Archive for March, 2011

Individual Savings | Tags: Accumulation, Allies, Amount Of Money, Discipline, Emotional Battle, Habit, How Much Money, Income Earners, Long Periods Of Time, Milestones, Misers, Percentage Rate, Saving Money, Threshold, Wealth Creation, Whim

The Threshold between Wealth Creation & Destruction

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March 27, 2011 at 7:20 am

Wealth is simply the accumulation of money, and it can only be created by the amount of money that is received and never spent. If you want to build wealth, then anytime you receive money: dont spend all of it. Sure it is a very simple concept, but it is very difficult to continually achieve. Luckily there are readily available allies to help you: find some compelling reasons to start saving, build it into a habit, watch the results of your efforts build, and set some financial milestones to reward yourself.

Setting aside a percentage of any money that you receive is the best method to follow through and build the habit of saving money. There are a few misers among us who find saving easy to do, but most people want to spend far more than is earned; let alone have the discipline of spending less than what they earn. So it starts as an uphill mental and emotional battle that gets easier by following through with the habit, and seeing the results of your effort. Spending less than what you earn every week, every month, every year, is the only way to amass money.

How much money should you set aside to build up savings? It should be a percentage so that you automatically move it into a separate savings account anytime you receive income, without exception. It is my experience that the range of 3% to 10% is the most successful starting percentage for people who continue saving over long periods of time. Saving only 3% is so small that it is nearly painless to even the lowest income earners (this is actually where I began years ago). Selecting a percentage under 3% accumulates to such a tiny amount of savings that I havent heard of anyone sticking with it. And starting out by setting aside over 10% is too painful for even high income earners to withstand, because they are so accustomed to spending on every whim. As you repeatedly save a set percentage rate, it will become more habitual, automatic and expected. Then youll be ready to increase your percentage rate. And the higher the savings rate, your growing pile of money will create more motivation to continue to save. This summer, I spoke with a successful saver who lives very well on only 30% of his income. Because he saved diligently to continually buy rental homes, after a couple decades he earns over a million a year in rental income by Ashville, North Carolina.

In the fragile first years of saving money, it can take only a single wrong financial move to wipe out everything that youve saved so far. And the most common wrong move doesnt look like it when it is occurring. This draining move can also start insidiously small and build a different habit, the wealth-destruction habit. You know the problem: pay your credit card balance in its entirety, every month, without exception. As an example, if you havent saved money for a vacation before you depart, and then charge it all to your credit card, there is a giant probability that you wont pay it off for a very long time. The credit card companies know this and they are extracting interest dollars from you instead of earning interest yourself. Youve shifted to the dark side of wealth destruction where it is more common for your credit card balance to grow than shrink.

Lets get back to building your wealth. Once you start setting aside the savings percentage that youve decided and opened a dedicated savings account, you need to closely review your account statements for motivation. Reviewing the progress that youve made so far youll see how you are moving toward financial goals can be self-reinforcing. And another motivator is rewarding yourself by spending some money on yourself when youve reached certain milestones. For example, you could start with a goal of accruing $500, and reward yourself with something meaningful; and then each time you double your amount of savings you get another reward. My advice is to at least begin with a savings percentage, even as small as my 3%, and allow this simple concept be of great financial benefit to you.

Why Planning Your “Re-Fired” Retirement Is Vitally Important

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March 26, 2011 at 11:15 am

Just about all of us plan to retire one day. You may visualize yourself with plenty of free time on your hands, no commute, and finally with an opportunity to travel with the person you love.

But statistics show that golden dream comes true for only a very few of Americans. Some studies reveal less than 10 percent of us ever retire. Even more alarming, other studies show a large percentage die within a year or two after retirement.

Clearly, an enjoyable, healthy retirement is not something that just “happens.” To get past all the challenges that lie in your way, you need to plan for your retirement wisely.

I advise people in my seminars NOT to retire, but to RE-FIRE. Instead of looking at retirement as merely leaving the world of work, look at retirement as a time when you can finally achieve the things you’ve always wanted to do.

