Do you want to make $100,000 a year?  In this post, I will show you how.  Often times, when people hear about a “business plan”, they instantly assume someone is talking about a complex preparation package for people seeking to start a new business.  However, this is not the only place a business plan is effective.  I would suggest that no matter what you do, you should have your own personal business plan written out every single year.

A personal business plan consists of the process of putting your “business” goals on paper, while providing the steps to achieve such goals.  Some of you may think that this may sound a lot like standard goal setting, however, there are distinct differences in setting up a business that makes it a very worthwhile task in your own financial planning.

First off, your personal business plan should be related to your business only.  This is not to say that you shouldn’t make goals in other aspects of your life, but for this particular plan, it should be solely focused on your personal business efforts.  The plan applies to any line of work you may be in.  Whether you are a CEO of a Wall Street firm, a pet groomer, or a landscaper, you should begin every new year with a fresh business plan.

Your business plan should break down what it takes to be successful in your line of work and how exactly you are going to accomplish that.  Kobe Bryant did not wake up one morning randomly knowing how to shoot a jump shot.  It took years of practice and discipline for him to get where he is today.  The same goes for any other occupation out there.  In most cases, people did not fall in the positions they are currently there by luck.  They planned out what it took to get there and how they themselves were going to make that happen.

Lets take, for example, an insurance salesman.  After looking at his last years call log, he finds that he made a total of 1500 cold calls to new potential clients per month (18,000 per year).  Well, as a result, he made a total of of $180,000 in commissions for that year.  So technically, this salesman can conclude that every call he makes is roughly worth around $10.  Of course this is really not the case, but for most sales jobs, performance is merely a numbers game.  Knowing that he historically performs at this $10 per call rate, he can than adjust his daily call schedule to earn his next year’s goal of a $200,000 year.  This same principle can be used in a variety of different measures.

A business plan should also include desired characteristic traits you wish to possess around the workplace, as well as things you feel you need to work one.  Take note of people around the office who are succeeding.  What attributes do they possess.  The best way to become successful at work is by surrounding yourself around people who already are.

Be specific about your monetary goals.  If you want to earn $100,000 next year, write it down!  If you don’t, it will be hard to see how exactly you get there.  The above example showed our salesman that one way he could get to his new “lofty” income goal is by increasing his daily call amount.  While breaking down your business plan, you will visually see just what it will take to earn what your goal is.

Now some of you may be saying, “well I’m stuck in a salary position and have no way of making anymore money than my contracted amount.”  Nonsense!  Within your company there are ladders of salaries.  Most likely there are people around you making the money that you desire to.  What are these people doing differently?  If you are just as qualified and talented as these people then there is no excuse for them making more money.  If you lack certain skills that they have, work to sharpen those skills.  Come to work earlier and stay a bit later.  Remember, you set the goal so it is you that needs to make it happen.  If you do have the same skills and are not making the same amount, go see your manager.  You would be surprised about how many times you are worthy of a promotion and they just don’t know it or are waiting for you to say something.  If they feel you are not qualififed, ask him/her for feedback about what you are lacking.  Then, start this process over.

Also, we live in a day of age where you can make money in a variety of different ways.  Thanks to the internet, you have access to the whole world to try and make money.  You have certain skills and traits that people will pay money to learn.  See how you can integrate that on the web for some supplementary income.

Sure, we all like to have money and success, but strive to keep it within reason.  As I have always said, money is not the definition of “success” and more important things should not be sacrificed for it.  When making your business plan, consider your other “life goals.”  If doing what it takes to earn you’re desired income only happens at the expense of acheiving your long term life goals, it is not worth it.  Consider thinking a few years out on how you consider to reach these goals, thus not burning yourself out all in one year.  Why work to make a good living, when at the end you cannot enjoy the fruits of it.

After completing a business plan, always keep it where you can see it daily.  Why spend time on this intensive document if you’re not going to reflect on it?  I keep mine in the top drawer of my office, so that when I do get frustrated, I can see what exactly I’m doing wrong.  The business plan doesn’t lie.  If done correctly, it acts as the Holy Grail of successful business practices for you personally in your business.  If you’re not seeing success, you’ve most likely waivered from your plan.  Take it out every week to make sure you’re living up to your goals.  If you are doing what you set out to do and are still not seeing success, revise your plan in way that points you in the right direction.

The power of a business plan is great.  When just asking how can I earn $100,000 a year?, it can seem distant and unattainable at the moment.  However, when really breaking it down, studying your current circumstances, and implementing a plan, you will be surprised at just how easy that road can be.  This combined with other principles discussed on the site can help you.

