Insurance is an essential Financial Planning tool. The purpose of insurance is to transfer risk. Especially for those at a younger age just starting out adulthood; you don't have a large cash amount and certain losses could bankrupt you, so wisdom says to transfer the risk.
These are 6 Basic Types of Insurance
Homeowners or Rental Insurance
Auto Insurance
Health Insurance
Life Insurance
Disability Insurance
Long Term Care Insurance
The ones that I am going to highlight today are the first four: Homeowners/Rental, Auto, Health, and Life Insurance.
Homeowners/Renters Insurance
When you own your home, it is a must to have homeowners insurance. If you are renting, you NEED rental insurance. It is extremely cheap (usually about $10/month) and if you do not have it you are no longer covered under your parents insurance.
Auto Insurance
I recommend that once you have your emergency fund, you should raise your deductible. The reason for this is because you will save a lot on your reduced monthly payment. Be smart with that and save it up so that it becomes your "Car Emergency Money" that will pay for the deductible when you have to pay it. Make sure you carry adequate liability.
Health Insurance
Along with auto insurance, I have the same recommendation for health insurance to raise your deductible because when you have an emergency fund in place you can save money on your monthly payment. And after a certain period of time you end up saving the whole amount of the deductible from the monthly savings anyway. If you are self-employed you can save money using an MSA (or Medical Savings Account). I will post on tax tips in the future and more will be included on the MSA then. But for now, the MSA is a tax deductible medical savings account for medical bills that works with a large deductible.
Life Insurance
This is a must if you are married and have a house. If you were to die without life insurance and the two of you have a mortgage together your spouse would be responsible for the amount. Chances are she was depending on your income for this which is why you are protecting her by taking out life insurance. However, if you both are working and have no debt (no mortgage, loans, cards, etc.), she really isn't depending on your income. In this situation it is not vital to have life insurance.
Life Insurance is to replace lost income due to death. It is actually more like "death insurance." There are 2 types of Life Insurance: Term and Cash Value.
Term insurance is for a specified period, is substantially cheaper, and has no savings plan built in. Cash Value insurance is normally for life and is more expensive in order to fund a savings plan.
A common misconception about life insurance that it is permanent need. That you will ALWAYS need life insurance.
What I recommend is for you to get a 20 or 30 year term life insurance and invest the monthly savings into a diversified portfolio of mutual funds (ex. 25% growth, 25% growth & income, 25% aggresive growth, and 25% International).
I encourage you to price a plan for Cash Value and Term and the difference will most likely be a great deal. Usually a plan for Cash Value that is $100 will be for about $10 or $15 with Term. If you save and invest the other $90 per month for the entire term of 30 years you will have $314,546.77 at the end of it. You will be self insured and no longer need to be sinking payments into a life insurance savings plan.
Tuesday, July 31, 2007
Monday, July 30, 2007
Common Budget Planning Traps to Avoid
In order to ensure success in your cash flow plan I wanted to talk about 4 common traps or mistakes that people fall into which ultimately causes them to "get out of the game" with their finances.
I have been harping on "having a plan" for the past few weeks and those of you that have started making a plan I want to encourage you. Every month you are going to get better at planning. The first month is the hardest, I cannot urge you enough to continue this every month because it is so easy to give up.
Everybody that makes a Cash Flow Plan is not always successful to start. Some do have a natural gift at thinking through each detail and following their plan, but I would say most do not. 4 Common reasons why your Cash Flow Plan may not work:
1) Leaving Things Out
Each month is different. December is going to be much different than June. December has Christmas; June probably has a vacation. March might have a birthday; August your kids need new clothes for school. My point is actually think through your month. Plan it carefully. You have a specific number of money coming in, you have to tell it what to do. That includes mid and long term savings that you set aside each month such as: car, retirement, kids college, etc.
2) Over Complicating Your Plan
You do not NEED to put down $17.22 for toilet paper in a certain month. This is not only tedious and annoying, it is also unnecessary. As an example of what I do is actually lump in my toiletries and groceries together (I usually get them from the same store anyway).
3) Not Actually Doing It
Tell your money where to go instead of wondering where it went. Imagine if a coach did not have a plan for his team; there is a pretty good chance he would not be very successful (and probably fired).
4) Not Actually Living By It.
If that same coach made a plan, but then didn't care if his players actually did what he planned out, they would still not be very successful in this scenario either.
Cash Flow Planning helps avoid living on a crisis by crisis management system. It should not be a surprise when Christmas presents come up or when you need to buy clothes for the kids. These are not what I consider "emergencies." If you want to review my thoughts on emergencies (see Click Here and read the importance of an emergency fund.
Proverbs 21:5 - "The plans of the diligent lead to profit as surely as haste leads to poverty."
Friday, July 27, 2007
Don't Break the Chain
If you know me, you know I love Jerry Seinfeld. He is a world renown comic that is extremely driven and seems to be one of the best in the business. I always wondered how determined that a person needs to be to reach that high of a level at anything (basketball, CEO, etc.). I imagine that in order to take your "skill" to a top level it takes a lot of consistency and perseverance.
This article was really cool on Jerry Seinfeld (if you don't want to read it, see below, I am highlighting what I am talking about).
Seinfeld Article
Highlights were:
He said the way to be a better comic was to create better jokes and the way to create better jokes was to write every day. But his advice was better than that. He had a gem of a leverage technique he used on himself and you can use it to motivate yourself - even when you don't feel like it.
Handling/Planning our money is extremely tough if you are just going to wait til 1 day a month to take care of everything. It is extremely overwhelming at times when you do this. I do not do the system that Jerry Seinfeld is talking about, however, I update my money system everyday. It takes me like 5 minutes. I am at the computer anyway (as I am sure many of you are right now...cause its a blog).
Consistency makes a HUGE difference in the way you see your money. Eventually it becomes natural to you and you enjoy the feeling of knowing where you stand with your money so much that you will hate not updating your money daily. Days that you can't get to your computer you will notice that you did not update and can't wait to get back and do it. I am not saying you should develop an OCD disorder, but like anything in life, consistency and determination can be a major contributing factor to success.
This article was really cool on Jerry Seinfeld (if you don't want to read it, see below, I am highlighting what I am talking about).
Seinfeld Article
Highlights were:
He said the way to be a better comic was to create better jokes and the way to create better jokes was to write every day. But his advice was better than that. He had a gem of a leverage technique he used on himself and you can use it to motivate yourself - even when you don't feel like it.
He then revealed a unique calendar system he was using pressure himself to write.
Here's how it worked.
He told me to get a big wall calendar that has a whole year on one page and hang it on a prominent wall. The next step was to get a big red magic marker.
He said for each day that I do my task of writing, I get to put a big red X over that day. "After a few days you'll have a chain. Just keep at it and the chain will grow longer every day. You'll like seeing that chain, especially when you get a few weeks under your belt. Your only job next is to not break the chain."
"Don't break the chain." He said again for emphasis.
Handling/Planning our money is extremely tough if you are just going to wait til 1 day a month to take care of everything. It is extremely overwhelming at times when you do this. I do not do the system that Jerry Seinfeld is talking about, however, I update my money system everyday. It takes me like 5 minutes. I am at the computer anyway (as I am sure many of you are right now...cause its a blog).
Consistency makes a HUGE difference in the way you see your money. Eventually it becomes natural to you and you enjoy the feeling of knowing where you stand with your money so much that you will hate not updating your money daily. Days that you can't get to your computer you will notice that you did not update and can't wait to get back and do it. I am not saying you should develop an OCD disorder, but like anything in life, consistency and determination can be a major contributing factor to success.
Thursday, July 26, 2007
In Case of an Emergency
Do you have a plan for when "life" happens. I don't think there is one among us who have not experienced some sort of unforseen event in our lives. We have all seen the car break down, the refrigerator dying, the air conditioning bust, or worst of all...the tv blow out. This stuff happens, it is GOING to happen again. There is no guess work involved; in your life you are going to have an unexpected event. Since this is GOING to happen, you might as well plan for it.
