Hope for your financial life and beyond

2 Milestones You Need to Reach Before Investing Money

When it comes to investing money in the stock market, time is your greatest ally and your greatest enemy. The longer you are investing money the greater likelihood you’ll generate great wealth. Shortening that time period by just a few years could significantly reduce the amount of wealth you’ll create.

investing moneyThat’s why it’s important to get started early – in fact, the earlier the better. Time is the most critical element in the investing equation. It doesn’t matter if you are a high school student making minimum wage at a summer job, a college student paying your way through school or married with your first child on the way. The earlier one can begin investing, even in small amounts, the more one can maximize big returns in the long run.

The following examples demonstrate this point:

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How to Save One Thousand Dollars in a Month

If you are serious about getting out of debt and building any kind of financial future, then saving regularly is a must. The best part is you don’t have to begin with much. All you need is to save one thousand dollars just to give yourself some cushion.

Every building requires a solid foundation. For your money, that foundation is savings. Without adequate savings you will struggle to get out of debt and will always be susceptible to emergency situations.

save one thousand dollarsSaving money isn’t sexy. We’d rather go spend our money on gadgets and entertainment that would give us an emotional high. Saving money and leaving it in the bank is just kind of emotionally blah.

That may or may not sound like a daunting task depending on your situation. Some of you may be struggling to pay your basic bills.

But you can save one thousand dollars quickly. In fact, you could do it in only one month.

How to Save One Thousand Dollars

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How Long Do Common Household Items Last?

Did you have an appliance or other household items that need repaired? One biggie that hit our budget early last year was replacing one of our heating and cooling units. We had to upgrade to a new furnace and air conditioning unit for our upstairs. Needless to say that was pretty expensive.

Since moving to our house over a decade ago we’ve purchased these household items:

2 new air conditioning units, 2 new furnaces, a new refrigerator, a new stove, a new dishwasher, a new microwave, a new garbage disposal, a new water heater, a new dryer, 2 new washing machines (bad luck here), 4 new vacuums (we buy cheap ones), 1 new LCD TV, 1 plasma TV, 2 new garage doors (main and basement), 2 new lawnmowers and countless other electronic devices (computers, iDevices, clocks, etc.)

This is the reality of owning a home…all these items will break at some point. When that occurs you will either have to a) do without or b) replace them.

Research on How Long Household Items Last

The issue here is twofold:

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Emergency Fund Basics: The Step On Which All Other Success Is Built

emergency fundWhat’s that? Oh…I see…you are just getting started with the “getting-my-financial-act-together” bit and don’t know where to begin. Well welcome to Emergency Fund Basics, the first step to success in all other areas of personal finance.

That may seem like a bold statement, saying that an emergency fund is the basis upon which all other financial decisions should be built. I can attest though, from personal experience, having money set aside strictly for emergencies is the #1 strategy that has propelled us forward in paying off debt, saving for retirement and college and investing in the stock market.

Why is that?

Because it’s a fact – emergencies are going to come and we will have to manage through the crisis. Sometimes they will rain in droves.

If cash is not available to take care of the emergency the moment it hits our door, then we are really only faced with one alternative – go into debt to deal with the situation. And the constant accumulation of debt hinders our ability to accumulate great wealth over time. The “going-into-debt-to-solve-the-emergency” cycle MUST be broken.

So today I’d like to outline the basics of the emergency fund process. You’ll learn when to start one, what to use it for, how much to save and the best way(s) to fund it.

What is an emergency fund?

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Guess Which Age Group Is Starting To Save?

Young woman with broken down car

Will you have enough saved if this emergency happens?

You may have seen this article last week in the Wall Street Journal that detailed the current status of Americans and their emergency savings. I probably don’t have to describe to you the article’s tone. Your intuition tells you it was filled with negative statistics.

The study from Bankrate.com showed that:

26% of Americans have no emergency savings…

66% of Americans don’t have the recommended six months of expenses saved…

Those with enough saved to cover expenses for three months shrank to 40% in 2014, compared to 45% in 2013 and…

Only 46% of those earning $75,000 or above have six months of expenses saved.

That last one is especially disturbing. $75,000 is a fine yearly income. That equates to 300k earned in 4 years time, assuming no raises or bonuses. Throw a tax refund or two in there and you are telling me 54% of the people in this situation can’t save six months of expenses in four years? That’s fascinating.

Of particular note, guess who the most likely savers are turning out to be according to the study?

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