The Secret to Getting Rich Slowly

Becoming a millionaire is easier than you think. Wouldn’t it be nice to have a million dollars? Even at 5 percent interest rate in retirement, that amount is enough to put $50,000 in your bank account each year, to add to whatever income you may have.

Financial experts say that having a million dollars in your bank account when you retire is entirely possible. As long as you’re under fifty years old, you can get on the path to turning $50,000 into $1M in 25 years. It’s even easier to do that if you’re under 40; if you follow these steps, you can have a million dollars in your bank account by the time you are 65.

The first thing you need to realize is that saving money is imperative for this million-dollar goal. Unfortunately, saving money is something that not many people are good at. Young people, especially, seem to have poor money management skills. If you accept the value of saving money, you’ll find it easier to make the choices you need to make in order to get started on saving your first million.

Next, you need to familiarize yourself with the compound rate table.

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The compound rate table is practically a mathematical fact. So if you start with an investment of only $10,000, you will have more than $450,000 in your bank account after 40 years, even at just a 10% growth rate. This table shows you the value of your money and what your investment could grow into in the future. It also serves as great motivation for saving your money and investing it where it will grow over time.

For instance, you can opt for the cheaper car and save the $10,000 for your future. Each cup of coffee you buy at Starbucks today is costing your future self up to $225. Flying first-class instead of coach? Say goodbye to the $54,000 your future self could have earned. Can you really afford to have all these luxuries?

Look at your habits and figure out where you can save money so you can come up with an initial investment. You never know how much each $10,000 you spend today is going to cost you in your 60s or 70s.

Financial experts recommend looking beyond the conservative 10 percent rate. If you look at the figures under the 20% growth rate, you’ll realize that each dollar you save now grows into $237 dollars in just 30 years. Remember, you only have to average better than 10 percent returns so you can ensure that you’ll be in excellent financial shape in the future.

It all begins with saving your money today. You need to make smarter decisions about your spending, whether it’s that $5 cup of coffee every day or that $500 ballgame every other weekend. Do you really need a big wedding? Do you really need to remodel your house to add that deck out back? These are all decisions that will affect your financial state once you’re retired. Just think of how much you’ll enjoy the payoff once you’re retired.

How to Get a Used Car for Less than $1000

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No matter how tough times get, there are just some things you have to have, like a car. After all, you need a reliable car to get you where you need to go, whether it’s to the office or to the grocery store. The good news is that getting a car doesn’t have to be expensive at all. In fact, some automobile enthusiasts say that it’s completely possible to get a car for under $1000.

Of course, for a car that costs less than a thousand dollars, you’ll have to do your shopping on Craigslist and you can’t afford to be picky about the kind of car you’ll drive. After all, what matters is that the car can get you from point A to point B, right?

To make the Craigslist shopping process a little easier and safer for you, here are some important tips to keep in mind.

  • Avoid dealers and go for the private party sales.

Anything you see advertised a t a dealership is likely to be the ‘money down’ amount and not the actual purchase price of the vehicle. For instance, if a local dealer has a 1999 Chevy Tahoe with a sticker price of $1000, that probably means that a thousand dollars is the amount of money the dealer expects as a down payment of sorts, with the vehicle’s actual purchase price as something closer to $4200. This is way beyond the budget for many people. Go for private party sales, which usually offer prices closer to your budget.

  • Avoid any car with a story.

Just to be on the safe side, avoid any car that comes with a story. For instance, a car that “needs a little work” probably needs a lot of work. You should be even warier about cars that are advertised with damage worth a specific amount of dollars; expect these cars to have twice the damage they’re advertised to have. You don’t need to invest in repairing the car you’ll buy, as you’ll probably use it only as temporary transportation.

  • Don’t be picky about the car’s appearance.

For a thousand-dollar budget, you have very little wiggle room in terms of the vehicle’s appearance. At your budget, what matters is that the car runs, the car has working brakes, and the owner has a legal title to the car. Practically any car that’s being sold for $1000 will have some rust damage, body damage, mismatched body panels, and a poor paint job. The interior may be in poor shape, too. Look on the bright side; given its nearly dilapidated state, your car isn’t likely to get stolen or broken into.

