Forget Your Goals – How to Make Real Changes to Your Finances

Your life is full of more money advice than you can possibly take in. Unfortunately, much of it falls into the “just give up that expensive cappuccino!” variety, which makes sense on the surface, but only applies to 0.001% of the population. The fact is there are no “easy” fixes to real financial problems. Changing your financial life is just as hard as changing your health, your relationships, or your career. So if you are tired of your money problems, open your mind, take a deep breath and read on.

Forget Your Goals

Chances are you’ve had the same financial goals for a long time now. “I want to own my own home.” “I want to live comfortably.” “I want to be debt free.” If these goals were going to fix things, you’d have checked some of them off the list by now. Unfortunately, for change to occur, there needs to be a clean slate. So stop trying to fix the ramshackle financial house you’ve built in your mind. Instead bulldoze it and rebuild from the ground up. To do that, there are a lot of other things you need to forget.

Forget What You Want to Own

You are currently surviving with what you own. If you weren’t, you wouldn’t be wasting your time reading an article on finances. This means that, at a fundamental level, you don’t need more stuff. This isn’t meant to be a judgment against struggling people who “waste” money on fast food or cigarettes that only the rich “deserve.” Instead, it’s a fundamental change in how you think about possessions. They just don’t matter until your money situation is fixed.

Forget “Saving” Money by Spending It

This goes hand in hand with the previous point but also applies to spending on essentials. If there is a great sale on something you want, but it means buying more than you budgeted, don’t. The hypothetical money you “saved” by spending more may feel good, but it won’t help you in an emergency the way money you actually save and put aside will. Having real money set aside for real emergencies is a must.

Forget Your Credit Score

Your credit score has one real purpose – to make it easier to take on debt. Sure, in the long run making good financial decisions will improve your credit score, but until you get where you need to be financially, it might as well be the high score on an old arcade game. Sure, it makes you feel good about yourself, but you might waste a lot of money achieving it. Save for emergencies and pay off debts that will make a difference to your long-term situation rather than paying off debts that will protect your high score. And never, ever try to improve your score by taking on new debt.

Forget Fairness

Oscar Wilde, who was no economist, once said “Life is never fair, and perhaps it is a good thing for most of us that it is not.” This is hard to accept. The world is stacked against you in many ways that you cannot change. There may be some ways that it isn’t but for the most part, you won’t notice those. If you are going to change your financial life, you cannot beat your head against the wall bemoaning the fact that some people get to have things you don’t and do things you can’t. Yes, it is unfair. It is also the way things have always been. The one comfort is that if you can tolerate that long enough to truly change your financial situation, then you have a better chance of becoming one of the people that other people are jealous of.

Informational credit: Accuplan Benefits Services, providing self-directed IRAs and 401Ks

8 Money Habits That the Wealthiest Individuals Practice Regularly

The gap between the world’s rich and the rest of the population continues to grow and be more evident. As the numbers of poor people increase, more individuals are trying to figure out the secret to becoming successful. While it’s true that family connections and luck have sometimes carved out a path of good fortune to some of the richest people on earth, for most individuals who have earned their way to the top, it’s about specific money habits. Here are some of the best money tips for those looking for a little bit of inspiration from the best.

1. Don’t Live Beyond Your Means

One of the biggest problems that plagues many people who have difficulty with their finances is that they live well beyond their means. It’s important, no matter how much money you bring in each month, to develop a modest budget and to stay within it. Spend less time collecting new things and more time experiencing moments and developing new skills. Drive a used, late model car instead of the newest one on the lot, and live in a house you can afford.

2. Stop Playing the Lottery

Another habit that the most successful individuals share is they refuse to buy into the lottery systems that are run around the country. While millions of people get excited at the thought of becoming an instant millionaire with a lucky jackpot, the reality is that winning the lottery is not something that’s going to happen to you. Every lottery ticket purchase is simply a waste of money that could be better spent. So, if you are a lottery player, think about the cost of all of the tickets you have bought, and what you could use the money for instead.

3. Spend More Time Talking to People

The top people who have reached ultimate success in the world also share another important characteristic; they have a way with their words. Taking the time to talk to people is another key factor that helps propel you to financial success. Meeting new people is easier when you open yourself up to a new conversation. This can help expand your network, which puts you in a better position for your career and ultimately, your finances.

