Smile, thats 500 dollars please

Of course, a quick visit to the dentist can easily top a few hundred dollars if you have any kind of work done and just a few hours later you notice that you are much lighter in the wallet or purse than you were coming in. It’s not to say that you’ve been bilked out of the money by this professional. Instead, it is likely that you, like me, have put off some of the basic maintenance i.e. brushing and flossing as much as you should. And the unfortunate result is that you have not ended up with a perfect, no-cavity, cheap dentist visit.

A Stitch in Time

Taking the time to make sure that your health (including your teeth) is taken care of is critical. Prevention is much less expensive than the cure and in the case of dentistry, most likely it is less painful. I struggle with this myself, but when you consider the facts, it seems like a no-brainer.

A large portion of bankruptcies are related to medical costs. This should be a huge indication to us that we should be trying to stay healthly. In addition, anecdotal evidence of pricey bridges, crowns, and restorative dental work can shock even the most steady financiers.

3 Simple Tips For Prevention

Assuming that you are sold on the idea of prevention and maintenance, but you are like me and have a hard time figuring out how to change your habits. Here are some basic tips that can help you stay motivated to remain on track.

1. Place a small note or index card in your bathroom or near your bedside table reminding you to brush, floss, take the pill that you forget etc. This small nagging reminder might help you remember to do this when your normal routine lands you in bed without brushing or running out the door before taking a pill in.

2. Make your appointments in advance. Instead of leaving your visit without planning the next appointment, make sure that you ask the secretary to get an appointment before you leave. Write it on your calendar and make arrangements to keep it. This will help you stay on track for regular cleanings.

3. Plan to spend money for the appointment. Now that you know when the appointment will be, you can set aside five or ten dollars on a regular schedule to prepare for that expense. And if you are lucky, you can do it through a flexible spending account to ensure that you get the most out of your money.

The answer, is fairly simple: debt. A little bit of digging on one of our government websites offers some staggering statistics. In just one year, our national debt, largely inflated by continued expenses from the war on terror, being waged largely in Iraq, contributed to an increase. And no small amount at that. Rather, the total debt went up by just over 550 billion dollars from 2004 to 2005 for a total of 7.9 trillion dollars. This marks an increase of approximately 7.45 percent in compounding interest.

Interest is racking up. Normally, you wouldn’t worry about that if it was a smaller amount of money like a few thousand dollars in our coffers. However, the fact of the matter is, we are not generating enough products – gdp in order to keep up with the increase. So the natural question, for someone investing in the united states debt (treasurydirect.gov is a great place to do that in the form of ibonds, tbills, or savings bonds), is United States debt a good investment?

Not long ago, I brought this question up to an investor who manages accounts for large accounts, high net worth clients. And I brought up the concerns about inflation. My concern being that we will have to print more money in order to keep up with this debt and that our inflated currency will become worth less and the chinese and other economies will surpass us.

The response I got was not what I expected. And so, despite hearing ideas from Rich Dad author Robert Kiyosaki dictating the opposite idea, I was interested in this opposing viewpoint which I share with you here: if the United States economy gets a cold, the Asian economy gets pneumonia. The idea here being that the chinese and other economies are at a first tier level. That is, they have an abundance of raw materials and cheap labor for manufacturing. The united states on the other hand, has a smaller, but overall, more highly educated population. The net result is that we can do lots of shopping at wal-mart for chinese goods at cheap prices.

The question was then simple: what if china decides to double its prices? The answer: it will have a very hard time doing it. In an open market, companies like wal-mart and others are competing. And if they have a hard time getting good prices from their suppliers, they punish them and have no mercy. The end result is excellent prices for goods when you go shopping at wal-mart or a competitor.

All of this begs the question though — does this high amount of debt really make sense? Ignoring the cost in human life, you might ask yourself if the war and its continued efforts make sense financially? Will the united states ever be able to pay back this money? And I think that the answer is that we will, but it will have to be through a combination of fiscal responsibility, cutting programs, and raising taxes. There is no other way out of this hole. Just the interest on the national debt is approaching an unreasonable level and soon, when government program benefit payouts hit their peak, we will be in real trouble. There will no longer be a social security surplus to hide behind.

Source Data:

http://www.publicdebt.treas.gov/opd/opdhisto4.htm

Historical Debt Outstanding – Annual
1950 – 2005

* Rounded to Millions
Includes legal tender notes, gold and silver certificates, etc.

Looking for more historical information?
Visit The Public Debt Historical Information archives.

Date, Amount:

09/30/2005 $7,932,709,661,723.50
09/30/2004 $7,379,052,696,330.32
09/30/2003 $6,783,231,062,743.62
09/30/2002 $6,228,235,965,597.16
09/30/2001 $5,807,463,412,200.06
09/30/2000 $5,674,178,209,886.86
09/30/1999 5,656,270,901,615.43
09/30/1998 5,526,193,008,897.62
09/30/1997 5,413,146,011,397.34
09/30/1996 5,224,810,939,135.73
09/29/1995 4,973,982,900,709.39
09/30/1994 4,692,749,910,013.32
09/30/1993 4,411,488,883,139.38
09/30/1992 4,064,620,655,521.66
09/30/1991 3,665,303,351,697.03
09/28/1990 3,233,313,451,777.25
09/29/1989 2,857,430,960,187.32
09/30/1988 2,602,337,712,041.16
09/30/1987 2,350,276,890,953.00
09/30/1986 2,125,302,616,658.42
12/31/1985 1,945,941,616,459.88
12/31/1984 1,662,966,000,000.00 *
12/31/1983 1,410,702,000,000.00 *
12/31/1982 1,197,073,000,000.00 *
12/31/1981 1,028,729,000,000.00 *
12/31/1980 930,210,000,000.00 *
12/31/1979 845,116,000,000.00 *
12/29/1978 789,207,000,000.00 *
12/30/1977 718,943,000,000.00 *
12/31/1976 653,544,000,000.00 *
12/31/1975 576,649,000,000.00 *
12/31/1974 492,665,000,000.00 *
12/31/1973 469,898,039,554.70
12/29/1972 449,298,066,119.00
12/31/1971 424,130,961,959.95
12/31/1970 389,158,403,690.26
12/31/1969 368,225,581,254.41
12/31/1968 358,028,625,002.91
12/29/1967 344,663,009,745.18
12/30/1966 329,319,249,366.68
12/31/1965 320,904,110,042.04
12/31/1964 317,940,472,718.38
12/31/1963 309,346,845,059.17
12/31/1962 303,470,080,489.27
12/29/1961 296,168,761,214.92
12/30/1960 290,216,815,241.68
12/31/1959 290,797,771,717.63
12/31/1958 282,922,423,583.87
12/31/1957 274,897,784,290.72
12/31/1956 276,627,527,996.11
12/30/1955 280,768,553,188.96
12/31/1954 278,749,814,391.33
12/31/1953 275,168,120,129.39
06/30/1953 266,071,061,638.57
06/30/1952 259,105,178,785.43
06/29/1951 255,221,976,814.93
06/30/1950 257,357,352,351.04