Most retirement advice centers around telling you to put a lot of money in a savings account. While saving for retirement is important, most of what you should do to retire well can be accomplished within five years of retirement.

Much of what you need to do to retire successfully is mental and spiritual. When many of us retire, we walk away from a life of work that filled our days, exercised our minds, and included most of our good friends. Once you’re retired, you find your days become empty and unfulfilling, even depressing.

That’s why it’s critical to plan new tasks, goals, and attitudes for retirement. While sitting in an easy chair and relishing not having to go to work can be fun for a while, you’ll soon need activities and relationships to make your days fulfilling. You’ll also need ways to create a satisfying social life that often includes important new friends.

That’s why RE-FIREING in your retirement years is the right approach to take. Rather than giving up, you’re recharging and moving forward to an even more exciting life.

Focus on attaining optimum good health, creating the fine-tuned relationships you’ve always wanted, and finally accomplishing some of your true purposes in life. Re-firing can help you figure out what has been missing from your life, what you really want to do in your senior years, and help you develop solid strategies for quickly achieving your important goals.

Why Debt Settlement Works Best in Texas

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March 18, 2011 at 8:15 pm

Debt settlement, also known as debt negotiation or debt reduction, is a relatively new way for dealing with your debt problems. In a debt settlement program, by negotiating with a creditor, a client can reduce their debt by as much as 50 percent and be debt free in as little as 12 to 36 months.

Debt settlement is a great solution for consumers feeling overwhelmed with credit card debt that find themselves either falling behind on their payments or just able to afford the minimums. Considering the savings, in most cases its worth doing if you find yourself in any of the aforementioned situations. As with any debt solution, however, there are potential downsides to debt settlement that should always be considered prior to enrollment. First, debt settlement may have an adverse impact on your credit, particularly while youre in the program. To put this point in perspective, however, its important to remember the following: 1) any third party debt counseling program and even debt consolidation loans from finance companies like Beneficial may affect your credit negatively in the eyes of lenders, 2) the effect on your credit in the long-term is minimal, given the fact youll be eliminating all your credit card debt (amount owed is 30 percent of your credit score, compared to credit history, which makes up 35 percent of your score) and 3) if youre falling behind or about to fall behind anyway, then your credit has been or will be affected negatively anyway.

Realistically, the two main draw backs of debt settlement that are unique to debt settlement are the following: 1) the possibility of legal action being taken by the creditor to collect the full balance and 2) the possibility of creditors harassing you until the debt is settled.

Thankfully, if youre doing debt settlement in Texas or even debt settlement in Florida these concerns are very much diminished. Why is Florida debt settlement so preferable compared to a lot of other states? The reason is Texas has highly favorable debtor laws that give consumers a lot of rights and protections when it comes to past due unsecured accounts like medical bills, credit cards, repossessions, and personal loans.

How State Collection Laws Benefit Texas Debt Settlement

Every state has laws that say if a collections agency is collecting a debt, they are legally obligated to stop contacting a consumer if the consumer sends a Cease and Desist letter and/or a Power of Attorney notifying the collection agency that a third party is responsible for handling all communications with the creditor. Texas law takes it a step farther and not only limits harassment from collection agencies, but also from the original creditor as well. In most states, when a consumer falls behind on their payments and the debt is still being collected by the original creditor (the bank that originally lent you the money or the hospital that serviced you, for example), then the creditor is reserved the right to call the debtor on a daily basis in order to collect whatever is owed, and although debt settlement companies servicing these clients can very easily reduce the calls (changing of your phone number and address and notifying the creditor that you are seeking third party help, for example), no one can ever make the calls completely stop.

This is not the case however for Texas debt settlement clients. In Texas, the same law that deals with what collections agencies can and cannot do when collecting a debt also pertains to the original creditor. What does this mean in practice? It means that a debt settlement company servicing someone from Texas can easily get the calls to not only reduced, but completely eliminated all together (sometimes within days).