  • Look for cars with pictures that visibly show their license plates.

A car with no visible license plates may indicate that the car isn’t being used currently, so you have no way of knowing how long it’s been parked. And you can’t really take the seller’s word for it, as he’s trying to get his old, rusted-over car out of his front yard. He could pay to have it towed away or he could earn some easy cash by selling the clunker off to unknowing victims. Don’t be that victim. Go for cars that have visible license plates; a current license plate is even better.

  • Expect the car to need some form of work.

Again, at your thousand-dollar budget, you’ll probably end up getting a car that needs some work. It’s probably been neglected for years and those years of neglect will show. The tires may be bold and the brakes may be completely shot. The engine may need to be rebuilt. That said, don’t go for a car that is way beyond what your mechanical skills can do. Choose cars that have damage you can easily fix, like shot brakes or bald tires, so you don’t have to spend any more money than you have to.

  • Do your shopping with a friend who’s knowledgeable about cars.

If you’re not fluent in car-speak, you’re better off bringing along a friend who is. You’ll need to know, for instance, if that valve tap is caused by a clogged hydraulic filter or something significantly more serious. Remember, you’re looking for a serviceable car, and you want something that will last long enough until you can get back on your feet and get a better car. So it’s better to have an automotive enthusiast with you when those sellers try to intimidate you with jargon.

  • Avoid exotic makes.

Exotic cars can be made to run for a long, long time, but you probably won’t have the money for repairs once they’re needed. This is why you’re probably better off sticking to the US Big Three: General Motors, Ford Motor Company, and Fiat Chrysler Automobiles US. You’ll also want to go for a heavy-duty vehicle with a long production cycle. RWD Chevy Impalas or Ford Crown Victorias are all great examples of such vehicle. If you’re patient at looking through your prospects, you might even spot older Chevy Blazers, Ford Broncos, or Jeep Cherokees.

  • Remember, no picture, no call.

Almost everyone has a camera phone these days, so the lack of a digital camera doesn’t really excuse your seller from providing a photograph of the car he’s offering. If there’s no photo attached to the Craigslist ad, it’s best to stay on the safe side and move on to the next ad.

  • If it sounds too good to be true, it probably is.

Like many online marketplaces, Craigslist is filled with scam artists who are always looking to make money by separating shoppers or sellers from their money as quickly as possible. The truth is that no one is going to sell a car below its market value unless the sale is to a family member or a close friend. So if you stumble upon an ad for a pristine, sweet-looking Porsche on Craigslist for less than $1000, chances are it’s from a scam artist.

What You Need to Know about 529 Plans

What You Need to Know about 529 Plans

It’s never too early to invest in your child’s future. In fact, one thing you can do now is to start setting aside funds for your child’s education through a 529 Plan. Through a 529 Plan, you can ensure that your child has the financial support he or she needs to pursue whatever degree he or she wants.

A 529 Plan is an education savings plan operated by a state or educational institution. This savings plan is designed to help families reserve funds for future college costs. The Plan is named after Section 529 of the Internal Revenue Code, which created these educational plans in 1996. You can start investing in a 529 plan by directly contacting a 529 plan manager or approaching a financial advisor.

Types of 529 plans

There are two types of 529 plans. These plans can be categorized as savings plans or prepaid plans. If you opt for a prepaid plan, you pre-pay all or part of the costs of an in-state or public college education. These plans may also be converted for use at out-of-state colleges and private colleges. There’s also a separate prepaid plan for private colleges, the Private College 529 Plan. The 529 prepaid plan is currently the only 529 Plan that is offered by educational institutions.

A 529 savings plan work similarly like a 401K savings plan or an IRA (individual retirement account). It invests your contributions in mutual funds or similar investments, and it offers you several investment options to choose from. Your account for this savings plan will go up or down in value depending on the performance of the investment option you select. You can typically get access to the performance of each 529 plan’s investment options. These savings plans are usually offered by states, alongside prepaid plans.