Its obvious that many people just don’t get this basic concept. There is a price to making your money go to work. It means it is not there to help you out around the house, fix that washing machine, repair the car, or take out out for a nice dinner at the drop of a hat. But, when it goes out and brings home more dollars that you can also send out to work, the sacrifice starts to seem worth it.

Tracking Your Employees

Regardless of your strategy for your tracking your budget, be it quickbooks™, MS Money™, or MS Excel™ or something else entirely, one figure you should be calculating and tracking is your cash-flow utilization. That is how much money that you have available is actually working for you to make more money. This could be money in real estate, money loaned out for interest via prosper or a personal loan to someone, or money just in an ING or EmigrantDirect savings account. Tracking this figure by a percentage helps me stay on track and make sure that I am not leaving too much cash on the proverbial living room couch.

Diversification – It’s Not Just For Stocks Anymore

Simply put, you wouldn’t want everyone in your family to work in the same company; what if it went out of business? Then there would be no income. Similarly, it doesn’t make sense to me to have all of my money in a single investment, even if it is making money or even if it is a great rate of return. So I diversify among accounts and also among investment types. I use interest bearing/money market/savings accounts, I use a brokerage account, and I have some personal loans through prosper. (Although Prosper might not be for you.) Spreading out my working dollars ensures that if a company that is handling my money goes out of business or has problems, not all of my money is working at the same ‘bad’ company but I still have a high cash-flow utilization.

Leverage – Getting In Over Your Head

For many people, they have more money working for them than they actually possess. This is called leverage. This is common when people buy a home and take out a mortgage. Despite not having several hundred thousand dollars to buy the real estate, this is still how much money is actually “working” for you. The result is amazing, if a bit risky. Of course, the problem with leverage is that if the money is put into an asset or investment that loses value, you might have to pay back much more than the asset is worth. This is the potential downside of leverage. I’m not concerned with getting any more leverage personally; instead I focus on the actual dollars I have in my hand. By keeping that utilized at about 90% of the money “working”, I feel comfortable that I am not missing any opportunity to earn and I still have flexibility for emergencies.

SSL

This stands for Secure Socket Layer and this is a standard of encryption that effectively garbles your information in order to make it extremely difficult, if not impossible for it to be read by a hacker or someone trying to steal it over the internet. Making sure you are on a secure site is generally as simple as looking at the address in your address bar; an address that starts with https:// instead of http:// is a secure site and has this SSL encryption built in.

Anti-Virus

Anti-Virus is the mainstay of computer security. Computer viruses are programs designed to compromise the data, security, and sometimes even damage or destroy a computer. In order to prevent these from happening, having a good anti-virus solution that is kept up-to-date is essential. This solution should be enabled to access files as they are used and then should scan the entire computer on a weekly basis. This will ensure that there are no additional files that are copied over that are damaging the computer.

Anti-SpyWare/Anti-AdWare

Spyware and Adware often get lumped together. And although there are many suite solutions for these problems, it doesn’t mean that you shouldn’t make sure that both issues are addressed. Furthermore, configuring and updating the solutions is the key here as well; this is no different than an anti-virus. Spyware is designed to capture, gather, and transfer information about your computing and internet usage habits to another third-party pc. Adware is software that is desgined to display ads as you use your computer in the hopes that you will click one of the annoying popups and buy something.

Firewall

Whenever you are connected to the internet and requesting information, you have an address. Your internet address is how the server that you are talking to knows how to send you the information you asked for. However, there are circumstances when information can be requested of you without you asking first. Simply by taking the request and processing it, a hacker can learn that your computer “exists”. This is bad becuase it can cause a problem later on since over time a hacker can figure out what kind of system you are running and how it might be possible to hack your computer. A firewall prevents unauthorized requests from getting to your computer. It makes sure that only people that you’ve started talking to can talk to you.

Conclusion

In the end, the following are good solutions to the issues mentioned above. And by getting these tools now and keeping them updated, you might prevent problems for yourself going forward and save yourself hours and hundreds of dollars worth of headache.

Microsoft Windows Firewall (included in winXP)
Microsoft Anti-Spyware (the top-rated paid AntiSpyware software, now with AntiVirus)
Mcafee Suite
Symantec Suite
Ad Aware SE (by lavasoft)*
Spyware Search and Destroy*
AVG Anti-Virus*

*denotes a free personal version available

Disclaimer: Neither Jed Pittman nor HelpYourMoney.Com specifically endorse these products. Download, install, and use these products at your own risk.

