Words to live by

Know these are words to live by:

Don't argue with stupid people; they will bring you down to their level and beat you with experience.

Two checking accounts-Budget

Member writes:

"Have my budget set up based on my new income. Calculating my montlhy bills
combined with a food and gas budget will eat up my entire monthly pay check.
All extra job cash will be used to help furnish the new apartment, or as
extra savings, or as some extra spending $."

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MONEY PROF responds:

If you mean "scratched out" budget IT WON'T WORK". ( I personally guaranty you it will not work over time). I'm 100% sure.


IMPORTANT: I'm positive, A 100% POSITIVE. THE ABOVE WILL NOT WORK.

If you mean you followed my advice below you have a chance:

( a very high chance if you buy the "excuses are BS" thinking)

The first step is to promise yourself you will always have a budget.

The easiest way to do that is to have two separate checking accounts. One (called household) is for bills that you don't have much control over, example: Savings, phone, electric, rent, car payment, car insurance, plates for car, etc.
The other is for credit cards, ( which I highly recommend you don't use unless you make payment before you use the card) food, beer, partying, gas, restaurants, clothes, gifts etc.
You compute what the bills are per week and deposit that total amount into household acct. every week, so if car insurance is $520 a yr. then you deposit $10 a week into household acct.
This sound like a pain, but it isn't as you would only compute this a few times a yr. once you came up with what the weekly figure needed to be. Best way to deposit is "direct deposit" if where you work offers this option.
After the correct amount is deposited into household acct., the balance goes into the other acct. The rules are simple, you can only write checks out of household acct. for the items that you listed as weekly deposit items. No excuses to yourself.
In the other acct. the only rule is save that weeks gas money, save spending money, and don't bounce a check.


The important part is the mental attitude. For example "what if I don't have enough money in the other checking acct. to go out with friends for drinks and dinner," then stay home and eat spaghetti. ( because you should have saved for this in advance)

No, not take out restaurant spaghetti !!!!!!!! :)

The box of spaghetti you bought on sale at the Supermarket.

Is it done or not?

The email in the middle is from one of our group.

Definitely not posting this here to embarrass anyone. I'm using it as its the PERFECT example of what I'm trying to get through to all of you. ( no, names or email addresses)

Just in case ( and I hope not) any of you agree with the excuse. Ask yourself: is she or is she not behind??? Or more importantly if she really did read them all at once then how much thought & time went into it. ???? Did she get the full benefit??? Or was it a quick skim over. ???? Etc.

Maybe in the skim over she missed this one:
All I ask is you provide the motivation. I'll be glad to provide the knowledge, experience, and the learning from my mistakes.

Stop here for just 1 min. I know you're saying "I GET IT" , but is that because you can see it in someone else, but not yourself????
Ask yourself "would I have found a way to read the emails in the example below instead of making excuses"????? If truly yes, please help me to teach the theory. :)

I need to get this point through to all of you OR what will happen is in the end you'll learn about investing, but a year later, or 5 years later you'll come up with a BS excuse of why you didn't put the money in. OR why you took it out. And you'll think it was a "good" excuse. :(

Why do I think so???? Because almost ALL the people I've done this with in the past either stopped putting money in or took it out. A few ( less than 1 in 10) did follow everything and have really good money saved. I think what went wrong is first of all I put very little time into them, PLUS I used that little time on investing theory. Instead of what really was needed. So the out come was 8% of zero, instead of 5% of zero. :(

Note: The email below starts with an excuse, and ends with " I'm not full of excuses." !!!!!!
__________________
STUDENT writes:

"I am just now catching up on all my emails. No, I haven't checked it b/c I
no longer have home computer access now that I'm living in my own apartment.
I only have access at work (which I can't really do any personal work), at
my friend's and at my apartment office on weekends.
My 401K will already be set up
in about a week for savings for retirement.
I understand that 5% of 0= 0! 8% of 0=0! 20% of 0=0!
I hope that you were not referring to me in one of your emails b/c I do
respond, just haven't been able to much these past coupla weeks. I have been
responding in regards to compounding, I have set up my 401K, I am setting up my direct debit for AG Edwards next week.
There is definitely a lot to "get" about investing, but I am getting it.
Though I know I've had terrible examples, I am not ignorant and full of BS
excuses and I just wanted to make that clear."

