Creating Surplus Cash For Savings and Investments

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Living below your means is more a matter of self-discipline. A few adjustments here and there could be all it takes to have the necessary funds available for saving and investing.

Saving, investing, money, debt, spending less, credit cards

You know you need to be saving money but you never seem to have enough at the end of the month or worse, you are further in debt.

Living below your means is more a matter of self-discipline. A few adjustments here and there could be all it takes to have the necessary funds available for saving and investing.

Some mutual funds can be opened up for as little as $200 with minimum contributions around $50.

Here’s a list of ways to save money by spending less.

*Open up bank accounts that have little or no service fees. Keep a cushion to avoid accidental bounced checks. These can eat you alive. Be sure to maintain your minimum balance to avoid service charges.

*Try to avoid banks that charge you a transaction fee for using their debit cards. If you have no choice, plan how much money you will need in a given period and then withdraw it all at once to avoid too many transaction fees.

*Compare credit cards. Look for the ones that have little or no annual fees. It’s not too hard to find those with no annual fee.

*Avoid specialty store charge cards as they often have interest rates six or seven points higher than major credit cards.

*Never choose a card based solely on incentives or reward programs. These include auto reward points and air travel miles. These cards may lead you to spend more money over time than you can afford.

*Most importantly, avoid unnecessary interest charges by paying off the complete monthly balance. You can avoid hundreds of dollars in interest expenses on an annual basis.

*When you buy a car, consider buying one that is one to three years old. A one-year old car will be about 20% to 30% less than a new car. A three-year old car is a good buy because it could be around half the price of a new car. A car depreciates the most in its first three years. After that the depreciation levels off and it will lose less of its value.

*Another good saving when buying a used car is you will pay less for the insurance.

*When going on vacation, consider staying in your home state instead of long distance trips or even international travel. It’s often cheaper to travel within your own borders, that way, you avoid visa and passport costs, border hassles, currency exchanges, tropical shots, medication, and additional health insurance. Frequently, people travel thousands of miles to see sights not nearly as spectacular as what’s next door.

*You should consider off-season vacations. Travel at a time when everyone else is at work or school, and the staff will actually be glad to see you. You may also save 50% or more on the usual travel expenses.

*Avoid large cities and tourist traps; you’ll save a ton by avoiding these places, where you pay more to eat, drink, sleep, and travel. If you do decide to visit a big city, consider accommodations in a smaller town close by.

*If you have a lot of credit card debt at high rates, look into consolidating your debt at a lower rate.

*Refrain from making impulse purchases. Exercise self-discipline.

*Refinance your mortgage or debt at a lower rate.

*Refinance your car loan at a lower rate.

*Shop around for cheaper car insurance rates. There can be a big difference.

*Lower your phone bill by using self-control on long distance calling.

*Use a phone card for long distance or international calls.

*Use coupons when you shop.

*Don’t buy things just because they are on sale.

*Wait for things to go on sale before buying them. Keep a record of when things go on sale. Some items will seasonally go on sale. Ask stores when certain things will go on sale.

*Buy generic, or non-name brand merchandise. Most times the quality is just as good.

*Stop smoking. This habit is extremely expensive.

*Contribute the maximum each year to your 401K or to an IRA.

*Remember, paying down debt is also a way to save money. If you can make extra payments on your mortgage or go for a 15 year mortgage instead of a 30 year mortgage. The savings are enormous.

*Reduce the number of times you eat out. Oftentimes eating out at a restaurant involves paying a lot of money for over-priced and over-sized meals. For healthy meals and to save money, eat at home.

*Watch videos or DVDs at home instead of going to the movies. Pop your own popcorn instead of paying a lot for theater popcorn.

*Evaluate your entertainment and recreational activities. Many are very expensive to participate in. There are many others that are just as fun and entertaining that are at the fraction of the cost.

*Don’t try to compete with your friends and neighbors. Sometimes, an apparent prosperous lifestyle can be an illusion. Those illusions come with a lot of debt. It’s much better to have peace of mind.

Be alert. There are always ways to save money. Soon you will yourself with money you never knew you had. The key is to put that money to work for you instead of spending it.

2006 Economy: How to Avoid Overextending Yourself

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The U.S. is the world’s largest economy and is moving into its fifth year of expansion. The biggest risk is the housing market which is expected to slow this year and potentially drag the economy down with it. Many people are betting that the housing market will avoid a major crash but instead will plateau leaving prices stagnant. The resulting rise in interest rates could put a lot of families under financial stress.

finance, housing, credit card, economy, 2006

The U.S. is the world’s largest economy and is moving into its fifth year of expansion. The biggest risk is the housing market which is expected to slow this year and potentially drag the economy down with it. Many people are betting that the housing market will avoid a major crash but instead will plateau leaving prices stagnant. The resulting rise in interest rates could put a lot of families under financial stress.

A housing market that is not growing quickly turns into a buyer’s market. People will have a number of houses to choose from which will block any increasing value for current home owners. To most home owners this will not be a problem because they have conventional fixed-rate mortgages and only need to wait until the market improves. People who have unconventional 5-year arms and interest only loans may be seriously hurt; especially if interest rates rise.

