020, The 2018 Christmas Gift

I wanted to take some time to wish everyone a Merry Christmas! I hope that everyone, their families, and friends have a wonderful and blessed Christmas. The picture above is my little granddaughter and her dad. What a precious picture of her first Christmas. I’m always thinking about the kids best interest which inspired a new Christmas plan for the kids.

Last year for Christmas 2017, my wife and I wanted to get our young, adult kids something beyond the typical “stuff”. We knew we wanted the “Gift” to somehow be related to personal finance and the discipline that is required. After much thought and discussion, we decided to start with the very basic, first step of FI. That’s Financial Independence to the “newbies”. Our gift to them would be conveying the need and proper use of an emergency fund.

So, last year for Christmas, this is what we did: We started each kid a savings account at our bank – a joint account for convenience. Their Christmas gift was a seed of $500 on Christmas morning. The start to an emergency fund.

However, our goal was not just to give, but to teach. To sweeten the lesson of needing an emergency fund, we threw in a way for them to double their gift. On Christmas morning, we told them that we’d match up to $500 if they added another $500 to their savings account by Christmas of 2018! We wanted them to have some skin in the game too.

Now, although we’ve pounded this necessary step of an emergency fund into the minds of our children multiple times, some are better at actually saving, budgeting and delaying instant gratification. There are also differing levels and understanding of an emergency fund. As it is with a lot people, something always seems to come along that puts the emergency fund on the back burner. Throughout the past year, the level in each of our kids savings accounts varied wildly. And as frequently happens, an emergency occurs when the account balance is down.

So, our “gift” sounded simple enough, right? Not so much.

You see, my wife and I have six kids between us. They are at various ages and stages with differing personalities, strengths and, yes, weaknesses. But we were offering to give them a 100% return on their own investment. We give you $500. You add $500 and get an additional $500.

As I write this (December 24th), the amounts in the emergency funds varied from $0.06 to over $4,200. Also, some of the deposits came as late as December 24th as to not miss the matching. FYI: Sliding to the finish line in just a nick of time is no way to run an emergency fund! As you can see, there was quite a range of how much seriousness the kids approached this worthy endeavor. However, we understand that FI is a process. Sometimes a painful process.

Now, here’s the initial intent as it was in my mind, including the numbers. We would deposit the initial $500. That money could only be used for emergencies and should be replaced if the balance fell below $500…as soon as possible. Then, sometime through the year, they would put away a little bit or lump sum until they added $500 to the account. The initial $500 plus their $500 they deposited in the account would equal $1,000. Then we would match their $500 contribution on or before Christmas of 2018. That $500 match would take their account up to $1,500.

Obviously I wasn’t clear to all the kids. Yes, they were even all in the same room and got to ask questions. I’ve also discussed the concept multiple times throughout the year with several. After talking to one of the kids a couple of weeks ago about his understanding of the Christmas gift, I committed to writing it down in order to ensure clarity. Since that conversation, I’ve also decided, for this year, to make it more complicated and add a bonus program. I like to try to encourage sound practices and discipline. So, here comes the 2018 Christmas deal:

1) For Christmas 2018, each kid will be gifted a deposit of $500 on Christmas Day. That’s their Christmas gift. Simple.

2) Bonus #1, The Match. Each kid should deposit $500 above and beyond the Christmas gift ($500) by December 24, 2019. This money must remain in the account on December 24, 2019 to qualify. If this is met, we’ll match the $500 with a deposit on December 24, 2019.

2) Bonus #2, Monthly Deposits. Each kid that does a direct deposit of $42 per month or a manual deposit of $42 per month will receive a $100 bonus on Christmas Day 2019. You must deposit $42 or more each month to qualify for the bonus. This is to reinforce paying yourself first & making small consistent deposits. The twelve $42 monthly deposits will amount to the $500 needed for the 100% match.

3) Bonus #3, The Intent Bonus. To meet our intent, each child that has $2,500 in their savings account on December 24, 2019 will get a $100 Bonus on Christmas Day 2019.

Here’s how I came up with the amount in Bonus #3, the intent amount of $2,500.

