Moneymonk

Friday Quote

2009-11-06T09:00:00.001-05:00

Money, if it does not bring you happiness, will at least help you be miserable in comfort.

- Helen Gurley Brown

Ramit's Boot Camp: Videos -Negotiation mistakes that cost you thousands

2009-11-05T11:15:00.010-05:00

I just wanted to share with you a few videos from Ramit Sethi's blog. These are videos that can help you negotiate a higher salary.

He is launching the I Will Teach You To Be Rich Boot Camp, which will help you automate your finances in 6 weeks.

Boot Camp members will get the full videos of the negotiation training, as well as: Weekly curriculum to automate finances, Live webcasts with me, where I'll answer your specific questions, Weekly guest speakers on entrepreneurship, where experts will cover pricing, marketing, sales, hiring, common mistakes, growing your idea to leave the rat race, and more

Surround yourself with hundreds of people who've invested in themselves to automate their finances -- who you can share/learn unrevealed tips from

Sign up for the Boot Camp here

Here are the videos!

Negotiation Mistake: Eeyore Syndrome #1
What's Eeyore Syndrome?
How it costs people THOUSANDS of dollars
You'll recognize your friends (and maybe yourself) in this example

[Watch Eeyore #1]

Negotiation Mistake: Eeyore Syndrome #2
More on Eeyore Syndrome

[Watch Eeyore#2]

Negotiation Mistake: "It's not worth it"
When people self-handicap by saying "it's not worth it," then complain about their financial situation for years and years

[Watch "It's not worth it"]

Remember you'll get more videos -- live & recorded videos -- in the Boot Camp.

Sign up for the Boot Camp here.

Friday Quote

2009-10-30T09:00:00.000-05:00

The art is not in making money, but in keeping it

-Proverb quote

When can you tell you are "financially comfortable"?

2009-10-28T09:22:00.011-05:00

When you can relax with money!

The day you become "above average" is when you enough money to not worry about money.

Here are a few other ways you may know when you have arrived:

When you can give/donate (a nice sum) of money without it hurting

When your bills can still be paid even if you miss a few paychecks

When you can order any meal at nice restaurant regardless of the price

When you can leave a tip above 15% without it hurting

When you can pay your car insurance in full instead of monthly

Do you have any more to add?? What are the indicators of being successful with your money?

Friday Quote

2009-10-23T09:52:00.004-05:00

Instead of a fancy car, I'd rather have an old car and a year of cash in the bank

- Paul Glen, IT consultant

Getting out of debt is not enough

2009-10-21T09:32:00.004-05:00

Most Americans say they have enough money to cover their expenses, to buy the things they need--and to have a good time. Only a minority have enough money for things beyond those bare essentials

- Jean Chatzky

So what does it takes to be in that minority? Perhaps, discipline and a higher income.

I often hear personal finance gurus say that you can have financial peace when you get out of debt and live below your means. Truth is, most people just don't make enough money to: Pay their rent/mortgage, have a good time AND save for retirement, college funds and emergencies. Most have just enough to cover the first two.

The average American household has an income of $50,000 a year, have two children and a car. How it is possible for this family to get ahead when taxes and medical insurance alone takes up half of their income?

I remember when a man called in to the radio show of Dave Ramsey. He mentioned that he got out of debt but he had trouble in the other areas, such as saving 6 months for emergencies and saving for retirement. According to Dave's plan you must save 3-6months of expenses and save 15% of income for retirement after you become debt free.

Dave could not understand why he can get out of debt but didn't have enough to save. The young man mentioned that he took on a second job to get out of debt; once he got out of debt he quit his job. Dave did not have a valid answer for him.

He neglected his children a lot by taking an evening job, so when he got out of debt he though his life will be free.

Trust me, to really feel free and comfortable you really have to spike up that income. Whatever income it took to get out of debt, will more likely take to have a healthy savings.

Unless he plans to downgrade his entire lifestyle, he needs to make a better income.

So remember when some personal finance guru tells you to follow his plan, make sure you have the income to do it.

In spite of increase salaries, why are Americans still broke?

2009-10-19T09:00:00.014-05:00

So as you can see, as income increased through the years so has expenses. And this is not including credit card debts, student loans and retirement. Yes folks, the middle class have been bamboozled!

Yes, we make more than our parents however, statistics don't lie. We are no better off as we in 1974. Due to inflation and taxes, we are actually behind.

So there you have it. We're broke because taxes and other expenses have slowly increased us on us. Thus, making us grab the credit card more.