Unfortunate Surprises

The reality for many students, however, is that upon arriving at their college, they are once again faced with placement tests. And these tests, if not passed, will put many, many students back into remedial courses in subjects that they’ve already learned. And according to the article, this is a contributing factor for more than 10 percent of students to quit the program that is leading to their degree.

It is a waste of money to start a degree program and then not finish it. Obviously, there are circumstances where it makes sense and works out. But for the general population, you are best off if you avoid the unnecessary expense. Thinking about your individual situation when it comes to school and making smart choices is critical; no less important than shopping around for a car. But in fact, probably more important. The financial implications of choices made at schools will continue to impact students for years into the future.

Self Assessment

Being honest about your skills and disposition is critical before enrolling or committing to a course of study. Here are some tips that might help with that assessment:

- What do you like to do in your spare time? What is it about these activities that you enjoy?
- Do you like working with other people or do you prefer to work alone?
- What is more important to you, money or being happy at work? Have you ever worked before? How many jobs have you had and whom did you work for?
- Are you rich or poor?
- Who will be paying for your college expenses? Have you accounted for pocket money, transportation costs, and miscellaneous fees?

If you don’t have enough experience or knowledge to answer these questions and really think about them, that is ok. If it is simple information, find out from a trusted resource at the university you’re considering, a parent or perhaps a college-aged friend that might have good information. There are also excellent books out there that help with this type of soul-searching.

Before you can honestly commit to a change that is as life-changing and expensive as college, it is important to think about the financial implications too. A pretty campus and great clubs and parties will do nothing for you when you get out. But considering those factors, in addition to how a potential university or college will improve the quality of your life when you get out may be the most profitable thinking you will ever do. A good, flexible plan for college means many great opportunities and choices later on which often translates into lucrative job opportunities and an enriching set of life-experiences.

In a subsequent article I will give some specific examples of freshman pitfalls and ways to avoid them.

Source: http://www.boston.com/news/local/massachusetts/articles/2007/01/19/many_hub_graduates_struggle_in_college/?page=2

Trump’s show, The Apprentice is reflective of Trump’s tastes. He spends an hour each episode working on beating up some twenty and thirty-somethings who aspire to be his apprentice. Only the best will do for Mr. Trump and he quickly dispatches those who are not worthly of his apprenticeship. It is interesting, but perhaps it has something to do with their jobs. Trump, it would seem, from the beginning was focused on being a businessman.

Keeping Score

When it comes to business and finance, once the necessities of life are met, food, water, clothing and shelter, what I would term the supplemental luxuries come in. I think of these items as things that most people have, but are generally considered luxuries because you don’t need them to survive. A car, a house or condo that you own, and a computer, cable or satelite tv, and a cell phone are all examples of these supplemental luxuries.

Ultimate luxuries are things that are generally not even in the vicinity of “necessary” but are things that are fun to have. There is a line somewhere between supplemental and ultimate luxuries. Vacations, multiple cars, pricey dinners out, and investments are all examples of these types of ultimate luxuries. When you are a billionaire like Mr. Trump, it is all the same. Standards are different. And the way that a businessman like Trump measures himself is by comparing his luxuries to the next guy.

Buying Happiness

It is not to say that Trump is unhappy. I think that people foolishly like to claim that money cannot buy happiness. However, I’ve seen very few people be unhappy about having too much money. But people who are poor are often worried about not having enough.

Our second billionaire’s name is David Cheriton. He became a billionaire by founding a startup in california and then investing some money in google when Google’s founders presented him with a search engine that already worked well even in its test phases.

Finding Similarities

Both billionaires have become rich as a result of business. Each of these men have a keen eye for opportunities and this talent makes them able to manage risk. Probably in a much more efficient way that we could. The takeaway here is that getting into business is the way to build serious wealth. It is not to say that you shouldn’t work as well. Both billionaires still work, but clearly it isn’t because they have to.

Spending Silly

Trump, as documented on his show, spends incredible sums on luxuries. He flies and takes a helicopter and also is always taken care of by his staff. Cheriton clearly could afford that, but he is content with a 1993 Honda Accord and living in the same house he’s had since 1981. This type of living sets Cheriton apart from Trump. Cheriton still works, and if I had to guess, is doing what he really loves. The money doesn’t seem to be a score for him as it is for 100% professional businessmen. The upside for both billionaires though is that they’ve both achieved a position where they could stop working and easily support the needs of their entire families. What a great feeling that must be.

You Can, but Should You

The most interesting thing when it comes to people’s net worth to me is discovering how they handle their wealth. Some people choose to live lavishly like Trump. Enjoying the money that they have seems to be interesting to them and also part of a status. Others like Cheriton live simply, and essentially never really get to the point where they “need” their money to live their lifestyle. Neither one is moderate in my opinion. Each is at the far end of the scale.

Everything in Moderation

Sometimes, in an effort to gain riches we can become overly cheap and perhaps even a little stingy. In order to save enough for your goals, it is absolutely necessary to live below your means. However, how much below your means may be something that you are able to choose and regulate. Saving 50% of your income after your expenses and retirement while sacrificing nice things for others, yourself, and charity might carry an unpleasant stigma. Conversely, running up debt to spend 140% of your income is just as bad, if not worse.

Give yourself permission to spend, to donate, and to enjoy some of the wealth you’ve accumulated. As the addage goes, “you can’t take it with you” so wouldn’t it be a shame if you spent all your energies accumulating for ’someday’, when the day may never come? Perhaps if these two billionaires took some of this advice, we would have some better role models when it comes to spending money.

One thing is certain though, if there seems to be a lack of money in your life, it may be because of how you handle the money you actually do get. This is where Cheriton’s example is really worth something.

