Author: Money Maroon

Stay positive

Stay Positive And Being Positive

Money Maroon

It is amazing how much better our days are when we stay positive. It is simple, when you give off good vibes/energy, it is likely to return to you. Just think of how a smile will almost always be responded to with a smile. On the other hand, with a frown, you will likely get a reciprocal emotion in return. Achieve your goals and impact those around you by staying positive.

Staying Positive Is Not About Ignoring Reality

When you are being positive, it is really not about ignoring reality. The fact of the matter is, life is happening around us. While there are a lot of bad things on going, there is also the good. Here, we are not saying that there is always a bright side and that the worst of an event should be ignored. What we are saying is, stay positive, while acknowledging the not so pleasant part of life. 

It is important to understand the things that we can change and then take action to change these things to favor what it is that you are trying to achieve. Be present for what is taking place around you but stay positive and maintain perspective.

Stay positive, be positive

Staying Positive Is A Choice

No matter what is happening in life, it is your choice whether or not you will stay positive. Take as an example being cut off by someone on the road. Yes, the first reaction is to get angry, be upset and as it is common for many of us to pull up next to the person that cut us off to show our displeasure. Others may take it much further and that is where we see episodes of road rage. The above was all a choice. The decisions that we make have a direct impact on our lives and the lives of those around us.

Let us approach the above situation differently. Following being cut off, you could choose to stay positive, be thankful that you did not get into an accident and continue on your way. Note that being cut off is only a few second of your day. You have so many more thousands of seconds in this day. Do not allow an action by another to ruin the rest of your day or your life. It is really your choice. 

Stay Positive  And Create Opportunity

Have you realized how difficult it is to be creative when your mood is in the gutter. If you accept that there is no way out of a situation or dwell on the worst of a situation, you will never be able to lift your head up to see all the opportunities. It is only when you stay positive and keep perspective, that you are able to fully appreciate the entirety of a situation and be able to formulate a plan to take advantage of what is available.

In some instance, instead of focusing on what you do not have, focus on how lucky you are to have what you do. Then go and make use of what you have to exploit the opportunities present. Further, do not focus on your failures, learn from them. Stay positive and learn where things went wrong and adjust your strategy and approach accordingly. Stay positive and see a learning opportunity in everything that occurs in life, good or bad.

Your mind is a powerful tool. If you stay positive, you not only affect those around you, but also those around those who are around you. One person does make a difference, choose to be that difference. Start by having a positive attitude.

Conclusion

It is amazing how much better our days are when we stay positive. It is simple, when you give off good vibes/energy, it is likely to return to you. Just think of how a smile will almost always be responded to with a smile. On the other hand, with a frown, you will likely get a reciprocal emotion in return. Achieve your goals and impact those around you by staying positive.

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Stop dreaming start doing

Stop Dreaming, Start Doing Now!

Money Maroon

We all dream about having a better life. Our dreams may be to have more money, better health, more time with family, or having physical possessions. However, if you do not stop dreaming, you will never achieve these goals. While dreaming is a great first step, get up, take control, stop dreaming and start doing. Go! Start today!

Stop Dreaming

You have an idea of what you want to achieve, you have been thinking about it for days, months and maybe even years. But you have not taken the step to move forward to achieving that goal. Why?

Typically, when we have our dreams, something else happens. Once the dream ends, and we have a thought about achieving it, it is only normal for us to begin envisioning all the possible road blocks. For example, you may want to be wealthy, but all you see are the debt, and expenses that you may currently have. It is also possible that you will reflect on your salary. This in effect result in you doing nothing and taking no action. You make no move at all and continue dreaming.

Well, if you take no action, you will only have the dream. You must take action, small steps toward achieving your goals.  

Fear Of Failure

While some people do literally fear failure, as in, I do not want to try a new task because I literally do not want others to see me  fail, because I care so much about what others think. Many of us have a fear of failing that cannot be express so easily. It is a paralyzing feeling of not wanting to venture out side of our comfort zone. 

To achieve goals, it is important to stop caring about how others view you. Move toward achieving your version of success. Second, if you stay within your comfort zone, you will say where you are in life. If you are happy with where you are currently, then stay in your comfort zone, but while you stay where you are, others around you will constantly be changing. Others around you will be moving toward their goals.

