Financial Independence Secrets

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US Government or States - College Savings Programs
College education in the United State is becoming excessively expensive with each passing day. Various kinds of federal and non-federal financial aids are available for students However, not only are they difficult to obtain, but also they are often not enough to abbreviate the gap in the cost of education. In attempt to make higher education easily accessible to more Americans, the federal and st... Read personal finance article



Estate Planning and Your Will
An estate plan is a legal system for the disposal of your property upon your death. It recognizes your wishes, such as those regarding the care of minors, and it legally minimizes taxes. It can take into account your views regarding future medical care; for example, it may state you have no wish to have your life sustained by a life support machine. Estate planning may or may not involve tax plann... Read personal finance article



Financial Independence Secrets
If you want to win the lottery, you first must buy a ticket.

This simple rule is no more simple than the rules for guaranteeing that you achieve financial independence; that is, if financial independence is important to you. My dad instilled in me that I should rely on no one -- certainly not the government -- if I wanted to live in my old age as well as I had lived when I was working.

There was a time when many workers in my age group thought that we could depend on Social Security to fund our retirement, but today we all should realize that possibility is unrealistic.

There is one simple rule for guaranteeing your FINANCIAL INDEPENDENCE: Start Early. While it is relatively easy to secure your financial future when you start building your next egg while you're in your twenties, it's next to impossible if you wait until you're in your fifties to start, but regardless of your age, begin immediately.

You don't have to be a financial genius to be financially independent; I am living proof of this fact. But you do have to develop the discipline to follow a few simple rules. I learned these rules from the very best and the very brightest. These rules are FREE. Follow them and your financial future is virtually guaranteed.

1. The secret to financial independence is the understanding of the basic principle of COMPOUNDING OF WEALTH. If you don't grasp this principle, you will most likely have to win the Powerball Lottery to be independently wealthy.

The main key to financial success is forcing yourself to live on 80% to 90% (10% reserved for giving and 10% for investing) of your take-home income and invest each month the 10% that you didn't spend.

As an example, the stock market has increased at a compounded rate of approximately 11% per year over the last 100 years. So $1,000 invested in, say, 1963 (my first year in the work force) would have been worth $88,897 by 2006.

Even if I had invested just $500 (10% of my take-home pay in 1963), that investment would have been worth $44,449 in 2006.

Now, think about what you'd be worth if you invested $1,000 every year between your present age and 65 years of age. Wow! Becoming financially independent is really easy when you start early.

Go to http://www.moneychimp.com/articles/finworks/fmfutval.htm for a compounded calculator and do the math yourself.

Could this principle be any clearer?

Is this enough said about the power of compounding of wealth?

Here are some more rules:

2. Minimize your investments in assets that depreciate.

Automobiles, as an example, are essential for most of us, but they are lousy investments. A new car or truck that costs you $25,000 will depreciate approximately $2,500 to $5,000 in the first year of ownership. Those of us who feel the need to drive prestige cars, i.e., a Mercedes, BMW, Lexus, etc., will suffer $5,000 to $10,000 a year ($400 to $800 per month) in depreciation.

If you can live with driving a pre-owned car, you'll reduce both the investment itself and the portion of your investment that disappears via depreciation each month.

Other examples of depreciable assets are furniture and clothes. No matter how much you pay for these two assets, they will be worth next to nothing after just a few days of use.

3. Maximize your investment in assets that appreciate.

Over the long haul, most investments in real estate, i.e., your home, stocks, bonds, etc., will grow in value. So if you can discipline yourself to maximize your investments in these kinds of investments and minimize your investments in "fluffy" kinds of assets, you're much more likely to realize financial independence before it's too late.

4. Do your very best to pay cash and except for a first mortgage on your home, AVOID DEBT. This means paying off your credit cards each month, paying cash for furniture and automobiles, etc., to avoid unnecessary interest expense.

5. Establish a personal spending budget and live within it. There is no better tool for controlling spending and living within your income than developing the discipline to live by a spending budget.

When many people begin their business careers, and begin for the first time to generate some discretionary income, they go a little bit nuts. They spend everything they earn and then some. Perhaps the first sign of trouble is when they begin to generate credit card debt that they don't have the income to pay off each month. So they begin making the minimum payment, paying exorbitant rates of interest and digging a deeper hole for themselves each month.