MONEY PROF contiues:
As we talked about before I'm not helping you if I tell you what you want to hear. You have all your friends, parents, relatives, co workers, etc. for that.

So given that: You're definitely smart or you wouldn't have gotten as far as you did in college. Obviously you're ahead of a lot of people in life. Where I see potential for improvement is you really need work on BS excuses. I really don't think you're being stubborn about it, worse......... I think you really can't see it yet. Let's try again, 95% of people have excuses for why it didn't get done. If you can be in the 5% that really believes " IS IT DONE OR NOT" it will give you a major advantage over them be it financially, on the job, or in life in general.

Now this next one might be too high level for you at this point, but I'll try anyway:
You're NOT receptive enough on the ability to take criticism, as soon as I "push" you what you want is a pat on the head. Again

THE PEOPLE THAT GIVE YOU PATS ON THE HEAD ARE NOT HELPING YOU. ( of course you don't need everyone pushing you at once, but I think I'm right that I'm the only one that is balancing that side???) . Now cut out the BS with "I want to make that clear", when you just finished an excuse, and open your mind to learning how to not think like most other people.

I'm rooting for you, but I guarantee you won't make it as high as your potential until you accept "is it done or not, excuses are BS, you don't find time, you make the time, need much less pats on the head, less defensive," etc., etc.

The bottom line: If I thought you didn't have the ability to do it I wouldn't push you. I'd "write you off" as I usually do with others that don't want to hear it. I think you can do it, IF I can get you to accept a higher level thinking process. Let's do it.

You provide the motivation

MONEY PROF states:
We added a new member today:
___________
NEW STUDENT writes:

"I know I'm a little late with the offer but after talking to you
I was hoping I could still get some help with you
starting my retirement."

________________
MONEY PROF responds:

Sure glad to help.

All I ask is you provide the motivation. I'll be glad to provide the knowledge, experience, and the learning from my mistakes.

Email me name, DOB, address., & SS #. I'll get paperwork sent to you to open IRA. Sign and return with a check for any amount.

To open acct. any amount is ok, but to invest you need to get bal. up to $250. Then after that $50 increments. Highly recommend direct deposits to your IRA. This is for long term investing so don't put any money into IRA that you will need before age 59.

Lets start with you getting caught up with this group. Read emails thoroughly and email me any questions. You'll need to double up on reading to catch up ASAP.

Bills

STUDENT writes:

"here is what I have come up with for my bills..."
______________

MONEY PROF responds:

Good start. You have it half beat just by thinking about listing bills, and having a separate acct.

Prevent these potential problem:

The most IMPORTANT Part: you need to always keep a copy of the items that you listed attached to the household checkbook. ONLY those items come out of there. ONLY.............. no excuses. NONE ever.

For this to succeed the frame of mind needs to be: "Nothing I can ever say is acceptable for an excuse to write a check out of household that's not listed."

The next potential problem I've seen on this program :
At some point you'll need money for the other acct. so you'll look at household and depending on the time of year, or month the bal. might appear high. Sooooooo what a great BS excuse to say you made a mistake and take out some of the money. Nothing comes out that's not listed in advance.

The only hard part of setting this up is the math for the starting point. For example: if car insurance is due in 2 months, don't divide by a year. Be careful with the math. How are car ins payments due?
Same with reg bills. In other words be sure you have the correct amounts in acct., in advance. Suggest using a small say 3% extra overage to cover price increases for the year. ( don't need to do math on each item just add 3% of total).

Highly recommend cutting up credit cards, except debit card.

Then if there is a balance on credit card that you can't pay in full this month ( if so beat yourself up good, then promise yourself would do it again as you're cutting cards)

DO NOT use household acct. for future credit card charges.
But do use household IF you're in hock to pay it off. ( ONLY CURRENT BAL.) Only if bal is an amount you can't pay in the next few months.

Suggest NOT saving beyond a few weeks pay, or even IRA, until cards are paid, as you're probably paying high interest on cards????

I know I sent this to you ( below) before, but reread it anyway:

The first step is to promise yourself you will always have a budget. The next step is to commit to be saving for retirement now. Yes, now. You will be a millionaire if you invest 10-15% ( depending on starting age) of what you earn per week into the stock market. EVERY week.
The easiest way to do that is to have two separate checking accounts. One (called household) is for bills that you don't have much control over, example: Savings, phone, electric, rent, car payment, car insurance, plates for car, etc.
The other is for credit cards, ( which I highly recommend you don't use unless you make payment before you use the card) food, beer, partying, gas, restaurants, clothes, gifts etc.
You compute what the bills are per week and deposit that total amount into household acct. every week, so if car insurance is $520 a yr. then you deposit $10 a week into household acct.
This sound like a pain, but it isn't as you would only compute this a few times a yr. once you came up with what the weekly figure needed to be. Best way to deposit is "direct deposit" if where you work offers this option.

