Sadly, we don’t live in a world where one can realistically be expected to save their money. It just doesn’t happen anymore! A few decades ago that could have happened …
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6 Proven Wealth Building Strategies
Building wealth is as simple as saving a little bit here and a little bit there. You need not have great riches in order to accumulate wealth, but you need to have the drive, determination, and discipline to successfully increase your wealth. Letís look at 6 proven wealth building strategies you can put to use today.
1. Pay Yourself First. If you do not set aside money before you start paying your bills, chances are you will never save any many after you pay these same bills. If your employer has a 401(k) or 403(b) plan, enroll in it and set up a reasonable percentage to invest. The money will come out before you see your paycheck, therefore the ìlossî of discretionary income will be less noticeable to you. Maximize your contribution if you are able, especially if your employer matches your contribution.
2. Save Now. The earlier you start to save in your life, the more you will have later in life. Of course, if you arenít able to save much until after your children are grown, you can step up your savings until you retire and still have a decent nest egg.
3. Get Rid of Debt. Even before you build up your savings it is best to get rid of your debt first before starting a wealth building campaign. If your credit card rate is 14% you will find it difficult to find any investment that gives you a return that exceeds that rate. It would be better for you to pay down your debt first and then implement an investment strategy.
4. Pick The Right Mortgage. If you plan on holding onto your home for a short period of time, select an adjustable rate mortgage as your rate will be lower than a fixed rate mortgage. Use the amount saved to pay down your mortgage quicker; refinance your home if rates begin to climb.
5. Build An Emergency Fund. Nothing wrecks the best laid plan more than an emergency, particularly one that costs you money. Set aside up to six months of your income to live on in case catastrophe hits. Without an emergency fund you will be tempted to take on debt, cash in your retirement accounts, and sell valuable investments. Try recovering quickly from this sort of hit to your wealth without an effective back up plan!
6. Protect Your Assets. You can have a healthy portfolio and see it disappear quickly if you are not properly insured. Make sure that your health/dental, homeowner, life, and disability insurance coverage is adequate to meet your needs. All it takes is one legal judgment against you to wipe out your assets.
Instance riches come to a few, but most riches are realized after careful planning and effective management of your resources. You can properly prepare for the days ahead by implementing these six proven wealth building strategies today.
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Do’s And Don’s Of Building Wealth
Don’t fall behind
Finance charges, interest payments, getting discouraged about your finances all problems that can occur if you let yourself fall behind. Whether itís bills, credit cards, or student loan payments, falling behind can be a very difficult problem to come back from. The more you have to pay out in charges, the less you will have to invest in your future.
Set goals
If you donít know where you are headed, how do you get there? In order to accumulate wealth you need a plan. Write out your goals, a way to achieve them, and youíll be on your way to an early retirement.
Invest early
The greatest thing you can do to build wealth is start early. Even if you canít invest much, start with what you can and let your money grow over time. As Albert Einstein said, ìcompound interest is the greatest mathematical discovery of all time.î
Invest in what you know
Whether you are looking to invest in real estate, stocks, or anything else, make sure you know how the investment works. The great Warren Buffett was often criticized for not investing in technology during the dot-com boom. His answer was simple. If you donít know the business model, what the company does on a day to day basis, or how it generates revenue now, and in the future, then stay away from it. This principle can be applied to all types of investing.
Donít do what the crowd is doing
When everyone is starting to get into an investment, that is generally when the smart investors are getting out. If everybody knows a stock is hot, or that their real estate market is booming, it generally indicates a bubble and that itís time to cash out. Investors make money buying low and selling high. If an investment is hot and lots of money is flowing into it, you canít buy low.
Donít try get rich quick schemes
Donít get greedy. This is easier said then done, but donít try to gain too much too fast. Building wealth takes time and hard work there is no easy way to get rich.
Save more
This is another one that sounds pretty basic, but can be difficult to achieve. Often times people want the instant gratification and go out and treat themselves. If you have some money burning a hole in your pocket at the end of the month, save it. Think about how nice it will be when that money is working for you rather than heading out shopping.
