EL

Quit Pretending

Quit Pretending is a phrase financial guru Dave Ramsey says all the time and I get a kick out of it. I like the hard in your face advice he gives his readers and listeners. (Radio show / Books) What is the premise behind this Quit pretending thinking? It basically means: Stop Living a False life people. Driving a brand new SUV or the many other vehicles while buried under debt is not a good life. Stop trading in those vehicles every three years and continually adding to your debt and financial mess by not holding a car for more than 4, 5, 6+ years. Research shows that as soon as people pay off a car the wanting kicks in and those same people begin to find another new car to replace the old car that was recently paid off. Just doesn’t make any sense.

I crack up when people tell me Hey why are you driving an old car? (1999 Camry) I tell them because that is what I want right now in my life and I do not need anything else to get me from point A to point B. I hate having car payments and debt. I rather save and save instead of making the banks and the car dealers richer. But what will happen if your car breaks down? I’ll go and buy another old car, maybe a 2006 vehicle with better fuel economy than my Camry or maybe another Camry. Ha Ha. I do not want to seem like I am preaching to a bunch of frivolous living people, because that’s how I sound to those people, but if I don’t say something then nobody else will. I am only expressing what I see and hear out there in the streets and social media. Granted nobody is perfect in this life but with small steps you can be closer to it than many others.

Behavior modification takes a lot of work and it all starts by just being content to say “No”.

-Say NO to Yourself and avoid lifestyle inflation.
-Say NO to your Co-Workers who go to happy hour every Thursday and Friday
-Say NO to your Family who doesn’t see the big picture of money management.
-Say NO to the Credit Card Companies hounding you to open a new credit card.
-Say NO to the Dealership sending you junk mail that you are approved for a brand new Car.
-Say NO to your Friends who buy enough Liquor to fill their bathtub up with Booze.
-Say NO to Anybody who is keeping up with the Joneses or the Smith’s.

I hope you can see the big picture of how the Quit pretending lifestyle is really like. That new Mercedes or BMW you recently spotted someone in, statistically 75% of the time that car is a lease. Now we all know the real truth. A lease is one of the worst money mistakes you can make in personal finance. (Unless it is used for a business expense and Tax write off) Because research shows that the people that can really afford those types of cars usually go out and buy a used 3-4 year old version and avoid the depreciation factor of the new car.

We all can enjoy life by doing things the right way financially. Money management takes a lot of effort and dedication to staying on the right path. Doing things in moderation is better than doing everything under the sun and regretting how much you spent along the path. To sum it all up if you are always intrigued with doing everything and being everywhere, then you are not fulfilled / happy in this life.

Let me know by commenting on how you avoid lifestyle inflation and the Quit Pretending lifestyle.

Rich Uncle EL

9/11: In Honor

Just wanted to give thanks to all those that gave their lives to help others and show bravery above and beyond. Honor is given on this day to all of you and your courage is inconceivable to the average person.

Thank you,

RichUncle EL

Attend College for a Profession minus the Debt

Do you how many people are college graduates that are working in an industry unrelated to what they studied in school? I hear stories all the time, how a student who majored in sociology is currently working in a mail room or sitting as a customer service representative somewhere in corporate America. Have not heard an example like this? Well maybe you have heard of IT majors being hired by financial companies to do budgets and bookkeeping. This is the trend we are facing now educational majors that are being offered with no possibility of having a demand for graduates. If a specific industry faces less than 10% growth in demand why offer the major in the university? (Just my own reasoning behind solving a piece of the unemployment porblem facing the U.S.)

I hope you do not misinterpret my thinking behind the title above, but what I am trying to convey to all those students who are unsure of what to do once they graduate keep reading. Point blank if you are unsure you can land a career then do not go to college until you know exactly what you see yourself doing in the future or can get some real world experience while attending school. Why burden yourself with debt and regrets by taking the traditional route for a school system that is practically broken.

This is why I am all for high school graduates taking some time off after high school to explore what they may want to do in life later by doing research, mentoring, or apprenticeship opportunities.

Tuition now a day’s is ridiculous and continues to worsen everyday by charging students 700 dollars a credit. This is just immoral and scary at the same time. Tuition has increased at least 30% as compared to inflation in the last decade. But guess what no one is complaining or at least nobody with enough clout to change the ridiculous mindset of university administrators. Obviously their argument will be how do we pay our staff and keep the universities open if we do not increase tuition? I think it can be done a different way instead of feeding off the students who are unaware of the problems they will incur by taking on 100K in student loans.

I recently read an article in Reuters, that stated the reasoning behind the rise in tuition is based on government cutting subsidiary funding to those colleges. My thinking behind this is if the government can cut school funds then the college should make similar cuts to its budget and not exploit the students with a heavier burden. If I understand the article correctly with my own two cents thinking behind it, the government is saving money with cuts to funding and making money by charging students astronomical interest rates on very large student loan balances. The average student loan debt in 2012 is 30 grand per graduating student.