“I think one of the principal risks is whether or not home prices decline and the impact that that will have in terms of influencing the savings rate and personal consumption growth as we have already seen in the U.K. and Australia?said David Rosenberg a U.S. economist at Merrill Lynch (Wolk, 2005).

A bigger problem is people’s personal savings rates. Because debt is so easy today and most families are at a maximum borrowing limit many people who will see a jump in their interest payments may begin to default. This default raises the interest rate even further due to increased risks associated with lending money. In the end many people will not have money to spend or save which could have serious consequences for the economy as a whole.

The best measure to avoid such pit falls is to put a larger sum down on your house during purchase which gives you a cushion to work with incase you need to sell your house quickly. The second measure is to avoid all credit card balances, home equity loans and charge cards. Finally, only engage in fixed-rate mortgages.

8 Money Myths

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8 Myths about money that harm our financial lives.

Personal Finance

8 Myths About Money
I grew up on a farm in Nebraska. My family had always worked hard for their money, and as a result, I always equated working hard with making money, with no idea that my beliefs could not have been further from truth. As I educated myself on human behavior and financial strategies, I learned that it’s actually the people who make their money work hard for them, rather than the people who work hard for their money, who end up with more of it. Since creating my millionaire-making program, I’ve learned that I was not alone. There are many people who shared this same myth.

Much like our views about many things — people, relationships, food, and health to name a few — our beliefs came from our parents, our teachers, and other adults in our lives. And it goes back even further, beyond them, back to the circumstances through which they lived, or what they learned from their parents, what their parents learned from their parents, and so on. These beliefs are ingrained, and because they’re usually subconscious, the cycles are continuous — until someone breaks them. You can break the cycle. Beliefs about money are many and varied, but in my research, I’ve discovered that there are a few that predominate.

Money is scarce. Several of us have parents or grandparents who lived through the Great Depression, an era that rooted an entire generation in a scarcity mindset. These people passed onto their children the idea that money was in short supply and that when it did surface, spending had to be limited and saving was imperative. If any of the following ever crossed your mind?A penny saved is a penny earned,?”Don’t dip into savings,?or “We can’t afford it?– then you have this perspective and rainy days loom ominously. Money doesn’t grow on trees. These threats create a fearful relationship with money.

Money is evil, dirty, or bad. Several of us have parents or grandparents who believe that the road to bad places is lined with green. They’ve only ever seen the drawbacks of the rat race, the downside of the money chase, and the audacity and indulgence of those with too much money. Some even believe that wealthy people are bad people. Novels and films often highlight the idea that it’s the crooked ones who make the money. The meek shall inherit the earth. Such prophecies create a hands-off relationship with money.

Money comes monthly. The most common way to make a living is to be employed, either with a company or as a skilled professional, with a weekly wage or an annual salary. Historically, this provided the safe, sure thing required by heads of households. Yet, that level of risk was usually balanced with an equal level of reward — low and low. For most, even those who do very well, working for a company or as a skilled professional is a constrained opportunity. Except for the outrageous exceptions, the average CEO of the average company making six figures a year will still experience only a small increase in salary during his or her lifetime. Slow and steady wins the race. Such fables create a cautious relationship to money.

Money is not for me. Some people feel that they don’t deserve to be wealthy or that there is only so much of the millionaire pie to go around. Creating wealth and financial freedom is available to everyone. It is our right to be wealthy, and my hope is that people take their space and know they deserve it. By making money, you are not taking it from someone else; this isn’t Bonnie and Clyde Go to the Bank. By making money, you create a greater capacity to contribute, and it’s your duty to do this. Better them than me. Such adages create a defeated relationship to money.

Money is a man thing. There was a time that men made and managed the household money. That time was not so long ago, and some of you may have grown up with such conditioning. Though there are gender tendencies, for example, men tend to carry more money in their pocket than women and are more likely to invest than women, the reasons behind this are not genetic; they are realities falsely fabricated from years of conditioning. Women and men need to understand that money knows no gender. One of my programs that really resonates with up and coming wealth builders is “Wealth Diva: A Man Is Not a Plan.?This is a must-do seminar for every man and woman, and the daughters and sons they love. Let him bring home the bacon. Such perceptions create an apathetic relationship to money.

Money is good medicine. For some people, retail therapy goes a long way; there’s no difficulty a new blouse can’t cure. At the moment, we live in a culture of consumerism, and many of us use money to fill the unsatisfying holes in our lives. Some people grew up with a sense of entitlement about money, assuming their parents or a trust fund would always pay for everything, and in the process, they became careless about what they had. This is a vicious and unproductive cycle. The new car gets old, the closet fills up with clothes, and the toys pile up in the playroom. This is notto say there aren’t wonderful things to buy and spend our money on; after all, money should be fun. But as with overeating, too much spending on the wrong things can get any of us feeling sluggish and sad. Shop till you drop. Such bombarding messages create a disrespectful or nonchalant relationship to money.

