When you get your frugality down, you will have the edge on the competition. So are you a day trader who plays the market like the crap tables, going all in on a penny stock, the value investor like Buffett, a master manipulator like Soros or do you have a conservative style of the typical buy and holder? Whatever fancies your style, you need a strategy in order to invest.
If you were able to take the money you saved and make it work for you, that would be ideal. But, if you are started out doing it, the best thing to do is probably hold on to your job and invest conservatively at first, but as you make trades and investment deals, you need to be prepared to build up for the next big thing. I have been able to take this mindset and run with it. I would suggest saving up to ten grand (like me) and then get your feet wet in investing heavily. You can out forth small amounts of sweat equity or try to invest passively per paycheck. If you happen to make around 3-4K a month, I would suggest trying to build up contingency investments like a 401K or a Roth IRA in case if things go sour. I would say that most of your saving should go towards the next investment, but conserve at least 50% of your cash for other investments.
If you are young, I would say that you should be prepared to fail first. I am not saying go out and totally lose your money, but be prepared to bounce back from losing. Losing is not a part of anyone's strategy, yet no one prepares to lose. Most people are usually wiped out of funding by their first venture or in less than three years. The way to counter loss is to have a nest egg. Who knows, you might not make a profit until the second or third year. That is usually the case for big box retailers. I am not saying stick it out if your losing because the only ones that can really do this is corporations like Wal-Mart or Costco.
Now if your in it to win it, remember one's personal investment style will not lead to success by merely mimicing the style of the gurus; you need to branch out and find your niche. While my style is value investing and buy and hold, it is still evolving. Who knows, it might switch to a growth stock, penny share strategy. I am finding my niche as well. And it will never be complacent with just stocks; I want to invest in other areas as well. So what type of investor am I? Probably 60% Buffett, 20% Vulture, 20% Dividend Investing. I will never truely know how one guru totally thinks, so why bother trying to emulate their success. I would rather become the guru by replicating success.
Friday, April 30, 2010
Thursday, April 29, 2010
It's the little tricks I do...
People wish to know the best way to save money. I get asked this all the time: "How do you save so much money working for Sam's Club?" I reply simply, "It's the little things I do." Trust me, every little thing adds up. I am not kidding when I say this. I get paid in food for my computer repair work. I use warranty sales to get more food. I walk to work, "rain or snow". I invest passively. I rent a studio apartment. I work Sundays and I keep the same job due to stability.
These little things hhave made it possible to save a lot of money. If I look back, at the year before last when I had a little to a thousand dollars in my name I can honestly say I have came a long way. My current goal is to try to reach a six-figure net worth in 5 years. I would like to reach 7 in ten years but I have to plan every financial move carefully. I just got a raise at work with being there two years. So now I will almost make $10/hr. And I am 5K away from 20K in liquidity. I did this on a paycheck of $8.65 per hour. I have been saving up and investing and it is paying off. Soon I will buy more stock and pursue a real estate deal (but more on that later). I am sticking to the main goal which is becoming the master of my own destiny. If there was anything I want more is to be able to work my own hours when I want to, but considering that I have yet to find such a job, Sam's Club doesn't treat me too bad; so I think I'll stay until I get one of my crazy to-do's out of the way. (To get the afrementioned I would have to become self-employed)
These little things hhave made it possible to save a lot of money. If I look back, at the year before last when I had a little to a thousand dollars in my name I can honestly say I have came a long way. My current goal is to try to reach a six-figure net worth in 5 years. I would like to reach 7 in ten years but I have to plan every financial move carefully. I just got a raise at work with being there two years. So now I will almost make $10/hr. And I am 5K away from 20K in liquidity. I did this on a paycheck of $8.65 per hour. I have been saving up and investing and it is paying off. Soon I will buy more stock and pursue a real estate deal (but more on that later). I am sticking to the main goal which is becoming the master of my own destiny. If there was anything I want more is to be able to work my own hours when I want to, but considering that I have yet to find such a job, Sam's Club doesn't treat me too bad; so I think I'll stay until I get one of my crazy to-do's out of the way. (To get the afrementioned I would have to become self-employed)
Tuesday, April 27, 2010
Shopping for Success
To shop for success, one has to think about what I mean when I say this. Success to me is going to be different from success to you. I would like to get deeper into investments, so I tend to be cut throat frugal. Teacher might be the same way due to their 3 months of no work. But what about food? That necture that keeps the biological engine pumping...
My answer to that is simple: I target food as my monthly luxury. The reason why is because I want to be able to obtain the nutrition that I need as an adult male. I cannot do so on just ramen and water. However, I do eat frugal at home nonetheless. My main two items are sandwiches and ramen. I am able to eat like a king with sandwiches.
For roughly $10 for the whole week, I get my fiber, calcium, Vitamen D, grains, protein and sugar. For work days, I eat pizza, pizza, and more pizza. I spend about $20/week on pizza combos (not extremely frugal, but there is a reason). This gets another portion of vitamins I need. And finally, I eat at restuarants for the rest of my vitamins and minerals, but not fast food. I eat mainly Asian food on my days off because it is loaded with vitamins that I missed throughout the week and I occasionally injest multi-vitamins for the remainder. It is really important to keep a sound body; it contributes to a sound wallet later on in life. Out of all the hospital visits I had as an adult, I only had one which was $750. That is all.
In other words, I must be doing something right to be able to not make so many trips to the hospital.
My answer to that is simple: I target food as my monthly luxury. The reason why is because I want to be able to obtain the nutrition that I need as an adult male. I cannot do so on just ramen and water. However, I do eat frugal at home nonetheless. My main two items are sandwiches and ramen. I am able to eat like a king with sandwiches.
