Money!

MONEY

Man's best friend?

    There are a plethora of money books out there and a lot of them are very good. If you’re wanting step by step specifics I suggest you pick one of those up. 

        Just like screwing up your finances there is more than one way to succeed and whichever method you use it should be simple to you and you should understand the process every step of the way. You really have no business putting your family’s nestegg into something you have no clue about. Choose what is right for you and use the following guidelines as a minimum and starting point for your financial method.

     Live under your means. It doesn’t matter if you earn minimum wage or make millions you need to live under your means. If you can’t learn to spend less than you make the rest of the tips, or tips by anyone else, are pointless. The first step to living under your means is to become less materialistic, which is a whole different discussion but you need to control the impulses. Nothing else written past this point, or anything anyone else will write, will matter if you can’t control your yourself. My short answer for controlling your impulses is to simplify. Only one to two hobbies which will give you the ability to put more money into those hobbies than if you’re jumping around to multiple hobbies. Besides, if you have too many hobbies you’re going to do them half-assed anyway so focus on a few.

    So how do I live under my means? Start with the little things, eating out, entertainment,etc. Five bucks a day for fast food is easily is around a hundred dollars a month. On top of that are you getting a good value. Are you getting healthy tastey food or just something to hold you over till the next meal.
     Do you really need the premium cable package? Here is a really a radical idea. Try free TV. For generations people didn’t pay for radio and TV. Minimizing your time in front of the TV will benefit almost every aspect of your life anyway so cut it back.
    Transportation is a big money sucker and should be looked at closely. It is near impossible to give a clear cut guideline on this because each individuals situation will be different but you need to put pencil to paper and do the math. For example unless you make a living using your truck to haul tools, materials, or do alot of towing you have no business buying a high-end super duty truck. Having a truck for practical puposes makes a lot of sense but there is a big difference between the good solid pickup and the four-door super-duty that often cost more than some brand new Mercedes. Don’t beleive me compare prices Here.

     Cars are covered specifically later in this article so lets continue with getting some extra money out of your paycheck. If you’re locked into a restrictive lease or the owner’s association has some very tight rules now allowing roommates this is one option. I would be warry of putting out an ad for a roommate unless you live in certain urban areas such as New York because you never know what you’ll end up with. But if you have a good network of friends let them know that you’re open to having a roommate to help keep your costs down. Even if one of your friends isn’t looking to share a place they may know someone that they can vouch that is. If you’re wondering; girlfriends and ex-wives don’t count as potential roommates. Just because you need a few bucks doesn’t mean you should start compromising other areas of your life.

        If you need money the best place to be is at work. The best place to be when you need money is at work. Whether you’re a young kid or a senior citizen if you need money you need to find some work, or start a business and start bringing in an income. In order you live under your means you must first have a means.

    You should always cut the fat first but if you’ve cut everything that can be cut and still find yourself with nothing extra when your next payday arrives then you’re going to have to increase your income plain and simple.

        
    Plan your money. Money is like time in that if you don’t have a plan for it you’ll ended up wasting it. This is where a lot of people get into trouble. Money and time without a plan are like water – it will find the path of least resistance, which is usually wasteful.
    Whether you’re the teenage kid or a middle aged man you need to think about what is important to you and how you want your life to be.  Do you picture, traveling, playing golf, or riding your Harley every year to Sturgis? Determining what is most important to you and your family will determine the plan for your money. Like any good plan the more information you have the better the plan will be. Start by sitting down with all your bills and financial statements for the last year. The problem with most budgets is it just takes your net income and puts it into little categories until you have zero. You need to put those fun and important things to the front of your financial plan and THEN budget the rest of the money out to get by. The smaller your income is the harder this will be at first and the more sacrifices you may need to make but odds are your tight financial situation is your own doing and by making some changes you will have some money to pursue those things in life you love.
     
    Emergency fund.  You need to put away a minimum of one week’s pay per household member now. Make minimum payments on everything you have to but get an emergency fund put away.  The screw-up will happen so you better some money put away.
    If you’re a home owner you should add another week of pay.  As with other tips in this book you need to look at your situation and evaluate it. If the company you’re working for is struggling or someone in your family has a health condition then you need to take some extra precaution and take care of your family before a crisis by socking away larger amounts of cash. But if you’re a young couple living in an apartment and want to buy a house it is a lot to ask to put away three month’s salary (say $12,000) and then start saving for their down payment on a house.