State Homestead and Garnishment Laws and How They Benefit Texas Debt Settlement

For Texas debt settlement clients, their wages and home are completely protected, which gives the creditor even more incentive to settle. Given the fact that creditors already have every incentive to settle even with clients who reside in states with less favorable debtor laws, Texas debt settlement clients are in an even stronger negotiating position with their creditors. What does this actually mean? Typically it means even greater protection in the event of a lawsuit and greater savings than what is typical. Let me explain.

Although the vast majority of cases settle, as anyone who has ever read a debt settlement contract will tell you—its impossible for a debt settlement company to guarantee that a client wont be the target of any legal action by their creditors. After all, creditors are always reserved the right to sue debtors to collect a past due account, regardless of whether the consumer is taking any action to resolve the outstanding debt.

In the event a creditor sues a consumer in court and wins a judgment, theyll usually go about executing the judgment in one of the following ways:

1)Wage garnishment—contacting your employer and asking that they set aside a percentage of your wages every paycheck until the debt is paid back in full. (Its illegal for an employer to fire you for this unless more than one creditor is garnishing your wages).

2)Lien on your property—obligates you to pay back the creditor with any proceeds from the sale or refinancing of the property. A creditor prefers to put a lien on your home since it usually increases in value over time, which means the proceeds from your homes sale will be higher, and thus theyre more likely to actually get paid back.

3)Seizing your bank account—contacting your bank, showing the proof of judgment, and asking to withdraw any monies held in deposit under your name.

Fortunately, Texas laws protect debtors from having their wages garnished (unless you authorized in writing to allow your creditor to garnish your wages) and entitle Texas consumers to 100 percent homestead protection in the event of a lien. (Note: this does not apply to tax liens, alimony, or contractors liens.) One downside, however, is that bank accounts are not exempt under state law. That being said, for most consumers who are drowning in credit card debt, there probably will not be much for the creditor to seize anyway, and if so, its unlikely that it will constitute enough to decline a settlement offer. On top of that, bank account information can be difficult for creditors to locate, unlike your home, which is public record.

In sum, these are major advantages for Texas debt settlement clients. Keep in mind that the vast majority of cases are settled successfully regardless of the legal advantages of the consumer. When you consider Texas state laws, debt settlement makes even more sense for the credit card companies, debt collection agencies, and most importantly, for the consumer.

Debt Settlement in Texas and Community Property Laws

If you are married, reside in Texas, and are seeking debt settlement services, you should enroll any and all debts that were accumulated during the marriage by both you and your spouse. Just because the debt is owned by only one partner the other partner is not exempt from having to pay for it as well under Texas law. Creditors know this and may use it to their advantage in the collections process.

The Quickest Way to Dramatically Increase Your Net Worth

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March 18, 2011 at 4:47 pm

Your net worth equals what you own minus what you owe. It is commonly referred to as the difference between your total assets and your total liabilities.

Heres a simple illustration:

Home Value = $350,000   Mortgage balance = $150,000
Investments = 100,000     Credit cards = 20,000
Auto = 45,000                  Auto loans = 30,000
Savings = 15,000             Bank loan = 4,000
You Own = $510,000        You Owe = $204,000

Therefore, your net worth would be $306,000.

There are two ways to increase your net worth. You can own more things or you can reduce your debt obligation. This article will focus on reducing your debt first because it is the fastest way to generate more money and, then, buy (own) more things.

In our example, you have $204,000 of debt. If youre like most people, you pay less attention to the mortgage and car loan balances because you consider them to be rather normal (necessary) to your way of life.

The credit card companies are probably charging somewhere between 12 to 18 percent (forget those slick, short-lived introductory teasers) and the bank loan is probably around 6 percent.

Now, before we go further let me ask you a question. Which is faster? Create $204,000 (in other words, own more) … or reduce $204,000 of debt? In both instances, the result is the same because your net worth will have increased by the same amount.

To create $204,000 in 15 years, you would have to invest $6,956.69 each year for 15 years and receive a guaranteed 8 percent rate of return. Where can you find a guaranteed rate of return this high in todays marketplace? No where!

