7 Money Mindset Myths That Are Keeping You Poor

by VINCENT KING 

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Budgeting and managing your money is never a happy experience – IF you’re in the red. Yet, if you’re like most people, there are 7 common money mindset myths that are keeping you that way.

Change your mind and change your numbers. This sounds simple, but it works.

Money Mindset Myth #1 – A Penny Saved Is A Penny Earned

Not losing that penny by saving it is helpful, but it takes so much more than not giving that penny to the cashier to create meaningful wealth. In addition to saving, you must also multiply that those cents that you are saving to truly feel the effects. Even if the adage is accurate, it is also incomplete, and certainly not something you can base your future fortune around. Saving pennies is good, but you also need to earn more.

Money Mindset Myth #2 – I Don’t Need Money Help

Paying for people to coach you in precision pilates is a want, but if you have zero experience straightening your finances, then shooting from the hip while going solo will likely only set you right back where you started from.

Investing in a money coach will lead you down a safer road lined with superior choices, better decisions, and ultimately a finish line you’ll likely never reach alone.

Invest in a coach and train for financial success.

Money Mindset Myth #3 – Budgeting Saves Me Money

As noble as that might be, it isn’t accurate. Write everything you earn, subtract everything you spend, and allot a certain amount toward your saving. Then you’re gold, right?

No, not really. You can record your pluses and minuses all day, but if you’re not acting on what you wrote, your budget means nothing.

Carefully plot and plan, then follow through by making improvements to see optimum success.

Money Mindset Myth #4 – If I Earn More, I Can Spend More

You worked 60 hours last week. Dog tired, you came home and collapsed into bed. The exhaustion is fine, at least your paycheck will be fat.

When it’s time to reap the rewards, you happily head out, paycheck in hand to shop.

“Look at all this overtime! I deserve a ‘little’ something for working so hard!”

That’s why you’ll stay right where you are in your finances.

That “little” something extra is called overtime pay, and THAT is your reward. Stick all your “extra” earnings in a special fund or savings account, then leave it there so you can watch it grow, rather than disappear.

Money Mindset Myth #5 – If I Don’t Risk It, I Can’t Lose It

Playing a smart financial game means taking intelligent risks. You will never make a mint if you don’t make smart investments. Fail to take SMART risks with your money, and you will keep the blooms from blossoming on the branches of your money tree.

Stock valuations are volatile, but individual investors can still profit on the expansion of the economy by buying into a broadly diversified index fund that tracks the total market as long as they have a long term vision.

Know a good investment when you see it, and be smart enough to make it.

Money Mindset Myth #6 – I Make Enough

You bring home your check every two weeks. Your house payment is always made on time. And your bills are current. Yet, you have nothing left for savings, and little if any for life’s extras. You might make enough, but you’ll never reach financial independence if you can’t get ahead. You don’t want to be 50 without any retirement assets.

Assets determine your worth, and if you want to grow your financial portfolio, you must find a way to start saving while you invest to increase your assets at the same time.

Money Mindset Myth #7 – My Today Is Taken Care Of

Too many people live in the moment. In today’s economy, it’s difficult to look past now to see the promise of tomorrow. Yet, right now is when it’s essential to plan ahead. What will your reserves be like as you head into retirement? Not putting away what you can now is a near guarantee that you’ll not have enough when you need it in the future.

Start saving into a retirement fund today so you can start planning for future success.

What money mindsets are holding you back?

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7 Reasons Your Neighbors Have More Money Than You

by VINCENT KING · 178 COMMENTS

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You look out the window of your home each night after dinner, staring across the street at your neighbors. You long for the cars they drive, their weekly manicured lawns, and even the vacations they seem to take several times a year.

You’re not alone.

I often look out my window, too, staring at the gorgeous homes and cars wondering how they manage to pay for them. After all, we live in the same neighborhood, our kids go to the same schools, and their salaries aren’t that much more than ours.

