Money Management

[cookiecutter]

Yes...another money thread, can you guess what has been on my mind lately? Just kidding, I'm not money hungry, however I can see the need to be money smart and also I can see my lack of money smarts. I remember bits and pieces from a statistics class in high school, but that is now 3 years ago (WHAT??). So I am looking to become a little more educated on how to manage my money in a realistic, non get rich scheme kind of way. I have never believed you get something for nothing, and I have generally applied this to how I have earned money as well as saved it...but I would like to know some money management tips, and even better WHERE I could go to learn. I don't start college for more than a month, and I am currently job hunting, and in the meantime I would like to become a little more educated. Thanks for the help!

cookiecutter

[blueeyes]

daveramsey.com

Started listening to him when we lived in Tennessee. The man has excellent info on money management.

Sent from my DROID X2 using Tapatalk

[uintahiker]

Two keys- Income and Expenses. If you have your income always more than your expenses are, you'll be fine.

A few things I try and do.
Put everything on my credit card. A % back sure is nice to get a some money back later on. I NEVER carry a balance though.
Earmark different amounts of my income toward certain future expenses- home, car, medical, trips, etc.
Cashflow- if you can get paid as soon as possible, but put off paying bills as late as possible (without being late), you'll have more money in the long run.

[Iceaxe]

My money management skills began with a really good book I read when I was about 18. The book was good because it explained how to get your money to work for you in a simple format that was easy for an 18 y/o to understand. Unfortunately I no-longer have the book and don't remember its name. I wish I still had it as I'd like my kids to read it. Maybe it's time I looked for anther good book.

FWIW: The very first thing I did when I decided to make my money work for me was open an IRA and deposit $25 ($50 in todays dollars) into the account every paycheck (twice a month). By doing that I never really noticed the money was missing because I made the deposit right up front. If you don't have an IRA or retirement plan this should be the first thing you do, even if you can only put $10 or $20 bucks into it each paycheck. Once you get a couple grand in your IRA you can do a lot of different things with it to make it grow faster.

The second thing I did was not run out and buy a new car. I had just paid off my first car and it was in great shape. So I stashed my car fund money into a bank account and kept making my normal car payment into the account. After something like 18 months I had the money to pay cash for a new car. I've maintained this strategy with regards to vehicles ever since. You will find you can actually buy your next car (new or used) in about 1/2 the time if you are not making interest payments.

[Sandstone Addiction]

My money management skills began with a really good book I read when I was about 18. The book was good because it explained how to get your money to work for you in a simple format that was easy for an 18 y/o to understand. Unfortunately I no-longer have the book and don't remember its name. I wish I still had it as I'd like my kids to read it. Maybe it's time I looked for anther good book.

This is a loooooooong shot I know, but that book didn't happen to be "Common Sense" by A L Williams did it?

Even if it's not the same book, Common Sense has some great info. I read this simple, easy to understand book back in the late 80's and learned a great deal about saving, investing and money management. This book is out of print, but I found a copy that someone scanned and made available for anyone to read. Some of it might be a little dated, but the overall concepts are sound.

Check it out http://achievebalance.com/commonsense/

[Sun Dance]

I'll agree with all the previous posters and suggest an additional resource that I found extremely helpful:

http://personalfinance.byu.edu/

Whether you love or hate BYU is irrelevant. The site is chock full of easy-to-understand information about money management, and it walks you through from the very beginning basic lessons on through more complicated investing, etc. etc. The good thing is that you can go at your own pace and take what you like and leave what you don't. It's easy to understand and very helpful.

Good for you for being proactive and getting things in order early. I honestly wish they would include more personal finance curriculum in high schools. There are so many that have no clue and have been taught by no one.

[cookiecutter]

I'll agree with all the previous posters and suggest an additional resource that I found extremely helpful:

http://personalfinance.byu.edu/

Whether you love or hate BYU is irrelevant. The site is chock full of easy-to-understand information about money management, and it walks you through from the very beginning basic lessons on through more complicated investing, etc. etc. The good thing is that you can go at your own pace and take what you like and leave what you don't. It's easy to understand and very helpful.


:hail2thechief:

Yes, I think that was what I was looking for to the T

Thanks!

[Iceaxe]

This is a loooooooong shot I know, but that book didn't happen to be "Common Sense" by A L Williams did it?

:2thumbs:

That's the baby!!!!! That book changed my life for the better. :stud:

Here is the direct link to the book in PDF format:
http://achievebalance.com/commonsense/CommonSense.pdf

I just printed up a copy and it will be required reading for my kids.

[Iceaxe]

FYI: I just read Commonsense again and 95% of whats in the book still holds true.... the book can be read in a couple of hours and should be required reading of every 20 to 25 y/o.

