Take Back the Money – Breaking the Cycle

Take Back the Money – Breaking the Cycle

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Category : Life Tips

What comes to mind when you think of the word money?  Do you think “I really could do with having more of it?” Do you think of all the bills needing to paid or the things you need to buy, such as groceries and gas for the car?  How often do you say “I just can’t afford it?” Does the word money trigger positive feelings or memories, or does it bring up images of lacking, even poverty?

The Money Thing

The “money thing” is a struggle for many. One of the main problems or factors is that most of us really didn’t get much of a financial education growing up. We didn’t learn the basic principles and probably learned by trial and error (hit and miss). Many of us grew up with a foggy and somewhat negative idea of what money is, what to do with it and how to keep it.

The reality is that money (getting it and keeping it) really has very little to do with luck and more to do with making good decisions. In fact, financial success does not really depend on how much you earn, but rather on how much you keep from what you earn. It comes down to knowing what to do and then consistently doing what you know you should do.

What Does Money Mean to You?

This is a very important question to ask yourself. We need to clarify for ourselves what exactly money should be used for. If we see it as a pass to do whatever we want indiscriminately, we will have a hard time keeping it. But if we see it as a tool (in the same way as a hammer or snow shovel) to use for things that are important (families, for example), then it will be easier to make decisions as to how to spend it.

Also, we need to need to think of how much time we put into generating money. How many hours, weeks, months do we give in exchange? Time is our most precious resource; it can not be renewed. Money, on the other hand, can always be renewed. Thinking about what money means also means thinking about the cost of time.

Where to Begin?

Everything worth doing begins with education. If we want to improve our current financial circumstances, the best way to start is to learn more about the basic principals. Getting the right information is the first step. Then acting on the information will bring about the changes you want to see. Information can only take you so far. It is not very helpful if it is not applied.

Who gets the first cut of your pay? Do the bill collectors get the first cut? If they do, it is time to change that. Ask yourself the questions “Am I worth being paid?” and “How much am I worth?” Don’t you think you should get the first cut off the top?  What if you took 10% off the top and paid yourself? Think of it this way- if you don’t take care of yourself first, you can not help others. And, you will have more problems keeping up with the other expenses. So, this is the crucial first step: pay yourself first always and consistently.

Have a Vision

It’s not all just about earning and saving money. What is your long-term vision? what are you working towards? Do you have dreams or goals? How much money do you need to accomplish these? What do you want to do with your money? Without a vision or goals, it will be so much easier for your money to just disappear over time on unimportant things. People who are successful with money have a plan.

Keep Track

One of the very basic financial principals is to live within your means. Not doing this will guarantee that you will struggle with money. To do this, you first need to know how much money is coming in (after taxes). The actual income (from all sources) is what is important. Then you need to know what is going out. List all expenses, and, this means all foreseeable expenses Include all payments. Basically, this is a budget.

Now, it is important to track all spending. Write everything down (every coffee you buy, every pack of gum). I like to have a plastic folder with pockets into which I put all bills and receipts for the month. I don’t keep them in my wallet or lying around on a table somewhere where I might lose them. So, in my folder, I have a projected spending column and an actual spending column. It is also helpful to use a budget application to keep track of spending. I use an app, which allows me to track spending and print out an overview of my monthly spending.

Tracking my expenses has been the number one action that has allowed me to have a visual of where my money is going and how much I am spending. I can make comparisons from month to month and really see where improvement needs to be made.

What is Your Relationship to Money?

We all have a relationship to our money of some sort. Some of us have a bittersweet relationship and some of us have a fear-based relationship – as in fear of never having enough. For some, money is a complete mystery; they have no idea how to get it, keep it or even how it works. For others, money controls their life – they are always thinking of bills that need to be paid and of how they are just getting by.

Some people have turned money into a monster and it causes anxiety, sleeplessness and basically overwhelms them to the point that they can not function. This can be damaging to their health and their relationships. Other people are so driven by money that all they can think about is how they can make more of it. For these people, success = more money and lots of it. Still, others find that money motivates them to higher achievement.

