Many people go through their young adult lives thinking that they will always rise like the sun and everything in their lives will continue on bigger and bigger and bigger. We are wired to be that way as humans. This is especially true when you are young.
You’ve heard the old saying: Sometimes bad things happen to good people.
Life experience teaches you that good things and bad things happen to everyone.
So, what do you do?
If you want to be wealthy, you must set your course.
What if you have no emergency savings?
Start by looking at your very next paycheck. Multiply your after tax pay by .01. Before you spend anything (even on a bill), take the number you get after taking YOUR PAYCHECK X .01 = XXXXXX and put XXXXX in money market savings. This is your emergency fund.
Each time you get paid after that first paycheck add another .01 to the number you use to multiply your after tax pay by in the first place. That means the second time you get paid, you will do this: YOUR AFTER TAX PAYCHECK X .02 = XXXXX. Take XXXXX and put it in money market savings. You will increase the amount by .01 each time you get a paycheck until you reach .15. This is our “1% Savings Plan.” It allows you to gradually increase your savings without killing your lifestyle. Once you “level off,” you will have regular savings down to a science. For more on our “1% Savings Plan” and other ways to build savings and then wealth, check out http://www.MiddleClassMoney.com.
Of course, if you work where you are eligible for joining the 401k at work, you should do that. If you have some extra room in your budget, you should also contribute regularly to a Roth IRA or Traditional IRA. We prefer a Roth, but either is good. Wealth does not build itself and anything of real value is not built overnight. Stay on the path and remember that the key is steady and regular savings.
Then, you will continue to build your fortress. Next look at your debt. Start with credit card debt. Here is a secret most of us don’t learn about credit card companies until it is too late: They are the enemy of your family. Don’t trust them. Don’t love them. Work to reduce and then eliminate your credit card debt and do not use credit cards unless you pay them off each and every month.
How do you pay these rascals off? It’s not easy, but we recommend you start by looking at the interest rates you pay on each card. We also recommend you become a pest to the credit card companies and work a system (built by you) to call them regularly, ask for a supervisor and beg, plead and argue your way to lower interest rates. Ask them for mercy. Beg them for a reduction so you can pay it off completely.
Try to consolidate your credit cards into a 0 or low interest card. However, be careful and watchful of tricks. Make sure it makes sense and there are no hidden fees or issues in rolling this debt together. Remember rule # 1 with credit card companies: Don’t trust them – read everything.
Then, start paying MORE than the minimum on the highest interest credit card. Pay the minimums on everything else until you pay the big interest rate card off. Then, choose the next highest interest rate card and pay MORE than the minimum on it until it is paid off.
You can do this. It will not be easy, but you will see the progress and get excited about being debt free.
There are other tricks, of course. You can check these tricks out at http://www.MiddleClassMoney.com or read our other blog at http://www.StickyAsset.com/blog. Our goal is to help middle class families fight back against a corporate driven world.
Remember this: Your emergency savings should equal 15 to 18 months of your expenses. Don’t worry if this is not the case right away; just work toward the goal with the “1% Savings Plan” and look for other excuses to remove any dollar you can from checking (because we believe a checking account is a money laundering account for other people’s money).
Involve your entire immediate family in the cause of building steady and regular savings. Brainstorm ideas about how to earn extra money simply for investing in long-term wealth production. This will teach your kids that saving and investing is not optional. It is something for every smart cookie.
HELPING YOUR KIDS GET AHEAD
If you think I was born saving money, you are wrong. My own family didn’t believe in saving. They don’t believe in having a 401k. They have had “emergencies” all their lives. These emergencies always get in the way of saving money regularly. I was not brought up to save and invest regularly and I have made every mistake you can think about when it comes to money. My parents thought they were shielding me from the realities of bills and worry. In fact, they were isolating me. I learned nothing until I had made many of the mistakes they made. I have had to learn the absolute hard way how to get savings on track and make it a part of your life without killing your lifestyle. I have had to learn the hard way how companies mislead with marketing. It is my mission to share what I have learned about regularly saving with my own children and also share it with you. That’s why we have a lot of “free” (blogs like http://www.boostmywealth.wordpress.com and http://www.stickyasset.com/blog and groups on Facebook like “Coupons & Coupon Codes”)!
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!
Connect with us on Facebook with these free groups:
“Coupons & Coupon Codes”
“Live The Lifestyle Your Family Deserves”
“The Money Store”
All on Facebook – join. It’s free.