Personal Finance Archives - Page 2 of 21

In Life There are no Shortcuts

In life there are no short cuts and you have to understand this in order to pursue the life you want. What drives you in life? IS it to travel the world? IS it to have luxurious things? OR maybe it is to attain a business one day. Whatever it may be, it takes sacrifice and dedication to achieve all of those probable dreams. You cannot reach the finish line in 1^st place without first putting in the work. Same applies to life; you can’t expect a free retirement without saving for it. Just like you can’t magically whip up a brand new Lexus without thinking how you will be able to afford it. That’s why I want to stress in life there are no shortcuts. Unless you just want to get by doling the minimum.

In life everything has a cost associated to it whether an action or non-action is taken. The fancy car that might bring you joy today will probably set you back 14 thousand dollars a year for 5 years. (70,000+ dollars less for retirement all due to a luxurious transportation choice) Because of this 1 choice you now have to work for 4 extra years and in the process delaying the trip around the world you desired to take.

Now I’m not knocking car purchases, but it is a simple example to illustrate why you must not take short cuts and realize the choices you make have consequences. I bet you can find examples of those choices in life which will set you back or push you forward every day. Like for example the daily $10 dollar lottery habit, that if saved may potentially turn into a 200 thousand dollar portfolio at age 59. What is the cost trade off for mistakes we make? It is a big cost and it will only hurt you in the future.

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How to Stop Financial Pride

Financial pride is a thing and it can be a long stressful life if you can’t take pride out of finances. Nobody wants to be guided with how they manage money, but if that were the case, then all the bad decisions people made financially would’ve never occurred. That gut check you sense when you’re about to make a sizable expense is the exact warning, to help you reconsider such a devastating financial event. If you find it OK to take multiple vacations a year because you think you can afford it, while you continue to live life paycheck to paycheck that’s a perfect example of non positive financial pride. Financial pride (negative meaning) can be a simple mindset to fix, steering you to make unwarranted financial decisions that are not financially optimal. How to stop financial pride is simple and you will see the answer below.

For example I almost purchased a used car for 4 grand just to drive it on the weekends. Rationality went out the door because I wanted a new shiny toy, but after thinking it through, I decided I needed to fix a few projects around the house first. What if we could just take a moment to decide whether a purchase makes sense in our lives? Would everyone avoid spending and live a so called miserable life from those who relate spending and happiness?

Why is it that people who spend a lot, think people who don’t spend a lot, live unfulfilled? The first step to getting around how to stop financial pride is to not believe money & spending equates to happiness. If you’re happy you live happy, and spending 60K on a new Lexus shouldn’t define that happiness. Or maybe by taking 3 vacations per year, you think it can possibly shoot your happiness gauge up a few notches. The experiences coupled with memories should make you feel better for sure, but if it means you just added debt to have fun, then that is counter to happiness.

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Wearing Yeezy Sneakers is not Financially Smart

Wearing Yeezy Sneakers is Not Financially Smart

The hype is real and its been real for the last 3 years.

So where can you make triple the value of money on cost besides the stock market? Practically nowhere and today we have an example of a product that gets used daily by hype beast people. The product I want to discuss is the Adidas Yeezy sneaker. I have to be honest at first I was not a big fan of the shoes as they looked a bit like moon sneakers. But after seeing them for a few years now I can actually say they are not too bad, but I still will never wear a pair. Why must you ask, because I understand the value of a dollar? This is why Wearing Yeezy Sneakers is not Financially Smart.

If you can compound your money to the tune of 3 times the retail value in a matter of a few hours it confuses me to think why not try to sell it and make a killing.

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Why I Want Financial Freedom

What’s going on my peeps? I want to talk a bit about my favorite topic financial freedom. I want to discuss this because its way more enjoyable than talking about debt. Why I want financial freedom is very simple, because we as humans were truly meant to be free. Once you feel the tug of this FI desire, you will understand. If it hasn’t hit you yet, be ready cause it will one day.

Do you fully grasp that this system is set up to trap us from a very young age. From school years and quickly transition to work yeara till age 67 plus.

My mom had the same desire to be free as she retired at age 39 and lived how she wanted for the next 10 years or so of her life. She started a few businesses and just hustled while enjoying life. Eventually she went back to work but only because she wanted to pass the time I believe after becoming an empty nester.

Even the super rich are trapped in this unfavorable cycle of being beholden to others. The rich CEO reports to the board, Warren Buffet has shareholders and his own obsessiveness of growing his business, politicians are controlled by other more powerful people or political parties who pull the strings, the movie star is at the mercy of recording studio heads, the doctor is bound to his patients or to the director of doctors. I can keep going if you would like, but you get the gist of it.

