Finance

Welcome to the latest series at JosephSangl.com – “Investing Fundamentals”  Investing is consistently rated by our audience as one of the most confusing topics they face. In this series, we are going to share some foundational principles that can really help you understand investing better!

Two  Automate Your Investments

Make your investments automatic! You can set up your bank account to auto-draft money into different accounts like a 401k or a child’s 529 college-savings plan. This will prevent you from forgetting or trying to use the money elsewhere because you will never even notice it’s gone!

If you ever have to switch between banks then the auto-drafting will stop so you will need to get it set up at your new bank. I know from firsthand experience how hard it can be to write a check to my savings account and my daughter’s 529 college-savings plan. There are moments where you will think “Wow! I could really use this money elsewhere!”

If I had to write a check every month to my savings account or to my investment accounts, there is a high likelihood my investing plan would be seriously off-track. MAKE IT AUTOMATIC!

By making your investments automatic you will see your net worth increase every single month. Making investments automatic eliminates the possibility of using this money for splurge purchases. This is awesome for those of us who are highly susceptible to spend any and all extra money!

STEPS TO TAKE:

• Go to your bank and tell them you want to start auto-drafting money into an investment account such as a 401(k) or any retirement account or also a 529 college-savings plan. I also do this with my savings account!

RECOMMENDED RESOURCE:

• OXEN – The KEY to an Abundant Harvest   In this book, Joe shares the steps you can take to maximize your money through investing!
• This book is also available via Amazon and Kindle.

NOTE: This post contributed by IWBNIN intern – Craig Fatt

Welcome to the latest series at JosephSangl.com – “Investing Fundamentals”  Investing is consistently rated by our audience as one of the most confusing topics they face. In this series, we are going to share some foundational principles that can really help you understand investing better!

One  Diversify Yourself

I’m sure you have heard someone say don’t put all your eggs in one basket. That directly relates to investing! A key step when investing is to diversify your investments. For example you should not put all the money you can into one company’s stock, instead spread your investment out. By spreading out your investment you greatly lower the risk of your investment.

You can research countless times where people have put a large portion of their money into one company only to have it fail, which means that they lost A LOT of money. Several people lost large sums of money when they only invested in Enron during the early 2000’s and then it went under. If these people would have diversified their investments they could have softened the blow.

An easy way for you to diversify your investments is to look into investing in mutual funds. A mutual fund allows you to purchase a portion of many stocks and bonds with the single share purchase so you are automatically diversified even though you have only bought 1 share! Also DON’T JUST THINK ABOUT STOCKS. Invest in a new business or a home that can be rented out. You don’t have to just think about the stock market when it comes to investments! You have a world of things to invest in! Real estate, land, new businesses, or even your own business.

STEPS TO TAKE:

• Review your investment choices. Are they diverse?
• Are you only investing in one type of company? If yes, take steps to address right away!
• What other investments could you make outside of the stock market?

RECOMMENDED RESOURCE:

• OXEN – The KEY to an Abundant Harvest   In this book, Joe shares the steps you can take to maximize your money through investing!
• This book is also available via Amazon and Kindle.

NOTE: This post contributed by IWBNIN intern – Craig Fatt

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

9.  Live a great life!

When you have accomplished Levels 1 through 8, you have positioned yourself to fund all of the amazing dreams and plans you have for your life. It allows you to be generous, provide in an amazing way for your family, and fund dreams you hardly dared to give breath.

Utilize your wealth to bless the poor and serve the less fortunate. Recognize that life is fleeting and that a life lived serving others and in the service of others is amazing. Ensure that you teach your children to apply the levels so that an inheritance will bless them instead of ruin them. Take no pride in your financial status as it will only amplify who you are anyway.

Have a blast with life! Life is amazing. And awesome. And wonderful. It is worth being FIRED UP over! And it is way too short to live it financially broken.

Read the entire series (available after 4/20/2013)

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

8.  Place at least 30% of your gross income into tax-advantaged investments.

Now that you’ve eliminated all of your debt – including your house and business debt, you have nearly reached the top of the ladder of winning with your money. At this level, you are now positioning yourself to prosper like few others choose to do. You have become an elite manager of money. Everyone can do this, but not too many are willing to make the few (but tough) decisions necessary to do so! In general, it takes between seven and ten years to move from Level 1 to Level 8.

Invest money into tax-advantaged holdings. It is important to pursue diversification to protect the investments to protect against a massive loss. Many people have achieved Level 8, but became so enamored with a particular investment (such as Enron) that they disregarded the importance of diversification and fell from Level 8 back to Level 1! After all, this is not about greed and hoarding. It is all about funding goals – your plans, hopes, and dreams.

Consider a 40 year old couple earning a combined income of $50,000 per year who has arrived at Level 8. They are now able to invest at least $15,000 per year. Suppose they already had $60,000 saved up because of their efforts in Levels 3 and 6. If they invest $15,000 per year from age 40 to age 66 and gain 12% annual growth, they will have $4,000,156 at retirement. That is with zero pay raises for 26 straight years.

Level 8 positions you for the final level on the “How To Win With Money” Ladder. It’s the best one of all.

Read the entire series (available after 4/20/2013)

Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!

How To Win With Money

7.  Pay off house (and business debt)

This is a level that marks a “major milestone” for most people. It is the goal of most people to retire with zero debt including their home. It provides a sense of security and accomplishment like little else will.

Utilize extra income and “found money” to eliminate the mortgage. There are several simple steps you can employ that can have a major impact on the velocity of your pay-off.

1. Make a half-payment every two weeks Because there are 52 weeks in a year, this will result in 13 full payments each year. This can eliminate around 5 to 7 years on the average mortgage.
2. Each year, use tax refund to make one extra payment toward principal This will accomplish very close to the same as option #1
3. Pay extra money toward principal each month  Use our early pay-off calculator to help you figure out how many months you can shave off your mortgage!

When you eliminate your final debts, your monthly cost of living has usually been reduced by 50% or more. This accomplishes two things:

1. It provides more financial security
2. It makes your investments last twice as long because you now require only half of your previous need.

By the way, I paid off my house by age 38, and I promise you this is an incredible feeling.

You can do this!

Read the entire series (available after 4/20/2013)