After the correct amount is deposited into household acct., the balance goes into the other acct. The rules are simple, you can only write checks out of household acct. for the items that you listed as weekly deposit items. No excuses to yourself.

In the other acct. the only rule is don't bounce a check.

The important part is the mental attitude: For example "what if I don't have enough money in the other checking acct. to go out with friends for drinks and dinner," then stay home and eat spaghetti. ( because you should have saved for this in advance)
No, not take out restaurant spaghetti !!!!!!!! :)
The box of spaghetti you bought on sale at the Supermarket.

You need me to balance your friends

Member writes:
"This being said, I need to... as u say, "Cut the BS" STOP spending and get my goals moving financially. I liked your story about the toy. That's how I view it! That's something I've always grasped--now I have to put it into action. "
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MONEY PROF responds:

I know you're saying ok, lets get to the stock market. :)

But remember.................. 5% of zero is zero, and 10% of zero is zero.

The young man that took the money out of his IRA a few days ago doesn't need to learn how to invest. :(


Here is the hard part:

That most of you don't want to hear. WHY .....................because you know I'm right. ( yes I get that you're smart enough to know most of this, the problem might be you're not yet disciplined enough to follow it??) That is what I'm trying to instill.


IMPORTANT:
Off the subject for a min. Why you need to stay with this and not quit or slack ( are you thoroughly reading emails or doing the BS "I don't have time"?) is I don't think you're getting this any place else.

You need me to balance your friends, boyfriends, girlfriends, Aunts, relatives etc. My guess is 98% of your friends would say this is all BS, their advice " live, laugh, love & don't worry about tomorrow". They will be standing by the mailbox at 68 yrs old waiting for the SS check to buy food. You will be vacationing on the beach and having the SS check direct deposited into your acct. ( of course automatically :)
No, not at 68, 30s as you saved for the vacation.

You have two three year olds with one toy, you say whoever goes first gets to play with the toy for 5 min., whoever goes second can play with the toy for 2 days. What do they both pick?

If the above doesn't motivate you, then maybe this will piss you off enough to take action:

"From birth to 18 a girl needs good parents; from 18 to 35, she needs good looks. From 35 to 55, good personality. From 55 on, she needs good cash. I'm saving my money." -- Sophie Tucker

Do you really want to be in the position of not being in control later in life??? You have to pay, do you pay now or pay later is the only question. And not always in cash. :( For example: do you pay by being in a relationship you hate but need to stay as you are dependant on that person for financial support??? Easy to say NO WAY now, but then work two jobs??? My point is you need to be in financial control of yourself now.

You need to decide what is more important, do you really need that extra 10th pair of shoes or do you just want them. NEED or WANT ???
Do you drop that extra $20 in the bar, or do you save it to buy the shoes?? Or do you invest it??
Let me try a different approach: I'm trying to get you thinking ( right now you probably don't think, you just get the urge and BUY, be it lets hit the bars, I'll buy more shoes, drop $50 on dinner AND bar, better yet hey lets throw a big party etc. etc.) I'm sure all of you see it in others: "I don't have any money to save, or worse I can't pay my bills", and you know you personally saw them waste $50 yesterday!!!!!!!!!!!
Please email me that you at least read this. Since I'm not getting paid, want to have the feeling I'm not wasting my time. That will be my pay.
One last point, nothing wrong at all with doing any of the above spending examples IF the money was saved for that fun thing out of the spending money. (Yes, in advance).

Repeat:
One last point, nothing wrong at all with doing any of the above spending examples IF the money was saved for that fun thing out of the spending money. (Yes, in advance !!!!)
Please email me that you at least read this. Since I'm not getting paid, want to have the feeling I'm not wasting my time. That will be my pay.

Why you can't wait to invest

STUDENT writes:

". 45 to 60 is only 15 years and it would double like 1.6 times so like 3,000 $ at 60"
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MONEY PROF responds:
Yes, close enough. Wanted you to see the difference.

