Monthly Archives: October 2009

Wealth, Greed, Envy and Shame

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The title sounds a bit like a shady law firm, doesn’t it? Actually, it’s meant to convey the emotions of this post’s topic. A topic I’ve thought a lot about recently, and one that another blogger covered in a recent post, The Guilt of Wealth. It deals with the emotions of money – from the shame of being poor, to the shame of being rich, and the greed and envy we feel in between those emotions.

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Photo by ItzaFineDay

Are the rich really wrecking the planet? Or are we all guilty? Or is it just a select group who have taken advantage of our financial system to maximize personal gain? First of all, I don’t hate the rich. Wealthy people open businesses that create new jobs. They invest in new technologies that keep our economy humming along (or at least sputtering along, as it’s been here lately). Wealthy people are also often the greatest philanthropists. Bill Gates comes to mind. Think of the good that he and his wife, Melinda, have done for others through the Bill and Melinda Gates Foundation.

I recognize that some wealthy people are not quite as giving. They often stomp on the little guy on their way to the top. They are shrewd. They take no prisoners. They lay off employees to save the company’s bottom line, and fatten their wallets. It’s safe to say there are plenty of examples on both sides of the argument.

The Evolution of Shame

Just a decade or so ago being poor was a great source of shame for many families. Most subscribed to the upward mobility theory that all of us should be striving to improve our economic lot in life. Those who didn’t were deemed lazy, unintelligent, or simply not properly motivated.

Slowly but surely things began to shift. A number of corporate scandals from Enron to Bernie Madoff left a permanent black eye on corporate America. No longer was it cool to be a member of the executive level. And then the government started bailing out many of these same corporate types who bailed out with their own golden parachutes, leaving behind a mess for someone else to clean up. The American public became fed up with the corner office. But has the pendulum swung too far?

With the help of the current administration and their unprecedented use of a pay czar responsible for oversight of executive compensation, we now have much more to say about the workings of corporate America than ever before. Is that a good thing? Well, that remains to be seen. But one thing is for sure, it has definitely put a freeze on the spread of capitalism.

Jealousy vs. Envy

We have all felt that little twinge when a friend brags about their new home, or their recent promotion. But I believe there are two fundamental types of jealous people. The first group of people is happy for their friend, and even if they are a little jealous, they recognize their friend has worked hard and with the same hard work they can aspire to similar accomplishments.

The second group of people are green with envy. They can’t be happy for their friend because they are not happy with themselves. If they can’t have something, then no one should have it. There have always been members of both groups, but in the last several years it seems the population of the latter group is growing.

How Does this Affect the Act of Building Personal Wealth?

There are many people out there dealing with shame because of their success. How can they be happy with the wealth they’ve accumulated when there are so many others out there in poverty? How can they be happy living in a beautiful new home when there are others out there homeless? It’s an interesting dilemma. But what’s lost in the worry over perception is the two factors that led to your success: hard work and luck. Yes, both are required for success.

Sherry left a comment on the post I mentioned in the opening that provided a pretty good analogy for this very dilemma:

Unless you amassed your wealth by stealing it from others, I do not understand why anyone would feel guilty. Don’t accept guilt you don’t earn. If you value something (like a charity) then give to support it. I am not wealthy (yet), but am certainly doing better than some of my siblings. However, I don’t feel guilty because of that. Why would I? It’s like feeling guilty that you [make] an A on a test because you studied, but your best friend only got a C.

Some work hard all their lives, but never get that break that separates those living paycheck to paycheck from those with a seven-figure nest egg. Some acquire wealth through inheritance, through lottery winnings, or some other windfall that didn’t require a great deal of hard work.

For every Paris Hilton in the world there are fifty entrepreneurs working 14-hour days for years to become an overnight success. They invest their life savings, give up their social life, and pour 100% of their energy into building a business month after month. Occasionally, someone hits it big and they can finally breathe. They are finally able to enjoy some of their wealth – buy a new home, a newer car, take a vacation or two, etc. Should we resent them for this success? Or should we hold these people in high regard and say to ourselves, “One day I’d like to be just like that guy!”

