How Did I do with the “5 Year-End Financial Things To Do Before 2016”

12362295_905215839567648_1920800572_n

photo credit: ge_keoni

Original post is at 5 Year-End Financial Things To Do Before 2016 at MoneyNing.com

Almost 3 short weeks before the end of 2015, and we are all frantically looking for last-minute gifts and getting ready to fill our schedules with holiday parties.

Things we need to look at for the end of the year should be filled with joy and get us ready for 2016. based on the article at moneyning.com, see how I have done and currently doing.

1. Review Your Yearly Budget

Looking back through the year I made some terrible choices when it came to debt reduction. I didn’t do very well with investing my money as well.

I feel that being honest with myself in this next year is going to shed light on how I will truly be able to get out of debt. I have already set up automatic payments to get out of debt, and I will not change those automatic payment for any reason.

2. Max Out Your Retirement Contributions.

In October I was able to max out retirement contributions in my step IRA. that is currently where the bulk of my retirement money is sitting.

I’ve been thinking about adding to a Roth IRA this year, but I haven’t been able to find the funds to be able to do it. Currently, I don’t feel a rush to contribute to a Roth IRA . With the current tax rules, I have until April 15 to make that decision.

3. Donate to a Charity

I make monthly donations to the organization EQUIP  at www.iequip.org Which is an organization that has been Co-Founded by John C. Maxwell and Larry Maxwell.

Their vision is to “see effective Christian leaders fulfill the Great Commission in every nation.”

This doesn’t have to be your cup of tea, but this is an organization that I believe in.

4. Spend what’s left in your FSA

I don’t have money in a Flexible Spending Account (FSA), so this isn’t a problem for me. An FSA might be an option in the future, but I haven’t found out how it could fit into my financial plan yet.

5. Prepare for 2016

Currently I only have a W-2 Income and I don’t need to have a lot of paperwork.

To alleviate any problem of searching frantically for anything during tax time is to continually update and maintain account information as the months close.

Overall, emotionally and spiritually I feel more prepared for 2016 because I’m putting plans into place to pay off my debt, and take more steps to building wealth.

Two things I plan to take action on in 2016 are to

1. Reading more about Warren Buffet and Benjamin Graham so that I can take steps to invest wisely in companies that have depressed stock values that have a high probability to rise in the future.

2. Continue with my debt snowball

3. Raise my net worth over from negative to positive this up coming year. I only have $14,866 to go until my net worth is positive.

Net Worth November 2015

Stairway to Heaven - Kyle Gendary

pc: kylegendary

Here is my first real net worth update. It feels a little intimidating putting this out to the world.

I’ve read many articles and stories saying that people would rather speak in front of crowds instead of talk about their finances openly. Maybe it’s because they have  little bit of shame hiding within themselves to let out the truth.

Being able to talk about my net worth with real numbers is tough. I feel that it will keep me accountable for where I am at, and where I want to go in the future.

Net Worth 113015

Total Cash and Bank Accounts (+$857.06): This consists of two life insurance polices that I use as banks. I am able to freely loan from it. Annually there is a dividend that is given, and it grows at 5%.

IRA(-$3.90): My investments didn’t do too well this month. I’ve invested 70% it into a Vanguard total stock index and 30% into a total bond index. I’m glad that I get a dividend every month from the bonds, and a quarterly dividend from the stocks.

Credit Cards(-$2,586.16): I ended up borrowing money from my life insurance policy to pay off a balance transfer a while back. The terms of the loan made it more costly than I had hoped.

Tax (-$267.37): I ended up having to pay some tax to the federal government a while ago, and I am deciding to pay myself back for that. It also goes into my emergency fund.

With my current payment plan, this debt will be paid of by February.

Car (-$233.59): I’m paying myself back with interest on this loan. I’m excited because this allows me to put it back into my cash account.

Do I see my car as an asset? Not really. It doesn’t appreciate in value over time, and I don’t plan on selling this car or trading it in for another car anytime soon.

Student Loan (-$172.20): This is by far the hardest thing for me to get rid of. It’s also going to be the last thing I’ll end up paying off. The interest rate on this isn’t too bad at 4.47%.

