You lose a lot when you live debt free.  You lose things like stress, fights with your spouse and sleepless nights. 

You also lose that financial ball and chain you’ve been dragging around.

Debt free living is financial freedom.  It is going against the grain in our society to find a better way.  I want to assure you, it is truly a better way to live!

Some might think that debt free living is impossible, but I’m living proof that it is not.  My wife and I have been debt free except for our mortgage for over 2 years now.  We will be completely debt free in the next five.

The 5 Attitudes You Need for Debt Free Living

Getting and staying debt free requires adopting the right attitudes.  Once you get your mind right about money then the rest is just mechanics.

Here are the five attitudes I think are most important for debt free living:

1.  There is no such thing as good debt

Debt is bad.  All debt is bad.  There is no such thing as good debt.  Have I made myself clear?  There will be some people out there that think I’m a simpleton for saying it, but I believe it is true.  Why do I think this way?  Because debt is risky. 

Ron at The Wisdom Journal wrote a little about this in No Such Thing As Good Debt?  I think he makes it clear that even what some call “good debt” can quickly turn on you and become “bad debt”.  He says it is a matter of perspective.  I think debt is always bad because it enables us to purchase things (even good things) when we can’t really afford them.

There are very, very few things worth going into debt over.  I might buy a house on a 15-year fixed rate mortgage, but I’d much prefer to pay cash.  Sometimes, you don’t have much of a choice like in the instance of a major health issue.  Of course, in either of these instances I would just consider the debt a necessary evil until I could pay it off.

2.  Financial margin buys me freedom

When you live below your means (i.e. spend less than you make and save the rest), you create financial margin in your life.  As Amanda at My Dollar Plan points out, Finding the Value in Money is an important step if you want to stop spending every dime you make.

Saving money and having financial margin provides freedom of choice.  It opens up options that wouldn’t otherwise be available to you.  This is one of the big reasons that I love living debt free.  Amanda shares some specific examples of how this has played out positively in her life.  I’d encourage you to read her story.

Bottom line, you must have a purpose that trumps your desire to buy everything you see if you want get and stay debt free.

3.  Accumulating wealth is not a bad thing

It seems that wealth has a bad name in America right now.  The rich have gotten some bad publicity.  Corporate scandals have left Americans feeling like everyone with money is greedy and unscrupulous.

Frugal Dad wrestled with this a bit recently in Wealth, Greed, Envy and Shame.  I’ll let you read his thoughts on the subject.  I think he offers a very balanced commentary.  Once you read the article, you can draw your own conclusions about wealth.

What I will tell you is that once you become debt free, you will start to accumulate some savings or wealth.  Therefore, you need to have your head on straight about what wealth means to you.  Personally, I kind of like it. 

4.  One mistake does not make you a financial failure

On the road to living debt free, you are bound to make a financial mistake or two.  This does not make you a failure nor does it mean that you should give up.  As Dave Ramsey puts it, “You just paid some stupid tax.”

Learning flexibility is an important part of getting and staying debt free.  We are often too hard on ourselves which robs us of our motivation.  Brad at Enemy of Debt writes When Your Financial Plan Takes A Detour It Doesn’t Imply Failure.  As Brad points out, being debt free actually takes some of the sting out of your mistakes because you have some cushion.

5.  I am a grown-up and I make my own money decisions

We have to take personal responsibility for our decisions about money.  This is part of maturing into an adult.  Living debt free is not the norm.  It takes courage to choose to be different even when “different” is clearly better.

Our society pressures us to spend money on things we don’t need or even really want.  Jason Price writing for Bible Money Matters tells us to Avoid The Pressure To Spend.  I think he did a very nice job bringing clarity to a subject that often goes ignored.

We have to be mature enough to use our heads and not our emotions to guide us in purchasing decisions.  The advertisers and marketers of the world are pros.  They know exactly how to get us.  We must steel ourselves against their efforts.

These Attitudes Will Lead You to Success with Debt Free Living

These five attitudes have served me and my wife very well in becoming and remaining debt free.  I hope you’ll also find them very useful.  Your attitudes guide your behavior so getting your mind right is more than half the battle.  Set yourself free!

What other attitudes are important to debt free living?

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These are certainly very basic personal finance practices, but it doesn’t seem that many people are still applying them.

Have these fundamentals of finance outlived their usefulness? 

The three good habits of personal finance that used to work

I generally believe that simple is better.  When things are easy and straightforward, then I can be more consistent with them, but maybe these basics are just too simple.

What are these good habits?  Here are the ones I am speaking about:

1.  Spend less than you earn

In the past, people believed that you could save to become rich if you simply spent less than you earned.

It wasn’t about how much you made.  It was about how much you spent.

If you kept your spending under control, you could save what was leftover, invest it wisely and over time create wealth.

