The True Freedom of Credit Cards

Earlier today, we posted about the national average for credit card debt... $8000. We pulled this figure from MSN Money, but like everything - it's open for debate. Personally, I thought the figure was a little low and www.creditcard.com agrees with me. Per their site, the average credit card debt totals $15,788.

This was a really interesting site with some staggering numbers. We'll explore this more indepth in future blogs, but for now - let's talk numbers for the credit card companies.


CREDIT CARDS IN CIRCULATION

• Visa: 270.1 Million
• Mastercard: 203 Million
• American Express: 48.9 Million
• Discover: 54.4 Million

CREDIT PURCHASES / VOLUME

• Visa: $9 Billion
• Mastercard: $5.9 Billion
• American Express: $3.6 Billion
• Discover: $1.6 Billion

Those numbers are so staggering, the figures are virtually unrelatable to most Americans. But consider these numbers:

• 84% of students have credit cards.
• Half of America's undergrads have 4+ credit cards.
• Only 2% of undergraduates have no credit history.

Wow. So out of 10 college students, 8 are going to have credit cards and 4 are going to have 4 or more credit cards.

As we get ready to celebrate Independence Day - think about your credit situation. Are you independent (free of debt) or dependent?

The Hidden Costs of Your Car

Did you know that you can save money in the way you drive? Here's some great tips that can help save both your car and your wallet...

1. Limit your driving.


2. Car pool when you can.


3. Map your route...there's no reason to drive all over the city! Consolidate your errands.


4. Stay up to date on your car's maintenance.


5. Fill up the tank instead of making frequent trips for smaller gas bills.


6. Avoid idling...park, and walk inside.


7. Use a consistent speed and utilize your cruise control on long trips.


8. Avoid stopping...if you see a red light ahead, slow down. It won't take as much gas to accelerate from a slower speed than to restart.


9. When you do have to restart, increase your speed slowly.


10. Avoid using the air conditioner.


11. When shopping for a car, be realistic. Do you really need a SUV for just one or two people? Think fuel efficiency when you make a new car purchase.


12. Wash / clean your car yourself.

What other ideas do you have to save money on your car?

What can you buy for a dollar?

Take a dollar out of your wallet. Money may be tight...we'll wait if you need to count out change. Got a dollar? Okay, now think about what it's worth. What can you buy with a dollar? It's actually harder than you think...there's not much a dollar can do these days. We'll help you out with a few ideas of our own:

• Anything off the McDonald's Dollar Menu


• A movie rental from the RedBox


• A popsicle


• A soft drink


• A candy bar


• A notebook


• A pen or pencil


• A pack of gum

Have you made any of these purchases recently? Over time, will your dollar investment in any of these things (or anything on your list) have made a difference to your future? Maybe. Perhaps you will meet your future spouse while sharing a movie you rented together at the RedBox. But chances are great that the fries you ordered off the McDonald's Dollar Menu are going to be quickly forgotten, perhaps even by the end of the day of your purchase!

Generation Millionaire is all about strategizing ways to build your nest egg, ways to cultivate million$ of possiblities for your future. We are certainly not suggesting that you don't deserve that pack of gum, but THINKING things out before a purchase can really make a huge difference to your wallet.

One dollar + time can equal a downpayment on a car, an extraordinary vacation, a new computer, and investments into your future. The possibilities are endless!

What kind of things do you buy that you know you can live without?

No Net - Make A Choice To Be Prepared

GenM this is what I have been preaching for the past 3 years! You do not have a net underneath you for retirement. Time is your best resource at this point - and saving NOW! This does not have to be a negative for your generation - it all depends on your choices.

What to do when your pension is frozen
BY M.P. Dunleavey,
Money Magazine
™ and © 2010 Cable News Network and Time Inc. and/or their affiliated companies. All Rights Reserved.
Money Magazine — 06/10/10

You've been looking forward to retirement — and the steady income your employer was supposed to provide — only to learn that your company has frozen its pension plan. Now what?

You're joining a well-populated club: Overall, about a fifth of workers in private-sector pension plans — 3.3 million people — have been affected by a "freeze," or suspension of benefits, according to the Bureau of Labor Statistics.
Kraft, HBSC, TWX, are among the largest employers who have frozen their plans this year, following 190 fortune 100 companies in 2009.

