Lets’ go ahead and get the disclaimer out of the way first. I
am not a lawyer, I haven’t passed the Series 7, not a banker, not even a
wealthy person. Do not substitute this information for that of a Certified
Finance Pro.
This is a simplified way to help those who are about changing
their lives for the better, to get started and move forward from these three
first steps.
They
call it the “Rat Race”…
Rich people, that is. I think Robert Kiyosaki, coined the term
in his bestseller, “Rich Dad / Poor Dad“Rich Dad / Poor Dad”.
The grind of making just enough to cover your bills and stretch your paycheck
through the week. It’s uncomfortable, but most American’s do it. In fact, most
Americans live here. 6 of 10 baby boomers have less than a thousand dollars
saved for emergencies. This place sucks, so we want to elevate to the next
level. Lucky, for you, it’s easy…not that you couldn't otherwise handle it….
Step 1.
Pay yourself first. That doesn't really make much sense, but it is the single most effective change you can make
in your life, and like most everything discussed here, you can do it now,
today. All you do is take about 10% to
15% of your profit, income, whatever and put it in your account, not to be messed with,
Paying yourself first means that you
take a predetermined amount, let’s try 10% for now, until we get to some
personal finance basic statements. I think that almost all of us could cut a
latte, cigarettes, or anything out of your life to cover the price of your
savings needs. Better yet, don’t cut it out (unless it’s cigarettes or the
like), but find a creative way to increase your income. The point of these
posts, ultimately, are to get you to see that there isn’t anything that you aren’t
capable of doing. It’s not bullshit. With a positive/realistic outlook on life,
yourself and your abilities, it’s true what they tell you in kindergarten.
So, right now, make the change. That’s
the beauty of change; you can do it instantly if you don’t fight yourself about
it, and it adds up to dollars. Speaking
of which, that reminds me of……
Step 2.
Use the power of compounding,
tax-free interest. This isn’t a tax-avoidance blurb, but we can go over some of
the basic vehicles in which to drive you tax-free moulah around in. This is
where you will want to do some research on your own. Don’t just any-many-Moe a
bank, and do what their guru says. She/he is not obligated to have your best
interests in mind. Needless, then, to say; he/she most certainly does not. He
or she can be a wealth of consulting knowledge once you can sift through the
crap. Remember, banks are the ones that rocked our economy, so hard that
everyone in the world felt it about seven years ago. It seemed like misconduct,
even control fraud to me, but no one was arrested but me that day. If I had
been smart, and went to school in Boston, for Finance, then I would have been
compounding interest instead of good time.
The way to make the most of this is
to use a Traditional or Roth IRA, educational savings plan like a 529 plan, for
your kids’ college money, even life insurance policies can be a good way to
grow your cash garden without having to worry about weeds.
Make sure you put away a month
of income, at least, in a money market account or the stock market, only taking
very little, if any risks at all with this. This is your emergency fund and the
cornerstone of a good healthy portfolio. This money cannot be tax deferred, by
nature, because you may need it quickly and tax-advantaged accounts like your 401k,
are penalized if you dip into the cookie jar earlier than agreed.
A 401k is an IRA that is contributed
to by both you and your employer. An IRA is a retirement fund and you can own
anything (almost) in your IRA. This part is tricky, often, Talk to a pro. I
think the only thing that you aren’t allowed to have is collectible wine,
because you might drink it.
A 529 plan is one of the educational savings plans that grows un-taxed, while, normally, your child grows up and then it is used for college tuition, books, computers, Beats by Dre (It’s true), rent during school and even a vehicle. The best part is, this is not calculated by the Pell Grantors. If you have a kid, head to Fidelity or your least hated financial institution and drop a couple of Jacksons on your IRA, Life Insurance Policy and/or that 529 plan for little Billy. Oh, and if Bill Jr.uses that dough on college expenses for real, like Beats by Dre, he may not pay taxes on the back-end either. You cannot beat that.
Briefly, if you have a high
deductible health insurance policy, you can open a tax—free savings account,
known eloquently as a Health Savings Account (HSA), this is not an exhaustive
list, but I thought I’d throw that weirdo in just to show you that there are
many tax-advantaged accounts and processes. Please, educate yourself further,
after taking these first two steps and manifesting them in your life. This is a
zero-sum game that we are all playing. There is foreclosure built into the
fractal banking system and Modern Money
Mechanics. It is overwhelming, but you’ll adapt or someone will be eating
your lunch. It’s a dirty game, yawl. I shouldn't even be telling you this, I
should want you to lose….Relax, I’m only joking. I want to see as many people
rise up and fight smarter to even the playing fields. The game is fixed, but
only as long as we allow ourselves to not be educated about said game.
That is why Rule 3, should be Rule
One, applies to every aspect of your life and is under your responsibility
100%. [ABC] Always Be Clowning’, Oh wait that was my old motto.
My new one doesn't need a catchy acronym and it is a good thing, no matter who you’d like to ask. Improve yourself daily. Learn and compound ideas. Help those around you understand, and seek help for what you don’t understand. The truth is that once a human accumulates an unimaginably vast fortune, hundreds of millions or billions, often she is a slave to the money in a whole new way. The object is to keep her from being so stressed out, by participating in your in own financial planning. The pros won’t always steer you in the right direction. Good intentioned layman, won’t either. I hope you take this to heart and out of your next paycheck, take 10%, walk inside your bank and add it to your IRA, find resources that will help you understand how to handle your money.
My new one doesn't need a catchy acronym and it is a good thing, no matter who you’d like to ask. Improve yourself daily. Learn and compound ideas. Help those around you understand, and seek help for what you don’t understand. The truth is that once a human accumulates an unimaginably vast fortune, hundreds of millions or billions, often she is a slave to the money in a whole new way. The object is to keep her from being so stressed out, by participating in your in own financial planning. The pros won’t always steer you in the right direction. Good intentioned layman, won’t either. I hope you take this to heart and out of your next paycheck, take 10%, walk inside your bank and add it to your IRA, find resources that will help you understand how to handle your money.
--Money
makes a great servant, but a horrible master. — -----whose quote is that?
www.fidelity.com My Favorite
