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DAVIDSON: It’s Not About How Much You Earn

Prudent finances are more important than ever before.

Jeff Davidson

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The tragic death of Robin Williams in 2014, who took his own life while suffering from severe depression as well as facing money problems among other things, reminds us of a truism of personal finances: it doesn’t matter how much you make in any given year, or in the span of your career. If you spend more than you make, and do it in a hurry, you can end up as bankrupt as anyone. This last year has been particularly tough for many people and so prudent finances are more important than ever before,

Yesteryear, we often read about professional athletes or entertainers who annually earned multimillions of dollars, but then, a few years out of the sport, or out of the celebrity limelight, fell into financial ruin. How could someone raking in several million dollars a year, we thought, end up penniless? How foolish, how reckless, how wanton could people be with their money?

Today, at least among pro athletes money managers ensure that said individual will have regular annual income for life. In pro contracts, clauses stipulate how much of an athlete’s earnings will actually be dispensed in any given year. Hence, 15 to 20 years out of professional sports, an athlete earning, say, $10 million a year will be assured of income for life as a result of effective money management. Celebrities who are wise enough to choose effective professional financial counsel are similarly aided.

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High Debt means no Breathing Space

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It’s no matter how much you make, if you don’t effectively manage your money, it can all go to pot. Studies show that an inheritance, no matter how large, on average is dissipated within seven years. So, whether someone receives $5,000 or $500,000, on average, after seven years all that money is gone.

Being in debt is not conducive to having breathing space. In fact, it’s the antithesis. When you’re in debt, that ever-present reality has a way of dominating your day. When the next bill is arrives, you think about your finances. When the next rent or mortgage payment becomes due, the issue arises again. Every time you write a check, surrender your credit card to a vendor, or even take money out of your wallet, you are reminded of your tenuous financial condition.

When you’re in debt and seek to re-pay it, you tend to work longer and harder. You want to make extra money to pay down those credit card balances. Living beyond your means, however exhilarating in the short run, is insidious in the long run. The constant drum beat in the back of your mind, “I’m not making it,” “I owe others,” and “what if people find out?’ can wear down an individual in ways that we don’t even fully understand.

Construct a Cash Flow

The fastest and easiest way to understand the state of your current as well as future personal finances is to construct a 12-month cash flow, which plots all of the incoming cash and revenue from all sources, and to the best of your ability projects all of the expenses you will be incurring. A 36-month cash flow is more ambitious and more revealing.

It’s too easy to get caught up in thinking, “I’m making a fortune annually, and my goodness, what do I have to worry about?” The fate of rich people who die with money issues tells us that you have plenty to worry about if you spend more than you earn.

Opinion

K-Mac Drops the Hammer on Mad Max with Official Censure

Kevin McCarthy isn’t playing around anymore.

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Maxine Waters

On Capitol Hill this week, there has been turbulence once again. This time, instead of a riotous mob looking to storm the building and create chaos intended to derail our government, the trouble comes from California Congresswoman Maxine Waters, whose suggestion that Americans need to be “more confrontational” in their opinions on the Derek Chauvin trial has been widely lambasted as an inappropriate call to arms at a time in which our nation is already suffering from uncouth bouts of political violence. For her troubles, Waters is now facing censure. House GOP leader Kevin McCarthy told Breitbart News exclusively that he will move to formally censure House Financial Services Committee chairwoman Rep. Maxine Waters (D-CA) over her call to violence in Minnesota this weekend. McCarthy’s move, which comes after House Speaker Nancy Pelosi refused to hold Waters accountable, will force a censure vote in the House. Pelosi cannot stop McCarthy’s resolution censuring Waters from receiving a vote, because it is a privileged resolution. If Democrats lose just three of their members on this vote and all Republicans vote for it, then Waters will be formally censured by the House and likely lose her powerful position as chair of the Financial Services Committee. This is certainly not Waters’ first foray into violent rhetoric. The Democratic stalwart had suggested that her constituents seek out conservatives and make them feel “not welcome” during a speech in 2018.  Over the next several days, Democratic operatives verbally harassed a number of prominent GOP women, shouting them out of public spaces.

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Opinion

Biden Comment on Chauvin Trial Stuns Legal Observers

Unbelievable.

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America and her people are in a tense situation at the moment, and you would think that the President would be looking to bring some calm and clarity to the situation.  Instead, Joe Biden has stepped into a massive controversy by weighing in on the case before the jury has even finished their deliberation. Jurors are currently examining the case of Derek Chauvin, the police officer who was kneeling on George Floyd’s neck when he died, looking to decide if he is culpable for the man’s death. All the while, our nation fears that certain outcomes could lead to mass violence, rioting, and looting. Now, as President Biden weighs in on the case, there are fears that his statement could be considered tampering with the process. As the nation awaits a verdict by the jury in the trial of former Minneapolis police officer Derek Chauvin, President Biden said on Tuesday he is “praying the verdict is the right verdict.” Briefly speaking with reporters at the White House, the president discussed his call on Monday with the family of George Floyd, the Black man in Minnesota who died after he was seen on video – handcuffed – saying “I can’t breathe” as Chauvin kneeled on Floyd’s neck. His death sparked nationwide protests last spring and summer over police brutality against minorities and systemic racism. Chauvin is charged with second-degree unintentional murder, third-degree murder and second-degree manslaughter in Floyd’s death. He has pleaded not guilty to all three charges. Fellow Democrat Maxine Waters has also garnered criticism for injecting herself into the case, after she was reported to have told constituents to be “more confrontational” regarding the issue – something that could certainly weigh on the minds of jurors as they deliberate. Jenna Ellis, a lawyer working for Donald Trump, blasted Biden…

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