Go Get Your New Car!

Your neighbor just bought the brand spanking latest car of his “dreams”.  How long did he dream of it, the thing just came out?   He will probably trade it in within three years for his upgraded “dream” ride.

You don’t need to do him one better. Forget about keeping up with the Joneses. They don’t pay your mortgage, car note or any other bill for that matter. Forget about impressing them because that is the real reason for keeping up.

Not saying you should trade-in your car for a bike, or drive your car until it becomes a rust bucket, but a new car every two or three years is a terrible financial move.

Buy certified pre-owned with factory backed warranty. This is like buying new, with the added benefit of saving thousands of dollars and ride it until you can ride it no more.  No plug here, just a little smarts!  .

Go ahead and buy that car.   Every summer while you are stuck in rush-hour traffic in your new car, dreaming about lounging in paradise; St Lucia, Cancun or Tenerife. I am there toes in the sand, refreshing beverage in hand, while you wish you could. It’s OK you are sitting in your NEW car.

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Essays From A Moron – Saving For Retirement

Over the last few days I spoke to many friends and co-workers about saving for retirement. What many shared stuck a nerve.  Pretty scary that many had almost nothing saved.  Even worse they had no idea where to start.

All works of life. A high school drop-out, many college graduates, there was even a doctor in the group. From minimum wage earners to one with a six-figure salary. The commonality was that they had no clue whatsoever

Many feel that between social security and whatever pension they may have will be more than enough. Most of us have seen what is going on many pension plans are being mismanaged into oblivion and most fear that whatever we receive from social security will be no more than what would be considered a supplement.

Some had invested in the market, but after the most recent collapse circa 2009, they cashed out when the market was low and took a substantial loss. Lack of knowledge, fear and misinformation has led many to never again invest in the stock market. That fear is real.

There are other options for those that may be afraid of the stock market.  Keeping your money in a savings account is like keeping it under the mattress; your savings can’t even keep up with inflation so look elsewhere.

The tools and information are freely available. I typed “investment information” into my scroll bar and I received about 706,000,000 results and all it took was 0.53 seconds. A few minutes reading some of the links and conducting some research is time well spent. Due diligence will get you very far.

There is no need to spend our “golden” years living in poverty. Getting started is much easier than many think. It is never to late to start.

The Pennies Do Count

Over the last several weeks I have been listening to personal finance podcasts and reading many other personal finance blogs.  All offer suggestions on how to save money and what to do so that it grows.  They all extol the benefits of 401K, IRAs, and other traditional methods to save for retirement.

That is where the likeness ends for many.  Same endgame, different routes.

Some believe that being frugal is the path. That having 25 pairs of shoes, or a closet full of dresses, suits or jeans is unnecessary as we can do with less than that.  Many go to extremes with this.  Eating boiled noodles every day because they only cost $2. One buys two-ply toilet tissue and separates them into two and cuts open the toothpaste tube to get the last bit. Wearing faded, full-of-hole t-shirts are the norm.

Many use The Latte Factor, how small daily expenditures add up, as an example of how small savings over time add up. Those that disagree with this say that saving such a small amount does nothing and you should focus on the bigger gains.  like getting a high paying job and only focus on big wins. Want that large $7 cup of coffee, go ahead.  it only costs $7.

My thinking, take the what works best for you and disregard what does not. some of the things I started with:

• I did not cut the cable, but got rid of every channel we did not watch.

• Still buy the latte, just not every day.

• I de-cluttered my house one room at a time and stopped wasting money on stuff that just cluttered my life.

• I don’t buy bottled water; a reusable bottle that has a carbon filter does the trick.

Remember these three simple rules:

1. Spend less than you earn.

2. Eliminate debt.

3. Save, save, save…

No one wants to end up poor and in debt, do your part and help yourself. There are many ways to cut out unnecessary expenses. Please share any that have worked for you.

Essays From A Moron-Eliminating Debt

When it com

When it comes to eliminating debt there are Several ways to approach the situation. Two of the more common . ,.are “snowball” and “avalanche” methods.

1. Snowball·

Create a list of all debts. This list is prioritized from smallest amount to largest. You make minimum payments on all. All available funds go towards that first, smallest gets paid off first regardless of the interest rate charged.  Once the first item is eliminated, you move to the second item and so on.

2. Avalanche

Create a list of all debts. This list is prioritized from highest interest rate to lowest.  Here the minimum payment on each debt is made, but all remaining funds go towards repaying the debt with the highest interest rate. Like with the snowball method, once the first item is completely paid off, you tackle the next item. This process continues until all the debts are paid off. The benefits of the snowball method are primarily psychological; when you eliminate that first debt, regardless of how small; you see progress.  There is a sense of accomplishment. This approach works for those that need a quick “win” to stay motivated. I am a proponent of utilizing the avalanche method because it saves both time and money, making it the more logical way to pay off your debts.Whatever method you choose, stay the course.  Eliminating debt is one of the pillars of financial freedom. You can now start the next phase-saving for retirement. Getting started is much easier than many think.es to eliminating debt there are Several ways to approach the situation. Two of the more common are “snowball” and “avalanche” methods.

1. Snowball·

Create a list of all debts. This list is prioritized from smallest amount to largest. You make minimum payments on all. All available funds go towards that first, smallest gets paid off first regardless of the interest rate charged.  Once the first item is eliminated, you move to the second item and so on.

