Last time I introduced you to the three laws to successful wealth creation that will enable you to build a solid foundation to ensure you provide a very sustainable income in retirement. As I pointed out, many people forego the planning required to prepare for retirement until it is too late. However, this needn't be the case. Even if you are about to retire or you have already retired you can still apply these principles to get your investments working for you.
In this article I want to address the first of these laws in more detail to show you how you can stop losing and start making money from your investments. If you remember, the first of the three laws to wealth creation was to 'spend less than you earn'.
Throughout my career many people have asked me to show them how they can create wealth. In most cases they expect that I will give them the 'holy grail' of investing, the one thing that will make them millions. Instead, I ask them a simple question - 'Do you have a budget?' You know, that great wealth creation vehicle that many suggest you should have to help you become financially independent. If you are like most people, you probably think a budget will restrict your spending, hamper your lifestyle and generally make you miserable. However, none of this is true - a budget is simply a financial plan to succeed.
A budget lists your income and expenses, and lays the foundation as to how you either invest or spend your money. It allows you to have more freedom, more security and more wealth. Quite simply, it provides you with the flexibility to plan for the future, but more importantly take control of your life today and put you on the right path for your future.
It is usually this first rule that creates considerable angst amongst people. This is because most people do not have a budget. However, without a budget, how do you know how much you are actually spending, or more importantly how much you can save?
Usually it is not until people receive their group certificate at the end of the financial year that you hear the outcry 'I got paid that much, what did I do with it all?' Only when spending habits are quantified do we know how much we can save. I have never met anyone that could not save at least 10% of their income after completing a budget. Most people could in fact save 20% to 30% of their income and still maintain a good lifestyle.
If you begin to budget you will realise how much money is wasted through uncontrolled spending.
Budgeting is like your roadmap to financial independence - it provides you with a plan of attack that allows you to create your preferred reality. The bottom line is a budget will allow you to allocate your income appropriately so that you stop losing and start making money. My advice to you is set some time aside to create a budget to quantify your spending so that you can begin to invest your income wisely.
20 Ways to Save on Your Utility Bills
Utility bills can consume a very large portion of your paycheck. Wouldn't it be nice if you could pay 25-50% less on these bills? There's a number of ways you can. Don't worry you won't find any low flow toilets on this list!
#1 Change your light bulbs - Compact florescent bulbs use about 25% the electricity of standard incandescent bulbs and will last for years. They do not work with dimmer switches, but you can swap out the majority of your light bulbs and save a significant amount on lighting.
#2 Check your insulation - Go in your attic. Does your insulation cover all the 2x4s? If not you don't have enough. Having a well insulated house will save you a significant amount on your heating and cooling bills and is well worth the cost. It's also the kind of project the average home owner can do by themselves.
#3 Add caulk and weather stripping - Is your house drafty? Look at your doors, does light shine in? Feel around the edge of your windows, do you feel a cold or hot breeze? You need to add caulk and weather stripping. It'll save you money and help get rid of those annoying hot and cold spots in your house.
#4 Fix leaking faucets - I'm sure you've heard even a small drip in your sink can fill a swimming pool in a year. It can also empty your bank account. Fixing this problem is usually as simple as replacing a 50 cent washer.
#5 Use fans - By having a slight breeze you can usually turn your AC up a degree or two and still be just as comfortable. It's a whole lot cheaper to run the fan than to run the AC, so use them.
#6 Turn the computer off - That 300 watt power supply in your computer is still drawing power when you're not using it. Turn your computer off when you're done with it. If that's too much of a hassle, adjust the screen saver settings to put your computer in sleep mode when it's idle. This is a low power mode that will allow you to quickly resume your work where you left off when you're ready to use the computer again.
#7 Switch to LED Christmas lights - You wouldn't think you're Christmas lights draw that much power, but when you get enough of those little lights, it really adds up fast. 25 watts per 50 bulb stand is standard and when you hook up 10 of those strands you're looking at 250 watts, probably running 24/7. Christmas lights that use LED bulbs use 80%-90% less electricity and still look just as bright. Also, turn your lights off when you go to bed.
#8 Get an LCD computer monitor - Are you still using an old style CRT display for your computer? Switch to LCD, they consume as little as 25% of the power of a CRT monitor of the same size. You were looking for a good excuse to switch anyways.
#9 Switch to tankless water heater - It amazes me how few people even know about the existence of tankless water heaters. These water heaters do not store hot water, but rather heat it instantly whenever it is needed. The consume a mind-boggling amount of energy when in use, but it ends up being much cheaper to consume a lot of power during the time you need hot water than a little keeping it hot 24/7.