On the other hand, if you are not happy with where you are in life, hence, you are having a dream in the first place, you must move outside of your comfort zone. You must take a chance and bet on yourself. Adapt a growth mind set and get growing.

Stop dreaming - start doing
Stop dreaming – Start doing.

Start Doing – Stop Dreaming

On any journey, it all begins with a first step. Then another step, and then another. Rarely do you hear a story of someone achieving their goals within a day, it takes time, it takes planing, it takes learning, it takes setbacks, it takes doing and doing. But it all begins with taking a first step.

Take that first step today. Do it now. While Rome was not built in a day, it was built by laying that first stone. Jeff Bezos did not become the Jeff Bezos that we know today by sitting back and dreaming, it took having a dream and taking action to make the dream a reality. It also took having failures about believing in yourself and pushing forward.

Taking A First Step

Whatever your dream, begin by taking a simple step today. That simple step could be taking the first step in designing a plan, which could encompass an immediate goal, a medium range goal and a long term goal of achieving your dream. Keep in mind, your dream and plans need not be static.

Your dream and the plans to achieve it will most likely be adjusted and modified on the journey. Things change, your priorities change, and so will your dream. But to achieve anything in life, you must take a first step and there is no better time for starting on such a journey than right now. Stay motivated!

Conclusion

We all dream about having a better life. Our dreams may be to have more money, better health, more time with family, or having physical possessions. However, if you do not stop dreaming, you will never achieve these goals. While dreaming is a great first step, get up, take control, stop dreaming and start doing. Go! Start today.

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Maintaining wealth

Maintaining Wealth: Generational Wealth Part: 2

Money Maroon

Each part of your financial journey is the most difficult part. But typically, even more difficult than accumulating wealth, is maintaining it. There are a lot of articles and podcasts about accumulating and building your net worth, but very little information is provided about maintaining what you have accumulated. But the same principles that will help you to accumulate, will also help you to maintain your riches.

The secret to maintaining your financial position is to perform and maintain the habits that got you where you are today. You must live below your means, save, and invest. Let us dig  into this a bit more.

Maintaining your wealth

Maintain Wealth By Living Below Your Means

If you did the hard work of accumulating the abundance that you enjoy today, and thereafter believe that you have arrived and now begin to live above your means, you will lose what you have accumulated in an instant. To maintain your financial position, continue to live below your means. Imagine having two million dollars and purchasing a million dollar home and a new car.  If you are foolish enough to take the described actions, your financial holdings will immediately take a significant hit. Further, if you also decide to upgrade other areas of your life, it is only a matter of time before you begin to live pay check to pay check. 

Do not fall into the trap of keeping up with the jones. Do not fall prey to the trappings of others. You lived below your means to accumulate what you have, live below your means to maintain and grow your wealth.

Continue To Save

To achieve financial independence, you must save. To maintain your financial independence, saving is also a necessary step. If you are spending all that you make, unexpected expenses will slowly over time eat away your wealth. The fact is, life is unpredictable. A car will break down, your heater will go out, you may lose your job, you may need a new roof. You just never know what will happen next. One thing is certain, life can be expensive. If you have gone through the effort of sacrificing and building wealth, do not blow it. Continue to save and maintain your financial cushion. The goal is not only to accumulate wealth, the goal is to maintain your wealth and enjoy financial freedom.

Grow Wealth By Investing

Saving alone will not bring you to financial independence. You must also invest, in other words, have your money work for you. Having your money work while you sleep is a sure fire way to maintain your financial position. It is important to note that the vehicles that you used to accumulate your wealth can also be used to maintain your riches. But typically, your investing strategy will be changed somewhat. You may not have the appetite to be as risky as you age over time or you may try to ensure that you have a better bet of maintaining rather than loosing it all in the financial markets. In other words, you may not be as aggressive with money in hand once you have achieve financial independence.

Once you accumulate your wealth, do not simply hide your money in the backyard or under the mattress. Do not allow inflation to erode your wealth, have your money continue to grow.

Keep Doing What You Are Doing

The same things that you have done in the accumulation phase is essentially the same things that you will need to do in an effort to maintain your accumulated wealth, but with some strategy changes where needed. Do not be satisfied with accumulating wealth. This is not the goal. Keep in mind that maintaining wealth and enjoying financial freedom until the end of your days on this planet is the goal. Build wealth and maintain it.

