The world runs on cash and stocks are no different.

The first part of the balance sheet under Assets is Cash and Short Term Investments. If you click on the little blue arrow a drop-down menu will show you that this section is broken into Cash & Equivalents and Short Term Investments.

Cash & Equivalents is typically cash in the bank (very rarely will it actually be giant stacks of cash a la Scarface) as well as highly liquid assets (assets that can be converted to cash almost immediately). Short Term Investments can be things like treasury bills. As you can see Research in Motion has a pretty decent amount of the green stuff; $1,518,210,000 to be exact (remember, those numbers are in millions).

I am going to refer to the total figure of “Cash and Short Term Investments” of $1.5 billion simply as “Cash” from here on out.

Cash or No Cash? That is the question.

Having a lot of cash can be a blessing and a curse at the same time – mostly depending on the management (more on this soon). If a company has too much cash it can mean that instead of spending the cash on useful things such as investing in growth or fixing those broken toilets to improve company morale, the management is simply enjoying building miniature cities out of blocks of cash (a.k.a. hoarding); although at least it will be able to pay off outstanding debts (more on that later as well) which should definitely make you as merry as a schoolgirl.

On the other hand if a company has no cash it can mean that it has utilized it all on useful investments, but if hard times hit and revenues decline, the company will have a harder time paying off its debts than Paris Hilton would have turning down sex.

So, how can you determine whether or not management is spending (or lack thereof) its cash in the most intelligent manner? Read and valuate the company’s income statement.

If a company is able to grow revenues while decreasing expenses you know that management is doing a damn good job, thus it would be logical to assume that they know what the hell they are doing with their cash and investments. On the other hand, if revenues are growing while profits are falling you can assume that management is spending more time snorting cocaine than keeping an eye out on being fiscally responsible.

How much cash is enough?

Sure, $1.5 billion in cash may seem like more money than there are flies in Africa but we don’t really have any way of knowing whether or not that amount of money is below average, average or above average…until now.

The first thing I like to do when looking at Cash and Short Term Investments is to make sure that there is enough of it to pay off a good chunk of the company’s liabilities (if not all). Scroll down the balance sheet to find that RIMM has almost enough dough to pay off 70% of its liabilities (1,518.21 divided by 2,227.24 multiplied by 100). Knowing that your company will be able to pay off most of what it owes (a.k.a. liabilities) in case of imminent doom is not a bad safety net to have.

You will find that some companies have enough cash to pay off their liabilities twice over (if not more)…I LOVE companies like that (sorry RIMM) – and you should too!

It’s also good to see that cash is growing or at least isn’t horribly decreasing. As we see with RIMM, Cash and Short Term Investments have been growing steadily up to 2008 with a slight decrease in 2009 – of course this is understandable considering that we were in the midst of the “worst economic climate since the Great Depression” where operating costs tend to be significantly higher (another reason why having a lot of cash is a good thing).

Comparisons, comparisons

Another way of determining the health of your stock’s cash holdings is by comparing it to its peers.

The first thing you want to do is to take the Cash and Short Term Investments figure and divide it into RIMM’s market capitalization (which I taught you how to do in the Income Statement guide) then multiply it by 100 (to get a percentage).

As of February 11, 2010, RIMM’s market capitalization (price per share multiplied by shares outstanding) was $38.52 billion. Divide $1.51 billion into that to get 3.9%. So, what does that mean? It means that RIMM can buy back 3.9% of itself with all of its cash.  If RIMM’s price per share were to suddenly get cut in half, RIMM would be able to purchase 7.9% of itself.

At first glance, 3.9% seems as low of a figure as the number of years Kevin Federline’s career will continue to exist but we will never be able to know the full truth without comparing Research in Motion to its peers, say Apple and Palm.

If we take a look at Apple’s balance sheet we see that it has $23.464 billion in cash (not too shabby) with a market capitalization of $180.15 billion – meaning it can buy out 13% of itself (again Apple seems to kick RIMM square in the crotch).

Palm on the other hand has Cash and Short Term Investments of 255.13 million with a market capitalization of $1.61 billion, thus being able to buy out almost 16% of itself – effectively leaving Apple and Research in Motion in the dust.  Of course when you realize that Palm has about one sixth the cash of RIMM and one one-hundredth the cash of Apple, you suddenly cease to care about Palm’s existence.

