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Money Smarts for the Real World

June 3, 2011


There's No Time Like the Present

Putting off until tomorrow can make your To-Do List longer while causing your financial prospects to grow dimmer.  Time can have the biggest impact on your investment results, and failing to make the most of the time you do have is as good as throwing money out the window.  Learn how to invest your time productively; set-up an automatic investment plan; sit down and work up your budget and you will see results immediately.    Devote the present to taking charge instead of avoiding or worrying about your finances.  You, your family, and your money will be glad you did.


hourglass

Investing Your Time Productively

 

"Hello I'm a procrastinator," I may as well have introduced myself in this manner at the training session on time management.

  It turns out, I was in good company.  Though I didn't realize it at first, the room was filled with others who shared my dirty secret.  The instructor stood at the front of the room holding up the calendar/planner and asked us to start our day - as we should every day - with a to-do list.  When our pens stopped moving, he asked us to prioritize our list with A for urgent, B for important, and C for keep on track.  Next numbers were placed after the letters to further prioritize the list: A1 being the most important, then A2, and so on.  It seemed simple enough, and yet I found myself itching to tackle C3 and B2 first.  These were projects I knew what to do about.  These were things that would produce an immediate reward to my efforts.  A1 --  well, that one I wasn't sure how to start.  Once I had these goals and priorities written out, it was hard to justify wandering off to handle the less urgent issues.  I felt better, though, when most everyone in the room giggled nervously when the instructor asked how many of us were not even looking at the As, but were thinking about the Bs and Cs.

 

Financial matters are a lot like those A1s that seem overwhelming or perplexing, so we jump ahead to the more interesting B and C issues - like shopping for a new car, or planning a weekend trip.  Even the "not so interesting" things on our list take a priority because they have a deadline - like paying bills, for instance.  The truth is, while there is no "deadline" imposed by anyone on your financial management, it is up to you to set them.  If you don't, time has that funny way of passing by very quickly.  Before you realize it, a whole year will pass before you call to get the forms you need to Rollover your 401k from your previous employer, set up a Roth IRA, or the open the kids' college savings accounts.  There is no bill that is sent showing you what you miss out on, but the reality is that time is the most powerful tool in growing assets.  The table that follows gives a snapshot of how planning ahead, and making the best use of time can be a powerful wealth builder.

 

The Planner and the Procrastinator are the same age, but The Planner invests early on, contributing $2,000 every year to an IRA starting at age 22.  Though the Planner only makes these investments for nine years (a total of $18,000) versus the Procrastinator, who invests $70,000 over 35 years, the Planner ends up with $109,222 more at age 65.  How?  Click here to read more.   

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Finding Financial Strength for $1.64

 

Looking for a way to save money that you can afford?  For just $1.64 a day you can start up a retirement account for yourself at  T.Rowe Price.   All you need to do is commit to investing $50 into an IRA account via their automatic asset builder.  From there, you can invest in their Retirement Funds that diversify the investments based on your target date to retirement.  This takes all the guess work out of how to allocate your assets, and does so with low costs/fees.   Set-up automatic monthly investments to painlessly meet your goals and, don't worry if you hit a rough patch; you are free to suspend the automatic asset builder at any time.   If you're feeling like you need more of a challenge, work your way up to saving $13.70 a day to make the maximum annual IRA contribution of $5,000.  This just may be the cheapest and easiest way to save for your retirement.  Get started today.

 

question

$mart Question

We've been trying really hard to do better with our money.  After spending got way out of control, we had $10,000 in credit card debt.  We made a plan and have already paid off half and we know what we need to pay every month to get rid of the debt within the year.  Due to mileage we earned on these credit cards, we can take a free vacation.  I know we're not done yet paying off the cards, but we will only spend cash (not charge).  I feel like we could all use a vacation.  It's been a rough road and I'd like a little family fun.  Do you think it's a bad idea?

First off, congratulations on working towards your goal of paying off your debt! 

As for the vacation, though, I think it is a bad idea.  There is no such thing as a free vacation unless someone is picking up the entire tab (not just the airfare).  There is food to buy, entertainment to be had, and kids (who want trinkets wherever they go).  Why impede your progress and risk losing momentum?  Why reward yourself for a job that is half finished?  I hate to sound harsh, but that is the very attitude that leads to debt. "I want it now."  Being smart with your money isn't just about what you spend, it's an attitude.  It is looking at the money and deciding where it does you and your family the most good.  Even if your debt is paid off, how is your emergency fund?  Do you have one that covers 6 months of household expenses?  (That is the key to keeping out of credit card debt in the future.) How is your retirement being planned for?  Do you both have IRAs for 2011?  Do you have college funds set up for the kids?  Do you and your spouse have life insurance and disability insurance? These, in my book, are the must haves.  Build these into the budget and pay off your debt and then yes, whoop it up (within budget, of course).  You will enjoy it so much more when you've really done what the whole task requires, and not just a small piece.  Why not plan some special family activities where spending money isn't the focus; make it a game to see how much fun you can have while spending nothing or as little as possible.  Parks, picnics, nature trails,  and the beach are places our family goes to enjoy together time without costing anything.  Good luck to you.  Keep up the good work.

 

Every issue we will answer a question from one of our readers. Submit your question here.

 

In This Issue
Investing Your Time Productively
Finding Financial Strength
$mart Question
$mart Move
$mart Move:
Grow It
rshead

Invest in planting a garden.  Not only is it healthier eating (and it tastes so much better), but it is fun for the kids, provides exercise, and can dramatically reduce your food bills.  Another way you'll save:  you will only pick what you need, so there will be less wasted produce.  Just take a look at the items we will harvest from our garden, and what the average cost is for these same items at the local grocery store.  These prices are actually a bit understated, as the garden is organic (cha-ching!).  What are you waiting for?  I'm so excited to watch my grocery bills go down over the summer.  Happy Planting!

Basil $2.69/bunch

Blueberries $2.99 pint

Cilantro $1.59/bunch

Grape Tomatoes (organic) $3.99 pint

Parsley $.99

Peaches $.99 each

Peppers $2

Plum Tomatoes $.39 each

Rosemary $2.49/package

Tomatoes on the Vine $1.79 each

Zucchini $.69 each

MINIMUM TOTAL SAVINGS:  $20.60

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Dina Isola, President

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