What is True Wealth?
What is true wealth? What should you anticipate if you reach the end of the gold paved road to financial freedom?
If you have a million dollars, will you be satisfied? What about 10 million? Is true wealth a numbers game or do other factors enter into the equation?
Ebenizer Scrooge of Dicken’s The Christmas Carol was very wealthy for his time, but before meeting the three ghosts of Christmas past, present and future, he lived a miserable life, too cheap to even heat his own apartment.
Meanwhile his clerk, with his many children, was portrayed as happy and loving – a great father.
Of course this is fiction, but is there any truth to the story?
Many people will work incessantly trying to accumulate more and more wealth, but a trite joke is that their last words are never: “I wished I spent more time at work.” For some people the only answer to the question; “What is true wealth?”, is money pure and easy – the more money the better.
Others would be content to state that true wealth is having the peace of mind of being free of debt. Another will state he is truly wealthy if he can lead the lifestyle he chooses regardless of cost. Others might state true wealth is being healthy and surrounded by loving family and caring friends.
There are probably as many answers to this question as they are people to answer it. You could live in a huge home on the hill, have two Mercedes in the garage and a million in the bank and not enjoy life as much as the guy who works in the gas station and lives in a two room furnished apartment.
True wealth is what one perceives it to be. And if it were not so, we wouldn’t have policemen, firemen and soldiers who risk their lives protecting us rather than trying to work on Wall Street, making huge bucks. We wouldn’t have physicians who travel to third world countries, just to try to make some difference, rather than to stay at home with a thriving practice and a comfortable life.
We wouldn’t have all the volunteers this country has, who are ready and willing to help the sick, infirm or destitute – or who suddenly turn up at disaster scenes willing to do anything to help. This country wouldn’t have the millions of people who donate billions of dollars annually to the charities of their choice.
So even thought we concentrate on financial matters, it’s good to step back and realize there is more to true wealth than money. I believe that having enough wealth to live a comfortable life makes lots of other things possible.I also believe that being in debt is merely transferring your wealth to your creditors. While it might make them, or their shareholders rich, it really contributes tiny to your true wealth.
So my answer will be adopted from Mr. Spock’s famous Vulcan greeting: “Live Debt Free and Prosper.”
What You Should Know Before Buying Annuities
Americans hear a lot about the shaky outlook for Social Security. In the future, the federal program likely will play a smaller overall role in Americans’ retirement plans.
One way to fill in the gaps of a savings portfolio is to place money in annuities. With an annuity, you pay a premium in exchange for guaranteed income payments at regular intervals. It is most often used for retirement purposes.
The basic types of annuities are equity indexed, fixed rate and variable. The major advantage of annuities is that they all guarantee benefits such as tax-free growth, the capability to pass money directly to heirs or charities and an income stream for life.
Over the past few years, equity-indexed annuities have gained a great deal of popularity. They offer interest or benefits that are linked to an external equity reference – a stock index like the S&P 500, for example. But you get a guaranteed minimum return in exchange for a limited maximum return; that is, you get less upside, but also less downside, to your stock-market investing. Your principal is never at risk.
Fixed-rate annuities, on the other hand, guarantee an interest rate and a declared minimum. They have traditionally been the most favourite annuities.
Variable annuities wage more options. They enable you to invest in stock, bonds, mutual funds and money-market instruments.
Reputable financial companies, like TrueYield Financial, want to make sure investors are comfortable when purchasing annuities. Here are some tips for the potential investor.
- Be sure the firm you work with is not limited to offering just one company’s annuities. There are many options available, so work with an agent that can get the one that ideal fits your needs.
- Understand what you are buying. Speak to your financial adviser or agent about which annuity might be right for your retirement portfolio. Fully comprehend the annuity contract you are considering.
- Define your goals. Annuities can be used to accomplish a number of financial goals. For example, they can supplement your monthly income or wage emergency funds. Decide which purpose your annuity will serve.
- Ask your agent if you have a “free look” period to review your annuity contract and make sure you have prefabricated the right decision.