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A Must Read Before Acquiring A Secured Credit Card
Banks and other lending entities and companies exist for business. And since business is their priority, profit must never come out their way. All businesses regardless of its capital’s size have goals to expand and earn. The system is so simple, product as equivalent to the capital, added with a percentage for profit equals business. Businesspersons always make sure that their capital is not being compromised and they are determined to gain out from the capital.
This idea holds true to credit banking and loans. The lifeblood of this business is the interest. It is where the gain that the company gets come from. However, in loans and credit banking, an amount as part of the companies’ capital is being given in the form of cash or notes. This capital needs to be returned in due time to keep the capital growing and rolling. When a debtor or a credit card holder doe not pay and intentionally runs away from his dues, the interest or the gain of the company is accumulated but the capital is lost.
This is why there are secured and unsecured credits. In a secured credit, the company will ask for a collateral equivalent to the actual amount owed. In the case of a house loan, the house is the collateral for the mortgage. The collateral will later be acquired by the company and sell it to bring back the capital that was lost from the debtor.
Secured credit cards use the same system. While on house loans the house is the collateral, and in car loans the car secured credit cards use the bank account that contains the amount equivalent to the credit. By doing so, the company will not have any reason to doubt whether a creditor will pay the dues.
Secured credit cards may have lower interest rates since the capital used by the company is being secured by the amount they considered as collateral. In unsecured credit cards however, interest rates may be higher than the secure credit cards since they do not have a hold to any collateral except for the promise of the debtor to pay his dues.
Secured credit cards can be acquired in any bank near you that offers such service. In general, all banks use secured credit cards rather to facilitate more the credit procedure. The higher the deposited amount, the broader the credit limit that a bank may award. In so many cases, banks give rewards to good payer creditors. These rewards maybe in kind or in cash. Cash are sometimes added to the deposit of the creditor and need not to ask the latter of a further deposit to the said account but adding up to the credit limit.
Most of the time, the bank asks for a deposit more than or equal to the credit limit. This means that banks would actually charge a client $ 300.00 to $500.00 as deposit or as guarantee for the credit card.
Secured and unsecured credit cards have their individual disadvantages and advantages. However, the performance of the credit card, secured or unsecured will now be on the shoulders of the company responsible for it. The policies of the lending companies and or the banks are what makes the credit card ugly. Interest rates are part of it, it is the life blood of the company, however, too much interest and climbing rates are no longer just for the clients.
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Financial Mistakes To Learn From
In this day and age, there really shouldn’t be any reason to make certain financial mistakes. Do a search of the internet and you will find that there are thousands of articles out there that warn you of the pitfalls of certain choices. Advice for living a financially stable life is everywhere. What are you waiting for?
Here are the most common mistakes that I’ve seen people make. I’ve even made a few of them myself. These are the financial mistakes that you can learn from. You’ve probably made a few of them yourself, they are very common.
Mistake #1: Using that little plastic card to get what you want.
We’ll just start off with the number one mistake out there. This is probably the most common mistake in the country. Almost every person in the US today has a credit card. It is almost like a right of passage when you turn eighteen. There are even people out there that aren’t eighteen yet that have them.
Credit card debt is the fastest way to ruin your finances. It is easy to acquire and difficult to pay off. The minimum balance doesn’t pay off enough of your outstanding balance to help you very much. You will be paying on your balances for decades. Even a $500 balance can take you over a decade to pay off if you simply make the minimum payment.
Add in the interest rate, which rarely goes down. If you miss a payment, you will really be paying the bank. Thirty percent interest is common on a credit card once a payment has been missed. And you only have to miss that payment by a day — which can happen in the mail or processing if you don’t plan ahead well enough.
Mistake #2: Buying more home than you can afford.
With the real estate market in the state it is today, many people are regretting their housing decisions. Adjustable rate mortgages are acceptable loan products for some people. But only if they can afford the maximum rate that the loan can hit if interest rates go up. Too many people only consider that introductory rate. They stretch and purchase as much as they can afford. Then, when rates go up and their rate adjusts, they can’t afford the payment. Add that to a slowing housing market, and you may have a foreclosure on your hands.