Industries such as aerospace, defense, and natural resources — along with state and local governments — are likely to offer defined-benefit plans for years to come, experts say.

But the firms that have frozen plans aren't likely to thaw them. So if your pension is iced over or at risk, you'll need to adjust your retirement strategy ASAP.

What a 'freeze' means
Unlike 401(k)s, which are funded in large part by employee contributions, a pension is paid entirely by the employer using a formula typically based on your years of service and highest pay.

A company might, for example, multiply 1.5% of your top salary by your tenure, meaning that if you worked 25 years and now earn $100,000, you'd get $37,500 a year.

Companies can freeze plans in one of two ways. Under a "hard" freeze, the pension is literally frozen. The benefit you've accrued as of today is what you'll get at retirement. "You don't accrue further years of credit, and your benefits are based on your salary at, say, 50 instead of 65," explains Alicia Munnell of the Center for Retirement Research (CRR).

A "soft" freeze is less severe — your benefit still grows, but based on a new formula. The company generally doesn't allow you to accrue more years of service, and it may cap the salary it uses (taking a five-year average, say). Either way, your pension is worth much less.

Who it affects the most
If you're under 35, or have been with the company a short while, you probably haven't amassed much of a benefit. Also, firms that freeze pensions generally offer a new or enhanced 401(k)-type plan, and younger people have time to make the most of such offerings. Folks within five years of retirement are also not so bad off: You'll have accumulated close-to-peak benefits, says Munnell.
It's those in the middle who "get the worst of both worlds," says David Certner, legislative policy director for AARP. You lose the guaranteed income and "you don't have time to recoup your losses by joining the 401(k)."

Absent a freeze, if you'd been hired at 35 and stayed on until retirement, you could expect about 43% of your final salary at age 62, according to a CRR study. But if your company instead froze the plan when you were 50, and you immediately started contributing 6% of salary to a 401(k) plan with a standard 3% match, you'd be likely to get only 28% of your final earnings at retirement.

How to make up for it
First, contact the pension specialist in HR to find out exactly how much you're entitled to at retirement, says Falmouth, Mass., financial planner David McPherson. "Make sure you understand the rules," he says. Get details on any new or improved 401(k) match too.

Next, use the program at basic.esplanner.com to reassess your retirement picture, weighing projected income and savings against expenses. If there's a shortfall, you'll need to save more to cover it.

Even with only, say, 12 years to save, a sweetened 401(k) can help you make up time. In the standard plan noted earlier, if you contributed up to the match, starting at age 50 with a salary of $100,000 that rises 2.5% a year, you'd have $184,000 by age 62, given a 7% average annual return, says McPherson. With an enhanced dollar-for-dollar match up to 6%, you'd have $245,000.

Though it may not sound appealing, postponing retirement can also help you bridge the gap, says Newtown, Pa., financial planner Michael Garry. You generate more savings and reduce the number of years you need to rely on those savings. Besides, as with Social Security, delaying your pension until full retirement age (as set by your company) results in a bigger benefit.

Overwhelmed? You can find pension assistance locally via pension help.org. But don't delay dealing with the issue. The sooner you take the reins, the more you stand to gain.

Stay tuned......

The Younger You Start Saving - The Better

It has been a while since I talked about the original mission of Generation Millionaire. To teach and encourage you to use the time you have to make your retirement more secure. So what is one of the pieces of the puzzle?

"Time + Regular Investing" into a diversified portfolio = Long term success. The sooner you start investing in a 401k or IRA the more $$ you have for retirement. If you invest $60 a week starting at age 18 for 50 years with an 8% return = $1.9 Million. If you invest $60 a week starting at age 25 for 42 years with an 8% return = $1 Million. By waiting 7 years to invest a mere $60 a week - you give up almost one million dollars.

Where am I going to get $60 a week or $8.50 a day ?? It is so easy with simple changes you won"t notice in the long run.....Pack your lunch instead of eating out - Go to the library for movies, cds, books and games - Plan your route to avoid extra driving - Go to a matinee, Drink water vs ordering soda, coffee, tea etc. Buy used books for classes, Don't use your charge card.

Little changes that will not affect your quality of life TODAY will pay off big TOMORROW. This information can change your entire generation - WILL YOU BE A MILLIONAIRE? Save any amount you can - less is better than none.

