I am really curious about how I compare to most people when it comes to financial planning.

I don't have one. Which is pretty bad, considering my education I think.

I do TRY to make smart financial decisions. But I know I make a lot of poor ones.

Smart Decisions:

*Bought a house at 25 - Owe $200k on it still, but luckily house is valued for tax at $375k
*Own half of my mother's condo valued for tax at $280k, with $160k owing
*Bought my car with cash
*Next to zero debt
*$20k in RRSP's
*Have 3 months salary in the bank as savings, just in case!

Bad Decisions:

*Have a joint LOC with a friend who had bad credit to help him get good credit. Bad move, the LOC is constantly maxed and he only makes the minimum payments
*Don't have a monthly savings plan
*Have many, many expensive hobbies (computers, cars, fishtanks, home theater, home reno)
*Live a lifestyle that doesnt allow me to save as much as I would like (lots of eating out, bought a nice car, kickass computer, top of the line home entertainment center, nice furniture, etc)
*Paid $60 for a haircut this weekend (I was told it was a nice salon, wasnt told it was highway robbery!)
*Not making a plan at all!

For my age and income situation, I really think I should be doing much better. I hate that I dont have a savings plan yet, thats really disgusting. I kept putting it off... I really dont know why, always thought I was too busy running my companies to worry about stuff like saving. But here I am, 4 years of success and really, nothing to show for it.

I am going to start a savings plan this week. Anyone else care to share any tips/tricks for success?

The credit card thread really has motivated me in some strange way.

Financial planning - debt-free, pay real crash (not the illusion of cash that credit companies sell) ... understand that I AM in debt and HAVE bought into the illusion in the past, but most importantly ...

Based my investments not the conversative, mainstream approach (401k, savings, conservative funds, etc.) It doesn't take an opinion to see the facts on those - when there is a 40% chance of retiring at the poverty level. Instead, go for what the 5% who actually have financial freedom beyond retirement do, and build business, invest in companies, and build residual income through real estate and network marketing.

Honestly, all financing aside, the best decision I made was to leave my corporate job because whether or not I make a single penny, the time I've had to spend with my family is priceless.

Our financial advisor? The "Rich Dad" series of books!

Jeremy

Our financial advisor? The "Rich Dad" series of books!
BUMP to that. They have helped me as well.

Have no mortgage, no car payments, or credit card payments. Hubby has a 401K and an IRA. I have a personal savings account. And we have an emergency savings account, which has enough in it that we could live on for 5 or 6 months if husband was layed off, or we had major medical problems or car problems. you get the idea.
The only debt we have at this point, is hubby has some student loans, he is still in school and works full time.

A mix of good and bad for me.

Good
1 House is worth 50-60% more than what I bought it for 4 years ago.
2 My PEP/ISAs (UK tax-free investment vehicles) have done well, averaging 40% over the past 5 years.
3 Have been tucking away savings since I started work (7 years).
4 I work for the health service, and it's pension scheme is one of the best in the UK (despite it's probable review).
5 My career will be well paid in the future.
6 No debt except mortgage.

Bad
1 Child on the way (Good life-wise, bad disposable income wise).
2 I have 2 endownments which are underperforming.
3 The past 2 years have been as a student, ie I have been earning half of my usual salary.
4 Expensive car, which is expensive to run.
5 Currently income is less than outgoings, and the meager savings are getting thinner.
6 Lifestyle is great, and we want to keep it as such, therefore outgoings are never likely to go down by much.
7 Spent a fortune on our wedding, but was glad to do so.

I suppose I have much to be thankful for. My parents were able to support me through university, I have an excellent job, and my income will continue to rise for the rest of my career (unless I do something stupid). My only real debt is my mortgage, and that is renegotiated every 2 years (this time saving 170 quid per month (about $275)).

My advice to people is to get your plans started early. Money squirreled away today will be worth more in the future, a stitch it time saves..... type of idea.
What helped me was that each time I got a new increment with my salary, I increased the amount I was putting away in savings. This meant that I never got used to the full amount of my income, so didn't miss it so much when my income dropped recently, and that money has stood me in good stead whilst my income has been lower.
Property is a great investment (certainly in the UK), and Jack and I have plans for branching out into development in the next few years. This route is one of those where you need cash to begin with (spend it to make it) so won't be open to all.

Most important of all however, is to be happy with what you have. There will always be someone with more, or bigger or better, and if you get into a cycle of having to have a certain thing to be happy, then you will ultimately fail. Being happy with your lot is one of the greatest things a person can be.

Andrew.

I'm sure you are only going to get people who are doing well posting here.

But sure I'll post why not.

Good

Bad
1. $25,000 or so in unsecured debt
2. $80,000 left on the house that I was able to buy (at age 19!) because I "built credit" with unsecured debt. (Thank you mom for co-signing, that was REALLY NICE of you!)
3. $20,000 in student loans to get a job to pay for the house that I was able to buy because I "built credit" with unsecured debt.
4. Man that was stupid.

Plan:
1. I can't currently afford to save for retirement, now, as 40% of my income is funneled into paying off my debt as quickly as possible. During that time I have worked two jobs @ 80+ hours a week, with a lot of stress and uncertainty. Fortunately, I have not and will not ever fail to meet my obligations.
2. Want to propose to a wonderful lady and get married, but will not because I refuse to bring this amount of debt into a marriage (she is debt free except student loans)
3. Before I met the lady in #2, my "plan" was to sell literally everything I owned on Ebay except for work clothes and my bike and live as a hermit in a shitty $250/month apartment, possibly with roomates until I undid the horror. Now, that I've met her, however, I am forced to a more traditional "slow pay" as that is no way to keep a girlfriend.

Not blaming Citibank for my spending but THANK YOU for extending a $28,000 credit card to someone with a $20,000/year net income -- that was very nice of you.

-Allen

i think that everyone should meet with a planner. they will help you figure out how to get out of debt, set up an emergency fund, prepare for major expenses, insure yourself properly, save for retirement, create a budget, and to take advantage of all tax codes. books are great but most people still wont figure out their current and future expenses write down a plan and adhere to it. i use microsoft money for tracking expenses,budgeting,debt reduction,savings,retirement planning. i should take my own advice and bring my stuff to a planner. i keep procrastinating because i want someone who will do all of those things for me with my best interst in mind. i have trouble paying people to do whats best for me when i know they live off of fees.

i think that everyone should meet with a planner. they will help you figure out how to get out of debt, set up an emergency fund, prepare for major expenses, insure yourself properly, save for retirement, create a budget, and to take advantage of all tax codes. books are great but most people still wont figure out their current and future expenses write down a plan and adhere to it. i use microsoft money for tracking expenses,budgeting,debt reduction,savings,retirement planning. i should take my own advice and bring my stuff to a planner. i keep procrastinating because i want someone who will do all of those things for me with my best interst in mind. i have trouble paying people to do whats best for me when i know they live off of fees.

I provided tech support for microsoft money before microsoft sent all our jobs to india, I advise you to backup your file, and just so you know it is probably corrupted. This is unrelated to your financial points which are good, but I'm just saying sooner or later that piece of crap program WILL bomb on you.

-Allen

I'm sure you are only going to get people who are doing well posting here.

I'd have to disagree, depending on how you look at it. I don't get into how much debt I had/have or how much my income dropped after leaving corporate America because focusing on the negative doesn't serve anything. If I was focused on that, I would have given up months after I resigned as Director of IT. However, I chose to have the mindset of someone successful, faith in God to provide and the patience to allow my new life to evolve. "Doing well" is a state of mind. I know people with $11 million in debt who are only pulling $1,000 / month that are doing well because they have the time freedom they deserve, enjoy life, and instead of focusing on the negatives, are building not for an income or to have a little to get by, but for a fortune to pass onto their children as a legacy. Then I know people who earn $100k+ per year with little debt, but if they lost their job they'd only last a few months before they are at ground zero, and they rarely spend any time with family because they're working for that "security" all of the time.

This isn't to say one is better than the other, only to say that "doing well" is more a perception/state of mind than some people give credit for. It's not about the money coming in or going out, it's about what you are doing NOW - what your priorities are and how the way you live your life actually reflects those priorities - if you are following your heart, living in your passion, spending time with those you love and essence enjoying the moment as opposed to collecting material things that you can't take with you when you pass on.

Jeremy

I provided tech support for microsoft money before microsoft sent all our jobs to india, I advise you to backup your file, and just so you know it is probably corrupted. This is unrelated to your financial points which are good, but I'm just saying sooner or later that piece of crap program WILL bomb on you.

-Allen

im not too good about backing up. ill take your advice and be sure to do it weekly when i update. thanks. i really do like the interface and the tools though. do you think quickbooks is any better as far as stability or usability?

an update too. i took my own advice and set up a meeting with a finacial planner for Tues. one of those free initial consultations. all this credit card talk and planning talk stopped my procrastination.

Amen, always back up with microsoft money. I have had it crash on me before.

And, just wanted to add - you can always spend every penny you earn. So learn to live on less and be happy with what you want. How many people have you heard say " I just make too much money, I don't know what to do with it." These people are really rare.
We don't make that much every year, but I have a friend that pulls in $30,000 a MONTH and is always complaining about not having enough money. They have like a 11,000 square foot home. I just listen politely and secretly roll my eyes. When here we are living in 1,000 sq ft. home, driving OLD cars that are paid for, and making about $40,000 a year. But I am happy with what I have and she is not.

No, more than likely you know more people that are in debt or are just squeaking by, or are stressed about money. So just learn how to live on less than you make!

Well, a little more about me - I am a small biz owner, I currently own 2 companies that I run full time (Jeremy, as a small biz owner, I've found less time for life and only time for work... you were smart with your choice). I honestly do not know if I could handle a third and continue to find time for food. If I work less then 70 hours a week, its been a great week :)

As for managing my money... I use simply accounting for both of my businesses... so I decided to set myself up as a business! Me Inc. hehe. Well, its a little sad. I really try to live below my means but just cant seem to follow thru on it. I read Wealthy Barber as a teen and always planned to follow it. I still have a copy of my spreadsheet showing how many millions I'd have at 50 if I put away only $250 per month... of course, I havent got to anywhere near that point.

The only time I put money away into savings is when I get a bonus (the tax accountant tells me when I can take extra $$ outta the companies, so thats when I do things like buy a car, buy RRSP's, bought the house, etc.). Well, except for the savings account. I move a little money into that each month.

I also have a crazy expensive wedding coming up in June. I could buy new car with what I am paying for it... I am also feeling like Allen - I don't want to drag my girl into my disorganised financial mess. She is well organised, makes decent money, has zero debt and some savings.

Oh Allen - you have a good point: you own a freakin house!

This is the answer to many financial issues people have:

http://www.wfg-online.com

They handle steps 1 through 6 of the financial plan in a complete and efficient manner for their clients. They sure helped me!

Good:
1. I own my home-with a mortgage of course, I have about 25k in equity. IMO it is a great idea to get a big mortgage and never pay it off.
2. I contribute $200.00 a month to my long term retirement plan that will grow tax deferred and be available to me with no taxes on the distribution at retirement...No taxes on retirement income! Sweet! That tool is on track to be over 1 million by the time I hit 60. but if I increase my monthly contributions as time goes on, which I will, it should be even more.
3. I contribute $150.00 a month to a Mutual Fund portfolio for shorter term investing (1-10 years). I hope to use this to start another business...not sure yet...any ideas?
4. I contribute $500.00 a month to Emergency Fund/immediate access savings. Once it hits a certain predetermined amount it will all go into the other investments.
5. I own my BMW, and it will be good for at least another 100k. Just fixed a bunch of stuff, got the tune-up and dropped a new transmission into it...5k later...ouch :spaz: (this is why I am rebuilding up my emergency fund so aggressively.)
6. Just invested about $3500 to begin my Certified Financial Planner study process. I have been Licensed in the industry now for almost 5 years.

BAD:
1. I have about $2,500 on a Visa card at 0% for 12 months. I could pay it off now, but I am just letting it ride, paying the minimum and I will pay it off upon the sale of my Wife and I's Toyota Camry. The balance was for a new computer for my Wife who runs a wedding and events co-ordinating business on the side.
2. Made a bad investment into a 99 4runner that guzzles gas and is costing us about $125.00 a month vs. $50 with the old Camry...oh yeah and it has a payment of about $290/month :( However if I start real estate investing I want a truck to handle lumber and equipment.
3. Taxes are gonna hurt this year because I did not file quarterly...not looking forward to that bill. However I have enough set aside to cover those.

I have been very fortunate, but have not always been like this. My wife and I were married at 19 and 20 and hardly had anything at that point...no degrees, no money and for her no job. We are now 22 (her) and 23 (me) and have been blessed very much over the last several years for the hard work we have put in.

Most of all though we have great friends and family and fitness has played a HUGE role in maintaining the attitude needed to succeed. So I think whatever financial point we are all at we are in the right place! :tu:

The Good:
- 10% out of every paycheck goes to 401-k
- Roth IRA - max contributions every year ( w/an aggressive growth fund)
- Own 1/2 townhome w/ a relative (appraised at 200% original purchase price)
- $50K in cash assets total (some for emergency, some for new property purchase)
- No car payments

The Bad:
- About $36K in student loans (to pay off grad school)
- Still don't 100% own my "own" property
- Need to be more creative with my investments
- Don't understand enough about real estate as I should

I also recommend the "Rich Dad Poor Dad" book as Jeremy has referenced. You don't have to take every word as the gospel, but I do recommend it people looking to gain perspective on personal wealth.

Remember always: Pay Yourself First...no matter how much or how little money you earn.

Amen, always back up with microsoft money. I have had it crash on me before.

And, just wanted to add - you can always spend every penny you earn. So learn to live on less and be happy with what you want. How many people have you heard say " I just make too much money, I don't know what to do with it." These people are really rare.
We don't make that much every year, but I have a friend that pulls in $30,000 a MONTH and is always complaining about not having enough money. They have like a 11,000 square foot home. I just listen politely and secretly roll my eyes. When here we are living in 1,000 sq ft. home, driving OLD cars that are paid for, and making about $40,000 a year. But I am happy with what I have and she is not.

No, more than likely you know more people that are in debt or are just squeaking by, or are stressed about money. So just learn how to live on less than you make!

Excellent post.

Well, a little more about me - I am a small biz owner, I currently own 2 companies that I run full time (Jeremy, as a small biz owner, I've found less time for life and only time for work... you were smart with your choice). I honestly do not know if I could handle a third and continue to find time for food. If I work less then 70 hours a week, its been a great week :)

Just for clarification, if you're working full time in these ownership ventures you're technically Self-employed. Check out "Rich Dad, Poor Dad" the first book is far and away the best. Look at the four quadrants of income. I would seek to move from a self-employed role, to a business owner role, where you're multiplying your effectiveness.

Total Money Makeover by Dave Ramsey is another must-read.

My plan is to move as much into the investment quadrant as possible.
I live debt-free, outside of the mortgage.
I maximize my Roth IRA, which is one of the very best investment tools out there. :tucool:
I also invest in mutual funds before taxes.

Good:
1. I own my home-with a mortgage of course, I have about 25k in equity. IMO it is a great idea to get a big mortgage and never pay it off.


I'm intrigued.... why do you think not paying off a mortgage is a good idea?

Imagine the wealth you could build if you didn't have to pay your mortgage evey month!!

You are right. I need to get out of the work role I am in. It's just extremely tough to let someone else run my company. I have had staff problems in the past... luckily that's all solved though...

They way I see it currently though, is this: if I hire the two staff needed in each company to replace me, thats 4 extra salaries I am paying. And, that essentially means my pay decreases by that amount... I need to find another business opportunity to invest in to bring in further revenues so I could justify those salary expenses.

Thanks for the book tips though. I read a LOT. So I've already ordered them thru amazon.ca :)

Enjoy the books! I'm sure you'll get alot out of them.

I'm not guessing that the transition out of self-employment will be easy. But, if you can copy your business model several times over with those two salaried employees doing your work, you can make just a small percent off of each entity and be very profitable personally. Does that make sense?

Multiple your time.

This is exactly right ... duplication is key.

That's why I LOVE network marketing - most robust NWM companies that have been around awhile and have proven, quality products, also have systems built in place to duplicate the business. It's like buying a franchise that doesn't require a physical space, doesn't require paying employees, and doesn't require leaving your own home - and what's great is the irrational fear of "pyramid schemes" keeps enough tire-kickers from ever looking at it seriously that it's like franchises were in the 60s - in strong growth phase without much competition!

Also, I have learned to apply the network marketing concepts to my own business so I own a business that doesn't own me. I use leverage everywhere I can - for example, having a multi-tier affiliate program to reach a broader audience, hiring a bookkeeper to manage the books so I can focus on what I'm good at, even having a third-party fulfillment shop to handle physical products so I'm not spending the time manufacturing, packing, and shipping those out myself. It actually results in BETTER quality because they handle tracking the shipments, have the experience to do it right, manage customer service aspects, etc.

I agree, most people see owning a business as being self-employed, which is entirely the same thing. It requires a different set of skills and unfortunately, most are too worried about being in control or wanting to be rigrht that they are unwilling to learn those skills and relinquish control. As an example, many people would be afraid to outsource their operations, or, in the case of my coaching, contract other coaches. Me? I'm willing to take that risk and find the people who are effective so that I can duplicate the business. Ultimately, I focus less on me and more on the system. There is "me" in my book and my CDs, but it doesn't have to be me to be a business. And I always listen to my mentors ... so many are afraid to invest in coaches, because it's "expensive" because they don't realize the return on investment. They don't see that you can invest $1,000 in a marketing coach and earn $3,000 extra you didn't have from the skills you learn, not to mention how you apply those moving forward.

In addition to Rich Dad, another GREAT book to learn about doing business the "right" way (that is, if you want to grow the business without growing your hours IN the business) is the E-myth by Michael
Gerber. Another is Paycheck to Passive by Ian King.

When I decided to go into business, I decided I would first find those successfully both financially AND with time freedom, to learn how they did it. I chose a team, approached several mentors, and joined a group of entrepeneurs (a mastermind group) to brainstorm with. I went into business for myself, but not by myself, and it's made all of the difference in the world.

Jeremy

Enjoy the books! I'm sure you'll get alot out of them.

I'm not guessing that the transition out of self-employment will be easy. But, if you can copy your business model several times over with those two salaried employees doing your work, you can make just a small percent off of each entity and be very profitable personally. Does that make sense?

Multiple your time.

I read the dave ramsey book already. Not really impressed. Too Anthony Robbin's-esq

I read the dave ramsey book already. Not really impressed. Too Anthony Robbin's-esque for me. I don't need motivation, I wanted information :)

I am a self motivated guy, I don't need someone to bump me up. When I get in a funk, I am the only person that can get me out of it. Doesn't mean that motivational speakers are bad or anything, just not for me.

But, it does contain some decent advice in there. I am going to give it to some friends of mine who are in dire straights.

I need more along the lines of investment strategies, etc. I've already drawn up my budget and allocated money for savings, etc. I am more curious what to do with that money then how to save money/get outta debt (which is what the dave ramsey book is all about).