Don’t Let the Children Dictate Your Finances!

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The following guest post was submitted by Rachel. Rachel writes about personal and family money management for an Australian credit card comparison website offering a range of cost-cutting reward credit cards that help your hard earned cash go that little bit further.

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Image via: eHow

Financial pressures are one of the top reasons for the breakdown of relationships. Faced with debts, mortgage payments, bills and keeping children fed and clothed, couples can become stressed and begin to take out their angst on each other. Worse, they can even blame each other for the pressure they’re under, or accuse the other of not pulling their weight. Before you start throwing plates at the walls and storming off to slam doors, check out our guide to getting through it together.

1. Work Together

If one of you is shouldering most of the financial pressure, eventually you’re going to blow your lid. Just because one of you might be the main breadwinner doesn’t mean you shouldn’t discuss your financial worries with your partner. Talking through financial problems will help share the burden, meaning that the breadwinner will feel less resentment towards the other partner. Equally, the other partner will not feel left in the dark about the family finances. Talking through issues together might also mean that you find a solution more quickly; after all, two heads are better than one.

2. Draw Up a Budget

It seems obvious, but often, a good solid budget is something that struggling couples overlook. Instead, many cut back randomly on this or that, without looking at the big picture to see where the biggest savings could be. So, it’s better to sit down and go over a whole month’s income and expenditure to figure out where the hole in your pocket is. Doing this together is vital for your relationship. One partner simply telling the other to stop buying brand-name baked beans or going to the pub is likely to breed resentment.

3. Make Sure You Both Treat the Kids the Same

If you are parents, it might be an idea to talk about what you both spend on the kids, and how. In most cases, parents pay for things for their children out of joint accounts with each other’s knowledge, but think about less formal spending. Does Daddy slip the kids extra pocket money? Has Mum been giving in to pleas for new toys before birthdays or Christmas in secret? This can be one of the toughest conversations of all, as nobody wants their children to go without anything, but you need to make sure you know how much you and your partner are both spending on them to keep it under control. It’s unhealthy for children when one parent says “no” to a new skateboard, whilst the other buys it for them. This will help your children appreciate the value of money much more in the long run, too.

4. Be Prepared for Career Changes

Different couples approach working and earning differently. In some relationships, one person is the main provider, in others, one person does not work at all, and sometimes both earn around the same. Be prepared for some tough conversations about work. One of you may have to find more or better-paid work. If one of you does not work, perhaps it’s time to start thinking about returning to the work force. This can be a delicate situation; if one partner has not been working for a long time period, returning to work can seem daunting. The partner in the relationship who has been the main provider might feel as though they have let the other down for not being able to keep the household afloat. It doesn’t need to be that hard, though; work through the conversation together with tact and without accusations, and you could find a way out of debt.

5. Get Some Help

Sometimes you can’t work out problems with your partner because you are both too close to the issues to see straight. If you’re struggling financially, see a financial advisor, and go together to hear advice and make decisions. Likewise with your relationship. If financial pressures are driving you apart, fixing the money issues might not fix your relationship, so seek guidance on that too. You’ll be relieved to know that hundreds of couples seek relationship guidance every day; and it can be done cheaply, too

Weekly Roundup – Great Eight Edition

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No fluff in this roundup. Here are the top eight articles I found around the web this week. Enjoy!

10 Attributes Of The Perpetually Broke. It’s true; there are some common characteristics of those who seem perpetually broke. If any of these apply to you, it might be time to change your habits. (@Money Matters)

How to Avoid Work While On Vacation. I remember a scene from the last trip we took. There we were at Dollywood outside of Gatlinburg, TN. For several minutes we kept pace with a Dad furiously checking his BlackBerry while his kids moved from ride to ride, begging him to watch. Sad. (@Brip Blap)

How to Retire Early. This post mentions the idea that a big salary early on can help you retire even faster, assuming you hold expenses low. Of course, a big salary often comes with big headaches, and it might burn you out long before early retirement. (@Free Money Finance)

