Author / Kevin

Mind Over Money

4 Quick And Easy Tips That Will Make You A Millionaire Fast

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Everyone wants to be a millionaire. Wouldn’t it be great if you could do it quick and easy?

Well it’s not. But why are people attracted to things like the title of this post? Once you get past looking at these types of articles you can move onto actually becoming financially free.

Nothing in life is easy. It takes hard work whether physically or mentally. You have to be prepared to recognize opportunities and seize them. Nothing helps that better than hard work.

Read, listen, and watch as much as you can about successful people. Learn from their mistakes and from their successes. Work what they have done into your own life

Here are real tips that will turn you into a millionaire….over time or at least make you better in life.

Be different

Don’t just do what everyone else does because then you’re not you. Still learn from others but add your own twist to it.

Persist

Like I said before, getting rich isn’t easy. So if you don’t want to work hard you will never be financially well off. It’s just not in your cards.

On that note, there will be times that you run into walls. When that happens you need to run through it. If you don’t stick through those hard times you shouldn’t even be trying because you will just be wasting your time. Just go back to your regular life until you’re motivated enough to want what’s on the other side of that wall. Success is filled with a lot of ups and downs so you need to be able to stick out those down times

Think Positive

If you don’t support yourself no one else is going to. You have to believe in yourself. You are going to be trying new things so always believe that you can do it.

Do you know why?

Because you can do it. There is no difference between you and Bill Gates other than that he seized on opportunities because he believed he could.

Have no fear

Remember “The only thing we have to fear……is fear itself”. If you truly believe that, then you can conquer fear.

I was scared to start this blog because I didn’t know what people would think or if anyone would even read it. And it really took me a while to get it started, but you know what? If I kept focusing on the fear I would have never started. Instead, I focused on “can you imagine how many people could end up reading what I write and have their lives touched?”.

I turned that fear into motivation.

If you do all of these things you will be successful. Being successful takes a lot of character, so when you do become successful don’t forget those that were there for you along the way. And always give back to those that don’t have the same opportunities that you had.

So, enjoy your success and be happy to know that your hard work has made you that way instead of spending a bunch of money on get rich quick schemes that never amounted to anything.

What do you think?

photo credit: Simon Davison

Investing

Debunking 401k Theory

Step Brothers

If you have a 401(k) retirement savings plan and you’re like the rest of working Americans, it’s highly likely that you don’t plan on touching that money until well, retirement. With social security increasingly becoming an unreliable source of income for many people, the younger generation is putting a lot of stock in their 401(k) savings.

Television gurus like Suze Orman and Jean Chatzky all preach the message that it’s a heinous crime to withdraw money early from your 401(k). But what if Suze Orman is wrong? Can it actually be smarter to cash in some of your retirement well before you will ever retire? If you have consumer debt, the answer is….yes!

How 401(k) plans work

Let’s quickly review how employer-sponsored 401(k) plans work. Employees are given the opportunity to elect to have a portion (usually no more than fifteen percent) of their pre-tax wages set aside in an investment account. In short, you get the benefit of saving money while deferring taxes.

Generally, the company will match part or all of the employee’s contribution to their 401(k), or offer a profit-sharing contribution to the plan. Because the nature of a 401(k) is that it’s an investment account, it can and usually will grow significantly over time. All 401(k) earnings (interest, capital gains, or dividends) are tax deferred, culminating in the blessed occasion when you turn 59 ½ and can withdraw funds without any penalties beyond regular income tax.

The good and the bad news

So why do all the gurus tell you not to withdraw early? It’s not because you can’t; it’s because the government imposes severe penalties to the tune of extremely high taxation whenever you withdraw early. Many 401(k) plans also allow withdrawals in the form of loans you eventually have to pay back with interest. Oftentimes, you can end up paying taxes twice over when you withdraw from your 401(k) early.

