Why the difference? Because women earn on average $0.80 for every dollar a man earns.
Therefore, men have to save less and women have to save more in order to reach the same goal of fill in the blank $ dollar amount here.
WHY IS SAVING SO CRUCIAL?
No one can arrive from being talented alone, work transforms
talent into genius. – Anna Pavlov
All wealth building starts with saving.
Don’t let anyone tell you any different.
Sure you may have to invest and diversify your money such as investing in stocks, real estate, and bonds, but you have to save money FIRST before you can buy or invest in anything.
If you have ever read a Jane Austen or Charles Dickens novel, then you know the theme always comes around to money.
Considering that Jane Austen never married and Charles Dickens grew up in a poor house, it is not surprising that the authors chose to hone in on this topic.
The sorted topic of coin. Both authors are British and in that society they have a class system.
You are either born into wealth and inherit it or you must
work for many years and earn your fortune.
Many of the landed gentry lived off of their land. Profits that were made from owning land was how they made a living.
That monthly sum could be the difference between prosperity
and being locked away in poor houses, which were a form of jail for the poor.
Here in America, we do not have a class system of royalty, nobility, tradesmen, shop keepers and owners, or farmers.
However, we do have a social ranking and social class. Those are the haves and the have nots.
If you want to find yourself in the realm of having, then
you best start saving money for your future today.
Many years ago, I was laughed at for my paltry savings
amount of 9% per year.
Now I am saving over 40% of my income.
No one laughs at me now.
HOW SAVING MONEY CAN MAKE YOU HEALTHIER
They say wealth equals health. And that is an understatement
if I ever heard one.
Having money allows you to pay for all of your needs.
This includes doctor visits, healthy food, and medicine.
Eating well not only affects your waistline, but also your
brain functions.
It is said that children that do not get the proper rest,
nutrition or eat breakfast before school perform lower on tests and have harder
times concentrating.
Success depends in a very large measure upon individual
initiative and exertion, and cannot be achieved except by a dint of hard work. –
Anna Pavlov, Prima Ballerina
When you have the means to pay your bills, eat, and work in
good health; then you are fortunate indeed to be able to pay your own way.
Being able to afford your monthly nut just makes you happier
overall.
You are protected from the pitfalls of many of life’s
hiccups.
You can get just as much pleasure saving as you can from spending.
I seem just as happy being able to have the ability to
afford items than am to actually purchase them.
It is a great feeling to payoff debt. Every check you write frees you from obligation to lenders. Then your money can stop serving THEM and start serving YOU.
Make a goal to write down evet single bill you have and
person you owe.
I started doing this and tackling every debt I had one by
one.
Once I paid of my car, I owed $30,000 and my personal loan,
I owed $20,000, then things started really taking off from there.
I was able to take these monthly payments, $450 and $333
respectively, and start investing that money. Now that money works for me in
the stock market.
Here is one stock I recommend: VFINX or VFIAX. (You can also invest in the VTSAX or any equivalent)
Portfolio composition of VFIAX
Month-end 10 largest holdings (22.40% of total net assets) as of 03/31/2019
1
Microsoft Corp.
2
Apple Inc.
3
Amazon.com Inc.
4
Alphabet Inc.
5
Facebook Inc.
6
Berkshire Hathaway Inc.
7
Johnson & Johnson
8
Exxon Mobil Corp.
9
JPMorgan Chase & Co.
10
Visa Inc.
Whatever you do just make sure you not just SPEND money but SAVE money.
Concrete jungle where dreams are made of there’s nothin’ you can’t do. – Jay-Z featuring Alicia Keys Empire State of Mind
Women and high heels.
It is a love affair that has been raging on for 500 years. Since about the 15th or 16th century.
Those 3-inch spiked heels and peep-toe pumps can really turn heads.
“It is better to be looked over than overlooked.” – Mae West
However, is that what you really want? Or is it something more to it than that?
Here are some women in pop culture that regularly work, dance, sing, wear, perform, and even workout in high heels.
Let’s take a look.
Nicole Scherzinger – estimated net worth $8 million (she was known to run on the treadmill in heels)
Shakira – estimated net worth over $80 million (she is known for her belly-dancing skills)
Victoria Beckham – estimated net worth over $100M (Posh Spice loves her some heels)
Beyoncé – estimated net worth over $350 million (performs in high heels while doing intense dance choreography)
From what I gather, the high heel is all about power.
In what way you ask?
Keep reading and find out.
WHERE THE HEELS HAVE A NAME
And the Clackers just worship her. They call them Clackers, the sound that their stilettos make in the marble lobby. It’s like, “Clack, clack, clack”. – Anne Hathaway in The Devil Wears Prada
Clackers are characters in The Devil Wears Prada. They are known for the clacking noise their stiletto heels make against the marble floors of the fictional Elias-Clark.
One of the biggest cities in the world, Manhattan, in New York is known as much for its power lunches and business suits as it is for women decked out in sky-high heels.
A business and fashion capitol of the world. It is also known as a concrete jungle. And the Empire state.
However, you have to pay the cost to be the boss.
A custom made bespoke business suit can cost anywhere from the low thousand-dollar range on up to $5,000. Regardless, if you are in New York buying a Tom Ford three-piece suit, or across the pond in England buying from Henry Poole & Co on Savile Row.
And women’s shoes are no exception.
When a Manhattanite was asked why women wear heels, she says the power is everything. The reason why women wear shoes that hurt their feet is about POWER.
I read online that a Manhattan woman was quoted in the New York Times saying “Low shoes are for those who give up. If a woman cannot wear heels, can she really take over the world?”
“Give a girl the right shoes, and she can conquer the world.” – Marilyn Monroe
You saw how crazy in love women can get with their heels on Sex and the City.
At one point, Carrie Bradshaw (Sarah Jessica Parker) was regularly dropping some serious coin on the likes of Jimmy Choo, Manolo Blahnik, Christian Dior and Christian Louboutin. Anywhere from $300 to $1,000 a pair!
