Let’s Talk Money | Jacob Foos

Some Do, Some Don’t

March 7, 2011 By Jacob Leave a Comment

What does it take to have your own private jet? As Jim Rohn says, some do, some don’t. The ones that don’t make up the common person, while those that do account for just a few individuals. There is nothing wrong with being one of the common ones, as long as you are content to be in the same place you are now, ten years from now.

To live the better life, to take value from every day—you must be a doer. That means learning the skills and disciplines, and practicing and refining them each day. To get you started in the right direction here are a few basic traits of the successful person:

Be an avid reader. All the knowledge in the world is available if you will only pick up a book and read it.
Plan your day before you begin it. With an outline of the day, you will make better use of your time and weed out unproductive habits.
Stay focused on the task at hand. If you’re reading, read. Don’t let your mind wonder to other activities.
Strive for success—in all areas of your life. Be the best worker you can be, be the best spouse you can be, be the best parent, the best friend, the best churchgoer you can be.
Be consistent. You can pour every drop of energy into conserving your money on Tuesday, but if on every other day you decide that eating out for lunch is better than bringing your lunch to work, you will not benefit from financial security, but rather take on the disillusion that you are working toward that security.
Smile. No doubt you can fight your way to the top, stepping on as many backs as it takes, but if you find that once you are up there you are alone, you will not have lived the good life.

Filed Under: Let's Talk Money, Life

Just a Common Man

November 25, 2010 By Jacob Leave a Comment

The lyrics of John Conlee hold more value than just a catchy tune and snapshots of interesting hair styles. The truth is that living a common life is a definite way to a secure financial future. In fact the more simple and low cost lifestyle, the more you can succeed. It is important to steer clear of the urge to take the extravagant life without first being financially independent because while it is nice to cruise around in a Mercedes Benz, it can leave a serious dent in your bank account. What’s worse is that once you buy into the opulent lifestyle, it becomes easy to justify unjustifiable expenses.

As discussed before, the power of compounding is fueled by pinching pennies today so that you won’t need to do clip coupons in retirement (although there is no reason to stop being conservative with your finances). Don’t take this to mean that your life must be dull and unexciting. The key is to not depend on materialistic things to bring you happiness. Instead find something like a rewarding hobby or participate on a sports team, but find ways to keep your expenses down. If you have a passion for reading romance novels then instead of buying each book, take a quick trip down to the library and check it out for free.

If you happen upon some extra money, use it wisely. The most rewarding things to spend money on that will add value to your life are experiences. An adventurous camping trip with your family can give you stories to share and remember for years to come as well as give you time to bond and build stronger relationships.

In what ways could being a common man benefit you?

Filed Under: Let's Talk Money, Life Tagged With: camping, common, conlee, expenses, experiences, finance, happiness, john, life, man, materialistic, money, passion, relationships, rewarding

Homeless Millionaire – Not Just an Oxymoron

November 3, 2010 By Jacob Leave a Comment

5 Reasons why Hobo Joe could be in Better Financial Shape Than You:

It’s unlikely that he pays taxes when someone drops a handful of change in his can.
His monthly expenses are limited to the extra-curricular activities he pursues.
Without a home, Hobo Jo has no place to put a television. No TV means he can’t spend his day watching CNBC and getting emotionally caught up in the drama of financial markets, dropping and adding stocks according to the latest news updates.
Due to the grungy first appearance, financial advisers may decline to take on Hobo Jo as a client. Although this may seem like a downfall, it is actually beneficial to Jo who is now forced to do his own research and have more confidence in his investment choices.
Hopefully Hobo Jo didn’t have to take out a loan for his card board box so he has no worries about being upside down on his mortgage.

Filed Under: Let's Talk Money Tagged With: box, can, cardboard, change, cnbc, finance, hobo, homeless, investment, joe, loan, millionaire, oxymoron, possible, stocks, taxes, television, tv

Lost Your Job, Money, or House? The Winter Always Comes…

October 7, 2010 By Jacob 2 Comments

What is the most important word in the phrase by Jim Rohn, “The winter always comes . . .” For me, it is the word always. At some point in life (actually multiple times throughout life) in one way or another, it will really hit the fan. I am not talking about when you are running late to work, and in the rush of following too closely behind someone, you rear end them. For most people that would not dramatically affect their life.

I am talking about those rare winters when the cold is so bitter and you have to fight to get through to see the beauty of Spring. These are the times when you’re laid off by a company that you devoted 10 years to and now have little to show for it. When you or a family member gets sick and are faced with staggering medical bills. When the banker personally comes to your home and says they are sorry, but they have to take your home.