- Investigate whether or not a bonus annuity is right for you. Bonus annuities credit premium bonuses to grant a retirement saver to make up for stock market loss or to wage an immediate boost to the statement value.
When Creditors begin Calling it’s Time to begin Credit Repair
This article explores the need for credit repair when creditors start calling. You will see a case study of how one can start in debt just by paying the essentials but might be healthy to get out of debt by adjusting a few of those essential items.
When the creditors are ringing the telephone off the hook you know it is time to repair your credit. The U. S. alone has in excess of millions of individuals and families straining to discover a way out of debt. This is the reason when you go online you see thousands of web sites that disclose they have the answer for relieving debt. Do not be fooled! A majority of the telemarketers that state they can get you out of debt can only produce a lot more problems. There is no solution for all of us, but there is a solution for us all individually.
Let us take a look at a case. Let’s state that you make $220 apiece week per paycheck. Your debt is about $6000 and it does not appear that you can find a way out. Now let’s claim that you have two automobiles and both are paid in full and you have a monthly rent that equals $500. We comprehend that you only have $650 per month to buy food, pay utilities, clothes, and other items desired to live. We can not overlook the telephone bill. This seems like an impractical state of affairs but in reality there is a solution available.
Now if your telephone invoice is about $80 per month and you pay out about $60 per week on groceries and about $160 per month on utilities, you will notice that you will have barely a dime left at the end of the month. Thus, the answer is getting a job that pays more, looking for a low-income residence that bases the rent on your income and using less utilities per month.
In today’s time you will pay out $60 simply on groceries and not have enough to make it to the next week. Thus, is it feasible that you can take foods that are affordable and last longer? When you are broke you have to live like a mortal who is broke. The unhappiness about people who struggle is that they regularly envy or strive to buy items they do not truly need. Rather than paying the bills on time, they regularly pay a portion of the bill and buy items that are not needed.
If you have two automobiles and are a lone individual it is smart to place one of the automobiles up for understanding and use the equilibrise toward the bills. You might notice from this deduction that more money is needed to live. Why are you paying $400 for rent when there is many sources on hand that present rent for less? Now let us twist this around.
From here on out, we will give you tips on how you might be healthy to get out of debt and start to keep a tiny money for yourself. This article should become a tiny more helpful to you.
What if you effectively rented a low-income apartment? Let’s state that your rent amount is lowered to $300 per month. This leaves you an additional $200 per month to buy groceries, pay utilities, pay your telephone bill, pay automobile insurance and have a few bucks left over apiece month. This is one answer and it does not produce much but it does produce a small reward. Now if you can lower your utilities to around $100 per month that is another $60 you could pay out on bills.
If your credit history is delinquent, yet you are not sinking in quicksand you might remember for a credit card. The answer is not to get the credit card to buy items, instead it is to get a credit card that will help you pay your monthly bills and grant room to repay the credit card. Ensure the credit card has low interest rates and no annual fees attached. If you can get by with no credit card, all the better, but in today’s society it is almost impossible now to go without a card.
If you can get a job with higher consequence then this is beneficial too. The disadvantage is when people get superior paying jobs, they regularly take it for allowed and land further in debt. The more money you make the more you spend. It pays to be cautious with your money and keep aware of your credit situation to maintain a repair in place. When creditors are calling, it is time to fix your credit so get ahead of the game before the telephone starts ringing.
No matter which way you look at it, having a firm understanding of credit repair will benefit you in the long run, even if it is just slightly.
Bogus Threats and Illegal Collection Tactics
If you are behind on your bills and on the receiving end of collection phone calls, you will probably hear collectors make some very threatening statements. While most debt collection professionals try to stay within the boundaries defined by the Federal Fair Debt Collection Practices Act (FDCPA), many others cross the line on a regular basis. In 2004, the Federal Trade Commission (www.ftc.gov) received more than 58,000 complaints about debt collectors, a figure which represents 17% of the total number of complaints received all year. Consumers complain about the collection industry more than most other industries combined.