This is a question that sooner or later everyone will ask themselves.  Should I buy or lease a car? My dad told me to always buy my car, but my best friend says Honda has a great lease right now.  Which should I do?!  For the most part, it seems as though people are either on one side or the other.  For those that buy their cars, they cringe at the thought of leasing, thinking that at the end of your lease term, you don’t even own the car!  Leasers, on the other hand, are appalled that people are willing to pay $30,000 or more for a brand new car, when you could be driving one for $200 per month.  So, who is right?

The answer is both of them.  Depending on your circumstances and usage of the vehicle, both options can be the better option at different times.  This is probably why there is always an ongoing debate of which is better.  In this article I will share with you some crucial things to know when looking to buy a car, and what to keep in mind when trying to decide whether to lease or buy.

Decide What You Need

This may be the most important step to buying a vehicle.  The worst way to buy a car is to blindly walk on a dealership without first deciding what exactly you and, if applicable, your family need.  Remember, a car is not an investment.  It is an asset draining liability.  For most cases, no logo on the front of your car will change the actual purpose of you buying the car in the first place.  Do your homework.  If this car is for you, sit down and decide why you need it.  Where will you be driving it?  Do you need good storage space or passenger room?  Do you want a more gas economical car?  There are so many options now available that if you do not know what you need in a car, you may end up with a car that doesn’t fit your needs.  Most importantly, decide what your budget allows you to spend on a car, and don’t waiver from that.  Never let your ego get in the way of your needs.  The “appeal” of a nice car fades in time, whereas the ability to satisfy your needs does not.

Know the Language

When looking for cars, it is important to know the language you may come across.  Knowing this shows dealers that you’ve done your homework and you’re not some gullible car buyer who is ready to get ripped off.  Here is some terminology you may need to know:

• MSRP- This is the recommended factory retail price for the car or the “sticker price.”  In almost all cases, this number will be negotiable.
• Capitalized Cost- This is the agreed upon price, which will most likely be lower than the MSRP.
• Lease Term- The number of years the vehicle is leased for.
• Residual Value- This term is used to describe the bank determined expected value of the car at the end of the term.  This value is expressed as a percentage of MSRP.
• Depreciation Charge- This is the value of any charges that exist after the difference of the capitalized cost and residual value.

Shop for Your Car

Once you find out what you need out of a car, begin looking.  Shopping for cars has never been easier.  There are countless amounts of websites that exist where you can get new car quotes (Discounted Internet New Car Price Quote from Web2Carz.com) with just the click of a mouse.  Look on Craigslist, eBay, and local Auto-Trader magazines for comparable prices.  Shop your local dealerships and let dealers know of your needs and ask for recommendations of cars that will accommodate those needs.  In most cases, you will never want to shop at just one dealership.  In time, you will eventually find a car that appeals to you the most.  Now we can get started.

Buy or Lease
Like I said earlier, depending on your needs, buying or leasing could be the better option.  Some pros to buying are that you own the car, regardless of any changes that happen in your life.  It is yours until you sell it again or until it breaks down.  You do not have a mileage limit so you have a lot of flexibility in the use of the car.  The downside is, of course, the upfront costs of buying a vehicle can be very costly.

Some pros for leasing include significantly lower upfront costs, considering you are only paying for depreciation costs and taxes during the period of ownership.   Leasing also gives you much more freedom to switch out cars every few years.  Disadvantages are that there are many hidden fees in leasing.  Also you’re flexibility for what to use the car for is greatly diminished, due to mileage restrictions, which if you go over, could have severe penalty charges.

When deciding which to do, consider these pros and cons.  If you like to buy a car every few years, leasing is probably the better option for you.  If you need to commute long distance for work or school, buying will probably be better.  Whatever the case, whether you buy or lease, you can always negotiate prices and fees.

Negotiate a Price

This is usually the fun part.  I am sure everyone you know that buys a car says that they got it for a steal and that it was the deal of the lifetime.  Well, if that were the case, auto dealerships would be out of business.  Auto sales is set up in a way where almost everything is negotiable.  Remember, no matter where you go, they want YOUR business.  Do not let the salesman dictate the terms.

It is usually smart to start negotiations at the dealer invoice.  Most dealerships will share this document with you and if they don’t, go somewhere else.  Often times, you can buy a car for invoice plus $100-$600, maybe even less.  Consider the fact that the more cars they have on lot of the one you’re looking for, the more they will be willing to negotiate.  Try to avoid the hot selling car of the month, as they are less willing to lower the price on cars that are low in supply.

