I say it all the time: There isn’t a person alive who can survive financially without budgeting. There’s not a single one of us out there (except maybe an as-yet-uncaught counterfeiter) who has an unlimited supply of money. That person just doesn’t exist. Not even Warren Buffett has an unlimited amount of money. If Warren didn’t have limits to his spending, guess what would happen? He’d go broke just like anybody else!
Somewhat famously, Warren still lives in the same house that he purchased in 1958. CNBC once asked Warren what the one thing he believed young people should be doing about money, his primary advice was to “stay away from credit cards.” Last year Warren sold his car and donated the proceeds to charity. It was a 2006 Cadillac—and it booked for about $12,000. These three things together tell me at least one, important thing about Warren: He’s not someone who is spending beyond his means.
I think there’s a lot to be said for someone who is frugal. I think there’s a lot to be said for someone who isn’t materialistic. But the most important choice anyone can make to have peace and control over their finances, *regardless of their income*, is the decision to live within his or her means.
Antoine Walker was a 3-time NBA All-Star over his twelve-year career where he made over $110 million dollars. He filed for Chapter 7 bankruptcy in 2010. Antoine had some different spending habits from Warren. Antoine wrote bad checks at casinos amounting to $750,000. While he was still in the NBA, Walker supported at least 70 family members and hangers-on. Banks foreclosed on 14 residential homes he owned. It turns out that $110 million isn’t an unlimited amount of money.
When ESPN released its documentary “Broke,” I recall reading comments online talking about the film and about how “stupid” these athletes were (and, naturally, how the people commenting never would have gone broke like that). Well, just Google “lottery winners broke” sometime. You’ll see how many “ordinary” people there are that have come into money for which they don’t have a budget and spending plan and ended up in a worse spot than before they won the lottery.
The point remains the same: whether someone makes $15,000 a year or $15 million, you need a plan; the plan needs to have less money going out than is coming in. And you need to be taking steps to follow that plan.
Do you have more money going out each month than is coming in and/or are credit cards making it tough to keep up on your everyday expenses? Give LSS a call at 888-577-2227 or GET STARTED online with your free and confidential financial counseling session.
By Dan Szymczak