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April 2014 Newsletter: Money Adds Up and Suggestions for Preserving Wealth
April 30, 2014
Hello to all my frugal friends:

I just returned from a fishing trip to Texas where the fish are just starting to bite real well. It was warm and humid and still down there, and now I'm facing climate shock with cold, wind and snow in Wyoming. So be it.

On previous trips I've hauled in some large fish, including this 20 pound carp I'm shown holding in the photo above. My brother was just about as proud as the fisherman who caught it. Being the self-reliant individual that I am, I fixed it fried and smoked, and I'm here to tell you that smoked carp can be excellent if you clean it and soak it right, and know how to smoke it. As with many other things, I'm learning as I go.

My fishing trip isn't just about fish, it's also about family. When I was a kid I enjoyed spending time at my grandparent's cottage in southeastern Michigan. My brother and I never dreamed we'd be hauling off to northeast Texas for great fishing, but we do it at least once a year because the fishing is so tremendous. I always dreamed of having a place on a small lake, and I made the dream come true by working hard, saving up my money, and making good decisions when spending it. Dreams may be mostly imaginary, but if we're going to make them happen, the work and focus will be quite real...and well worth the effort.

The nice thing is that this dream come true is also shared with my family. It gives my mother, brother, sister and nephew a nice place to go for family gatherings. It's a way for me to practice what I believe in...everything of value has much more value when shared with others.
So, let's get to sharing some information which I believe has value.

This month I'm providing you with two articles that you won't find on the site. As promised, the first article discusses an old adage, "It adds up." It's a saying that a friend of mine is fond of. As you'll see, both savings and debt can add up, so we need to pay attention if we're to keep our personal finances pointed in the right direction.

The second article is #3 in roughly a 40-part series on economic and financial preparedness. In this article, I want to introduce the second of three main ideas for being better prepared from an economic and financial standpoint: preserving our wealth. The next article in the series will discuss making good use of our wealth, and after that we'll start examining details of the three main areas of: creating wealth, preserving it, and making good use of it.

Let's jump in.

It Adds Up – Financial Adages Help Us Learn from Others

by Clair A. Schwan

I have a friend who likes to say, “It adds up.” He says this when he’s referring to saving a little money here and there. Well, of course it adds up, and when we’re saving money, it seems to take forever to amount to anything appreciable. But, that’s not the case when it comes to spending money, especially when we’re buying things with a credit card.

Whereas our savings grows at a speed equivalent to grass growing in the front yard, the credit card bill seems to multiply faster than rabbits. Why is that? The answer is found, in part, in another adage we’re all familiar with – a watched pot never boils.

Just take a look at your credit card statement and go through the list of purchases. They’re probably not big purchases – a meal here and there, a couple of things at the auto parts store, several small items from the grocery store, a purchase at the home improvement store, and a couple of items from the office supply store. Nothing extravagant, no attempt to buy happiness, and for the most part, all of those purchases were based on need – they weren’t purely discretionary purchases.

The problem is that you’re staring at a $2,754 credit card bill, and you’re wondering how in the world it got to be so high. There must be a mistake. No, the answer is simple, it adds up.

You see, you’re watching your savings grow, and that’s why “the pot” never seems to boil. It’s also because there is only so much you can “shave off the top” and put away in savings. On the other hand, what we spend on credit cards is out of sight and therefore out of mind. It’s the pot we don’t watch, so you can be sure it’s going to boil over. And, the money available to spend always far exceeds what’s available to save, thus making it especially easy for the pot to boil over.

There are some simple techniques we can use to better our situation. Try these:

  • Log credit card purchases in your checking account, and keep your checkbook register current. It will show you just how much and how fast you’re depleting the money you have.
  • Pay cash for most everything. That’s one sure way to see money heading out the door.
  • Reassess how you determine need vs want. Much of what we think we need is really a desire wrapped up in a disguise of our own creation.
  • Find other, cheaper ways to satisfy your interest in buying things. Garage sales are great for that. You can satisfy your interest in shopping, and when you find a purchase, it’ll probably be at a 75% discount or better. Quite often there will be a box marked “free” and that’s always a good price.
  • Busy yourself with activities that make money instead of allowing yourself more time to spend money. That’s a double-edged sword in your favor – less time for spending, and more time dedicated to earning.
  • Make a game of it. Challenge yourself to resist spending, and set some realistic goals. Do the same with savings. Then, after a goal is reached, reward yourself in a frugal way. Sometimes your reward comes simply from seeing a tiny monthly credit card balance and a much larger pile of savings.

  • Get a suitable financial mentor lined up and make use of their skills and experience and attitude. Try out their suggestions to see how they can work for you.