See Article: Student Loan Debt

In conclusion think long and think wisely about what you would like to do when you graduate from school because the road to repay errors made by switching majors or wasting time by being undecided can be very significant. Times are changing and we have to evolve with the times to take advantage of the collegiate system we are dealt, by being conscience of the monetary issues in our educational lives.

That is why I say; only go to college if you know exactly what you want to do and when you are ready for the long road to graduate with a profession and not just a job.

RichUncle EL

Asset Allocation

Why is asset allocation important? Basically you are dedicated to a specific breakdown of financial sectors that you may or may not have knowledge what the breakdown should be. The possibilities are endless when it comes to the asset breakdown for your retirement accounts. Finding the right asset allocation is crucial to how your investing performs.

But it all comes down:

What you want to invest in
How much Risk you wish to take
Why your age may favor a specific breakdown
How comfortable you are with making adjustments

For years many investment gurus preached that the younger you are the higher your percentage of funds should be in U.S. Stock sector but now I think that is not the right way to invest. The volatility now a days is getting way to out of control for even the professionals to grasp.

What can you do to put yourself in the best possible path for your funds? Understand the importance of doing asset allocations based on you’re percentages and fund prices. (If you are into spreadsheets and tracking prices you will benefit from the ups and downs of the market)

When I say for you to make these allocations, I am referring to your 401K or similar plan which may include IRA plans as well. The reason I say this is because these types for accounts usually do not charge you fees for making moves / shifts between funds. Now let’s discuss the % breakdowns by age range.

Asset Allocation by Age:

20-30s: 70% U.S. Total Stock Fund, 15% International Fund, 15% Bond Fund
40-50s: 50% U.S. Total Stock Fund, 30% Bond Fund, 20% International Fund
60-70s: 40%U.S. Total Stock Fund, 40% Bond Fund, 20% International Fund

Clearly as you get older you want to start to move the risk away in retirement accounts by reducing your % in the U.S. equity markets and moving it to bonds, income producing assets, and cash. This will assure you will be better protected if there is a dramatic market collapse like in 2008. These diversification tactics coupled with the lower costing index funds like Vanguard funds you will have a greater chance of hitting your retirement magic number sooner than later.

Then you can be preoccupied with what to wear to the beach because you have just reached the financially free stage of your life. Now the fun begins.

Asset allocation definition as per Investopedia

Rich Uncle EL

50 Years Paying Dividends

Hey guys I know how hard it is for some of you out there to trust the stock market or the fact that you hear of random stock tips by non-credible sources. Let me tell you that the stock market does have risk, and nothing is guaranteed. In addition to this there is risk with letting your money lose value sitting in a measly bank account or under the mattress, due to inflation.

What can you do to protect your hard-earned money aka Mula?

-Have a great offense to accompany your defense. Look for companies with a history of 50 years paying dividends.

Did you know that many companies have been in business for over 50 years and been paying and increasing dividends for the exact same time frame. Yes you heard it here first and I know with information comes power. Companies are in the business to make money, which includes making money for the owners of the business aka Share owners. Your next question would and should be; What are the mysterious companies you are talking about and how can I invest in them? See below for the list of Dividend Champions:

50+ Years Paying Dividends:

-3M Company
-American States Water
-Cincinnati Financial
-Coca-Cola Company
-Diebold Inc.
-Dover Corp.
-Emerson Electric
-Genuine Parts Co.
-Johnson & Johnson
-Lowe’s Companies
-Northwest Natural Gas
-Parker-Hannifin Corp.
-Proctor & Gamble
-Vectren Corp.

Now after you just learned that these companies offer 50 years paying and increasing dividends for shareholders wouldn’t it make you a little bit more at ease investing in one of these companies? If you maintain a long-term position in these companies and reinvest all the dividends into new shares of stock I believe you can beat inflation hands down. In addition to having a good track record most of these companies have had stock splits throughout the years and that means more shares in your pocket. (aka More Profit)

Granted history does not repeat itself and past results may not indicate future results, but wouldn’t you rather be in the game than thinking, I could have made so much money if I had invested. Just a brief example for you, if you had invested 1,000 dollars in Coca-Cola in 1962 those shares would be worth about 165K dollars today. Obviously it would be a lot more with all the stock splits and if you invested more dollars through out the years. (Calculator did not take into account the stock splits)

Any of these stocks above are available through the myriad of online discount brokers and directly by contacting each company’s shareholder services for the dividend paying companies. Research the fees associated for each and make a decision as to what is best for you.

Now tell me would you be more confident investing in a company that has never stopped a dividend payment for 50+ years?

I would be and you can too if you sign up with: Trade king. See the banner link at the bottom of this post.

RichUncle EL

*I get a referal fee if you use my link and sign up for an account with tradeking. Thanks.

