Are You in Charge of Your Financial Future?

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Financial Future

There has been much discussion in the media lately about our financial livelihoods and what they might look like now in light of the result of the Fiscal Cliff. For months running up to the end of 2012 the media was throwing around their self-proclaimed “Fiscal Cliff” and doing their best to make everyone feel like the sky was going to fall come January 1st. The blogosphere was full of our thoughts on it; heck, I even wrote a post or two on the subject. Whether or not there would’ve been a full scale meltdown is open to debate and is not the purpose of this post. The issue is that our do-nothing Congress created this problem several years ago and played a ridiculous game of chicken in the media only to throw a Dora band-aid (you can tell I am a parent of little ones) on the gaping wound that is our national debt crisis. Our elected officials kicked the can down the road on the more serious topics. This brought me to a question that has been on my mind the past few weeks…Can we really be expected to lead lives of financial prudence when our leaders do such a pathetic job of it themselves? I am here to say a resounding YES we are to lead lives of financial discipline.

But, I Don’t Like to Budget!

One of the most foundational issues I see with the entire situation is the aversion to budgeting. I know that I am in the small minority of people who love to budget. Call me a nerd, I don’t care. I’ll gladly wear that badge and I’ll wear it with pride. Many years ago I had no clue what a budget was and would’ve told whoever suggested one to butt out of my life as I was perfectly happy with my undisciplined spending habits. Looking back though, I was never as happy as I am now. Regardless of whatever I put on the credit card the luster always wore off. That left with me with $20,000 in credit card debt, and it sucked working to get out of it. But, you know what, I am immensely thankful for the lesson I learned in the process. It taught me that avoiding that impulse and actually delaying gratification made me happier in the long run because it meant I had skin in the game. I learned that I had to work for something to get what I wanted. Ultimately it was a lesson of contentment and being happy with what I had and not looking for my happiness in things. That came as a direct result, in large part, to having a budget. If you don’t have one now, give it a try and see what you think. I don’t care how you do it. If it’s simple, then great, don’t allow anyone to hold that against you. The point is to start now.

Do I Really Need to Pay More in Taxes?

Another thing that has been all over the place is how we “lost” the 2% payroll tax due to social security. The fact is that we did not lose it; it simply expired. When it was “given” to us it was told to us as being temporary. Sure, it means $70-$80 being lost from monthly incomes for many middle class families. Being a middle class family ourselves, I know that it’ll be felt by many. It may not seem like much, but many will use that for a summer vacation or to be able to get more than the basics while grocery shopping. That’s not the point though; the point is that it should’ve never been counted on as it was TEMPORARY. I hate paying taxes as much as the next person, especially to a government that is rife with overspending and viewing a budget as nonsense. However, taxes are a necessary evil. Do you like to have roads to drive on? I know that I do. Do you like having cops keeping you safe? I know that I do. There are MANY other things I could list, but the point remains that there is no real legal way around paying taxes and we’re responsible to pay them.

The Time is Now

Do not use our government as a guide. While they posture and smile for the cameras they continue to push finances and prudence to the side. The result is continuing and growing debt with no commitment by either party to take the bull by the horns and deal with the real issues. PLEASE do not follow their example. If you want to get ahead financially and have good long-term prospects, make the hard choices now. Do not wait. Sure, you can save some money by cutting corners here and there. That’s great; however it will only take you so far. Look for ways to increase your income and couple that with being frugal. The combination of the two can be a powerful combination and can help improve your future prospects. Ultimately, it’s time to put the big boy pants on and make the hard choices. Living a disciplined financial life does not happen overnight and it does not happen on its own. If you find yourself in massive credit card debt or lack of direction financially, sit down and make a plan for where you want to be three months from now, a year from now and so forth. Don’t feel like you need a ten page plan in order to start or some glorious vision statement. Just start. Start now.


Photo courtesy of: Klangkult

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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.

Latest posts by John Schmoll (see all)


  • DC @ Young Adult Money says:

    I get frustrated when seeing how fiscal and monetary policy is handled in the US. I think the entire tax code should be reformed and our spending cut DRASTICALLY. I don’t think anyone minds paying for police, fire, and roads, but it’s frustrating paying for social security knowing that there is a good chance that money won’t be there when young adults retire, and the fact that we are paying huge interest payments on our debt because our government can’t get their act together and balance budgets.

    I definitely agree with you -> do not use them as a guide!

    • John says:

      Totally agreed DC. I read somewhere recently how many thousands of pages the current tax code is. It’s just nuts…and to think we sent back 98% of the ones who were there in the first place.

  • Thad says:

    Best line: “Do not use our government as a guide”. You are absolutely right. A powerful federal government (an imperial federal government?) is not to be emulated.

    You do recall that when the payroll tax holiday was started a couple of years ago it was done explicitly to lead low-information voters to believe the WH had cut taxes, right? A complicit popular media obliged, and now? Those low-info voters? They are befuddled at what happened to their paychecks.