Many people followed this model.  They worked earning modest wages, lived a simple lifestyle and all the while crammed back thousands of dollars into investments. 

By the time they reached their 50s and 60s, these people were the millionaires next door.  They didn’t let the fact that they never earned a high salary deter them from amassing a fortune.  They just worked hard and saved toward their goal.

Today, it seems many believe that it is wiser to leverage debt to have a luxurious lifestyle without having to wait so late in life to enjoy it. 

Many also believe that an enormous income is necessary to become wealthy.

Is this the new wisdom?  Have I missed something?

2.  Pay yourself first

In the good old days, people believed that in order to pile up riches, you had to pay yourself first.  For example, you saved the first 10% of your income.

You took this off the top before you spent anything or paid anyone else.  You paid yourself first because you knew if you didn’t that there wouldn’t be any left over.

Again, many people applied this principle in their financial lives very successfully in years gone by.  The first thing they budgeted was how much they wanted to save.

Of course, savings itself is pretty old-fashioned.  Why save?  You can just whip out a credit card to cover any unexpected expenses or to get something you want now.

Today, we pay the bills first.  We can’t get behind with a creditor or they’ll ruin our FICO score.  Our credit score has replaced our reputation, character and frankly our means to pay as the defining variable in our lives.

Without a high enough FICO score we can’t get a job, a place to live or insurance.

All hail the credit score!  Pay the (master)card first or else!

3.  Neither a borrower nor a lender be

In the past, it was actually shameful to have to borrow money to purchase items.  It was an admission of weakness and failure.

Many of you may have read Abraham Lincoln’s letter to his stepbrother that eloquently lays out why not to loan others money especially family members.

Lincoln points out the many complexities of being a lender.  He felt it was generally against the best interest of both parties to engage in debt.

Today, our entire national economy seems to hinge on the ability to borrow money.  We’ve loaned it too easily to people that couldn’t afford it and thereby created ourselves a mess.

Now our government is loaning money to insolvent companies that failed in managing the loans and other financial deals they made.  Oh, what a tangled web we weave!

Would you loan a friend money that had a proven track record of sorry financial decisions?

It doesn’t make a lot of sense, does it?  Damned if you do and damned if you don’t.  This is the kind of trouble we could have avoided by being neither a lender nor borrower.

What’s your opinion of these three good habits?

Usually, you need to get the fundamentals right before moving on to the more complex aspects of any discipline. 

We are deep into March Madness so, let’s take basketball as an example.  Should you practice executing a coordinated zone defense before you can effectively dribble and rebound?  What about shoot a free throw?  It wouldn’t matter much, would it?

Doesn’t the same hold true in managing our finances?  Shouldn’t we be solid in the fundamentals before moving on to more complex ventures?

It seems we as a nation and globally have violated the fundamentals of personal finance.  We have gotten the cart in front of the proverbial horse.

It seems to me that these old-fashioned personal finance ideas need to be reconsidered.

It seems if we would have heeded the advice of the wise ones, we wouldn’t be experiencing the problems we face today.

Maybe I’m just too simple.  What do you think?

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All too often, people rely on unrealistic means to free themselves financially.  Their hope lies more along the lines of wishful thinking than true strategy.

A solid plan for the proper use of your existing income is the best way to reach financial freedom.

Where many go wrong in their pursuit of financial freedom

I believe most people would say they desire financial independence.  However, if you asked them how they plan to get there, very few would have a worthy strategy.

Many hope for a big break.  They wish for one or more of the following:

• To win the sweepstakes or lottery
• To inherit money from a rich relative
• To hit it big in a multi-level marketing business
• To get lucky at a casino or race track
• To make a quick fortune trading individual stocks
• To stumble onto the next great get-rich-quick opportunity

Any of these would be great, but riches rarely fall into people’s laps this way.  The fact is that most wealthy individuals get there the old-fashion way.  They earn it!

It is amazing to me how so many can go their entire lives essentially hanging their hat on one or more of these fantasies.

Well, I’m sending out a wake-up call.  These wishful dreams rarely, if ever, work!

I know it is rare, but don’t some people get-rich-quick?

Yes and, despite the odds, some people would rather hang onto this fantasy than face reality.  They believe that someone has to win so, “Why not me?”

Well, even for that ever so small minority that do see a gigantic windfall come their way, it rarely lasts.

For those that come into a large sum of money by having it handed to them, they generally wind up broke.  In fact, they typically blow the money frivolously and end up worse off than before!

People that fail to learn the discipline of good money management, don’t know how to handle wealth when they get it.  This has been proven over and over again.

More tried and true methods for accumulating wealth

Okay, so if the old fantasies for achieving wealth don’t work, then how can I become financially independent?

Well, becoming financially healthy is a lot like becoming physically healthy.  It takes time, discipline and consistency.