Accounts Receivable

Under “Cash and Short Term Investments” you will see “Total Receivables” which can be divided into “Accounts Receivable” and “Other Receivables”. Do not be afraid of these seemingly terrifying sounding titles for they mean just one thing: money that is owed to you (or to your company).

It’s basically the same way credit cards work, like the time you bought that big screen plasma TV along with all the accessories and then got smacked with a bill the size of New Jersey’s budget deficit – you got the goods, now you have to pay them off.  Think of them like one big fat “IOU”.

Out of all the receivables, Accounts Receivables are the ones you really want to look out for; it is the money owed to you from various accounts, specifically frequent or special customers – typically where the bulk of revenues come from.

So, then you get to thinking with your incredible mind: when someone owes you money, it’s just as good as having the real thing! Meaning, a company that has loads of Accounts Receivables is rolling in the dough…right? No, not exactly.

Having high receivables can mean a few things, good and bad. First, high receivables can mean that your goods or services are in high demand and a lot of people are purchasing them. On the other hand, it can also mean that the company is doing a poor job of collecting its money.

If receivables are growing too slowly it either means that the company isn’t taking in enough money or is collecting the money owed to them extremely efficiently. Again, your best bet of knowing how efficient management is being is by valuating the company’s income statement.

Also, it’s good to remember that not every single account will end up paying off what it owes. There are always random (and extremely cruel) events that can transpire which will prevent you from getting paid, such as your customers going bankrupt or a tornado ripping through their main headquarters. Or your Money Collecting Department may simply be spending too much time putting dollar bills into strippers’ thongs instead of actually doing their jobs.

Valuating Accounts Receivable

We see that Research in Motion’s Receivables are growing quite splendidly with a spanking 82% increase since the year before and a 104% increase the year before that. So now you’re as giddy as a schoolgirl…then you suddenly remember what I said about having Accounts Receivables grow too quickly.

So, how do we know what is a healthy growth rate for Receivables? Compare them to revenues…back to the income statement!

As we determined in the income statement guide, RIM’s revenue growth for the last year was 84% and 98% for the year before – meaning that the growth of the money that is owed to the company is very near equal to the real money coming in.

Your receivables can’t be looking much better than this!

Inventory

If you read my critically acclaimed guide about Reading an Income Statement, you would know just how crucial the income statement is to understanding the financial standing of a company – where else are you going to find out how much money a company is making if any at all?

The same importance applies to the balance sheet, nowhere else will you be able to find how much cash a company is holding, how much money it is recieving, how much money it owes and that little thing we like to refer to as debt.

Just like how you would never consider loaning money to someone who has no income, I would say that it is safe to assume that you wouldn’t be too happy lending out your money to someone who already has more debt than MC Hammer and $3.54 in their bank account – so why would you want to do the same with a stock?

After reading this guide you will be able to take a look at a balance sheet and will have a clear picture of the financial standing of the company. Now couple that with understanding the earnings potential of  said company via the income statement and you will be sailing around in yachts forged out of platinum in no time.

As I promised with the income statement guide and my understanding that reading a balance sheet sounds like as much fun as skinning a chicken to the average person, I will do my best to make this guide as entertaining and informative as humanly possible.  If things start to get a little hazy and you feel your eyes rolling into the back of your head while reaching for a knife to end your misery, just remember to visualize the huge sacks of cash that will come from mastering these crucial skills.

Getting Started

As per the income statement guide, I will be continuing valuating the mighty maker of the mighty Blackberry smartphones, Research in Motion (RIMM). Again, I will be promoting the use of MoneyCentral’s website as it is the most convenient to use and will apply to a wider variety of company valuations.

You can find the link to RIMM’s balance sheet here: http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=rimm&lstStatement=Balance&stmtView=Ann

If you want the significantly more detailed annual report (which you should read anyway), you can find it here: http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=rimm&lstStatement=Balance&stmtView=Ann

It is important to note that this guide will be as useful for financial and commodity stocks as Britney Spears’ dietician. In this guide I will teach you that debt/liabilities are the equivalent to Satan (in most cases) yet if you abide by my rules you will never invest in financial stocks because their whole business model is based on debt. Commodity stocks on the other hand can’t function without taking on a massive amount of debt (in most cases anyway) yet they are able to make people many big fat moneybags.