You may say that it’s kind of dumb to have my money in a life insurance policy vs paying off my student loan. After running numbers, I’m actually getting more money back by having the money compound in my life insurance policy. (I’ll explain this more in a later post)

Misc Loan (-$3.24): This consists of money that was used in a bad way. This actually has some debt I paid off because I tried to do a balance transfer to see if it would work in my favor. In a short answer, it caused more headaches than I would like to admit.

I also used some money in my cash account to pay for the balance transfer on my credit card. I’ll be paying myself back on this as well.

Overall, the progress is going in my favor. Slow and steady, and having a specific plan will help me pay down these debts.

3 Reasons to Keep a History of Your Financial Information

Akaka Fallsjpg

Working at my computer last night I found that I had added a duplicate bank account in the Quicken, and I didn’t know how to fix it. I spent about 45 minutes trying to fix the problem, and then I got frustrated. I had a bright idea , and I thought to myself “Quicken has a restore function, lets restore the system when I didn’t have this problem.”

Before I did the “Restore to a Previous Date” function, I decided to do a backup before any major changes. After the backup completed, I started to download all my bank information from their websites, and then I thought I was almost done.

I got to one of the accounts that I manually put into Quicken, and my heart dropped into my stomach. I thought I didn’t have the information. Luckily, I remembered that I just did a backup. It’s a good thing that I did because I forgot to download information for two accounts.

Two hours later, the restoration was complete and I learned three very important things.

1. Keep Good Records of Your Financial Information.

You never know when you’ll need fix a a problem with a computer program or when you’ll need to report records to your accountant. Having a good system to keep your financial information intact is a must.

Make sure you keep a lock box or an area designated in your home for your important financial records. You never know when you’ll need your social security information, life insurance policy, or passport.

For electronic records, properly have information saved where you can easily access it. Have a system of backing up the information once a month.

2. Money tells a Story

Your financial information tells a story of what you did in the past and what you spent your money on. Recently it reminded me of being able to take my father-in-law out for his birthday. It was fun and we had a great time trying new food.

It also tells you of the mistakes that you have made financially in the past like taking out student loans and not paying them back, or having invested in business deals that didn’t go well.

Your history is a learning tool. Learn from your mistakes and success and use that information to make better decisions in the future.

3. What You Spend Your Money on is what is Important to You

It took me a while to understand, but where and how you spend your money says a lot of where you spend your time. A great teacher said “Where your treasure is, there your heart will be also.

Rick Warren said “Here’s how you know what’s really important to people: Look at their calendar, and look at their bank statement. The way we spend our time and the way we spend our money says what’s really important to us.”

Money Quotes

Kalalau Beach Kalalau Beach by @bozbut

A few quotes that challenge your ideas on money as the holiday season starts courtesy of the Quotations Page:

Annual Income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery. – Charles Dickens (1812-1870)

Money was never a big motivations for me, except as a way to keep score. The real excitement is playing the game. – Donald Trump “Trump: Art of the Deal

The only way not to think about money is to have a great deal of it. – Edit Wharton (1862 – 1937)

Money frees you from doing things you dislike. Since I dislike doing nearly everything, money is handy. – Groucho Marx (1890 – 1977)

One of the greatest disservices you can do to a man is to lend him money that he can’t pay back. – Jesse H. Jones. The New York Times Magazine, July 2, 1939

Be rich to yourself and poor to you friends. – Juvenal (55 AD – 127 AD)

Never spend money before you have it. – Thomas Jefferson (1743 – 1826)

Perhaps the most important use of money – it saves time. Life is so short, and there’s so much to do, one can’t afford to waste a minute; and just think how much you waste, for instance, in walking from place to place instead of going by bus and in going by bus instead of taxi. – W. Somerset Maughamm (1874 – 1965). The Razors Edge, 1943

Personal Finance in Paradise – Debt Elimination Series: Part 3 – 5 Step Plan of Attack toward Debt

Wailua Falls. Kaua'i

Photo by: thisworldexists

In this final step of the process. This is where you plan your month before you start it. This is like an architect who begins the process of building a house. You start with blueprints and then you begin the building process with raw materials to start the foundation. Your budget and debt snowball is the blueprint and the building of the house are the actions you take to get out of debt (budgeting).