Remember to factor in additional costs that are not included in your agreed upon price.  After agreeing upon a price, you will have to pay taxes, documentation fees, registration, license renewals, and more.  Leave some room in your budget for these added expenses.

How Will You Pay for It?

I usually try to refrain from auto financing if possible, but if you must, here are things to consider.  First, realize that in most cases, financing terms offered by dealerships will most likely be more expensive than financing that could be found from an outside institution.  Make sure and compare the differences between loan terms.  The main things to look at are down payment, interest rate, loan term, and any extra fees that are charged.  Maintaining a strong credit score is crucial for securing a favorable loan.  This is why financial planning is so crucial and affects so many aspects of your life.

Leasing financing is similar.  Your credit score will dictate how good of terms you receive from the dealership.  Keep in mind that depreciation costs are usually more for newer cars than older ones, thus a lease for a newer car will almost always be more expensive.  Make sure to know your lease term and how it coincides with your warranty.  In some cases, your lease may extend beyond your warranty period.  As a result, it may be smart to get an extended warranty from the dealership or a third party like SmartAutowarranty.com.

Enjoy the Car

Buying a car can be a long, vigorous process.  When it’s done, be sure to enjoy what you just bought!  Avoid buyer’s remorse as almost everyone gets it at one point.  Realize you did a good job researching and you have the best car for your needs.  Try to maintain the car as best you can so that you can get the most car for your money.  Remember, a car is not an investment.  However, it can be a great help in accomplishing your financial goals for financial planning.

It is hard to browse the web these days without getting an ad or running into a website stating, “Get Rich Quick or Earn Money From Home!“  Following these catchy slogans are usually testimonials from people who have supposedly participated in the program and who have very easily made a lot of money, without doing much themselves.  It is my goal of this site to provide insights to finding financial freedom, however, this process does not happen overnight.

It seems that hopes for a quick wealth has been with us for a long time.  Early gold rushers left on the spot for the search of gold in California, hoping that they would find their “quick riches.”  We hear the tales of those that did find success, however, we rarely hear of thousands more that found nothing and lost everything.  Aside from winning the lottery, or being a criminal, I cannot think of many things that will make you rich overnight.  Sure, you could one day find oil on your land, or win the jackpot from a slot machine,  however, your odds for getting a fatal disease at a young age is much greater.  So instead of playing the game of odds, lets try to improve them dramatically.

Invest in Yourself

I am amazed at the countless multi-level-marketing businesses and online scams my friends get caught up in.  In many of them, they are not only required to pay an initiation fee (many of these can be thousands of dollars), but also are required to spend a lot of time getting set up.  Whether it is going to motivational sales meetings, getting their website set up, learning the process of the business, there is a lot of time that gets used.  In most cases, after several months of failed attempts to make money, people give up on the program and jump to the next one that catches their eye.

It can be so enticing to look further into these ventures, however, as the old saying goes, “if seems too good to be true, it probably is.”  Think of all of the lost time that could have been invested into sharpening their skill-set, learning more work experience, and making them that much more competitive in the workforce.  On top of that, instead of draining their resources in attempts to launch this program, they could have been adding to it.  I ask you, next time you are asked to pay money to begin a new pyramid business, give it to charity, because most likely you will never get that money back.

Hard Work vs Smart Work

I am not a believer that one must slave their entire life to be able to enjoy a successful life.  Not at all!  In fact, I believe with proper planning and goal setting, this process can be accomplished rather quickly in life.  It all depends on how much you want it.  Don’t let those that say you need to work until your 70 before you retire, or you need to work two jobs.  Success is not derived by how many hours you put in.  In fact, I have known people that have consitantly held two to three jobs their entire life and still struggle to make ends meet.  Hard work is an important principle, but it is only effective when that work is assisting to accomplishing your end goal.  A man could work and sweat all day moving a pile of rocks from one side to another, but at the end of the day, he still has a pile of rocks.  Sure, the man worked incredibly hard, but he has nothing to show from it.  Create success out of your work.  Make sure your work is contributing to an end that will be satisfying to you AND your employer.

I often hear of people who are content in their slothful jobs who say, “work is so easy, I don’t even do anything.  I just get to browse the internet the whole time, it’s great.”  Although it may seem fun to get paid for not much work, it can be a disease to financial planning.  Time is a precious thing.  It is important to utilize your time the best you can to work towards your end goal.  When employed, not only are you providing a useful service to the company you work for, you are also strengthening your own skills.  This can only be a benefit and will bring good rewards down the road.  Don’t let three years go by with a job that you didn’t learn anything from.