Save this for future use: http://www.math.com/students/calculators/source/compound.htm

For those of you in 20s use 8% compounded. ( we'll discuss why at a later date)

I'm trying to illustrate the difference of why you can't wait to invest.


$8,000 vs $2,500 on ONLY $1,000.

In other words IF you wait til 45 you need to invest $5,000 per the $1,000 at 25 to be even. Do you save say $2,000- $3,000 now or $10,000 $15,000 later and only be even ??? Do you really think you can save $15,000 per year later ??? If so you're not only dreaming, but you'll come up with a BS excuse of why not wait even longer. So start now.
No not next week, month, or my favorite BS "soon". A firm date.

Toy Story

Now I have a question for you: do you think anyone who would close out an IRA would be following the above advice on "household acct"??? Would the problem be that person didn't learn enough about investing ??? Or would the problem be that he isn't mature enough to be able to distinguish between WANTS & NEEDS.

Being mature is not a number of years, it's a state of mind, but easier to illustrate this way:

You have two three year olds with one toy, you say whoever goes first gets to play with the toy for 5 min., whoever goes second can play with the toy for 2 days. Now for your test: which choice do they both want???????????
So you all know the correct answer, then if you can apply that to yourself you will be able to follow the advice suggested in the 2/27/05 post "budget- two checking acct."

You want to buy a car? Start a business?

STUDENT asks:

"OK so I know that investing in retirement is VERY important, but this is where my financial worry comes in. In the future, lets say I want to start a business, buy a car, a house etc (and by future I mean late 20's-30's) I would need something in savings to do this with---is that correct? Or is there a way to invest somewhere else so that in say 10 years, I could have that money set aside for such things which collects annual interest"

________________
MONEY PROF responds:

You would have another acct with Ag Edwards ( or another brokerage)

What would be different is it would be taxable.

Another major difference is you would have to invest much more conservatively.

We'll get into this in detail when we're into investing. But for example:

x time until you'll need money = x % to have in stock market.

This is very rough as there are other factors, age, future income, tolerance for risk, etc., etc.

Will need money in 5 years= none in stock market, 10 yrs = 30%% in market. 20 yrs = 80% in market. Why is because based on past history the market goes up over 20 yr periods. On a year to year bases anything is possible. ( BTW: if you ask someone their opinion on what the market will do this qtr. or this year and they answer you, then you know they don't know sh*t. The correct answer is it might go up, or it might go down.)

Really shouldn't have got into the above investing theory at this point.

Why.....................
repeat after me:
5% of zero is zero, 8 % of zero is still zero. repeat after me: 5% of zero is zero, 8 % of zero is still zero. And 20% of zero YES, is still zero.

So that takes us to lets say buying a car in future. You would compute the estimated needed amount of money, less trade in on current car.

( you would use current car price and add say 3 % per yr for increase.,

then take your current make of car and use the yr of an older car that equals the yr you'll buy the new car. For example: say you have a 2002 now and you're plan is a new car in 2007, then look up a 2000 car to get rough trade in amount on 2002 in 2 yrs. All this can be done in 10 min. using NADA on Internet.

NADA Guides - New Car Prices, Reviews, Rebates, Dealer Quotes

Once you have that figure you'll know the amount you'll need for car.

The correct answer is YES you pay cash. But obviously that won't be an option on this car ( but should be in future). So you compute what will be saved and what on credit. NEVER exceed 3 yr loan on new car. ( less on used).

Now the IMPORTANT part. Reread this often:

I know all of you want to learn about investing and making money in the market, but I'm telling you this below is the important part now.

...............repeat after me:
5% of zero is zero, 8 % of zero is still zero. And 20% of zero YES, is still zero.

The first step is to promise yourself you will always have a budget. The next step is to commit to be saving for retirement now. Yes, now. You will be a millionaire if you invest 10-15% of what you earn per week into the stock market. EVERY week.
The easiest way to do that is to have two separate checking accounts. One (called household) is for bills that you don't have much control over, example: Savings, phone, electric, rent, car payment, car insurance, plates for car, car repairs etc.
The other is for credit cards, ( which I highly recommend you don't use unless you make payment before you use the card or debit card) food, beer, partying, gas, restaurants, clothes, gifts etc.
You compute what the bills are per week and deposit that total amount into household acct. every week, so if car insurance is $520 a yr. then you deposit $10 a week into household acct.
This sound like a pain, but it isn't as you would only compute this a few times a yr. once you came up with what the weekly figure needed to be. Best way to deposit is "direct deposit" if where you work offers this option. IF IT'S NOT AUTOMATIC IT WON"T WORK.
After the correct amount is deposited into household acct., the balance goes into the other acct. The rules are simple, you can only write checks out of household acct. for the items that you listed as weekly deposit items. No excuses to yourself.
In the other acct. the only rule is don't bounce a check.
The important part is the mental attitude. For example "what if I don't have enough money in the other checking acct. to go out with friends for drinks and dinner," then stay home and eat spaghetti. ( because you should have saved for this)

