Living Below Your Means

As always, I want to thank the people that are viewing, getting over 2,500 for the week.

This week I want to talk about living BELOW your means. Working with people's finances on a daily basis, I see almost everything. Some people want to max out what they can afford, driving a BMW, living in the most expensive house, living in a great school district, but they've not saving anything on a monthly basis. If you're not saving SOME money on the side, that's just not financially smart.

One of the best ways to make sure you save is living BELOW your means. And the best way to do that is to first create a budget and figure what YOUR means are. If you're in a position like me where your income is SOLELY based on commission that can be difficult to figure out, but it's still doable. The best thing you can do is make guesstimates. I don't know if I am going to close $1M in loans or $300k in loans, but I still live my life the same way regardless of if I do. My biggest "splurge" was what most people would call a practical purchase, my '13 Accord.

A great tool for budgeting is Mint.com. They provide easy to read graphs, easy interface and knocking on wood, no hacks. Some people are apprehensive about using a site that has all your financial data into one place, but they shouldn't be. In order for you to really be at a financial loss, they would first have to hack your password for Mint (which should be different than any other financial institutions) and then do a 2nd level attack on those encrypted passwords. By the time the first hack was made aware, there would be plenty of awareness to stop the 2nd attack.

Here's one graph that I love. It's a "net worth over time" graph. I'm not going to put specifics on there, but this tells me that in general, I've been making good financial decisions. I had a few rough months work wise and wasn't sure if I was still trending upwards, but this reinforced that I am using the principles I try to live by and made me feel better about it. It shows the assets (green), the debts (red) and your net worth is the black line chart. You can see when I purchased my car in July of last year, my net worth went down significantly, because I owed more than it was worth. Once thing I need to do is manually add it to the assets page, which is a nice feature that Mint allows. I have a few loans I've made to people and I can update the balances each month as I receive payments from those people.

The most important thing for our purposes is the budget section. As I have previously mentioned, we have three different types of expenses:

1.) You have your fixed expenses (car payment, student loan payment, internet, cable, cell phone, insurance) that don't change much at all. Internet and cable could vary based on the amount of days in a month, but it's negligible in the amount.

2.) You have your semi-variable expenses (utility bills, groceries, gas) that change more than your fixed expenses, but you generally have a good estimate of what they're going to be. i.e. you might spend $200 at the grocery store every 3 weeks, but that could slightly change.

3.) You have your variable expenses (entertainment, travel, shopping, ME items) that aren't necessarily a monthly event, but you figure those into your expenses more as one time expenses. This is still important to budget for however.

Here's an example of how the budgeting should go for a person making $48,000/year or for calc purposes, let's look at it like $4,000/month. Uncle Sam takes his cut and then you undoubtedly have insurance, medicare, SS, etc. Let's say after all is said and done, you bring home $3,000/month. This your net income, the amount you can take home and do whatever you want with.

Your fixed expenses are the first thing to look at because you can most easily budget for those.

Mortgage or rent - $1k, left with $2k. 

Car payment - $300, left $1.7k. 

Student Loans - $250, left $1.45k. 

Internet, cable and cell - $200, left $1.25k.

Car Insurance* - $70, left $1.18k.

Savings** - $400, left $780.

*Car insurance isn't typically paid monthly, but it should be be budgeted in as such.

**Savings is one thing most people don't budget in, but should be a high priority. If you can't find space for this in your budget, you need to cut back spending or increase earning and typically spending is the more likely of the two.

Your semi-variable expenses are the next thing to look at because those are the 2nd easiest to budget for.

Gas (Car) - $80-100, left $680.

Gas, Electric, Water, Trash - $130, $550 left

Grocery - $300, left $250.

Your variables expenses should be budgeted for by using whatever is left at this point. You shouldn't set a specific budget necessarily, but approach it like above, using the bottom line as your variable expenses. In this scenario, this person has $250 left for going to a concert, going out to eat or any other entertainment or gifts they want to buy.

There's two very easy ways to know if you're living at, above or below your means.

1.) If you make a budget and your bottom line (after entertainment) is negative, you're living above your means.

2.) If you open up a Mint account and your chart clearly shows that you're net worth is decreasing month after month, you're clearly living above your means.

If you have any questions about a Mint account or personal finance in general, my email address is davids@eqfin.com. I do create budgets for people as well as doing simple city, state, federal tax returns.