Believe

Believing is probably the toughest part.  Most entrepreneurs and successful business men/woman have failed multiple times before they had their great success.  The point is that they always believed in themselves.  For most cases, a leap of faith must be taken to reap big rewards.  The power of believing and having confidence in yourself is a big one.  This principle is used in professional sports, medicine, military service and in many other aspects of life.  You are the only one stopping you of accomplishing your goals.  Everything else is possible.  Believe in your ideas and have the confidence to try them.  Do not get frustrated with your failures.  Learn from them and it will eventually lead you to great success.

Monetary success can be found rather easily, but it takes planning and application.  Do not fall into the trap of “get rich quick” scams, as most of them will just be a hurdle to your goals.  Instead focus on your skills and you will find that not only will you become “rich”, but you will have become better for it.

Insurance. It always has a negative connotation, because it is usually a protection against something bad or negative happening.  As it is important to always keep a positive attitude, it is also important in measuring risks and learning how to manage those risks.  Knowing how to buy insurance can be a great tool for you as well as a safeguard as you strive for financially freedom.

Nowadays, you can almost find an insurance policy for just about anything.  It all depends on how much you’re willing to pay as a premium.  Professional prospected college athletes sometimes purchase insurance policies as a protection in case of injury during their college year.  Their premiums can be insane, but it can act as a hedge in case of injury, one of which could support them the rest of their life.

Think of it this way, there are many ways you can manage risk in your life.  You can avoid risk, which would result in you keeping yourself in shape, maintaining a good diet, and avoiding risky investment opportunities that leaves you vulnerable to a lot of downside risk.

You can take on risk, meaning that you carry the full burden yourself.  Many people choose to not medically insure themselves or only buy “liability” insurance for their cars. Buy doing this, you fully take on the risk yourself in case of any problems.

You also have the choice of reducing risk.  Continual auto check ups as well as visits to the doctor can keep your risk at lower levels.  This helps of reducing risk of a problem occurring.

The other option you have is to completely transfer your risk. You can transfer your risk by purchasing an insurance policy.  By doing so, you pay a “premium” to have another company assume the risk for your potential problems.

Most likely you will eventually buy some sort of insurance in your life.  When considering insurance plans and what to buy, you may want to consider the following:

Stay Big
There are many companies out there fighting for your business.  It is best to stick with the larger companies who have been around for a while and have a lot of capital backing.  It is not unusual for insurance companies to go bankrupt, which could be a disaster for you if you are in the middle of an emergency.  Some companies may tempt you with lower premiums, but the extra few dollars a month is worth the security of a strong, reputable company.

Look For Discounts
Many insurance companies offer discounts.  For instance, well performing students are often given a lower monthly rate.  You may be eligible for a discount, depending on your employer as well.  Those who have family who have retired from the military are most likely eligible for USAA insurance, which is a very cost-effective, private insurance company which services military families.  Even if your father or even step-father was or is in the military, you are most likely eligible for USAA.

Compare Quotes
Just like any other industry, insurance is a business.  As such, companies are competing for your business.  Call around to several companies getting their quotes for their services.  You may be surprised at how much of a discount they may be able to offer in order to win over your business.

Purchasing insurance is an important element of financial planning.  All it takes is one medical emergency or one severe car crash, to put you in a pile of bills.  By purchasing insurance, you transfer most of the risk liability to your insurance company, helping you to focus on other important aspects of financial planning.

On PlanningFinancials.com, we discuss a variety of different types of lending options.  Debt markets are so critical to the US economy and to continuing to keep the money supply liquid.  Mortgage loans are critical to understand in regards to financial planning, especially if you plan on buying a house someday.  Before diving into different types of mortgage loans, lets define conventional loans. Conventional loans are loans that are not guaranteed or insured.  These loans have pre-set amounts which are set by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).  These two entities are the major purchases of mortgages in the secondary market.  If your down payment is less than 20%, than Private Mortgage Insurance (PMI) is required on a conventional loan.  Now lets break down the different types of mortgage loans:

Fixed-Rate Mortgages- These are loans with a fixed interest rate for the duration of the loan.  These are the least risky types of loans for consumers, since the bank assumes the risk of rate variability.   However, due to the risk going to the lender, interest rates and monthly payments are usually larger, especially earlier on.

Variable or Adjustable-Rate Mortgages (ARMs)-  ARMs are mortgages that have interest rates that move with a particular index, such as 10 yr Treasuries.  Usually ARMs have lower interest rates, because the risk is given to the consumer.  However, during inflationary times, ARM’s can be very vulnerable to huge increases in interest rate.

