October 10, 2010

Broke-A$$ Brotha Tip #1: Ignorance is Not Bliss

I'm not sure when it happened. At one point in my life I was living large. In fact, I left my secure corporate-type employment for life as an entrepreneur back in July 2002. The economy over the past few years took a big chunk out of my cash inflow. The problem was that I didn't cut back on my cash outflow at a similar rate. Next thing you know ... I'm a Broke-A$$ Brotha.

I'm not proud of being a Broke-A$$ Brotha.  My plan is to take steps necessary to get rich.  The process begins by getting serious about my current financial situation. I'll share some tips with y'all as I go through the process. I would love to hear from you on some Broke-A$$ Brotha (or Sista) tips that you have learned over the few months and years as well.

My first tip is simple. You can't fix your situation if you fail to face your situation.

Ignorance is Not Bliss!

My Dad dealt with personal finances in a very disciplined and direct manner.  He was an aeronautical engineer so he made a good living.  However, he didn't believe in credit cards ... so he never got caught in the trick bag of living beyond his expenses.  I remember that he would take me to the Sears warehouse store to buy clothes because they had some great deals.

The largest single expense that my Dad ever had was the first (and only) home he bought.  His instructions to the realtor were simple -- the home had to be located in such a manner that the sun was behind his back on both ways of his commute to work.  Secondly, the total mortgage expense needed to fit into his salary.  You should know that my Mom was working full-time as a public school teacher ... but, my Dad insisted that the mortgage payment fit into his salary as if we had a one-income family.   It took a little longer to find the house ... but the 2-story brick house that my parents purchased is now fully-paid off and remains the family home of my Mom as she enjoys her retirement years.

My young brother was disciplined as well.  He showed me his system once.  He would get cash at the beginning of the month to cover his discretionary expense budget (food, entertainment, clothes, transportation, gifts and such).  He would then (literally) place the cash-dollar-bills in envelopes that were labeled for these various discretionary expense line items.  He was disciplined enough to stop spending on a particular item if the money ran out before the month ran out.   He told me that it became easier to cut back on things like fast food and other money-wasters while he was using that envelope system.

I now recognize that I need to get a handle on my expenses. I need to BUDGET. The odd thing is that I've been tracking income and expenses with my Quicken software for many years. However, I've not been disciplined about reviewing the results regularly ... analyzing those financial results ... and making adjustments accordingly.

Ignorance is Not Bliss.  When you're living large you're making enough money to make up for stupid spending decisions.   When you're a Broke-A$$ Brotha those stupid spending decisions can literally put you in jail (...speaking to those of us paying child support with that comment!).  

I pledge to review my budget vs. actual expenses for the first nine months of 2010. I will also create a budget for the final quarter of 2010 that details out my fixed expenses (rent, utilities, child support, etc.), my discretionary expenses (transportation, food, entertainment, etc.), my debt repayment expenses, my long-term savings and my emergency savings (six months of current income).

How about you? Do you have a written budget for the month of October? Are you tracking your actual income and expenses against that budget? If not ... it is time to get busy.


Karen Swim, Words For Hire said...

This is an issue we should all be discussing much more often. Debt is slavery and it seduces its victims with the so called trappings of success. My husband and I followed the same principle as your Dad when we bought our house - depend on only one income. Years later when my husband was no longer able to work and was dying of cancer, we lived with no income for three years. Medical expenses, mortgage, everything was paid from our savings. I understood in a new way the wisdom of past generations of living below your means. We must educate and support the value that truly living large means being indebted to no man. It is not spinning rims Louboutins and designer clothes but having a peace of mind knowing that what is yours is truly yours.

Villager said...

Karen - I appreciate you sharing your story on this topic. "Living below your means" is not something that is discussed much in our community.

I gotta go google "Louboutins" as I don't have a clue what they are! :)

What tip would you like to share with others that are trying to get their personal finances in shape?

Villager said...

Karen - I did my Internet search and now understand that Louboutins are upscale shoes. I also see that Jennifer Lopez just dropped a single that basically promotes the shoes.

Live and learn in da Village!

Karen Swim, Words For Hire said...

Lol, I forgot that men are not familiar with the shoes women love. :-) I really want to see change in our community on so many levels. My #1 tip would be get serious about taking control of your finances. Track your spending for at least a week so that you will know where your money is going. Pull out your bills, income, and spending sheet and DO A BUDGET. Get rid of the debt and look for areas to cut back (cable, phone bills, non-atm fees, eating out). Get help from professionals, there are tons of free resources online or at the local library to help you get your money in check. We all have the power to build wealth but it requires a shift in our perspective.

Regina said...

AWESOME POST!! People tend to ignore personal responsibility when it comes to finances.
I am at a point in my life where I am struggling to regain some footing and financial stability and independence.
I was laid off, and had a house go into foreclosure 2 years ago, the house is STILL in the foreclosure process which is making things worse on my credit. I lived off my unemployment for a year and a half and when that ran out I jumped back into childcare. Because of the over-saturation of childcare centers and homes in my area the business is not really lucrative, but it is partially maintaining me (the other part if my maintenance thankfully comes from my 2 oldest children, GOD BLESS THEM!) So I am making plans and arrangements for a major shift of ... everything! By 2011 there should be a major shift and change in my life. Going back to school was step 2 in my plans. Step 1 was making a conscious decision to change things. Financial stability and independence is MINE IN 2011!!
I love your dad's & your brother's system!
If you don't mind I am going to share this post!
Peace & Love!

Villager said...

Regina - Anything published on this blog is free to be shared. My hope is you will provide some link-love when you do so.

I agree with you that personal responsibility is key when it comes to personal finances. Too often, we are simply unaware of what we need to do and we're too shy / embarrassed / foolish to ask for help.

re: your personal situation and desire to make a change. All I can say is, It's Never Too Late!. You and I may be too long in the tooth to get full advantage of compound interest ... but, making positive moves to be responsible with our savings and our expenses is always a good thing.

We take it one day at a time!