Source: http://www.canadianbusiness.com/after_hours/lifestyle_activities/article.jsp?content=20061204_83242_83242

For those of you with kids, you might want to cover their ears. I am about to bust out that dirty word that people don’t like to hear when it comes to personal finances: budget.

Budgeting does not need to be a huge deal, but even if you have a regular budget including retirement and savings, it is likely that you are still “dipping into the savings”. And this nasty little habit could cost you your yearly trip in retirement, age 60-90. When you think about it like that, do you really want to give all of those exciting trips or other adventures up? And don’t think that you will die quick and escape that boredom either. Even people who have lived rather unhealthy lives are being kept alive for many more years now courtesy of many new medications that are being prescribed.

But getting back to debt….Debt is the unwanted, unexpected, and most importantly, unnecessary result of the lack of a plan for these expenses inside the budget. This is not the simple debt of 50 dollars extra on clothes once a year. These are big bills that you just aren’t planning for.

Large Tax Bills: Excise and Property Taxes (and sometimes income taxes for the unemployed)
Medical Expenses: People likely will need operations; if you have insurance that has high deductibles or copays, you should be saving for these unfortunate events in advance.
Maintenance: Cars, Houses, and other high-value assets require maintenance that can be pricey. Lenders encourage homeowners to expect an extra percent of their home’s value will be needed for basic upkeep. This doesnt include home improvements.

Diversify Yourself

Diversification is the standard when it comes to being safe in the stock market or other kinds of investing. This area of personal finance is no different. Provided that you have reasonable interest rates that are somewhere in the neighborhood of 6-14% and you have large amounts of debt (say over 100K) but without the funds to pay for it, you probably will want to consider diversifying your excess funds.

Retirement First

Just because paying off debt is a “guaranteed return” doesn’t mean you should shirk your retirement. If your company has any match, you want to take advantage of that free money. It is likely the best deal for your dollars. If you don’t, consider a split:

• retirement
• emergency (never to spend) account
• long-term expenses that you know will come up.
• debt paydowns (one bill at a time to get the snowball effect).

Reevaluate Frequently

You will want to reevaluate this plan frequently, but be disciplined during the interim. Great ideas of when to update this plan and incorporate it into your budget are either once a year or whenever your household gets a raise or whenever you payoff a bill for good. These are triggers that can change your life and being flexible with this plan will help you control these changes adequately.

Shortly after I had the work done, I found that I still had a significant pull to the left when I drove on the highway. And the pull led me to think that the alignment clearly was not done the way that it should have been. After a quick trip to the body shop, I was able to get it fixed for good without paying anything additional. However, after talking to the person at the shop, a little maintenance could have prevented the whole ordeal.

In terms of conventional wisdom, most people talk about a 4% draw-down of personal assets on a yearly basis while in retirement. This makes sense because it is likely that on some years, there will be a less-than-optimal year of stock performance while there will be other years where the portfolio will have put in a stellar performance. 4% is the number many people stick as a good average to make sure that people don’t take out too much up front and then end up chasing butterflies and rainbows later on when trying to make it back in the economy because they’ve spent too much.

Reality Check:

For some people, its time to face facts. People that have waited until 10 or less years before they’ve retired to start significantly saving are most likely going to feel a pinch on retirement day.

Indeed, many retirees or near-retirees are simply embracing the idea that they will never stop working. Part of this, undoubtedly is due to the increase in expenses related to healthcare, but the fact is that most of this relates to the plain and simple truth that there just is not enough there in their personal retirement coiffers to sustain them at the lifestyle to which they were accustomed.

10% Might Not Be Enough:

Even for people who start relatively early, saving ten percent might not be enough. The group I am talking about here are those under 40, but older than 25. Let me explain why: Say you are 25, and you make a salary of 50,000 dollars. Even if you were agressive and were able to start saving 5 or 6 percent of gross, pre-tax income starting immediately, it is likely that you will have just about 100000 dollars in just contributions (not adjusted for inflation or raises) if you were to retire at 65. Compounding interest will help you out significantly, but the reality is that there just won’t be enough time for you to achieve what you really will likely need in retirement, something north of 500k. In today’s economy, raises are just barely keeping with inflation so that the two of them will likely cancel each other out and you shouldn’t be counting on a windfall somewhere either.

Expenses Count Too:

For someone at age 55, the best bet is to take a real hard look at the expense side of the equation as well. More detrimental in my opinion than the lack of funds in a retirement portfolio for someone starting so late is a big chunk of monthly expenses. A significant deal of the work will be to investigate and resolve any excessive expenses. After that, it is a matter of being frugal with the remaining sum and anticipating the inevitable.

My guess is that the real demise of Medicare and Social Security will be quiet and sneaky, not loud and obvious. Even powerful politicians eventually will cave to grade-school math. There just isnt enough money coming in to cover the existing payments, let alone the increased expenses once all of the boomers have retired. Taxes are already high and a tax-hike in the form of mandatory insurance, increased medicare percentage costs etc will eventually hurt businesses and hurt the economy. These items must be planned for and factored in, especially for someone starting late.

Look Before You Leap:

Just accounting for these items and being aware of them will give someone pause who is at age 55 or 60 and about to deal with retirement. For people in this situation I hope that this article has helped to give some options; sometimes by bringing these issues to the fore and dealing with them sooner, we actually do making things better for ourselves in the long run. Im an options-kind-of-person. Not stock options. At least not yet. Rather, I mean that when it comes to my money and my life in general, I like to put myself in a position to have as many choices as possible. Often, this means that I will forego items in the present in order to assure myself a more wide array of choices later. This is the crux of personal finance, really, and why starting soon could make a big difference.

ATM access is a concern though, but ING seems to have fixed this in the form of hooking their customers up with fairly accessible ATMs for many locations.

But Does It Make Sense To Plug In?

