Op-ed: Romney, Buffett and Financial Victims

By now you've heard Mitt Romney's assertion that 47% of Americans are victims who are dependent on government assistance. Romney went on to assert that "I'll never convince them they should take personal responsibility and care for their lives." He is essentially claiming that almost half of the country is mooching off the other half. Romney's math and attitude may rub many of us the wrong way, but some Americans are indeed walking a fine line between solvency and financial ruin.

In my opinion it's pretty hard to call retired people or people serving in the military as mooching off the government. Likewise, not owing federal income tax doesn't necessarily make you poor, or even mean you are not paying a lot of taxes. According to ABC News, 1% of the top 1% of American earners paid no federal income tax in 2011. Warren Buffet recently told NBC News that he knows at least six of the 400 wealthiest Americans paid no income tax in 2011. Clearly, not paying income taxes doesn't mean you are unsuccessful, or even a victim. While I completely disagree with what Romney is asserting here, many Americans may be leaving themselves at risk of falling victim to financial calamities.

Would you believe 68% of Americans report living paycheck to paycheck? That's according to a survey released in September 2012 by the American Payroll Association. I was a bit more surprised to learn that 21% of people making $100,000 per year or morestill report living paycheck to paycheck. And 60% of workers report having less than $1,000 in savings and investments combined. None of this alone makes you a victim or moocher, but it does put you just a few steps away from financial calamity. These are factors that can lead to things like bankruptcy, foreclosure and spiraling credit card debt.

With so many of us trying to keep up with the stereotypical "gay lifestyle," I doubt the LGBT community would vary too much from paycheck numbers above. Romney may not be able to convince you to take control of your finances and get on the road to financial independence, but I hope I can. If you don't, you are at risk of becoming the victim Romney claims you are.

Lesson of the day: "It is not what you make, but rather what you keep." Some of you struggle to make ends meet on $100,000-plus income. Some can save on a $30,000 a year salary, and I know some of you would starve on $500,000. It really comes down to what you view as a necessity versus what you view as a luxury.

To be honest, if you have a financial plan and are adequately funding it to reach your financial goals, then a financial planner like me really could care less where you spend the rest of the money. However, with two-thirds of Americans living paycheck to paycheck, I'm willing to bet many of you reading this could use some help breaking out of the cycle. How do you start on the road to financial independence?

* Stop wasting money on things you don't even use. A friend recently reviewed their monthly bills and found $150 in extra services they weren't using. For example, he was paying for a home phone line he didn't even know he had. What insidious expenses are you spending money on?

* Save automatically. This is the easiest way to ensure money gets where it needs to be. Also, not seeing this money in your balance when you head to the ATM may slow other spending. Make sure to take advantage of free money, like 401k matching from your employer. Put money away and forget about it.

* Forget the Joneses. Trying to keep up with the Joneses is a big trap that can land you in financial hot water. Be honest, if you can't afford the big-ticket items (housing, cars, travel, dinners) don't try and fake it. I've seen you driving around, and you look hot in that 3 series convertible. But how sexy do you think it will look when you are living in it?

* Avoid Credit Card Balances!This one is a huge issue for 50% of you who carry a balance. It's the fastest way to erode your ability to spend. I've often heard $10,000 called a small credit card balance. Interest alone could easily be $200 to $300 per month. That's money out the door for no enjoyment.

Prove Romney wrong. Take responsibility for your financial life. Be proactive, and take the steps to get off the paycheck-to-paycheck treadmill, and start building your financial future. Think of a financial planner as your personal financial trainer to help you get your finances in the best shape of their lives.

Just to be clear, Romney claims 47% of Americans are sinking this country because they pay "no federal income tax." Guess who else didn't pay any federal income tax in 2011? Give up? Mitt Romney.

DAVID RAE, CFP(r), is a Retirement Income Specialist with Trilogy Financial Services. For more information about reaching you financial goals visit www.davidraefp.com Follow him on twitter @davidraecfp(use link https://twitter.com/davidraecfp )

Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA,SIPC, a Registered Investment Advisor. Trilogy and NPC are separate and unrelated entities.