#10 Change your filters - So you change the filter on your AC/Heating unit every spring and fall like you're suppose to? Wrong! Most filters are only rated for 30 days. Filters are cheap, so change them frequently. The efficiency gained in heating/cooling your house will make well worth it.
#11 Install a programmable thermostat - These are fairly cheap and easy to install. Why pay to cool your house while you're gone to work? Do you really need it to be the same temperature while you sleep as when you're awake? Programming it will allow you to make these energy savings adjustments automatically every day.
#12 Take (short) showers instead of baths - Try this one day. Pull the plug on your tub and take a shower like you normally do. When you're all done, look at the water level. It's probably about a quarter of the way full. This is how much water, and energy heating that water you save by taking a shower instead of a bath. If you can shorten your shower, even better.
#13 Ditch the phone company - Remember those "We don't care, we're the phone company" adds from Saturday Night Live in the 70's? Not so anymore. They now have competition from the cable company, cell phone providers and internet phone companies. Shop around and you can probably find a better deal. If you use cell phones all the time, you may even be able to shut off your home phone.
#14 Cancel extra TV channels - Do you pay $50-150 a month for 500 channels but end up just watching the networks? Cancel the extra channels and save some cash. If there's one show you just HAVE to have on one of these other stations, considering paying to download that one show from iTunes or elsewhere instead.
#15 Have AC Maintenance - If your AC is struggling to keep up in the summer, it might be a good idea to have some routine maintenance done. Low Freon levels can significantly impair the efficiency of your AC unit. So can grass clippings and other debris.
#16 Clean that lent trap - Be sure to empty the lent trap on your dryer after every load. If you are doing so and your clothes are still damp, there's probably lent that has built up in the exhaust hose and it may be time to replace or clean it.
#17 Have a free energy audit - Many power companies provide energy audits free of charge. They can help you find inefficiencies you may not be able to find on your own, and will sometimes even provide you with free compact florescent bulbs. Contact your power company to see if they offer this service.
#18 Get some shade - Blocking out direct sunlight can significantly lower your cooling bills. Plant some trees that will help shade your house and close the blinds on hot days.
#19 Water in the early morning - If you water your grass on a regular basis do it in the early morning hours. By doing so you reduce the amount of water that evaporates which means much more gets to the grass. It's not recommended to water in the late evening because having damp grass overnight provides a good environment for parasites that can harm your grass.
#20 Change your shower heads - You can switch to a low flow head without having to settle for a wimpy shower. Newer shower heads available can generate just as high of pressure but use less water. They do this by quickly pulsating between on and off to deliver rapid high pressure bursts. These heads are only about $20, have multiple settings you'll love and can save a lot of water.
#1 Change your light bulbs - Compact florescent bulbs use about 25% the electricity of standard incandescent bulbs and will last for years. They do not work with dimmer switches, but you can swap out the majority of your light bulbs and save a significant amount on lighting.
#2 Check your insulation - Go in your attic. Does your insulation cover all the 2x4s? If not you don't have enough. Having a well insulated house will save you a significant amount on your heating and cooling bills and is well worth the cost. It's also the kind of project the average home owner can do by themselves.
#3 Add caulk and weather stripping - Is your house drafty? Look at your doors, does light shine in? Feel around the edge of your windows, do you feel a cold or hot breeze? You need to add caulk and weather stripping. It'll save you money and help get rid of those annoying hot and cold spots in your house.
#4 Fix leaking faucets - I'm sure you've heard even a small drip in your sink can fill a swimming pool in a year. It can also empty your bank account. Fixing this problem is usually as simple as replacing a 50 cent washer.
#5 Use fans - By having a slight breeze you can usually turn your AC up a degree or two and still be just as comfortable. It's a whole lot cheaper to run the fan than to run the AC, so use them.
#6 Turn the computer off - That 300 watt power supply in your computer is still drawing power when you're not using it. Turn your computer off when you're done with it. If that's too much of a hassle, adjust the screen saver settings to put your computer in sleep mode when it's idle. This is a low power mode that will allow you to quickly resume your work where you left off when you're ready to use the computer again.
#7 Switch to LED Christmas lights - You wouldn't think you're Christmas lights draw that much power, but when you get enough of those little lights, it really adds up fast. 25 watts per 50 bulb stand is standard and when you hook up 10 of those strands you're looking at 250 watts, probably running 24/7. Christmas lights that use LED bulbs use 80%-90% less electricity and still look just as bright. Also, turn your lights off when you go to bed.
#8 Get an LCD computer monitor - Are you still using an old style CRT display for your computer? Switch to LCD, they consume as little as 25% of the power of a CRT monitor of the same size. You were looking for a good excuse to switch anyways.