To reduce $204,000 of debt in 13.5 years, it takes only $100 extra each month. Now, lets make sure you understand what I just said.

To increase your net worth by $204,000 you must invest almost $7,000 each year for 15 years. You hope and pray youll receive no less than 8 percent average every year.

Or… you can come up with only $100 each month to reduce 100% of your debt (to include your mortgage) in only 13.5 years — guaranteed! Hard to believe isnt it?

Go ahead and check it out yourself. First, use a compound interest table to compute the investment requirement. Then, print this
debt reduction chart. Youll need an Adobe Reader, which is probably already installed on your computer. Otherwise, go to adobe.com for a free download version.

In every instance, it is faster and more reliable to eliminate your liabilities than to increase your assets. Why? Because the interest you pay on your debt is excessively higher than the guaranteed interest you can earn.

By following the debt chart and adding an additional $100 each month to the minimum payment requirement, you can dramatically compound the effect of your payments and expedite the complete elimination of all your debt.

Its a lot easier to come up with $100 extra each month than it is to find $6,956.69 each and every year for the next 15 years.

Who Else Wants Access To Real Private Banking Solutions?

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March 14, 2011 at 7:58 am

As a middle aged, middle class, married, business owner, father of 3 (one in college.argh) freedom seeker, I have sought for many years to establish the knowledge, the relationships, and the resources needed to make a lifestyle of financial privacy and freedom available to me and my family. One of the most frustrating and problematic areas to resolve successfully has been that of how to establish a private banking relationship, for someone of moderate means, in todays world of intrusive financial surveillance. Many have found that without doing something shady or under the table or downright illegal, and having to constantly be looking over your shoulder to see who is looking, having a workable private banking solution is, in real life, unattainable.

But I have found something that simply works…

If the above statement does not suitably impress you, perhaps you are not fully aware of what it takes to accomplish this in this day and time. Just because I said it is simple, do not underestimate the value of this gem. If you think its easy to find something that actually works…you have not tried…end of story. The Continental Trust and Credit Union has been the long sought answer to the banking relationships I required.

But before I give you a brief review of its qualities and benefits, let me stress that I am not talking about just going out and opening an offshore bank account. In my opinion, this is not a valid and workable relationship. First, unless you intend on having assets of less than $10,000 USD (I am talking about US citizens here) you are required to report this account; and secondly, anything with your name attached to it in the banking system is discoverable. Just having an account in a supposedly sovereign jurisdiction that will keep your information private is not good enough in todays financial landscape. Suffice it to look at the large number of high rollers who tried to hide a good portion of their assets this way and got in a good deal of trouble. This is not the way to do it; its not what I want, and I will presume its not what you want. Hiding things and privacy are very different arrangements, and you want to be involved in the latter.legitimate, legal, secure, workable financial privacy!

With that being saidlets take a look at this treasure I have found

The Continental Trust And Credit Union is a private savings and loan association domiciled in Stockholm, Sweden and registered in accordance with the Economic Associations Act (1987:667). The activities are regulated by the Swedish Banking Act (2004:297). As a legally designated ‘Ekonomik Foerening’ (EF) it is essentially a Savings and Loan association. Under the law that regulates Continental Trust, provided that it does not solicit to the public and keeps its membership ’small’ by legal definition, an EF is exempt from the standard banking regulatory regime and the only reporting required is an annual tax return filed on net profits.

What this means is that this type of an organization is basically not required to report anything regarding its membership or financial transactions…ever! This is as good as it gets! Now this does not mean you can get away with criminal activity, because if you give governments or courts a legitimate reason to come after you, they can eventually get just about any information they want…but as far as financial privacy, this is off the grid. This is a legitimate type of organization classified by the World Bank as a Non-Bank Financial Institution and recognized as having an important role in a balanced and diversified financial sector. In other words, its not some shady deal that you have to worry about being under the table. All of its officers have had background checks, the books are audited annually by a major, well recognized auditing firm.