I challenge you to write down every time you spend a penny - you will be amazed at the way money trickles out of our wallets. Always check with a financial expert prior to making any investment decisions. Play with the financial calculator under the calculator link tab at the top of the page.

Stay tuned.......

Secrets of Self - Made Millionaires

5 Secrets of Self-Made Millionaires

user
by Reader's Digest Magazine, on Fri Apr 30, 2010 12:04pm PDT
By Kristyn Kusek Lewis

They’re just like you. But with lots of money.When you think “millionaire,” what image comes to mind? For many of us, it’s a flashy Wall Street banker type who flies a private jet, collects cars and lives the kind of decadent lifestyle that would make Donald Trump proud. But many modern millionaires live in middle-class neighborhoods, work full-time and shop in discount stores like the rest of us. What motivates them isn’t material possessions but the choices that money can bring: “For the rich, it’s not about getting more stuff. It’s about having the freedom to make almost any decision you want,” says T. Harv Eker, author of Secrets of the Millionaire Mind. Wealth means you can send your child to any school or quit a job you don’t like.According to the Spectrem Wealth Study, an annual survey of America’s wealthy, there are more people living the good life than ever before—the number of millionaires nearly doubled in the last decade. And the rich are getting richer. To make it onto the Forbes 400 list of the richest Americans, a mere billionaire no longer makes the cut. This year you needed a net worth of at least $1.3 billion.

istockphoto.comIf more people are getting richer than ever, why shouldn’t you be one of them? Here, five people who have at least a million dollars in liquid assets share the secrets that helped them get there.

PLUS: 13 Things Your Financial Adviser Won't Tell You

1. Set your sights on where you are going - Twenty years ago, Jeff Harris hardly seemed on the road to wealth. He was a college dropout who struggled to support his wife, DeAnn, and three kids, working as a grocery store clerk and at a junkyard where he melted scrap metal alongside convicts. “At times we were so broke that we washed our clothes in the bathtub because we couldn’t afford the Laundromat.” Now he’s a 49-year-old investment advisor and multimillionaire in York, South Carolina.There was one big reason Jeff pulled ahead of the pack: He always knew he’d be rich. The reality is that 80 percent of Americans worth at least $5 million grew up in middle-class or lesser households, just like Jeff.Wanting to be wealthy is a crucial first step. Says Eker, “The biggest obstacle to wealth is fear. People are afraid to think big, but if you think small, you’ll only achieve small things.”

PLUS: 17 Things Your Mother Wants You to Know

It all started for Jeff when he met a stockbroker at a Christmas party. “Talking to him, it felt like discovering fire,” he says. “I started reading books about investing during my breaks at the grocery store, and I began putting $25 a month in a mutual fund.” Next he taught a class at a local community college on investing. His students became his first clients, which led to his investment practice. “There were lots of struggles,” says Jeff, “but what got me through it was believing with all my heart that I would succeed.”

2. Educate yourself - When Steve Maxwell graduated from college, he had an engineering degree and a high-tech job—but he couldn’t balance his checkbook. “I took one finance class in college but dropped it to go on a ski trip,” says the 45-year-old father of three, who lives in Windsor, Colorado. “I actually had to go to my bank and ask them to teach me how to read my statement.”One of the biggest obstacles to making money is not understanding it: Thousands of us avoid investing because we just don’t get it. But to make money, you must be financially literate. “It bothered me that I didn’t understand this stuff,” says Steve, “so I read books and magazines about money management and investing, and I asked every financial whiz I knew to explain things to me.”

PLUS: 6 Moneymaking Tips

He and his wife started applying the lessons: They made a point to live below their means. They never bought on impulse, always negotiated better deals (on their cars, cable bills, furniture) and stayed in their home long after they could afford a more expensive one. They also put 20 percent of their annual salary into investments.Within ten years, they were millionaires, and people were coming to Steve for advice. “Someone would say, ‘I need to refinance my house—what should I do?’ A lot of times, I wouldn’t know the answer, but I’d go find it and learn something in the process,” he says.In 2003, Steve quit his job to become part owner of a company that holds personal finance seminars for employees of corporations like Wal-Mart. He also started going to real estate investment seminars, and it’s paid off: He now owns $30 million worth of investment properties, including apartment complexes, a shopping mall and a quarry.“I was an engineer who never thought this life was possible, but all it truly takes is a little self-education,” says Steve. “You can do anything once you understand the basics.”

