Tuesday, 10 December 2019

How Much Is Your Car Payment Really Costing You?

Car Loan

America is the richest country that the world has ever known and yet nearly half of its citizens are living paycheck to paycheck and according to recent studies, 61% of Americans don't have enough savings to last 6 months without a paycheck. 

Why is that the case?

It's been almost a decade since the great recession and yet almost half of Americans are still living paycheck to paycheck. And I think a large part of it is because of our money habits. Financial education in this country is lacking, to say the least. It's not something that's taught in schools, and unfortunately for most of us, it's not something that we can learn at home either. Because what are our parents going to teach us?

If half of them are living paycheck to paycheck and 61% don't have enough money to last 6 months without a job, are the lesson that they're teaching us actually going to benefit us? And the unfortunate answer in most cases is no. We're going to learn the same lessons that our parents learned about money. The same lessons that most of society has learned about money. And those lessons are backward.

Car Loan

Things such as you're always going to have a car payment is something that's just accepted in society today as fact. And I'm here to tell you today that it's not, and I can say that from personal experience I do not come from wealth, my parents never had a lot of money when I was growing up. In fact a trip once a year was considered a treat. 

However I was lucky enough to have a father that studied finance religiously, and while he did pass away before he was able to put his ideas into practice long enough to gain wealth he did have enough time to pass those lessons on to me. As a result, I've never had a car payment. I don't have student loans. I've never owned a credit card. In fact, I do not owe a single penny to anybody. And that's one of the greatest feelings in the world.

You don't know how much stress your debt is putting on your shoulders until it's gone. And I've been able to experience it because my dad made me realize just how impactful those payments are in the long run.

Today I want to pass that knowledge on to you so that you too can experience the relief of being debt-free. 

Today we're going to be talking about debt. Most specifically we're going to be talking about just how much that car payment is really costing you.

Read: How Much Car Can I Afford | 20/4/10 Budget Rule


Average Car Payment: $500 Per Month

  • Average Length Of Loan: 68 Months
  • Average Time Between
  • New Car Purchases: 71 Months.

According to a study done Experian the average car payment today in American is about $500, $503 to be exact and what's worse is the car loan on average lasts about 68 months or a little over 5½ years. And what's more according to AutoTrader the average person only keeps a new car for 71 months, or just to shade under 6 years.

This basically means that as soon as we're getting ready to make that last payment on a car loan we're also almost simultaneously getting ready to sign a new one. And again this is normal in America. So that answers the title question of the article, how much is that car payment really costing you? And I think the best way to illustrate this is with an example.


Car Loan

Let's say that John financed his first car at 18, he had a car loan that cost $500 a month. He like most Americans will have a car loan for the rest of his life. But how much is this going to cost them in the long run?

Well, according to what I found out, on average at least over the last 40-years the market has returned about 8.6% per year. $500 at 8.6% per year for 40-years is $1,906,776.89. Now that's what the typical financial Guru will tell you and it's great because that kind of money is a very effective tool into getting you to rethink the value of a car loan.

However it is a little bit too simplistic for me, so let's see the other side of the coin.

Let's assume that in the previous example even after paying his car loan John still had about $500 a month to invest meaning after 40 years he would have a nest egg of about 1.9 million dollars.

Car loan

  • $5,000 For First Car.
  • $20,000 For Each New Car Purchase.

On the other side, we have Jane who buys her first car with cash and does the same for every new car that she gets. In other words, she will never have a car payment. Now she's also getting her first car at 18 it's probably not a brand new one, we'll assume that she saved her money from her part-time job after school and bought a used car for say $5,000.

Once she has a full-time job I'm going to assume that every new car she gets will be a $20,000 purchase. Assuming she makes the same amount of money as john, will Jane end up with more money in her nest egg by buying her $20,000 cars with cash every 7 years but then investing the extra money she has in her pocket by not having a car payment over the course of 40 years? The answer is as it turns out absolutely yes.

She will have way more than John, in fact, her ending net worth after 40 years will be $3,229,066.54! That's almost 70% more than John. 

Even if you were to say that in the years that Jane bought the car she didn't invest anything because she used all her spare cash to pay for the new car, she would still end with a 40-year net worth of 2,835,972.02! Still nearly a million dollars higher than John.

Even if you were to say that she bought more expensive cars, say instead of a $20,000 car every 7 years she bought a $40,000 car every 7 years. She would still end up with a net worth of $2,232,696.20! Still over $300,000 more than John. And that is the power of being debt-free.



Hopefully you got some value from this article.

Monday, 9 December 2019

8 Side Hustles Ideas To $8,000 A Month

Side Hustles Ideas

In today's article I'm going to share with you 8 different side hustles that you can do, most of these are at any age if there are any particular requirements I will leave that on this page. but I don't want you to feel you're not capable of doing any of these things, you don't need a degree for any of these side hustle, you just have to desire to learn new skills and put yourself out there.

None of these things are going to be easy and I want you to know that if you want to reach a certain level in your life, you have to put the work in. Literally, if you put the work in and dedicate time and invest time into yourself and create a different side hustle, you will reach the goals that you want to reach.

I commend you to try at least 3 different side hustles from this article. A lot of this side hustle are things that you can do in your own free time so if you cut out the time that you're watching Netflix, the time that you're playing a game, etc. And put the time in for yourself, you will be able to reach the next level that you want to reach.

Let Get Started



1. Youtube Ad Revenue

This is an amazing side hustle because there are so many different things that can do on youtube. Youtube is an amazing source of income and Youtube is so diverse, literally, you could go on Youtube and make videos on anything that you have a passion for. There are people that make gaming videos, movie reviews or people that do relationship vlogs, college vlogs, business vlogs.

There are so many different Youtube video ideas that you can do. You can make videos on stuff that you like watching videos on, you can create youtube channel on anything that you find interesting, there are so many different audiences on Youtube and you'll be surprised at how many people will love what you decide to film.

My brother started his youtube channel using his iPhone 6, that just goes to show that you don't need a $500 camera, you don't need a lighting system, final cut Pro, any of that stuff, to be successful on Youtube. Because my brother was filming on his iPhone, editing on his iPhone when he first started.


2. Started A Business

You don't need much to start a business but you definitely have to put some money inside so you can mix and match some of these side hustles and start something, save some of the money to start a business or start a youtube channel and save some of that money to start a business or any of the other side hustles.

