PAY YOURSELF FIRST BOOK PDF
Pay Yourself First Action Plan If you have paid off a loan, keep making the monthly payments to yourself. .. download used books and reduce the use of supplies . 7. Pay Yourself First. Use this tip sheet to help you in the process of setting and reaching your personal savings goals. This tip sheet covers the following topics. The Pay Yourself First module helps students identify ways they can save money and introduces download used books and reduce the use of supplies. 7. Learn to.
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Pay Yourself First y. P t fth. • Put some of the money from your. h k i paycheck in a savings account. • Save before paying bills. 5. And if you do, do you pay yourself first 10% of your gross income? ❑ Yes ❑ No My Grandma Rose Bach passed away in , right before my first book. One tip for saving is to pay yourself first by making a. “savings bill” part of your budget. When you pay your other bills, pay your savings bill, too. Just deposit the.
When growing up my dad taught me how to save but little else when it came to budgets and bills. So when I got married I had to learn all about living on a paycheck with rent and other bills. I had long since then forgotten how to save. Now I am slowly getting back into saving again. You may find it is a good place to start. My wife and I were feeling down about all the bills that were coming our way this summer including holidays I should add till I realized just a year ago the whole thing would have been financed with credit cards.
And bravo to the poster who mentioned rule. At any rate, certainly some people do consider borrowing a moral issue or a values judgment. I believe morals and values survive and are passed from one generation to another in large part because they mostly work. I personally look on borrowing as a simple financial decision, as do you. The amount of interest one must pay on an item is not fixed, it is random, depending on interest rates and your ability to make payments. As such, the comparison to a more expensive version is not an effective one.
You also are discounting the very real negative effects that happen to the person who declares bankruptcy, including the loss of all those lines of credit. As for houses, renting something, such as shelter, on a permanent basis is an even poorer financial decision than downloading on credit. This is particularly true when that something does not depreciate in value easily, and generally appreciates in value. Borrowing for education puts you in a safer position in terms of future risks, not a more precarious one.
Unless you are a guitar teacher or a professional golf player, your examples are exempt from such considerations.
So you see, my examples are not values judgments at all, but financial ones. Your examples are the ones to reflect values judgments. Young people — and all of us — should be living with a mind to the notion that we might need some money at some point in the future more than we need all of the money we have today.
It acknowledges that tomorrow you might need some of what you have today. Pay your bills. Then download your guitar or what have you. Another way I have started saving is by downloading things ahead of time…when they are on sale. I download towels, wash clothes, bed sheets etc and keep them. However this does take some skill and afterthought for you can end downloading too much too and waste money.
You need to know alitle of product branding and pricing. Apart from this you need to check stores frequently to know what their sales are and how you can save. What we do is to 1 max out ks 2 a certain chunk to emergency account savings each month 3 and then we have various other savings goals.
Sam and me short term fun savings goal or a new couch again the old couch is just fine but I want a new one, so I count this as fun. So Mr. Instead we put aside vacation money each month and once we have a vacation scheduled we create a rough budget and put aside more money each month to cover the budget. I posted about my Memorial Day trip on a budget on my blog if anyone is interested not that its rocket science.
Which is one of the roles of credit. Borrowing is one way of maintaining a ready cash reserve. Its foolish to deny your kids a trip to Disney World so that you can take your grandkids. No one is arguing that people should overextend themselves on credit and end up struggling financially.
They should responsibly use their capacity to borrow to make their lives better. And responsibly means staying within your financial ability to make payments. I like this advice. At the end of my month, whatever is left in the discretionary budget goes into savings. I love the idea of paying yourself first, but how can you possibly do that if you make less than you spend?
After all of my recurring bills mortgage, utilities, car payment, etc. I still need to download groceries, gas, and anything else that pops up.
So, basically I go in to debt on how much groceries I download and how much gas I put in to my car.
How can I pay myself first? I will go in to debt even further each month doing that. But you apparently have missed the point. Whether you use credit and pay it back or save it in the first place is irrelevant. And even more foolish to deny your kids a good education so you can take them to Disney World.
You mean if you use your savings to go to Disney World? Or if you refuse to take on debt for their education? Again the issue is spending money wisely, not whether it is borrowed or saved.
My point was that not spending money now so that you will have it to spend in the future makes no sense unless you think you will have better things to spend it on in the future than you do today. If you are a guitar player and downloading a guitar on credit can lead to future income, then that is probably not a bad idea. I think that using credit or loans to acquire necessities is using credit responsibly. Using credit for daily expenses and frivolities can only be done responsibly if you have a plan to pay that loan back quickly hopefully within a month.
