All posts by Greenbacks Magnet

I grew up in the Washington DC metropolitan area and have been working in the financial services and lending industry for over a decade. I earned a bachelor's degree in psychology and master's degree in distance education from the University of Maryland University College.
Financial Freedom

You can be festive on a budget

Leave a comment

The holidays are just around the corner. I feel like Christmas decorations start getting put up as soon as Halloween ends. Sometimes before!

Don’t let the decorations, garland, and twinkling lights fool you. Retailers want you to spend. Shop ‘til you drop as they say.

Well word to the wise:  make a budget for gift shopping.

There is no reason that buying presents should mean that you have to burst the bank.

With piggy banks already on life support, there is no logical reason why shoppers should spend what they don’t have.

It really is the thought that counts.

I suggest to large families that they draw names out of a hat and just buy for that person. If you decide you want to do more, especially for the kiddies, then may I suggest planning for it well in advance. Regardless, of what method you use just make sure it’s cash that buys the gifts and not plastic.

Nothing is worse than buying presents on credit with money you don’t have.

It always feels better to buy with cash. Once the purchase is done, it’s done.

There’s no credit card bill coming in the mail for months after.

The holidays will be long gone and you are still paying off grandma’s toaster oven. Who wants that? Nobody, that’s who.

Set a realistic limit to spend and stick to it.

Limit the amount of gifts you buy and decorations. Save excess wrapping paper and tinsel for next year.

The point of gift giving is to show people you care not how much you can spend.

Some of the best gifts I have seen come from the heart. Those gifts are enjoyed and last a long time.

I once heard a saying that love leaves a memory that no one can steal.

Those are the types of gifts you want to give to others. The ones no one can lose.

If you really want to enjoy the holidays, instead of sparring no expense make a commitment to yourself to limit what you give from your wallet but not from your heart.

Happy Holidays!

College

College season: Time for the FAFSA

Leave a comment

The function of education is to teach one to think intensively and to think critically. Intelligence plus character – that is the goal of true education. – Martin Luther King, Jr.

It’s that time of year again. The Fall is when high seniors start to apply for college admissions.

If your child is interested in attending college next Fall, then there are a few steps you will need to complete the application process. For most colleges this includes: application and fee, high school transcripts, and SAT scores.

Colleges may also request letters of recommendation and/or an essay as part of the admissions requirements.

To begin the process, you should first start with listing all the schools that your son or daughter is interested in attending.

You will need to apply to several colleges in order to increase your chances of admission.

Generally, there are three types: match, safety, and dream.

According to The Princeton Review, the match school is one where your credentials meet or exceed college admission requirements.

A good number of match or target schools to apply to would be around three. Preferably to colleges that are in-state with affordable tuition.

A safety school is a college that is likely to accept you as your credentials are above the requirements for admission. This just gives you reassurance that you get in somewhere.

If you do not want to be stuck at home, you should apply to at least two safety schools and that includes community colleges that may allow freshman to live on or near campus.

Lastly, there is the DREAM school. Oftentimes, referred to as the reach, because it can be a long shot to get in. If money is no object, then this is when you shoot for the stars.

Usually dream schools are just that because your credentials fall below the admission standards at this college. However, you can still apply and “see what happens” as far as long shots go, that is the point after all.

The goal is to apply for at least three dream schools for a chance to possibly get into one.

Once you have settled on a college you then have to start thinking about how to pay for it.

Unless you live under a rock, you will notice that college prices are now creeping up to mortgage prices.

If you want a chance to lower the cost of college, you may want to consider affordable in-state or community colleges.

If you are determined, to go out-of-state where you will likely pay three times as much for crossing state lines.

In order, to be considered for federal student loans and state aid, you will need to complete the Free application for Federal Student Aid (FAFSA).

The FAFSA now opens on October 1 starting in 2017 for the 2018-2019 academic school year.

You will want to get this done early if you want to be eligible for all the possible merit scholarships given by the college and federal Pell grants. The U.S. Department of Education offers student loans that you repay over time, as well as grants, such as the Pell Grant, that you don’t need to pay back.

Grants are free money for school that does not have to be repaid. So, get those FAFSA applications in ASAP.  Grant money is on a first-come first-served basis, so the earlier you apply the better.

After completing the FAFSA, you can complete your college applications online for a fee to the colleges of your choice.

You should then contact your high school guidance counselor to request copies of your transcripts to send to your selected colleges.

Finally, you will want to send your SAT or ACT scores directly from the CollegeBoard to be considered for admission.

Do not be overwhelmed. It is a straightforward process. Just follow the steps above and get it done.

Good Luck!