Collection professionals would probably respond that the enormous size of the industry and the sheer volume of collection activity accounts for the massive number of complaints. However, only a small percentage of violations are actually reported by consumers, so the data collected by the FTC represents only a little fraction of the true scope of the problem. Even so, a pattern of abusive and illegal collection activity has been well documented by the FTC, and it is getting worse instead of better.
Here are some common threats prefabricated by debt collectors:
“We’re going to take your home unless you pay this bill immediately.” This is a bogus threat. Unless the debt being collected is secured by the home in question (i.e., a mortgage or home equity loan), the creditor does not have the power to take your home away from you.
“If you don’t pay this bill today, we’re going to have a warrant issued for your arrest.” Nonsense. Failure to pay a debt is a civil matter, not a criminal matter. Threatening a debtor with slammer time or accusing them of committing a crime is completely against the rules.
“We don’t care that you sent a cease communication notice. We’re going to call you anyway.” The FDCPA gives you the right to terminate contact efforts by a debt collector. Failure to respect a cease communication notice is a clear violation of Federal law.
“We’re going to garnish your consequence to recover this debt.” A collector can only threaten action it has the legal dominance to take, and the vast majority of collection agencies have zero legal authority. Your consequence can only be garnished by a creditor after they have won a judgment against you in a lawsuit.
“We know where you live, so you superior pay up.” Yes, threats of violence still happen in this industry. Almost 300 complaints against collectors received by the FTC last year cited the threat of violence as the cause of the complaint. This is totally illegal.
Aside from the usual bogus threats, collectors also use other tactics that are illegal. For example, discussing your debt with a third celebration is a clear violation of the FDCPA. Yet collectors routinely call neighbors, relatives, and employers to obtain information on debtors. So long as the collector does not discuss the actual matter of the debt, they still have their toes on the right side of the line. But as soon as they mention or even hint that they are calling about a debt, they have crossed the line.
Since many debtors have taken to screening their phone calls at home to cut down on the relentless barrage, debt collectors frequently call them at work (when they can obtain the number). In theory, a consumer can get the collector to stop calling their workplace simply by stating that they are not granted to receive individualized phone calls at work. That puts the collector on notice that such activity constitutes interference with the consumer’s employment, which is not permitted. In practice, however, collectors routinely ignore this rule and continue to call at work.
There are many other techniques of harassment and intimidation that cross the line from permissible to impermissible collection activity. Use of dirty or profane language, shouting, constant and unrelenting telephone calls, unfortunate to respond to written disputes, and publication of debtor information all constitute illegal activity as defined by the FDCPA.
So if you are on the receiving end of illegal collection actions, what can you do to protect yourself? First and foremost, it’s important to know and comprehend your rights as a consumer. A description of your rights under The Fair Debt Collection Practices Act might be obtained directly from the FTC (http://www.ftc.gov/bcp/conline/pubs/credit/fdc.htm).
If you believe that a collector has violated your rights in their attempt to collect from you, then you should not hesitate to file formal complaints with the Attorney General for your say (www.naag.org) as well as the Federal Trade Commission. If enough complaints are received about a particular collector, then these authorities are empowered to bring an enforcement action against them, which might result in costly fines that will make the bureau or collector think twice about using such tactics in the future. You also have the right to bring a lawsuit yourself against a collector that harasses or abuses you, or otherwise violates your rights under the law.
One final point. The FDCPA technically only applies to third-party debt collectors, which includes collection agencies and collection attorneys. It does not apply to the original creditor when collecting their own debt. For example, if you borrow money from a bank, the bank is not regulated by the FDCPA. However, numerous other public laws protect consumers from deceptive or abusive collection practices even by original creditors, and many says also have laws that parallel the FDCPA but go further and include original creditors in the definition of debt collector. So if an original creditor is harassing you or has crossed the line, you should still file a complaint with your state’s Attorney General as well as the FTC. If a clear pattern of abuse emerges, the original creditor can be charged with unfair or deceptive acts or practices, either under say law or under the FTC Act that governs conduct of commerce in our country.