Conclusion

Each part of your financial journey is the most difficult part. But typically, even more difficult than accumulating wealth, is maintaining it. There are a lot of articles and podcasts about accumulating and building your net worth, but very little information is provided about maintaining what you have accumulated. But the same principles that will help you to accumulate, will also help you to maintain your riches.

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Generational wealth

Building Generational Wealth: Part 1

Money Maroon

At a certain point, we should take a step back and stop thinking about ourselves, and begin to think about our legacy. We should begin to think and live in such a way so as to build generational wealth. Luckily, if you are living a life with your financial future in mind, building generational wealth does not take much effort. Just keep on doing what you are currently doing. Know that each action you take today is not just for you, it is for those who will come after you. Build a stable foundation and provide a spring board for those who come after.

Generational Wealth Begins With You

No matter how rich or poor you are today, building generational wealth begins with you. If you are wealthy, learning how to grow, maintain and not completely erode your wealth is important. If you are poor, start today to build a stable foundation. Rich or poor, to build generational wealth, you must have something to pass on to the next generation. It takes, saving, investing and reducing your debt. The same concepts relevant to you building wealth, are vital for keeping and passing on wealth.

Increase Your Wealth

When it comes to saving money, the math will never work if your expenses are higher than your income. To reduce expense, consider moving to a smaller home to reduce rent/mortgage, moving closer to work to reduce the cost of commuting, bringing your lunch to work, stop/reduce eating out, cut your cable or other subscription costs. But do not forget the other side of the equation.

To increase wealth, do not only reduce debt, also increase your income. For example, work toward a raise, invest in your education and return to school/learn a skill to get a better position or research a side hustle that may provided additional income? The goal is to increase your income such that your income is higher than your expenses. 

Begin Saving

If you have gotten your income above your expenses, it is time to save. Many fall into the trap of spending their disposable income each month. Do not fall into this trap, remember, your goal is generational wealth, not to simply reduce your expenses and increasing your income. Your goal is to save and grow your wealth. So save your money.

There are a number of tools available that facilitates saving money. For example, you can automate your savings by automatically transferring money from your pay to a savings account or you may save in a high yield savings account that provides higher interest rates than the typical brick and mortar banks. Research the options available to maximize and grow your savings. Further, to consistently save, while it is not required, a budget may provide a financial guide.

Saving Money And Your Future

Now that you are saving, do look towards the future and your financial health. Look to paying off debts, investing, and contributing to your retirement. Saving is only the first step on the path to growing financially and financial independence.

Generational Wealth Is Built On Investing

Generational wealth is built on investing. Investing in your future is an extension of investing in yourself. Once you begin to look to the financial markets, look to learning more about the opportunities that are available to you. Educate yourself.

Retirement

No matter your age, begin thinking about your retirement and related investment options. In thinking about your retirement, you will no doubt hear about traditional IRAs, roth IRAs, SEP, roth 401Ks, 401Ks, 403Bs, 457Bs and TSPs to name a few. Do not simply get lost in the alphabet soup of different retirement plans. Do your due diligence. An investment in your retirement plan education is invaluable to your financial future.

Do Not Give Up Free Money 

If you have access to an employer match, take advantage. Employer 401K match can come in a variety of shapes and sizes. In one instance, the employer will match a portion of your contribution up to a limit. Typically, this limit is represented as a percentage of your salary. In some instances, an employer may match your contribution if you contribute or irrespective of if you contribute.

If your employer provides a 401K match only if you contribute to your 401K, ensure that you are contributing at least up to that threshold. An employer 401K match is free money. Take advantage. Free money will only turbo charge your journey to building generational wealth.

Generational Wealth Is Investing In The Future

Generational Wealth
Generational Wealth

Think about your legacy, your children and their future. To put your kids on the right path and build generational  wealth, think about a 529 plan. By contributing to a 529 plan, you are able to offset some or all costs associated with a college education. In many States, two 529 plans are available, an investment plan or a prepaid plan.

  • The investment plan allows you to contribute by buying and selling shares offered by the State or the State’s agent (similar to investing in the stock market).
  • The prepaid plan is based on the cost of attending a college. Here, you are prepaying the cost of attendance.

While 529 plans are not deductible on your federal tax filings, many States allow you to deduct a set portion of your 529 contribution from your State tax filings. Essentially, your State may be helping you to build generational wealth.