Some of the numbers in the book are a little out dated (new homes cost $70,000 in 1983), but I noticed multiplying the numbers given by a factor of 3 brought everything up to a reasonable 2012 number that is good enough to bring everything back into line.

The biggest change to savings that is not in the book is a ROTH IRA is now avaiable along with the Trad IRA talked about in the book.

:cool2:

[double moo]

I believe Iceaxe's program will net you about 10% more in the long run.

[reverse_dyno]

Many investment books talk about how important it is to invest in stocks or stock mutual funds. This last downturn shows the risk inherent in the stock market. It might not be as good of an investment as many people believe it is. A steady 6% return can be made by investing in bond mutual funds. 6% doesn't seem much, but the return normally goes up when the stock market does down. In fact, the best investment vehical of 2011 was treasuries. I got 12% with almost no downside risk last year through my treasury mutual funds.

Stocks work best if you buy and sell frequently. The stock market tracks the general increase in overall economic growth, which in reality is never very much in a well developed country such as the US. Anything over that growth rate are gains from picking the right companies to invest in and selling at the right times. Something that is almost impossible for anyone to successfully do on a consistent basis.

[Iceaxe]

A steady 6% return can be made by investing in bond mutual funds. 6% doesn't seem much,

I don't think I'd be happy at 6%, your mileage may vary.

My portfolio is a nice mix of everything.... It has averaged 9% over the past 10 years.

For reference: if we both start with $10,000 at the end of 10 years our orginal investments will look like this.

6% = $17908.00
9% = $23673.00

A 6% investment will double every 12 years. A 9% investment will double every 8 years. I guess it just depends on what your goals are and your tolerance to risk.

And for the record, inflation over the past 10 years has average about 2.8%, so if you are not at least making that on your investment you are losing money.

[gholt]

Another good book to look at is The Richest Man in Babylon. It was written quite a while ago, but a good primer on learing how to manage your money.

[JONBOYLEMON]

Wealthy Barber

Millionaire next door

Subscribe to Kiplingers, Money, Inc, and the Wall Street Journal.

Great reads, a little basic, but get the idea in your head that the wealthy are not the ones who look wealthy. I am almost 40 years old and have a net worth far in excess of most of my friends and yet our standard of living is lower and I drive a 2003 Blazer :mrgreen:....... You do the math.:mrgreen:

Its called wealth accumulation for a reason.

[cookiecutter]

I have learned an important truth, in order to manage money, one first must have money to manage. I just secured a job (whoo hoo!) I've got college paid for with scholarship, so things are working out well. Thanks all for the advice and resources. I just may turn out all right after all..and speaking of money, anyone interested in buying an 06 summit snowmobile? (just a plug, not an add. I understand this isn't the place, but since money is the topic for tonight...)

I have really enjoyed getting everyone's opinion about this stuff... my appreciation I send to all, whooosh---

[aloken]

"Your Money or Your Life" is also excellent. It approaches "budgeting" from a different angle (budgeting doesn't work!) and really makes your think about what is important in your life and align your time and money investments with your goals.

[Iceaxe]

I have learned an important truth, in order to manage money, one first must have money to manage.

Actually I think you have it reversed. You must know how to manage money in order to have money. If you had read through some of the suggestions above you would know this.... at least one of the books above even details how to obtain the money you need to begin.

[Ron Perrier]

I learned a lot from 'The Wealthy Barber' - its Canadian but rewritten every year so is always current and the general advice is excellent. My keys are 1. it is not what you make but what you spend. 2. marry a woman without expensive tastes - a very nice house with 2 new cars and expensive furniture, expensive holidays staying in high priced hotels is not the way to accumulate wealth. Ask you prospective wife if they like to sleep in a tent - that tends to separate them out. 3. save at least 10% of every pay check (and hopefully more) every month by automatically deducting it out every month. 4. when you invest make sure you are well diviersified - in the US, Canadian and International markets.

[Sun Dance]

Couldn't agree more, Ron. Well said.

[blueeyes]

Ask you prospective wife if they like to sleep in a tent - that tends to separate them out.

This made me chuckle. I keep spouting this advice to my son. :2thumbs:

[Iceaxe]

Warren Sapp Files For Bankruptcy

FORT LAUDERDALE, Fla. -- Former NFL star Warren Sapp has filed for bankruptcy in South Florida.

Court filings show Sapp filed for Chapter 7 bankruptcy in Fort Lauderdale on March 30. The documents show he owes more than $6.7 million to creditors and back child support and alimony. Sapp's $6.45 million in assets include more than 200 pairs of Jordan sneakers.