If you plan for a credit card to be your Emergency Fund I ask that you reconsider. If you use it for an emergency you are not taking care of that emergency at all, in fact you just made it even HARDER on yourself.
Imagine something serious happens like your car breaking down, a loved one is injured, or even worst a friend or family has died and the costs from the event are coming in. Life is hard enough to deal with trials. You don't need to pile on more crap (I think I can say crap, its my blog) in your life. You don't want to have a life problem AND a money problem.
If you don't remember why being in debt is bad, we talked about it a few weeks ago. Quick Recap: Proverbs 22:7 "The rich rule over the poor, and the borrower is servant to the lender." Another translation says "the borrower is slave to the lender." When you establish a lender/borrower relationship you are actually establishing a slave/master relationship. The sad thing is I know too many people whose master is Visa or American Express. I don't think that the people who named "MasterCard" were too far off.
Anyway, in order to hedge life I recommend that the FIRST thing you do is save/set aside $1,000 in an "Emergency Fund." This is a fund that is not a big earner, it's not an investment, it can't be tied up and not easy to get to, and you don't touch it. Put it in a money market account (see Money Market and leave it there. I have mine earning 5.10% in a Money Market through Bank of America. I just moved it there from ING Direct earning 4.50%. Regardless of the percentage points, the important thing is to do it because when life happens you need to have a plan.
The reason why I say it do it FIRST before paying off debt is this. Let's say you are throwing all your money and attacking your debt. Well, if life happens and you don't have any buffer you are going to put it back on the credit card and emotionally kill all the momentum you built. There is so much freedom in when an emergency happens you can just write a check and its over. When you draw out those expenses it builds an emotional burden that is very real. After all, personal finance is just as much personal as it is finance. That makes sense considering God created our hearts and money connected (see heart and money).
Challenge Step: $1,000 in an "Emergency Fund." After you pay off debt I recomend getting an "Emergency Fund" of AT LEAST 3 months expenses. That way if life happened and you lost your job. You would not have the unbearable stress of not knowing if your family can be taken care of while you look for another one.
If you plan for a credit card to be your Emergency Fund I ask that you reconsider. If you use it for an emergency you are not taking care of that emergency at all, in fact you just made it even HARDER on yourself.
Imagine something serious happens like your car breaking down, a loved one is injured, or even worst a friend or family has died and the costs from the event are coming in. Life is hard enough to deal with trials. You don't need to pile on more crap (I think I can say crap, its my blog) in your life. You don't want to have a life problem AND a money problem.
If you don't remember why being in debt is bad, we talked about it a few weeks ago. Quick Recap: Proverbs 22:7 "The rich rule over the poor, and the borrower is servant to the lender." Another translation says "the borrower is slave to the lender." When you establish a lender/borrower relationship you are actually establishing a slave/master relationship. The sad thing is I know too many people whose master is Visa or American Express. I don't think that the people who named "MasterCard" were too far off.
Anyway, in order to hedge life I recommend that the FIRST thing you do is save/set aside $1,000 in an "Emergency Fund." This is a fund that is not a big earner, it's not an investment, it can't be tied up and not easy to get to, and you don't touch it. Put it in a money market account (see Money Market and leave it there. I have mine earning 5.10% in a Money Market through Bank of America. I just moved it there from ING Direct earning 4.50%. Regardless of the percentage points, the important thing is to do it because when life happens you need to have a plan.
The reason why I say it do it FIRST before paying off debt is this. Let's say you are throwing all your money and attacking your debt. Well, if life happens and you don't have any buffer you are going to put it back on the credit card and emotionally kill all the momentum you built. There is so much freedom in when an emergency happens you can just write a check and its over. When you draw out those expenses it builds an emotional burden that is very real. After all, personal finance is just as much personal as it is finance. That makes sense considering God created our hearts and money connected (see heart and money).
Challenge Step: $1,000 in an "Emergency Fund." After you pay off debt I recomend getting an "Emergency Fund" of AT LEAST 3 months expenses. That way if life happened and you lost your job. You would not have the unbearable stress of not knowing if your family can be taken care of while you look for another one.
Wednesday, July 25, 2007
Attack That Debt
This is a proven method that helps you stay on track with attacking your debt. This method gets criticism and I will explain why. It is your life and your money, and all I can do is show my work to why I believe what I believe. I am not trying to hide anything from you, or pull anything over your eyes.
This is called the "Debt Snowball Method" and the first I heard of it was from Dave Ramsey's book Financial Peace.
The first thing you have to do is make a budget and set aside however much money you are going to put towards debt each month. I am not going to go into this but I am assuming you have canceled the cable, lowered your cell phone plan, got rid of the gym membership, and done any and everything to free up money in your monthly budget to attack debt. Now once you have that number that you are going to attack your debt with write it at the top of a sheet of paper.
Then list all your debts from smallest balance to largest balance. Pay the minimum payment on all of them except the smallest debt and destroy it. Then once its gone, add the money that you were paying on the little one, to the next little one (this is a little more because you are adding the minimum payment plus what you were paying on the little one). Continue in this method until each debt is gone and move on to the next one with a bigger amount to attack it with.
Just so you can see the example:
Weaponry: $1,500
Visa: $250...................................$25.00 Minimum Payment
MasterCard: $2,100..................$100.00 Minimum Payment
American Express: $2,500.......$120.00 Minimum Payment
Medical Bills: $10,200...............$400.00 Minimum Payment
Total Minimum Payment..........$645.00
So in this example you have $1,500 to attack debt with. $645.00 is going out for minimum payments and that leaves $855.00 to attack with. This means we can put $225.00 of that towards Visa and get it out of our life forever, then still have $630.00 left that we can put on Master card. After that month our new debt will look like this (will be different baring interest):
MasterCard: $1,370
American Express: $2,380
Medical Bills: $,9.800
Then attack it again the next month and have a blast crossing stuff off the list. The reason why this method gets criticized is because other people think that you should keep the debt with the lowest interest rate and therefore not to rank or pay them off according to balance but interest rate. The thing is I agree with them and they are correct mathematically. But I have realized that personal finance is just as much personal as it is finance.
The reason why this is a proven method is because it offers the emotional pat on the back that is NECESSARY in order to keep the passion and motivation needed to attack debt. You may have intensity at the beginning with doing the interest rate method, however, it is so much easier to lose that intensity when you are not seeing results. Its just like when a Shark tastes blood, he wants to attack more. The same happens when we start seeing results from attacking our debt.
Now, if you want to do some balance transfers or consolidation and get a lower rate on something that is fine with me. But the reason why I am not harping on that is because balance transfers and consolidation are just smoke and mirrors. The real issue here is the DEBT. And by you shifting your problem around tricks you into thinking that you are doing something when in actuality you are mistaken.
The way to get out of debt is to attack. It's going to take a half a year or more living on beans and rice, grilled cheese and ramen noodles. But it's worth it to be free. I was listening to a radio program and the host asked the caller who was a hundred thousand dollars in debt, "What would your life be like if in 3 years you had no more payments?" She had to use every bit of energy to respond over her overwhelming tears and sniffles and all she could muster was, "I can't even imagine what life would be like if that happened."
That broke my heart that she was in BONDAGE. This is serious stuff and it matters. It affects everything in people's life, and for this lady she was at the end of her road. She could not take being in this bondage anymore to the point that life was not life anymore.
I know things may seem bleak and overwhelming but chances are the reason why is simply that you need to get organized. Getting organized and putting a plan down like I am suggestion allows you to see the light at the end of the tunnel that isn't an on coming train.
I can't say this enough, if you need to attack debt don't get caught up and play around with the balance transfer games, just attack it with intensity and that is how you will obtain Financial Freedom.
This is called the "Debt Snowball Method" and the first I heard of it was from Dave Ramsey's book Financial Peace.
