February 28th, 2013

The last day of each month will be reserved for you and your questions. What questions do you have for me when it comes to financial happiness?

8 thoughts on “February 28th, 2013”

  1. Aaron Howard says:

    What’s your system for staying on track with financial goals? in the long run it’s difficult for me to consistently invest in my future. It seems that eventually, there’s a new gadget, vacation or something else that can put me off course.

  2. Mike Finley says:

    I think that is a problem we all deal with Aaron. Here are my solutions. (1) Make saving one of your highest priorities and that means paying yourself first before anyone else by automatically having the money taken out of the bank as soon as the paycheck is received. (2) Write those goals down, make them specific, and if possible, do a month by month plan that helps you reach those goals. (3) Only allow yourself to spend what is left after your savings. After you have saved 20% or more of your paycheck, identify the fun money you have left after all of your bills have been paid. This comes back to the priority issue. (4) Reduce your exposure to advertising (can be hard). Advertising causes us to buy many things on impulse because they are “wonderful.” They really aren’t and we learn that after the immediate high drops in a day or so. (5) Implement the 30 day waiting period to avoid emotional triggers that cause you to buy on impulse. If there is something you desire, hold off 30 days before you buy it. If you still want it after 30 days and you have the money for it, buy it. This little step will reduce many purchases over a years time. Good luck, Aaron and I would certainly recommend Your Money or Your Life, by Vicki Robin and Joe Dominguez. It can change your life. It did for me.

  3. Aaron Howard says:

    How would you approach balancing long term investing in retirement funds vs other non-retirement investments? How would you determine how much you should be saving? What types of passive income should be considered for example rental properties?

  4. Mike Finley says:

    That’s another really good question, Aaron. Modern Portfolio Theory teaches us to evaluate our investments as a collective group rather than each individual entity. So I would focus on making sure each investment I had (company retirement account, Roth IRA, emergency account, taxable stock fund, etc.) fit into my overall asset allocation mix. They should all fit into your overall plan.

    As for saving, 20% of your gross income is my rule. Some people scream bloody murder when I recommend that number, but I can promise you a much brighter financial future filled with freedom if you stick to that number and automatically have it taken out each and every paycheck.

    My advice for real estate and the passive income it can provide is pretty simple. If you are a hands on guy and you enjoy hard assets that you can touch and work on, rental real estate may be the right fit for you. If not, REIT index funds which you can find at Vanguard would be another option (my personal option). Both produce a great deal of yearly income which should continue to grow over time.

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