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Using three jars to attain financial stability

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Just a Thought ... By Rick Kraft

If you keep doing what you’re doing, you are going to keep getting what you’re getting.

Simple words of advice that we too often fail to recognize. Often our bad habits doom us. We keep repeating our same poor habits then we live a frustrated life because the results don’t change. Do you ever get sick and tired of being sick and tired?

This wisdom applies across the board to our marriage, our parenting, our health, our work, and other activities we’re involved in. In our hearts we desire different results, but we don’t change our habits. We end up depressed or frustrated, yet we’re not willing to pay the price to change the behavior that leads us to a place we don’t want to be.

There are many things in each of our lives that are near and dear to our hearts and affect our global worldview, but today I am going to apply this concept to one of the biggest stressors in each of our lives...money.

Are you happy with where you are financially? Does the financial world you woke up in today cause you to worry or be anxious and therefore lower your quality of life? Understand that you didn’t wake up where you are today by accident. Own up to the fact that you choose to be where you are today.

Finances can create great stress both individually and collectively. This stress can keep you awake at night. Some studies put it as a top reason for divorces. Financial conflict in a close relationship will spill into other areas.

I heard a recent talk by a former member of the Dave Ramsey organization, Jimmy Pruitt. He is now a pastor at the Oak Hills Campus in Fredricksburg, Texas. He cited numbers on the average financial health of the typical American household.

The average household income in America is $56,516. The average household debt is $187,000 in mortgages, $29,575 in student loans, $16,917 in automobile loans, and $5,100 in credit cards. This totals an average debt of $238,592 per household. Bottom line, Americans are swimming in debt. 

Seventy six percent of Americans live paycheck to paycheck. The average American household wastes 24% of their take home pay on consumer debt. Sixty four percent of Americans can’t cover a $1000 emergency. The average credit card interest cost is $2,630 per year. Seventy percent of couples do not budget on a consistent basis. 

Dave Ramsey says “If normal is broke, we need to be weird.” Regardless of how you get there, most of us have financial struggles and something needs to change. Each of us needs to own up to our financial past.

Today I am going to give you some pointers on how to lower stress in your world. It takes time, but I believe it is important to increase your quality of life. This method is so basic you ought to use this method with your children to teach them how to manage money.

Set out three jars. Whenever you get your paycheck (or allowance for children), convert it to cash. Put 10% of it into one jar, 10% in a second jar, and the remainder in a third jar. 

The first jar is the “giving jar.” This is money that you give away or donate to pour your life into the lives of others. The purpose of this jar is to add value to the lives of others.

The second jar is the “savings jar.” This is money that you are putting back for a rainy day, because we all know we will have rainy days ahead. This money should grow monthly. After enough is put back for emergencies, it may be used for a large purchase (i.e. a car) to avoid incurring debt on the purchase.

The third jar is the “living jar.” The money in this jar should be used first to pay down any debts that exist (hopefully none eventually) and then is to live off of.

Cut up all of your credit cards except one, but don’t carry any balance on the remaining card. Best case it is to be taken on trips or is only to be used in the event of an emergency if the rainy day fund is exhausted. Unless absolutely necessary, there should never be more charged on this credit card than what can be paid off when the monthly bill is received.

If you have a mound of debt, stop the bleeding by living out of the “living jar” and not above your means. Don’t incur any more debt and each month chip away at the mound you have. Never borrow money to buy anything that reduces in value after you buy it.

Understand that either you are paying to use someone else’s money or you are investing your money so someone else will pay to use your money.

There you have it. These principles apply whether you make a six figure income or minimum wage. 

What is amazing is that each of us, regardless of what we make, are in the top 10% in the world and still we stress over finances. Whether you are happy with what you have or unhappy with what you don’t have, you still have the same things.

With discipline and time you can enjoy life now, put back a nest egg for when you need it, and generously share your blessings with others. 

Understand that despite complaining about not having enough to live off of, there are countless others making less than you who are doing just fine. 

My challenge to you today is to be a good steward over everything you have been blessed with and what you will be blessed with in the days ahead...your health, your family, your time, and your finances. 

If you don’t like where you are, change your habits. Some new habits and a different view of the world can lead to a more relaxed approach to life. It can save your marriage, give you options to retire, and even allow you to get better sleep at night. 

Just a thought...

Rick Kraft is a motivational speaker, a syndicated columnist, a published author, and an attorney. To submit comments, contributions, or ideas, e-mail to rkraft@kraftlawfirm.org or write to P.O. Box 850, Roswell, New Mexico, 88202-0850.

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