You can do this on Microsoft excel or a notepad.

Step 1 Income: Start your month with your first paycheck and have this at the top of your sheet.

Subtract your fixed expenses first. This will let you know how much get to spend for the rest of the month. Then subtract the amount you may need for variable expenses. This will give you the remainder that you can spend on anything that may come up.

At this point, every time you make a purchase subtracted from your paycheck amount. This is going to keep a running tally of how much you can spend for the month. This will keep you from going over budget

Step 2 Fixed Expenses:  Find out what your monthly recurring expenses are.  They are typically savings, cell phone, subscriptions, donations, student loan payment, car payments, health and life insurances. It’s best to know theses expenses before you get caught in a crisis. You will probably end up having to use your credit card to pay for these expenses, and then get further into debt.

Savings is first on the list because your goal will be to live the remaining money. Trust me, you will be able to make better judgments throughout the month with the rest. You can start saving with 1% of your income. Get your feet wet, and over the months, you can increase the amount you save by 1 more percent.

My car insurance is paid every six months, so I take the total amount and divide it by six. It helps me to break down the payment into smaller manageable amounts instead of having to come up with $360 in one month.

For instance, if you have a car insurance to in January for $360 you would take $360 divided by six to get $60 dollars which would you will put away in either a savings account or leave in your checking until it becomes due in January.

Step 3 Variable Expenses: Like I said in the previous post, we are bad at estimating our true expenses. What we want to do here is get a general idea of what we may be spending in each category of non reoccurring expenses and then add 25%. It’s better to overestimate than underestimate your expenses.

These are things like groceries, gas, and other miscellaneous expenses that you may come up with over the month.

Remember for the categories, like groceries, make sure to add what you spent as an expense, and then subtract from what you had set aside for groceries for the month.

Step 4 Tracking: Take your notepad and and pen, and every time you use your debit card, credit card for use cash, will write down the expense. What you are doing is keeping a register of the expenses you have during the month.

The act of writing your expenses will keep you accountable to yourself. It also makes you think about what you’re buying. For instance, will I need this extra water bottle? Will this handbag be worth it in the future?

Step 5 Make Adjustments: If this is the first time you’re making a budget, you will make mistakes and overestimate expenses. This it took me a few months to get a handle of what I could pay for variable expenses. It’s a learning process and the more you track, the more practice will get by doing it.

Let me know your thoughts and if you have any better ideas please let me know.

See you soon

Personal Finance in Paradise – Debt Elimination Series: Part 2 – 5 Steps to get a handle on your debt

Hanauma Bay

Image by propst7pl

This is part two of the personal finance in paradise debt elimination series. The focus of today is to set a step-by-step process of getting your credit card debt down, and to be able to set up plan to follow so there is no wiggle room..

The major thing that holds people from investing and building wealth is credit card debt. If you are getting charged anywhere from 12.99% to 24.99% on credit card debt, it is going to be an uphill battle to building wealth if you’re losing money by paying interest.

This is a simple detailed plan of what to do and how to get out of debt so you can begin building wealth.

1. Find out where you are: in scientific studies, it has been found that people are really bad estimators. When it comes to managing their time or estimating the amount of debt that they owe, people tend to underestimate the amount of debt they really do have in their accounts. For instance, a person may think that they have $10,000 worth of debt, when in reality it can be anywhere between $12,000-$15,000.

There are online websites such as CreditKarma.com, credit.com, and mint.com that’s are good resources which I have used in the past. These resources can access your account information and give you an overall picture of the types of debt that you have.

CreditKarma.com and Credit.com both have access updating your FICO scores as well. These may not be completely accurate at the time, but it gives you a good idea of where you currently stand.

Think of it as your adult report card. It gives you a snapshot of how well you are doing. If you have a negative net worth you can be doing better, and if you have a positive net worth, what can you do to invest more.