What advice do I have to get ahead of the game? make more money!!!! As you are doing that, reduce your debt. We are going to always have expenses: water, gas, lights, and transportation fees. So try to reduce the consumer debt: car notes, credit cards.

As long as we work kids will need daycare. Unless you plan to be a stay at home parent, be prepared for this expense.

*table was swiped from Elizabeth Warren book: The Two-Income Trap: Why Middle Class Mothers and Fathers are going broke

Friday Quote

2009-10-16T10:23:00.000-05:00

Everything that irritates us about others can lead us to an understanding of ourselves.

- Carl Jung

Biggest Rip offs of the Middle Class

2009-10-14T09:22:00.006-05:00

Car leases- they tend to never let you get ahead. It's like a long term rental. Yes, you will never own the car. Buy you are guaranteed to have a shiny new ride every three years. And the price you pay for that in being caught in a contract the most people find it impossible to get out of. So if you want to remain middle class, lease a car.

Credit cards- love them or hate them; this is another product of perpetual debt. You ever want to find a quick way to enter debt; a credit card can get you there. But once you allow debt to remain on the card, most people never seem to get out of it. You become a victim of their game. Late fees, interest rate hikes, finance charge they can take advantage of you for either way. Once you're late, you are giving them permission to jerk you around.

Cash-Value Life Insurance - a life insurance policy that is used like a savings account. You feed this thing for 15, 20 years and you'll be lucky to receive what you put into it. You're better off getting a term life and investing the remainder that would have went into a cash life policy and saving or investing it yourself. Why is cash value much more expensive than Term life insurance? I tell you why because much of the monthly payments are eaten up by commissions and expenses for at least the first 3 years. Term Life is simple, flexible and low price. Save money on your own, not through a life insurance.

Bottom line if you want to stay middle class, make heavy debt payments for the rest of your life, However, if you want to slide into upper middle class or rich, get out of the payment game and into the investing game!

The price we sometimes pay to get out of debt

2009-10-12T09:07:00.001-05:00

I often read stories of people doing crazy things just to get out of debt.

People are willing to skip meals and drive a junk car just to meet your goal.

If you plan to pay off your house in 7 years, please don't make it so strenuous you don't have a life! Some people focus too much on a goal and neglect every single thing around them: Family, friends and health.

Working three jobs just to pay off your home early, please take a breath before you crash.

Paying off debt can take some people a long time, therefore it can get old fast. Sometimes, it’s OK to reward yourself in between accomplishing your goals.

I once knew a guy that had Five children and they all stayed in a 3 bedroom apartment, seven people in all. The relationship suffered because of this. Why they are sacrificing like this? because the husband wants to save up and pay cash for a home. The marriage suffered.

I was listening to a podcast on debt a few months back and the caller mentioned that righter after the became debt free her husband left her. Pay attention to what you are doing, certain things are not worth wrecking a relationship because you want to get out of debt fast.

What I'm saying that sometimes it's not worth it. When you tend to strain yourself financially just to meet a goal, you wind up crashing and not doing anything.

Wealth is never worth sacrificing your happiness, family or integrity

-Stewart H. Welch III

~~Wealth~~ DEBT is never worth sacrificing your happiness, family or integrity

-Marie Joseph

Here are some checkpoints:

-Make sure you AND your spouse both want this goal. Just because you want this does not mean you spouse will automatically participate in it.

-Make sure it's an obtainable goal. Paying off your $100,000 mortgage in 7 years when you make $30,000 a year is not possible.

-Make sure you are not sacrificing your health to pay off debt. Working three jobs to pay off debt in the short term is okay. Working several jobs for years to pay off debt is insane.

-Have quality in your life as you get out of debt. Paying on debt, while you need a new heater in the middle of a freezing winter is not smart. Your priority should be having heat.

You don't want to be debt-free and Divorced. Being debt-free should not come before your marriage. Make sure you are both on this journey together.

photo:istockphoto

Friday Quote

2009-10-09T09:01:00.000-05:00

One of the keys to happiness is a bad memory.

- Rita Mae Brown

Do whatever works best for you in personal finance

2009-10-07T09:06:00.003-05:00

In my 20s, credit was not important to me. Why? Because financing a car or house was not my main goal. I actually was satisfied with just having a job and a bus pass.

As I grew older, I wanted a nice car and a nicer apartment. Therefore, credit became important to me.

Once I got married, insurance became important.

We began discussing kids and eventually retirement and college savings became priority.