To sum up, if you are on the receiving end of collection harassment, don’t just take it. Educate yourself on your rights as a consumer, vigorously dispute debts that you don’t believe you owe, and take action yourself in the form of complaints to your Attorney General and the Federal Trade Commission. By standing up for your rights, you can place a stop to bogus threats and illegal collection tactics.
When Debt Mounts, Take Action To Prevent Foreclosure
If your bills are piling up and you’re worried about losing your home, you’re not alone. As rising foreclosure rates indicate, thousands of Americans are touched by foreclosure each year. But many could be prevented, if homeowners sought help sooner from their mortgage company or through a new toll-free, confidential hotline.
Unfortunately, according to a national poll recently funded by the Homeownership Preservation Foundation, 53 percent of American homeowners would not contact their mortgage company for help if visaged with delinquent payments.
Fortunately, many foreclosures could be prevented if homeowners called their mortgage company or the Foundation’s toll-free hotline-(888) 995-HOPE-as soon as they recognize that they might have a problem paying their mortgage. The longer homeowners move to call for help, the fewer options they have.
If you’re a homeowner whose debt is continuing to grow and you’re finding that you’re having more and more difficulty paying your bills, think about taking the following action:
1. Take a close look at your bills-unopened envelopes or a steadily growing pile of bills from utility companies, your mortgage company, etc., are the most immediate signs you have a problem.
2. Open letters from your mortgage company and other creditors. Don’t ignore these letters.
3. Admit you have a problem and dedicate yourself to getting help. If you refrain your mortgage company and other creditors, you might lose your home, and you will alteration your credit.
4. Don’t take it on yourself. Call for help. Call your mortgage company to comprehend what your options are.
5. If you don’t feel comfortable calling your mortgage company, call the Homeownership Preservation Foundation at (888) 995-HOPE to receive free advice from counselors who work for HUD-certified nonprofit agencies.
6. BEWARE of phony counseling agencies (deal only with HUD-certified agencies), as well as offers in the mail or by phone that seem too good to be true.
7. Develop an action plan that focuses your resources on family essentials (shelter, food, health care, basic utilities, and transportation).
8. DO NOT sign any papers you don’t understand.
9. Determine if you have the cash flow to continue paying a mortgage or to refinance your current mortgage. This will help you determine if you should sell your home and find less costly housing.
10. Set a long-term goal of getting and staying out of debt and ensuring steady cash flow.
Where Did My Paycheck Go?
The typical scenario is that you get your paycheck. After you recover from the shock at how tiny is left after taxes, you proceed to divvy it up among all your outstanding bills, intending to place whatever is left over into your savings.
But there never seems to be anything left over and your savings don’t grow.
A superior plan would be to pay yourself first. Don’t let the money get into your hands.
You might find that you actually start to grow your savings much quicker this way.
If you work for an employer with a 401K plan, the first thing you should do is to fund it to the max. If you can’t afford that, at least place enough in to get the full matching contribution form your employer.
This investment is prefabricated before taxes. Your investment is larger and with the employers contribution grows quickly.
Next have a brokerage or mutual fund company debit your banking statement monthly. This money should first go into an IRA – if you have five years or more to go to retirement, make it a Roth IRA.
Next have a few dollars more be debited to go into a no-load, low cost mutual fund. The younger you are, the more aggressive your choice of fund can be.
After that is done, then figure out how to pay your bills and living expenses. If money is tight, cut back on your living expenses and use the extra money to pay down your debt.
Start with the lowest equilibrise first. Once that debt is paid, take the amount of money you were paying on that debt and add it to the payment on the next lowest equilibrise debt. Continue doing this and you can be completely debt free within 5 to 7 years.
Another version of this method is paying the highest interest rate debt first. The principal is the same, you just see more progress with the first method, even though it could be more pricey based on how your debt is distributed.