Jumbo Loans- These are loans which are over the maximum loan amount set by Fannie Mae and Freddie Mac (which in 2008 was $417,000).  Larger loans are also often referred to as jumbo loans.

Interest-Only Loans- These are loans that are structured where only interest expense is paid off in your monthly payments  in the initial stages of a loan.  These are usually done in order to preserve capital to either pay down more expensive debt or to allocate cash to more profitable vehicles.  Although, the initial payments are much lower, as soon as the “interest-only” term is up (which is usually 5-10 years), the increase in your mortgage payment can be monumental.  So, these can be risky.

Piggyback Loans- These are two separate loans that are split up as one being for 80% of the value of the home and the other being 20%.  The second loan usually bears a significant higher interest rate, because of the risk of the loan.  These are usually used to avoid PMI.

Option Adjustable-Rate Mortgages (Option ARMs)- With these loans, the interest rates adjust monthly and the payments adjust annually.  You then have options on the payment amount, which sometimes can be very low.  However, negative amortization is a big risk for Option ARMs.

Balloon Mortgages- These are loans that at the end of the term of the loan, the principal has not fully been paid off.  There is then a “balloon” payment in order to pay the remaining principal of the loan.  Once again, your monthly payments are usually less, but the balloon payment at the end can be very large.

Negative-Amortization Mortgages (NegAm)- These are when your monthly payments are too small to amortize or fully pay off the loan.  The amount which is not being paid, is then added back on to the principal loan.

Above are many types of mortgage loans that are available to consumers.  One cannot be considered “the best”, as it all depends on your current need for the money and your financial position.  As always, always be cautious when considering debt, as it can be a big hurdle in your goal to financial freedom.

I find it very interesting to see the different saving/spending dynamics of the older generations compared to the youth of the world today.  With the help of movies and TV, much of the youth of today seek to be rich, or at least try to own expensive goods, at such a young age.  Sure, it may be fun to race around in a Porsche or BMW in your 20’s, but if you stretch outside your means to buy such, you could very well end up regretting it in the end.  I do think the older generation still had parenting influences that were around The Great Depression, so the principal of hard work and save for tough times is embedded in their head.  Maybe it will take another depression to teach our youth these same principals or you can just choose to live by them.

One big fact is that most Americans are horrible at saving. If you are from another country, you probably already know this, but no other country comes near the debt that US consumers pile up to buy things.  Hopefully, this debt is going towards useful and needful things, such as school and house loans.  Unfortunately, this is not the case for most Americans.  It is very normal for most people in their twenties and thirties to live paycheck to paycheck.  If they reach the end of two weeks and their account balance is $0, they feel that they have done well.  They feel as long as they stay out of the red, they’re doing OK.  Some are even  fine being in the red, as long as it remains “manageable.”  This practice couldn’t be more detrimental to the principals of  financial planning and personal finance.

The goal of financial planning and this site is to help people find financial freedom and enjoy the things in life at their free will.  Saving is an essential part to this process and can be a life saver for you during critical times in your life.  I have always had a goal to try and save 20% of my paycheck.  Mind you, after taxes, religious donations, and expenses, this can become a tough task.  However, doing so will greatly reduce the stress of finances, knowing that you have money in the bank.

You Don’t Need Something To Save For

It’s amazing how often I talk to people who are young and living paycheck to paycheck and they say to me, “why should I save right now?  I don’t have anything to save for.”  Just because a new house, college, or a car is not included in your immediate future, does not mean you can’t save.  You don’t need something to save for.  In fact, this is the best time to save!  You will be able to save more money and sooner or later, I promise, you will need to dip into those funds.  Start saving now whether or not you are planning to buy something big.

Establish An Emergency Fund

An emergency fund can play a very important role in your financial planning.  An emergency fund is usually a portion of cash which is set aside that if you were to lose your job, you could survive strictly on the fund for around six months.  So, if you currently make $2,000 per month, your emergency fund would be around $12,000.  It may seem like a lot to set aside for an “emergency”, but trust me, this fund can be a lifesaver.  During good economic times, most would probably think such a fund is worthless.  However, as we have seen recently, a healthy, thriving economy can be turned around in the matter of a few months.  Many people I know have recently lost their job and have families and a mortgage to pay for and have no clue what to do.  It is during times like these, an emergency fund could save you.

Emergency funds need not to be reserved just for job security.  It can be used for cases in which a medical emergency has occurred, legal matters, accidents or disasters, etc.  It is a source of funds that should be used in case of an emergency.  Having such a fund, could one day make a huge difference in your life, but it starts by saving for it now.

If you do not have one, think about opening a savings account.  ING Direct offers great rates for people desiring to put away some cash, you can set one up here: The Orange Savings Account. Great rates, no fees, no minimums.

