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Budgeting

15 items or less

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Shopping, Spending, Till Slip, Purchase

When I think of 15 items or less it always reminds me of being in line at grocery store. However, it has more meaning to it than that for me. It is not just a line at the grocery store.

That number represents the amount of ingredients I prefer to have in my food or any meals I prepare, the amount of items in my Amazon cart I like to have, and the number of stocks I like to have in my portfolio.

Many financial experts will tell you that you need no more than 20 individual stocks in your retirement and investment accounts to build wealth. Personally, I am an index investor. I put my money in these funds because a single stock can go bust and you could lose every penny.

An index fund can’t go to zero because it is made up of hundreds or thousands of stocks and if one business goes belly up, then it is replaced with another one that is in good standing. Thereby, making sure your investment never goes to zero.

One of the reasons I stick to a budget and adhere to strict investing rules is because I know money is not always so easy to come by. Even though you can earn more money and not time, money is still an important commodity that cannot be overstated.

During COVID-19 lockdown, I got to see up close and personal just how important it is to keep your head down and stay focused on your money goals.

After losing my job during the Great Recession in 2009, I do not take anything for granted. I always try to keep a 3-6 month emergency fund, money in savings and brokerage accounts just in case. At the very least, I try to keep $5,000-$10,000 cash for a rainy day.

Imagine my surprise when the pandemic hit and I was yet again shown numerous cautionary tales of why it is important to have these things in place.

Living on a budget can help save you from going hungry when times are lean. This always gives me perspective. Stay disciplined, save and keep your feet firmly planted in reality and on the ground. Plan for the long term.

Your personal savings account is your own version of having Geico insurance; it is there just in case something bad happens.

These stories reminded me why I save so much. I don’t ever want to be caught out in the rain or a heavy storm without an umbrella.

I’m going to share with you just a few of the things I heard while standing in lines to buy food and other shopping items over the last few months.

The following are some of the things I overheard while millions had lost their jobs and income in 2020:

Cashier: “That will be $8.64.” Customer: Exasperatingly said, “There goes all the money.”

Customer in line on the phone that looked 50ish: “Hopefully, my mother will be able to pay my car payment this month for me.”

Woman shopping for furniture: “I just bought a house at 64. I hope they can finance this for cheap.”

Cashier gives customer total to pay. Grocery store customer to cashier: “I don’t have any money.” The cashier then decides to pay for the customer’s groceries herself out of her own pocket.

A landlord calling a tenant: “Can you pay your rent a little earlier because I need to pay the property taxes on the 31st?”

Why not just have the property taxes wrapped up in the mortgage? Just a thought, but okay, I digress.

A gentlemen speaking with his coworkers: “I’m trying to buy a home. It will cost about $900,000.” His coworkers reply: “But you’re in your 50’s. Why not stay where you are and leave some money to your kids.” His reply to that: “They have to struggle like I did and fend for themselves. This is for me. It’s time to shine.”

Woman talking to her folks : “Private school costs like $1,200 a month. It’s expensive and I have a lot of student loan debt, but I want the best for my kid.”

Workers discussing an overpayment they received from their employer: “If they are going to take back the money they just gave us by accident on our next check, they got to give us a payment plan right?”

A payment plan for a lump sum payment they just got. Why not just set the funds aside that they received by accident? You would only want a payment plan if you already spent the money.

All these stories tell me that these folks are broke and living on the financial edge. I knew I did not want to ever be on the side of a financial cliff ever again. Therefore, I had to get my fiscal act together.

I cut my living expenses to the bare necessities; got my housing costs to under $1,000 a month, paid off my car and got rid of my $450 car payment, and started tracking my net worth.

I felt like Smokey the Bear would always say, “Only you can prevent forest fires.” In my case, it was financial fires that would burn up all my money and leave you broke. I didn’t want that.

I know times are hard, but I hope as I did all those years ago, that people learn some very important lessons from all this tragedy. And that is, the government is not going to save you. No one is coming to save you. We are all on our own out here. You must fend for yourself or be broke.

