Secrets of a Self-Made Millionaire

Its been snowing all day today. And those of you that know anything about Georgia know that we're never prepared for snow, especially since it only comes about once every three years. Anyway since I'm snow bound I had plenty of time to catch up on the blogs I read.

I stumbled across an article that that JD who publishes the blog Get Rich Slowly discovered in Readers Digest called Secrets of Self-Made Millionaires, seeing that I plan to be a self-made millionaire figured I should check it out.

Below I've summarized the secrets the article lists:

1. Set your sights on where you’re going
2. Educate yourself
3. Passion pays off
4. Grow your money
5. No guts, no glory

The Biggest Secret? Stop spending.

I decided I'd check to see how I was coming on each of these secrets.

1. Set your sights on where you’re going - I definitely have my sights set. But the more important part, at least to me, I have an action plan to achieve my sights. check--- on my way to becoming a millionaire
2. Educate yourself - By creating this blog I'm helping to educate myself. I read a ton of money articles every week and anytime I run across a financial topic or a word I'm unfamiliar with I research it. My biggest problem is when there is conflicting advice trying to figure out what to follow. check--- on my way to becoming a millionaire
3. Passion pays off - I am passionate about my job and am happy to go to work every day (well most every day). I also am passionate about savings because I realize the freedom money saved will give me in the long run. check--- on my way to becoming a millionaire
4. Grow your money - I have never really lived pay check to pay check so I'm head of that curve. I also activity save. check--- on my way to becoming a millionaire
5. No guts, no glory - Okay I definitely am not doing this. I've never been a financial risk taker. I have always felt I work really hard for my money and save every penny I can, so I don't want to loose even a cent. This thinking holds me back from taking risks, even minimal ones. But I think I'm starting to take some calculated risks, this year is the first year I've invested indirectly in the stock market via mutual funds. So maybe there's time left for me, however I know I'm loosing opportunity every second I wait to take a calculated and responsible risk.

The Biggest Secret? Stop spending. - While no one ever just completely stops spending I think I've reach a point in my life were I realize I don't have to have the latest gadget or accessory and truly do want to live below my means.

Overall, I think I'm on my way to becoming a self-made millionaire. How do you check out with becoming a self-made millionaire? I hope you're on the same path and/or working to get on that path so we can all enjoy our retirement together.

Progress on 2008 Goals --- Progress on obtaining Promotion

I just got back from the airport after being out of town for work since Tuesday and wanted to take a quick second to let you all know about an interesting conversation I had while out of town before I crash in bed since I've hardly slept in the last 4 days.

In my company the culture when you're traveling with a group of people is that you're expected to go to dinner and the hotel bar with everyone each evening (not sure how productive the next day meetings are since every one's usually pretty hung-over). I always end up staying up too late and my schedule gets all messed up, but at the same time I don't think I'd have it any other way because once you've socialized and "boozed it up" with the bosses you always get to know the inside scoop of what's going on in the company. You can find out who's performing and who's not, what's the next cooperate strategy that's going to roll out, etc etc etc -- its really invaluable knowledge you receive.

Thursday night one of the Vice Presidents and my old boss (soon to be my current boss once I move back to Atlanta) was talking about the problems that he's having in his department with some of the new hires and how he's is really looking forward to having me back to set an example as well as bring positive energy and enthusiasm for the job. We'll call him "Mr. VP" goes on and on about how I'm such a valuable asset. I'm taking this all in and listening to him and he continues on, so I'm thinking this is good that he recognizes I'm a valuable asset but I also realize the man's had about ten vodka tonics and he likes to talk. But "Mr. VP" goes on and says he wants to see me succeed and that when I come back in April we should sit down and talk about my career path. Again I'm happy but he's still drunk so he might be just talking but the next day at breakfast as "Mr. VP" is hesitantly drinking his coffee and shading his eye he asks me if I remember our talk last night, I say yes thinking he wants to let me know I should keep that info to myself since my career path wasn't all he talked about, but rather he says he wants to make sure that when I do come back in April that we talk about my career path because I'm a "super star" according to him and he wants to keep me challenged and happy. Inside as I eat my bagel I'm silently jumping for joy! Exactly what I need, some one in a high place that wants to help me get ahead and recognized that I'm good at my job.