Is there really any good reason to withdraw early from your 401(k)? Absolutely, definitely, and yes. You will never hear the famous financial gurus tell you this, but sometimes waiting until you retire is quite simply too long. The number one reason to withdraw early from your 401(k) is to pay off debt.

Early withdrawal can save you money

For a person with thousands of dollars worth of personal loans that are growing at a very high interest rate, cashing out part of a 401(k) might be just the solution.

With interest rates on the rise, consumer loans and bad debt can quickly drain a person’s cash flow. Sure, early withdrawal from your 401(k) will get you tax penalties. But if the trade off is that you can move toward being debt-free and freeing up cash flow, tax penalties are a small price to pay for financial freedom

Consider the long term impact

It’s important to do long term cost analysis before choosing to withdraw early from your 401(k). If you’re in a situation where you’re only able to pay the minimum due on a high interest, high balance credit card, the long term consequences of not paying off that credit card can have a far greater impact on your finances than losing a few thousand dollars in taxes from your 401(k). For people who aren’t facing any type of hardship or significant debt burden, early withdrawal most likely isn’t the best solution.

Only you truly know your own financial circumstances. Do your own research and absorb as much knowledge as you can. Besides, it’s always possible that by the time you’re 59 ½ years old, you’ll be dead. I like to leave on a positive note so here’s a smiley face :)

Mind Over Money

Break The Cycle Of Being Financially Poor

schoolThere’s a deadly cycle when it comes to being poor. When you aren’t educated on how to be good with money, your children aren’t going to be educated on how to be good with money. If you are bad with money you need to get better for future generations. The only thing I ever learned growing up was about investing in stocks. I never learned about making a budget and it never occurred to me that I even needed to know because no one ever told me I needed to know. The only thing kids know about personal finance is that you need to work to pay bills. That’s it. You need to break the cycle.

Get An Education

If you don’t know about good money habits, how can you possibly have them? The only way to learn that way, is to make mistakes. That is the long hard road. Take the easier route and learn from other people’s mistakes. Read a book, read blogs online, just learn from people before you make those mistakes. When you learn something be sure to pass it onto your children so they have a lesser chance of making those mistakes as well.

Stop Wanting What Other People Have

“Ooooo my neighbor just got a new 52 inch Hi def  TV. It looks fantastic. I think I’m going to get one. I can get one at Rent-A-Center and make payments for a couple of years.” Don’t! Your neighbor has that because they can afford to buy one or are willing to put their future at risk to own something that looks cool. Don’t be that person that does the latter. You can’t define your life by what you own. If you really do define yourself by what you own, then earn more money so that you can buy what they have instead of ruining your future by paying for it with payments that end up costing you thousands of dollars in interest.

Don’t Spend All Of Your Money

This should be a given but how many people have a lot of money by spending it all? If you live paycheck to paycheck it means you spend it all. Stop doing that! Find places where you can cut back your spending. Find a cheaper place to live, stop eating out, stop spending money everyday. If you can’t do that then start earning more money so that you can put some away for a rainy day.

Having bad financial habits will most likely cause your children to have the same habits. Change your habits before it becomes too late and the cycle is started over again. On your journey to become financially independent bring your kids for the ride. Break the cycle of being financially poor.

Do you have any habits you don’t want your kids to have? Why do you have those habits if you don’t want your kids to have them?

Money Management

Does Saving Excite You?

It’s not a question that you often hear asked but there is no denying its positive value especially for those who are concerned about their future; so we ask, does saving excite you? Are you one of those people looking to prepare for the rainy days? If your answer to these questions is “yes”, then perhaps it is time for you to choose a cash ISA account. 

For those who are wondering, a cash ISA is much like most savings accounts offered by banks. It offers a great way to stash away a fraction of your earnings and convert it into savings. It is not uncommon for many people today to head to the bank to open a savings account and in fact, the truly savvy maintain multiple savings accounts in many banks and for various purposes. 

