Gregory Karp - Living Rich by Spending Smart: How to Get More of What You Really Want

Gregory Karp

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2008 by Pearson Education, Inc.
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Printed in the United States of America

First Printing January 2008

ISBN-10 0-13-235009-2

ISBN-13 978-0-13-235009-9

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Library of Congress Cataloging-in-Publication Data

Karp, Gregory.
Living rich by spending smart : how to get more of what you really want / Gregory Karp.
p. cm.
ISBN 0-13-235009-2 (pbk. : alk. paper) 1. Budgets, Personal. 2. Home economics
Accounting. 3. Finance, Personal. I. Title.
HG179.K374 2008
332.024dc22
2007035095

For Dad and Grandpop,
role models and noble men

In 2003, Tribune Co. was creating a new personal finance section that would be available to all its newspapers, including the one where I worked, the Allentown (PA) Morning Call . That's when I successfully proposed a new kind of consumer column that I would write. We would call it "Spending Smart." It was first published in January 2004.

"Spending Smart" was an instant success with the millions of readers who buy Tribune Co. newspapers, which include the Chicago Tribune , Baltimore Sun , Hartford Courant , and Orlando Sentinel , among others. The column's success did not stem from my journalistic prowess. Rather, the topic of spending your money smarter struck a chord with readers. They had plenty of financial writers advising them on how to manage their extra money. But they didn't have someone telling them how to accumulate that money in the first placehow to spend their money smarter so they had some left over to manage. That's why they love the "Spending Smart" column.

Since the first column rolled off the presses, literally hundreds of readers have written and phoned with praise and criticism, both of which were invaluable. I am grateful and indebted to those readers.

"Spending Smart" the newspaper columnthe genesis of the idea for this bookwould never have achieved liftoff without initial and continuing support from several top-quality editors at the Morning Call . They are former Business Editor Michael Hirsch, Managing Editor David Erdman, and Editor Ardith Hilliard. I thank them for that.

This book also benefited from many of the experts I talked to along the way. They are far too numerous to mention by name, but I thank them nonetheless.

Thanks also to the folks at Pearson Prentice Hall, including Executive Editor Jim Boyd and Developmental Editor Russ Hall. Thanks too, to manuscript reviewers Liz Pulliam Weston, an author who also writes columns for MSN Money , and Cynthia Smith.

Thank you to Coach Deb, who helped me figure out what I wanted to do with my professional life. Those Sunday evening coaching sessions by phone led directly to this book. Thanks, sis.

Finally and most importantly, I want to thank my immediate family for unwavering support. There were too many times when Daddy couldn't pay enough attention to Jacob and Michael because he was cooped up in the home office tapping away at the computer keyboard at night, on weekends, and during holidays. And to my wife, Rebecca, thank you for your constant encouragement and boundless optimism. You are my inspiration.

Gregory Karp is an award-winning, nationally published newspaper journalist. Greg's column, "Spending Smart," is consistently among the popular personal finance columns in Tribune Co. newspapers each Sunday. In 2006 the column was named Best Column by the Society of American Business Editors and Writers.

Greg's writing regularly appears in such newspapers as the Chicago Tribune , Newsday , Baltimore Sun , Hartford Courant , Orlando Sentinel , and Allentown (PA) Morning Call . It also appears on the Web sites of such television stations as WPIX in New York, WGN in Chicago, and KTLA in Los Angeles.

Greg often writes family money stories for Better Homes and Gardens magazine. He's a frequent guest on the morning show, Good Day Philadelphia , and appears weekly on RCN-TV in the Lehigh Valley, Pennsylvania. He maintains a blog at themorningcall.com .

Greg lives near Yardley, Pennsylvania, with his wife and two sons.

Spending Smart is the only way to get out of debt and build wealth. That's a bold, but true, statement. It's like calories are the key to a weight-loss diet. It doesn't matter what the new diet fad is. A diet to lose weight only works if you burn more calories than you consume. Everything else is just window dressing and hype.

In fact, controlling spending is far more important than the amount of your debt, which investments you choose, or even how much you earn. For people in debt, it wouldn't matter a bit if somebody graciously paid off all their credit cards or if they got a huge bonus at work to pay off the balances. Before long, they'd run up the card balance and be right back in serious debt because they didn't fix the fundamental problem, spending too much money. Americans today don't have a problem with debt. They have a problem with out-of-control spending. Debt is simply the result.

The truth is, you can't outearn dumb spending. Just ask all the multimillionaire Hollywood celebrities, sports stars, and lottery winners who ended up broke. Most people become wealthy and stay wealthy because they care as much about money going out as money coming in.

Spending Smart provides both the philosophy and the details to help you care about your spending too. If you already care, it will speed your trip to financial freedom and wealth.

The basic premise of wealth must be understood. It doesn't matter whether you earn $20,000 a year or $200,000. The only thing that makes you wealthier is regularly spending less money than you make.

That was proven in The Millionaire Next Door , a tremendous best-selling book that shattered myths about who America's millionaires really are. In fact, millionaires are not highly educated people who inherit a lot of money and spend it on obscene luxuries and pampered lifestyles.

Instead, they are hard-working people who, among other common attributes, care about what things cost and about getting good value for their money. In short, America's real millionairesnot those who just look the partcare about their spending. And you should too.