If you are going to buy a home, make sure that you purchase what you can afford. Take out a fixed-rate mortgage so that you know what your payments will be. If rates go drastically down in the next couple of years, you can always refinance. If rates go up, you are protected. Try to aim for a 15-year mortgage over a 30-year. It will save you hundreds of thousands in interest. But if you can’t do it, a 30-year fixed-rate mortgage is an acceptable loan choice for the purchase of a home.
Mistake #3: Not controlling your money.
Too many people live paycheck to paycheck. They have no savings. They have no retirement plan. They have nothing to back them up in the case of an emergency. They have no control over their money.
You have to take control of your finances if you want to retire someday. You have to learn how to budget, save, invest and spend. All it takes is a little time. And once you get in the habit, you will notice that your life has more control. You should say where your money goes, not lenders or creditors or anyone else.
Mistake #4: Not saving for retirement.
There are more seniors in the work place now than there were twenty years ago. And even more than there were fifty years ago. If you want to retire with enough money to live comfortably, you have to start putting something back today. Start an IRA. Contribute to your employer’s 401(k) plan. Figure out how much you need to invest and find a way to do it. This is your future. You don’t want to reach sixty and realize that you can’t afford to stop working. There is no guarantee that you will be able to draw social security or other forms of assistance then. What if you become ill and have to retire? What if you get hurt? Prepare for the future. Start saving for retirement today.
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Understanding Mortgage Basics
Being able to buy that house you have always wanted probably means that you will need to get a mortgage. Another word for a mortgage is loan – which you usually get from a bank or other lending agency. Since most people are not able to buy their house with cash, a loan is the most common practice. Here are some things to help you understand mortgage basics.
Length Of The Mortgage
The size of a mortgage makes the length necessarily longer. Common lengths of mortgages can fall anywhere between ten and thirty years. This means, that if you pay according to the terms of the mortgage, that you will have it entirely paid off at the end of that time. Generally, the lower amount of payment you can afford, the longer the time you will need to pay off the mortgage.
Interest On A Mortgage
The interest rates on buying a house or property change every day – sometimes even more than once a day. It depends on the economy, and the area you live in. You need to shop around and get the lowest amount of interest that you can because even one percent over 30 years means a difference of over tens of thousands of dollars.
Two Types Of Mortgages
All mortgages will fall into one of two types. It will be either a fixed rate mortgage, or an adjustable rate mortgage. The fixed rate mortgage is one where the interest and payment amounts are “fixed.” That means it is always the same until the mortgage is paid in full. The other, an adjustable rate mortgage, is, like the name implies – adjustable. That means that the amount of your payments changes in an unpredictable way – according to the economy. If the economy is doing well, then your interest rates on the mortgage are lower – and so are your payments. But remember, it may cover a thirty-year period. No one can see that far ahead. A bad economy also means that your payments can become very high – maybe even too high. These are excellent when the economy is doing well, but you may need to get another mortgage if the economy goes bad.
Paying Off The Mortgage
The best type of mortgage will enable you to increase your payments, or make additional payments in order to reduce the amount you owe. This means that you will be able to pay off the mortgage early, and save a lot of money. Most mortgages, however, have clauses in them that will limit how much you can pay extra each year, or may not allow it at all. You may need to negotiate with the lender in order to get this put in the agreement.
When going for your mortgage, the best thing you can do to help yourself is to understand as much as possible about mortgages. Then, with that knowledge, shop around and get online quotes so you can compare various offers in order to get the best deal.
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Family Finance
One of the hardest things that young couples report during their first year of marriage is getting to grips with joint finances. While most are willing to share what they have with their partner, they are not sure on the best way to bring this sharing into effect so that they can share with their new partner, but at the same time maintain financial security and a degree of independence. Some couples resolve this by resorting to separate finances and others find a way to keep things together, but it is generally reported as one of the biggest strains on newly married couples.
As well as this, there is also the problem that many people find it difficult to budget and control their finances. It is one thing to fail to keep track of expenditures when you are single, but when you are married you have more to answer to than just yourself. This is especially true once you have children. If one partner fails to keep control of their spending while the other is forced to worry about finances, it can create an enormous strain on the relationship.
