Single Servings

My Money-

December 16th, 2009 in Journey to Financial Freedom, News | 4 Comments »

Living the Single Life

My Money Making ME More and More Money

Review previous articles under the Journey to Financial Freedom category.

When it come to money we tend to spend as much as we have. Have you noticed that you are living paycheck to paycheck, you get a great raise and then before you know it, you are once again living paycheck to paycheck.

Why does that happen?

It happens because you upgrade your lifestyle to the point where your new salary including the great raise can no longer pay for your upgrades. We need to stop with the instant gratification we all feel and move more into long term planning and delayed gratification

Following are ways money seems to disappear as well as ways to stop the flow permanently:-
You are saving with one hand and spending with the other hand behind your back.

You keep a saving account that pays you a miserly 2-3% while you are paying you credit card bill with a 15% interest rate.

You believe a tax refunds equals mad money when in fact it is money you loaned the government tax and interest fee for an entire year. You try using the government money tax and interest free and see how fast they come knocking at your door.

Revisit your tax withholding and ensure you are not giving the government a tax free loan. Place that money in the bank online banks are paying interest rate up to 6% on saving with a $1,000.00 minimum deposit.

Living in the moment failing to enroll in your 401K plan. 401Ks are still the best money building instrument there is saving by payroll deduction is painless and ensures that you make regular contributions. You get a tax break on the money you put in and it grows tax-free until you withdraw it in retirement. And of course there is the free money employer matching, typically $.50 cents on each dollar you invest into your 401K upto 6%.

You find yourself saving large sums of money and then you generate credit card bills to match up to what you have save. And poof the money is gone.

You spend and spend and have absolutely no idea where your money is going. You need a budget or metaphorically jars to place a percentage of your money in each pay period regardless of the amount of money you make.

These jars are to be labeled-

1. (Tithe) Tithe Account -
place 10% of your paycheck into it

2. (FFA) Financial Freedom Account -
place 10% of your paycheck into it

3. (LTSS) Long Term Saving to Spend -
place 10% of your paycheck into it

4. (EDUC) Education -
place 5% of your paycheck into it

5. PLAY Do with whatever you want -
place 10% of your paycheck into it

6. (GIVE) Charities -
place 5% of your paycheck into it

7. (NEC) Necessities -
place 50% of your paycheck into it

Each paycheck place your net pay into these ‘jars.’ Put the above distributions into your ‘jars’ on automatic, take self discipline out of the equation. Most companies are on direct deposit, either have your payroll department or your financial institution place the correct percentages into the accounts (jars) you opened & labeled (Tithe – FFA – LTSS – EDUC – PLAY – GIVE – NEC) The most important rule you need to follow relentlessly

PAY MYSELF FIRST

always – every time – no matter the amount of income coming in. In fact do like your Uncle Sam, get yours off the top before any bill is paid. For more detailed information and a full accounting of these principles read T. Harv Eker- The Secrets of the Millionaire Mind and Check Out Eker and other Fantastic authors under The Financial Series

You need all the jars labeled above, especially the PLAY because the mind has a way of sabotaging us if we only follow one part of our being SAVE SAVE SAVE, this part will retaliate if you don’t fulfill the other part of our being. i.e. enjoying the journey.

Waiting till the end of the year to fund your IRA you have lost the whole year of compounding interest. (Look for article on why you need an IRA coming next).

Throwing good money after bad money
making repairs that cost more that your car is worth.

Making decisions about how to spend time and money based on how much money and time you have already spent/lost

Ways to accomplish your goals:-
Take baby steps in this process, don’t set high unattainable goals, set goals you can measure and can definitely accomplish

Make it Specific, put a dollar figure and a date on your goals make your goals concrete i.e. I will get my credit card balance down to $0 by January 1, 2008 that is five months from now.

With this concrete number and date in mind, you make the way to make it happen. Repeat and review your goals daily so they are fresh in your mind. And you will find the mental shift in the way you view money and be able to attain your goals.

You need to lock it up into a six-nine-twelve month CD, somewhere where it makes you money where you are unable to access it. Research and find the highest paying interest rate don’t settled for your corner’s bank 0.080and put the money in it

Look for reinforcements, don’t keep your goals to yourself, get everyone on board. You need a cheering section, someone to boost your determination and cheer you on when you find yourself backsliding. In this instance, peer pressure is a necessity.