When it comes right to it, I don’t intend to jump on this bandwagon. When I have money in my checking account, it is for purchases within the next 30 days. Granted, there is a constant churn of money, but in general, I only have about 5-10 days of “reserve” funds in the checking account at a time. This is by design. Why should the bank be able to make money on my money? By the same token, why would you want to settle for an inferior 3% interest rate by keeping money in this account that you aren’t going to really use when you could stash it in a CD, an emigrant direct or ING savings account at interest rates that are 4.5% and above? It doesn’t make sense.

High Rollers:

I think that this is a great option for people who have large operating budgets month to month and want to take advantage of that fact. Personally, there is only about 5K flowing in and out of the checking account each month and an average balance of about 2500; so the interest lost at 3% is minimal. But for people who generally have high average balances, this is a great move.

Getting Started:

This offer is not open to the public, as I discovered by checking ING’s website directly. So if you are interested, I would check out ING’s online savings account first.  It is likely that you will get an offer by them while you are logged in.

Earn 2.50% annual percentage yield with the Orange Savings Account – No Fees, No Minimums & No need to change banks! FDIC Insured.

In fact, according to a spokesman at Forbes, “a nail in the casket is hardly the end for some stars. Instead, their work, as well as their iconic images, continues to appeal to fans who remember them, and to those born long after they died.”

When it comes right down to it, this guy made his money the easy way. He earned it by accumulating assets. Fortunately for the rich folks, people don’t think of it that way. The real value of what this celebrity accumulated won’t be realized for years because it is a real asset.

Assets put money in your pocket. And one can definitely say that about Kurt Cobain and Nirvana’s music. It is intellectual property and copyright protected material. Every CD sale and play of a song on the radio generates income and puts money into the pocket of the person controlling the asset. It’s just another example of how the best way to get rich is by gathering assets.

Source: http://www.timesonline.co.uk/article/0,,3-2421384,00.html

Patience is a Virtue:

Assuming that you don’t score some high-end job with oodles of tasty stock options or inherit millions from your great uncle harry, you will have to work and earn your money the hard way like the rest of us. But being patient with the changes that happen in your life is the best way to remain in a good financial decision. Preparation, Patience, Discipline. These are the keys to success. Not just in finance, but in many other arenas as well. All to often, we become impatient, and then lose our discipline and the results are mediocre at best, horrible at worst.

Stay The Course:

Personally, the challenge for me lately is that it is way too easy to do “something new”. I am looking at other options for investing, other ideas when it comes to working and earning money and I am becoming restless. But this is not the best way for me to achieve wealth; in many ways, this article is a simple post-it™ note tacked right to my head. But my feeling is that this is the same thing for many people, especially this time of year.

Taking a long-term view is the best way to get yourself aligned with your financial goals. Consider your preparation. You’ve done a lot of work already to get yourself to the place you are at. Concievably you’ve spent hours on end developing your plan, whether on paper or just in your head (on paper is best though, I think). And now, some stumbling block has come and gotten in your way. Maybe you fell down hard, or maybe you just lost your footing for a moment. Either way, by looking way down the road, you will be able to focus and get your feet. Looking down and keeping your head down is the worst option for you; it will keep you paralyzed by your current situation and unable to focus and generate new energy and opportunities for your future.

Mistakes Are Ok:

So you’ve changed careers and it hasn’t worked out. You got a ticket or some other kind of legal trouble. Maybe it’s not that serious; you just spent too much on Christmas shopping, and now that credit card debt has crept up again. Whatever the mistake was that happened, it really doesn’t matter that much. In reality, the money that you lost is money well spent, if you do something in addition to spending it; that something you need to do now is learn!

Each time we lose money in life we have the opportunity: learn, or make the same mistake again. It is a basic human principal. Either we learn or we keep getting burned when we touch the stove. The problem with money is that there are often other issues and emotions at play. But the simple fact is that it is no different than touching a hot stove; if we are learning, we will become patient and more careful over time. This patience and discipline will make us rich.

Patience Is Not Easy:

It’s hard to be patient. If it were easy, everyone would do it. But the fact is, there are people who are always going to be more and less patient than you are. So don’t focus too much on the runners on your left or right. You are running your own financial race, and you are your own best motivator. So be patient, get your feet immediately and just get back on track with your savings, investing, and other financial goals. I promise you, if you do that, this temporary setback or fall, if you will, will be nothing more than a distant not too long from now. And you will come out of your trial stronger than when you went in.

Buying a Condo:

After waiting for a couple of years and working hard and just paying my installment debt, someone mentioned to me that it might be a good idea to consider buying a house. It was something that I thought would be a good idea but I wasn’t sure how I could handle it. So, the issue of course was that there needed to be cash saved and there needed to be a real plan in place in order to get that going. Even though I had started saving and I had some ideas about credit and credit reporting, I didn’t have enough knowledge to really make the leap.

Feeling Empowered, Involving Your Family and Close Friends:

Continuing to watch the show, I began to save with a goal in mind; and I got my family on board. Once I figured out what the goal was, I tackled it with the support of my family and there were not huge issues in terms my relationships because of it.

Suze’s concept of people first, then money, then things was an easy concept to apply. It made me start to consider my relationships first when it came to money. I strongly thought about who/how/if people would be affected by a financial decision that I would be making. Just being mindful of this has avoided countless amounts of hurt feelings and avoided arguments. This is allows you to feel powerful about money and value relationships too much to let money get in the way of them.

Rich is a state of Mind:

One other point that I really like that Suze explains with regard to emotion is that Rich is very much a state of mind. That is, when you are rich and feel powerful about your personal finances, people sense it. She alludes to this in her books and has said it directly on her show. And this outward attitude that you have exudes confidence and the end result is that you get richer.

By attacking issues about my finances that have bothered me personally, I’ve become stronger and more confident with each step. And now that my financial life has become simpler and goals are being met, it gives me courage to take these ideas and transfer them to other areas of my life.

