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What Are We Proud Of?
2008-03-28 22:41:00
I heard someone on the radio today talking about Americans and what makes them proud.  That is a funny little word that has a tendency to have deep emotional and moral connections.  Another way to look at pride is one of its opposites, shame.  Both pride and shame have important applications to personal finance that I'd like to consider. First, what about your money situation are you ashamed of?  Debt is something that makes many people ashamed.  But, not all debt!  The debt that you are ashamed of comes from those purchases that you know deep down you never should have made, or the times you splurged when there really wasn't any money to splurge.  I know that right now I am ashamed that I have about $10,000 in credit card debt.  How do I know I'm ashamed?  Because I've told "white lies" or understated the amount debt I have when talking about the issue.  I know that if I'm willing to lie about something...
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Anecdotes from the Downturn
2008-03-25 17:59:00
CNN Money is running a series a short stories from those who are struggling financially.  In total there are 26 articles that cover a diverse mix of Americans.  The common theme is that broad swaths of our population have been hit by hard economic times.  However, all of these stories remind me how important it is to recognize the difference between a collection of anecdotes about individuals economic hardship and statistically important analysis of the whole economy.After reading through all of the anecdotes, the most common hardships are job loss, health problems, and single parent households.   What struck me is that even in good economic times these problems are very real and likely to hurt the prosperity of ANY household.  As it turns out, unemployment is still at solid levels historically speaking, less than 5%.  A net loss of 63,000 jobs in February may significantly impact individual families, but it has almost no effect on the broader econ...
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Your Brain Makes Building Wealth Hard
2008-03-25 04:55:00
One of the first steps to overcoming a challenge is to recognize there is a problem. If you do not know where your stumbling blocks lie it is often impossible to achieve the results you desire. In the wealth building process there are multiple challenges, but one that many people don't recognize is your own brain. Our brains developed to do a great job helping us hunt, gather, and reproduce. Unfortunately our brains are not particularly suited to the challenges of creating wealth.There is [relatively speaking] a new field of study called Behavioral Finance. The basic idea is that investing decisions are made by people, and people are influenced by psychology in addition to the pure numbers of the markets. In fact, investors (being human) are subject to quarks of neurology, biochemistry, and evolutionary anthropology which in turn influence all of our money decisions.So, now that we realize that there is more to investing than just the numbers, what does that mean? First off,...
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March Money Madness
2008-03-21 22:53:00
The pinnacle of the college basketball season is upon us, and like many people I have found myself checking stats and picking brackets.  In years past I have put some cash into various betting pools and wagers.  This year I have decided to enter only for fun but I now regret that decision.  Why?  Paying with nothing on the line isn't very much fun at all. It is my theory, and I'm not psychologist, that the small bets I've made in the past give me a personal stake in the outcome of the games.  If I don't care who wins I don't enjoy watching as much.  Who cares if Butler or South Alabama win in the first round?  I do because I've got $5 on Butler.  Why did I bet on them?  Because I have a cousin that went there.  Does that make logical or mathematical sense, of course not.  It does however make March Madness more fun. Next question: How much should I spend to add to my b-ball enjoyment these next few weeks?...
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Hump Day Round Up
2008-03-20 05:30:00
I've continued to look into the inflation problem I raised in my post How High is Inflation Really? I found two good links that dig deeper into rising food costs and rising fuel costs. In general it seems like there have been a whole series of failed policies and broad economic mistakes that have all built up to give us a perfect storm for rampant inflation. It may not be too late to fix some of the problems but there is the potential for very bad things.On another note, Aspire 2 Wealth has been included in a whole slew of carnivals over the past week. I have gotten behind with sharing them, but today I sat down and read through many of the posts and came across a lot of great information. Here they are:Money Hacks Carnival #2 hosted by beingfrugal.netMoney Hacks Carnival #4 hosted by Amatureist Financial JourneyEthics, Values & Personal Finance hosted by Money and Values
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How High is Inflation Really?