If these boots were made for walking, then she was usually in heels. Remember this iconic newspaper dress. Well, those shoes are Louboutins.
WHY SO HIGH?
That’s a great question.
I actually read a book about finance and in the book it discussed women wearing heels while working as cocktail waitresses. Particularly in casinos. When asked why they wore heels that obviously hurt their feet and back, they replied, “bigger tips.”
The higher the heels, the better the pay.
Even with this fact, statistics say at least 40% of women have given heels up.
So, basically it’s all about money. As a study reported, taller people or at least those that look taller make more money. Like $800 or more per year. Go figure.
WHAT DOES IT COST TO LOOK THIS GOOD?
“I like my money where I can see it – hanging in my closet.” – Carrie Bradshaw
Glad you asked.
As an extreme example, we will use a reference by Carrie Bradshaw.
Remember that episode where her building was going co-op. She had to come up with a down payment or lose her home. An apartment in a great location.
She told her friends Samantha, Miranda, and Charlotte (Kim Cattrall, Cynthia Nixon, and Kirsten Davis) that she didn’t have the money.
When prompted why she didn’t she stated she wasn’t sure where her money was going.
They tallied up her shoe addition.
Those Jimmy Choo’s ain’t cheap after all.
At $500 bucks a pop, she owned maybe 30 pairs. She then gasps, and clutching her chest she says, “I spent $15,000 on shoes!
That is a down payment on a home or rental property.
Using the rule of 72, with a 12 percent interest rate she could have doubled her money every 6 years! In 18 years, that $15k is worth $120,000! In 48 years, that’s $3,840,000!
Come on, Carrie. I need you to spend more wisely. And follow your own advice.
“Beauty is fleeting, but a rent-controlled apartment overlooking the park is forever.” – Carrie Bradshaw
BUT DOES IT SCALE?
Buying all those shoes I mean.
Scaling can mean a lot of things, but in this case I mean making best possible use of the resources we have and amassing wealth. Can we also do better things with our money ethically?
If she was a costume designer, and she got paid to shop and was paid in shoes and money. Then yes.
However, since someone else isn’t footing the bill, that money is coming out of your pocket. Gone forever.
According to philosopher Kant, there is no greater good to come from this.
If buying shoes was a hobby she turned into a business, like taking all those heels and putting them all in one marketplace online for resell with an upsell. Then using that money for a better purpose.
That’s money in your pocket. More is coming in than going out.
Saving equals success.
WHERE CAN ALL THOSE SAVINGS GO?
Another great question!
I’ll tell you.
But first…
A few questions for you.
• What interests you? • Do you want to earn money? • What do you like to do with your time?
Once you have a starting place, you can go from there.
Therefore, if remodeling, decorating, scrapbooking, sports, or the ballet interest you, then maybe you should consider putting your money into those things.
You could place your money in REIT’s (real estate investment trusts). These mutual fund stocks allow you to invest in real estate without doing all the work of managing a property or paying property taxes on it.
Like to play sports?
How about investing in sports teams.
You may not be an owner like Jerry Jones, but you can certainly buy stocks in sporting equipment or businesses that own sports teams. For instance, owning shares in a publicly traded team like the New York Knicks.
You can also buy sporting goods stores who sell retail merchandise and apparel. Like Dick’s Sporting Goods, Foot Locker, or Nike and Adidas. On the New York Stock Exchange (NYSE), the Nike shoe brand is listed as NKE.
Are you interested in the arts?
You can donate to charities like libraries, hospitals, and museums. For example, the Metropolitan Museum of Art or “The Met” in New York City.
Founded in 1870, its statement reads: The Met “collects, studies, conserves, and presents significant works of art across all times and cultures in order to connect people to creativity, knowledge, and ideas.” The art and library is accessible to anyone and you can make any donation you wish. Anything will do.
You can also donate to your local library or other places that are close to your values because the best thing you can do with your money is put it where your values are.
You’ve got to work to succeed. – Owner of a Lonely Heart Song and Lyrics by Yes
If you crisscross the country, you will see home prices are highly inflated. Homes values have gone up, but so too have prices.
I look to my left and to my right, but I don’t really see any new starter homes being built.
How is a family just starting out supposed to find affordable housing without any affordable homes?
You need to keep your fixed expenses low, so that you can keep more of your money in your pocket.
Remember the future is more expensive. Things do not go down in price. Prices go up.
I urge you to reconsider purchasing anything that will mean paying a high fixed amount over a long period of time such as a mortgage.
High fixed expenses can cause folks to go bankrupt.
If you do an online search, you can lookup bankrupt celebrities and see my point.
When going through their financial records and bank statements you see the glaring red flags right off the bat.
Here is a typical list of items I see when high profile people file for bankruptcy:
The newest or latest Range Rover
Large wardrobes and expensive designer suits or furniture
Huge credit card bills
Expensive foreign car leases
Tax liens
Medical debt
Back mortgage payments
Multiple child support or alimony payments
Back taxes owed to Uncle Sam
There is one-line item I would like to pull out in particular and that is the mortgage payment.
Let’s say hypothetically speaking, one was to bring in $70,000 a year, but was once pulling in $520,000. That’s a pretty huge drop in income right there. Would signify some belt tightening needs to be done right?
Nope.
Instead folks were continuing to live in the same neighborhood and even in the same house. In addition, driving fancy cars, and pretty much were living as if there had been no drop in income.
That is no way to do your finances.
You have to respect money. You cannot spend before you earn. As the song goes in the lyrics stated above, you’ve got to work to succeed.
You can’t continue to have the trappings of success, if you truly can’t afford them.
So, let’s discuss buying less home in order to be wealthier.
HOME PRICES ARE THROUGH THE ROOF
According to Zillow.com, the median home price in Washington DC is $575, 800.
