Posts Tagged ‘Savings’
I recently received this email from an actor who just finished working through the Artist’s Prosperity Home Study System:
I just have to write and tell you how excited I am to have found you! I’ve been an actor for five years, struggling along with everyone else, and I finally decided that enough is enough: I need to put together a plan so I can really focus.
All of this time, I thought I had already been focusing on my art, when in reality, I was part-timing everything: my job, my family and my craft. Now, you’ve put me on a path that I don’t think I could have accomplished myself. I have an emergency fund, a separate checking account for my business, and for the first time, real hope for the future. While I have yet to score that elusive “great part,” my auditions are much better. I believe this is because I come in focused and without worrying about “how broke I am.” Sure, I still worry about money, but not in the “OMG, I need this role” desperate way that I have in the past.
Thank you again for what you do. I just wanted to let you know there are people out there who appreciate you very much.
It is rewarding when we hear from folks who have started to take control of their financial futures, because the unfortunate truth is that many people simply never will.
I was just reading some statistics from a group called the Employee Benefit Research Institute. While most Abundance Bound readers are self-employed (and not employees of others), we frequently fall into these same traps and the results of their recent retirement survey weren’t encouraging: (more…)
A couple weeks ago I wrote about the strange place I found inspiration for my 2013 goals. This week, I’d like to address New Year’s Resolutions head-on. Every year millions of people write out a fresh list of goals in the hopes of making the next twelve months better than the previous dozen. We creative people are no exception: in our world, it’s often the well-disciplined artist who ends up on the road to loftier goals, while the dreamer without clear, concise milestones spends another year chasing the same first-tier plans (and never can figure out why he doesn’t achieve anything….). You know the ones; they’re the artists with grand ideas, fantastic plans, and nothing to show for it except a series of excuses.
One mistake that even big businesspeople make, is that they set professional goals, but forget about the fuel to get them there. It might not be the most glamorous activity, but remember your financial goals; don’t just focus on your art. By making sure that your financial picture is healthy, you’re bound to have the fuel ready to have a wonderful 2013 in your craft. By placing well-executed goals, you’ll get where you want to go faster, and with less bumps along the road.
Some Financial Goals to Act On
Emergency Fund – If you don’t have a cash reserve, now’s the time to start one. Anything can happen…and probably will….in 2013, so you’ll want the protection to know that when bad news occurs, you’ve got the money in the bank to easily get through it.
What’s a good reserve? Generally, I recommend having at least three months expenses in a safe place away from market fluctuation (like a bank account). (more…)
In our last post I discussed (among other things) setting up an automatic savings plan. I’ve received some questions about why this works. If you’ve found that you have trouble starting your automatic savings plan, today’s piece is for you.
I’ve found something awful happens when a dollar appears in my wallet.
I spend it.
Maybe this doesn’t sound like a special revelation, but over the course of the last week I asked a few friends if money disappears from their wallets. It turns out that I’m not alone. After answers that varied from head nods to enthusiastic “I do that too!”’s, I now believe this is a fairly universal trend. Money in your pocket is destined to end up in someone else’s pocket.
This realization spurred another, bigger thought: the inverse is true.
I don’t spend money when it isn’t in my pocket.
This is another truth. I don’t go to ATM machines to take out money often. I avoid using my debit or credit card for purchases that aren’t necessary.
That doesn’t mean I never use plastic. I still spend money if I don’t have an actual dollar in my wallet, but just not as often. Last week we went out to dinner once. I also had a couple of lunches out with colleagues. Those both were on my debit card.
So, I was on the right path, but when I examined places where I could get to money (the ATM or credit card) cash was still being spent. Where did I have money that I never spent? Was there a place where money would always be mine? What about longer term savings? How about my emergency fund? (more…)
What is it about September? People walk a little more quickly. Long evenings under the stars with friends become nights at home in front of the computer. Kids go back to school. Client work picks up. Projects roll. The world shifts into gear again.
This is a time for productivity. It’s a time to set up a successful move for your art. If you’re going to celebrate a great 2012, this is the time to clean up your financial picture so you can focus on your craft, your clients, and your career.
1) Write out your goals. In the book The E-Myth, author Michael Gerber points out that most small businesses fail because they don’t have set workflow practices. Don’t just jot down some 1,000 foot goals, get your hands dirty!
- What are you going to do each day to reach your goal?
- What milestones along the way will you set to stay on track?
- How much is each goal going to cost?
2) Set up your budget and direct deposit schemes. By automating your financial picture you’ll be able to focus on your art instead of on a stack of energy-draining “to do’s.” If you have a side-hustle job to pay the bills, direct deposit this money into a savings account, then set up an automatic transfer of enough to live into your checking. Use online tools such as Mint or Yodlee to plan your budget parameters. Once you’ve written out your expenses, you’ll be much more comfortable in your financial shoes. (more…)
I’m facing a big tax bill. Every year I have trouble putting away money for quarterly taxes. What’s a good trick to get money saved?