2008-03-19 21:12:00
If we stop at the gas station to fill up the tank it is obvious that prices have done nothing but go up, up, up these days.  What is even more worrying is that it isn't only fuel costs that have skyrocketed.  Two years ago it would cost about $100 for a trip to the grocery store.  This would provide all of the staples for two weeks.  In a month, the total bill would be about $250.  Lately I am budgeting $300 a month and finding that I consistently go over budget.   It isn't a scientific measure by any means but it feels to me like my buying power has dropped by as much as 25% in two years.  How is that possible? The official figures for the Producer Price Index, which measures the cost of goods at the wholesale level, rose 0.3% in February and 1.0% in January as reported by Forbes.  Year over year inflation clocked in at a 6.4% rate.  This trend seems to be accelerating to an annual rate in the neighborhood of 7.8% for 2008 b...
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Overcoming the Fear of Failure
2008-03-19 05:35:00
I want to start my own business. In order to diversify my income streams and increase my income I feel that entrepreneurship is by far the best route. The problem I now face is that I am hesitant to risk my savings on an unproven venture. I am afraid to fail. I think that recognizing both my desire to enter the business world and my reservations is a good start, but as someone wise once said, "You can't win if you never play the game."I spent some time this evening scouring the net looking for advice. Here is some of what I've found:Biz Thoughts: Don't Be Afraid to FailNational Federation of Small BusinessPractical Commerce: Four Things You Should KnowBecause I went out looking for motivational and inspirational resources that is mostly what I've found. One common theme I have found is to start small. By moving slowly and making a limited investment you can gauge the market without large risks. Next, many people advise that what I consider failure, a business that does n...
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I Missed Out on a 517% Single Day Return
2008-03-17 15:50:00
Yesterday I wrote about the Bear Stearns buyout announcement.  Had I been able to put in my options trade for BSC last night it would have worked out to a fat 517% return in mere seconds at the opening bell this morning.  As predicted the stock fell from $30 a share to $3.20 per share.  The March 19th puts with a $25 strike price went from $4.10 up to $21.20 in a matter of seconds at the open.  If I put in my order overnight I may not have gotten my trade done at the perfect price but I almost certainly would have still tripled my money.  My investment of $4,100 could now be worth $21,200.  I missed this boat this time, but it is still nice to know I made the correct call and would have made out like a bandit if I'd had the foresight to get my brokerage account approved for options trades.  Next time I won't be caught ill prepared.  Please read last night's post to fully understand the how, what, and why of the options investment...
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I Am a Perma-Bull
2008-03-17 05:45:00
In case you have missed the latest development in business news, Bear Stearns Companies Inc has brokered a deal with JP Morgan Chase to be purchased for $2 per share. At the start of 2008 the stock was trading at $88 per share. This deal is expected to rock the global financial markets and completely crush the stock price of the financial firms. It is likely to be very ugly.On the flips side of this pain there are two great ways to find profit. First and the method I plan to take advantage of is to continue to invest into the broad market indexes and dollar cost average more money into the market. This route will profit when the market recovers.The other way to profit from this situation is to delve into more complex investment concepts like options or short sales. I personally tried to buy put options on BSC (Bear Stearns ticker symbol) this evening. Unfortunately my broker requires an additional signature on paper in order to add options trading to my account. With a small...
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10 Simple Steps to be a Millionaire
2008-03-15 00:35:00
Believe it or not anyone can become a millionaire. Becoming a member of the millionaire club can even be achieved on a very modest income. The trick is to realize that what determines wealth is not how much you make, but instead how much you save and invest. Here is the proof, a New Jersey man while never earning more than $11 an hour became a multimillionaire. There are literally thousands of examples of people who started with nothing and were able to achieve their millionaire dreams.When I started Aspire 2 Wealth I quickly decided that I would need a plan if I was going to reach my goals. As a part of that plan I wrote down a list of rules or steps that would guide me on my path to wealth. These are ideas that are embodied by millionaires all around us that built their wealth gradually and deliberately over the years. I want to share with you my Millionaire Rules.Ten Millionaire Rules:Write Down Your GoalsCreate a Spending Plan / Track Your ProgressLearn to Say "No" to You...