Well thanks for listening to my exciting news, in April I'll have to let you all know how our talk goes, but for now I'm crawling to bed and won't resurface until late on Saturday.

Monday's Money Funny - Debt Consolidation

I've decided to start a feature on my blog called "Monday's Money Funny" which will be humorous (or at least humorous to me) articles (real or satire) that I've discovered over the weekend when I catch up on all my on line reading.

I hope you enjoy the first of the series from The Onion

Below is the article: U.S. Takes Out Debt-Consolidation Loan

WASHINGTON, DC—Plagued by late fees, high interest rates, and harassing creditors, the U.S. took out a debt-consolidation loan Monday, combining the nation's $6.1 trillion debt into a single, easy monthly payment.

Enlarge Image

Bush watches an E-Z Debt commercial on a White House TV.

"My fellow Americans, we have just taken the first step toward regaining control of our finances," said President Bush at a press conference. "Thanks to a joint arrangement between the Treasury Department, the Federal Reserve, and E-Z Debt Services of Baltimore, we are finally on our way to freedom from debt."

As of press time, the national debt stands at $6,144,393,982,061.52.

Under the terms of the consolidation, E-Z Debt Services will repay the nation's estimated 45,000 creditors, a majority of whom are foreign investors, insurance companies, banks, and other privately held entities. In return, the U.S will make a single monthly payment of $9.26 billion, adjusted for inflation, to E-Z Debt every month for the next 70 years.

"We are proud to enter into this arrangement with the federal government," E-Z Debt spokesman Phil Rizzo told reporters. "We know how hard it is when you're buried under a mountain of bills with seemingly no way to get out. When you don't know where else to turn, E-Z Debt is there to help get you back on your feet."

The government first became aware of E-Z Debt Services on July 10, when Sen. Max Baucus (D-MT) happened to see a commercial for the company while watching late-night television. Two days later, President Bush saw the same ad during a 3 a.m. M*A*S*H rerun.

According to White House press secretary Ari Fleischer, Bush was sitting at his desk clutching a fistful of past-due notices when he saw the ad.

"He was holding all these unpaid bills, and tons more were piled high on his desk, including a three-month-old bill from Lockheed-Martin for $5.3 billion worth of jet fighters," said Fleischer, who was in the Oval Office working late at the time. "He raised the handfuls of bills above his head and shouted, 'I can't take it anymore!' That's when the ad came on."

Enlarge Image

Bush poses with a Lockheed-Martin X-35A fighter that was saved from repossession, thanks to E-Z Debt.

After extensive meetings between E-Z Debt officials and the Treasury Department, an arrangement was reached which provided a manageable payment plan—with no threatening phone calls or military invasions from creditor nations.

Though the House Of Representatives swiftly and decisively approved the consolidation plan by a vote of 285 to 103, the Senate took longer to rally the necessary support, debating the issue for weeks.

"I was definitely skeptical about E-Z Debt, as were many of my colleagues," Senate Majority Leader Tom Daschle (D-SD) said. "I'd heard horror stories about those debt services. England used one to get out of a recession in the late '80s, and they're still paying for it."

"But E-Z Debt is different," Daschle continued. "Jim [Smoller], our E-Z Debt representative, sat down with me and the other senators and really convinced us that debt consolidation was the way to go. He was extremely helpful, taking the time to patiently answer all our questions. He even gave us a free quote."

Opponents of the plan charge that it unnecessarily endangers the numerous national assets offered as collateral. Among the valuable properties being put up are Yellowstone National Park, NASA, and the state of Alaska.

"Holding the nation hostage to a single creditor is hardly preferable to the original situation," said Sen. Dianne Feinstein (D-CA) during a lengthy Senate debate on the consolidation. "Besides, I am confident that if we just trim a few unnecessary expenses from the budget and somehow get a little bigger GNP, we can climb out of this hole without help. We just need a little more time."

"Okay, so we mismanaged our money a little bit—who doesn't every now and then?" Sen. Bill Frist (R-TN) said. "But that's no reason to resort to using one of those get-out-of-debt-now services."

Despite such opposition, ultimately, the Senate's pro-consolidation voices won out.

"In the end, everybody came to see that E-Z Debt isn't just another loan. It's a way to get out of debt without declaring bankruptcy," Daschle said. "Thanks, E-Z Debt. We couldn't have done it without you."

