Wait. Rewind that. Run it back.
“…..extra at the end of the month.” Did you catch that? This is how many Americans save money. At the end of the month, your month is gone and you don’t save anything.
How do you get ahead?
Do what the rich do (but start smaller). Look at your pay. Look at your bills. Recognize that the world has shifted on its’ head (especially in the U.S. right now) and companies know that times are tough.
Questions to ask in your own self interview:
1. Am I in my company 401k? If not, you should be. Remember: 401k plans are for the long-run. This is money you are kissing goodbye for decades (and it will need decades to grow). Don’t get down about day-to-day stock market issues. Focus on the savings and your building of wealth for retirement and remember that the race is not always to the swift. In fact, often true value is build only with time and effort.
2. What is my after tax paycheck?
3. If I take my after tax paycheck and multiply it by .01, what is that number. That number is your savings the next time you get paid. Put that number of dollars and cents in money market savings. Then, each time you get paid use a different number. For instance, the second time, use .02. The third time, multiply your after tax paycheck by .03. Each time you get paid starting now, adjust so that you are increasing your savings by only 1% each time. This will allow you to gradually move your savings from 0 to 20% over time. And the best part? Make sure you take the savings before you pay any bill or purchase anything else. It’s the best way to pay yourself first.
4. What is your true emergency savings? Is it enough? We believe your emergency savings should be 15 to 18 months of expenses in money market savings and certificates of deposit (in an FDIC-insured institution). Because you are using the 1% Savings Plan, your savings will build a lot faster than you think! Get started as soon as you get paid next!
5. What can you do to reduce and then eliminate debt? Look at your bills. Look at your spending. Set a goal for reducing the percentage of your monthly payout in terms of regular bills (we recommend you set this goal be a reduction of between 10 – 15%). Spend time on personal spending (look at the last three months). Reduce this spending by 10 – 15%. Then, go after the companies you do regular business with. Ask them for help and be open to their suggestions with the goal in mind that you need to reduce your spending by 10 – 15% “so you can continue to be a customer.” Everyone understands hard times. Any reduction you can get should go immediately into savings until you have the proper emergency savings fund (see # 4 above). By increasing savings first, you will have a pad or fund if things get worse. Once you have reached the proper savings fund, move to paying off bills exclusively (starting with credit cards).
6. Do you owe too much on credit cards? We will simply point you to “8 Ways To Rock Credit Card Companies” at http://www.stickyasset.com/blog. Yes, we are against credit card companies.
Are there more steps you can take? Yes.
Education. Self-education. Yes.
Can you do this? Yes! You can do this and build savings while reducing debt. Then, you can begin to build wealth.
Rome was not built in a day. Steady as she goes. Ever heard that? Apply it to saving and debt reduction and elimination. Then, apply “steady as she goes” to investing. We can talk about that later. Go to work on the six things above in this blog and commit to making a difference for your family.
You’ll be glad you did!
HELPING YOUR KIDS GET AHEAD
In this country we don’t do enough to teach our children about money, managing money, saving regularly (and automatically), compound interest and steady investing for a long-term future. As a parent, we are always concerned that they get a good education and go to a good college so they can make a lot of money or have a valued career path. The truth is that we could do our children the biggest favor and one of the best things by sharing with them sound saving and investing principles.
You can join our free Facebook group (or have your children do it, too) by searching in the Facebook bar on your “wall” for “Live The Lifestyle Your Family Deserves.” Click on “become a fan.” It’s free and it ties our free blogs into that group.
If you want to give your children the same information we are giving ours, you can purchase the only thing we sell on any of our blogs or groups. It’s called “How To Survive Any Financial Crisis” and you can get it for only $4.95 at http://www.middleclassmoney.com.
Thank you for reading our blog and good luck!