If you have a 5% interest rate and a 30-year mortgage, that means you will owe $3,091 a month. And that’s just for the bricks! You have not paid property taxes, closing costs, home warranty, or utilities.
Adding in homeowner’s insurance and property tax, you are looking at $3,419 a month.
The Mortgage affordability rule states you should spend no more than 36 percent of your gross income on all your total debt, and this includes mortgages.
Based on the numbers, to purchase a home at this price point, you would need to bring in over $12k a month. That’s $150k a year. And this amount includes no down payment no debt except a mortgage.
Who doesn’t have a car payment these days? However, make anything less than that and its sorry game over.
Let’s not forget that this is for a property in Washington DC. There are tons of other metropolitan areas where to pay to play is even more egregious.
What a home in swanky parts of New York, California, Connecticut, Florida, Colorado, or Texas? Well, it’ll cost you.
Homes in gated communities can be well into the seven figure range.
If we take three times $575,800, that gives us $1,727,400. A $1.7M home will cost you approximately $10k per month, which is $120k a year and $10k of that goes just to property taxes.
In a decade you would have paid $120k for property taxes, just for you to sit on your couch in your living room .
That means a $3.5M home would cost the homeowner $250k over 10 years.
That’s right. A quarter of a mil. Just because the house is standing.
PROPERTY TAXES ARE FOREVER
Oh and by the way, did I mention that property taxes are forever?
You don’t ever stop paying it.
That means you will always have some cost associated with owning a home, even if everything inside of it and the dwelling itself is paid for.
Wishing you could buy a manse like Hova and Beyoncé. Well, be prepared to shell out big bucks cause the property bill alone is massive.
It was reported they bought an $88M mansion in California. A pricey piece of property indeed. A ritzy neighborhood for sure and a jaw-dropping beauty of a home.
In sunny California, the property tax rate is composed of three types of levies: general tax levy, voter approved bond indebtedness repayment, and special district assessments. The general tax levy was frozen by Proposition 13 at 1 percent of assessed property value.
So, let’s get down to the bottom-line. Property taxes on an $88 million-dollar home at 1% is $880,000 dollars! That is for one year. I shudder to think about the cost of upkeep.
Although, this is obviously not what the average American homeowner is paying in property taxes, it does illustrate that paying these taxes can be mighty expensive. Especially, if you are living on a fixed income, which many Americans one day likely will be.
HOW MUCH CAN YOU SAVE
What can you do instead of buying a huge property?
Glad you asked.
You can buy less home and save money.
This will effectively allow you to increase the amount of money you save.
For example, just buying a property that is $100,000 cheaper could allow you to save $584 a month in mortgage payments and property taxes.
Investing that $584 over 30 years at an 8% rate of return could net you $877,423.
You would be giving up close to $900k in wealth to live in a neighborhood that ends in the name of Hills instead of Heights.
Basically, you could save a small fortune.
HOW MUCH GREENBACKS MAGNET SAVES
I decided to buy a smaller home than most friends and family members I know.
In one case, I paid $500k less than my peers or their families. In another, I paid less than $700k!
Just figured less home would mean less to do for maintenance, lower utilities, and more freedom because less time is needed to manage my household.
I was right.
It is way less stress to care for a smaller versus a larger home.
You have less stuff because you have less space.
Either you throw out and donate crap or get creative in storing it. I prefer to come up with less storage solutions and just stop buying stuff.
Til Debt Do Us Part is a Canadian television series that follows couples that are going through financial crisis and financial expert, Gail Vaz-Oxlade, comes in to help the couple find solutions.
The series ran for over 100 episodes from 2005-2011. It also had a spin-off called Princess. She teaches couples to go from red to black and gain control over their money.
The show would air right after the Suze Orman show during its run on CNBC. Read my post Dom Perignon Taste on a Budweiser Budget to see how it all went down on Suze’s show.
#1 REASON COUPLES BREAK UP
Money is the number #1 reason couples break up. She visits couples weekly and gives them challenges to help with their finances. Then at the end of each episode, after about 4 weeks, she awards the couple with up to $5,000 dollars to help them get out of debt.
CUT THE CHEQUE
By far the best part of the show, in my opinion, is when at the end of one month, Gail Vaz-Oxlade gives the couple a cheque for an amount up to $5,000, depending on their attitudes and how well they did during the challenges. Keep in mind, couples could get less and some have. One of the lowest amounts I have seen her give was $3,000, which is a 40% reduction of the prize money.
The show was so popular that a 52-Week Life Planner was released based on the television series and offers day-by-day, step-by-step strategies and tips for successfully managing household finances.
This reminds me of a Tom Holland interview he did for Spiderman talking about how Anthony Mackie always says, “cut the check.”
If you have never heard of the show Til Debt or can’t remember it, no worries, I will take you back down memory lane tonight.
WHO IS GAIL VAZ-OXLADE?
“We feel good when our homes are bright and shiny, put a little elbow grease into your money and it’ll glisten too.” – Gail Vaz-Oxlade
Gail Vaz-Oxlade is a financial writer and was a columnist for numerous publications as a freelancer including Yahoo! Canada Finance. She has helped people from high finance to low-income solve their money problems. Eventually, she became a television personality due to all of her work in finance and that is how the show Til Debt came into existence with her as the host.
She has written numerous books on the topic of finance. I have actually read one of her books called Debt-Free Forever.
Gail has a no-nonsense attitude when it comes to money. And that is what makes her so good at what she does.
FOR THE LOVE OF JARS
“You can have everything you want. All you need is a plan. And how do we spell plan? B-U-D-G-E-T!” – Gail Vaz-Oxlade
Watching the show was very interesting. One recurring theme was the jars. Gail advocated for couples to live on cash.
Every single episode, you got cash jars. You would put in a certain dollar amount. When you spend, you write it down in the budget binder cause cash slips through our fingers easier than that snail did with Julia Roberts in Pretty Woman.