Conclusion

At a certain point, we should take a step back and stop thinking about ourselves, and begin to think about our legacy. We should begin to think and live in such a way so as to build generational wealth. Luckily, if you are living a life with your financial future in mind, building generational wealth does not take much effort. Just keep on doing what you are currently doing. Know that each action you take today is not just for you, it is for those who will come after you. Build a stable foundation and provide a spring board for those who come after.

In part 2, we will discuss how to maintain wealth.

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Father's Day

Have The Father’s Day Money Talk

Money Maroon

For father’s day, instead of falling into the commercialization trend, let’s make our fathers proud. Have a father’s day money talk. This talk will not only impact your father and show him that you are thinking about his future, but will also help you organize yourself to better care for him.  Buying shirts, cards, or tools is a nice gesture. But having a financial chat with dad is impactful. Be impactful on this father’s day and show dad how much you truly care.

The Sacrifice

On this father’s day, remember the financial sacrifices that your father has made over time. Think back to how much your father worked and his pains. Yet, he continued on. While you are at it, it should become very clear why some people stay at jobs that they hate. At times, some people will stay at jobs that they hate in the name of love and responsibility. He did it for you.

Father’s Day And Financial Education

Many have the luck of having a dad that inspires. For some, this is manifested in financial success or the search for financial success based on lessons learned. For example, save, invest, live below your means. It may be in the form of literal education or an education based on observation. Was it his struggle or was it his drive and position as an authoritative figure who did what was best for the family that motivates you to become financially independent? For some, it was the unfortunate mismanagement of finances that provided the teaching lessons that motivates today. Whatever your reason, I am confident that your father contributed and continues to contribute to your reasons for reading a financial independence blog and this article.

While your father may not be your biological father in the context of the man who took care of you, we all have a father, show him that you care.

Father's Day
Happy Father’s Day

Having The Father’s Day Talk

With all that your father has done to influence your financial life, it is time to have a father’s day money talk. Check on his current financial situation and his future plans. Although it may be difficult to talk to family about money, it is important to start.

Previous generations had the now acclaimed three legs to their retirement stool: (1) personal savings, (2) social security and (3) a company pension. Over the years, the three legs have been significantly weakened.

First, many have very little to no personal savings; second, as it currently stands, the social security program is teetering on the edge of insolvency; and  third, for the most part, company pensions are a thing of the past. Taken together, the baby boomer generation have little saved for retirement, no pension plan and are dependent on social security. This is the reason for the talk.

The Talk

To have the money talk with dad, there is no reason to be aggressive. Do not forget that it is father’s day. If you approach your father’s finances aggressively, your father is likely to get defensive. The point here is to begin a conversation or continue the conversation such that you know where your dad is financially. More importantly, these conversations will aid your financial planing.

We cannot control what another person does, especially our parents. However, if we can make them aware of potential issues that may be on the horizon, maybe they can and will take action to change course. 

The fact is, you as the child may be responsible for your parents during retirement. It is important that you begin taking steps to mitigate the impact on your financial future by talking to your dad this father’s day. 

The Best Father’s Day Gift

For most of us, as adults, it becomes a struggle to get the perfect gift for dad. Guess what, you have most likely provided a lot of his material wants over the years. There are only so may cruises, trips, tools, shirt or gadgets that you can gift dad. At this point, the best father’s day gift may be just showing that you care by having an important conversation. Instead of gifting something that will be used for only a day or a month, have an impactful financial conversation.

Conclusion

For father’s day, instead of falling into the commercialization trend, let’s make our fathers proud. Have a father’s day money talk with dad. This talk will not only impact your father and show him that you are thinking about his future, but will also help you organize yourself to better care for him.  Buying shirts, cards, or tools is a nice gesture. But having a financial chat with dad is impactful. Be impactful on this father’s day and show dad how much you truly care.

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Amazon prime day

On Amazon Prime Day, Ask These Three Questions

Money Maroon

It is back. Yes, it is that time of the year again, it is amazon prime day. The annual two day deal event that is exclusively for prime members. But before you hit the checkout button and reach into your wallet or bag for your credit card, ask yourself the following three questions. Do I really need this item? Can I afford it? How many days will I have to work to pay for this item. Do not buy just to buy, be intentional and logical with your purchases. It is your hard earned money after all. 