Friday Quotes XII

Friday’s Best Quotes:
-If saving money is wrong, I don’t want to be right! – William Shatner
-Money comes and money goes, the secret is to keep, more money coming in than going out-Rich Uncle EL
-I grind because the work will build something I can be proud of one day.-Rich Uncle EL
-Opportunity is missed by most people because it is dressed in overalls and looks like work.-Thomas Edison
-Turn your passion to success and opportunities into gifts for yourself and your legacy-Rich Uncle EL
-The only place success comes before work is in the dictionary.-Vince Lombardi
-By working faithfully eight hours a day you may eventually get to be boss and work twelve hours a day.-Robert Frost
If these quotes can offer you something that might change how you view your life then I have succeeded. Thomas Edison used a great metaphor by using overalls in his quote to describe how we can overlook things right in front of our noses.

Opportunity will knock for many of you, so be ready to let it in your life. The Shatner is once again featured and hits a home run with that quote mentioned above. Who would have know he is a personal finance blogger in disguise, even though he makes millions off his star trek show or price line commercials. LOL. Any way you slice it he is passionate about money and personal finance.
Vince Lombardi had many gems in his day and this one is a new quote I have never heard from the man. It teaches anybody who reads it to view work ethic in a new light. Robert Frost was a great poet and this quote goes on to explain when you finally start working for yourself, the dedication and time spent increases. Mainly because you do not want to fail working your most passionate pass time.
I am giving you extra quotes this week because I am still on vacation and thus will not be featuring any carnival posts this week
What a list this week. Which one is your favorite and which one will you implement in you’re life?
Watch your money!
Rich Uncle EL

Why I like Vanguard Funds

I will give you the reasons why I like Vanguard as my primary online investing option for Index funds only. A lot of people preach that simplicity is better and leads to a more fulfilled life. But when it comes to investing things can get a little skewed and complicated. Vanguard is my number one option for Roth IRA and Traditional IRA account options including transferring any old 401K employer accounts.

For stock investing I do this at another online broker because I for one like having a little separation of wealth to avoid risk and also my online broker is cheaper when it comes to doing stock trades. Plus some of the big name investing options charge more than the discount brokers per trade usually, unless you have massive wealth and then the discounts are available due to the size of your nest egg. Having a big amount of money has it’s perks.

Back to the matter at hand, Vanguard index funds. I find their customer service to be exceptional. Every time I have contacted them over the phone, I get a person who is both knowledgeable and very customer service driven. They always answer my questions and I am not steered into doing something I am not 100% knowledgeable on the subject matter and comfortable doing. Give them a chance and you will see how easy it is to maneuver around online and set up an account with them.

They have all types of accounts available like, mutual funds, IRA’s, 529 plans, stocks / bonds, and ETF’s. In addition to being a full service broker you can invest as little as $50 a month automatically from you’re bank account to your IRA (only) investing account for no additional fees. This is called a bank ACH debit and can be very convenient for your online money system.

I promote Vanguard because I like how the company is run and how inexpensive most of their funds are to own. I am not being compensated for promoting them and you can find them at their website Vanguard.com. I am just passionate about sharing what is and has worked for me and the great reputation of a good financial company. If you have any questions you can call them directly, go on their home site, or send me an email at Moneywatch101@gmail.

Here is a link to a another fellow blogger who loves Vanguard as well: MrMoneymustache

RichUncle EL

Photo credit to Businessweek and Vanguard.

Money and Music

I have come to enjoy these posts as I decipher what some of the artists in today’s music world are saying about money and how they can influence younger generations to either spend or save their hard earned money. The artist of the week is Calvin Harris featuring Neyo: Let’s Go is the name of the song. I must admit the song is good and has a great vibe to it.

I wanted to feature this song because it is mostly positive and can insight a great motivational message to our generation and younger generations as well. Maybe you are struggling to get by or have a mountain of debt. Any obstacle can be dealt with by merely having the right attitude and focusing on what needs attention. For example if you are struggling to get by then pick up a part time job or get a side gig on the weekends.

On the other hand if you have a huge debt problem then read books on how to eliminate it and implement a great system called the debt snowball. Remember financial decisions are based on 20% math and 80% behavior. Change your behavior and you will have the right motivation and will most likely succeed in personal finance.

What do they say in the song:

Make no excuses now. I’m talking here and now.
Let’s Go
Your time is running out.
It’s not about what you’ve done it’s about what you’re doing?
It’s all about where you’re going now matter where you’ve been.
Let’s Go
It’s now or never. Oh Oh Oh
Tomorrow is good, tonight is better.
Let’s Make it happen.
Let’s Make it happen.
Let’s Make it happen.

These words can be used for anything in life that lacks motivation including financial, weight loss or any other life goals you are attempting to achieve. This song just makes the energy level and positive juices start flowing through your body. I played this song during my last workout. Financial influence is everywhere and sometimes it is delivered in a negative context, but this time it is all positive!

Enjoy the video, YouTube is awesome for letting anybody use and share videos.

Better yourself and strive for a new mentality of preserving what you have and growing it every day.

RichUncle EL

Calvin Harris Ft Neyo- Let’s Go Video:

Pic and video by Calvin Harris