Thats the legal stuff…now as far as its usability and benefits…here are the major points:

Full internet access to accounts and built in secure message system
Internet security system twice as good as most major banks (Regarding security; Account data is held not only in secure and stable Linux servers with all the appropriate firewalls, but is then maintained on powerfully encrypted hard drives which are not on the same server as the web page but are instead, held and maintained very privately and secure half a world away. The domicile, banking, secure servers, web servers and administration are all conducted and compartmentalized from different parts of the world making Continental Trust one of the most secure operations of its kind in existence today.)
So designed that even if the webserver were hacked, no information could be accessed
Transfer accts. for general in/out activity by wire transfer or by transfer to linked private International Secured Mastercard Program (no spending limits except for the balance stored)
Credit card, not debit card; much more useful in situations such as car rental etc. Funds accessed by:
merchant purchases
ATM withdrawals
Wire transfer
Bankers draft
Savings Accounts with 9% yearly earnings
CDs yielding from 1%-2.5% monthly (thats rightmonthly; excellent passive investment)
Minimum initial deposit is 2500 euro.
Loans against capital or real estate

My experiences with CTCU have been excellent. The communications with the staff have been prompt and professional. The treatment I receive is as a person, not a number. The one small problem I once experienced was when opening a trading acct. The trading institution would not initially accept the wire transfer because it was sent from another institution than what was named on the account. This is actually how this kind of organization works, its clearing of funds is through a separate bank. The problem was easily resolved by the staff sending the proper documentation showing that the CTCU account was in fact the initiator of the wire transfer. Problem solved!

The other thing you need to know is that access to the Credit Union is by private membership only…you must be a member of the private business group Venture Resources Group. There are other benefits as well to becoming part of Venture Resources Group as they are experienced professionals in the international arena, but I will not go into that here.

The last thing I will point out, is that CTCU is still fairly young and its deposits and ability to do other things in the financial world is comparatively smallbut growing.

So there you have it as best as I can put it. More detailed information is available from the Venture Resources Group and guest login codes to access all the information on the Continental Trust And Credit Union website are available upon request.

I sincerely hope that this article and the information it contains are of great benefit to you and can give you a sense of financial confidence that here, finally, is a solution to what you may have been looking for… as it did for me.

Important Note: A pre-requisite to having this kind of financial privacy is to establish working relationships with properly formed and maintained international entities. For the purposes of this article, I have assumed that you understand this, and have access to this kind of knowledge and relations. If you do not, then allow me to refer you to Venture Resources Group where I know you can get reliable and reasonably priced access to them.

Individual Savings | Tags: Amount Of Money, Bank Balance, Eight Months, Health And Happiness, Importance Of Saving Money, Important Things, Investing Money, Investment Bond, Lifestyle, Little Bit, Managed Money, Much Money, Parents, Pool, Target, Twenty Three Years, Wages, Wreckless

The Importance Of Saving Money For The Future

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March 10, 2011 at 3:25 pm

Money in my opinion is not the most important thing in life, but it is nice to know that you have a certain amount of money, saved or invested, which you can use if needed. I actually think that health and happiness are the two most important things in life. Having this pool of money helps to keep me healthy and happy, as it means that I do not have to stress as much about the future.

I only really realised the importance of investing and saving money, when I was twenty-three years of age. Up until this age, I would always spend all of my wages and did not care if I was overdrawn in the bank. I used to think that I could die tomorrow, so why bother about saving money which I might not ever use. This is a bit stupid, I know.

At the age of twenty-three, on one particular day, I was having a conversation with a friend called Tim. He basically earned the same amount of money as I did and lived a similar lifestyle. Tim told me that he was thinking of buying a flat and that he was going to cash in his investment bond to help fund the move. I was very shocked that he even had a bond and asked him how long he had had the bond, and how he had managed to get the money to put into it. I expected Tim to tell me that his parents had given him the money, but they hadn’t, he had saved up the money himself.

Tim told me that he tries to save as much money as he can per month and normally manages to save at least 100. When he has a 1000 saved in the bank, he then invests the money into a bond.

I was very impressed with Tim and I have to admit a little bit jealous of his money. I then thought to myself, if Tim can save, then so can I. I set myself a goal of saving up a 1000 and planned to do this within ten months. I had to be less wreckless with my money and it would be a good test for me.

It did not prove to be that difficult and it was a good feeling seeing a healthy bank balance for once. After only eight months I had saved my target of 1000. Instead of putting it into a bond, I decided to take an even bigger risk and to buy some shares. I am happy to say that two years later the share price of the company I had chosen to invest in, had risen by sixty percent. This I have to admit was pure luck as I had simply guessed at who to invest in. The company I chosen had had a dismal few years and its share price was at its lowest ever level. I had heard that the company had recently had some major changes at the top and I decided to gamble just on these few facts.

That was my first experience of investing and it gave the taste for it. I have regularly been buying and selling shares as well as investing in unit trusts for around ten years now. It has also become like a kind of sport or hobby for me, as I am trying to always pick a winner. I have won some and lost some but have had a huge amount of fun along the way.

I now have a certain amount invested in different ways and when for example I have a big car repair bill, I have no need to panic as all I need to do, is to cash in some of the units of my unit trust. That is what I like about a unit trust, unlike with an endowment policy where you need to wait until the end of the term to have access to your money, with a unit trust you can take out all or just some of your units at anytime that you want.

Before I started to save up money, I would often get quite stressed about the future. How would I be able to buy a house? How will I be able to buy a decent car? These are just two of many questions I would ask myself. I would try to ignore the questions by saying to myself that at that stage of my life, I should be earning more money.

I am now very happy that I had that conversation with Tim. Investing money in the way that I do has helped me to get onto the property ladder and also helps to fund my yearly holiday abroad for my family. It also gives me a peace of mind for the future and helps to to sleep easier at night.

The Four Mandatory Buckets Of Personal Finance

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March 4, 2011 at 2:39 pm

I have already written about the financial necessity of saving a portion of any income payment that you receive. This means that a percentage of every single source of income is set aside, marked, or tracked as money that you cannot spend. This task isnt optional if you want to have some basic financial stability or start growing some serious wealth. Saving is the first step and it is the easiest, simplest, but the most emotionally difficult step. I know that starting to save money is emotionally painful because spending money is easy and pleasurable, while saving money feels difficult and challenging. But like any behavior, it becomes easier and natural the more you do it.

As a review, the billionaire John Templeton started out working during the Great Depression but he saved 50% of his income. This guy was serious! OK, you may have a lot of fixed expenses that you just cant cancel immediately, but at least enroll in financial nursery school by saving 1% from all the income that you receive. Or start with only $3 a month and then ratchet up your savings rate continually until you are at least over 10%; or if you are ambitious get it over 30%. (If you are trying to find the loophole, this savings is your after-tax income that you can spend dont count your 401K or medical savings accounts or any other qualified money that you dont have full/immediate access to spending).

The remainder of this article is about what to do with that savings. Economics is the study of allocating scarce resources. Personal economics are similar, but I think that it is better described as: The allocation of your income that you cant spend. If you dont spend this money, and maybe have it setting aside in savings account, what do you do with it? Do you pay down on a credit card, save it for a car, donate it to a worthy cause, or purchase a bank certificate of deposit? How do you go about deciding?

Well, I have given this some thought and have reached a few conclusions. It is my view that your monthly savings needs to be divided among four mandatory categories. By this, I mean that among the zillions of things you can do with savings, it is my view that four of them are absolutely mandatory. For example, if you earn a paycheck (and after all of the taxing authorities take their share) of $1,000 that you can deposit into your checking account and youve chosen a personal savings percentage rate of 8%, then you move $80 ($1,000 X .08) into a separate savings account. Now, you will take this $80 and divide it up into at least the four mandatory categories I am going to discuss, along with any other categories that you value. In this way youll have the whole $80 assigned to specific financial duties to meet your financial goals.