For roughly $10 for the whole week, I get my fiber, calcium, Vitamen D, grains, protein and sugar. For work days, I eat pizza, pizza, and more pizza. I spend about $20/week on pizza combos (not extremely frugal, but there is a reason). This gets another portion of vitamins I need. And finally, I eat at restuarants for the rest of my vitamins and minerals, but not fast food. I eat mainly Asian food on my days off because it is loaded with vitamins that I missed throughout the week and I occasionally injest multi-vitamins for the remainder. It is really important to keep a sound body; it contributes to a sound wallet later on in life. Out of all the hospital visits I had as an adult, I only had one which was $750. That is all.
In other words, I must be doing something right to be able to not make so many trips to the hospital.
Sunday, April 25, 2010
The 3 Immutable Laws of Equity
For people that are in the business of making money, this term is all too familiar. For those that work the 9-5, this might be considered a highly speculative move, but rewarding one. "Sweat Equity" exists even in the workplace: you trade your body for money (sounds kind of dirty, but please bear with me), you use your body to earn money by working so many hours every two weeks. This is commonly known as collecting a paycheck. You basically work for money.
There is another type of sweat equity. One that pays nothing at first, but pays numerous times over. This is known as speculative sweat equity. In other words, you work on a commission only basis or are self-employed. People that honestly want to work for themselves take this path. Automobile salesmen also venture down this path. They eccentially network themselves and build up a marketing list for their payout. This can be very rewarding if you have the right network. The drawback to this type of equity is that it takes time and effort along with networking.
This blog is considered a form of sweat equity. I write this blog purely on a commisson basis. The only time I get paid is when people visit the site. Most of my traffic comes from directories and word of mouth. In other words, the most profitable sweat equity is the equity associated with speculative investments aka speculative sweat equity. While I will probably not quit my job over this page, if I hypothetically started earning four figures to five figures a month, there would be no need for me to work at Sam's Club anymore (but I would probably still do so because that is an extra stream of income).
And yet, there is another form of equity that should be addressed: speculative equity. You venture into something using your dollars and it pays off. In other words, your money works for you. This equity is the most rewarding of the three because it requires the least amount of exchanged labor. In fact, you could do either sweat equity or sweat speculative equity so as long as you already have a sizable nest egg. The sky's the limits. Such examples include stocks, real estate, business ventures, limited partnerships.
Mastering the three forms of equity will make you rich. Even more so if you live within your means.
There is another type of sweat equity. One that pays nothing at first, but pays numerous times over. This is known as speculative sweat equity. In other words, you work on a commission only basis or are self-employed. People that honestly want to work for themselves take this path. Automobile salesmen also venture down this path. They eccentially network themselves and build up a marketing list for their payout. This can be very rewarding if you have the right network. The drawback to this type of equity is that it takes time and effort along with networking.
This blog is considered a form of sweat equity. I write this blog purely on a commisson basis. The only time I get paid is when people visit the site. Most of my traffic comes from directories and word of mouth. In other words, the most profitable sweat equity is the equity associated with speculative investments aka speculative sweat equity. While I will probably not quit my job over this page, if I hypothetically started earning four figures to five figures a month, there would be no need for me to work at Sam's Club anymore (but I would probably still do so because that is an extra stream of income).
And yet, there is another form of equity that should be addressed: speculative equity. You venture into something using your dollars and it pays off. In other words, your money works for you. This equity is the most rewarding of the three because it requires the least amount of exchanged labor. In fact, you could do either sweat equity or sweat speculative equity so as long as you already have a sizable nest egg. The sky's the limits. Such examples include stocks, real estate, business ventures, limited partnerships.
Mastering the three forms of equity will make you rich. Even more so if you live within your means.
The Rainy Day Fund
Picture this scenario: you have been working at XYZ Corps for 15 years. You have been putting in diligent effort and have even managed to get elected for some company awards like employee of the month. The suddenly you are fired or laid off.
Did you prepare for your "rainy day"? There is a proverb that states, "you should save money for a rainy day". This simply means, when things go sour you should have a savings account to "weather the financial storm" so to speak.
So how much should one have saved up? Well last year, I stated six months is a good amount, but considering the changes in the economy, I would change that to ten months worth of pay. The economy is down and is showing no real signs of improvement yet. The total amount of job losses here in Reno is numerous. With 13.6% unemployment, everyone is literally holding on to what they have. In other words, job hopping is dead. There are only a few people who engage in job hopping these days. There are people out there that are just greatful to have a job, which means if you have a good job, there will be people that will try to vy for your position if you so let them.
If you do get the ax, hopefully you have money saved up for a rainy day. If you do this you will have a prosperous transition. If you do not, getting a new job will be that much harder because you did not save any money. So keep that in mind should you try to move from one job to another.
Did you prepare for your "rainy day"? There is a proverb that states, "you should save money for a rainy day". This simply means, when things go sour you should have a savings account to "weather the financial storm" so to speak.
So how much should one have saved up? Well last year, I stated six months is a good amount, but considering the changes in the economy, I would change that to ten months worth of pay. The economy is down and is showing no real signs of improvement yet. The total amount of job losses here in Reno is numerous. With 13.6% unemployment, everyone is literally holding on to what they have. In other words, job hopping is dead. There are only a few people who engage in job hopping these days. There are people out there that are just greatful to have a job, which means if you have a good job, there will be people that will try to vy for your position if you so let them.
If you do get the ax, hopefully you have money saved up for a rainy day. If you do this you will have a prosperous transition. If you do not, getting a new job will be that much harder because you did not save any money. So keep that in mind should you try to move from one job to another.
Saturday, April 24, 2010
Tax Season is Over
Tax season is over and those of you that got their IRS refunds at the last minute probably have holes burning in their pockets from the stimulus plans out there. There definately is a lot of good refunds coming back, but should you reward yourself by spening the money quickly?
I would not condone this behavior. You paid taxes on that money and now it is being given back to you. It was your money to begin with, not the governments. Also if there were any complications in the return they have to be resolved after words so they can be accounted for audits, admendments, and anything else that falls into the tax catagory.
