Tuesday, November 29, 2011

How to Get Rich by using Credit Cards

Banks have learned how to get rich by offering credit cards a long time ago.

They basically offer easy credit to almost anyone who can fog a piece of glass. ( as long as they're breathing)
Then they charge a whopping 18% or more interest to those who don't pay off their balance each month.
(which is a large percentage of credit card holders ) Sounds like it should be criminal, doesn't it ?

Even in today's extremely low interest rate environment many cards interest rates remain at this outrageous level. As you can probably tell, I do not have too much good to say about most banks. Anyway, I'll get into that issue at a later time when I have more space.

Banks have been making a fortune on credit cards for years. Did you know that they even charge the merchants (stores, etc ) something like 6% of the purchases on credit cards. They make money no matter what from both ends of the sale. Do you still love your bank ?  Would you like to turn the tables on them ?
I thought you would !
                                                      Turn the Tables on your Bank

Just so you know, by using the following advice your bank will still be making money, just not as much.

How would you like to get an interest free loan from your bank for 30 days or so. I hope you said yes !
That is basically what you will be doing if you follow the three steps below.

1- If you haven't already, apply for one good Credit Card, (VISA or Mastercard) and destroy all of your other store credit cards etc. When choosing a card, try to choose one that will give you some benefits such as purchase points or air miles. This way you get free stuff once in a while just for using your card.

2 - Now, when you purchase anything ( and I mean anything ) use your new card. This should apply to most purchases including groceries and everyday items. At first, you may have a small limit and that's ok. If you go over your limit, simply call the bank and ask to have your limit raised. I have never seen a bank refuse this request yet. They will sometimes even do it without asking.

3 - When you get your credit card statement every month, make sure you pay off the entire balance by the due date. No interest will be charged as long as you pay the entire balance on or before the due date. I would also recommend that you set up a preauthorized payment of the full balance each month. This way you won't accidentally forget the payment. Just make sure you have enough funds in your bank account when the payment is to come out.

That is it. Pretty simple really, but don't make any mistakes (especially in step 3 ) or the bank will win and charge you the whopper interest rate.

You make money in two ways from this. Firstly, up to 30 days free use of the bank's money which you can keep in your account earning you the interest up to the due date on your statement. Secondly, by using your card for everything, you can accumulate points or air miles etc. pretty quickly and get some good stuff for free.

I really do love getting back at the banks ! Maybe you can too !


When making your purchases, don't go overboard. If you don't have the money in the bank or have enough income coming in to cover the costs, don't make the purchase. You should only be making purchases with the card that you could pay cash for. This is not the place to borrow money.

As always, I welcome your comments and requests for future topics.

Friday, November 25, 2011

What Is Life Insurance - Is It Really Needed

Life Insurance is a financial product that has been around for many years. It comes in many shapes and forms and has been sold under many names. How do you know if you need it ?

The purpose of Life Insurance is to pay your beneficiary a specified amount of money in the event of your death. It is needed if you have someone in your life that depends on your employment income to survive. This could be a child, a spouse or even parents in some cases.

If you have a family to support and you do not have a substantial amount of money invested, chances are you should have some life insurance. The amount and type will depend on many factors which should be reviewed by a competent life insurance broker prior to your purchase.

In the past, life insurance has been sold to many individuals who did not have a need for it. For example, new college or university grads were targeted by insurance agents as a new source of long term revenue for them. Do most new college or university grads have a family to support ? Not most of them. Most of them did not need life insurance.

Life insurance is normally something that is sold, not something that most consumers go out and buy. What this means is, insurance companies use various forms of direct marketing techniques to contact individuals and try to persuade them that they need life insurance. Many people do not need life insurance but are persuaded by clever sales techniques that they do. Be aware.

How To Buy Life Insurance if you Have a Need

As a consumer, what you should be doing is taking control of your insurance needs and starting the process of shopping around for the best deal. Do not wait for a sales person to make first contact. You need to look around and compare different products just as you would any other purchase.

Many insurance companies combine a savings element in their policies to use as a lever to make you feel better about buying the product. In most cases it would be better for you to develop your own savings plan, as you have more control over the use of it and what it is invested in.

When shopping around for life insurance, I would recommend in most cases to look at term life policies only. Stay away from any products that have a savings element involved. They generally pay a much higher commission rate for the agents and you know who will be paying that.

Term policies come in varying lengths of time. What this means is your monthly or annual payment (called a premium) will be fixed for the length of the term. Examples are 5 year, 10 year, 20 year etc. Generally the shorter the term, the lower the premium.

