Five Uses of Money

The Wall Street Journal recently reported that US household indebtedness has reached a new high.  After years of retrenchment following the 2008 housing collapse it appears that Americans have resumed their love affair with debt.  This new peak in indebtedness is being driven by student loans, car loans, and even the evil credit card.  Credit card debt topped $1 Trillion for the first time since 2008 and will likely reach a new all-time high this year.

What is so bad about debt, you might ask?

The reality is there are only five uses of money, and what you use in one area, cannot be used for other areas that should be a higher priority.  In this way, debt steals people’s financial future.

LIVE:  This is the money you spend on lifestyle

What house will you live in, what car will you drive, where will you live, what will you wear, what will you eat, what will you do for entertainment, where will you go on vacations?  These are some of the things that fall in this category.  For most of us, this is where we would like to see a large portion of our money go so we can have “a good life.”  What credit enables us to do is to get these things on other people’s money, but it comes at a price.

GIVE:  Charities, family, friends often need our help

Can you provide for your children’s college.  Would you like to support kids overseas, or your church?  Do your parents need help from a private duty nurse or paying for assisted living?  These are just some of the areas we might like to help with, but sadly we often cannot find the means to do so.

GUARD:  Health, Life, Auto Insurance, Emergency Fund

Most people who understand financial risk have a large portion of their income going to this area.  The cost of a major health issue or a major car wreck, especially involving others, can bankrupt a middle class household.  Many who do not allocate funds to this area have experienced financial ruin.

GROW:  Investments in self development, entrepreneurial and/or career endeavors and retirement.

This is the area where we expect money to produce a return in the future.  Investing in a college education, trade school, or certifications should produce higher levels of income.  Money spent to get your own business off the ground should help you attain financial independence.  Allocating a percentage of your income to retirement funds can provide for your future in your golden years.  Unfortunately, most Americans do very little for retirement and use debt to fund their educations and business start-ups which result in the anchor of indebtedness weighing down their progress.

OWE: Taxes, Debt Service

There is little we can do about taxes unless you do not produce an average income or better.  Even then you will have gas taxes, sales taxes, and property taxes eating away at your cash flow.  Indebtedness, however is within our control.  we make the choice on whether or not to go into debt.


I have found it useful to take a look at your monthly spend and see how much of your hard earned money is going to each of these areas.  No one can tell you what percentages should go where, that is totally up to you.  Just remember, what you spend in one, you could spend on another.  Are you happy with what the balance looks like in your uses of money?  If not, you CAN change the equation.


You can eliminate debt to provide more cash flow to retirement funds.  You can buy used cars for cash instead of new cars on leases and free up hundreds of dollars a month to go in your child’s education fund.  You can choose to live in a smaller house to be able to travel more.  You are in control.  Be intentional about the life and future you want to create and start making moves to live your dream.


Round Tuit Rant. Reader Discretion Advised!

round_tuit_magnetFinally!  You have what you need to accomplish everything you hoped in life.  It is pictured right here and can be ordered at  For less than my son’s weekly allowance, you may hold in your hand the ever evasive, altogether allusive, Round Tuit.

For any of you who have not already heard this age old joke, by holding this item, you will have the power to do everything you have said you will do when you get “around to it.”  Some examples:  When are you going to go for that promotion, write a book, spend more time with the kids, go on that diet, start exercising…  That is right, when you “Get a Round Tuit!”  Well, now you can have one.

All kidding aside, we have a society filled with procrastinators.  “Why do today what we can put off until tomorrow?

Rather than Plan, we Pass.

Rather than Persist, we Pause.

Rather than Produce, we Play.

Why?  Because we believe we are Entitled.  Someone is supposed to make us happy!  THEY owe it to us.  Whoever THEY are!  We have paid our dues… or our parents did… or grandparents, or someone we cannot quite identify.

That does not matter, I am an American.  I have the right to Life, Liberty, and Happiness.  It’s in the Declaration of Independence!

What’s that?  What do you mean it does not say happiness, but the “pursuit of happiness.”  What does that mean?  Wait, pursue… That implies I have to do something!  Not only that, I might not even succeed in the pursuit?  Well forget that!  Just redistribute the wealth and we will all be fine.  There is plenty to go around. Right?

The fallacy of this fantasy world has popped in two financial bubbles in the first decade of the new millenium.  First we had the bubble where everybody bought tech stocks and fantasized that new technology would save us from having to work for a living.  It popped.

Next we tried to continued to try to live beyond our means buy taking out second mortgages, enabled as bankers started lending money to every warm body who could make their mark on a zero down mortgage contract.  The demand of all those new home buyers inflated housing prices and created false “equity” for us to borrow against.  Of course, we did, convincing ourselves it was “good” debt.  We could even get the tax deduction.  Of course, the house of cards came tumbling down, and our grandchildren will be paying the price for decades to come.

So, have we learned our lesson?  If not, here is a sure fire get rich scheme.

Work hard, spend less than you make, invest wisely for the long-term, only in vehicles you control and you understand, and be generous.  Good things come to generous people.

The time is NOW to get around to doing the things that will get you where you need to go.  Concentrate on these three things:

Plan:        Dare to Dream

Persist:    Do your Duty

Produce:  Don’t stop Doing

I have never seen someone follow these principles and not succeed in the long-run.

Special thanks to Pastor Kevin Myers, 12 Stone Church, for inspiring this rant!