1) Statistically Speaking
Statistics show most Americans don't save money.
Statistics show that the number one reason for divorce is money.
Statistics show that money does not buy as much as it used to, so you have to save a lot more to get what your parents have.
Now ask yourself, "Am I a saver or a spender?"
"Will I marry a saver or a spender?"
Statistically you will marry a spender.
This is looking at marriage from a financial perspective only.
However, if both you and your spouse are spenders the chances of that relationship working long-term is significatly reduced.
September's Ensign has an article for saving that I highly recommend.
If you answered that you are a spender and not a saver the time to learn, disapline and commit yourself to a financial goal is now.
2) Financial Mantra
I believe everyone needs a personal saying that will help you save.
When you learn about finances your brain hears something that it truly connects with.
Not everyone will react to the same saying so find your own and stick to it.
My favorite saying this year has been:
"Pay attention to your costs and your revenues will take care of themselves."
I'm certain Warren Buffet said this in an article but I can't find the exact quote.
This saying helped me to reexamine all my costs and see where I could cut corners.
You can find your financial mantra by reading financial articles or books on tape.
Read the articles that yahoo has to offer.
"When it comes to saving money, there are two types of people -- those who save and those who wish they were saving."
"Nobody cares more about your money than you."
"A penny saved is a penny earned."
"The best way to save money is not to lose it."
"The individual most accountable for your future financial welfare, is the one you see in the mirror today"
"Money in the bank is like toothpaste in the tube. Easy to take out, hard to put back."
"I am indeed rich, since my income is superior to my expense, and my expense is equal to my wishes."
3) How much does my Mutual Fund cost me?
This month we discussed how to know what a mutual fund costs. You want to keep your costs below 1% a year if possible.
Yahoo is my favorite place to find costs.
Here is the annual cost for SPY (S&P500 Index Fund)In the lower right hand corner you will see a fancy word called "Total Expense Ratio."
All that means is what percent they will charge you per year for them to manage the fund.
SPY has an expense ratio of .08%
VTSMX has an expense ratio of .19%
EFA has an expense ratio of .35%
Most Mutual Funds have expense ratios of 1.4% and higher!
Try to get out of those and buy index funds that have less than 1% expense ratio.
4) Financial Planners
Some people have asked me about financial planners.
I'm against them, but if you really want to speak with one see if your company has one for free.
If not, get one on a fee basis.
Some of them will charge you $175 an hour, then put your in a mutual fund that has a "front load" of 5% of your money. (Front load just means a fee of 5% when you buy. A back load of 5% means a fee of 5% when you sell.)
The mutual fund could also have a "Total Expense Ratio" of 5%.
Which means they just took 10% of your money before you even invested!
Other finanical planners will charge you 1% of everything you have to invest. Which could be much higher than $175 an hour.
Many financial planners are just salesman looking to take your money away from you.
Get your own education on money.
If you make a mistake you now learned from it,
if they make the mistake, it's now your mistake too.
5) Everyone should be a millionaire.
http://finance.yahoo.com/banking-budgeting/article/103410/your-first-million-is-the-toughest?mod=oneclick
6) Setting Financial Goals
http://financialplan.about.com/cs/personalfinance/a/FinancialGoals.htm
7) Real Estate
This article just made me chuckle.
Read the last part about the chief economist for the National Association of Realtors.
http://www.nytimes.com/2007/08/26/business/26housing.html?ei=5065&en=90a6583c461dae0d&ex=1188792000&adxnnl=1&partner=MYWAY&adxnnlx=1188159108-WNoSnoidJyy8bbtWJaJyDA&pagewanted=print
Conclusion, nobody knows what's going to happen in real estate - especially the experts.
Make sure you know you can afford the house because YOU have done the math.
And make sure you have enough cash in a high-yield savings account to take care of the mortgage and all your costs for at least 3 months. You never know when you will be out of a job or even worst - an accident.
That's it for this time.
As always I'm more than happy to help if you have any questions.
Craig
With no action, there is only thought.
http://colonial-investment-club.blogspot.com/