I might release a special article for reading the balance sheet of financial or commodity stocks in the future, but for now avoid them like the plague…unless of course you feel comfortable gambling your money.

As mentioned before:

At first glance, you will most likely see a whole jumble of numbers and your first instinct will be to buy the length of rope that I sell for discount prices – but before you do that, just take a deep breath and regain your composure. We will go over every little detail together and I will explain to you the meaning and significance (or lack of) for every little word and number.

For your convenience: text under italicized headings can be easily skipped over and it probably won’t affect your multiples of moneybags very much – but I would still recommend you read it so that you understand all the little intricacies that come with rolling around in giant piles of cash.

Understanding the Balance Sheet

At first glance, the balance sheet may seem as confusing as the United States’ exit strategy from Iraq, but just by remembering one very simple tidbit of information will make your life significantly easier: the balance sheet must balance. There’s a reason it’s called the balance sheet!

As you go down the balance sheet you will see the heading Assets followed by Liabilities and Shareholder’s Equity shortly after (with many scary numbers in between). The balance sheet abides by one very simple equation:

Assets – Liabilities = Equity

This equation can be arranged to make:

Assets = Liabilities + Equity; meaning assets have to equal liabilities plus equity – they have to balance.

In case you are currently left scratching your head about all these terrifying terms: assets are something of value that are owned by the company, liabilities are what the company owes, and equity is what is left once you subtract what a company owes from the value of its holdings – it is what can be taken home in the end. In the case of stocks, Equity is known as Shareholder’s Equity.

Assets and Liabilities can be split up into two categories, Current Assets/Liabilities and Long-Term Assets/Liabilities. Add Current Assets to Long-Term Assets and you will get Total Assets or add Current Liabilities to Long-Term Liabilities and you will get Total Liabilities. It’s all quite simple.

I will go further into detail about each category in the next parts of this guide, but knowing these few tidbits of information can help you understand what it is that I am talking about exponentially better.

General Balance Sheet Information

At the very top of the balance sheet you will notice this jumble of numbers and words:

Head on over to the first part of my Reading an Income Statement guide if you are having trouble understanding these numbers. Once you are finished, come back to this page and we will get started with the REAL balance sheet information – you know, the stuff that will prevent you from saying “Whoops I didn’t know the company I invested in was hundreds of millions of dollars in debt, not receiving any new money and burning through cash faster than you can say plum sauce.”

Part One: Current Assets

Part Two: Total Assets

Part Three: Current Liabilities

Part Four: Total Liabilities and Equity

Every time I hear someone complaining about how they don’t make enough money, that they want more money, about their lousy job, about how they can’t find a job, about how no one appreciates them or what they have makes me more frustrated than scraping ice off of my car in the middle of a snowstorm (we can all relate).

Now, after I recommend these people a book, a seminar or even someone to talk to, and they give me an excuse in exchange ranging from not having enough time to simply being too lazy, that’s when I feel like taking my sledgehammer forged out of diamonds and introducing it to someone’s skull – thankfully there are laws that prevent me from doing so.

You see, it’s one thing to want something and it’s a completely different thing to actually get it.

Sure anyone can sit down and say they want $7 million dollars in three years, a job that they love which doesn’t require too much work, to have a body that would make Brad Pitt cower in shame and to be able to charm a woman’s pants off in under thirty seconds. Only to find them loading up their credit cards on useless crap followed by playing Xbox games instead of learning new skills to acquire said job while chugging down their second bag of Doritos and ultimately looking so repulsive that even the most heinous woman would never dare to approach them.

Yes, welcome to the real world.

The Real World

It’s not a pretty world – it’s a world which requires you to work for your results, one which gives you back what you put in and one that requires constant innovation of yourself. In short, it sucks.

I talk a lot about my love for stocks and how I believe they are some of the best investments vehicles on the planet. You may personally believe that stocks are for one-legged gimps who smell like broken sewer pipes and go the way of bonds or real estate or what have you – even so, none of these investments can even compare to the most important one that you can possibly make: yourself.

