Beyond Suzy Orman and Dave Ramsey-the simple secret to financial security that your grandparents or great grandparents knew

Step one: Enter your net income after all taxes and required deductions (including health insurance).

Step two: Subtract savings of at least 10% to build and maintain an emergency fund and for retirement, etc.

Step three: You may spend the difference, in other words this is what comprises your standard of living and no more.

Step four: Never use credit cards to make purchases that will not be fully paid within the billing period (or don’t use them at all).

The number that results from step three determines the kind of car you can drive, the type of housing you will have, how often you can enjoy some extras like eating out, vacation, etc.

Maybe the answer for now is you drive a Yugo, rent a one bedroom apartment, actually cook all your food at home and never take a vacation. That by the way is just about how my parents lived…except for most of the time, they couldn’t afford a car.

Now, if you are not happy with the number in Step three, you have to do something about it. That “something” does not include spending more than the amount in Step three to enjoy some extras or keep up with the Joneses. The “something” you need to do includes things like getting a second job even one related to french fries, developing marketable skills, starting a small side business, coming up with creative ways to make more money, perhaps selling something you are good at making, working as much OT as you can get, taking a paper route, write a blog with advertising, the possibilities are endless. It may not all be fun or even enjoyable, but you do what you have to do to reach your goals. See I told you it was simple.

At some point you may decide you are never going to reach a number in Step three that makes you happy and allows you to live as you would like. When that happens, it’s time to look into the mirror and ask a few questions. Do I have the skills and training to move ahead? What decisions have I made so far that limit my ability to do better? What do I really need to do to change things? Is there something about my attitude that is holding me back?

Or, you could take another route and join a protest blaming someone else for that lousy Step three number.

When I was seventeen, I had two goals that I recall very clearly. One was to own a Mercedes and the other was to be a millionaire by age forty-five. Well, I am nearly age 69 and I don’t own a Mercedes and instead of being a millionaire by age 45 it was then that we started a journey of one, two or three children in college each year for the next ten years. But missing those goals doesn’t bother me because I learned along the way your priorities quickly change and sleeping at night with no debt, paying cash for what you want and spending money on things other than “stuff” does have its own rewards.

The downside I suppose is to get to that point you must work a lot of years, perhaps work more than one job, definitely put up with a lot of crap and aggravation and find creative ways to make the things you want to happen, happen. That is not always simple or easy, it’s called life.


  1. “the simple secret to financial security that your grandparents or great grandparents thought they knew but were terribly mistaken about”

    Step two: Subtract savings of at least 10% to build and maintain an emergency fund and for retirement, etc.

    As we are now seeing in Europe and will probably happen here as well, when faced with unsustainable debt there are three possible corrective measures.

    1- Growth- but we are in a worldwide recession with no end in site.
    2- Austerity- but as soon as it is tried and before any results can be achieved, governments fall or are replaced due to popular revolt and austerity agreements are reneged upon.
    3-Inflation- governments crank up the money printing (quantitative easing) which eventually devalues the currency.

    When inflation and currency devaluation becomes the path of least resistance to solving a debt crisis, it is those who have saved who ultimately pay the bill. So the question is…. Do I save money and hope for a world of individualism and personal responsibility or do I spend it all now and hope that a socialized state will take care of all my needs as THEY see fit.



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