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What Color Is Your Advertising? How Color Theory Can Make Your Marketing More Effective

January 22, 2012

If you’re planning a marketing or advertising campaign, color is sure to play a key role in the success of your venture. After all, it’s pretty much the first thing your consumers will notice*, making color your best – and sometimes only – chance to get a message across.

Use of color in most design for marketing and advertising is dictated by certain obvious requirements; the need to reflect a specific brand, as well as the attempt to communicate a certain mood dictated by the product itself.

Company branding is pretty straightforward – specific colors dictated by logos and other devices will need to be incorporated into at least part of your design. It’s the choice of color scheme for conveying the ‘personality’ of a product that’s often a lot harder to come up with.

Sometimes the decision is partly intuitive – most people understand even at a very basic level that bright, saturated colors will convey a different kind of mood to neutral grays or browns. Experienced designers, of course, go further still, selecting and implementing colors on the basis of their effectiveness in the overall design. Here, the guidelines of traditional color theory often come into play as a kind of balancing act to ensure that all parts work together well and that the right kind of colors are used.

But what if some colors are actually more right than others?

We’re about to embark on an exploration of color related not just to its use in layout, but rather, the psychological and physical impact it’s likely to have on a viewer.

A big, and sometimes controversial undertaking, and we’ll first need to get a couple of things straight. While people often talk about a psychology of color, in reality, most psychologists would find fault with the accuracy of this term. This is because the significance given to various colors isn’t universal and unchanging – in many ways it’s quite the opposite: various cultures quite often associate the same color with very different emotions and ideas.*

Yet colors and their underlying fabric of sociological and historical connotation certainly do produce specific reactions in particular contexts – emotions, associations and even physical effects that can help advertisers in their quest for ever more accurate targeting.

And if this all sounds a bit hokey, at the very least, the idea that color can actively influence consumers shouldn’t be disregarded entirely. So let’s take a look at what colors seem to be telling us.

Red

Red, the most vibrant and powerful of colors, seems like a good place to start. Particularly since studies have shown that it’s the first color babies recognize, and one that continues to appeal to most people throughout their childhood and into their adult lives.

At a purely symbolic level, it’s the color of fire and blood, an association that’s common to all cultures and therefore extremely powerful. Less specifically, it’s a color that seems to be associated with energy, war, danger and power, not to mention passion, desire, and love.

So what does that mean for marketing?

To start with, some of these associations are so deeply ingrained that it wouldn’t be wise to use a color other than red to represent certain states. Try depicting extreme emotions such as violence or passion with shades of blue and you’re going to run into problems.

What’s more, it has been shown that in its brighter variations (tomato, pillar-box), red actually provokes a physical response by raising respiration rate and blood pressure.

For this reason, its use in ’sexy’ advertising scenarios or as an erotically charged statement (on lips or fingernails) should quite literally set hearts beating faster – and unusually, it’s regarded as equally arousing by men and women.

Whether the physiological ‘red effect’ occurs simply as a result of its associations; or because the color itself somehow provokes such a response; or, if, indeed, this effect relies on a combination of the two isn’t something that necessarily matters here. What is important is that red, like virtually every other color, exerts a measurable influence on the consumer.

More about the ‘red effect’

Quite apart from any physical reactions it might provoke, red’s association with force, and therefore power, is an extremely dominant one. Consider all the small details in our everyday lives that support this notion: red icons on switches to indicate their ‘on’ state, the plastic coating on ‘live’ wires, the tiny red glow that tells us an electrical appliance is working.

All of which makes red an ideal color to suggest fast-moving action or extreme force – examples of products that might fall into this category include computer games, action-adventure books or movies.

This deep-rooted association with power, coupled with the fact that it actually raises metabolic speed, also makes red a good candidate for any product that seeks to impart the idea of improvement, rapidity or physical change. Just a few of many possible examples include anything related to sport or speed (think of those red sports cars), energy drinks, self-help guides, or batteries. Even ‘fast-acting’ or ‘powerful’ over-the-counter drugs can support their status with at least a dash of red.