There are several reasons our can neighbors afford so many of the things we would love to have, but could never fathom splurging on:

1. Perception is Everything

Your perception may be skewed. You see fancy cars in the driveway, and the trim lawns you can almost feel between your toes. You watch work crews going in and out of the awesome remodeling projects happening inside. Yet, none of that means your neighbors are wealthier than you are. Just because you see them as more affluent, doesn’t mean they are.

You are only able to see above the surface of their spending, meaning you have no idea what’s happening down below.

2. Allocation is Essential

While you choose to consistently save money for your kids’ education, and retirement later in life, they are spending what they believe are excess funds on their cars and homes. They might be making the shallow choice to spend their money on what people can see, while you are spending your money on the life you want to live, both today and tomorrow. You choose to pay for peace of mind.

It’s how your neighbors allocate their income that makes them seem richer than they are.

3. Perks Matter

While Your neighbors’ salaries might be slightly more than yours, it isn’t enough to justify the massive leap in spending. However, fringe benefits can greatly widen the gap. Perks such as cars, phones, laptops, and more can give the recipient an amazing leg up when it comes to freeing money for other pleasures.

4. Luxuries of the Mature

As families mature, houses get paid off and savings grow. Even if your children do go to the same school, their children are older, and they have a few years on you as well. Those could be years spent paying on their house and putting money in the bank. Imagine how much more freedom you would have without also having to manage your monthly mortgage.

5. Their Lives Might be Plastic

Your neighbors might be disciples, worshiping the power of the plastic. While you are smart enough to understand the headaches of undisciplined credit, your neighbors might be living carelessly, buying short-term luxury today in exchange for a meager tomorrow.

6. They Know Where to Find Deals

I consider myself a connoisseur when it comes to finding great deals on groceries and kids clothing. Perhaps your neighbors also know something about finding deals on the things they need, freeing up more money for things they want.

7. They Pay for Their Immediate Wants First

Your neighbors could also have more money than you do because they prioritize differently, and pay from their savings for projects and luxuries that they want done.

While my neighbors may or may not make have more money than me, I don’t let it influence the way that I live. I spend money in the way that’s most important for me and my family, both for a better, more comfortable today, and for a brighter tomorrow.

As “The Millionaire Next Door” and “Rich Dad, Poor Dad” point out, those that spend on things like homes, cars, and clothes are spending on material items and living on “rented” lifestyles. Instead of building assets, these people are living on liabilities and that can be a dangerous mindset. You don’t have to live like a king today, if it means you’re going to live like a pauper tomorrow.

It doesn’t matter what the Jones’ are doing. Not now, or ever. Save where you can. spend where you need, and live a life you want.

When in Cebu City, please visit gregmelep.com for your real estate and retirement needs.

3 Things You Need To Know As a Poor Stock Market Investor

By John Laframboise

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As a poor investor, there are 3 very simple things you can do to make yourself a better investor right now. You may already practice them, but it's still worth exploring and will be particularly helpful for new investors on a budget.

Saving money is insanely important. You have to learn how to manage your finances and save money. I hear frequently people talking about increasing your income - that's fantastic and worth pursuing, but the reality is 80% of the people out there are making lower/middle class income. That's not necessarily a bad thing; a friend of mine is a hairdresser and she loves her job and is very happy with the present situation, yet she makes only 20k a year. If you can save money well, you have more freedom to chase your goals, whatever they may be. Whether it's starting a business, investing in stocks or just wanting security and certainty, you can greatly increase your chances of success by managing your money well and saving.

Saving money starts with making independent decisions for the betterment of your financial future. It's about realizing that if you give up small luxuries now, it can lead to huge financial gain in the future. It's learning that material things do not add fulfillment and enlightenment to one's life. It's about getting healthier and eliminating health/wealth destructive practices like excessive drinking, smoking and spending. Saving money is something most people cannot do, so take pride in knowing that your going against the grain and taking control of your future.

Secondly, you need to be aware that you can get rich over time by diligently investing small amounts of money periodically. It's basic math. For example, say you invest $50 per week for the long term in a stock index fund. If you can do that, and are lucky enough to get the normal 10% average annual return from stocks, after 30 years you would have about $456 000 dollars. That figure increases the more you save. Think of how easy you spend $50 dollars. With small tweaks in your lifestyle, most people can save that money even on a lower class income.