  • Kim@Eyesonthedollar says:

    It would be nice if we had a government who could lead by example, but sometimes we don’t even get parents who do this. It is up to us to make our own way and be responsible for our mistakes. Taxes can only go up, so I’d make as much while you can. Rates are still fairly low unless you are making over $400K.

    • John says:

      I totally agree Kim. It is up to us and so often we see many taking the victim mentality when that is so toxic. Taxes will go up and probably need to, all we can do is try and plan as much as we can for it.

  • Tackling Our Debt says:

    I use to think budgeting was a waste of time as well, but things change and now I we use ours every month and we know where each dollar goes. When you watch where your hard earn money goes you learn to appreciate it your income more and you challenge yourself to find ways to diversify your income.

    • John says:

      Great point Sicorra. Seeing how hard it is to bring in the money does make you more keenly aware of how you’re spending it and appreciate it more.

  • Grayson @ Debt Roundup says:

    Nice work John. I think a lot of people try to use the government as a guide and look where they are. I use the government as a guide of what not to do.

  • Lance at Money Life and More says:

    This is so true. I am very glad I took control of my financial future after graduating form college and feel that I will do the best I can for myself. I don’t worry about what others or our government does because it is largely out of my hands.

    • John says:

      Great point Lance! It is largely out of our hands, so we should do our best to control what we can in order to further ourselves financially.

  • Roger @ The Chicago Financial Planner says:

    A great wake-up call for everyone!

  • Midlife Finance says:

    I don’t have a detailed budget, but we do keep track of every dollar spent. We do have an overall monthly budget of $4,000 and we usually can keep it below that. I don’t like how our government is dealing with the budget either. It’s a huge mess and I don’t think they’ll be able to fix it anytime soon.

    • John says:

      The sad thing is that many don’t know where their money is going. You have to find what works for you, but you need to do something.

  • Mackenzie says:

    “While they posture and smile for the cameras they continue to push finances and prudence to the side.”
    Great post John! I am in awe that our government put our country in this position, and then don’t want to really do anything to fix it. I think if they could put a “Dora band-aid” on the situation, they would!

    • John says:

      Thanks Mackenzie! I am in awe too. They’re too busy blaming each other and lining their own pockets that they simply do not get anything done.

  • The Happy Homeowner says:

    Great post! You can find plenty of great examples to be your guide if you’re really looking for inspiration: Most PF bloggers!

    • John says:

      Thanks! Inspiration has to be found somewhere if our government is not doing anything and people continue to make ridiculous choices.

    • KK @ Student Debt Survivor says:

      I agree, If I’m looking for financial role models, fellow bloggers in the PF world are a much better example to follow. Our government and the politicians we elect have proven time and time again that they cannot be responsible and prudent with our money.

  • Money Bulldog says:

    It’s so sad that due to bad financial decisions at the highest level we will all have to pay in some way. As you say though, we don’t have to take the same road and inflict the same misery on our kids!

    • John says:

      It is sad. What I think is even sadder is that we re-elect so many of them. In the end we need to make the best decisions for ourselves and our family as opposed to taking the victim mentality.

  • John says:

    I also forgot that the 2% was temporary. And although I don’t like seeing it taken from my paycheck I realize that it was temporary and now we’re back to normal. I do find it funny though when those who voted for Obama specifically because taxes wouldn’t be raised are now upset about this one. It’s neither a raise or originally a temporary reduction by Obama.

    • John says:

      A lot of people did not realize it was temporary and sadly I think many were not planned for it, which can be big for many families. You bring up a great point about Obama, we shall see how that’ll play out.

  • krantcents says:

    Taking responsibility for our actions is fundamental to success or failure. It really doesn’t matter what the Federal government does because it is up to each of us to succeed. The Social Security tax reduction was temporary and I added that to my savings. If I had debt, I would have paid it down by that much. Everything we do is a choice, it is up to us to make good choices.

    • John says:

      I could not agree more KC. I knew it was temporary as well and put the large extent of it towards savings. It is up to us to succeed and not take a victim mentality. There are some things out of our control, but there’s a lot that we can control. It’s up to us to see that and make appropriate decisions in light of that.

  • Savvy Scot says:

    Love your rants John!! I would go as far as to say… do the opposite of the government!! ๐Ÿ˜‰

  • Edward Antrobus says:

    While it was nice that the lower brackets’ tax cuts were made permanent, I was prepared for those to expire as well. I find it kind of funny that the same kinds of people who say that people should try to make more money to pay off their debts tend to think that the government shouldn’t do the same.

  • Kurt @ Money Counselor says:

    I guess I’m a nerd too, ’cause I like to budget also! We’re all different, but for me I attribute much of the progress we’ve made financially to the process of budgeting, tracking our actual expenditures, and then comparing the results each month. I really believe in the adage ‘you can’t manage what you don’t measure.’

    • John says:

      I am the same way Kurt! It was learning how to budget that got me started to get out of credit card debt and starting to think of the future. I view it as having a plan for your money so I can manage it more effectively.

