“Where Does The Money Go”

The other day I was looking at my finances and as many people try and budget. The thing is that sometimes there are months that you really don’t spend any money and other months you have surprises…in either scenario I have NO money.

Let’s take some of us that get paid every 2 weeks, now in my case and I am sure that many others experience this as well; I receive 3 pay checks in some months. Now the thing is on those months I expect to be able to put away all that check into savings, well I do, but then I end up needing to transfer money over to cover expenses, the thing is I don’t make any additional purchase that month, from the norm that is, and I still end up in the red.

“Where Does The Money Go”, I ask myself. I don’t understand why is it that I end up with no money like any other month and yet I get paid more, plus I don’t spend on anything else. Well, so I decided to get tough and live below my means, I decided to follow even to a stricter degree my last post, about “Living Below Your Means”. I said to myself it’s time to take away a few luxury items, for at least one full year and put away all the money I use to spend on those items, whether it was extra cable channels, daily coffee runs, those unnecessary cookies…I mean even my groceries will be audited…at least for one year and the most important thing of this all that I will be doing is that…I will start a spreadsheet and track the expenditures for each month…and see exactly what I spend and how much and where and whom and on-and-one.

My Perspective:

Start living below your means, start saving each month and start with $100 dollars the first year, $200 the second year, $300 the third year, $470 the fourth year and from then on. You need to think about the real important things in your life and think dearly about what you will be doing during your golden years…because I really don’t want to be working unless it is because I am helping someone on a part-time basis and it is a hobby or fun thing…or nothing at all. Anyhow, thanks for reading, till next time Latino Man signing off.

Start With $10,000 and Retire a Millionaire
by Jonathan Burton

Monday, April 25, 2011

The 7% solution: Let money and time work for you, no matter your age.

The millionaire next door could be you.

All it takes is money and time; it always does. But what this really means is you have to save money over time, and that's where so many of us struggle.

Reaching age 65 with $1 million saved requires strong discipline and sustained effort. You need to recognize the importance of starting early and putting money away regularly. But even if you don't have as much time, you still have options other than a last-ditch Hail Mary pass.

It can be done -- even if you start with just $10,000.

"Whether you're 25 or 45 or even 55, you've got to start somewhere," said Nathan Dungan, founder of financial education firm Share Save Spend.

Call it a 7% solution. Assume a 7% inflation-adjusted return from a portfolio of U.S. and international stocks, bonds and cash -- not overly aggressive, but an expected return that requires taking some risk -- and living well within your means.

"In order to save, you have to understand your spending," said Eric Kies, a financial adviser with The Planning Center, an investment manager in Moline, Ill. "Build some awareness of where you are now, where do you want to be, and what are you willing to do to get there."

Of course there will be bumps along the road -- potholes, even, that challenge your resolve. The financial markets love to shake and stir individual investors; don't give up, because it may be hard to get back in

"It's less about where the money is invested and more about your ability to be disciplined," Dungan said. "Ask yourself, What is realistic? What can I achieve? The best savers don't have magical thinking about money. They're honest with themselves."

25 Years Old: Starting Out

Forty years is a long time. So long, in fact, that it's easy to put off saving for the future. There are bills to deal with, college debt to pay, stuff to buy, vacations to take, a career to build.

Savings -- sure, but who has money for that? Indeed, one of every three Americans between the ages of 18 and 33 have no personal savings, according to a recent Harris Poll survey. What's more, 53% of this age group has zero in the way of retirement savings.

They're missing out, big time. If a 25-year old with $10,000 invested $320 a month at a 7% annual compound rate of return until they turned 65, they would wind up with $1 million.

"There's a reason why Albert Einstein called compounding the most powerful force in the universe," said Jonathan Guyton, a principal at investment manager Cornerstone Wealth Advisors in Minneapolis.

Whether or not Einstein really said this, the math speaks for itself. At 7%, your money doubles every 10 years.

If saving a few hundred bucks a month seems daunting, rest assured it only gets worse. One way to make the job easier is to rely on your job -- specifically investing in your company's 401(k) plan and enjoy whatever contribution match your employer offers. Think of it as free money.

Don't have a 401(k)? Open a Roth IRA if you qualify, and automatically deposit money into it from your bank account to get tax-free growth.

35 Years Old: Early Innings

Ten years later, the price of waiting has been high. Not as costly as it will be, but tough enough. Instead of $320 a month, you're looking at saving $775 a month to turn that $10,000 into seven figures at a 7% annualized return.

Don't beat yourself. Just save. Funnel money into your 401(k) so you're not dipping into your own pocket for the full amount. Take the Roth IRA route if you can. By now you may have a young family -- so do it for the kids. Show them you not only can make money, but also know how to handle it.

"Children can be extremely good motivators to good financial habits," said Eleanor Blayney, consumer advocate for the CFP Board and a wealth adviser in McLean, Va. who specializes in financial planning for women.

Teach the kids sound money habits, and teach yourself at the same time. Said Blayney: "It induces you to be financially smart."

45 Years Old: Halfway Home

At 45, you're likely established in your career, with a decent salary. You may own a home, and the kids are thinking about college.

It's good you're making money, because you'll need to add $1,850 every month to that $10,000 base in order to reach $1 million in 20 years.

"There's a greater sense of urgency; your window for taking advantage of time is starting to close," Dungan said.

Yet one in four Americans between the ages of 46 and 64 have no retirement savings, the Harris Poll found. Another 22% have retirement savings mostly in bonds and savings accounts.

With so little saved at this point, you would do well to reevaluate your expectations for retirement. Are you saving and investing accordingly? You may have to weigh the purchases you make today versus a stable retirement.

"Now's your chance," Blayney said. "Don't blow it."

55 Years Old: Winding Down

At 55, the amount needed to reach $1 million with a $10,000 bankroll is both comical and sad: $5,700 a month for 10 years.

Maybe you've been living paycheck to paycheck, and life has been good. You've got a nice house, a fancy car -- but no savings.

In short, you have a big hat, but no cattle. The millionaire is next door, and he isn't knocking.

This is your moment of truth. You may not become a millionaire, but you can live like someone who is on the way to being one.

Here's how: Cut expenses, save what you can, and work longer.

"If a client is in their mid-50s and hugely behind, we start to focus on lowering expenses by paying off debt, restructuring debt, or lowering housing costs," said Guyton, the Minneapolis financial adviser.

"If that change lowers their expenses by $1,000 a month, that's more beneficial than helping them accumulate an extra $100,000," Guyton said. Indeed, cutting $12,000 a year from expenses equates to what roughly $175,000 in assets would produce at a 7% yield.

And take care of your health, Guyton added. You're going to need it in order to show up at work.

"It's a whole different matter when you have to stay on the treadmill," Guyton said. "We don't mince words. We try to make it manageable and realistic, but there are some options that aren't on the table anymore."


My Perspective:
It never to late to start something. even if you put aside a measly amount, but having somthing is better than nothing. And if you can, you should start on your childrens retirement, give them a leg up in life and start them on their retirement. Thanks for reading till next time Latino man signing Off.