4. Avoid Time Wasters

If you want to get ahead, the first things you need to cut out of your life are the big time wasters. Sitting in front of the television for hours at a time, playing video games, and spending the day online for no specific reason are all big activities that produce no viable outcome for those who crave success. If you are looking for something to do in your spare time, take up a hobby instead, such as music, sports, or reading. Hobbies that help you develop a specific muscle or skill are much more likely to help you be your best.

5. Do Your Best Work

The next helpful tip that can give people a greater chance of finding huge success is to do your best work. No matter what you do to earn your money, make sure you do it well. While many of the richest people in the country had various jobs before they made it big, whatever they did, they did it well and with passion.

6. Get Professional Advice for Money Decisions

Those with large amounts of money must also take special care to protect what they have. Wealthy individuals never make foolish decisions about money because they employ the help of financial advisors. Even if you aren’t a millionaire, it’s still a good idea to get advice from professionals for the best path to take with your financial reserves. Following popular wealth advisors, such as Patrick Dwyer’s twitter, may give you some basic advice about what to do in the current financial market today.

7. Focus on Task Completion and Organization

Making a large amount of money can only be possible if you’re constantly working toward completing important tasks and have some sort of organizational system for everything that you do. People who put things off or procrastinate difficult and time-consuming work may struggle to reach a certain level of success. A system of organization is vital to those who want to be able to deal with more demands as they become more prosperous.

8. Make Realistic Goals for Yourself

The last important habit that the richest people in the world are good at is that they make realistic goals for themselves. You can adapt this idea to your own life and career as well. Instead of existing in a life that doesn’t fulfill you and dreaming about a different path for yourself, set small goals that you can realistically achieve. Once you reach a goal, make a new one, until you finally get to where you want to be financially.
Following in the footsteps of the people at the top of the earnings chart can help you get to where your highest financial level may be. When your hard work and smart decisions start paying off, you must continue to focus on your goals and stay the course.

Can Good Record Keeping Make You Rich?

What if I told you that managing your finances more efficiently could make you rich? Would you be interested in learning how to effectively manage your finances? Something tells me you would be. You see, the thing is… many would assume that in order to get rich you need to acquire more money. While that is a portion of the equation, the other part of becoming financially successful and staying that way is – financial management.

Accountants and Financial Management

Unless you’ve majored in accounting yourself, to effectively manage your finances it is ideal to work with a certified public accountant. Kansas City CPA firm MarksNelson points out that the right accounting firm will work with you to help safeguard and grow your business.

Consulting with an accountant on a periodic basis to set up accounting systems, make major purchasing or investment decisions, evaluate existing accounting systems for errors, and assistance with business tax filing is an investment worth making. It essentially helps you to keep your finances in order, which can certainly lead to a financial increase.

The Importance of Good Bookkeeping

Do you know what money you have coming in and out on any given day? Do you know how much of that money you’re spending on operational costs, investments, or savings? Whether your business brings in $30,000 a year or $100,000 a year if you’re not tracking your expenses, chances are you’re allowing money to go down the drain.

The mismanagement of funds can quickly start a domino effect. It will hinder your ability to purchase inventory, pay salaries, make investments, and even provide quality customer service. In a nutshell, poor bookkeeping can quickly lead to the demise of your organization.

Benefits of Good Bookkeeping

Let’s take a look at some of the ways effective bookkeeping can increase company profits and bring you closer to being rich.

1.  Better Financial Analysis – You can’t make a decision on purchases, hires, investments, or savings if you don’t have a clear understanding of how much money you have (cash flow). Ideally, with the right accounting system in place, you can clearly see where money is coming in and going out each month.

2.  Fulfill Tax Obligations – As a business owner, you’re responsible for paying a lot more taxes than you would if you worked for someone else. Proper financial records make it easier for you to remain in compliance with tax obligations. Keeping track of cash flow, account balances, profits and losses makes it a lot easier to file your taxes every year. It ensures that you’ve paid the correct amount, which can prevent you from receiving hefty fines from the local and federal government. Good records can also help you in taking advantage of the many tax benefits there are out there for small businesses, which of course saves you money.

3.  Prevents You From Going Into Debt – If you’re blindly making purchasing decisions or taking out lines of credit and loans that you can’t afford to pay back, you’re going to find yourself in debt. Quality financial management, however, can help you stay out of debt (or at the very least manage the debt you have). If you have a clear understanding of what you have and what you can afford you will make more effective decisions as it pertains to purchases and borrowing money. Accurately recording company debt can also ensure that you stay on track with payments so you don’t incur more fees or damage your company credit.