Perhaps as a result of all that heavy breathing, red also increases appetite, making it an excellent choice for advertising food (it’s popularly claimed that Chinese restaurants often use red color schemes for this reason, but there’s little truth in this – red simply happens to be a very popular and ‘lucky’ color in Chinese culture).

However, if enticing diners to eat heartily is something you’re aiming to do, an all-red environment is a good way to get stomachs rumbling.

Pink

Although it derives from red, pink has little of its big brother’s forceful qualities. In fact, although it’s usually perceived as a warm and fairly upbeat color, it is, of course, popularly associated with femininity and even passivity. A cliche, perhaps, but its vigor-reducing reputation has again been shown to have some basis in fact.

Famously, a shade of bubble-gum pink used in certain cells in a men’s prison was unexpectedly found to placate aggressive inmates. Research corroborated the fact that pink did indeed have significant calming qualities – although subsequent study revealed that after a certain time these effects were dramatically reversed as prisoners became more agitated and aggressive than before. (Surprised? You try living in a bubble gum pink environment).

Nevertheless, the fact that pink does induce at least a temporary sensation of calm makes it a powerful factor in the color-coordinated approach to advertising. Its peaceful, relaxing qualities and general evocation of comfort and softness have long made it a favorite for items such as toilet paper, cotton wool and ‘gentle on the skin’ toiletries, especially baby lotions.

This association could possibly be explored further as a background or accent color for items where comfort is key, such as bedding, sofas or carpets. Apply with caution, however – the strong association with femininity means that anything ‘too’ pink is likely to be snubbed by men.

There’s one other area in which pink has an interesting effect, however – and one that’s far less likely to alienate males. It’s well known that a high concentration of color in foodstuffs will lead consumers to believe they’re tastier, or even identify a flavor that isn’t actually present.* And pink coloring is a particularly effective way of suggesting sweetness.

This may relate to the fact that it’s often used as a coloring in candies, but whatever the case, the association is powerful enough to substantially increase a food’s perceived sugariness or even depth of flavor. Pink sprinkles or toppings will add oomph to vanilla ice cream, and pink marshmallows are often assumed to be sweeter than white ones (they aren’t).

Although in these health-conscious times sweet, sugary foods have lost much of their popularity, the marketing of certain products is still likely to benefit from a little pink-appeal: feel-good desserts, ice creams, shakes and certainly artificial sweeteners. It’s also a color that could be used to make sugar-free, healthier foods seem more enticing to kids – as long as Mom and Dad are able to see through the ruse themselves.

Green

Occurring naturally as a sign of plant growth and renewal, green is one of those colors that’s universally seen as positive, fresh and fertile. It’s also a color that, once again, produces noticeable physical effects. it’s the easiest color for the eye to assimilate and therefore one of the most relaxing; it induces feelings of calm and restfulness, and can even improve vision. In short, it’s a very positive color indeed.

This emphasis on nature, freshness and renewal means that it’s commonly used to emphasize the cleansing, ‘regenerative’ aspect of household items such as bleaches, detergents, air fresheners. But if you notice a certain irony in this, well-spotted, because green, of course, has steadily evolved into the symbol of all that’s ecologically aware. Which isn’t a label that applies to most cleaning products.

The widespread acceptance of ‘green’ in its current sense is actually a fairly recent phenomenon*, but with increasing focus on ecological issues it’s extremely powerful and will only gain in strength. So much so, in fact, that real care needs to be taken now that use of green doesn’t suggest a product is all-natural, organic or additive-free if it isn’t. Congruity in advertising – or the notion that what’s implied about a product should be supported by its reality – is one of the most vital aspects of marketing. Get this wrong, and there’s no consumer forgiveness.

Yet despite green requiring caution in advertising, its current associations have equally led to opportunities for more refined targeting. Wholesome, healthy food items are likely to be quickly identified as such through predominant use of green, and the same can be said for products or services associated with any type of healing, spirituality, or personal growth: yoga, slimming programs, alternative medicines.

Different greens, different meanings

Green is a symbolically complex color, and particular shades transmit subtly different messages. Darker greens – the classic color of bank-notes and bills – have long held an association with finance. The added implication of growth and fertility therefore makes green a good choice for promotion of many financial products, particularly saving schemes, pensions and insurance plans.