But you do want to invest in yourself and I feel like starting a business is honestly one of the best ways. You can sell something that you love, even if there's anything that you're consistently buying, something that you buy every year, something that you genuinely love, you can sell it, but figure out how you're able to mass-produce it and sell it on your own website.


3. Teach A skill

There are so many different things that you can do, all you have to do is be willing to learn a new skill so you are able to master it and then obviously sell your services in the future. Aside from learning a new skill, you can teach people skills. Anything that you were able to learn you can then teach. I basically teaching somebody a skill for however much you decide to charge them for and I think that's an amazing side hustle.

That's what I'm doing as well, I learned how to started a business, I was able to be proficient in it I've made a lot of money and I feel like I'm in the position to be able to teach people and now I'm able to sell my services and make money on the side from doing that as well, so that's going to be another side hustle for me.


4. Forex Trading

I know there's been a lot of skepticism behind Forex but it's definitely very legit, it's become very popular recently because of the different income streams that are underneath forex right now. 

There are multiple different ways to make money off of forex trading depending on how you go about it. I don't want to tell you that forex is easy because it's not, it's definitely a skill that you have to learn and it takes years for people to master. 


5. Delivery Services

If you have a car you have so much access to different ways to make money, there're upbeat, doordash, there's amazon flex you're able to go amazon warehouse and deliver stuff that is in your area. 

If you know uber eats or doordash, you basically pick up meals from different restaurants and send it to people that order their meals on uber eat or doordash, and you just deliver to their house. I like this idea better than uber itself because you don't have to have somebody in your car, you don't really have to interact with people as much, you later just pick up the food, drop it off to its location and that's it.


6. Social Media Marketing Agency

This has become very popular as social media has become very important in business structures. You can set up your own social media marketing agency where you basically just go to local businesses around you and help them with their social media, and businesses set aside money for stuff like this.

Businesses have a set amount of money that they use for Facebook ads, Instagram ads, just taking pictures for their social media and posting it and making sure that you generate an audience towards their social media pages and you can get paid for that. 

I will not say it's easy it's definitely something that you have to take time out to learn, but you don't have to go to school for this, you can learn a lot of this stuff online on how to generate sales from ads on Facebook and Instagram. This can help you with your own business. For example, you can go to local pizzeria, local gym, any local businesses and offer to help them with their social media pages and they'll pay you thousands of dollars.

A lot of these businesses have a lot of money to spend on social media and it might not seem like it's a hard task for you because you're on social medial probably every day, but a lot of these businesses are run by older people that are not as proficient on social media. 


7. Q Kids

teaching kids online on how to speak English, and it's not hard there are kids in different countries that are trying to learn English and they pay you $18 an hour, $12 an hour, that's if you're willing to sacrifice specific times for a certain amount of money. If you're interested you can set your own time, you can say that you're only free on these weekends and schedule in between your class schedules, in between your work schedules, and that'll just give you extra money on the side every week. And I know that do pay weekly which is really good.


8. Transcriptionist

This is where a company will pay you or an organization will pay you to just type things out. You listen to an audio or video file and you'll just be required to type out everything you hear. It might be a tedious task for people that don't enjoy typing but it's definitely a very good income stream.



Those side hustles are not really difficult if you put some hard work into it, and to be honest, I have done some of this side hustle in the past and I'm still doing some of them right now. 

Tuesday, 3 December 2019

Investing Mistakes Beginners Make In The Stock Market

Stock Market

I'm going to share 6 investing mistakes that people are making that can end up costing you thousands of dollars and sadly these are mistakes that many people can end up falling into. I've made many of these mistakes in the past and it's important to understand how these work and how you can prevent these so that you can save a lot of money in the process.


Let's Get Started


1. Trusting Experts Too Much

We're talking about stock markets gurus, people on forums, even people who have Youtube channels. Who is telling you to buy this stock or sell this stock, I think that's something you want to be very careful of. If you see in the news that Warren Buffett is buying American Airlines or he's buying Southwest Airlines Stock or he's selling Apple stock, you shouldn't necessarily be buying or selling something just because a very good investor at the top is doing that as well.

Because in some cases they can be wrong and they might have a winning track record, but you really want to think for yourself and try not to follow the crowd too much, but rather make sure you are able to understand the logic behind it rather than just following other people.


2. Timing The Market

The problem comes in when people trying to time the market too much to the point where they end up missing out because they end up never investing. They say well, it's 2012, we had a recession a few years ago but I'm worried that we're going to enter another recession so I'm going to wait, I'm going to wait until the market goes down further and then I'll start investing. And then 2013 happens they say the same thing, 2014, 2015, 2016, we're all the way up in 2019 almost 2020 and people are still holding up waiting to invest in the market for the perfect time. Which is very difficult to actually predict. 

You also want to understand that regardless of where the economy is at the moment, there are going to be companies that are performing very well and companies that are not doing very well. Try to find companies that are valuable, that are within this mix and it's getting more difficult to do that as the markets are rising but they still do exist, you can find an undervalued company in any market and that is really the key to finding success. 


3. Speculation

Let's talk about one of the first mistakes that so many people make and this is a very common, this is something that I was susceptible to when I first started investing and it was essentially not understanding the difference between gambling versus investing.

I think a lot of people when they start and maybe this isn't you but I know for myself when I started investing, I was really speculating rather than making logical investments based off the statistics and based off of numbers but rather looking at my emotions thinking about how much money I could make in thinking about the hype of a certain product, stock or a company that you might be investing into.

That's one of the first tips there, to make sure that you understand the difference between speculation and investing. The whole purpose of investing is to minimize as much risk as possible while at the same time maximizing as much return as possible. that's the whole point of that.


4. Too Much Risk

Investing money that you can not afford to lose. This is incredibly important and I have to say I'm not a financial advisor here this is just free information so you need to make sure that you're doing your own research, but investing money that you can't afford to lose. This is a very terrible mistake that so many people are making, what we're talking about here is either you're borrowing money to invest in the stock market because you think you can make a lot of money which maybe you can, but in some cases, you might not. 