1) $500 2018 Christmas gift

2) $500 Kid’s contribution for 2018

3) $500 2018 Match

4) $500 2019 Christmas gift

5) $500 Kid’s contribution for 2019

If you add all the value of the above items 1-5, it adds up $2,500. Of the $2,500 they would have $1000 of their money in the account, the rest would be gifts. So, the incentive to follow the plan is pretty good by most standards.

And finally, here’s our thoughts on the emergency fund and our intent in general for this gifted lesson: An emergency fund is money on hand to cover emergencies. When an emergency arises and you spend from your emergency fund, you should return that money to your emergency fund as soon as possible. Having a $1,000 unplanned issue like a car problem should cause only an inconvenience , not a crisis. Also, this emergency fund’s value should increase every year until there is 3-6 months of expenses saved. (Expenses are everything that you need to pay each month to live like food, housing, bills, gas for the car to get to work, etc).

So, that was our gift to our kids for 2018. What do you think? Please leave comments as to your thoughts. I’d love to hear any ideas or improvements on this idea of mine.

Again, Merry Christmas to all!

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019, Can’t Win Big Without a Strong Offense

Offense or Defense? How do you budget? Are you even watching your money? No matter what goals are trying to be achieved, it’s not likely to happen if no one is watching the money. An awareness of what’s going on with your finances is essential. What’s coming, what’s getting paid, and what’s going on with any remaining money. If money isn’t told where to go, it can’t be maximized towards your goals. It will slip through your fingers.

Having a great offense:

Playing offense would be knowing the money coming in for the month and designating each dollar where to go. Send it to pay for a bill, an expense, maybe pay down a debt, or put into savings or investments according to a plan. Yes, a plan is important too. Without a plan, spending is just random and not targeted towards a specific goal. Just like in football, there’s always a plan for both offense and defense. Time is put in to study how to play the game and maximize chances of success and winning. Finances are no different. Plan and have a great offense. Then execute as close as possible to that plan.

Goals (SMART goals) are key. SMART goals can be it’s own blog post. But the essence is Specific, Measurable Achievable, Relevant, and Time based. If goals are created using the SMART structure, they tend to be met more frequently. There’s a saying “If you aim at nothing, you’ll hit nothing every time”. So set SMART goals, plan to achieve them, and track them. That’s a great offense. Have short, medium, and long term goals. Just as mountains can’t be climbed in one giant step, goals can’t be met in one giant step either. Daily decisions move towards weekly, weekly move towards monthly, monthly towards yearly and on an on. Some will be met, some will be missed, and some will be excepted. But in general, you’ll be closer to where you wanted to be than if you just wandered through life.

Take an active role in keeping expenses down to a minimum. Often it’s difficult to make more money at a typical job quickly. Generally workers have to wait for an annual raise or an even less frequent promotion. That should be part of the plan too. But cutting expenses can yield immediate results. Decisions to buy one item over another could be the difference between spending a little money or a lot of money. Each of these decisions move you closer or farther away from your financial goals. Lots of small good decisions lead to big wins. Lots of small bad decisions lead to big losses and mistakes. To make a Smoking good decision, you have to be prudent, intentional, and consistent. Prudent, intentional and consistent purchasing is a great offense for personal finance.

A defensive budgeting perspective is much different. Some find themselves trying to make their dollars last to the end of the month. They may not be tracking all their expenses throughout the month. They may be struggling to come up with rent money. Maybe it’s emptying the change jar to keep the lights on. Whatever the situation, budgeting (or simply paying your bills on time) seems to be a struggle.

These struggles are real. These struggles stem from a lack of planning and poor execution. Not paying attention to the details and being on offense for your personal finance will surely lead to you playing from a defensive position. Defensive budgets are plagued with creeping expenses that go unnoticed until it’s time to pay the light bills. It’s trying to just get through just one more day, week, or month. It’s living paycheck-to-paycheck. That’s a defensive position.

There’s balance to this game. Sometimes there will be unexpected expenses that force you to go on the defensive posture. But if it is happening every month, you’re losing the game. Stop playing defense and make choices that get you back on the offensive drive.