Lime greens, which emerged as popular trend color in the ’90s, denote an especially vibrant freshness due to their close relationship to effervescent yellows. As such, they make excellent keynote colors for fresh, healthy, energy-inducing products such as juices, tonics, vitamin supplements and energy drinks.

Finally, a further modern-day association with green stems from its use in traffic systems to signify ‘go’. This link with movement, forward motion and vehicles make it a potentially good choice for anything related to transport: carriers, train networks, buses. And for online advertising, try using green for buttons or links you’d particularly like clicked – you’re practically inviting a user to go ahead and do so.

Blue

Blue is by far the world’s most popular color. And as one that, like green, occurs in nature – the hue of skies, water and sea – it’s not surprising that it’s so well loved. With such universal associations and widespread appeal, blue is an important asset to any color theorist.

Unlike very warm colors, which provoke impulsive, passionate responses, blue is a cerebral color that’s commonly associated with clear thinking and intellect. For good reason, too, as its use in offices and workplaces has been shown to dramatically increase productivity and a sense of well-being. Perhaps more surprisingly, other studies indicate that blue can even improve physical prowess – weight-lifters typically perform better in blue surroundings. However, this is probably a secondary effect of its ability to sharpen concentration.

This association with clear thought and precision make blue a good choice for anything involving a high degree of complex manufacture, such as computing products, electronic goods or hi-tech appliances in general. Darker blues emphasize this association even further, and their widespread appeal among men provide a perfect keynote for high-end, precision-made items with a masculine focus – expensive cars, bespoke tailoring, luxury grooming products.

Given such a setting, it’s no real surprise either that blue emerges as a clear favorite in the corporate world. Its implication of steadiness and reason continue to make it an effective choice for much company branding, although its white collar associations can also suggest stuffiness and conservatism.

In its lighter, brighter shades, blue loses much of its cool aloofness and takes on happier, sparkling and spontaneous overtones. The pure and natural aspect of such blues convey a sense of cleanliness and freshness and are often used for cleaning products, detergents, deodorants and toothpastes.

Bright blue is also an obvious choice for the typical vacation. Evocative of cloudless skies and inviting pools or seas, it also gives a tantalizing taste of tranquility and relaxation by slowing down the metabolism and producing feelings of calm and well-being. A powerful message indeed, and one that makes blue an equally effective choice for health spas, beauty clinics and any other service where deep relaxation or therapy is a key selling point.

In fact, blue is such a flexible and well-liked color that it’s almost impossible to mis-use – with one major exception.

Foods, particularly meats, dairy products and staples such as pasta or rice, really don’t benefit from any kind of association with blue. To start with, that drop in metabolism will certainly reduce the appetite; but this doesn’t explain the fact that a blue/food combo can even induce feelings of nausea. (Try it. Add a little coloring to pasta, white sauce, or even better, light-fleshed meat such as pork or chicken. See how far you get before pushing your plate to one side).

It’s been suggested that we instinctively associate the color with something that’s rotten and unsafe to eat, but whatever the case, it’s not a great choice for marketing a ready-meal. And if you find yourself running low at your next dinner party, bring out the blue plates. There won’t be many requests for second helpings.

Yellow

Yellow is clearly vibrant, energetic and fun – it’s the color of sunshine, flame and fire and is closely associated with warmth, happiness and the positive energy such states create. It produces bodily responses that are perfectly in keeping with this reading, too; an instant feeling of well-being along with a noticeable boost to mental activity.

For this reason, it’s a color that effectively communicates the nature of products associated with vitality and stimulus, such as energy drinks, sports equipment, vitamin supplements or remedies. And as the perfect feel-good color, it’s a great choice too for promoting group leisure activities, clubs and social networks.

Visually, yellow has a high impact that’s hard to ignore, a fact reflected in its use for items such as sticky notes and highlighter inks. Since it demonstrably sharpens attention, too (back to the notes and highlighter pens!) it’s worth considering lighter yellows as a background for large amounts of text, especially copy that requires close attention such as tutorials, instructions, or rules and regulations.

