickets, so be especially aware of tougher enforcement of all DMV rules and regulations.

       Roger L. Caron

Dollars & Sense

Think long and hard before co-signing on a loan for a friend or relative. Why? because its a three-way transaction between the borrower, you and the creditor ... that can come to bad end. Don't co-sign unless you're willing to pay back the loan yourself. Because as co-signer, you're equally responsible. In the event the other party defaults, the creditor will look to you to make good on the debt. Often you won't find out the borrower is late on the payments until your own credit is blemished, and thus damage a relationship with someone you sought to help. if you want to assist another financially do so only with unneeded cash and consider it gift, that way there will never be any cause for hard feelings.

                                                                      Roger L. Caron

Bank Account

A poignant story with a meaningful message: A 90 year old man who dressed himself each morning, hair combed and perfectly shaved even though legally blind, moved to a nursing home ... his wife of 70 years having passed away. After a long wait in the lobby, he smiled when told his room was finely ready. As he maneuvered his walker to the elevator, a staff member provided a visual description of his room. “I love it” he stated with enthusiasm ... "but you haven't seen the room yet" said the staff member.

He responded “That doesn't have anything to do with it ... happiness is something you decide on ahead of time. Whether I like my room or not doesn't depend on how the furniture is arranged, it's how I arrange my mind. I already decided to love it. It's a decision I make every morning. I have a choice, spend the day in bed recounting the difficulties I have, or get up and be thankful for all the happy memories I've stored away … Just for this time in my life”. 

Old age is a lot like a bank account ... We can only withdraw from it what we put in. 

                          Roger L. Caron

You Can Get Rich

The idea that your chances of getting rich can be calculated is a fallacy, based on the idea there is a finite amount of wealth in the world. In reality, there is no cap on the number of people who can become millionaires. In fact, if you live in the United States you have a far better chance than most folks on the planet of becoming wealthy. According to a report issued in 2010, America is home to three million plus people with a net worth in excess of seven figures, representing one third of all global high net worth individuals.

- Being out of money is a temporary situation “Broke” is a state of mind -

                                                   Roger L. Caron

"Big Hat - No Cattle"

The Texas expression “Big Hat - No Cattle” refers to looking good versus having substance, a pithy though derisive remark, that carries a noteworthy message ... one that brings to mind an illustrative parallel from my youth.

In my collage days my driving demeanor was one of wild abandon. Speeding through an unmarked intersection, I was the cause of a major car pile up. Fortunately no one suffered serious injury and though bazaar, the other driver was deemed at fault. I knew otherwise, of course, but wasn't going argue the point having just wrecked my dad's new pick-up truck.

And here's where the story gets interesting. The other driver's insurance company not only took care of the vehicle repairs, they paid me five thousand Dollars to sign a non-injury release form. The irony of what followed is a life lesson well worth sharing.

Five Grand was a lot money back then and as the saying goes, it was burning a hole in my pocket. So I rushed out and blew the entire amount on General Motors most expensive model. Although I didn't realized it at the time, it was the personification of “Big hat - No Cattle.”

Had I instead taken my financial wind fall and invested in a few “blue chip” companies like Procter & Gamble, Johnson & Johnson, Coca Cola, etc. The same $5000 would have grown to $500,000 today.

In other words the fancy car, long gone to the junk pile, in reality cost me a half million dollars! Had I shown a bit of restraint and purchased a new Chevrolet for $2,500, the lost opportunity cost would have been reduced to a quarter million dollars. Experience is an excellent teacher but can often exact a high price.

The message: the choices of today beget the outcomes of tomorrow ... for better or worse.

                                                             Sincerely, Roger L Caron