If you're borrowing money from someone else so that you can invest, that's a terrible decision in most cases, you should not be investing the money that you need for next month's rent, that you absolutely need to pay your bills, you shouldn't be investing that money all of it into the stock market thinking that you can double that money and the pay off your rent in the future or pay off your credit card bills with the money that you're investing.

If you have a lot of debt, if you're swamped in the high-interest debt like credit card debt or personal loans, anything in the double digits in terms of interest rates, then you might want to consider paying that all first or at least getting a hold on that before you start investing into the markets.

I think that's one of the worst positions that people can get in, once they start to find themselves in debt they say what's a great way to get out of this maybe I can invest into penny stock or invest into hot stocks and then I can take this money from the stock market that I make and then pay off my debt.

That is not a good plan it's almost always going to be putting you in not only a very stressful position but something that can end up really hurting you in the long run. So make sure you are limiting risk to maximize your reward by not investing too much money that you cannot afford to lose.

If you've already got your expense covered, if you're able to pay for your rent, you're able to pay for your electricity bill and your car payment and maybe some of your credit card payments and you want to start investing in the stock market then that can be a great option.


5. Waiting To Invest

A mistake that people make which is that they end up waiting far too long to start investing in the markets. We just said that you want to be careful that you're not investing money that you cannot afford to lose. but I also want to mention that I think it's important for everyone if you are interested in growing wealth over your lifetime to consider getting your feet wet in the markets even if you do find yourself in a position where you don't have a lot of money at the moment.

Even if you do have some debt I think it's a great idea to get your feet wet, and we're talking about $5 a week, $10 a week invested into the markets so that you can get a better understanding. Because one of the best ways to learn about investing whether you're investing in bonds, CDs, stock market, or real estate, one of the best ways to do this besides reading books and learning free information like this article, is to have the experience.


  • Try things possibly fail, possibly win, but end up over the long term gaining a lot of wisdom when it comes to the markets. The longer you are investing, the more you learn, the more mistakes you make, but then the more you learn from those mistakes and you don't make them again, and it makes you a much better investor from what we've found. That's something you do want to consider, just getting started very small.

6. Paying Too Many Fees For Investing

Back in the day you used to call up your stock broker and say hey I want to sell, I want to buy or go into your financial institution to buy and sell stocks, or investment or mutual funds then it comes changed to etrade or TD Ameritrade when you may be paying $10 for every time you're buying or selling stocks. But now we've entered sort of this new phase where investing should be free in terms of fees. 

If you're paying too much in fees look at how much you're paying not only with buying and selling stocks or ETFs or mutual funds but also look at these rates that you're paying for these mutual funds or ETF, there's something called an expense ratio on these different funds so you might see something where it costs you 1% or ½% for someone to manage this fund for you, we're talking specifically about mutual funds, ETFs and index funds, might have some type of expense ratio or fee that they might have on there, a management fee.

Try not to pay too much I really don't like to have expense ratios or those management fees anywhere above a quarter percent, half a percent, obviously there are some funds that do take a lot effort, a lot more work going into them actively managed so they could require higher fees, but generally speaking I really try to avoid as many fees as possible when it comes to investing.


Hopefully, you got some value at of this

Thursday, 28 November 2019

6 Places Your Money Needs To Go | Money Saving Tips

Money Saving Tips

This is going to be an all-inclusive article showing you the 6 places that you may want to consider putting your money after you get paid. Most people can't get past step number 2 but if you follow along and implement all 6 of these different steps then you could find yourself in a much better financial position than you were previously. 


Let's Get Started

It's very important to understand why is it that so many people who are making $50,.000 to $70,000 per year or more, why is it that they're still struggling financially, why is it that they're in large amounts of debt. Is it the economy pitted against them? Is there a massive wealth gap, are we being taxed too much, what's the problem here? It comes down to the number one factor is that most people don't understand how to manage their money. it's not taught in our schools, it's not taught by our parents in most cases because some of our parents are in the same financial pit that other people may end up in. And their kid may end up in it. And hopefully, we can find some value right now in this article.


  • It turns out that about 40% of Americans can't afford to pay a $400 emergency fund expense. Because they're in such a financial hole at the moment in most of their life that they were never able to dig out of that financial hole that they may be in.

Let's talk about the first place where you want to consider putting your money once you get paid.


1. Retirement  Fund

If you're in America, about 70% of visitors on this site live in the United States, you could take advantage of something like a 401k plan that may be offered through your employer. If you don't have 401k plans there are other options as well. But taking money out before you even see your paycheck through something like a 401k could certainly help you build that future that you may be looking for. Because one of the worst things in the world this has been quoted by many people I'm not sure how entirely true it is, but it definitely holds to some truth and that is that the only thing worse than dying is running out of money before you die. 

Like I said, I would much rather be alive than dead, but still, at that, you want to think about the idea of running out of money before you die. It's certainly a depressing idea, it happens to people it's really sad to see and you don't want that to happen to you. Even if you're in your 20s right now and you think well, I'm not going to retire for another 40 years what's the point in saving for retirement, this is the perfect time to do that.

Just putting away 5% to 15% of your money before you even see your paycheck into something like a 401k especially if your employer is offering to match that opportunity then that's something that you may want to consider. Just keep in mind that I'm not a financial advisor and you need to understands that there are risks involved with any financial decision that you make, so any investment that you're going to make there are going to be risks involved and you need to make your own financial decisions as to what you're going to do with this, but this is an idea that a lot of people do take advantage of, but sadly some younger people especially when they first started their jobs they opt out of the 401k, they opt out of some of this pre-tax retirement that they can invest into and they and up really hurting themselves over the long run.

Retirement fund is the first thing you want to consider doing before you even get your paycheck, set it up with your employer, if they don't offer that there are other opportunities especially if you live outside of the United States, your government may have something similar to a 401k plan or investment fund that you can get into.


2. Necessities

When I say necessities we're talking about the bare'bones necessities to keep you off the streets and to keep you alive. We're not talking about a TV, buying Xbox for your nephew for Christmas, we're talking about the basic needs of people.


  • Food
  • Shelter
  • Transportation
  • Healthcare
  • Utilities
  • Electricity
  • Not getting your water shut-off
  • Not getting evicted from your apartment

Depending on where you live, depending on how many kids you have, depending on your current situation, this shouldn't be an excessive amount of money we're talking about the basics here, so paying those is very important to keep yourself alive.