 Below is an example guude for an emergency fund.

  • 52,000 ($1,000/wk) annual income
  • two people in household = $2,000
  • Home owners                      = $1,000
  • Total                                        = $3,000
   
    Keep in mind this is your starting point. It is the minimum you should have socked away. It is a lot of money and probably looks like a large mountain to climb if you are currently swimming in debt but until you get an emergency fund put away your credit card balances will only go up not down. Everytime a car breaks down, an emergency home repair or any other emergency if you don’t have money put away you will be forced to pull out the credit card. And the debt-cycle will continue. If you have a thousand put away and find out your car needs a $700 brake-job ASAP you will be able to pay it cash. You will then have to work to get your emergency fund back in place but you just avoided adding $700 to your credit card.
    As  your life changes you need to adjust accordingly. If you find out your wife is pregnant you need to add another week of pay to account for the coming addition. If you’re going to be picking up the tab on a percentage of the hospital stay due to your deductible you need to put away for that also. 
    Evaluate your life soberly and plan appropriately. 
    
    No credit cards. By reading the previous money tips it should be obvious what the plan is going to be here. All credit cards must be eliminated. Don’t believe the myth that “you need to have credit cards in today’s world”. Get a good debit card and you’ll be able to rent cars, get hotel rooms, and purchase items online. And if you think not having credit cards is going to crimp your style you haven’t done the math on that interest rate you’re being charged. Even if the most important thing in your life is having the latest clothes carrying balances on department store cards is eventually going to inhibit your purchasing power. You won’t be able to afford the latest gadgets or toys because you’ll still be paying for outdated stuff from five years ago that you longer use.  
    If you have any lines of credit that aren’t being used close them and cut them up. Odds are there maybe lines of credit that are still active that you don’t know about so get a credit check and see what is open under your name. Don’t worry about your FICA score. You can’t eat your FICA score. Get rid of your debt and you will have money and not have the need for credit because you lack cash.
    Most money problems are the result of a behavior rather than an external factor that caused the problem. If you’re a casualty in the area of finances your wounds were most likely self-inflicted. You were probably buying items you wanted and not items you needed. And like most people there were some large wants as well as those little wants and they probably went on the credit card and before you know it you’ve run up thousands, if not tens of thousands of dollars worth of debt.
    If you are saying “But my debt was things that went wrong” this is the reason why you should always have at least one week’s gross pay worth of emergency money for every person in your household. If you think back to those car or house problems, most weren’t thousands of dollars in one shot. Most of the problems were $200-500 at a time that added up to thousands over time.
    If you’re currently in debt your short-term plan has been made for you and that is to get rid of that debt. Once you have your emergency fund in place it is now time to begin what is the hardest part of getting your financial house in order and that is paying off all your debt. Not getting your debt “under control” the only debt that is under control is one you can pay the balance on when it is due. 

    You’re going to pay off the card with the smallest balance first and start working your way up. Some experts will argue with this method because the lowest balance cards may not be the ones with the highest interest rate therefore the theory is your payments are less effective by percentage. But if you were good with math you would have never started carrying credit card balances in the first place. By paying off the smallest balances first you will see results quicker and little victories under your belt that are an emotional boost. Right now is about building the habit.

Here is an example of how you should approach paying off numerous lines of credit card debt. Say someone has the following debt.
Visa:                           $2,000 @ 14%
Mastercard             $4,500 @ 19%
Dept card                 $1,100 @ 21%
Dept card                 $   800 @ 21%
Gas card                   $   200 @23%
Elec Retailer            $    175  @17%
Discount Retailer   $     75  @21%

    Even though the gas card has the highest interest rate we aren’t going to worry about that until the card from the discount and electronic retailer are knocked gone. In this scenario the person has $200 a month extra to put on cards after making minimum payments to the top 5 cards. They will pay the $75 balance off on the discount retailer and close the account. The remaining $125 will go to the electronics retailer leaving that balance at $50.

