Setting Goals
Master your personal finances in 6 easy steps
Mastering your personal finances using the 6 steps identified below will change your life the moment you begin implementing them. You will immediately began reaping the rewards and satisfaction that comes with financial security. You deserve a secure future that provides the life style that you want. So read the steps below and go get started on the path of personal financial mastery today! Identify your current financial status. This can be a little intimidating for some but it is essential to a better financial future. This entails knowing three important things: your expenses, financial problems and financial desires. Be aware of how much you spend vs. how much you can afford. Ok you got me…I am referring to budgeting but nobody likes that word, however it is essential to personal financial mastery. Write down your monthly expenses if you have time, or use a personal finance program (I love “Mint.com”). Make allowances for problems that may arise such as unexpected doctors’ bills, car repairs, and tax returns. Set goals for your ideal lifestyle. Taking note of your desires will help you decide which ones are reasonable and which ones are not. Focus on the reasonable ones as they will provide the motivation to manage your personal finances. Start being honest with yourself today. Honesty is another key attitude to managing your personal finance plan. If you decide not to accept the facts surrounding your current financial status, you are not likely to move ahead. Be honest with yourself in how much you can afford and how much you owe, otherwise your financial plan will most likely end in financial trouble. Develop discipline, discipline, and more discipline. Discipline is perhaps the most important of all steps when mastering your personal finances. Once you have discovered what you truly can and cannot afford, you must learn to say no when needed. This is easier said than done, but if you are determined on having a financially secure future, discipline is imperative. I call this Jedi finance because you must trick your mind into delaying instant gratification. May the force be with you! Begin increasing your personal financial knowledge now! You must be wise in your investments if you wish for success in your personal finance. Consult accountants and financial planners, research on trends on the market or speak with your friends and co-workers about their investments. This research is sure to pay off whereas lack of it will surely lead to more debts and deviating from your personal finance plan. Also, diversify your investments to reduce risk and leverage out your financial investment. If you implement these steps you will begin to immediately reap the benefits. Remember to keep it simple as the most effective method to improve your personal finances is to spend wisely and never more than you earn. Make sure all your expenses are covered first. Understanding this will allow you to manage your personal finance a little better. Do this and you will definitely begin saving more and living...
read more6 ways to consolidate your debt
Most consumers have good reasons for accumulating debt. Sometimes these good intentions can spiral out of control into a high debt load spread out all over the place. How great it would be if all those debts could be lumped into one easy payment each month? Well there are typically many options for any consumer to consolidate debt into a single loan and provide clarity and peace back in to your finances. Here are few that may be available to you. Remember to consider them carefully to ensure that these options actually make financial sense: Credit Card Consolidation – If you can read this sentence then you probably qualify for 0% interest on a balance transfer with some credit institution for a year or more. This is a great option for the disciplined consumer looking to save money on interest while paying down debt. Please note this strategy requires extra diligence to ensure payments are made on time every month as penalties can be very severe. Life insurance loan – This is one of my favorite, but you to have a cash value life insurance policy to qualify for this one. Personally, this was just one of the reasons whole life insurance made since for me. You can borrow against the cash value. Since it is your cash value used as collateral you dictate the payments back into your policy. Student Loan Consolidation – If you have not taken advantage of this option I beg you to look into this one. Rates are fluid and you may have an opportunity to lower your interest rate. This has the potential of substantially reducing your monthly payment. Personal Loans – You used to have to put on a suit and strut down to your local bank for one of these. Now you just log on to your PC. There has been some competition in the sector with advent of peer to peer groups like Lending Club. However, an easy application does not mean easy approval. You are still going to need strong credit and verifiable income. Gone are the days of the “no documentation loan”. Home Equity Loans – Okay, I hear you laughing. However, home values are on the rise and if you have been in your home for 10 years or more chances are this could be an option for you. This is a convenient way to access cash to pay off higher-interest debt. Be careful to ensure you can indeed make the payments as you now risk losing your home if you do not. Retirement plan loans – Some retirement plans allow you to borrow funds for a specific period of time. You will be charged a competitive interest rate which goes to yourself by the way. The draw back here is if you do not pay it back, Uncle Sam will hit with a tax bill that will make Bill Gates...