Now I have a question for you: do you think the guy that closed his IRA yesterday was following the above advice on "household acct"???

Learn from other people's mistakes READ THIS OFTEN

STUDENT writes:
"Thank you again for your help,"

___________________
MONEY PROF responds:
My pleasure IF you're serious, glad to do it.

Reread this often.

I know at this point it looks like I'm getting side tracked on investing training BUT I'm not. I'm not worried at all about you learning proper and prudent investing. I'm much more concerned about the BS excuses for not putting the money into your IRA, or other retirement accounts.

This below is not to be negative, but to try to get you to learn from other people's mistakes. And for you to understand where I'm coming from:

Why this concerns me is past bad experiences: a few examples: On one of my "projects" I really thought I had 100% succeeded. The "student" put money in an IRA, and put money into a work 401K EVERY paycheck for over 10+ years. It was invested wisely and got good returns. I was actually bragging on the great success I had. Then all my training on investing didn't matter as evidently I didn't do enough "excuses are BS" training. Her BS excuse was to take $10,000 out of IRA for her wedding. ( why $10,000 is had to withhold min. tax AND 10% penalty to IRS out of the $10,000 !!!!!!!!!!)

Next BS excuse: at the time she did this said she would put extra in to make up for it, never did. And the final major BS excuse changed jobs and said she needed money so wouldn't put money into 401K for a few months and then start.............. that was 3 yrs ago!!!!!! ( I guess as bad as this is, it beats the crap out of the ones that don't put any money in.) :(

A different story: Member sounded interested as had emailed me on wanting to learn about investing. So I did the IRA emails, some emails on investing 101 etc. ( BTW: for your management training, the above is the hardest to read as the person is not lying to you, they're lying to themselves) Etc. Set up the AG Edwards acct. She made 2 small deposits and then said she didn't have enough money to do an IRA. !!!!!!!!!!!!

( always had money to have a drink with friends, or go shopping, yes, vacation etc.)

This was one of my favorite BS excuses: lived like the above for years, then when I "pushed" her on the excuses are BS theory she wanted to discuss that it wasn't true as she was buying 13 cent soup on sale, and not shopping. YES, she was, but for a few weeks. The cause of being broke was previous 3 yrs, NOT 3 weeks!!!!!!!!! :(

The good part about the above story is this Student is back & giving it a fresh shot. In process of setting up payroll deduction to a 401K plan at work. I think ( hope) learning to accept excuses are BS. :)

Then there is the young man that put money into IRA for 2 years. ( this one isn't so sad for me as I had very minimal time into this one, but sad for him) then he was moving out of area. so said he would stop auto deposit for 2 or 3 months and then start. That was over a year ago!!!!!!!!! The other BS on this story is he started very small and saying he would increased deposits in time, never did. :(


The last example I'll give you is I got this person to put money into a work 401K for several years. Left job and rolled it into an IRA. Never made deposits to IRA in the last 15 years, but at least had a few bucks that was growing.
( so small though in correlation to age that will definitely be standing by the mailbox waiting for SS check. :(

A few years ago her husband told her that if she would take $15,000 out to use towards a car, he would put the money back in. ( I don't think lying to her, I think lying to himself) I explained to her the taxes AND the penalty. She took it out anyway, and after about say 5 years $5,000 of the $15,000 was put back in. And none since then :(

Yes, I do have success stories and will give you some of those at a later date.

I hope that this batch of members end up following the wisdom of this old guy. Who didn't learn all of this by being smart but by learning from mistakes. I want you to learn from other people's mistakes and NOT your own.

Reread this often.
Learn from other people's mistakes.