529 plans from state to state

Nearly all US states now offer their own 529 plans. Some states even have more than one 529 plan available. It’s the state’s decision to offer a 529 plan or not, and 529 plans often differ from state to state. This is why it’s important that you do your research on the plans you want to invest in. There are plenty of websites you can visit to compare between 529 plans available to you.

Applicability of 529 plans

You’ll be glad to know that 529 plans can be used to meet costs of qualified colleges all over the US. This means, for most plans, your choice of school will not be affected by the state your 529 savings plan is from. For instance, you can be a Vermont resident, invest in a North Carolina plan, and send your child to a college in Pennsylvania. There are also some online tools you can use to check whether your institution of choice is eligible under 529 rules.

Other benefits of 529 plans

Investing in 529 plans also offers more benefits than being able to save up for your child’s future. These plans often offer significant income tax breaks, both at federal and state levels. You can even claim state tax benefits each time you contribute to your plan.

Plus, as donor, you get to stay in complete control of the account, as the named beneficiary has no legal rights to the funds you’re saving up. You can also withdraw funds at any time for any reason and you can change your 529 plan investment options twice per calendar year.

Should I apply To Harvard

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Is a Harvard Education Worth It?

Costs for education in the US continue to rise every year. This is particularly evident in Ivy League schools, where tuition and fees are usually higher, compared to state universities and community colleges.

For instance, tuition and fees at Harvard University for the 2015-2016 academic year are at approximately $45,200, up from the $43,900 estimate for the previous academic year. And Harvard isn’t even the most expensive of the Ivy League Schools; the top spot goes to Columbia University in the City of New York, which charges up to $53,000 for tuition and fees per year.

At these tuition rates, it’s understandable why many students these days graduate saddled with debt amounting to hundreds of thousands of dollars. Many education pundits have actually praised the virtues of community colleges and state universities as opposed to Ivy League schools. One pundit says that it’s difficult to justify the exorbitant tuitions required by these schools when state universities and community colleges offer the same degrees at significantly lower tuition fees.

No consensus has been reached on this matter, but pundits say there are four main points to consider behind the argument.

First, this argument draws from the convergent thinking that college is much like a trade school where practical skills are gained and applied. The truth is that many college students grow out of their diplomas and their specializations. After all, can an 18-year-old really be expected to be able to choose a highly specialized field and stick to it? Educational pundits argue further that the real waste of money is on the students who spend four years studying an expertise only to quickly abandon it in the real world.

Second, the divergent value of a liberal education must be emphasized. College, after all, is not just about gaining skills; it’s also a place to discover and explore possibilities. “College is not just a place where we clamor to climb into some well worn career box, but a place where we get outside all the boxes we bring with us,” one pundit, a Harvard graduate, says.

Some say that the most important business skill is creativity; ironically, creativity is not a skill at all. Creativity is fuelled by curiosity, encouraging people to question assumptions and resist conventional thinking. Creative people have an ego with the courage to make many mistakes and are capable of drawing on analogies and metaphors from a wide range of disciplines. These are all qualities today’s leaders must have. They must be able to see all the possibilities that lie outside the four walls of the business. Business experts say that many businesses fail not because their leaders are not skilled but because they are narrow-minded.

Third, business is all about people, much like real estate is all about location. Even with the presence of ‘hard’ skills, many a career has hit a wall because of the lack ‘soft’ people skills. The ideal educational institution encourages positive interactions with people, allowing students to gain the necessary social skills. This is something many parents and young adults fail to take into consideration when choosing a university or college to enroll in.

Fourth, what we must realize is that leadership is relies on a person’s values and attitudes. More often than not, these values and attitudes are influenced by peers and not authority figures such as teachers and parents.

As early as the 1950s, this was put forward by Lou Mobley, who created the leadership development program that forged IBM’s leaders. Mobley argued that the most crucial things we learn in business come through osmosis. This further supports the notion that the social environment a campus offers matters far more than the course content and the quality of education. So if we want big results from students, they must be surrounded by big thinkers who see things out of the box.

Education pundits emphasize that, more than these points, the matter of choosing a college or university requires more than just a simple cost/benefit analysis that only considers the lowers possible cost.