4.  Informed Purchasing Decisions – You have to be willing to spend money to make money in the world of business, but if you’re spending more than you’re making – it’s a waste of time. Bookkeeping ultimately helps you to see the bigger picture as it pertains to your company finances. Having a budget for instance lets you know how much you have to spend on necessary expenditures so that you don’t go overboard.

So… you may have caught on to the fact that bookkeeping won’t make your company rich. HOWEVER, it will help you to utilize your money more wisely and can assist you in saving hundreds if not thousands of dollars every year. Think about it… if you had an accounting system in place that allows you to manage cash flow, make more informed purchasing decisions, maintain your tax obligations, AND helps you to take advantage of deductions and credits… you’ll have more money to invest into your business so that you can ultimately meet your financial goals.

Don’t be a Del Boy: get a steady career

The Del Boys of this world are always on the lookout for a quick fix, an easy way to make money without having to put in an abundance of hard work or real effort. Whether it’s selling moody diamonds, become a repairman for a rich home or winning the lottery, you’ll make your millions – one day.

It’s a character that’s ripe for comedy for good reason. While their plans might be well-intentioned, making stable levels of cash requires oodles of hard work and determination.

Prodigious entrepreneurs don’t just take a shot in the dark. Their calculations are risky, but are ultimately designed to pay large dividends. And where they fail, they’ve got backup plans to reinvigorate their cash flow.

It all sounds like a bit of a hassle, really, doesn’t it? Wouldn’t you prefer to table your plans for entrepreneurial domination and enjoy a steady career instead?

If you would, we’ve found a few career paths that are more stable than entrepreneurialism – but will still earn you plenty of cash. Take a look and see how they could help your career.

Project Management

Every large company needs a glowing leader, someone with the charisma of Don Draper and the planning skills of a master architect. But beneath them sit people who are keeping the cogs whirring in this grand business structure.

These people are project managers – and the best of them are rolling in cash.

To become a project manager, you’ll have to study hard and work your way up the career ladder.

Start by earning an Msc Project Management from a fully-accredited distance learning provider, which will teach you all the foundations of leadership and project management that’ll keep you in good stead throughout your career. Once you’ve got a degree in your back pocket, you’ll be ready to grab the world of project management with both hands.

Tax Manager

Doing taxes isn’t for everyone. Some find those mountains of numerical values, befuddling variables and head-scratching bureaucratic forms about as accessible as a crash course in rocket science.

But some people are prodigious in the field of taxes, looking at a complex series of facts and figures and processing them like they were Sherlock Holmes. What’s more, they’re paid well for their cash.

Earning a sizeable salary in this role does, however, take a lot of time and dedication. You’ll need at least two years of experience at the bottom of the ladder before you can progress. From there it’s a case of keeping up to date with tax information and maintaining an air of professionalism that’ll put you head and shoulders above your peers.

If you’ve got any other career suggestions that could make you a ton of money, we’d love to hear them.

4 Things You’re Not Prepared for in High School

High school is the best time of many people’s lives. For others, it’s a complete and utter nightmare. But for every high school student, there are a few things that you just can’t prepare yourself for, no matter how confident you may be about the future. While constant studying, homework, college prep and trying not to fall asleep in your classes might be consuming most of your brain, it’s likely that the other half is focused on your social life. The harsh reality of the matter, however, is that in the long run, many of these things don’t matter as much as you think they do – or even at all.

High school – and life after it – requires some preparation. Here are four areas that you might think you’re an expert in, but should really should read about, just to be safe.

  1. College

According to EdSource, a recent survey reported that less than half of the U.S. high school students feel they’re ready for college. No matter which side you’re on – ready or not ready – rest assured that there’s little that can prepare you for the actual experience, short of diving right in.

One way to prepare yourself for college is to take AP classes. The coursework will teach you critical thinking skills necessary to excel in the university classroom. When it comes to the application process, selecting a school and ultimately making your move onto campus, you’ll find yourself faced with an entirely new lifestyle.

In college, you’ll be living on your own, making your own schedule and facing new responsibilities; not to mention taking your education into your own hands. Appreciate what you have now, live in the moment. College will change you, in a good way.

  1. Life Skills… Seriously

Unfortunately, understanding the Pythagorean theorem will only get you so far. Many high schools don’t teach a lot of basic life skills, and you’re going to need those more than anything once you get into the real world. The Huffington Post wisely recommends that you educate yourself on life skills like finances, cooking and handling stress while you’re in high school.