read moreThe Silver Lining in Silver Investments
Silver is like gold’s little brother. No one pays much attention to him. Gold is attractive, desirable, and much more expensive. The price of gold can be volatile, and it makes for an exciting investment. Aside from use in jewelry and a few electrical components, though, gold has minimal industrial use. In fact, gold’s only true value is that people like it. There’s already far more gold sitting in vaults than could ever be used. Silver has much more practical use. Over 40% of the demand for silver is for industrial applications. Silver is used in electrical applications because it’s the industrial metal with the lowest electrical resistance. Silver also has anti-bacterial properties and is used in the medical field. Silver can be a good investment, too. Silver has been used as a form of money and wealth storage for over 4,000 years. The price of silver is a function of supply and demand, as well as speculation. This is true for most commodities. Silver also serves as an excellent hedge against inflation. Consider these options for investing in silver: Silver bars. Silver bars can be purchased in several sizes. They are sold in troy ounces and the common weights are 1 ounce, 5 ounces, 10 ounces, 100 ounces, and 1000 ounces. The larger the bar, the lower the cost per ounce. Bars can be purchased online and at retail outlets. Silver doesn’t have as many storage limitations as gold. This form of investment also doesn’t yield any interest. In some European countries, silver bars can even be bought and sold at most large banks. Exchange traded funds (ETFs). This permits the investor to own shares in a trust that actually buys and holds silver. You can avoid worrying about storage or insurance. The largest silver ETF is iShares Silver Trust. Silver stocks. Stocks can be purchased in related activities. Mining stocks are one such example. While most investments related to silver rely entirely on the current price, silver stocks are more independent of prices. This is a relatively conservative investment. Keep in mind that silver mining companies also mine other metals found along with silver. These commonly include zinc, copper, and lead. Options and futures. If you have an interest in derivatives, you can use them with silver to obtain greater leverage. It isn’t necessary to worry about storage. The risk is high, but the potential payoff is high, too. Silver mutual funds. There are mutual funds that invest in silver, silver stocks, and other investments. Some specialize in multiple precious metals. These mutual funds can vary dramatically with regards to risk and volatility, depending on the types of investments. Silver medallions and coins. Coins are inexpensive in most cases and can be converted into cash quite easily. The cost per unit of weight is greater than that of silver bars. Medallions can range greatly in price and aren’t as easily converted to cash. If you’d like to invest in precious metals, silver is one of your most lucrative options. The price of gold is almost entirely dependent on the desire of investors to own it, whereas silver has actual industrial applications. When companies need more silver, the price tends to rise. Silver is much less expensive than gold, permitting small investors to make purchases of the actual...
read moreGuidelines for the Amateur Investor
Warren Buffett provides simple advice for the amateur stock picker. Most of us aren’t financial wizards and don’t even hold a job in a finance-related field. We’re teachers, managers, laborers, and engineers. Can the average person do a good job of picking stocks? That depends. Warren Buffet has 60 years of experience and invests full-time. Historically, Buffett has insisted that investing doesn’t require a high IQ, but it does take experience to recognize a great investment. He also has several advantages the average person doesn’t. However, his basic strategies are available to all. Buffett has suggested two different sets of instructions for non-professional investors. If you lack knowledge about the stock market and are short on time, check out these tips: Put 10% of your investment monies into short-term government bonds. This is money that can be accessed quickly and easily, but isn’t rotting away in a checking or savings account. Put the remainder in a low-cost index fund. While this isn’t the most exciting advice, it makes a lot of sense. Few managed funds are able to match the expense-adjusted results of an index fund over several years. Plus, the expenses and the folly of the fund manager are too much of a disadvantage. This is the exact advice Buffet has left for the trustee that will administer his wife’s trust. Assuming he loves his wife, it’s probably good advice for the rest of us.It doesn’t get much simpler than this. It also requires very little time and attention. If you prefer to pick your own