When the smoke truely clears, you have three options to use your tax money: a) you can wait for the smoke to clear and save your hard earned cash, b) you could spend it on something that you want, or c) you could re-invest it. I would go with a combination of either a) or c) or just do c). b) should be covered under the 1 luxury per month plan.
So everybody knows how to save a tax return, but how do you invest a tax return? Well, there are a number of options. There are stocks, bonds, index funds, real estate, and speculative ventures. The most prudent of the 5 when starting out is stocks and bonds. Here is why: stocks can be bought in either small amounts or large amounts and the amount used can be controlled by how much you put into a company. Bonds on the other hand is like an IOU either from a company the U.S. government. You can buy bonds at fixed amounts and just hold on to them and cash them in when they mature. Note that bonds are mainly a long term investments so I would not bother trying to cash them until they totally mature or until you can sell a bond for more than what you paid for it. There are advantages to the bond in the sense that you can sell them at loss and write off the loss on next years taxes.
I would not condone this behavior. You paid taxes on that money and now it is being given back to you. It was your money to begin with, not the governments. Also if there were any complications in the return they have to be resolved after words so they can be accounted for audits, admendments, and anything else that falls into the tax catagory.
When the smoke truely clears, you have three options to use your tax money: a) you can wait for the smoke to clear and save your hard earned cash, b) you could spend it on something that you want, or c) you could re-invest it. I would go with a combination of either a) or c) or just do c). b) should be covered under the 1 luxury per month plan.
So everybody knows how to save a tax return, but how do you invest a tax return? Well, there are a number of options. There are stocks, bonds, index funds, real estate, and speculative ventures. The most prudent of the 5 when starting out is stocks and bonds. Here is why: stocks can be bought in either small amounts or large amounts and the amount used can be controlled by how much you put into a company. Bonds on the other hand is like an IOU either from a company the U.S. government. You can buy bonds at fixed amounts and just hold on to them and cash them in when they mature. Note that bonds are mainly a long term investments so I would not bother trying to cash them until they totally mature or until you can sell a bond for more than what you paid for it. There are advantages to the bond in the sense that you can sell them at loss and write off the loss on next years taxes.
Tuesday, April 20, 2010
Keeping Bills Paid On Time
Wow! Sounds like a easy thing to do right? If it was so easy I would not be writing this blog, now would I? Well maybe I still would to address some other point, but the most interesting thing happened to me two days ago. I could not pay my bill when I wanted to. I paid a little bit from last month because there was a serice charge of $1.35, but I could not pay for this month. I tried to call and pay again, but I could not. Turns out the internet providers have a ten day grace period from one bill to the next. In other words, I could not pay online or over the phone for this month even if I wanted to. I had to go in and take one to the hip. (I would rather pay the $2.00 than to damage my FICO score. Let's just put it tht way.) I went in and paid today.
Folks, not matter what fancy trick these companies use, do not let them force you to be late. It will damage your credit. All bills should be paid on time. Cell phone companies do not check credit scores when you sign up, but they will ding your score if you're late. All you need to do is just simply miss one payment and you'll see what I am talking about. But at the same time, do not try to totally automate your payments because they will take the money they need out at their convienance, not yours. This means that you will have to constantly check your account and do more accounting to make up for their ability to tap into your funds. Who knows, company XYZ might overdraw you if you are tight on funds.
The only exception to this rule usually comes from making mortgage payments. You can have those automated and can be sent to your account and then applied to your mortgage. And you can also set the date of withdrawal. This should probably be set to the middle of the month so you have the ability to pay the mortgage off with either payheck you get from your job or business.
Well why is it important to pay bills on time? This goes back to my last article about FICO scores. If you do not pay on time you will take hits left and right to your credit score card. Remember, these days a good credit score is 680-739 and excellent scores is 740 and above. If one wants to go in on real estate, they need a good to excellent standing with FICO. Again, this determines how long you have kept good credit and whether or not you are a good risk for a loan.
Folks, not matter what fancy trick these companies use, do not let them force you to be late. It will damage your credit. All bills should be paid on time. Cell phone companies do not check credit scores when you sign up, but they will ding your score if you're late. All you need to do is just simply miss one payment and you'll see what I am talking about. But at the same time, do not try to totally automate your payments because they will take the money they need out at their convienance, not yours. This means that you will have to constantly check your account and do more accounting to make up for their ability to tap into your funds. Who knows, company XYZ might overdraw you if you are tight on funds.
The only exception to this rule usually comes from making mortgage payments. You can have those automated and can be sent to your account and then applied to your mortgage. And you can also set the date of withdrawal. This should probably be set to the middle of the month so you have the ability to pay the mortgage off with either payheck you get from your job or business.
Well why is it important to pay bills on time? This goes back to my last article about FICO scores. If you do not pay on time you will take hits left and right to your credit score card. Remember, these days a good credit score is 680-739 and excellent scores is 740 and above. If one wants to go in on real estate, they need a good to excellent standing with FICO. Again, this determines how long you have kept good credit and whether or not you are a good risk for a loan.
The Consequences of Job Hopping
I do not how many people do this, but overall job hopping damages your credit score. Your FICO scorecard is ruined if you hop from job to job. Why do I say this? I know from other people who have been denied jobs and credit cards. The credit card companies along with the mobs and FICO consider you a risk when you go from job to job. So consultants out there have to sometimes dispute their score because of the per diem jobs they might obtain.
I realized this because of the fact that the scores of people who are denied credit have commonalities that Transfax, Experion and the other one looks at. They consider good credit risk to someone who has kept the same job for years, who lived in the same place for years, who pays their bills on time and who has never filed bankruptsy. Do only time I see job hopping as permissible is if you transition into one job to another smoothly, as in giving the proper two weeks notice and finding a higher paying, more stable job.
