A dollar saved is two dollars earned!

It really is … A dollar saved is almost two dollars earned. Think about it. If your employer gives you a grand two dollar bonus, how much do you actually get? About a dollar, because you have to pay income tax, social security tax, medicare tax, etc. So in reality, you only got a dollar increase.

There are several ways you can save your dollars.

• You can buy things for bargain. Rather than pay full price for an item, you can get new items for a lesser price. Shop at Walmart, Big Lots, Christmas Tree Shop, places where you get good stuff for a less price. I am not saying, become a total cheap freak. But, it helps you save some money.
• Don’t buy brand new cars. The moment you drive the car off the dealer’s lot, it’s price is reduced by several thousand dollars. Purchase a pre-owned vehicle.
• Don’t purchase luxuries on credit. Save for luxuries. If you pay for your big screen tv, vacation, stereo system, etc. in cash rather than take a loan, you will enjoy them much better. On top of that, you also save money on interest that you would pay otherwise.

Most people are good at saving money in the above mentioned ways. But, the difference between the rich and poor people is what you do with the savings. Poor people buy more things with the money they save. Things that don’t appreciate in value. Rich people save or invest the difference between full price and the price they pay for items they need.

Question is … What do you do with your savings? Do you invest it for future or do you spend it?

Hope this helped. Looking forward to reading your comments.

Respectfully,
Mayur

Make budgeting work for you!

What? I’ve tried it many times. Doesn’t work. I just can’t stick to it. You need to be very disciplined to make it work. Budgets don’t work. It might work, I haven’t tried it yet – These are common reactions I get when I talk about budgeting to somebody. You know, it doesn’t have to be hard to tedious. Yes, budgeting needs a little bit of discipline, but it’s not hard as you think. A bit of planning, a bit of discipline and Walah! Budgeting becomes easy.

Most people simply budget for their needs. $1000 for rent, $300 for utilities, $300 for food, $150 for car payment, $100 for insurance, $200 for gas, and $300 for savings. This is how most people budget. But, remember we are humans. We have wants. If you are budgeting for a business, it is okay to budget only for needs. Businesses don’t have wants. But, people do. And, most people look at that extra $300 dollars at the end of the month and buy clothes, stereo systems, music cds, shoes, etc. and end up with zero or negative balance at the end of month. Then they wonder, I budgeted. I even followed it, It doesn’t work. I have no savings to show for it. But, they hadn’t budgeted for wants.

While budgeting, it is very important that we take our needs and wants into consideration. Out of $300 savings, take $100 and put it towards your wants. Plan early what you want, and budget accordingly. This way, you will have some money in your savings account.

Hope this helped. Looking forward to reading your comments.

Respectfully,
Mayur

Before Diving into the World of Investing

In his book Cashflow Quadrants, Robert Kiyosaki talks about 4 kinds of people - Employee, Self-Employed, Business Owners and Investors. While Employees and Self-Employed people form the left side of the quadrants, Business Owners and Investors form the right side of the quadrants. Point of this book is that it is okay to start your life on the left side of the quadrants, but make sure when your life ends, you are on the right side of the quadrants. Most people also desire to rich, so they make a dive – straight from employee or self-employed to investor. Bad Move!

Most people who have a comfortable job, start investing in real estate. Everything is hunky dory. They spot a good deal, seal the deal, start making monthly payments, and hope to sell the property when prices go high. Sweet! Then they get laid off from work. Trouble begins. Can’t pay the bills, money is stuck in their real-estate property. Can’t afford to make mortgage payments for real-estate property. I know what you are thinking, it won’t happen to me. So did a lot of other people whose houses are being foreclosed.

What does the Employee or Self-Employed person need to do? They need to create a supplemental income, a secondary income which they control. Not their boss. So, if something happens to their job, they can still afford to pay bills and make mortgage payments on the house. It takes worry off your head. You can still invest, but without much worries now. You don’t worry much if you lose money on the deal. Treat it like a learning experience. But, if all your money was stuck in investment and it turned out to be sour deal, you could have been in a depression.

So, look for a way to create a secondary source of income. Even if you don’t plan to invest, it will help you incase you lose a job. Always keep you eyes open for opportunities. There are plenty.

Hope this helped. Looking forward to reading your comments.

Respectfully,
Mayur

Job Security or Financial Freedom?

Last night, I met a computer consultant who had been out of a job for the past few months. His project had ended and he was looking for a new project. Upon inquiry, I found out that due to his Visa status, he could only work in computing field. Next question I asked him was if he could start a business under his visa status. That, he could do. I recommended he start a business of his own and also gave him a few low-cost ideas. This way, he could start generating some extra income.

To my surprise he gave me every reason under the sun why he cannot start a business and why job was the way to go. I knew I had to run away from this guy. His values about money and my values about money contradicted big time. He was the kind of guy who went from job-to-job looking for that security. He even told me that if he does not find a job by end of this month, he might have to sell his car, just to get some cash for survival. I really feel sorry for this guy. But, if he isn’t willing to help himself, there wasn’t much I could do.

However I am glad I met him, because he got me thinking about my beliefs about money. He treasured a job security, whereas I am gunning for financial security and financial freedom. Nothing wrong with what he was doing, but there is a lot of misery in that path.

Anyways, hope this got you thinking about what you are doing? Do you have a spare income? Are you gunning for job security or financial security and freedom? Let me know.

Hope this helped. Looking forward to reading your comments.

The 10 Percent Rule for becoming Rich

A couple years ago, I read a book called The Richest Man in Babylon by George S. Clason, and a few months ago I read another book called The Wealthy Barber by David Clifton. Both the books are about personal finance. They both talk about certain processes that are required for an average person like you and me to become wealthy. And, both the books recommend that you start it with the 10% rule. So, what is this 10% rule? By the way, I want to let you know that my wife and I have been following this 10% rule for a few months now, and its been working great for us.

The 10% rule is very simple. Every time you get paid, take 10% of your income and save it aside. Put it into your savings account, where your money creates more money for you in form of interest. I understand that most people live paycheck to paycheck and cannot afford to put 10% aside every paycheck. However, most people also spend money on things they don’t require and get into huge debt. At the beginning, it might seem a lot like putting 10% of your paycheck aside when you could be using it for other things but eventually you won’t even notice the difference. Your savings account will get bigger every payday. Within a short period you will have accumulated a small fortune.

This rule has worked for us, and I am sure it can work for you too. You just have to be disciplined about it. One of the best way to do it is getting the process automated. So, the money is directly transferred to your savings account rather than you manually putting it. If your company offers you direct-deposit, have them put 10% of your paycheck into your savings account. If you have a retirement account, put 10% of your paycheck into retirement account. If you get paid cash, immediately, put 10% of that money into your savings account.

You can create a fortune. You don’t have to be dependent on anyone for retirement. One of the concerns people have is I don’t make as much money as a lawyer or doctor would make. They have a higher chance of becoming wealthy, as opposed to me. No, they don’t. Because, if a lawyer and a doctor are spending everything they make they are broke at the end of each month. It’s not how much you make, it’s how much you keep. If you are saving from what you make, your expenses are less than your income which makes you richer.

Apply the 10% rule in your life and start your wealth building process. Begin it instantly. Do your research. Find out where you can get the most interest and you money will be safe. You can do it. You can be wealthy.

Hope this helped. Looking forward to reading your comments.

Respectfully,
Mayur