Personal finances are not a game to be taken lightly. Families depend on security. It’s the most basic need. By playing offense with your budgets and directing your money, you’ll win a lot more frequently financially. Paying attention to your incoming bills and expenses and outgoing money will show you the play book for the month. Make choices that support moving into a better position today and in the future.

013, Mortgaging a House

architecture clouds daylight driveway
Photo by Pixabay on Pexels.com

So, we covered ratios in the last post. The focus of that post was to show you the basics of a ratio for buying a house. Now you know and understand the ratios that are recommended in relation to your income. You understand that the 20% recommended down payment is the minimum you should put down on a house. Let’s run through a few examples to show you the impacts of a few scenarios. Sometimes a picture is worth a lot of words. In this case, the picture will be a spreadsheet. Before we get started, here are some of the areas we’ll cover.

I ran all of the calculations through Mortgagecalculator.org. It has the most complete variables necessary to truly capture all of the costs. Be wary of the bank calculators that only show principle and interest. While that’s a big portion of your monthly rate, it’s not the whole picture. So, I’m going to lay out a few things in this post to help you truly capture the total costs you can expect.

First, there’s the purchase price. You may hear people say things like “I paid $200,000 for the house”. They are referring to the purchase price. By the end of this post, you will know the cost of the house will be much more than the purchase price… unless you pay in cash.

Then there’s the down payment. You’ll want to put 20% or more down on a house so you avoid paying PMI (Private Mortgage Insurance). Remember that’s where you get to pay for the bank’s insurance in case you don’t make good on your money. That 20% should be your minimum. You can put down as much more as you want.

Next comes taxes. You can’t get away from taxes. Taxes can be a considerable expense…especially in Texas, where I’m writing this post. What Texas loses in income tax, they make up for in property taxes.

You’ll also want to have insurance. This isn’t the PMI insurance. This is the homeowner’s insurance that you pay for things like a hail storm that trashes your roof, fence, etc. The bank will require you to have insurance if you finance. If you pay in cash, it’s a good idea to pay just to protect your home from an unexpected diseaster.

What we’ve covered above is referred to as PMTI. PITI is simply Principle, Interest, Taxes and Insurance. Everyone will pay those when financing a home. But don’t forget or confuse PITI with PMI. Remember PMI is that insurance for the bank that you get to pay. So, the total monthly cost will be PMTI plus PMI. The less you put down the more PMI’s cost goes up.

In order to show the differences in PMTI plus PMI, I’ll set a few variables so you can see the impact of the changes. I’ll also randomly choose Grand Prairie, Tx as our city of choice to nail down the exact taxes for a property. Limiting the variables should help you see the long term impacts to your finances for the choices you make.

The house will be a $200,000 house in Grand Prairie, Tx. The interest rate is going to be set to 4.33% which is fairly close to the current rate. Your rate will likely vary somewhat based on down payment and your credit score. So, 4.33% is good for illustration purposes. The property taxes for Grand Prairie are 2.921736% of your home value or $5,843.47 every year. That amount will be divided by twelve and added to your monthly payment. Homeowner’s insurance is set at $1,000 per year. Again this will be broken down and spread across your monthly payments. The three scenarios will be putting 5%, 10%, 20% down for your down payment.  The Term will also be either a 30 year or 15 year fixed rate mortgage.

Price Down Pmt % Down Term (yrs) # PMI Pmts Montly Pmt Total PMI Pd Total Int Paid Cost for House
$200,000.00 $10,000.00 5% 30 79 $1,592.98 $7,679.17 $149,698.07 $357,377.24
$200,000.00 $20,000.00 10% 30 71 $1,539.23 $5,325.00 $141,819.22 $347,144.22
$200,000.00 $30,000.00 15% 30 40 $1,485.40 $2,833.33 $133,940.37 $336,773.70
$200,000.00 $40,000.00 20% 30 0 $1,364.90 $0.00 $126,061.53 $326,061.53
$200,000.00 $10,000.00 5% 15 37 $2,086.49 $2,929.17 $68,666.11 $271,595.28
$200,000.00 $20,000.00 10% 15 26 $2,006.69 $1,950.00 $65,052.11 $267,002.11
$200,000.00 $30,000.00 15% 15 14 $1,926.89 $916.70 $61,438.10 $262,354.80
$200,000.00 $40,000.00 20% 15 0 $1,780.42 $0.00 $57,824.10 $257,824.10

Take a good look at the chart.  Study it for a bit and see if you can find the Big Rocks.