    The next month they would pay the electronics retailer off – let’s say $55 dollars after finance charges and the other $145 would go to the Gas card.
    This method would be repeated until all the smaller cards are paid off and closed. Even if the person can only muster up an extra $50 a month to put on the balances they will begin to feel beter about their finances much sooner than throwing an extra $50 on the $4,500 card. There is something to be said about starting with multiple cards and after just a few months later having fewer to deal with to make you feel like you’re making real strides.  
        Never borrow against your home to pay off your credit cards. It is tempting to want to get rid of credit cards instantly, and those commercials make it sound so easy but don’t do it. Doing that eats up the equity in your home and only shifts your debt – it doesn’t pay it off. 
    One of the hardest parts of paying off credit card debt is the endurance it takes. When you’ve worked some overtime to put toward credit cards there is nothing wrong with taking out enough money to buy a nice dinner to treat yourself. But your treats and rewards need to be modest. Expensive vacations are off the table.  The family trip may just be a tent and a cooler full of food but sometimes those the most memorable trips anyway.

    Don’t get discouraged. You need to stay at it but you need to attack it. If you make lukewarm efforts you will get discouraged and revert back to the bad habits that got you in trouble in the first place. What would your attitude be someone was taking money from you every month? The credit card companies aren’t stealing (you knew the rules – or should have) but those companies maybe holding your ability to live a completely different life.

        Student loans. Student loans are sometimes a necessary evil so if you must take them out do so using the following guidelines. 
    Only take out loans for actual school expenses. A spring break vacation is not a school expense. You shouldn’t be paying for a glorified kegger well into your forties. Buying a nice car is not a student loan expense. If you live in an area that a car is needed to get around then you need to swallow your pride and buy a cheap car that you can afford even if it looks horrible.
    The trap of students loans are that you don’t have to pay on them while in school so it gets tempting to run them up because after all you’ll be making tons of money once you have that degree in hand. Don’t fool yourself into believing that once out of school you will start out with the high powered job soon after graduation. This rarely happens. Again, when taking out student loans just keep it to tuition and fees. You can include dorm expenses or an apartment that you’re sharing with other students.

    To minimize the cost of school look into college credit programs such as CLEP tests. This especially applies to the older student looking to go back to college and can put the real world experience they have to use for college credit. Passing CLEP tests in subjects you’re already well versed in can save you thousands in tuition and speed up graduation. Check with the college you’re applying for to make sure they’re accepted . Some colleges are very lenient in the amount of CLEP tests they will accept and others are very strict but it is well worth checking into and should be pursued before you have spent your first day in class.
   

    Look for scholarships. Even if you’re a returning student. There are a surprising variety of scholarships for everything from university degrees to vocational programs. The best all around scholarship is probably the military – if you’re a young person without obligations you should seriously consider this option.

     The most obvious ways to keep college costs down is to go to a school that is in your price range. Sure, it maybe nice to go to a school near a coast but if you’re serious about college most of your time is going to be spent in classrooms and labs and those don’t vary that much school by school.

    Take as many classes as you can at the cheapest school that has a partnership  with the university you plan on attending. Sure community colleges aren’t as much fun as the large schools and all the events they have but those events come at a cost. And do you really want to be paying for those “free” basketball games ten years later. The money you’ll save by taking your first year, or two, at a Jr, or community college can buy you season tickets for the next ten years.

     Get some income. Even though college is your main job and you need to focus on doing well you should still work in come capacity to have some money coming in. Money from this job shouldn’t be for a cool apartment. Your money should go to school expenses and miscellaneous needs. You need to keep your expenses as low as possible and use as much of your money as possible to go toward school expenses thereby lowering the amount of money you borrow on student loans.

    If you don’t go to school in the summers then you need to work full time during the summer. Give yourself a week at the beginning and end of the summer to rest and recover but you don’t need weeks of lounging around playing video games and staying up late. What you do in the summers may have as much to do with your success after school as your grades in school. The no reason you shouldn’t work full-time during the summer, besides emergencies, is because there is a great internship opportunity.  If you don’t have such an internship you need to find full-time employment or two part-time jobs and work as much as possible socking away as much it as you can for when you are back in school. 
   

    The last tip for reducing student loans is to take as many classes as you can handle. You need to focus on doing well but you also need to make sure you’re taking as many classes as you can handle. Taking fewer classes each semester will only drag out the time and drive up the cost of college. Tuition and books only increase and fees and other expenses are tied into time. If it take you five years to finish then then that is an extra year of fees, rent, and part time jobs. You’ve also lost one year of full-time work and adds one year before you start to establish yourself.

