Part 1 : Being Simple

Frugality is misunderstood For instance, in a recent Washington Post

column on haggling, I was told by many commentators that “Since I earn good money I shouldn’t care about the prices I’m paying”

WHAT?!

What is frugality?◦ Minimizing Expenditures◦ Maximizing What You Get◦ This could mean price-comparison shopping for

the cheapest item◦ Or it could mean buying an expensive item with

greater durability◦ Frugality puts your money to work for you.◦ It can also be a creative spark

What is Net Worth? Definition #1 Assets minus liabilities

◦ Very bland. Tough to Calculate◦ Not very personal finance-y

Definition #2 Good Habits – Bad Habits◦ Who said this? Ben Franklin◦ Sums up what a SMART Strategy will help◦ Applies to personal finance, business finance, life

in general.

Bob Durst was the Casper College custodian in the blue jump suit and bow tie that every student, staff member and instructor recognized. He’d sometimes reach into his own pocket to help out a student in need with $10 or $20. When he retired in 2007 at the age of 86 after 27 years of driving his roller and paint brush touched-up Chevy Caprice to work every day, a classified staff award was named in his honor. “He never took vacation,” remembered Sharon Bell, Casper College Human Resources Director. “‘I don’t need to have one, give them to somebody else,’ he would say.”

When Durst died on January 20, the World War II Navy veteran who lost his right eye during his military service, left his entire estate to the college. The unrestricted gift totaled $1,074,600.

Coffeehouses are uniquely suited to conversations. Money is a taboo subject to discuss (unless you’re a personal finance blogger). It is noted that

You’ll learn more by talking about budgeting, financing, with others, hearing their ideas, successes, failures, than listening to one boring ole economist.

New York Times 2005 – Half of families in the top 20% of Households shifted down the distribution between 1988 and 1998, a time of economic expansion.

While wealth is correlated across generations, 70% of the correlation was due to “hard work” and savings.

Online Budgeting tools◦ http://www.Mint.com (free)◦ http://www/wesabe.com (free!)◦ https://www.budgetpulse.com (free!)

BudgetPulse’s HQ is in Vienna, Virginia (Support your local industry)

◦ http://www.pearbudget.com (3 dollars a month)◦ And of course Quicken…

I-Phone Apps◦ Compare and Convert (6 Pack or Liter?)◦ RedLaser (Price Comparison Shopping) 1.99◦ ShopSavvy (Same as RedLaser but free)◦ Wesabe and Rudder are on the Iphone

Of course, you can also build your own budgeting tool in Excel or Access

A few years ago I shared my Excel Budgeting Tool at GetRichSlowly.Org

It’s still there. Maybe I should update it? http://tinyurl.com/2qx4eu There are many ways to track your

finances. Do whatever develops the good habit

From Liz Pulliam Weston◦ A good initial budget that can be made more

complex later.◦ Starting from a simple base will make it more

likely you’ll stick with it. This is a psychological trick. Complex plans, budgets etc, while more robust and realistic, are also more daunting and stressful.

60% to Committed Expenses such as taxes, clothing, basic living expenses, insurance, charity (including tithe), and regular bills (including things like cable).

10% to Retirement. 10% to Irregular Expenses such as

vacations, major repair bills, new appliances, etc.

10% to Long-Term Savings/Debt — money set aside for car purchases, home renovations, or to pay down substantial debt loads.

10% for Fun Money to be used for dining out, hobbies, indulgences, etc.

http://tinyurl.com/pwz56

It is very difficult to find yourself in a bad spot if this condition holds.

What you earn > What you spend You NEED a budget

“Latte a Day” “Margarita Millionaire”

◦ What’s the commonality? Small change today – big change tomorrow “The power of Compounding”

What can be substituted?What can you do yourself?

Helpful Links http://www.billshrink.com/ (find cheaper

services) http://www.truecar.com/ (find the best price

for a car)

http://portfoliomonkey.com (More Important in Session 3)

Most Importantly, Saving is prioritized first.

Compounding◦ http://www.fool.co.uk/Your-Money/guides/the-

miracle-of-compound-returns.aspx◦ http://www.mindyourfinances.com/money-

management/savings/081104-04

Consumer Action Handbook◦ http://www.consumeraction.gov/

Guide to ROTH IRAs◦ http://www.getrichslowly.org/The%20GRS

%20Guide%20to%20Roth%20IRAs.pdf

Transparent Investing◦ http://www.transparentinvesting.com/uploads/

wholestory.pdf

Consumer Action Handbook◦ http://www.consumeraction.gov/

Avoid lifestyle inflation◦ We’ll talk about this in session 3◦ http://www.getrichslowly.org/blog/2006/12/27/

how-to-protect-yourself-from-lifestyle-inflation/

Avoid workplace inflation

Simplify your venture idea◦ Note, this works for savings goals, retirement

goals, job goals, etc, just modify the words.◦ 1)What is your product?◦ 2)Who is your target consumer?◦ 3)How do you get your product to your target?◦ 4)What does your product provide your

customer?◦ 5)Do you want to make a profit? (or non-profit?)

Simplify your venture idea◦ 1) Personal Finance Education◦ 2) 20-somethings◦ 3) Sessions at Local Coffeehouses◦ 4) Improve Personal Financial Awareness◦ 5) Non-Profit

What is Coffeecents?◦ A non-profit organization encouraging personal

finance discussion targeting young adults through partnerships between personal finance bloggers and local coffee shops.

◦ Budget your venture simply What you absolutely need to start What you want to start What you can do yourself Can you scale it up over time? Define success

Thomas J Stanley “Millionaire Next Door”◦ This is an actual picture of Warren Buffett’s house

Timothy Ferriss “4-Hour Work Week” Ramit Sethi “I Will Teach You To Be

Rich”