More on "Excuses are BS"

STUDENT writes:

"I already have an IRA that I put $500 into which you help me set up through A. G. Edwards. It's up to about $550 now. I set this up the summer going into college from Graduation money. I had a really great Econ teacher in High School that made us calculate out how much we would need to put in the bank every year until we are 60 to have 2 million dollars. He chose 2 million because that's what many have predicted will be the amount needed to have a decent retirement for my age group. I calculated around 2000 dollars a year starting at age 21. To me, that's a lot of money. However, if I put $ aside every paycheck like you said, it is do-able."

____________
MONEY PROF responds:

OK, GREAT. I had forgot about that. :(

You're ahead of the thinking process already if you even know what you need to save.

For my BS excuses on not having your acct online:
I keep an eye on over 45 accts. Between my own, the company profit sharing plan, sons, grandchildren, relatives, friends, friends children, and yes, friends grandchildren.

Now, be honest does that make it OK??? How much do you really care about my friends grandchildren's accts?????
All you want to know is your acct. OK. ( if it does make it OK, then we really need to do some work!! But I doubt it.)

LEARN THIS: Excuses are BS, WAS IT DONE OR NOT!!!!!!!! Its too bad there isn't a course on this in college. Or High school, but might be too hard to teach at that level. You will get more out of really accepting and applying this than 10 courses. ( no, don't cut your fall schedule :) Every time you run into this in life, say to yourself: was it done or not??? If not, excuses are BS.


Soooooo, I already signed up this morning to view your acct. online. You will be mailed a form to sign to authorize me to see your acct., look for it about Mon. Something must have gone wrong when we first set that acct up?? If you don't receive it by Tues. March 1st, call [...] to mail you another form. Do they have your correct address college address??? If not, call [...] to mail you another form to correct address to authorize me. ( as the one I signed up for goes to whatever address you have on file).
Hold it !!!!!!!!!!!!!!!!!! Could that be the problem on this???

Before Taxes

STUDENT asks:

You said: My suggestion is this amount should be 10% of your earnings before taxes.

How do I get it taken out BEFORE taxes?

______________________

MONEY PROF responds:
I meant in calculating the 10% use the gross pay, not the net pay.
Again, only use 10% if positive you won't take money out.

At your current tax bracket and your age you don't want it tax deferred.
Your further ahead with a Roth IRA. Which means no deduction now, but NO TAX later when you take the money out at age 59.

On a 401K you have to have it tax deferred.

Pay yourself first

STUDENT writes:

"Probably being a woman this is going to be much harder for me. I have a horrible spending habbit that I need to cut out of my life. I work really hard but at the same time the money"

_______________________
MONEY PROF responds:

Not true, don't do women's discrimination.

Males have the same problem, just different items. Instead of more shoes, its chrome air intakes for their hot car. etc. A male relative by marriage, bought a $100,000 oversized truck.

YES, you guessed it, ON CREDIT!!!!!!!! Had it for a while and when he realized he couldn't afford it sold it for a big loss. He owed a lot more than he sold it for.

The answer is "pay yourself first". In other words you save first, then spend. For it to work good it should be automatic. If possible payroll deducted to say your checking acct., then a set amount automatically transferred to your brokerage acct. My suggestion is this amount should be 10% of your earnings before taxes.

On future discussions we need to get into the two separate checking accts. theory , you probably can wait on that until you have set bills.

This is an important part if you have bills, rent, electric, etc. If so, HIGHLY recommend two checking accts. Will discuss this with you on future emails.

BTW: there is nothing wrong with spending for items you enjoy, clothes etc., JUST SO you "saved to spend".


My personal spending first , and nothing left to save later story:

When I was 18 yrs old I made real good money (for the age) as a meat cutter in NYC. In today's dollars probably $600+ a week. My roommate was a mason in construction and made about $750+ a week. We were so broke that we couldn't get through to the next paycheck. Couldn't piss the money away fast enough in bars and restaurants etc. I would borrow from roommate, on Fri., he would borrow from me on Tues. ( yes, every week!!!!!!!) Had nothing to show for it, went out partying 7 days a week. Now here is a really dumb one: I thought the problem was that I needed to earn more money. :( So worked construction a few times on my day off to earn more money.

By 19 yrs old fortunately cut down the partying, and was on a budget.

By 20 was saving for down payment on a house and bought the house at 20 1/2 ( lied on age to bank :). My point is its NOT what you earn as much as what you spend compared to what you earn. ( obviously over X dollars, but that x is lower than you might think).

