Dear Appreciated Friend,
Everyone is being affected by the current economy. There are those people you may think are rich or financially secure, but who actually may be on the edge of bankruptcy. On the other hand, those you may believe have average earnings, e.g., teachers and postal workers or those earning less than $40K a year, are financially independent and many are even millionaires! What is their secret?
We at Tony’s Body Shop are committed to bringing you and your family the latest information for your protection and well-being. This issue of our newsletter gives you some information to help empower you and your finances.
In this Issue you will learn the four principles to becoming debt free. How to:
1. Track all your spending.
2. Set financial goals for the life you want.
3. Live on less than you earn AND Pay off your debts.
4. Make your money work for you instead of you working for your money.
Wouldn’t you like to have cash to pay for your next car, that vacation you and your family want or the funds to pay for your child’s education without going into deep debt? Wouldn’t you like to eliminate all those interest charges that keep you trapped in a job you hate? Maybe you’d like to start your own business. How about becoming a millionaire? This is absolutely possible – just follow the principles.
Write down your goals. What do you really want to have in your life? What would you like to be able to buy? It is important to write down what you want in order to make your goals more attainable. By simply thinking about your goals you can easily set them aside and forget them. When you write them down on paper or in a computer file, they are real. What about that second home, a paid-off mortgage, a sailboat, a trip to Italy or an addition to the house? Don’t judge the possibility, simply write it down.
What if you want to be a millionaire? Save $200/month at a 9% return per year during a 40-year career and you’ll have $1M by the time you retire. If your income is $3300/month, $200 is only 6% of your income.
To realize shorter-term goals, you might start with $10,000 in an account that yields 6% return, and if you save $100 each month, at the end of 10 years you will have $112,449.50 in that account! See how you can get that first $10,000. Learn about compound interest by visiting www.bankrate.com and see how “money makes money”.
“In the absence of clearly defined goals, we are forced to concentrate on activity and ultimately become enslaved by the activity.” “If the goals were taken out of sports, a bunch of people would be running around aimlessly after balls! Who would want to do that or watch that?!” - Blaine Harris & Charles Coonradt
1. Goals must be written down to become a reality.
2. Goals must be yours, not your parents or your boss’s or your neighbor’s. Only you can set your financial goals. If money just for money’s sake doesn’t motivate you, decide what you want to have long term. For example: a large purchase, college funds, a vacation, or retirement. Do you really think that you can live on Social Security?
3. Goals must be positive. Don’t say I want to lose 5 pounds or I don’t want to be fat. You will be focusing on how you will be depriving yourself. Focus on your optimal weight, health and energy.
4. Goals must be measurable, specific and time bound. Example: For your finances the focus is on being debt free with $500,000 in your portfolio and writing out a check for $20,000 for your child’s first year tuition.
This doesn’t mean you have to spend less, just spend differently. This means you pay yourself first rather than wait until the end of the month to see if there’s anything left. The trick to having a surplus for your financial goals is to pay yourself first, and then live on what’s left over.
There is no one, no matter how much they make, who can be financially successful unless they live on less than they earn.
1. Look at your debts.
If you could save $300 a month by your trimming suggested in principle #1, how long would it take you to pay off your smallest debt?
Call the other creditors and tell them you are financially stretched and ask them how they might help you by lowering the rate on your bills. Assure them that you fully intend to pay off the account, but need some help right now. Most creditors will try. No one wants you to go bankrupt and not be able to pay them at all. You will be amazed at what can be achieved by asking.
Keep paying the minimum amount on those other credit cards on time. This is key. When credit card #1 is paid off take the monthly payments you were paying for credit card #1, which you aren’t paying anymore, and apply them to the monthly payments for the next credit card/loan with the lowest amount of debt.
Continue this process with each account until all debt has disappeared.
Yes, this will not happen overnight, but you will have a plan and at the same time you will be saving money and eliminating debt. By attacking the smallest debt first, then moving on to the next smallest debt, you will see results and the results will motivate you to continue.
Change your habits.
Start by cutting out a few items you normally spend a week and save that money. This might be a few Starbucks or CDs you’d normally buy. Make this a game, enroll your whole family and see what creative ways you can come up with to save what you normally spend. However, don’t forget about your goals and how saving, paying off your debts, and having a surplus will allow you more freedom to do things you and your family want to do.
1. Use cash instead of credit cards. You’ll spend less and this will put a brake on your impulse purchases.
2. Write down all the things you want to buy and keep a running list in a notebook you carry with you. Visualize yourself able to purchase that item, you just choose not to right now.
3. Whenever you see something that says “buy me now,” put that item on your list and walk away.
4. Have a garage sale.
5. Donate stuff to Goodwill and take a deduction at tax time.
6. Go on picnics rather than dinners out.
7. Borrow movies and books from the library.
8. Go online to find the cheapest gas in your area.
9. Take public transportation if you can or commute with others.
10. Ride a bicycle for short trips. Make sure that it’s comfortable so that you will use it. This is becoming the latest trend due to today’s gas prices.
11. Cancel your expensive cable and newspapers. Spend a morning at the library.
12. Pay your bills as soon as they arrive, so that you will know exactly how much is left.
13. Don’t go grocery shopping on an empty stomach and always bring a list. Stick to the list and don’t buy anything that isn’t on that list.
14. Take your lunch to work. It’s amazing how those “little” sandwiches or salads add up.
15. Take advantage of free entertainment in your community; e.g., free concerts, free museum days; etc. Sometimes your local library has free passes to museums or events.
16. Increase your gas mileage by taking care of your car with monthly check-ups and by driving 50 mph on highways. Higher speeds use more gas.
See how you can save 10% from your expenses and put that in a savings account. If your paycheck is automatically put into your bank account, then have 10% of each check automatically put into a savings account. Since you have already found items you don’t really need as discovered thru principle #1 and above, this won’t be too difficult.
Principle # 4. Learn how your money can work for you.
Once you are debt free, don’t just squander your money or you’ll be back where you began. Start spending your money on things that will appreciate.
There is much to learn about how your money can work for you. Start reading the Money Magazine or the Wall Street Journal. Take some classes. Learn about financial products that will make you money while you sleep. You’re on your way to the life of your dreams.
If you commit yourself to a life of tracking, goal setting, trimming, and learning, you will always have financial security and wealth.
For additional useful information,
The Four Laws of Debt Free Prosperity, Blaine Harris and Charles Coonradt with Lee Nelson; Chequemate International
The Automatic Millionaire, David Bach; Broadway Books
Rich Dad, Poor Dad, Robert T. Kiyosaki with Sharon L. Lechter; Warner Books
Women & Money, Suze Orman; Spiegel & Grau
The Power of Compound Interest,
Choose to Save, choosetosave.org
For free coupons and tips, coolsavings.com