Yellow does requires a certain amount of care, however. Very light yellows can often appear drab, especially on-screen, while brighter shades tend to become overpowering.

The yellow effect is an intense one, and its enervating qualities can quickly put people on edge. Yellow rooms make babies cry more, and they also provoke hot tempers and arguments. And finally, while it’s a color that can be used to market most products to women – from washing up gloves to expensive scents – men are far less likely to appreciate its use with expensive or luxury goods.

White

Pristine and pure, white appropriately signifies cleanliness, spiritual health and, of course, purity in most cultures. It’s considered a non-color to which nothing has been added, making it an ideal choice for products wanting to accentuate their unadulterated, un-tampered with goodness: no-frills items, reduced fat, low-sugar or no-additive foods, pure juices, skin-care products.

White is also the classic ‘clean’ color, providing the easiest way to add a sense of uncluttered spaciousness to print or screen graphics. Yet its association with cleanliness and hygiene (white clearly shows dirt so is commonly used in hospitals, for example) lends it a certain clinical quality that can deprive a marketing message of warmth or even context. For this reason, it’s best used with an accent color to combine the best of two worlds – the visual clarity of white and the emotional resonance of a carefully chosen highlight.

Remember, too, that on-screen, the combination of light-filled white with black text is fairly hard on the eye. Try choosing a tinted background for large quantities of copy (yellow is often a good choice, as mentioned above) or change the color of the text itself.

Black

Although in western culture the color black certainly holds several negative linguistic connotations (black magic, black market) it’s also very positively associated with authority, prestige and exclusivity (black tie event, black credit card, black mercedes).

A slightly confusing message, but in general, black can be used very effectively to denote cool sophistication and a powerful sense of extreme luxury or expense.

Pair this with the fact that visually, it’s a color that creates a real sense of depth while also focusing the attention more completely than white, and black makes an ideal backdrop for images of luxury goods or services such as high-end hotels. Men seem to respond particularly well to such a combination – perhaps because it’s also been shown that for guys, black is a color with marked erotic overtones (combine it with red and you’re onto a testerone-charged winner that’s bound to attract male attention!)

Black is also by far the most common text color; perfect in print, although on-screen the contrast with white can often seem harsh. A good tip is to consider using a very dark gray instead. And colored text against a black background is rarely a good idea except in small areas, as black backgrounds diminish readability and will quickly tire viewers.

Orange

With Its combination of energetic reds and feel-good yellows, orange is a color that’s clearly suggestive of fun, warmth and pleasure. And like its constituents, orange exerts an invigorating effect by increasing oxygen to the brain and stimulating mental activity. It’s therefore an excellent choice for any product associated with energy and vigor, such as sporting equipment or services, adventure holidays, theme park rides, energy drinks.

Think you’ve read something like this before? Well in fact, orange can impart very similar messages to red, but importantly, without its slightly aggressive edge.

Of all the colors, orange is also the best at stimulating appetite. So good in fact, that you may notice a lot of it in the snack or candy shelves near a checkout. Strategic thinking, because the orange ability to generate sudden hunger pangs will often lead to impulse purchases.

Yet orange, particularly in its brighter shades, is also a color that’s perceived as lacking prestige. Perhaps this is because its high visibility means it’s a frequent factor in motel signs, fast food outlets and similar ‘low-frills’ businesses, but whatever the reasons, it’s a color that’s become associated with lower-budget options and shouldn’t be used extensively for products wanting to impart a high quality message. (The opposite also holds true, however, making it a very good choice to indicate value for money, savings and discounts).

Purple

Mysterious, alluring, and very definitely regal, purple is a relatively uncommon color in nature. In the ancient world, its scarcity meant that it was highly valued, and rare, expensive purple dyes were used exclusively by nobility.

This association with wealth and prestige remains to this day, making purple, especially in its darker shades, an excellent complement to luxury items.

In fact, the association with expense is so strong that it can even be used to add a touch of instant class to cheaper products. For example, a bus company using purple livery would almost certainly be perceived as more luxurious than one using orange. The risk here, though, is that the consumer’s perception of comparative price might also rise accordingly – even if fares are identical.