He also reported losing his 2002 Super Bowl ring with the Bucs and his 1991 national championship ring from the University of Miami.

TMZ.com first reported the filing. Messages left with his attorney Saturday by The Associated Press were not immediately returned.

Sapp was a former defensive tackle for the Tampa Bay Buccaneers and the Oakland Raiders.


How not to manage money....

[gholt]

It's sad that far too many of professional athletes end up just like this. Most of their careers are farr to short to live like that. If they only invested their money they earn wisely, they could put that money to good use and it could last most of their lifetime.

[Iceaxe]

Money cannot buy happiness, but it's more comfortable to cry in a Corvette than on a bicycle.

:mrgreen:

[Wasatch Rebel]

These two sites are very helpful: http://www.bogleheads.org/forum/index.php

and http://www.clarkhoward.com/

[Iceaxe]

Interesting read..... :popcorn:


Why athletes go broke
By Matt Harpring, ksl.com Contributor

SALT LAKE CITY — Evander Holyfield, boxing icon, made over $230 million over his entire career and finds himself going to court because he is over $372,000 behind in child support.

Evander had 12 kids from six different mothers. Child support payments were reported to be $19,270 a month just for one of his kids. The home he built was 54,000 square feet, which is only 1,000 square feet smaller than the White House, has 109 rooms, 17 baths, three kitchens, a bowling alley, a movie theater, an Olympic-sized swimming pool, and sits on 235 acres.

The home sold at auction for $7.5 million with Holyfield owing a reported $14 million on the home.

Every year we hear stories of athletes that made many millions of dollars over their careers but end up in bankruptcy. How? Why? It doesn't seem possible!

I want to start with some shocking statistics. 60 percent of NBA athletes go broke after five years of being retired and 78 percent of NFL players are bankrupt or under financial stress after just two years of retirement.

A common misconception amongst the public is that athletes are "dumb jocks." While there are a few that fit that description, a recent study showed American elite athletes scored, on average, 96 to 107 on I.Q. tests. The problem lies not with the lack of intelligence, but rather the same challenges and issues every American faces.

Regardless of salary, statistics show many Americans spend everything they earn. As dangerous as that is for the ordinary folk, it's even more so for athletes that are one injury away from a career being over.

Let's take a look at how these million-dollar bank accounts get reduced to zero.

Taxes

Yes, this is huge. Let's not forget about Uncle Sam. We all pay our fair share to the government, but with ultra high salaries comes ultra high tax bills. Every contract should be viewed as half of the actual amount. A player signs a $20 million contract, he will clear only $10million. I know, who can't live off $10million?

Divorce

Again divide by two. That player that signed a $20 million contract gets divorced; he will receive $5 million of that $20 million after taxes and a divorce settlement. During NBA careers, 90 percent of married couples stay together. Post NBA career, 18 percent stay together!

When a divorce settlement is reached, each walks away with half and legal costs are usually through the roof. Oh, and what if there are kids?

Child support

Depending on the number of kids an athlete has, child support can be extremely costly. Travis Henry, former Denver Broncos tailback, has obligations to pay $170,000 annually in child support. Remember, that is for one year and for one child.

Bad investments

Athletes all have them and they are lucky if they just have one. Read any story of an athlete going bankrupt and there will be a high probability of him having a bad real estate deal, a bar/restaurant that failed, a next "big thing" investment that busts, or a plain old risky investment in stocks and bonds that losses money.

Some athletes have services that pay their bills and handle all their business matters so they can focus on their sport. They trust people, the wrong people, and shell huge amounts of money for the "sure thing" investment. Money managers, CPA's, lawyers, and agents can grossly overcharge or outright steal without detection.

Unfortunately for an athlete, there is no high school or college course on how to live with and protect millions of dollars.

Most athletes are first generation wealthy; meaning their parents never had nor know what its like to have money. They usually are young, new to money, and often try to surround themselves with people they have been around their entire life- family.

An athlete can always rely on family right? Sadly, in many cases, it's the family members who put their own self- interests first. They put enormous amount of pressure on the athlete to be generous; reminding him he didn't get there by himself. Many times it's the buying of houses, cars, and expensive jewelry to show appreciation. Next thing you know, mom, dad, brother, uncle, and cousin are on the payroll. Financially it can be managed when the money is flowing in, but the real problem arises when taking care of family lasts a lifetime.

The average NBA player has a career span of 4.8 years; NFL is 3.2 years, and MLB is 5.6 years. It should be obvious that careers don't last forever. Unfortunately, that is not the mentality of an athlete. Athletes can't envision the body breaking down or getting old until it is too late. Spending habits form off the money that is currently coming in from paychecks.