All this talk about living at, above or below your means got me to thinking, how the NFL teams budget themselves. If they're payroll is much higher than their record suggest, they're playing above their means (which is bad) while the opposite would be the case if they had a good record with a low payroll.

SHERMY'S SAFE SIX!

These are going to be the picks that I like the MOST this weekend with a SHORT analysis.

Last week I went 3-3 again, really half-assed the Bengals game... That does put me at 19-17 for the year and still a WINNING RECORD!!!

1.) KC @ OAK (Under 42.5)

Both of these teams are playing AT their means based on payroll vs. standings (8th and 10th for KC, 32nd and 32nd for the Raiders)

Despite the Thursday night fireworks of early the last two have not been as such, scoring only 27 and 38 points. The O/U is 42.5 tonight and I like the under.

KC doesn't have a great offense, their most explosive game was 41 points against NE, but that was rather inexplicable. The only reason is they were trying to set the record for loudest stadium. The last 3 games they've scored 24, 17 and 24. You know how I like patterns, although I don't think they score 17, I think they add an extra FG, scoring 20. I think they win by the score 20-18 actually. Janikowski may kick 6 FG's... I just don't know. KC was also under their previous five games (before they went over by .5 points) with Seattle. KC is also 8-2 ATS and typically, teams don't finish with ATS records of much better than 60% (on a good year) so they will be coming closer to normal. On the offensive side the TEs are Probable and Questionable and Donnie Avery is out.

The Raiders are at .500... Against the spread. This makes me think it's going to be a decently close game. And if this game is close, it won't be because its high scoring, I can assure you that. Derek Carr is playing, but he's hobbled. The Raiders have gone from scoring 24 to 17 to 6 and by that logic, they may actually score negative points this game, I am confident that won't be the case. They should have a small uptick in offense from last week, I like them to get in the double digits.

2.) CLE @ ATL (-3)

Cleveland is playing well above their means (17th league, 30th payroll) while Atlanta is playing EXACTLY at their means (20th in both).

 Cleveland is still the positive surprise in the NFL I think. They pulled up lame against Jacksonville, but other than that, won the games they should have won. Their lost against Houston last week was against a good Houston team, but that being said they gave up 156 yards rushing to a backup RB. Ryan Mallett is going to be good though, he's going to make that Texans team a contender in the near future. It just stinks for him he is in Andrew Luck's division. They're sitting at 6-4 with their only bad loss against Jacksonville and they get Josh Gordon back. I think they are going to try and force the ball to him too much. Jordan Cameron WILL NOT play. Based on the patterns (W,L,2W,L,3W,L) they're due for a win, but  I don't think they get it done.

The Falcons are a different team at home. They're 2-1 at home (one neutral loss). Matt Ryan has a better rating (13 points), completion % (5%) and record (28% higher) at home. Their only wins are against other lowly NFC South teams so I think it's time they buck that trend. I like a high scoring game here, but I like the Falcons more in this one.

3.) CIN @ HOU (-2.5)

These are two teams living above their means. Cincinnati is 8th vs. 3rd. Houston is 18th vs. 10th.

Cincinnati is the hardest team for me to figure out in the league. I believe I'm like 2-4 in picking their games, but I like a good challenge. And I think this will be a challenge for CIN. HOU > CLE by 16. CLE > CIN by 21. Therefore HOU > CIN 37. That's a little math lesson for you. This game isn't played on paper (except paper football of course), which means anything could happen. The Bengals are 2-2 on the road, beating the Saints and Ravens which aren't bad wins, but I'm still not convinced because the Saints are all over the place. The Ravens loss was due to a 77 yard TD reception late in the 4th to AJ Green. Even then it took two sacks under the two minute warning deep in CIN territory to clinch the game. In addition Vontaze is not expected to play and there's going to be a little RB controversy with Gio being back and Jeremy Hill filling in VERY well for him. I do think AJ Green has a decent game though going against the 30th ranked pass defense.

Houston is a pretty good team this year that just got better due to Ryan Mallett taking over at QB. Alfred Blue has filled in great at RB for Foster and he's going to again today. I think he has a BIG day. CIN is 26th against the rush. There's not enough film on Mallett to fully scout him and he has the skills learned from Brady and two good outside weapons in Johnson and Hopkins. In addition Houston's only two home losses are against Philly and Indy, two of the best teams in the league.