Credit Cards – Close ‘em Shred ‘em & Forget ‘em! Earlier in the week we debated what to do with unused credit cards. Looks like Jabs knows exactly what to do with them! (@Debt Free Adventure)

Painting a Specific Future – And Figuring Out How to Get There. Some inspiring thoughts from Trent on laying out future goal with actionable steps and a time line to accomplish them. (@The Simple Dollar)

How to Improve Your Credit Score When Paying Down Debt. Continuing the theme of paying down debt, here are a few ways to boost your credit score while reducing your debt balances. (@No Debt Plan)

How to Stop Buying Clothes You Never Wear. I like to think my wardrobe represents that of the typical male. I own a couple pairs of jeans, a pair of brown, black and tennis shoes, and exactly one suit. The rest of my wardrobe is dedicated to work clothes – the usual business casual garb. (@Get Rich Slowly)

With or Without Interest – Do You Know What You Paid. A great reminder to always figure the interest when calculating the total cost of something financed. We tend to forget about that when quoting costs. (@Mrs Micah)

The Entrepreneur Fund: One Year of Projected Expenses

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As debt freedom moves closer to reality in the Frugal household, my dreams have again turned to the idea of venturing out on my own. I’ve been fortunate to enjoy some growth around here these last couple years, and my combined earnings from all freelancing ventures are enough to support us comfortably once we are debt free.

Most of you know that I’m a pretty conservative guy. Let me say it another way – I hate risk! The idea of becoming an entrepreneur is exhilarating and terrifying at the same time. But it is something I have wanted to try since the very earliest moments of my career. Until now it has been a pipe dream.

To overcome my fear of crashing and burning, and taking my family down with me, I’ve decided to implement a couple actionable steps that should provide an adequate safety net, both for my household, and my business.

Building an Entrepreneur Fund

1. Take an inventory of all household expenses. Make a master list of all household expenses using last month’s records. Apply no filtering here; just list.

2. Develop a projected household budget after leaving the workplace. When I turn in my notice, a few things will change around our household, financially. Some “employment” expenses will go away or be lessened (gasoline, clothes, meals out, etc.). Other expenses will increase (self employed health insurance, etc.). Get quotes on things like health insurance and office space rentals now, and factor those new expenses into your projected budget.

3. Save one year of projected expenses in an “Entrepreneur Fund.” Think of it as an emergency fund for your business. Worst case scenario – my idea completely flops after six months and I have to hit the pavement looking for work. In that case, a year of expenses in the bank would make me much less desperate!

Since I included a few self employment expenses in the mix, I recognize those go away if I give up the entrepreneurial endeavor. For instance, the expense of leasing office space eventually dies off with the end of a lease or rental agreement. Self employed health insurance stays around until I’m working again.

*From this point forward, the steps are highly individualized for my situation. Maybe it could work for you, too, or maybe not. Do what works best for your circumstances.

4. Move Entrepreneur Fund to an online savings account and schedule a biweekly draw to your personal checking account equivalent to half of monthly household budget. My income as a freelancer is somewhat erratic. There are a few forms of ad income that hold steady each month, but nothing is a sure thing.

To offset the peaks and valleys, I plan to “pay” myself the same amount from the Entrepreneur Fund every two weeks, just as if I was receiving a paycheck from my employer.

5. Transfer monthly profits from my business account to Entrepreneur Fund. At the end of the month, I will make two transfers to online savings – one to my self employment tax sinking fund from where quarterly estimated tax payments are made, and the second to transfer profits to my Entrepreneur Fund.

During months where earnings are high, I’ll be replenishing more than I’m spending. At the end of the year I’ll plan to do a re-balancing of my account taking the balance back down to 12 months of household and business expenses. The excess profits will be invested as profit sharing via a self employed retirement account.