By learning to save at a young age, you will find that the habit will stick with you throughout the years.  By practicing good saving principals, you can reduce the stress in your life and better prepare yourself for tough economic conditions.  Remember, we live in a cyclical economy.  That means we go up and we go down.  It will always be like that, remember it, even when it seems like things are so good.  Saving and having an emergency fund will help you better weather the tough times.

It can drive one to insanity.  It is frequently the cause of murder and suicide.  It can overcome your life and, if you allow it to, completely destroy your path to success.  This nasty beast I am referring to is debt.  Don’t get me wrong, I am a fan of certain types of debt and recognize that without it, many of us would be unable to probably ever buy a house or receive a college education.  However, a healthy amount of debt can quickly turn into an income-eating monster that can eventually eat up your entire paycheck and leave you nothing to enjoy for yourself.  Sure, most everyone at sometime will require to lean upon a lending institution to receive a loan for something of need.  Here are a few tips of how you can maintain your debt.

First, a key principal, that if you live by, you will be better off than your peers.  Live Within Your Means. Human nature begets a competitive spirit.  Many times this can result in a “better than your neighbor” mentality.  Some are constantly trying to keep up with their friends by constantly having the nicest and most expensive goods on the market.  Whether it is trying to have the nicest car out of the bunch or the biggest boat.  Whatever the case may be, it is important to try and tune those impulses out and focus on living a way of life you can afford.  By doing so, you will be able to save more money, minimize your debt and make it a lot easier for you to accomplish your long term goals.  Can you give up a Mercedes in your early twenties for your dream house in retirement.  If you were to bypass paying $60,000 for a luxury car when you were 25, and instead put it into a CD yielding 5% amortized interest, at 45 you would gave $162,758 to spend.  This amount is with not even contributing to the account over time or accounting for the additional money saved from maintenance costs and repairs that the vehicle would need.

The point is to try to limit yourself in what you choose to use debt for.  They should be NEEDS, not WANTS.  Now of course, we all get compulsive sometimes and can find ourselves in a spending frenzy.  So what do you do if all of a sudden you realize you’re swimming in a pool of debt.  Don’t panic, just analyze the situation:

Organize your debt

You may find yourself in debt in 10-15 different vehicles.  An auto loan, a credit union, two or three credit cards, a friend, etc.  The point is  to organize all of your debts into one document and find out your total amount owed.

Plan your debt payoff

It can seem like a monumental task when looking at all the money you owe to creditors and thinking of having to pay it all back.  However, it is amazing of how fast debt can be wiped out just by planning to pay it off the right way and deciding who to pay off first.  Organize a debt calender much like the one below to help plan your time line in paying off your debt.  Start with allocating as much money as possible to your higher interest rate debt like credit cards.  By setting up a table you are able to see exactly when you plan to be debt free.  This can be very liberating.

Consolidate your debt

If you find yourself in a sleu of credit card debt, you may want to consider a home equity loan (if you own a house).  A home equity loan is a secured loan, which in turn yields a much lower interest rate.  If you are getting eaten alive with interest payments, you may want to consider receiving an equity loan to payoff your credit card debt.  However, remember, failure to payoff your home equity loan could result in losing your house.  So make sure to change prior spending habits to allow you to payoff this debt.

When times get tough, always seek debt negotiation with your creditors to see if you can alter your terms of your loans.  You may be surprised to see how easy it can be to get a lower interest rate, or smaller monthly payment.  There are loan modification sites that have lists of agencies who can assist you in modifying your loans for your house or other debt.

Bankruptcy

Lastly, you can consider legal action, or bankruptcy.  Bankruptcy has become quite popular in recent times as it can free you from a deep burden to creditors.  However, bankruptcy is on your record for 10 years and can be a huge burden to you and very much restrict you from accomplishing your goals.  Bankruptcy should be considered as an absolute last resort.  Avoid it as much as possible, but if severely needed, bankruptcy can be a help in getting you back on track.

When studying bankruptcy, they find three major trends that influence it the most: Unpaid medical expenses, a loss of primary source of income, and divorce (separation and death).  By trying to avoid these, you can be able to better your chances of avoiding this plague and better your path to financial freedom.  Consider organizing your debt today, as the earlier you start, the earlier it is paid off.