Purple secrets

Purple also has some interesting hidden talents. It’s been noted, for instance, that many women find it an extremely erotic color, making it the female equivalent of the guys’ libido-enhancing black.

In fact, purple turns out to be a very girly color indeed – far more so than pink, the usual suspect. It’s a definite hit amongst young and adolescent girls for example, with some studies claiming that almost 75% rate it their favorite color. So while men seem fairly neutral about purple, if you’re looking for a color that speaks directly to the ladies, this may well be the one to choose.

Brown

And what about the guys? Well if you tried to guess, chances are you’d get it right. Brown, along with blue, is consistently voted a favorite color by men. And why not? Solid, earthy, dependable; it might lack the zing of the brighter primaries, but it resonates with a sense of trustworthiness and dependability. And if that’s the kind of message you’re looking to add to your marketing strategy, brown is often the right color to convey it – especially of course, if the product’s aimed specifically at males.

An interesting off-shoot of all this earnestness is the fact that brown is often claimed to be a highly ‘believable’ color, too. In other words, it’s more likely to add credibility to an advertising message – an important factor if your communication makes claims that may seem extravagant.

Bear in mind though, that if used too extensively brown can also have a stodgy, dampening effect. And whatever message your marketing is ultimately trying to convey, its main purpose is to stimulate enough visual interest to attract and excite instant attention.

But even in this respect, brown turns out to be pretty dependable: it easily converts into lighter and darker shades without losing depth, and can also be mixed with more dynamic colors – reds, yellows, oranges for a much more upbeat feel. So use the color recommendations given here to spice up a brown accordingly.

Planning an ad for well-made, hard-wearing, yet sporty gear for guys? Brown combined with a hint of red should give just the right message.

FOOTNOTES

* While images are generally more noticeable than flat blocks of color, they are, of course, usually dominated by a particular color in order to enhance and support an overall layout.

* One example would be the use of white clothing to signify mourning in India and many parts of Asia. In this article I’m focusing on color in the context of western culture.

* Numerous studies have shown that higher levels of coloring in food or drinks leads to the belief that they are stronger in taste than identical items with less color. Assumptions regarding color-taste correlation can even cause errors when identifying flavor; for example, a cherry-flavored drink colored purple may well be identified as grape.

* The color green has long been a symbol of ecologically motivated political parties and movements, but it’s only in recent years that this meaning has become completely mainstream through widespread media emphasis on global warming and other ecological issues.

* Oddly enough, red in this context don’t seem to provoke a ’stop’ response and will also work well for buttons, particularly if a quick decision is required. Green, however, will always be perceived as a less risky click.

REFERENCES

Bellizzi, Joseph A., Ayn E. Crowley, and Ronald W. Hasty (1983), “The Effects of Color in Store Design,” Journal of Retailing, 59 (1)

–, and Robert E. Hite (1992), “Environmental Color, Consumer Feelings and Purchase Likelihood,” Psychology and Marketing, 9 (5)

Birren, Faber (1978), Color and Human Response, New York: Van Nostrand Reinhold.

Gorn, Gerald J., Amitava Chattopadhyay, Tracey Yi, and Darren W. Dahl (1997), “Effects of Color as an Executional Cue in Advertising: They’re in the Shade,” Management Science, 43 (10)

–, and Patricia C. Smith (1959), “A System of Color Preferences,” American Journal of Psychology, 72 (4)

Hall, Richard H., and Patrick Hanna (2004), “The Impact of Web Page Text-Background Colour Combinations on Readability, Retention Aesthetics and Behavioral Intention,” Behaviour and Information Technology, 23 (May/June)

Hevner, Kate (1935), “Experimental Studies of the Affective Value of Colors and Lines,” Journal of Applied Psychology, 19 (2)

Jacobs, Keith W., and James F. Suess (1975), “Effects of Four Psychological Primary Colors on Anxiety State,” Perceptual and Motor Skills, 41 (1)

Madden, Thomas J., Kelly Hewett, and Martin S. Roth (2000), “Managing Images in Different Cultures: A Cross-National Study of Color Meanings and Preferences,” Journal of International Marketing, 8 (4)

Meyers-Levy, Joan, and Laura A. Peracchio (1995), “Understanding the Effects of Color: How the Correspondence Between Available and Required Resources Affects Attitudes,” Journal of Consumer Research, 22 (2), 121-138.