There are some high risk candidates besides consultants and job hoppers and those people are the self-employed. While I partially fall into this catagory, my primary source of income is from Sam's Club while secondary sources comes from investments. When employers check your employment history, some might also check your FICO score, hence the name background check. And while employers cannot disciminate against you for gender, ethnicity, or income bracket, they can disriminate against you for job hopping and having a low FICO score. Also mortgage companies hate to deal with you if you have not held a job for more than one year. They consider you to be irresponsible and unrulely. Such might not be the case, but job hopping is a high risk manuver. Even more so than stocks. You establish yourself with one company and then hop to another because they pay "better" and burn than bridge then have to re-enter probation for 90 days yet again. So remember that when you go from one $7.75/hr job to another $7.75/hr. job. The results can decimate your credit score.
Perhaps if you choose to do so, one should check with trying to obtain a grace period where the job hours do not overlap. That is what I did when I went from City of Reno to Sam's Club. The transition was fun and rewarding, but draining at the same time. While you make a lot of money, you lose a lot of time in exchange. But the city did not hold any animosity towards my departure. So I would actually reccomend this course of action if it is option to you.
I realized this because of the fact that the scores of people who are denied credit have commonalities that Transfax, Experion and the other one looks at. They consider good credit risk to someone who has kept the same job for years, who lived in the same place for years, who pays their bills on time and who has never filed bankruptsy. Do only time I see job hopping as permissible is if you transition into one job to another smoothly, as in giving the proper two weeks notice and finding a higher paying, more stable job.
There are some high risk candidates besides consultants and job hoppers and those people are the self-employed. While I partially fall into this catagory, my primary source of income is from Sam's Club while secondary sources comes from investments. When employers check your employment history, some might also check your FICO score, hence the name background check. And while employers cannot disciminate against you for gender, ethnicity, or income bracket, they can disriminate against you for job hopping and having a low FICO score. Also mortgage companies hate to deal with you if you have not held a job for more than one year. They consider you to be irresponsible and unrulely. Such might not be the case, but job hopping is a high risk manuver. Even more so than stocks. You establish yourself with one company and then hop to another because they pay "better" and burn than bridge then have to re-enter probation for 90 days yet again. So remember that when you go from one $7.75/hr job to another $7.75/hr. job. The results can decimate your credit score.
Perhaps if you choose to do so, one should check with trying to obtain a grace period where the job hours do not overlap. That is what I did when I went from City of Reno to Sam's Club. The transition was fun and rewarding, but draining at the same time. While you make a lot of money, you lose a lot of time in exchange. But the city did not hold any animosity towards my departure. So I would actually reccomend this course of action if it is option to you.
Monday, April 19, 2010
Luxury Threshold: When to Spend and When to Save
People are always wondering how to become more frugal. But people think it is easy to suddenly cut back to a lifestyle of living below the margins. No, it is not easy in some cases. Especially when it comes to vices. But nonetheless, I will set up a plan for those who are trying to save up their first couple of grand and set up a plan for those who are already there but would like to sock away more cash.
Now there is a lot that can be said about wanting to take control of your finances. There is often good and bad advice about managing debt. First off, there is no magic bullet, cure-all, fix-all program. If you are leveraged up to your eyeballs in debt, it would probably be a good idea to see a professional financial counselor who is FINRA certified or see a CPA that works on debt management. You can obtain some pertainent information, but you will seriously need someone that will legally be on "your side" and knows loop holes in the mortgage/taxation system(s).
For the rest of you, I present my luxury calculator. I should probably patent this formula, but it is probably worthless anyways. Here is how I calculate luxury ratio.
I take my cost of item/total liquid assets on hand. Just to simplify things we will use a $10 item and divide it by $15000. Here the total is .0006667... The rule of them to all luxury is one type of luxury per month. So in order to meet that luxury threshold I just set a random percentile. I will use .0075 since I have strict standards. People can set the numbers to whatever percentile they choose, but try not to go past .05 mainly because when starting out it becomes a burden to recoup losses so you want to get into the habit of saving money. Starting out I did .10 or 10% of my overall balance until I was able to build it up and then the amount naturally becomes smaller. The smaller the number, the more freedom you have to make purchases on stuff you do not need. Remember, you need to take into account your liabilites as well. And yes, mortgages are liabilites.
Going back to the .0006667, another thing that needs to be accounted for is that when you spend money, this number will compund itself. So it does not mean that $130 is my monthly threshold, it means that after continual consumption the amount will amortize itself and probably be around $110 or $120. In case if anyone was wondering food is my selected luxury usually. However, the exception to the rule is the amount does not amortize for an item is $1300. If something is that much already, the best way of handling it is to spread out the amount over a 10 month duration into the budget. The reason being is that it is counted as a big ticket item and can be re-earned over the course of a few months. Doing this will cut you out from luxuries for 10 months so be careful or you will lose out!
Now there is a lot that can be said about wanting to take control of your finances. There is often good and bad advice about managing debt. First off, there is no magic bullet, cure-all, fix-all program. If you are leveraged up to your eyeballs in debt, it would probably be a good idea to see a professional financial counselor who is FINRA certified or see a CPA that works on debt management. You can obtain some pertainent information, but you will seriously need someone that will legally be on "your side" and knows loop holes in the mortgage/taxation system(s).
For the rest of you, I present my luxury calculator. I should probably patent this formula, but it is probably worthless anyways. Here is how I calculate luxury ratio.
I take my cost of item/total liquid assets on hand. Just to simplify things we will use a $10 item and divide it by $15000. Here the total is .0006667... The rule of them to all luxury is one type of luxury per month. So in order to meet that luxury threshold I just set a random percentile. I will use .0075 since I have strict standards. People can set the numbers to whatever percentile they choose, but try not to go past .05 mainly because when starting out it becomes a burden to recoup losses so you want to get into the habit of saving money. Starting out I did .10 or 10% of my overall balance until I was able to build it up and then the amount naturally becomes smaller. The smaller the number, the more freedom you have to make purchases on stuff you do not need. Remember, you need to take into account your liabilites as well. And yes, mortgages are liabilites.