Needs Vs Want

You need to understand your difference between needs and wants. A lot of people can't decide on the difference between those two so you want to consider what you do you need to stay alive and what you do want. Do you need to get McDonald's or could you find a way to lower those expenses for food? 

Healthcare is very important never skimp on health care that's something that I think is something that people will skimp on, they'll skip health insurance, they'll skip going to the doctor's because they want to save some money but that could end up hurting you in the long run.


3. Emergency Fund

  • $2,500
  • Liquid
  • Easily Accessible

Everybody should have an emergency fund regardless of whether you have a million dollars in your bank account or a negative $100,000 to your name. Having an emergency fund is going to be one of the first steps to alleviating some of the financial stress that you may have at the moment. This is going to be a crucial step.

I just put $2,500, this could be $500, $1,000, $10,000, over time it's nice to build this up, a great strategy for doing this is to just start by taking $10 to $40 out of every paycheck and putting it into a separate emergency fund that is very easily accessible. You want to be accessible because this is for situations where it's a true emergency, maybe you don't have any cash on you but you need to get a tooth removed because you're in a lot of pain and you can't focus on anything else because you're in so much pain, that would be an emergency.

Another emergency would be if your car breaks down and you have to use that car to get to work that's an emergency, but nothing else we're not talking about if you have to buy somebody a Christmas gift, we're not talking about if you just feel like going out to eat somewhere or vacations, this is strictly for emergencies and emergencies only.


Liquid And Easily Accessible

You want this to be liquid and easily accessible. Maybe separate savings account or checking account would probably be the best option so you can easily access it very quickly. You can also consider doing it in cash but I wouldn't consider having $2,500 cash laying around, but like I said, you start with a smaller amount of money, start with $500, $1,000 and then build it up over time. Especially if you have a family maybe you want to consider getting this a little bit higher may be closer to $5,000 in case something happens, maybe you have to pay some medical expenses and you have that money on hand. 

Like i said even if you're in debt this is important to have because if you are at the zero dollar mark and you don't have an emergency fund, every time there are a little expenses you have to start digging into more debt to pay off that expenses so just having this is going to be a big help.


4. Paying Off Your Debt

  • Snowball Method
  • Avalanche Method

Once you build that emergency fund, once you start to get a little bit in your feet, here you want to consider how you're going to pay off your debt. There are multiple ways to do this and depending on what type of person you are and depending on how much debt you have there are two different strategies for paying off your debt.

Read: How To Get Out Of Debt Fast - Debt Snowball vs Debt Avalanche

One of them is called the debt snowball method and the other one is the debt avalanche method. 


Snowball Method

For a lot of people who are really struggling financially, they have large amounts of debt and they're struggling to actually stay motivated to pay off this debt then you may want to consider using the debt snowball method. Essentially what this is going to be let's say that you have 5 different types of debt, home mortgage, student loans, personal loans, credit cards, and a car loan. 

What you do with the debt snowball method is you're going to tackle the one that has the lowest balance. Again read this article below

Read: How To Get Out Of Debt Fast - Debt Snowball vs Debt Avalanche


5. 4-8 Months Payroll

  • Online Saving
  • Money Market

I would say probably the most enjoyable step of the entire process and that is by saving up at least 4 to 8 months of payroll. Let me give you an example. 

I try to keep this closer to almost a year full of payroll, but let me give you a story here. 


  • Bill Gates when he started Microsoft he found that he was struggling to please investors, he found that in some cases investors would be putting a lot of pressure on him so what he did is he saved up enough cash, he wanted enough cash in Microsoft. So that he could pay all of his employees for an entire year. He had a year's payroll on hand in cash that he's able to pay all of his employees if the company wasn't making any money.

The reason for this is because he realized that there's going to be times where maybe they put out a product that is not as great as what they thought it would be and maybe they're not pulling in as much money as they thought they would be and they would still be able to pay their employees while doing this. This is something that I learn about and I realized that if you have a job and you're taking that for granted right now because we have a really good economy at the moment, things can go south. Think about the recession that we had about 10 years ago and how many people were losing their jobs unemployment rate almost 10%

Especially if you're an entrepreneur, if you're self-employed then you'll have to understand that there might be times where things go south where maybe your income drops significantly, so having some money in your bank account and not just a regular bank account where you're losing money by putting in a regular bank, we're talking about something that's going to keep up with inflations.


Online Saving

I like to go with something like an online savings account, you can get them for over 2% interest on those and that should essentially keep up with inflation, it's something that is very steady. You don't want to put too much money into this in a lot of cases and once again, you make your own financial decision, you can choose to do this and do not do this. But there is a time where people lose their jobs, there are times where people fall on a hard time and having this is going to give you such peace of mind knowing that if you lose your job today you can live off this money for a year before you even get a new job.


Money Market

You can also consider putting money into a money market account or possible CDs. I'm not a big fan of CDs because they lock your money in there for a certain length of time, you also consider putting this into investments and maybe the stock market, bonds, but this is more stead and it's more predictable.


6. Investing

  • Real Estate
  • Stock Market
  • Bonds
  • Etc

This is how you can truly get your money to work for you, for number 5 talking about money in that bank account that's netting you 2.5% interest that's probably not going to make you rich, it's going to be a nice thing to hold on. But investing is going to potentially make rich as listed above.



Conclusion

After these 6 steps. That is when you can take the money that you have leftover and then spend it on travel, vacations, TVs and different type of entertainment. But only after all 6 of those steps you have to pay yourself first before you can start doing all these other things that you may want to do and this is a problem that I think some people run into with money management.

This is why people who are making $80,000 per year are poor. Because they're not taking these 6 steps but instead all of their money comes into their checking account, they're not tracking it, they're not running a budget, they're not running themselves like a business and they just spend most of it on entertainment, leisure, travel and all kinds of different things that are not necessities and they end up really hurting themselves. 

Pay yourself first, invest money and you might find yourself in a much better financial position for the rest of your life. 

Tuesday, 26 November 2019

How To Negotiate Like A Pro When Buying A Car

How To Negotiate Like A Pro When Buying A Car

Let's talk about how to buy a car and how to get the best possible deal when negotiating for buying a vehicle. Lets be honest, the car buying process for most people it can be stressful, it can be time-consuming and it can be just outright not fun but hopefully, this article can give you some ideas as to how you can get the best possible price for a vehicle and if you've ever walked into a car dealership and gotten the price of a vehicle in a 15-minute span then there's probably a good chance that you aren't getting the best possible deal. It usually takes some time, take some effort in order to negotiate going back and forth to get that perfect price that you're looking for. 