stocks, follow this advice: Familiarize yourself with stock analysis. Buffett has frequently given this advice to business students. It consists of analyzing every single stock on the NYSE. When students point out that there are thousands, Buffett’s response is, “Start with the A’s.” Warren Buffett has stated that it’s easy to recognize good companies after you’ve researched a few thousand of them. Consider the margin of safety when you invest. Invest in companies that are available for a discount relative to the true value of the company. The greater the margin of safety, the greater the potential upside. The downside is also greatly reduced. Invest in businesses, rather than markets. Buffett doesn’t recommend investing just because a certain type of economy exists. At the end of the day, it’s the quality of the underlying company that’s most important. The economy rarely enters the picture. Keep it simple. According to Buffett, having anything beyond average intelligence is unnecessary when it comes to investing. Stick with businesses that are easy to understand. It’s easy to understand how a grocery store makes its money. Biotech companies are a little more complicated. Be careful where you get your information. Buffet once said, “Never ask your barber if you need a haircut.” Who benefits if you follow a broker’s advice? Be sure to consider the source. Unfortunately, the more mysterious the source, the more credibility we tend to project onto the source. You might doubt your friend, but you convince yourself that the odd man on the bus certainly knows what he’s talking about. Warren Buffet suggests an index fund for the armchair investor, but many enjoy investing and can do well on their own. It’s important to put in the necessary work to find solid investments....
read more6 Things You Need to Know If You Plan to Invest In Stocks
If you are serious about growing wealth in the stock market you got to be in it for long haul. Warren Buffett and other value investing proponents are quick to point out that you ought to be willing to stay the course for an extended period of time in order to get the benefit of value stock picks. Sometimes, this can even take over 10 years. It’s important to be able to separate the long-term investment companies from the short-term ones. To find a stock that you might be keeping for 10 or more years, it’s important to know the characteristics that these stocks possess. Fortunately, there are several qualities frequently shared by these long-term plays. Stocks for the long haul frequently share these characteristics: 1. A business that will still be thriving 10, 20, or even 30 years from today. Simple businesses that produce products or services that have stood the test of time are usually good long-term investments. A few examples of such products would include toothpaste, toilet paper, office supplies, banks, and insurance companies. • Many of these businesses may be seen as “boring.” But these products and services have been around for a while and will continue to be important. • High-tech firms frequently don’t meet this requirement, unless extremely well-established. Microsoft would be a good example. AOL is still around, but it’s hardly the company it was back in the late 90’s. 2. Solid financials. Companies with minimal debt and good cash flow are likely to survive even when the economy is faltering. These companies are typically unshakable and pay consistent dividends. Dividend payments come from earnings above and beyond what the company needs to thrive or expand. • Is the company valued fairly? How close is the competition within the same industry regarding pricing? This is the perfect place to use the Price to Earnings ratio (P/E ratio) in your analysis. 3. Consistent earnings. Are the earnings affected by the strength of the economy? By how much? When the earnings have slipped in the past, do you understand why? Have the earnings been rising over the last 10 years? Can you reasonably expect them to continue rising? • Value investors believe that price ultimately follows earnings. It only stands to reason that long-term earnings growth will lead to long-term stock price gains. 4. A good history. If you look at the popular stalwart companies today, you’ll see that most of them held a certain position far into the past. A company doesn’t suddenly have this characteristic. Many of these companies were around during your parents’ or grandparents’ childhoods. • How has the company performed in poor economies? If it performed poorly, is it still susceptible to the same economic conditions? 5. Good, consistent management. Executives at this type of company don’t have to do anything spectacular. They simply guide the ship gently and avoid doing anything foolish. The human factor is unpredictable, so solid management is important. • The best businesses may not require great management, but it’s good to have it...