Going back to the .0006667, another thing that needs to be accounted for is that when you spend money, this number will compund itself. So it does not mean that $130 is my monthly threshold, it means that after continual consumption the amount will amortize itself and probably be around $110 or $120. In case if anyone was wondering food is my selected luxury usually. However, the exception to the rule is the amount does not amortize for an item is $1300. If something is that much already, the best way of handling it is to spread out the amount over a 10 month duration into the budget. The reason being is that it is counted as a big ticket item and can be re-earned over the course of a few months. Doing this will cut you out from luxuries for 10 months so be careful or you will lose out!
Saturday, April 17, 2010
Work for Food (No Seriously)
This year's is turing out great for me. I think I have found my calling as a side job entrepreneur. If I ever decide to not buy anything for a week one day, I would totally do one thing: work for food. This past week I have not paid for a single dinner. I am totally stoked because I have been socking away the cash because of this!
I know what people are saying: why don't you just get a second job? In all honesty, I thought about it and much rather enjoy what freedom I do have. Working side jobs here and there is much more rewarding because there is the commute the hours and the food I would have to buy anyways. Why work two hours when half the money is going to go on food anyways?
Because of this question, I have thought up an idea. Work for food. I am going to pay for it anyways, so might as well save time and have food as my source of payment. It has worked out great. I seem to be able to obtain side gigs as a techie thanks to my job skills I currently have. The money I make as an associate is more than enough to try different investment ventures. It is also not enough to kill the hunger of expansion. Once you lose that hunger for success, it is all over. And when you really need to sock away money, work for food.
I know what people are saying: why don't you just get a second job? In all honesty, I thought about it and much rather enjoy what freedom I do have. Working side jobs here and there is much more rewarding because there is the commute the hours and the food I would have to buy anyways. Why work two hours when half the money is going to go on food anyways?
Because of this question, I have thought up an idea. Work for food. I am going to pay for it anyways, so might as well save time and have food as my source of payment. It has worked out great. I seem to be able to obtain side gigs as a techie thanks to my job skills I currently have. The money I make as an associate is more than enough to try different investment ventures. It is also not enough to kill the hunger of expansion. Once you lose that hunger for success, it is all over. And when you really need to sock away money, work for food.
Friday, April 16, 2010
DRIPS and You
You know how I mentioned more on the DRIPs later? Well that "later" is today. DRIPs can be a very economic way of investing in stocks. This is for the average guy that does not have Buffett like earnings. While it will not get you much, it will at least get your feet wet. Almost all DRIPs pay cash dividends which is very important to consider and just about all of them are either blue chip stock (well established) or growth stocks (a rising star!).
The concept of a DRIP is to privately make money with no middle man or commission fees. I happen to like DRIPs because they will reinvest the dividends hence the acronym Dividend Re-Investment Plan. Just think of your portfolio being like a bucket and the dripping is the water being caught into the bucket. The more dripping, the heavier the bucket, the more bottom line.
There are advantages and disadvantages to DRIP investing. The advantages are that you can contribute a small portion of money for stock (you usually have to buy at least one share) and you can contribute however you like without getting hit up for commission. There is usually a cap on how much you can buy at once, but it can promote cost averaging: a technique of buying stock over a duration of time in order to absorb some of the expense of purchasing it.
The disadvantages of DRIPs is that your are limited on how many stocks you can buy and also dividends will be taxed. Another thing about DRIPs is that overall there is no real gain or volitility on stocks even though they might be cost effective. Perhaps it is a blessing or a curse, but you are limited in choice as well because some companies are unfortunately getting rid of their DRIP investment plan.
Two known companies that have DRIPs happen to be Wal-Mart and Proctor and Gamble. Wal-Mart's employee DRIP is okay and Proctor and Gamble's has some small start up fees. I heard that our competition, Costco has a DRIP as well, but I do not know if they charge for contributing or not. Normally the charges will be less than the commission for the stock broker, but some campanies will hit you up for additional fees per transaction so be careful.
At any rate, having a DRIP has done nothing, but helped my portfolio. If you do not cash out your stock, you should be able to rack in a few shares from just letting your money work for you every quarter. And word has it, the dividend contributions sometimes rivals a CDs cashflow!
The concept of a DRIP is to privately make money with no middle man or commission fees. I happen to like DRIPs because they will reinvest the dividends hence the acronym Dividend Re-Investment Plan. Just think of your portfolio being like a bucket and the dripping is the water being caught into the bucket. The more dripping, the heavier the bucket, the more bottom line.
There are advantages and disadvantages to DRIP investing. The advantages are that you can contribute a small portion of money for stock (you usually have to buy at least one share) and you can contribute however you like without getting hit up for commission. There is usually a cap on how much you can buy at once, but it can promote cost averaging: a technique of buying stock over a duration of time in order to absorb some of the expense of purchasing it.
The disadvantages of DRIPs is that your are limited on how many stocks you can buy and also dividends will be taxed. Another thing about DRIPs is that overall there is no real gain or volitility on stocks even though they might be cost effective. Perhaps it is a blessing or a curse, but you are limited in choice as well because some companies are unfortunately getting rid of their DRIP investment plan.
Two known companies that have DRIPs happen to be Wal-Mart and Proctor and Gamble. Wal-Mart's employee DRIP is okay and Proctor and Gamble's has some small start up fees. I heard that our competition, Costco has a DRIP as well, but I do not know if they charge for contributing or not. Normally the charges will be less than the commission for the stock broker, but some campanies will hit you up for additional fees per transaction so be careful.