The first thing I see is that the final cost for the house could be anywhere from $257,824.10 to $357,377.24.  So, depending on how you set up financing for your house, you could pay a lot more.  Maybe this would help with some perspective on just how much that is.  Let’s say you make $57,000 per year.  If you are inefficient you would work for more than 3 years just to pay for the interest and PMI if you put minimal down and finance for 30 years.  You’d only have to work for one year to pay for the interest if you put 20% down and got a 15 year mortgage.

The second thing I see is that by far, the biggest difference in what you pay in interest is determined by the length of financing.  The longer you finance, the more you pay in interest.  Many folks say that they will finance for 30 years and pay early.  Statistically, they don’t though.  So, if you are in that small percentage, you’re likely not. I tried that and didn’t do well.  It wasn’t until I locked myself into the 15 year mortgage that I actually stuck to it.

The last thing I see is more of a reflection.  Being in the military, I’ve never truly owned any houses. I mortgaged them.  So, I’ve pretty much have been paying interest for most of my adult life.  While I did make money on every house I’ve mortgaged, it was done through improvements, etc.  I’ve never run the numbers, but I’d be lucky to break even considering all the interest I paid.  I wonder if I would have come out cheaper if I only rented and paid cash for a house.

So, as you can see from the chart above, there’s a lot of ways you can buy a house. This post points out a few different ways and for many different lengths of time.  Use this information and the thoughts to do it as efficiently as you possible can.  In just this one example, it could mean you save about $100,000.  What can you do with $100,000????

You now have the tools to make an efficient decision. Don’t be Average!

012, Financial Ratios, It’s all About the Numbers

What’s in a number? A number standing alone is meaningless. Especially in personal finance. Something like $10,000 without comparing it to other factors is surrounding the number is just an amount of money. If that $10,000 is buying someone’s car outright with cash for someone who makes $30,000 a year, it’s a significant amount to that person. That same $10,000 paid as a down payment on someone’s $250,000 Bugatti sports car who is making $5,000,000 per year is less significant in that person’s personal finance. That $10,000 is hardly anything compared to the $5,000,000 annual income. But someone who’s buying a $100,000 car outright with cash for someone making $300,000 per year, the financial impact is exactly the same as the first person buying the $10,000 car in the first example. The ratio is what matters in these examples.

We started to touched on Ratios a little bit in the last Post with Warren Buffet’s house. In that example we were comparing his home’s value to his net worth as a percentage. His house is really a very, very small part of his net worth. This post will look at important financial ratios that banks, landlords, and many other people who try to manage personal finance.

Financial Ratios Everyone Should Know, Wallet Hacks and Millionaire Mob are just a few sites that give some ratios. The first is the most basic. Then each one after that give some more ratios to understand. I give you those three so that you can dig in at your own time and at your own pace.

Since several of the readers have asked about buying a house in the near future, we’ll cover a few ratios for buying a house. I first heard of a ratio for buying a house when I purchased my first house. During the application process, the loan officer informed me that I could get a loan for up to 28% of my income for the house. But there was a caveat. The total of all my debt could not be more than 32% of my income. Since I was an Average person, I had more than 4% (32% – 28%) in consumer debt. This limited my first home to less than the standard 28%. I don’t remember exactly what the numbers were at the time. The point is that I had a lot of credit card debt and it effected my loan to buy my house. That was one of the earliest wake up calls that I may be in trouble. So, I started tracking these ratios periodically.

I’ve never really thought about that ratio for several years now. While writing for this Blog, I’ve noticed these ratios have changed! They haven’t changed for the better either. The newer ratios are 28% for your house and 36% for the total debt ratio. While that may seem better, it’s not. This is not in your best interest at all. Here’s why I don’t agree with the ratio.

