Personal Finance Archives - Page 14 of 21

Money Advice for every Age Range

Do you have an idea of what is the best money advice for every age range? I was given a cool article sponsored by fidelity and written by Forbes magazine about what money strategies you need to make in every decade of your life. Beginning in the 20’s all the way up until your 60’s. The premise of the article is how to retire rich by having a long term game plan. Everything in the write up is what many bloggers including MoneyWatch101, have been saying for a while now, become an expert with personal finance to achieve a better than average retirement. It is of no use to constantly repeat the same content to all of you, so now I will give you a different twist and tell you what you need to do in every decade of your life. Granted you do not have to hold off on things because they are mentioned in say the 40’s age range and you are in the 20’s, this is a mere guideline and you can complete them as fast as you desire too.

First before anything you have to find the passion your soul needs to feel fulfilled, and somehow make money off the said passionate work. It will possibly shorten the time frame to reach financial independence and can save you a costly work transition later. Obviously you cannot control when you get the calling to do what you suddenly love to do as a career path, but it doesn’t hurt you to begin to think about it now as to not waste time later. See Below for the money advice:

The 20’s:

The Article Advises / My Input:

-Pay off Student Loans / Pay off all debts or avoid all Debt is best solution

-Sign up for 401K retirement plans / Take advantage early and contribute 20% (You won’t miss it if done from the beginning)

-Fund a Roth IRA / Establish a Surplus -place 50% in Roth ETF’s / 50% in Stocks

The 30’s / 40’s:

-Buy a home / Only if you have 20%+ down payment $$, and expenses are less than 30% total income

-Sign a Will / Do this only when you have kids, and finally have reached 100K in assets

-Purchase 20 years Term Life Insurance / Purchase only 10X your income, instead get 30 year term level

The 50’s:

-Plan Ahead, Find something you can transition too that’s less busy / Agree

-Review asset allocation, do not fall victim to generic advice / Reduce risk but still stay in the game as funds are needed well into the 90’s

-Form a Charitable Foundation / If house is in order, begin steps to give back

The 60’s:

-Update the Estate plan, with careful attention to taxes / Agree

-Play with Social Security, if you are still working consider a file and suspend ploy it will pay off later with bigger SS checks / If Non-SS income is consistent I agree

-Sign the Bill Gates giving pledge to give away more than 50% of wealth to charity / After family is taken care off, I agree

As you can see I only added on the money advice the article mentioned. There’s a ton of money advice for every age range that can be given in multiple posts so be on the look out for the second part of this series coming soon. I hope you can get some value out of the advice given above, have a good money day and life.

Comment if you agree with these steps and if you have any other useful money advice for every age range?

Rich Uncle EL

photo credit: Cayusa via photopin cc

States with the Highest Income

The Highest Paid States

I recently read an article based on a study done regarding which states have the highest income mobility. For many people being affluent means having an income over a certain amount and living in a community focused area. What is the amount in income that the study is referring too? The study focuses on typical 30-year-old, earning income slightly greater than their parents did (30 years ago)and upwards to the top fifth percentile for income in the U.S. The study then states that the reasoning behind it is where you live as the primary factor.

The second factor is how involved one is with the community, aka get along with your neighbors as connections are important. If after reading the study based on income mobility, will the information sway people to move in order for their children to hopefully have a better chance to be in a higher income bracket when they are in the work force? It might definitely get me to think twice about where I buy a home in the future. The third factor in the study, towns with great school districts, this factor is very important because many people use this as the primary factor before moving and I totally agree with this because it is the highest criteria I am placing on my home location preference list.

Continue reading States with the Highest Income

The Top 10 Car Rules

The Basics of Financial Management: The Top 10 Car Rules

One of the biggest money drains on a family’s budget; car costs. The old loyal car is the machine that makes your life that much simpler. It can take you from point A to point B in a flash, but at what costs will you pay for that convenience. If you do not know how to handle this money pit based on smart money management then you have arrived at the right time and right place. This advice is going to leave you wondering if having a car is worth it because it takes such a big chunk out of the budget. For a quick example add up the money you spend in a month to maintain the nice old dune boogie and write it down. All of the categories below should not add up to more than 15-20% of total monthly income. If when you add it you are at 30% when compared to income some changes must take place because it is not financially smart.

I have heard a few horrid stories of 20 something year olds who drive a car with a 500 dollar loan payment, 250 insurance, 200 in gas, 150 in cleaning costs, etc. That is $1100 hundred bucks going to waste month after month to drive in style. This young person should be earning $7 grand a month in order to effectively afford those high car expenses I just mentioned. (7,000 x 15% is 1050)

Just imagine if you invested that $1100 a month for a year, it adds up to $13 thousand a year. That is a sizeable emergency fund or initial investment amount that can grow year after year. Let’s assume that person drives 1250 miles per month or 15K annual miles. The cost per mile is .88 cents per mile. (This is not even including additional service fees / depreciation) If you add up the total costs it will be closer to 1.10 cents per mile driven. (I don’t know about you, but I don’t have an extra 15-20 thousand lying around to throw away on a piece of machinery)

Car Expenses Categories:

Car Note (Loan)

Car Insurance

Gas

Maintenance

Accessories

Cleaning

The Top 10 Car Rules:

Do not purchase a car that is more than 20% your annual income

Do not get a gas guzzler unless you can easily afford the gas bill

Do not let all the expenses for the car including maintenance exceed 15% monthly income.

