Personal Finance Blog — Page 9 — Tips And Stories To Help You With Managing Money

Advice From The Money Pros

January 15, 2018 By Twila Van Leer

The best people to learn financial wisdom from are the ones who have succeeded themselves. These bits of wisdom from some of those in the know are based on their own experiences that led to financial security:

David Bach:

Former vice president of Morgan Stanley and prolific best-selling author in the personal finance genre, Bach has a common-sense approach that focuses on money-management strategies. His own approach to building personal wealth has a strong eco-friendly philosophy. He doesn’t recommend that to everyone, but says it’s something to consider. He believes there is lots of wisdom in the many books, articles, media shows and other sources that are available to those just beginning the process. His own book, “The Automatic Millionaire,” was on the best-seller lists for more than 31 weeks.

Barbara Corcoran:

Well-known for her regular role on TV’s “Shark Tank,” she is considered one of the most successful real estate brokers in the country. Her no-nonsense approach to building personal wealth is in her most recent book, “Shark Tales: How I Turned $1,000 into a million-Dollar Business.” A bit of advice from this experience: don’t listen to friends who take a negative approach to life. Few people adhere to her advice, she says, but she is convinced that you can overcome the odds by following her path to financial success.

Suze Orman:

She’s known for her flamboyant, take-charge approach to financial advice. She doesn’t pull punches or skirt issues. By taking a hard look at what people are doing wrong, she can turn her expertise into good advice. Her many books, aticles, TV specials and other forays into the financial arena, all come back to the same premise: You need to understand the difference between what you want versus what you need. Cutting the fat out of your budget is the beginning of wisdom.

Dave Ramsey:

His syndicated radio show is broadcasted on more than 500 radio stations, and his books “Total Money Makeover” and ”Financial Peace” have influenced thousands of people seeking financial security. He also holds forth on Fox Business Network. His focus is on financial discipline, and he gives it to his followers straight – to the point they may feel he is yelling at them. It’s what people need to stay on track, he says.

Ali Velshi:

Anchoring CNN’s World Business Today and as the network’s chief business correspondent has made him familiar to millions of Americans interested in improving their personal finances. His focus is on how to build wealth, implement successful budgeting practices and understand the economy. His media appearances and writings have a straightforward and reputable approach and he is best known for his coverage of national and international financial crises and telling consumers how best to dig themselves out of debt.

Five Money Mistakes To Avoid

January 13, 2018 By Twila Van Leer

Putting Off Investing

The stock market is on a roll, but too many Americans are not benefiting from the gains. Bankrate data shows that fewer than half – 46 percent – of American adults have money invested and even fewer, only 18 percent, of the youngest adults are involved in the market.

Failing to invest because of fear of losing money is shortsighted, the experts advise. Time has proven that a well-balanced portfolio will always produce a net gain. Compound interest is at stake, so investing as early as possible is the best approach.

Now is the time to make the jump if you a beginning investor. If you are more experienced, it may be time to accept a little more risk.

Have a Rainy Day Fund

Things happen. Those who are smart money managers anticipate them and will be prepared. When the car breaks down or your family experiences a medical emergency, a rainy day fund makes the difference between an inconvenience and a disaster. The gurus suggest a cushion of savings that would take you through three to six months of emergency financing. That’s on the conservative side and more is nicer. Having to take out loans or dip into other reserves can set your personal finance plans back for a long time.

Pay Off Debt

Mortgages and student loans can be an annoying reality, but there is no way around them but through them. There are different schools of thought as to how to approach debt – pay off the largest first or pay off the smaller ones first. The Harvard Business Review in a recent article suggests paying off the ones with the highest interest first. Credit cards have notoriously high interest rates, so should be your first targets.

Request a Pay Raise

Last year, only 48 percent of Americans got a pay raise, often simply because they didn’t ask for one. Failing to make a bid for higher wages could cost you lost income over your career. Go to the boss armed with proof that you are worth what he is paying you, plus some, and then be prepared to keep looking at the job market if no raise is forthcoming.

Don’t Spend Too Much

If there is any one truism in personal finances that can’t be argued with, it is the one that says you can’t save anything if you spend it all. Eric Roberge, a certified financial planner and founder of “Beyond Your Hammock” compared spending everything you make to driving a race car at 200 mph with a warped wheel. It simply can’t do anything but lead to trouble. You must make room in your budget for savings or you will be scrambling for money when you need it most. Learn to live below your means.

David Bach Has Financial Answers

January 11, 2018 By Twila Van Leer

When it comes to giving sound answers to personal finance questions posed by the American public, no one does it better than David Bach.

His best-selling “The Automatic Millionaire” was on the New York Times’ best-seller list for an unprecedented 31 weeks for a book on that topic. Over the past decades, he has written nine consecutive New York Times best-sellers that have been translated into 19 languages. He is the only business author to have four books simultaneously on the NYT, Wall Street Journal, BusinessWeek and US Today best-seller lists. His seminars and appearances on top media shows have made him familiar to those who are looking for guidance in their personal finances. More than a hundred million Americans have been exposed to his no-nonsense approach to improving finances.

For simplicity, he boils his advice down into 15 “timeless truths.” To wit:

• Always spend less than you make. Life will be easier and less stressful.

• Automate your financial life, rather than wasting time budgeting. Budgeting causes frustration and failure, he believes. Automation relieves the stress.

• Be an investor rather than a borrower. Investors get rich. Borrowers stay poor.

• Buy a house. Don’t rent. Homeowners and landlords make money and build wealth. Renters stay poor.

