Wealthy Turtle

Darth Vader’s Top 5 Tips For Saving Money

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Okay, I admit it…I’m a bit of a Star Wars nerd. I used to beg my dad non-stop for the newest Obi-Wan or Admiral Ackbar figures. And I completely wore out my VHS tapes of the original trilogy until they were virtually unwatchable (much like any of the prequels when Natalie Portman was not on screen).

So as I sat brainstorming for new ideas to write about, I naturally wondered what the great Lord Vader would do to save some cash.

I mean let’s face it, running a Galactic Empire isn’t cheap. And how embarrassing would it be to call home to Emperor Palpatine begging for beer money?

So here you are…Darth Vader’s top 5 tips for saving money:

  1. Some of your senior officers nearing retirement age? Not a problem. Just use the force to choke them to death before they’re eligible for retirement benefits. Cha-Ching!
  2. Shields are expensive…way too costly to install on tens of thousands of TIE fighters. Replacing pilots killed in action is much more cost effective.  On the other hand, you may want to shell out the cost of shielding exhaust vents on massive, planet-destroying space stations. Especially when they lead directly to the main reactor where a single torpedo could destroy a trillion dollar installation. I’m just saying.
  3. Suddenly realize you made a bad deal and want to get out of it? Just say you’re changing the terms of the contract. Then lean in close, and in your most menacing voice say, “Pray I don’t alter them any further.”  It helps if you have a regiment of highly-trained Stormtroopers backing you up.
  4. Outsource some of your less desirable jobs to some good old-fashioned bounty hunter scum. You only pay when the job is complete, they’re not entitled to benefits, and they don’t even need a company car. Just don’t complain if Boba Fett gets carried away and incinerates someone you wanted alive.
  5. No one likes paying for insurance, but it can be a life saver if you suffer a serious financial disaster.  Our favorite Sith Lord used the insurance money from the first Death Star to build a bigger and more powerful version.

There were some pretty scandalous rumors at the time that Vader took out a huge policy on the first Death Star just a week before it was destroyed…by a handful of out-dated and out-gunned fighter ships no less.  Pretty convenient how he decided to step outside for a smoke just minutes before the whole thing blew, huh?

Do You Lie to Yourself About Your Finances?

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Back in the day, I loved watching Everybody Loves Raymond.  There was one episode in particular called The Checkbook that still sticks with me.  Debra does all the money management and budgeting for the household, and Raymond finds out that Debra had borrowed money’s from Ray’s parents to make ends meet one month.  Ray is upset and thinks that Debra is not doing a good job with the budgeting, so he insists on taking over.

Things seem to be going smoothly, and Debra is relieved to be free of her budgeting duties . . .until the lights go off one night.  Turns out, Raymond had been making a mess of the checking account from the beginning, so he created a separate second check registry so Debra would think everything was fine.

In the end, when Debra sits down with Raymond to fix the mess, he confesses that there’s yet one more check registry he’s kept from her.  Hours later, the mess is finally cleaned up, and Debra takes over financial responsibilities for the family once more.

The Lies Will Catch Up with You

Are you like Raymond sometimes?  Do you lie to yourself about your finances?  Do you insist that things are not that bad even though you have credit card debt or have no emergency fund?

No matter how many lies you tell yourself, just like Raymond’s experience, the time will come when you’re faced with reality.  In Raymond’s case, his reality came when the lights were shut off.

In our own family, we lied to ourselves that we could afford parochial school for our son.  That lie cost us thousands of dollars we really couldn’t afford.  Thankfully, when our youngest two were scheduled to also enter the parochial school, we did the math and finally faced reality.  Now, we homeschool.

Face Financial Reality

We’re only days away from 2014.  If you’ve been lying to yourself about your financial situation, why not make this the year that you face the truth?

Take a few hours and write down exactly how much debt you have, what assets you have, and how much income you have every month.

The whole exercise might be painful, but at least you’ll be honest with yourself.

Take Steps to Improve Your Situation

Once you see your complete financial picture, take the steps to improve your finances.

First, slash whatever expenses you can.  Perhaps get rid of your home phone and get an Ooma instead.  Call your insurance company, your cable company, and your credit card company to negotiate monthly payments and interest rates that you pay.

Sell the extra stuff in your house.  We all have “clutter” that someone else may find useful.  Sell that stuff on Craigslist, eBay, or a Facebook group.

Get a side gig.  Find a side gig that can help you bring in extra money to help you pay down debt faster or increase savings.  Thanks to the Internet, there are many jobs that you can do online in your free time.

Let 2014 be the year you face financial reality.  You’ll be in a much better financial position at this time next year if you do.

What is the biggest financial lie you tell yourself?