The first thing you have to do is make a budget and set aside however much money you are going to put towards debt each month. I am not going to go into this but I am assuming you have canceled the cable, lowered your cell phone plan, got rid of the gym membership, and done any and everything to free up money in your monthly budget to attack debt. Now once you have that number that you are going to attack your debt with write it at the top of a sheet of paper.
Then list all your debts from smallest balance to largest balance. Pay the minimum payment on all of them except the smallest debt and destroy it. Then once its gone, add the money that you were paying on the little one, to the next little one (this is a little more because you are adding the minimum payment plus what you were paying on the little one). Continue in this method until each debt is gone and move on to the next one with a bigger amount to attack it with.
Just so you can see the example:
Weaponry: $1,500
Visa: $250...................................$25.00 Minimum Payment
MasterCard: $2,100..................$100.00 Minimum Payment
American Express: $2,500.......$120.00 Minimum Payment
Medical Bills: $10,200...............$400.00 Minimum Payment
Total Minimum Payment..........$645.00
So in this example you have $1,500 to attack debt with. $645.00 is going out for minimum payments and that leaves $855.00 to attack with. This means we can put $225.00 of that towards Visa and get it out of our life forever, then still have $630.00 left that we can put on Master card. After that month our new debt will look like this (will be different baring interest):
MasterCard: $1,370
American Express: $2,380
Medical Bills: $,9.800
Then attack it again the next month and have a blast crossing stuff off the list. The reason why this method gets criticized is because other people think that you should keep the debt with the lowest interest rate and therefore not to rank or pay them off according to balance but interest rate. The thing is I agree with them and they are correct mathematically. But I have realized that personal finance is just as much personal as it is finance.
The reason why this is a proven method is because it offers the emotional pat on the back that is NECESSARY in order to keep the passion and motivation needed to attack debt. You may have intensity at the beginning with doing the interest rate method, however, it is so much easier to lose that intensity when you are not seeing results. Its just like when a Shark tastes blood, he wants to attack more. The same happens when we start seeing results from attacking our debt.
Now, if you want to do some balance transfers or consolidation and get a lower rate on something that is fine with me. But the reason why I am not harping on that is because balance transfers and consolidation are just smoke and mirrors. The real issue here is the DEBT. And by you shifting your problem around tricks you into thinking that you are doing something when in actuality you are mistaken.
The way to get out of debt is to attack. It's going to take a half a year or more living on beans and rice, grilled cheese and ramen noodles. But it's worth it to be free. I was listening to a radio program and the host asked the caller who was a hundred thousand dollars in debt, "What would your life be like if in 3 years you had no more payments?" She had to use every bit of energy to respond over her overwhelming tears and sniffles and all she could muster was, "I can't even imagine what life would be like if that happened."
That broke my heart that she was in BONDAGE. This is serious stuff and it matters. It affects everything in people's life, and for this lady she was at the end of her road. She could not take being in this bondage anymore to the point that life was not life anymore.
I know things may seem bleak and overwhelming but chances are the reason why is simply that you need to get organized. Getting organized and putting a plan down like I am suggestion allows you to see the light at the end of the tunnel that isn't an on coming train.
I can't say this enough, if you need to attack debt don't get caught up and play around with the balance transfer games, just attack it with intensity and that is how you will obtain Financial Freedom.
Tuesday, July 24, 2007
Workouts are not easy...
So it is my birthday today and I decided to wake up early and go for a birthday run. Which turned out to be more like a birthday crawl. Workouts are not easy and I got to thinking about how physical fitness parallels a lot to financial fitness.
Firstly, both are very important and affect other areas in our lives. I will not go into this but I am certain I won't have many who disagree that this holds true. Secondly, a workout takes discipline, which is the same thing that is needed with money. It does not come natural and it takes effort. Once you do this for a while you begin to get in shape.
With physical fitness it takes eating as well as working out. You cannot just eat all the time and be healthy it takes both eating right and exercise to be healthy. The same goes with the way we handle our money. Tracking AND planning are two essential parts that are necessary for financial fitness.
When we get overwhelmed with money, chances are it is because we are not handling it and letting it handle us. A common form of this is not tracking or planning. When you plan and track your money it takes all guesswork out. But you cannot just do one and be financially healthy; you have to do both.
It is important to take a spreadsheet (or even a yellow pad) and put down a projection of what your month looks like. Each month is different and will change so it is important to change and tweak before every month. Some things you need to plan for and set aside money each month (ie Christmas or Vacation). But the point is you have to start now. Just like when I got up this morning to run, even though it did not go as well you have to start somewhere.
Cliche Quote that applies is: "A journey of a thousand miles begins with a single step."
Practical Application Challenge: Download the Cash Flow Plan from my tools portion of my website FINANCIAL TOOLS. Fill it out and try to stay within your plan (keep all receipts for the new month, in this case it is August). Then after the month is over tally up all receipts and track where your spending went and compare that to your plan. From there you will see how you need to tweak things. If you have debt check back tomorrow, I will have a specific plan for you to attack with.
A word of prophecy if this is your first budget: you will not stay within your plan. I suggest that you put more than you would think for food because chances are you are going to undershoot it if you haven't been tracking your money closely. If there is no more money for food and there is still more month you are going to be going on one intense diet.
Firstly, both are very important and affect other areas in our lives. I will not go into this but I am certain I won't have many who disagree that this holds true. Secondly, a workout takes discipline, which is the same thing that is needed with money. It does not come natural and it takes effort. Once you do this for a while you begin to get in shape.
With physical fitness it takes eating as well as working out. You cannot just eat all the time and be healthy it takes both eating right and exercise to be healthy. The same goes with the way we handle our money. Tracking AND planning are two essential parts that are necessary for financial fitness.
When we get overwhelmed with money, chances are it is because we are not handling it and letting it handle us. A common form of this is not tracking or planning. When you plan and track your money it takes all guesswork out. But you cannot just do one and be financially healthy; you have to do both.
It is important to take a spreadsheet (or even a yellow pad) and put down a projection of what your month looks like. Each month is different and will change so it is important to change and tweak before every month. Some things you need to plan for and set aside money each month (ie Christmas or Vacation). But the point is you have to start now. Just like when I got up this morning to run, even though it did not go as well you have to start somewhere.
Cliche Quote that applies is: "A journey of a thousand miles begins with a single step."
Practical Application Challenge: Download the Cash Flow Plan from my tools portion of my website FINANCIAL TOOLS. Fill it out and try to stay within your plan (keep all receipts for the new month, in this case it is August). Then after the month is over tally up all receipts and track where your spending went and compare that to your plan. From there you will see how you need to tweak things. If you have debt check back tomorrow, I will have a specific plan for you to attack with.
A word of prophecy if this is your first budget: you will not stay within your plan. I suggest that you put more than you would think for food because chances are you are going to undershoot it if you haven't been tracking your money closely. If there is no more money for food and there is still more month you are going to be going on one intense diet.
Monday, July 23, 2007
FREE BLOCKBUSTER TOTAL ACCESS
I got this info from http://www.bargainist.com/
Blockbuster Online - Free TotalAccess one-month trial
Blockbuster Online is offering a free one-month trial of TotalAccess with coupon code FREETRIAL0618M at checkout. When the trial is over, if you decide to stick with it, the monthly fee is $17.99 per month. You'll then receive four free in-store rentals a month, and be allowed to return the mailed DVDs to any Blockbuster store and exchange them for in-store rentals. Expiration unknown.
It is pretty cool if you want to catch up on lots of movies/tv shows. I just did a free month and it worked great. They sent me 3 movies really fast, then after I finished with those I took them to the blockbuster store and got 3 more movies immediately. By the time you finish those, 3 more movies are already in your mailbox...neat deal.
Blockbuster Online - Free TotalAccess one-month trial
Blockbuster Online is offering a free one-month trial of TotalAccess with coupon code FREETRIAL0618M at checkout. When the trial is over, if you decide to stick with it, the monthly fee is $17.99 per month. You'll then receive four free in-store rentals a month, and be allowed to return the mailed DVDs to any Blockbuster store and exchange them for in-store rentals. Expiration unknown.
