Acclerated Debt Payment

Saving money from our family budget and investing is one way of accumulating money. Another strategy is to reduce the amount of interest you will be paying on credit cards, first and second mortgages, other installment credit accounts, and car loans.

As part of a financial plan, consider taking a thirty year mortgage on which you will have a total interest amount larger that the origianl loan and pay additional princple. You have already agreed to the terms of this mortgage and by adding $100.00a month to a $160,000 loan it will reduce the length of the loan around five years.

The best appoach is to review the interest rate charged on all your revolving credit accounts and pay of the one with the highest interest rate or smallest balance. When an account is paid off add that amount to another account's payment make the balance reduce faster. Continue this proceedure until you are debt free. The amount that was being paid to the last debt should now be put into an investment, 50% for future spending and 50% for retirement spending.

The time value of money is a big help in accomplishing your financial goals. Start young, make a good income, and use a lot of financial discipline.

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Energy Cost -Part II

One of the arguments is that fossil fuel pollutes the environment and that we need to use some other form of energy. Electricity runs from 6.5 cent to 12 cents a kilowatt. Solar power runs between 34 cents to 42 cents. Wind is between 3 to 5 cents when the wind is blowing.

The market place says that oil is the most cost effective source of fuel for mobile vehicle energy consumption. So government says we will add a tax to pay for roads. The tax keeps going up but the taxpayer do not have accountability. Is the money going to roads, or maybe to partially fund a mass transit system?

Atomic and coal fire electric power plants provide the most cost effective electricity. Oil is the most cost effective fuel for cars, trucks, airplanes, trains, etc.

There is no scientific proof that the environment is harmed by carbon dioxide omissions into the atmosphere. In science there is not consensus, only absolute conclusion. Global warming is a scientific consensus based on computer models.

In 2006, the west coast forest fires produced one-third of all the pollution in the United States. I have not heard any outrage from the environmentalists, laws being passed to make forest fires illegal, or a tax on smoke.

Animals exhale carbon dioxide. What is next, a tax to breath?

Let the market place work. Drill for the oil. Work on alternatives. The solution will be found when the price is right without governmental interference. Nature is to complicated to think that humans can control the atmosphere.

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Frame Of Mind

Making money work hard sounds easy until you get into the process
of structuring a program to accomplish increased accumulation and
savings.

Your talents and interests may not involve planning how to spend your
money but it is very important to learn how to manage your money properly.
There is only one person who cares how well you do, and has the motivation to be successful.

An important concept is what frame of mind you’re in and how you
visualize the whole financial planning process.

Think of being at the entrance to a tunnel, looking into the dark and asking
yourself what do I see. Visually you see black darkness but mentally you
can envision what ever you want to. Accumulating excess money is the
catalyst to make the vision you saw in the tunnel happen.

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Energy Cost Part I

One of the greatest thing about our market driven economy is the ability to solve problems. If there is a demand for a good or service, the market place will provide what is needed if a profit can be made in the process. Another type of economy is when the government decides by legislation to change the market place.

In the case of gasoline the oil company makes 8 cent, the gas station makes 8 cents, and the government makes 32 to 48 cents a gallon. The ability to refine crude oil has been restricted for environmental reasons, and drilling for news sources in continental U.S. has been restricted for environmental reasons.

To supplement the need for fuel, the government has decided to subsidizes a more expensive alternative. Since ethanol is made from corn the price of commodities have forced the cost of meat, milk, cereal, eggs and other groceries to new highs. The fuel cost has increased the price of all item hauled by truck. The price of natural gas has increased because it is used to refine ethanol, and fire power plants to conform to environmental restrictions.

What price must be reached before we get back to a market economy?

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Mental Picture

One of the most important thing that we need to be aware of is our media sources. With the number of different kinds of information and entertainment, our space is invaded by others everywhere we go. The new portable communication devises make access a lot easier and the cost is declining so it is affordable.

These invasions into our space causes a mental reaction to the informations received. Most of the information is sensationalized, spun to match an agenda, conforms to a political point of view. Joseph Goebbel's in his Principles of Propaganda gave seventeen principles for a successful information program. He said if you tell the people the same thing over and over it become truth whether it is or not.

If you find yourself thinking that every thing seem to be going wrong, sub-prime loans, high prices for oil, low housing sales, four soldiers killed in Iraq, the dollar is declining against foreign currency, etc. Ask yourself, do any of these situation apply to you? Are these circumstance you can get involved directly to change? Would the best thing to do be turn off the media, don't read the newspaper, and make a choice as to what you really think or what you want to do about this issue.

The greatest asset a human being can have is to be a citizen of the United States. The rest is up to you. Don't let others do your thinking. Question everything and make you own conclusions.

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401(k) Allocation Review

When the stock market takes a down turn, what should be done
with the allocations in my 401(k) to keep from loosing money?

By the time you receive the quarterly report showing the account
has lost money, it is probably too late to take any adjustments.

There are several steps that can be taken to reduce the loss in a
down market. The overall strategy is to buy low and sell high.
Changing allocations after the money has been lost will prevent
receiving the gain when the market turns around.

When you watch the evening news, make note of the Federal
Reserve prime interest rate, the change in the S&P 500, and the
trend of the stock market, up or down .

The prime interest rate shows what is going to happen short
term. Interest rates going up, stock market/bond market
going down, and economy slowing down.

This is the time to decide what action needs to be taken. The
closer you are to retirement will determine the action that needs
to be taken.

The investment company who is the fiduciary for you retirement
plan (401(k),403(b), 408 (a), or 457 Deferred Compensation will
change allocations per your instructions. Their income is made
managing the funds in the different variable accounts. It the
future retiree’s responsibility to keep track of the allocations
to minimize the loss in a down market.

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Retirement Day

The magic time has arrived. Your old enough to stop working and retire which is defined when you have time, money and health. The amount of benefit is hard to pin down. There are defined benefit plans(union plans, government pensions), 401 (k), ESOP, and 403 (b) just to name a few.

401 (k) retirement plan for profit making companies are a combination of your money and employer matching money which says you can have all the money usually after five years of employment. You should transfer the balance to your own IRA , either an annuity or mutual fund and make withdrawals as needed. All withdrawals are taxable.

(E) ployee (S)tock (O)ption (Trust) is a retirement plan based on length of employment, position, and profits of the company. Your balance of the trust is available when you stop working and should be rolled over into your own investment account. All withdrawals are taxable.

403 (b) retirement plan for non-profit companies which in most cases the contributions are made by the employee by payroll deduction but can have matching fund from the employer. The withdrawals are all taxable and are usually in the investment vehicle chosen by you and is fully vested from the beginning.

Define benefit plans are calculated by the pension plans to determined you monthly payment.The usual scenario is the human resources department or pension trustee will call you into the office and ask you what option you want to take? So you ask yourself, what is he/she talking about? (1) Life income option is the maximum amount and you will receive this amount for your life then it ends. (2) Life with 50% survivor which means you will receive a lessor amount but your spouse will receive half that amount for the spouse's life then is ends. (3)Life and 75% survivor which is a lessor amount now and 75% for spouse for life. These are the most common choices. Some of these plans have cost of living adjustments but usually only on governmental plans.

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