We all know that these winters exist. We may think, “This could never happen to me” but we must realize that it can, and at some point will happen. It is said that the better we understand something, the less we fear it, because the fear lies in the uncertainty. If we choose to accept future struggles then we can at the same time prepare against them. We can stock up on what we will need to survive the harsh cold, whether it be a reserve of canned goods and firewood, a solid savings account, or a loving relationship with family members.

The most important thing to cling to is that the Winter does not last forever. It is followed by the growing opportunities of Spring and then the hopes of Summer and Fall that lay ahead.

Filed Under: Let's Talk Money, Life Tagged With: always, comes, drama, fall, house, jim, job, life, lost, money, phrase, rohn, seasons, spring, summer, winter

Don’t Let Your Attitude Affect Your Work

September 8, 2010 By Jacob Leave a Comment

In this video, Zig Ziglar explains how much of an impact a person’s attitude affect their work. Use Zig’s advice to improve your attitude at work, as well as at school, and in the community.

By being a more enjoyable person to be around, you will attract success and people who value your positive appreciation for things.

For more insight on attitude, please visit Todd Smith’s blog Little Things Matter and read his three part series “Is Your Attitude Helping or Hurting You?”

Filed Under: Let's Talk Money, Life Tagged With: affect, attitude, positive, video, work, zig ziglar

The Ever Feared Overdraft

September 5, 2010 By Jacob Leave a Comment

I over drafted my account. Oh my!

Please believe me when I say that it was an honest mistake. I placed an order online a week before for a futon for my new apartment. When I checked out for the order, I somehow used the wrong debit card and cost myself a hefty $35 overdraft fee.

What should you do when your account is overdrawn? First of all you should be monitoring your accounts daily so that you will know within a day of when it happens and can quickly correct the problem. A helpful tool is if your bank offers account alerts where they will either call, text, or email you that the account is overdrawn. Knowing that your account is overdrawn will also prevent you from making additional charges and possibly incurring extra fees.

The next step is to not panic. It may shock or stress you at first; just take a deep breath. Being calm and collected will help you think clearer. Next, do whatever it takes, within reason, to put your account back at a positive balance. Hopefully you have money in another account that you can transfer over, or perhaps you have cash that you can deposit into the account.

If you will not be able to obtain the funds necessary within a day or two, this would be a situation where you would pull from your emergency fund (but no more than the amount needed). If you are bottomed out on money, then go down to your bank branch and explain to them your situation. Talking with them will let them know that you are aware of the situation and that you are working to resolve it.

Some people may complain about high overdraft fees. Dave Ramsey, a well known finance guru, suggests that instead of complaining, the person should go down to the bank and apologize to the manager for using money that did not belong to them.

Filed Under: Let's Talk Money Tagged With: account, bank, charge, do, draft, fear, fee, funds, insufficient, over, overdraft, to, what

Dividends, Love at First Sight

September 4, 2010 By Jacob Leave a Comment

I remember the day I first fell in love with dividends. At the time I was 17 years old and I wrote “Dividends!” in a green marker across a page of notes. This was not the first time I heard of the term dividends. In fact, I was already receiving a quarterly dividend payment for my shares in a mutual fund. What happened was that the power and potential for dividends finally dawned on me.

If you are not familiar with a dividend, it works like this: A company decides to provide an incentive to their shareholders, so at set times in the year, (usually quarterly, but occasionally monthly and annually) they take a determined amount of the company’s profit during that period and pay it to each share of the stock.

For example you buy 10 shares of XYZ for $20 a share. XYZ gives a quarterly dividend of $0.25, or 1.25% of the share price, making the total dividend yield for the year equal to $1 per share or 5% of the price of the stock.

The first quarter you receive $2.50 in dividends for your 10 shares. Now here is an important piece to becoming a wealthy person, you should set it up so that the dividend is automatically re-invested into XYZ, giving you now 10.125 shares (assume for this that the price stays at $20/share). Since you have an extra piece of a share, it will be calculated into your next dividend payment, making the second quarter payment $2.53.

Within two quarters, you have experienced what is called compound interest, which is what will make you wealthy over a long period of time.

Dividends can also be beneficial for curbing risk. If the stock drops in price, the dividend can help recuperate that loss by increasing your stake in the company making it easier to reach your portfolio’s previous balance quicker as the stock rises.

Filed Under: Let's Talk Money Tagged With: company, compound, dividends, interest, love, mutual fund, payment, portfolio, profit, stock, wealthy

I Don’t Have Enough Money to Invest

August 30, 2010 By Jacob Leave a Comment

Nonsense!