But it's important to realize that the car dealer is trying to make money and you're trying to save money. So we have this conflict of interest and you have to meet somewhere in the middle in most cases. So let's talk about how to actually go through this process of buying a vehicle.


1. Knowledge - Power

This first step is to build some knowledge, gain some knowledge on this vehicle to know how much they're worth. One of the biggest mistakes that so many people make is they walk into a car dealership not knowing the true value of the vehicle that they're looking to buy. 

In 2019 it's never been easier to get this information to know how much a car is going to be worth, so you can go on to something like kelly Bluebook or turecar or a variety of other websites that will give you the value or at least a price estimate of how much a vehicle is worth based off of the made and the model, the year and the mileage on that vehicle, to give you a range of maybe that car is worth between $17,000 and $19,000 you can use that information to bring it into the car dealership and say this is how much these sources are saying that these cars are worth, they might try to discredit them say all those aren't accurate but it's something that you can use to help prove your point and negotiate for getting a better price for a vehicle.


2. 20/4/10 Rule

Something else that you want to do is you want to keep something in mind called the 20/4/10 rule.

Read: How Much Car Can I Afford | 20/4/10 Budget Rule

This is a rule of thumb that is important to at least keep in mind. You don't have to necessarily follow it but you want to be aware of it. So the 20/4/10 rule essentially is you want to be able to at least afford 20% down on a vehicle. If you have no money in your bank account and you're taking advantage of no money down a car loan at a car dealer, that might be a sign that maybe you shouldn't be buying this car, maybe it's too expensive for this vehicle if you can't afford to pay at least 20% down on that vehicle.


  • That doesn't mean that you have to use 20% down, you can buy a car using cash or you could do 0% down but make sure that you have at least enough money that you could afford it theoretically if you wanted to.

The 4 in the 20/4/10 rule stands for 4-year loans so you want to be able to at least afford to be able to pay monthly payments on a 4-year loan. If you have to stretch those loans out to 6-year, 7-year, 8-year loans, maybe 60 month loans or 72 month loans or 84 month loans and you have to stretch it out to be able to afford those monthly payments, then that's also a sign that you're paying too much for this vehicle, maybe you should get not the BMW but maybe you should get the Ford Focus or get a cheaper $15,000 or $10,000 car to suit your needs to get you from point A to point B.

I think a lot of people go for those cars that are just too expensive and out of the rang because they want to look cool or they want something that's a little bit more flashy or can show their neighbors that they're doing very well, when in fact it's actually making you poorer. Because cars are very expensive we've talked about that many times on this site, the true cost of a vehicle is very expensive when you factor in depreciation insurance, wear-and-tear, taxes, a variety of other different expenses on cars it's going to be so expensive.

Read: How Cars Keep You Broke

The 10 in the 20/4/10 rule stands for 10% of your income should be going towards the cost of owning and operating this vehicle. This is just another rule of thumb that you can stick by, so if you are paying $600 in monthly payments for a vehicle when you're only making $3,000 a month, that could be a sign that you're paying too much for this vehicle when you should be getting a cheaper less expensive car.


3. Trade-In Value

If you have a current vehicle at the moment you're thinking about trading it in to buy a new car or a used car at the car dealership. You want to know the value of that vehicle before you walk into the dealer. I want you to do some homework before you even go into a car dealership before you step foot into any car dealership, there are a few things you want to do.

Get some offers on your current vehicle or your trade-in so that you're able to see how much people are actually willing to pay for this vehicle. You can list it as a private sale, maybe see what kind of offers you get on that vehicle.

You could even go into smaller dealerships and say you know what, I have this car I'm willing to sell it, how much are you willing to pay me for it, and they can give you those numbers and once you get those numbers make sure you compile them and bring those numbers, those printout or those papers to the car dealership where you're thinking about buying a car so that when they talk about your trade-in car, you can say you know what, I actually have offers from these other different buyers who are willing to pay $500 or more $1,000 more for this car. So that's a way to call them out and say that this dealership is low balling you when you're trying to use it as a trade-in. That's just another bargaining chip that you can use.


4. Pre-Approved Loan

Before you step foot in a car dealership is you want to make sure that you can get some private lending or go to a bank, your local bank and see what kind of loans you can get through them. Walking in with financing beforehand is going to be such a benefit because this will do one of two things.

It can either save you a lot of headaches from talking to the finance department at a car dealership but also you can actually make them bid against each other and pit them against each other. if you go through the whole car buying process, you talk to the salesman, they're talking to the manager, you get the price that you're looking for, then you talk to the finance department and if they slap you with some high-interest rates, you can say you know what, I actually have a loan offer from the bank down the road that's going to give me a better interest rate so if you can beat that interest rate then I'll consider getting a loan with you. So you're bidding them against each other to get the lowest possible rate. it's a very smart idea in a lot of cases to walk in with pre-approved for a loan from your local bank or some other financial institutions.

This is like playing poker, when you go into the dealership you want to hold your cards close and some of those cards are your trade-in, you don't want to talk about financing as much it's better for them to know less about your trade-in and your pre-approved financing so that you can be focused on getting a better deal for the actual price. of a vehicle.

We have already talked about the four square method

Read: How Car Dealerships Rip You Off



Where the car dealer will talk about the trade-in value of a car, the price, monthly payments, and then the down payment for that vehicle. This is the 4-square method and what they'll do is they'll try to talk about anything except for the price of that vehicle, but what it turns out is that you want to focus on getting that price of that vehicle down so they might try to smudge some monthly payments, they might try to lower those monthly payments or to lower the downpayment, but you really want to focus on the price of that vehicle first.

There are a couple different tactics that you can use but generally speaking you'll probably have to go back and forth between talking to the salesperson then they're going to go back to their sales manager, talk to them and maybe lower the price by a couple hundred dollars and then go back and forth a couple of time. Now, you want to hold your guns and stick to your price as much as possible, what I would say is it usually takes at least two to three times of them going back and forth to get to a price that you're more satisfied with.

