As I watched the coverage of Hurricane Irma today I began to think of the importance of protection in one’s financial life. Are you and your family properly insured against loss? Not just loss from disastrous weather, but financially protected. Below are some ways you can protect your family from financial loss:
- Do you have proper life insurance? If you are married or have children, life insurance is a MUST! The loss of your life or the life of your spouse can trouble the financial waters in a hurry. Be sure you have adequate term life insurance. A good benchmark is about 10 times your annual income. Example: $50,000 salary = $500,000 in coverage.
- Do you have an Emergency Fund? A good starter emergency fund is $1,000. This should be in a savings account SEPARATE from your checking account. There are some online savings accounts that can be linked to your checking account.
- Do you have a will? Do not out an added stress on your survivors by not making your wishes known in a will. A decent will can be done by an attorney for $500-$1000. If you leave no will your survivors and heirs will be double whammied by the emotional loss of you and the extra stress of how to distribute our assets.
- Do you have health insurance? Living without health insurance can put tremendous stress on your life. Without health insurance you may neglect or ignore your health problems for financial reasons. The number one reason for bankruptcy is medical debt. Don’t put yourself and family under the stress of no health insurance.
What issue did I leave out? Please share in comments.
Today’s blog post title comes from the book, The Road Less Traveled, by Scott Peck. I’m putting a financial spin on his title. There are many financial roads you can travel. The most traveled road in today’s society involves carrying credit card debt, HELOC – home equity line of credit, and just being neck deep in debt. The financial road less traveled involves those who do the following:
- Live on a Budget – too many people don’t have a clue where their money is going month to month. If you don’t tell your money where to go, you will wonder where it went.
- Save up and pay cash for vacations – too many people in our society fund their vacations with credit cards and lines of credit.
- Save for Retirement – 52% of Americans have less that $10,000 in their retirement funds. This will not cut it. Americans are living longer lives. Social Security benefits could be less for the next generation. Not preparing for retirement can create a shipwreck when you reach retirement age.
- Being content – Our society’s marketing strategies are always pushing us to spend money on the next new gadget. If what you have isn’t broke, don’t replace it. You must learn to live within your means. You must say no to adult peer pressure. There will always be someone who has more than you. Know what a need is. Know what a want is. Spend only on needs. Comparison is the thief of joy.
- Teach your children about money – It is not up to the schools to teach your child about money. You are your child’s primary teacher. Your values are caught more then taught. You need to teach your child about spending, saving, and giving.
- In summary, you need to know what financial road you are on. If you find yourself following the crowd and saying yes to impulse purchases, you are probably on the road most travelled. You don’t have to stay on that road. You need to control your money and not let it control you. You need to live by your own values and not those of others.
Here it is. My quick list of ways to win with money.
- Spend less than you make.
- Invest early.
- Live on a budget. For a great free budgeting program go to: EveryDollar.com All you need for set up is an email and a password.
- Don’t compare your wealth to others. Make goals that match your values.
- Make a very high income.
- Write down your financial goals.
- Work hard.
- Be disciplined. See my previous post.
- Save 10% of your income for retirement.
- Be united with your spouse about money.
- Educate yourself about money.
- Be content.
- Know your values.
- Create passive income streams.
- Invest in Real Estate.
- Own a business.
- Give to causes important to you.
- Define your financial priorities.
- Treat debt like a dreaded disease. Use the snowball method to attack your debt.
Most people in America have some form of debt in their life. There are arguments about what ‘good’ debt is vs ‘bad’ debt. The Bible says the borrower is servant to the lender. There are several studies that report that money issues is the leading cause of divorce. As a married man I can attest that money fights with my spouse have been among some of our most intense disagreements. We have debt. It brings stress to our marriage but we don’t allow it to consume us. I recently got a summer job (side hustle) to knock out some of our debt. It is medical debt from a couple hospital visits. I decided to UP my resolve to knock this debt out. A side hustle can be anything you can do to put extra money in your pocket. Delivering pizzas, sorting boxes, selling on Ebay, garage sale are just a few examples. Dedicating time to a side hustle can help you throw bigger payments toward the debt in your life. I just read a great book titled Hustle Away Debt by David Carlson. He shares some great thoughts on differing types of side hustles. He used side hustles to attack his student loan debt. What amount of debt do you have in your life right now? Is it a nuisance? Is it affecting your relationships? Is it affecting your sleep at night. Don’t remain paralyzed by debt’s grip on your life. Seek out a side hustle. Imagine what an extra $200, $300, or $500 a month could do to help you knock debt more quickly out of your life. Ask yourself what skills you have that somebody could pay you money for. Are you tech savvy? Mechanically inclined? Handy man? Think about your hobbies and interests? Could you turn these talents into part time income? Get a side hustle into your life and send debt running.
