Book Review: Stop Acting Rich

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.”

PF Roundup #1

 

Planting Money Seeds shares  how to achieve your investment goals.

Over at Money Manifesto he shares that delayed gratification is the key financial success.

Blonde and Balanced shares how to avoid rookie investment mistakes

Wise Dollar share 4 simple ways to start investing.

Financially Blonde reveals the role of desire in reaching your financial goals.

Dough Roller shares how to invest your first $10,000.

Over at Paying Debt Down he shares top 10 tips for couples to plan their finances together.

Managing Money & Marriage

Managing money and marriage can be a delicate endeavor. Timing is important. Discussing a major financial decision right before bed may not be a good idea. My spouse and I made a pact to not discuss money on Sunday (God’s day) because we don’t want to set the day off in a negative direction. You also have to have money boundaries that work for the two of you. The two of you may decide on an amount of money (fun money) that you can spend without having to discuss it. Trying to micromanage your spouse’s spending is not going to have a positive outcome in most cases. It’s also important to discuss money goals. What do you both want to accomplish with the money you earn? Have you discussed retirement? Do you have adequate life insurance? If you have children….are you planning for college expenses? Do you have a budget? Which one of you crafts and maintains the budget? Not talking about significant money issues will NOT solve the problem. It’s not just what you say but HOW you say it. If things get too heated it’s OK to call a time out as long as you agree on another specified time to discuss the issue. Remember you are on the same team. Have you merged your two paycheck into 1 checking account? Do the two of you operate from separate accounts? What bills get paid from each account? The two of you may want to have a Money Date. This is an opportunity to discuss money issues specifically. You don’t have to go to a restaurant.  You can have the date on your front porch if you wish.

Money Talk Guidelines:

  • Use a civil tone of voice
  • Discuss one topic at a time
  • Agree to research a topic and bring it back later
  • Don’t play the blame game
  • Take responsibility for poor decisions
  • Be willing to forgive each other for mistakes
  • Be consistent in scheduling money talks (at least once a month)
  • Listen closely to each other
  • Remember that you both are on the same team

Discussing money issues in your marriage can be both challenging and rewarding. It is my hope that suggestions in this post can help guide your money conversations. What talking tips could you add to my list? Feel free to share your tips in the comments.

Giving Away Your Money

Many personal finance blogs give much attention to earning, investing, saving and managing money. Today’s topic is giving away your money to meaningful causes. What is a meaningful cause varies from person to person. There are literally thousands of non profits to donate money to. If your faith is an important part of your life you can give to your local church. Why should you give your money away? You worked hard for it and the choice to give some of it is a personal decision. There are no doubt millions of families and children that are far less fortunate than the typical American family. I just read on http://Www.pretendtobepoor.com that almost half the world’s population lives on less than $2.50 a day. We would be well served to take time to count our blessings to live in the U.S.A.  However, you don’t have to go beyond our borders to find those in need. I work in a local school and it well known that 1 of 5 students in U.S. Schools is food challenged. Take a minutes to count your blessings. Take another minute to ask yourself how you may give to others. Expressing gratitude is a worthy action in your life. If you are concerned about where your donated dollars go a great site to visit is http://Www.charitynavigator.org There is a search box where you can type in your charity of choice and see what amount of each dollar goes toward administration, program expense, and fundraising. Charities are given a 1-5 star rating. Giving money to great causes can be a great experience when it comes to blessing others. If you have a family taking time to discuss giving as a family can prove to be a valuable endeavor.

Do you give to causes that are important to you? Please share how you give money in comments.

 

 

12 Money Goals

Do you have a goal for your money? Where do you want it to go? What do you want it to do? Without a goal for your money you are unlikely to succeed. Goals give you direction. Goals give you motivation. To succeed with money you need to have financial goals. Have you ever written a financial goal? Are you guilty of the “get it and spend it” mentality? Below are some suggested money goals for you to establish in your financial life.

  1. I will save $1,000 in an emergency fund.
  2. I will live by a budget. For a free budgeting resource visit http://Www.everydollar.com
  3. Spend less than you earn.
  4. I will open a retirement account and invest $50 a month.
  5. I will talk regularly about the budget with my spouse.
  6. I will save up and pay cash for vacations.
  7. I will visit personal finance blogs to learn more about managing money.
  8. I will check books out of the library to learn more about managing money.
  9. I will schedule an appointment with a financial advisor to discuss my financial situation.
  10. I will purchase term life insurance to cover my family if the unexpected occurs. Great company with competitive rates: http://Www.zanderins.com
  11. I will talk to my spouse and make sure he/she has adequate term life insurance.
  12. I will begin talks with my children about making, spending, saving, and giving money.

Continue reading “12 Money Goals”

The Cost of Procrastination

They say the road to hell is paved with good intentions. You may be among those that says, “I’ll start investing for retirement next year.” Next years comes and you say it again. Next year comes and you say it again. Postponing investing for retirement can cost you LOTS of money when you get to your retirement years. What a sad consequence for someone to get to the end of their working life and be told you don’t have enough saved to retire. There are no doubt millions of elderly over 65 today working because they procrastinated year after year after year.

Example 1: A 25 year old begins investing $100 a month in a Roth IRA and leaves it alone for 40 years (age 65). 8% return on the investment.   Result: $335, 737.25                                                                                  Actual dollars invested: $48,000

Example 2: A 30 year old begins investing $100 a month in a Roth IRA and leaves it alone for 35 years (age 65). 8% return on the investment.     Result: $223,332.58                                                                                   Actual dollars invested: $41,000

The investor in Example 1 only contributed $7000 more dollars than investor in Example 2. However, his reward for investing 5 years earlier is $112,405.00!! Wow! When it comes to investing the early bird gets the worm financially!

Have you started investing for retirement yet? What is stopping you? I’m sure you can see from the above example that SOONER is much better than later. Don’t be hard on yourself if you’re a late starter. You can’t change the past, but you can learn from it. Below is a link for a Compound Interest Calculator. Go ahead and punch in some numbers to see what you can do with your money.

http://www.moneychimp.com/calculator/compound_interest_calculator.htm