    The important thing is to finish and there are times when you have difficult classes and difficult professors and it may even be necessary to drop a class and take a lighter load but don’t let that become the norm.    
    

    Mortgage debt. If there is such a thing as good debt then a home mortgage is it. There are some points you need to keep in mind to prevent your home from becoming a weight around your neck. 
    Only buy what you can afford. There are a lot of people that subscribe to the theory that “your home is your best investment” and that you should “buy as much as you can afford”. People that follow this thinking and overbuy and are often strapped for cash and live paycheck to paycheck because their house is taking up most of their money.
    Despite what your realtor says, a home isn’t an investment if it is your primary residence. If you purchase a duplex that you live in one of the units, then you have an investment. The home you live in is not an investment because you must live somewhere. You can sell your stocks, bonds, and other property but you’re always going to need a primary residence. 
    “But I will accumulate equity so it’s no different than any other investment.” This is only true if you move down in your next home. If you have an expensive home and move to a cheaper home you should put all of that equity into your next home so your “investment” still hasn’t brought you any income, although you will benefit greatly when you eventually pay it off. But most people don’t move down they move into even more expensive homes and they end up having larger mortgages around their necks.

    One big problem is if you were ten years into your old thirty year loan when you sold, unless you take out a twenty year loan your new home you’re starting over at thirty years. You have now lost ten years of your home being paid off. That may very well be the difference between retiring early or having to stay working. Your “investment” cost you another ten years of work.

    It is fine to move up in homes, you don’t need to stay in your first home forever but if you are over 40 you need to seriously think about how smart it is to start over with a brand new thirty-year loan. If you don’t have the money to afford your next home, after selling your current, and carry a 15 year loan then your “investment” hasn’t done as well as you think. 
    
    A good rule for the amount of house you should buy is that your mortgage payment should be 25% of your monthly income. A man making a thousand dollars a week this can either get you something nice or you may get laughed at by your real estate agent. It all depends on where the man is buying but if that is his income then it is what he should be shopping for. If you live in a more expensive area it maybe necessary to go above the 25% guideline but try your best not to. If you live in a metropolitan area and you can get by without a car then you can use all the money that would go for a car, which can be quite a bit, and put it toward a house payment.

    Truth is most men will put more thought into the vehicle they buy than into their home. For the last twenty or more years buying a home isn’t the accomplishment that it was to past generations. When making purchases of this size a lot of due diligence is needed. You need to make sure your financial house is in order. This means a minimum of a thousand dollars put away just for emergencies and credit card debt eliminated or well on its way to being eliminated – less than one month’s salary worth of credit card debt.

    If your financial house is in order you need to examine your life and your career for the next 3-5 years. Are you going to be living in the same town? Is a marriage or children in the future? Do you dislike long commutes? Is living near family members, living in a city, or rural area important to you? These along with numerous other questions, many unique to you and what makes you tick, need to be asked and written down and examined. You won’t be able to get everything you want so are you going to have to narrow down the most important criteria and go from there.  
       
     Once you have your amount budgeted that you can afford it is time to start educating yourself on the market. Even if you’ve lived in the same town for your whole life you lived most of it rent free with your parents, in a dorm, or in an apartment so you may not necessarily know the realities of the housing market.
    Pull up the listings for 10% above your price range and lower. Get a list of 3-5 houses in different areas and start paying visits. Don’t blow off the areas you aren’t familiar with since these often have the hidden gems. Drive through the neighborhoods paying attention to certain features that are deal breakers and deal makers. When you see a house you like stop and look around the block. Take your own picture of the house and make sure you get a few shots that include the neighboring properties to help you remember the house and almost as important if there was a house with six cars in the driveway and a burned out lawn. If the house is vacant it won’t hurt anyone to peek in a window but if it isn’t vacant be respectful and schedule a showing. Making these visits to the different neighborhoods will give you a clearer picture of what you want and what you can actually afford without having a salesman in your ear. If you’re faced with the reality that what you can afford isn’t what you want put the home buying on hold or look at other options such as condominiums.
    If you like what you see call a realtor. The reason you didn’t involve a realtor up to this point is because the realtor needs to work for you and they won’t be able to as good a job for you if they don’t know what you want. The best way to let a realtor know what you want to is show that you are financially prepared, have studied the market and have a list of homes you want to see. This will help eliminate wasted time looking at property you can’t afford or don’t want. 
    Be prepared for the realtor’s reaction to your criteria because it will not be the norm. You will get a lengthy explanation of how “no one uses fifteen-year loans anymore”, “you could buy more house with an adjustable rate mortgage” (ARM), and any other number of options that sound great at first. The thought of buying a house that costs twice as much as what you originally thought with all those extra features is appealing until you have been in it a few years and the ARM kicks in, the housing market takes a hit, the upkeep on that large house is higher than you estimated, or you simply overbought and have no money for the other things you enjoy in life. Remember that in the real estate business everyone -except the buyer – has a vested interest in getting you into as expensive a home as possible with no regards as to how that will effect your future. The real estate agents and mortgage brokers work on commission and could care less about your financial situation after the closing.  Stick to your guns and do what you know is best for you.
    If you start to feel overwhelmed or things are going a different direction than planned you need to step back and slow the process down. In deal making speed kills; why do you think auctioneers talk so fast. Slow down and make sure you understand fully what is happening every step of the way and if you don’t you need to stop the process. It is vital that you  understand fully what is happening before proceeding. This doesn’t mean being difficult it just means being fully engaged and making sober in decisions on what will be the largest single purchase in your life. 
  