In one of my earlier articles I wrote about how everything you do is an investment – and all that still applies. How will you ever be able to make enough money to own a petting zoo full of endangered animals if you refuse to learn new skills to get you there? How will you ever be able to look like one of Hercules’ descendants without hitting the gym more than once a week? How will you ever be able to…you get the point.

So, how can you get what you want?

Invest in yourself

And how can you invest in yourself?

College

College is typically the first and definitely most expensive vehicle that most people tend to use to invest in themselves – mainly because they almost always get an excellent return on investment.

Of course, some of you may think that the sole purpose of college is to provide you with such fabulous opportunities such as meandering from keg party to toga party in a drunken stupor while hooking up with questionable members of the opposite sex – turns out that’s not the only thing it’s for!

If you want to be doctor or engineer or some other highly specialized profession, chances are you’re not going to get far without that shiny piece of paper (a.k.a. a diploma) hanging fancily on your wall. Even though those steep tuitions may seem larger than Jennifer Lopez’s behind, your annual salary will pay it off many times over in the future.

Books

Believe it or not, college doesn’t teach you everything, in fact, as soon as you land a job you are going to have to learn and relearn bigger and more important things that actually have a tangible value in the real world. Thankfully, books exist that can accelerate this process or simply remove the need for a college education completely (in special cases of course).

So, brush the dust off that book collection of yours and get reading. If you have no books, I highly recommend you go buy a ridiculously large stack of them or even hit up the library (you cheap bastard!).

Books should help develop the cornerstone(s) of your thinking, what your books teach you are crucial to you getting a better chance of getting out of the potato peeling factory and on the road to financial independence.

Seminars and Conferences

You might have noticed ads for different seminars while reading the paper. While not all of them are intended to bring out the better “you” as in some are just there to get your money and make you sell ash to smelter dealers, some are purely educational and are of high value for the people that do make use of them.

Plus, you are more than likely to meet a lot of like minded people that are facing the same dilemmas as you and even a few people whose knowledge you might be able to mooch off of. Contacts are priceless; make great use of the time you spend with people. Be bold, outgoing, ask questions and say things as they are.

The World Wide Web

Turns out the internet can offer you more than just porn; if used properly, the internet can be one of the greatest tools for getting your noggin up to par with your wants and dreams. Simply put, you can find virtually anything on this contraption; that is of course if you are in the mood for discovering something in the first place.

Meet your new best friend

It happens.

Irrespective of how you want to solve your debt problems, you should use budgeting as a debt management tool. When you’ve become overwhelmed with debt, you must precisely find out how much you earn every month and how much money you spend every month in which areas - unless you enjoy not knowing how much money you make, where you spend your hard earned money and finally gawking at your massive credit card bill at the end of the month of course!

Most people turn away from designing a budget. Nevertheless, you would need to put your monthly income and expenditures in order if you want to go for any of the following options:

• Reducing debt
• Enrolling with a credit counseling service (those godly people that help you reduce your debts)
• Negotiation with creditors for substitute repayment plans (the godly people mentioned above can help you with this as well)
• Debt consolidation through balance transfer card offers
• Filing for bankruptcy (of course that would mean you weren’t following the sage advice on this godly website)

The Debt Obliteration Action Plan

Even though you don’t want to go for any of the above mentioned options, it’s essential to get a transparent picture of how your money is spent every month or you will end up installing fluorescent light bulbs  for little old ladies to be able to support your current lifestyle. So, to find out your actual financial condition and become debt free forever kick debt square in the crotch, you should must take the following steps:

First step: Determine the areas where your money is spent and how much gets wasted every month.

This also happens.

Second step: Determine how and where you can reduce your expenditures for freeing up additional funds to pay down your debts; try finding cheaper alternatives to things you are currently using.

Third step: Make a decision about what plan of action you want to take (credit counseling, debt settlement, bankruptcy or making more income via interesting venues such as kidney harvesting) based on what you found out regarding your finances in the first and second step.

You should always look for ways to cut down on your monthly expenditures (unless you have an unlimited amount of money, such as myself). Talk to a debt management professional who would work with you to design a practical budget. Follow it.

