A Personal Finance Guide

Ted and Wilma are in their thirties and both work outside the home. Ted is paid weekly and Wilma is paid once a month on the 20th. Their take home pay is enough to pay the bills with very little left over.

In this family, Ted is the “Clyde,” the Clyde who runs the water out of the tub while you are trying to fill it up. Clyde is usually the one who does not actually sit down and write the checks to pay the bills. Clyde is the one who talks a lot about being the boss, about how smart and tough he is, but Clyde is really a baby. He understands nothing about the family finances, but gripes when he cannot buy what he wants or if he happens to see a cutoff notice on the electricity in the mail. Clyde is usually the male, but in rare cases, Clyde is the female. Anybody have a Clyde like this in your life? And sometimes there are two Clydes! “Lawd” help!

Wilma reads “The Debt Destruction Engine”, which is weird to her because she sees herself mentioned on page 100. Then, Wilma wins Ted, her “Clyde,” over to her way of thinking, well, at least somewhat. He does not completely understand or like what she is doing, but agrees to at least try to go along with it. Ted’s take home pay for the month is 56% of the family’s total take home pay. He is paid on every Friday. So, each check, in most months, is 14% (56% divided by 4) of the monthly take home pay. Wilma is paid once a month and her check is 44% of the total take home pay.

Wilma knows that they tend to spend whatever is available to them and then try to pay the bills with what is left. She decides to “get the money out of their hands” so they cannot spend it before they pay their bills. On Thursday night each week before Ted gets his check on Friday, Wilma writes checks for 14% of the monthly bills. On the evening of the 19th before she gets her monthly check on the 2oth, she writes check (more…)

Over the past couple of decades, one might have begun to think that inflation was a dragon that had finally been slain. Today, though, with food, gas, and nearly every other daily expense skyrocketing it is becoming crystal-clear that this is just not the case. With inflation on the rise, and a recession an almost inevitability, perhaps it is time that we refresh our memories on just what these terms mean.

So, what exactly is inflation, you might ask? Some experts claim that inflation is the phenomena that results from the supply of money exceeding the amount of goods produced in this country. This results in consumers willing to spend more on goods in demand. In turn, the goods producers raise prices until the supply meets that demand and no higher price can be gained. The net effect: an overall lowering of the value of a dollar.

Other factors that can influence the rate of inflation include pressures on the economy from other countries. If a certain country experiences inflation of it’s own, then the price of goods from that country will rise. This, in turn, causes the costs of importing that item to this country to rise, which results in inflation in this country.

This is the way inflation works, no matter what the currency or country. Every country takes some sort of steps to try to manage inflation, with varying degrees of success. In the United States, we have a central bank called the Federal Reserve that tries to manage inflation through the careful management of credit and money supply.

In recent years the Federal Reserve has attempted to manage inflation through the management of interest rates. By lowering interest rates, the Fed effectively increased the amount of money available to loan to businesses and consumers. This short-term strategy has a long history of causing more problems than it solves though. By keepi (more…)