For proper physical health, study after study shows that you have to eat right and exercise.  It isn’t glamorous or exciting, but it works.  The fact that it works more often than not, makes it a viable strategy to choose.  It is no longer just wishful thinking, it is a plan.

In the same way, the true methods for accumulating wealth are not usually popular or exciting, but they work. 

To become wealthy, you need to apply these steps consistently over a long period of time.  You need to make them the habits you live by.

If you do, then chances are very good that you will become wealthy.  This is the plan to follow.  It is a tried and true strategy.

Using your income to achieve financial freedom

So, what are the steps?  Here they come in all their splendid glory:

1.  Generate a decent income by working

You don’t have to make six figures to get rich.  People of all income levels have done it.  You just need a decent income to use as your tool for building wealth.  You can generate this income by working for someone else or by working for yourself.  It doesn’t really matter.

2.  Budget your money to live below your earnings

A budget is simply a method for planning and tracking your income.  It converts the money you make into a tool for building wealth.  It does this by giving every dollar a purpose.  You have to be very intentional to become wealthy.  That’s the role of a budget!

3.  Keep your lifestyle very modest

It is much easier to spend less than you earn if you keep your lifestyle modest.  Stop trying to keep up with the Joneses who are living well above their means!  Sell what you don’t enjoy, be thrifty and pay cash.  Simpler is better!

4.  Live without debt

Most wealthy people who remain rich pay cash for everything they buy.  They do not use credit.  Debt is risky and it is a more expensive way to buy things.  Millionaires are much too smart to fall for this trap.  Live debt-free!

5.  Save what you don’t spend

Rat-hole away every dollar that you can!  The more you save, the faster your net worth will rise and the sooner you will become financially independent.  Accumulating money is what being wealthy is all about.  Save, save, save!

6.  Make your money work for you

The rich understand the magic of compound interest and wise investing.  They diversify their investments and they watch their money grow.  They only invest in things they understand and they never leave their investment decisions to someone else!

Financial independence will not take as long as you think

I guess most people balk at this simple, but effective plan because they think it will take too long.  They want to be rich today!

Well, it does take some time, but it doesn’t take forever.  In fact, once you start and especially after you pay off all your debt, your wealth will accumulate much faster than you think.

The key is to get started.  The sooner you do, the quicker you will realize your dream for financial independence!

What are you doing to build wealth?  How well has it worked for you?

Photo by Dazzie D

This is one of my very favorite success books.  It has served as the inspiration I needed on many occasions.  In fact, it was largely  the spark that prompted me to start this blog. 

I’ve read Think and Grow Rich several times, but I was never really sure that I figured out the Hidden Secret.  This ambiguity always bothered me.

Hill clearly states in his preface that:

The secret to which I refer has been mentioned no fewer than a hundred times, throughout this book.

However, he goes on to say:

It has not been directly named…

I never really understood this and it nagged me every time I read the book.

Why should we care to discover the secret?

As Hill points out:

A peculiar thing about this secret is that those who once acquire it and use it, find themselves literally swept on to success, with but little effort, and they never again submit to failure!

Read that again!  Once you know and apply the secret, you will be swept on to success and will never again fail.  What a bold statement!  Is it too good to be true? 

Well, now that I’ve had the opportunity to read Brian Kim’s e-book, The Hidden Secret in Think and Grow Rich, I believe the above statement.  Brian sifted through all the clues that Napoleon Hill provided in the book and clearly uncovered the Hidden Secret.

Is it automatic?  No.  Hill and Kim are both clear to point out that it takes effort, but with the Hidden Secret it becomes much easier.  It helps you naturally achieve your goal, so you don’t have to force it or rely on things outside yourself to pump you up.

In fact, now that I know the Hidden Secret, it makes a lot of things that I’ve read about success click together and come into better focus. 

Skeptical?  I totally understand.  I was the same way.  However, I can assure you that Brian Kim goes into painstaking detail to confirm that he has truly discovered Hill’s formula for success.

What sets this e-book apart and makes it worth buying?

First of all, the e-book gets right to the point.  Kim spills the beans on the Hidden Secret in the very first chapter!  He avoids a big build up with a giant let down.  Instead, he lays it out in plain language that everyone can understand and follow.

Things I really like about this e-book:

• It finally resolves all the ambiguity by clearly stating the Hidden Secret
• It spells out the details with plenty of examples
• It walks you through every chapter of Think and Grow Rich pointing out the logic and validity of the Hidden Secret.
• The Hidden Secret is more than fluff.  It is logical, definite and practical. 

Why I’m recommending this e-book to you

I’m a no nonsense kind of guy.  I have a degree in engineering.  I served in the military.  I work with computers.  I deal in facts and I hate fluff. 

I hardly ever read fictional books.  I like books that get to the point and make a difference in my life.  Well, I’m recommending this e-book to all my readers.  It is that good!