Family Budget
One of the best answers to this dilemma is to create a family budget. This should outline what is allowed for the various expenses, which is to be responsible for what expenses and how much each partner can spend on discretionary expenses. While this may seem like a drastic response that takes away all the responsibility and financial independence from both partners, all it is really doing is getting both parties to sit down together beforehand and work out how much they can afford to spend on what, and then sticking to this. It is about being in control of your expenses rather than letting them have control over you.
Other ways of taking care of difficulties between married couples is to divide out the family expenses depending on how much each partner earns. This way both will feel responsible for the security of the family and will feel like they are an important contributor to the family finances.
Financial Matters
While each partner should have a degree of financial freedom, and also privacy, finances should be discussed openly and with without shame. Past debts or mistakes that one party has made should be put in the past and should be forgotten. At the same time, if one partner shows that they are unable stick to the budgets they have agreed, their financial freedom will have to be taken from them and they should be given a tight leash in financial matters.
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Tips For Applying For Credit Cards
Applying for credit cards is a fairly normal routine for most consumers. Banks, credit unions, and credit card companies often send mailers asking consumers to fill out applications and return them in order to get new cards. For some people, this is a good way to get credit, but for many others, this can spell financial ruin. There are many things to consider when establishing new accounts but one of the most important is the APR.
APR stands for Annual Percentage Rate and by law it must be posted on all credit card offerings that are sent out to consumers. The APR will tell you how much you will have to pay when you use the credit associated with the account. This amount of interest, however, only applies to that amount of money that you cover over into the next billing period. If you pay off the entire balance within the grace period you will not be assessed any interest. This is an important issue to keep in mind.
Common sense would dictate that when applying for credit cards that you apply for those with the lowest APR. You might be surprised at how much money this can save you over the life of the account. But do be aware that the APR can change depending on how you use the credit cards.
For instance, with nearly all credit cards, you will pay a certain interest rate when you purchase goods. These goods might be anything from food to music CD’s. Unless you pay off the full amount when due, you will have to pay an additional amount that corresponds to the stated APR for purchases. However, if you use the credit cards to take cash, also known as a cash advance, you are most likely going to be charged a higher APR for that transaction. It is for this reason that you carefully read and understand the various percentage rates that are attached with each account. It is also important to remember that these percentage rates can change with each company. Nearly all credit cards will charge a much higher rate for cash withdrawals than for simple purchases.
Consumers are also advised to read very carefully to see if their credit cards allow any grace period for cash advances. Many companies do not allow any grace period at all when cash advances are taken. What this means is that the interest rate for the cash advance will begin as soon as you make the transaction. This interest will have to be paid even if you pay off the full balance of the amount of cash withdrawn at the end of the month.
Lastly, it is a good idea when applying for credit cards to see if the company uses a tiered system for interest rates. Some companies will charge a certain rate up to a certain amount. If you go over that amount, a higher rate will apply to those new charges. This can become very expensive for consumers who are not paying attention to their current balances.
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Emergencies, Are you prepared?
A young man got into a car accident resulting in many bedridden months in the hospital and $100,000 of debt in hospital bills. Pathfinderís ìMastering Your Moneyî series originated from this true story. The young man decided to pay off his debt in small amounts each month instead of filing for bankruptcy. When he was released from the hospital, he got a job, generated a modest income and stuck to his plan of paying his doctors $5 each week. He calculated with each payment how long it would take him to get out of debt. The result: he learned how to manage every penny he made.
Your overall financial wellbeing has less to do with your income than the strategies you put in place and honor. We are stewards of our money. In my opinion, we have an obligation to honor our money by treating it as best we can. It doesnít matter how much youíre making, if you have a leak somewhere, the money will run out. Prepare for lifeís emergencies. One of Robert Kiosakiís quotes from last weekend that I took away and believe to be true: ìThe way you do anything is the way you do everything.î Do you cut corners? Do you plan ahead? Are you disciplined? Hard working?
Speaking of discipline and preparing for emergenciesÖone of Pathfinderís principles isóWhen you track your money, you can control it. Do you avoid balancing your checkbook? Do you blame employees and others because you donít make enough. Blame the kids, your boss, your investment partners? Donít think youíll ever have an emergency? Statistics say you will, and youíll need an emergency fund. Keep at least six months of living expenses liquid, so you have half a year to gain control over your emergency situation.