The 28/36 ratio allows for 4% more than the old ratio. That’s a 100% (4% to 8%) increase in consumer deb! So what they are doing is allowing you to charge more depreciating assets! They haven’t increased from 28% for the generally appreciating asset called your house. Not that I’m a fan of financing to the maximum, but the above shows where the banks interests are focused. What they did was basically allowed for the Average consumer to borrow more money for the highest interest rate category. That means they make more money and you lose more money to interest.

So, you loose the flexibility to use that second 4% that you could put towards an emergency fund, for food, or for investing. You are also loosing the opportunity cost of that 4% compounded over the years if you invest it in your retirement. That’s worth you seriously considering before you decide to max out how much you can borrow on a house and credit cards. Let me say it again:  That’s worth you seriously considering before you decide to max out how much you can borrow on a house and credit cards.  The old 28/32 ratio was hard enough to recover. The 28/36 ratio would be much harder. So, don’t be Average and max out your credit. Live below your means and invest the remainder in your future.

By now, most of you by now have read about how much credit can cost you. You know to avoid it on depreciating assets. Assets that don’t appreciate in value or provide income should never be financed.  So, when buying a house, don’t forget that wasting money on depreciating assets can really mess up your chances to minimize your interest costs. Remember all numbers in relation to your objectives of financial independence. Don’t get caught up in the Average American dream of owning a house at the expense of your financial future.

Maxing out your credit to purchase a house will significantly hinder your ability to save for your future. It will strap you for cash and for emergencies if you don’t have those in place before you finance a house. So, before you even consider buying a house make sure you have a fully funded emergency fund and an appropriate down payment.

Why is the down payment of 20% or more stressed by so many financial people? Because of two major reasons. Fist, it shows the mortgage company that you have skin in the game. You have 20% equity, so the bank has less risk. You are more likely to pay on time and not walk away leaving the bank with a house. They are not in the house buying business. They reward you for this by giving you a favorable interest rate. So, you’ll be financing less and at a lower interest rate. Over the life of your loan, the reduced financed amount and the lower interest rate will be a significantly less amount you pay to the banks.

Secondly, you won’t have to pay for Private Mortgage Insurance or PMI. PMI is insurance that the bank makes you pay for to insure that they actually get the money back that they lent you. That’s right, they make you pay insurance for them! You get absolutely no value for this either. So, you are losing money here too. In most instances, 20% down will eliminate this PMI. PMI increases with the cost of your house. More expensive house will require a more expensive PMI payment. So, just save at least until you get the 20% down to avoid throwing this money away by paying for the bank’s insurance for your home loan. Don’t do it. If you can’t afford this 20% down, wait until you can.

So, don’t be Average. Learn your financial ratios so you get a better picture of your major purchases such as a house.

011, Enough Already

How much is enough?  Since a home and vehicles can be such a large part of your expenses, especially when you are young, let’s address that first. You surely don’t need the excessive stuff above. You may want it, but you don’t need it.

How much house is enough? Warren Buffet is a extremely rich guy. If you don’t know him, take a few minutes on google and check him out. He lives in house that’s .001 Percent of his Net Worth. Think about that for a second to let it sink in. For some perspective, if your net worth was $1,000,000 your house would be $10 ($1,000,000 X .00001). Yep, that’s ten dollars. The $10 represents how difficult it would be to purchase the house from your cash or investments. This house he bought in the 1950s is an insignificant part of his wealth. He could afford a way more expensive house if he wanted. He’s said he’s happy where he lives. If he felt he could be happier in another house, he would move. But he’s content. There’s no need for him to spend any more to chase a bigger house to keep up with others. He has what he needs and wants.

Granted, he’s worth $60-80 billion, so he’d need a massive house to even begin to approach 1% of his net worth. But that’s not the point necessarily. When you have enough, you don’t need more. When you are content, you don’t need more. When you are happy, you don’t need more. That’s my point.

You’ve often heard things like “your home is your biggest investment”. While your house is an appreciating asset, it doesn’t generate any income. Money is tied up in your house where you can’t spend it or truly invest it. Practically, that means that if your home is your biggest investment, more than half of your net worth isn’t going to generate income. Having that much of your net worth inaccessible and tied up means that you can’t spend it. It also means that it’s not generating income. So, you’ll have to work longer to build assets that can actually generate cash either now or in retirement. That’s the classic house rich, money poor scenario. You have an expensive house, but you don’t have much money for other things like properly investing for your future. Being house rich can severely limit your flexibility to get ahead financially.