Now that I know the Hidden Secret, I can see where in certain instances in my life I have naturally applied it.  In those instances, success came in bigger measure than ever before.

A great example of this is when I started my own business.  I realize now that I followed the exact steps that Brian details in his e-book to successfully start my small business!  As I look back, I realize it was because I followed the Hidden Secret that things seemed to just work out naturally.  It is really amazing at how well the Hidden Secret works whether we are aware we are using it or not!

Of course, I believe that by consistently applying the Hidden Secret that I can achieve even more in my life in a shorter span of time.  In other words, the Hidden Secret is a clear recipe for living life to the fullest!

The special offer available to obtain the Hidden Secret

I feel strongly enough about this that I have arranged a special offer with Brian Kim so you can obtain The Hidden Secret in Think and Grow Rich at a 20% discount!  This special offer is only good for the first 72 hours, but the e-book is always available.

Click here to discover the Hidden Secret in Think and Grow Rich!

In addition to the 122-page Hidden Secret e-book, this special offer for My Super-charged Life readers allows you to download a free, full-version of Napoleon Hill’s Think and Grow Rich in PDF format.  Read it first!

Brian has also offered to include his special report on The Three Biggest Mistakes People Make With The Hidden Secret in Think and Grow Rich and a 27-page workbook that will guide you in applying the Hidden Secret.  These two resources will give you a head start in applying the Hidden Secret to achieve your burning desire!

All together, you’ll get the e-book (normally $24.95) and all three bonuses (valued at $45.00) for just $19.95!  That’s an amazing deal and I assure you that it is worth every penny. 

I hope you’ll take a moment to click the link above and check into this for yourself!

Popular strategies for achieving financial freedom

It seems that people have different ideas in mind for funding their retirement.  Let’s take a look at a few that appear popular.

1.  Live it up now and hope to get lucky later

In America, this one seems very prevalent.  I have heard it expressed as, “Why should I scrimp and save while I’m young?  I’d rather live it up while I can still enjoy it.”  Spending even well beyond one’s means is very typical.

Of course, life expectancy continues to grow higher and higher.  The average life expectancy reached a record high of 78.1 years in 2006.  Who is going to take care of these folks in their old age if they don’t prepare?

I guess this group hopes to hit a financial gold mine one day.  They must hope to get lucky by winning the lottery, collecting a large inheritance, or receiving some other large windfall.  What other hope do they have?

2.  Get rich quick with a brilliant business or investment

Many entrepreneurs and investors jump from one thing to the next in a heated pursuit of the next popular idea.  They keep hoping to strike it rich in one brilliant move.  If the money doesn’t come shortly, then they ditch it and move on.

The problem with this strategy is that so much money goes to waste.  There is always a start-up cost or initial investment involved.  However, because this group rarely sticks it out, they generally lose their money.

When I was growing up, my stepdad was one such person.  He was constantly starting a new business hoping to ramp it up and sell it for a fortune.  Obviously, there are people that have made money this way, but I think the failures far outweigh the success stories.

3.  It is impossible so I’m not going to try

It seems some people have given up before they’ve even tried.  They believe it is impossible to create margin enough in their lives to save a dime.  They feel trapped and want to blame everyone else for their failings.

I know it is very difficult to make ends meet for some families today.  However, I also believe those that are stubborn and persistent can get ahead.  It definitely takes time and a lot of work, but for me, I’d rather face the difficulty now so I can retire with some financial security.

I’m not the type to just give up so I have a hard time understanding this mentality.  I’ve seen it and I’ve got people pretty close to me that have adopted this way of thinking, but I still don’t get it.

4.  Slow and steady savings over the long-term

This last group embraces a modest lifestyle, gradually builds their income, lives below their means, invests a regular amount each month, and stays the course for many years.  The ebb and flow of the markets, economy, political environment, and popular opinion rarely effect them greatly.  They are not quick to change their plans.

Some feel like these people make too many sacrifices all their lives.  They think this group is boring and never enjoys anything really nice.  It is said, they are always living for tomorrow instead of today.

In my experience, these are the only people that ever really win financially.  They are the only ones that accumulate any wealth and hang on to to it.  They are the ones you see traveling abroad or driving across the country in a big RV once they are retired.  This is the strategy I’ve chosen and that I continue to promote.

Which strategy are you pursuing right now?

Achieving financial freedom at any age takes discipline and planning.  It takes a commitment.  Which of the strategies above most closely matches what you are doing today with your money?  Do you have a plan?  Are you following it? 

Retirement will be here before you know it.  It is amazing how fast time flies.  It takes years to accumulate enough money to retire comfortably.  It is time to start working earnestly so you can cross the finish line to financial freedom!