Third, as a poor investor you need to minimize fees and commissions for your investments. Instead of investing in mutual funds (high fees), consider exchange traded funds or picking stocks (if you are willing to do a little work). This means you need to open a brokerage account to purchase your investments. For poor investors, I recommend online discount broker Interactive Brokers - they have some of the lowest fees around and an easy to use trading platform. I would also stay away as much as possible from the big 5 banks if you are Canadian. There are way better options out there and their fees are just laughable - $20-$30 a trade and $15/month for a checking account!? It's absolutely ridiculous and should be avoided.

By saving and investing small amounts periodically in low fee exchange traded funds, as well as using a no frills broker with low fees, even a person making income below the poverty level can have a meaningful investing plan.

John Laframboise is founder and author at http://www.riseofamillionaire.com, a personal finance Blog that follows his progress to become a millionaire. John has held positions within the Canadian banking industry and has a Bachelor of Commerce from the University of Windsor in Canada.

When in Cebu City, please visit gregmelep.com for your real estate and retirement needs.

Article Source: http://EzineArticles.com/?expert=John_Laframboise

My 10 Dumbest Money Moves -- And How You Can Avoid Them

by Stacy Johnson
Thursday, October 14, 2010

My 28-year-old niece and I were recently talking about money. She's (finally!) become interested in accumulating more and spending less, and because I've been in the personal finance business in one capacity or another since before she was born, she logically assumed that I've always done everything right and know exactly what to do at all times.

Confession time: I've blown it big on more occasions than I care to mention. In fact, most of what I've learned about money I didn't learn in books or by being a CPA, stock broker, or financial reporter. I learned it the hard way — by making stupid decisions and missing opportunities.

So for her sake, and maybe yours, I've put together the following list of 10 mistakes — most of which I've made — that you really should try to avoid.

1. Not having a goal

Whether sitting in your car or standing at the airport, you'd never start a trip without a destination in mind. The same logic applies to money. You should decide exactly what it is you'd like to accomplish, then remind yourself of that goal early and often. Are you trying to buy a house? Become self-employed? Save for your kid's college education? Retire in your 50s? Whatever it is, write it down, picture it and share it with anyone else who you're counting on to help you accomplish it. Your goal isn't money — money's paper. Create goals — both short-term and long-term — then decide how much money you'll need to reach them. Take it from someone who wandered aimlessly for years: goals work.

2. Not having a spending plan

If you have a job of any kind, you can bet that your employer tracks every dime they make and every dime they spend. Granted, they have an incentive to do so — both income and expenses affect their income taxes — but it's only logical to want to know where your money is coming from and where it's going.

Tracking and categorizing your expenses with a budget — or spending plan, as I prefer to call it — is the single greatest tool you have to accomplish your money-related goals. A plan that includes what you intend to spend on things like entertainment, food, housing, etc., vs. what you actually spend allows you to fine-tune your finances and find places to save. Not doing this is like driving with your eyes half-closed: You might reach your destination, but you're certainly going to take more time getting there.

If you're not writing down every penny of money coming in and money going out,

go to this page and download one of many free budgeting worksheets we link to there. Then read 4 Reasons Budgets Fail and How to Create One That Won't.

3. Attempting to derive self-esteem from possessions

Although we all know that money doesn't buy happiness, very few of us act that way. Instead, we seem to go out of our way to appear successful by driving the right car, living in the right house, and wearing the right clothes. Nothing wrong with nice things — if you can afford them.

But here's something that life has taught me. It's a quote from my most recent book, Life or Debt 2010: You can either look rich or be rich, but you probably won't live long enough to accomplish both.

Attempting to derive self-esteem from possessions is dumb on two counts. First, it's expensive.

More important? It doesn't work.

4. Doing what everyone else is doing

One of the world's wealthiest men, Warren Buffett, said, "Be fearful when others are greedy; be greedy when others are fearful."