Simply put, now money requires less energy and does more for you. Because all of the energy spent worrying and stressing is gone and you simply have the energy spent on other things which are better.

Personally, for me, this is just researching, writing short articles and blog entries, helping others, and earning more; it’s just a little bit of soul-searching and then some effort about an small job, idea, or investment, which for me, is a relaxing and fun process.

Consider Your Emotions:

So, if you are person who has read various financial websites, books or other materials that still don’t work for you, I would strongly encourage you to read Suze’s book: The 9 Steps To Financial Freedom. It is my favorite of her books that I’ve read. It is a simple, easy read, and gives you some real information that is useful and gets you up to speed regarding financial topics and your emotional involvement with regard to your money.

Rich Dad shows us that working more is often not the best way to get more income, alone. Instead it can get us trapped in the earn and spend rat race. Instead, rich dad urges us to accumulate assets. So, the ideas here are focused on just that: accumulating assets.

The first type of asset is basic loans. Loans are a promise to pay back a lump sum of money that is borrowed, but paying it back over time, usually with interest. People have been investing in loans for hundreds of years. Until now loans were only available to the very rich or to people through investing in banks and other businesses that deal in loans.

Prosper: an on-line lending website, is a way for individuals to invest in loans. By making small loans to other individuals you can reap the benefits of investing in these assets without the hassle of investing in banks or other corporations.

When it comes to investing most people don’t think of credit cards. However, the reality is that many people are using 0% balance transfers in order to accumulate wealth. People do this by writing a check to themselves and depositing it into a high-yield savings account. This allows people to earn money on credit cards by effectively “stealing” the interest from these lending institutions–interest that they would normally get if you were paying something other than zero percent.

The trouble with this type of plan is that you generally have to have your finances in order (i.e. a good fico score) to qualify for these types of plans. Furthermore, the interest is usally not that significant. for example, on one thousand dollars, the yearly interest might only be 45 or 50 dollars per year that you can get in a safe, high-yield savings account. This might not be the kind of money that will really make a difference for you.

Plain old stocks are another option for people that want to accumulate assets. Many stocks pay dividends. Dividends are just small amounts of money that are paid to the shareholders. Dividends are often reinvested into the original stocks. By doing this shareholders obtained more and more shares of the stock over time. This type of Plan is called a drip. Drip stands for Dividend Re Investment Program.

When people do research about how others become rich one common factor is usually a business. Often it is not enough to work for someone else. Working for yourself, in the form of a small business is often one of the best ways to earn additional sums of money and sometimes even develop a longer term income stream for the future.

Starting a business is not as easy as it sounds, however. But when you consider that it is one of the best chances to make decent amounts of money, it is no surprise that this is the case. If it were easy, as they say, everyone would be doing it. In future articles I will be talking more about how you can get started and some easy steps you can take to determine whether or not it makes sense to start a business, and if so, what type of business might suit you.

In any situation, you must first hear the knock of opportunity at the door. If you actually hear the opportunity knocking, you must immediately take steps to sieze it because as cliche as it is, the fact is, opportunity really does only knock once. And after that, it is gone. Getting motivated to listen for new opportunities and then staying motivated to actually sieze upon them is the first step to becoming motivated to generate more income.

In simple terms, many people are working and are living at or above their means, but perhaps are able to pay their regular installment debt just fine. Hundreds and thousands of dollars lost yearly to interest costs and such, but it doesn’t really matter. These funds are not needed so long as the monthly debt is paid. One way to become motivated is to calculate the interest lost each year by installment debt. There are various calculators out there that are easily available to calculate the interest on loans or credit cards. Add up all of that interest lost in a year and imagine what it could buy.

If that doesn’t motivate you, consider what that same sum would be if invested at a 10% growth rate for 30 years for your retirement, how much would that sum be? Would that be worth doing something to accelerate your debt repayment and/or savings plans to want to generate more income? It probably would. And if it doesn’t motivate you, you can stop reading now. Right now. I mean it. The rest of this article won’t interest you.

So what is the right way to generate more income?

In reality, there is really no bad money that can be generated. Sure there are ways that are better than others if you are trying to save money, avoid taxes, and the like, but the fact is, that there are more opportunities out there to make money than you could possibly exhaust if only you are willing to look for them, and then, actually spend the time as a motivated person, to follow up and cash in.

Self-Employment is always an option if you have a unique set of skills that you feel that you could offer to others and make money. Small-Cash jobs are also available for short money if you know where to go on the internet to do them, depending on your skills. Investment income is also available in the form of bank and investment accounts. I will discuss each of these methods in a subsequent article to provide you some great opportunities.

Are you listening? You might be. But now that we come to it, are you willing to work?

Enter Suze

Many people within the personal finance world really don’t like Suze Orman, but I do. Others are big fans of Bach or Ramsey, but neither of them has really jumped out at me like Suze Orman has. I think that there are times when she can become more like a therapist and some of her advice is somewhat harsh, but there are few situations where I could say I honestly disagree with what she is saying. And more important than her advice on individual questions, in my opinion, is the fact that she is a smart, rich, woman who provides not just answers, but a philosophy when it comes to money that fills a large void in the personal finance world. No amount of “Automatic” millionaire type advice was going to work for me until I started to work on the emotional issues that Suze Orman brought up.

Her Personal Finance Empire

Suze Orman’s personal finance empire is huge. She has written several books on personal finance. She has a website. And she also hosts a call-in show on CNBC which I really like because you see real people and their questions and issues. And now she writes a regular column for Yahoo! Finance. Once you get your finances together, her information is a great reminder of where you came from and helps you stay current as well. Her advice, like most Personal Finance advice can become repetitive, so I would not read all of her books or watch every show she has, but instead I would recommend Suze’s early work, the 9 steps to financial freedom. I even gave this book to my mother as a Christmas gift this year.