If you're interested to pursue the pay yourself first program. You will need to set up a brokerage acct. for an IRA.

I'll get it started for you, email me SS#, address you want mail sent to, date of birth, and phone#. You can open the acct for any amount of money, like $5.00. For automatic transfers I think the minimum is $50, but not a problem as you can adjust the time. For example every other week, or once a month. For investing the minimum is $250, but after that then $50 increments. You don't need the $250 up front, this just means you need to get up to $250 in the acct. before it can be invested.

Excuses are BS

STUDENT WRITES TO MONEY PROF:

"Thank you so much for recomending this book. I bought it online for a $5.00 and it should be here within a few days. It'll be good reading material while I'm on spring break. I'm very interested in learning more about the art of investing. I have a lot to learn."

MONEYPROF responds:

If ok with you will CC your Mom at this point. Why I'd like to do that is I don't have the time for the needed follow ups, and the detailed help that might be needed. What this will do for example, is she will call to ask you a question from the book. You might come up with an excuse of why you didn't do the say 30 min. reading over 2 days. Hopefully she will say "excuses are BS". Which will piss you off in the beginning.

But.................. my goal is you will say it to yourself in time.

At this point you might be saying " what the heck does this have to do with investing". So trust me on this one for now, it does.

Please do however email me questions you have.

At some later date if you don't want to do that just let me know.

( the Mom part not the excuses are BS part. :)


Really don't want to teach you "the art of investing". I'd rather teach you an easy way to invest, that can be automated. Which will serve you well over the long term. But it won't do you any good if you don't have the discipline to follow it.

So lets start with this: if you invest zero $ at 2% earnings, you have ZERO.

but......... if you learn how to invest and you can average 8%, the problem is zero $ @ 8% is still zero.

What to invest in is the easy part to learn. The hard part to learn is the thinking process. The discipline etc.

For example, I thought you ordered the book 2 weeks ago, so why is it not delivered yet???

Spring break?????? This book can be read in a few hours.

You don't find the time.......... you make the time.

My suggestion is to start with some things like this below first.

Then get into the investing part.

I've been working with a few other people on "investing". Having quite a bit of success with two of them. And some with the others.

I'll send you some of my emails to them.

BTW: a couple of them are close to your age, early 20's. Won't use their names or yours.


This email is to address one of the BS excuses that this young woman used ( she had a BS excuse for EVERYTHING):

"Deal is a deal" and the payments will be on time.

This is to address her excuses for being short of money and making a payment late. In her mind it was OK because of...........................X.


I had already emailed her the "hard ass" BS excuses email. This email is after she backed off and agreed to make future payments on time.

Great. Glad to hear that.

Save this email, and reread it often. This is NOT the type thing that can be mastered by a read through. It will take a while to totally change a thinking process that is further justified by almost everyone you know also thinking that same way.

I can't tell you enough how much it will help you in life if you can be in the few % of people that really believe in your heart "is it done or not" and all excuses are BS.

Remember this:

The good part about this is most people really believe that it was OK to not get X done BECAUSE of ........... fill in blank. There will always be a" blank" to use.

If you can ever beat this it will give you a major advantage over all of them. In other words, what if everyone "got this'??? can you imagine how hard it would be to get ahead in life?? But................ I'm telling you it is a VERY small %.

So start with things like the 10th means the 10th. etc. Don't lie to yourself with excuses. Being broke today has nothing to do with eating 13 cent soup today, it has to do with shopping last yr. or 2 yrs ago, etc.

Let me give you an example of the next level when you really believe "is it done or not", ALL excuses are BS:

In my starting years there were 5 stores in [town], when I started we were the lowest in sales, on COD deliveries etc. ( BTW: #1 now) At that time on holidays warehouse suppliers quite often ran out of high demand holiday only items. All 4 of my competitors thought: The excuse: Hey it's not my fault, I ordered it and the warehouse ran out. The beauty part about this is they REALLY believed that.

We ran out too as my supplier ran out of stock.

My thinking" did it get done or not" the answer to myself : was NO.

So if I'm in the all excuses are BS mode;

I make a list for the same holiday the next year and order those items just a little early in advance and I have them to sell when the others run out.

Don't confuse this with being smart, nothing to do with that. A low level person in retail could come up with the answer. But................ they couldn't even think that way because " it was OK". Why was it OK?? Not my fault BECAUSE of .............. the blank.

