Smart Saving and Investing

Whether it’s for the love of money or being in love with money. A really great way to love your money is to let it go.

What I mean here is to set your money free into an automatic mode that allows you to concentrate on the important things in your life.

Yes, we’ve setup an automatic online savings account as described in action one so we are in good shape when we need that “emergency” or “rainy day” money when bad things happen to good people - water heater breaks, furnace, deductible needs to be met, etc.

We’ve set up our retirement plan at our employer and money is flowing from our paycheck to our retirement plan automagically.

We’ve opened up a Roth IRA somewhere and setup an automatic deposit, purchasing the same amount of shares of designated mutual fund(s) a month. This is also called dollar cost averaging.

So what’s left?

Well, what else can you put on automatic pilot that has to do with your money world so you can quit receiving paper bills in the mail and start making this world a greener place?

Let’s start with your bills that come in every month. Can you get started on a level payment plan with your utilities - gas and electric? You could sign up for a level payment plan and have your utility bills paid directly out of your checking account every month. If you don’t lke level payment plans then pick your own amount as long as it covers your utility bills. Don’t pay too much though because remember we want as much money to invest with.

Here’s some more bills to put on automatic pilot:

• Cable TV (are you still watching cable TV?)
• Phone
• Internet access?

Which takes me down a path of questions:

• Do you pay for cable TV?
• Do you have a landline phone and a cell phone? Why?
• Do you pay to have internet access on your cell phone?
• Do you pay for text messaging on your cell phone?
• Do you pay for internet access?
• Do you go to the movies in addition to all this?
• Is all of this paying for itself?
• In other words, do you make enough money to pay for these items?
• Do these items bring you income? If not, these are all entertainment devices. That’s right. Think about it. Just another way to divert your attention to what you could or should be doing to make your life more better financially.

That’s a lot of entertainment folks!!

Credit Card Bills - Are any of these on automatic pilot? Do you allow the credit card company to hit your checking account and retrieve the necessary payment monthly plus a little bit more so you can pay it down quicker? Or do you have it setup so an automatic payment goes out of your checking account on a set date every month for a set amount?

Credit Card Applications - Do you get boat loads of credit card applications in the mail? If you’re not looking for one then immediately shred these bad boys. Buy one of these shredders or search for your favorite and put it in your garage or right next to the first door you walk in after you’ve brought in the mail. Shred, Shred, Shred!!

I prefer confetti style shred to better protect your personal information. Also, you don’t need to shred the whole application, just the page(s) that have your personal information on them.

While you’re at it you might as well throw away those coupons that save you so much money on things you don’t need. Do you really need to go to that new steak house across town by the 18th this month and plop down $50.00 for dinner to get $5.00 off? Couldn’t you grill out for a lot less and make it a bit more intimate for you and your lovey dove?

By the time you make it from your car inito your house you should only be holding the absolute necessary mail (bills, magazines, etc.) you want or need.

written by Bill Stevens

For a lot of young folks Thursday nights start the weekend party.

When I was in my twenties in college and after college, my friends and I were out and about either in a nightclub participating in the atmosphere or providing the atmosphere since I was a musician back then.

When you’re young it’s very easy to do this because you’ve got that never-ending energy that keeps you going for days on end with very little sleep. This also explains why some consider every night a weekend night. Reminds me of one of my daughters.

These activities also might explain why you don’t have any money to save automatically or invest automatically. Well, a good replacement for these Thursday night outings and saving a bunch of money is to get involved with a volunteer program of some sort or go help out every Thursday night at your local homeless shelter.

I did this almost every Thursday night for two years in my thirties. I would go straight from work which was only about a mile away from the local homeless shelter. Mostly it was to wash dishes and organizing the supplies in the basement of the shelter. I also made sure I was there for Thanksgivings as well where you mostly wash dishes.

A lot of times people who volunteer think they’re going to do some wonderful part of the job like serving the homeless food and possibly make it on the local news displaying their goodwill for all to admire, but typically people are needed to do the most mundane jobs - like washing dishes or organizing supplies in the basement. They’ll probably remind you that they need help all year round and not just one day or night a year.

