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Planning for Your Financial Future and the Challenger

Old 06-23-2006, 12:15 AM
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Default Planning for Your Financial Future and the Challenger

Okay, I thought I would start a post that will help peoples financial future including the dream of buying a Challenger.

People spend more time planning their vacation than their financial future.


Here are some basics:

1. Setting priorities - List the goals your want to pursue such as when you plan to retire, what kind of house to do you want to buy, things you want to achieve, exotic vacations.

2. Making a budget - Bring your spending under control, so that you get the most out of every dollar. For goodness sake don't use a credit card bill to pay for
another credit card bill

3. Banking and saving - some say save 3 months but I say save 6 months of emergency cash. This is for things that break or require maintnance. A dishwasher, refreigerator, air conditioner,
flat tire that got destroyed because of a nail in the side wall, or maybe you got laid off and need time to find the new job etc..

4. Basics of investing - Find a financial advisor that you can trust. You can visit some and once you find one stick with him. Typically, they will document your cash flow of your household, what your goals are and then determine a course of action on how to achieve those short/long term financial goals. They will typically recommend taking advantage of a 401K, but start other funds for college, buying a house or car etc. Getting house, auto, medical insurance should also be part of the equation to protect you assets you have saved over the years.


5. Planning for retirement - From the time you start working you need to start saving for your retirement.

For example to save $1M by retirement with a interest rate of 10% tax deferred.

Years before retirement vs how much you have to save per month.

40 - $156.82

35 - $261.21

25 - $438.73

20 - $1,306.00

15 - $2,392.78

10 - $4,841.40

5 - $!2,806.99

Put time on your side. You can't afford not to start. That is the magic of compound returns. Get started now.

7. Practice Dollar Cost Averaging - Forget the get rich quick schemes they are dangerous. Try the long term approach and by
the time you retire you can have more than you dreamed of and it could easily be millions of dollars.

Out of each pay check be sure you:

a.Tithe because after all the money you make belongs to God so give it to him.
b. Pay yourself next and put a consistant and same amount in your investments. This is for your nest egg.
c. Pay your bills and do not get bad credit.

So what is Dollar Cost Averaging - Instead of investing assets in a lump sum, the investor works his way into a position by slowly buying smaller amounts over a longer period of time. This spreads the cost basis out over several years, providing insulation against changes in market price. In a nutshell if you put $100.00/month into an investment, when the stock goes up you buy less and when the stock goes down you buy more and over the long haul you have paid less but have more stock. Bottom line is you have to be consistent and invest the same amount.
Don't chase the investment when it is up and then you don't buy because it is down you will just lose money. After all when it is down that is a sale or a bargain so why do we not buy it.....you see what I mean. That is why Dollar Cost Averaging eliminates the guess work and chasing stocks and investments. If a Challenger was on sale wouldn't you buy it?

8. Asset allocation- Do practice asset allocation. Asset allocation is about not putting all your eggs in one basket. Diversify your portfolio
based on your age in the different assets such as savings accounts, health and life insurance, bonds, mutual funds, stocks, and discuss the percentages
of each with your financial advisor.

8. Taxes - talk to a tax advisor to see how you can save taxes each year.


9. Estate planning - plan for who will inherit your wealth
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For I know the plans I have for you," declares the LORD, "plans to prosper you and not to harm you, plans to give you hope and a future. Then you will call upon me and come and pray to me, and I will listen to you. You will seek me and find me when you seek me with all your heart.
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Old 06-23-2006, 01:09 AM
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Default RE: Planning for Your Financial Future and the Challenger

Thanks for this list of advice. I've got plans to first get a job after I'm out of college and put money on the side from the beginning to start a rental property business. One of the last things my grandfather told me before he died was that he sold his stocks in the 80s because he was depressed with losing his wife (my grandmother) to ALS (Lou Gehrig's disease), and he said that was the dumbest decision he ever made. He quit his job, but he kept his rental properties and he said that was the only reason why he wasn't dirt poor and depending on my parents. He told me to make sure I had investments that made money and start from the beginning. I'm considering to go into business with some friends on this.

I am also working on writing a whole bunch of books on the side. If they are successful, I will invest that money wisely. My father has taught me very well how to handle a budget (he's an accountant). When I buy a car, I look for what will last a long time which I can stand to own for a long time. I intend to live in the town I am currently in right now for college. The expense of living is very cheap and property value is low right now, but I believe it is going to boom eventually. It is a perfectly safe, small community that I know very well.

I only use my credit card when necessary, and will be trading the one I have now (which has zero benefits) for a Dodge card. I have NEVER paid the minimum payments and never intend to. I don't buy unnecessary things, and when I buy my luxury items such as a TV, I buy what I believe will last the longest and I use it until it quits working. I buy quality over price.

I try to find ways to cut expenses, such as I buy E10 89 instead of normal 89 that costs 10 cents more per gallon. I use a K&N air filter which improved my mileage by at least 2-3 mpg. I could go on forever.

