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GUERRILLA WARFARE: YOU VERSUS YOUR PORTFOLIO

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savings account. Therefore, you don’t have to be responsible for remembering to send in a check every month, or however often you want to invest. Also, since it comes directly from your bank account, you may be less likely to discontinue or skip the saving.

I CAN’T LIVE LIKE THAT!

When was the last time you made a budget? Most people I know make budgets, are very proud of their budgets, and then fail to follow them. Some of my friends don’t even last one month on their bud- gets. Why is that? It’s not like they are cutting things out of their lives that they can’t do without; they just can’t trim the fat off of their monthly consumption. There are some good ways to see where the fat in your expenses lies. First, gather as many of your home expense bills as possible. This means your water, heat, electricity, phone, cable, etc. Then find all the bills relating to your regular car mainte- nance. Make a list of all the things you spend money on regularly that don’t fall into those two categories (i.e., food, credit card payments, auto loan repayments, mortgage, education, etc.). If you don’t have this information, make the most accurate estimate possible. Be care- ful that you don’t double count. If you use your charge cards to pay for gas and oil changes for your cars, don’t count this twice.

Take all your bills and figures and determine what your monthly expenses are. These are your committed expenses, things that you have to spend money on. Then, figure out how much you spend monthly on things like entertainment and dining out, chari- table giving, travel, hobbies, etc. These are your discretionary expenses—things you enjoy but could live without. Add to this figure any systematic savings and contributions to IRAs or employer-sponsored retirement plans (401(k)s) that you make. Don’t forget to add in anything that you don’t pay on a monthly basis, such as gifts and health club memberships.

Once you arrive at your monthly committed and discretionary expenses, multiply this by 12 to determine your annual expenses. (See Table 3.1.) Now, you will need to figure out how much income you receive. This can be an annual amount. Be sure to subtract how much you pay in taxes from your income. Then subtract your total

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