If you have a savings plan in place, the amount of insurance you need in the future may be less than what you need today. In this case you may be best to buy the shorter term insurance and review your needs again just prior to the end of the term.

Please use the information here as a guideline only. Find yourself a qualified insurance broker (sells products for more than one company) and have him/her work with you to determine your best life insurance plan.

The main point here is to take control of your own needs and find someone who will work with you and not try to sell you something you don't need.

As always, I welcome your comments and any suggestions for future topics.

Tuesday, November 22, 2011

How to Protect your Wealth - Avoid Financial Fraud and Decepcion

We work hard to build our lives. We work hard to develop a savings and investment plan. We work hard to develop a good income and relationship with our employers.

Why is it then that some of us will fall prey to the underhanded and downright criminal acts of a few fraudsters?

Because we are impatient? Because we are trusting? Because we are unhappy with our current situation?

All of the above.

Society has conditioned us to expect to have everything NOW, therefore we are impatient.
We live in a society where people are generally good and understanding, therefore we are trusting.
Society and the media glorify lives of the wealthy, therefore we we are unhappy with our own lives.

The con artists and fraudsters of the world take advantage of all of these conditions we live in. They prey on our above weaknesses and quite often they are very successful.

How then do we protect ourselves from these attacks ?

First of all, if you are ever approached by a stranger with a good pitch, do not trust them until they have earned your trust. By stranger, I mean anyone you don't know personally. Always tell them you'll think about it and get their contact info. If they don't want to give it to you, you know why. Say goodbye.

Never, ever, ever give your credit card or bank account info over the phone unless you know the company or the person on the other end.. Also, never give out personal data such as your birth date etc. Identity theft is also big business.

Never pay an up front fee to get a prize or service of any kind.  Free vacations have been a big one in the past. They are usually a time share operator trying to peddle their units.

If you are ever in a situation where you feel pressured to buy NOW because the offer will expire, DON"T !
If it is a good deal it will always be there tomorrow. Always walk away and think it through.Quite often you will discover that it wasn't such a good deal after all. Shop around, compare, take control.

Control ! That is the key word. The con artist and fraudster always wants to take control of your money. Don't let them pressure you or persuade you to do anything. You as a consumer should always be initiating
the negotiations to buy anything.

Unfortunately, we live in a world where we cannot trust every individual we encounter. You will find that as your wealth grows, so too will the potential attacks on your wealth. There will always be somebody out there looking for something for nothing. Don't be an easy target. Be careful.

As always, I welcome your comments and suggestions for future topics.

Friday, November 18, 2011

How to Increase Your Savings - 3 Top Money Saving Tips

As mentioned in a previous post about the Golden Rule - Pay Yourself First, it is vital to your financial health that you spend less than you bring home as income. This is by far the easiest and most controllable way to start increasing your wealth.

You are the one who has control over your spending habits. There are many ways that you may be able to reduce your spending without giving up anything. The following are easily the top three.

The first thing you should try to do is shop around before you buy anything. Yes, this includes everything especially consumables such as food etc. Most people could save twenty percent or more on their food budget if they just shopped around. Check the local papers etc for ads from local grocery stores. They generally compete for your business and quite often offer big discounts to get you in their stores. Get to know the prices on everything you consume. You should know if you're getting a good deal or not.

Another important thing to do is avoid impulse buying. Be organized and make a list of all that you need and stick to it. Know what you want to buy before entering the store. Do not let a pushy commissioned sales person add extras to your bill. Normally what they try to push is very profitable for them.

Whenever possible use coupons. Companies issue coupons to try and introduce new products as well as boost consumption of existing products. Take advantage of these situations whenever possible.

By utilizing just these three simple tips you could save a substantial amount of money every month. Remember, anything you can save without sacrificing anything is free money. This free money can be added to your savings without even feeling it.Give it a try and see how it feels.

There are other ways to save money of course, especially on the bigger ticket items such as cars and real estate etc. , however, even these three tips can be used for big ticket items as well ( well maybe not coupons for real estate ).

The biggest thing I want you to take from this posting is " Take Control of your Spending Habits"  Don't let advertising, convenience, or the pushy sales person tell you how to spend your money. Remember, you have 100% control of your money until you sign the check or swipe the card. Be careful or you could be in the "I owe, I owe, off to work I go", crowd.

As always, I welcome your comments and any suggestions for future topics.

Tuesday, November 15, 2011

How to Deal with Debt - The Good the Bad and the Ugly

Debt is something that we all must live with at some time in our lives. For big purchases, most of us will be required to get help to make it happen. Such things as real estate or even a new vehicle etc.are good examples.