Some couples were taking out cash at the ATM from their bank accounts or doing cash advances, which Gail said she could not track so we don’t know where the money went. When it’s gone, it’s gone. Without writing it down or keeping receipts, there is no other way to track cash. So, jars it is.
MONEY LESSONS FOR GAIL
Gai loves cash and hates banks. She thinks they are bleeding people dry slowly with their interest and fees. Gail says banks are wolves in sheep’s clothing. The only way this will change is to teach financial literacy in school. I say start in elementary when they are old enough to start asking for a $1 lollipop, it’s time to start the finance lessons.
This is the secret recipe to building wealth: You need to make more money and you need to spend less money.
Here are 3 lessons that Gail taught me: (1) both partners need to manage the money, (2) no retail therapy, and (3) debt repayment takes time.
LESSON ONE: GAIL ON COUPLES MANAGING MONEY
Do not have only one partner manage the finances.
“It’s not unusual for one person to assume the nitty-gritty of daily finances…. The problem is that when one person is excluded, or totally abdicates responsibility, it means the other can mess things up with no monitoring or grow resentful at always having to do the detail…. Taking turns managing the chequebook, and having regular conversations so that both of you are clear about what’s going on, means you’re both in the know and working to the same ends. It also means that one person doesn’t have to deal with all the crap, while the other merrily laughs off the stress and frustration with, ‘You’re managing the money, so this is your problem to deal with.’ (Yes, there are dopes who say this.)”
Always know what is happening with your money. I don’t care who signs the check and put it in the envelope. Just make sure you lick the stamp. Be involved. Ask questions. Don’t be in the dark.
It’s kind of like that scene in Charmed in the episode Be Careful What You Witch For. Remember that scene in the beginning, after the opening credits. I want you to be skeptical like Phoebe. Always know who you owe and how much. Nothing is for free.
The conversation went like this:
Phoebe: I don’t get it you’ve been stuck in that bottle for two hundred years then someone finally sends you to us and you’ve no idea who licked the stamp? I find that very hard to believe.
Genie:What? I don’t get it you win the lotto and you’re asking for explanations?
Piper:Actually we’d like to know who to send the thank you note to.
“Plastic is anesthetic — it dulls the pain, and then what happens is you just keep waiting for the next fake high.”
And don’t I know it. I had a huge shopping problem for years. It was done as a way to dull the pain of the things going on around me – low-income, working full-time, going to college – I was a mess!
I had some pretty terrible managers when I was younger too. All the stress was getting to me. I had to find a way to cope, but shopping was not it. As I got more mature, I found ways to de-stress that were cheaper or free.
I have said it before that credit is seductive and addictive. It should not be used to replace your emergency fund (liquid cash). However, if you do, be strategic and use credit wisely and sparingly.
“A goal without a deadline is just a dream.” – Gail Vaz-Oxlade
Slow and steady is the way to repay debt.
“One step at a time. You are on your way. Expect challenges. Keep your goal where you can see it.”
You better believe it. If it took you 8 years to accumulate the debt, thinking you can pay it off in 3 months is delusional. See my post Getting out of debt one step at a time.
The good news is that once you recognize you have a problem with debt, then you can work on solutions. I have noticed that generally 2-3 years of cutting back and attacking debt is usually enough time to pay off most if not all of your consumer debt except the mortgage and student loans. After 5-7 years, the only debt left is usually the mortgage. That is a small price to pay for freedom.
Money can’t buy you love. But keeping love alive without money can be pretty tough. In fact, ninety percent of marriage breakups are due to money problems. And to get advice on how to manage money usually costs money! Til Debt Do Us Part, is a series that offers tough-love solutions to those willing to face their financial troubles head on. In each episode we meet a couple in crisis. Some are on the verge of bankruptcy, hounded by creditors or facing eviction. Others are just getting by, but in the midst of a personal meltdown or relationship breakdown because of money issues. With the sensitivity of a therapist and the toughness of a CFO, our host, renowned financial author and columnist, Gail Vaz-Oxlade reveals what she’s found in a couple’s finances – and then she’ll dig a little deeper. She asks some tough questions and then they’ll be forced to face reality. Where will it end if they continue on this rocky road? To get things back on track, Gail takes control of their finances …
This show was very eye-opening in how people managed their finances. Many did not have a clue what was coming in and going out. Gail would come in with her screen shots of the couples bank accounts and spending and give it to them straight.
Many times the wives would burst out in tears after seeing how much debt the family was actually in. Lots of couples were in over their heads. Some so deep in debt they had to consider selling their house, or worse, bankruptcy!
Some couples did not want to make any changes. Even though they were debt up to their eyeballs. These people needed to get their priorities straight. Much like Hermione, in Harry Potter.
Here is the show’s Intro and theme song along with a promo. This is just a taste, a light sampling, of what you are in store for with this show.
There are 2 episodes that stand out for me. They were called The Worst Family Ever and Love Affair with Luxury.
MONEY WORRIES CAN CAUSE SLEEPLESS NIGHTS
In the S03E13 entitled, “The worst family ever?” One couple were living in the wife’s family basement for about a couple of years. They spent with reckless abandon. Oh, the couple popped bottles night and day. Especially, after moving out and buying their own home for about $225,000. That’s not bad. What is bad is that they saved zero dollars while sponging off her parents.
Then, to make matters worse, they threw non-stop parties at their house for friends and family. This was obviously all to make themselves look good to friends and family. In Yoda speak, so concerned with appearances they are.
“Happy people don’t worry about what other people think about them.” – Gail Vaz-Oxlade
OUT OF CONTROL SHOPPING FOR BABY BUT THE KIDS ARE ALRIGHT
In addition, they expanded their family and had a son, but financially were unprepared for this. At one point, the wife was spending $1200 a month outfitting junior! I couldn’t believe it. What is she buying Versace onesies? Get real. A baby doesn’t care. They just want to be warm, feed, and dry.