• Don’t lend money to family or friends. You’re not a bank and you could lose both the money and the relationship.

• Never invest in things you don’t understand. If a potential investment cannot be explained to you on one piece of paper, it’s too complicated.

• Invest for the long term. Building wealth takes decades, not days.

• Never invest on margin. Leverage kills you when things go wrong.

• Never assume that “things are different this time.” Things work until they don’t work. Never bet the farm. You could lose it.

• Once you become rich, stay rich. It beats starting over again. Talk to those who have been in this position and they’ll attest to that truth.

• Give back. The more you give, the more you will grow, and you make the world a better place. (Bach is known for his charitable contributions.)

• Never give up. No matter how many times you fail, you haven’t lost as long as you get up and try again.

• Compound interest is a miracle that works when you work it. Save $10 per day at 10 percent interest and in 40 years, you’ll have $1,897,233. If the interest is only half that, you’ll still have near a half million dollars, a considerable amount. Your older self will thank you.

A bottom-line quote from Bach crystallizes his philosophy: “When your values are clear, your financial decisions become easy.”

Books Financial Wizard David Bach Recommends

January 9, 2018 By Twila Van Leer

David Bach Book Recommendations — The six books David Bach recommends for those who want to improve their personal finances and build wealth

David Bach is one of the country’s leading financial gurus. His words of wisdom on personal finance are read in a dozen books and touted on top TV shows and other forums. So, what does he read on his own time? Here are six books that he recommends for those who want to improve their personal finances and build wealth:

• “Think and Grow Rich,” by Napoleon Hill. A journalist, Hill researched more than 500 self-made millionaires, including Andrew Carnegie, Henry Ford and Charles M. Schwab, to include in his 1937 best-seller. This classic explains that accumulating wealth has more to do with mindset and the drive to overcome psychological barriers than anything else. It tells you how to start “thinking your way to success.”

• “Business Adventures” by John Brooks. Self-made billionaires Bill Gates and Warren Buffett endorse this book, which posits that starting a business in the best way to start your march toward financial success. It was published in 1969, but though a lot of business practice has changed, the fundamentals stay the same.

• “Your Money or Your Life,” by Vicki Robin, Joe Dominguez and Monique Tilford. Millionaire Grant Sabatier, who claims to have read more than 360 books on personal finance, declares this one the best. It also was the first one he picked up. Another endorsement comes from Chris Reining, 38, who had logged his first million by age 38. The book reiterates over and again the idea that you exchange your life for money. The question then becomes, when you consider what you exchanged for a particular item: “What did I trade for this and was it worth it?”

• “Unshakeable,” by Tony Robbins. After interviewing some of the world’s greatest financial minds, Robbins created a step-by-step on how to transform your financial life and begin to grow wealth. He posits that you don’t have to predict the future to win the investment game. Focus on what you can control and you’ll be the master of your own investment fate, he writes.

• “The Little Book of Common Sense Investing,” by John C. Bogle. Wise investing is the core of building wealth, this author says. He is founder of the Vanguard Group and creator of the world’s first index fund. He details the simplest and most efficient strategy: low-cost index funds, Warren Buffet recommends this read.

• “The Automatic Millionaire,” by Bach himself. The book exposes a handful of money misconceptions that keep ordinary people from achieving financial goals. Bach insists that “you don’t need a budget, you don’t need a lot of money and you don’t even need willpower to accumulate a fortune.”

With 2018 just getting under way, there’s a reading list to keep you learning more about how you can manage your money and start realizing goals to increase your wealth. Happy reading!

Will They Be Ready For Retirement?

January 7, 2018 By Twila Van Leer

Even though it appears that young workers today can look forward to less benefits from government programs and pensions when they retire, they don’t seem to be bothered enough to start saving.

Forty-eight percent of those aged 18 to 30 have zilch in their savings accounts, according to a GenForward poll conducted by the Black Youth Project at the University of Chicago. Associated Press-NORC Center for Public Affairs Research collaborated.

While some of those in the research sample would still be in school, those at the other end of the spectrum are doing no better. In the age group 25 to 30, the great majority had nothing set aside for retirement. All this is occurring at the same time that traditional pensions offered by employers are disappearing, leaving future retirees dependent on their own resources.

Contributing to the problem are new Social Security rules that keep increasing the age limits for participants. It used to be possible to apply for full SS benefits at age 66. Now it is 67. The rising generations have less faith in the federal retirement program than did their parents. Only 5 percent say they have confidence in the program and 28 percent are “somewhat confident.” That leaves well more than half who are not counting on Uncle Sam to underwrite their retirement.

Still, the young people look at the situation through rose-colored glasses, expressing confidence that they will be able to maneuver through retirement okay.

Many are relying on company-sponsored savings plans such as 401(k)s to see them through. One young man who took a finance course in college, was alerted to begin saving at age 20 to secure his retirement. He didn’t begin until several years later, but at least has the concept in mind. He and his wife both have 401(k)s. Some of the younger set reported taking second jobs to give them a savings boost.

There is no simple formula for deciding how much you need to squirrel away for retirement. Depends on when, where and the lifestyle you anticipate. Fidelity suggests as a rule of thumb that you dedicate 15 percent of your current income to that future need. Some young workers have looked at their personal situations and expect to be working beyond usual retirement age — until they are 70 or more.

Some of the confidence these younger generations exhibit is founded in the knowledge that they are just getting started in their careers. They expect to increase their earnings as time passes and to have more leeway for saving. But based on well-founded common wisdom, about half of them are already behind the curve and they may wake up to find themselves retired — and broke.