Money Reasons

Smart Reasons to Save, Use and Invest Money

Posts Tagged ‘Wealth’

Paying Expenses From Dividends

May 4th, 2011

Paying normal expenses is a lot like renting, you never really get ahead and may even be living paycheck to paycheck for your entire life, just barely getting by.

Or perhaps you are hording away money living like a miser until it’s time to retire. The problem with that approach is retirement may never come, after all, accidents happen…

Maybe your plan is to just spending everything, going into massive debt figuring that you can always declare bankruptcy and start overall someday in the future.

All of these are ways to handle expenses and spend money, but what if we tried paying our expenses from dividends instead of money from our paychecks?

In fact, what if from the beginning of adulthood we started paying expenses from dividends?

If from the start, we took our salary or wherever you get your income, and bought stocks that provide a stable dividend, we could have a level of freedom that most people don’t have after 10 or 20 years! I’m sure you are thinking that it wouldn’t be possible, and you would be right! It would have to be a gradual process, buying some dividend stocks at the beginning, but slowly using that dividend money to pay your expenses.

Using the graph above, the red would be the money we bleed from our paychecks, whereas the green would be the dividend money that would continue to grow over time. Eventually we would be paying all of our expenses from dividends!

You wouldn’t have to directly use the dividend money, instead you could have the money automatically reinvest back into the stock (let’s say a DRIP), while paying from your paycheck as normal. it might take decades for your expense to totally be handled by your dividends, but it’s worth a try!

Much like the line in the graph above isn’t straight, neither would the stream of dividends. At the end, it would dividend money would grow more quickly, so it would be slightly parabolic.

So I’m going to try this approach, but more importantly, I’m going to teach my kids early when they are young. If they could incorporate such a system into their lifes, I think they would be well provided for in the future!

Bests,

-MR

21 comments »

Posted in Goal Funds

Tags: dividend rich dividends expenses paid by dividends stock dividends Wealth wealth with dividends

10 Ways To Improve Your Chances To Become Rich

January 20th, 2011

Honestly, Are you trying to become rich?

I’ll admit there is more that I could do to try to breach the point where my passive income exceeds my expenses, but I choose not to.

Although I’m frugal, I’m quite sure that I could run an even tighter financial ship!

Below is a quick list of ways that I could improve my chances to become rich:

I could use budgets and do extreme couponing to whittle my consumption expenses down much lower!
I could try to get more free stuff via giveaways online. Free stuff is great and believe it or not, it’s out there with some work.
I could create a budget to identify where my weaknesses are and plan to fix them accordingly!
I could get another job by working during a second shift period. This would have a huge impact on my savings game since my first job covers all of my living expenses. This means I could pocket almost all of my earnings from the second job.
I could try to expand my hobby activities into other forms of social media. This could practically double my hobby income.
I could create a goals spreadsheet to track my saving goals and keep me on track… This is more important than it sounds! Feedback is a great thing!
I could create an investing goal to track my investments performance. This could help determine if I should start investing more into index ETFs etc…
I could borrow tools/things from family, neighbors and friends more. Why buy a sidewalk edger when I only use it once a year?
I could do a better job of reducing my taxes, a Roth IRA is a great vehicle to reduce taxes on dividends from stocks, etc.
I could do a better job of reducing my gas expenses, treat driving as a real expense instead of just ignoring it.

There are plenty other ways that I could improve my chances of becoming rich some day. Surprisingly, I now realize that I”m only putting in about half the effort that I should be putting into getting rich…

-MR

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28 comments »

Posted in Uncategorized, Wealth

Tags: financial planning planning rich Wealth

Getting Wealthy By Swimming to Shore

November 5th, 2010

Getting Wealthy By Swimming to Shore.

Yesterday’s post: Defend Your Financial Fortress Against Spending Temptations!, prompted Sandy from First Gen American to ask the following question: “I’m interested which budget categories you beefed up since your mortgage got paid”? So in this post, I attempt to explain my position and answer Sandy’s question!

Originally, I wrote: Stop Drowning in Debt, Start Swimming To Shore. In that post, I compared being deep in debt to being underwater trying to breathe.

When you are underwater, you only focus on one thing, and that is to get our head above water so you can breathe again! In the financial world, you try to get out of debt so that is your goal and what you primarily focus on!

When you are deep underwater, it’s a battle to get to the surface to breathe air! When you are in massive debt, your primary goal is to claw yourself back to the financial free air.

I broke the surface of the water, but instead of getting wealthy by swimming to shore, I’ve been treading water, trying to catch my breath, and then determine which direct to swim.

Getting Wealthy

Now that I’ve caught my breath, I’m going to start to swim towards the financially independence island/goal by going after the expenses that are like debt!

So I decided to start swimming by buying stocks with dividends, so someday the dividends could cover my Real Estate taxes and homeowner’s insurance payments. I think the key is to start swimming and stop just treading water!