And by responsible, I mean being responsible to yourself.
Might as well pay in the lower tax bracket today. Nobody said it was. The guitar may have more value to some people than getting rich. If you are running up big bar tabs every weekend, its probably a poor use of resources whether you pay cash or use credit.
Irresponsible to who? Certainly not your dead self. And, presumably, the business people who loaned you money factored that possibility into the price of your credit. Why should you feel responsible to them?
If you are talking about loans from friends and family I would agree with you. Great website. Since my parents refused to help me, I had no choice but to get two jobs during the school year and work like crazy to pay it off.
I just wish that more young people would take the time out to educate themselves about personal finance. What about the chance of getting caught you say? Alright, well then how about the waiter at the restaurant? He factors the possibility of patrons who do not tip into his decision to wait tables. So of course you leave no tip. Is this your personal philosophy, Ross? Is this your sense of responsibility?
These are empty arguments for all but a selfish few. Your suggestions in general seem to be predicated upon a certain philosophy that not many people share with you.
If people cannot agree upon the axioms or initial assumptions in an argument, then there can be no persuasion, or even constructive discussion. The business has already fulfilled their responsibility to you when they provided the item or the money loan to download the item. However, we pay ourselves last… but that is because our budget is setup so where we have significant cash flow at the end of every month. It gives us the flexibility we need during the month in specific categories gas if we go on a trip, eating out if we have an extra church event, etc.
My bad. I have no problem making moral judgments if you are clear that is what they are. But that was my point, credit or cash wasting money is a bad idea. All of those are illegal. But there is no legal obligation to pay off debts before you die. And there is no moral obligation either.
If the lender wants assurance of getting paid, they should take out insurance. That is what it is for. Part of the current fad for creating the notion that there is some further moral responsibility for commercially obtained debt is the fear that customers will start treating the transaction as a business deal, the same way the business does.
The business entered into a contract where they expect to make money. It was a business transaction. You have legal responsibilities as a result. You have no moral responsibility beyond that any more than the business does. Because their liability is limited by law to their investment. Anyone think they have moral responsibility to assume liability beyond that?
I think you can make a better case for that than for the poor smuck who is under water on his house has an obligation to go down with the ship instead of handing the keys to the investors who bought his loan. He serves food with the assumption people will leave a tip if he performs his service satisfactorily. That is part of the deal. Its a social obligation like leaving money in the collection plate on Sunday. These are not business contracts.
I think the argument that you should feel a similar social obligation to faceless investors who bought your credit is plain silly. In fact, he serves food with this assumption only about most people. Anybody with the slightest experience in the restaurant business knows that there are people who will stiff the server on their tip even if the service is performed satisfactorily. Insurance is not magic. Insurance does not remove expected cost, it only removes the related uncertainty of it.
When you harm a business, you harm the investors, employees, and customers through your actions. The harm is spread out to the degree where perhaps nobody notices the effect individually, but the cumulative effects are not trivial.
Hard to put in to practice, but it pays dividends when it becomes a habit. Unfortunately, there tends to be more month left over than paycheck remaining, but by placing a certain percentage or dollar amount aside, one will always have money for those surprise bills.
I tried for years to save after my bills were paid, but that never seemed to work.
I think the importance of paying yourself first, is that it helps establish a good habit which will be needed once the high-interest loans are paid off. This will help fill the void of no payment. After all, as Ben Franklin ,I believe, said: A penny save is a penny earned.
Good luck for the folks who are embarking on this lifestyle! I agree with Ross and the need to pay yourself first. Its hard to see how personal finance is different from a real business. Since the objective of a business is to make money in the long term. To make money you need money. Since money is not in the mattress in the bedroom, therefore it has to be borrowed.
Borrowing money to invest in education, a new house, a business venture is the key to economic progress. They need to ask themselves, does this download actually pay for itself in the long run? How will it improve the quality of my life, will I be able to make more money off it? Of course food and electricity will also qualify since food is needed to stay alive, work and make more money.
That way if a person invests in education, then the payoff 5 years down the line would be substantially more. Or he could invest in a guitar and stave off loneliness or reduce stress. Now that would reduce the chances of suicide or improve her chances of social interaction and therefore make her more likely to save money on depression medication.
There is a whole branch of accounting that deals with putting a dollar value on such things. However any real business would not take on credit card debt for the simple reason that the interest rate is astronomical.
Credit card debt has a very high interest rate. No business on the planet would raise money at that rate for any duration more then 2 months. But most business would jump at a interest free loan of substantial amounts for a fixed amount of time.