If you go in there saying that you want to pay $20,000 for this car that they listed for $23,000, hold your guns make sure that you are able to display some confidence. When you walk in with confidence rather than your head down afraid to speak up if you don't like a price if you don't like something about the car point out and be able to do that. Because knowing that you're afraid to speak, they will throw you around like a rag doll because that's what some dealers will do and no offense to them you know car dealers have to make their money as well.

If you're walking in there timid and afraid and not able to speak up and voice your opinion then you are going to get beat up essentially and end up signing a paper for something that you really didn't want and end up with a car for a price that you weren't satisfied with.


5. Dealership Don't Like To Talk About The Interest Rate

In a lot of cases and this happens to some of my friends they'll ask me if they should buy the vehicle or not and I say well, how much are you paying for the monthly payments and they'll show me the chart and I say how much does the interest rate, in a lot of cases they just don't know and sometimes the dealers won't talk about it, they'll just talk about the monthly payments.

What they'll do if they get you down into the monthly payment area where they're trying to save you some money what happens often is if you say you know what, I can't afford this monthly payment, this 4-year loan for $400 a month, I just can't do it I'd like to get it lower. And they say well, let me see what I can do and they fudged some numbers and the next thing you know you're signing a 7-year, 5-year or 6-year loan of that car for a lower monthly payment 

But if you actually calculated it you're actually sometimes paying more over the long-run for those payments. They're trying to save you money but they're actually making more money off of you so there's something to keep in mind.

What I would consider doing either walk in with a physical calculator with you or have a calculator on your phone so you can calculate those payments and calculate the math for yourself right there.


6. Walk Out If You Can't Afford The Price

When you're negotiating with car dealers there's just going to be times where they're not willing to come down further than a certain price and they're going to hold their ground on it and you for most cases it's going to be because they do need to make some money, they need to make some money off of you and they might not be able to come lower than a certain price and in that case I would suggest walking out especially if it does not meet your needs.

If you're willing to pay $20,000 because you know that the value of that car is $20,000 and they're trying to get $23,000 and they're not coming down further than to $20,500 or $22,000 and you're not happy with that just walk away. You have to go in there knowing that you're willing to walk away. The number of times that I've walked out of car dealerships is kind of ridiculous and it can take a lot of time, it can be time-consuming, but if you can hold your guns you're going to get a better deal over the long run if you're willing to do that and not get bullied around.




Conclusion

The most important thing as I said is to focus on the price of that vehicle nothing else but the price of that vehicle. Then over time you can talk about your trade-in, try not to talk about it at first and if they keep buying you about it just say you know what, you haven't made up your mind yet, you're not quite sure you'd rather just talk about the price first.

Sunday, 24 November 2019

How To Start Investing In Dividend Stocks For Passive Income

How To Start Investing In Dividend Stocks

I'm going to share how you can earn passive income by utilizing something known as dividend investing. Investing in dividend stocks it's something that has been around for quite some time, it's something you can consider taking advantage of in order to earn some extra cash on a monthly basis. We're going to dig into that in this article.

There are two different ways of making passive income. You're putting something upfront to then reap the rewards of it later and you can use time upfront which some people don't have or you can put money upfront to then earn money off of your money, this is how the rich stay rich, they invest money and then make money off of their money.

You don't have to have a lot of money in order to start with this, I started with literally $50 with a dividend investing and have built it up over time. When I started I didn't have a mentor, I didn't have someone to show me how to do it, or teach me how to do it, but I just used free resources online and various different books to learn how to invest into dividend stocks and invest into various companies to then earn money from my money. So you can do this, anybody can do this, it's very possible.

Let's Get Started


What Is Dividend?

It's just a payment that a company is going to give you for owning that company stock. That's the best way to think about it, it's almost like a little bonus or a cash payment that they're going to give you either on a quarterly basis, sometimes on a monthly basis, or even in some cases on an annual basis depending on how they structure it, but they're going to be paying out in cash for you owning that company stock.

I'll give you an example here of how this actually works and how you can take advantage of this.


Why Some Companies Pay Dividend And Other Companies Don't.

If you look at PepsiCo which I'll show you a little bit more in-depth, but if we look at Pepsi they're paying almost about a 3% annual dividend versus amazon, facebook or Netflix, they don't pay a dividend.

Pepsi



Amazon



Some companies pay these cash payments as dividends and all others don't. And the reason for this is because one's generally in the tech sector or companies that believe that they can reinvest this money back into themselves a little bit better, generally won't pay out dividends but rather just take the profits and put it back into R&D or various other things that they can then grow their business faster and hopefully grow their stock faster. Then dividend stocks that are generally more well-established, you'll see them as blue-chip stocks companies that maybe have been around for quite some time but like to pay out to attract new investors with that dividend.

Let's take a look at PepsiCo to give you an example here as to how you can actually take advantage of this. But what I'm using here is just a free resource you can use yahoo finance, it gives you a little bit of information about this company and a nice decent understanding and an overview of this company. You can also go on to the company's website, look at the various other investor relations page just about every company that's traded on the stock market is going to have an investor relation or investor resources page on their website and they're going to have a lot of information on there.

If you ever considering investing in a company, just go on to their company's website or just go on to google and type in investor relations for that company.

Let's take a look at Pepsi here to show you how can you take advantage of dividend investing.



$134 per share for this particular stock, that means if you have $134 of your money invested into Pepsi you could be earning about 2.8% as a dividend payment from that company. About $3.82 in the course of a year as a cash payment to you paid out on a quarterly basis, every 3 months you'd be getting one-fourth of this $3.82.

This might not seem like a lot of money, $3.82 i can barely buy a cheeseburger at faster food place how is this worth it, well, the key here is that you're building this up over time, and what you can do is maybe you only have one share of Pepsi for $134, but over time if you had 10 shares or a 100 shares this could really add up or even a thousand share you can be making thousands of dollars per year in dividend payments that you can then use towards car payments or Netflix subscriptions or various other things that you want to spend money on and it seems to be very sustainable over the long run.

If you are using yahoo finance, just go to the statistic and look a little bit more about their actual dividend and the other financial metrics you can take a look at




But looking at the dividend there are a couple things that you're going to want to be aware of. One of them is the payout ratio this is a very important financial metric that you want to consider when looking at dividend stocks. If you're seeing this number quite high like over 100%, this could be somewhat of a red flag showing that maybe this company isn't able to sustain dividends that they're paying out and this is what I really want to caution on.