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Easy Ways to Start Saving
The holidays can really have us searching for a deeper meaning — one that tells how to make the dollars go further. There are easy ways to start saving money.
Start with the simple things. Eat out less, and stay home more often. Have your friends over for a movie night instead of going out on the town. Start a rotation. Have friends over to your house one weekend, and go to their’s the next weekend. This way you both save without having to sacrifice your social life.
There are many ways to save money shopping for your children. All it takes is a little research. You can often find clothing at a consignment or thrift store for half of the original cost. But be careful — you can often find the outfit new on sale for the same price. Once you have shopped around for a while, you’ll learn where to look.
Set up a clothing swap with your friends who have children. You can hand down clothes to a younger child who will then hand them, and others, back down to your younger child.
There are other areas that you can save money when it comes to your children. You may have noticed that children love to draw. Instead of sacrificing your new office paper, let them use your used office paper. Simply stick a box in your office that you toss paper into. I do this. My children know to just get paper from the box and get busy. You can even re-use paper grocery bags for a change of pace.
Babysitting costs can add up. Wouldn’t it be great to find a free babysitter? Try rotating sitting with your friends. We keep the kids on Friday night and our friends go out. On Saturday, we hit the town. Both couples get to enjoy a night out without the added expense of a babysitter.
Speaking of the weekends, don’t blow all that you have saved on the weekend. You have worked so hard all week, so it’s easy to think that you deserve a little fun. While that is true, there are ways to enjoy the town without spending a lot of money. For example, instead of going to the amusement park (which can cost a small fortune), go to a new park and ride bikes through the trails. Picnics, hikes and scavenger hunts cost little, but make lasting memories for your children.
One of the biggest ways that money is lost is through simple mismanagement. Credit cards do help make ends meet, but only temporarily. If you can’t pay off the balance at the end of each month, you are going to be in a world of hurt in the future. Interest charges and minimum payments can stretch out a small amount of money into a long, endless repayment period.
Overdrafting your account is another example of lost money that you could be saving. Even if you have overdraft protection, the fees will cost you in the long run. If you have a $25 overdraft fee, and overdraft four times a month, you will lose $1,200 a year. Was it really worth it? What could have been purchased with $1,200?
There are ways to save money that don’t take a lot of effort. It may seem like a little bit here and there is just useless. But it only takes 100 pennies to make a dollar.
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Earn Money Now
What are you waiting for? Haven’t you realized that the future is on the internet? Whether it is online marketing or simply working for companies that are computer based with employees that work remotely. If you don’t do it you may always regret it because sooner or later you will be force to make the switch but you won’t be the master of your own domain like you are now.
Another huge advantage to this type of job are that you don’t have to worry about an actual physical product whether it be the storage, distribution, or tech support for it. Most often you earn money via commissions for selling other people’s products. You also aren’t limited by geography in your market. You can sell to people in Guam just as easily (other than maybe language barrier) as to your neighbor. The web allows you more
potential diversity of cash flow than your typical job does as well. If one channel of income dries up you will typically have 2 or 5 or 13 other sources to fallback on while you repair or replace the first.
So what are the other advantages to having the ability to earn money online? Well there are several! There is increased ability to automate and therefore be working even while, you are sleeping. You also don’t have to work in the typical and uncomfortable cubicle. You can work when you want which lends more flexibility to take that needed vacation when you need it rather than simply when you can so that you donít miss a busy week of work (after all isnít that the idea of a vacation?). You can also work where you want–at home, in the coffee shop, or in Belize for that matter. You can also (maybe most importantly to me) wear what you want. Gone are the days of slow suffocation for the sake of the status quo wearing ridiculous ties.
So this sounds good right? Is there something you waiting for? Oh…you think that the initial risk of quitting your job to earn money online is too high? Well then don’t quit your career! You can easily maintain both a normal job and an additional income at the same time and you will find very quickly that you have nothing to fear. What about startup? Well depending on how you start some (surveys, party poker, etc.) have very little cost assuming you already have a decent computer and connection to the internet. Other cheap options include the online auction sites. Do your self a favor and don’t wait, now is your chance to beat the impending stampede and at your own level of comfort.