The reason why people have financial problems is they go nuts. They spend way beyond their budgets on credit cards and depend on their minimum payments. They waste their money trying to have the best stuff ever. They do not make wise investments. They buy new cars before they have the security for it (I have friends in college who are buying brand new cars and are in debt city). They have to have the best TV, best cell phone, best computer, best clothes, best everything. I buy quality stuff on discount at quality stores, but never the most expensive. This is why I don't have financial problems.
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Old 06-23-2006, 09:04 AM
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Default RE: Planning for Your Financial Future and the Challenger

Sounds like you are on the right track.

When you do you business with your friends be sure to draw up a legal contract even with family members.
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For I know the plans I have for you," declares the LORD, "plans to prosper you and not to harm you, plans to give you hope and a future. Then you will call upon me and come and pray to me, and I will listen to you. You will seek me and find me when you seek me with all your heart.
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Old 06-23-2006, 09:41 AM
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Default RE: Planning for Your Financial Future and the Challenger

Believe me, we are planning to do that. I am perfectly aware how people who are either your friends or your family will be more than happy to rip you off. Don't worry, we are planning on doing that, as well as having an independent 3rd party accountant check everything over to make sure no one is cheating, then have their work analyized by our own personal accountants just to be safe.

I know better than to just trust people blindly. I maybe friends with the other members but that doesn't mean that I will be blind and stupid to them taking advantage of me. Thanks for the advice though. Don't worry, my father accountant has taught me very well on what things to watch out for, as have my instructors. My family has a lot of enterpruners that have all given me good advice.
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Old 06-23-2006, 12:43 PM
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Default RE: Planning for Your Financial Future and the Challenger

Already have retirement in check. Have a 401k at work. I have them take out 6% now since that match 50% of the first 6% you put in. That is just free money so why not. But plan on upping the %. When I get a raise, say it is a 3% raise. I plan on upping at least half that to be put into 401k since I am accustom to the way I live now with what I make. I also have an IRA that is a rollover IRA from the previous company.
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Old 06-23-2006, 02:39 PM
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Default RE: Planning for Your Financial Future and the Challenger

As a balance, you might check to see if your company plans on doing a Roth 401K because if don't need a tax break now it will benefit you later because it will not be taxed when you retire. If you everything paid off like your house, college, etc. you might consider a 30 year term insurance that way it takes care of burial and money you owe so your family doesn't take care of the burden. Depending on when you retire, you might take advantage of you companies medical insurance until Medicare takes over at 65 years of age.

Now you can save $15k/year but when you turn 50 you can move this to $20K/year if you have to. After you max your 401K you can always open up another account separately and add more.
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For I know the plans I have for you," declares the LORD, "plans to prosper you and not to harm you, plans to give you hope and a future. Then you will call upon me and come and pray to me, and I will listen to you. You will seek me and find me when you seek me with all your heart.
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Old 06-26-2006, 11:24 PM
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Default RE: Planning for Your Financial Future and the Challenger

This is from CNN.com:

The Employee Benefits Research Institute reports that more than half of workers 45 to 54 have saved less than $50,000 for retirement. A recent Fidelity study found that the average boomer is on track to replace just 60% of his or her current income in retirement, even with help from Social Security and pensions.

To have only saved this amount is sad.

How much will you need for retirement?

Here is an example:

Current annual income $50K I just picked a nice round number.

Desired post-retirement annual income: Let's say 100% as nobody wants a cut in pay
(Note: You'll need at least 70% of the amount you earned during your peak earning years for every year of retirement.)

Current age: I picked a median age of 35 years old.

Desired retirement age: Let's say 63 years old.

Life expectancy: Medicine is allowing us to live longer so say 85 years old.

Expected annual pension: Most companies don't have this anymore so say $0

Expected annual Social Security payment: $20,707 pretty sad uh!

Just 13 years from now, in 2017, the government will begin to pay out more in Social Security benefits than it collects in payroll taxes and shortfalls then will grow larger with each passing year.
By the year 2027, the government will somehow have to come up with an extra $200 billion a year to keep the system afloat.
By 2033, the annual shortfall will be more than $300 billion a year.
By 2041, when workers in their mid-20s begin to retire, the system will be bankrupt unless we act now to save it.

Bottom line: Don't expect the government to pay for your retirement. Plan and take control of your own retirement!

R E S U L T
You will need a total of $1,061,600 to retire at age 63. Based on the same numbers but your age is now 45 you will need $789,930 to retire at 63.

What if you want to retire at 55 like my father in law did? Well you better start putting a plan now and not later.

There are a number of financial illustrations on line to figure out how much you need. Run them and see how much you need to save each year then adjust your 401K accordingly.

If you have maxed out your 401K then open up and IRA account of some sort. Don't just blindly put some percentage into any 401k without looking at what you'll need 40 or whatever years later for retirement.

HAVE YOU STARTED SAVING?????

Best Wishes on building your nest egg.




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For I know the plans I have for you," declares the LORD, "plans to prosper you and not to harm you, plans to give you hope and a future. Then you will call upon me and come and pray to me, and I will listen to you. You will seek me and find me when you seek me with all your heart.
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