Here are the four categories in priority order:

1. The Vault this is your wealth account. Money gets deposited into this account and it never leaves, like a one-way valve. The Vault is invested and the principal is never spent. It will grow into the largest part of your net worth, generating nearly all of your investment income. If you dont start creating wealth penny-by-penny, youll never have any.

2. Soft Savings a delayed spending account. This money is marked for things that you want to buy, but cant afford to purchase with normal pocket money. For example, a house, car, boat, vacation, college fund for kids, planned medical care, clothing, jewelry, etc. But this also includes maintenance to your home, like a roof, new appliances, new siding, paint, landscaping, remodeling, etc.

3. Paydown Debt Balances making extra principal payments on your credit cards, car loans, and your mortgage. By chipping away at these expenses you will eventually eliminate them all, and then have more money available for other categories. Personal debt is the opposite of financial freedom and dramatically makes it more difficult to reach your financial goals. If you doubt this, look at the interest charges you pay each month and imagine if that money had been invested instead.

4. Financial Education books, magazines, newsletters, seminars, software, investment memberships. Also, hiring professional financial advisors, tax accountants, estate attorneys, etc. (Avoid free advice a buddy, your cousin, or a friends neighbor buy the best, most expensive professional advice you can afford).

As I mentioned before, you can put your savings into places that are only limited by your creativity. But it is my view that these four areas are so important that they need to be continually fed money in a systematic manner.

If you are missing the first account, The Vault, youll never have the money to start investing so youll never receive any investment income. This is pretty much the goal of all personal finance, to help you generate the most investment income. That is why this is the most important of the four categories, to get your money earning money so that you dont have to. (I do not consider any retirement accounts or qualified accounts to be Vault money. This is because you do not have direct control to invest the money or receive any investment income until the government decides that you can).

If you are missing the second account, Soft Savings, you either cant buy what you want, or you have to increase your personal debt. This is moving in the opposite direction of financial freedom you are reducing the amount of money that you can spend each month by the amount of the debt payment, and you are reducing your net worth by the principal and interest that youll be charged. Another symptom of a lack of Soft Savings is disrepair to your car, home, and health because you dont have the money for upkeep. Everything physical needs to be maintained, from your teeth to your vacuum, and it costs money to do so. This depreciates the financial assets that you own, and puts at risk the most important quality of life your health.

If you are missing the third account, Paydown Debt Balances, you are simply going to be the patsy in the financial game of life. People that are building their wealth collect lots of little interest payments from the people that are destroying their wealth by making lots of little interest payments money is transferred every month from one group of people to the other. Which group do you want to be in? Well, your Vault can automatically put you into the group of wealth-builders and your Paydown Debt account starts to extract you from the group of wealth-destroyers. The Paydown Debt account puts you on track to permanently extinguish all of your personal debt. The sooner a personal debt is paid off, the more rapidly you can take all of this money and put it into the other categories.

If you are missing the fourth account, Financial Education, you wont know how to captain your Vault, and you may run it straight into the rocks. Only you will manage your money in a manner that will be to your maximum benefit. So it is best if you pay to learn how to handle money and learn where to put it. But not everyone has an interest in these subjects, and that is fine. For them, instead of personally managing your money, you are going to personally manage your financial advisors. Youll be spending money and time to hire and manage the advisors to attend to financial details.

By allocating your savings into these four categories you are addressing the four most important elements of financial management. Youll be making certain that: Your investment income will always increase by adding to your Vault; youll have money available for extra expenses with your Soft Savings; your net worth will always be increasing with a Paydown Debt account; and youll intelligently learn how to lower your investment risk, raise your investment returns, and lower your tax liability with your Financial Education account. The only source of money to build these critical financial functions to increase your income, net worth, and stability is your savings you simply have to do it.

I recommend you fund these accounts simultaneously do not focus only on debt or only on education because I have seen how it is financially detrimental to do so. For example, lets say that you really want to paydown your debt so you dont contribute anything to The Vault. I have found that if you dont have any investments, your investing skills will be under developed. You will not know how to invest once your debts have been paid off, youll have no investment income to manage, you wont be looking for investing opportunities because that is something you cant afford right now, etc. And as a result, it will be harder to get into the investing game later, youll have more to learn in a shorter amount of time, and may just avoid it altogether and put Vault money into a low paying account.

