(Editor’s Note: Jerry Robinson will be traveling to speak on the economic crisis until early next week. He will return to with daily column on Tuesday, May 3. In Jerry’s absence, FTMDaily.com friend, Marcus Curtis, will fill in with his personal financial insights. Marcus has been using our Five Levels of Financial Freedom for the last two years.)
by Marcus Curtis | FTMDaily Contributing Writer
TULSA, OK , Apr 27 – I remember the last part of 2007. I remember looking at that year with great anticipation. Things were going well. Sure I was living pay check to pay check, but I had a healthy 401k and I had a decent job. In my view, things were going pretty good. But in reality, my finances were an absolute mess. I knew very little about economics. And I was just content to be a happy little sheep going to work day in and day out.
Little did I know that 2008 would serve as my wakeup call. The events that happened in that year shook me to my very foundation. I watched in horror as my 401k began to take a nose dive. My profit sharing accounts also started to nose dive. Of course, both accounts were heavily invested in the stock market. I watched as the U.S. housing market collapsed and as the price of oil soared to $149 per barrel. Amid all of this economic crisis, I also discovered that my hours at work were cut back. What in the world was going on?
Well, as I now know, these events were what we refer to today as the financial meltdown of 2008. My savings completely vanished. I soon realized something needed to be done. Economics 101 says that if your outflow is larger than your income, then your upkeep will be your downfall — or something like that. (It’s too bad that Congress hasn’t learned this principle yet.)
It was shortly after this time that I had the fortune of meeting the founder of FTMDaily.com, Jerry Robinson. I played guitar and was asked to be a part of a program that he put on in my city. After meeting him, I started attending some of his financial education webinars. I found his information to be genius in origin. After putting some of his principles into place, I gained some financial stability. Diversifying your savings account and having multiple streams of income were just of the few ideas that Jerry helped me put into action. I began buying foreign currency. Some of the currency that I chose to buy was the Iraqi Dinar. I began to research Iraqi politics and to follow the country’s currency. In February of 2010, I even started a blog called Iraq Currency Watch. This blog follows and documents the history of this currency, and it follows political events in Iraq.
So, how did I break the paycheck to paycheck cycle that I had found myself in? The first thing I realized is I needed to drastically lower my monthly expenses. That would be like getting a raise, but the question remained what do I cut and how do I go about it? I spent a few months slashing things in my monthly budget which was about $2,500.
Cut the cable bill. I went to Radio Shack and bought a digital antenna for my flat screen TV. It was only $26.00. I was amazed to see this antenna bring in 28 channels. All were digital quality. Since I had a cell phone I shut off my home phone and I shut off cable TV. This saved me another $120.00. Now, instead of having 80 channels with nothing worth watching, I only had 28 channels of the same. What surprised me was getting things like 3 different network channels, like CBS, with different content. I stopped renting movies and signed up for Netflix. My family likes to watch movies and this was a cheaper way to do it. They also stream movie content via my video game console. This actually saved me $50.00 every month.
Change the light bulbs. I also noticed that my electricity bill was out of control. It was somewhere around $160.00 a month. Since one of the costliest uses of power is lighting, I went through the house and replaced every light bulb with those florescent curly light bulbs. The result: My last electricity bill was just $60.00. That is a savings of $100.00. (Now, there is a new light bulb that takes even less power and they last a lot longer. They are also safer to use. They are called LED light bulbs. A 7 watt bulb is equivalent to a 50 watt regular light bulb.)
Consider a Power Save Unit. My brother has installed a whole house power save unit. He claims this has cut his electric bill by 25 percent. I am still doing research on this. These units are about $299.00. There are a few products like these on the market and they seem to get good reviews. This device also serves as a whole house surge protector. Whole house surge protector units can run between $200.00 and $300.00. These are all practical ways to cut your monthly budget. Here’s a couple of links to learn more about these:
Refinance the mortgage. I just moved into my home a few years ago. I refinanced and got a lower mortgage rate. This saved me $200.00 a month.
Reduce paper products. I stopped using paper products. While this sounds like a minor thing. I was amazed to see how much money I spent on paper plates, paper cups, lunch bags, baggies for sandwiches, things like that. It turned out to be a $40.00 a month savings. That’s 280.00 a year.
I went through my house and cut even more from my monthly budget. Things like shopping around for more competitive insurance premiums and cutting back on restaurant visits were all ways my monthly budget was slashed. Some cuts turned out to be lifestyle changes. Some cuts may represent a small investment on your part. Do the simple no cost cuts first. Then move on to things like changing out the lights.
When it was all said and done my monthly budget went from $2,500.00 to $1,800.00. That is a savings of $700.00. I took that extra money and paid off my car loan in 4 months. Now I have an extra $365.00 a month. Now, with this extra income it was time to start building my emergency savings fund. I was able to break the paycheck to paycheck cycle and have extra income to boot. Of course, your savings will be determined by the size of your family and the size of your home.
Your savings plan may be a little different from mine. You may find things to cut that did not apply to my situation. The point is to start looking for things to cut in your monthly expenses. I think you will be amazed at what you find.
Cutting debt is very important to the monthly budget. I would say be patient, it took a while to accumulate debt. It may take a little while to pay it off. Having a plan of attack is very important. I started with the small debts first. Once they were paid off I had more money to save and invest. Maybe the higher interest debts should be paid first. right now my mortgage interest is tax deductable. So that debt would be the last one paid. Get a plan and stick to it.
Now with my monthly expenses cut, I need to raise the amount of money I was taking in. Having multiple streams of income was something I never considered until I met Jerry Robinson. This was really a no-brainer for me. Being a musician I was able to generate 3 streams of income.
1) I gave guitar lessons.
2) I opened my home recording studio to others for an hourly fee.
3) I started seeking paying gigs.
That is 3 possible revenue streams. Everyone is different and everyone has different talents. Jerry has some great advice when it comes to setting up multiple streams of income.
In the end, I urge you to consider ways in which you lower your monthly financial outflow. Take some time and be patient. The financial freedom that will follow is completely worth the effort.
About Marcus Curtis
Marcus Curtis is a FTMDaily guest writer. He is the founder of IraqCurrencyWatch, a blog dedicated to following the developments in the political and economic developments in Iraq.
FTMDaily.com is a financial education and media company that seeks to help individuals understand how the global economy and geopolitical events affect them and their families. Learn more at FTMDaily.com