Establishing An Emergency Fund

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Taking Control of Your Money in 7 Steps

Dealing with money problems can be difficult because, often, you don’t realize you’re in deep trouble before it’s too late. You might just wake up one day and realize that your debt is overwhelming and that your poor money management skills are affecting every aspect of your life.

So before that happens, take control of your money today. Follow these seven steps to ensure that you’re headed into a stress-free life of saving and giving.

  1. Start an emergency fund with $1,000.

The goal with the first step is to save $1,000 as quickly as you can. This thousand-dollar amount will be a great starting place for your emergency fund. An emergency fund is essential for dealing with those unexpected events. Your dog might suddenly have to go to the vet, for instance. An emergency fund ensures that you won’t go broke trying to deal with these curveballs.

Sell some stuff you’ve been storing in your garage too long. Pass on going out for dinner and drinks for a couple of months or so and bring a bagged lunch to work. Whatever it takes to save money, do it. Once you accumulate $1,000, put it all in a checking account that is separate from your regular account. Remember to use the money in this checking account for emergency purposes only.

  1. Pay off all debts, except the house.

Make time to sit down and list down all the debts you currently have except the house. The smallest debt should be your top priority. Don’t pay too much attention to interest rates unless two debts require similar payoffs. In such cases, list the debt with the higher interest rate first.

Once you’ve completely paid off the first debt, you can add what you were paying on it to your payments for your second debt. The larger payoffs allow you to more easily knock out your bigger debts. Your budget will feel a lot freer and your cash flow will increase. You’ll become motivated to start attacking the major debts at the bottom of your list. Before you know it, you’ll be debt-free.

  1. Build up your emergency fund further with enough money for 3 to 6 months of expenses.

Now that your cash flow has increased, it’s the best time to start building a full emergency fund. Calculate how much you money you need to live on for 3 to 6 months and save up that much; for most people, that amount is between $10,000 and $15,000. If you have that much money in your emergency funds, you’ll be able to protect yourself against the bigger, more expensive curveballs life may throw your way. If you suddenly lose your job or you have to do some major home repairs, this large emergency fund ensures you won’t go in debt.

Money Magazine says that, in any given 10-year period, 78% of Americans will experience a major event that will hit their finances hard. Once you complete your emergency fund, keep it in a simple checking account or a money market account with check-writing privileges. That way, you can immediately provide payment on the spot.

  1. Put away 15% of your household’s income into retirement.

Now – while you still have a source of income – is the best time to think about retirement. You’re debt-free and you have a large savings fund in place so you can start putting 15% of your household’ income into your retirement fund. This step is all about building your long-term wealth.

You have a lot of options, like your 401(k), Roth IRA, and Traditional IRA. Take 15% of your gross household income to invest it first into matching company 401(k) plans and then Roth IRAs. If your company doesn’t offer a retirement plan or if it can’t match your contributions, put the money straight into a Roth account. Make sure to spread your money equally across four types of mutual funds: growth, aggressive growth, growth and income, and international. Financial experts say that even just a couple hundred dollars invested now can make you a multimillionaire in the future.

  1. Start a college fund for your children.

With no debts and your retirement savings in place, it’s time to save for your kids’ college education. This is becoming even more important these days as tuition fees and living expenses continue to rise. Two ways to save for your kids’ college education are 529 college savings funds and Coverdell ESAs or education savings accounts. These are savings vehicles that also offer you tax advantages while saving money.

Both 529 plans and ESAs let you save money in an individual investment account. You have to do some research, though, as a 529 plan may be better than an ESA, depending on where you live and your income level. Like with your retirement fund, you can spread your investment across the four types of mutual funds.

  1. Pay off your mortgage as early as you can.

Remember when you listed down all your debts except the mortgage? Well, now it’s time to take on those house payments. Try to put whatever extra money you can towards your mortgage so you can pay it off earlier; this will help you save tens of thousands of dollars in interest.

Financial experts say that it takes the average family anywhere from five to seven years to pay off their mortgage early. If you have an adjustable rate mortgage, interest only, or even a 30-year mortgage, refinance to a 15-year fixed-rate mortgage. The faster you can pay off your mortgage, the sooner you’ll enjoy being completely debt-free.