I hope no one is in quite as dire situations as the US government's debt, however in case you are facing these type of problems I have included a link to an article at Bank Rate on how to best consolidate your debt.

Stay tuned for next week's Monday's Money Funny!

How Much to Spend to Buy a Car

The other day I was having dinner with one of my good friends and knowing that I'm into personal finance, he sought my advice about buying a car.

My friend, "Car Fanatic", has always been a big car enthusiast, in fact he's the only one I know who every month goes to a different car show. However, ever since I've know him he's always driven the crappiest car of the group. (Keep in mind I've known him since we were freshman in college -- so most college students, or at least the one's based in reality, drive crappy cars). Anyway he used to drive a 1981 Mitsubishi and then about two years ago when he graduated from college he upgraded to a 1992 Honda Civic. Well now "Car Fanatic" is looking to get a "real car" in his words and now that he's financially stable wanted my advice on what he could afford.

I know he was looking for something like "$20,000 max" or "no more than $250 a month" or any other solid dollar figure. I'm usually rather opinionated and am always willing to contribute my two cents and sometime even twenty-five cents, so "Car Fanatic" was taken back when I said that I really couldn't give him a firm answer and it really depends on him. He said no, Future Millionaire, seriously what can I pay a month for a car payment?

First off the idea that he has to finance it, doesn't sit well with me, especially since I know he paid cash for his other two cars. But none the less, I'm not one to judge (okay I take that back, I judge but tell myself I shouldn't). So the best advice I could give him was:
It really depends on how much you value a car and what you're willing to sacrifice for it, for example would you rather have a rockin' ride or be able to go to a nice dinner with friends every week? etc. In the mean time while you're figuring out how much you value a new car, you should start playing house by setting aside whatever amount of money you feel you can a) afford and b) would align with a car payment for your future car. And play house for several months (at least 4-6) to see if this is a realistic amount of money and on top of that when you go to buy your call you'll have a nice down payment already set aside.

On top of that I advised "Car Fanatic" to avoid at all costs going into a dealership when he was ready to buy a car with the attitude that he could only afford X amount of dollars per month as many times they will fluctuate the interest rate and length of load based on this information instead of dealing strictly in the lump sum price of a car. With an attitude of money per month the dealership can really end up having you pay more for a car than you were ever intending.

Well that's my 2 cents on buying a car, and my no means am I an expert car buyer so for your used I've listed several good car buying advice articles that may be of help:
Edmonds.com --- check out the real price of cars
Inside Car Buying Secrets
How Stuff Works : Buying a Car
Car Buying Tips

Spending Money to Save Money

Its nearing the end of January which means W-9's are on their way and I'm starting to think about preparing my taxes.

2007 was the first year I've ever been eligible to contribute to a 401k account, which will complicate my taxes and make me uncertain. In the past my taxes have been pretty straight forward; W-9 + Bank Statement with Total Interest + Standard Deductions means complete in about 30 minutes. Now that I have the 401k complication, I've tried to investigate on my own how to impute this data into my return but if you've ever read the IRS info on 401k its about as clear as mud. If you'd asked me even two years ago if I'd pay someone to do my taxes I'd have said no way -- I was frugal and could do them on my own.

I used to think I was a frugal person but really I was just cheap. I'd buy the cheapest of any product I needed, I needed paper towels I'd buy the el cheapo brand, I need a pair of black pants and would also get the store brand that was on sale for 75%. Its only within the last couple of years that I've realized that I wasn't being frugal, I was cheap because it was taking me 5 paper towels to complete the same job that the bounty brand (or whatever you preferred brand is) and that those pants I thought I got a steal at for $20 only lasted about 2 wearings.

So this year I'm biting the bullet and spending the money to get my taxes completed, but at the same time I'll ensuring my return is correct and more importantly learning how to complete my taxes with these complications.

8 Smart Money Moves for 2008 includes Rent, Don't Buy

I was doing my usual daily reading of financial news and came across US News 8 Smart Money Moves for 2008. One of the 8 smart moves was to "Rent, Don't Buy" which helped reinforce my hesitation to buy a house this year. I then started searching more about Renting instead of Buying and found these great articles: Why rent? To get Richer at MSN Money, 6 Money Dilemmas including Buy or Rent at Money, and Rent, Grow Rich, Be Free at Millionaire Mommy Next Door Blog.

