Beating Broke

Personal Finance from the Broke Perspective

The Millionaire Fastlane

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The Millionaire Fastlane

By: MJ Demarco

If there was ever a case for a little less “hype-y” title for a book, this is it.  I’m not sure what else I would have named it, but the title just seems like a whole bunch of get-rich-quick hype, and it kept me from reading the book sooner than I did.  Which turned out to be a bit of a downer, since it’s really a good book.  Demarco spends about half of the book describing his ideas on the different types of life travelers.  There’s the “sidewalkers”, the “slowlaners”, and then, the “fastlaners”.  Each describes a way of thinking about how we travel through our life, financially.

The “sidewalkers” are the people who subscribe to a 9-5 work life and save as much as they can in hopes that they can one day retire on a decent budget.  The “slowlaners” are those that have started to break away from the 9-5 lifestyle and have some side income coming in, but they just don’t (or won’t) make the jump and get into the fast lane.  The “fastlaners” are those who have made the jump to business ownership, entrepreneurship, and are making their money on their own terms.

The second half of the book is dedicated to the “fastlaners”.  Demarco talks about the dynamics of earning money and how the way you make and spend your money is so important to becoming a “fastlaner”.

As someone who regularly writes about frugality, saving, and making the most of what money you do make, I have to admit that I was a bit off-put by the first half of the book.  There is a large contingent of the world that will work most of their lives, save for retirement, and then enjoy the rewards of having done so.  His arguement, of course, is that we shouldn’t have to work our lives away until we’re 60+ years old only to have our body break down on us and not be able to enjoy our hard-earned money in retirement.  Instead, he talks about becoming a “fastlaner”, and creating your own wealth so that you have control over your life and your income.

On the flip side, as someone who recently quit my job, and am trying to make a go of it as an entrepreneur, I really felt that I connected with many of the “fastlaner” ideas.  Going to college, getting a job, and working until you’ve got enough to retire on does seem like a long, fruitless pursuit.  Going solo and building something worth a great deal of money that enables you to retire early and live life the way you want to sounds a lot less long and more fruitful.  I think he makes a great point that many won’t be willing to make that jump and will, instead, settle for the “slowlane” lifestyle.

If you’ve ever given though to starting your own business, or are just unhappy with your job, I think this is an excellent book to read.  It’s inspirational in that it really gives a good idea of what is really possible.  Demarco comes across as someone who really is trying to help people out of the “slowlane” and into a “fastlane” mindset.  I think some will struggle with the concept, and surely, with the ingrained mindset that we’ve all been taught growing up, but seeing that, and beginning to break away from it are excellent steps.  Steps that will be helped by reading this book.

 

Are Electric Cars Worse for the Planet?

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Not content to upset the recyclers in the community (See: Is Recycling Bullshit), I’m moving on to electric cars today.  Rob at Say Anything Blog had an interesting post the other day citing a report from the University of Tennessee at Knoxville that talks about how electric cars might be worse for the environment than their gas guzzling counterparts.

To summarize the report, electric cars seem to be more hazardous to the environment because a majority of the electricity that they consume is created in fossil fuel burning electric plants.  Rob points out that the study was done in China where a very large proportion of electricity is produced by coal powered plants, and that a smaller proportion is produced that way in the Unites States, but that the proportion still isn’t small enough to negate the negative effects of the increased pollution from production.

Wind farm and greenhouse gas farm, togetherI think this is another case where the technology just isn’t advanced enough to support the new initiatives.  Cleaner electricity production would, obviously, help the situation, but many of the clean energy production methods just aren’t mature enough to support themselves, let alone a growing fleet of electric cars.

Combine that information with the added expenses in maintenance of an electric car, and they begin to look downright unattractive.  Not to mention that they have yet to create an electric car that is capable of reproducing the power that is needed for them to become mainstream in smaller cities and rural areas.

What do you think?  Are electric cars an already dying breed?  Should we continue to support them in hopes that electricity production technology catches up eventually?

photo credit: kevin dooley

Creating a Simple Budget the Beating Broke Way

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One of the most important parts of paying off your debt and becoming financially independent is creating a budget.  At the very least it gives you an outline of where your money goes and where it should go.  At it’s most extreme, it serves to create strict limits for your spending.  How lax or strictly you adhere to the budget is up to you and how die-hard you are about your budgeting.

One thing remains constant however.   When the end of the month comes, the ending balance should be 0.  Money in – money out = 0.  If you have a deficit, you overspent and need to compensate for that by either reducing budgeted amounts in another category or by reducing the available money for the next month.  If you have a surplus, (good for you!) then you need to budget that money until your end result is 0.  Most of us looking to become debt free will budget any surplus towards excess debt payment.

Here’s how we have things set up at the Beating Broke household.

Income.  We keep a very simple income spreadsheet.  It lists the sources in Column A.  The amount in Column B and any notes for the income in Column C.  All of that gets totaled at the bottom.  That’s all we do with our income.  It’s the expenses that we really need to focus on anyways.

Expenses.  The expenses spreadsheet is a little more complex.  I have a field for the income that I carry over from the income sheet.  I also have a field for a total of all budgeted amounts.  I then have a few calculated fields.  The first is a field that gives me the budgetary deficit or surplus.  I get that by subtracting the total budgeted amount from the income.  A second calculated field gives me the true deficit or surplus.  This is calculated by subtracting the actual amounts spent from the income.  This field is really only useful for balancing at the end of the month, but if you’ve done your budgeting properly, the amount should be small and easy to take care of.

The meat of the expenses spreadsheet is everything else.  Column A holds the categories.  I’ve broken them down into header categories and sub categories.  For instance, the Health header category has sub categories for Health Insurance, Aflac, Prescriptions, and Medical Bills.  I could go even further and list each bill, but that would greatly increase the amount of time I spend on my budget.  I want it to do it’s job (keep my money in order), not take up hours of my time.  Column B holds the budgeted amount for that sub category.  Pretty simple really.  Column C is the amount that I’ve spent to date on that category.  Column D is the % the budgeted amount is of the income/budget and Column E is the % that the actual spent amount is of the income/budget.    I’ve also thrown in some totals for each header category as well as the % of total for those as well.

Each week, we go over our checkbooks, credit cards, and all other financial happenings and enter them in the appropriate places.  By doing it every week, it keeps the task down to a half-hour or less which helps with reducing the stress level of working with your finances.  Especially if they are a little wonky to begin with.

Budget deficit and surplus.  Occasionally, we get to the end of the month and we have a surplus or deficit.  We’ve either spent less than we budgeted for or we have spent more than we budgeted for.  The latter is a little rough, but the first is always fun.  Because we don’t usually figure out the overall surplus/deficit until the month has ended, we can’t budget for the surplus/deficit in that month.  So, I’ve thrown in a field on the Income sheet that is titled “Carryover” and one in the expenses sheet that is titled “Shortfall”.  If we have a deficit, the carryover value is 0 and the shortfall amount is the amount of the deficit.  And vice versa.  This helps with taking the surplus and budgeting it as an extra debt payment or in accounting for previous months deficits.

Most of these ideas are pretty basic budgeting principles.  We’ve tweaked them around a little to fit our financial style and to be loosely based on the Dave Ramsey system.  If you’ve got questions on budgeting that we might be able to answer, drop us a line and we’ll try and answer them as soon as we can.