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“My attitude is that if the economy’s good for folks from the bottom up, it’s gonna be good for everybody. I think when you spread the wealth around, it’s good for everybody.” ~ Barack Obama

Wealth redistribution is a subject that I just don’t get.  Maybe somebody can explain it to me.  How is it fair to take money from people that have rightfully earned it and give it to others who did nothing for it?  Will this really improve anything?  Apparently, Barack Obama thinks so.

I know that I’m venturing off into dangerous territory here because many will think that I’m slipping off into politics.  I’m really not.  This has nothing to do with Democrats or Republicans.  I really just want to make the point that we are not a socialistic society.  I want to protect our individual right to earn and give our money as we see fit. 

We are empathetic to people’s needs, but the majority in this country have always believed in the basic premise that “if you want to eat, you should work.”  Is it callous and cold-hearted to believe people should pull their own weight?

The government should not redistribute our wealth

Doesn’t it scare you even a little to think that our government could get involved to a larger degree in spreading our money to others?  I mean we already do this in a lot of ways. 

All social programs including social security, unemployment, and welfare collect your money in the form of taxes and then redistribute it to others.  Generally, helping a neighbor down on his luck or that has worked and contributed to the common good his entire life is not a bad thing.  However, doesn’t it seem we have created a whole segment of the population that feels entitled to these benefits now?  I’m not a fan of creating more of the same.

I don’t think we want to pay the 40% plus tax rates that are found in many countries that use the wealth redistribution approach.  This is the way it is in countries like Germany, Belgium and Denmark where they have universal healthcare and many other such programs.  Is this really what we want?

Of course, a large part of our taxes are spent on good things.  The government uses much of our tax dollars to pay for things like roads, the military, law enforcement, etc.  These programs benefit us all and I’m sure we want to continue these.  I’m certainly not against working together for a better country.  Again, I just think we all need to pull our own load.  Is this wrong?

I don’t see why a person that has spent their blood, sweat and tears building up a business over his/her lifetime should now be penalized because they’ve accumulated a nice income and a pile of cash in the bank.  Is my thinking wrong on this?

It is not wrong to be rich!

Where did some people get the idea that it is wrong to accumulate wealth?  The power, influence, and status this country has enjoyed for many years is largely a result of our wealth.  Having the freedom to own land and be rich is a right that we fought to get.

I know that some people have gone wrong and become overly greedy.  I don’t like hearing about CEOs of failing companies getting rich off the deal anymore than anyone else does.  However, we deserve a reminder that people at all economic levels make mistakes and fall to greed.  There is no reason to throw out the baby with the bath water!  There are some very generous rich people out there doing good things with their money.  It isn’t wrong to have wealth or want it, is it?

I don’t understand why some people automatically think negatively of people that have money.  Money is not dirty.  It is not wrong to have it.  Could the problem be envy?  I know I have thought negatively of others just because I was jealous of what they’ve achieved.  Of course, this is no reason that their stuff should be taken from them and given to me.  Do you think rich people deserve some sort of economic penalty for their achievement?

Let’s encourage people to work and build businesses

There is still opportunity in America to work and achieve success.  It is still possible to succeed by starting with hardly anything and without knowing anyone of influence.  It just takes work. 

The problem is that many people do not want to work.  Doesn’t it seem like they’d rather wait for the government to take care of them?  Why should my hard earned money be taken from me via programs that I don’t agree with and given to others that aren’t working?  Will this really lead to a better America?

It seems to me that instead of redistributing wealth, we should be encouraging people to start their own businesses.  We should give breaks to the regular guy that shows up from 9 to 5 everyday of his life and works hard to put food on the table for his family.  This is the majority of America.

We are a country of people that aren’t afraid to work.  We are innovative, resourceful, and proud.  In fact, I hope we are still too proud to take undeserved handouts.  I hope we still believe in an honest day’s wages for an honest day’s work.  I hope we still believe in the freedoms we have fought so hard to get.  No matter who we elect as President, I hope we choose to preserve the opportunities that have made America great!

“If there is anything which it is the duty of the whole people to never entrust to any hands but their own — that thing is the preservation of their own liberties and institutions.” ~ Abraham Lincoln

What am I missing about Senator Obama’s plan to spread the wealth around?

Photo by Simon Davison

This is not as difficult as it seems.  With all the negative press going on concerning the stock market right now, you might feel it is better to keep your money under a mattress rather than investing it.  However, this is simply not true.

The stock market has provided a 10-15% rate of return over the last 80 years.  Of course, this is no guarantee that it will do the same during your investment horizon.  Past performance is not necessarily an indicator of the future.  However, what else do we have to go on?

In order to make money with our investments, we should follow some simple tips. 

I should tell you right now that I am not an investment professional of any kind.  I do not profess any expertise whatsoever with investing.  I am just passing along what I think is some sound advice.  Invest at your own risk!