There are people who tend to tailor their ambitions and goals to how much money they have and not strive to reach other goals. It is a tendency o give up and just accept the current situation. On the other hand, there are the people who do just the opposite. These people make use of their money to contribute to some purpose greater than themselves and to reach their potential.

Some people view money as a way of achieving status or recognition. These people may use their money to pass on their “dominion” to future generations. And, finally, some people use money destructively to nourish addictions or stir up trouble.

One way or another, we all have or have had some kind of relationship with money that has gotten us where we are today.

The Takeaway

Money problems may appear overwhelming and it may be hard to imagine a time when we are able to gain some control. In many cases, we have not received the financial education that we need to get a proper handle on money and make it work for us rather than against us. But, just like getting on the health and physically fit path after a long period of inactivity, we can get on the path of becoming healthier in our finances. It’s all about what we think, what we know and what we do with what we know.

Have a great day!

Read Also

10 Big Money Mistakes People Make

Focus on THIS to Improve Your Finances

Overcoming Money Problems

Has this post been helpful to you? Let me know in a comment.

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Diana Lynne’s passions are family, travel, self-improvement, pursuing a debt-free/financially free life. She also loves hanging out with family, friends and being with her dog Skye. Diana is a Quebec City girl. who loves living life.  You can connect with her through Livingandstuff.ca

This blog post was inspired by:

Financial Fitness (The Offense,  Defense and Playing Field of Personal Finance), Chris Brady & Orrin Woodward, Obstacles press, 2014

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What I Learned about Cryptocurrency (Bitcoin)

Category : Life Tips

photo credit: andrefrancois@silverhousehd

We have probably all heard of Bitcoin and know someone who knows someone who is into trading and buying cryptocurrency. But what is it exactly? How does it work? These are questions I wanted to explore and try to answer in order to understand it better. Hopefully, this information will give a clearer picture of what cryptocurrency is all about.

I do not claim to be an expert on this subject, nor do I intend for any of the following to be used as advice to buy or an endorsement of cryptocurrency.

So, What is Bitcoin?

Bitcoin is one of over 1,000  cryptocurrencies and the most popular and widely used of them all. It was launched officially in 2009 following the Wall Street Banking fiasco by Satoshi Nakamoto. It is unclear as to who Satoshi Nakamoto is or whether this name refers to one person or a group of people. The Bitcoin grew out of the frustration people had with the financial system: the mishandling of borrower’s money, exorbitant banking fees, distrust of the banking system and the sentiment of deception.

The idea was to create ” a new electronic cash system” that was “completely decentralized with no server or control of authority.”

So, cryptocurrency is a decentralized currency (independent from the financial system) which the owners are in control of entirely.  It is essentially an exchange of digital information that allows owners to transact (buy and sell) without the intermediary of a financial institution. The information flows from person to person in a network (through a file-sharing system). It does not follow the traditional rules and regulations of financial transactions. There is no collection of names, IDs or other personal information.

The first Bitcoin pioneers wanted to:

  • eliminate the “middleman”
  • eliminate interest fees
  • make transactions transparent
  • halt financial corruption
  • cut back on fees

photo credit: David Shares @davidshares

More Details Please

  • Cryptocurrency transactions are anonymous and irreversible. Once the transaction goes through, it can not be changed. No one knows the identity of either the buyer or the seller.
  • There is no physical location. Bitcoins are received through digital addresses and there is no connection to the buyer or the seller.
  • Transactions are fast and global. They happen within minutes anywhere in the world since it is a global network.
  • All transactions are secure, They are locked into a cryptography system and owners have one or more encryption keys to access their account to send or buy currency. It is virtually impossible to break into the code.
  • The system is independent. Anyone can download the software and install it. Once the account is set up, you are set to go and can begin buying and trading.
  • The supply of Bitcoin is highly controlled and limited. Only a small number of bitcoins come out every hour and there is a cap of 21 million Bitcoins. Presently, there are around 16 million in circulation.

Are they accepted as currency?