Below are some examples of side hustles.
- Working Retail
- Food Delivery
- Waiting Tables
- Child Care
- Concessions at Sports Stadium
- Mystery Shopping
- Caregiving & Senior Services
- Selling on Etsy
- Virtual Assistant
- Flipping Things on Ebay or Craigslist
- Graphic Design
- Creating YouTube Videos
- Creating An Online Product To Sell
- Music Lessons
- Freelance Writing
- Web Development
What do dieting and attacking debt have in common? Discipline. It’s not a popular word but definitely necessary when attacking debt. You need to get focused with your money. Every dollar has to have a destination. Attacking your debt often means saying no to the ‘extras’ in life like eating out and vacations. Saying no to excess is a discipline. Deciding to live on less requires discipline. Deciding to live on a budget takes discipline. There will be days you don’t want to exercise. There will be days when you don’t want to cook a meal at home. You MUST be focused on the bottom line. You must be willing to sacrifice now to have more later. You must see the more confident future self that discipline produces in you. How motivated are you to put debt away? It’s much easier to get in debt than it is to get out. Be disciplined and you will be on your way to financial success.
How do you begin to show discipline with your money? Below are some tips to get you started.
- Live on a budget. You must have every dollar accounted for before you spend your first dollar. For a free budget resource, visit
- Save something. Begin small but save something. Just $25 a pay period is a start. You need to make Savings a line item in your budget. I recommend putting your savings in an online savings account like Ally or Capitalone360. A couple tips for beginning to save are: 1) When you pay off a debt, begin to set that money for savings; 2) Save your pay raise.
- Spend on Needs not Wants. You need to begin examining each purchase and ask yourself, “Is this a need or a want?” There will always be a better version (upgrade) of what you own. Just because a newer version exits doesn’t mean you have to buy it.
- Create your Debt Snowball. Simply put, this is a listing of all your debts from smallest to largest. Having this list in front of you can heighten your awareness for more discipline in your financial life. While discipline can be painful it is no doubt a necessary skill when it comes to winning with money. With any new skill you must start small and begin incremental growth. What money tip would you add when it comes to discipline and money?
The Finance Girl shares great tips on how she is conquering student loan debt.
At Your Richest Life Planning she shares how to talk about money with your spouse.
Bible Money Matters shares 10 most common money mistakes
Your Richest Life Planning shares why life insurance is NOT an investment.
Blonde and Balanced shares how to not suck at investing.
Are you paying interest or earning interest? This could very well draw the line between the rich and the poor. The poor pay interest to others. The rich earn interest on investments. Which camp are you in? The Bible says the borrower is servant to the lender. How much of your monthly income goes to debt payments? What interest rates are you paying? There are real consequences to paying interest. Money spent on paying interest is money that could be used to earn interest. If you find yourself paying more interest than you are earning, below are some tips to help you get on a better financial path.
- Have an Emergency Fund. Many people go into debt because they have no plan for life’s emergencies. Cars and appliances break down. Medical expenses can burst onto your financial radar. The unexpected will occur in your financial life. A $1000 emergency fund is a good start as a defense against going further in debt. Put it in a separate savings account that can be linked to your checking account. Not having an emergency fund will result in you borrowing money through credit cards or other loans. Take action today to start saving toward your emergency fund. Sell something. Take a second job. Just saving $50 a month is sufficient enough to get you moving toward the $1000 goal. It’s okay to start small. Use your income tax refund. This is step Number 1 in the war against acquiring new debt.