Debt can be good, it can be bad or it can be extremely ugly. It all depends on how it is used. Let me explain the different uses for debt and whether they can help or hurt you in your future financial lives.

Let us start with the extremely ugly . High interest loans such as credit cards and loan sharks. Never borrow long term money from these two sources, it's a recipe for disaster. Credit cards are a convenience but can be a huge trap if not used properly. I will be writing about the proper use of credit cards in a future post.

You guessed it, next is the bad debt. Basically any debt that you take on just because you want something NOW and couldn't wait to save for it. In today's society we have been conditioned to believe that we need something right away or else our heads will fall off. Or more commonly because everybody else has one and their heads are still intact. Examples of this kind of debt are lines of credit, special zero percent loans, etc.
Remember when it comes to borrowing money Nothing is FREE No company that I know of is in business to lose money!

Now for the good stuff. Good Debt. Yes, there is such a thing. Borrowing to buy a home for instance is generally good debt. Besides, most of us could never save enough to pay cash for a home. A home, or more generally Real Estate, will tend to rise in value over a long period of time. Many in the US may not believe me on this one right now, but remember I said long term (generally 10,20, or more years). Unless the world falls apart, or your head falls off, I should be right on this one.

Another example of good debt is borrowing to invest in something that pays you an income or that will potentially rise in value over time. Also, with this type of debt, governments will generally allow you to deduct the cost of this debt from your income when calculating your income tax. Another advantage of borrowing money to invest.

Debt can be your friend or it can be your worst enemy. It all depends on how you use it. The secret is to take control of your debt use and don't be convinced by others, even banks, that their loan is the best for you. Remember banks and other businesses are in business for one reason. To Make money. I will be writing about banks more in future postings. Stay Tuned, or your head may fall off. (Where did this come from??)

As always, I welcome your comments and requests for future topics.


Friday, November 11, 2011

How to Protect Yourself - Multiply Your Income Streams

Having just one source of income today could be a recipe for DISASTER ! Do you think that most Wealthy people have just one source of income ? Not likely.

Most people today work at a job full time and have no time to work at a second job etc. However, this is not exactly what I am getting at. Each person has only so much time in a day, that is obvious. Generally, eight hours per day five days a week is considered full time employment. If a person is to take on a second job in their so called spare time, this can add a lot of stress to their life. Also it can make them too tired to function properly in their full time job. I would not recommend this situation to most individuals.

Would it not be much better to find ways to earn income without taking a lot of your time ?  Of course it would. This is called investing !  You simply trade some of your savings for an income. There are many forms of investing but not all of them pay you an income. In fact, some are very risky and you may even lose all of your savings. Remember, if something sounds too good to be true, it usually is.

There are many good sources of investments that will pay you a monthly income, such as stocks, income trusts, reits, and individual rental real estate, to name a few. The trick is to find the ones that will pay you the most income with the least amount of investment dollars and risk.( risk meaning the potential of losing all of your investment dollars).

Each investment you make ( and earn a monthly income from ) is called an income stream. These investments will pay you a monthly income for as long as they keep earning that income from within their structures.The more of these income streams that you can add, the more your monthly income will be.In fact, some day these income streams could even bring in more income than your full time job.

Having these income streams means that your future is much more secure. If you should get laid off from your job, for instance, your income streams could help pay some of your expenses until you find another job.

How you choose these investments that create income streams is up to you. There are many, many choices, however, not all of them are suitable to each individual. Some are far too risky and should only be considered by the seasoned investor who understands the risks. The point here is to be careful, especially when starting out.

Multiple income streams, when chosen properly, will provide years of income and protection for your growing financial life.

As always, I welcome your comments and suggestions for future topics.

Tuesday, November 8, 2011

How to Build an Emergency Reserve

What would you do if you suddenly lost your job? What would you do if you suddenly had a large car expense? How would you cope? Sad to say, but for most they would borrow, borrow, borrow and borrow! Maybe one too many borrows, but you get the point! The point is, most people are not properly prepared for a major financial setback.

What a lot of the the wealthy people do, is draw upon their Emergency Reserve. A much better solution as you won't have to depend on anyone else, including a bank, to help you out.

An Emergency Reserve is simply a sum of money that you set aside just in case of an emergency. This money should be kept in a place that you can access, however, not too easily. Preferably in a bank savings account at a different bank than you use for your everyday spending. And don't ever, ever ever have a bank card set up for this account. This account is for EMERGENCY USE ONLY!!!