The first step is to recognize what is happening, but the second step is to force yourself to plan your spending so that it doesn't exceed your after-tax income. I believe strongly that a budget should include an expense category for both saving and giving. It has been my personal experience that individuals who can discipline themselves to save and tithe (give 10% of your income to the church or other charities) can manage other aspects of their financial lives equally well.

Make sure you have an emergency fund equal to six months of salary as a contingency in the event you were to lose your job or have an equally major emergency.

Hire a fee-based financial planner to assist you with your investments. I use Ron Blue & Company. www.ronblue.com. Edward Jones is another investment firm that has an office in just about every community, large and small: www.edwardjones.com

THE key to successful investing is a broad-based portfolio. Don't speculate. Don't try to time the market. Stay invested even when things look bleak. If you miss those rare days when the market rises 300-to-500 points, your portfolio won't grow at historical compounded rates. NO ONE can time the stock market.

Make sure that you and your spouse are in agreement on an investment plan and the goals for your plan.

Once you and your fee-based financial advisor agree on a plan, stay the course.

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How To Budget Your Money Easily

Are you having trouble budgeting your money when living with roommates? You're not the only one. Most roommates at one time or another find it hard to juggle their money and live within a budget. The key is to create a budget that includes all of your roommate expenses so that you don't have any unexpected surprises.

Creating a budget with all of your costs lets you find out whether you can meet your bill commitments. When you have an overview of your expenses, it's easier to budget for the future and you know how much money you need each month or week. This is important whether you are budgeting for yourself or are making a household budget. It also helps you separate your roommate expenses from other living costs.

So, what expenses should you include in your budget when living with roommates. Here are 9 typical costs you will encounter when moving in with roommates.

1. Rent
The rent will be your largest expense each week or month. Your rental agreement will set out how it needs to be paid and if you need to pay additional expenses like electricity and water to the landlord. Roommates usually split the rent evenly but this may depend on your household.

2. Kitty
Many households have a separate kitty for common household expenses. The kitty includes household items like cleaning and laundry products, toilet paper, petty cash and sometimes food. Petty cash is money put aside for emergencies, breakages and small common household items like light globes.

3. Electricity
Depending on your rental agreement, you may be directly responsible for paying the electricity bill. If this is the case, you will receive the bill monthly or quarterly depending where you live and/or your electricity provider. Electricity bills are usually split evenly between roommates.

4. Phone
The phone bill is often one of most disputed household bills. You can resolve disputes by setting up a system where roommates receive their own pin number which they need to enter before making a call. This can be arranged by contacting your local phone company. An alternative solution is for roommates to use cell phones or phone cards. Phone bills are usually sent monthly.

5. Internet
If you decide to share Internet access, you will need to calculate the cost into your budget. Check with your provider if each roommate can be billed separately. You will receive your bill monthly.

6. Water Bill
The amount of your water bill is usually determined by your rental agreement with the landlord. Sometimes water is included in your rent while other times the bill will be sent directly to you. It's important to check your rental contract regarding how your water bill is calculated and is to be paid. This is often determined by the type of premises you are living in.

7. Cable TV
As it's difficult to monitor how much Cable TV each roommate watches, this bill is split evenly between all household members. You should receive this bill monthly.

8. Entertainment Expenses
It's a good idea to calculate some money into your budget for entertainment. This way there will be enough money available when you have invited guests and you won't need to worry about spending more than your budget. You can put any unspent money into a special entertainment kitty.

9. Miscellaneous Expenses
These expenses are extra costs that are unique to your household. For example, you may need to buy supplies to maintain a garden or your household may decide to hire a cleaner.

When calculating your expenses or planning a budget, it's important to make sure all of your costs are measured using the same timeframe. For example, if you are calculating a monthly budget, you will need to make sure that each of your expenses has been converted to the monthly amount. By creating a budget and having a clearer understanding of your roommate living costs, you'll have greater control over your money and won't need to worry about unexpected costs. Before you know it, your roommate budget troubles will be over.

Good Luck and Enjoy Roommate Living!




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Financial Independence Secrets
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