It is pretty cool if you want to catch up on lots of movies/tv shows. I just did a free month and it worked great. They sent me 3 movies really fast, then after I finished with those I took them to the blockbuster store and got 3 more movies immediately. By the time you finish those, 3 more movies are already in your mailbox...neat deal.
Friday, July 20, 2007
Your Money and Heart are CONNECTED
Most of us have heard:
Matthew 6:21 "Where your treasure is, there your heart will be also."
For a while a just brushed that off and agreed with it but was never convinced that this was so. I can prove this and then I will talk about how that changes the way we should look at things.
Wherever our money goes a piece of our heart goes too. I just bought Clemson Football Season tickets for the first time in my life. I have gone to every home game since I was in 7th grade but never paid for them. I love going to games and anticipated each trip to Death Valley, but the anticipation has never been like this. I am emotionally connected to the Tigers now that I have dropped my $600 to support the team. I am invested in what happens. I am "bought in."
Or a better example might be if you have invested in stocks before. When you put money behind a stock and you see that 3 digit ticker symbol run across the bottom of the screen on CNBC your heart jumps with it. Your heart goes up and down with the stock. It is connected. The same thing happens when gambling. You are now invested into the game and connected to the team that you are cheering for. It could be two teams that you care nothing about, but suddenly you are rooting a team as if you grew up watching them throughout childhood.
Anyway, my point is Jesus was not lying when he said that our heart and money are connected. Well, how does that affect the way I live life or plan my money? Most people just want to have enough money so that THEY can be "happy." The realization to that is happiness is never brought on by more money, all that comes with that is being discontent because you want even more money. You are chasing a rabbit that can't be caught. Think about it, if more money is what brings happiness then celebrities would be the happiest people imaginable, but after seeing them self destruct over and over again you realize that the money that they have does not bring their happiness...or as Michael Scott would say, "mo money mo problems"
I honestly think the key is contentment in what we DO have. Most of you have just turned me off and stopped listening because of how cliche this sounds, but it is TRUE and I think this is one of the things that ring true with the statement of money and heart being connected.
There is something spiritual and free that happens when you give. Especially when you give to someone who is in NEED. Even people who to not have a Christ Follower background agree with this.
Whats going on when you do not give is you are thinking about yourself. This enhances greed which causes you to WANT more money to be happy and never get there. The shift that I think happens when you give is you stop thinking about yourself and therefore since your money and heart are connected your greediness begins to diminish. By you giving your money, your heart is affected greatly and this will allow you to be content with what you have.
I'm basically saying, "you should give, its good for you." I recommend giving at least 10% of your income away. If you are a Christ Follower, by Biblical standards you should be giving this minimum amount to the local church that you call family.
If you are reading this blog chances are you are in the top percentile of the world in riches. We have a lot to be thankful for, you should be very content with what you have been blessed with. I know that money problems affect everything in life so I cannot urge this message to you enough. If you think, "I'm going to be happy when I have more money", when you get more money you are still going to feel that.
I challenge anyone reading this to really evaluate if you keep telling yourself this and if that is true to take steps in order to shift your paradigm of thinking. A good way to start is to GIVE.
Matthew 6:21 "Where your treasure is, there your heart will be also."
For a while a just brushed that off and agreed with it but was never convinced that this was so. I can prove this and then I will talk about how that changes the way we should look at things.
Wherever our money goes a piece of our heart goes too. I just bought Clemson Football Season tickets for the first time in my life. I have gone to every home game since I was in 7th grade but never paid for them. I love going to games and anticipated each trip to Death Valley, but the anticipation has never been like this. I am emotionally connected to the Tigers now that I have dropped my $600 to support the team. I am invested in what happens. I am "bought in."
Or a better example might be if you have invested in stocks before. When you put money behind a stock and you see that 3 digit ticker symbol run across the bottom of the screen on CNBC your heart jumps with it. Your heart goes up and down with the stock. It is connected. The same thing happens when gambling. You are now invested into the game and connected to the team that you are cheering for. It could be two teams that you care nothing about, but suddenly you are rooting a team as if you grew up watching them throughout childhood.
Anyway, my point is Jesus was not lying when he said that our heart and money are connected. Well, how does that affect the way I live life or plan my money? Most people just want to have enough money so that THEY can be "happy." The realization to that is happiness is never brought on by more money, all that comes with that is being discontent because you want even more money. You are chasing a rabbit that can't be caught. Think about it, if more money is what brings happiness then celebrities would be the happiest people imaginable, but after seeing them self destruct over and over again you realize that the money that they have does not bring their happiness...or as Michael Scott would say, "mo money mo problems"
I honestly think the key is contentment in what we DO have. Most of you have just turned me off and stopped listening because of how cliche this sounds, but it is TRUE and I think this is one of the things that ring true with the statement of money and heart being connected.
There is something spiritual and free that happens when you give. Especially when you give to someone who is in NEED. Even people who to not have a Christ Follower background agree with this.
Whats going on when you do not give is you are thinking about yourself. This enhances greed which causes you to WANT more money to be happy and never get there. The shift that I think happens when you give is you stop thinking about yourself and therefore since your money and heart are connected your greediness begins to diminish. By you giving your money, your heart is affected greatly and this will allow you to be content with what you have.
I'm basically saying, "you should give, its good for you." I recommend giving at least 10% of your income away. If you are a Christ Follower, by Biblical standards you should be giving this minimum amount to the local church that you call family.
If you are reading this blog chances are you are in the top percentile of the world in riches. We have a lot to be thankful for, you should be very content with what you have been blessed with. I know that money problems affect everything in life so I cannot urge this message to you enough. If you think, "I'm going to be happy when I have more money", when you get more money you are still going to feel that.
I challenge anyone reading this to really evaluate if you keep telling yourself this and if that is true to take steps in order to shift your paradigm of thinking. A good way to start is to GIVE.
Thursday, July 19, 2007
Tell it where to go...
Being on top of your money is simple. It is the difference from telling your money where to go instead of wondering where it went.
Let me disarm people who are intimidated by their money. Life is hard to plan for, your money is not. However, we have made it more difficult than it has to be. Think about it, life has all types of curveballs. Relationships are confusing, jobs are frustrating, men are difficult, women are emotional, life has all types of abstract things that are being thrown at us. But money is not one of them...
We have a number of what came in. All you have to do is put it where you want it to go. So simple; it is a concrete number and you just use it. That's it. When it's gone, it's gone so don't put it in places that it shouldn't go.
Figure out your money TODAY. Basic suggestion that I challenge you to is write this down on a piece of paper.
Your Money : $________
Food : $________
Housing : $________
Power, Water, etc. : $________
Clothing : $________
Transportation : $________
These 5 categories are what you NEED. If your money coming in for a month is less than these 5 basic needs you are in need of ACTION. You need to sell that expensive car payment, you need to sell your house that is beyond your means, you need to quit buying Gap this and Ralph Lauren that, you need to quit eating out so much.
If your money is less than those 5 basic categories I urge you to act and get back in control of this thing.
Notice that I did not include any credit card payments. Those categories get paid FIRST. I don't care that Visa did not get paid and it hurt your credit. I care more about you and your kids having food or having lights on in the house.
But let's say your number of income is BIGGER than those 5 basic needs. Then choose where to put the rest, don't waste it. I recommend an emergency fund so that just in case "life" happens and you lose your job and that number at the top becomes $0 one month. Your family will still have food, home, lights, clothing, and transportation.
Let me disarm people who are intimidated by their money. Life is hard to plan for, your money is not. However, we have made it more difficult than it has to be. Think about it, life has all types of curveballs. Relationships are confusing, jobs are frustrating, men are difficult, women are emotional, life has all types of abstract things that are being thrown at us. But money is not one of them...
We have a number of what came in. All you have to do is put it where you want it to go. So simple; it is a concrete number and you just use it. That's it. When it's gone, it's gone so don't put it in places that it shouldn't go.
Figure out your money TODAY. Basic suggestion that I challenge you to is write this down on a piece of paper.