By monitoring every penny spent for a number of months, you will find that you’re unloading your pile of debt without anybody’s help and without having to go for bankruptcy, debt settlement or credit counseling. Some people find out that they waste up to $800 each month ($9600 a year) that they could have used to pay down their debts - compounded at an annual rate of return of 30%, that’s over $600 thousand in 10 years and just under $10 million in twenty years! That’s the equivalent of 30 million sticks of gum, 9.5 million chocolate bars, 7 Bugatti Veyrons  or one Victorian mansion wasted on virtually nothing!

The Wonders of a Budget

If you don’t have a budget in place, it can and probably will shatter your dream of becoming debt free. If you don’t have any debt, the absence of a budget can make you fall into debt. If designed properly, a budget can make your life stress free. A budget would help you identify the area where you should cut down on your expenses. With a budget, you won’t have to worry if you have sufficient funds to pay off your bills. Living within a budget makes your life simpler and ensures that you don’t fall into debt once more. It helps you regulate your spending so that you don’t have to depend on loans to make ends meet.

Knowing that, why don’t YOU have a budget? Go make one now!

It’s no secret that we’ve come a long way since the dawn of man; we went from clubbing our fellow leopard-skin draped brethren over a few scraps of meat to trading Credit Default Swaps while shorting European equity markets.

Gone are the days of hanging out at your local market, trying to find someone stupid enough to trade two goats for your daughter and then another few days of finding someone to trade up your two goats for a cow. Instead, all of this is done in fractions of a second on the Internet with a click of a button or two while banking executives sit in their buildings forged out of platinum and twirl their moustaches as they laugh maniacally atop a throne made entirely out of cash.

Yes, welcome to the 21^st century.

Despite the plethora of things that have changed ranging from technology to the president’s skin color, there is one thing that didn’t change: toilet paper. Come to think of it, there’s one more thing that didn’t change: the world still revolves around money.

People will go to incredible lengths to make more money – and it shows. Stocks, bonds, businesses, corporations, jobs, real estate, Ponzi schemes, derivatives, equity funds, hedge funds and the Slap Chop were all implemented to make people money.

Every day more and more people are finding, altering and adding to methods of making more money. One place that has seen some of the greatest innovations in money-making out of any industry would without a doubt be the financial industry.

Ten years ago you would have sat down with your financial adviser and they would take an hour to inform you about your options when it comes to stocks, bonds and maybe even real estate. Today, you could hold a forty-day marathon of non-stop blabbering and you will get almost nowhere – with Credit Default Swaps, Collateralized Debt Obligations, Real Estate Investment Trusts, Exchange-Traded Funds, puts and calls and you will soon realize that people have gone to great lengths to find new ways to make more money.

Let’s take a look at some visuals to see just how much people really like to make money…

Money makes the world go round

In 2006, the measured economic output (in layman’s terms: the income) of the entire world was $47 trillion.

Sounds like a lot, right?

In case you’re having a hard time envisioning it, here is what one billion dollars looks like (those are stacks of hundred dollar bills):

And here’s what one trillion dollars looks like:

Now imagine 47 of those and that’s what the world’s income looks like! (Thanks goes out to PageTutor.com for the visuals.)

Okay, so the world makes a lot of money – it’s the world after all, with a mass of over 6 billion people and millions of greedy money-making corporations run by greedy little men to whom the phrase “too much money” simply does not imply (a.k.a. myself), but it’s the world after all! Surely there is nothing in this world that can hold more money than the entire world, right? Wrong.

In fact if you were to bet money on such an assumption, you would soon find yourself stripped naked, all of your worldly possessions taken away and your kidneys ripped out of your body in order to be harvested – thankfully you didn’t make any such bets before reading this article…right?

Welcome to the Stock Market!

Remember this place? It is the place that I so highly speak of, where you can take an initial investment large enough to buy a dining room set and make enough money to buy out all of Australia and half of Uganda. Yes, it is a wonderful place indeed.

So, just when you thought that no place could hold more money than the world, I present to you, the stock market with total holdings of $51 trillion, a whole 10% larger than the economic output of the entire world!

And just when you thought that it just can’t get any bigger, I present to you…

Meet the Bonds

These bonds may not by secret spies working for British intelligence nor do they drive Aston Martins but the people who own them certainly do. The world’s bond markets are quite hefty, with a market value of $68 trillion – 50% more than the world’s income!

