Smart Money

Whether talking to Susie Orman or Warren Buffet, there are some smart money choices you can make. Yesterday I saw a news story about a man from New Jersey who never earned more than eleven dollars an hour, but by the time he retired he had over three million dollars in the bank. He lived frugally and had no kids, but it does go to prove that you don’t need a six figure salary to be financially  successful.

Smart Money Hints:

Live as Debt Free as Possible– Although a mortgage or car loan can help you to establish credit, the less debt you have, the more in control of your life you will be.  Try to have only one or two scheduled payment debts at a time. Beware of “credit card checks” or “buy now pay later” deals. I have personally had bad experiences with both. For instance, with credit card checks, they can charge you as much as a 3% check fee for the check. On a ten thousand dollar check that can translate to three hundred dollars!! OUCH! On top of that, if you have charges on top of that, they can charge you a maximum interest rate on those charges until your ten thousand dollar check is paid off.  If you absolutely have to have money, stick with a bank loan or line of credit or second mortgage. Some easy credit deals can make loan sharks look good, so beware.

Be Accountable for your Spending Habits- Design a budget that is realistic for you and stick by it.  Please sue the budget worksheet to make sure you consider all expenses.

Use cash whenever possible – Use cash or a debit card whenever possible. You may be getting great airline miles from a card, but if you pay over $300 in interest payments, was it worth it? There I no doubt you will be  more tempted to succumb to an “emotional buy” if you have a credit card than if the money is coming directly out of your account that day. Credit card companies are not in business to make your life easier despite what their commercials might say. They are in the business of making money, and it is yours they want. 

Stop Paying at ATM machines. The only time you should consider using an ATM is when you are traveling and get caught short on money. If your bank doesn’t have a free ATM, get another bank. Otherwise you are paying to use your own money. How ridiculous is that?

Speaking of banks, shop around for the right one. Find a bank that has totally free checking, online banking, free ATM cards, overdraft protection etc. There are differences that can add up to hundreds of dollars a year. Establish a good relationship with you bank so that if you ever need a loan  or mortgage, you have a local who can help you out

SAVE - Establish a “rainy day fund”. Start right away putting money toward a rainy day fund. You never know when you will need it. You may be injured and temporarily out of work, you may lose your job, or you may want to move to a new part of the country. Having a “rainy day” fund takes the pressure off of all those scenarios.

Establish a short term and long term savings account and a long term investment account.  Also, start saving for retirement in your twenties. Let’s face it, there is a good chance that social security will be well diminished once the baby-boomers start retiring and you are almost thirty years behind them. It is NEVER easy to save, but it gives you freedom when you do, so start right away.  For many more money saving tips, go to Feed the Pig  at:  http://www.feedthepig.org/2008_Calendar.pdf

Financial Goal Setting

Consider the following:

What is your dream goal?  Do you want to retire at fifty-five with enough money to enjoy traveling and skiing on the weekdays?

What is your long-range goal? Do you want to be able to help your kids attend a private college or help them to start a business? 15 –30 years

What I your medium –range goal? Do you want a house in a safe neighborhood with a good school system?  5-10 years

What is your short-range goal? Do you  want to save up to move to a new part of  the country or a new car?  6months – 2 years

Immediate action goal – Do you need a vehicle to get to and from work?  Do you need to pay a down payment for an apartment? 1-2 months

What is your current  situation? Are you in school and only work on the weekends? Are you trying to save for college next year?

Please use the financial goal sheet to consider what you need to do to achieve your goals.