If you know you would rather be rich, then keep reading the blog posts on this page to stay motivated to leave the rat race sooner rather than later.

You will do it by attracting one dollar at a time and then investing it to turn it into two.

Happy reading and good luck on your road to wealth.

Credit Cards, Retirement

Credit Cards the silent wealth sucker

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Credit Card, Master Card, Visa Card

The world is in love with credit cards. – Warren Buffet

I’ve heard it so many times before.

Your favorite sports team is coming to town. You have wanted to go see them play live for years, but you don’t want the nosebleed seats. You want to be close to where the action is.

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So close that you can almost touch your favorite player and shake their hands or pat them on the back while their names are announced as they come out of the tunnel.

Lebron James Running GIF by NBA - Find & Share on GIPHY

This year you have decided to treat yourself and will go see your team play.

However, tickets aren’t cheap.

After reviewing information on ESPN.com, you will see that watching James Harden dunk on LeBron James comes at a hefty price.

Lebron James Running GIF by NBA - Find & Share on GIPHY

The average ticket in the NBA now costs $51.02, according to the Team Marketing Report, which monitors the business of sports leagues. Add charges for food, drinks and parking, and that cost rises to $72.53 per person.

And if you want to sit front row, the range for a courtside seat in the NBA is generally anywhere from $300-$20,000 just from a quick price check on Ticketmaster.

See my post How buying Super Bowl tickets could cost you $2 million dollars

Since almost everything in America costs more than the federal minimum wage of $7.25 that millions of low-wage workers are earning; Americans are turning to plastic to fund clothing, doctor fees, college, medical bills, furniture, cars, excursions, and jewelry. You name it, then folks are dropping down their American Express to make a purchase faster than The Rock can put out another film!

The problem with that is pretty obvious. You don’t have the money to go to the game so you put it on plastic instead. This can have serious consequences down the line. If you are unable to pay off the balance, now you have to pay interest on this purchase.

With the average credit card interest rate hovering around 18 percent, you could end up paying double or triple the cost of this little excursion to go see the LA Lakers play at Staples Center over the next several years!

In the book American Plastic, the author stated she saw consumers going into debt to pay for cosmetic surgery, which could cost you $7,000 for one procedure. Putting many Americans further behind in their wealth building.

The book Credit Card Nation by economist Robert D. Manning, published in 2000, provides a comprehensive overview of a social and economic crisis going on in America-escalating dependence on credit. The deregulation of financial services in 1980 paved the wave for Americans to become dependent on credit cards.

According to CNBC and USA Today, the average credit card debt in Americans held is approximately $6,200. And Alaska topped the 50 United States with the most credit card debt at $8,026. This is also the state that gives all its residents annual checks from its rich oil supply. Just something to chew on right there.

Meanwhile, the average credit card debt is now becoming a major wealth killer. Those households with it and more likely to have lower 401(k) balances, less in savings and investments, and less home equity.

Billionaire investor Warren Buffet says you should avoid using credit cards like a piggybank; it doesn’t work because a piggybank is filled with cash and credit cards are not cash. Credit cards funnel all your cash that should be used for wealth building into the banks coffers. Banks are now making a billion dollars a month thanks to easy credit access!

The credit card love affair usually ends in trail of past due bills.

Game, Game Over, End, Hand

Once the minimum payment (usually a paltry one percent of the balance) becomes unmanageable, you can get into serious trouble. Instead of making minimum payments are paying interest, you should be earning it instead in Mr. Market.

The one percent you are paying could be going to your retirement accounts or toward the down-payment of a home. How important is once percent really? It is enough that if you subtract that amount from the expense ratio of a mutual fund, then that one percent difference can be enough to fund 10 years of retirement. Very important in my book.

Forget credit card debt. Go max out that 401(k) at $19,500 annually and/or a Roth IRA at $6,000 per year and $7,000 if you are 50 and over.