read moreThe Emergency Fund Re-examined
Practically every financial planning and personal finance book you’ll ever read advises you to start an emergency savings fund, or rainy day fund as some call it, to meet unexpected financial emergencies, as one of the first steps you should take to build wealth. Some advise a fixed dollar amount, such as $500 or $1,000, be set aside for financial emergencies. I’ve seen recommendations ranging from $500 to $12,000. Others recommend saving a certain number of month’s income for financial emergencies, such as three month’s income, six month’s income, or as much as twelve month’s income. Still others suggest setting aside a certain number of month’s living expenses, such as three month’s living expenses, six month’s living expenses, or even twelve month’s living expenses, to meet unexpected financial emergencies. So… With all this conflicting financial advice… How much money should you save for financial emergencies? Well… According to Wallace D. Wattles, author of “The Science of Getting Rich”… If you truly want to be wealthy… That’s right… Absolutely none! In an article titled “The Constructive Attitude”, Wallace D. Wattles wrote: “… do not lay up for a rainy day. If you live right, think right, and work right, there will never be a rainy day for you. If you lay up for a rainy day, you will impress the sub-conscious with the fear of a rainy day; with the idea of weakness and incompetence, and so you will cause the rainy day to come.” If you stop and think about it… He’s absolutely right! I don’t know about you, but every single time in my life I attempted to build up an emergency savings fund, guess what happened? That’s right… A financial emergency would pop up out of nowhere and wipe out my emergency savings fund leaving me right back where I started… Broke! Sound familiar? Until I read those words by Wallace D. Wattles, it never dawned on me that, by my own thoughts and actions, I might be creating the very thing I was most trying to avoid. Now… Does this mean you shouldn’t keep any extra money at all? Not at all… In the same article, Wallace D. Wattles wrote: “… provide a surplus, so that you may take advantage of any new opportunity…” Once I began to build up a surplus to take advantage of new financial opportunities, instead of saving for financial emergencies, guess what happened then? That’s right… Lo and behold… New financial opportunities started popping up all over the place… And… Interestingly enough… The financial emergencies disappeared! You see… There’s a Creative Power within you that makes your life into the exact image of that to which you focus your attention. If you focus your attention on financial emergencies, by thinking about them, by preparing for them, by saving for them, that’s exactly what you’ll have in your life… Financial emergencies. On the other hand… If you focus your attention on financial opportunities, by thinking about them, by preparing for them, by providing for them, that’s exactly what you’ll have in your life… Financial...
read morePlan Now to Avoid Future Financial Disaster
It’s tough to get by financially in today’s fast-paced life. With mortgages, car notes and massive amounts of credit card debt, most people struggle to get by from month to month. With most people doing what they can just to pay their bills, few people are prepared for the unlikely event of a financial disaster. They come in many forms; a storm like Hurricane Katrina, a loss of job, or a sudden illness can break anyone who isn’t prepared for an unexpected interruption in their financial life. But it isn’t all that difficult to make preparations that will help you in times of a money crisis. All it takes is a bit of planning ahead of time. Here are a few things that will help you be prepared for the unexpected: If you don’t already have one get an ATM/Debit card – You may not regularly use cash or have a need for a debit card, but there are some circumstances where it may be necessary. People from New Orleans who were temporarily displaced by Hurricane Katrina would have benefited from having access to cash even while away from home. If you don’t use one regularly, get one anyway and keep it in a safe place. Sign up for direct deposit – With direct deposit, you will know that your paycheck will be in your bank account even if you cannot, for whatever reason, physically get to your bank. This will help you in the event of illness or natural disaster that may have your local bank temporarily closed. Sign up for online bill paying – You can pay bills even if you aren’t at home via the Internet. You don’t have to use the service, but it may come in handy at a time when you least expect it. Save some emergency cash – Financial experts recommend that you save at least three months’ worth of financial expenses. That’s difficult, but every little bit can help. Try to cut back on a few unnecessary items, such as that tall latte you buy every day. It adds up, and you never know when you may need to access that emergency cash. Set up a home equity line of credit – Unlike a home equity loan, which provides you with a lump sum of cash right away, a home equity line of credit provides you with cash that you can use a little at a time, and only when you need it. If you don’t actually take any money out, you don’t have monthly payments. But if an emergency strikes, you’ll have cash available. This can be particularly helpful if you find yourself out of work for a short period of time. Your bank won’t lend you money when you are out of work, so plan ahead of time and the money will be ready when you are. A little bit of planning can go a long way when financial emergencies strikes. If you plan for it now, you will have fewer worries...