Do not get a car to impress others (Getting a SUV that is 100% X annual income-not smart)

Do not get a New Car unless you are willing to lose 5 grand + in depreciation

Do not get a navigation package (cell phones can give you the same service for free)

Do not get car dealer financing or a Lease (Pay for it all in cash is best)

Get a used car if you are still building Wealth (Under the Radar Millionaires always buy used)

Never go to Car Dealer’s for service (Find a reliable/trusted Mechanic)

If you have a car loan, pay extra every month to eliminate the debt

Ok if you follow the car rules above and never break them, I believe you will be better off than 90% of the drivers on the road. Why you ask, because people are not making the right choices when it comes to a depreciating thing like a car. They overextend themselves and completely erode their monthly cash flow by breaking all the rules above. For example why pay 2500 extra to get a navigation system when you can easily set up the smart phone or standalone gps to get you where you need to go for free.

That kid that just graduated college wants to show off and get a BMW or Mercedes that equals 100% of his income. At that rate it will take him 7-8 years to pay it off plus a ton of interest. The time will come when you can truly afford a luxury car, and that time will happen when you do two things. Increase income and or save the complete amount in a car fund to not take out any car loans. The rules are made to protect you and help you grow your knowledge regarding financial management. If you follow these car rules you will have the ability to grow your money and not hurt your chances at retiring early. By taking all the extra money you are now saving due to smart choices you can invest it and watch it grow.

Comment if you have any suggestions to add to the top 10 car rules?

PS: Car Leasing is the worse car rule you can ever break!

Rich Uncle EL

Is Money killing you?

Hey friends I will introduce to you a new post based on how we treat the money we have and use. The title can be a bit deceiving as money can’t actually kill you, but how you use it can put you six feet under. I apologize for being so morbid, but I feel this has to be said, I will warn you this post is judgmental towards those who fall for any of the misuses of money below that can be slowly taking your life. See below for the 5 reasons money is killing you:

Reason 1 – Smoking

Every day as I drive to work for about 30-40 minutes I see people looking happy-go-lucky giving $$ to the big tobacco companies to smoke in their cars. I think wow do those people like to throw money away by lighting up the cigs, in addition to this they eventually are killing their lungs. This is the first on the, is money killing you list because it is a double whammy. Abusing money to feed an addiction that is killing you is not the ideal way to help anybody prosper with money. In the short-term you are losing available funds to help you retire and in the long-term you are guaranteeing a ton of future hospital fees for a slew of smoking related medical reasons. (Average smoking habit costs $200 dollars a month)

Reason 2 – Liquor

This is a tricky one because drinking on occasion is ok and actually a fun thing to do. But what I am trying to bring to light for all of you is those people who cannot control themselves. Let’s be honest here if you have a friend that drinks 6 beers a weekday and 20 cans on the weekends, then that is abuse in my book. Then you have the people who pay nightclubs 4 times the amount of a bottle to have the luxury to drink fancy in the club. Hey take a few pics of these bottles every weekend, they say.(Doesn’t that get old ?) They are throwing in the towel of retirement, before it can even have a chance to fight for you. Liquor abuse will grow your gut, destroy you liver, and waste all of your discretionary income. (Average costs of abusing liquor = $150+ week)

Continue reading Is Money killing you?

Life is a Beach

What do you think of this mantra, Life is a beach. I grew up seeing this phrase on hundreds of T-shirts as a kid. I sort of got the message, but now that I am an adult I get it with complete conviction. It is a modern version of the phrase that goes like this, Life is what you make it.

But what some people cannot see is that we control, if our life becomes a beach or if life becomes a desert. Imagine trucking along life in the Sahara desert trying to reach the imaginary pool of drinkable water? Well that is what happens when you do not take money management coupled with a dedication towards investments seriously. The destined plan for you will be a life of always playing catch up while working for the benefit of others. Who are the mysterious others you are giving your paycheck too? Well it’s really simple to answer, just open up the random bills sitting on your desk. The companies who hold all of your debt are your new bosses, on top of bosses you already have at your day job. I personally do not want to be told what to do by anybody, and that message goes directly to Chase and MasterCard. Every time you consume junk on debt, you are adding new bosses that then get to take your extra dollars every month.

When you think of things in this new light then you will realize that it is just not worth it. Buying a product on credit card debt that you could not afford is the end of freedom. Hey buddy do you know you just signed up for a new boss to tell you where to send you’re hard earned cash. This is the sad reality that we are facing in this society. I will do anything in my power to cut ties with all these fake bosses who control my wallet. Now the million dollar question is will you do the same given the opportunity. Can you really say good-bye forever to American Express and Capital One. This year alone I cut up two credit cards I have not used in over a year. Why did you do that you think to yourself, because maybe you can use the credit card for a rainy day emergency? The final answer to the question is because having it is an added level of temptation I do not want or need in my life. I live on cash baby and so should you.

