As mentioned in a previous post about the Golden Rule - Pay Yourself First, it is vital to your financial health that you spend less than you bring home as income. This is by far the easiest and most controllable way to start increasing your wealth.
You are the one who has control over your spending habits. There are many ways that you may be able to reduce your spending without giving up anything. The following are easily the top three.
The first thing you should try to do is shop around before you buy anything. Yes, this includes everything especially consumables such as food etc. Most people could save twenty percent or more on their food budget if they just shopped around. Check the local papers etc for ads from local grocery stores. They generally compete for your business and quite often offer big discounts to get you in their stores. Get to know the prices on everything you consume. You should know if you're getting a good deal or not.
Another important thing to do is avoid impulse buying. Be organized and make a list of all that you need and stick to it. Know what you want to buy before entering the store. Do not let a pushy commissioned sales person add extras to your bill. Normally what they try to push is very profitable for them.
Whenever possible use coupons. Companies issue coupons to try and introduce new products as well as boost consumption of existing products. Take advantage of these situations whenever possible.
By utilizing just these three simple tips you could save a substantial amount of money every month. Remember, anything you can save without sacrificing anything is free money. This free money can be added to your savings without even feeling it.Give it a try and see how it feels.
There are other ways to save money of course, especially on the bigger ticket items such as cars and real estate etc. , however, even these three tips can be used for big ticket items as well ( well maybe not coupons for real estate ).
The biggest thing I want you to take from this posting is " Take Control of your Spending Habits" Don't let advertising, convenience, or the pushy sales person tell you how to spend your money. Remember, you have 100% control of your money until you sign the check or swipe the card. Be careful or you could be in the "I owe, I owe, off to work I go", crowd.
As always, I welcome your comments and any suggestions for future topics.
Friday, November 18, 2011
Tuesday, November 15, 2011
How to Deal with Debt - The Good the Bad and the Ugly
Debt is something that we all must live with at some time in our lives. For big purchases, most of us will be required to get help to make it happen. Such things as real estate or even a new vehicle etc.are good examples.
Debt can be good, it can be bad or it can be extremely ugly. It all depends on how it is used. Let me explain the different uses for debt and whether they can help or hurt you in your future financial lives.
Let us start with the extremely ugly . High interest loans such as credit cards and loan sharks. Never borrow long term money from these two sources, it's a recipe for disaster. Credit cards are a convenience but can be a huge trap if not used properly. I will be writing about the proper use of credit cards in a future post.
You guessed it, next is the bad debt. Basically any debt that you take on just because you want something NOW and couldn't wait to save for it. In today's society we have been conditioned to believe that we need something right away or else our heads will fall off. Or more commonly because everybody else has one and their heads are still intact. Examples of this kind of debt are lines of credit, special zero percent loans, etc.
Remember when it comes to borrowing money Nothing is FREE No company that I know of is in business to lose money!
Now for the good stuff. Good Debt. Yes, there is such a thing. Borrowing to buy a home for instance is generally good debt. Besides, most of us could never save enough to pay cash for a home. A home, or more generally Real Estate, will tend to rise in value over a long period of time. Many in the US may not believe me on this one right now, but remember I said long term (generally 10,20, or more years). Unless the world falls apart, or your head falls off, I should be right on this one.
Another example of good debt is borrowing to invest in something that pays you an income or that will potentially rise in value over time. Also, with this type of debt, governments will generally allow you to deduct the cost of this debt from your income when calculating your income tax. Another advantage of borrowing money to invest.
Debt can be your friend or it can be your worst enemy. It all depends on how you use it. The secret is to take control of your debt use and don't be convinced by others, even banks, that their loan is the best for you. Remember banks and other businesses are in business for one reason. To Make money. I will be writing about banks more in future postings. Stay Tuned, or your head may fall off. (Where did this come from??)
As always, I welcome your comments and requests for future topics.
Debt can be good, it can be bad or it can be extremely ugly. It all depends on how it is used. Let me explain the different uses for debt and whether they can help or hurt you in your future financial lives.