So, go find something to volunteer for on Thursday nights when you might typically spend money. If you have spent money foolishly on Thursday nights, take that money and save it automatically online or invest it in your Roth IRA like we’ve talked about in the three actions.

Another good idea to do with the money you save by not going out on Thursday nights is to start writing down now, in August of 2007, what you’re going to spend on holiday gifts this year.

Make a list of all the people you need to buy gifts for and use some of your Thursday night money that you save NOT going out and partying but for holiday gifts. Keep in mind that the presents you buy and give won’t be remembered as much as the time and attention you provide people during the holidays. This should help you determine how much to spend on holiday presents. Especially if you have kids. They will NOT love you less if you don’t buy them the biggest and best present of all.

Try asking the people you gave presents to last year what you gave them or what they received from so and so. Some folks can’t even remember. Then ask them what kind of memorable moments they had during last year’s holidays. Hopefully they remember the time shared with you and other loved ones.

Think and list what kind of memorable moments you want to create this Christmas that don’t include buying and giving expensive gifts.

written by Bill Stevens

Here are three ways to save money in marriage:

1. You have an online savings account in your name only
2. Your spouse has an online savings account in their name only
3. You both have a shared online savings account in both names

3. A Shared Online Savings Account

I’m starting in reverse order but first in importance. This is the main account that gets funded first. It will contain the emergency or rainy day money that will help you survive as a couple and as a family when bad things happen to good people. Like the water heater breaks down, you have a fender bender and you have to pay the insurance deductible.

This account is funded automatically every pay period from both of your incomes before paying any bills and right after you get paid. Remember, this is the “What would it take to cover your living expenses for 3-6 months?”

2. Your Spouse’s Online Savings Account

It’s ok to that your spouse has an online savings account of their own. If this person has spending issues that we discuss below, then they’ll have free reign over this account. They can deplete this account willy nilly if they’d like to.

However, this is the only account they can do that with. I’m certainly not advocating that though. It would be much better to see the account handled responsibly and not ever be depleted.

This account should be funded by a percentage of your spouse’s income in your spouse’s name only, but should not be funded until your shared online saving account is funded.

This gives your spouse the opportunity to display their recklessness or their fortitude regarding saving money.

1. Your Online Savings Account

You’ve worked hard for your money and it’s important to do action one.

What you don’t need is an online savings account that gets depleted every time your partner has a moment of spending-i-tus. This is when your partner is by themselves or with friends and all reality and sensibilities leave their minds and he or she comes home with a new __________ or went and played __________ or __________. Fill in the blanks.

Well, to reduce the overwhelming anger that starts to boil inside of you when this happens, you need to have your own online savings account. This is an account that is untouchable by your spouse as long as your alive.

Your spouse should understand the need for this account, as it is a way to take care of each other. If you really love someone, you want to take care of that person. Even if you are not the bread winner in the relationship, the bread winner of the relationship should be setting aside money for you by giving it to you to manage.

It’s all in taking care of one another, financially in this case. This is where the folks who feel like they need to control other people are really tested. You’ll find out real quick what your spouse really thinks of money and how it relates to your relationship.

Like your spouse’s online savings account, this account is funded after your shared online savings account is funded first.

Now, with all that said, this way of saving could be difficult for some folks to accomplish. It might be that you feel financially strapped and can’t even save, or maybe one spouse doesn’t believe in separating the family money. Besides, that old wonderful saying that’s been around forever, “What’s mine is yours and what’s your is mine” seems to rear its ugly head every now and then.

If one spouse has the bad habit of depleting their account and the shared account, then other steps need to be taken especially if the bills are not getting paid. Consider this scenario as a crisis mode and steps need to be taken to protect each other’s financial lives.

Someone said, regarding relationships, “A piano player and a violinist can make beautiful music together, but they can also make beautiful music without each other.” We can go out into the world as individuals, independent of one another, and we do just fine. When we are together, it’s even better.

written by Bill Stevens

Do you have a plan? Do you have a financial plan? Do you have financial goals? Do you have any goals?

What do you want to be worth when you’re 30 years old, 40 years old, 50 years old, etc.?