And now I present to you the Bill Gates of financial vehicles…

The Evil Derivatives

If you thought $47, $51 and even $68 trillion was a lot of money, then you’re in for quite a treat.

For those of you who aren’t too familiar with derivatives, these things are basically contracts derived from or whose value is taken from other securities (such as stocks). All of those fun things that are said to have caused our latest financial catastrophe ranging from Credit Default Swaps to Collateralized Debt Obligations are just examples of derivatives.

Just by looking at their name alone you can probably deduce that these things are more complicated than Paris Hilton’s ascent to fame. So, logically speaking, if derivatives are so complicated and since the vast majority of the world consists of ignoramuses who can’t tell the difference between a cockroach and a dinosaur, you’d think that not many people would make use of derivatives, right? Well, this is exactly why I urge you not to bet your money.

As of 2006, the amount of derivatives outstanding was $473 trillion – ten times the world’s income!

Get in on the action

The belief that the more you work the richer you will get simply isn’t true anymore. The richest people in the world all have their money working for them – be it from stocks, bonds, derivatives or kidney harvesting centers.

Ten years ago you may have never heard of derivatives, ten years from now I’m sure there will be many more things to ponder about. All that is certain is that the world moves quickly, so you’re going to have to keep up with it if you want to be rich enough to afford a petting zoo full of endangered animals covered in gold and precious gems.

One thing you can and should bet on is that people will always find new ways to make more money and more than likely, many of these new ways will come right out of the financial industry – so be prepared for it!

Everyday two trillion dollars is traded on foreign exchange markets (remember that giant pile of cash I showed you earlier?), seven trillion dollars is traded on global stock markets in a single day and every minute of every hour of every week, someone, somewhere is trading their money to make more money – why aren’t you?

You may rue this day all you want but it is inevitable. How else are you going to continue your legacy if not through little Neanderthals running about and breaking everything in sight and screaming at the top of their lungs (a.k.a. children)?

Just look on the bright side, no longer will you have to scour the dark and dingy bars and night clubs of the world, looking for your sexual fix as it is but a few feet away from you at all times…for the first few years anyway until the mere sight of your partner throws you into an epileptic seizure of self pity – thank goodness for divorce lawyers.

Of course, any situation will always have its positives and it will always have its negatives – what really separates those of us that always have a smile plastered on their faces versus those that consider hanging themselves on a bi-weekly basis is what these people do to mitigate the negative aspects of whatever situations they are in… That’s where I come in.

Money: the leading cause of disagreements in all marriages

Look familiar?

Did you know that money is the leading cause of disagreement in all marriages?

According to the relationship guidance organization Relate, money trumps disagreements over sex, untidiness, disciplining children, housework and parents and friends.

If you’re married, then this fact probably isn’t very shocking to you. How many times have you ever argued over how you can’t afford that last stupidly expensive purchase your partner just made or simply attacked the other for not making enough money?

There is only one way to fix this dilemma…

Money: the greatest answer to disagreements in all marriages

A problem-less marriage

Do you know what would fix all of these money-related problems? Having more money.

Think about it; never again will your wife beat you with a frying pan for spending the kids’ college fund on a big screen plasma TV, never again will you nag at your wife for maxing out the credit card on a plethora of indiscernible purses and shoes, and never again will you have to indefinitely put off another family vacation because you have to work extra hours at a job that you hate so you can pay off the mortgage.

Yes, money solves all problems. Then again, money creates new problems, such as the question of how are you going to make more money?

It’s a simple question and one that has a plethora of answers – most of which require large amounts of work to be put in to them, something that many of us simply aren’t willing to do.

Thankfully I have a much simpler solution: we can simply study the main causes of disagreements over the subject of money and by knowing the causes of our violent fits of screaming and bad-mouthing we can avoid them altogether. Quite ingenious, no?

The problems and solutions to disagreements over money

Talking over our problems makes life so much easier

Cause: Handling the money

In a typical household situation, one member is usually left responsible for maintaining the myriad of bills, mortgage payments, investments and everything else left to do with money for the household while the other watches TV while slurping from a can of beer. This can be extremely stressful and the person for whom the burden falls on can feel as if he/she is doing all the work.