2. Negotiate Interest Rates: one of the ways to pay less on your credit cards is to lower your interest rate. It’s pretty easy to do, all you need to do is call your credit card company to ask for a lower interest rate. Give them a compelling reason, like you been paying on time, you have been a longtime customer with the company, and or you have also been struggling with payments. It may not work the first time or with the first person that you speak with, continue to call and ask for manager if necessary.

I personally have called the credit card companies when I have missed the payment, and my interest rate shot up from 9.99% to 24.99%. They were very lenient and they had told me that I needed to pay on time for six months or my interest rate would shoot back up to 24.99% if I miss another payment. It’s worth a try, you may get shot down, continue until you are able to get that credit card breakdown.

3. Stop getting credit card offers: when I began college, I got stacks upon stacks of mailers from credit card companies to sign up for their cards. To prevent being enticed by the credit card companies stop the credit card offers from coming to you.

One way to stop credit card offers is to contact one of the three U.S. credit bureaus three credit bureaus, Equifax, Experian, and Transunion, and have them remove you from all pre-screened credit lists. When you contact one of the credit bureaus they must contact the other two to let them know that you do not want to receive any offers from credit card companies.

Another way of doing this is to go to optoutprescren.com and click on the bottom link that says “Click Here to Opt-in or Opt-Out”, and fill out the the form and mail it in. I sent in the information, and I do not receive any other offers.

4. Choose Your Strategy: Use the debt snowball strategy, popularized by Dave Ramsey, which lists your debts in order from smallest to largest. You start to paying off the smallest debt with all the extra money you have while paying the minimums on the rest of your debts. Once the first debt has been paid off, take the money you are putting to the smallest debt and use that money to pay down the next debt on your list. Continue doing this until you you are done paying off your debts.

5. Track Your Progress: Make sure to log your progress. It’s easier to keep going if you know how well you have been doing.  You want to be able to create good tracking habits so that you can focus on the rest of your life.

One good habit is to put reminders on your phone calendar every month to update your accounts, or piggy back a habit on something that occurs regularly.

Personally, I track my information on Quicken and I forecasts my expenses for the month on an Excel sheet. I get paid on the 15th and the last day of the month. I update my accounts and prepare for the next month on payday.

it doesn’t matter how you track, just find a system that works for you.

 

Personal Finance in Paradise – Debt Elimination Series: Mindset

Kahana Bay

Debt elimination strategies should always start with how you think about money and how you use it.

I feel that it is easy to blame ourselves for the debt situation that we are in. it is easy to be the victim and take no responsibility for what we have done to ourselves. Does take a bit more courage, and small tasks to step up and take real responsibility to pay off all of the debt we have accumulated.

At the same time,  we have a chance to remember that we have more than 80% of the people in the world.  It is better to focus on what is going right in our lives, and to appreciate what we already have what we have right now.

Marie Forleo has a great video about how to have a mental shift around money. I find it really helpful because the six steps she talks about are ways all of us should be reminded about how we can make small changes in mindset. It’s always the small things that can do on a daily basis to feel a little bit better about our situation.

Carol Dweck also has a great book called Mindset. Its main focus is to teach us about the growth mindset. This is where we look at the positive side of the situation, not in a sense where we pretend that the negative isn’t there, and seeing the situation or how it can make us be a better person.

It is a chance to grow from the struggle, and a chance to work through the problem to be a better person. Paying one small debt, choosing not to buy a cookie or a DVD, and finding ways to save money will help build new habits and get us one step closer to financial freedom.

Money is a powerful force that can destroy you if you let it. You have to learn to control your money instead of letting it control you. If you don’t, you will never get out of debt and will continue to dig a deeper hole.

Be honest with yourself, and and really examine the reasons why you are and that. Be aware of your desires and you wants.

Personal Finance in Paradise – 3 Steps to Achieve Your Goals (which helped me pay off $35,000 in debt)

Stairway to Heaven  pc: @ricahyokoi

The New Year is coming around and about time when I personally start thinking about my goals for the the next year. I feel it’s always good to update yourself on how you are doing on your goals. Another good habit is to continually make new goals as you complete others that you have finished.