Amazon prime day
On amazon prime day, think before you spend

Do I Really Need This Item

So often we buy items because we think we need it. But do we really understand what is a need versus a want? Generally, a need is something that is a necessity or essentially required for life. For example, food, water, and shelter are needs. In some instances, the list can be much broader depending on your specific situation. But if you are hoping to take advantage of an amazon prime day deal, it is likely that the item you are planing to buy is in the category of a want. 

A want is something unnecessary but desired. For example, while you may need a car, do you need a luxury car? We all need shelter, but do you need the home that is at the top of your budget? Do you really need the new fancy gadget for your grill or your car? The answer is no. It is not a need, just a want. What is actually interesting is that a lot of times, we may desire an item, but once we have that item, we will rarely use that item.

Many factors contribute to your wants. Did you fall victim to a commercial or was it something you saw in your neighbor’s yard? Your want for an item may also be a matter of the fear of missing out. The fear of missing out will at times push us to buy when we need not do so. Before pulling the trigger on a purchase, remember not to buy just because something is on sale. Assess whether or not the item is a need. Does it make sense? For all you know, next week, the special sale that appears on amazon prime day will be back. Do not allow a manufacture sense of scarcity and pressure force you to make a purchase.

Can I Afford Amazon Prime Day

When thinking about taking advantage of amazon prime day, always ask the question of can I afford it. No matter what the sale prize is or the discount percentage, ensure that you can afford it. Being able to afford something is very different from being able to purchase the item. You can use credit to purchase just about anything. But can you actually afford what you are buying.

Do not be tempted to put something on a credit card that you cannot afford. You do not want to have an amazon prime day purchase made this year that is not paid in full next amazon prime day. Credit cards are expensive. Take a look at your interest rate. Ensure that if you make a purchase on credit, you are able to pay it off in full without having to pay interest.

Can you afford your next purchase? Be honest with yourself. If the answer is no, know that it is ok. Because there is a sale does not mean that you have to buy. Keep your financial future in mind.

How Many Days Will I Have To Work To Pay For Amazon Prime Day

It is a question that is rarely asked but should be asked before every major purchase, especially on amazon prime day. The question is, how many days will I need to work to pay for this item? For example, if the item costs $500, and you are paid $30 an hour, it will take you 16 hours of work to pay off the item, two days of work. If you are making significantly less than $30 an hour, you may have to work for over a week to pay for the item. Now consider if the item or items total over $500, it may take you a lot longer than a week.

Now, is this item that you are thinking of purchasing worth a week of work? Is it worth it? If the item is a need, then it likely is. However, if you are about to purchase a want, take into account the costs. With regard to costs, consider not only the money, but also your time.

Before you consider making a purchase on amazon prime day, ensure that you are not succumbing to a manufacture sense of scarcity and pressure.

Amazon prime day
On amazon prime day, don’t forget that it’s your money

Conclusion

Amazon prime day is here again. The annual two day deal event that is exclusively for prime members. Before you hit the checkout button and reach into your wallet or bag for your credit card, ask yourself the following three questions. Do I really need this item? Can I afford it? How many days will I have to work to pay for this item. Do not buy just to buy, be intentional and logical with your purchases. After all, it is your hard earned money. 

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Compounding interest

Compounding Interest, It’s Magic!

Money Maroon

Do you like free money? What about increasing your wealth over time by doing absolutely nothing? I figure that your response to both is yes and yes. Well, I am here to tell you about the so-call eighth wonder of the world, “compounding interest.” It is simple, very logical and does not take much to understand or implement as part of your financial toolkit. In many cases, it is automatic. It is the reason why you should start saving and or investing early, and the reason it is never too late to get on the right financial track. By understanding compounding interest today, you can be financially secure tomorrow.

What Is Compounding Interest

Compounding interest is the addition of interest to the principal sum of a loan or deposit. In the context of saving, this is the reason why it is so important to start saving and or investing early. In its simplest form, it is interest upon interest. It is a beautiful thing when you are saving and investing. However, compounding interest can be detrimental if you are in debt.

