Passive Income

Matthew 6:20 – Store up for yourselves treasures in heaven, where moth and rust do not break in and steal.

It snowed at my house on Sunday night. Four inches of snow and the whole state of South Carolina shuts down. I have to say I was pretty excited about this. I got to spend the entire day with my son. That makes it one of the best days I have had in months.

We spent the morning making snowballs, watching the older kids sled down the street and playing with Thomas the Tank Engine. All in all, a perfect day. Since we played pretty hard in the morning, my son slept until around 4:30.

I am never home during the day, but since I was, and my wife was sick, I watched a little TV during nap time. I have mentioned before that I cannot stand Oprah. I do not like what she stands for, who she puts her faith in and the unnatural sway she has on millions of women across America. But today’s show was in my area of interest, personal finance, so I watched it.

The basic premise behind today’s show was “What Could You Live Without”? Oprah, in conjunction with Suzie Orman, challenged people to:

• stop spending for one day
• stop using the credit card for one week and
• stop eating out for one month

To be honest with you, these are all extremely reasonable ideas. Nothing earth-shattering, but overall, a pretty decent start for someone trying to start taking control of their personal finances. If it were my show, I think my challenge would have been as follows:

• create a zero-based budget – purchasing food, clothing, transportation and gas with cash
• stop using your credit AND debit card for one pay cycle
• hold a budget committee meeting with your spouse, or responsibility partner, once a week
• fully understand Dave Ramsey’s baby steps and implement them in your daily life
• repeat as needed

While many people knock Mr. Ramsey because they think the “math” does not work, I can promise you one thing – simplifying your life will make it so much more meaningful. Take a look around your house. How much stuff do you own that you could live without? How many items did you buy because you could not live without them? Do you use (or wear) them often? If not, why are you keeping them?

I have decided to go through my house once a week until 2010, and sell one thing that I no longer need on eBay. While this may not seem like a lot, at the end of the year I will have gotten rid of 40 – 50 things that I no longer use (or need). This may not bring in a lot of money, but it should remind me (at least weekly) of how much I do have, so perhaps I will stop focusing on what I do not have.

What about you? Are there any items sitting around that you could live without?

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It seems to me that we live in a country that allows ridiculous things to continue to happen. We meander along with our lives, never questioning things that are wrong or seem out of place. Why do we do this?

According to Yahoo, crude oil dipped below $100 a barrel today for the first time in 5 months. A few months ago, it was at $147. Does this mean that gas prices will be dropping by approximately 50%? Will we be paying $2 a gallon again?

 Of course not, and guess what, most people will not even care.

Instead of doing anything about it, we will continue to drive our SUVs, 30 miles each way to work (in the snow – grandpa reference), while drinking our $1.75 20 oz. cola or our $5 Starbucks coffee. We will visit the local gas station once a week and merely shake our heads that it now cost $70 to fill up the Ford Explorer.

Sometimes our refusal to care is so bad that we do not even ask for what should rightfully be ours.

Did you know that the IRS has increased their fuel reimbursement recommendations to $0.585 cents per mile? For every mile that you drive your personal car for your employer, you should be receiving 58.5 cents. Are you getting this? Or is your company still paying 48.5 cents (the rate from 6 months ago)?

Why do we let the prices of items go up faster than we demand them to come down? Why is it OK for the consumer to continue to pay for gas as if a barrel of crude still cost $147? I am not sure why we allow this, but we do?

What do you think? Why is it so easy to raise prices but so difficult to reduce them once the price of the underlying commodity comes back down? I would love to hear your opinion on this.

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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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