Because unfortunately, you might not learn them any other way. You may not need help figuring out where to put the stamp on an envelope – as this particular Huffington Post writer lamented – one day you’re going to have to do things like sew buttons, file taxes, open a bank account and know how to do more in the kitchen than boil water. You’ll also have to manage necessities like auto and health insurance, that is, once you’re no longer eligible to be on your parents’ plan.

  1. Getting Auto Insurance

Getting your own car might be one of your biggest dreams and goals right now, but owning a car isn’t all made up of fun and driving off into the sunset. A car is an investment that you’ll have to put some serious thought into, and one of the biggest mistakes you can make is having those thoughts clouded by factors like what make and model will boost your popularity. And don’t forget about the fact that you’ll have to make car payments – and pay for insurance. Unfortunately, there’s no answer out there to help you pay (asides from your own financial planning), but when it comes time for you to look up the best car insurance for students, sites like CoverHound are a helpful resource. Figuring out various types of insurance on your own is just one of the things you’ll be dealing with later in your adult life.

  1. Relationships

This last item on the list will be brief, and maybe one of the hardest to remember. While there’s a lot to be excited about when it comes to getting started on your dating life, the truth is that high school relationships aren’t always fruitful. They can seriously distract you and bring about undue stress. Staying with your high school sweetheart is pretty darn unlikely – and that’s coming straight from Psychology Today. In high school, you’re just not prepared for the level of maturity, understanding and commitment that a serious relationship needs to thrive.

 

Overall, keeping an open mind, staying humble, and taking initiative to educate yourself will all serve you well during high school and beyond. Eventually, you’ll be able to look back and feel proud, rather than reflecting on all of the things you wish you would have known or done to have made your life easier. Regardless, growing up is certainly no easy journey. But try to keep in mind that no matter what life throws at you, if you keep the proverbial good head on your shoulders, you’re going to survive it – guaranteed.

What’s your next move.

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Personal finance, well really life in general, is often about the next move. You go from elementary, to middle, to high school, and then to college. You finish college and get a job, only to find yourself looking for a new job after a couple of years.

My entire personal finance journey has always been about the next move.

First it was getting a job so I could earn money.

Then I used my new income to start paying down $28,000 in student loan debt.

Once my debt was paid off, I focused on saving for a down payment so we could buy a house. When we reached $100,000 in our savings account, we bought a house.

This year, Girl Ninja and I have turned our focus to contributing more significantly to our taxable investment account, in addition to maxing out my 401k ($18,000) and Roth IRA ($5,500).

Even though we are in the wealth building phase (heavily investing as opposed to paying down debt or saving for a house) of our personal finance journey, I still don’t really feel like I know what our next move is.

Am I investing simply for the sake of investing? 

Shouldn’t I have a plan, stated goal, or purpose for this wealth I’m trying to create? I need a next move if I want to stay focused.

I need something to look forward to.

But what? Here are a few of the things that sound appealing, but I’m not quite sure are for me…

Early retirement.

We could build up our retirement and taxable accounts to such a great number (probably around $1.5 million) so I can retire a decade before I’m supposed to. That’s cool and all. But I honestly don’t think I would quit my job even if I was financially able to. The pay is too good. The work life balance is second to none. And I legitimately enjoy my job. It’s weird, I know.

Buy an investment property

I quite enjoy the the idea of putting down $70,000 or so down on a $350,000 house, renting it out for $2,000/month, and letting someone else pay off my mortgage for me, not to mention watch my asset appreciate over the years.

That said, I also quite enjoy not having to be a landlord, property manager, or maintenance man. Nor do I necessarily want to tie up even more money in another illiquid asset.

Save for our next home

Girl Ninja and I bought a cute/modest 1930’s craftsman in the greater Seattle area. We spent $350,000 for our house, even though we were approved to spend nearly $600,000 by our lender. We’ve been in our house for just shy of two years and we love our community more and more every day. That said, we also realize that 10 years from now, when multiple children are in the picture, we might want a house that meets different needs.

If we are going to upgrade in house five or ten years from now, we could start saving today to make the more expensive house less of a financial burden.

?????????????

No. Seriously. What else could be my next move? I honestly can’t think of another “next move”.

This is where you might be able to help me by sharing what YOUR NEXT MOVE is.