    
    Being the dumbest person in the room will often make you smarter and being the poorest person in the neighborhood may help increase your wealth. Look for the ugliest house in the nicest neighborhood rather than the nice house in the so-so neighborhood.
    
    If you’re going to do well in real estate sweat-equity is one proven way to do that. Buying the house in the good neighborhood that has been neglected will get you the biggest bang for your buck. You may need to learn some new skills, make some mistakes, and give up some time during the weekends but you can dramatically raise the value of your house very quickly. If you have no desire to do any home-improvement you should buy the home that is complete. 
    
    Trailers and modular homes should only be purchased if absolutely necessary. If the land is more important to you than the structure a trailer is a good option. There are certain beach front properties where trailers are grandfathered into the area and are about the only way a person on a moderate income can get into a beach front home. If ranching and farming are more important to you and the cost of having a home built in a rural area is too high this is another valid option. 
Otherwise whenever possible stay away from trailers as purchases. Modular and prefab homes have become much better in quality than years past and can be good option if placed on a real foundation. When looking into modulars you need to factor the digging of a basement, the laying of the foundation, building of a garage into the total cost. Most people tend to see the initial lower upfront cost then start getting in over their head afterward. By the time you’ve done everything to get that factory built home complete you have been able to buy a site-built house.

    Upgrading. So you bought a house a while back and through your hard work and ambition your financial situation changed for the better. The urge to upgrade is hitting you. There’s nothing wrong with that by the way. Just make sure to do it right.

    Absolutely do not upgrade a home based on a marriage. Again, do not upgrade a home based on a marriage. You met an amazing woman and love her and have dated her for over a year and are ready to make the big leap. Your blushing bride works full-time so when you’re married your combined monthly income is going to take a nice jump. Resist the tempatation for at least a year. A woman will tend to get the ‘baby-bug’ after being married, which can mean not only an added expense but possibly the loss of that additional income if she wants to stay home. 
    When most people’s financial situation improves there is a common desire to move up in housing right away, not to mention cars, cable packages, restaurants, etc. Getting a promotion or having your business start to take off is great but just because some larger checks start coming your way doesn’t mean you should upgrade your house so soon.

    First question should be – is your current home really that bad?  Often times people want that new house as much for the new cabinets and flooring as much for the extra space. If you haven’t outgrown your house then look at what can done with your current home to make it more enjoyable and comfortable. You might be surprised how differently your older home will feel with new kitchen cabinets and counter tops. If you have outgrown your home an addition may be just what you need.  

       Unless your pressed to move because the promotion is in a different city or your neighborhood is declining and there may be safety reasons you’re going to approach this slowly. And by the way your next home should have a 15 year loan.

    “But I want to move now!” I know you do and that extra money is burning a hole in your pocket but you need to do your due dilligence and approach this coldly with as little emotion as possible. To you it is a bit like Christmas and you want to have it sooner than later. In the end this is are some large financial transactions and you need to detach yourself as much as you can from the emotion and deal with it as soberly as possible. And the truth is if you can’t afford your new home on a fifteen year loan than you need to take that extra money you now have and put it into savings for your next down payment. As you’re saving money for your next down payment this also gives you time to get your current house in better shape to sell, which in turn can help you put more on your next house. Use this time to paint the rooms, get the curb appeal better, and upgrade features that will get you the most bang for your buck.

