A Simple Equation

photo of a wine glass with sand for investment guideThe power of budgeting is the power to decide between two paths.  

One path goes to financial freedom, the other heads downhill to increasing misery.

The two paths diverge more than you might think.

A glass half full is about the same as a glass half empty.  It’s a little different with money.

When you earn a dollar, you pay taxes on that dollar, which means you keep, say, 75 cents.

When you borrow a dollar, say on a credit card, you pay interest on that dollar until you pay it back.  You pay back dollars from those with 75 cents left over from taxes.

It’s a double whammy.  Spending a dollar that you don’t have is worse that spending a dollar.

But when you SAVE a dollar before taxes, you keep . . . a dollar!

The dollar that escapes interest charges and taxes is special.  You have wrested it free from the tax man and the creditor.

When you save that dollar in a 401K, you don’t have to pay taxes on your gains.  You keep your cake and a little bit of frosting that gets thicker over time.

The difference between spending more than you earn and saving more than you spend is more different than most people appreciate.

I learned this lesson years ago from this book.

I promise you, the price of this little, funny book will pay you back many times over.