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IT'S
YOUR MONEY, AND IT'S YOUR DECISION WHAT TO DO WITH IT Stacy Johnson makes it sound so easy: ''You have a choice. You can look rich or you can be rich.'' His message is get out of debt and you will be free. Johnson, author of Life or Debt (Ballantine Books, $22.95) and the host and producer of Money Talks, a series of 90-second syndicated TV news spots, is totally convinced that if you can just live beneath your means, all good things will come to you, at least money. His book is not for the down-and-out or for people seriously living on the edge. Instead, it is for the unbelievable number of people who are overextended, immersed in unnecessary debt and have what my father always called ''buy-itus.'' ''Madison Avenue would have you believe that the more we spend, the more we get. But that is not true,'' said Johnson, in town last month to promote his book. ''I think there is actually an inverse correlation between money and happiness. In other words, the more you spend, the less happiness you get.'' His seven-day plan toward financial freedom starts with having you compute your average hourly after-tax wage (he has a formula). Part of the point of this is to see how many hours you would have to work to pay for a prospective purchase. (''This bracelet would cost me 23 hours at the office'' kind of reasoning.) Next, he says, inventory your possessions. ''Write down everything and put its estimated cost, and then make a mark beside the ones you bought but didn't really want or need. Add it all up. Get the total cost of things you needed but apparently didn't.'' Then he wants you to make a list of what you really want from life. This is a crucial step and should make the other ones easier. Next you have to make the commitment to stop creating new debt, rank your debts in order of the fastest payoff, and get on with it. At the same time you need to start setting aside 10% or more of your gross monthly income as savings. When all of your debts are gone, invest the 10% as well as the total of your old monthly payments and you can actually become a ''money machine, '' he says. For Johnson, getting rid of the debt is the critical factor. ''I feel rich because I don't have debt and I can do what I want.'' Johnson is also a savvy shopper. He proudly showed me the $200 shoes he bought at a yard sale for $3 and had resoled. And I loved his story about his wife buying him a $1,000 suit for Christmas. When he saw that the store was having a half-off sale after the holiday, he went in and asked the store owner, ''What would prevent me from bringing that suit back and re-buying it and another one for the same price? ''The store owner paused, and in a minute said haltingly, ''Common decency?'" Johnson paused, too, and finally blurted out, '' 'Well, that's not good enough. I'm bringing it back.' The guy was a little bummed but . . .'' Johnson and I had a fun talk - agreeing that we all have to make choices about our money. If you spend money on one thing you have to save somewhere else. ''I choose not to buy $200 shoes, but I drive a $15,000 Harley,'' he said. ''What I'm trying to accomplish is to get people to focus on what makes you happy. Make a list of the happiest moments in your life. I'm willing to bet that most of them did not involve the exchange of currency. It was laughing with friends or something special you did with someone special. And I do laugh a lot on that Harley.'' With Johnson's professional background in investments (CPA and broker), I wondered why he didn't write an investment book? It's simple: ''For every person looking for investment advice, there are 20 looking to pay off their Visa.'' He's right, but I'm afraid it may not be as easy as he makes it sound. Stay cheap! |