Financial Stability? OT

[amy_b]

Much good advice already given! Basically, you need one strategy for playing good offense, which is raising your income, and another strategy for playing good defense, which is controlling all your outflow. We are debt free and have a very nice reserve now. HOWEVER, we were on food stamps about 8 years ago, with credit card debt to boot. NOT FUN! Our offense plan was this: we bought a very small OLD house that was VERY cheap and fixed it up with cash only and our own labor. That means I learned how to use a jack hammer myself. We made $30k on that and paid off our credit card and bought another house and fixed it up, making about twice the amount on the next house. These were very inexpensive things we did for the most part (paint, ceramic tile that we did ourselves, etc.). Then we had enough money to buy equipment to start a business and that has generated a good income. Before we had a good income, we had to play EXTREME defense: NOT go out to eat, not buy clothes, not overcommit financially in any way, not borrow money, not buy furniture, drive OLD cars with no payments, etc.

My parents have had a financial "Extreme Makeover" just from getting a REALLY GOOD financial planner. Not one who was trying to sell them 401's and insurance policies, but one who was trying to give them a PLAN to get out of debt and generate a better income. It has really worked well for them! They are now in a MUCH better place.

I think controlling a spendthrift is done by agreeing on a valid plan. If you are 100% committed to the plan, even if the plan will take a long time to execute, it might help you curb the spending urges.

 

[nancy324]

Amy-

Your accomplishments are very impressive! And so are your parents.
I absolutely agree that it's not easy to find a good financial planner, and most of them are just trying to make money off of you. They love to sell annuities, and most people are better off without them. (BTW, I don't think there is a product that can be sold that is called a "401". Must be a typo). Unlike lawyers and accountants, who have a duty to their clients, financial planners have no duty except to themselves. Beware!

I really am impressed by your acomplishments Amy!! Way to go!!

-Nancy

 

[amy_b]

Thanks, Nancy,
The 401's was just a DUH moment. I had our 410k quarterly report papers sitting in front of me. I did mean to say costly annuities instead, or worse ill-advised stock purchases that insure the "financial planner" a tidy profit. Once we started our business, we got a financial advisor and accountant who worked together. I would trust those two men with my very life. I'm not entirely sure how you go about getting a good finance person, but one thing to look for might be one who doesn't work on commission. YOUR best interest should be their number one goal. Our guys have about 10-12 business owners and they bill us hourly, plus we give bonuses to them at the year end (I think we are the only ones who bonus them- that's what they say anyway). We just really appreciate them.

Honestly, I can't believe that is was just 10 years ago when we bought and lived in that dumpy house. You just can't imagine how bad it was! And we had a little baby, too. Making it nice was a great challenge and accomplishment! I think when all my kids are in school, I might do it again, only this time I don't have to live in it while I work on it! I love turning a dump into a beauty! Funny note: We now live in a really nice community and there is couple who just moved in down the street who also lived on our street in our old neighborhood (with the yucky house). They watched our house transform and decided to do the same thing and it worked for them too! We just met them this summer.

 

[Cruncholi]

WOW! Thanks to everyone who responded! I am going to print off all the responses and review them carefully. And, hopefully, put some of the advice into action. I skimmed them through and my first plan of action is to give a smaller wedding gift to the couple whose wedding we are going to later today than what I had planned. Especially since I've only met the bride once!

Thanks again!

 

[markymark157]

I seem to do this a bit different than most. I use my
dividend rewards credit card for every single purchase, no
exceptions. Then we pay it off in full each month, so we never pay a fee.
I make between 1% - 5% on all purchases. I
even pay my phone bill and cable bill with it. I have three
cards and all three pay dividends. I can't think of an easier
way to budget. My wife and I simply agreed on a monthly
budget (including all entertainment) and when the card gets
to that amount, we are finished until the next cycle. In addition
to the money we make, we also have the security of the purchases
being protected by MasterCard and Visa. It's working very well
for us.

The second thing I do, and have done for over 10 years, is
on the 1st of each month, I write down my net worth. Then
I add/subtract from the previous month to see where I'm at.
For me, net worth simply means liquid cash (bank, CD's, mutual
funds, etc, not figuring out what the house is worth and what
is still owed, or the car, etc.) If you aren't saving fast enough,
just lower your monthly budget. Sticking to the budget is the
key for us.