Archive for Financial Literacy

7 Fundamental Footsteps To Finding Financial Freedom

Achieving Financial Freedom – providing for yourself and your own family is certainly not easy, but independence has its rewards. It astounds me every time I encounter someone who takes pleasure in being dependent on someone else or worse, the government.

As soon as I graduated high school, I left home to go into the Navy where I would start providing for myself.  In fact, I enlisted in the Navy in October of my senior year.   I love my folks, but being dependent on anyone, including my parents was just not something that had any appeal for me.

These days, it is common for adult children to continue living with parents indefinitely.  They may move away for a while, then boomerang back home to enjoy the life of dependence.

Financial Freedom begins by achieving a state of Self-Sufficiency, being free from dependence on another for your basic needs. Sometimes there are good reasons for returning home. It is good to have parents that can assist for a while, but not when there is no effort to return to an independent life.

Break Free From Dependence

Maybe you have found yourself at the point where I was many years ago.  After serving in the Navy for about ten years, I was not earning enough to support my growing family without some assistance from the government.

You can read the long story of how I got to that point and how I recovered in Who is Responsible to Provide Basic Needs of Americans? That post laid out the problem and referenced next steps. This post should be more of a challenge to take the next steps toward independence and gives you clear steps to that end.Whether you are dependent on the government or on your parents, it is time to plot a course for… Click To Tweet

Now, if being broke and dependent on the government or someone else describes your situation and you are ready to start on your path to financial freedom, this article is written for you.

Don’t give up hope.  There is a way out when it feels like there is no way out.  It might not be quick and it may even get darker before dawn. Read More →

Your Commitment In Advancing A Strong Economy

What does it mean to make the economy strong or weak?  In what way are you participating in making your country’s economy stronger?

Economic Fundamentals

The Economy is talked about as if it has a life of its own.  From the news reports, you might think that the economy controls people’s behavior rather than the other way around.  The truth is that actions and beliefs of the members of society control the economy.  Individuals earning and spending determines whether the economy is growing or declining.

Let’s bring that concept home.  As an adult member of society, you participate in the country’s economic health by earning and spending money.  In order to earn money, you exchange some product or service for money.  Ideally, you will gain more money in exchange for the goods or services than it cost you to produce them.  If you are an employee, your role is to contribute to your company’s endeavor of adding value to the goods or services that they sell.  This is your most basic participation in the economic system.

Then, you take the profits or earnings you made from the first exchange and exchange that for goods or services that you consume.  And the person you purchased from turns around and repeats the process.  That continuous movement of money defines the economy.

If the people of a society only purchase items they consume and don’t add value and resell something, then the economy grinds downward.  You’ve got to add value and bring in positive cash flow.

Positive and Negative Cash Flow

The concept of positive and negative cash flow is a fundamental business concept.  Cash flow is a financial term that refers to money coming in relative to money going out.  Basically, it’s a way of stating whether the company is making or losing money over a specified period of time.  Positive cash flow happens when more money comes into your business or individual accounts than the amount of money that goes out.  A negative cash flow condition exists when your outgo exceeds your income.  You can apply the concept to your own wallet and bank account.  Are you earning more than you spend or spending more than you earn?A portion of all I earn is mine to keep! - George Clason Click To Tweet Read More →

Why Young Americans Should Not Abandon Capitalism

Popular media paints a bleak picture of capitalism and touts the benefits of socialist values.  Those views tickle the ears, but do not hold up to scrutiny and critical thinking.  Don’t fall into the trap of going with what sounds good rather than what truly is good and beneficial.

Many benefits available to you and the American way of life are only possible in a capitalistic economic system.  I want you to take away a viewpoint that capitalism is a positive, compassionate system.  Seek out, read and become informed about the fundamentals of Capitalism.  Realize how the application of the principles will benefit you and then decide to engage the system to your benefit.

Paladin Pillar Article

This post is a pillar article for the Paladin blog.  An article by Sarah Kendzior in Foreign Policy magazine details many reasons that young Americans are believed to be giving up on capitalism.  While that article was a gut punch, it exposes many of the maladies of the past eight years or so that have caused young Americans to begin doubting our system.  They have begun to feel like our system might not be the best, despite not having personal exposure to a longstanding socialist economic system.  As you read the Paladin About page, you will find that this blog is all about promoting Capitalism.