This will of course take discipline, but so what. If you are willing to fork over $10,000 for season tickets to see the San Francisco 49’s play, why can’t you put away $100 a month for your future?

Maxing out a 401(k) over 20 years with a 9 percent return would net you 1,087,408.34. Don’t let credit card debt take this away.

Just my 2 cents.

Investing, Saving

Stimmy Alert: $1400 Stimulus coming to a bank account near you

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Flying, Dollars, Currency, Business

As of this writing, over 100 million stimulus checks have gone out.

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According to CNN, 90% of American households will be eligible for stimulus checks. Individuals earning below $75,000 annually can receive the full amount. You can also receive an additional $1400 per dependent.

This money is set to start hitting bank accounts across American on March 17. That money could go toward living expenses such as rent, food, and utilities.

My top five ways to spend your stimmy could help middle-class families start looking ahead to a time when 100 million American households finally are vaccinated.

First, if you can save it, then do it.

Save, Piggy Bank, Money, Economical

Funding an emergency fund can be a lifeline in times of hardship, as many well know during these challenging times. A flat tire or broken water heater can be an unexpected expense that could put someone in credit card debt.

A friend of mine recently joked that the next unexpected bill or expense will probably be estimated at $1399, right after the stimulus checks go out!

If you are one of the eligible Americans due to get a stimulus, then be sure you have a rainy day fund set up. This stimulus check could be your starting seed money toward a 3-month emergency fund.

Money, Grow, Interest, Save, Invest

Second, pay for the roof over your head.

Paying for any back rent or missed mortgage payments is a must. You need housing. Working out a payment arrangement with a landlord or lender is in your best interest.

This stimmy could help keep you housed and your family safe.

Third, put food on the table.

Basket, Vegetables, Food, Fresh, Organic

Food pantries such as Feeding America are seeing 200% increases in food assistance requests. That is happening across the country. Some folks are lining up at the crack of dawn and standing in lines for hours to get free meals.

This would be a good time to put this money to use stocking up your cupboards with non-perishables.

Food insecurity is severely affecting the elderly and the 10 million children in American living in poverty.

Stockpiling canned goods, cereal, grains, and nut butters is a good way to spend this money.

Fourth, pay up the utilities.

Power Lines, Cables, Tower

Seeing news media discuss $5,000 electricity and heating bills in Texas due to cold storm was enough to make me want to set up a savings account just for utility bills.

The New York Times reported how one man owes a whopping $16,752 energy bill! Although this is not common, utility bills are a necessary expense that households must manage.

Many Texans may get some of these skyrocketing energy bills forgiven or decreased as a winter storm ravaged last month that was completely out of their control. Due to not being on a fixed electricity pricing plan. However, until that happens, bills got to be paid.

Therefore, it is a good idea to have a savings bucket just for keeping the lights on, literally!

If you get these bills reduced, then you can simply pay yourself back any refund you may receive. Those funds will go straight back into the savings pot and are not to be spent.

Trust me, you may need them again someday.

It seems like every 10 years, we are in some sort of major crisis. Plan accordingly.

See my post Suze Orman’s FIRE protection plan during COVID-19

Lastly, start a Roth IRA.

Piggybank, Dollar, Savings, Banknote

You heard me. That account you have been waiting to open for the last few years, do it. If you have all the above covered, then you can afford it.

Honestly, you can’t afford not to.

The easiest way to do this is by opening a brokerage account with a company that will allow you to start with something like $100 monthly automatic investments.

Start building wealth for your future. I started a Roth with $50 a month.

Tens of thousands of dollars later, I do not regret that decision one bit.

So there you have it. My top five stimmy alert spending tips. It will only cost you $1399.99. Ha! Just kidding.

I know some of you may think this is mission impossible, but I am here to tell you that anything is possible.

Because if this was truly a mission impossible, then this blog post will self-destruct in five seconds so memorize the above or take a picture on your smartphone!