This couple were overspending by the tune of $4,100 a month! Holy spending gone bonkers, Batman!
Fun Fact: For those of you unfamiliar with that Batman line, here is where it comes from. The Batman television series from the 1960’s. Batman was American live action television series, based on the DC comic book. It starred Adam West as the titular character and hero Batman and Burt Ward as his sidekick Robin.
It was also turned into a cartoon series. Here is Robin at his finest with his sayings. Hilarious!
I decided to post it so you won’t ever have to get the tongue lashing that Penny got from Sheldon on an episode of The Big Bang Theory about Batman at 2:48 into the video.
It was about The Lord of the Rings. Even Raj used a Holy Robin saying in there!
In this next video, Sheldon gives a fun fact to Raj. Now, you know where I get it from.
Now, back to the story.
The way the couple on the show were able to overspend like that, drumroll please…the credit cards!
When Gail comes along they are so bad she tells them they have to sell the house. They flat out said they could not sell the house. Even though they are on the path to $1.3 million in debt and possible bankruptcy! Gail, at one point in the show, tells them they are the worst couple she has had on the show and that she had a few sleepless nights worrying about how to help them out of this situation. Coming from Gail, that’s scary.
The way it went down, it reminded me of that scene in The Chipmunk Adventure, when Jeanette and Eleanor was telling the Arabian prince that Brittany spends money like a drunken sailor and Brittany got mad. Hilarious. I just so happened to find the footage of that particular scene and the movie on YouTube. Hope you have fun watching! No need to thank me. Like Dean Winchester says, “You’re Welcome.”
SHOULD YOU FINANCE A $100,000 CAR?
“Change brings challenges, learning, and a sense of New. Change is full of promise.”- Gail Vaz-Oxlade
In the S04E03 entitled, “Love Affair with Luxury,” which aired March 6, 2008, is the gold standard of delusions of grandeur when it comes to money management. The wife, Simone, is a champion shopper and a spendthrift who manages to make 53 shopping trips in a single month! That’s nuts. Even though she’s on maternity leave, a luxury car is next on her shopping list.
The only reason the couple is able to afford such luxuries is because they have each other’s incomes. The minute one person’s income is gone or reduced, i.e. disability or divorce, the whole house of cards comes tumbling down faster than the stock market has in the last 30 days.
Frank and Simone’s combined $110,000 annual income is currently curbed by Simone being on maternity leave. Simone is addicted to what she believes she needs to keep up appearances in every respect, which includes working out at the gym, and spending money on “stuff” for herself, such as clothes, getting beauty treatments of various kinds, and having a beautifully appointed house. A $125,000 new car is next on the list. Simone, however, states that she would never do anything that would place her family at risk. But Frank doesn’t realize he is just as guilty, spending money on his electronics, which includes six large television sets in their house of four people, including one infant. This spending has resulted in $55,000 in consumer debt so far. They constantly fight about money, something having to give if their marriage can overcome this issue. As such, Gail issues them challenges largely focusing on dealing with their root problem, namely their addiction to luxury, this focus which not only entails them doing the challenges, but understanding why she has issued these challenges.
At one point in the show she says, “we can finance $100,000 can’t we.” For a car no less! If you have ever read this blog, you know I can’t stand cars for the simple reason that they can keep you in debt forever. You could spend a couple hundred grand on cars in a lifetime. You know how much interest you could earn on $200,000! Here are just a few on my posts on my beef with car loans below.
Money is a tool we use in the present to create the reality we want in the future. Learning about finance is a good start. Practicing good money habits and teaching your kids to understand the concepts of money – budgeting, saving, and spending – you help create their reality.
So, I want to always stay in control of your…I will now end this post in the last words of the Til Debt Do Us Part theme song, money, money, money, money, money, money, moneyyyy!
Everyday and in every way, invest in yourself. Invest in your health and education to help build your wealth. With money comes power and protection. The wealthy are protected. Build up your knowledge and money coffers. A war money war chest is your way to ditch the 9 to 5 and get out of the rat race.
Jay Leno gives advice on how to do just that.
MONEY LESSONS FROM JAY
Jay on starting out
“I wasn’t a millionaire when I started.”
“I would alternate between the two, so it was cars and hamburgers, which are actually still two of my passions.”
He started his career working for minimum wage at McDonald’s in Massachusetts. Jay also worked at a Ford dealership. He discovered the key or secret sauce (pun intended) to getting rich: Developing multiple streams of income.
Jay on working more than one job
“I always had two incomes.”
“I’d bank one, and I’d spend one.”
“I had two jobs because I realized that was the quickest way to become a millionaire.”
“When I got ‘The Tonight Show,’ I always made sure I did 150 [comedy show] gigs a year so I never had to touch the principal.”
And there you have it. Basically, if you want riches, then you have to put in the work. If you work 40 hours a week, then find a way to work 50 or 60. Gotta make that paper.
“When I was younger, I would always save the money I made working at the car dealership, and I would spend the money I made as a comedian.”
“When I started to get a bit famous, the money I was making as a comedian was way more than the money I was making at the car dealership, so I would bank that and spend the car dealership money.”
“Then I got to the point where the comedy money was, like, five times the other money, so I decided to flip it around and save the comedy money.”
Therefore, if you are working 2 jobs or more, then you bank the bigger paycheck and spend the smaller checks. Bank the bigger of the two checks and live off the other.
Forget the pundits that tell you not to save. There is value in saving. You need an emergency to help in case of job loss or illness. Life is full of hiccups. Once you have saved reasonable amount, then you start investing your surplus income.
The key is not to only save, but to also invest. Savings help you live your life to the fullest. In addition, savings can help you fund your dreams. Not having to go to the bank for a loan is an incredible feeling.
Jay on living on one salary
“I pretended as if I didn’t even have the ‘Tonight Show’ job.”
“You know, when you start making money, you get lazy. I wanted to make sure I always had that hunger, so I never looked.”