– Are you working towards paying down debt?

– Or are you saving to start your own business?

– Have you drank the early retirement kool-aid and you’re saving 50%+ or your pay? 

Maybe one of your “next moves” will inspire me and become my next move!

Things every high school senior should know about college.

I’ve been mentoring the same group of high school boys for four years. They are seniors now, and most of them are in the midst of receiving their college acceptance/rejection letters in the mail. At one of my recent Bible studies I asked the guys if they would be interested in doing a “college prep” night where I shared with them some insights on the college experience. Here’s what I’ve got so far to share…

Do look in to going to a public school. I made the decision to go private and man oh man did I pay for that choice. My school ran about $30k/yr, quite a bit different than the $5K-10k/yr public school options at the time. Looking back I wish I would have considered going to a state school. It’s okay though, I don’t regret my choice as I had the best four years of my life, but I SHOULD have explored public options more carefully.

Don’t drop out. Yeah that’s right. If you start college…finish. I can’t tell you how many kids I went to school with that didn’t come back after the first year. They paid $30K for that one year, and don’t have a degree to show for it. School can be hard, life happens, and money will be an issue, but you better do everything in your power to make sure you graduate from somewhere, even if it’s your local community college.

Do work part time. I don’t care if you are working 5hrs/wk or 40hrs/wk, but try and make some money. I know, being a full time student can be stressful, but I bet part of that stress comes from being broke. You don’t need to be earning enough to contribute to a Roth IRA (although that would definitely be sexy), I just want you to be able to cover the majority of your personal expenses (food, clothes, school stuff, etc). It also will give you something to put on your resume come graduation time. Think about it, if you were on a hiring panel would you hire someone who graduated college with a 3.5 GPA and no work experience or someone with a 3.5 GPA who also had a job during those four years? I’m going with the latter.

Don’t use that fricken credit card you signed up for. Yeah, that’s right. I’ve been watching you. Some dude at a booth said “Hey fill out an application for this credit card and we will give you this frisbee” and you filled it out didn’t you…DIDN’T YOU!? I too took advantage of a “free shirt” offer, but I actually lied on the application and input all fake info (which I think is actually a crime, but I didn’t know it at the time). Fortunately, I never accumulated a credit card balance while in school and you need to do the same. This is a non-negotiable. Credit cards can not be the means by which you provide yourself food and textbooks.

Do get good grades. Sounds like a no brainer right? But are you really applying yourself in all of your classes. I sure didn’t. In fact I got an A in Organic Chemistry, but a B in Introduction to Art. I picked and chose which classes I wanted to succeed in and where I was okay falling short. I wish I could go back in time and try just a little bit harder. When you graduate your GPA is going to be a huge bartering tool for you. Yes, your college GPA will become less important as you establish yourself in the work place, but until that time comes, it is your most valuable asset. If you graduated with honors don’t be shy about telling your prospective employers about it during an interview. It shows that you are dedicated to working hard and doing well.

Don’t grow up too fast. If you are the typical 20-something college student you have a responsibility requirement to act like it. Have fun. Pull stupid pranks on your dorm mates. Stay up really late and watch movies. Once you graduate college, you have to enter the 9-5 world, and let me tell you… it ain’t pretty. Midnight burrito runs are a thing of the past. Enjoy the college lifestyle.

Do take advantage of EVERYTHING your school has to offer. I was heavily involved in various college activities. Sporting events, clubs, organizations, all at your fingertip. There are so many FREE programs available to college students, you would have to be stupid to not take advantage of them. You aren’t stupid, are you?

Don’t take out $100,000 in student loan debt to become a teacher. If you know exactly what you want to do with your life (teacher, socialist worker, nurse, etc) then you need to think about the average pay for that position and how much student loan debt you will have. Don’t be naive and take out $25,000 each year in loans, only to graduate and become a Kindergarten teacher who makes $35,000/year (if you even get a job right away). You will literally be in debt for just about ever, and probably doomed to live in your parents basement until your 40.

Here is a general rule I would use; the total amount of your student loans should be less than what you expect to make annually in your chosen profession. If that’s not the case, change schools or change majors.

So there ya have it, some of my thoughts on the college experience. Take them with a grain of salt as they are only my opinions, and according to Girl Ninja, my opinion means nothing.

I’d love for you to share a few MUST SHARE items that I need to address when I meet with these high school kids. What is something that your 18 year old self would have liked to know?