This is really amplified when you are young. Your young years can have the most impact on your wealth in retirement when you invest efficiently. When you neglect your retirement in your early years, it’s much harder to catch up due to the time that has passed. The compounding interest from these early years really help to build up an investment nest egg of investments to carry you through your retirement years. Don’t become house rich and cash poor.

Here’s a great article looking at home ownership in total. Avoid the Dream House Trap. It talks about how an expensive house can strap you with large expenses. Those expenses, if not properly balanced against your income, will be felt financially a lot more. It will limit your ability to have flexibility to properly invest in other income generating assets to help you through retirement. The Average people in America frequently overlook how a house can trap you in the rat race just to stay afloat.

You need a roof over your head to shelter yourself from the elements. People do live in grass huts, modest homes and mansions. They all provide the basic requirements of shelter to keep you alive. People are also happy in each of those examples. Each example is also more costly. Grass huts are cheap, modest homes are reasonable, and mansions are extremely expensive. So, choose your housing carefully without overestimating your needs.

Next, let’s talk about cars.  We’ve touched on those before.  This is likely the second biggest expense that can cost lots of money if not done smartly. Since I’ve been into Choose FI a lot lately, here is an article about new cars and here’s a podcast if you listen to those.  The bottom line is that your transportation costs can eat up quite a bit of your income.

Over the course of your, at least 40 years of driving, decisions you make can literally cost you hundreds of thousands of dollars if you are not wise in your choices.  Those hundreds of thousands of dollars can either boost your income during retirement or drag you down.  The choice is yours. If you haven’t read my article about the brand new car I bought, please go back and read my post.  Buying a new car was not a good financial move for me.

You do need transportation. Most will drive cars or trucks versus mopeds or bicycles. Just as in houses, the choices vary widely. They will impact your finances one way or another. Make well informed decision on how your choices will impact your finances. A cheap used car can get you from point A to point B just as well as a brand new high dollar sports car. So, it’s truly up to you which path you choose. Choose wisely and position yourself for success in retirement.

These two major expenses can make or break your finances in the long run. They are the Big Rocks. So, make wise decisions based on facts and solid information that will meet your financial goals. Don’t overestimate your needs and max out your wants. Find the sweet spot that can work for you. If you have to have the cat’s pajamas, you’ll pay more for things at the expense of your financial security in your later years.

Make finding contentment a goal with whatever you have.

006, Always “Bee” Learning

In the first five blog posts we’ve covered the basics. As was mentioned you can literally get advanced degrees on this stuff. The degrees don’t guarantee that you’ll be successful. Nothing really does. However, once you have a solid understanding of the basics, continue to learn. Strive to learn new things throughout your life. The more you know, the more likely you’ll make a well informed decision. The more you make well informed decisions, the higher your chances of success will be.

In today’s fast paced environment continuously learning is more accessible than ever before. Frequently, that learning doesn’t even have the high cost of a college education. There are websites for almost any topic you can think of to learn about. Granted, not all are great. But a website that doesn’t deliver will quickly be left in the dust by good ones. With the advancements in equipment and the ease of publishing something on the internet, a crowd of followers will point out any mistakes or poorly supported ideas presented as facts quickly. So, if you search for educational based websites that have a large following you’ll generally wind up with sound advice. When something is presented, you can cross check facts with another website quickly as well. Sitting in uncomfortable chairs listening to an instructor is not the only way to get educated today.

Podcasts are another development in recent years. Yes, I’ve been learning before podcasts were available. But you don’t have to even read websites if reading isn’t your thing. Some people learn from reading and some from listening. Many of the websites out there on financial independence and personal finance have both websites and podcasts. The podcasts range from just the host’s opinion, experiences, or advice to discussions among a group of people. Often times the guest hosts will either be someone who has achieved success or are well on their way. The guest could also be the authors of books, other podcasts, or other experts in the topic of the day.