“It would go directly into a bank.”
Simply put, bank it and forget it.
Jay on patience
It took 22 years to accumulate, “a nice little nest egg.”
You heard it here folks. Building wealth takes time. In many cases, it takes a couple decades. There are no get rich quick schemes. There’s is no free lunch. There are no shortcuts. You do the work, get paid, invest the surplus incomes, and wait to earn interest.
Jay on retiring
“If you do something and it works, then keep doing it.”
You do not have to retire early unless you want to. If you are passionate about something, and can make a living doing it, then do it.
Jay on Buy-And-Hold
“The McLaren F1, I paid $800,000 for it in 1998. The last offer I got was $12 million. … The nice thing is, if you buy what you like, and it doesn’t go up in value, you still like it.”
Warren Buffet likes to buy-and-hold forever. Therefore, don’t even part with your cash, if you don’t want to keep an item to infinity and beyond. Just don’t even open your wallet.
Jay on avoiding credit cards
“I barely use credit cards.”
Words to live by. Either use credit sparingly for a purpose and get it paid off ASAP or don’t even bother using it at all.
Jay on house buying
“I didn’t buy my house until I had cash. When you own something and you don’t have to write checks every month, you’re just better off.”
I learned from James Brown, Dick Clark, Jay-Z, Oprah, JK Rowling and Michael Jackson to own what you do. You can control your earning potential and life, if you own. You can continue to make money off the things you own and control for many years to come.
Regardless, of whether or not you’re still working. You can still earn royalties from work you have done in the past. That is how the rich get richer. Earnings on top of earnings.
Jay on debt
“I don’t carry any debt. I don’t write checks at the end of the month for anything.”
“I didn’t buy anything I couldn’t afford to pay for in cash.”
“Here is the money, give me the thing, transaction over.'”
Jay hates installments, as do I. His cash only solution is what the world needs to adhere by.
I have literally saved for two years or more to purchase items or services I wanted or needed.
When I wanted Lasik, I used my flexible spending and waited about 3 years before I did the procedure. It cost between $4,000 to $5,000. And was worth every penny. Paid cash, not credit.
When I needed dental work done, I saved for 2 years. Paid cash, no installments.
Don’t buy on credit, build a fortune.
Jay on Retooling
“Since high school, I’ve always had two jobs. I worked at a McDonald’s and I worked at a car dealership. … When I was doing the Tonight Show, I’d be on the road at least two to three days a week because I thought, ‘We’ll see how long this lasts.’ ”
Do not ever get too comfortable. Things can change. Always have more than one way to earn a living.
Jay on owning
“I own everything. I own my buildings. I own my cars. That way, if it ends tomorrow, I know what I’ve got.”
His conservative money philosophy gives him peace of mind. When you are out of debt you just feel better. Take control of your finances and this too will help give you some peace of mind.
“It’s a little old fashioned, I suppose, but it seems to work pretty well for me.”
No impulse buying. This is the debt trap. Plan your expenses. Budget just means you plan where your money goes and it gives you permission to spend. Use it.
Jay on Taxes
“I just pay. Fine, I’ll get another job, I’ll work harder. That’s probably not very good tax advice. I don’t have money in the Cayman Islands or any of that nonsense.”
Always pay your taxes. Period!
Jay on being frugal
“McDonald’s sent me these Happy Meal coupons, so one day I’m in the McLaren and I’m going to McDonald’s. I say, ‘Give me two Happy Meals.’ And I give them the [coupons].”
“Now I look like the cheapest guy in the world driving this multimillion-dollar McLaren and I’m trying to get a free hamburger.”
He hates spending on clothes and has not touched one dime of his Tonight Show money. At one point, he was earning around $30M a year! It pays to be frugal.
So, you just avoid the mall, invest the money you would spend on clothes and start earning your way to a fortune with compound interest. Delay your gratification. Discipline is the key to wealth. Once you have it, no one can take it from you. Then you can save money to invest. Easy as pie.
Jay on Shifting Gears
“So many friends of mine, all they ever did was the TV show. When the TV show ends, suddenly their life ends, because that was their whole life. I was never that guy.”
It’s great to have hobbies and interests outside of work. See if you can turn a hobby or side gig, into an income. At the very least, have something to do after one thing ends. Remember, no idle hands.
Jay on shopping
“I’m not a big shopping guy. I’m just not interested in clothes outside of the essentials.”
“To me, it seems like a complete waste of money. I just want to have enough clothes to cover legally what parts I have to cover.”
Hear, hear! I used to like shopping. Until I didn’t. That happened once I learned I was losing a small fortune for that new purse or shoes. Read my post How Millennial Money inspired me to start saving $13,333.06 a year for more on that topic and see how I quit shopping for good.
Jay on Fixing Things
“When you’re in a business like show business, everything is subjective. Some people think you’re funny, some people think you suck. …When something’s broken and you fix it, no one can deny it’s running.”
Very true. Always be tweaking or working toward expanding and doing better. People notice you the harder you work.
Jay on setting high standards
He, like Coco Chanel, believe in setting high standards for yourself. Chanel said, “keep your head, heels, and standards high.”
Jay learned this attitude while working at McDonald’s. A key pillar of success: You can never go too far to ensure you’re producing a great product.
He would go home every night after work and write jokes. Jay would go through hundreds with his staff and get it down to the top 20. He would record himself and then re-listen for timing. Tedious? Yes, I know. But effective. The hard work paid off.
Fun Fact: Did you know @jayleno started his career making minimum wage at McDonald’s? Here are 5 things the self-made millionaire did that catapulted him to success: via @CNBCMakeIthttps://t.co/Y7ewRMHNXV
“I meet with the writers at about midnight or so and work until about 4:00 a.m.”
“I sleep four hours, maybe five.”
The way he saw it was, “if you have time to complain, you don’t have enough work to do.”
I am notorious for going to bed thinking of work and getting up to work. Sometimes I get up in the middle of the night to write down ideas about work. I work so much I barely have time to breathe.