I’m going to start to research which stock(s) to purchase, and then in a later post, I’ll identify which one(s) I have chosen.

The Decision

While I haven’t saved a lot of money since paying off my house, I still have a few thousand to play with, and that enough to start to swim towards shore.

So to answer Sandy’s question above, I’ve been putting the extra money from the payment from my former mortgage into cash, fixing things and a mild lifestyle inflation spending. I’ll probably purchase the investments partially through a Roth IRA and partially through my regular online brokerage account.

Other than retirement, what ways are you planning on using to getting wealthier?

-MR

17 comments »

Posted in Wealth

Tags: debt-like expenses dividends rich swimming Wealth

Making More Money By Working Two Jobs At The Same Time

October 27th, 2010

Smart Phones make it possible

It’s 6:00 am on a Saturday morning ! You might be thinking, “That guy sure is an early morning riser“, but that’s not so! Normally, I’d be blissfully sleeping away in my comfy bed without a care in the world. But this fine early Saturday morning, I’m working two jobs at the same time! What I’m about to describe is a great way to get rich or at least make more money in a given day!

Which two jobs do I have going on?

First, I’m part of a team installing software for a big release for work (I’m telecommuting in to do the work). We are currently waiting for a large SQL script to complete.
Secondly, I’m also typing this blog article for next Tuesday! If I get this post done before the software is installed, I’ll do other tasks that need done related to this blog.

Why do two jobs at once?

Because it’s a great way to maximize both time and money! If you can do the work for two jobs during the time of just one, you have the potential of making more money and saving time to do other things later in the day. Using such a technique, you should effectively increase your rate of pay per hour! Even small increases are better than no increase…

This is what I call a “maximizing working time“!

I know this is obvious, but I watch people who work such jobs that could be take advantage of in the way that I describe, but typically, I don’t see them doing it.

So which jobs have the potential to allow you to work another job at the same time?

Information booth worker(especially if there isn’t a lot of people asking questions)
Desk Security guard (again, especially if human traffic isn’t common)
Customer support (sitting by the phones waiting)
Gift wrappers
Ticket takers
Firefighters/EMS
Smaller store retail clerks/sale rep.
Auto Salesmen
and the list goes on and on…

Of course, the work mix can vary with each job! So perhaps the information booth worker’s time is 30% her primary job, but 70% her side-job, while the opposite may be true for a gift wrapping position.

I know of a lady that works at an airline information booth, that also quilts (and takes orders for quilts) during that time she’s at work. I asked if she constantly has to put the quilting projects down to help people. She said not really, and especially when it gets later in the evening. While I don’t know the exact amount of money she makes from selling her quilts; I do know that the money that she does make from selling the quilts pay for the big vacations that both she and her husband go on (the last one being a cruise in the Bahamas) every year.

Why haven’t people done this all along?

I believe that they just didn’t have the resources to do so in the past, but with advancements in technology, doing so is my more feasible.

I just scratched the surface with this article! It might even be possible to do 3 or more jobs at once… But I’m happy just doing 2 jobs today, on an early Saturday morning…

Do you personally know people who are able to perform two jobs at the same time? Do you think it’s possible to overlap jobs so that you could work four or more jobs during a day, and not become burnt out?

-MR

14 comments »

Posted in Wealth

Tags: getting rich jobs maximizing money maximizing time money Wealth

Tools To Help Me Become Financial Independent

May 10th, 2010

In theory, I should be able to obtain at least 1 million dollars 10 years from now. As long as I stay frugal, and invest using principal of dollar cost averaging, and occassionally rebalance my portfolio (this is currently my biggest weakness), then I should be able to conquer that million dollar milestone.

How did I start believing that I could achieve financial independence?

I started by reading “The Millionaire Next Door” when I was young and just starting college. The problem with the book (at least the edition that I read), was that the numbers were a little dated, but the principals still rang true!

What is helping me focus on my goal of becoming financial independent?

Automated investments. Using this technique, I’m saving for my Retirement and my kid’s future college expenses.
Statistics on the rich and the bell curve distribution of wealth in American… This feedback helps me gauge whether I’m behind or doing okay.
Spreadsheets to track my progress. Today, there are online site that can accomplish this now, like www.mint.com and www.networthiq.com. I also keep a milestone spreadsheet just for motivation.
Quality books like “The Millionaire Next Door”. Examples of the wealthy in “The Millionaire Next Door” gave me hope. After reading this book, I realized that one don’t have to be born into wealth to achieve it. In the past, I read about the exceptions, but I always thought that I’d have about as much a chance of getting rich that way as I would getting rich via winning the lottery…, pretty slim. “The Millionaire Next Door” gave me hope and enabled me to Believethat in it was possible after all!
Picking the perfect risk model for my core investments (especially those in my 401(k)). Although, I still do play with a little bit of cash in speculative investments.
Saving more than 20% of my salary. It takes a little bit of sacrifice now to payoff later.