         Being able to walk away from a deal at any time is key to getting a good deal. There are plenty of books about making deals so I won’t go too much into other to say whenever possible you must be able to walk away. When a salesman knows you’re stuck you will never get the best deal possible. 

    You’ve probably noticed the reoccuring suggestion to slow down when dealing with finances and your money. Don’t ever be rude or just waste someone else’s time but when you are deliberate and give decisions the right amount of though the salesman will be more willing to get something than to have you walk away. But, first you must be in a position to at any time walk away from any deal that is not to your liking.

        Debt for a vehicle. You should avoid going into debt for a car if at all possible. That being said reliable transportation is a must in most areas so if you have to then go ahead but make sure to do it right.
    The first question, or qualifier, is do you need a car. Need, not want. It is almost always cheaper to keep the vehicle you have than it is to buy a newer one. If your finances are a mess and you’re living paycheck to paycheck you have no business taking on a car payment. If the seats in your car are worn and the A/C doesn’t work but overall the car is reliable to get you back and forth to work then you need to be putting your money toward getting your finances under control and not adding another large payment. If you have to drive another summer with the windows down so you can get your finances in order then that is what you must do. But just because you want it doesn’t mean you need it.
    You need to figure out what you can afford without breaking the bank. You’re better served in the long run if you buy a car that is the best quality you can afford so you can get the most out of it. Buying cars that are only a few years away from being in the same shape as the car you have now will only create a cycle of constant car payments for the rest of your life. 

    Do your research online. Do some shopping for cars you like and use the online calculators based on real interest rates and down payments to get a good estimate of part of what you will be facing. The other part of the equation is to price the cost of your auto-insurance on your new vehicle, especially if you’re driving a beater on minimum coverage right now. Once you have your estimated monthly payment and cost of insurance your next step is to set aside that much money every month on a certain day for at least three months. Four to six months would be even better. 

    If you find yourself having a hard time putting away the money then it is time to reevaluate what you can afford to finance.  Don’t assume you’ll need to automatically buy a lesser car. You can still buy the car you had in mind but you’ll need to put a larger down payment on it to keep your monthly payments in a range you can afford.

    When financing a car never take out a car loan that is over three years. Extending a loan out an extra year, or more, just to make the monthly payments more affordable is a sign of lack of financial discipline. Lack of discipline will end up costing you more later on.
       

    The best way to control your debt on a car is to not go into debt. Keep your current car running and start putting the amount that would have went for the car payment into a car savings account. Don’t skip months. A bank doesn’t let you skip a month when you come up a little short so hold yourself to that same standard. Do that for three four or even five years and you will have the amount you need. For example if a nice used car was going to run you $250/month for three years you would put that much away in an interest bearing savings account earning 4% after three years you would have $9,566 plus put away for a vehicle. If you did that for five years you would have over $16,599 cash for a car.

    “But I want a nice brand new car not used” you maybe whining to yourself. If so, then just adjust accordingly. If you put away $500/month for 60 months you would have $33,198 cash, again with 4% interest, for a car and when you drive it off the lot you wont owe a dime.

    The month after you buy your car cash you should start putting away another $500 or more so that five years later when your brand new car is showing some age you will already have the cash for another new vehicle. You are going to end up paying for the car so you can choose to either do so accumulating interest for you along the way and put you in a position of strength when negotiating with the dealer or you can pay more than the cost of the car (due to the interest working against you because of a loan) for something that is getting less valuable every month.
        Ultimately no matter which car you choose, new, used, or classic it is your money so you should drive something you love and not something you think you should. Buying a car you love will make you more inclined to keep up on it and take care of it. Buying a boring practical that does nothing for you emotionally will make you reluctant skip fixing those little things that after a few years add up to you believing you need another new car. Possibly before you’ve even paid off the one you’re in. Am I suggesting you buy a two-seater sports car with hot engine; not necessarily because that’s up to you but I do suggest you buy a vehicle of good quality and one that you’ll be happy with long after the loan is paid.