Let me preface this article by saying that today a friend that I had not seen in while told me that they had intended to take my advice to begin investing as a college student, but they had been derailed by someone who told them that they needed roughly $3,000 to begin investing.

Again, nonsense!

Let me start by saying that how much money you have to invest does not matter. Yes, that’s right: it DOES NOT matter. Some people refute with “but with some companies that I might invest in, I cannot afford a whole share, how am I supposed to make any money from that?”

For starters you do not have to buy a full share of a stock, many brokerage companies allow you to purchase partial shares. The second part to the question is how a person would ever make money with a partial share or even a few shares. I do not know where the myth originated that says the number of shares is significant. This is what you must remember: It is not about the dollar amount or the quantity of shares, it is about percentages.

Suppose you own a half share of Google (GOOG) which would currently be about $230 (a full share being $460). In one year the stock goes up by 5% making a full share $483, and a half share $241.50. Here is where the negativity often comes in. “I tied up $230 for an entire year and only made $11.50, that’s pathetic.” Remind yourself again that it is not about the dollar amount, but about the percentage.

In one year you have increased the value of your portfolio by 5%, which is not bad for the current economy. $11.50 is not a great sum of money, but if you would have had $10,000 invested in Google, a 5% increase would set you at a $500 return on investment for the year. Think of it this way, you are getting wealthier just on a much smaller scale than Warren Buffet or Bill Gates.

By contributing to your portfolio over time with compound interest, and with steady stock growth and possible dividends, the path to financial independence will become easier to see down.

Filed Under: Let's Talk Money Tagged With: account, college, compound, dividends, enough, interest, invest, kid, minimum, money, not, partial, portfolio, share, stock, student, teenager, time, young

Take Control of Your Money

August 26, 2010 By Jacob Leave a Comment

The other day a good friend and I were discussing finances while listening to Tony Robbins’s tape on money management. One question Robbins asks is “What beliefs about money do you have that may be hindering your financial efforts?” My friend answered that one of his beliefs is that its not money but what is really important is family and friends.

I thought about this statement, which rings true for many people including myself, and why inspite of this, we still seek to become financially independent and build wealth. I asked him if there are things that he would like to do but cannot because of lack of money. He answered, “Of course.”

The point of the question was to show that regardless of how you feel about the true value of money, it has the power to control you by limiting the things you can do in life. Perhaps that is why we strive to become financially independent. Take control over your finances; do not allow them to control you.

Filed Under: Let's Talk Money Tagged With: build, control, finance, independent, management, money, plan, robbins, tony, wealth

The Number One Reason to Invest While Young, Compound Interest

August 10, 2010 By Jacob Leave a Comment

As already discussed, it starts with a dollar. What you do with that dollar begins your journey of finance. One of the worst assumptions a young person to make is that the dollar in their pocket does not matter, but what does matter is how much money they will be making when they get older.

Finance is something that young people can easily say, “I’ll worry about that when I am older.” Let me share with you a secret that blew my mind the first time it clicked in my mind. The secret is the concept of compound interest.

Compound interest can best be explained by example: You have a $100 to invest so you purchase a few share of a company’s stock. To make it easy, assume the stock is $20 each, so you have five shares (and somehow you did not have to pay commissions).

You picked a good company! They pay 7% in annual dividends, which means every three months they pay you a percentage of the value of the stock. Let’s say you opened the account at the beginning of the year, so that in March you get paid the first dividend.

The interest rate for that period would be 7% (which is the annual interest) divided by 4 (which is how many times the dividend will be paid in that quarter). So for each quarter you will earn 1.75% interest. The first dividend payment will be $1.75(or 0.35 per share), which brings your total value to $101.75 (assuming that you re-invest the dividend payment back into the company, so that know you will own 5.0875 shares of the company.

Spring passes by and now the hot summer is here in June and you are ready for your next dividend payment. This time something has changed. You know have 5.0875 shares of the company, which means you will be paid $0.35 for each whole share, and $.036 for that little extra portion of a share. This gives you a new balance of $103.54.

Can you understand the process? Every time you get paid a dividend, your base amount grows, your number of shares increase. So that the next time you get paid, although the interest rate is the same, the amount that the interest is based on is now larger, so you get paid a little more every time.

With compound interest and a strong investment strategy earning 10% annually, you can double your money every seven years.

Bankrate.com offers an excellent compound interest calculator to help you plan for your future.

Filed Under: Let's Talk Money Tagged With: beginning, compound, dividend, dollar, finance, increase, interest, investment, kid, saving, shares, stock, strategy, teenager, young