Wednesday, September 21, 2011
Retirement Goals
Everyone have different goals for their retirement, but for me I would like to be living in a home that is mine and I am not paying for yet. Also I love to travel so I would like to be able to travel all over the world. Because I want to travel I don't want to be too old so I want to be able to retire earlier. In order to be able to do all of this, I will need to follow a lot of these tips in The Automatic Millionaire and I plan on doing some soon.
Tuesday, September 20, 2011
How do I plan on using this in the future?
There were many great tips throughout the entire book and I plan on using a lot of them. Like to make everything automatic and to be debt free. I don't use credit or debit cards now and I want to stay that way as in debt free. Also the tips on making your mortgage payments shorter where you don't have to pay for your house for 30 years, it could be more like 22 years instead. A good website to figure out how much you could be saving on you martgage go to www.bankrate.com click on calculator then mortgage, and then mortgage calculator.
How has what I learned changed my current finances?
One thing that I have applied to my current finances is the latte factor. I am more cautious with my money and don't spend money on things I really don't need. Everything else that I learned in this book I have not applied to my current finances. I do however plan on using these tips in the future. I plan on paying myself first with my paychecks and working at least an hour for me. Also to start as soon as possible saving for my retirement.
Monday, September 19, 2011
What I Learned
What I've learned in reading this book is that many people can not retire at the age of 65. One in ten people can barely afford to retire. There are some acceptions though that can retire earlier than 65. These people learn how to become automatic millionaires.
Also to not spend money on the small things. This principal is called the Latte Factor. The idea with the latte factor is if you are spending money everyday on coffee or a soda that money adds up to be quite a bit that could help you in the future. Instead of buying those things, you could make coffee at home for cheaper or buy soda at the store in a larger quanity, like a 24 pack of soda, to save money. many people don't know but saving just 5 dollars a day could add up to almost 1.2 million dollars by the time you're 65.
An important and interesting thing I learned was to pay yourself first. the concept of paying youself first is simply. You have 10% of your income taken out of your pay check and put into a savings account or retirement account. ( You can go higher or lower than 10%) This percentage is taken out even before taxes are taken out and you don't see this money at all so you don't know how much you are missing.
Another thing is you should have a cash cushion of at least three month's worth of expensive. This is incase something should happen, like you lose your job, this way you are covered for at least three months. You should have more because incase you do lose your job it could take as long as a year to find a new one. The money should also be kept somewhere safe and where you could be making money on it. Either a savings account or money market account. A good plce too open a money market is ING Direct at www.ingdirect.com
Last but not least, make all of this automatic. A good place to make things automatic is Vanguard at www.vanguard.com. Here you can do everything yourself and don't need a financial advisor. Once you make these steps automatic you don't have to mess with them anymore. It will all be done for you and because it is all automatic you don't ever see the money so you don't know how much you are missing and will still be able to pay check and etc. with the money you get in your paycheck that you do see.
Also to not spend money on the small things. This principal is called the Latte Factor. The idea with the latte factor is if you are spending money everyday on coffee or a soda that money adds up to be quite a bit that could help you in the future. Instead of buying those things, you could make coffee at home for cheaper or buy soda at the store in a larger quanity, like a 24 pack of soda, to save money. many people don't know but saving just 5 dollars a day could add up to almost 1.2 million dollars by the time you're 65.
An important and interesting thing I learned was to pay yourself first. the concept of paying youself first is simply. You have 10% of your income taken out of your pay check and put into a savings account or retirement account. ( You can go higher or lower than 10%) This percentage is taken out even before taxes are taken out and you don't see this money at all so you don't know how much you are missing.
Another thing is you should have a cash cushion of at least three month's worth of expensive. This is incase something should happen, like you lose your job, this way you are covered for at least three months. You should have more because incase you do lose your job it could take as long as a year to find a new one. The money should also be kept somewhere safe and where you could be making money on it. Either a savings account or money market account. A good plce too open a money market is ING Direct at www.ingdirect.com
Last but not least, make all of this automatic. A good place to make things automatic is Vanguard at www.vanguard.com. Here you can do everything yourself and don't need a financial advisor. Once you make these steps automatic you don't have to mess with them anymore. It will all be done for you and because it is all automatic you don't ever see the money so you don't know how much you are missing and will still be able to pay check and etc. with the money you get in your paycheck that you do see.
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