Let us start with the extremely ugly . High interest loans such as credit cards and loan sharks. Never borrow long term money from these two sources, it's a recipe for disaster. Credit cards are a convenience but can be a huge trap if not used properly. I will be writing about the proper use of credit cards in a future post.
You guessed it, next is the bad debt. Basically any debt that you take on just because you want something NOW and couldn't wait to save for it. In today's society we have been conditioned to believe that we need something right away or else our heads will fall off. Or more commonly because everybody else has one and their heads are still intact. Examples of this kind of debt are lines of credit, special zero percent loans, etc.
Remember when it comes to borrowing money Nothing is FREE No company that I know of is in business to lose money!
Now for the good stuff. Good Debt. Yes, there is such a thing. Borrowing to buy a home for instance is generally good debt. Besides, most of us could never save enough to pay cash for a home. A home, or more generally Real Estate, will tend to rise in value over a long period of time. Many in the US may not believe me on this one right now, but remember I said long term (generally 10,20, or more years). Unless the world falls apart, or your head falls off, I should be right on this one.
Another example of good debt is borrowing to invest in something that pays you an income or that will potentially rise in value over time. Also, with this type of debt, governments will generally allow you to deduct the cost of this debt from your income when calculating your income tax. Another advantage of borrowing money to invest.
Debt can be your friend or it can be your worst enemy. It all depends on how you use it. The secret is to take control of your debt use and don't be convinced by others, even banks, that their loan is the best for you. Remember banks and other businesses are in business for one reason. To Make money. I will be writing about banks more in future postings. Stay Tuned, or your head may fall off. (Where did this come from??)
As always, I welcome your comments and requests for future topics.
Friday, November 11, 2011
How to Protect Yourself - Multiply Your Income Streams
Having just one source of income today could be a recipe for DISASTER ! Do you think that most Wealthy people have just one source of income ? Not likely.
Most people today work at a job full time and have no time to work at a second job etc. However, this is not exactly what I am getting at. Each person has only so much time in a day, that is obvious. Generally, eight hours per day five days a week is considered full time employment. If a person is to take on a second job in their so called spare time, this can add a lot of stress to their life. Also it can make them too tired to function properly in their full time job. I would not recommend this situation to most individuals.
Would it not be much better to find ways to earn income without taking a lot of your time ? Of course it would. This is called investing ! You simply trade some of your savings for an income. There are many forms of investing but not all of them pay you an income. In fact, some are very risky and you may even lose all of your savings. Remember, if something sounds too good to be true, it usually is.
There are many good sources of investments that will pay you a monthly income, such as stocks, income trusts, reits, and individual rental real estate, to name a few. The trick is to find the ones that will pay you the most income with the least amount of investment dollars and risk.( risk meaning the potential of losing all of your investment dollars).
Each investment you make ( and earn a monthly income from ) is called an income stream. These investments will pay you a monthly income for as long as they keep earning that income from within their structures.The more of these income streams that you can add, the more your monthly income will be.In fact, some day these income streams could even bring in more income than your full time job.
Having these income streams means that your future is much more secure. If you should get laid off from your job, for instance, your income streams could help pay some of your expenses until you find another job.
How you choose these investments that create income streams is up to you. There are many, many choices, however, not all of them are suitable to each individual. Some are far too risky and should only be considered by the seasoned investor who understands the risks. The point here is to be careful, especially when starting out.
Multiple income streams, when chosen properly, will provide years of income and protection for your growing financial life.
As always, I welcome your comments and suggestions for future topics.
Most people today work at a job full time and have no time to work at a second job etc. However, this is not exactly what I am getting at. Each person has only so much time in a day, that is obvious. Generally, eight hours per day five days a week is considered full time employment. If a person is to take on a second job in their so called spare time, this can add a lot of stress to their life. Also it can make them too tired to function properly in their full time job. I would not recommend this situation to most individuals.
