It’s what you spend

Yesterday while on the road I listened to Bob Brinker’s “Money Talk” show on WLS radio.
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Mr. Brinker made it clear that we need to distinguish between assets and income, and then noted that a high proportion of professional athletes –  who had exceptionally high incomes for a several years – file bankruptcy just a short time into retirement.
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It’s mindboggling to think of how much money that actor Johnny Depp must have taken in over the years, but he’s reportedly now going through financial difficulties.
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So, you’ve never had a multi-million dollar income?
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I counseled factory workers who were paid very well at forty hours per week.  But they had become accustomed to receiving overtime income month after month, for several years.  Then, when the overtime was cut back, they had trouble making the boat or motorcycle payment and were compelled to take “emergency” withdrawals from retirement savings.
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It’s sad to see so much wasted potential.
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There was a married couple of university professors who, even with a steady, six-figure income, were struggling to pay their debts.  With first and second mortgages, car loans, and credit cards, they were knee deep.  Undoubtedly brilliant in their fields, they simply were not good money managers.
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High income or not, too many people fail to create wealth over their lifetimes, even when they could have.
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It’s hard to feel sorry for someone like Johnny Depp.  But he’s probably feeling some of the same embarrassment, desperation and helplessness that the rest of us would.
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Each of us must somehow find a way to live within our means, and often it involves making substantial lifestyle changes.
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You may have heard the story of Anne Scheiber, a “normal” woman in New York who worked a “normal” job.  A very frugal woman, she didn’t eat out and she wore the same coat year after year.  In 1944 she invested $5,000 in the stock market, didn’t touch it for 50 years, and made headlines when she died in 1995 at the age of 101, with a net worth of $22 million.
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As long as you’re meeting basic human survival needs, then it’s what you spend that makes the difference. 

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