Your Money : $________
Food : $________
Housing : $________
Power, Water, etc. : $________
Clothing : $________
Transportation : $________
These 5 categories are what you NEED. If your money coming in for a month is less than these 5 basic needs you are in need of ACTION. You need to sell that expensive car payment, you need to sell your house that is beyond your means, you need to quit buying Gap this and Ralph Lauren that, you need to quit eating out so much.
If your money is less than those 5 basic categories I urge you to act and get back in control of this thing.
Notice that I did not include any credit card payments. Those categories get paid FIRST. I don't care that Visa did not get paid and it hurt your credit. I care more about you and your kids having food or having lights on in the house.
But let's say your number of income is BIGGER than those 5 basic needs. Then choose where to put the rest, don't waste it. I recommend an emergency fund so that just in case "life" happens and you lose your job and that number at the top becomes $0 one month. Your family will still have food, home, lights, clothing, and transportation.
Wednesday, July 18, 2007
Investing Made Easy
If you are intimidated by investing this post is for you. It is my goal to take away the uncertainty about investing that causes you do not want to start NOW. I am going to go through each investment type and explain it so you could teach it to your 5 year old nephew.
CD (Certificate of Deposit)
This is just a type of glorified savings account. Nobody is scared of a savings account well this is the same thing only you get a better interest rate but you cannot touch the money for a determined period of time (3 months, 6 months, etc.)
Money Market
The other type of glorified savings account. Usually with these accounts you have limited transactions but a similar interest rate to CD's. You should have a minimum rate 4.5% if you don't get that on your current money market you need to switch to www.ingdirect.com. However, I have a Bank of America Money Market that gives me a return of 5.05% so you can get better rates out there, just keep your eyes open for promotions.
Stocks
Easiest to understand. The stock market lists a price. Example: Crazy Joes, Inc. for $35.00 per share. If I want to invest $140 in Crazy Joes I buy 4 shares. As the stock market continues the price will either go up or down. If it goes up to $35.25 you just made $1. If it goes down to $34.75 you just lost $1.
Let me add this: Individual stock picking is extremely difficult. Experts in the field that try this still have no consistency in being sucessful. The key is DIVERSIFICATION. Whenever you hear me talk about investing the word DIVERSIFICATION is going to come up a lot. If you do want to go with individual stocks you better have your money spread accross MINIMUM 20 stocks, I recommend 50 and even then I am not too confident. It takes a lot of time, preperation, and research in order to have confidence in your investment.
Mutual Funds
These are my preferred type of investments. Because they come diversified, and I even like to diversify my diversified mutual funds.
What a mutual fund is: A fund manager picks a bunch of investments (could be a certain type of stock, could be real estate). Let's say Fidelity comes out with a new "aggressive growth stock" mutual fund and they pick Larry Ostertag to be their fund manager. It is now his job to pick a bunch a bunch of aggressive growth stocks and hope they do good. Now on the flipside the money he is investing for is "mutually funded" by lots of people like me and you.
Picture a bowl and you and 10 of your friends all put a certain amount of money in there. That is the pool of money Larry has to work with to make you and your friends money. So the difference b/w mutual funds and stocks is that instead of me trying to guess what stocks will do good. I have a trained, licensed, experience professional picking them for me.
I have heard it is a good idea to diversify your mutual funds something along these lines: 25% growth stock, 25% aggressive growth, 25% growth & income, 25% international. This is a very oversimplified version of diversifying but it is a foundation to build on.
I am going to the Braves game now so please click the contact me button on www.chriskakaras.com if you have any questions, I would love to help!
CD (Certificate of Deposit)
This is just a type of glorified savings account. Nobody is scared of a savings account well this is the same thing only you get a better interest rate but you cannot touch the money for a determined period of time (3 months, 6 months, etc.)
Money Market
The other type of glorified savings account. Usually with these accounts you have limited transactions but a similar interest rate to CD's. You should have a minimum rate 4.5% if you don't get that on your current money market you need to switch to www.ingdirect.com. However, I have a Bank of America Money Market that gives me a return of 5.05% so you can get better rates out there, just keep your eyes open for promotions.
Stocks
Easiest to understand. The stock market lists a price. Example: Crazy Joes, Inc. for $35.00 per share. If I want to invest $140 in Crazy Joes I buy 4 shares. As the stock market continues the price will either go up or down. If it goes up to $35.25 you just made $1. If it goes down to $34.75 you just lost $1.
Let me add this: Individual stock picking is extremely difficult. Experts in the field that try this still have no consistency in being sucessful. The key is DIVERSIFICATION. Whenever you hear me talk about investing the word DIVERSIFICATION is going to come up a lot. If you do want to go with individual stocks you better have your money spread accross MINIMUM 20 stocks, I recommend 50 and even then I am not too confident. It takes a lot of time, preperation, and research in order to have confidence in your investment.
Mutual Funds
These are my preferred type of investments. Because they come diversified, and I even like to diversify my diversified mutual funds.
What a mutual fund is: A fund manager picks a bunch of investments (could be a certain type of stock, could be real estate). Let's say Fidelity comes out with a new "aggressive growth stock" mutual fund and they pick Larry Ostertag to be their fund manager. It is now his job to pick a bunch a bunch of aggressive growth stocks and hope they do good. Now on the flipside the money he is investing for is "mutually funded" by lots of people like me and you.
Picture a bowl and you and 10 of your friends all put a certain amount of money in there. That is the pool of money Larry has to work with to make you and your friends money. So the difference b/w mutual funds and stocks is that instead of me trying to guess what stocks will do good. I have a trained, licensed, experience professional picking them for me.
I have heard it is a good idea to diversify your mutual funds something along these lines: 25% growth stock, 25% aggressive growth, 25% growth & income, 25% international. This is a very oversimplified version of diversifying but it is a foundation to build on.
I am going to the Braves game now so please click the contact me button on www.chriskakaras.com if you have any questions, I would love to help!
Tuesday, July 17, 2007
You've got to start NOW
I wanted to talk about starting NOW. Being that I am considered younger I have excused myself from having to plan for things really far in advanced. In fact, I will test this. Knowing that my audience probably is younger as well please help me and test your reaction to my next statement. Today I am going to talk about planning for your retirement. If you are anything like me you kind of turned down the volume just a little bit.
That is my point, I am all for 5 year plans, 10 years plans, and maybe even a 20 year plan. But planning for something 40 years away is ridiculous. Well, it really shouldn't be and I can convince you. Check this chart out.
The Adventures of Sigmund and Alberto
Who had the better plan, Sigmund starting NOW, or Alberto waiting til he was "established?" Sigmund had a plan and followed it. It was hard for his first few years, but he benefitied from it the next 40 years and while those first few years are hard, that is what maturity is. It might be "hard" to set aside money right now. But let me challenge our definition of "hard." We have every basic need met (food, clothing, shelter, and transportation). This is more than most of the world gets. So if we have all that stuff met, what is so hard. I am sure that if we really evaluated where our money goes, it should be EASY to set aside $1500 a year.
This is what being an adult is. Children do what feels good, adults devise a plan and follow it. What you do now does effect the future, you might as well make a plan.
The roth IRA is a great tool that can help. This is a tax free growth tool that the US government as given us. For the year 2007 the maximum we can put in our Roth IRA is $4,000; in 2008 it goes up to $5,000. Just in case you don't know what this means: Normally when you invest in a mutual fund for retirement when you take the money out you have to pay taxes on it because you made money. Same reason why we pay income taxes from our job. However, with the Roth IRA when you check out that chart of Sigmund and Alberto, they do not have to pay any taxes when they take the money out at age 65...it is cash money.
You can open your roth IRA through any brokerage firms or any online brokerage places like E-trade or Ameritrade. I recommend http://www.zecco.com/ because it is just like e-trade but there are no transaction fees. Check into it, but before you invest you want to do research on which mutual fund you choose. I will go more in detail but make sure you go with something that has a long track record of success. Don't go after anything that is new but has skyrocketing returns. More on investing tomorrow.