  1. Start giving.

Last but definitely not the least, enjoy the wealth you’ve built. And one of the best ways to enjoy all the money you now have is to start giving to those in need. Put your money to good use and leave an inheritance for future generations.

Reasons To Avoid Student Loans

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5 Simple Ways to Avoid Student Loans

College can be a stressful time for any young adult. And the stress doesn’t start on the first day of freshman year, either. Young adults and their parents may be feeling the pressure months or even years before the first year of college starts.

Parents, of course, want to be able to see their kids complete their education with a college degree. And many kids, in turn, want to be able to go to college to study something they’re passionate about. Unfortunately, turning these desires into reality can prove to be difficult given the rising costs of tuition and living these days. Student loans may sound like a convenient option, but you could be so weighed down by these loans by the time you graduate that you’d still be paying them off well into your thirties.

The good news is that there are many ways for you to get through college without resorting to student loans. You just have to come up with a plan and stick to the plan throughout your college years. Here are the five most important things you must include in your plan to avoid student loans:

  1. Apply for scholarships.

Scholarships and grants may sound intimidating, but the truth is that these can make the biggest difference in whether or not you can get by without student loans. The great thing about scholarships is that many of them not only cover tuition, matriculation, and other educational fees but also provide living allowances.

You may think that you won’t qualify for a scholarship, but you won’t know unless you do your research on the scholarships and grants available to you. For instance, companies such as Exxon Mobil Corporation, General Electric, and J.P. Morgan Chase all have their own scholarship programs available for graduating high school seniors.

You may have to apply for these scholarships early, though, as many scholarship programs and grants are on a first-come, first-served basis. Remember to apply not just for scholarships with the biggest dollar amounts, as it will benefit you more in the long run to go for scholarships that best fit your capabilities.

  1. Opt for a school that has lower tuition fees.

Take tuition fees and other educational costs into consideration when you’re choosing a college to attend. Some would argue that a degree is a degree, no matter where you get it. By choosing a college with a cheaper tuition, you’ll definitely be able to save money.

There are a lot of websites you can visit to discover approximates of educational and living costs of universities and colleges across the US. Some colleges even offer free tuition, like Brigham Young University, Alice Lloyd College, Sterling College, and the Curtis Institute of Music. Many Ivy League universities also provide significant amounts of financial aid to students from families with income under $65,000, so don’t let go of your dream to go to Harvard or Yale just yet.

  1. Live frugally.

If you want to save as much as possible money on your college education, it follows that you should control your spending on campus, too. One significant way to save money during your college years is to live at home rather than in on-campus or off-campus housing. This may let you save up to $25,000 over the course of a degree.

If living at home as you go to college is not an option, you can cut down on your expenses by learning how to cook. Producing three meals a day, when you’ve never had to cook anything in your life, may prove to be challenging at first, but you’ll definitely get the hang of it. Use seasonal fruits and vegetables and grains like whole-wheat pasta, which tend to be cheaper than other types of food.

It’s also crucial that you learn to budget the money that you do have. Make a strict budget and stick to it. Focusing on your budget can help you avoid the temptation to splurge on clothes or expensive dinners.

  1. Find a job that pays well.

You could get all sorts of jobs on campus, but what’s important is that you find jobs that pay you more than the minimum wage. Yes, these jobs exist; you just have to find them or be creative. For instance, some students have reported making $9/hour taking notes for students with hearing problems in cases they were already attending. Leverage your skills to get jobs or start a small business that will help you earn money.

You can also go for paid internships or co-ops that will allow you to get school credit while making money. Your college may also have some work-study programs you can get into. All of these will go a long way in helping you stay free from loans and debts all throughout college.

  1. Graduate on time.

Many students fail to see that spending an extra year on their programs means spending more money towards tuition fees and living expenses.

Don’t take more time than necessary to complete your chosen program. Do your best to get that degree in four years or however long the program actually takes. If possible, take extra classes whenever you have the free time so you can earn credits and graduate in less than three years.