- Eradicate Debt. Your debt payments are consuming your opportunities to earn interest. List all of your debts, their balances and interest rates on a spreadsheet. List the debts smallest to largest. After this exercise you are to throw all your money paying off the smallest debt. This is a practice called snowballing that is encouraged by finance guru Dave Ramsey. Once you pay off the smallest debt you throw the payments you put toward that toward your second smallest debt. You continue this practice until all your debts are paid (except your house).
- Get On A Budget. To some people the word ‘budget’ sounds constraining. However, if you don’t tell your money where to go you will wonder where it went. There is a great free budgeting program available at EveryDollar. This program is very user friendly. You can set up your own budget in 15 minutes. All you need to register is an email address and a password.
- Start investing on a small scale. You can invest with as little as $50 a month. A good place to start for beginners is Betterment. You can choose how much to invest in stocks or bonds with just the click of a mouse. You can link the site to your checking account and choose what day of the month you want the money drafted out. Once you get to $3000 balance I would recommend selecting a mutual fund with Vanguard. I would recommend you get serious about educating yourself about investments because nobody should care more about your money than you. For more information on other options for beginning investors click here. Follow the above steps and see how well you can begin earning more interest and paying less! Good Luck!
If you are married and/or have children you need to make sure you have adequate life insurance. The best type is term life insurance. It is very cheap and will cover the unexpected events in life. We are not guaranteed tomorrow. You don’t want to leave your surviving family with the stress of worrying how the bills will be paid after you die. A good rule of thumb is to get insured for 10 times your annual income. Example: If you make $50,000 annually you will need to seek out a $500,000 policy. If you are in good health and in your twenties or early 30’s this may only cost you $25-$30 a month. This is not much to pay and it gives you peace of mind knowing your family is prepared for the unexpected. A couple of reliable sites to get competitive rates are:
When applying for life insurance you will be asked LOTS of questions about your physical health, age, etc. This is just a necessary part of the process.
Jeff Rose of Good Financial Cents shares 10 top insurance companies.
I just recently read the book, Stop Acting Rich…and Start Living Like a Millionaire by Thomas J. Stanley. He shares tons of statistics about millionaires and millionaire wannabes. He calls those who act rich ‘aspirationals.’ These are folks who have little in investment wealth but wear the badges of wealth anyway. He shares that aspirationals very seldom become millionaires because they can barely afford driving the status symbol cars (Mercedes Benz, BMW, Porsche). Many aspirationals finance such vehicles through leasing because they cannot afford to purchase/finance the total cost of the vehicle. He calls someone a millionaire someone whose total net worth is 1 million dollars and only 1/4 of that wealth includes home equity.
Below are some telling quotes from the book: What percentage of the millionaires who live in homes valued at under $400,000 are happy? More than 9 in 10 (91 percent) indicate that they are extremely satisfied with life. Yet only 1 in 20 has a wine collection. Happy people tend to live well below their means. I have found this to be the case in all of the studies I have conducted.
The demographics of this group, millionaires who live in homes valued under $400,000, are quite similar to those of the millionaire next door profiled 14 years ago. Ninety-two percent are married. In 90 percent of the cases, the male head of household is the major breadwinner. Fully 62 percent of those who are married have never have never been divorced. The median value of their home is $293,214. Their median realized household income from all sources in 2006 was $152,193, or more than one-half the current value of their home.
This book reveals that hundreds of millionaires live way below their means. While they could afford to live more extravagantly, they simply feel no need to impress others. Their satisfaction comes from high levels of achievement. The author warns to not fall into the trap of becoming an ‘aspiration all.’ These are folks who are consumed with appearing rich while their balance sheet (investments) reveals they are in fact not millionaires. The book also reveals that millionaires are generous people. There is a strong correlation between donating to charitable causes and overall satisfaction with life. In conclusion this book is a good read if you want to know how millionaires live lives of value. You will find that many millionaires live below their means and invest wisely. I liked a quote from Henry David Thoreau shared in the book: “That man is richest whose pleasures are cheapest.”