That is my point, I am all for 5 year plans, 10 years plans, and maybe even a 20 year plan. But planning for something 40 years away is ridiculous. Well, it really shouldn't be and I can convince you. Check this chart out.
The Adventures of Sigmund and Alberto
Who had the better plan, Sigmund starting NOW, or Alberto waiting til he was "established?" Sigmund had a plan and followed it. It was hard for his first few years, but he benefitied from it the next 40 years and while those first few years are hard, that is what maturity is. It might be "hard" to set aside money right now. But let me challenge our definition of "hard." We have every basic need met (food, clothing, shelter, and transportation). This is more than most of the world gets. So if we have all that stuff met, what is so hard. I am sure that if we really evaluated where our money goes, it should be EASY to set aside $1500 a year.
This is what being an adult is. Children do what feels good, adults devise a plan and follow it. What you do now does effect the future, you might as well make a plan.
The roth IRA is a great tool that can help. This is a tax free growth tool that the US government as given us. For the year 2007 the maximum we can put in our Roth IRA is $4,000; in 2008 it goes up to $5,000. Just in case you don't know what this means: Normally when you invest in a mutual fund for retirement when you take the money out you have to pay taxes on it because you made money. Same reason why we pay income taxes from our job. However, with the Roth IRA when you check out that chart of Sigmund and Alberto, they do not have to pay any taxes when they take the money out at age 65...it is cash money.
You can open your roth IRA through any brokerage firms or any online brokerage places like E-trade or Ameritrade. I recommend http://www.zecco.com/ because it is just like e-trade but there are no transaction fees. Check into it, but before you invest you want to do research on which mutual fund you choose. I will go more in detail but make sure you go with something that has a long track record of success. Don't go after anything that is new but has skyrocketing returns. More on investing tomorrow.
Monday, July 16, 2007
Out of Bounds (it aint just for sports)
Recently I have been in the planning process to moving into a new house where I would be going from 1 roommate (what I have now) to multiple roommates. I have learned in my experience of living with people that it is incredibly important to have boundaries in order to respect each other.
I want to go back to that verse Proverbs 22:7 "The rich rule over the poor, and the borrower is servant to the lender." that I talked about last week. In that NASB it reads "the borrower becomes the lender's slave." So we talked about how debt establishes a new relationship. It creates a master/slave relationship. This is bad normally however when it now involves friends and family it is even worst.
I have always heard if you want to lose a friend, loan them 100 dollars. You will not hear from them again. It's always funny when the expression changes to "how to lose an in-law, loan them 100 dollars." However, the sad thing is it is true.
Imagine when a son or daughter borrows money from their parents for a business venture. It changes the relationship from mother/son to master/slave. It has tore families apart, and I have even witnessed it happen many times in my life. Thanksgiving dinner tastes a little different when you are eating with your master instead of your mom.
It is incredibly important to have boundaries with your friends and family. One of my rules is that I do not loan money to friends and family. You may be thinking how awful that is and saying, "What if so and so needs something! You are just going to leave them hanging?" My answer to that is: No way will I leave them in a position of need and not give it to them. The difference is that I would GIVE it to them. It gets erased, you don't hold it over someones head. In fact, I would argue that you aren't even blessing them when you do this, it's a curse.
Let me say this before I finish. In my personal life, I asked my sister to loan me a large amount of money for me to be out of debt because I was paying outrageous interest charges to credit cards. She was nice enough to do this and I worked my butt off and paid her back quickly. There were no problems, I kept her up to date with progress and she was first in line who I would pay back.
What I am trying to say is, I was LUCKY. This is the exception, not the rule. I would not dare test the odds again because I am certain that it wouldn't take long to have something go wrong and the master/slave relationship takes its course.
I want to go back to that verse Proverbs 22:7 "The rich rule over the poor, and the borrower is servant to the lender." that I talked about last week. In that NASB it reads "the borrower becomes the lender's slave." So we talked about how debt establishes a new relationship. It creates a master/slave relationship. This is bad normally however when it now involves friends and family it is even worst.
I have always heard if you want to lose a friend, loan them 100 dollars. You will not hear from them again. It's always funny when the expression changes to "how to lose an in-law, loan them 100 dollars." However, the sad thing is it is true.
Imagine when a son or daughter borrows money from their parents for a business venture. It changes the relationship from mother/son to master/slave. It has tore families apart, and I have even witnessed it happen many times in my life. Thanksgiving dinner tastes a little different when you are eating with your master instead of your mom.
It is incredibly important to have boundaries with your friends and family. One of my rules is that I do not loan money to friends and family. You may be thinking how awful that is and saying, "What if so and so needs something! You are just going to leave them hanging?" My answer to that is: No way will I leave them in a position of need and not give it to them. The difference is that I would GIVE it to them. It gets erased, you don't hold it over someones head. In fact, I would argue that you aren't even blessing them when you do this, it's a curse.
Let me say this before I finish. In my personal life, I asked my sister to loan me a large amount of money for me to be out of debt because I was paying outrageous interest charges to credit cards. She was nice enough to do this and I worked my butt off and paid her back quickly. There were no problems, I kept her up to date with progress and she was first in line who I would pay back.
What I am trying to say is, I was LUCKY. This is the exception, not the rule. I would not dare test the odds again because I am certain that it wouldn't take long to have something go wrong and the master/slave relationship takes its course.
Friday, July 13, 2007
$100 For Opening a Savings Account
I got this post from Hustler $$$ blog
This is just like one of those online savings accounts, the only difference is you get $100 for siging up using offer code: CSLN.
The $100 gets deposited 90 days after your first statement as long as the account is in good standing.
This offer is only good for new customers. You can get $100 bonus by signing up to a Citibank Ultimate Savings account. The account includes:
4.65% APY
FDIC insured
No monthly fees
No minimum requirement
No Checking required
From the website:
This offer is not available at Citibank Financial Centers.
*Annual Percentage Yield (APY) is accurate as of 07/03/2007 and is subject to change without notice. The rate will apply only to accounts opened through citibank.com or by phone, and may change after the account is opened. Fees may reduce earnings.
** $100 Offer is only available for first-time Citibank deposit account customers, and will be paid only once to any individual. Persons who currently have or at any time have had a deposit account at Citibank (or any of its predecessor banks) are not eligible. To qualify for this offer you must apply for and open a new Ultimate Savings Account by 08/31/2007. $100 will be credited to your Ultimate Savings Account within 90 days from the end of the statement period in which your account was opened. Account must be in good standing at the time of the $100 credit. All accounts are subject to approval. Customer must be a citizen or resident alien of the United States (U.S.) with a valid U.S. taxpayer identification number. The amount of any bonus payment will be reported to the IRS as interest earned in the year credited. Persons under 18 years of age are not eligible. Offer may be modified or withdrawn at anytime without notice and is not transferable.
This is just like one of those online savings accounts, the only difference is you get $100 for siging up using offer code: CSLN.
The $100 gets deposited 90 days after your first statement as long as the account is in good standing.
This offer is only good for new customers. You can get $100 bonus by signing up to a Citibank Ultimate Savings account. The account includes:
4.65% APY
FDIC insured
No monthly fees
No minimum requirement
No Checking required
From the website:
This offer is not available at Citibank Financial Centers.
*Annual Percentage Yield (APY) is accurate as of 07/03/2007 and is subject to change without notice. The rate will apply only to accounts opened through citibank.com or by phone, and may change after the account is opened. Fees may reduce earnings.
** $100 Offer is only available for first-time Citibank deposit account customers, and will be paid only once to any individual. Persons who currently have or at any time have had a deposit account at Citibank (or any of its predecessor banks) are not eligible. To qualify for this offer you must apply for and open a new Ultimate Savings Account by 08/31/2007. $100 will be credited to your Ultimate Savings Account within 90 days from the end of the statement period in which your account was opened. Account must be in good standing at the time of the $100 credit. All accounts are subject to approval. Customer must be a citizen or resident alien of the United States (U.S.) with a valid U.S. taxpayer identification number. The amount of any bonus payment will be reported to the IRS as interest earned in the year credited. Persons under 18 years of age are not eligible. Offer may be modified or withdrawn at anytime without notice and is not transferable.