With the line being less than a FG this is essentially a pick EM. Only 8% of games have been decided by 1 or 2 points in the last 5 years. The Texans, at home, more healthy than the Bengals get the edge.

4.) GB @ MIN (Under 50.5)

Green Bay, like most years of late is living within their means, this year exactly 6th in both. Minnesota, mostly due to Adrian Peterson, (23rd vs. 2nd) is living well above their means, they're like a volunteer driving an Escalade.

The Vikings have very little offense. Greg Jennings is questionable, Matt Asiata is out with a concussion and Jarous Wright is questionable with a hamstring. The RBs are going to be Jerick McKinnon and Ben Tate who hasn't had any time to learn the offense. I see confusion and lack of skills causing very few points to be scored by Minnesota. In addition, there's apparently fog, cold weather and high humidity which means slippery conditions. I still haven't learned to avoid weather picks apparently.

Green Bay I am hoping will run the ball often with the weather conditions, knocking time off the clock. The only way this goes over is if GB scores 38 or more points, the max points MIN puts on the board is 13.

5.) DAL (-3) @ NYG

Dallas is living below their means (7th vs. 25th) while the Giants are living well above their means (26th vs. 13th).

Dallas is another great surprise this year. Even as a Cowboys fan, I had them maxing out at 6 wins. I just wasn't confident at all in them. I wasn't the only one, there's a reason they started out 5-2 ATS. Once they beat Seattle and the Giants the first time around, they lost 2 in a row ATS. Well the Cowboys are rested, hopefully Romo's back is feeling better and DeMarco Murray is coming off his two worst performances of the year, 90 and 131 total yards. He's going to be anxious to get back on the field. Also, this is a primetime game and Dez Bryant loves the spotlight. I expect a BIG (maybe even record setting) night for Dez Bryant. Coming off of last games personal best, a week rested I think he has it in him to get 160-165. He has his best numbers again the Giants (against teams he played at least 3 games) so why not? As long as the weather cooperates, this will be a game to watch.

The lowly Giants can't figure it out. They go 0-2 (vs. two NFC leaders) then beat three teams (12-18 record combined) then lose 5 straight, scoring less in each of the last 3 games. Dallas doesn't have a spectacular defense, but Eli can make a lot of defenses look better than they really are. I expect a Dallas blowout in this one. If the weather is good, I also like the over, but potential rain I wouldn't risk that.

6.) BAL @ NOR (Over 49.5)

Baltimore is playing above their means, (14th vs. 22nd payroll), while New Orleans is playing well below their means 21st vs. 7th payroll).

New Orleans is due, so very due. They haven't lost 3 straight home games since 2006 into 2007. Cincinnati destroyed them last week but they are one of the most hard to figure out teams in the league. Right now there is just an NFC South epidemic. When a team is 2-8 and only 2 games out of first, that's just terrible. That being said, New Orleans is still tied for 3rd in points scored in the NFC. That's even with scoring 44, then 28, then 24 and then 10. In addition Brees has thrown for 371, 342, 311, 297, 292 and 255 in his last 6 games. Only having two true RBs healthy (Ingram and Cadet) put all of the emphasis on stopping the passing game. With this being Monday night, we won't truly know who's going to be healthy in the backfield until tomorrow but it looks like Pierre Thomas might be back in addition. Remember these are the same Saints that put up 44 against the Packers less than one month ago, putting up a combined 67 points. Finally, on defense they've been not that great for a while. They've allowed at least 23 in 6 of the last 7 games.

Baltimore is #5 in rush defense (which NOR) doesn't have a great rushing team. Baltimore is #23 in receiving defense (NORs bread and butter). Their offense isn't terrible either. They've scored at least 21 in 8 of their last 9 games. Steve Smith has been cold the last few games, 4 games without a 100 yards or a TD. His targets though are also considerably down which is what really needs to be noted. He had 42 targets in he first four games, only 29 the last four. Last week being a season low 3-17. Torrey Smith on the thee hand has two straight games with a TD and increasing targets the last 3 games.

My short summary, T Smith now S Smith will lead the team for the Ravens. Saints will win a high scoring game.

Have a great weekend everyone!

***Disclaimer - All puns are intended ***