If you make this fund too easy to access, you will be tempted to use it for non emergency items. These could include a vacation or a new whatever or what have you. But these items are certainly not emergencies are they?

The amount that you should have set aside in your Emergency Reserve is up to you and will depend on many factors. Factors such as your total net take home pay from work, your cost obligations that you have every month such as rent or mortgage payments and other household bills.etc. What you need to do is make a list of all your monthly obligations and tally them up.

Once you have an idea what your monthly expenses are, you must think of what possible emergencies you could face. If you operate a vehicle, you know that repair bills usually bite you when least expected. Your Emergency Reserve must allow for this. There are many other situations as well, but the single worst one is the loss of your main income source (your job) Be prepared, because it may happen and at any time even when least expected.

A general rule of thumb is to have an amount of between three and six months of your monthly expense obligations set aside as your emergency reserve. At first, this may seem like an awful lot to save, and it is. However, if you start saving now, whatever you have saved when the next emergency arises will be better than having nothing saved at all.

Once you have this fund up to a comfortable level, you will be able to start directing your savings towards your future wealth building goals as I will begin discussing in future posts. Just to clarify, the "pay yourself first" amounts from the previous posts is where the savings for your Emergency Fund will come from. There is no need to save more than that unless you have the extra funds of course.

Your Emergency Fund will become your safety valve so to speak to smooth out the bumps in your financial road ahead. Having this fund will allow you to concentrate your future efforts towards building your income and your wealth.

As always, I welcome your feedback and comments about this and/or other posts. If you have a specific question or concern or have a topic you would like me to cover, please let me know.

Friday, November 4, 2011

The Golden Rule Part Three - Accumulation of Savings

By "Paying Yourself First" or setting aside a set percentage of your take home pay, you will be taking the first and most important step towards building your financial future. As simple as this may sound, it is often the most difficult step towards building future wealth.

As previously mentioned, you may have to give up some of the luxuries that you have become used to enjoying in the past. As the old workout saying goes NO PAIN, NO GAIN ! In today's society, everybody wants everything NOW and they will even go into debt to get it NOW instead of waiting until they can afford it.This step is all about discipline and developing a good savings habit.

Because of the many temptations and distractions of everyday life, it is also imperative that any money you save by "Paying Yourself First" be placed in a separate savings account and never touched. At least never touched until you put those funds to work for you. I will discuss ways to utilize these funds in later posts.

For now, accumulate the savings in a separate savings account, preferably at a separate bank from your daily spending accounts. Also never , ever ever get a bank card for this account ! Don't Touch This ! Leave it alone and let it Grow.

You will from time to time be tempted to use these funds. You will say to yourself "I have the money for this or that" but Don't Touch This  Pretend that it doesn't exist otherwise it won't. !

This concludes my series on The Golden Rule. I hope you enjoyed this topic and please share this advice with all your family and friends. The whole world could use this advise in today's turbulent times. Please send them to this site as there will be much more good stuff to come.

As always, I would appreciate your feedback and comments on any posts and welcome any requests for topics you would like me to cover in the future. Stay tuned for further posts as I intend to post new material every Tuesday and Friday.

Tuesday, November 1, 2011

The Golden Rule Part Two -Needs versus Wants

Further to the previous post, you may be wondering how you can possibly live on less than you do today. Well, the first step you must take is to make a list of all of your needed expenses.

This list could be lengthy given today's high expectation lifestyle. However, really think about what you need to survive. Food - we all need to eat to survive. Clothing - we all need to cover up and keep warm (besides most of us are not super models ) . Shelter - we all need a place to live and call home.

The above needs are traditionally the basics of life and survival. However, in today's global community, I would suggest that there is one more category that qualifies as a need. Communication - we all need to be connected to what is happening in the world in order to thrive financially. Whether this be through internet sites such as Facebook, Twitter, Linkedin,  or other means, communications is vital.

All other categories are considered wants and we can do without them and survive quite well. Of course, we all want to be entertained and pampered occasionally, but some restrictions in these areas would be your best starting point for finding the funds needed to pay yourself first.

For instance, eating out in restaurants is a want, not a need. We can eat at home for much less than dining out every day, etc. Designer clothing is also a want and not a need. Where you live can also be a want and not a need depending on your income level.

Whatever your situation, you should be able to free up 10% of your take home income and pay yourself first. Without this ability, it will be very difficult to get ahead financially and to some day become wealthy. This is where your future must start. Develop the good habit of paying yourself first no matter what happens.

Stay tuned for future posts on related topics. Please leave a comment if there is a particular topic you would like me to cover. I will do my best to include your requests in future posts.