Obopay
I got this post and the post above from Hustler $$$ blog
Here’s the $15 bonus from Obopay.
What’s Obopay?
Obopay, Inc. (http://www.obopay.com/) is the pioneering service provider for payments via mobile phones. Only Obopay delivers instant and effortless payment solutions that allow consumers, merchants, banks and carriers to easily embrace the power and convenience of instant mobile payments. The company is bringing mobile payments to more consumers through many industry- first alliances, including Verizon Wireless, Citi, and America Online. Obopay is a 2007 Fierce 15 Wireless Company headquartered in the San Francisco Bay Area.
It’s legit for an easy $15. Here’s a Yahoo article on Obopay.
Here’s the $15 bonus from Obopay.
What’s Obopay?
Obopay, Inc. (http://www.obopay.com/) is the pioneering service provider for payments via mobile phones. Only Obopay delivers instant and effortless payment solutions that allow consumers, merchants, banks and carriers to easily embrace the power and convenience of instant mobile payments. The company is bringing mobile payments to more consumers through many industry- first alliances, including Verizon Wireless, Citi, and America Online. Obopay is a 2007 Fierce 15 Wireless Company headquartered in the San Francisco Bay Area.
It’s legit for an easy $15. Here’s a Yahoo article on Obopay.
Thursday, July 12, 2007
It takes time...
If you work for (yourname) incorporated and you are handling all the money for that company the way you handle the money in your life, would you fire yourself?
It is not effortless to know where your money is going. Farmers are good managers. They have to be or they will lose a lot of what they work so hard to gain. I really like what Proverbs says:
Proverbs 27:23 "Be sure you know the condition of your flocks, give careful attention to your herds"
You have to do this or you your animals will run away without you even knowing. At some point farmers would even need to hire hands to help them with this. IT IS THAT IMPORTANT.
According to the Wall Street Journal nearly 70% of all consumers LIVE from paycheck to paycheck. This means that they would not be able to make a mortgage, utility, or credit card payment if they missed a paycheck.
According to the American Bankruptcy Institute filings for bankruptcy is at an all time high with a new record being set virtually every year. I think these statistics are connected to the life that we now have that is very contrary to the life on the farm.
It is simple, if you don't have an accurate picture of where your money goes, you are bound to make a decision that will hurt. Trust me, I have made too many bad decisions that I definitely paid for.
Please don't just look at the balance in your bank account. I know A LOT of friends who have made decisions because of their balance and then a few days later they realized their rent check that they wrote a week ago just cleared and now they are in a STRESSFUL situation. Please please at the very least you need to get some sort of program or service that you can type in your transactions and track where your money goes.
You can check out www.clearcheckbook.com it is free and online which is a great feature. I personally use Microsoft Money and I love it.
If any of you are competitive or enjoy games like me, handling money is a game. Think about it, you plan out your money (let's say you have $3,000 coming in a month. Plan where all that goes before the month. $1,000 savings, $1,000 to giving, $1,000 spending. As an example). Then you just track it...see how you did. You will keep getting better and better.
The best part of the game is, that if you just do it, YOU WIN! You will be in the minority of people in America handling your money correctly.
Did you know that the average Japanese family saves 18.8% of their income? According to the Department of Commerce after 2000 the personal savings rate in America fell to -2.2% (the lowest in 60 years).
It is not effortless to know where your money is going. Farmers are good managers. They have to be or they will lose a lot of what they work so hard to gain. I really like what Proverbs says:
Proverbs 27:23 "Be sure you know the condition of your flocks, give careful attention to your herds"
You have to do this or you your animals will run away without you even knowing. At some point farmers would even need to hire hands to help them with this. IT IS THAT IMPORTANT.
According to the Wall Street Journal nearly 70% of all consumers LIVE from paycheck to paycheck. This means that they would not be able to make a mortgage, utility, or credit card payment if they missed a paycheck.
According to the American Bankruptcy Institute filings for bankruptcy is at an all time high with a new record being set virtually every year. I think these statistics are connected to the life that we now have that is very contrary to the life on the farm.
It is simple, if you don't have an accurate picture of where your money goes, you are bound to make a decision that will hurt. Trust me, I have made too many bad decisions that I definitely paid for.
Please don't just look at the balance in your bank account. I know A LOT of friends who have made decisions because of their balance and then a few days later they realized their rent check that they wrote a week ago just cleared and now they are in a STRESSFUL situation. Please please at the very least you need to get some sort of program or service that you can type in your transactions and track where your money goes.
You can check out www.clearcheckbook.com it is free and online which is a great feature. I personally use Microsoft Money and I love it.
If any of you are competitive or enjoy games like me, handling money is a game. Think about it, you plan out your money (let's say you have $3,000 coming in a month. Plan where all that goes before the month. $1,000 savings, $1,000 to giving, $1,000 spending. As an example). Then you just track it...see how you did. You will keep getting better and better.
The best part of the game is, that if you just do it, YOU WIN! You will be in the minority of people in America handling your money correctly.
Did you know that the average Japanese family saves 18.8% of their income? According to the Department of Commerce after 2000 the personal savings rate in America fell to -2.2% (the lowest in 60 years).
Wednesday, July 11, 2007
Proverbs 12
This is extremely fresh bread so I am excited to share it. It is more like old bread that now has become fresh again. But that doesn't really happen. It's more like in the past I LOVED Wendy's Spicy Chicken Sandwiches, but over the past year or two I kind of forgot that I liked them. Recently I had one and now I can't stop trying to figure out ways to go to Wendy's to have another. Okay that's what this is like.
Proverbs 12:1 - "Whoever loves discipline loves knowledge, but he who hates correction is stupid."
I really love it when a passage of scripture sounds like my friend Adam wrote it. Adam is full of wisdom and full of bluntness, like this passage. To think that every time I am corrected I immediately get defensive and try to avoid it. This is a necessary step for knowledge.
Proverbs 12:11 - "He who works his land will have abundant food, but he who chases fantasies lacks judgment."
Work is supposed to be hard. I know a lot of people (including myself) think we deserve to have any job of our choosing, but that is not the way it works. We are supposed to work from the sweat of our brow, that is the broken world that we live in. I am not saying don't go after the career you want, but I am saying don't chase fantasies. If you have to work a job to pay bills while doing something you are passionate about on the side, do it. But scripture is clear that if you chase fantasies without working the land you are lacking judgment.
Proverbs 12:24 - "Diligent hands will rule, but laziness ends in slave labor."
I love it when scripture cross references with other scripture. At first glance this passage kind of doesn't make any sense. Why would laziness end in slave labor? Glad I asked. This passage works well in light of Proverbs 22:7 "The rich rule over the poor, and the borrower is servant to the lender." Another translation says "the borrower is slave to the lender." When you establish a lender/borrower relationship you are actually establishing a slave/master relationship. The sad thing is I know too many people whose master is Visa or American Express. I don't think that the people who named "MasterCard" were too far off.
So if debt leads to slavery and laziness leads to slavery then we can conclude that laziness and debt are connected. If you find yourself in a mound of credit card debt (like I was), you have to evaluate if laziness was a contributing factor why you got into debt, or why you are not out.
Proverbs 12:1 - "Whoever loves discipline loves knowledge, but he who hates correction is stupid."
I really love it when a passage of scripture sounds like my friend Adam wrote it. Adam is full of wisdom and full of bluntness, like this passage. To think that every time I am corrected I immediately get defensive and try to avoid it. This is a necessary step for knowledge.
Proverbs 12:11 - "He who works his land will have abundant food, but he who chases fantasies lacks judgment."