So sensible borrowing is the basis of economic growth. If a car or a set of golf accessories enables you to increase your earning potential then its a good investment. However you need to run the numbers before saying its a good investment.
However people are not businesses. They are creatures of impulse and emotion. There, now it is out of my system. I feel happy…hmmmm…. Maybe I need to get out more. They bought very risky investments where the borrower paid a stiff premium in higher interest to offset that risk. In essence the borrower paid extra as insurance against the possibility of default. That depends on what return they could get from the money and whether they had alternatives available at a lower rate.
It is the same for anyone. Using credit is more expensive than using cash, it makes whatever you download more expensive. And that needs to be figured into the decision of whether to download on credit. But there is no intrinsic moral superiority to using cash.
Its just a downloading decision, like whether to download the more expensive brand of toilet paper. That also works for grocery shopping whether biking or walking. Its amazing how focused you can be when you are limited to one shopping bag full of groceries. You have to control your impulses.
In part this is because of a difference in starting principles, specifically some rather fundamental ethical ideas about being honest and fulfilling obligations made. I cannot say this with certainty, however, as I do not know precisely what all the fundamental assumptions would be. As the primary cause of your disagreement with almost all of the other commenters, myself included, seems to stem from a difference in first principles, I think we must simply agree to disagree.
If you are looking for places to promote your ideas about the liberal use of consumer credit, I would venture to say that this blog is probably not the most receptive or appropriate venue. Then why did you say this? I think you are being fundamentally dishonest.
You want people to continue make decisions about how they handle their money emotionally. I would venture to say that this blog is probably not the most receptive or appropriate venue.
Credit or cash are morally neutral. The choice of which to use is practical, not moral or ethical. Credit is more expensive than cash. It is in limited supply, just like cash. Its the decisions about what you download, not how you pay for it, that is important.
But then, we obviously have some different ideas about those values. I am a person. I am not conducting my personal affairs as if I were a business. I do not see the reason for converting my way of thinking to see myself differently.
We are not corporations. We are people. What is your problem with this whole concept anyway? What is it you find so objectionable about the very simple concept of saving a portion of your money every month? Why is embracing that idea so vilely based in emotion that you have to keep hammering at people in this blog? Just understand that if you make your money decisions based on emotion they are often going to be bad financial and business decisions.
Corporations are run by people too. Young people starting out should be far more concerned with making sure they spend money on things that will help establish them in life, than accumulating a bank account. And since their earning power is likely to increase, they ought to make responsible use of credit to accomplish those things.
That devolved into a discussion of the appropriate use of credit. And, in general if you are young, you ought to leverage your limited finances by borrowing for a download and using the money you would have saved to pay off the loan rather than saving for a later download. Ross, I have made no attempt to deceive people about what you said. The entire thread of conversation is contained right here on this comments section, and anyone reading it can very easily see for themselves exactly what you said, and make their own judgments about whether my responses are fair.
At any rate, your accusation of my alleged unfair representation is immediately followed by a string of your characterizations of my position which are at least as exaggerated and baseless as you claim my characterization is of yours. You have said that you have a social obligation to tip a waiter or leave money in a collection plate, but that you have no such obligation when a business is involved, and you back that up with a statement about faceless investors.
In my mind, this says that your system of ethics treats businesses differently because they are not people, or because a business contract is involved instead of an unwritten understanding between one person and another. Finally, the word liberal is entirely subjective and contextual. In the context of this blog and the readers thereof, your position on the use of consumer credit falls well within the range of the term liberal, and I stand by that comment.
I am sorry that you seem to be taking this personally and on an emotional level. If you thought, however, that your ideas would not come under criticism on this blog, then you perhaps need to familiarize yourself a bit better on what this blog is about. Instead of addressing the specific examples I provided you just repeat your belief that it is unethical to leave unpaid debts at death. Frankly, I think either proposition is preposterous. These are business relationships governed by law, not ethical discussions.
You both signed a contract that spelled out exactly what your obligations to one another were under the applicable laws. You want to put the additional burden on the borrower of some unstated moral obligation. And the reason that is problematic ought to be obvious.
For me, however, defaulting on a loan is. You clearly take a different view. I am afraid to say more, lest you accuse me of misrepresenting you yet again. Which law is it exactly that you have read that states that your death will relieve your obligation to pay your debts? The moral obligation some of us keep referring to is the promise that a person makes when they borrow money. When you take out a loan, you are promising to abide by the terms of the contract and repay the loan.
They kept their end of the deal, you need to do the same. What you are ignoring here is the variable of risk. While most of the time income increases as we get older, you never know what is going to happen. What if they become injured or disabled and are unable to work? They still have the debt.