Middlestadt, Susan E. (1990), “The Effect of Background and Ambient Color on Product Attitudes and Beliefs,” in Advances in Consumer Research, vol. 17, Rebecca Holman and Michael Solomon, eds., Provo, UT: Association for Consumer Research,

Schaie, Klaus W., and Robert Heiss (1964), Color and Personality, Berne, Switzerland: Hans Huber.

Schindler, Pamela S. (1986), “Color and Contrast in Magazine Advertising,” Psychology and Marketing, 3 (2)

Wilson, Glenn D. (1966), “Arousal Properties of Red Versus Green,” Perceptual and Motor Skills, 23 (3)

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Coast To Coast AM – 27.5.2011 – 1/4 – Student Loan Scam

January 18, 2012
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MP3 www.4shared.com Guests: Alan Collinge Student Loan Scam: During the first hour, Ian Punnett welcomed the founder of StudentLoanJustice.org, Alan Collinge, who discussed how federal student loans have become predatory, turning a generation into debtor slaves. “It’s a socially horrible epidemic,” he declared, noting that America’s total student loan debt now surpasses the nation’s credit card debt. He explained that student loans are particularly pernicious because they contain no consumer safeguards such as bankruptcy protection, statute of limitations, or the ability to re-finance the debt in an open market. As a result of these factors, Collinge said, when a loan is defaulted, it can double or even triple due to penalties and fees. In looking at the source of the problem, Collinge pointed to student loan advocates and the Department of Education as the key entities that “failed to play their part” in overseeing lending practices. According to him, the DOE has been using a faulty metric to determine the default rate on student loans, thus misleading Congress into increasing the allowable limits on colleges for lending. Additionally, Collinge said, the DOE actually makes “about 22% versus what they pay out” for defaulted student loans. In order to fix the student loan epidemic, Collinge endorsed restoring bankruptcy protections for these loans. Should that happen, he said, “a multitude of problems” will resolve themselves, including an “almost overnight” drop in

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What Household Budget Percentage Breakdown Is Typical?

January 11, 2012

The typical American household budget percentage breakdown looks like the list below. For most of the categories a range is shown. A range makes more sense to help you see where your personal budget fits (or doesn’t fit.) If your budget doesn’t fit the typical American household budget, rejoice! The average American household budget is jacked up – we carry too much debt and we just don’t save enough. We’re so worried about our neighbor’s new pool, our co-worker’s new car and our friend’s new designer shoes that we spend more than we earn to try and keep up. But take heart! Review the percentages below, compare your household budget and then read on to find out how you can move yourself into the elite minority of Americans who have mastered where their money goes.

Typical Household Budget Percentages

33-38% Housing (59%-66% of this is on shelter – mortgage interest, property taxes, repairs, and rent, and other items)
15-19% Transportation (up to half of this is vehicle purchase – 2 cars per household average)
13-14% Food Budget (55% at home, 45% away)
0-2% Alcohol
0-3% Tobacco and related products
0-2% Caffeine related products
4-5% On clothing and related services (drycleaning)
4.5 – 6% on out of pocket Health Care
9% Personal Insurance and Pensions (breakdown: 1% life and other personal insurance, 7.5% Social Security, .5% investment
5% Entertainment
2.5% Charitable Contributions
2% Reading and Education
1% Personal Care products and services
2% Miscellaneous
4% Credit Card, Consumer Loan Interest

If your budget closely matches the above, here’s what you can do to fix that. Do these in order. Do not proceed to the next step until you’ve addressed the current step:

Stop using your @#!&*! credit cards!
Make a down and dirty budget right away! Don’t worry about it being right at first…you can perfect it over time. Just do it!
Cut back on your easy to identify, frivolous spending habits (3 dollar lattes, magazines, 450 extra satellite channels, etc.) If you’ve got some expensive habits you’ve wanted to quit for some time, now’s the time. For example, if you’re a hard-drinkin’, chain smokin’, coffee drinkin’ fool, you can reap a windfall of up to 7% or more of your income! Just cutting back to 2 drinks per day, only drinking coffee from home and quitting the cigarettes will net you a nice amount of extra cash and add years to your life! Refine your budget after eliminating what you can.
Reduce your 401K and other investment payments (if you have any) to the minimum allowable to keep your 401K and/or other investment accounts open. If your employer has a stock matching plan, keep that in addition to the minimum to keep your investments accounts open (but only up to the minimum you need to get all the matching money.) You’re going to reap a whole lot more return on paying off your debts than you can ever hope to reasonably get from traditional investments. If you’re paying into a college fund for your kids – keep doing that – if you’re not and you really want to, hold off until step 6. Refine your budget to reflect the extra income available, if any.
Build an emergency fund equal to 2% of your gross annual income. It should be a little hard to get to (like a separate checking account or mutual fund), but not too difficult (Certificate of Deposit.) Work this into your budget – it’s very important. You will not believe the amount of stress that will melt away when you do this.
Pay off your debts – everything except mortgages. And don’t just move your revolving debt into a second or third mortgage – that’s bad. Pay them off using a rapid debt paydown system. Pay off any student loans (for future reference, these are a bad idea.) Pay off your car(s) too. If you’re not upside down on a car loan (your car is worth more than you owe) you can sell it and get a cheaper, paid for car. Throw a small (inexpensive but fun) party for yourself and your loved ones every time you pay off a debt.
Take all the money you WERE spending to pay off your non-mortgage debt and start putting it into those investment accounts you put on idle. Make sure you’re investing at least 10% of your gross income. If you followed steps 1-4 exactly, you should have lots of breathing room in your budget now. If this is true and you want to invest more than 10%, go ahead, but be sure to reward yourself too and live a little. Grow your emergency fund to a level you’re comfortable with (2 or more months of income is a good start.) If you have young kids and you want to send them to college, start putting money into a college fund of your choice for them, if you haven’t already. Throw a bigger party than usual when this is done.
Pay off your mortgage and throw your biggest party yet! You can start towards this by refinancing to a single fixed rate mortgage (your credit should be in pretty good shape having paid off all your other debts.) If it’s a 30 year mortgage, pay more than your monthly payment to dramatically lower the amount of interest you give to the bank. If it’s a 15 year fixed – wow! That’s excellent!
When you’re totally debt free, regularly give away whatever you think you can afford. It’s good for the soul!

Easy? Not. Worth it? Doing the above will pay dividends in your life in many more ways than just dollars and cents. You will assure yourself a dignified and financially secure retirement. Do this well and you will also build a way for your kids and your grandkids to enjoy prosperous lives, and they will remember you with fondness and respect long after you’ve moved on to the other side. Now get started!

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David Rovics – Stay Right Here

January 9, 2012

Stay Right Here by David Rovics – Vocal and Guitar Drums Jerrod Kaplan Bass Arcellus Skyes Recorded at Big Red Studio by Billy Oskay Video Edited by Chris Chandler and Jen Delyth Shot by Chris Chandler with clips by Anonymous, Public Domain, The Bouyaomar and Ericu510 Because this is where they buy the politicians Because this is where power has its seat Because ninety-nine percent of us are suffering At the mercy of the madmen on this street Because all of us are victims of class warfare Being waged on us by the one percent Because these greedy banksters rob the country Leaving us without the means to pay the rent Because the last time that we had a decent government Was about 1932 Because we the people are supposed to run the country But instead it’s all run by and for the few Because now we know the rich do not pay taxes But when they need a hand it’s us who bail them out Because we suspected we lived in a plutocracy But suddenly of late there is no doubt And so we’re gonna stay right here (2x) Because both my parents lost their savings Because I have never opened an account Because the interest on my credit card just doubled And now I can’t pay the minimum amount Because these budget cuts are just immoral With our schools as overcrowded as they are Because there are no buses where I live But I can’t afford to drive a car Because so many of us don’t have health insurance The rest of us have it but it sucks Because the rich are riding in their private jets While the

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