Solution: Handle the money together

When two people are handling the finances together, life suddenly becomes infinitely easier. First of all, there are no feelings of resentment towards the other person and secondly the workload has just been cut in half. And if you are reading this and you are the one who mooches off of your partner, just think about it this way: less work = less stress = less nagging = more energy = more “fun” = everyone wins.

Cause: Attitudes towards money

What if you’re one of those people who doesn’t see the value in hoarding all your money and prefers to actually get some use out of it via the latest and greatest gadget or the hottest and most stylish minx fur coat there is? Now, what if your partner is a frugal little man/woman who insists on getting his/her own haircuts because in order to save a few bucks? Well, expect many imminent arguments.

Solution: Discuss your attitudes and set a budget

First and foremost, discuss the way you both feel about money, debt, spending and future plans. Maybe if you explain the way you feel to your partner they will understand you better, perhaps you can might get lucky and turn them over to the Dark Side.

Once you do that, set a budget and follow it. Consider it like a limit; by knowing each other’s attitudes towards money, you can set realistic budgets for the household and then you can track who hasn’t been (budget) faithful. After this the name of the game is: discuss, discuss and discuss some more.

Cause: Not enough money

Sometimes after all is said and done and screamed about, the reality is that you’re simply not making enough money to sustain your living. It happens, a lot. And there will be arguing, guaranteed.

Solution: Make more money

Now, I did say earlier that the answer to all of life’s problems is also the cause of it, since by finding the solution to your problem of not making enough money, which is to make more money, new problems arise of how to actually make more money – and you will have to work for it.

So, you’re going to have to ask yourself, are you willing to work for your money? If not, then find a way to live within your means, on the other hand, if you are willing to work then you are in luck my friend! There is nothing than I love more than showing people how to make more money. So, how can you make more money?

1. Work more hours –If you work at a place that gives you over time then you can simply work more hours – it’s simple, but it sucks but it’s the sad truth;
2. Negotiate a higher salary – if you honestly believe that you should be working more than gather up all of the accomplishments you have made in the near past along with earnings that resulted from your money-making escapades and throw it in your boss’s face. If you are able to prove that you deserve a higher salary, you will get it;
3. Work from home – blogging, data entry, customer service representative, mystery shopping, surveys, kidney harvesting, there are a plethora of ways you can make money from home – this article can help you out;
4. Start your own business – have a great business idea that you’ve been putting off for no apparent reason other than laziness? Well, maybe it’s time to get on that;
5. Stocks – there’s nothing that I love more in this world than counting all the sacks of cash that I made from the stock market. Read my free eBook to help get you started and then look at The BAG Fund for inspiration.

In Parting

Most problems arise from mis-communication – everyone has their own thoughts and feelings and naturally assumes the other person should understand when that clearly is not the case. So, make the other person understand! It’s quite simple really.

There will always be problems when it comes to marriage; my guess is that the couples who can work through their problems are the ones who won’t be working with divorce lawyers. Whenever you find yourselves fighting over anything, especially about money, just talk it over. You can thank me after (preferably in the form of a very heavy cheque).

Let’s see what some of the cast members of The Simpsons can teach us about that thing that we seem to never have enough of (a.k.a. money):

Homer Simpson

Meet: Homer Simpson

“Son, if you really want something in this life, you have to work for it. Now quiet! They’re about to announce the lottery numbers.”

I think we can all wholeheartedly agree that Homer is an intellectual prodigy who always does the right thing in every situation…as long as he does the exact opposite of what he would typically set out to do.

Whether it is through spending thousands of dollars on useless crap without consulting his wife or tearing up thousand-dollar paycheques shortly before announcing to everyone not to worry as he makes three of those a year, Homer has quite a bit to teach us when it comes to the subject of finances.