I guess in your world it OK to just keep the stuff you bought and not pay what you owe. The business can just raise prices and the rest of us can pay for it. The post was about individuals saving a portion of their income on a regular basis as a matter of personal finance. DO NOT tell me what to understand. You have no authority to try and educate me. You do not know the extent to which I make decisions based on emotion and furthermore you oddly seem to equate emotionless decisionmaking with business decisions.
You also are not nearly as successful in walling off your emotions from your decisionmaking as you think you are. I do not know why you keep dragging corporations into this. Corporations have a vast complex of legal obligations to fulfill. Personal finance is usually much simpler, unless you are rich or have complex investments. Your basic assertion that in the face of a huge debt load it makes more sense to pay debt than emphasize savings is a sound one.
Not everybody reading this blog is a young person, starting out, with more bills than money at the end of the month. We still need to save and pay down debt. You have no authority to do so. You are free to ignore that particular piece of advice — at your peril.
That is who holds most of the debt people owe, unless they have sold it off to individual investors. It was a specific statement about who that advice does not apply to. In the world I live in, the owners of corporations are not responsible for paying off its debts to you. In the world I and you live in, I pay a rate of interest that includes the assessed risk that I will be unable to pay off the loan. In the world I live in, my obligations are spelled out in a contract and subject to applicable laws.
Yes I am. If I am wrong, at worst they go bankrupt. If you are wrong they waste their life by failing to invest in it. All choices have risk. There are plenty of other ways young people can use money that are equally valuable. Neither do I. Your end of the deal is spelled out in the contract and by law, as is theirs. I believe I have a moral obligation to repay debt that I owe to anyone or any organization, regardless of their status as individual or corporation.
Afterall, what about all those poor investors who loaned your company money. The vendors whose bills are unpaid? It seems to me you are inventing a personal moral obligation where there is none. And if you borrow from friends and family it still is. But that is not the case with credit cards.
These are entirely legal relationships that are spelled out as such. But it certainly serves lenders to have people feel some obligation beyond those spelled out in the contract. Just to put this in perspective. Heh, JD, thanks a lot! To Ross, et al: How many hours have you wasted? Turn those hours into dollars… then put them in a savings account! Ding, instant millionaire! That was one of the points I tried to make to you. My death would not eliminate the responsibility to pay my debt.
It is what I agreed to, and it is the right thing to do. This is why I would not encourage a young person to go into debt for a freaking guitar. This is why we have a credit crisis and record numbers of home foreclosures and bankruptcy filings, everybody has to have it NOW. Maybe we should make shareholders and the overpaid CEO and Board of Directors responsible for a bankrupt corporations outstanding debt.
Your expectations have nothing to do with it. You are dead. Why should they pay for yours?
pay yourself first.pdf - Page|12 A1 PayYourselfFirst
The answer, of course, is that you had a legal contract that used your house to secure the loan — whatever purpose you used the money for. In other words, the bank has NO moral right to your house, but they have a clear legal right to foreclose and they are going to use it regardless of the consequences to your innocent wife and children.
But in fact, you made no such agreement. You signed a legal contract that under the law included the possibility that you would go bankrupt. And that possibility was figured into the interest rate you paid.
In essence, you have paid for insurance and are refusing to use it.
The lender can turn around and sell the loan for a higher price because it is insured, making a handy profit financed by the sucker who took out the insurance. Saving money, and paying yourself first is very, very important. They are basically living paycheck to paycheck, to paycheck, or on large amounts of credit, that will take years to pay off.
Wealthy people usually, but not in all cases try not to show their wealth. They live in modest mid-sized homes, drive modest older model cars, and dress down for the most part.
Having a good sum of money in the bank, is what really will raise our confidence, self image, self esteem. People who have assets and large amounts of money, think different than people who are poor.
The mindset is different. Having a rich, wealthy mindset is very important. Just imagine how it would feel to work two jobs, slaving away everyday, like a robot, but have no or little money in the bank. Thats a horrible feeling. What is the point of working two jobs. I was like this at one time in my life, but than i learned how to pay myself first, save with discipline every month, let compound interest work for me, learned how to develop passive income from my savings, developed more streams of income, and I have to say that I feel damm good.
I not rich, but comfortable. And if you saw me in the street, you would probably judge me to be struggling, by the car i drive, and how I dress. So my friends save something every month, and discipline your mind. Let time work for you. Thanks, JD, this is great advice. Next year my wife and I are moving and we will both be getting new jobs. Hers will come with a substantial pay rise. Our plan is to have a large percentage of that rise automatically taken out of her pay and put it into retirement savings.