Currently, there are over 100,000 merchants and businesses that accept payment with cryptocurrency including big names such as Expedia, Microsoft, Dell and Overstock.com and the list is growing.  People pay for things like pizza, flowers, and gift cards with Bitcoins.

Ok, So how does it work?

Bitcoin and other cryptocurrencies are mined by miners. The mining process is a highly complex combination of algorithmic problem solving and record keeping. Volunteer users verify transactions within the network on computers. Each transaction is recorded in a ledger which is grouped with other transactions to form a block. These blocks (or groups of transactions) are then put into a blockchain, which is essentially a massive publicly accessible and permanent record of all transactions worldwide.

The existence and continuity of the blockchain is dependant on the miners to keep up their work of recording transactions, which will continue to grow indefinitely. Blockchains are created roughly every ten minutes. They are the only record and arbiter of all transactions and proof of ownership. The blockchain also serves as a payment processing system which is also facilitated by the miners.

In return for their dedication and work, the miners are rewarded with Bitcoins and they also receive transaction fees paid by buyers. Sellers who charge transaction fees typically get paid first over those who do not.

Each owner has a private (digital) key which confirms his digital identity and allows him to buy or sell Bitcoins. The key is called an encryption key. The keys must be kept very safely; if they are lost, it is impossible to access your account and if it is permanently lost, so is your Bitcoin currency – into virtual space.

Bitcoin exchanges (such as Coinbase, CEX, Coinmama or Kraken) allow owners to exchange (trade) Bitcoin units (Bitcoin can be broken down into subunits) for world currencies such as the dollar or the euro and for other cryptocurrencies. There are transaction fees for the exchange.

photo credit: Thought catalog @thoughtcatalogue

Where do you keep the Bitcoins?

Bitcoins are stored in digital wallets, either private or public wallets (in a public exchange or storage center).  Generally, the wallets are secure cloud storage locations with special owner ID information confirming ownership.

Where do you buy Bitcoins?

There are different ways you can acquire Bitcoin. One way is to set up an account with an exchange (such as the ones mentioned above) and then depositing fiat currency (dollar, euro) into your new virtual wallet. It is free and simple to set up an account – just like setting up a Paypal account. Then you are ready to begin buying and trading in cryptocurrencies. Another way to earn Bitcoins is to accept them as payment for goods or services. Owners cand lend out Bitcoins and earn interest on them. You can also earn bitcoins through trading.

What about the risks?

Since Bitcoin is a digital currency, there is always the risk of theft through hacking. The public exchanges (and wallets) are particularly vulnerable to theft through hacking. So, the possibility is there.

Bitcoin transactions are virtually untraceable, which means they are very secure, but at the same time they are also obscure. You can never know who you are buying your currency from, nor who is buying from you. If you have bought from scammers, there is very little recourse for you to recover your funds.

Being a relatively new and decentralized currency system, the rules and regulations governing cryptocurrency are a bit murky. It is a “legal grey area”. Some things to be wary of are:

  • stealing of private keys
  • wallet theft and vulnerability
  • Illegitimate or fraudulent exchanges
  • Vulnerability of exchanges

What is the takeaway?

Bitcoin and other cryptocurrencies are still in their infancy. There is a lot we know, but also a lot we do not know. There are obvious benefits. There are also risks. It could be argued that there are risks with traditional currency as well and money has been lost through mishandling and deception there too. The jury is still out on where it is going and the governing rules are still murky at best.

One thing I have gotten out of this is that common sense should always rule. For obvious reasons, you probably wouldn’t want to put the money you can’t afford to lose into any financial endeavor without first getting all the facts, if at all.

Disclaimer: This post is purely for educational purposes. It is not to endorse or facilitate any financial decisions. Before engaging in any financial transaction, you should always consult a professional advisor. I am not a financial advisor, nor a legal advisor. I do not offer financial or legal advice.

 

Have a great day!

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Click and share below if someone you know might enjoy this post.

 

Diana Lynne’s passions are family, travel, self-improvement, pursuing a debt-free/financially free life. She also loves hanging out with family, friends and being with her dog Skye. Diana is a Quebec City girl. who loves living life.  You can connect with her through Livingandstuff.ca

 

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