PLUS: 17 French Restaurant Words You Need to Know

3. Passion pays off - In 1995, Jill Blashack Strahan and her husband were barely making ends meet. Like so many of us, Jill was eager to discover her purpose, so she splurged on a session with a life coach. “When I told her my goal was to make $30,000 a year, she said I was setting the bar too low. I needed to focus on my passion, not on the paycheck.”Jill, who lives with her son in Alexandria, Minnesota, owned a gift basket company and earned just $15,000 a year. She noticed when she let potential buyers taste the food items, the baskets sold like crazy. Jill thought, Why not sell the food directly to customers in a fun setting?

PLUS: 15 Foods You Should Never Buy Again

With $6,000 in savings, a bank loan and a friend’s investment, Jill started packaging gourmet foods in a backyard shed and selling them at taste-testing parties. It wasn’t easy. “I remember sitting outside one day, thinking we were three months behind on our house payment, I had two employees I couldn’t pay, and I ought to get a real job. But then I thought, No, this is your dream. Recommit and get to work.”She stuck with it, even after her husband died three years later. “I live by the law of abundance, meaning that even when there are challenges in life, I look for the win-win,” she says.

PLUS: 20 Secrets Your Waiter Won't Tell You

The positive attitude worked: Jill’s backyard company, Tastefully Simple, is now a direct-sales business, with $120 million in sales last year. And Jill was named one of the top 25 female business owners in North America by Fast Company magazine.According to research by Thomas J. Stanley, author of The Millionaire Mind, over 80 percent of millionaires say they never would have been successful if their vocation wasn’t something they cared about.

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4. Grow your money - Most of us know the never-ending cycle of living paycheck to paycheck. “The fastest way to get out of that pattern is to make extra money for the specific purpose of reinvesting in yourself,” says Loral Langemeier, author of The Millionaire Maker. In other words, earmark some money for the sole purpose of investing it in a place where it will grow dramatically—like a business or real estate.There are endless ways to make extra money for investing—you just have to be willing to do the work. “Everyone has a marketable skill,” says Langemeier. “When I started out, I had a tutoring business, seeing clients in the morning before work and on my lunch break.”A little moonlighting cash really can grow into a million. Twenty-five years ago, Rick Sikorski dreamed of owning a personal training business. “I rented a tiny studio where I charged $15 an hour,” he says. When money started trickling in, he squirreled it away instead of spending it, putting it all back into the business. Rick’s 400-square-foot studio is now Fitness Together, a franchise based in Highlands Ranch, Colorado, with more than 360 locations worldwide. And he’s worth over $40 million.

PLUS: 10 Smart Money Moves to Make Now

When extra money rolls in, it’s easy to think, Now I can buy that new TV. But if you want to get rich, you need to pay yourself first, by putting money where it will work hard for you—whether that’s in your retirement fund, a side business or investments like real estate.

5. No guts, no glory - Last summer, Dave Lindahl footed the bill for 18 relatives at a fancy mansion in the Adirondacks. One night, his dad looked out at the scenery and joked, “I can’t believe we used to call you the black sheep!”At 29, Dave was broke, living in a small apartment near Boston and wondering what to do after ten years in a local rock band. “I looked around and thought, If I don’t do something, I’ll be stuck here forever.”He started a landscape company, buying his equipment on credit. When business literally froze over that winter, a banker friend asked if he’d like to renovate a foreclosed home. “I’m a terrible carpenter, but I needed the money, so I went to some free seminars at Home Depot and figured it out as I went,” he says.

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After a few more renovations, it occurred to him: Why not buy the homes and sell them for profit? He took a risk and bought his first property. Using the proceeds, he bought another, and another. Twelve years later, he owns apartment buildings, worth $143 million, in eight states.The Biggest Secret? Stop spending.Every millionaire we spoke to has one thing in common: Not a single one spends needlessly. Real estate investor Dave Lindahl drives a Ford Explorer and says his middle-class neighbors would be shocked to learn how much he’s worth. Fitness mogul Rick Sikorski can’t fathom why anyone would buy bottled water. Steve Maxwell, the finance teacher, looked at a $1.5 million home but decided to buy one for half the price because “a house with double the cost wouldn’t give me double the enjoyment.”