If indeed, you are excited with the concept of saving, then you would be pleased to know that a cash ISA takes the idea of savings to a whole new level. This is because compared to a traditional savings account, a cash ISA carries a lot of advantages. Consider the following short list of positive benefits that you can expect from cash ISA: 

  • Tax advantages. A normal savings account is taxed just like most profits. In many cases, it is levied a capital gains tax which eats into the profit itself. This is not the case with cash individual savings accounts; by law, cash ISAs are not taxed during the holding period or during withdrawal. This maximizes the profit that you can expect to draw out of each investment.
  • Cash ISAs are convertible to stock ISAs should one choose to do so. This increases the flexibility of the investment and simplifies the process of investing without having to withdraw and personally purchase financial instruments like stocks and shares. With a cash ISA, you can follow through the prescribed conversion process and your host bank takes care of all the processing for you. 

You do not need to be a deeply enamored with the idea of saving to appreciate the value of cash ISAs, although it bears mentioning that being excited with the idea of savings can give you more than ample motivation to take advantage of the benefits of financial instruments like the cash ISA. See how you can incorporate it into your investment goals so you can invest safely, and enjoy the tax benefits that come with cash ISAs. 

Investing

Using Letters of Credit

Letters of credit are used for the purpose of substituting a customer’s credit for that of the banks. This transaction provides the ability to facilitate a trade. Letters of credit are often used for international trading, where a seller lives in one country and the buyer lives in another. There are essentially two types of letters of credit – the commercial letters of credit and the standby letters of credit. The primary payment used for a transaction is the commercial letters of credit and the standby letters of credit are considered as the secondary payment option.

Commercial Letters of Credit 

A commercial letter of credit has been used for hundreds of years as a way to facilitate payments for international trading. As the global economy is continuing to evolve, the letters of credit will continue to be used. 

The governing agency of commercial letters of credit is the International Chamber of Commerce Uniform Customs. The provisions and definitions of the documents are binding for all parties that are involved in the transaction. 

The document is a contract agreement between the bank that issues it and one of their customers. The letter of credit authorises the confirming bank to make the payment. A customer will request that the issuing bank open the letter of credit and the bank will commit to honour the drawings that are made through the credit. Typically, the provider of the service or goods will be the beneficiary. Simply put, the issuing bank is replacing their customer as the payer. Letters of credit act as a guarantee for suppliersand an international finance corporationcan routinely issue these.

Letter of Credit Elements 

1. Issuing bank undertakes a payment on behalf of the applicant in order to pay the seller a set amount of money

2. If specified, documents that represent the goods that are supplied are presented within the specified time frame

3. Documents have to meet the terms and conditions as set out in the letter of credit document

4. The documents have to be presented in a place that is specified. 

Beneficiary 

If the beneficiary provides the necessary documents as evidence as stated in the letters of credit, he/she is entitled to payment. Letters of credit are distinct and separate documents from the sales contract that it is based on. The parties will deal with documents and not with goods and the issuing bank cannot be held liable for the contract that has been set between the customer and the beneficiary. The obligation of the bank is to inspect the documents in order toensure that they meet the terms and conditions that were set for the credit. If the bank finds that the conditions have been met it will issue the payment as directed.

Characteristics of the Letter of Credit 

Typically a letter of credit will be negotiable. The bank that issues the letter will be obligated to pay the beneficiary, as well as the bank that is nominated by the beneficiary. The instrument can be passed between parties in the same manner as money exchanging hands. In order for the letter to be negotiable there will need to be a clause that states there is an unconditional promise to make a payment on demand or within a specified time. 

When creating a letter of credit the parties may choose to make it irrevocable or revocable. Revocable letters can be changed at any time for any reason, without notification from the issuing bank. This type of letter may not be confirmed. 

If the letter is irrevocable it cannot be changed unless all parties agree. This type of letter is insurance for the beneficiary, stating that if the correct documents are presented payment will be made.