    Investing. You will not get rich by just making an income and putting your money in your banks savings account. You need to have your money working for you and the only way to that is to invest not just save.
    Your investing strategy depends on your level of entrepreneurship and tolerance level. If you own your own business. You need to make sure your venture succeeds and in the beginning that will take all available resources. Once your business is turning a profit and you’re bringing in a good income you need to invest back into your business but you should also put a substantial amount in savings or some form of liquid assets. You don’t want your money so tied up that if you needed to get to it you will suffer big penalties or fees. A lot of small businesses owners went broke after 9/11 because the owners didn’t have enough liquid assets to draw on to tide them over till things returned back to normal. Once you start posting profits you need to make sure you are putting money away and reinvesting in your business to grow it and not purchasing boats and Harley’s as soon as the profits start coming in.

    A couple more thoughts. Don’t buy crap. I touch on it in the article but to put it bluntly stop buying crap. Whether it is lunch or a car. Stop pissing your money away on inferior quality and quickly depreciating items.

     But buying the best will put me in hock again won’t it?  That depends on how you buy, which is really what this artlice is about. Treat yourself out to lunch occasionally but when you do make it a treat and go somewhere great – not fast-food. And the days you’re packing your own lunch take a high quality lunch. It will be better for you in the long run.  

  
    One last thought. Don’t work to retire.

    Are you saving for your retirement? How are you going to live when you retire? Will you be able to retire? These are the types of questions you will see in almost every publication or web page about investing. The commercials show the older couple happy as clams both wearing comfortable sweaters out on their sailboat or the in their wine cellar (or winery for that matter) looking at the various vintages. Yes, investing money for your future is important but it isn’t all about retirement. Don’t start living your life at at 65 or even 55. What are you doing to live a full life now? Don’t wait till you retire to start doing what you love. Don’t wait to start that hobby you used to do. The past is gone and we don’t know what the future holds so you need to live your life now.

    Find that balance of having fun now and having enough money for your later years. That will depend where you’re at in your career and your goals. If you’re in your fifties and want to retire soon and don’t have enough put away you will need then you have no choice but to delay some short-term gratification for your retirement goal.
    Worrying about retirement is another reason to work in a field you love. When you love, or at least like, what you do you don’t have that feeling of doing time like a prison sentence. By the time you put in your thirty-five years your health may not be the same or other family situations may inhibit your ability to do certain things that you could have done earlier in your life. When you, or your wife, are older will your knees or back be in good enough shape to walk all over Rome or see the Pyramids in Egypt? It’s wonderful to have millions in your 401K but what good is it if you’re just watching CNN all day bitching about the decline of civilization and longing for the good old days.
    And now for the shocking statement. Why retire? You shouldn’t plan on retiring if it is nothing more than sleeping in and watching TV. Did you really work your ass for decades for that? You must have a purpose in life or you will not have much of a life.

    Even if you hate your job when you get to the point when your house is paid off your life can change drastically. Do you really need that high stress job if you don’t have a house payment anymore? You may need to work to keep some money coming and have health insurance but if you can find a job you would enjoy more then why not? It is hard to put a dollar amount on happiness but if you could, would your high-stress good paying job be worth more than your happiness. There is a lot to be said to wake up excited to go to work – even if it is at a lower paying fun job.
    Retirement is a fallacy created by unions and government. If you’re alive and healthy you need contribute and you also need to have fun and celebrate in all stages of your life. You shouldn’t just map out a financial plan. You need to plan what you want to accomplish and how you can get it done financially. Traveling is a common retirement goal so I will use that for demonstration. If you do want to see the ruins in Greece or visit The Pyramids in Egypt as well as museums in New York you need to plan them according to your age. How many older people don’t travel because of medical reasons? Save for the trips that would be more physically demanding and do them now even if they’re expensive. In many ways you can travel cheaper when you are younger because you are more open to the idea of hostels or even tents.

    Does this mean you put nothing away for retirement since you’re not going to retire? No. Think of it more as your financial freedom plan. You need to save so you can work less and if you so desire do nothing at all. From what I’ve seen though the men that can’t keep themselves busy are the most miserable.

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About Mr Writing III

Freelance/Freerange writer from parts unknown and weight unknown. This blog is Mr Writing III vents his personal beleifs but his passion is writing fiction. His short story "Borgs of Summer" was twice ranked in Amazon's top 100 in Kindle/Baseball category.
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