Many of us out there have a difficult time handling credit, and for those individuals, a credit card is probably the wrong financial tool to have handy. Nevertheless, we all need to learn how to manage our credit more effectively. I say this because changes in the marketplace strongly suggest that we’re headed in the direction of credit and debit cards being a necessity – some establishments don’t accept cash because it’s an attraction to criminals, and many places don’t accept checks because of a different type of criminal activity.

No matter what payment or savings mechanism you prefer to use, it adds up, and it always will. It’s up to us as individuals to determine how best to make that financial fact of life work in our favor.

Economic and Financial Preparedness – Preserving Wealth, The Second Step

by Clair A. Schwan

In my mind, the second step to economic and financial preparedness is preserving wealth. It can also be viewed as conservation of wealth, much like conservation of energy. The idea is now that you’ve created wealth, in various forms, you’ll want to protect it from many factors that can rob it from you, including your own poor decision making, the strong arm of the government, and others who would like to persuade you to part with your earnings.

There is an old saying, “A fool and his money are soon parted.” It’s very true, so we’re here to see how we might be a good steward of our wealth, more informed about how to manage it, and far less foolish with it.

Let’s keep in mind that wealth can take many forms other than a pile of money. In my mind, wealth is usually something other than a stack of cash. Remember, when you have a pile of money, you really only have paper or numbers in an account. Until you exchange your money for something else, it’s questionable whether you can really say that you have any wealth at all, at least not tangible wealth.

Preserving Wealth

According to my play book, the second step in being financially prepared is to behave in a manner that preserves the wealth you’ve created. If you don’t, you’ll simply be treading financial water. Here are some ideas, presented in order of priority, that I think can help you keep your head well above the water line:

  • Provide reasonable safeguards and insurance for the various assets you have, financial and otherwise. Minimizing risk of loss seems to be a reasonable thing to do once you have some wealth accumulated. I consider diversification to be a type of safeguard for your investments.

  • Adopt a frugal living lifestyle – perhaps the best way to preserve wealth is to avoid squandering it. Frugal living is the other half of the equation when it comes to building wealth (earn more and spend less).

  • Avoid bad influences – there are many bad influences all around us that we might be best off simply avoiding. Whether it’s advertising, American popular culture, an irresponsible friend or neighbor, or something else that sets an example of acceptance when it comes to financial irresponsibility, it’s best to avoid immersing ourselves in this type of culture and thinking, lest we lose sight of our own goals and interest in personal achievement.

  • Be wary and guard against scams – there is no limit to the number of scams that one might encounter. We need to stay on our toes with respect to those who have their eyes on “our stack.” For many out there, it’s their job to con others out of their hard earned money.

  • Build a team of helpers and example setters – if you can get a little help and advice, you can save money when it comes to building, fabricating and maintaining things. A team can also be a good sounding board and serve as a resource of ideas for you to consider, whether you’re trying to make money, save money, or put it to better use. A trusted team will also be a source of good examples of thinking and behavior that lead to higher achievement.

  • Minimize taxation – one characteristic of government is that it represents a consumer of wealth, and it’s your wealth they aim to consume. We can avoid excessive and unnecessary taxation by being a better player of the tax game, and by relocating to places that don’t have sales tax, income tax, corporate tax, inventory tax and the like.

  • Buy precious metals – for thousands of years, wealth has been measured by precious metals, and even today they’re still used as a medium for storing wealth. In addition to traditional gold and silver coins and bars, precious metals commonly traded today include platinum and palladium. When there is uncertainty in paper currency and other paper-based investments, one usually sees an increase in the price of physical wealth like precious metals; their value is intrinsic, as they’re worth something because of what they are.

We see many and varied ways of preserving the wealth that we might create. It’s the second leg of the financial and economic milking stool, for if we don’t preserve our wealth, we’ll have no substantial resource with which to invest or otherwise convert into things we enjoy.

Next Up

In the next article on economic and financial preparedness, let’s look at how we might put our wealth to good use. It is in this arena that I think we’ll find the greater emphasis on economic and financial preparedness. It’s really where the rubber meets the road. If we’ve done a good job creating and preserving our wealth, then we’ll have the opportunity to put it to good use.

Next Month

I'll continue to provide more articles that I think are of interest to those with a frugal mindset, and at least one of the articles will be a continuation in the economic and financial preparedness series.

Next month, I'm planning to provide an article about the idea of "Stop spending money." It's odd when you learn what some people think "stop" means. I'll also provide the fourth article in the economic and financial preparedness series that focuses on the third leg of the financial milking stool: making good use of your wealth.

Thanks for being along for the ride here at Frugal Living Freedom. It is my hope that you enjoy the articles in the newsletter, learn something new and have an opportunity to make good use of the information. Again, when we share something of value, it helps increase the value of what we have.

I wish you all the best,


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