Practical tips for investing from a layman

I believe in keeping my investment strategy simple.  I’ll admit that seeing my net worth grow is very exciting to me, but the nuts and bolts of investing is not.  If you are an investment geek, then you probably won’t find much to get excited about below.  However, if you are like me, you need simple, practical information to help you grow wealth for retirement.  Here’s what I’ve learned:

1.  Pay off your debts before investing

I’ve already told you why I believe being debt-free is the path to financial success.  You should pour all your financial might into becoming debt-free as soon as possible.  Freedom from debt is the most important step toward building net worth.  Remember, your net worth equals your assets minus your liabilities.  Therefore, it makes sense to eliminate your debt before you start investing your money anywhere else.

2.  Set an investment goal before you begin

It is best to know where you are going before you head out.  By knowing your destination, you can keep the ship on course.  An investment goal will serve as a guide for your investment decisions.  As you invest, questions are going to arise about where you should put your money, how much you need to save each month, and when to make certain changes.  Without an investment goal, you really have no way to answer these questions.

3.  Find someone that will teach you about investing

I highly recommend finding an investment geek that you can trust and that will teach you what you need to know.  An investment geek gets all excited about the ins and outs of the stock market, mutual funds, charts, graphs and reading a prospectus.  Me?  I’d rather be whipped with a rubber hose.  However, I know that it takes expertise to invest smartly.  Find a broker, advisor, counselor, mentor, family member, friend, or neighbor that has a long track record of success in the market to teach you in layman’s terms what you need to know.

4.  Understand your investments before you invest

If you don’t fully understand the investment and how it works, then do not put your money into it, no exceptions.  It doesn’t matter how convinced anyone else is that this is the next big thing.  You want to understand it and be 100% comfortable that you know what you’re getting into before you give your money to anyone.  This is why your financial advisor needs to be a teacher and not a salesman.  There is no reason to hurry.  Take another day and make sure you understand.

5.  Diversify your investments

In the stock market especially, you want to spread your money out across numerous different companies.  The easiest way to do this is by investing in mutual funds.  By investing in a mutual fund, you are, by definition, diversifying your investments.  The fund manager takes your money and everyone else’s and invests it in a collection of stocks according to the fund’s stated objective.  I recommend spreading your money across multiple mutual funds.  This is called asset allocation.

6.  Learn to allocate your assets intelligently

You will generally distribute your money into more than one mutual fund to diversify your portfolio.  This distribution is called asset allocation.  Dave Ramsey recommends investing 25% of your investment dollars into the following types of mutual funds:

• Growth
• Growth & Income
• Aggressive Growth
• International

Over time, you will probably need to look at rebalancing your portfolio to maintain this type of allocation.  This is necessary because you will earn more in certain of these areas for a given period of time.

7.  Take advantage of matching funds in 401k

Many employers offer a 401k plan so you can invest pre-tax money for retirement.  Usually, the employer agrees to match whatever funds you invest up to a certain amount.  For instance, your employer may match your investments in your 401k up to 4% of your annual salary.  This is free money.  You should seriously consider participating in the 401k plan to take advantage of these matching funds.  Also, do not forget to rollover your 401k when you change employers!

8.  Keep a long-term mindset when investing

Investments in mutual funds and the stock market in general should be thought of as long-term investments.  This means that you should only invest money that you won’t need in the form of cash for five years or more.  Also, you shouldn’t worry about fluctuations in the market.  You only realize an actual loss when you sell at a low point in the market.  If you leave your money in, then your investment balance will go back up when the market recovers.  Trying to time the market is a losing proposition.

Basic investment tips that work when followed

These are basic tips for investing to build wealth.  However as with most things, if you get the fundamentals right, then you are 90% there.  Most people that have any wealth will agree with the majority of these tips.  I encourage you to research this further on your own.  You are the only one responsible for your financial well-being.  Take charge and make your goals happen!

What’s the best piece of investing advice that you ever received?

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Money is the root of many good things in our lives.

It seems strange that a need exists to convince people that they need to be more financially responsible, but you don’t have to look far to find someone that has created a personal finance nightmare.  There are three basic components to a sound financial strategy that will ensure you have money to live a nice lifestyle.  They are:

1. Earn a good income.
2. Control the money you have.
3. Make sound investments.

If you are failing in any one of these areas, then you will most likely face some rough financial times ahead.  Maybe you’re already struggling.  The good news is that it isn’t that difficult to get things headed in the right direction.  I’ll share more on that in a minute, but first let’s back up and examine why we should be motivated to be more responsible.

The ways that money defines your life.

I think it is valuable that we review why money is important to us.  If we aren’t being financially responsible in the three areas listed above, then maybe its because we haven’t stopped to examine what money really buys us.  Maybe we don’t realize the extent to which money defines our life.

1.  Money defines our level of freedom.

The more money that you have the freer you are to live your life the way you desire.  Money opens up a wealth of freedom like travel, leisure, and choice of occupation.  If you aren’t strapped for cash, then you can take time off, go on awesome adventures, and pursue the job of your dreams.  Being financially responsible creates margin in our lives to make our own choices.  These things are possible if you choose to be financially responsible.