My point is to do what works best for you. A person with 3 kids cannot be given the same financial advice that a single 20 year old will need.

If you are good with credit cards, (meaning you only charge what you need and pay it off in full as the bills arrives) stick to your plan. You do not have to change because some personal finance guru told you it's better to cut up your credit cards.

If you are in your 20s and have been investing in Apple stocks because you love its products, don't stop because some guru said you need 6 months cash in your account before you can invest.

You have to take advice with a grain of salt.

If you have a company that is better off spending on equipment than hiring new employees and it has worked out better for your company, by all means do not change your strategy.

However, if you are not good with spending: BUDGET

If you are not good at handling debt: Stop using the tools that make you go into debt.

If you are better at investing than saving: keep doing it. Do what you are good at and perhaps have your spouse handle the saving and budgeting.

Again, do what works best for yourself and family. If you are married make sure both of you are in agreement.

Take time out to look at your assets and liabilities. If your liabilities are greater than your assets, regardless, of your plan, then your finances are not in order. Find ways to decrease the liability side.

On the other hand, if your assets are greater, whatever you're doing it's working in your favor.

Are you paying last month's bills with this month's money?

2009-10-05T09:07:00.004-05:00

If so, you are walking on a tightrope. One small incident can collapse your financial world.

This is usually one of the causes of being in debt. If your income does not increase very soon, you may never get ahead. I don't mean caught up, I mean being one month ahead of your bills. Having one month of expenses saved can help you avoid debt in some way.

I would suggest you double check your expenses and make some cutbacks in the appropriate areas of your financial life to get ahead. Being behind clearly shows that you are not organized and/or not paying attention to where your money goes.

This becomes especially hard for single parents. Most of them do not have any financial backing. So it becomes very easy for them to fall behind.

Start by listing all the creditors that you are behind with.

List them by most important (extreme need) to less important (not needed)

A list sample would be:

1. Housing
2. Food
3. Utilities
3. Transportation
4. Daycare
5. Entertainment
6. $8.00 lunches
7. Credit card debt
8. Happy hour after work

If you have to go a month with without the least important it won't kill you. Please start now, the more you procrastinate the more your expenses will pile up.

Just remember important things first. Who knows by the time you get around to paying your credit card debt, they may want to settle for 10 cents on the dollar. Yes, your credit score is shot, but again it's not the end of the world.

Calculate your take home income and equate it to your absolute needs. If your income is lower than your monthly expenses, you must make changes.

Friday Quote

2009-10-02T07:13:00.001-05:00

Anyone who lives within their means suffers from a lack of imagination.

— Oscar Wilde, Irish dramatist and novelist

What debts should be paid off first?

2009-09-30T09:00:00.002-05:00

Most people have this problem when it comes to debt. Like most people, you have a substantial amount of debt and do not know where to begin. You can always try the Cash Flow Index (CFI).

To figure out your index number, divide the total balance of the loan by the amount of the minimum payment. The resulting number is your index number.

Most people go by interest rates, but when you use the CFI, it may help you get out of debt faster.

For instance, Joe has $49,000 of debt.

His car balance is $14,000 and his (min. payment is $700)

His credit card debts are $4000 (min. payment $80)

His personal loan is $3000 (min. payment $300)

His student loan is $27,000 (min. payment $100)

His payday loan is $1000 (min. payment $150)

What debt should Joe pay off first to increase cash flow?

He should pay off his payday loan first. So instead of going from highest interest or small balance first go by your CFI number.

Now, you may ask how I came to that conclusion.

His payday loan balance is $1000 and if you divide 1000/150 = 5
(this is his index number)

This debt should be paid off first because it's the lowest number of all his debts.

His car loan would be the next balance to attack

$14,000/700 = 20

Next would be his personal loan

3000/300 = 30

Then his credit card debt

4000/80 = 50

Finally his student loan

$27,000 X $100 = 270

The lower the index number, the higher the priority.

For instance, your mortgage is most likely to be the highest index number, therefore it should always be last to pay off.

A cash flow index number below 50 is deemed important.

So with the cash advance loan being a 5, it will be the very first priority.

If you go in order by CFI, his debts will be listed from first priority to last:

1. The payday loan (5)
2. The car (20)
3. The personal loan (30)
4. The credit card (50)
5. The student loan (270)

The higher the index number, the less cash flow you will have. In order to have more cash flow, pay off debt starting with the lowest number.

If you looking to have more cash flow, you may want to go by this index. I know most experts will strongly suggest that the highest interest debt should be paid first because it's expensive debt. But if you want to have more money, the CFI is your method.

