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How to Sustain Good Financial Decisions: AUTOMATE

We’ve all had moments where we have firmly stated our resolve to do something different with our money. Usually the outburst follows a negative financial outcome. Perhaps we’ve overspent on our vacation. Maybe we have the starting realization that there is no money in the college fund for our high school senior. It could be that we’ve dipped into the overdraft account again. Whatever the case may be, it causes us to commit to better financial management.

Here are some common statements people make in these moments:

  • “I’m going to start preparing a written budget each month.”
  • “I’m increasing my contributions to the retirement plan.”
  • “Let’s open a 529 college savings plan and begin making monthly contributions.”
  • “I’m cutting up the credit cards.”

There is just one problem with each of these statements: saying it doesn’t make it true.

For every statement and moment where we commit to better financial decisions, one must actually do the work to follow through. And, my friends, we all know that it is truly hard work. Life is so busy. We’re exhausted. Plus, many of these decisions require information and knowledge we may not currently possess. This is a recipe for failure to follow through on really good financial decisions.

And we’ve all been there, haven’t we?

Let’s flip the script, and put in place some “best practices” that can really help us sustain these good financial decisions so that we can reap the benefits they can provide us: fully funded lives, dreams accomplished, and freedom to live generously.

Sustain Good Financial Decisions – Practice #1:  AUTOMATE

Many good financial decisions can be followed through with automation! This is perhaps the easiest and best tip possible because it is literally a “set it and forget it” solution that ensures your financial decision is put into practice. If there is any possible way to automate your decision, do it.

Here are some great examples of using automation:

  • Committed to save money every month for the annual family vacation? Set up automatic drafts from your bill paying account to your savings account.
  • Want to help your child with college expenses? Open a 529 college savings account and establish automatic drafts.
  • Ready to up your retirement investments? Log in to your 401k (or similar RSP) account and adjust the automatic contribution.
  • Want to ensure your retirement money is put to work right away instead of sitting in a savings or money market account? Establish automatic investment selections.
  • Want to ensure all of your bills are paid on time? Automate every single bill payment. As an added bonus, you will spend far less time paying bills!
  • Want to ensure your retirement investments become more secure as you approach retirement? Choose a targeted retirement date investment fund that will automatically become less risky as you near retirement.

What good financial decisions have you been making that could leverage the power of automation to ensure they are sustained into the future?

Joseph Sangl’s Current Investments – 2017

It’s that time of year again where I review my current investments and take a moment to philosophize about the future of investing. I’m a fundamental believer in this statement: “There is no HARVEST if you do not INVEST.

Without putting seed in the ground, a farmer cannot expect a harvest later. Even if you are not a farmer, the same is true for you! If you do not invest money, you have no hope of achieving a financial harvest later. In May, I will have been an active investor for 21 consecutive years. For the first six years of this journey, I invested exclusively into market-based investments. Since that time, I have diversified into real estate and small business along with a dabbling in precious metals. It has worked well for me.

Full Disclosure: I am not a certified financial planner, nor do I sell investments, insurance products, or other similar financial products. My goal in sharing this information is to shed light on a topic that very few people understand well. It is my hope that this information will help inspire more people to climb the I Was Broke. Now I’m Not. Ladder (download a free copy HERE) and become investors so they can live fully funded lives.

One of the most common questions we receive here at I Was Broke. Now I’m Not. is: “What investments do you recommend?

My answer is always, “I don’t recommend specific investments. I can only tell you the investments I own, and they have worked well for me. The investments you choose are up to you.”

Below is a chart of my current investments – click on the chart itself to download a printable version.

Yet another year has passed, and you will see that I have continued to actively trade stocks. I have sold several individual stocks while deepening my investment into other stocks. Overall, my investment strategy has continued on a straight-forward path of maintaining a balanced portfolio with approximately 35% real estate, 30% small business, 25% stock market and 10% cash.

My views of the investing market place:

  1. Stock Market Strength  There has been significant earnings growth which has supported a substantial increase in company valuations. One key measure to track is the “P/E Ratio” – Price-to-Earnings. This is the ratio between share price and the earnings per share. Currently the DJIA is priced at 21.12 times earnings, this is not sustainable. One of two things will happen: earnings will indeed grow or share prices will drop. My belief is that a combination of the two will happen. Earnings will indeed grow while share prices moderate to achieve a more reasonable P/E. (Side Note: My weighted balance P/E Ratio for my individual stock investments is a more acceptable 15.39)
  2. Speculation  Mark Twain once famously stated: “OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks in. The other are July, January, September, April, November, May, March, June, December, August, and February.” Rather humorous and spot on for short-term investors. This is why the majority of my investments are being held for the very long term. Notice that my individual stock investments only comprise 3.74% of my overall net worth.
  3. Deals will be found – but they will have to be looked for! A lot of the great and easy investment choices are gone from the market. Real estate prices have recovered. Businesses are doing well. Precious metals have stabilized. Finding a great investment opportunities will require diligence and focus.
  4. The wildcard: Tax Reform  Who knows where potential tax reform will take us?! Some investments made attractive due to special tax advantages could fall out of favor with investors if they sense that those tax advantages are in jeopardy.

I welcome your thoughts on the investing market place as well. What do you think? What are your strategies?

Read previous installments of Joe Sangl’s “Current Investments” posts HERE.

Monday Money Tip: The Fundamental Rule of Money

I’m excited to bring you another Monday Money Tip – this one is focused on The Fundamental Rule of Money

Questions to challenge yourself with:

  1. Are you managing your money using the Income – Outgo = Exactly Zero formula?
  2. Are you intentionally spending money into savings and investments – every time you receive money?

Monday Money Tip: Debt Pay-off Spectaculars

This Monday Money Tip is one of most talked about tips I deliver at a live event. Even several years later, people remember this tip. I hope it helps you too.

Subscribe to the Monday Money Tip.

 

Monday Money Tip: MINT App

In today’s Monday Money Tip, I share about one of my favorite money apps – Mint

It can be a great way for you to gain a better understanding of your financial behavior and the resulting performance of your financial decisions.

Take a couple of minutes to watch the tip (4 mins 39 secs):

Questions:

  • Have you tried out the Mint app?
  • How are you planning to use it to improve your financial results?