Amazon.com: Inspector Gadget Wowzers Self Destruct Message Vintage Funny Humor Sticker Decal Vinyl Bumper Sticker Decal Waterproof 5": Automotive
Inspector Gadget trademark of DHX Media.

So until the next time we meet again, stay safe!

Retirement, Saving, Wealth

Forget being broke, go for the money

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grayscale photography of human holding coins

I’m going to star this blog post with some words of wisdom that my dad text my sister.

The text my sister sent me went down like this: Dad said f*** poor go for the money lol 😂.

That ladies and gentleman was my father in a nutshell.

Girl, Father, Portrait, Eyes, People

Growing up my father was always telling it like it was and giving it to people straight. He didn’t really play around with or mince words. He was just raised that way.

My father grew up in the Washington DC area. He was born and raised there. Worked there all his life and retired at the age of 55.

Many of my money habits, I got from my dad. I watched him as a kid be very careful with his money and spending. He always made sure the rent or mortgage was paid first before spending on anything else. He would pay cash for everything.

One of the reasons he was able to retire was because he had a pension.

My father would brown bag it to work for lunch and believed in cooking and eating at home. I always loved watching him make breakfast in the morning. He always seemed so content when he was making breakfast and just doing the simplest of things.

That’s when I also learned the simple things seemed to make people the happiest. Therefore, I made sure to always lead a simple life. However, I also knew that I didn’t want to be broke.

I saw the difference it made to have some money in your pocket. People treat you better, they like you more, and you get better service.

I once read a book called You’re broke because you want to be and it described some sad tales of broke people.

One of the ones that really hit home for me was when a bus driver looked at a person crazy for saying the couldn’t afford the $1 bus fare.

Bus, Transportation, People, Aisle

It reminded me of the time I accidently let slip while I was in a cab “oh crap, where’s my wallet!” When the cab driver heard that he hit the brakes so hard, I almost hit the seat in front of me.

Fortunately, I did have my wallet. So the cab driver stopped looking at me like I was crazy and gave me a ride home.

Traffic, Manhattan, New York

That little episode taught me to keep some money on me at all times including a credit card for emergencies. You don’t want to be stuck in the middle of no where with no cash and no credit because everywhere you go, the first sign you read on any business we accept cash or credit.

I also learned not only from my father, but from Warren Buffet to pay attention to the bottom line.

Buffet knew from a young age that he should focus and surround his life on the flow of money. Therefore, he learned about investing and building businesses. If you want to have money, you need to know how to earn it and how to make it grow. So that’s what I decided to do too.

Now one thing I will tell you is that my preferred method of building wealth is to own stocks. That’s just me. After, reading tons of books and blogs about building wealth, that was my conclusion.

At this point in my life, I want less time focused on working and more time focused on enjoying the fruits of my labor!

Relaxing, Lounging, Saturday, Cozy

I have been blogging for almost 5 years and it’s still one of the most fun things I do. I just combined my passions, talking finance and writing.

I remember when no one read my blog. Now I get hundreds of readers a week from all over the world from as far away as India!

However, everyone is not a fan. I actually had a reader that made a comment that I have a limited knowledge of money. Really? After reading hundreds of books on personal finance, business, and building wealth, I think I am pretty well versed in the subject.

Considering that I have been blogging about money for over four years; I think me and the topic of money are very intimately acquainted with one another.

That being said, everyone is entitled to their opinions. Maybe because I am not constantly quoting stock market gyrations or the yield curve, that individual was not impressed.

Image result for yield curve inversion

What is the yield curve? In finance, the yield curve is a curve showing several yields to maturity or interest rates across different contract lengths for a similar debt contract. The curve shows the relation between the interest rate and the time to maturity, known as the “term”, of the debt for a given borrower in a given currency.

The federal reserve has also dropped its interest rate to 0.00%. That means borrowing will become cheaper and why mortgage interest rates are so low. You know. Stuff like that.