  • Ian says:

    I had some conversations with friends about the SS increase or readjustment and many didn’t understand it was going back to previous levels. I also think many don’t know how historically low our taxes are in the states are right now either. Regardless if taxes are high or low I think most people should just stick to their financial plans and stay the course.

    • John says:

      I think a lot of people just assumed we’d have it forever, when it was never communicated as such. I agree that many don’t know how low our taxes are in comparison to past years. Decades ago the tax rates were much higher on some classes. Great point on sticking to your plans. You can control only so much, make sure you do something with it.

  • Pauline says:

    I don’t like budgets very much but I have to admit that making one has been great to see where money was going and helped move faster towards financial goals. I still have a lazy approach to budgeting but it is better than nothing!

    • John says:

      I hated them when I got started, but I am glad that I started. The lazy approach is great…you’re better off than 98% of the rest of us. I really view it as a plan of where I want to get. Just like when you go on a trip you need to know how to get there, budgeting works the same way.

  • Budget & the Beach says:

    I also believe that everyone has a personal responsibility for their own life. The government or anyone else helping is the icing on the cake. I started and stopped budgeting SO many times during my life. But ever since last May it finally stuck, and I’m so glad. Now I may not have always followed it, or even stayed in budget, but having it had kept things very real for me. I’m kind of nerdy about it too. ๐Ÿ™‚

    • John says:

      I totally agree Tonya! Having your budget puts you WAY ahead of the game in comparison to so many others. No one is perfect, and we all make mistakes but too often it’s common to give up…kudos to you for not. ๐Ÿ™‚

  • Justin@TheFrugalPath says:

    I think people should run their personal finances more like a successful business and less like the government.
    On a side note, I like Buffet’s idea of firing all law makers every year the budget is not balanced. I’ll bet we’d get some compromise then.

  • Canadian Budget Binder says:

    I agree not to wait until one gets the green light, we have to take charge of our own life. Budgets well I’m a budget nerd right next to you mate. You are right though it doesn’t have to be complicated it just has to be. I had an email from a fan who is in severe debt possibly bankruptcy. I asked if this person uses a budget and the person says no, I just check to see what’s come out of my bank so I know what I have to spend on food etc. That’s clearly not the way to do it and not the way that has been helping this person. I really hope people start looking a budgets as an important tool rather than something only people with money can use or people with time or people who are anal about their finances. It’s alot more than those misconceptions. Great post. Mr.CBB

    • John says:

      Very well said Mr. CBB. Sorry to hear of the email you received, I am always saddened to see people in that situation. I hope they’re able to turn it around.

  • CF says:

    Very true! No one has your best interests at heart except yourself. I feel like by just having a budget, you’re setting yourself up in a good spot. Even when I had a very frivolous budget (I gave myself $400 in monthly spending at one point!) I could still see where my money was going and allocate money deliberately towards savings. Over time, I realized that I wanted to put more and more into savings and less into spending. It just works.

  • Jamie Dickinson @ YourSavingAngels says:

    Love the bit about people disliking budgeting. If you’re going to get out of debt and save money for a better lifestyle, it’s the only way, other wise you’re just floating by. Great work!

  • jefferson @SeeDebtRun says:

    I try to focus on what I can control.. and whatever comes down from Washington, we will adjust. Obviously they way this country handles its finances (and heck, its legislation) is inane and frustrating..

    But yeah.. I am with you on the griping about the 2% payroll tax.. It was never meant to be permanent.. I don’t let it bother me..

    • John says:

      Great point Jefferson! I like to look at it as well, otherwise you’re just getting yourself stressed for no good.

      Yes, it was temporary I just wish more would’ve remembered that.

  • Shannon Ryan @ The Heavy Purse says:

    I’m a nerd too. ๐Ÿ™‚ I love budgets. Yeah, I’m a financial advisor so it goes with the territory, but I know plenty of advisors who are budget adverse. But I love them. People find them constraining, but I find them freeing. Now I know where I stand, what areas need some help and how much money I have to play with – so I can CHOOSE how to use my money that I have available without going into debt.

    • John says:

      Awesome to hear Shannon! ๐Ÿ™‚ I feel the exact same way about budgets. They’re freeing and they allow me to choose where I want to direct my money. It’s really a plan on what I want to do with my funds.

  • Boris says:

    Living in California I have to deal with exorbitant taxes not only at the federal level but at the state level as well. You’re right in saying that we can manage our own destinies by living frugally, but it sure is discouraging when elected officials keep biting more and more of my pay in some way or another.

    • John says:

      Oh, California… I feel your pain Boris. I lived there for two years and my in-laws have lived there for decades. My mother in law works for the City of San Diego, she’s really hoping her pension is there for her in a few years.

  • Kay Lynn says:

    It was eye-opening how many people were surprised when the payroll taxes returned to their previous level.

    I agree that the tax code needs to be simplified. It’s so complicated and I think the burden is on the shoulders of the middle class.

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