Stay tuned......

Livn the Dream

There are many ways to create the opportunity to live your passion.

I realize we all need money to survive and we all want the best for ourselves and our families. But what is the best? More stuff.... Bigger houses.... Name brand everything.... Eating out...... The newest electronics?

What we all really want is...... to be connected to people we love...... feel good about our work - make a difference.......... Be healthy........ Be a part of the bigger picture by helping others, working to clean up the environment, finding a cure to a disease, helping animals etc.

So how do we close the gap from wanting everything NOW and shifting our thinking to How good do I feel because I have this vs doing that?

It takes a conscience decision everyday with every decision. Eventually, it will be second nature. But for the first few months - before every purchase you need to stop and think - "Why am I buying this, Do I really need it NOW, Is it going to sit in a pile with other things I have bought and didn't really need.

Look at your actions - is it easier to buy things for others verses spending time with them? When I talk with people and ask what is important to them - they always tell me stories of when they spent time with their parents, kids, siblings and friends, volunteering and the difference they made. I have never had the response I feel great because I have all the latest electronics, a new sports car or the biggest house on the block. Never makes the top 100 responses.

The blog I need motivation asks great questions.

Health is the top answers all the time - but what are you doing to stay healthy? Our lifestyles are killing us. Fast food, hormones in meats, pesticides sprayed on all our vegetables and preservatives in all the processed foods we eat are terrible for us. 40 years of eating like this and you will not have a fun and healthy retirement. (if you even make it to retirement)

It takes as long to go through a fast food drive thru as it does to go home and grill a piece of chicken and steam some vegetables. Stores like Trader Joes and Whole foods have made eating without preservatives pretty easy. Local grocery stores are also labeling foods and setting up sections to make it easier.

I often hear that it is more expensive to shop at the above stores or to eat healthy. This is possibly true depending on how you go about it. Ways to keep costs down are: plan your meals, watch for sales, use coupons, go to farmers markets and eat what is in season. If you cut out soda and junk food, the extra money will cover the cost of the additional cost of the healthier food as well.

The long term cost to you is your health - so if you even start with some of your meals - it is a benefit.

So to recap -

Before spending any money - THINK - Don't sleep walk thru purchases. Marketers have trained you do this. Take control back.

Are you really fulfilled with what you are doing with your time? Would you rather be spending time with people or causes you care about? Playing a game, going for a walk, cooking a meal together are great ways to reconnect.

Staying healthy - Huge issue. We have been convinced that fast and processed is better. Go simple. Be able to name all the ingredients in the foods you eat. The less in it the better. Get back to the basics of eating. It will add years to your life.'

Lastly, here is the money part - take inventory of where you are financially. List all your debts and assets. Look at how much you are spending on rent, cable, cell phones, food etc. Can you reduce spending anywhere. Seriously, can you live without 2000 TV channels or eating out everyday?

The next post will cover more on the shift in thinking with spending money.

Stay tuned......

Living Your Passion

Hey Generation Millionaire -

I want to go back to my original mission. Live your life's passion, live a balanced life, give back to society, and live within your means.

Did you notice that the money goal is listed last? That is on purpose because if you follow the basic principles - money isn't the goal - it is the means.

• Living to make money and get stuff is not rewarding - it is a grind.
• Going to a job that drains you of your energy - is cheating you out of living your best life.


• Only thinking of yourself and what you can get - robs you from the rewards of seeing someone else do well and having compassion. Also, it is true - energy comes back to you - so when you put out positive energy and help others - it seems like things start to go our way as well.


• Money - is important - however, we need to recalibrate how we view it and what it means in our lives.

The next few posts are going to talk about each topic and how by recalibrating your views on money and living your passions will provide you the opportunity to live the life you want. I will suggest books, give tips, and yes, we will talk about the basic principles of money - back to the basics.

I have been busy redesigning my mission - I am adding programs for toddlers through retirement planning. Although your generation is my key focus - as you have to change now to hope for enough money in retirement - if we can influence younger kids now - our tribes grow and we can spend time enjoying life vs. managing it.

Stay tuned....

