The typical scenario is that you simply get your paycheck. After you recover in the shock at how little is left after taxes, you proceed to divvy it up among all your outstanding bills, intending to put whatever is left above into your savings.
But there never seems to be anything left over and your savings don’t grow.
A better plan would be to pay yourself very first. Don’t let the money get into your hands.
You may well find which you actually start to grow your savings much quicker this way.
If you work for an employer with a 401K plan, the initial point you should do is to fund it towards the max. In case you can’t afford that, at least put sufficient in to get the total matching contribution form your employer.
This investment is made just before taxes. Your investment is larger and with the employers contribution grows rapidly.
Next have a brokerage or mutual fund company debit your banking account monthly. This cash must first go into an IRA – if you have five years or more to go to retirement, make it a Roth IRA.
Next have a few dollars more be debited to go into a no-load, low cost mutual fund. The younger you’re, the more aggressive your choice of fund can be.
After that is done, then figure out how to pay your bills and living expenses. If funds is tight, cut back on your living expenses and use the extra money to pay down your debt.
Start with the lowest balance initial. Once that debt is paid, take the amount of money you had been paying on that debt and add it towards the payment for the next lowest balance debt. Continue performing this and it is possible to be totally debt free within 5 to 7 years.
Another version of this method is paying the highest interest rate debt initial. The principal could be the same, you just see a lot more progress with the initial method, although it could be more costly based on how your debt is distributed.
(Should you don’t believe me, get the premier version of Microsoft Cash or Quicken and use the “Debt Reduction” module. You may be shocked at how a lot funds you’ll save and how fast it is possible to eliminate debt this way.)
The idea is to scrimp at the expense of your current lifestyle, while leaving your savings to grow and you debt to shrink.
I know numerous of the people reading this will scream that that is an impossible plan.
But it can be quite doable with a little will power as well as the ability to delay gratification for any while.
The problem is that in case you don’t do this, your future may turn out to be really bleak.
by Rick Newman, US News World & Report
Don’t exhale just yet.
The recession is winding down, and shell-shocked consumers can finally begin to repair finances thrashed by the housing bust, stock-market collapse, and wretched job market. But the white-knuckle ride may continue, even as the economy recovers. The whole nation has been living on borrowed money and putting off tough decisions, and the bills are finally getting too big to ignore. Here are six eventualities that will keep the pressure on American families–while providing even more reason to save extravagantly and live carefully. [Read more]
[Excerpt] They’re just like you. But with lots of money.
When you think “millionaire,” what image comes to mind? For many of us, it’s a flashy Wall Street banker type who flies a private jet, collects cars and lives the kind of decadent lifestyle that would make Donald Trump proud.
But many modern millionaires live in middle-class neighborhoods, work full-time and shop in discount stores like the rest of us. What motivates them isn’t material possessions but the choices that money can bring: “For the rich, it’s not about getting more stuff. It’s about having the freedom to make almost any decision you want,” says T. Harv Eker, author of Secrets of the Millionaire Mind. Wealth means you can send your child to any school or quit a job you don’t like.
According to the Spectrem Wealth Study, an annual survey of America’s wealthy, there are more people living the good life than ever before—the number of millionaires nearly doubled in the last decade. And the rich are getting richer. To make it onto the Forbes 400 list of the richest Americans, a mere billionaire no longer makes the cut. This year you needed a net worth of at least $1.3 billion.
If more people are getting richer than ever, why shouldn’t you be one of them? Here, five people who have at least a million dollars in liquid assets share the secrets that helped them get there.
1. Set your sights on where you’re going
Twenty years ago, Jeff Harris hardly seemed on the road to wealth. He was a college dropout who struggled to support his wife, DeAnn, and three kids, working as a grocery store clerk and at a junkyard where he melted scrap metal alongside convicts. “At times we were so broke that we washed our clothes in the bathtub because we couldn’t afford the Laundromat.” Now he’s a 49-year-old investment advisor and multimillionaire in York, South Carolina.
There was one big reason Jeff pulled ahead of the pack: He always knew he’d be rich. The reality is that 80 percent of Americans worth at least $5 million grew up in middle-class or lesser households, just like Jeff.
Wanting to be wealthy is a crucial first step. Says Eker, “The biggest obstacle to wealth is fear. People are afraid to think big, but if you think small, you’ll only achieve small things.”
by Forbes, Edited by Brett Nelson
Think you’re not getting a fair shake? Here’s how bad it really is.
Economists call them “market inefficiencies”–those periods when the price of something veers from its underlying, inherent value. Consumers on the short end of these misalignments call them rip-offs.
We’re not talking fraud here, though there’s plenty of that going around, too. We’re talking about all the ways, within the law, that we allow ourselves to be taken for a ride.
by Katy Marquardt
[excerpt] Don’t judge this penny pincher by his cover. Jeff Yeager may be the author of The Ultimate Cheapskate’s Roadmap to True Riches–which one might assume to be filled with coupon-clipping strategies and saving tricks–but his philosophy isn’t as much about how to get more for less as it is learning to live with less, period.