read moreBuilding an Emergency Fund Needs to Be Part of Your Financial Planning
None of us have the ability to foresee the future or predict the hurdles which lie ahead of us. This makes building an emergency fund a financial priority. Building an emergency fund is healthy for your financial well-being, since you’re rarely given advance notice of a setback or an accident which will keep you out of work for an extended period. It is also a safety net that can save you from bankruptcy or severe financial hardships in the event of an unexpected change in your income or expenses. Housing a small rainy day fund should be a vital part of an individual’s financial goals. This is of high importance if you don’t already have readily available funds in your account for covering any unanticipated expenses. They provide financial security because they give you funds to fall back on if you become ill, or if you or your spouse loses your job, you incur large medical bills, or have an unexpected large bill such as a major car or home repair. You do not want to end up in a situation where you have to buy daily necessities on credit and end up with payments on groceries you bought two years back on credit, with a further 10-18% interest on it. Saving your money in a savings account for emergencies is definitely a better alternative to taking a loan or cashing in your long-term investments (yes, this includes a 401-K loan). If you take a loan, there is the additional burden of paying interest. Encashment of your investments before maturity means not only will you lose out the interest, but also some part of the original investment. This will also set you back significantly in your overall financial plan. Success at building an emergency fund depends on consistency of saving money on a regular basis, and resisting the urge to dip into this rainy day fund for non-emergencies. This money should be kept separate from the general savings account. Otherwise you will be tempted to dip into these monies even if you simply run over your budget at a certain point. A substantial part of this emergency fund account should be invested in low risk funds. This ensures that your investment does not lose its value in case you need the money. Also, it should be extremely liquid, to give you access to the cash easily and quickly if you need it. The size of the special savings account will depend on your personal situation. People often keep three to six months’ salary in the reserve. But you will have to decide on an appropriate amount based factors such as your dependents and fixed monthly expenses. If you are single with no obligations, and have a reliable support system of friends or relatives during a financial crisis, you might not need a substantial amount stashed in this fund. This is opposed to someone who needs to pay nursing costs for his aging parents and supporting a young family. The more people you support, the more likely you are to have unexpected or unplanned costs. While making a decision about an emergency fund, you should also take into account the degree of difficulty you’d have in finding a new job if you lost the present one. In case of a...
read moreBe Financially Prepared For an Emergency
A little planning now can help you handle a natural disaster or other emergency. Many Americans have focused on their need to be prepared in case of an emergency. Very few, however, consider financial preparedness in their plans. From keeping an evacuation box with important documents to setting up an account with emergency funds, preparing now can be the difference between financial security and financial crisis. These simple tips from financial experts at Savemoneyliverich.com can help anyone prepare financially for a natural disaster: Conduct a Household Inventory – Create a household inventory for items of significant value and locate originals of important financial and family documents. Store original documents in waterproof bags in a safe deposit box or durable “evacuation box” and photocopies in a safe place. Use a CD to back up key documents on your computer. If practical, store copies with friends or relatives who live outside the area. Know Your Insurance Policies – Understand what types of losses your renters or homeowners insurance covers. Ask your insurance agent or financial planner about additional coverage for floods, earthquakes, home offices and big-ticket items. Keep copies of your policies in a safe place along with your other important papers. Keep Cash Accessible – Keep at least $300 in cash at home in a place where you can get to it quickly in case of a sudden evacuation. The money should be in small denominations for easier use. Create and Maintain a List of Emergency Contacts – Keep a list of important emergency contacts, including direct family members, doctors, medical facilities, numbers for your bank, insurance agent and company, lawyer and financial planner/advisor. Credit card 1-800 numbers can help you quickly retrieve account information. Keep an Emergency Savings Account – This account should be separate from any other account and contain enough money to cover at least three to six months of living expenses. Financial preparedness in regards to the aftermath of a potential natural disaster is not particular at the top of anyone’s mind. Be sure to follow these guidelines to ensure you and your family are protected...