#9 Switch to tankless water heater - It amazes me how few people even know about the existence of tankless water heaters. These water heaters do not store hot water, but rather heat it instantly whenever it is needed. The consume a mind-boggling amount of energy when in use, but it ends up being much cheaper to consume a lot of power during the time you need hot water than a little keeping it hot 24/7.
#10 Change your filters - So you change the filter on your AC/Heating unit every spring and fall like you're suppose to? Wrong! Most filters are only rated for 30 days. Filters are cheap, so change them frequently. The efficiency gained in heating/cooling your house will make well worth it.
#11 Install a programmable thermostat - These are fairly cheap and easy to install. Why pay to cool your house while you're gone to work? Do you really need it to be the same temperature while you sleep as when you're awake? Programming it will allow you to make these energy savings adjustments automatically every day.
#12 Take (short) showers instead of baths - Try this one day. Pull the plug on your tub and take a shower like you normally do. When you're all done, look at the water level. It's probably about a quarter of the way full. This is how much water, and energy heating that water you save by taking a shower instead of a bath. If you can shorten your shower, even better.
#13 Ditch the phone company - Remember those "We don't care, we're the phone company" adds from Saturday Night Live in the 70's? Not so anymore. They now have competition from the cable company, cell phone providers and internet phone companies. Shop around and you can probably find a better deal. If you use cell phones all the time, you may even be able to shut off your home phone.
#14 Cancel extra TV channels - Do you pay $50-150 a month for 500 channels but end up just watching the networks? Cancel the extra channels and save some cash. If there's one show you just HAVE to have on one of these other stations, considering paying to download that one show from iTunes or elsewhere instead.
#15 Have AC Maintenance - If your AC is struggling to keep up in the summer, it might be a good idea to have some routine maintenance done. Low Freon levels can significantly impair the efficiency of your AC unit. So can grass clippings and other debris.
#16 Clean that lent trap - Be sure to empty the lent trap on your dryer after every load. If you are doing so and your clothes are still damp, there's probably lent that has built up in the exhaust hose and it may be time to replace or clean it.
#17 Have a free energy audit - Many power companies provide energy audits free of charge. They can help you find inefficiencies you may not be able to find on your own, and will sometimes even provide you with free compact florescent bulbs. Contact your power company to see if they offer this service.
#18 Get some shade - Blocking out direct sunlight can significantly lower your cooling bills. Plant some trees that will help shade your house and close the blinds on hot days.
#19 Water in the early morning - If you water your grass on a regular basis do it in the early morning hours. By doing so you reduce the amount of water that evaporates which means much more gets to the grass. It's not recommended to water in the late evening because having damp grass overnight provides a good environment for parasites that can harm your grass.
#20 Change your shower heads - You can switch to a low flow head without having to settle for a wimpy shower. Newer shower heads available can generate just as high of pressure but use less water. They do this by quickly pulsating between on and off to deliver rapid high pressure bursts. These heads are only about $20, have multiple settings you'll love and can save a lot of water.
Recession? Let the Revolution Begin!
The economic drum I have been beating for a while now has gone mainstream as the "R" word, recession, rolls off the tongues of almost every news broadcaster. Suddenly, or so it seems, the economy is tanking. Sure the housing market was already sliding but Christmas season provided a pregnant pause in hopes that increased consumer consumption might save the day.
But those kinder and gentler days are over. Right out of the 2008 gate, the "R" word came roaring shamelessly into our living rooms with major Wall Street sell-offs catching everyone's attention.
Yet, as I mentioned in the beginning, many writers and thinkers including myself have seen the writing on the wall and this day coming down the pike since the good-old dot com bubble of 10 years ago. How could that be?
There's no crystal ball and it's not rocket science once a person wraps their mind around how money works in the context of a monetary system. James Carville, Bill Clinton's political strategist in the 1992 election, placed a sign over his desk in the Little Rock headquarters: 'It's the economy, Stupid!' The sign answered the often asked question: What is the campaign about? Though a catchy slogan, our current economic state of affairs would be more aptly put as: It's the system, stupid!
The Bush administration's proposed economic stimulus package will be a short-term fix at best on an unrecoverable monetary system; the blueprint of which was designed to obscenely benefit a few while extracting wealth from everyone else. In addition, none of the mainstream presidential candidates have more than some new version of the same-old tax and entitlement-type reforms to offer, that is except for Ron Paul who has recently lost visibility.
