I’ve heard a lot of talk about the large income gap between your average worker and a company’s top executives. There are many different opinions on the subject, and I’m not going to debate the issue here. I did however read an article that espouses an opinion that I’d never heard before.

In the article, “An Embarrassment of Riches”, Howard Gardener believes that we’ve lost sight of what it means to be rich enough. Unfortunately our society seems to make the assumption that the most accurate measure of success is how much money you have accumulated. It is also sometimes hard to believe that people can be happy without all of the glamour and well to do that we see in the media.

His proposed solution is some form of an income cap. He says that for starters no single person should be allowed to take home annually more than 100 times as much as the average worker. That would put the cap at $4 million if the average wage is $40,000. He also says that no one should be allowed to accumulate an estate worth more than 50 times the allowed annual income. That would put the amount at $200 million.

Now I know there would be many people out there who would think that this is a great idea. They can’t even imagine making that much money, so why should anyone else? People could however make the false connection that limiting someone else’s income would somehow increase their own. Instead of adopting this entitlement attitude believing that something should be taken away from others and given to me, I would rather look to self-sufficiency.

Regardless of your thoughts on the issue, it’s an interesting viewpoint. That being said, let us know what you have to say about it. Would you be in favor of it?

If you’re thinking about a new car these days, you’re not alone. I’m seeing more and more new cars on the road as evidenced by the temporary license plate hanging in the back window. A new car however doesn’t necessarily mean that it’s brand new off a dealer’s lot. You may decide to buy used (which is usually the better choice). If a “new” car is in your future though, you may want to take a few steps to make the purchase more manageable for yourself.

First of all, if you’re planning on financing some portion of the purchase you’ll want to take a good look at your credit rating from the different bureaus. Every consumer is entitled to one free credit report per year, but very few people actually take advantage of it. Just go to AnnualCreditReport.com to order your free reports. By knowing your credit rating you know what kind of financing you can expect and can also take steps to raise your score if that be the case.

In order to determine whether or not you can realistically afford the new purchase, you may want to set aside an amount each month equal to your estimated monthly payment. After doing this for some time, you’ll not only know how the payment will affect your monthly finances, but you’ll have a nice down payment as well for when the time comes. I would highly recommend this option to anyone who is looking into getting a new car or adding any significant monthly bill to their finances.

You will also want to research ahead of time the type of car that you’re looking for. The last thing you want to do is walk into a dealership without any idea and have the salesman talk you into something. You’ll want to be familiar with the options that are offered and decide beforehand which options you do and don’t want. Knowing this information up front allows you to negotiate the best price on a vehicle that you actually want.

Finally, before you buy that new car, take a step back and ask yourself whether you really need it or if it’s just satisfying a nagging want. Buying a new car can be a great experience, but the “perceived newness” to you doesn’t actually last that long. Just make sure that it’s purchase that doesn’t put an unnecessary strain on your finances and that you won’t regret in the near future.

In order to really get a handle on your finances and understand what’s going on, you need to know where all of your money goes. Most people know how much money they make and where it comes from because it usually only comes from a couple of sources at the most. Knowing where your money goes is more difficult since there are so many places for it to go.

So take some time to go over your bank and credit card statements and find out what you’re spending all your money on. It can be an eye opening exercise and allow you identify problem spending areas. You can’t fix something if you don’t know it’s broken.

Do you struggle with credit card debt? Maybe a better question is… Are you still struggling with credit card debt? You know that you should get out of debt; you’ve read about it and been told about it countless times. You now need to figure out what it is that’s keeping you in debt or what it is that’s holding you back from getting out.

I’ve seen too many people that all but forget that they actually have a balance on their credit cards. When these people get their statements in the mail, they ignore the balance and only focus on making the payment that is required like it’s a gas or electric bill. This is not the correct way to handle credit cards. Don’t just make a payment. Realize that you have a balance, a debt owed, and make steps to eliminate it. You’ll never get out of debt if you don’t.

I’ve also seen people who just have to spend money. If they’re bored or don’t really have much to do, their natural inclination is to go out and buy something or entertain themselves in some way that usually costs money. This type of person is never satisfied with what they have, yet they figure that if they just get this next thing then that will be it. Unfortunately it doesn’t ever stop there. This issue is larger than just credit cards. You need to learn to be more content. You also need to be more conscious of what you’re spending your money on. Try a spending log in a small notebook or something similar if it would help.

Some people find themselves in so much debt from which it seems practically impossible to recover. They figure that it’s already a lost cause and they’ll never get out of debt. Because of this, they don’t worry about trying to pay it down; it’s just another drop in the bucket as far as they’re concerned. If you find yourself in this situation, realize that the situation isn’t hopeless. There are steps that you can take to eventually get yourself out of debt. You may not be able to do it all on your own, but you can get help. The best thing to do first is to stop using your cards and start making extra payments.

Whatever your situation is, find out what is holding you back and then take specific actions to remedy the situation. Credit card debt does not have to be a way of life.

There’s always a lot of talk in the realm of personal finance about emergency funds. How much should one have? Where should one keep it? I’ve talked about these before on this site, and I don’t want to rehash it all right now. I do however want to mention an aspect that I haven’t really seen addressed.What happens if you’re involved in a true emergency such as a natural disaster? I’m talking about something where the normal infrastructure has either been destroyed or isn’t accessible. Would you be prepared for such a circumstance?

Obviously there are a lot of issues here, but I’m only concerned with the financial in this space. Regardless of how much you choose to keep in an emergency fund and at which institution you decide to hold it, it would probably be a good idea to keep at least some money in cash for true emergencies. When I say cash, I mean actual cash money kept at your home or some other self-designated place.

How much you decide to keep on hand is a choice that you’re going to have to make based on your circumstances and needs. I would recommend keeping whatever you’d need for at least a period of 72 hours. This would obviously be only for extreme cases, but I’m sure you’d be glad to have it if something awful were to happen. Like I stated before, this isn’t your typical emergency fund, but it’s another part of your personal finances that you ought to consider.

When I first started this site, I wrote about financial statements; in particular, the balance sheet and the income statement. People typically think of these in conjunction with companies, but they can be incredibly useful for individuals as well.

If you don’t already use these financial statements in your personal finances, you should probably start with the income statement. If you’re unfamiliar with how it works you can check out the above link and email me with questions. The reason I suggest you begin with it first is because it allows you to get a handle on all of your expenses. Most people are very aware of how much money they have coming in, but they need to do a better job of keeping track of where their money goes. Keeping a personal income statement will also tell you whether or not you’re spending more money than you’re earning, and by how much.

Once you’ve got a handle on the income statement you can move on to the balance sheet. From the balance sheet you will determine your net worth. As you continue to update your balance sheet you will be able to see the trend in your net worth. Hopefully you will see it continue to increase.

The most important aspect of these financial statements, however, is that they allow you to make informed decisions about your finances. You’ll be able to determine how certain expenditures or purchases will affect your overall financial picture. You’ll also be able to better formulate a plan that will get you where you want to be and allow you to reach your goals.

I’m trying something new here on this blog. It’s an ad network that provides contextually relevant ads. You’ll notice that different words and phrases will be linked and double-underlined. Supposedly it will take about two weeks or so to accurately “learn” the site and optimize itself. I’m testing this out as a possible revenue source that will help keep this blog up and running. Hopefully it won’t be too distracting. Feel free to let me know what you think, be it positive or negative, but I’ve decided to try it out for a while.