Mistake To Avoid When Investing in Dividend

I started young in the stock market nobody was showing me the way so because of that I made a lot of mistakes when I was younger. And one of them was that I was falling into dividend traps and I don't want to see people do this for themself.


  • Dividend traps what can happen is a company might have a very high dividend to attract investors and then either slash that dividend as a new investors come in or just not be able to increase their stock price because they're paying out so much money in dividend payments that they're not able to reinvest back into their own business.

If you're seeing companies that are paying out very high dividends you want to look at the payout ratio, you want to look at their history of paying dividends as well as their stock price because something else you want to consider is you want to look at this company's dividend over their lifetime but also their stock price and factor those two into the equation, for example, company one pays out a 6% dividend, but their company stock is losing 4% per year over the past 10 years, well, your total gain on that might only be about 2% per year because you're getting a high dividend but the company is not growing, it's declining. That's actually not that great.

Then the other company that is paying out a 3% dividend but growing at a 4% rate, so you could be earning 7% on that one with a smaller dividend but the company stock it actually increasing. that's a great example for something like Pepsi they've been increasing over the long run, have been increasing their dividend as well as increasing their stock price in the long run which is something you definitely want to consider. 

Don't just look at the dividend, i sort of think of a dividend payment as a cherry on top, it's not the first thing you want to look at but certainly something that you do want to factor into the equation as to whether you're going to invest into that company or not invest into that particular company.


How Much Money Can You Make With Dividend Investing

What I want you to think about here is let's say that you're earning 3% annually from your dividend payments if you're starting with $50 like myself over the course of a year, the dividend payments you might get like $1. But if you can build this up to $100,000, well, $100,000 3% annually would be about $3,000 which is about $250 a month in cash coming into your pocket that you can then use on various expenses and what's interesting about this is that it's in many cases is quite sustainable.


Word Of Caution

It could be very sustainable but there are times where the market declines will see recessions, there is a time of hard economic, times you want to be very careful of and think about before putting any money into investments. There are risks and you need to be aware of that, but what I personally do is I reinvest the dividends that I get from these companies back into these companies or various other different types of investments and I think this is the key to finding success over the long term

Instead of taking that dividend payment and spending them on your mortgage, car payment, or something else, just reinvesting them back into various other companies or various other different types of investments and that is how you can build wealth over the long term.



Conclusion

Dividend investing, passive income through dividends it's definitely a long-term game it's not something you jump into and get out of in a couple weeks and make a lot of money, it's not going to make you a millionaire overnight, but it's something that could potentially make you a millionaire over your lifetime and it's something that as been proven by millions of people have done this and they've done very well with it. So it's something you want to consider doing. 

How To Budget Your Money (Best Strategy)

How To Budget Your Money

I'm going to share with you how to how to budget your money. How to manage your finances so that you can actually make sure that you're getting ahead in your life financially and that you're not just spending money on things that you don't need, you're not getting into debt, credit card debt which you want to avoid at all costs. Any high-interest debt you want to avoid.

Unfortunately what happens for a lot of people, because they don't have awareness around their finances, and the money that their making and where they're putting it and how they're spending it, they end up living paycheck to paycheck. Whatever comes in goes out. And the problem with that is how can you ever get ahead? How can you have money put aside to save for emergencies, or to save for certain opportunities that might come up? How do you expect to make more money if you can't invest in yourself? In your own knowledge and own skills so that you can make more money in the future.

Because a lot of it is the mindset of a lot of people, they want instant gratification, they just want to spend their money and buy things because it feels good, and a lot of it is the mindset of delaying the gratification.


  • By learning how to manage your money and your spending and to have a budget in place so that you do not overspend. I'm going to share with you a system in this article of how you can make sure you have a budget, but you can allocate your money and finances that is allowing you to achieve your financial goals longterm, but also enjoying your life as well, and improving to be the best that you can be.

Where Your Money Is Coming In From. How Much Money Is Coming In, And How Much Money Is Going Out

That is the first thing you've to be aware of. You've to know your income is, as well as your expenses.

  1. Income
  2. Expense

How To Budget Your Money

You first have to know where you're at. You can never be blind to your finances. And i find that a lot of people, including myself, because I had times in my life where I was broke and I was struggling and I got into credit card debt and the reason why you get into credit card debt, or any kind of debt, oftentimes is because of a lack of awareness and paying attention to these simple things. Your income and expenses, very important. And what happens for a lot of people is, because they know they're racking up debt and they're not tracking things properly, they avoid looking at this because they don't want to confront and face the pain of seeing the reality of being in debt.


  • I know for myself I'd get in those credit card statements every month and I'd avoid looking at it "cause I was like. man I know I'm in debt, I just don't want to know what that number is "cause it's going to overwhelm me, it's going to freak me out, it's going to feel uncomfortable and painful to face that number.

But here's the key here, you have to confront it and when you do you actually feel empowered by it because now you have a target and I'm going to share with you the system that you can get yourself out of that situation and of course get ahead in your life. Confront and have this awareness.

What Are Your Sources Of Income?

When it comes to income you've to know what are your sources of income. That's coming in every single month? And you have to write it down and track it. And what I recommend that you do is to create an Excel spreadsheet or a Google spreadsheet.

Some sort of spreadsheet online, it could be in the cloud, something that you can update on a regular basis, on a weekly basis, and ultimately an overall monthly basis. Very important to set up a system for tracking. 

I want you to go through your bank statement, go through your credit card statement, whatever it is and actually first identify how much money are you receiving on a monthly basis? What are those sources of income? And let's track that and put that in a spreadsheet so that we actually know how much money you have available.


How To Budget Your Money

Let's say you have a job. And you get paid a salary, for simplicity as an example you're bringing in $3,000 per month. That's $36,000 a year.

You have to factor in, if you're getting paid this at a job, most jobs if you're getting paid a salary, then they already deduct certain things like for taxes, maybe it's insurance, maybe a small percent goes to a 401k, retirement account, whatever it is, we have to identify that because otherwise, if you have another source of income, lets say, for example, you don't get paid a salary, but you instead get paid dividends, lets say from investments or stock, or maybe you get paid like a self-employment income. Like you have a business.