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Milestones Realized in 2016

Increased Dividend Income from 4500 in 2015 to 5580. (Increase of 25%)

As I’ve said before and I’ll say it again, invest today so that you can grow dividends. These dividends will pay me for life as long as I hold them, and if a company decides not to pay dividends one day, then I will just sell the stock and buy a competitor’s. Saving money has benefits, but investing money to get free money is the ultimate benefit in my book. I predict if I continue on this pace I’ll be able to reach 10K in 3 years. Some of you might think 3 years is a long time, but believe me it goes fast. Imagine how many shares I can pick up with 10 thousand dollars of free compounding money. This year dividend payouts amounts were down for the majority of my index funds, and this hurt my goal of 6K in annual dividends. FYI almost all dividends are reinvested into tax deferred retirement accounts and I do not have access to this money. What milestones realized in 2016 made you smile?

I saved 27% of gross income. (With the employer Match)

Hey man this is just simple to do, automate automate till your blue in the face. Set up 401K or IRA money to be deducted immediately from every pay check. The opportunities are everywhere to save so take advantage today. Connect bank accounts with investment accounts to make the transition even smoother.

I was able to do various spending freezes throughout the Year

Spending freezes are fun for me, and I do them to challenge myself from time to time. We all should practice this and when you do, funnel the money towards the next best goal. If that is paying down debt or funding your next vacation, as long as you act and don’t let the funds roll over into the next month.

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Knowing Where Your Money Goes in 2017

“Do you know where your children are?” Even if you aren’t old enough to remember this famous TV slogan from the 60’s through the 80’s, the sentiment is easy to understand. It takes awareness to keep track of the important things in your life, and this includes your money. Without careful oversight, money tends to have a life of its own. Some people are slaves to their money, and to their spending habits. Many people fear taking a look at the balance of their checking account, because it might be low, empty, or overdrafted. In order to improve your financial status, you’ll have to keep careful track of your money. Here are three aspects of that process, as well as ways that it will improve your financial life

Keeping careful track of your money puts you in a great position to catch fraud before you are robbed blind. If your money is stolen – from your checking account, from your credit card, from your Paypal account – you can usually get it returned, if you catch it fast enough. If your money is stolen and you do not report it for days or weeks, your chances of getting your account restored are much slimmer. PPI claims history has borne this out. Payment protection insurance is a form of insurance that used to be sold to unwitting loan borrowers. Many of them didn’t notice the problem for months, because they didn’t regularly check their financial accounts for invalid charges. It would have been easier to recover the money, and less would have been taken, had they caught it sooner.

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Merry Christmas and Happy New Year

It’s that time again where we celebrate the holidays and ring in the new year. What new blessings will 2017 bring to you? Well 2016, I must say was not so good to me famiy wise, as I lost a loved one. Hopefully 2017 will be another year full of financial cheer, as the markets have been up so far this past year. The markets are still doing ok given the travesty of the presidential results. I don’t know how people can vote in a reality TV star to hold the highest office in America, but I will leave the politcial talk for another day. Merry Christmas and Happy New Year to all of you happy savers.

This is the time where we really need to reflect if this past year really helped or hindered our financial lives. If it helped you great keep on the right path, and if it hindered you lets try to make positive changes to help you succeed. We really are the masters of how our financial life plays out.

Investing and saving is a product of how we manage our spending. If you over spend and have debt it will be hard to invest. But if you don’t over spend and give all your money to mastercard you will have surplus money to save.

We all need to re-evalute how we spend and if we could invest more in the new year. Investing is the end all be all to free anyone from a 9-to-5 and from getting back free time in the future. So in any way possible invest and be merry.

I want to wish you a Merry Christmas and a Happy New Year

Rich Uncle EL

Personal Finance Myths We Need to Ignore

Hello friends it’s the 4th quarter of 2016, and as I get through a tough patch in my life, the blog has suffered without fresh new content. It is hard to find the right balance when you lose a loved one.(Miss you Mom) But I know it’s a part of life and we need to have the strength to move on. Let’s jump back into the topic at hand personal finance myths we need to ignore.

I hear random talks like this all the time and it is unbelievable people still can’t see the big personal finance picture. Why must some of us live with our heads in the sand per say?

If others have done well with money, you can do it to. People of various income levels are doing amazing things, like reaching financial freedom, paying off the mortgage, living a debt free life. These are only a few examples. Let’s not fall victim to the defeatist mentality of some people and please don’t listen to the personal finance myths we need to ignore.

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