2.  Money defines our emotional well-being.

Having a pile of cash gives one a sense of security.  When you have money, you can relax and rest a little easier because you know that you have the resources available to deal with most situations that arise in life.  There is usually less stress in life when you have adequate financial means.  You don’t have to worry as much about things like paying the bills, meeting your kids expectations, and how high gas prices are getting.  Money affords you an easier life.

3.  Money defines our physical well-being.

Many believe that those with more money enjoy better health and live longer.  This could be for any number of reasons.  For instance, with money a person can afford better health insurance and healthcare.  The best doctors are often only available to those with the right kinds of coverage and money to pay for what insurance doesn’t cover.  Also, as discussed above, people with more abundance often suffer from less stress which is a major contributor to all kinds of health issues.

4.  Money defines our power.

It is no secret that money talks.  It often greases the wheels of getting things done.  This is true at the highest level of government down to getting something fixed in your home.  If you have money, it is likely that you are going to get faster, better service from everyone.  Some might think that this isn’t fair and it may not be, but it is reality.  Money gives you power to get your way more often.

5.  Money defines our social life.

Your level of wealth determines where you live and who you associate with.  It is impossible for someone of lower means to hang out much with people of a higher means.  You can’t afford to go to the same places and do the same things.  You can’t live in the same neighborhoods, wear the same clothes, or drive the same cars.  You can’t go to the same restaurants, frequent the same establishments, or go on the same vacations.  Generally, your social network is going to consist mainly of those with about the same financial habits that you have. 

6.  Money defines our wealth.

This may seem obvious, but let me expand the thought for a moment.  Most would agree that, the more money you have the easier it is to get.  It takes money to make money.  If you are a poor earner and bad manager of what you do have, then it isn’t likely you will have any money to invest in ways to build wealth.  This prohibits you from getting your money working for you.  On the other hand, those with money often make more money with little to no physical effort on their part.  They can invest to earn interest and dividends.  They can also hire others to do the labor.  Money breeds money.  You need more to have more.

Choose to have more money and change your life.

As you can see, poor financial habits may limit you in a number of ways.  It is time to decide to do better.  You want a better life, right?  So, why not get it?  It really is a choice you can make.  You may not think it is possible, but there are many people that would tell you different.  In fact, if you think you can’t get ahead, then I would highly recommend reading Larry Winget’s book titled, You’re Broke Because You Want to Be: How to Stop Getting By and Start Getting Ahead.  This is the book that inspired me to write this article.  It is a quick and easy read that could change your life.

Once you have decided to get more money and get ahead financially, then I would suggest reading the following to get started in the right direction.

7-Day Turnaround- That’s a Wrap – An excellent series of articles on how to change your family’s financial destiny.

Dave Ramsey’s 7 Baby Steps – If you aren’t familiar with Dave Ramsey, then my advice is to read this.  I am about 75% of the way through Baby Step 3.  I am convinced that this is a great methodology to start getting ahead with money.

There’s No Shame In Not Being Able To Afford It – Often our problem with money stems from our ego.  We have to decide that being more successful with money is our top priority.  You should read this to help adjust your attitude.

Borrow, Barter, Buy Used- Espousing The Frugal Lifestyle – Again, it is all about how bad you want it.  If you are serious, then this article will help get you started in cutting back on your lifestyle so you can create margin in your life.

40+ Alternative Income Ideas and Resources – Get busy and earn more money!  Here are a plethora of ideas for how to do so.

Plan Ahead- 6 Steps to Secure Your Financial Future – Successful planning is essential to being wise with your money.  You do have a plan don’t you?

Everyman’s Guide to Increasing Income – Dave Ramsey says,
“Your income is your best wealth building tool.”  In fact, it really is your only wealth building tool.  Forget about winning the lottery and get busy!

25 of the best books about money – Read everything you can get your hands on about be more wise with money.  Here’s an excellent list to get you started.

You CAN Get Out of Debt! – It’s true!  If you don’t believe me, then read this for a second opinion.  Make the decision to be free today.

7 Solid Tips For Living Debt Free – Make a decision to get debt free and then read these tips to help you along the way.

How will money define your life?

Okay, I’ve told you how money defines your life which hopefully has convinced you to earn more and manage it wisely.  I’ve also provided you with an incredible list of reading material that will send you off in the right direction.  All that is left is for you to make the decision that you want to get ahead with money.  What legacy will you leave?

Photos by erikogan and E.Al-Sheikh

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Here’s the reality check for getting ahead in life.

