This blog is intended for educational purposes only. None of these posts are meant to give legal or financial advice. If you need advice you should consult an appropriate professional.

Thursday, December 8, 2011

Every penny is valuable

I think it's important to remember that no matter how small any amount of money is it's valuable.  Getting in this mindset can help you in life.  It all starts out with treating pennies well which leads to treating the bigger amounts of money with respect.  Let's face it, a penny is pretty insignificant.  But they add up to bigger amounts.  And those bigger amounts, or even the smaller amounts, can be put to work for your benefit.  Overall the bigger expenses in our lives are probably the ones that matter the most, but the small ones are important too.  Carefulness would sum up this attitude.  Even saving a small amount of money can matter.  So try to be as conscious as possible before letting the money leave your hands.  Think about it for a little while before completing the transaction.  I pick up pennies on the ground from time to time.  Sometimes I'm too embarrassed to do it though because of what others will think of me.  It shouldn't matter what others think of me, but I let it matter.  I think careful and cautious spending is one of the best things we can learn.  It's like having your shield up against those that are trying to get your money.  I spend money just like everybody, but I usually try to get a deal.  Don't trivialize small beginnings.  You have to start somewhere.  And you start where you are today.  Treat your money as something valuable because it is.

Thursday, December 1, 2011

Keeping up appearances

I'd rather actually be wealthy than look wealthy.  I really don't understand the whole keeping up with the Jones mindset.  I see so many nice houses and cars around these days.  Where is all this money coming from?  My guess would be that it's all a big fake show.  If you were able to see behind the scenes of the flashy people it might be kind of ugly.  I have no desire to impress anyone with my material possessions.  What's the point?  There isn't one.  Why not have a fat investment account and appear like a regular person instead.  Call it being in stealth mode if you want.  The whole looking down your nose at someone is silly.  We're all on our way to the grave.  We all struggle with the same stuff.  Even if I had a lot of money I wouldn't show it off.  I would get more satisfaction knowing that I didn't have to work for a living.  I look at all these trinkets as just a big hassle and a lot of expense too, and where's that money coming from that is paying for them?  Most likely it's coming from waking up to an alarm clock everyday and reporting to a boss.  Not that there's anything wrong with that.  After all that's how most of us have to survive in our society.  But why not build investments instead to at least give yourself more options and freedom.  So there will be no flashiness here.  Now why most people would rather give an appearance of wealth than have actual wealth I don't know.

Thursday, November 3, 2011

I don't like driving

Well I'll tell you we live in a car culture.  I didn't choose this, and I surely don't like it.  I would really like to not have a car.  I could do that, but it would be very difficult to survive by walking and taking the bus.  What to do?  Minimizing driving is a good start.  As far as I see it even if cars weren't a money pit, which they are, I just don't like driving.  It's stressful!  And there are some crazies on them there roads.  There's nothing routine about it.  Each day is a different scenario even if you're only going a mile down the road.  Not to mention all the ambulance chasing lawyers we have that are chomping at the bit to cash in when someone gets in an accident.  I really wish our whole civilization wasn't built around the automobile, but it is.  I would like to live in a dense area where you don't need a car.  The trouble is those cities are cold and expensive.  I've thought about selling my car and huffing it, but I would be severely limited with what I could do.  I do try to drive as little as possible.  Sometimes it's a choice of spending 30 minutes in the car as apposed to 2 hours on the bus.  I don't like having my days eaten up by bus time.  I guess what annoys me the most is I was born into a car dominated world.  We really have limited choices in this way.  Either drive or be a shut in.  I am fortunate to have a dependable paid off older car.  It could always be worse.  I hope in the near future we as a world can break this addiction we have to the car.  

Thursday, October 27, 2011

riches to rags

We've all heard stories of people going from rags to riches, but what about individuals who go the other direction.  I don't mean to be pessimistic with this entry.  I'm just trying to look at something that's not talked about a whole lot.  Whether through misfortune, bad decisions, or both some people go from the top to the bottom.  You have many lottery winners who come into sudden money and don't know what to do with it.  They think the sky is the limit while buying all kinds of contraptions.  The same rules of money apply to everyone no matter what your level of affluence.  It boggles my mind to read stories of rich and/or famous people who make really bad decisions regarding money.  In theory it should be a one way trajectory for those with a high income.  Up!  If you keep your expenses at a manageable level while raking it in wealth building can come in short order.  The strange thing is this is not a given.  I must say it has to be hard to go from having much financial security and material possessions to very little.  If you never had it I don't think you would miss it.  So the whole thing is just because you have it today doesn't mean you always will.  One good lesson to be learned from this is riches are uncertain.  It's good to respect money and treat it well, but don't trust in it or worship it.