I'm really struggling on whether I should buy a house or not this year. I'm starting to think that if I'm struggling this much then maybe now is not the best time for me to buy but on the same token if I'm going to buy a house within the foreseeable future I feel like now's the time. In the next 3 months I'm being transfered back to Atlanta after working and living out of town for the last year. Now that I'm finally settling in one location for the long term, have a sizable down payment (well over 20% of any house I'd choose), and with real estate prices falling it would seem that in the coming months would be the ideal time to buy a house for me.

Here's my hesitations for holding off buying a home:
I'm not sure if I'm ready to make the committment of owning a home and all of the work it entails. I don't think I'm ready to start giving up a potion of my weekends to maintaining a home, I do work in construction so I enjoy building things but I enjoy my current maintenance-free lifestyle. Every time I visit my mom I end doing her "Honey Do List" it always feels like she's got to have something done, yard work, HVAC cleaing, etc etc, and I just don't know if I'm ready to take on that. That's strike 1 against home ownership right now.

I also don't know if I'm readying to stay put for several years. Committing to one location and one house for years seems scary. Heck, I have a hard time committing to watch a movie from start to finish half the time, who am I kidding trying to buy a house that according to this great calculator by KJE which compares the financial aspects of buying vs. renting I need to own and stay put in the house I buy for at least 6-8 years to break even. At this point in my life 6 years seems like a really long time. That's strike 2 against homeownership.

On top of that I'm still a single woman, who at some point in her life would like to settle down and have a family and I can't see the home I buy this year to be the same one I'd want to have a family in. So it makes sense to wait, although I think its some what silly ---- its not like I want a knight and shinny amour to come and "save me" and then support me, I think I'm perfectly capable of taking care of my self and possibly a future family - its just that the cute little townhouse or house that's small enough for just me to take care of right now probably won't work with fido, junior, and hubby in toe. That's strike 3 against buying a home -- I guess three strikes and home buying gets put on hold.

I think for at least the next year I'm going to hold off on the house and continue to rent, we'll see where I am financially and mentally next year and reevaluate my decision then. I'm not planning to never buy a house, eventually I want to have my own place I can take pride in, but whether this home comes into my life now or in five years remains to be seen.

Financial Blast from the Past

Well I'm back from a long hiatus called Christmas vacation with my Family.

During my vacation I decided to clean out my closet at my mom's of stuff I'd left from high school, when sorting through old purses I stumbled upon an old bank statement and pay stub from when I was in high school. It surprised me how far I've come from then net worth wise. The statement was for my regular free checking and for my Money Market. In the checking account I had $19.48 and in my money market I had $4,708.21 and I know that was all the money I had in the world and it was being saved for car insurance, car repairs, and of course college. To think that in the last 6.5 years I've gone from that to where I am today plus paid for college along that way is amazing to me. This means I "saved" (including compounding interest earned) over $12,000 a year and increased my net worth by over 20 times. It makes me very excited about where I'll be in another 6.5 years.

Well now I'm off to donate the purses to goodwill.

Financial Goals for 2008

Its nearing the end of the year and its time for me to finalize my goals for the coming year.

So far I've narrowed down the list of goals to the following:
1. Have a Net Worth of $105,000*
2. Fully Fund my 401k and Roth IRA
3. Diversify Roth IRA
4. Get Next Promotion
5. Get Ready to Buy a House ???

My Action plans are:
1. Have Net Worth of $105,000 - My net worth is currently slightly above $85k, to reach the $105k I plan to fully fund my 401k ($15,500), fully fund my Roth IRA ($4,000), and save $1000 "cash". To save the $1000 I plan to set aside $100 every month with the exception of November and December. Those months I'll use the $100 to go towards my gift shopping budget.

2. Fully Fund my 401k and Roth IRA - To continue to fully fund my 401k I will leave my automatic payroll deduction contribution at 27%. Since I just opened my Roth IRA this year with money saved outside of the account I will need to establish an electronic transfer on a regular basis. I plan to contribute $330 per month towards my Roth IRA but will need to investigate Vanguard to find the best way to contribute to minimize fees (ie. contribute $990 quarterly, $165 bi-weekly, etc.). I plan to have this investigation completed by January 31st.

