Passive Income

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In a time, not too far in the past, I had been known to buy a few state lottery tickets. I would drop down $2, thinking that maybe, just maybe, I would get lucky and I could actually catch up on my bills.

Of course, that day never arrived. I think in the 50+ times I have played, I have NEVER picked one number correctly. Not even one lousy number! What I failed to recognize is that on my quest for quick cash, I ignored a sure path to wealth. The secrets of the rich do not exist. Sounds principle of wealth management do exist.

While reading MyOpenWallet, I first read about Ray Otero. This guy spent $30,000 last year of lottery and scratch off games. Thirty Grand! The real kicker is that he only makes around $40,000 and supports his wife and two kids.

Someone should really talk to this guy. Come on NYTimes! Quit running stories on these people and offer to help them. Find local CPA who will sit down with him and walk him through the basics. Explain to him the odds of actually winning. Teach him and allow him to retire one day with diginty.

Get him connected to the internet and direct him to a few really good blogs on personal finance. Frugal Dad, My Investing Blog, Bible Money Matters, and Get Rich Slowly should get him started.

Just don’t stand there and let him spend 75% of his income of lottery tickets.

How much money do you spend on the lottery? I hope it is not too much!

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My wife and I absolutely love Dave Ramsey. We attended his 13-week Financial Peace University, began following his “baby-steps” program, and began to simplify our lives.

We quickly completed the first baby-step, which was to save $1,000 to use as a small emergency fund. This gave us a place to start. In previous attempts to get control of our finances, we tried to do everything all at once. This always lead to disaster.

We are currently tackling baby-step #2 (The Debt Snowball). Hopefully, if all goes as planned, this step will be completed in 12 – 18 months.

Putting our background behind us for now, last week our Jetta blew up. Of course, the first thing we did was take it to the Stealership to find out what was wrong. The Volkswagon Stealership charged us $95, just to tell us what was wrong with it. Then they proceeded to give us a quote of $1,600. The main thing that was wrong with it was the water pump and the timing belt. How could this cost so much money?

Luckily for us, this all occurred on Friday, so we had the weekend to think about it. A friend from our small group suggested we take it to a small shop where she had previously taken her car, with tremendous success. On Monday, we called and talked with “Tony”, who turned out to be one of the nicest guys I have ever met.

To make a long story short, Tony had our car towed from the stealership to his shop (boy – was Volkswagon mad). After letting him work on it for a few days, we went and picked up our car. The price tag – $1,100. Dang! That was still more than our emergency fund.

Taking advise from Dave’s book, we went to the bank and got out our $1,000 in cash (from the emergency fund). Once we got to the shop, we asked if he would give us a discount if we paid in cash. YUP! And not just a few bucks to appease us. This guy knocked the bill down to $950. We saved $650 by using a local business and cash.

Has anyone else ever had success using cash or by buying from a small, local dealer? If not, I highly recommend trying it. You could end up saving a lot of money.

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According the the latest edition of SmartMoney magazine, Americans now spend an average of 22 hours each year simply sorting through their bills, statements, and other paperwork. It goes on to state that that the average household has 14 credit cards.

Can that be correct? 14 credit cards! I knew that Americans loved their credit cards, but 14 of them? Is it any wonder that we are drowning in debt? Is this any way to teach our children the value of money? Over at MyInvestingBlog, Hank posted a funny clip that talks about what you should do if you do not have the money to buy the stuff you want.

I’ll give you a hint – Don’t buy it! Or better yet, save up for it and buy it with cash.

My spending philosophy has changed over the past few months. We are simplifying our lives, which includes buying less stuff (and getting rid of the extra crap we have around the house). We developed a budget. We cut up our credit cards (we kept one until our emergency fund is fully funded) and we buy groceries, gas, clothing, and entertainment items with cash. It hurts more this way and according to SmartMoney, we should be 39 percent more wealthy than our less organized peers.

So why do I feel so poor?

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