Compounding Interest As An Asset

As an example, if you earn 8% return on your savings/investment on a yearly basis, after the first year you will have a total of your initial amount plus 8% of that initial amount. If you began with $100, you will have $108 at the end of year 1. However, look at what occurs over time. At the end of year two, you will have the amount at the end of year 1 plus 8% of that amount. Essentially, you have earned interest upon interest. In our example, you would now have approximately $116 at the end of year 2. At the end of year 3, 4 and 5, you would have approximately $126, $136 and $146 respectively. In 5 years, you would have earned $46 just by saving/investing.

Imagine if over that 5 year period you continued to save and or invest to grow your principal. Your return would be significantly more. Compounding interest is the reason why someone who saves and or invest at the age of 25 to 35 and stop will likely have significantly more for retirement than those who invest significantly more from 35 to 55.  Compounding interest is the reason for a number of sayings, for example “it is not timing the market, it is time in the market.” With compounding interest, time makes all the difference.

To drive this point further home, in our example, in 20 years your $100 principal would turn into $466. If the total after 10 years is not impressive enough, in 50 years, your return would be a whopping $4,690. This total is from having $100 growing without contributing anything additional. Crazy isn’t it? Check out the US securities and exchange commissions’ Compounding Interest Calculator. Play around with the numbers, and see what happens when you not only save/invest, but also continue to do so over time.

Compounding Interest

Compounding Interest As A Liability

In the context of debt, compounding interest is the reason why it is so important to eliminate debt early. It is the reason why your student loan balance increases while you are still in school or in forbearance. It is also the reason why you hear so many stories of folks who have been paying down debt for years and have made no progress. How do you pay minimum payments on a debt for 10 years and still owe more than the original amount? The answer is simple, the answer is compounding Interest. 

The interest rate on your debt matters, and so does the time that you take to pay it off. Compounding interest is why you are typically advised to pay more than the minimum payment on debt. The faster you pay off your debt, the less time there is for the interest to compound, the less total debt you will have to pay.

Your Advantage

Now that we have tackled the issue of what is compounding interest, to have compounding interest work to your advantage, pay down debt and begin saving and or investing today. The sooner you begin to save, invest, and pay down your debt the better financial position you will be in. Compounding interest is often called the eighth wonder of the world because once the momentum begins, it is hard to stop. For better (when you save and invest) or for worst (when you are buried in debt).

Our discussion should give you the imagery of a snow ball building in size. The snow ball begins small. When small, the snowball is insignificant and can easily be stopped and disposed of. However, over time, as the snowball continues to roll downhill and  adds layers, it becomes a monster that cannot be controlled or stopped. That is compounding interest, use it to your advantage and achieve your financial goals.

Begin small, be consistent, and build over time to become financially unstoppable.

Conclusion

We all love simple and beneficial concepts that can be easily integrated into our life. Compounding interest is simple, very logical and does not take much to understand or implement as part of your financial toolkit. In many cases, it is automatic and works like magic. It is the reason why you should start saving and or investing early, and the reason it is never too late to get on the right financial track. By understanding compounding interest today, you can become financially unstoppable tomorrow. Journey to financial independence.

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Summer time

Summer Time Is Money Time

Money Maroon

It is summer time again. While this time of the year is not packed with costly holidays where you risk over spending to impress another with presents, be careful. Summer can easily become a time of the year where you overspend. Summer is the time for grilling, summer vacations and out door activities. In a year of pent up demand for leaving home, the costs of this year’s summer time activities can add up very fast. Stay focus and keep your financial goals in view.

Vaccines And Summer

With covid19, the summer of 2020 was unlike any other. For the most part, we all stayed in and only mingled with those in our household. Not a lot of traveling, and not a lot of vacations. Lots of unintentional savings were made in 2020 as we spent significant time with our immediate families. For some, financial plans were derailed because of loss jobs. However, this year is a bit different when compared to last year. With the roll out of covid19 vaccines, we are moving closer and closer to normal. Mask mandates are relaxed and traveling is picking up.

As we return to normal, so will our spending. Our overspending will also likely return to  normal or accelerate. With more to spend and the deviation from the norm that was 2020, it is only natural for us to want to get back out there and enjoy this summer. But this can get very costly.

Sumer, put your feet up
Summer Time – Money Time

Cost Of Summer

If you are planning to travel, I would encourage you to take a look at airline fares and plan ahead. Travel related prices have increased significantly. While the airline industry lost  billions last year, you better believe that they are looking to profit this year. Further, with increased demand, it is likely that your travel costs will be significantly more expensive than years prior.