During the recession-induced stock market rout that began in the summer of 2008 and bottomed in March of 2009, the Dow Jones Industrial Average plunged all the way from 10,000 to 6,600. It was at that time that I bought most of the stocks I now own in my online portfolio. I didn't buy then because somebody on TV told me to — the "experts" were as fearful as everybody else. I bought then because I'd missed similar opportunities in similar downturns before, and I was determined to learn from that mistake this time.

Likewise, when the housing bubble was at its zenith, many of my friends were buying as many houses as they could possibly borrow for, even though it should have been apparent that prices were over-inflated. Now they're broke — and I'm shopping for real estate. Again, not because I'm smart, but because I've also missed that opportunity before. Hence this recent story Why You Should Buy Stocks and Houses Now.

It's common knowledge the economy runs is cycles of boom and bust — yet when times are good, everyone seems to believe that trees grow to the sky. When they're tough — like they are now — the same people stand like a deer in the headlights.

If you're convinced the economy is going to zero, buy guns and canned goods. But if you can reasonably expect a recovery some day, invest — even if that day is a long way away, and even if it's possible things could get worse before they get better.

5. Starting to save large and late rather than small and soon

If you're 25 and you save just 5 bucks every day ... call it $150 a month ... and earn 10 percent, by the time you're 55, you'll have $340,000.

If you wait till you're 45 to start accumulating that same 340 grand, you'll have to save $1,700 every month for 10 years. True, you can't earn 10 percent today, at least without risk.

But over time and by taking a measured amount of risk, you can.

6. Paying interest to buy things that drop in value

There are only two situations where paying interest makes sense, at least mathematically. The first is when the purchase goes up in value at a rate greater than the rate of interest you're paying to finance it. Example: You borrow money at 5 percent to finance real estate that you think might return 8 percent on your overall investment. Other examples might include a business loan or a student loan — in other words, something that's going to return more (at least potentially) than it costs in interest payments.

The other situation where paying interest makes sense is when you can earn more on your cash than you're paying in interest. Example: After taxes, I'm only paying about 3.5 percent to finance my house. Since I think can make more than 3.5 percent after-tax in the stock market, I'll forgo paying off the mortgage, even though I have the cash.

Obviously there are times when we have no choice but to borrow. The point is that unless the math works out, the less you borrow, the better.

7. Turning down free money

If your employer is offering matching money when you participate in your company's 401k or other retirement plan — and you're not participating to the extent necessary to get the full match — you're literally refusing free money, not to mention ignoring an opportunity to get a tax deduction and grow your retirement savings tax-deferred.

There are only two kinds of people who turn down free money: people who really, truly can't afford to put up the money to get the match, and people who aren't thinking it through.

And yes, I've been one of those people.

8. Buying a new car

Everyone knows that cars drop 15-25 percent before you get them home from the showroom. Which makes it odd that so many people continue to buy one. My girlfriend just bought a 2009 BMW that still smells new for $26,000 — about $7,000 less than a new one would cost, and they look pretty much identical.

This is one mistake I can happily say I haven't made — I've never spent even that much on a car — or owned one that new.

If you're buying a car for transportation, it doesn't have to be either new or fancy. Cars are depreciating assets: the less you spend on one the better, especially if you're borrowing money to do it.

9. Buying more house than you need or can afford

It's practically gospel: spend 25 percent of your gross income on a mortgage, regardless of what size house you really need. While spending the maximum possible amount you can afford will make real estate agents happy, will it make you happy? When you buy more square feet than you're going to actually live in, you're required to insure them, furnish them, clean them, heat them, and cool them. All of that costs money, time and stress.

Buying a big house makes sense if you're trying to make a leveraged bet on the future of housing prices — or if you're trying to impress your friends.

If you're not doing either, buy what you need and put the money you save into more productive things, like meeting your financial goals.

10. Not protecting your good credit

Credit is like lots of things in life: simple to screw up, a bear to fix. And even though you may think it doesn't matter, some day it might, and probably will. If you've already messed up your credit, take the time and steps necessary to fix it and then keep in good shape.

That was my list of dumb moves to avoid, but I'll bet there are plenty of things that you could add. So let's hear it!

Source: Money Talks News