On a positive note:

The following month she made the payment early!!!!!!!!!!!!!!!! Yippie. :)

Retirement 101

STUDENT WRITES:

"The company matches a %- last year 25, the two before were 10.
Should I go ahead and enroll? Maybe at 3-5%? I have options as to where I
want to invest."

MONEY PROF responds:

Email me again to make this clearer Do you mean it matched 25% of whatever you contribute?? If so up to what amount??? For example 25% up to 5% of salary??? Is there a waiting period to get the match??? Etc.

YES, enroll today. Would start with 5% of salary, with a firm goal to raise to 7% by Sept., and 10% by Feb 2006. Important not a BS "wish", a firm goal of 10% within a year. As that's what needed to be in good shape at age 60.

Bear in mind its before tax dollars, so the top of your tax bracket is saved. For example if you put in $25 per week, it will only cost you about $15 out of pocket as you'll defer $10 in taxes.
Read this again as I've had trouble getting this part through to people in the past: If you don't put in the $25 you DON'T keep the $25, you only keep $15. Repeat, you only have $15 in your hand.

So you're out $15 at this point. Now you deposit $25, and lets say the company puts in $6. So your $15 turns into $31 to invest. YES, $31.

With a 401K you will have to pay tax when you withdraw the money at retirement, but you wouldn't do that until you weren't working so your tax bracket would be very low.

If you take money out before 59 yrs old, not only do you pay income tax which will be high as it is added on top of your salary income, but also a 10% penalty.


If you understand "compounding" you know that its almost impossible to save the amount that would be needed if starting with zero at age 47. Could never afford the weekly deposits.
If you don't understand compounding be sure to learn the basics this week. I don't have time is a BS excuse, you don't find the time, you make the time.

Here is a start: its called the "rule of 72". You divide the interest rate, or the % return, into 72 = the years it takes your money to double. For example if you earn 8% on your investment, it would take 9 years to double your money. So where 90% of the people go wrong is they say why worry about this now, I'll save when I'm 50 yrs old. It doesn't work.
So if your in your 20's you have a lot of doubles. If 50 a lot less.
Now actually do an example: make the math easy, say you have $1,000 at your age. What would you have roughly at age 60 if you earn 8% and only counted the $1,000??? Now do it again, but start at say 45.
Email me the answer.

Saving for Retirement (recommended book)

In a message dated 2/10/2005 1:12:55 P.M. Eastern Standard Time, X e-mails to MoneyProf:

"Just this morning, [X] called and wondered if I thought you would
mind her asking you for a little education on investing in the stock
market. She said she has tried to talk about this with X, but she
never was really able to get him to sit down and "instruct."

MONEY PROF responds:

Tell her to email me with questions anytime.

The IMORTANT starter tip:

In the beginning when you have no money, or very little money to invest. Instead of using too much of your mind thinking you need to learn the stock market use it to think & learn where you'll get the money for the next deposit for your IRA.


Something I noticed with human nature is people usually don't get that:

5 % of zero is zero, or invest better and get a 10% return. But........... 10% of zero is still zero!!!!!!!!!

I can't remember if I had recommended X read the book "The Automatic Millionaire", if she didn't read it already tell her to email me that she ordered it. Or she read it.

(That will tell me she's serious, and I'm not wasting my time).

The book is real easy reading, I'd guess that she can get most of the points out of it in 3 hours. Then a few hours more for finishing and review

This is the whole book, but still recommend reading it ( because she needs to learn the "latte factor" BEFORE she learns the stock market):

The real message of the book could be conveyed in about a chapter. He explains how we nickel and dime ourselves to death and advocates using payroll transfers to put some of each of your paychecks away for retirement. That way, self control isn't involved and you forget you even have the money. That, naturally means that you don't spend it. Throw in a lesson on the powers of compound interest and the evils of consumer credit and you have the whole book.

NOTE: the hard part is really accepting the "latte factor", the easy part is learning to invest in the stock market.

Saving for Retirement (Article)

"Investing " in the stock market for the short term is not investing it's gambling.

Investing in the stock market for the long term has an excellent risk reward ratio based on the last 80 years.
The stock market has never lost money over long periods of time.

Past performance is no guarantee of future results, But............. the odds sure are in your favor.

BTW: I Don't agree with the last paragraph about individual stocks. Wouldn't do that until your "covered" on retirement money.
Read and save this for future reference:

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