Hotels, are operating similarly to airlines. This year, there will be increase demand compare to 2020. Many families will try to hit the road and get out and away from home.  Overall, supply may be lower because of those business who have gone out of business due to covid19, but demand will significantly increase over last year. As supplies decrease and demand increase, prices will also increase. Further, take into account that hotels will try to make up for last year’s short fall and you will be paying a heavy price.

Now, if you are not traveling and want to stay home, the cost of meats for grilling has increased, the price of gas has increased. Again, because a number of business went out of business because of covid19, the supply chain has been disrupted. Again, the law of supply and demand means as we go back to normal, prices will rise as demand rises.

Save This Summer

You have survived covid19 and for the lucky ones, you have saved if you were able to keep employment. As we return to normal, do not forget your financial goals. While your financial goals may have been derailed or accelerated in view of the covid 19 pandemic, do not lose focus. Your actions today will be amplified tomorrow. The financial decisions you make today will affect your finical life in the future. Take steps today to rein in your spending and continue on a journey to financial independence.

If you were able to save during 2020, save during 2021. Do not stop. Maintain or increase your saving/investing rate. Know that  you are in control and if you were able to do it in 2020, you can do it in 2021. You are in control.

Conclusion

It is summer time again. While this time of the year is not packed with costly holidays where you risk over spending to impress another with presents, be careful. Summer can easily become a time of the year where you overspend. Summer is the time for grilling, summer vacations and out door activities. In a year of pent up demand for leaving home, the costs of this year’s summer time activities can add up very fast. Stay focus and keep your financial goals in view.

Life is what you make it. If you were able to take the steps to survive covid19, this summer, take the steps to secure your financial future and achieve financial independence.

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Pay yourself first

It’s Best To Pay Yourself First

Money Maroon

If you are working and cannot afford to save, it may be time to take a step back and pay yourself first. From any pay check, no matter the value, it is incumbent upon you to ensure that a first portion of your pay check goes into your personal account. If you cannot trust yourself to perform this task consistently, automate. The simple fact is, if you are not paying yourself,  you are working to pay others. You are essentially building another person’s empire while neglecting your own.

Why Pay Yourself First

You should pay yourself first because if you do not, you run the risk of not paying yourself at all. Have you ever received a paycheck and after paying all your bills, you have a zero or a negative balance? Have you had money in your account after paying your bills, and that money quickly disappears due to frivolous spending? 

These situations occur when you do not pay yourself first. If you do not pay yourself first, it is likely that you will end up not budgeting and over spending, or you will simply spend what you have because you have not assign a task to that money.

By paying yourself first, it forces you to budget. For example, if your monthly salary is  $5000, and you automatically pay yourself by saving $1000, you really have $4000 to spend for that month. That $1000 makes a huge difference. You will no doubt adjust to having $4000 and will stop thinking about making $5000 per month. By having this mindset shift, you will live on $4000 and not $5000. By paying yourself first, you will force yourself to live below your means and budget accordingly.

Pay yourself first
If you are not paying yourself first,  you are working to pay others. Stop building another person’s empire while neglecting your own.

Force Budgeting

For many of us, budgeting can be difficult. It is difficult not because it is a mentally difficult task. It is typically difficult because if forces us to track our spending over a long period of time. Budgeting forces us to itemize what we are doing and forces us to be conscious of every purchasing decision. 

By paying yourself first, we are pushed to budget without actually making a budget. In the example above, if you are paying yourself $1000 per month on a $5000 monthly salary, you must now live on $4000 per month. You are in a force budget situation. You are forced to curb your lifestyle from one that spends $5000 per month to one that spends $4000 per month. This is not an easy feat for many, but it can be done. By cutting out a few items, you will be surprise by how much you can save.

If you do not budget and live beyond your means, paying yourself first becomes a moot point. The interest on your debts will easily out pace your savings. To get ahead on your financial journey, it is important to live below your means. Paying yourself first helps facilitate this mindset change.