2. Avalanche

Create a list of all debts. This list is prioritized from highest interest rate to lowest.  Here the minimum payment on each debt is made, but all remaining funds go towards repaying the debt with the highest interest rate. Like with the snowball method, once the first item is completely paid off, you tackle the next item. This process continues until all the debts are paid off.  The benefits of the snowball method are primarily psychological; when you eliminate that first debt, regardless of how small; you see progress.  There is a sense of accomplishment. This approach works for those that need a quick “win” to stay motivated. I am a proponent of utilizing the avalanche method because it saves both time and money, making it the more logical way to pay off your debts.Whatever method you choose, stay the course.

 Eliminating debt is one of the pillars of financial freedom. You can now start the next phase-saving for retirement. Getting started is much easier than many think.

Life Experiences Rule

“Focus on making yourself better, not on thinking that you are better.”

― Bohdi Sanders

Our consumer oriented culture has always told us that owning more will make us happy. The big house, a closet full of designer labels, will possessing more make us exponentially happier?  We cannot buy our way there.

There is a rapidly expanding belief that life experiences mean more than possessions.  The happiness found in making purchases fades away like empty calories that leave a need for more,  but experiences; no matter how small, will last forever.

I wanted to see if this was really true.

Last summer I went on a cruise with my sons.  I bought them some t-shirts and shorts for the trip.  When I asked them about these items they could not tell me brand or color. These were purchased just few months ago.Next

I asked them about an amusement park we went to more than three years ago.  Last minute thing as our original plans fell thru.  The smiles came along with the memories. They remembered how good that wood-fired pizza was, the rides, what they liked and what they didn’t.  They even remembered the smallest most insignificant details like the tan line on my collar bone and the bird that took some fries from us.

Ask yourself similar questions, I bet you will get the same answers I did.  Guess the experiences add more value.  Pay for experiences, not for junk.

I am not a financial advisor. I hold no fancy degree and as such this is not financial advice.  This is simply what I have done and recommended my children do when the time comes.

Source: Life Experiences Rule

Where Did My $20 Go?

One night not to long ago I arrived home from work and emptied out my pockets. Keys, wallet, two bucks and change and some pocket lint was all I found.I left with $20 that morning and got home with nothing to show for it.

I decided to find out where my hard earned money was going. This is what I found: A coffee when I arrived in the morning, lunch, another coffee in the afternoon and a snack somewhere along the way.  That was it, there was my money.

No grand scheme, or plan to make millions, I just thought I could save some money here.

 I started by getting three things: an envelope, a travel mug and a food container.  Took a twenty to work every day, but I also took my morning coffee with me and lunch on alternating days.  Nothing extra, just last night’s leftovers.

Whatever cash was in my pocket went into the envelope.  I work a six-day on, three day-off rotation.  After one cycle I had $61.  Not break the bank money, but substantial savings nonetheless.  Approximately $2475 in a year.

That money is going to work for me! In my opinion IRAs are the safest , most effective tool available for retirement savings.  Due diligence here. Some studies report a 10% yearly growth, while others report that due to inflation the growth is “only” 7%.

If were to contribute into an IRA, that $2475 could grow into $107, 940 in twenty years. Not bat  for a total investment of $47,000.  More than doubled my potential investment.  See the calculator for yourself.

To me, all things being equal, frugality is the easiest way to save.

I am not a financial advisor. I hold no fancy degree and as such this is not financial advice.  This is simply what I have done and recommend my children do when the time comes.

Is Using Credit Cards a Sound Financial Strategy?

Credit card usage has become such a controversial topic that to recommend using one seems like bad financial advice. Many will tell you to not use them, to get rid of them altogether.

Using a credit card to buy things you can’t afford or don’t even need is certainly not smart. The interest charges will pile up over time-Why do you think minimum payments exist?

Stay within your budget and pay your bill in full, when due. Never run up or carry a balance, so if you can’t afford to pay the bill, you probably should not be buying it.

I have a rewards card that I use to make almost all of my purchases. If am going to make the purchase anyway, might as well get all the benefits possible. I do suggest taking advantage of the many perks credit cards offer.

I use my points to get things I would otherwise pay for. Cash might be king, but credit cards offer advantages otherwise unavailable. Some offer travel insurance, extended warranties, fraud protection and allow you to dispute billing errors and defective merchandise.

Some credit cards even offer travel and emergency assistance or other travel related features. Credit cards are one of tools used to build credit. Somewhat frequent purchases and a solid payment history help achieve a respectable credit score.

A higher credit score will help you qualify for lower interest rate on loans. The difference between a mortgage at 7% versus 3% is staggering. They also provide financial backup in case of an emergency, such as an unexpected healthcare cost, job loss or major auto repair.

A few things to keep in mind: Do not, under any circumstances miss a payment, you will be accessed with late fees and interest, increasing your debt load. These can add up and have a negative effect on your credit score.

 Review your monthly statements and keep track of your purchases. Report lost/stolen cards immediately.

The card issuers will make money from every single purchase you make. Merchant fees. The multiple charges to cardholders – annual, cash advance, balance transfer, late fees and interest payment .

Some even sell customer data to other businesses. Completely legal as data is anonymous and aggregated, meaning you out can not be singled out.

Some items to consider when choosing a credit card:

-Don’t get a card with annual fees. The benefits hardly ever offset the expense.

-Look for a low-interest rate. The plan is to pay in full, but life happens.

-Look for the rewards program. Some of the most common rewards include Cash back on purchases and airline miles that can be redeemed for trips.

Credit card issuers are betting that by offering perks you will buy more and end up carrying a balance therefore paying interest. Prove them wrong take advantage rewards programs.

 I am not a financial advisor. I hold no fancy degree and as such this is not financial advice.  This is simply what I have done and recommend my children do when the time comes.