Emergencies:

As it stands I have just under $10k stashed away as an immediate cash emergency fund. If my car blew up or I was injured in some way I have that cash on hand and I’ve had to tap it only a handful of times in the past few years.  How much can these individuals put toward their emergency fund? Will it keep up?

Health Insurance:

Since many of these individuals are part-time workers, I’m curious as to how they cover themselves for health insurance. Going out on your own to get insurance is very expensive and would take a large chunk out of that $18k income.

When I look at my current budgetary guidelines, I wonder what I would have to cut if I was making exactly $18k (I’m assuming before taxes). My car, for example, is currently paid off, but I do have a car fund that will be ready for the inevitable day that my car bites the big one. That would have to go. I also pay as much as I can towards my student loan, which would have to be brought down to the minimum. Doable, certainly, but likely outside of my comfort zone.

Think about it. When you purchase your average song on iTunes it’ll cost you about a buck. No big deal right? Until you open up your Kindle and the latest Twilight book is out (it was a prequel I think?). No problem! One click and it’s yours at just under $10. Hop on your PC and you notice that your retrofavorite game Golden Axe is available to download right now so you can play with a friend! What’s a few bucks, right? Unfortunately all of these seemingly insignificant transactions can balloon into a digital version fo the latte effect.

My Solution:

While I love downloading books and old games as much as the next guy, I have a very simple way of making sure it keeps under control: I link these stores to my spending account. Since it has a finite amount of funds allocated to it each month, I can go ahead and blow my money on music and books if I want to, I just won’t have anything left over to do much else. In the end it works itself out, and I’ve found a happy medium. If I run out of money well, that’s it. No more spending until next month!

I believe that money is a tool that should be used to help build the life of your dreams. After you’ve repaid your debt, saved for emergencies, and funded your retirement, anything you have left over is yours to do with as you please.

This is great for JD, who is finally finding the time to pursue whatever it is that he finds interesting, in this case traveling the world and seeing what there is to see outside his home state. But for many of us, following those dreams can seem like a push-pull towards one goal or another. Do you want to travel the world or save for a house/pay your mortgage early? How much is enough of an emergency fund? What if your dream means giving up the extra income of your 9 to 5 job? In short, where do you find the balance to save for the things you have to, like retirement, a home (if you want one), and pay for insurance while still starting your own business or traveling the world?

Unfortunately there’s simply no right answer, and you won’t get the same answer from the same person you ask no matter where you go. The reason for this is that each of us act differently under the same circumstances. Some people like having that fire lit under them, having to drive toward a goal because they simply have no other choice. Dropping everything and throwing everything they have at a new business idea or designing their own lifestyle despite not having that nest egg or emergency fund actually works for some people, like it did for Naomi over at Ittybiz. The stakes are high and that provides even more incentive to succeed.

Others, (I consider myself in this camp, I should note) would not do well under these same circumstances. Not having a nest egg or an emergency fund to support them if their endeavors failed would only exist a source of worry and stress that would distract them from their goals. For them (and me) it only makes sense to really pull the trigger when it is financially viable to do so. This is similar to a situation I’m in now, where I gave up a chance at a decent-paying 9 to 5 job for a part time contract gig and my fledgling hydra to support me, but it wasn’t something I took into consideration lightly. I do have an emergency fund and severance from my previous employment to that could keep me going for at least a year even without any outside income. The question you have to ask yourself is when are you really going to be ready to make the leap and accomplish your goals? If you need that emergency fund and the mortgage paid off before you’re comfortable, do it.  If you have the drive and fire to go all out on a goal you know will work, fire away. Neither one is the right path, per se, but it’s important to know the right balance for you.

In that vein if you’re looking for a bit of a pick-me-up, I recently came across in article on Yahoo! Finance that shows us that we are a whole lot richer than we think.  Here are a few tidbits to take away:

For example, if you make $52,000 a year (the median American household income for 2009), you are the 58,252,719 richest person in the world (or in the top 0.97 percentile of all moneymakers).

and

Someone who makes half of that ($26,000 a year) is still in the top 10%, ranked 569,942,529 on the Global Rich List.

$26,000 a year here in the United States is certainly viewed as the lower end of the wealth pool, and yet you are still well above the vast majority of earth’s inhabitants. I understand this is of little comfort when the bills are piling up and some jerk is driving past you in his Corvette, but it’s important to keep your perspective when examining your own financial circumstances.

So go ahead and reach for the stars, try to break into that 0.97 percentile if you want. If you work hard enough you’ll get there before you know it, but also remember to be thankful you are as prosperous as you are, and that many others don’t get the same opportunity.

Which turned out to be early January 2010.

A recent change meant that my license was no longer necessary, and so I am once again allowed to write! Of course this still means that you won’t be seeing anything investment related around here, seeing as the whole experience has led me to err on the side of caution. There’s still plenty of other subject matter to cover though, including rebuilding my passive income empire that currently lies in ruins. You’ll notice that my last post involved our Adsense update.

From what I understand, the Adsense portfolio has continued to blossom and grow in 2009 (It’s no longer under my ownership for reasons stated above, but I turned everything over to my older brother who I partnered with originally). I also plan to once again pick up on writing if possible. While technically I can write about whatever I want, I enjoy where I currently work and would like to stay here (A mutual fund). So baby steps. For those of you still lurking around the blog I’d like you to know that I’m back, and hopefully we can pick up where I last left off.