Pay Yourself First And Build Your Empire

Let us not forget, if you pay yourself first, you are building your financial legacy and not someone else’s. Think about shopping at Walmart, buying a car, or any other consumer goods, by making that purchase your are making someone else’s family rich. If it is not the Waltons, it’s the Porsche’s or the Cargill’s, by spending you may be enriching the Dell’s or the Knight’s. You may get a fleeting enjoyment from your purchase, but someone else’s family just got your money. Your temporary satisfaction is building another family’s permanent wealth.

However, if you pay yourself first, your are building your own empire and not someone else’s. Pay yourself first and you are growing wealth. Money that you typically spend on consumer goods go to your investment/savings account. You are growing, you are opening up opportunities and will be afforded all the advantages that comes with being financially secure. Pay yourself first and lay the foundation for a financially secure future.

Conclusion

If you are working and cannot afford to save, it may be time to take a step back and pay yourself first. From any pay check, no matter the value, it is incumbent upon you to ensure that a first portion of your pay check goes into your personal account. If you cannot trust yourself to perform this task consistently, automate. The simple fact is, if you are not paying yourself,  you are working to pay others. You are essentially building another person’s empire while neglecting your own.

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Billionaire

The Billionaire And You

Money Maroon

The word billionaire is thrown around daily. But have you actually stop to think about what it really means. Yes, being a billionaire is having more than being a millionaire and who would not want to be that wealthy. But by comparison, what is the billionaire status compared to the average person. When you look at a comparison, it is truly mind boggling.

The Billionaire Compared To The Average Person

To get a full and clear understanding of what it means to be a billionaire, let us compare to the average household. In this comparison, we use the median household income because the median provides a better representation of central tendency as compared to the mean. Essentially, the median income gives us a better view of the average household income because the mean can be skewed by those in the super rich/super poor.

The median household income was $68,703 in 2019. In most parts of the US, the cost of rent/mortgage + child care would easily exceed this amount. But let us put this total in the context of a billionaire. If we do the simple math of $1 billion divided by $68,703, it tells us that it would take a person/family making $68,703 a year 14555 years to earn $1 billion. To be clear, it would take a household making the median income over 14 thousand years to earn a billion dollars. This is absolutely eye opening.

This further demonstrates why it is so financially dangerous to try and keep up with the Jones. The wealth disparity between you and the Jones can be so vast that it can take thousands of life times to amass comparable resources.

Billionaires

When we talk about billionaires, we must acknowledge those who have risen to this level of wealth. This includes Jeff Bezos, Elon Musk, Mark Zuckerberg, Warren Buffet and Bill Gates. These individuals have done extraordinary things and do deserve their wealth. But you can’t help but ask, when is enough, enough? With such accumulation of wealth, what is the plan? We know that if these individuals try, it would be a monumental task to try and succeed in spending all this money. No matter the interest rate or the return on investment, a billion dollars will accumulate so much on a yearly basis that it is really almost impossible to dispose of such sums of money. Not too many billionaires go broke.

Billionaire Fortunes Since The Pandemic

As our conversation about billionaires continue, it becomes factually crazy that many of these individuals have increased their wealth during the pandemic. For example, Jeff Bezos is reported to have increased his wealth by about $70 billion and Elon Musk has reportedly increased his wealth by about $132 billion. While the math is simple, the more you have the more you can make, it is mind blowing to imagine the difference between someone of Jeff Bezos’s wealth and that of the median household. It is a matter of $187 billion vs $69 thousand ($187,000,000,000 vs $69,000). The difference is a lot of zeros.

While the average household is thinking about mortgage/rent and child care, billionaires are thinking about legacy. And why not, the financial difference is truly a sight to see. The simple fact is, the purchase of a mega yacht to a billionaire may be comparable to you purchasing a shoe. While the cost matters, it does not change your life financially. Keep this in mind the next time you hear of someone purchasing a mega yacht, helicopter or an island. The billionaires can afford it.

Billionaire
I want to be a billionaire, don’t you?

Conclusion

The word billionaire is thrown around daily. But have you actually stop to think about what it really means. Yes, being a billionaire is having more than being a millionaire and who would not want to be that wealthy. But by comparison, what is the billionaire status compared to the average person. When you look at a comparison, it is truly mind boggling.

So why did we write this article. We wrote this article to show that we sometimes do not truly appreciate the sums of money that we discuss on a daily basis. It is only when we break it down and compare do we begin to see the full scope. Next time you hear/see the term “billionaire” realize that it would take the average household over 14 thousand years to earn that sum. 

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