Here’s my favorite technique to save money: save into a central savings account that’s difficult to reach, then pay yourself a separate amount into checking from this fund. Have money automatically deducted from this central savings account each month for your tax bill before you pay yourself money to live so that you don’t face these huge bills.
It’s a horrible mistake to pay tax penalties. The IRS assesses a five percent penalty for every month you’re late filing. Then they tack on a half percent penalty per month on late payments. These amounts are on the overdue sum, not the entire tax due, and are capped at 25 percent.
The biggest problem I see?
People try to use discipline to fix their saving problem. Don’t trust your financial picture to your ability to be “disciplined.” Take 15 minutes with your bank and set everything up on automatic deduction. You’ll be happy you did the next time you encounter a large tax bill and the money is already saved.
Should I pay extra on my mortgage? I’m making a little extra money right now and I’m thinking paying off my house is a good idea.
This is an intensely personal question. Certainly, less debt is always a step in the right direction, but there might be better choices to grow your net worth more quickly.
Here are a few areas to think about before tackling extra mortgage payments:
- Is your credit card debt paid down? If not, this is a greater priority. Credit card debt is more harmful to your credit score and is usually at a higher interest rate.
- Do you have an emergency fund? If not, put extra money into a savings account so that if you have financial trouble down the road, you’ll have funds available.
- Are your long term goals met? If you’re saving enough for retirement, college or other priorities, then pay down your mortgage.
A mortgage is tax deductible, low interest debt in most cases. Because money paid into a mortgage can’t be used for other goals, I usually look toward other options before paying it down.
Contribute to your 401k even if you don’t plan on staying with the company long enough to claim the matching dollars.
A 401k plan allows an investor to place money into investments on a pre-tax basis. Let me explain what that means: when you collect cash from an employer, they’ve already taken out federal tax, state tax, FICA tax, and in some cases, city taxes. Yuck. When you invest in a 401k, your money avoids ALL of these taxes until you take it out. That means you’ll have more money invested than if you tried to save these funds in the bank. Even when you take money out, it’s distributed as ordinary income, circumventing FICA taxes. The 401k is a powerful tool you should be using right now! When you leave your company, you can often leave it alone or roll it to an IRA until retirement.
If I were forced to choose one time of year that was about making smart choices, it’d be hard to choose against this one. What should you wear to the next holiday party? Who should you invite to a gathering you’re holding? How much should you spend on gifts? Probably the biggest one of all is this: what should you eat?
I was out with a friend recently for lunch and as she perused the menu, I heard her mumble, “Oh, that looks good, but I want that cake!” I felt a bit envious because if I eat frosting at noon, I’m struggling to stay awake by 2:00 PM. But I was surprised when the waiter arrived and she ordered a healthy salad and water.
She never ordered cake.
I asked when the bill arrived, “You aren’t getting the cake?”
Her answer was surprising. This healthy, fit woman told me that she was on Weight Watchers. She enjoyed this particular program because it was less about diet and more about making wise choices. She hadn’t been talking about the cake from that restaurant’s menu. Instead, she was already thinking about the awesome cheesecake a woman was serving at a holiday party we’d both be attending later in the week.
In short, she was making choices today that would affect what she was going to eat in the future.
If you extend this type of thinking to your whole life, powerful results are right around the corner. (more…)
Remember the three little pigs? Sure you do. The moral of the nursery rhyme was simple: build your house right the first time and it won’t be blown over.
In the arts, we’ve all heard this advice before. It’s the quality of our work that brings people back. We’ve watched suspiciously as performers with gimmicks shoot to the heights of fame for a few brief moments; but it’s only quality work that helps ensure a long, prosperous career.
Or in other words, using three little pigs speak: If you’re building your house, make it brick.
I’ve often heard financial planning referred to by professionals as a house. A foundation laid on the sandy ground of debt and scattered income is bound to fall later. For the average person, building consistent, dependable income and paying down debt are jobs number one and two.
But we aren’t average, are we? (more…)
So you’ve finally checked your bank statement to discover that you’re getting nearly no interest from your savings account. Should you check out online bank accounts or are those risky?
Internet banking isn’t for everyone. I could never tell my mother to open an online account because she wouldn’t know how to withdraw funds and would worry that she couldn’t run down to the corner to take it out. That said, usually your best interest rates are going to be found with large, reliable banks online.
There are two considerations –
- Are you internet savvy and comfortable saving online? If so, explore away! Websites such as www.bankrate.com will help you compare interest rates when deciding where to invest. You should also check out bankrate’s list of star rankings when determining which firm to trust with your money. All banks aren’t created equal.
If you aren’t internet savvy, it’s better to stay close to home. Check to see if you’re eligible for a credit union. You may be surprised to find very competitive interest rates, which are often better than those at the bank.
- How quickly can you remove the funds? Remember that a savings account pays a low interest rate because it offers quick liquidity. If you’re saving online but don’t have an easy method to access funds, you may defeat the purpose.
You may also want to check other account types at your bank. Often, banks offer higher interest money market accounts with higher rates as long as you promise not to touch them often.