read moreAre You Living Beyond Your Means
You’ve worked hard all day and come home at night, only to discover that you can’t get comfortable in your own bed. You toss and you turn for well over three hours. As 3a.m. approaches, you finally go to sleep but the alarm sounds all too quickly at 6 a.m. It’s time for you to go to work. Day two comes and you’re off again to the usual rat race. You repeat the same pattern once you get home. Later that night you lay in bed, thinking how you’re going to pay all of these bills. Despite your best efforts on the job, including overtime, it doesn’t seem to be enough. What can you do? Who can you to turn to? Does this sound like you? Are you having sleepless nights because of your finances? Here are the top five reasons I have found why people get into debt: 1) Try to live beyond their means. Keep up with the Joneses. 2) Lost job and bills pile up 3) Have never been taught money management 4) Divorcing and the other party charged up cards in the process splitting up 5) Impulse Shopping People in debt tend to operate out of fear – for example they ignore phone calls because it might be a collection agency on the other end. How many calls have you missed? Or perhaps, they write a check in the hopes that it will clear the bank; knowing full well they spent the money on luxuries and other needless excesses that have caused the bank account to have insufficient funds. If any of this sounds like you or someone you know, assure them they can get out of debt without filing bankruptcy. They have to want help and not let pride or embarrassment get in their way of being...
read more10 Warning Signs to Identify You Are Living Beyond Your Means
Do you find that keeping control of your finances is becoming increasingly difficult? In today’s society, advertisements bombard us with offers which encourage us to spend! Spend! Spend! With promises such as- “Easy Credit!” “Pre-approved loans!” “3 years interest-free credit!” “Free gift when you apply!” To most people this can all seem rather tempting, given the current “live for today” attitude. But too much can be spent on luxuries, leaving not enough to pay the bills. Certain kinds of debt may be appropriate, such as a mortgage or a car. Many people, however, try to buy more than they can afford. Indeed, banks and businesses encourage us to do so. Credit cards can be too easy to obtain yet too difficult to maintain, especially when people find themselves borrowing from one card to pay off another. Credit may even be advertised as free – but we still have to pay in the end. Many families lose up to $1,500 a year in instalment debts, resulting in a drop in their future standard of living. Families often live from payday to payday with little or no savings for emergencies. Here in the U.S. personal bankruptcies have doubled in the last 10 years. Most of these people had jobs yet unexpected bills or reductions in pay caused their bankruptcy. Some economists agree that global recession is on its way. Did you know that the amount borrowed from credit cards has more than doubled in the past 4 years? I am not against all debt, if you can afford the repayments. But what if you lost your job? The time to get out of debt is now! One major benefit of getting out of debt is avoiding interest payments. For instance; if you owe S1,000 on a credit card with an interest rate of 18.9% per year, and you only pay the minimum, say 3% per month, it will take over 13 years to pay it off plus a HUGE $848 in interest. But if you double your payments to 6% per month, the debt will be gone in less than 5 years and the interest paid will be $292. Savings can be gained by refinancing. But make sure your mortgage is flexible so that you can pay off more if you do have some spare money. Bank loans, as there may be penalties for early repayment. Just stick to the repayments and make sure that you don’t get tempted into any more debt. Remember that covetousness (i.e. desiring what we see) = debt! This is because we often get into debt over what we want, not what we need. There are warning signs to indicate whether you are heading for financial difficulties. Look at the following list of 10 warning signs. If anyone applies to you then it’s time to take a closer look at your budget. If more than one applies then you could already be in financial difficulty. Using a credit card for purchases that you normally pay for with cash. Taking out loans to pay off debts. Paying only minimum amounts due on credit cards. Receiving “overdue” notices. Using savings to pay bills. Cashing-in or borrowing from, life insurance policies. Working overtime to make ends meet. Using your overdraft to pay bills Juggling debts and only paying the...
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