At any rate, having a DRIP has done nothing, but helped my portfolio. If you do not cash out your stock, you should be able to rack in a few shares from just letting your money work for you every quarter. And word has it, the dividend contributions sometimes rivals a CDs cashflow!
Wednesday, April 14, 2010
100th Post. 100 Hundred Ways of Being Frugal
1. Walk instead of drive.
2. Employ the $10/day plan for food when going out for work.
3. Select only 1 luxury a month, big ticket luxuries have to span over a couple of months.
4. Open up an emergency savings account.
5. Open up a either a 401K or Roth IRA or CD and don't touch the money.
6. Target blue chip stocks that pay out stock dividends.
7. Open up a DRIP investment plan (more on this later)
8. Shop at low cost stores like Wal-Mart
9. Shop at bulk stores like Costco and Sam's Club
10. Search for deals on http://www.pricegrabber.com/
11.Use coupons.
12. Do not get a soda at a restuarant unless you absolutely want to.
13. Refrain from combo items; stick to the dollar menu when eating fast food.
14. Fill out surveys for free swag!
15. Buy stuff that is returned or on clearance.
16. Buy only one car and make it your for life car.
17. Have renters pay down your mortgage.
18. When thinking about buying an item, think about how bad you want the item at home and think of one way it can truely better your life within 24 hours. If you cannot think of anything to justify buying the item, leave it on the shelf.
19. Use #18 to resist 'impulse buys'
20. Use the 401(k) to lower your income tax bracket.
21.For long distances, carpool.
22. When renting movies, split the amount it cost to rent a movie at Redbox down the middle: you'll only pay 50 cents.
23. Use your change to pay for a purchase, that way you can not get hit up with fees for using a card to pay for something.
24. Eat at home.
25. Eat ramen; lots and lots of it! I saved a bundle doing this.
26. When you feel the need to impulse buy, think about how much the item costs, subtract that amount from your bank account and use that amount to invest in something, be it a book that gets you more knowledge, a stock, whatever. Repeat this and you'll be a impulse investor =)
27. Write your goals on a piece of paper and have that as your drive.
28. Read the Millionaire Next Door; over and over again. Emulate some of the habits in the book and you'll be on the path to success.
29. Save up to 10 grand starting out before doing any risky investing.
30. Surf Youtube; everything there is visual swag waiting to be watched!
31. Buy off brand groceries no one really cares.
32. Start your own blog. Blogger is free and it keeps me out of trouble ;)
33. Put $10 per week in an envelope and have yourself a $520 Christmas
34. Shop off of Criagslisgt for your appliances
35. Hit up used bookstores for new books to read; more than likely they have your silly Vampire romance novel there too.
36. Better yet, start a book club at work and read each other's books.
37. Buy a used car and let that care be your "for lifer"
38. Get only one credit card that gives you cash back. You should shoot for 2-5% or a double mile card if you travel a lot.
39. Periodically eat like a college student; go for Top Ramen and Bomb Burritos (Just warn me if you have a B.B.)
40. If your going to drink, target $1 drafts or low budget tall cans and cap it off at $3.
41. Buy a PS2 and play only $5 dollar games. There are thousands of Playstation games on the market! I have about 80 games total!
42. Take your dates to free venues. Sometimes I come across bands that *gasp* actually have talent.
43. Carpool to work.
44. If your still a student, check and see if your city has year round passes. The one in my town cost $30 for a whole year! They are a good deal if you can get one.
45. If you drink soda, try to target stores that offer $1 2liters. This will curb your craving for days.
46. Bicycle to work! Your body will thank you later.
47. Play the guitar, there are millions of free downloads on the internet.
48. Exercise in your own home instead of the gym.
49. Unless it is urgent do not send or recieve mail via priority. Patience is a virtue that could protect your pocketbook.
50. If you want to lower your tax bracket and increase your bottom line, contribute to your 401K.
51. If you want to invest money that won't be taxed afterwards, the Roth IRA will make you an automatic millionaire if you start while your young and contribute the maximum.
52. If you absolutely need a car, look for one with low insurance rates. Check the car for any machinical problems as well.
53. Write poetry and go to an open mike session. You'll be a star!
54. Subscribe to blog ring. You will have a smogaboard of free reading material.
55. Better yet, subscribe to this blog! It well help put you on the path to riches.
56. Read articles off of http://www.getrichslowly.com/ !
57. Study a foreign language at home instead of in class. You can also study what you want to study.
58. If you really want to buy that movie, try looking for extra movies at the pawn shop. If it is only $2, then there is no kicking yourself when it is terrible.
59. Go mountain hiking!
60. For those of you in San Francisco, go street hiking. The roads there are built like mountains!
61. Do not hire a contractor for small home improvement things, do it yourself.
62. Your tax dollars are paying that librarian's salary; use the library for free reading material. I am fairly sure they have at least one of your "New Moon" vampire romance novels there.
63. Instead of taking the plane every where you go, take the train.
64. Do not even use taxis. Why pay $40 to go 20 miles. They are only useful if you walk and you are going to be late to work. The GPS vanquished the cabbie. They even have pedestrian modes!
65. Walk everywhere for your cardio. Passive exercising is the way to go!
66. Get a used GPS. If you are in town why do you need all the bells and whistle to get from point a to point b?
67. Get a CPA when tax season gets complicated. They can find all sorts of loopholes in the tax code.
68. Take on doing your taxes yourself if you have the free time. Just try not to get yourself audited.
69. This might be a bit unethical, but if you have to take a date to the movies, sneak in your own snacks and drinks.
70. Only sign up for a monthly gym membership. Trust me; there is no need to sign up for a yearly one especially if you move around a lot.
71. Buy a pre-paid phone for out of residence calls and use either Skype or the Magic Jack for in house/international calls.
72. Invent your own 100 frugal habit list!
73. Instead of going for 4 year college degrees, consider going for a lucrative certification program while working full time!