It is a dramatic shift in thinking that starts you on the path of creating personal weath. I finally realized that I was giving all of my paycheck away to the restaurants, the shops, the banker and my landlord. This little amount quickly turns into a large amount as time ticks on! Switch to cash to download everything and make a rule that you can only use 20 dollar bills!
Once a 20 is broken, the change goes to the bank. You will still spend all of your 20s, but you will now have some left over. Luckily for me I already have the right mindset! I learned really quick from one year of being in debt. I realized I was going nowhere, and concentrated on crushing my debt and saving money for a house. After downloading my house I plan on never using credit again! I love finances and I love saving money!!!! It is truely empowering and just gets you into a snowball effect towards real wealth!
I recently learned a lesson about saving money from pay raises. However, as a result of the economic downturn, my employer stopped all raises for this year, and likely next year as well. When I was working, most of my raises were relatively small anyway. I was better off putting that into my retirement savings so I could reap the benefits down the road. Like you said, getting started is the toughest part.
Paying yourself first also helps you to be more adaptable. If you are nearing the end of the month and you are running out of money, you will find a way to cut expenses or generate more income. We pay ourselves first via the K at work so we never see that money in our pay check and then we pay ourselves first again by directing money to both long term and short term savings goals via auto transfer to ING. Typically people will try to save whatever is left over after their normal spending which means the saving aspect is the lowest priority.
Putting it first just makes it a higher priority. The PF blogsphere is slowly becoming useless with every blogger peddling the same advice. This past year my husband had a bit of luck with his business and we were able to save some the additional income that came in. At least this month I set aside a small amount.
Love Yourself, Pay Yourself First
But it is surprising how quickly even a small monthly set-aside adds up. You also can increase contributions by putting the amount of loan payments into savings as you pay off debt. Truth to tell, the only way to build credible wealth by paying yourself is to earn more money. What really goosed my savings was getting a second job and putting all the net income from it directly into savings.
The hardest part I have on my savings strategy is making sure I can do the contributions to the Long Term Savings plan and I occasionally faulter, having to skip a month about once a year.
I dont want to live like a hermit afterall! Saving through a k is a really painless way to do it. Even for low-income earners. Anyone who has access to a k should open one for themselves. I totally agree with this as a tenet for personal finance. I would be wary of some of the numbers used by Bach though. Rather the problem is how that increase in spending is financed—mainly through a salary. One exercise I like to ask people to do is to list out every expense they have in one column and then their income in another.
Then I ask them to cover the income column. They are poor when it comes to financial intelligence. Cut expenses? Cutting expenses is what the poor do. The rich do not cut expenses. The key is that they increase a certain type of expense that will later make them richer. The power of paying yourself first I want to share two stories that illustrate what I mean. Here is the first story: Here is the second story: They say that a picture is worth a thousand words.
Study the diagrams above and see if you can pick up some of the distinctions between the two stories. The first diagram depicts the actions of those who pay themselves first. Each month they allocate money to their asset column before they pay their monthly expenses.
The second diagram depicts the actions of those who pay everyone else before they pay themselves. Each month they allocate money to their expenses column and then invest with whatever is left over—which is usually nothing.
This is the diagram of those in the rat race, no matter how much money they make, they are poor.
Pay yourself first: How you can overcome the challenge of saving
If you understand the power of cash flow, you will understand what is wrong with the second diagram. You have to set it as a goal, write it down, make a savings plan, and work on it all the time, But once this practice locks in and becomes automatic, your financial success is virtually assured. Practice frugality, frugality, frugality in all things.
Be very careful with every penny. Question every expenditure. Delay or defer every important downloading decision for at least a week, if not a month. The longer you put off making a downloading decision, the better your decision will be and the better price you will get at that time. A major reason that people retire poor is because of impulse downloading. They see something they like and they download it with very little thought. You never get ahead and you never get out of debt.
If you cannot save 10 percent of your income, start today by saving 1 percent of your income in a special savings or investment account. Put it away at the beginning of each month, even before you begin paying down your debts. Live on the other 99 percent of your income.The goal should be to allocate your money to spending or saving effectively. But there is no legal obligation to pay off debts before you die. You'll realize when you've hit your limit.
Matched contributions are like free money. The rat race is the cycle of poor financial habits that most people make in order to keep up with the Jonses especially the Jerry Joneses! Credit is more expensive than cash. However, on the way out of debt, after I knew I was doing the best I could, I did pay myself first.
You've tried once or twice in the past, but it's so easy to forget. Be very careful with every penny. By this, I simply mean using your income to invest in cash-flowing assets before you pay your bills or download anything fun.
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