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Dress to Impress
2008-03-14 04:51:00
Over the last year and a half I have started traveling for business every couple of months. Usually on these trips I am visiting a contractor which does business for my company. Ultimately my role is to perform an audit or provide oversight into how well they are executing their contractual duties. I have also starting giving briefings to high level managers and decision makers. In other words, at times my job requires me to put forth a professional, credible persona.A large part of that professionalism is dressing the part. In my normal work environment we don't have a dress code. As an unspoken rule, shorts and sandals are a bit too casual except on special occasions, but day-to-day a tee shirt and blue jeans is perfectly acceptable. I am sometime teased by friends and family because I almost always wear the same thing whether at work or at home: a collared polo-style shirt and blue jeans. When I travel or have a presentation to give that outfit does not give the impressi...
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Life Insurance: How Much?
2008-03-13 02:44:00
I know I need more life insurance. I've been planning to get more ever since we bought a house last May. I have a few reasons that I've put it off, but I know I should stop making excuses and do it!We aren't completely without life insurance at the moment. I have a little more than twice my salary from work. My pension also provides a death benefit that would be about $1,500 a month to my wife. Finally, there would be a small amount of social security that my wife would collect as well. If you add that all up it is in the ball park of $200,000 plus $1,500 a month. That is enough to pay off all of our debt (including the mortgage) and leave my wife a little money each month to get by.Based on what I have already, I know we are currently ahead of many people out there. However it certainly isn't enough to replace my income. I'd say that it would cover about 40% of my current income and that would leave a lot of strain on those I may leave behind. I'd prefer to be able ...
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House Lust
2008-03-11 05:58:00
This weekend we had some great weather, and so we spent a few hours yesterday afternoon gawking at the pretty houses. I nearly went into architecture, and even though I did not choose it as my career, I still draw floor plans and elevations as a hobby. There are dozens of open houses all over the area and if something really gets our attention we will stop and take a look.Yesterday we drove through several neighborhoods where prices ranged from $280-500k. Of course in those price ranges we found a lot to like about the houses. One in particular really stood out and I immediately started running the numbers in my head. Could I ever afford it?In our area basic housing will run around $80 per square foot. That will get you a house that is a little older (built in the 50's and 60's) and may need some touch ups but is in generally good shape. For $100 per square foot (the range for our house), you can get a mint condition house with some moderate upgrades. In the $115-125 per s...
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Millionaire Rule #10
2008-03-09 01:00:00
Generate Multiple Income StreamsThere are two components to having more money left over in the bank at the end of the month. The first is to reduce expenses and spend less money. The second is to increase your income. While it may sometimes seem impossible to make more money on will power and elbow grease alone, creating multiple income streams is a sure-fire way to bring in extra cash. Branching out from your traditional day job to seek new ways to create income is an integral part to becoming wealthy if you, like most of us, don't pull down the big bucks. This installment of the Millionaire Rule s series will explain the importance of having diversified sources of income and some suggestions for how to get started increasing your cash flow.First off, if we want to become wealthy we must also be willing to do some extra to get ourselves there. If you do the exact same thing as everyone else, how will you "get ahead' in life? At the end of the work day most people go home and...

New Way to Bank Extra Cash
2008-03-04 16:41:00
Today I am taking off for a quick three day / two night business trip.  I don't travel that often, but every couple of months I need to attend an out town meeting or drop in with a supplier.  As a part of my quest to squeeze a little more money out of my budget I am going to try and use these business trips as a way to increase my income. How can I turn my travel into extra money?  First, I signed up for all of the frequent traveler accounts that I may use while on the road.  My employer lets its employees keep the rewards they rack up for personal use.  For the first couple of trips I wastefully failed to claim these benefits.  I now have accounts with each of the major airlines that service my local airport and a selection of hotel chains that I will use for lodging too.  In fact, with only three business trips and two night of personal hotel stays I have nearly earned enough points to get a free hotel stay, worth $60, by simply doing things ...
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