Money is always a menace. For too many of us, money was always a problem. Bills were a hassle, keeping up with the Joneses was exhausting, entrepreneurs were considered nuts, and one’s station in life was, well, stationary. And getting rich would be worse. Money can be such a burden, not to mention all that paperwork and responsibility. These views of money create a perspective that money is actually a problem, not a solution. It’s hard enough just to survive, let alone thrive. Such pessimism creates a negative relationship to money.

Money talk is taboo. Many of us have been brought up to believe that conversations about money are in bad taste. Money and financial success, and failures, are considered personal subjects that shouldn’t be discussed and certainly shouldn’t be taught. Few of us asked our parents how much money they made, and even now, there are people who don’t know their spouse’s salaries. The results have unintended consequences and have created a world where very few people are having real conversations about money and finances, the very conversations they need to learn and succeed. These things are not discussed in polite society, dear. Such a scolding creates an ignorant relationship to money.

In each of these examples, it’s clear that unless your parents made a conscious choice to think and act differently, they conditioned you to have the same mindset as them. If you make a decision to break this cycle, you will have the opportunity to teach your children to have more productive beliefs about, and a more profitable relationship to,money. As you come to understand the beliefs you hold, you will work to change them. Through the action steps in this process, and with the help of mentors and respected friends, you will change your behavior. By sharing your desire for new beliefs and asking your mentors and respected friends to help you spot the subconscious limitations you may be putting on yourself, you will teach your brain to follow your behavior. Begin now by restating your beliefs. For example, if you’ve discovered that you hold any of the above examples as beliefs, you will

1. Change “money is scarce?to “money is abundant?and support a courageous relationship to money.

2. Change “money is evil, dirty, or bad?to “money is good and acceptable?and create a hands-on relationship to money.

3. Change “money comes monthly?to “money comes from a range of sources?and create an opportunistic relationship to money.

4. Change “money is not for me?to “who better than me for money to come to?and create an empowered relationship to money.

5. Change “money is a man thing?to “I can and will know about and understand money,?and create a thoughtful relationship to money.

6. Change “money is good medicine?to “money is a tool to help make my life better?and create a respectful and concerned relationship to money.

7. Change “money is a menace?to “money is a solution?and create a positive relationship to money.

8. Change “money talk is taboo?to “money talk is vital?and create a knowledgeable relationship to money.

You can see how much better it is to be courageous, hands-on, opportunistic, empowered, thoughtful, respectful and concerned, positive, and knowledgeable than to be fearful, hands-off, cautious, defeated, apathetic, disrespectful and nonchalant, negative, and ignorant. The choice is yours and it looks like you’re well on your way. You’ve already taken a huge step by deciding to actually take the first step. By making the decision to start right now, you have created the opportunity to raise your financial consciousness and change your life.

Copyright ?2006 Loral Langmeier from the book The Millionaire Maker McGraw-Hill; December 2005;$24.95US/$00.00CAN; 0071466150

Loral Langemeier is a master coach, financial strategist, and team-made multimillionaire who reaches thousands of individuals each year. She is the founder of Live Out Loud, a coaching and seminar company that teaches her trademarked program Wealth Cycles.

401(k) Participants Turn to Pros For Help Managing Their Money

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You’re a computer engineer, or a nurse, or a graphic designer. Just keeping current in your own specialty is an effort. So what happens to your 401(k) retirement plan while you’re off doing what you do?

401(k) Participants Turn to Pros For Help Managing Their Money

You’re a computer engineer, or a nurse, or a graphic designer. Just keeping current in your own specialty is an effort. So what happens to your 401(k) retirement plan while you’re off doing what you do?

Does it just languish, forgotten, in some dusty corner of your mind? Are you, among millions of others, crossing your fingers and hoping your portfolio will provide?

Thanks to changes in the industry, investors now can get more help managing their 401(k) accounts. In the past, to prevent conflicts of interest, defined contribution plan providers could make only general asset class recommendations. But regulations now allow financial service companies to hire independent, third-party financial advisers like Ibbotson Associates to manage individual investors’ 401(k) accounts.

Those who choose professional help will find that the money in their portfolio will be allocated appropriately to funds in their existing plan, rebalanced regularly and adjusted over time to meet changing life circumstances. And these programs are catching on.

Ibbotson is the independent third-party advisor for 401(k) managed account programs run by AIG VALIC, Fidelity, Great-West Retirement Services, Merrill Lynch, the Principal Financial Group and TIAA-CREF. Although 401(k) managed accounts are only two years old, participation in such programs is increasing rapidly. Currently there is over $10 billion in 401(k) managed account programs, and that number is expected to reach $300 billion in 2010, according to industry research firm TowerGroup.

A major reason for the growth is that many employees don’t know how to manage their retirement plans. Human resources firm Hewitt Associates found that only 16 percent of 401(k) plan participants made any changes to their accounts in 2004. The study also found that, while some employees were not aggressive enough with their investments, others took on too much risk. For example, participants concentrated about 27 percent of their 401(k) assets in their company stock.