 

Financial Freedom

How I used the Buffet 25 strategy to Walk the Talk

Leave a comment

Bob Marley poet and a prophet; Bob Marley walkin’ like he talk it. – Red Hot Chili Peppers  

One day I was reading an article online. It was about Warren Buffet, the most successful investor of all-time, so I had to stop and read it. Glad I did. 

In the article, it discusses how Buffet was speaking to the pilot of a plane and asked the man why he still works for him instead of doing what he wants to do.  

The pilot stated he had lots of goals and dreams but no time to focus; therein lies the rub. 

Buffet then suggested his strategy of writing down 25 things you want to accomplish.  

The trick is to circle the top five most important things to you. These are the things you should focus on.  

What about the others? Forget them. Only put your time, energy, and attention on the tasks that are truly in your heart. These are what you will put your best efforts into anyway. Now you have solved the crux of the problem: too many distractions.  

If you want to be successful, then you have to focus.  

It is best to focus your energy on one thing. 

Instead of too many eggs and not enough baskets.   

After reading this article, I did my own list of 25.  

I circled five things that were really important to me.  

This is how this blog came to pass.  

I stopped focusing on doing twenty things and narrowed my focus to five. I became so much more productive and decreased my stress at the same time.  

I increased my productivity tenfold. Instead of trying to find time to write one article, I now had more than enough time to write 10.  

I had been saying for years I need to write a book or teach a class on finance. I was so fed up with reading so much and realizing I had known so little. I wanted to share my new knowledge.  

Well then I decided to write a blog. I remembered reading another blogger who had written a post called how to start a blog. The rest as they say is history.  

Financial Freedom

All your investment eggs in one basket

Leave a comment

It’s okay to keep all your investment eggs in one basket or even a jar.

“Keep all your eggs in one basket, but watch that basket closely.” -Warren Buffet

Below are some of the most common things I have heard while learning to invest.

Do not keep all your eggs in one basket. Diversify your investment. Diversification is for people who do not know what they are doing.

It is nearly impossible to make a decision with all that back and forth. It’s like a financial tug of war. I got tired of the tennis match. No more ping-ponging. You have to pick a path. You finally have to ask yourself, which one is it?

Basically, it’s okay to keep all your eggs in one basket. As long as you watch over it.

A simple method to use is a split one. If you have $1,000 to invest and cannot decide among four investments, then put 25% into each of them.

The one that tanks over a three to five-year period you can just jump ship or hedge your bets by only limiting what you invest. Just decrease your exposure to risk by selling the entire investment or reducing your investment amount to say 12.5 percent.

For example, you decide to invest in Apple. You like to products. You also like 10 other tech stocks. However, instead of diversifying you place your funds into one stock: Apple.

Wait. Let’s back the truck up.

Please note, that first you must decide on your risk tolerance. This is based on what you can afford to reasonably lose because as they say if you can’t afford to lose it, then you can’t afford to have it.

You may decide you can only afford to lose $100. This is your risk level. Anything past this means stop. Do not pass go. Do not collect $200. Or in this case, do not invest $200.

You may have inherited $5,000. Nice windfall. You decide that you are willing to invest $1,500.

Now let’s get back to Apple.

You place all your bets on one stock. That’s it. Now all you do is watch over it. You may set a time horizon of say three years to see an increase of five percent or more.

If this is not the case, then you can sell some or all of your investment and move on.

Either cut your losses or be ready to possibly lose more.

I’m the kind of person who’s comfortable carrying low-interest, tax-deductible debt for 10-20 years. It doesn’t phase me. I sleep just fine.

No matter what: you made a decision. You pulled the trigger. Life like investments cannot be all theory and no practice. People tend to aim, aim, aim….

I think you get the point.

Celebrities and Money, Financial Freedom

Money Basics: The Rule of One

Leave a comment

“There is brilliance in simplicity.” – Bruce Lee

Do not listen to those who say live for today or have to treat yourself or have fun. Those are the same people in debt up to their eyeballs.

Avoid debt, especially credit card debt, at all costs. The money paid to these institutions lines their pockets while you go broke.

Case in point, LL Cool J, the famous rapper, entrepreneur, and actor had some telling advice as he was quoted as saying that “I lease a Honda Accord for $399 a month while other rappers are going broke”.

Therefore, buy a smaller house, car, and wardrobe. The money you save can go in the bank. You can earn interest instead of paying it when you don’t spend.

I recently read that Americans are in over a trillion dollars in each category of auto, student loans and credit card debt.  An all-time high! I bet.

Considering that everyone or system of some kind seems to be in cahoots to separate you from your hard earned money; it is no wonder that the savings rate in America is so abysmal.

For example, you need a college degree to get a good job, i.e., one with good benefits like health care and a retirement plan as many low-paying positions offer none.

