Is this mantra really that hard to grasp? Why do I see examples of individuals living frivolously with their spending? Let me tell you a secret, if you do not follow the spend less than you earn lifestyle you will not succeed with money. I see people spending and they are smiling when they spend half of their paychecks on a thing aka product. How can anybody be happy spending that much money, when I spend that much it is with saved up money and I am still not smiling. Why don’t I smile when I spend, because I know the true value of my dollars, and I know the possibilities of what it can do? The only time I smile when I spend upwards of $500 bucks is when I am booking a vacation, because I can visualize the joy the trip will bring to my family. Today I want to share with you a few quotes and posts on the, spend less than your earn topic. (Hopefully you can see the value of it)
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?
Do you know that you have a financial responsibility towards the future? In the present you might want to spend every last penny from each pay check, but this is not good for several reasons. See Below:
This trend will lead you to never improve financially. (Bad Habits take time to break)
If you do not have readily available money, no opportunities. (Businesses need startup funds)
The future will look bleak. (Retirement will be below average)
If you have kids you will pass on those horrible habits on to them. (Johnny will not learn the right way to manage money)
Giving back or leaving a windfall for loved ones will be a joke if you do not take things seriously. (What did Dad or Mom leave me? – Headaches with no money)
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.
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!
I wanted to share with you a story of how a young financially smart person got into and out of about 14 thousand in credit card debt. I thought I was doing good with my money by saving a lot during my young days, while accumulating debt on the flip side of the coin. The year is 2007 and I had just been laid off from a great paying job, subprime mortgages. Now I can’t even recall how I got into so much debt, but I believe it had to do with unhappiness in a previous life situation plus the fact that America was in a credit card spending frenzy.
I was spending without any concern between years 2002 through 2007 just to get rewarded for credit card points. I am hoping that all of you can take this advice to heart and realize that those credit card points are not worth it. One of my overall goals with this site is to attempt to help others avoid the same mistakes I made. Why you ask? Because the younger you are, the greater the chance you will do well financially with some guidance. See Below for the tips.
7 Steps to Eliminate Credit Card Debt: 1. Never use debt to accumulate points for useless exorbitantly high rewards 2. Do not charge daily living expenses on credit cards 3. Do not save up money until after you have paid off you’re debt 4. Use all savings to help pay down debt faster (keep only 1-2K in savings for emergencies) 5. If your interest rate is high, do a balance transfer to a lower rate 6. Avoid cards with annual card fees 7. Do not pay only the minimum
This is what I did to eliminate the 14 thousand dollar debt monster. What did I charge through out the years to accumulate all that debt. Honestly I can not recall, but I would assume the bulk of it was spent on watches, sneakers, car accessories, gifts and every day life expenses. I had the mentality that the more I charged the faster I would be rewarded with those powerful credit card points. Which in turn rewarded me with useless products from their rewards shopping catalog. Always remember that credit card companies use all the tactics possible to bait you to spend more. They want you to eventually live life cash strapped by paying the minimum for life and extending the interest you pay them. If you fall for their game you will lose and possibly be in a paycheck to paycheck scenario for a long while.
Sometimes we get carried away in getting things that we do not see the damage that is being done on a daily basis. Keeping careful track of budget categories expenses will solve that problem. Another thing that really helped me improve on my spending habits, is to simply avoid the malls and superstores. By 2010 I was done with paying it all off and a big monkey was lifted off my back.
So please do your best to take the advice above and delay gratification with immediate wants. Credit card companies want you to fail at life. Being in debt for me is failing at life.
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)
Hello friends I wanted to give you all a different spin than the usual post topic today. I usually give you a few quotes on Friday to get your motivational juices flowing, but today the subject at hand will be based on frugality. I know you do your best to save money by living below your means already, but it doesn’t hurt to get new ideas that you might not be using to help you in this life. The theme for today’s post is a new series called frugal tips Friday, and I will share 4 tips I think can get you to scale back a bit all for a higher purpose. This post is for those of you who are struggling to complete something due to a tight cash flow, and if you have no cash flow worries then this post is not for you. I am hoping I can make this a fun Friday series on random Fridays as I see people cutting back more and more. (If you are a Starbucks drinker, please do not read this post as you can’t comprehend frugality)
I apologize for the sarcasm but I do not see the point in spending $5 bucks for a cup of coffee. Let’s move on as the Starbucks bashing is actually played out already in the PF blog world. So what topics will I be discussing today, regarding frugalism? (that’s not a word but I like the way it sounds) It will all be just random tidbits here and there, just for the sake of increasing the greenbacks in the bank. Maybe you will be able to use some of these tips or maybe they will not relate to your life. I feel as long as 1 person benefits from the tips I have done my job. (insert smile right about now) J
Frugal Tips Friday:
Do not carry credit cards on you ever. (If you don’t have it you will not use it)
Buy what you value, love, and only will have a use for. (Buy only those products you value more than current goals)
Make your own trail mix by buying bulk nuts and raisins. (This will save you $, Take to work as a snack, avoid vending machines)
Keep a running total of all Misc. and Food purchases monthly. (These two categories are notorious budget busters)
These tips are frugality 101 and it will allow you to have a basic foundation towards living on less. Granted some people might view being frugal or cutting back as not living the right way, but I tend to think that we all can adjust for the right cause. Do you struggle to finally establish an emergency fund? Do you want to pay off that car loan? Have you started a college savings fund for the children? If you desire to cross off the goals you have then frugality is the fastest method to do it. Many people do not have the extra time to dedicate to an additional part-time job, so cutting back is the only viable option. (Parents/ Students with a full-time job)
When you give meager effort towards your goals you will get meager results, so give it your best shot now to really make a difference.