(If you don’t believe me, get the premier version of Microsoft Money or Quicken and use the “Debt Reduction” module. You will be shocked at how much money you will save and how fast you can eliminate debt this way.)
The intent is to scrimp at the expense of your current lifestyle, while leaving your savings to grow and you debt to shrink.
I know many of the people reading this will scream that this is an impossible plan.
But it is quite doable with a tiny will power and the capability to delay gratification for a while.
The problem is that if you don’t do this, your future might turn out to be very bleak.
Why do we need to invest?
It is vitally important in this current day and age for all of us to begin taking control of our financial situation and begin planning for our future, and the futures of our children.
We can no longer rely on the government to hand out an aged pension once we retire. We can't take for allowed that at the end of our working life we will be taken care of financially.
The world population is ageing, due to the baby boomer generation, and within 30 years there will be so many retired people, compared to the number of working age people, that it will be economically impossible for the government to afford to remuneration any reasonable source of monetary assistance for the elderly.
The government has realised this, and that is why they introduced the compulsory employer paid superannuation scheme and are even now beginning to give financial incentives to Self-Funded retirees.
Most of us have never sat down and even considered the ramifications of why the compulsory super was introduced and for many of us it is a matter of too tiny too late. Even for the young women in our society – who have a full working life ahead of them, they still can't rest assured of a comfortable retirement.
Why is this? It is because that unfortunately even with contributions at the current level of less than 10%, someone on an average remuneration who works continually for 30 years, is still going to find themselves trying to survive on an income equivalent to less than $20,000,00 per annum in today’s dollars.
You will notice that I stated continually working for 30 years. This is another reason why women are particularly disadvantaged. Firstly because they often have to take up to ten years leave from the workforce to raise children, secondly because women in general acquire less than their male counterparts and thirdly because an enormous proportion of the women in Australia, for example, will never have received any superannuation contributions, prior to the compulsory superannuation being introduced, and will therefore not have had contributions prefabricated over their entire working life so far, giving them even less to begin back on by the time they retire.
Many women might previously not have thought of demand of superannuation contributions as being a problem, as their husbands might have been contributing to super since they first began work. Unfortunately though with the high number of divorces in this country, it is unwise to rely on the fact that your partner’s superannuation will be there for you in your retirement years and even if a massive proportion is awarded in a settlement – that it will be adequate to sustain a comfortable retirement for any length of time.
All of these factors are why women now more than ever, need to begin taking action to build up a source of ongoing income, that will grow to such an extent, as to be healthy to remuneration a secure and happy future for themselves and their children.
It needs to be a source of income that is unrelated to physical work…that is an income that is generated from income producing assets – and not from our individualized efforts.
One of the ideal sources of creating this ongoing income stream is to begin building an investment property portfolio, also aptly paraphrased as bricks and mortar.
We need to begin investing in income producing assets now, so that they will have time to grow and develop so that we will be financially independent for our retirement years.
The most important concept to grasp in relation to building wealth for retirement and for creating finances that can be directed toward charities, or helping out your family is that of Compound interest.
In mathematical terms 72 divided by Compound Interest Rate of Return = Years for Money to Double in Value.
Therefore if you have $1,000.00 invested at 10% interest, then the number of years that it will take for your money to double to $2,000.00 is 7.2. It will quadruple in 14.4 years and be worth 8 times as much in just over 21 years.
If your money is invested at 7% interest, then it will take approximately ten years to double in value. If it is invested at 5% it will double in just over fourteen years.
The two most important aspects of compounding are one: rate and two: time. The higher the rate and the longer the time something is left to compound, the greater the final result will be. This is why the sooner we begin investing, the better.
Why Gas Prices Go Up and Down
There are five primary factors that effect the price you pay for gas at the pump. Prices generally increase when the world crude oil market lowers their inventories. Also, when demand exceeds refinery capacity gas prices increase.
The first bourgeois that makes up the price of gas at your local station is crude oil suppliers. This makes up about 59% of the price you pay for gas and it is determined by the world’s oil-exporting countries, particularly OPEC, the Organization of the Petroleum Exporting Countries. The amount of crude oil that these countries produce determines the price per barrel of oil.