You might want to read my colleague Richard C. Cook's latest article, Will Economic Stimulus Measures Stave Off Recession? As far as I'm concerned, Cook is the man with the big-picture-economic plan. It's a plan informed by 32 years of practical experience with US public finance including his 21 years in the Treasury Department and based on knowing how a debt-based monetary system has wrecked the US producing economy and threatens to destroy the world and mankind. Plus, he has already won his stripes as a whistleblower given his career as the analyst who back in 1986 blew the whistle on NASA for having known for years about the flaws in the O-ring joint that doomed the space shuttle Challenger, the flaws that led to the explosion in January 1986 which killed seven astronauts and changed the U.S. space program forever. In January 2007 Cook published Challenger Revealed: An Insider's Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age. (Thunder's Mouth Press, New York)
In December, he invited me to write the introduction to his first economic book soon to be published; a compilation of 22 essays written over the course of 2007 titled: We Hold These Truths: the Hope of Monetary Reform. In it the author exposes the fatal-design flaw of a monetary system that is debt-based and privately owned. More importantly, he provides a new economic vision and practical model that benefits all concerned and not only for an elite group of shareholders.
After Cook read my own book, The Quality Life Plan: 7 Steps to Uncommon Financial Security, he endorsed my off-the grid personal finance approach as some of the best stop-gap measures individuals and families can apply right now to reduce the impact of a debt-based monetary system: A system that ultimately leads to debt-slavery. Similar to the fact that until recently most doctors did not have nutrition as part of their pre-med curriculum, nor have most traditional financial planners ever heard of or learned about the link between personal finance and the implications of a debt-based monetary system. The result? Conventional wisdom has not stopped the bleeding and life on the edge has become the new norm. Until Cook's vision of genuine economic democracy becomes reality, we are left on our own to empower ourselves with personal finance strategies and tactics that can reverse negative trends.
But those kinder and gentler days are over. Right out of the 2008 gate, the "R" word came roaring shamelessly into our living rooms with major Wall Street sell-offs catching everyone's attention.
Yet, as I mentioned in the beginning, many writers and thinkers including myself have seen the writing on the wall and this day coming down the pike since the good-old dot com bubble of 10 years ago. How could that be?
There's no crystal ball and it's not rocket science once a person wraps their mind around how money works in the context of a monetary system. James Carville, Bill Clinton's political strategist in the 1992 election, placed a sign over his desk in the Little Rock headquarters: 'It's the economy, Stupid!' The sign answered the often asked question: What is the campaign about? Though a catchy slogan, our current economic state of affairs would be more aptly put as: It's the system, stupid!
The Bush administration's proposed economic stimulus package will be a short-term fix at best on an unrecoverable monetary system; the blueprint of which was designed to obscenely benefit a few while extracting wealth from everyone else. In addition, none of the mainstream presidential candidates have more than some new version of the same-old tax and entitlement-type reforms to offer, that is except for Ron Paul who has recently lost visibility.
You might want to read my colleague Richard C. Cook's latest article, Will Economic Stimulus Measures Stave Off Recession? As far as I'm concerned, Cook is the man with the big-picture-economic plan. It's a plan informed by 32 years of practical experience with US public finance including his 21 years in the Treasury Department and based on knowing how a debt-based monetary system has wrecked the US producing economy and threatens to destroy the world and mankind. Plus, he has already won his stripes as a whistleblower given his career as the analyst who back in 1986 blew the whistle on NASA for having known for years about the flaws in the O-ring joint that doomed the space shuttle Challenger, the flaws that led to the explosion in January 1986 which killed seven astronauts and changed the U.S. space program forever. In January 2007 Cook published Challenger Revealed: An Insider's Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age. (Thunder's Mouth Press, New York)
In December, he invited me to write the introduction to his first economic book soon to be published; a compilation of 22 essays written over the course of 2007 titled: We Hold These Truths: the Hope of Monetary Reform. In it the author exposes the fatal-design flaw of a monetary system that is debt-based and privately owned. More importantly, he provides a new economic vision and practical model that benefits all concerned and not only for an elite group of shareholders.
After Cook read my own book, The Quality Life Plan: 7 Steps to Uncommon Financial Security, he endorsed my off-the grid personal finance approach as some of the best stop-gap measures individuals and families can apply right now to reduce the impact of a debt-based monetary system: A system that ultimately leads to debt-slavery. Similar to the fact that until recently most doctors did not have nutrition as part of their pre-med curriculum, nor have most traditional financial planners ever heard of or learned about the link between personal finance and the implications of a debt-based monetary system. The result? Conventional wisdom has not stopped the bleeding and life on the edge has become the new norm. Until Cook's vision of genuine economic democracy becomes reality, we are left on our own to empower ourselves with personal finance strategies and tactics that can reverse negative trends.
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