One of my goals is to go to the CrossFit box here in Honolulu at least 2 to 4 times a week. Sometimes I don’t go because I’m not motivated. It’s good for me, but at the same time we all go through the love-hate relationship at the gym.

My current financial goals are to payoff at least $10,000 of debt, which will also increase my net worth by $10,000.

In my studies and my own personal practice, there are practical ways to reach your goals, which are easy to do and also easy not to do. when I was able to pay off $35,000 of my debt, before I was married, I followed the following steps:

1. Define Your Goal

This is where you decide what you really want. My goal was to get rid of debt, and I had choices to make. Like I said above, my goal is to pay off $10,000 of debt. This is attainable and specific.

A good outline is using the SMART criteria for goal setting. It’s a good way for you to gather your thoughts, and to know the general idea of where you are going.

Specific – target a specific area for improvement.
Measurable – quantify or at least suggest an indicator of progress.
Assignable – specify who will do it.
Realistic – state what results can realistically be achieved, given available resources.
Time-related – specify when the result(s) can be achieved.

2. Plan what what small steps you’re going to take

Define the most important tasks that you can make so that you can get to your goal.

Be specific  with what actions you are going to take. Some people call this having a black-and-white goals, meaning that there will not be any gray area of what you can and cannot do.

For instance if you’re going to pay off a specific amount say $650 a month to your credit card bills. there is no gray area, it is a specific number and you know what you’re going to have to do.

3. Define your “Why”

Getting to your goal is easier when you know what you’re trying to achieve and why it is good for you. My why was getting to travel to Taiwan, and be able to fly around the country with friends.

This is the motivator for you and only you. There will be trials that you will go through reaching toward your goal. Getting on to the road of wealth creation is a marathon. Sometimes you just want to quit.

4. Take Action and Celebrate the Small Wins.

People find it more motivating to be partly finished with a longer journey than to be at the gate of a shorter one.

Once you start, you’re already that much closer to the finish line than you might have thought.

For your money this is where you track your expenses when you make them, and to enter it into a program like Quicken where you can see what you have done with your money. This allows you to have a history of what you’ve done, and it lets you know where you have spent your time.

It’s also writing down your expenses at the end of the day. It’s a transitional habit because you become more aware of what you are spending your money on, and you know you have to be accountable for tracking where every cent and dolalr goes.

While I’m Crossfit, and I’m looking at the countdown timer to see how much longer I have until the clock with hit 00:00 or counting the reps until I’m done with the workout, I celebrate the time passing by  doing another rep or seeing the clock tick away. I know that I’m almost done with the workout no matter how grueling it can be.

The steps are easy to do and also easy not to do. at least, for me, it gives you a framework of setting goals and achieving success.

Personal Finance in Paradise – Let Me Introduce Myself

Akaka Fallsjpg

My name is Mike

I’m the creator of Personal Finance in Paradise. The reason behind why I started this blog is because I hate debt.

Prior to getting into debt i had quite a bit of savings, and I used it all on trips and training in other parts of the country.

I’ve been in debt as far as $66,500 and having not much to show for it, and I felt that I needed to do something different with my life.

I looked and searched for all of the ways possible to get out of debt. I read online for specific tips and tricks, even paid for a program that said it would pay off $25,000 in debt be 24 months with an annual net income of $40,000. (Come to find out that program lied, and I believed the impossible). I continue to read both secular and non-secular ways of how people do with money.

I’ve been around the block. Making bad mistakes along the way, and trying to find out the best way possible to get out of debt.

A Few Examples of Bad Decisions

I cosigned two loans that the original payers defaulted on, and creditors came after me for that as well. I was able to fend off those creditors and point them into the right direction.

Creditors called me, and I was able to fend them off. They tried to subpoena me, and force me to tell them that I owed a debt that I didn’t own personally.

I’ve had an “a wide” set of experiences in my life. At the top that all off I do live in Hawaii. That’s one of the most expensive places in the world to live.

Sometimes you you may have seen that you get a two bedroom home here in Hawaii for the price that you would get a mansion out in Texas. The goal of this site is to keep not only myself accountable, but to also teach my experiences to help you get out of debt as well. My goal is to reach out to you who have been in my situation.