Are you doing what it takes to get ahead?  Our behavior defines who we are.  We can learn a lot about ourselves simply by looking honestly at how we act.  For instance, if you want to see what you value, then look at where you are spending your money.  It doesn’t matter what you say is important, it is the results in your life that count.  Your actions have to reflect your words if you really want to make progress.  Here’s a list of questions to ask yourself as a reality check. 

1.  Is your house clean?

A clean house is a reflection of an organized life.  Is there a sink full of dirty dishes at your house?  What do your closets and garage look like?  Does everything have its place or are things strung all about?  If you are a slob at home, then you probably aren’t paying attention to other details in your life that are important to succeeding.  I know that this is not the end all, be all, but it is an indicator.

2.  How much television have you watched this week?

I have watched TV and I know that there are very, very few programs on that are going to help you get ahead in life.  Get out of in front of the television!  It will rot your mind.  Instead, use this time more productively to work toward your goals.  Use this time to learn something new, produce more income, or build valuable relationships.  If you need more reasons for watching less TV, then I highly recommend reading Twelve Reasons to Turn off the Television.

3.  Are you overweight and out of shape?

Ouch!  This one may hurt a little, but if you aren’t taking care of yourself, then it is probably safe to say, that you don’t have the discipline you need to get ahead.  Take an honest look at yourself.  Are you fit and healthy or do you get winded from simply walking up a flight of stairs?  We all know the health risks of obesity and lack of exercise.  If you aren’t taking the proper action to protect your health, then this is probably evidence that you need to work on your self-discipline.  If you need more motivation, then check out 10 Reasons to Work Out That Have Nothing to Do With a Sexy Bod.

4.  When was the last time that you read a non-fiction book?

Do you read regularly?  Successful people are continual learners.  Pick up a book and learn something new today that will help you get ahead.  There are so many great books to read.  You can learn practically anything by simply going to the library and checking out a book on the subject.  It won’t cost you anything other than a few hours of your time and it may help you to develop a new attitude, skill, or some additional knowledge to be more successful. 

5.  Have you created a budget to manage your finances?

You will never get ahead financially until you get control of your money.  Would you think your employer was responsible if they ran their business like you run your household?  It really isn’t any different.  You have to be intentional with your money if you ever expect to get and stay wealthy.  It doesn’t matter how much money you make, if you don’t manage it properly, then you won’t get ahead.  Just look at all the athletes and movie stars that make tons of money and yet still wind up broke.

6.  What did you do last Saturday night?

How do you spend your weekends?  Do you have a case of self-induced flu on Sunday morning?  Do you spend all weekend recovering from Friday night?  This is not healthy or productive.  Again, if this is your lifestyle, then you haven’t really made the decision and committed yourself to getting ahead.  It takes discipline and hard work to really make the kind of accomplishments necessary to be successful.  There are no shortcuts!

7.  Who are your friends?

The old saying that birds of a feather flock together is true.  Look around at the people you hang out with.  They are probably a pretty good reflection of who you are.  Are they career minded or do they constantly bash their employer?  Would you say that your friends are smart with money?  If you were or are an employer, would you hire your friends?  You might need to find some new influences in your life if you truly want to get ahead.

8.  What is the condition of your relationships?

How’s your marriage?  Do you get along with your spouse?  How about your kids?  Loving and nurturing relationships are very important to our emotional well-being.  If we aren’t taking the proper action to develop and maintain these vital connections, then we are probably less effective in other areas of our lives.  If you have a trail of ex-spouses or even ex-boyfriends/girlfriends a mile long, then you probably need to take a hard look at yourself.  As much as we would like to believe differently, I doubt they were the cause of the problems in every one of these situations.

9.  Do you pay your bills on time?

Paying your bills is a matter of integrity.  You owe the money and you agreed to pay it.  If you aren’t doing so, then you have an integrity issue.  This is why employers and others check people’s credit histories before hiring them.  If you aren’t paying what you owe, how do you expect to get ahead?  Get a second job!  Swallow your pride, get a job delivering pizzas, and get your bills paid!  Oh yeah, get on a budget!

10.  When was the last time you donated money to a good cause?

Truly successful and prosperous people are empathetic to the needs of others.  They get involved in their communities.  They give their time, money, and influence to help good causes.  There are a ton of ways to do this.  I have written about virtual volunteering and microloans which are both excellent ways to make a difference.  If you aren’t helping others, then it is likely that you aren’t getting the assistance and support you need to get ahead.

The value of a reality check.

Have you ever noticed that we judge ourselves by our intentions, but we judge others by their actions?  We are often way too easy on ourselves.  Did this reality check produce an emotional response in you?  What made you mad?  Where did you feel your defenses rising?  This is probably exactly where you need to take a second look at yourself.  I’m not trying to push your buttons, but I do want you to be successful and live life to the fullest.  They only way this is going to happen is if you are brutally honest with yourself. 

Where do you need to improve to get ahead?  Please leave me a comment and let me know.

Photos by Melting Mama and moron noodle