Uzair’s Theory on How to Budget Your Money

The Mona Lisa of spending

I have this theory that when people graduate from school and start earning money their brain cells die off proportional to the increase in salary from school to the workplace. After talking to a lot of my friends, there seem to be two major extremes; some blow all their money away on stupid things like a house or a car and live pay check to pay check. The other side is where people literally save 90% of their salary and cheap out or deprive themselves from everything in life. Now as we all know I don’t like extreme behavior.

Why not save up 90% of your money if you can live at your parents’ house? This question depends on how much you are making. If you are making $4000 a month then living off 10, 20 or even 30% of your salary is going to be difficult. You will have to count every penny, every latte you buy, and every cheese burger you buy. You worked really hard in school, why live such a boring and limited life. Your social life will suffer as well because you friends will want to eat out at nice restaurants but you want to save all your money so you won’t be able to. And if you do go you’ll have to eat before and be that degenerate.  Saving money should be balanced with the idea that life is meant to be lived now and enjoyed. You don’t need to spend lavishly to enjoy it but you shouldn’t say no to hanging out with your friends because you’re too cheap to and have to save your money. Also you don’t want to be that guy who stresses over every drink or $20 spent. If you want that nice suit, or that watch you should buy it but do it smartly.

So this how Uzair suggests how those with a peasant mentality do their budget. This is not the only way to do it but it’s by far the best. I’m going to break it down into percentages so it applies to everyone except the ones who are still in school.

45 to 55% – Living expenses – this includes all your bills, insurances, food and rent. There is no way you can’t live on this. If you can’t “afford” to live on this then rent out a place you can afford or get a roommate. If you want to live in a nice place you can move this up to 60% but no more. This also includes eating out so be careful and if you go over here it you will take money out of your “Frivolous expenses” account.

10% – Car payment – Preferably you don’t want a car payment, and I don’t have one. But I’m including this for the peasants who insist on a financing a newer car. This is retarded so I’m actually going to scratch this out. You shouldn’t have a car payment that you pay to a bank or dealer. I will talk about this later. I recently went to a dealership to drive a vehicle, and I was disgusted when the car salesman said that people only take out 6 to 9 year loans. NINE YEARS!! For a car loan. Now whenever you see some punk driving a nice car just look at him and laugh, he’s probably paying that car off in 9 years! The longest loan should be 3-4 years and even that’s too much but 9! Damn. This is why you don’t want to be average.

10% – Frivolous expenses – This is where you buy all the things you want like suits and watches and fancy dress shirts. This is the only stuff you should be buying most of the time. The clothes you wear are an investment in your future, not just bought by the vain. To quote ex-NFL Player Andre Rison – “You look good, you play good, you get paid good”. It all starts with looking good.

15% – Extra expenses – This is random stuff you can’t really categorize and aren’t exactly a monthly expenses. Examples include personal care products, gifts, traffic fines etc. You get the point.

30% – 20% – Savings – This is the most important part of your budget. You have to set up an automatic deposit system so it automatically takes money out of your account into a separate savings account that’s a hassle to get your money out of. The habit of saving is one of the most important habits you can have. No one takes a person who lives paycheck to paycheck seriously. Most personal finance “gurus” recommend you save 10% but that’s for the average person. Since you’re reading my blog you are clearly not just average, but you are the top 2% of the population (being modest). So you’re going to save money like the top 2% do. I’ll talk about what to do with this money in my next post.

Now if you want to buy a car, this is what you have to do. Drive a car you can buy in cash or pay off quickly <6 months. Call me and I’ll advise you on what cars you should be looking for. The most you should spend is $12,000 and you can find really nice and capable vehicles in that range. Some suggestions are a 2002 – 2003 BMW 5 series, 2002 – 2006 BMW 3 series, 2004-2006 Mercedes Benz E – Class. There are more but at this price range you can get a very capable and luxurious vehicle that looks good and if maintained well can last you a long, long time.

When it comes time to buying a pricier vehicle you have to ask yourself first if you really care that you have that fancy of car. You have to really want the car for the car itself. If your reasons are to look cool, or have people say nice car then stop reading my blog, peasant. Even if you want the car just because it’s newer you’re just as big as a tool. A car is an unnecessary expense and you should only buy a newer car because it’s what you’ve always wanted for a while. It’s the same principle that applies to houses. If you buy the cars I’ve recommended, you really should have no want to move up.

But if you really want a car then I suggest you buy the high performance model of that car. For example if you want a Cadillac then buy a CTS-V or a Mercedes Benz then buy a AMG. These high performance cars don’t depreciate as much as other cars (a 2001 BMW M3 will cost you $22,000 today) and they are worth the premium. The first thing you have to do is pay cash. When you finance a car you are paying the bank 4% in interest for a depreciating asset which is the height of idiocy.  The problem with paying with cash is now you just lost $70,000 in liquid assets in the form of a vehicle which isn’t great. What you have to do is budget 10% to 15% of your monthly income and make a car payment to your own savings account, so in essence you’re paying yourself back with the same interest any bank would charge. You can’t take that 15% from the money you’re already saving. No one does that, it’s stupid. You have to cut back on other expenses that you don’t care about. So after 4-5 years or however long it takes you, you have put all that money back in your savings account with interest paid. This requires discipline, and you have to detach yourself from your personal finances and look at it from a banks point of view.

Up next, I’ll talk about how to invest like Uzair would. In simpler terms; “How to invest like a genius”.

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Comments

comments

4 Comments

  • Chaka

    October 17, 2012 at 12:50 am

    This was both funny and informative. Thanks man!!

  • AK

    October 17, 2012 at 2:06 pm

    Uzi, What my years of knowing you and all these theories of yours have taught me about you, is that you’re all style and no substance. Buying suits, looking good, having a large savings account, and your recommended cars to purchase: BMW, BMW, Mercedes. How about advice for the rest of us who view money as a means to an ends, not the end itself. Why do I care if interest on a car is high. If I really want a car, then the value of that car to me goes beyond what it says on that MSRP sticker. If at the end of the day it costs me an extra $5000 to borrow that money from a bank over a 4 or 5 year period, so what, that car means to me more than those $5000 i could have had in the bank after those years. If at the end of my life money in = money out, and I’m happy, why do I care about the millions I could have saved up in my bank account?

  • Rej

    October 28, 2012 at 8:53 pm

    Can I invest in this blog? #genius

  • Jeremy

    December 22, 2013 at 1:27 am

    One weird guy once told me to budget my money I had to live at home till I was 35. I didnt think this was good advice. Cause people look at you differently and judge you more. You wont pick up girls, cause what girl wants a guy that lives at home?