Wednesday, October 26, 2011

cash management is key

Financial planning is a pretty broad subject.  There's a lot to consider with each individual situation.  It all starts with cash management though.  It's the day to day cash flow that's the foundation for everything else.  The money comes in (hopefully), and it goes out.  It's important to track this movement of funds meticulously.  It's hard to get a grip on the more advanced areas of financial planning if you don't have a good grip on your cash flow.  The bottom line is WATCH YOUR SPENDING.  Money is never in an unlimited supply, so we have to be diligent about spending.  Once you've built the surplus by spending less than you take in then you can begin to maneuver better in this world where it takes money to do almost anything.  It's a good idea to know what bills are on the horizon and where the money is going to come from to pay them.  Always know how much is in your bank accounts and in your wallet.  When you know you're going to spend money figure out which pot it will come out of.  You can also keep a little piece of paper with you to keep track of where you're spending your money.  This is what I do.  It's kind of a pain for sure, but it lets you see where your money is going.  Also try not to spend on impulse.  Give yourself at least a few minutes to think it over before you buy.  Know what's coming in and what's going out, and you will have the data you need to make adjustments.   

Monday, October 17, 2011

buy assets

Money is hard to get your hands on these days for a lot of people.  That's why it's important to buy assets.  You can think of assets as something that has the potential to go up in value or give you income of some kind.  Now I know we all have bills to pay, but with the money that's hopefully left after that try buying an asset.  It could be a paper asset, real estate, precious metals, a business, or many other things.  I'd say quite a few people spend most of their hard earned money on things that immediately depreciate in value.  And sometimes they use debt to do it.  No no no!  At least avoid the debt part.  Change your state of mind from earning and spending to earning and putting money to work.  A small start is better than none at all.  Consider each purchase carefully.  Our money supplies are not unlimited, so treat each dollar with respect.  You can think of them as your little employees, or how about this, a seed that grows into a big tree.  Think of new ways to use your money to be better off in the long run.

Thursday, October 6, 2011

Income is not wealth

Many people want to have a big income.  That's all well and good, but income is not wealth.  It is quite possible to build wealth on a very low income.  The key is to build a surplus that can be put to work.  Some of the highest income people have little wealth.  Now it's easier to build a high net worth if you have high income no doubt.  The more you make in income the more you pay in taxes though.  Wealth is stored income.  Income and expenses go together as do assets and liabilities.  Wealth is the assets you own.  A high income doesn't do you much good if you spend it all or worse yet go into debt.  I think one of the most admirable and challenging things is to build wealth while making income on a minimum wage level.  Once again I have to conclude that expenses are paramount in this world.  Keep them low!  Keep your money for yourself.  You earned it didn't you?  Any level of income can be spent no matter how high.  The principle is what matters not the amount.  Respect money, and it will be there when you need it. 

Tuesday, July 12, 2011

dividend stocks for passive income

The best way I can come up with to produce passive income is dividend paying stocks.  You buy the stock and collect the dividend.  Easy enough right?  I think a good way to look at this is aim to pay one bill with dividends like internet.  Once you have that covered then aim to cover another expense with dividends.  This technique takes time and money I might add.  You have to have capital to get a return.  So start small and build a dividend machine for financial independence.  There are many good companies that have raised their dividends for many years now.  That's a good way to go.  It's like getting a raise every year.  Now to totally live on dividends is challenging.  Let's face it that would take a lot of shares to produce enough cash to pay all the bills.  Maybe a good way to look at it is replace part of your work income with dividends to make you less dependent on a wage.  I mean any amount of passive income is better than none.  So take it one bite at a time and slowly build those dividends for more freedom.  There are other ways to get passive income like royalties, rent, annuities, pensions, and interest, but dividends are my favorite.  Anybody can do it.  It's very democratic now.  Another good thing about the companies that increase dividends is it will likely beat inflation.  I think it's beneficial to rely more on investment income and less on wage income over time.  This seems to be the natural course of things.  And don't think because you're only investing 50 bucks a month that it doesn't make a difference.  It does!  Any is better than none.  Remember that.  Start small, and stay small if need be.  This is just one idea of many to get off the treadmill.