Would it not be much better to find ways to earn income without taking a lot of your time ? Of course it would. This is called investing ! You simply trade some of your savings for an income. There are many forms of investing but not all of them pay you an income. In fact, some are very risky and you may even lose all of your savings. Remember, if something sounds too good to be true, it usually is.
There are many good sources of investments that will pay you a monthly income, such as stocks, income trusts, reits, and individual rental real estate, to name a few. The trick is to find the ones that will pay you the most income with the least amount of investment dollars and risk.( risk meaning the potential of losing all of your investment dollars).
Each investment you make ( and earn a monthly income from ) is called an income stream. These investments will pay you a monthly income for as long as they keep earning that income from within their structures.The more of these income streams that you can add, the more your monthly income will be.In fact, some day these income streams could even bring in more income than your full time job.
Having these income streams means that your future is much more secure. If you should get laid off from your job, for instance, your income streams could help pay some of your expenses until you find another job.
How you choose these investments that create income streams is up to you. There are many, many choices, however, not all of them are suitable to each individual. Some are far too risky and should only be considered by the seasoned investor who understands the risks. The point here is to be careful, especially when starting out.
Multiple income streams, when chosen properly, will provide years of income and protection for your growing financial life.
As always, I welcome your comments and suggestions for future topics.
Tuesday, November 8, 2011
How to Build an Emergency Reserve
What would you do if you suddenly lost your job? What would you do if you suddenly had a large car expense? How would you cope? Sad to say, but for most they would borrow, borrow, borrow and borrow! Maybe one too many borrows, but you get the point! The point is, most people are not properly prepared for a major financial setback.
What a lot of the the wealthy people do, is draw upon their Emergency Reserve. A much better solution as you won't have to depend on anyone else, including a bank, to help you out.
An Emergency Reserve is simply a sum of money that you set aside just in case of an emergency. This money should be kept in a place that you can access, however, not too easily. Preferably in a bank savings account at a different bank than you use for your everyday spending. And don't ever, ever ever have a bank card set up for this account. This account is for EMERGENCY USE ONLY!!!
If you make this fund too easy to access, you will be tempted to use it for non emergency items. These could include a vacation or a new whatever or what have you. But these items are certainly not emergencies are they?
The amount that you should have set aside in your Emergency Reserve is up to you and will depend on many factors. Factors such as your total net take home pay from work, your cost obligations that you have every month such as rent or mortgage payments and other household bills.etc. What you need to do is make a list of all your monthly obligations and tally them up.
Once you have an idea what your monthly expenses are, you must think of what possible emergencies you could face. If you operate a vehicle, you know that repair bills usually bite you when least expected. Your Emergency Reserve must allow for this. There are many other situations as well, but the single worst one is the loss of your main income source (your job) Be prepared, because it may happen and at any time even when least expected.
A general rule of thumb is to have an amount of between three and six months of your monthly expense obligations set aside as your emergency reserve. At first, this may seem like an awful lot to save, and it is. However, if you start saving now, whatever you have saved when the next emergency arises will be better than having nothing saved at all.
Once you have this fund up to a comfortable level, you will be able to start directing your savings towards your future wealth building goals as I will begin discussing in future posts. Just to clarify, the "pay yourself first" amounts from the previous posts is where the savings for your Emergency Fund will come from. There is no need to save more than that unless you have the extra funds of course.
Your Emergency Fund will become your safety valve so to speak to smooth out the bumps in your financial road ahead. Having this fund will allow you to concentrate your future efforts towards building your income and your wealth.
As always, I welcome your feedback and comments about this and/or other posts. If you have a specific question or concern or have a topic you would like me to cover, please let me know.
What a lot of the the wealthy people do, is draw upon their Emergency Reserve. A much better solution as you won't have to depend on anyone else, including a bank, to help you out.
An Emergency Reserve is simply a sum of money that you set aside just in case of an emergency. This money should be kept in a place that you can access, however, not too easily. Preferably in a bank savings account at a different bank than you use for your everyday spending. And don't ever, ever ever have a bank card set up for this account. This account is for EMERGENCY USE ONLY!!!