One big expense that will most likely follow you around your entire life is that of paying taxes. Effective tax planning is essential in personal finance and financial planning, as it is the single-most biggest expense for American families.  In fact, as of  2008, most people do not fully pay off their tax liability for the whole year until April 23.  That means you do not start putting money in our pocket until about 25% of the year is done (see below).  Your tax liability is bigger than your food, clothing, insurance, and other expenses combined.  By learning how to effectively plan for taxes, you can minimize this expense and learn how use the tax savings vehicles the government has provided for you.  As a preface to this article, I am not a CPA or accountant, and any sort of tax planning and advice for you should be discussed with a CPA or your local accountant.  However, I am going to mention a few of the vehicles I use and the benefits I receive.

First, let’s discuss how you determine either what is owed to the government, or sometimes, what is owed back to you.  Computing your tax liability is very simple and can be described using this simple equation:

Income – IRS Exclusions=

GROSS INCOME

– Adjustments=

ADJUSTED GROSS INCOME

-Standard Deductions & -Tax Exemptions=

TAXABLE INCOME

(Refer to IRS table to find your tax bracket, then calculate)

TENTATIVE INCOME

-Tax Credits

TOTAL TAX OWED

-Taxes Already Paid

TOTAL CURRENT AMOUNT OWED OR ABLE TO RETAIN AS A REFUND

Using this simple formula, you should be able to roughly estimate where your annual liability should run.  You can use software like quicken to help make the process easier.  In any case, it is important to realize how much you roughly pay a year.  By doing so, you can plan around this large expense.

There are four main strategies to try and utilize when planning for taxes.  These can help minimize your liability and in the end, keep more money in your pocket at the end of the year.  These four strategies are:

1. Receive Tax-exempt Income

You can use medical savings accounts (flexible savings accounts) to pay your medical bills.  This allows you to pay your bills with pre-tax dollars.  Also, look for tax free investments.  Many municipal bonds are tax free.  However, depending on your marginal tax rate, it may not make sense for you to use these vehicles.  You can also contribute long-term, appreciated assets to charitable organizations.  Using stock can be a great way to donate to charity.  In fact, many churches or charitable organizations will now accept stock transfers as donations.  By doing so, you get the full tax credit for the donation and do not have to pay the taxes on the gains of the asset.  See when you give, you shall receive.

2. Make the Most Out of your Deductions

Be charitable.  By giving more, you can save more.  Sure, we do not give just to save in taxes, but this can be a great added bonus.  Also, use your house as a tax shelter.  Your interest payment can be a great deduction for your taxes.  Adjust your deductions to get the maximum savings on a given year.

3. Use Long Term Capital Gains

Look to invest in long term investments.  Usually, long term capital gains is taxed at a lower tax bracket than short term capital gains.  Long term gains are usually referred to assets being held for 1 year or more.  Your tax rate can sometimes be 20% lower in a long term case.  Think about this when choosing your buy and sell strategies with your stocks.

4. Learn to Defer or Pre-pay Taxes to Help Save Money

Use tax exempt or tax deferred vehicles as much as you can.  401ks and IRAs are great vehicles to use to avoid paying taxes.  Try to contribute as much as possible to these retirement accounts.  Save for children’s educations using Education IRAs and Series EE or Series I savings bonds.  You can pay for education using pre tax dollars and can end up saving you a lot of money in the end.

I just cracked the service of some of the vehicles you can use in tax planning.  Be sure and talk to a good accountant or CPA to find out how you can best keep as much savings in your pocket every month that you can.  Remember, tax expense is most likely by far your largest annual expense.  By effectively planning for taxes, you will be able to save more money and become that much closer to achieving your goals to financial freedom.

In the post, Preparing For A Job Interview, I discussed several important elements to remember when preparing and executing a successful job interview.  Here I am going to talk about one of the most important element.  The Resume.  The sound of it can make people cringe.  I think most people are more worried and bothered about creating an updated resume than about their actual job hunt or interview.  It can be brain racking and tedious sometimes, but having a good, strong resume can give you a big edge against your competitors.  You don’t necessarily need a page full of job experience.  As it does help to have good experience, you can manipulate resumes to play to your strengths.  So how do you do this?

Clean and Professional

Some people get the wrong idea of “standing out” amongst competitors and feel that using colored paper or an enlarged styled font will somehow give their employers the impression that they should be chosen over their competitors.  This couldn’t be anymore wrong.  Although it may seem plain and boring, a simple, clean resume is important in maintaining a perception of professionalism to your employer.  Your name should be the biggest word on the paper.  You can freshen your resume up with bolded headers, bullets, and indentation, but keep the appearance of clean and professional.  Doing so will give your resume a good impression to your employer.  The content of your resume will distinguish you from the rest.  Below is an example of a clean and professional resume.