We've to know whether or not this amount of money that you're receiving, is tax-free? Because otherwise, you have to factor in, at the end of the year you're going to have to pay taxes on that amount of money, in which case we've to know that plan ahead so that we can take a certain percentage of that for taxes right away. That is an important thing you have to know.

One mistake that I made, when I first started a business when I was 21 years old, I and my business partner, we did not factor in taxes. So whatever amount of money we had come in, $3,000 let's say, we thought, great we can spend $3,000 a month. And sure enough, we did and then at the end of the year when it came to reporting taxes and we then realized that we then owed a couple thousand dollars which we didn't have because we were taking all this money and we were spending it. We didn't factor in the taxes. That is an important thing you have to think about when determining how much money you've got coming in.


What Are Your Expenses?

This is where you're going to have to go through your bank statement and your credit card statements to determine this. Here's one thing that I always recommend. I recommend using credit cards and not using cash. Why?

Because using a credit card is a great way to build your credit rating. the better relationship that you have with these credit card companies and, of course, making sure you're paying off your credit cards every month but that's a way for you to build your credit rating which is going to be beneficial for you in the future if you want to borrow money to start a business, if you want to get mortgage, if you want to to get a car loan or whatever it might be. Building those relationships and your credit rating is very important. So that's why you want to use a credit card.s 

The credit card also allows you to track things a lot better, versus when you're using cash, it's a lot harder for you to track things in a spreadsheet-like what I'm going to show you. And also credit cards can allow you to get points, cashback, sometimes you get air miles, you get little perks and things like that which can be useful, as well.

I use credit cards, but of course, you've to be aware of making sure you do not get into credit card debt. That's the worst kind of debt because that's the kind of debt that's very hard to get out of. When it's a 19% interest rate that's insane. And it's not that you don't want to be in debt, "cause sometimes there's good debt. 

Here's a tip, if you do have credit card debt, look to find another credit card where you could do a balance transfer. So you can transfer the balance you have from one card to another and there are credit cards out there where if you transfer a balance from one card to their card then they actually have, maybe for the first 12 months or the first 18 months they have a 0% interest rate.

That's what I did when I was in credit card debt years ago is I did a balance transfer "cause I was paying such a high-interest rate, moved my balance to another credit card, and that allowed me to pay it off easier because I was able to have a 0% interest rate for a year or 18 months.

Read: What is a Balance Transfer? How Does It Work
             
But expenses, having your credit card statements, bank statement, go through month after month to identify what are your common reoccurring expenses and let's track it, let's confront it, let's know what that is.

How To Budget Your Money


  • Income: $3,600 per month
  • Expenses: $2,536

Let's say your expenses are $2,536, maybe it's more than that because now we get to look at the difference. So the difference is you should have an extra $1,000 available in cash flow every month. 


  • Let's say that you do this and you're like, well Micheal, I'm making $3600, but I'm spending $3,600. Or you're spending more than $3,600. That's not good, now you're getting in debt.

We have two options here. The first option is, and we should be doing both of these simultaneously by the way.


1. Increase Your Income.

You have to make more money. There are many different ways you can do that, get a higher paying job, get a second job, start a business, start an online business. There's a variety of different ways, of course, you can be resourceful and increase this. but you've always had to be looking to increase your income. 


2. Reduce Your Expenses

Increasing your income could take a little bit more time, but the easier and faster way is to decrease your expenses. So how can we cut off expenses? How can we make some sacrifices? And don't be afraid to make sacrifices, I've had to. Because part of getting what you want is knowing what you have to give up in other to have that.

by sacrificing, it might seem like you're giving something up, but you're actually gaining something much greater.


How Can We Reduce Expenses?

How To Budget Your Money

How To Budget Your Money

I can share with you my story. I had a time in my life I was getting in debt, I had to cut out, my rent. I had to move in with my friend and live on his couch, on his futon for 8 months to a year. not easy to do, but I had to make that sacrifice to get myself out of debt. I had to get rid of my car. I was able to replace that with taking the bus, walking, taking a bike to get around. But those are some sacrifices I had to make.

It might not be realistic or attainable for you to do that, but I want you to be creative and think about some things that you could do. 

Let's say that you are in a positive cash flow. Great, you have money to put aside. What do you do with that money? 

Long Term Savings

How much do you want going towards that? 10% of your income. We've to take 10% of this $3,600, that's $60 ideally every single month to go into a long term savings account. You want to build this up until it's about 6 months' worth of your income. 


Emergency. 

That's if shit hits the fan in your life if you lose your job if there's a recession if some horrible medical occurrence happens in your life and need the money for that. You don't touch that money unless it's a rainy day unless it's an emergency. You have to build up that reserve, very important. 


Financial Freedom Account

You've to take 10% to put into this. This is money that you can use to invest, this is money that you can use to start a business. Things that will make you more money to bring up your income. Stock, real estate, bonds, mutual funds, different investments. 


Education.

You have to be improving yourself. You've to be putting money aside to invest in you because you are the most valuable resource that is going to determine how much money you make. You've to develop your own skills, you have to buy books, go to a seminar, go through course, training programs, mentors, and coaches. Always improving to reinvest in yourself.

The best investment you can make is not in stock, is not in real estate, is not in business, but it's in you. So invest in yours. Put money aside for that to take your own education seriously and your own success seriously as well.


Fun

You've yo enjoy yourself as well because if you're just working, making money but you're not rewarding yourself then you're not going to be motivated because part of it is you've had to enjoy some of the money that you're making. Put 10% into fun.


Give. 5%

You can modify all these numbers if you like, but this is a simple model, but giving and contributing is very important to building financial wealth and abundance. Why? Because what it does is it conditions your mind that you are abundant. That there's more than enough. 




Conclusion.

One thing that's important to understand when it comes to budgeting and managing finances, is not the amount that matters, it's the habit. "Cause here's the thing. 

If you can't currently manage the money you already have right now in your life and you're not budgeting, if you make more money but you don't develop this habit and this foundation, you're going to be in trouble. That's why, by the way, you see people that win the lottery, $100 million and then end up back where they started they lose it all "cause they didn't learn how to manage finances.


That's the best strategy for budgeting your money, hopefully, you learn something. Thanks for reading our article.