Some of this may sound not so “grammatically correct”, because I’m not a grammarian nor am I a grammar Nazi. I’m using a program called “Dragon Dictate” to record my voice  and put it down here on the website. So going to apologize ahead of time that this may not be completely grammatically correct.

I’ve heard it said that “smart people learn from their own experiences, and wise people learn from the experiences of others.” My goal is to help you to be wise.

I’m excited to hear from you, and I’m glad that were going on this journey together.

Personal Finance in Paradise – My Story

Aloha

pc ig: cq__

I thought about chronicling my debt story into a book, and thought the background of how I got into debt would be interesting.

I found myself being college student who seemed to go back and forth between wanting to stay in school and feeling that it wasn’t the right place for me. Hearing all of the stories of Bill Gates and Bill Wozniak fascinated me about what they were able to do in business and in life. Hearing the stories built a strong desire in me to find something to invest in. I didn’t know what I wanted to do so I began searching. I started to read self development books, and how some of the writers were able to pull them out of poverty and build great wealth. I continued to read business books and came up to the subject of real estate investing, becoming a stock market millionaire, and building businesses from nothing into multi-million dollar corporations.

A friend invited me to a weekend seminar in the summer of 2005 where you would get a feel for real estate investing, find out if investing in real estate was the right choice for you, and if it was even plausible to make money in it. It was my first time going to one of these events and all you could see were rows and rows of chairs. At the front of the room we heard the music pumping as the eight hour day began. A short blond woman with glasses walked up to the front and introduced herself. She began talking about how she had used other people’s resources get into her first real estate deal. I was mesmerized because she said that you didn’t need to have much to start your real estate empire. You just needed to make the right contacts, buy some houses, and resell them to investors.

It was the height of the real estate boom. She asked to the crowd “does anyone know what hard money is?“ I thought I had answer, so with great and utmost confidence, I threw my right hand into the air and stood up. One of the volunteers quickly grabbed a mic, and began rushing toward me. When he got there, I took it, and in front of 500 people I said with my with the greatest bravado and confidence I said “hard money is money that you need to work hard for.” The crowd laughed so hard that it reminded me of the stories of Santa Claus’ belly shaking. I was thinking in my head “that probably wasn’t the right answer, but at least the crowd was happy.” I was embarrassed, and I sheepishly gave the mic back to the volunteer and sat down. The speaker looked at me a little awkward at first, and she smiled. She said hard money is hard to work for but in this case that’s not what I meant. Hard money is really the money that you borrow from a hard money lender. A hard money lender is someone who lends their money for short period of time with a high interest rate to investors in real estate. The speaker’s voice started to fade out and at that point in time something in my mind clicked, I wanted to know more, and I thought I could build an empire.

Later that weekend I picked up a book and I found myself gorging on a book about real estate. I found myself being sucked in, and the information felt so fascinating that I just wanted to finish the book as soon as I could. I felt as if this was the right path for me. Greed had gotten to me. At another meeting that weekend they revealed the the tuition which was $30,000. I thought if I can buy and turn around I real estate property for thirty thousand dollars I would make up the cost of my tuition. All I could think about was building an empire.

Two months later, I found myself traveling to Arizona and learning about real estate acquisitions, business theory, and trying to get deals done. Then I found myself in a room, a conference room filled with hundreds of people trying to do the same thing. Little did I know that all of these people were broke, and there were not very many success stories from this pool of people. All I wanted to do was become wealthy by any means and have fun while doing it. I was beginning my life as a wannabe entrepreneur that chose not to go to college.

It took a while for the blinders to come off, but they finally did. January 2010 I found myself with $66,504.69 of debt. A bulk of this debt was a student loan $29,242.86 and the rest piled into three credit cards amounting $37,261.83 in three credit cards. I didn’t realize what I had done to get in so much debt.

I could have done a lot of things like complain about my situation. I realized that I created my own reality. I violated all of my values of being prosperous, saving money, and paying for things when I only had the money. I chose not to complain about the situation. I chose to buckle down and get to work. Many people put stock into worrying of what cannot be done. If you choose to focus on the actions that you can control you will be better off.