I think when you reach a certain point in life, that all those added risky money moves should be abolished forever. The habits you choose here and now will make or break you. By having an emergency fund in place and 2 debit cards to cover you in case you ever need emergency money, these are the proper steps needed to live life stress free. No debt is the equivalent of life is a beach instead of life is a bitch. Get it good; now get things in check my friends.

To put it in prospective see below for an example:

Weekly Restaurant Bill of $50 dollars X 52= $2600 X 10 years = 26,000.

Plus costs of putting it on a Credit Card with interest

Plus costs of losing out $$ in opportunity cost with investable gains on money

Comment if you believe that your life is a beach or if life is a bitch?

Rich Uncle EL

How to Become a Money Maven

I appreciate being here in this blog space talking about how everyone can improve on the complicated issues regarding personal finance. I hope to enlighten you today / this weekend with some fun quotes and posts about life plus money. If you keep motivation and positivity at a high level you will achieve goals and succeed. It’s safe to say that you may possibly become a money maven. I come up with these quotes for myself, but they turn out so good that I have to share with all of my readers. If after reading them you do not understand them, leave me a comment and I will elaborate further.

Anyway back to the topic at hand, life and money will always be intertwined as long as we have a capitalist economic system. When you fully understand both of these topics, and the importance of managing money to make life more peaceful you will see the point for all of this talk about becoming an expert with money management aka Money Maven. If you do not take this advice and embrace it, then you will stay a novice for a long time. If you want to be better than the average person, then it is best to listen while absorbing any information that will help you. See below for the best quotes and posts on how to become a money maven:

Continue reading How to Become a Money Maven

Why you should consider Dividend Investing

The average savings account pays only .50 percent interest with traditional banks and 1% with online banks. When you compare these paltry rates to that of dividend stocks the average is closer to 2.5 – 3%, wouldn’t you want to make your money work harder for you? The only reason money should be placed in a savings account at a traditional bank is if the money will be used within 1 year to buy something you are saving for, otherwise dividend stocks are very liquid and provide you a premium above any other alternative.

Take for example a stock like AT&T (T) depending at what price you purchase this bad boy, your yield will vary from 3-6% and is protected as long as AT&T is in business. If a number like this does not intrigue you or make you second guess why you have your money earning so little yield, then something is wrong. My example in this post is AT&T, which has been in business for over 25 years, but believe me they are not the only dividend stock out there giving away 3% plus in interest.

Continue reading Why you should consider Dividend Investing

Money is not the problem, it’s Patience

When you look at your checking account and you see a big fat zero, you may think to yourself dammit I am feeling broke. The next few days you mope and complain that you can never make enough Benjamin’s in this life. The last few months the bank account incurred several overdraft fees. Why is all of this bad misfortune happening to you? One Simple answer to the myriad of complaints listed before, because of the reflection in the mirror. You Have No Patience! People wake up, as the lack of money is not the problem. When you lack patience it makes you do things on impulse, which results with spending above your limit.

Let’s do a big picture exercise, multiply your income X the number of years you have been working. What does that equal? Then add up how much of that you have saved? Kind of low when you compare it to all the income you have made in your entire lifetime.

Example: Average US Income 35 thousand X 5 years working history = 175, 000 dollars. How much of this have you saved? KEEP YELLING YOLO HUH!

Pick up your jaw off the floor now because this is the truth and now you must face it. Many of you want things now, and you will not take no for an answer. If that is how you want to live life then expect to be broke. Also expect to work forever, why because that impatience is taking away from the years you can retire early. I will propose something right now to help anybody struggling out there. Relax and take time to do things. The new summer wardrobe you have to have, it can wait. The new flashy Audi you have been desperately seeking for, it can wait. The yearly 4 thousand dollar vacation you have to take, it can wait. When can the time come to enjoy some fruits of our labor? See below for two very important money equals patience guidelines.

Money is Not the Problem, it’s Patience Checklist:

– Get Patience in Check. Control it now

– Do a Simple Budget, Income Minus Expenses should = Surplus

– If No Surplus cut things immediately

– Save up for raining day fund aka to avoid adding new debt

– Revisit budget to constantly improve upon it

– Track Net Worth Monthly

– Systematically Remove Debt and Increase Net Worth

– Stalk your checking account, from home computer or Cell Phone App

– Keep improving on patience to not fall victim with Money Issues

When can the time come to finally do what you want and not have to worry about money? Simple Solutions:

When you are debt free (Excludes Mortgage)
When you are consistently saving for retirement 15% or better(401K and Roth IRA)
When you are giving / generous $$ without hurting your budget 5%
When you have ample surplus to do what you want with cash
When you can invest in stocks for a retirement back up plan 5% or better

Patience is just as important as the ability to earn money – Rich Uncle EL

Comment if you agree with money is not the problem, it’s patience?

Rich Uncle EL