The Power Of Choice

Lately it seems to me there is a flood of people who I bump into who don’t realize the relation of their choices to the results of those choices. They ignore the basic concept for every action there is a reaction. You hit one domino and the rest fall as well.

I have a goal to have my money work for me rather than me working for money. The goal is a relatively simple math problem have your money create enough money to cover expenses.

The concept is simple but, getting the goal accomplished takes some preparation, perspiration, and inspiration . The reason I bring up my goal is it reflects back onto the decisions I make today.

One of the most basic financial choices I make everyday is whether or not I purchase something. Based upon that choice I am building up or taking away from momentum to or from my goal.

When I purchase something I always bounce through the following list in my mind:

  1. Is this something I need? or can I do without?
  2. Can the item purchase be delayed for a later time?
  3. Do I have the ability to buy cash (not via credit, incurring debt)

This list helps me keep my direction and focused when making purchases. I challenge the reader to make your own list based upon your own goals. This will help you guide your choices towards what you want to accomplish.

What are the dominoes that can fall if you buy a car without having the cash to buy it?

  • You have to finance the car purchase price which also includes the tax and related fees–>
    • The ability to be up-sold on more expensive features is easier–>
      • The amount of hours you have to work is increased due to the increased cost–>
        • The amount of free time is decreased due to having to work more to pay for the increased price
  • The risk of having a car with payments–>
    • Ability to sell the car is decreased; you don’t own the title
    • If you lose your job the ability to make car payments has decreased–>
      • The chances of a car getting repossessed is increased
  • The opportunity to save future earnings has decreased–>
    • The ability to invest in the future has decreased–>
      • The cash needed to take part in future deals has decreased

This is just an example of one decision and you can see all the ripples that can happen. Everyone has made some decisions they could of made better if they just asked themselves what are the most likely outcomes of these decisions.

When you have the next decision to make ask yourself some things to help you get to the best outcome.

  • Does this help me accomplish my long term goals?
  • What are the risks? (How can I minimize those risks?)

Write down on paper what dominoes could fall if you make your decision one way then the alternative way. Find the path that makes the most sense.

Apply this to some of your financial challenges. See how you move closer to your goals rather then being a part a financial goal that someone else planned.




How to Start a Retirement When Your Job Doesn’t Offer One

Many people make up the excuse my job doesn’t offer a retirement plan so I can’t save for retirement. I want to show you it doesn’t take much effort to get started. This way you are facing your finances in the right direction.

vanguard1Vanguard IRA Start Page

The best way to start a retirement is as soon as possible. Compound interest works better with more time. In the United States you can save for retirement with some tax benefit. There are two major retirement categories available here; 401k and IRA. A 401k is a retirement plan an employer sets up with their employees. Some jobs do not have this option so an IRA (Individual Retirement Account) can be established to have some of the same benefits as the 401k.

There are two categories of IRAs: Traditional and Roth. A traditional is tax deferred until retirement. A Roth is paid for with post tax money and is tax free at retirement. If you have a low income it may be best to pay with post tax dollars in a Roth structure if you predict your income being more at retirement age. (a college student or early career person might be ideal.) Whichever one it is more important to start than to worry about being in the wrong type account.

There are some prerequisites towards starting IRA. :

  1. An Income (a W-2 form is useful)
  2. Citizenship or Legal Residence (a Social Security number is needed)
  3. Income levels – Check with IRS guidelines ; (2017 – Single $117,000- $132,000, Married Joint $184,000-$194,000)

Step By Step:

  1. Collect general info needed:
    1. Social Security Number
    2. Savings or Checking Account
    3. Routing Number of above account
  2. Find a IRA provider
    1. Check Consumer Reports Broker Ranking
    2. Look in the top 10-20% brokertop30per
    3. Avoid the bottom 20%brokerbottom30per
  3. Fill out the forms
    1. Log on to the provider’s web page and fill out the form
    2. If you are a resident non-citizen you may be required to fill out, sign forms, and mail them in

This was a quick guide… Just to get the procrastinators started…


Low Hanging Fruit – Credit Cards

In my previous article I went over some low hanging fruit items including ask for a lower credit card rate on your current card. That is an OK kind of tip but, it was thin. So in order to thicken up the help on this I wanted to break this down a little deeper. If you know a little bit about the credit card company and how they make money you can be better prepared when you ask for a new rate.


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Give Yourself A Raise

Would you say yes to a raise if your boss offered you a raise?  Everyone I’ve spoken with throughout my life would say yes if they were asked. Of course there will be some people who will say no but, I have not found them. Why would anyone want a raise?  Speaking for myself a raise would give me more choices. Depending on the amount of increased cash flow would determine choices that can be made.

You are the boss of you; so ask yourself “Do you want a raise?”  If you can answer yes keep reading. A raise is basically money that you get with little or no lifestyle change. A raise gives you more free cash if you keep your spending the same. A raise is thought of as an increase of income. What if you decrease your spending with no increase of income? This has the same effect with more free cash.

I have heard people say then “I have to live like a monk and cut out all the fun stuff when I cut my spending.” The only question that should be asked then is How do I decrease my spending without changing my lifestyle? If you can answer this question then you can give yourself a raise.


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Lighting with a Match

Matching is a concept of taking something and adding a complementary item and making it greater exponentially. Coupon stacking is an example of this. You can have a need to buy an item like spaghetti on your shopping list. If you have a coupon the money saved is a match for the value of the coupon. If the spaghetti is a two for one special you get a 50% match. When both matches are combined your match is increased by the stacking method.


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Money – The Time Tool

The saying “Time is Money” is in my eyes not correct. It implies money is more valuable than time. If this is reversed “Money Is Time” this would imply to reverse. Time is finite on a personal level. You can’t get more time but, you can leverage the time you have with money to make the time you have more valuable.


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