The Difference Between Income and Wealth

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Increasing your income is great.  But in order to build true wealth you need to use that income to acquire assets than increase your net worth.

Do you ever feel like you just can’t get ahead?  You want to start putting money away and investing for your future but there never seems to be anything left after you pay all your bills.  If only you could make just a little more money you’d be in much better shape.  Maybe when you get your next raise you can open up a brokerage account or invest in a mutual fund.

Oh that’s right…you said that last year.  And the year before.  But even with those raises you still never had any money left over.  There was always some unexpected expense that came up, or the additional income just seemed to vanish into thin air and you’re not really sure where it went.

You my friend have fallen into a trap that all too many of us find ourselves in.  You’re mistaking a high income with wealth.  You assume that if you could just earn a higher income, everything else would take care of itself.  But as you’re about to learn, there’s a big difference between income and wealth.

What Does Wealth-Building Really Mean?

When I first read The Millionaire Next Door I realized there was a big difference in mindset between a typical millionaire and myself.  One point that really made me stop and think was that “affluent people follow a lifestyle conducive to accumulating wealth.”  They allocate a considerable amount of time and energy towards building their wealth.

They focus on saving their money and investing in assets that generate income and appreciate in value.  That could include real estate, stocks or a small business.  With each asset they acquire, their net worth increases.

Most people do the exact opposite.  They spend all of their income (and then some through credit cards and loans) on status symbols like 70 inch flat screen TVs and expensive sports cars.  While these types of purchases can be rewarding and make you feel good, they erode your debt instead of building it.  The minute you open the box or drive it off the lot it is worth much less than you paid for it.

As your salary increases you just increase your spending instead of taking the extra funds and investing them.  That’s why a higher income doesn’t necessarily equal wealth.  Your neighbor down the street with the new Mercedes and the expensive landscaping may be up to his eyeballs in debt and living paycheck to paycheck, while the guy down the street with the old pickup truck in his driveway could be a millionaire.  Appearances can be deceiving.

So do yourself a favor and stop trying to keep up with the Joneses.  Because like your neighbor with the Mercedes, they may not be as well off as they appear to be.  Instead of following them to the poor house, forge your own path to financial freedom.

Seven Characteristics of The Millionaire Next Door

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If you want to stop living paycheck to paycheck and start building real wealth, you should look at these 7 characteristics that most millionaires have and you probably do not.

In their classic 1996 book The Millionaire Next Door, Thomas Stanley and William Danko share their findings about the factors that determine who becomes wealthy in America.   You might be surprised when you read their description of the average millionaire as many of the common perceptions we have of the wealthy are dead wrong.

According to their research, there are seven characteristics that are common to millionaires.  I’ll list each of them below along with a few thoughts of my own.

1. They live well below their means.  That’s not really surprising is it?  Common sense should tell you that if you want to build wealth you need to spend less than you earn.  If you spend every dollar you earn (or more than you earn thanks to credit cards) then you’ll have nothing left over to save or invest for your future.

2. They allocate their time, energy, and money efficiently, in ways conducive to building wealth.  That’s right…millionaires work hard to be successful.  They spend their time building businesses or planning and monitoring their investments.  They don’t just cross their fingers and hope for the best.  If you want to be wealthy you have to actually take steps to make it happen.  Remember that the next time you spend countless hours playing Call of Duty with your friends or stalking some poor girl on Facebook.

3. They believe that financial independence is more important than displaying high social status.  They’d rather invest $1,000 in dividend stocks than use it to buy a new flat screen TV because they don’t worry about how others perceive them and they don’t waste time trying to keep up with the Joneses.  They’re less concerned with looking wealthy than they are with actually being wealthy.

4. Their parents did not provide economic outpatient care.  In other words, their parents didn’t support them forever.  They were taught how to fish for themselves rather than being handed a package of fresh fish every day.  That taught them how to take care of themselves financially instead of relying on handouts.

5. Their adult children are economically self-sufficient.  Just as the wealthy didn’t receive handouts from their own parents, they are less likely to provide financial handouts to their children.  They understand that handouts will only increase their children’s dependence on them while at the same time depleting their own financial cushion.

6. They are proficient in targeting market opportunities.   Even in turbulent economic times, there are always opportunities for those who have the insight to see them.  Certainly having wealth opens up many doors.  But grit and determination can open many doors too.  Remember, self-made millionaires didn’t just get lucky.  They probably worked their tails to the bone to create the opportunity that led to their success.  We make our own luck.

7. They chose the right occupation.  There is something to be said for following your dreams and pursuing a career that you really love and find rewarding.  But you have to be realistic and and accept the tradeoffs that come with having your dream job.  If you borrow $75,000 in student loans to get a Theater degree, don’t complain when you don’t earn the same salary as a doctor or lawyer.