Investing: Spending, Paying Down Debt, Saving or Investing

When you hear Wi-Fi, Bluetooth, 3G, highspeed, high definition, 1080p, Blueray, LCD, Smart Phone, and iPad, what comes to mind?  First thing I think of is high priced toys.  These gadgets are a weakness of mine, but my wife could take them or leave them.  I tend to spend money, where she would rather do without to save money.  Have you ever bought something, thrown a party, or taken a vacation with a justification of we deserve it?  There is nothing wrong with rewarding yourself or loved ones by splurging on material items or going on a nice vacation, but it should not take precedence over being fiscally responsible.  It is acceptable to reward ourselves once we reach certain financial goals set from a previous year or once we meet an investment goal.

Spending – Controlling spending is difficult for most of us to do.  After reading the book The Millionaire Next Door by Thomas J. Stanley and William D. Danko, I decided to work on my spending habits.  Believe me, some days are better than others when it comes to being disciplined about spending money.  This book suggests that the majority of truly wealthy individuals do not live as if they were wealthy.  Only a small percentage of them live extravagantly.

Finding the proper balance between the money we invest and the money we spend on material goods can be challenging.  There are two different ways we can assess our spending habits.  We can lower our standard of living in order to be able to create excess cash to invest.  You can impose a strict budget for your family or you can increase you means in order to maintain your desired standard of living while having a targeted amount that you choose to invest yearly.  My wife and I are trying to increase our means in order to maintain our current standard of living and increase the amount of money we are investing.  We believe that life is too short to live under a stressful budget in order to find the additional money to invest yearly.  That doesn’t mean that we do not have a budget, we do.  We choose not to drive fancy cars, throw parties for people that may or may not be friends, and choose not to dress to the “T” daily, all of which costs money that would come out of our investment funds.

Our primary goal for increasing our means is to generate additional money to invest.  I hope that our investments provide enough passive income to be financially free so that we do not have to work for a paycheck.

Paying Down Debt – I had always made paying my debt my first priority.  If I had any money left over I would “invest” what little money we had in the stock market until we needed the money to pay down our debt again.  The problem with keeping your debt paid down without changing your spending habits is that it creates a vicious cycle of reckless spending.  If you are like me, you will find very little if any additional money to invest.  While reading Robert Kiyosaki’s book Rich Dad Poor Dad, he discusses paying yourself first.  It took me a while before I realized how to pay myself first.  Paying debt remains a very high priority, but I do not pull money from my investments to pay my bad debt.  Just as a reminder, bad debt is debt that we pay ourselves and good debt is debt that someone else pays, simply the debt of an asset.

Saving We are all taught to save money from a very young age.  I suspect that one reason we are all taught to save is because we all have been influenced directly or indirectly by people that had experienced the great depression.  After experiencing the great depression, many people preferred the security that comes with saving money.  There are still several people today that are so risk adverse that they prefer to save money rather than “invest”.  I spoke to a colleague of mine that was telling me how they where investing in a CD, Certificates of Deposit.  If they are lucky, the interest that they earn will be equal or slightly greater than inflation.  As you can see I am not a proponent of saving money.  The only thing that I use a savings account for is to hold enough money for my next investment.

Investing – There are many vehicles for investing.  We all have to find our niche to become a successful investor.  I am currently going through the growing pains of investing.  I am learning tons through experience and reading.  I recommend that you do your homework prior to getting into an investment.  I had always been taught that investing had to be risky, but I am not sure that is entirely true.  The more informed you are about your investments, the more you lessen your risks.  The more control you have over your investment also lessens your risk.  For example, when buying stocks in the stock market we have very little control of our investments.  The only control we have with stock is the timing and the price we pay for a given stock and when we sell the stock, not necessarily the price we get for the stock.  This is not to say that I do not invest in the stock market, but I limit the percentage that I have in the stock market at any given time.  We all know someone that is waiting to retire because they did not feel like they had enough money to retire due to our current recession.

I recommend doing your research on each investment, read to increase your financial knowledge and get experience by investing.  Do not be so risk adverse that you are afraid of losing money.  We all are going to lose money in our investments from time to time.  Learn from the variables that cause you to loose money and avoid making the same mistakes.  There are no get rich quick formulas.  Just be persistent in you pursuit to financial freedom.

Feel free to visit my blog at

The primary reason for starting this blog is to force myself to write down my thoughts on my investment process.  I hope to get the same value from writing this blog as I would by writing my Business Plan.  By writing about my investments, it forces me to think more about my investment values.  I am a strong believer that your subconscious works on problems that are not intuitive until you understand the problems that you face.  By writing this blog I hope that I become a more informed investor.  This blog is not meant as a recommendation for anyone and their investments.  It is just a way to share my investment thoughts with the internet community.

Article from

Ways to become a millionaire include setting aside money for savings, and building up a financial emergency fund. Strive to be a millionaire by changing an overall attitude about money with tips from a futures and options floor trader in this free video on personal finance. Expert: Mark Griffith Bio: Mark Griffith has graduated in economics and philosophy at Clare College, Cambridge. He has been a futures and options floor trader at LIFFE (London International Financial Futures Exchange). Filmmaker: Paul Volniansky

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