In lean times, the Entrepreneur Fund will allow us to continue to receive the same draw in the form of a paycheck. In other words, temporary downturns will not affect your household. Of course, long-term downturns could be problematic as my Entrepreneur Fund balance slowly drains. Without cutting expenses, or turning around earnings, I’d be looking for other sources of income and fast, but at least I’d have a few months as backup.

If you are like me and have always dreamed of becoming an entrepreneur, I hope you will consider building a healthy Entrepreneur Fund before taking the leap. I believe many more businesses could stay afloat if they had a stronger cash position early on to survive that first inevitable income dip. Without savings, business owners are often forced to turn to borrowing to pay expenses, make payroll, etc. The debt creates yet another expense, and without a quick turnaround, only speeds up the demise of the fledgling business.

Punch Life In The Face

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The following guest post is from Steven Severson of HundredGoals.com. After reading his post, please visit his site and consider signing up to receive his free content.

Disclaimer: I am not writing this article as a way to insult people or imply that I am somehow superior to them. I am writing this as a way to share my life journey in hopes of inspiring people to accomplish their own goals. Am I better than anyone else for the things I have done in my life? No. That is not what this is about. It is about making changes in order to become the person you hope to be. It is about being proactive in your life to make those changes possible.

When the going gets tough, the tough get…no, that’s not reality. In reality, when things get hard people quit. They give up. Instead of breaking a sweat, shedding a tear or losing a little blood they take the easy route and do nothing. It is easier to accept defeat & tell yourself that it is too hard, that you aren’t smart enough, you aren’t pretty enough, strong enough. For every inaction we find an excuse that will suit our situation. Hell, we may even convince ourselves.

It is time to stop making excuses. It is time to quit being a quitter. It is time to get off your ass and do something with your life. Yes, you might struggle. You might feel pain. You may even cry but if you don’t do something with your life why are you even here? It is time to start living. It is time to stand up and punch life in the face.

Too often we accept our lives the way they are, even if we aren’t happy with them. We are miserable at work, our relationship with our spouse sucks, our kids hate us, we waste our time doing absolutely nothing. Our joy in life is derived from a bottle; we can’t even relax without a glass of wine to settle ourselves. This is our life and it sucks.

When I was 16 years old I was a loser. My life was consumed with drugs and alcohol. If I wasn’t high or drunk I was in the process of getting there. Two days after I turned 18 I was arrested. I had just gotten high a few minutes before being handcuffed & taken to jail. I spent that night in my cell thinking about where my life had gone wrong and how I was going to change it.

I realized that I was screwing up my life. It wasn’t only the drugs and alcohol that were the problem. I was wasting my time. I couldn’t turn the clock back and recapture those years. They were gone and there was no getting them back.

In order to change my life I had to turn my back on everything and everyone. This was hard for me. It meant losing friends. It meant making major changes in my life. I had created a lifestyle for myself and people expected me to be that person. For a while I struggled to get sober. I didn’t want to disappoint my friends when they wanted to get high with me. Eventually I came to realize that I needed to change my life for me and not live my life as a consequence of other people.

Once I figured this out I made the changes I needed. I quit drinking and doing drugs entirely. I have been clean for almost 9 years.

What does all of this have to do with you? Maybe you don’t drink or get high but I have no doubt that you are wasting your life with things that are just as stupid; video games, television, Internet, gambling, celebrities, work…anything that takes time away from the person you want to become deep down inside.

It is so much easier to do nothing than to do something. If I hadn’t been arrested and had the time to sober up and reflect on where my life had come and where I was going maybe I wouldn’t have changed. I wouldn’t have traveled around the country and now the world. I would probably still be sitting in my bedroom taking hits from my bong and eating Milk Duds watching the world move around me.

Get off your ass and grab life by the balls. Do something that you’ve always wanted to do but have told yourself you “couldn’t,” for whatever reason. Stop lying to yourself. Life will go on with or without you. Just remember that you can never make up for lost time. Never.

Note from Frugal Dad: One of the greatest things about blogging is forming friendships with other bloggers like Steven who have overcome so much to lead successful lives. For me, their stories are an inspiration, and a reminder that none of us have to be victims of our circumstances.