How you can get ahead financially?

2009-09-28T09:46:00.001-05:00

By having a good investment strategy and great salary!

First comes the salary and later you can develop a good investment strategy

Salary:

Network with professionals (LinkedIn.com is a great start)

Read books on Career and personal finance

Seek a promotion (considering you love what you do)

Seek raises

Stay educated

Investment strategies:

Market goes down, contribute more dollars

When oil goes up, it usually means the stock market will go down. This will also be a great time to load up on shares.

Once a year you should can re balance your portfolio.

A good rule of thumb, keep a percentage of your investment portfolio in cash based on your age. If you are 35 years old, 35% of your portfolio should be in cash. (this is my personal opinion)

A typically portfolio should include: Growth funds, Mid cap funds, Small cap funds and International funds

Invest outside the stock market.

Start a company, write a book, start a blog! Investment in yourself!

Real Estate can be a good investment based on location.

Take a chance on investing in an IPO- both Visa and Rosetta Stone did well during there IPO launch.

A salary alone cannot make you rich. Make your money grow. You have to have good investing skills and others sources of income to get ahead financially. Borrow prudently, saving in addition to investing are also important factors.

Friday Quote

2009-09-25T10:00:00.000-05:00

The easiest way for your children to learn about money is for you not to have any

- Katharine Whitehorn

Your bills should be as low as possible

2009-09-23T10:34:00.002-05:00

By having low payments, you will automatically have a larger cash flow. That is the reason we're able to enjoy life more and have great weekends with our daughter.

In Thomas J. Stanley book Stop Acting Rich, he mentions that the key rule concerning homes and happiness:

Live in what is below your means

I could not agree more, make sure your house debt is very comfortable in according to your income. Because that will be the largest and longest debt you will have. So it should be an expense you can handle during good and bad times.

The lower your expenses, the more discretionary and disposable income you can keep for yourself.

It took me years to figure this out. As we learn and grow in our jobs, obviously our income will rise. Always think of money in percentages, regardless of your income.

If you don't know how much you should be spending on certain expenses, use my chart below:

under 30% mortgage/ rent

10% car expenses (includes car note)

10% food, household needs

I know for some of you, these are tight percentages, but if you want to be wealthy or on the path to wealth, your percentages should be that above.

The less debt means the more vacations, sabbaticals, dining out, and splurges you can have.

Woohoo!!!

Cheaper does not mean you have a deal

2009-09-21T09:38:00.002-05:00

Just because something is inexpensive and you can afford it, doesn't mean you HAVE to buy it.

Point in case, my Dad's friend and his wife has absolutely no debt. Their home is paid for and cars are as well. Credit cards are paid as the bill arrives. I know this is going to sound weird but no one in his family has debt. (his siblings all are renters). Only one of his siblings has debt, his sister, she loves to shop. Therefore, she must have her credit cards.

Back to my Dad’s friend, they bought a house in the country for $80,000. However, the house is in poor condition. Every single room needs work and also the exterior. He has spent money on new windows for the entire house, put in a new heating and air unit and also built a deck. The home has foundation issues and needs a roof. They have a tin roof for now. He says it will do.

Inside, there are no decorations. They have one sofa, a computer and desk and chair (the chair is very uncomfortable). The 3 rooms all have beds and one dresser for each room. They told my Dad they bought the house because it was sooo cheap.

I said to myself, they will have did better putting $80K down on a $150,000 house and putting the remaining balance on a ten year note.

They both are so fixed on being debt free that they totally ignored a lot of important issues.

Just because you can afford it, does NOT automatically make it a deal.

It’s like buying a $2000 car that needs repairs every three months. You would have come out ahead just buying an $8000 car and paying it off in one year. Than to buy the cheapest car you can find only to pour money into it constantly.

Being cheap sometimes means spending more money later. Get what you want so you can grow into rather than something cheap that will have to be replaced sooner than later.

Just my 2 cents!

pic: askDong

Friday Quote

2009-09-18T10:00:00.002-05:00

The most important thing a father can do is love their mother

-Bill Toohey

Selfishly Employed

2009-09-16T09:00:00.005-05:00

Words that are used for people that "choose" to work when they want do. They follow their passions instead of the money.

Of course, you have to have money first to even participate in this game.

I hope to be selfishly employed 5 years from now. Right now I'm on track. A year from now who knows. So my backup plan is to always keep my skills sharpen. It's always good to keep various income streams, but in order to have them you must stay current with skills that are valuable to the public.