You now have to sell a kidney to afford the ever increasing cost of college. So what do you do instead? You finance it.

If you are one of the lucky ones, as only 33 percent of adults hold a college degree meaning 67 percent may be struggling to find decent work and wages. In contrast, in 1940, a mere 4.6 percent had a four-year college degree.

Don’t get me wrong. There are many out there without a degree that are doing well but, they in many times are the exception and not the rule.

Then you go out there and get a job now that you have the coveted golden ticket… err uh I mean a college degree. Jobs nowadays pay peanuts so you have to finance a wardrobe, car, home, and furniture.

And dating? Forget about it. That costs money. If you go out for more than coffee, you have to finance it.  That’s right, you charge it on the plastic because that’s the only money you have and thing you own that the finance company won’t repo.

If we could ask how the finance companies feel about customers no longer wanting access to their credit lines, in my opinion, I suspect a humdrum response. A customer wants to return their credit card as they no longer can afford to continue payments.

For example, the exchange may go something like this.

Question: Do we turn the card over to you as we no longer want it?

Answer: You can keep the card, but we want back all the things that clothe, transport, and shelter you.

When you can no longer afford your automobile. Your car can be repossessed by the bank.

When you can no longer afford your mortgage. The bank forecloses on your home.

It may take time for the finance company to pick up its property, but it will happen if you can’t pay.

Maslow’s hierarchy of needs says you really need the basics first and foremost which is food, clothing, and shelter. After that, you must make the slow ascension up to the top of the needs hierarchy pyramid; culminating in self-actualization: one’s full potential.

So let’s recap.

You do and have the following: Go to college. Finance it. Get a job. Finance a car to get to work. Get a mortgage to finance a home or rent an apartment to have a roof over your head. Buy a wardrobe because you need professional clothes as the t-shirts and hoodies no longer work. Stagnating wages. Tons of debt. Pay your bills. No money left for saving and investing to get out of the hole. Rinse and repeat.

The only way to get out of the proverbial rat race is to buck the trend.

Start at a community or low cost local college. Live like a broke college student until your debt is repaid. Then put into practice living like a real adult. College is all about theories, but being an adult is about practical application.

This is where the rule of one will serve you well.

One house, one car, one nice piece of jewelry.

The problem is that many people let their lives become too complex. Simplify it.

One bank, one credit card, one motorcycle, etc. etc.

Keeping it simple with this rule can save you hundreds of thousands of dollars over a lifetime. That is money that can be invested or spent doing other things like starting a business or traveling to see family.

I know you may have learned a lot from the post above and it may take some time to sink in.

So let’s keep it simple. Just do one rule at a time.

Financial Freedom

Getting out of debt one step at a time

Leave a comment

“There’s no problems, only solutions.” – John Lennon

Kudos!

You have committed to get out of debt once and for all.

It takes guts to recognize that there is a problem.

In psychology, you identify a problem and then come up with a strategy to solve it because, as Lennon so eloquently put it, in life there are no problems, only solutions.

Now, let’s get down to brass tacks.

Every journey begins with a first step.

“An investment in knowledge pays the best interest.” – Benjamin Franklin

I have read hundreds of books on finance and debt. It has been over 10 years, but I still learn new tips and information to this day.

Here are my suggestions of how to start getting out of debt.

Organize. Gather every piece of mail you can find or any documents that pertain to your income. You need to know where every penny is going. Locate bank statements, pay stubs, tax returns, and promissory notes.

Know the terms. You should know the who, what, when, where, and how of your money. Do not think, know. One of the best ways to do this is to pull a copy of your credit report with one the three credit reporting agencies – Experian, Equifax, and TransUnion.

Write it down. List all the people and places you owe. You should include the name, date opened, amount owed, and interest rate.

Set a goal. I have read in numerous books and articles that said if you want to get out of debt, then you have to commit to a debt repayment plan of two to five years. Anything more than that could mean you may have to consider bankruptcy.

Avoid bankruptcy at all costs. Even though it is supposed to be removed from your credit report after 10 years, I have heard tales of lenders still bringing this up in conversation while someone was applying for a loan more than two decades later. This says to me that bankruptcy is a dark cloud that follows you around for the rest of your life.

Read about money. The more you know, then the better decisions you can make. Go to your local library and check out books on finance. You will not regret it. You can start here at my blog. I have yet to hear anybody say I wish I didn’t learn about the stock market.

Start today. Start a cash cushion of just $50. If you start, then you are taking a single step.

Cash on hand. Work your way up to $500. This will get you motivated to continue saving and provide a small cash reserve for minor life hiccups such as a flat tire or insurance deductible.

The point is just to start.