Start with Strengths

In my past resumes, I usually use the following four main sections in the resume:

• Experience in (what job I am applying for) - This is the work experience directly related to the job you are applying for (doesn’t have to be prior jobs, could be volunteer work or other experiences.)
• Education – Your list of educational accomplishments, with your most recent degrees and accomplishments first.
• Other work experience - This is other work experience that may not be directly related to the current job you’re interviewing for.
• Other achievements/interests – This is your bragging section.  Any accomplishments, interests, personal core values or anything else that you think will set you apart from others.

Your first few resumes will not have a lot of previous work experience on it.  That’s not a problem.  If you do not have much work experience, than start with something else.  Employers are not just interested in your past work experience.  If education is your strength, start with that.  You can put your past work experience towards the bottom.  Some employers will be looking at hundreds of these, so you want to put your best foot forward and catch their attention as soon as possible.

Keep it Short, Aim for One Page

As you get older, you may have more to brag about in these documents.  However, it is good to aim to keep this document to a page.  If you do have to go over, consider printing on front and back.  A stapled, two page resume can be overwhelming on screeners and may just be that one little thing that puts your resume in the “discard” pile.  If you are running out of room, considering cutting your less relivant jobs or other jobs that have become outdated.  Sometimes you are asked to provide a “cover letter.”  If that is the case, than attach a brief cover letter introducing yourself to the company.  Cover letters are becoming less and less popular.

Preparing References

Many times employers will ask for references to use to get more information about you.  These can be very influential for better or for worse.  I am amazed at people that I get called to “refer” to new companies.  Some are people I barely knew, or sometimes, didn’t think much about.  Make sure you have a strong relationship with the people you choose.  It is also wise to call them before hand to ask permission to use their name.  This can also give you a chance to help prepare them of what job you’re going for and maybe give suggestions of what they are looking for.  Make sure they are good references!  Try to stay away from your family.  Although sometimes you may have influential people in your family, it is always better to use outside of kin references.

After generating a strong resume, use it.  There are many online resources that can help provide leads for you in your hunt for a career.  Sites like Resume Rabbit will take your resume and send it out to tens of thousands of employers looking for new positions.  This can be a great help and speed up your process for getting interviews. By bettering your chances at getting the job you want, you greater the chance of the getting the job that better fits your needs and, in turn, gets you closer to accomplishing your goals.

We have said before that with the new generation growing up, statistics show that people between the ages of 18 and 38 will change jobs an average of 10 times.  With this being the case, this means that you will need to be prepared and ready to nail 10 job interviews.  In the US, finding a job can be very competitive and it is important to find ways to distinguish you from your competitors.  Finding the right job is critical for your life and for your journey in financial planning.  Here are a few simple tips that can help you.

Research

The first step to prepare yourself for an interview is to do some due diligence about the company you are interviewing for.  Most every company has a vision or mission statement.  This usually gives a brief description of why the company exists.  When getting hired, companies like to know that you have taken specific interest in their company and that you can contribute to the values they make them who they are.

What to Bring

The first impression.  Dress nice.  You can never overdress for an interview.  I have never been rebuked for wearing a suit.  Also, make sure to bring a pad of paper, pen, and several copies of your resume as there could be multiple people interviewing you.  You will be surprised at how impressed employers will be as you come prepared ready to jot down points that are of value and that you find important.

The Interview

Be confident.  They say most employers make their decision of hiring within the first ten minutes of meeting you.  Maintain good eye contact and be vocal.  Don’t be afraid to ask questions.  Try tying in questions that you learned from your research, like “I noticed you have over 53 locations, do you plan on opening more?” or “I see that you have 59 different product lines, which one is your best seller?”  Questions like these show your interest in the company and helps the employer to feel like your not just going to another job interview.  Give good feedback to the employer’s question.  If you do not understand the question, rephrase back to him to make sure you do.  There is nothing worse than not answering the questions they want to know about you.  The point is to stand out.

Follow Up

You would be surprised at how much success you could have at getting a job if you just reminded the employer of yourself.  A couple weeks after the interview, if you haven’t heard back from the company, send them a quick email reminding them of who you are, appreciation for the original interview and when to expect to hear back from them.  Several times this extra effort could put you above that other person as you become fresh in their memory.  Also, it can happen that they lose your paper work.  In any case, it cannot hurt to follow up.

The interview is such a critical part of your career, as the next 10-20 years of your life can be decided in a 15 minute meeting.  Give this event its needed attention.  By becoming better in your job interviews, you will have more job options to choose from, which will help enable you to find the job that fits you and your needs.  Being in the right job is critical for financial planning and can help you accomplish your long term goals.