I learned that from Pat Benatar who was a workaholic in the 80’s. But guess what? She wrote hits songs for like a decade. When there are times I need a break or pick me up while working, I’ll listen to her songs Invincible, Shadows of the Night or Love is a Battlefield.
For those who may not know or remember those songs, check out the links below. Good stuff.
Jay on failure
“You learn a tremendous amount from the mistakes.”
I have learned to fail better. It makes you stronger. It also humbles you and makes you more empathetic to others.
“I put my money in a hammock and say, ‘You relax. I’m going to go work.’ And when I come back, I put some more money in the pile.”
It’s your money. Don’t blow it.
Jay on Life
“Life is not that complicated … if you’re kind and decent, and try to be honest, it’ll probably work out. Yeah, you’ll get screwed once in a while. I certainly have, but that’s okay … don’t dwell on it.”
Pick yourself up, dust your wallet off, and get back into the grind. Don’t rest on your laurels. Put your head down and work. Stay humble and stay hungry. Generate multiple streams of income, diversify your earnings, increase your savings, and build your wealth. Get that net worth pumping in that interest faster than Arnold Schwarzenegger did lifting weights in Pumping Iron and you will start rolling in the dough!
Just FYI: Jay is worth over $300 million dollars. Has no debt. Is a self-made millionaire. And still works at the age of 68.
Although, student loans are a different financial beast, mortgage debt can be just as damaging to a family’s finances because, like student loans, bankruptcy does not absolve you from the debt. You still owe the money.
I read this article in the Washington Post several years ago entitled, “Swamped by an underwater home.” The Boatengs had no debt in 1997 and by 2006 owed over $951,000. By 2013, their debt had gone up to $1,011,176.
In Fairwood, dreams of black wealth foundered amid the mortgage meltdown https://t.co/r4w5chO2Ng When buying a home goes wrong.
When this article was published in 2015, the Boatengs had not made a mortgage payment in 6 years. It took them 10 years to go from $0 in debt to $1 million in debt. This is crippling debt. Most families in the United States will not come anywhere near this amount of debt in a lifetime, but this couple did in less than a decade. Here is their story.
HOW TO GO FROM DEBT FREE TO OWING $1M IN 10 YEARS
Comfort and Kofi Boateng won a visa lottery to come to America from Ghana in 1997. Their odyssey would not take them to where they truly wanted to be like Homer’s, but just the opposite. Instead of the American Dream they would be ensnared in an American Nightmare.
In the Ghandian culture, people pay cash for their assets including their homes. In Ghana, Comfort graduated with a degree in computer science at the University of Science and Technology in Kumasi and his wife, Kofi, received an associate’s degree.
The couple married in 1989, he was 30 and she was 26.
Wanting more opportunities, they applied online for a lottery administered by the State Department to receive a U.S. permanent resident card. If this was football, this would be considered a Hail Mary.
The reason for this is that the odds of getting chosen were slim. Per federal data, less than 5 percent of the 1 million immigrants granted permanent residency enter the United States through the lottery. But, this family beat those odds.
In July 1997, Comfort was on his way to American in a plane headed for Maryland.
On May 5, 2000, they bought their first home, a three-bedroom townhouse for $128,900 in Germantown, MD. This was after renting for several years and taking 2 of those 3 years to save for a down payment.
Even though his wife admitted she didn’t know anything about loans and houses, she was now a homeowner.
For me, this is a red flag. If you do not know about loans or homes, then why buy a home with a loan? This is a double whammy. At this point, I would urge anyone to learn about these things before doing anything else.
FROM $128,900 IN MORTGAGE DEBT TO $223,900 IN FOUR YEARS
In 2003, the Boatengs become American citizens. Comfort’s mother gets a green card to come live with them and this eliminates $300 in weekly child-care costs as they now have three children.
The Boatengs refinance their Germantown home several times to pay for home improvements and consolidate other debt. They cash out $95,000. They now owe $223,900 in mortgage debt.
Ultimately, with 6 people now living in the home, they decide they need a bigger house.
The townhouse, thanks to the booming housing market before the 2008-2009 stock market crash, their home is now worth $355,000 within only 3 years.
FROM $223,900 IN MORTGAGE DEBT TO $838,583 IN 1 YEAR
The Boatengs decided to move to from Germantown to Bowie, which is in Prince George’s county Maryland.
A home is found in a subdivision with manicured lawns, European cars, and intercom systems in a place called: Fairwood.
The neighborhood has a lot that Comfort likes because it reminds him of his dormitory back in Ghana.
At this point, he is already emotionally attached, which is a major no-no when it comes to money.
The family decides to build a house for over $600,000!
They think it will be a good investment. Their thinking was it is likely to go up in value like their Germantown home and could use the equity (more cash outs) to pay for the kid’s college educations.
I now have to call a time out! Flag on the play. I am shocked that this couple did not see the RED FLAGS here! How are you going to afford this? His wife is working as a secretary making $30,000 and he as an IT specialist making $80,000-$100,000.
They do not have the money to pay for this. This is the part in game where they are supposed to forfeit.
Alas, they continue to roll the dice with their finances. Little do they know the house is about to win.
Their real estate agent assures them it is affordable, if the refinance (yet again) the mortgage on the Germantown house — which they were going to keep (this just makes no sense, now they are going to be landlords!!!) — and cashing out the $60,000 in equity. That money will be the down payment for the Fairwood house.
Bad, bad, bad idea. They are now taking advice from a realtor.
Let me tell you something. This person is not their financial advisor, CPA, attorney, business manager, or anything. He owes this family nothing. They have signed no documents to act as a fiduciary. They are not working is this family’s best interest.
Think of it like this. A baker likes to bake. If you ask the baker, if you should buy a cake, the answer is going to be yes. A barber likes to cut. Same rules apply, if you ask a barber, if you need a haircut.