Audio Books are another option to learn. While websites and podcasts can be very educational, the author needs a little more room to explore or explain the topics. Podcasts and websites tend to be more focused on a particular topic in a format that’s a quick read or listen. But a book isn’t limited to those formats. They can be as detailed as necessary to fully explain complex topics, stories, or ideas.

By now, you may be questioning the amount of time required to actually learn personal finance and financial independence. Everyone is working these days. Generally married couples both work too. So, how can you get to advance your education? When will you find the time?

My morning commute is about 45 minutes. During that time, I’m usually listening to a podcast of some kind to learn something new. Over the years there have been many topics I’ve leaned about on this commute. Dave Ramsey Podcasts about how to get out of debt when in debt. Choose FI and the Mad FIentist are podcasts about personal finance. Bigger Pockets is about real estate investing. I’ve also listened to many podcasts about deer hunting, turkey hunting, and even cooking. So, rather than just listen to the latest song by a random artist, I’m learning new stuff on the podcasts. If you can think of a topic, chances are there is a podcast about it.

Podcasts can also be listened to during other times. Anytime you can wear headphones, you can learn. Instead of being that person bobbing his head up and down in ignorance, learn something. You can learn while exercising, while your partner is watching TV, or even sneak in a quick topic in a waiting room. You may even be able to listen to a podcast in a deer stand! Just make sure you download it first if there’s no cell coverage in the woods.

I’m also an early riser. Maybe you’re a night owl. Whatever your schedule is, carve some time out to better yourself either before the kids or wife get up or after he or she goes to bed. If you are going to get ahead in life, you need to spend some time educating yourself. Early or late in the day is generally a good time to sit alone and learn.

Almost all of this information is available for free, in many formats, and pretty much hassle free. Just as you want your finances to be efficient, so should your learning. It isn’t necessary to lock yourself in a classroom, office, or basement to learn. Don’t be stung by wasting your time being idle, learn something. Look for opportunities to be efficient with your time and always be learning.

Resources, Stepping Stones for Success

If you just skim things, click on the books to be taken to Amazon and you can buy the book directly from the link and have it delivered straight to you door.

Here are a few of the many books I’ve read over the years. They are very good books that have had an impact on me and my personal finances. I wouldn’t recommend them if I didn’t read them and they were worth every penny. I assure you that if you buy, read and apply the books, they are worth more than the cover price. You won’t get a check, you can’t sell them, and they aren’t going to magically turn into money. But when you understand the ideas in them, you’ll make more on interest, dividends, or growth of your investments. You will also save many more times their value by reducing how much you pay in interest over your life. Remember, you don’t have to do everything exactly correct in every detail. You only have to get the Big Rocks right to reap significant financial benefits from them.

I also explain a little bit of each book to help guide your through them. Depending on what you are seeking, one may be more right for wherever you are in your financial standing.

I’ll update these books periodically when a book or something catches my attention.

Total Money Makeover, Dave Ramsey

This is a tried and true guide to getting out of debt. Dave explains in simple terms the quickest way to pay down, and eventually pay off your lenders. It’s a 7 step program. I highly recommend tackling the first three as fast as possible.

The Wealthy Barber, David Chilton

The core of this book is getting the Big Rocks right. It shows shows that you don’t have to have a big income to become wealthy. It covers debt, investing, and even keeping living costs efficient. This is a quick and easy read.

The Millionaire Next Door, Thomas Stanley and William Danko

The authors studied self made millionaires for over 20 years. They explain several common characteristics of what made the millionaires, well millionaires. You may be shocked that many self made millionaires may look like every other person in your neighborhood. He or she was just better and more efficient with their personal finances. It’s a really good read too.

Your Money or Your Life, Vicky Robin

Vicky takes a very unique look at the value placed on time and money. The first several chapters are a bit loose for me. But then it gets into some really interesting topics explaining how money and time are intertwined. It goes into quite some detail to guide you the true payment for your time from your employer or business. There are examples that lay out the details to get the true monetary benefit of working. It’s worth a read or two.

Full disclosure notice: The above books are links from the Amazon Affiliate advertiser program. I do get a small percentage if of the sale if you use the links above to purchase the book or books.