What do you want to be doing with the rest of your life or at different stages of your life and how are you going to do that?

Do you want to be like Timothy Ferriss of “The 4-Hour Workweek”, where you take mini-retirements. Sounds good to me. I suppose a bit tough to do for a lot of folks but he is definitely on the right track.

I highly recommend you read his book The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich for some new ways to think about retirement, work life and thoughts on how to design your own life.

It’s important to ask these questions and try to answer them in some form, because not only are you looking into the future to try and sculpt or shape it, but it also creates a bit more stability in your mind as well as open the possibilities you might not have thought about.

I know some folks don’t like to perform repetitive tasks in life because they always want to do something different so they don’t get bored with life or complacent. However, if you’re married or have a family where other people financially count on you, then you might want to plan some of your financial future by setting goals.

We’ll take the first action that I talk about on this blog, open an online savings account. Sounds simple for some, on the other hand it might be difficult for others.

After you’ve accomplished that goal, you might set other goals for the account. Let’s say you’ve decided to save enough for that proverbial 3-6 months of emergency funds and that would make you feel good and secure about any hardships that come about during everyday life.

Well, write down the target amount. Let’s say you would like to save $5,000.00 before you stop automatic deposits to that account. So do some simple math and let’s say you deposit $100.00 a month through automatic deposits for four years.

You’d be contributing $1,200.00 a year for four years and you’d have $4,800.00 in your online savings account. Plunk $200.00 more in there for the final month or $100.00 for an additional two months and that would give you your $5,000.00, 3-6 month emergency funds that would then grow at around 5% which would give you $250.00 a year that your money would make for you.

Now, I know that sounds wonderful and that sometimes emergencies happen right when you’re in the middle of your savings plan or for some folks all the time, but this is something that you forge ahead with until you hit that magical number that you’ve set for yourself.

I would start thinking about your tax refund, if you usually get one, and NOT planning on using it at all except for your online savings account or funding your Roth IRA account.

Stop thinking about your tax refund as if it’s some kind of gift or Christmas present from the government. It’s you’re hard earned money that you lent the government instead of making money on it yourself. Just say NO to that type of thinking!!

“A journey of a thousand leagues begins with a single step” - Confucius

written by Bill Stevens

I had a root canal today. The total bill was $715.00 . Would that consititute an emergency for you? Would you have to dig into your emergency funds to pay for a root canal? Do you have dental insurance? How much does your dental insurance cover for a root canal? Certianly you have that memorized don’t you?

Well anyway, I had my first root canal around 10 years ago and the secret back then was root canals don’t generally hurt if done correctly. It’s a long procedure (approx. 2 hours). But even 10 years ago it seemed to be a non-event other than the fact you had to sit there so long.

Today, I went to an excellent dentist who specializes in Endodontics referred by my regular dentist. After filling out the necessary paperwork, slapping down the minimum $214.00, getting in the chair, and taking two doses of local anesthetics, we were well into an hour of it all.

Then the fun started. The dentist and the dental assistant had worked together so long it was rather wonderfu to watch in a crazy kind of way. They barely spoke to each other and when they did, it seemed to be in whispered code. They moved swiftly through the whole process adjusting the necessary instruments routinely to finalize the job.

Fifty minutes later and with my face half numb, it was all over. Total time was one hour and fifty minutes. I was impressed at how they worked and the resulting pain threshold was very little or non-existent. I went in at 7:00am and was home by 9:15am. Nice.

The rest of the day went well as far as pain management went. As the numbness wore off I took a few Ibuprofen as instructed and the world was good again. Of course I had to reward myself with some of my favorite foods, since hey, I missed breakfast and couldn’t eat for a few hours after that. What’s a person to do!!

Well, we’ll see what the insurance pays but I did call their number and worked my way through their voice menus to get a feel for what they pay for and what they don’t. So we’ll see.

I’m sure this was an extremely interesting post for your to read but the point is, how would you pay for a root canal? Since I’ve been a saver and investor for over 25 years I only needed to pay for my minimum $214.00 out of my checking account.

But I know, around 25 years ago, I would have been wondering, how am I going to pay for this?.

written by Bill Stevens