If you make this fund too easy to access, you will be tempted to use it for non emergency items. These could include a vacation or a new whatever or what have you. But these items are certainly not emergencies are they?
The amount that you should have set aside in your Emergency Reserve is up to you and will depend on many factors. Factors such as your total net take home pay from work, your cost obligations that you have every month such as rent or mortgage payments and other household bills.etc. What you need to do is make a list of all your monthly obligations and tally them up.
Once you have an idea what your monthly expenses are, you must think of what possible emergencies you could face. If you operate a vehicle, you know that repair bills usually bite you when least expected. Your Emergency Reserve must allow for this. There are many other situations as well, but the single worst one is the loss of your main income source (your job) Be prepared, because it may happen and at any time even when least expected.
A general rule of thumb is to have an amount of between three and six months of your monthly expense obligations set aside as your emergency reserve. At first, this may seem like an awful lot to save, and it is. However, if you start saving now, whatever you have saved when the next emergency arises will be better than having nothing saved at all.
Once you have this fund up to a comfortable level, you will be able to start directing your savings towards your future wealth building goals as I will begin discussing in future posts. Just to clarify, the "pay yourself first" amounts from the previous posts is where the savings for your Emergency Fund will come from. There is no need to save more than that unless you have the extra funds of course.
Your Emergency Fund will become your safety valve so to speak to smooth out the bumps in your financial road ahead. Having this fund will allow you to concentrate your future efforts towards building your income and your wealth.
As always, I welcome your feedback and comments about this and/or other posts. If you have a specific question or concern or have a topic you would like me to cover, please let me know.
Friday, November 4, 2011
The Golden Rule Part Three - Accumulation of Savings
By "Paying Yourself First" or setting aside a set percentage of your take home pay, you will be taking the first and most important step towards building your financial future. As simple as this may sound, it is often the most difficult step towards building future wealth.
As previously mentioned, you may have to give up some of the luxuries that you have become used to enjoying in the past. As the old workout saying goes NO PAIN, NO GAIN ! In today's society, everybody wants everything NOW and they will even go into debt to get it NOW instead of waiting until they can afford it.This step is all about discipline and developing a good savings habit.
Because of the many temptations and distractions of everyday life, it is also imperative that any money you save by "Paying Yourself First" be placed in a separate savings account and never touched. At least never touched until you put those funds to work for you. I will discuss ways to utilize these funds in later posts.
For now, accumulate the savings in a separate savings account, preferably at a separate bank from your daily spending accounts. Also never , ever ever get a bank card for this account ! Don't Touch This ! Leave it alone and let it Grow.
You will from time to time be tempted to use these funds. You will say to yourself "I have the money for this or that" but Don't Touch This Pretend that it doesn't exist otherwise it won't. !
This concludes my series on The Golden Rule. I hope you enjoyed this topic and please share this advice with all your family and friends. The whole world could use this advise in today's turbulent times. Please send them to this site as there will be much more good stuff to come.
As always, I would appreciate your feedback and comments on any posts and welcome any requests for topics you would like me to cover in the future. Stay tuned for further posts as I intend to post new material every Tuesday and Friday.
As previously mentioned, you may have to give up some of the luxuries that you have become used to enjoying in the past. As the old workout saying goes NO PAIN, NO GAIN ! In today's society, everybody wants everything NOW and they will even go into debt to get it NOW instead of waiting until they can afford it.This step is all about discipline and developing a good savings habit.
Because of the many temptations and distractions of everyday life, it is also imperative that any money you save by "Paying Yourself First" be placed in a separate savings account and never touched. At least never touched until you put those funds to work for you. I will discuss ways to utilize these funds in later posts.
For now, accumulate the savings in a separate savings account, preferably at a separate bank from your daily spending accounts. Also never , ever ever get a bank card for this account ! Don't Touch This ! Leave it alone and let it Grow.
You will from time to time be tempted to use these funds. You will say to yourself "I have the money for this or that" but Don't Touch This Pretend that it doesn't exist otherwise it won't. !