What we can learn from Homer:

1. Stop being an idiot. Stupid people do stupid things with their money, it’s not rocket science. Put down the TV remote, pick up a book, have an intellectual conversation or stop drinking so much. Your bank account will thank me (and Homer);
2. Go easy on the beer and donuts. Overindulge in beer and you will get drunk and crash your car into a succession of fire hydrants, mail boxes, trees and front lawns (see: Homer) along with the many dollars wasted on the “liquid courage” over the years. Overindulge on donuts and you will end up horribly out of shape (see: Homer) and fighting off a whole concoction of diseases brought on by obesity while missing out on many needed work hours;
3. Laziness only pays off in cartoons. Homer is a lucky bastard; somehow things always end up turning out for him, such as being able to get his job back at the nuclear power plant after nearly causing it to explode along with the entire city – if you can get that lucky, then I wish you all the best. For everyone else, get off your lazy ass!

“Bart, with $10,000, we’d be millionaires! We could buy all kinds of useful things like…love!”

Marge Simpson

“Homer, I’ve gone through seven years of receipts, and you’ve spent less on gifts for me than you have on temporary tattoos.”

Marge, on the other hand, is what we can call the antithesis of Homer with her responsible nature and thoughtfulness. Hell, she even counts receipts, tries to cut down on food expenses and is an attentive mother.

What we can learn from Marge:

1. Patience pays off. I think we can all agree that if you can deal with all of Homer’s shenanigans and still have enough energy to do the laundry at the end of the day, you are quite possibly a super human being. And if you can do that, that also means that you have enough patience to balance the chequebook, pay the bills on time, cut coupons and follow a budget;
2. Take responsibility. When you have a family consisting of a brain-dead husband, an evil son and an overachieving daughter who all refuse to take responsibility for their actions, all responsibility falls on the responsible mother who bears all the hardships. Being responsible means you don’t let your spoiled, dysfunctional family drive you into bankruptcy or even the jailhouse. I am also going to be responsible right now by admitting I overuse the word responsible. Responsible.

“I brought you a tuna sandwich. They say it’s brain food. I guess because there’s so much dolphin in it, and you know how smart they are.”

Montgomery Burns

“Well, that’s odd … I’ve just robbed a man of his livelihood, and yet I feel strangely empty. Tell you what, Smithers – have him beaten to a pulp.”

If there’s any character in the world that I can relate to most, it would be that of Mr. Burns, Springfield’s friendly neighbourhood trillionaire who is never afraid to release the hounds on just about anyone. He may be the oldest man in Springfield and weaker than a diseased kitten but he is still the richest, meanest and most bad-ass dude out there.

What we can learn from Mr. Burns:

1. Own the necessities. Whether it’s the power plant, oil, casinos or converting churches into casinos, Mr. Burns knows the latest and greatest investments that everyone will die without and isn’t afraid to monopolize them by any means necessary. Hence, he’s a trillionaire;
2. Even rich people can be frugal. He may be filthy stinking rich, but he still (attempts to) steal lollipops from babies and (try to) pick up nickels off the sidewalk (albeit then requires his back to be fixed back into place) and still refuses to pay for his employees’ health insurance. Someone give this man a Nobel Peace prize!
3. Don’t be afraid to release the hounds. Have you ever seen anyone stand up to Mr. Burns? Would you want to be attacked by a vicious pack of hungry dogs? Didn’t think so;
4. Kindness never killed anyone. Unless you want to die old and alone with only a gay servant named Smithers by your side, then do what ol’ Monty does, otherwise you may want to get that old heart beating again.

“Smithers, for attempting to kill me, I’m giving you a five percent pay cut!”

Apu Nahasapeemapetilon

Good ol' Apu

Apu, the mighty self proprietor of the famous Kwik-E-Mart who has been shot eight times in one year and still managed to make it to work every single day, is the tale of the hard-working immigrant living the American dream…sort of.

What we can learn from Apu:

1. Being an entrepreneur is hard work. If there’s anyone that can show us that owning your own business is hard, it is Apu, who appears to be working every waking minute of the day to pay the bills and send money back home;
2. Hard work pays off. Well, you’d assume if you seemingly own the only store in town and don’t spend any money on employees, eventually your bank account will be in an extreme state of jubilation;
3. Sometimes cheapness pays off. Apu isn’t afraid to make a few dirty bucks when he can, such as by selling expired products or simply by lying to his customers. Is it unethical? Perhaps. Does it pay the bills? Undoubtedly.

“Yes! I am a citizen! Now which way to the welfare office? I’m kidding, I’m kidding, I work, I work.”