Well guess what? That ain’t my style. And I gotta be me. This is my blog after all.

I am her to give it to you simple in terms you can understand without all the money jargon. If you’re eyes are glazing over when you read my blog, then I ain’t doing my job right.

I want to educate, but I also like to entertain because I know if I can keep you engaged, then you will come back for more and learn something along the way.

What I will say to that person is this, there are tons of blogs out there that do talk in more technical terms and this blog has named many of them here so you are always welcome to check them out too!

The reason I like to keep it so basic is that is how I like people to break things down to me. The reason I have chosen to build my wealth with stocks is because it is the simplest path to wealth.

Treasure Map, Navigation, Map

When I did some research, I found that investing in housing only returned ~4% over 30 years. Over that same period, stocks had returned ~10%. So would you rather earn 4% on your money or ~10%?

Also with real estate, there are lots of carrying costs such as repairs and maintenance of the property, insurance, taxes, and fees. I do not have to water the plants in front of my stocks, or do any repair work to it. There is no private mortgage insurance with stocks either as you only have to pay a small expense for owning it. Therefore, I chose stocks.

Take It Easy, Without Having To Worry

Every time you buy a stock, you become an owner in that company. You now have an ownership stake and that company wants to reward you with dividends.

When you put your money to work for you instead of you working for it, you end up making way more. There are only so many hours in the day for you to work physically, but money that is invested has no such limitations.

The money you invest does not call in sick, get tired, take breaks, or even take vacations. It is working for you every single day.

And the earlier you start investing, the more money you can make.

I started investing with $50. I continued to invest aggressively. Then one day I woke up and had $100,000 in my retirement account less than 9 years later.

Interest also compounds. Meaning your money earns money. That is how wealth is made.

I also didn’t want to own 100 stocks. Who wants to manage that? I found that I could own a piece of the entire market by investing in index funds.

You can do this by investing in any fund that says total stock market index like the VTSAX at Vanguard or a 500 index fund like the S&P 500.

You can start small like I did and work your way up. The point is just to start.

Why is investing so important? It’s simple: To beat inflation.

You do not want to keep all your money in the bank and over 30 years later find out your $1 is now only worth the equivalent of 50 cents! That is inflation my friends. It erodes the value of money over time.

You need your money to keep its purchasing power by always earning more of it.

It always puts money into perspective for me on why we need it, when I wake up seeing recent headlines that people’s electricity bills in Texas were skyrocketing to the cost of $10,000! That’s insane. Some families’ emergency fund were being wiped out overnight! That could take many folks years to save. One emergency can set you back years. That is why you plan, save, and invest.

And forget rich quick. Most people I saw try to build wealth on this path ended up broke and worse off than they started. I chose to get rich slow.

If my $100,000 earns ~10% annually, then I would become a millionaire in 30 years. If that’s too long for you, then you must invest more of what you currently make, earn more money or both. I did both! And so can you.

Regardless of your method, just get started. Do a little math. I use a retirement calculator to see how much I need to save to be a millionaire in 10 years. It would take time, perseverance, and sacrifice on my part, but it’s worth it! The money in my retirement account is a scorecard. It shows me all the progress I have made along the way.

That cab driver slamming down his brakes on me and looking to put me out on the street made me realize something. I needed money to live. I needed money for the privilege and convenience of taking a cab and not the bus. That is the reason I say forget broke. Go out there, get to work, and get this money.

Legally and safely, while being socially distanced and 6 feet apart of course.

Retirement, Saving

Surviving in a covid world

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Virus, Protection, Coronavirus, Woman

I’m baaaaccckkkkk!!!! Did you miss me?

Well guess what? I missed you too!

Had to take a break to batten down the hatches and get things under control at the home front.

Image result for batten down the hatches gif

Like many other folks out here, I had to stop everything and readjust to life in the pandemic.

March 13, 2020 will go down as a day in infamy.

It went from getting up and going about my day to lock everything down, close up shop, HIDE the wife, HIDE the kids, and LOCK THE DOORS!

Who would have thought that this would still be wreaking havoc on so many of our daily lives almost a year later?

The year 2020 sink into the abyss.

While the fat cats on Wall Street got richer, many of the regular working stiff got the shaft. I ain’t here to put anyone down. I’m here to lift people up.

I want to get you to the places where you want to go. So I am going to show you how the rich are doing it. I know that talking about building wealth during a pandemic may seem callous, but know this, one day the pandemic will end.

And if you are tired of living hand-to-mouth and paycheck-to-paycheck, then you better listen up. I’m trying to change your money mindset to one of sheer hope and abundance dammit!

I feel like Kanye and his song Jesus Walks when he rapped the lyrics,” I ain’t here to argue about his facial features. I’m here to convert atheist’s into believers.” Many will doubt me. But some will listen. And to those that do, your life will change.

I have so many posts on ice that I didn’t even know where to start. So I figured I would just dive right in.

My 5-step plan for surviving COVID.

Number One you need shelter.

If you are beefing or in any type of conflict with your roommates or partner, now is the time to kiss and make up.

This cannot be over-stressed that you need a roof over you head. I saw a ton of chatter online about people not knowing they need to sign a form and submit it to their landlord to stop any possible eviction due to limited funds or no income.

Reach out to local housing authorities, neighbors, 7 on your side or even your Congressman if it will help you. If you can’t afford an apartment, see if you can rent a room. This is top priority. You cannot stay safe without 4 walls and a roof.

Number Two you need food.

Whether it is a local grocery store, Instacart, or a food pantry, doesn’t really matter. You must have food to live.

Stock up on fruits, veggies, milk, bread, and eggs. Anything that helps you make a quick meal. You just need to survive this.

This too shall pass.

Number three you get the household in order.

Forget putting water in the pool, watering the grass, or landscaping.

You have to conserve everything.

You never know when a freak storm or accident could make things more difficult. So limit and cut any unnecessary spending and home maintenance.

Number four you need an emergency fund.

Don’t kid yourself into thinking the government or unemployment is going to save you. It’s not.

Any place you can pull resources from do it!

Even if you do cash advances on a credit card, a cash-out home refinance, or personal loan.

You need MONEY IN THE BANK!

Money is the only legal tender with which to pay bills.

My suggestion is to have a minimum of $5k at all times just in case.

Number five keep stacking that dough.

If you are one of the lucky ones that still have a job or are working from home (about 30 million Americans lost jobs), then you have something to work with.

Keep contributing to your retirement and savings accounts. Do not stop. This fund will be what allows you to one day retire.

Don’t slack now, if you do not have to.

I’ll leave you with this tidbit.

The stock market has averaged over 11 percent from 1975 to 2015.

Over those 40 years, the stock market has minted many millionaires. You could be one of them, as long as you keep stacking and stay the course.

And if you need motivation, tweet me. I’ll be @mjp2520 on twitter.

Talk to you soon.

Financial Freedom

2011 Net Worth Goal: $100,000

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By Miriam Joy

My number one goal was always to get $100,000 into a 401(k) for as long as I can remember. I picked this number because the first 4100k is the hardest.

Keeping in mind that I started at ground zero, I feel good that I at least have a goal to shot for. I was aiming for the stars but who cares right? I wanted to see more 0s in my bank account.

So, let’s dive right in.

Cash Savings: I was still working on building up my cash reserves to reach my goal $2,500. This is the start of my rainy day fund.

Roth IRA: I just opened this account up in June of that year. I started with contributing $50 a month.

403b: I got this account last year in 2010 when I got my new job. I’m so happy to have the matching contributions! Hopefully, I can put in $5,500 per year!

So there you have it. I am giving you a peek inside the finances of a future blogger. This is lonngg before I started beefing up my savings and investments to 40% of my income. More to come in the next several months on my net worth updates.

Thanks for reading!