This is because it was written early on in Suze’s career and addresses these real issues that I am mentioning: the emotional components to personal finance. For many people, myself included, I needed to understand why I felt the way I did about money and debt and loans before I could really tackle what was important to me—enough to make a plan and stick to it. Before I really became involved thanks to Suze Orman, I found that I was only partially able to save and I was not able to figure out whether or not it made sense to save and how, despite tons of good advice from my grandfather. He taught me the mechanics, the math. But I learned from Suze about the emotional/thought components of money and for me, those were the most important.

In part two I will talk about a few of the main themes from the book so you can get a feel for whether or not it is a book that would interest you.

Continue to Part 2 Suze Orman Simplified (part 2)

Tip 1: Stick with the professionals.

I am talking about chain auto-repair stores here. As with anything, try to get referals from people you know, but in general, my experience is that you get what you pay for. And although the big companies will differ from franchise to franchise, I find that sticking with these type of bigger companies that have standardized service and a corporate office you can contact if something really goes wrong is a great first step toward making sure that you get a decent job done for your money.

These chain-type stores are generally reliable, are forced to keep prices competitive in order to make money which is good news for you as a consumer as well. Small shops are not optimized and therefore may end up passing along the costs of their lack of skilled management to you in the form of higher prices. Warranties are more likely in this type of environment as well in the form of an additional “maintenance plan” etc. Personally, I know that this costs more money, but I find it to be worth it in the long run provided that you follow the next tip on my list.

Tip 2: Be consistent.

Make sure that you go to the same one or two places over and over again (provided you are satisfied with their work). This strategy has some clear benefits. Familiarity with the staff is a great benefit since you will be a repeat customer for them over time and they will likely take care of you if you need some special assistance.

Recently I had to bring my car in for a checkup and got excellent service for free; I am convinced that this is because I am a loyal customer at my local shop. Long-term records abound in these situations as well since they track the history of the maintenance of your vehicle. This is great for me since I often can forget what needs to be done in the next several months.

Tip 3: Keep a record of repairs (completed AND upcoming) and budget for Car Expenses.

Budgets are the financial key to success for many people. Car repairs, unfortunately, do not always make the list because they are erratic and hard to plan in advance. I would counter, that these expenses are unevenly spaced out, but they are very predictable. In short, as you own a car longer and longer, you can budget your expenses based on the amount of money you’ve spent up front compared to the number of miles you’ve put on the car and its age. Its not an exact science, but often, a simple 150 dollar tune up every year can avoid a nasty 750 dollar job every two or three years.

Maintenance is really worth more than the car payment in many circumstances if you are buying a quality car and planning on driving it into the ground. This is because the last year or two of automobile ownership can be frought with expenses of the pricey variety. This is where some specialization is crystal ball gazing becomes handy.

Bonus Tip: Don’t play the stock market with your car. What do I mean? You should be realistic about what you can expect out of your car and how much you can afford to spend on repairs. If you get into a situation where you have a costly repair (over 500 dollars) and the car is paid off, you need to strongly consider whether or not this is going to be the last repair you make; that is, if you will sell the car.

Often times, people make repair after expensive repair to a vehicle because they like the car, or because they feel like they need to make the repair so that they can continue to drive a “free car” since they don’t have a payment. However, if a new car would cost you 300 dollars per month and an old beater that you drive costs you an average of 450 dollars monthly over any 6 month period, this is a strong signal that it is time to be thinking about selling.

If you wouldn’t pay that much to buy the car, even new, why in the world would you spend that much on an old used car that you could trade in for something new? The thinking here is similar to people who buy more and more of a stock as it tanks. They are “averaging down” to improve their basis. Like putting another 50 or 100 bucks up at the blackjack table to “make up” what you’ve lost, this is often a much riskier move than you should be making. If you have a limited income, the absolute last thing you want to do is gamble on your car; it will likely be a very expensive bet.

Pay As You Go!

Several months ago I went through a serious cut off of some of my expenses. Of course with gas prices rising and my expensive tastes, some of these expenses have crept back in but on the whole I am doing much better than I used to. I’ve removed a monthly cellphone bill and a seasonal game subscription which monthly totaled over 50 dollars. The cellphone, however, is the most remarkable I think. For my business, I often have a cell phone available so that people can reach me on the road, so that I can take the calls there rather than on my phone at home, and in this day and age, who doesn’t have one?

Do You Really Need That Cell Phone?

So, one of the challenges of course when I was reviewing my expenses was to figure out what services I really used and which services that I might be able to live without in the situation that I really couldn’t afford to keep them in terms of a layoff or something similar. So one of the services that goes right away is the cellphone since it is a monthly expense that could effectively be handled by using the home phone. So I think that is something that I should consider. After a long process, I finally cancel the phone; but I realize that I still would like to have a phone to use once in a while.

Pay As You Go:

One day when I am in Wal-Mart, I notice them selling pay as you go phones so I started doing some comparison shopping and decided to not get the Wal-Mart one but instead I bought one at the local convenience store for 20 dollars, no activation fee, no contract, pay as you go, and some airtime was included with the cost of the phone. The activation was easy—took less than 5 minutes on the phone with the guy. That might be because I am somewhat tech savvy but I don’t think so.

Service Quality:

One of the items that I was most concerned with was that I would have to either sacrifice service quality, phone quality or otherwise give something up in order to get to a pay as you go phone. But in my case, I didn’t have to. The phone is a Kyocera, it’s decent. It has voicemail and I could have kept my number if I had wanted to. But the bottom line was that I didn’t want to.

Great Price:

The rates are very reasonable, under 10 cents per minute which considering that I only use the phone once a week perhaps for 5 minutes, that is more than reasonable.

