Mark Eisenson and Nancy Castleman have been living the rich life for years. It’s not that they’re flush with cash. It’s just that they have all that they need, and then some.
Twenty years ago, they left the banking world and moved to the Hudson Valley to focus on what really mattered: each other and their family. Since then, they started the Good Advice Press, a small publishing company that offers smart advice on everything from stretching out your dollars to nifty ways to pay off debt faster to getting the most out of your child’s kindergarten year.
Two decades of advice about money has boiled down to a few short thoughts: ‘It doesn’t take a lot of money to live a rich life. Wealth is having more than you need. Poverty is having less, write Eisenson and Castleman.
As they often put it: It’s that simple. Here are a few of their suggestions for getting your financial life back on track. The first step is to pay down your debt.
Back in 1984, when we began writing about investing in the debt side of your portfolio, we were called “contrarians.” Now, most financial thinkers agree that your best investment option is probably in your pocket,’ Eisenson and Castleman write.
If you routinely pay only the minimum due on a typical 13 percent, $8,000 credit card balance, you’ll be paying that bill for 31 years. Even if you never charged another dime on that card, you’d pay over $17,000 in interest on the debt. But if you send in $100 a month more than the required payment, you’ll save over 26 years of payments and $6,700, probably more – because interest rates are going up, and virtually all card issuers will raise the rates. (On fixed rate cards, card issuers are only required to give you fifteen days’ written notice before they raise the interest rate.)
Prepaying your credit card debt, auto loans and mortgage all help you save big bucks over the long run. What should you do with your savings? After you’ve set up your emergency fund, consider investing it for the long run. Save $25 per week, and invest it at 8 percent and in 18 years you’ll have $50,000 saved. That can help you beef up your retirement savings
Eisenson and Castleman, who are also the authors (along with debt expert Gerri Detweiler) of a terrific book called Invest in Yourself: Six Secrets to a Rich Life (GoodAdvicePress.com), believe in the concept of deferred gratification. In other words, think before you buy, and delay the purchase as long as possible. If you still want the item, odds are you’ll appreciate it that much more.
Before you run to the store, Eisenson and Castleman suggest you stop and ask yourself three key questions.
If I didn’t need this yesterday, why do I need it today? If you’ve waited this long to purchase something, why can’t you simply wait another month or two. Putting off the purchase as long as possible gives you time to think about whether you really want the item or are just buying on impulse.
How much is it going to cost me in days or years worked before I’ve paid it off? If you charge it on your credit card, and carry a balance but only pay the minimum each month, it could take you 30 years to pay off whatever you had to buy, write Eisenson and Castleman. Your time is more valuable than money, they add.
- Can I get it used? Whether you’re shopping for a car, clothing, furniture or bicycles, you can often save a lot of cash by buying something that is gently worn than brand new.
The big idea Eisenson and Castleman talk about all the time is keeping it simple: If you consistently spend less than you earn, and make conscious choices about the lifestyle you really want, you’re far less likely to panic or feel deprived when the market takes its next dive, or you’re downsized. The key here is to cut back voluntarily – in ways that won’t leave you feeling deprived, they say.
They believe people who focus on leading the simple life tend to spend less mental energy and financial resources on material possessions, strive to be more self-reliant, put their family before their career, try to find a career they love, live debt free, care for the environment, and lead a slower-paced life.
Does it work? Mark Eisenson once told me that paying off his mortgage years early had been a profoundly moving experience that changed the way he looked at all the pieces of his world, including work, recreation, and family. He hasn’t looked back since.
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