How much do you allocate among the four categories? Anything more that zero! It is up to you, and your financial situation will fluctuate and be different from others. Just to get some starting percentages, below is my allocation. It is not a recommendation for anyone, it is just what works for me right now.

My current savings rate = 20% of all after-tax income.

(This does not include 401K, medical savings accounts, or other deferred/qualified withholding). This means that 20% of all cash income that hits my checking account each month is set aside into these categories:

1. The Vault receives 50% of total savings each month.
2. Soft Savings receives 20% of savings each month.
3. Paydown Debt receives 20% of savings each month.
4. Financial Education receives 5% of savings each month.
5. And that leaves 5% for other categories each month.

You may receive continual, ongoing income, in addition to some rare, one-time inflows of money. The percentages detailed above are how I allocate regular income savings. But if there is any one-time inflow of money (garage sale, bonus, extra project), then I take 90% of the proceeds and split it among the four accounts, and the other 10% is just spent. You can create your own money rules for different types of income; you can tell by my allocation percentages that my primary focus is to build up the balance of the Vault.

The amount of money that you can save from every source of income is your key to a brighter financial future. Contrarily, a risky and dimmer financial future awaits those that refuse to systematically save money. So be sure that you take the steps necessary to set savings aside and then simultaneously divide it among the four mandatory accounts by consistently allocating money to them. You dont have a financial foundation without these four accounts, but with them, you can build as high as your ambition takes you.

Your Retirement… Will it be Fact or Fiction?

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March 4, 2011 at 7:43 am

Keep Your Banking Information Safe
by Tomas Cullin

It would seem that the computer is becoming a bigger and bigger part of our lives each and every day. There’s good reason for that perception… it’s true. One specific area that is becoming incredibly popular is online banking. Customers love it because it is very convenient and a great time saver. The banks love it because it automates a great many functions for them and cuts down on their overhead.

The number one concern of anyone that deals with online banking should be security. Putting your personal information over the Internet can be risky, there is no denying that. Fraud and identity theft have become huge problems in the modern age. There are any number of hackers and thieves out there in cyberspace just waiting to prey on innocent people. They lurk in the deep spaces of the Internet just waiting for some of your private information that they can steal.

Fortunately for us, the financial institutions of the world are very aware of this problem and are working aggressively to combat it. There was a time when a bank’s chief security concern was whether they would be robbed or not. I think we’ve all seen the old movies about Bonnie & Clyde, John Dillinger and the like…to say nothing of the daring train robberies of the wild west. Now banks face a new and much deadlier challenge than ever before, and instead of wearing a mask and using a gun, the bad guys are now invisible and use keyboards. They can access information from the safety of their homes and apartments. And even at the local coffee shop through wireless connections.

Identity theft has now become so prevalent that thieves are rifling through garbage to attain any information that they can use to steal from their unsuspecting victims. With this said, there are some simple, common sense approaches that will go along way to securing personal bank information.

1. Do not share your passwords with anyone and make sure if you write it done put it in a safe place where only you know where it is.

2. Keep important documents locked in a safe or safety deposit box.

3. Shred documents that you no longer need and use a cross cut shredder.

4. If you bank online, make sure your bank is using a secure, encrypted site (It’s OK to ask what security features they employ). Make sure they use https in the address and you should see the lock symbol in the lower right hand corner of your browser.

5. When using an ATM make sure no one can see the codes you enter.

These are a just a few of the things that can be done to keep banking information secure and to avoid possible crimes against you. While many of these suggestions seem to be glaringly obvious, all to many times they are taken for granted or just plain ignored. It is at these times when the criminals are at their best. Individuals that grow careless and complacent are exactly what criminals look for. Don’t be counted as one of the careless!

You may copy this article and place it on your own website, as long as you do not change it and include this resource box including the live link to the Credit Repair Advice site.

March 2011
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