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Most people think that the quickest way to become rich is to increase their income as quickly as possible. Though this is important, it is not necessarily the first step you need to take in becoming wealthy. In his book: The Automatic Millionaire, best-selling author David Bach describes something he calls the latte factor. If you have any intention of understanding your money, or simply want to just manage your money better, you need to understand what the latte factor is. This one simple concept could literally change your life. Before we learn about the latte factor, there are a few basics we need to first cover.
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In part 1 of this series we looked at the cost of waiting when it comes to investing. An example of this showed that waiting only 5 years to invest could cost you literally hundreds of thousands of dollars over the long run. Many people want to pay off debt before they start to save. Figure 2 shows the excuse debt and how much it will cost to play catch up. For this example we will use a fixed total amount to save for, let’s say $500, 000 by age 65:
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Budgets don’t work. What? Then why the heck am I writing a post on how to create a budget? Budgets don’t work for the same reason diets, or new years resolutions don’t work. They appear to be too restrictive, oh yeah, and were lazy. We are inherently lazy and we like things to be easy rather than difficult, this includes me. I myself don’t like to use the “B” word, I prefer to call it “a guideline for money so that you don’t have to be a greeter at a department store during your retirement”. I’ll give some personal finance help and show you how to create a working guideline in 4 simple steps
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