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Starting Young

January 27th, 2007 at 04:02 pm

One of the concepts I stress to my "teammates" is the importance of starting young along their investment path.

Although I am only 35, I understand and appreciate the value of compounding interest, time IN the market and long term vision.

As a business owner, not only do I have to monitor my personal growth and financial "moves", I must also monitor my corporations growth and financial stability as well. Both take great patience, prayer and vision. I invite any visitors to my blog to share with me their thoughts, ideas, questions, concerns and comments. Knowledge and communication are powerful tools. Let's share and learn together.

5 Responses to “Starting Young”

  1. mariannej Says:
    1169938020

    I am 33 and I feel like the "starting young" concept has already well passed me by. Although I have been fairly frugal and knowledgable about saving while in my young 20's I never had the money to actually practice those concepts. The one piece of the puzzle I was missing was finding a career that paid well, so here I am knowing full well that I am starting late and somedays I kill myself over it, but at least I will be starting within the next year.

    I do have all this knowledge and great resources such as this site, and I am well aware that I am starting much younger than many others. I just wish I had opened an IRA with the money I made when I was in High School instead of spending it on a trip to France (which I hated). Live and Learn, right?

  2. Mooshocker Says:
    1169945478

    Mariannej,

    It's never too late to begin taking steps to secure your financial future. And there is truly no rule as to how much money you have to make. In fact, there are many wonderful articles on MSN's Money regarding turning $1.00 per day into hundreds of thousands of dollars.

    Granted, due to the "lost" time in the market, you certainly are never going to be able to recoup those earnings, however, making saving a priority now will certainly bode well for you and your family in the future.

    My thought (albeit aggressive and against the grain of many professional financial advisors...lol...) is always this:

    1. Completely payoff any/all unsecured, revolving credit. This credit COST'S you money in the way of interest paid. Focus every dollar you can from every source of income to this goal. Start by applying the most to your highest interest account with the minimum going toward the others. Once one is gone, stock pile the next highest and so on.

    DO NOT worry about investing until this debt is gone. Now, I know, what about compound interest, etc. Well, trust me, when you are paying anything over 5% (which a good money market account is paying today) in interest, your earnings are not nearly as significant.

    PS - once you pay off the cards, don't necessarily cancel them, simply chop them into tiny little bits and throw them in the trash. Keep one for EMERGENCY's only. No dinners; no movies; no christmas gifts; no DVD's or other gizmo's...EMERGENCY's ONLY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Take it from me, you do not need them!!!!!!!!!!!!! Cash is king and you are not ready yet to balance credit card spending!

    2. Now that your debt is gone, begin to immediately focus on your employers 401K, SIMPLE, SEP or other source of work retirement that your company's offers. Put at least as much in it to earn the match, if one is given by the employer. This is not only a great source of "retirement", it is an awesome way to reduce your taxable income!!!!

    3. CASH RESERVES!!!!!!!!!!!!!! Nothing will deter you from saving faster than a blown tire, leaky roof or tired furnace. Open a MONEY MARKET ACCOUNT! Stay away from bank savings accounts. They are as ancient as typwriters. Utilize a fund that invests, allows check writing, atm and a great rate of return to stash at least six months worth of income! Yep, that's right, SIX, not THREE!!!!!! As I always say, go big or stay home!!!!

    4. Once these steps are made "automatic", you are ready to open a ROTH IRA. This plan is going to assist in your non-taxable income at the time of retirement. Work hard to sock away the $4K in 2007 (and remember, you can still open and fund a ROTH for 2006 until 4/15.

    Again, outside of six months worth of income in your money market, I am not talking about hundreds of dollars worth of money going into these accounts each payday. Just a few bucks will add up quickly. Stay diligent, automate it whenever possible and forget about it.

    One last note about pre-paying mortgages.....UNLESS YOU HAVE FULLY FUNDED YOUR EMPLOYERS RETIREMENT PLAN; FULLY FUNDED SIX MONTHS OF CASH RESERVES; FULLY FUNDED A ROTH IRA AND MAINTAIN ZERO DEBT, YOU HAVE NOT BUSINESS GIVING YOUR EXTRA MONEY TO YOUR MORTGAGEE TO MAKE HIM WEALTHIER...PAY YOURSELF FIRST!

    That said, if you have accomplished the above, start chopping away at that mortgage interest! It will give you the greatest sense of satisfaction and save you hundreds of thousands of dollars in interest!

    PPS - For those who don't think they can afford a house, car, etc because of your age, credit, income...STOP PLAYING REALTOR, MORTGAGE BROKER AND CAR SALESMAN!!! Let the professionals tell you you don't qualify...I see so many twenty three year olds pass up the opportunty to put $600.00 month toward a home of there own versus giving it to the landlord (which, I am one of also). Trust me, unless a professional tells you no, the sky is the limit....stop assuming and thinking negatively....JT


  3. jersey jen Says:
    1169955116

    Welcome! Keep up updated with your progress!

  4. Broken Arrow Says:
    1170086652

    Welcome!

    Yeah, I'm 32, but I feel like I'm starting late as well. Big Grin Of course, I still have time to catch up, but I do think that your (early) 20's is definitely the place to start. Teens if you're really sharp. Smile

  5. billm950 Says:
    1203363897

    I stated when i was only 23, i am 25 now... and hope to when i am 45 i will be in retiring age in terms of financial independence with mortgage and all other loans. good luck with your endevour...

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