It's kinda like a musician that only sings disco related music. They have to change with the public demands. They should have other talents to share that is valuable to the marketplace.

A lottery winner is only rich for the moment. They cannot spend forever. They have to have an income stream in place if they plan to keep up with their new lifestyle.

It's like on the show "Extreme Makeover", lucky families get an upgrade on their existing home and later realize that cannot keep up with the higher utilities, property taxes or insurance. Thus, making them fall behind in payments. Why? because the house has increased but not their income.

A boxer can make his money as long as his boxing skills last. Once it ends he has to generate another skill to get money flowing in again.

So being selfishly employed is fun until the money runs out.

Like it or not in order to generate a cash flow sometimes you may have to do things that you are not truly "passionate" about, especially if you have a lifestyle to maintain. If you are a frugal person by nature, you may be happy on a fixed income.

My lifestyle constantly changes every 5 years or so, therefore I have to have multiple income streams.

photo: Amex

How to Preserve your Money

2009-09-14T14:15:00.005-05:00

I believe there are 3 stages to money in personal finance:

Accumulating money
Preserving money
Giving money

The hardest part is the preserving money stage. It's easy to make money; we all are good at finding a job and going to work.

However, keeping and preserving it becomes hard. There are taxes, medical expenses and family obligations that constantly come in and out of our lives. We tend to spend it as soon as we get it.

Very few ever get to the stage where they can give and donate money to various causes without going broke.

Once we make money we have so many things that are marketed to us to take away our money. America is filled with goods and services waiting to get money out of us. So we fall for it and never get pass the Preserving money stage.

Yes we have to pay taxes

Yes inflation will be an issue

Yes children cost money

The trick is to earn more than you spend

Never get too settled in a job. I don't care how much it pays!!

Focus on investing and growing your money. Make room in your day for money making opportunities instead of watching TV.

The best way to keep your money is to pay taxes and have ample insurance on anything that is an asset.

Your job - disability insurance

Your life- Life insurance

Your car- car insurance

Your home- home insurance

Your apartment- renter's insurance

Your health- medical/dental insurance

Also having a will in place can determine what assets go to whom, instead of your dependants fighting for it in court.

NO TIME FOR TACT: Book Review

2009-09-14T09:00:00.004-05:00

Another awesome book by the New York Times/Wall Street Journal bestselling author Larry Winget. He share his quotes to keep you upbeat for 365 days out of the year.

If you think like a "Life happens to me", Well this book is for you. He has 365 quotes and words of wisdom that is sure to change your mentality of "I cannot succeed" to "I don't have room for pity"

I have been a fan of Larry Winget for over 5 years now and he never seems to disappoint me.

His new book NO TIME FOR TACT: 365 Days of the Wit, Words, and Wisdom of Larry Winget is sure to get you not feeling sorry for yourself. You will definitely take responsibility for yourself after you read this book.

A must read for anyone that struggles with who they are and what they want to be.

America needs a straight talk dose of Larry Winget reality. The book motivates you and empowers you. This is memorable advice of words and wisdom that you can share and keep as a good reference.

Here are some of my favorite quotes and words of wisdom from the book:

The three main reasons people are not successful:

1. They are stupid
2. They are lazy
3. They don't give a damn

When in doubt, wear black. Black is always appropriate. it makes you look richer, classier, and best of all, slimmer.

We work together.

We are not family.
We are not related.
I don't have to like you. I don't have to spend time with you. I just have to work with you. That's all I have to do with you---everything else is by choice.

Your income is going to be on average that your five closest friends'.

Don't have enough money? Get some richer friends. No kidding. Dump them and get some friends with money.

You can never build yourself up by tearing others down

Don't complain and don't whine.

First of all, no one cares about your complaints because they have problems of their own.
Second, you look like a victim and you lose your power when you victimize yourself.
Third nobody likes a whiner.

When it comes to dealing with your children, remember that you aren't perfect, so don't pretend to be. Admit your mistakes. If you overcorrect, punish unfairly, or yell when you shouldn't, stop and admit it to your child. Apologize. Parents who create personas that are always right and never make a mistake will lose their creditability and the respect of their children very quickly.

Friday Quote

2009-09-11T08:11:00.003-05:00

Wealth is never worth sacrificing your happiness, family or integrity

-Stewart H. Welch III

Friday Quote

2009-09-04T10:15:00.000-05:00

Nobody got anywhere in the world by simply being content.

- Louis L'Amour