74. Take out fast food if it is not on your luxury list.
75. Form a 1 habit per month luxury list, big ticket items have to carry over.
76. Buy a take and bake pizza from Sam's Club and ration the pizza out for 4 days as your dinner.
77. Never pay for umbrellas. Just ask your lost and found for your "missing" black umbrella. (Taken from: A Million Bucks by 30 by Alan Corey)
78. Do surveys for free stuff.
79. Do psychological studies for money. Just avoid doing the ones with meds.
80. Borrow some of your friends games for some of yours. Then play through them and return the games.
81. Split the rent in a apartment.
82. If your more hardcore, split the rent of a studio apartment down the middle. Your bank account will thank you later!
83. Use grocery bags as your garbage bags. If you need bigger bags, look for a demo person at Sam's Club or Costco. They sometimes demo garbage bags.
84. If you have the time, attend free pre-concert tickets before the venue begins. I did this and got to meet Korn for free! I should have gotten a refund on the ticket though.
85. If you have a Pandora account, use it to listen to free music.
86. Go to Sam's Club and Costco and hit up the demo areas for free food. Why pay for free when it is being given away?
87. Panda yourself out for dares if you do take yourself seriously. Your friends will just be paying you ffor laughing at you.
88. Become a side-job entrepenuer. All the free swag with none of the capital! This will at least keep you from paying for extra stuff.
89. If your work offers free food for prizes, abuse the system.
90. Eat the same stuff over and over if it is cheap.
91. Wear multi-purpose shoes; you'll be dressed out for a job interview and for a game of hoops! Why own 20 pairs when you don't have to?
92. Look for deals in the local newspaper.
93. Read this list again.
94. Watch movies on your netbook, not at a rental store.
95. ATM $40 to use for the whole week on food and nothing else. That is how to avoide the majority of transacction keys at fast food joints.
96. At fast food joints, order from the dollar menu.
97. If you can, do not pay for a soda and a side of fries at a fast food place. If you really want them, then get a small and exploit the free refills!
98. Write down five people that you know of that have bad debt and list all of their bad spending habits. Afterwards do the opposite of what they do.
99.Now list 5 people that have good spending habits and seek them out for guidence.
100. Find your own financial niche and from there establish your frugality and limits on comfort.
And there you have it. 100 ways of being frugal. This actually took me some time to compile this list and hopefully there are no repeats. If there are, then please let me know so I can adjust them. This is porbably the most challenging blog ever written to date, but hopefully it will give you ways to provide finacial harmony in such troubling times. Do not think just following this list will be your magic bullet. It will help you save and invest a little, but to truely invest, you will have to go beyond the spectrum of this blog. I would seriously start out with the Cash Flow Quadrant and the Intelligent Investor along with the Millionaire Mind. These books will put you in the process of thinking like an investor. The rest will have to be frugality combined with repeated successes.
2. Employ the $10/day plan for food when going out for work.
3. Select only 1 luxury a month, big ticket luxuries have to span over a couple of months.
4. Open up an emergency savings account.
5. Open up a either a 401K or Roth IRA or CD and don't touch the money.
6. Target blue chip stocks that pay out stock dividends.
7. Open up a DRIP investment plan (more on this later)
8. Shop at low cost stores like Wal-Mart
9. Shop at bulk stores like Costco and Sam's Club
10. Search for deals on http://www.pricegrabber.com/
11.Use coupons.
12. Do not get a soda at a restuarant unless you absolutely want to.
13. Refrain from combo items; stick to the dollar menu when eating fast food.
14. Fill out surveys for free swag!
15. Buy stuff that is returned or on clearance.
16. Buy only one car and make it your for life car.
17. Have renters pay down your mortgage.
18. When thinking about buying an item, think about how bad you want the item at home and think of one way it can truely better your life within 24 hours. If you cannot think of anything to justify buying the item, leave it on the shelf.
19. Use #18 to resist 'impulse buys'
20. Use the 401(k) to lower your income tax bracket.
21.For long distances, carpool.
22. When renting movies, split the amount it cost to rent a movie at Redbox down the middle: you'll only pay 50 cents.
23. Use your change to pay for a purchase, that way you can not get hit up with fees for using a card to pay for something.
24. Eat at home.
25. Eat ramen; lots and lots of it! I saved a bundle doing this.
26. When you feel the need to impulse buy, think about how much the item costs, subtract that amount from your bank account and use that amount to invest in something, be it a book that gets you more knowledge, a stock, whatever. Repeat this and you'll be a impulse investor =)
27. Write your goals on a piece of paper and have that as your drive.
28. Read the Millionaire Next Door; over and over again. Emulate some of the habits in the book and you'll be on the path to success.
29. Save up to 10 grand starting out before doing any risky investing.
30. Surf Youtube; everything there is visual swag waiting to be watched!
31. Buy off brand groceries no one really cares.
32. Start your own blog. Blogger is free and it keeps me out of trouble ;)
33. Put $10 per week in an envelope and have yourself a $520 Christmas
34. Shop off of Criagslisgt for your appliances
35. Hit up used bookstores for new books to read; more than likely they have your silly Vampire romance novel there too.
36. Better yet, start a book club at work and read each other's books.
37. Buy a used car and let that care be your "for lifer"
38. Get only one credit card that gives you cash back. You should shoot for 2-5% or a double mile card if you travel a lot.
39. Periodically eat like a college student; go for Top Ramen and Bomb Burritos (Just warn me if you have a B.B.)
40. If your going to drink, target $1 drafts or low budget tall cans and cap it off at $3.
41. Buy a PS2 and play only $5 dollar games. There are thousands of Playstation games on the market! I have about 80 games total!
42. Take your dates to free venues. Sometimes I come across bands that *gasp* actually have talent.
43. Carpool to work.
44. If your still a student, check and see if your city has year round passes. The one in my town cost $30 for a whole year! They are a good deal if you can get one.