No Lost Phone Issues:

And the best part is that if the phone is lost, then I can just forget it and start a new one. I am out only the amount on my account and that is only if I am not able to get it resolved with customer service. So, all told, this was a switch that costs me less money, only a about an eighth of what I used to pay each month and I still get all of the same services and features. Check out your cell phone usage. Maybe you could get the same benefits from a dealer near you!

Services Are Free

The first thing to recognize about online banking and all of these services is that they should be free at this stage of the game. There is a huge market of banks that offer these services now and therefore there shouldn’t be a premium on getting them. If you aren’t getting these services (and maybe more) for free, you should consider switching to a bank where you do get them.

Online-Reconciliation

By banking online, you rarely will need to “balance” your checkbook anymore, at least I don’t. It should be fairly simple to see items that you’ve written and catch them clear. For those of you who are accustomed to balancing your checkbook when the statement comes in, you had to deal with somewhere between 25 and 35 days of activity each time you balanced your checkbook, likely taking somewhere between 15 and 30 minutes. This was really wasted time. Now, by checking your balance once or twice a week, you can quickly and easily keep things balanced and ensure there are no errors. (Checking your bank statements regularly is important.)

Online-Statements

Instead of having to deal with searching folders and piles of paperwork for that check you wrote three months ago, it is easy to find that information online now. Most banks offer a moving window of at least 90 days of activity where you can easily see what you’ve done for the past 3 months in terms of checks and purchases. A quick log-in process and the information you were looking for is right at your fingertips.

Downloadable Statements

For the most part, people who are really interested in personal finance have some kind of program or routine to keep their information related to their bank accounts and such in order. But if you are not really that obsessed or involved with your finances, you still may like this feature. In addition to getting the data in the basic comma-separated, and quicken-file formats, my statements are now available for me to download in pdf format. Provided that you am comfortable keeping this data on my hard drive (and you should be, although I will be addressing that issue in a separate article), you can easily archive all of your data electronically and reduce the need to hang on to tons of bank statements for years on end.

Online-Bill Pay

In addition to seeing all of your checks and purchases, many banks now also offer online bill pay which eliminates the need for checks altogether. The financial companies love this because it is less paperwork for them as well. Your payment is nothing but a bunch of ones and zeros zipping through the internet in a batch of ACH or EFT transactions. This is unnerving to some, but for me, it is just fine. No more writing checks; no more losing bills; and no more buying stamps. I recently got my mom onto online-bill pay. See the story here.

Linked Accounts

Once you get accustomed to online banking, you are just one step away from a high-yield online account at either ING or EmigrantDirect or one of the other competitors for your savings dollars. Since you are comfortable with the processes, you will see how easy it is to link accounts whether it is your brokerage to your checking, or an ING savings to your business checking. Nearly any type of link and easy electronic transfer is possible once you have become comfortable with online banking.

So if you haven’t started banking online yet, you might want to think about starting!

“Consumer prices fell half a percent in September, the Labor Department reported Wednesday. But leaving out food, and the significant drop in energy costs, the so-called “core rate” of inflation rose 0.2 percent.

That’s the third consecutive monthly rise for core inflation, which is running at its fastest rate in 10 years. Costs for housing, medical care, and clothing all showed a significant jump.”

Inflation is a major factor when considered for retirement. And the market isnt super-safe or super-reliable anymore as it once was. In fact, compared to some of the more active and growing stock markets in the world, the Unites States stock market has performed average over the past few years. This average performance means, unfortunately, that inflation is a more powerful force influencing our portfolios than we may like.

Often people put inflation near 2% but in real terms for me it seems much higher. Almost all of my bills are increasing and the only reason I am able to reduce my monthly expenses is by getting bills paid off. This is a great feeling of satisfaction but it truly feels like I lose about 5% of that gain every month to inflation which would put it much higher than the stated 2% when you compare my total expenses at approximately 5000 per month. At that rate, assuming that I am not able to reduce my expenses further by paying off more bills, in just over 14 years I will find that I no longer have any savings at all.

This seems most dubious for those in retirement situations. There will not be any amazing windfall or lottery ticket that is going to double their retirement nest egg, and therefore their monthly check. Instead, they have to somehow just live on the money that they have and just try to survive. All the while, the price of goods like milk, eggs, fuel, etc. just continues to grow. Social Security does have a cost of living adjustment and although that has been good lately, I confess that I really don’t factor in social security when it comes to retirement. It just doesn’t make sense, in my opinion, for anyone under 30 to count on it.

Inflation is increasing the costs of goods and therefore removing the buying power of the portfolio that you’ve grown for 20, 30, or perhaps even 40 years. But, what does that mean for other aspects of retirement. Inflation is not just the cost of perishables, but it is also the cost of services. Utilities, healthcare, and other items of this nature will all increase in price. But in addition, there will be increases in the costs of large purchases. Homes, appliances, and cars are all items that will grow more expensive over time since the salaries of the people who are working will increase.

Interest rates will be hit next. If you are diversified and have strongly monitored your asset allocation, it is likely that you have a portion of your money in cash, money market funds, cds, or perhaps something more exotic like a T-Bill or municipal bond. Regardless of where you are putting this money instead of the stock market, it is likely that an increase in inflation will bump up the rates on some of these investments, but what to do if the interest doesnt make enough when compared with inflation? Or what if the stock market doesn’t rebound once interest rates are raised.

In a world of cause and effect, the devil you might already know (inflation) may be better than the one you don’t (high-interest rates) since this new one may not make you much money at all. Worst of all is the fact that there is no panacea for this situation. Homework, watching the market, and being shrewdly allocated with a large portfolio, however, seems to be the best shelter for weathering the buffeting waves of inflation and the occasional gusts of high-interest.

Source: http://finance.yahoo.com/columnist/article/moneyhappy/11094