Work is supposed to be hard. I know a lot of people (including myself) think we deserve to have any job of our choosing, but that is not the way it works. We are supposed to work from the sweat of our brow, that is the broken world that we live in. I am not saying don't go after the career you want, but I am saying don't chase fantasies. If you have to work a job to pay bills while doing something you are passionate about on the side, do it. But scripture is clear that if you chase fantasies without working the land you are lacking judgment.
Proverbs 12:24 - "Diligent hands will rule, but laziness ends in slave labor."
I love it when scripture cross references with other scripture. At first glance this passage kind of doesn't make any sense. Why would laziness end in slave labor? Glad I asked. This passage works well in light of Proverbs 22:7 "The rich rule over the poor, and the borrower is servant to the lender." Another translation says "the borrower is slave to the lender." When you establish a lender/borrower relationship you are actually establishing a slave/master relationship. The sad thing is I know too many people whose master is Visa or American Express. I don't think that the people who named "MasterCard" were too far off.
So if debt leads to slavery and laziness leads to slavery then we can conclude that laziness and debt are connected. If you find yourself in a mound of credit card debt (like I was), you have to evaluate if laziness was a contributing factor why you got into debt, or why you are not out.
Tuesday, July 10, 2007
PlayStation 3 Deal
From time to time I am going to see a deal or two and want to post it. It will usually be regarding things that I like or am interested in. For instance, I like video games (NCAA Football is my favorite game). So I see a good deal and I want to tell everyone about it. I am not saying buy it, I am saying if you have been planning on buying it, you probaby would want a good deal.
PlayStation 3 just dropped their price by $100 at Amazon.com. Add one to your cart along with a free remote, and a free Blu-ray copy of Memento. After receiving your new PS3, fill out a mail-in rebate to receive an additional 5 free Blue-ray movies. Rebate expires 09/30/2007
PlayStation 3 just dropped their price by $100 at Amazon.com. Add one to your cart along with a free remote, and a free Blu-ray copy of Memento. After receiving your new PS3, fill out a mail-in rebate to receive an additional 5 free Blue-ray movies. Rebate expires 09/30/2007
Alternative Income Streams
I have been very interested in something that seems to be growing in the personal finance blogging world; it is called Alternative Income Streams. The idea is very simple, it is the idea of tracking side income that does not come from your job. Basically it is getting money outside of your job.
Now that I am tracking this I have naturally been looking for avenues to make this increase. I have already had an ingdirect.com account that has been earning me 4.5% interest. To put numbers to that if you have $4,000 in that account it will get you and extra $180 a year or I like to view it as $15 a month. With the idea of compound interest (my topic for tomorrow) that number will increase but just to put a round number it is $15 a month.
This is nice considering if you are saving up for something you are not using that money anyway, you might as well get paid a little bit each month while saving. I have recently opened up a Bank of America money market account that gives me 5.05% which given the $4,000 example would be about $17 a month.
However, recently I have been getting into prosper.com. This is a middle man for borrowers and lenders to meet. Banks are very profitable. They are charging people 10-12% (excellent credit ratings) for unsecured loans while we are giving banks loans and only getting 4-5% (if that). I am essentially a "bank" through prosper.com where I have access to their credit report history and prosper takes care of collecting and distributing the money to lenders. Also they have collection agencies that go after delinquent payments and this will hurt the borrowers credit the same as if they were in default for a bank.
This not a plug, I am not trying to sell you on anything but (whenever you say "but" it erases everything before it) if you want to get $25 for signing up and making a loan click this link to do the referral thing. You can do the same thing through ING Direct (you get $25) but you have to do it through e-mail, just contact me if you want a referral. Okay, enough with the shameless plugs.
To sum alternative income streams up, it is my goal that my AIS is greater than my expenses outside of my house payment. If you read a lot from me you will realize that I really want to pay off my house quickly because I like the idea of freedom in our finances. Owing someone money just sounds dumb to me. If I owe money than I do not have complete freedom because I HAVE to get a paycheck or my house gets foreclosed on. Don't get me wrong I am a strong advocate of working (and working hard) but I want to CHOOSE to work not HAVE to work.
So a mini plan (or goal) of mine is to pay off my house early and have my AIS be greater than my expenses (gas, food, utilties, clothing). Those are the 4 basic needs that I have after I don't have a house payment and I will make sure I never have a car payment. If this happens that is my idea of freedom. Imagine getting to work and devote your full time to something you really believe in and then say, "Nah don't worry about that paycheck, I'm good."
Now that I am tracking this I have naturally been looking for avenues to make this increase. I have already had an ingdirect.com account that has been earning me 4.5% interest. To put numbers to that if you have $4,000 in that account it will get you and extra $180 a year or I like to view it as $15 a month. With the idea of compound interest (my topic for tomorrow) that number will increase but just to put a round number it is $15 a month.
This is nice considering if you are saving up for something you are not using that money anyway, you might as well get paid a little bit each month while saving. I have recently opened up a Bank of America money market account that gives me 5.05% which given the $4,000 example would be about $17 a month.
However, recently I have been getting into prosper.com. This is a middle man for borrowers and lenders to meet. Banks are very profitable. They are charging people 10-12% (excellent credit ratings) for unsecured loans while we are giving banks loans and only getting 4-5% (if that). I am essentially a "bank" through prosper.com where I have access to their credit report history and prosper takes care of collecting and distributing the money to lenders. Also they have collection agencies that go after delinquent payments and this will hurt the borrowers credit the same as if they were in default for a bank.
This not a plug, I am not trying to sell you on anything but (whenever you say "but" it erases everything before it) if you want to get $25 for signing up and making a loan click this link to do the referral thing. You can do the same thing through ING Direct (you get $25) but you have to do it through e-mail, just contact me if you want a referral. Okay, enough with the shameless plugs.
To sum alternative income streams up, it is my goal that my AIS is greater than my expenses outside of my house payment. If you read a lot from me you will realize that I really want to pay off my house quickly because I like the idea of freedom in our finances. Owing someone money just sounds dumb to me. If I owe money than I do not have complete freedom because I HAVE to get a paycheck or my house gets foreclosed on. Don't get me wrong I am a strong advocate of working (and working hard) but I want to CHOOSE to work not HAVE to work.
So a mini plan (or goal) of mine is to pay off my house early and have my AIS be greater than my expenses (gas, food, utilties, clothing). Those are the 4 basic needs that I have after I don't have a house payment and I will make sure I never have a car payment. If this happens that is my idea of freedom. Imagine getting to work and devote your full time to something you really believe in and then say, "Nah don't worry about that paycheck, I'm good."
Monday, July 9, 2007
Storing Treasures
Storing Treasures is meant to be a tool. I have thought through as much as I can on the topics that I post about and hope that this is used by those looking for help or guidance. I am going to flat out say my position on specific topics regarding money and I do not plan on debating. For example: My position on debt (I mean leverage for those who want to stick a fancy word on it) is I am against it. It is not up for discussion, I am not beating you over the head with it I am going to say what I believe and then show my work behind it.
The idea of spending money that you don't have seems dumb to me. If I can't afford something, I don't get it. If your response is, "But you need a car, you need to send your kids to college"
You are right! That is why you should be planning for that stuff in advance! It is important, too important to put your finances at risk when you know it is coming. Bankrupcties are at a rapid rate in America; Divorces are at 50% and the #1 cause is because of financial tension.
I love the idea of not owing anybody money, it allows me to actually buy things remorse free, it allows me to freely give without wishing that I hadn't when something comes up, and it allows me to put God first in my finances. More on this soon.
The idea of spending money that you don't have seems dumb to me. If I can't afford something, I don't get it. If your response is, "But you need a car, you need to send your kids to college"
You are right! That is why you should be planning for that stuff in advance! It is important, too important to put your finances at risk when you know it is coming. Bankrupcties are at a rapid rate in America; Divorces are at 50% and the #1 cause is because of financial tension.
I love the idea of not owing anybody money, it allows me to actually buy things remorse free, it allows me to freely give without wishing that I hadn't when something comes up, and it allows me to put God first in my finances. More on this soon.
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