They usually associate with other athletes or high spenders and tend to spend accordingly. They buy cars, houses, jewelry, clothes, and fancy dinners because there is almost nothing they can't afford at the time.

The years of undisciplined spending habits are too hard to break. Factor in taxes, divorce, child support, pressure from loved ones, bad investments, and unchecked spending, there is a perfect storm brewing for bankruptcy.

[Scott P]

Money management (regardless of income bracket) summed up in a few words:

Spend less than you make = good

Spend more than you make = bad

[rockgremlin]

1. Pay off debts. Maintain only the mortgage.

2. Put most of the rest of your cash into a HIGH DIVIDEND IRA. Mine currently yields 14%/monthly. It kicks ass. You're lucky to get more than 3% from the clowns at your local bank.

[IntrepidXJ]

Spend like there's no tomorrow...because there may not be...

:)

[JONBOYLEMON]

Mine currently yields 14%/monthly. It kicks ass. You're lucky to get more than 3% from the clowns at your local bank.


Ummmmmm, are you sure????

Cuz if you are getting 14% a month on anything, you need to send me a PM with how to do it!!!!!! Legal methods would be preferred....

[Iceaxe]

Rockgremlin invests with the firm Ponzi & Ponzi.

Sent using Tapatalk

[rockgremlin]

Ummmmmm, are you sure????

Cuz if you are getting 14% a month on anything, you need to send me a PM with how to do it!!!!!! Legal methods would be preferred....


Oh it's 100% legal. But you have to open an account with TD Ameritrade or Etrade or any other trading platform like that. Once you get that far let me know and I'll walk you through the rest. Don't get caught up in "day trading" penny stocks...that's a sure way to lose your shirt.

[Iceaxe]

Rock.... he was making fun of the 14% a month when I'm guessing you meant year.... cause if its really a month its either illegal or you are getting scammed.

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[Scott P]

Rock.... he was making fun of the 14% a month when I'm guessing you meant year.... cause if its really a month its either illegal or you are getting scammed.

Some of those payday loans really do (or did) work out to be 14%+ a month! :eek2:

[Iceaxe]

Some of those payday loans really do (or did) work out to be 14%+ a month! :eek2:

And that's my point.... if you used them you were getting scammed. Loan sharking has always bee a lucrative business.

FWIW: I'd like to see the government put those payday loan places out of business. The only people using them are people that absolutely shouldn't be.

[Iceaxe]

And just for fun....

DOW Average Monthly Performance Since 1929

Return in January has been 1.04%
Return in February has been -0.01%
Return in March has been 0.37%
Return in April has been 1.44%
Return in May has been -0.2%
Return in June has been 0.51%
Return in July has been 1.5%
Return in August has been 0.75%
Return in September has been -1.3%
Return in October has been 0.01%
Return in November has been 0.84%
Return in December has been 1.46%

[rockgremlin]

Rock.... he was making fun of the 14% a month when I'm guessing you meant year.... cause if its really a month its either illegal or you are getting scammed.

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Two corrections (I haven't logged into my account for a while).

1. Shane's correct - it is an annual dividend... :roll:

2. It's actually not 14%, but 21%. It's become my favorite savings account. It's performed flawlessly for almost two years now. I was carrying a margin balance for a while there, but the monthly dividend has paid it all off.

Anyone who stows their cash in a bank either must love the 2.75% interest they're getting, or love to pad the pockets of the greedy corporate banks.

[JONBOYLEMON]

OK 14% annually. These are High Dividend stocks? Seriously 21%?????

Also, I have a couple of brokerage accounts that I use, so I am set up and awaiting direction on how to get 21%!!

[Iceaxe]

Anyone who stows their cash in a bank either must love the 2.75% interest they're getting, or love to pad the pockets of the greedy corporate banks.

If you can find a bank paying 2.75% right now you are way ahead of the curve. Most at currently paying less then 1%.

[Iceaxe]

Awesome article well worth reading.

Average people think you need money to make money, but the rich use other people's money.

21 Ways Rich People Think Differently (http://finance.yahoo.com/news/21-ways-rich-people-think-differently.html)

[Deathcricket]

Awesome article well worth reading.

Average people think you need money to make money, but the rich use other people's money.

21 Ways Rich People Think Differently (http://finance.yahoo.com/news/21-ways-rich-people-think-differently.html)


"Meanwhile, the masses are convinced that master's degrees and doctorates are the way to wealth, mostly because they are trapped in the linear line of thought that holds them back from higher levels of consciousness...The wealthy aren't interested in the means, only the end."

That's a good quote right there. Great article! :2thumbs: