What Are We Proud Of?

I heard someone on the radio today talking about Americans and what makes them proud.  That is a funny little word that has a tendency to have deep emotional and moral connections.  Another way to look at pride is one of its opposites, shame.  Both pride and shame have important applications to personal finance that I'd like to consider.

First, what about your money situation are you ashamed of?  Debt is something that makes many people ashamed.  But, not all debt!  The debt that you are ashamed of comes from those purchases that you know deep down you never should have made, or the times you splurged when there really wasn't any money to splurge.  I know that right now I am ashamed that I have about $10,000 in credit card debt.  How do I know I'm ashamed?  Because I've told "white lies" or understated the amount debt I have when talking about the issue.  I know that if I'm willing to lie about something it really means that I'm ashamed of it.

I am also ashamed that I do so little to help strangers or those in need.  Since leaving High School I have rarely volunteered my time for others.  I do not donate to political campaigns even though I care deeply about certain issues.  I do not give to the homeless or the hungry.  I see the importance of giving but have not made it a part of my budget.

I am sometimes ashamed that I do not save more or pay down my debt faster.  From my gross income I save 12.9% plus an additional 5% in 401(k) matching.  I know that there are many people out there that save more than twice as much as I do on a similar income, but I enjoy my lifestyle and don't want to sacrifice anymore.

I recognize that the thing that make me ashamed are weaknesses where I can improve.  Rather than beat myself up I made a plan to address these issues.  I am making steady progress toward getting completely out of non-mortgage debt and will be done by July 1, 2010.  I plan to give a significant portion of my estate, should I be lucky enough to have one, to charity when I die.  I also have plan to gradually increase my savings to 20% of my gross over the next few years.  I am not perfect, but I've realized areas I need improvement and set to work on it.

Now, what about your money situations are you proud of?  I am also very proud of many of my accomplishments.  I am proud that I pay my own bills and am off my parents dole.  I am proud of my education.  I am proud of my job.  I am proud that I own my own home.  I am proud that I have made great progress saving $17,000 in my retirement accounts by my 25th birthday.  I am proud of my wonderful wife and the life we have together.  All of the things I am proud of are the things that I've done right and enriched my life and put me on track to achieve my dreams. 

The things we are proud of can help you set goals for the future.  You want to continue to excel in the areas where you have already had success.  I would like to eventually start a family with my wife, that would make me proud.  I would like to finish a PhD, MBA, or CFP to further my education.  I would like to grow my investments to reach wealth and true financial independence.  I have set goals that relate to many of my proudest money achievements, and new goals will be created as I learn more about what makes me proud.

All of us should stop and take a moment to realize what in our lives makes us proud and gives us shame.  We should embrace what we learn from this exercise and use this knowledge to set goals and improve our personal finances.

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Overcoming the Fear of Failure

I want to start my own business. In order to diversify my income streams and increase my income I feel that entrepreneurship is by far the best route. The problem I now face is that I am hesitant to risk my savings on an unproven venture. I am afraid to fail. I think that recognizing both my desire to enter the business world and my reservations is a good start, but as someone wise once said, "You can't win if you never play the game."

I spent some time this evening scouring the net looking for advice. Here is some of what I've found:

• Biz Thoughts: Don't Be Afraid to Fail
• National Federation of Small Business
• Practical Commerce: Four Things You Should Know

Because I went out looking for motivational and inspirational resources that is mostly what I've found. One common theme I have found is to start small. By moving slowly and making a limited investment you can gauge the market without large risks. Next, many people advise that what I consider failure, a business that does not proser and make money, is not actually failure. That seems silly, but learning from mistakes is a common theme too.

"No man ever achieved worthwhile success who did not, at one time or other, find himself with at least one foot hanging well over the brink of failure."

It was also pointed out that bankruptcy isn't that bad. I've traditionally been brought up to completely disagree with this statement. My parents have may encouraged me to learn chess or ride a bike through trial and error, but failing to pay back debt was certainly not something that was acceptable; thus, business by trial and error would have been out of the question. A willingness to follow my entrepreneurial spirit because of, rather than in spite of, bankruptcy is a totally new concept for me, but it is endorsed by the entrepreneurship articles I read.

In the end I have been encouraged to push forward with my plans to enter the business world. I will take the advice of other bloggers and business people and start small in an industry where I already have some experience. I'll put off my grand plans for real estate development and focus more on free lance coding and web based business. I'll try to grow Aspire 2 Wealth and keep the readers informed as I test out my business chops and grow my wealth.

Comments and suggestions are welcomed. Please subscribe to my RSS feed if you like what you've read. Till next time, thanks for reading.

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What is an Emergency?

Save an emergency fund!  This is one of the most important first steps to getting control of your finances and stopping the cycle of reaching for the credit card when things get tough.  I even made saving an emergency fund Millionaire Rule #5.  I've scraped together almost $2 grand for my emergency fund over the last year, and that is great progress. Right?  

My problem today is that my car needs work, but I don't want to raid my emergency fund.  The $400 repair bill seems small enough for me to pay out of my regular living money, but history has shown that I won't tighten the belt enough.  I know that if I pay this bill out of normal income I will run out of money by the end of the month.  When the money runs out the immediate response will be to reach for the credit card for groceries and gasoline that I've got to have.  Spending more on credit is exactly what I shouldn't do.

However, I would almost rather seem my credit card balance go up than see my emergency fund balance go down...   I know it is crazy talk, but it took so much to build it up I don't want to use it!  I like knowing if a real emergency happens I have the money to cover it.  I also like looking at the nice balance and watch it continue to grow each month.

So here is the real question, how do you decide what constitutes an "emergency" and justifies raiding savings?  For example, I needed to buy two pairs of shoes (one for the gym and one for work) for which I hadn't planned.  Is that $100 expense for shoes enough to raid the emergency fund?  What about redoing the brakes on the car? What about text books for my wife?  It seems there is a possible emergency that doesn't fit into the budget every month.  Ugh.

In the last two months I've spent significant sums on these unplanned expenses.  Fortunately I've also had a significant inflow of cash from selling unused items on eBay that has covered these expenses.  That extra money was originally earmarked for paying off debt.  Instead of paying down my debt I chose to pay the bills and let my balances tread water.  This seems like a decent trade off, but in reality is is the same as if I had paid down the debt and later (when money got tight again) run the credit card right back up.  That scenario may have actually saved me some interest now that I think about it.

I'm a little confused about how I should be using my emergency fund, and a little frustrated with all of the unbudgeted expenses that have popped up.  Please leave some comments to let me know what you think.  Thanks for reading.

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Getting Smart About "Found Money"

Sometimes extra money, for which we have no plan, finds its way into our pocket. I call this unexpected money "found money" because it appears out of nowhere. To qualify as found money, the cash can not be something that we can predict ahead of time or can not be counted on to pay bills. The money might be an inheritance, a gift, or unexpected bonus. Found money can also be created by holding a garage sale, taking on extra hours, or starting a new revenue stream.

One of my goals for 2008 is to create an average of $333 of found money per month. I got the process started today by posting my old inventory from my failed MLM business on eBay. I put up the first 10 auctions that I expect to bring in a couple hundred dollars. I have also earmarked some old computer equipment and used books for sale over the next few weeks too. Nearly everyone has stuff taking up room in closets and attics that they never use. Turn it into found money and remove clutter from you life at the same time.

Once you have created the new cash it is time to put it to use. There is always the temptation to use unexpected windfalls to splurge or reward yourself with luxuries. I know that I am often guilty of this myself. Each year at Christmas my wife and I receive a rather substantial amount of cash gifts (from $500-1000), and we tend to use it to buy toys, gadgets, or indulgences. How do you spend money in these situations?

I found this great post from Advanced Personal Finance that deals with how people spend their found money. For me, I would tend to blow money that was a gift and invest money gained from cashed-in stock options. I am not certain why it seems natural for me to spend the money differently, but I am no psychologist. I plan to keep this in mind with future windfalls and strive to spend ALL of the money more responsibly. My plan is to reward myself with about 10% of the windfall by spending it on something fun I wouldn't otherwise buy and invest or pay off debt with the rest. I will use this particular found money from my eBay sales entirely to pay down debt.

Making $333 per month outside my normal earnings will be a big stretch for me this year, but if I succeed it will have a huge impact on my financial situation. It would be a total of $4,000 knocked off my debt in only a year for a little extra effort. Let me know how you plan to create found money this year, and where you will allocate your extra cash by leaving a comment.

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Blogging Goals for 2008

These evening I sat down and wrote out some goals for Aspire 2 Wealth for the next year. The blog is only about 6 weeks old and hopefully I am just getting warmed up. To get a sense for where I started check out my blog stats from December.

Carnivals and Roundups:
Host a carnival
Get a post selected as Editor's Pick for a carnival
Participate in one or more carnivals per week

Visitor Growth:
Increase my unique visitors by 5% per week

Page View Growth:
Increase my page views by 5% per week
Keep the ratio of page views per visitor over 1.75

New Blog Features
Create a Branding Scheme (colors, header image, logo, etc)
Create a "Welcome" page with Aspire 2 Wealth Intro and Adfecto's Bio

Stats for Mid-year '08
Receive 750+ unique visitors per week
Receive 1300+ page views per week
Raise my Technorati authority to 75+
Increase my Feedburner 7 day subscriber average to 100+
Earn $100 (total) from blogging

Stats for Year End '08
Receive 2800+ unique visitors per week
Receive 4800+ page views per week
Raise my Technorati authority to 150+
Increase my Feedburner 7 day subscriber average to 250+
Earn $100 a month from blogging

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Blog Performance: December

I am going to start a monthly post to record the key statistics from Aspire 2 Wealth. The idea is to chart the performance over time and learn what works best. The period covered by these results is December 2, 2007 - January 1, 2008.

Sitemeter -
Total Visitors: 925
Average Visitors: 29.8 per day
Total Page Views: 1668
Average Page Views: 53.8
Page Views Per Visitor: 1.8

Adsense -
Total Impressions: 1,773
Clicks: 5
Earnings: $2.06

Feedburner Stats -
Total Views: 238
Total Clicks: 224
Average Subscribers: 11
Average Reach: 5
Ending Subscribers: 14
Ending Reach: 12

Traffic Source -
StumbleUpon: 465 (55.29%)
Direct: 114 (13.56%)
Blogger.com: 39 (4.64%)
PFblogs.org: 26 (3.09%)
Search Engine: 10 (1.19%)

* One important note is that I got two huge days of StumbleUpon traffic that may distort these statistics if similar traffic does not repeat next month

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My 2008 Financial Goals

On the final day of 2007 it is time to post my goals for the New Year. Unlike a "New Years Resolution" which is more hope than substance, I will follow my Millionaire Rule #1 and establish GOALS. Here we go:

Save, Save, Save - in 2008 I will save 8% of my gross pay in my 401(k). It will also be matched with 5% more from my employer. I will also save $100 bi-weekly into my Roth IRA. In the middle of the year I will get a raise (odd July to July pay system) which will be used to increase my Roth IRA savings to the annual rate of $5500 per year (or $211 bi-weekly). Finally, I will save $50 bi-weekly into my online savings account as an emergency fund.

Pay Down Debt - in 2008 I will pay $600 per month toward my credit card debt (while not spending any additional money). This will allow me to pay off Card #1 which has ~$2,000 at 19% interest and make significant headway against my ~$5600 at 5.9% fixed. I will continue making minimum payments on my 0% interest furniture loan and 6.5% interest car note. Total principle repayment will be $10,000 to reduce my total debt to less than $14,000 (from ~$24,000). As a stretch goal, I will aspire to use 'found money' and extra windfalls to reduce my debt below $10,000 by the end of the year.

Continue Education - in 2008 I will continue my education by completing the online certification from my employer for my Level 2 education requirements. My wife will complete at least 18 hours toward her BA degree.

Grown Net Worth - in 2008 I will double my net worth to approximately $48,000.

Grow Aspire 2 Wealth - in 2008 I will continue to foster my blog to the best of my ability and meet the (separate) goals I outline for its performance.

Create "Found Money" - in 2008 I will sell unused items, take paid overtime, or otherwise generate at least $333 per month of extra revenue outside my primary profession.

Be sure to subscribe to my RSS and check back with me through out the year while I chart my progress on these goals. Let all make 2008 a great (and financially sound) year!

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Back to the Grind

I am back from my Holiday travels. The entire trip consisted of three things: 1) Driving, 2) Eating, and 3) Football. My wife and I had a good time visiting her family, and I'd say the trip was a success.

During the trip I was asked several times what my plans are for the future. That got me thinking that I don't really have a cohesive plan for the next phase of my life. I've reached a point where most of my short term goals like completing my masters degree and buying a house have been achieved. What do I do next?

I might get a Ph.D. It can almost never hurt to get more education (especially when my work contributes to these endeavors) and it would be really neat to be Dr. Adfecto! I have also thought about becoming a Certified Financial Planner. Why not make my favorite hobby into my day job? I might actually enjoy my work that way. I have also looked into becoming an entrepreneur by starting businesses in a few different fields; 1) real estate investing, 2) real estate property management, 3) franchise (Subway, Papa Johns, etc), 4) home theater/networking/automation/AV installer, and 5) financial services firm. I can already see the glass ceiling above me at my current job (though I have a few years before I hit it) so I want to be prepared to maximize my earning potential.

Another thing I thought about a lot over the last few days is my near term financial goals. I'd like to put them down here to document my thoughts and outline the specifics. First, I want to pay off all of my debt except my mortgage. That is my most immediate goal and I think is a great goal that everyone should achieve. I currently have about a 12k car loan and about 12k in consumer debt that I want to pay off. I also want to reach a savings level that maxes my Roth IRA ($5500/year) and puts me on course to max my 401k (15% of gross pay). Next I want to purchase (preferably with cash) a replacement for my 1999 Chevy sedan that is sadly already struggling. Third, I want to establish an emergency fund with > 3 months of expenses in an online savings account. I have set a very ambitious completion date of July 1, 2010.

This is the basic advice that the columnists like Walter Updegrave (CNNMoney), Michelle Singletary (Washington Post), and Liz Pulliam Weston (MSN Money) or the gurus like Dave Ramsey (The Total Money Makeover), Robert Kiyosake (Rich Dad, Poor Dad), and David Bach (The Automatic Millionaire) or the scores of personal finance bloggers (Money Blog Network) write about every day. I agree with them and will put these goals into practice in my life. Reading these articles and books is a great start however, is not enough to bring out the type of wealth I want in my life. I want to be able to travel to exotic places, to own a beautiful spacious home (or two) with upgrades like a home theater and billiards room, own a pair of late model mid-luxury cars (for example Infinity G35 for me and an FX35 for my wife). I want be able to work with flexibility and generate as much of my money as possible from completely passive sources (bonds, stocks, 3rd party managed real estate or businesses, etc). In other words, I want to be truly wealthy with a net worth of 10-15 million. That my friends is not the 'Millionaire Next Door' or the 'Comfortable Retiree' that will result from the advice of those I mention before. What then should I do to achieve this kind of wealth that such a small percent of Americans achieve? That is a whole different set of ambitious goals I need to figure out.

Aspire 2 Wealth is a center piece of this thinking. It will provide me a place to put my thoughts into concrete form so my ideas don't go to waste. It will also (hopefully, one day soon) give me an audience (or even better, a community) to give me feedback, encouragement, and tough love to push me further toward my goals. I think I need someone to call me on my pie-in-the-sky dreams and make me take action on the dozens of "million dollar ideas" I think I have on a regular basis. Thoughts and suggestions appreciated.

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