Help What to do with Student Loans

Subject: debt counseling


Hi,I came across your blog accidentally, but am glad that I did. I live in California and have been looking to find some debt counseling services. After an initial web search, I was very confused - most services seem like debt consolidation scams. Could you point me in the right direction? I have around 30k in student loans and another 2-3 in consumer debt. I currently make a fair salary and am spending (slightly) less than my income. If you can provide any info - even a few links to authentic services.
Thanks!
John

John,

Thanks for the opportunity to help. I am going to go over a few basic concepts that you need to think about before consolidating your loans. Remember the rules change all the time and the state you live in may have different rules. So this is a general guideline.

• Do you have Government loans? Gov. loans usually divide into four types: Stafford Loan, subsidized & unsubsidized, Federal Plus Loans & Federal Perkins Loans.


• Do you have Private Student Loans?


• Use a loan calculator to list all your student loan debts and determine your situation.

Now you have a picture of your current situation. Make a call.

• If you have government loans I would start by calling them to determine your current situation and options.


• Private loans I would call your current provider to see what the options are with them.


• Ask questions - my understanding is Gov. Loans and Private loans can not be consolidated. Government loans normally have a lower interest rate. If consolidating private loans be careful not to increase your rate and watch for fees.

What is your goal?

• Paying off as soon as possible?


• Simplifying - one payment


• Extending your payments to lower monthly payments - but will add more interest you pay over time?

My recommendation always is pay off as soon as possible. If you do not consolidate take the highest interest rate loan and pay as much extra to principle payment as possible while paying the minimum on the remaining loans. Once you pay off the higher interest loan - add the payment from the first loan to the next highest interest rate loan and pay it off etc.

The companies who gave you the loans want you to take the longest repayment schedule and will make it very appealing by telling you how low your payment will be. What they don't tell you is the longer you have the loan - the less freedom and opportunity you have in your life. As well as, how much more money they make from you.

Hopefully, you will never be poorer than while being a college student. So I tell recent graduates - do not increase your lifestyle dramatically - take the time to pay off your debt instead of creating debt with large purchases or expensive living accommodations. If you can keep a roommate or continue to live modestly for a few more years - you can have so much more freedom to live your passion going forward.

Regarding your credit card debt - I would try to pay that off as fast as possible - more than likely that is your highest interest rate debt. Attempt to live debt free - pay cash for any purchases so you don't continue the cycle.

My next post will cover steps to save while paying down all the debt you currently have as that is as important as paying off debt. Time is currently on your side for long term planning - also the need for emergency savings, and money needed over the next couple years to everyday living.

It is truly a life choice to change your thinking and set yourself up for long term success. I believe you can live your passion and have a very balanced and financially successful live.

Stay tuned......

Stephenie

87 Million dollar Income and now 5 Million in Debt

Derrick Coleman, NBA basketball star made over 87 million dollars in his 15 year career - and now is 5 million dollars in debt. If I said it once I have said it a million times, if you don't know how to manage $30,000 what makes you think you can mange more?

So let's start with the basics regardless of your income.

1. Always pay yourself first. I don't care if it is $10 a week. Preferably it would be about 15% of your gross income, going into a tax deferred retirement account.

2. Have an emergency fund. It should be at least 3 months of your total monthly expenses.

3. Pay cash, if you can't afford it - don't buy it.

4. Live under your means. If that means you live in a smaller place, don't have the latest gadget, or name brand clothes - sorry. It beats the alternative, debt, stress, and homelessness.

5. Get a second job if necessary for the short term, walk dogs, mow lawns, work fast food. What ever it takes to get out of debt or get that emergency cash saved.

6. Grow your own vegetables, herbs etc. People say good food costs more than fast food. That is true - however, at what cost. Your health will pay in the long run. It is very inexpensive to grow your own - have a small garden in your backyard or get a hydroponic planter. They go on sale often. Check out local farmer markets.

7. Have a roommate or two to keep costs down.

8. Spring is right around the corner - look in the paper for free activities. Most cities have parties in the park, free concerts, bike paths, etc. Entertainment does not have to be expensive.

Once you start to adjust your thinking - and realize you can save money. It becomes fun. Because you have FREEDOM and OPTIONS. Which gives you the opportunity to live your passion.

Stay tuned..........