However, I digress. Let’s get back to the story.
The Boatengs receive a loan from Lehman Brothers.
I’ll offer you a little background on the Lehman Brothers. It was founded in 1850. This bank was the fourth-largest in America and was not only one of the biggest subprime mortgage lenders (that helped cause the 2008-2009 housing crash), but also became the biggest bankruptcy in American history with $600 billion in debt. It had been in business for 158 years.
Due to their income, they could only qualify for an interest-only, adjustable rate mortgage. This is the worst type of loan there is. Do not ever take out an interest-only loan.
He has a great credit score of 748, which is how they got they loan. However, credit scores only mean you are great at managing debt. Nothing more. It does not necessarily mean you have any wealth.
For the first five years, they only make interest payments, then afterwards they would be required to pay more. How much more? Nobody knows. That is why these loans are so dangerous.
The Boatengs borrow $493,600 from Lehman Brothers, at an initial loan rate of 6.1 percent. In five years, it would reset to at least 8.3 percent. Their payments go from $3,662 up to $4,336. Thinking they would be able to refinance in the future to get a better rate. This day would not come.
He would then lose his job while the home was being built.
This is the part of the story where I am like. It’s all over. The house of cards has come crashing down. The jig is up. No more easy credit access. The bill has come due. There is no free lunch. It’s over.
And what happens next?
They admit to being emotionally attached, do not tell the lender of his job loss, decide not to walk away from the $20,000 deposit and not back out of the deal.
The Boatengs get a second loan to complete the financing through their broker’s company, a 30-year fixed-rate mortgage of $61,700 at 8.5 percent. The couple paid $29,000 in closing costs and put down a total of $73,000 in cash at the closing. They move in on November 25, 2005.
They now owe $838,583. Comfort has no job or any income and the couple are drowning in debt.
FROM $838,583 IN MORTGAGE DEBT TO $951,176 OF DEBT IN LESS THAN 1 YEAR
The couple is tapped out. They have no money to furnish the home. The first payment is due on January 1, 2006.
The payment on both homes (they still own the one in Germantown) is $5,550 a month!
Shut the front door! No, I mean literally. Shut the door to that place and give the keys back to the bank. Sell it and walk away. From both properties, in my opinion. You owe the bank everything you have.
The tenant in Germantown couldn’t pay. The housing market crashed, now being underwater, they couldn’t sell.
What did they decide to do? Take out more debt. Kofi started selling Mary Kay and took out $15,000 in personal loans with Bank of America. Then another $20,00 for her Mary Kay business with a 15 percent interest rate over 10 years. She didn’t see the risk because she thought she could earn $7,000 a month with Mary Kay.
Hold the phone. What happened to being cash heavy when starting businesses? Or starting them with your savings. Businesses need capital. Why not start small and see if a business works out? Then expand. She is putting the carriage before the horse here. There is no guarantee of making $7,000!
The Boatengs now owe $951,176.
FROM $951,176 TO $1,011,176 OF DEBT IN 6 YEARS
They decide to consolidate again. Howvever, consolidation only works when you pay off what you owe.
The couple took out a $620,000 refinancing loan from Countrywide Home Loans. It was again an interest-only subprime loan, carrying a 6.29 percent interest rate and adjusting in two years (even sooner this time) instead of five. Their payment on the Fairwood house would rise to about $5,230 by November 2008. That is $62,760 a year, after tax income!
They were unable to pay the $5,000 monthly payment and tried to modify their mortgage, but were able to get relief. They owed to much to qualify for HAMP. Ain’t that a kick in the head.
The Boatengs made their last Fairwood mortgage payment on Sept. 18, 2008. They are now in default and can be foreclosed on at any time. This means not only losing their home, but any money they put into it.
By November 2011, their payments were set to go up to $6,000. The bank valued the house at $378,216. That is $238,839 less than what they paid.
During this time, his wife went back to school in 2003 and graduated in 2009. She owed $90,000 in student loan debt. She lost her job and unemployment ran out after eight months.
Comfort was mostly unemployed or not working full-time from 2005-2010.
In 2014, the family was notified by Nationstar Mortgage, their new lender, that late payments dating back from 2008 were due now: $318,611.97.
Comfort’s mother passed away in 2014 and he was still looking for full-time work.
He became so frustrated he thought: Why stay in America? Why not just go back to his country and find a job there?
Like me, their housing counselor noticed that their downfall began with the idea of buying a second home for more than $600,000!
The couple owed $$ 1,011,176.
That was 2014.
FROM $1,011,176 TO $1,371, 813 OF DEBT
By 2015, they owed $257,776 on the Germantown house, $969,037 owed on the Fairwood house, $55,000 in personal loans and still have the student loan debt (which is not dischargeable in bankruptcy). The couple who had never owned a credit card before moving to the United States now owe more than $1.3 million.
They currently earn about $100,000 a year.
It does not take a rocket scientist to know that they do not make enough to pay off these debts. They owe more than 10 times their gross income (what they make). And more than 19 times their net income (what they take home).
The interest on that type of debt is mind numbing. We are talking more than $50,000 a year in interest alone. That debt is likely to balloon to $2 million in another a decade. This will be during their golden years. They are building no wealth.
The reasoning for taking on so much debt was that the couple stated they saw that was how everything was done in America. You had to borrow to get ahead. Everything involved debt.
I want anyone out here reading this to take this away from this cautionary tale: Stay away from debt.
Don’t borrow more than you could ever afford to repay.
Do not borrow one million dollars, if you do not have $10 million in the bank.
You should have 10 times more in the bank than you owe, not owe 10 times more than you make.
That way if the bill comes due, you can pay it off in full.
At this point, borrowing money is strategic and not the only option.
Matter of fact, just pay of all your debt ASAP and owe no one a penny. NOT ONE RED CENT!
You’ve got to work to succeed. – Owner of a Lonely Heart Song and Lyrics by Yes