One of the blessings that I have enjoyed in my life is the opportunity to travel the world and gain first-hand knowledge of political-economic systems different from my own.  This exposure has reinforced the belief that America has The Best Economic System at its core.  It is my belief that if the principles of capitalism were studied and employed by every American, many of the maladies mentioned in Kendzior’s article would have self-corrected.  The short sighted actions taken by thousands of Americans led people into traps that impacted us as a whole.  The root of these problems goes much farther back than when their impact was first observed.  A mix of actions by the government, financial institutions and industries has fed the problems.

To the Young American Launching into the Workforce

So, how does this apply to a young American who is starting out in the workforce?  Understanding how the system that you are entering works will help you understand your role and the opportunities that you can benefit from.  Of course, you can go out there and experience it first if you want to.  Better to study and learn from others how it is intended to work.  You will suffer fewer knocks if you know what you are getting into.  Words to the wise, it is up to you what you do with them. Read More →

9 Fundamentals of Sustainable Out-go and Reliable Income

If Your Out-go Exceeds Your Income, Your Upkeep Will Be Your Downfall!  This is a mantra that I have written about before.  In this post, I will go deeper into some fundamentals and practices that will help you maintain that critical balance.

As long as you continue to spend more than you earn, you will continually fall further and further behind. Eventually leading to a financial crash and burn.  This practice will lead you deeper and deeper in debt.  At some point you will eventually not be able to pay the interest on the debt you owe causing you to fall into bankruptcy.

Bankruptcy is a major personal setback and brings with it consequences that have a long lasting effect.  Credit becomes harder to acquire.  Its impact is felt by more than the individual who filed for bankruptcy.  Those debtors that did not get paid in the settlement now have to deal with the loss to their business as well.  The increase in bankruptcies and foreclosures took a toll on our nation’s economy over the past decade.  The trend had snowball effect that hurt us all.

How much have you spent on interest charges this year?  What does that add up to over your lifetime till now?  How much do you hate budgeting and how much would you be willing to pay to avoid making and living on a budget?

We’ll group the fundamentals into two groups; things to avoid and things to move toward.

  1. Avoid:
    1. Easy credit offers
    2. The trap of indebtedness
    3. Immediate Gratification
  2. Move toward:
    1. Improve financial literacy
    2. Desire to grow wealth rather than overspend
    3. Commit to a New Pattern of Saving before Spending
    4. Prioritize Spending – control your out-go
    5. Reduce Amount of Out-go to Finance Charges
    6. Improve Income Potential

Three Pitfalls to Avoid

Falling prey to offers from credit card companies, continued indebtedness and the desire for instant gratification are traps that threaten to sabotage our efforts toward achieving our desired outcome.  By identifying them and setting guards against them, you will have a safer road to achieving financial independence.

If Your Out-go Exceeds Your Income, Your Upkeep Will Be Your Downfall!

If Your Out-go Exceeds Your Income, Your Upkeep Will Be Your Downfall!

Read More →

How to Replace Consumerism with Proven Wealth Building Strategies

Devoid of wealth building strategies, almost one-half of all Americans do not have $400 to their name.  This statistic includes people from all income brackets.  No matter how much money people make, it seems they just can’t manage to hold on to it.  Here’s the test – if you had an unexpected expense of $400 pop up right now, how would it impact you?  Could you pay it with cash or check?  Would it impact your ability to pay other current obligations? Or would you have to borrow the money, use a credit card or sell something?

American’s have been consumed with consumerism for the past few decades.  As credit became easier and easier to obtain, Americans began to rely on credit as a safety net rather than build up their savings as a safety net.  They also use credit to obtain more material possessions.  So credit has replaced savings as a means to purchase and protect possessions.

After the attacks of September 11, 2001, the government encouraged Americans to continue spending as before to prove that our economy would not be affected by the attacks.  That encouragement would have been good advice if the status quo before the attacks was to earn and save money before spending it.  Since using credit to purchase everything was becoming the status quo, this advice was feeding the vice of consumerism.

The impact of continuing the rise of consumerism will result in an unhealthy financial state.  It is time to reverse the trend.  Americans need to learn to replace Consumerism with wealth building practices.  That begins with becoming financially literate.

Financial Literacy

A majority of Americans have become financially illiterate.  Despite the fact that we now have access to more information about how money works, we do not partake of that knowledge.  This financial ignorance has led to financial distress in many households.  There is a tendency to spend a little more than we make, no matter how much we make.  Earning more enables you to borrow more and so many people do just that.  Rather than learn and leverage financial principles, people have begun to live for today and wind up dealing with the consequences when it catches up with them.  Some do things like use credit cards for daily purchases, losing track of their spending and then when the bill comes, they don’t pay the balance in full.  An understanding of the principles of compounding interest and avoiding that expense would save many people thousands of dollars every year. Read More →