3. Diversify Roth IRA - This one will require some more investigation on my part. I know the minimum transaction required to start a different fund in vanguard is $3,000. So I will need what the best method to procure the other fund (ie. sell some of my S&P 500 fund and invest in the other or lump sum contribution). I plan to have this work complete by February 29th.

4. Get Promotion - This one takes a little more finesse. At this point I feel like I was hired in at a lower level than my experience and work load would normally bring and most of the reason for this is that I only recently graduated college; however I been working for my company for a little over 5 years. I went along with this because I was assured I would advance quickly. To ensure I get a promotion before the end of the year I need to: 1. Continue to do an "amazing" job on every task 2. List my responsibilities and compare to established tables for positions 3. Talk to my boss about the discrepancy I find in responsibilities and position and request to know the steps I need to take to make it to the next level (additional tasks to take on, people to talk to etc). 4. Continue to Ace my Performance Review and take the opportunities that are offered to me

5. Get Ready to Buy a House - This one I'm a little unsure of. A couple of years I ago I couldn't wait to buy my first house, I saw it as the key to success, but now I'm not so sure. While I feel I have more than a sufficient down payment to put down on a house I'm not sure if I'm ready for the additional upkeep on a house, plus there's the added monthly costs I would incur. So for this goal I'm going to leave it open and allow myself to investigate more by researching my options to make a sound financial decision.

*I calculate my net worth by the value of my assets in banks/brokerages. I do not include the value of my car or personal possessions. I also do not figure in debt because I have none other than a credit card I pay the full balance monthly, if at some point I develop debt/liabilities I will include that in my net worth calculations.

Finances and Family

Just read a very interesting post called My mother-in-law thinks we're cheap! and it hit home for me. My grandma used to guilt my mom into buying her expensive presents that my mom could ill afford. And the worst part of the whole situation was my grandmother was not living a life of poverty in fact she could afford a lot more luxuries than my mom, since grandma had my grandfather's extremely large estate, pension, social security while my mom is a single parent school teacher with two children still at home to raise.

Come to think of it none of my family are good with finances. I know I certainly didn't get my financial beliefs - like no debt - from their example. I do think my fear of debt is motivated by my fear of having the financial life they live.

All of the women in my family are poor money managers, which used to scare the living day lights out of me (and still does at times).

My mom's pretty much been in debt her entire adult life. This year for the first time in 30 years she was breifly in the black and not in the red hole known as credit card dept. This brief reprieve from debt was because my grandmother passed away and my mom received some life insurance benefits. My mom and I talked long and hard about her getting out of debt but after only two months my mom was back in debt (granted not as much, yet). My mom realizes she's got a problem with managing her money and that I'm relatively financially adept so she comes to me frequently for help. Several times over the years I help her establish a budget, help her track her finances, help her develop a get out of debt plan but with in a matter of days she gets frustrated at having to keep up with it the plan of action and quits.

My grandma was similarly heavily in credit card debt, however she never fully admitted a problem.

My granny (my dad's mom) is also in debt, but this only came to light about four months ago when my CPA uncle was helping her to consolidate some retirement saving accounts. The embarrassment of this coming out to the family has motivated my granny to get out of debt. She now lives on a strict budget. So I guess there's hope yet for me that I won't turn out financially like my female relatives.

Seeing my loved ones struggle in debt really does motivate me to continue saving, stick to a budget, and always ask myself before purchasing: a) Does this purchase fit in my budget and do I have the money right now to purchase it? b) Do I really need this thing-a-ma-bob and do I have the room for it? c) Will this purchase bring me satisfaction 2 years from now or would knowing I have money in the bank make me happier? If any of my answers to those three question are "no" then its not meant for me to purchase.

Why "Savy"

So I was getting ready to add my post for the day when I realized I missed spelled my blog name and corresponding URL. I'm thinking oh great...this whole new idea of blogging is really going well...can't even get the correct URL. (said with only a touch of sarcasm in my voice)

I wish I had some clear come back as to my real motivations for calling it Saving "Savy" like it was intentional to make my blog specific, especially since I just realize someone else has a blog Saving "Savvy" or that I did it on purpose because I was saving that extra "v". Really it just further goes to prove that I'm an engineer and not an English major, but I try. So as you read through my blog please consider this is one *smart* chica, but no English major. :)

PS If you do know your grammar and spelling better than I do please feel free to correct any errors you see.