Is college worth it?

It depends.  If you get an in demand high paying degree I would say yes.  If you're no better off after getting a degree then I would say no.  People come out of college these days with staggering and inescapable amounts of debt.  If you start making good money right away then it's best to pay those suckers off.  Even if you make it through college debt free I still think too many of our young people are pushed in this direction.  What about just getting a job after high school and working your way up.  A trade is another good option or the military.  You could also start your own business.  I would like it if college wasn't pushed as the right path for everyone because it isn't.  And it seems to me that so much of what you learn on campus is just plain useless out here in this rough world.  How about a class on how to survive well on minimum wage.  It is possible you know.  It's best to find some kind of a balance between what you like and what's in demand.  It's still something I'm trying to figure out myself.  And remember if you keep expenses low then income is not that big of an issue.  You can go after something that you like more even if it doesn't pay well.  I look forward to the day when college isn't looked at as a one size fits all answer for the masses. 

Monday, July 11, 2011

debt is bondage

I say avoid any kind of debt at all costs.  A good example is our government.  Just kidding.  Whenever you owe someone money they have power over you.  Americans aren't very good savers compared to the rest of the world.  We want what we want and we want it now.  Even if we have to put it on credit and pay loan shark rates of interest.  You know what businesses are booming right now?  Payday loans, pawn shops, and rent to own places. That's not a good sign.  To say that these places are predatory is an understatement.  They take advantage of the people on the bottom.  How nice of them.  In some states they are illegal.  But let's not forget credit cards, car loans, student loans, and upside down mortgages to name a few.  You can't even escape student loans with bankruptcy.  I was in credit card debt at one time.  It was hard to pay off the balances, but I did it.  It taught me a valuable lesson I will not forget.  Don't borrow money!  Especially when you can't even remember what you bought.  People taking out home equity loans to go on vacation and buy cars is just not good business my friend.  I think if more people saved and borrowed less our economy would be stronger.  Even though a mortgage is considered good debt you still end up paying roughly 3 times the cost of the house over 30 years.  And that doesn't count insurance, property tax, and maintenance.  If you miss a couple payments the company who loaned the money can take your house away from you keeping your equity.  Wait so let me get this straight if I miss mortgage payments you take my house from me and keep the surplus, but if I walk away from a negative equity situation you can sue me for the deficiency.  How is that right?  No thanks, I'd rather make my landlord rich.  My personal preference is no debt for the rest of my life.  I don't want to owe anybody a dime.   

lower expenses for more freedom

I think the key to being free in our money world more than a high income is low expenses.  The three biggies in my mind are housing, food, and transportation.  The more you have to pay out every month the more you have to work.  And even if you don't get your money from work, it has to come from somewhere.  And money is never unlimited no matter how rich you are.  So my idea is keep overhead low.  It's a good idea in business too.  Now it's always going to cost some money to live.  That's just the way it is.  As far as housing live in a small cheap place with or without roommates.  This could mean moving to another area or staying put and finding a low cost place where you are.  The grocery store is money well spent.  No tax, no tip, and lower cost food.  Cars are expensive no doubt.  If you have to have one then minimize driving however possible and take public transportation, bike, and walk.  Layoffs are rampant nowadays.  If your overhead is high it's going to be very painful when those checks aren't hitting your account anymore.  But with low expenses it will be easier.  Combine that with savings and some passive income of some kind and it's even less painful.  Why not build passive income as fast as possible while keeping expenses low.  This is a recipe for more choices in life.  Some people pay a couple hundred a month for a cell phone.  That keeps you chained to the treadmill.  So remember look for ways to cut your outgo and build more surplus.  This gives you more options in this crazy world.

get a deal

I notice that people often times don't get the best deal out there.  It's just too easy to give away our hard earned money to the best known service or the one with the best advertisements.  But I must say that's often not a good idea.  It turns out it takes some digging to come up with the best deal for whatever product you're in the market for.  Research and patience are important when it comes to making a purchase.  When you find the best deal it's good to strike quickly.  It's also good to remember how you get your money.  Most people get their dough from a job so always consider how many hours you had to work to buy the latest trinket you're getting.  A lot of people just don't get the best deal they could.  Why spend more money if you don't have to?