This concludes my series on The Golden Rule. I hope you enjoyed this topic and please share this advice with all your family and friends. The whole world could use this advise in today's turbulent times. Please send them to this site as there will be much more good stuff to come.
As always, I would appreciate your feedback and comments on any posts and welcome any requests for topics you would like me to cover in the future. Stay tuned for further posts as I intend to post new material every Tuesday and Friday.
Tuesday, November 1, 2011
The Golden Rule Part Two -Needs versus Wants
Further to the previous post, you may be wondering how you can possibly live on less than you do today. Well, the first step you must take is to make a list of all of your needed expenses.
This list could be lengthy given today's high expectation lifestyle. However, really think about what you need to survive. Food - we all need to eat to survive. Clothing - we all need to cover up and keep warm (besides most of us are not super models ) . Shelter - we all need a place to live and call home.
The above needs are traditionally the basics of life and survival. However, in today's global community, I would suggest that there is one more category that qualifies as a need. Communication - we all need to be connected to what is happening in the world in order to thrive financially. Whether this be through internet sites such as Facebook, Twitter, Linkedin, or other means, communications is vital.
All other categories are considered wants and we can do without them and survive quite well. Of course, we all want to be entertained and pampered occasionally, but some restrictions in these areas would be your best starting point for finding the funds needed to pay yourself first.
For instance, eating out in restaurants is a want, not a need. We can eat at home for much less than dining out every day, etc. Designer clothing is also a want and not a need. Where you live can also be a want and not a need depending on your income level.
Whatever your situation, you should be able to free up 10% of your take home income and pay yourself first. Without this ability, it will be very difficult to get ahead financially and to some day become wealthy. This is where your future must start. Develop the good habit of paying yourself first no matter what happens.
Stay tuned for future posts on related topics. Please leave a comment if there is a particular topic you would like me to cover. I will do my best to include your requests in future posts.
This list could be lengthy given today's high expectation lifestyle. However, really think about what you need to survive. Food - we all need to eat to survive. Clothing - we all need to cover up and keep warm (besides most of us are not super models ) . Shelter - we all need a place to live and call home.
The above needs are traditionally the basics of life and survival. However, in today's global community, I would suggest that there is one more category that qualifies as a need. Communication - we all need to be connected to what is happening in the world in order to thrive financially. Whether this be through internet sites such as Facebook, Twitter, Linkedin, or other means, communications is vital.
All other categories are considered wants and we can do without them and survive quite well. Of course, we all want to be entertained and pampered occasionally, but some restrictions in these areas would be your best starting point for finding the funds needed to pay yourself first.
For instance, eating out in restaurants is a want, not a need. We can eat at home for much less than dining out every day, etc. Designer clothing is also a want and not a need. Where you live can also be a want and not a need depending on your income level.
Whatever your situation, you should be able to free up 10% of your take home income and pay yourself first. Without this ability, it will be very difficult to get ahead financially and to some day become wealthy. This is where your future must start. Develop the good habit of paying yourself first no matter what happens.
Stay tuned for future posts on related topics. Please leave a comment if there is a particular topic you would like me to cover. I will do my best to include your requests in future posts.
Friday, October 28, 2011
The Golden Rule for Building Wealth
There are many important things you must do to ensure your financial future will blossom. However, without the following Golden Rule for Building Wealth, you will not be able to employ any of the other techniques.
The golden Rule is - you must learn to live on less than your current income!! What this means is that you must save a portion of everything that you earn. It's that simple.
Most people will probably find this to be a difficult discipline to follow because most people are currently spending more than they earn. A scary thought and not a good plan for their future.
The simplest way to achieve the Golden Rule is to pay yourself first. Set aside a percentage of your paycheck, say 10%, and learn to live on the rest. This will likely mean cutting down on some expenses, but most of us will find that we can live without some of our current so called needs.
I welcome your feedback to this concept and look forward to providing further wealth building tips in future posts.
Subscribe to:
Posts (Atom)