45. If you drink soda, try to target stores that offer $1 2liters. This will curb your craving for days.
46. Bicycle to work! Your body will thank you later.
47. Play the guitar, there are millions of free downloads on the internet.
48. Exercise in your own home instead of the gym.
49. Unless it is urgent do not send or recieve mail via priority. Patience is a virtue that could protect your pocketbook.
50. If you want to lower your tax bracket and increase your bottom line, contribute to your 401K.
51. If you want to invest money that won't be taxed afterwards, the Roth IRA will make you an automatic millionaire if you start while your young and contribute the maximum.
52. If you absolutely need a car, look for one with low insurance rates. Check the car for any machinical problems as well.
53. Write poetry and go to an open mike session. You'll be a star!
54. Subscribe to blog ring. You will have a smogaboard of free reading material.
55. Better yet, subscribe to this blog! It well help put you on the path to riches.
56. Read articles off of http://www.getrichslowly.com/ !
57. Study a foreign language at home instead of in class. You can also study what you want to study.
58. If you really want to buy that movie, try looking for extra movies at the pawn shop. If it is only $2, then there is no kicking yourself when it is terrible.
59. Go mountain hiking!
60. For those of you in San Francisco, go street hiking. The roads there are built like mountains!
61. Do not hire a contractor for small home improvement things, do it yourself.
62. Your tax dollars are paying that librarian's salary; use the library for free reading material. I am fairly sure they have at least one of your "New Moon" vampire romance novels there.
63. Instead of taking the plane every where you go, take the train.
64. Do not even use taxis. Why pay $40 to go 20 miles. They are only useful if you walk and you are going to be late to work. The GPS vanquished the cabbie. They even have pedestrian modes!
65. Walk everywhere for your cardio. Passive exercising is the way to go!
66. Get a used GPS. If you are in town why do you need all the bells and whistle to get from point a to point b?
67. Get a CPA when tax season gets complicated. They can find all sorts of loopholes in the tax code.
68. Take on doing your taxes yourself if you have the free time. Just try not to get yourself audited.
69. This might be a bit unethical, but if you have to take a date to the movies, sneak in your own snacks and drinks.
70. Only sign up for a monthly gym membership. Trust me; there is no need to sign up for a yearly one especially if you move around a lot.
71. Buy a pre-paid phone for out of residence calls and use either Skype or the Magic Jack for in house/international calls.
72. Invent your own 100 frugal habit list!
73. Instead of going for 4 year college degrees, consider going for a lucrative certification program while working full time!
74. Take out fast food if it is not on your luxury list.
75. Form a 1 habit per month luxury list, big ticket items have to carry over.
76. Buy a take and bake pizza from Sam's Club and ration the pizza out for 4 days as your dinner.
77. Never pay for umbrellas. Just ask your lost and found for your "missing" black umbrella. (Taken from: A Million Bucks by 30 by Alan Corey)
78. Do surveys for free stuff.
79. Do psychological studies for money. Just avoid doing the ones with meds.
80. Borrow some of your friends games for some of yours. Then play through them and return the games.
81. Split the rent in a apartment.
82. If your more hardcore, split the rent of a studio apartment down the middle. Your bank account will thank you later!
83. Use grocery bags as your garbage bags. If you need bigger bags, look for a demo person at Sam's Club or Costco. They sometimes demo garbage bags.
84. If you have the time, attend free pre-concert tickets before the venue begins. I did this and got to meet Korn for free! I should have gotten a refund on the ticket though.
85. If you have a Pandora account, use it to listen to free music.
86. Go to Sam's Club and Costco and hit up the demo areas for free food. Why pay for free when it is being given away?
87. Panda yourself out for dares if you do take yourself seriously. Your friends will just be paying you ffor laughing at you.
88. Become a side-job entrepenuer. All the free swag with none of the capital! This will at least keep you from paying for extra stuff.
89. If your work offers free food for prizes, abuse the system.
90. Eat the same stuff over and over if it is cheap.
91. Wear multi-purpose shoes; you'll be dressed out for a job interview and for a game of hoops! Why own 20 pairs when you don't have to?
92. Look for deals in the local newspaper.
93. Read this list again.
94. Watch movies on your netbook, not at a rental store.
95. ATM $40 to use for the whole week on food and nothing else. That is how to avoide the majority of transacction keys at fast food joints.
96. At fast food joints, order from the dollar menu.
97. If you can, do not pay for a soda and a side of fries at a fast food place. If you really want them, then get a small and exploit the free refills!
98. Write down five people that you know of that have bad debt and list all of their bad spending habits. Afterwards do the opposite of what they do.
99.Now list 5 people that have good spending habits and seek them out for guidence.
100. Find your own financial niche and from there establish your frugality and limits on comfort.
And there you have it. 100 ways of being frugal. This actually took me some time to compile this list and hopefully there are no repeats. If there are, then please let me know so I can adjust them. This is porbably the most challenging blog ever written to date, but hopefully it will give you ways to provide finacial harmony in such troubling times. Do not think just following this list will be your magic bullet. It will help you save and invest a little, but to truely invest, you will have to go beyond the spectrum of this blog. I would seriously start out with the Cash Flow Quadrant and the Intelligent Investor along with the Millionaire Mind. These books will put you in the process of thinking like an investor. The rest will have to be frugality combined with repeated successes.
Friday, April 2, 2010
Apologies for the Last Post
I would like to say I'm sorry for the last post. There was one detail that did not occur to me until later at work. You would have to be a lease-to-own buyer for this to work. Or an agreement would have to be met with the owners to buy the house on a note system. If that was to occur, then I would say go for it. That is 3% per year cash flow! The taxes would easily cover the remainder of the amount unless you are of course planning to rent out part of the property.
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