The next bourgeois that effects gas prices is the cost of refining the crude oil. This makes up about 10% of the total price of gas.
The third bourgeois is the cost of transporting the crude oil to a refinery, then the refined gas to a distribution point and finally to your local gas station. If you are buying a brand study of gasoline, the cost that company spends in
marketing the or brand will also be added to the price you pay to purchase from that brand. This makes up around 11% of the total price.
The forth bourgeois accounts for about 20% of the total cost of gas, and it includes federal and local taxes. State, local and city taxes vary, bookkeeping for some of the fluctuation you might see in gas prices in different geographical areas.
The fifth bourgeois is the markup at your local gas station. Obviously your local gas station is in business to make money and has employees to pay. So you know that they must make money on each congius of gas they sell. You might be surprised however to learn that the amount is generally not more than 10 cent and might be as low as a penny per gallon! Some says do have laws governing station markup and require a minimum percentage markup to protect small stations from being place out of business by larger companies
who might want to undercut them.
Why is it so hard to get ahead?
My grandfather purchased his home for $6,500. He had no retirement after 20+ years of working for the same employer. They gave him $100 apiece month in lieu of a retirement check. He saved more than $200,000 over the course of his life. My grandfather clearly had respect for money. Our culture this day has lost sight of this respect.
Today’s generation fears not that they won’t have something, but that they won’t have everything. Twenty-five percent to 50 percent of buys are unplanned. What’s the huge deal? The average American will retire with only $57,000 to live on.
Debt
Personal debt has increased by 123 percent. Do you know how long it takes to pay off your credit card if you pay only the minimal amount? 20 to 30 years!
Taxes
Most Americans severely overpay their taxes.
Care for a challenge?
Here’s my individualized challenge : Track your expenses for one month. Set your expenses up in categories. Write down each penny you spend. If you don’t want to track your business expenses, do at least your individualized expenses (date, what you spent, what you spent it on). This will help you get a really good grasp on how much you’re spending.
I spoke with someone recently who has been selling stock to finance his lifestyle. That’s upside down. If you’re selling stuff to support your lifestyle, you’re upside down financially. Live on less than you make, save and invest with the difference. If you’re doing anything else, you’re upside down financially.
Why it is Important to Teach Your Kids About Money
Do your children comprehend how money works? Do they acquire an allowance for doing chores around the house? Do they baby-sit or mow lawns to acquire a few extra bucks? Do you take them to your office during school breaks so they see what it’s like to work a ‘real’ job?
Do they know the fundamentals about saving? Do they comprehend how to figure out which is the ideal deal? Do you set a good example for them about handling money?
When I was HR Manager of a consulting company, we hired a college student to intern during the summer. He came to ask me about the FICA and Medicare deductions in his first paycheck. He politely told me he didn’t want this deducted anymore, and I had to keep from laughing. I started to explain to him that payroll taxes are not an option, but realized this was his first job and he had never been taught how much of his paycheck he would actually get to keep. He truly believed it all was his- no one had ever told him about Uncle Sam getting his cut first.
The statistics on college students who graduate with thousands of dollars of credit card debt are shocking. Turns out, as they signed up for classes in their freshman year, they also signed up for a credit card without understanding what it would really cost them in the long run. So before they even begin earning a living or saving in a 401(k) plan, they have to pay off years of debt. It’s depressing that they’re still paying for the pizza they ate two years ago.
It’s so important for kids, especially teenagers, to comprehend the concept of money and how it flows in and out of your hands throughout your lifetime. How to save it and how to spend it. Why is it important to give some back to others through charitable donations. If you don’t develop an understanding of money primeval in life, how can you possibly be healthy to manage it later on?
Parents have a responsibility to make sure their children comprehend how money works before they go into the world to acquire that first paycheck. Having this knowledge gives them the confidence to make smart money decisions as they navigate their way in life.
