The Poor Millionaire

The Poor Millionaire

Sanjib Saha  |  Feb 18, 2023

HOW WE SPEND DEPENDS on how we feel about money.

To be sure, we’re supposed to spend according to our financial situation and needs. But life experiences can so badly distort our attitude toward money that our financial decisions end up being ruled by fear and insecurity rather than questions of affordability. Such is the case with an acquaintance—let’s call her Satee—whose money habits are at odds with her financial standing.

Satee grew up in a typical Indian family of four. Her working dad was the family’s primary breadwinner and financial decision-maker. Her homemaker mom put most of her energy into raising their two kids and taking care of the house. In their family, the financial and nonfinancial responsibilities were clearly divided between husband and wife.

When Satee got married, she envisioned becoming a homemaker instead of a moneymaker. She wanted to be a supportive wife, a loving mother and a responsible daughter. Handling money was neither appealing to her nor on her list of responsibilities.

Satee’s husband was professionally successful and financially savvy. They moved to the U.S. and had two children. They bought a house, saved for retirement and set aside money for the kids’ education. Everything was falling into place, just as Satee had hoped, except for one problem: Relationship and trust issues soured their marriage.

Long story short, Satee went through a messy and conflict-ridden divorce that dragged on for months and turned her world upside down. A property settlement was eventually reached, but the bitter memories and fear of uncertainty remained.

Satee took a while to accept her new role as head of a household with two school-age children. To get through the rough patch, she turned to the local community for emotional support. She met my wife through a mutual friend and quickly formed a bond with her.

A few years later, she connected with my wife again. This time, she seemed happy and settled. She had some money questions and my wife asked me to help. Satee and I chatted a few times, going over some financial basics. She was keen to learn more.

Satee focused a lot on ad hoc, short-term money decisions. She had no clear long-term financial picture. Instead, she was consumed with keeping a tight lid on her spending. Her modest lifestyle left no room for indulgences or even small niceties.

I couldn’t tell if the scrimping and excessive penny-pinching were out of necessity or insecurity. Her financial situation didn’t seem so dire. She owned a paid-off single-family house in a good neighborhood, had a decent job with a six-figure salary, and the kids had fully funded education accounts.

To continue reading, please go to the original article here:

https://humbledollar.com/2023/02/the-poor-millionaire/

‘How Do I Tell My Friends About My Six-Figure Inheritance?’

‘How Do I Tell My Friends About My Six-Figure Inheritance?’

By Charlotte Cowles, the Cut’s financial-advice columnist My Two Cents Sept. 1, 2022

A family member recently passed, and I will receive a six-figure inheritance from a trust. I already have a financial adviser, and I’m working on a plan to save/invest half and give away the other half. My question is, how do I bring this up with friends? I make a reasonable salary from my public-service job and still have student loans to pay off. For my immediate day-to-day life and lifestyle, I don’t expect this money to change anything significantly. But the security of suddenly having retirement savings as well as being able to make significant donations to nonprofit and grassroots organizations I care about is different.

This isn’t the kind of money where I could suddenly stop working as a young person and live lavishly, but it is a lot of money and I realize I have a lot of privilege to get it. I haven’t talked to my close friends about this yet, and it feels weird to bring up, but it feels more weird to not share information at all. Also, I’ve been a person who rolls their eyes about what I perceive as easy lives of “trust fund” recipients in the past, and now I’m one of them!

My friends are empathetic and reasonable, but I just feel self-conscious about getting a lot of money I did nothing to earn. How would you recommend talking to friends about this?

It can be jarring to inherit money, especially when it results from the death of a loved one. You seem to have a great plan for what you’re doing with it (donating to causes you care about and saving the rest), and I’m glad you have a financial adviser to guide you.

But sudden changes in your financial situation can be isolating, too. You used to be in the same boat as your peers — able to afford similar things, relating to each other’s financial challenges. It’s not like you’re quitting your job or buying a yacht now, but this money puts you on a different resource level. That’s incredibly lucky, of course, but it’s also a little lonely.

I can understand your desire to talk to close friends about this, as well as your trepidation around how it could affect your relationships. If there’s one thing that everyone has opinions about, it’s other people’s money, especially when it comes from a trust fund. You’re smart to tread carefully and be thoughtful about this.

To figure out the best way for you to broach this topic, I spoke to several people who work with families with multigenerational wealth. Ellen Perry, the founder of Wealthbridge Partners, recommends that you start by considering three questions: Why you want to tell someone, who you want to tell, and how you want to tell them.

To continue reading, please go to the original article here:

https://www.thecut.com/2022/09/how-do-i-tell-my-friends-about-my-six-figure-inheritance.html

How To Become Financially Independent, According to 3 Experts

How To Become Financially Independent, According to 3 Experts

Cynthia Measom  Tue, February 14, 2023

For some, financial independence seems like an impossible dream and probably always will be. Others, who are more optimistic, might believe sheer determination will get them there.

While a positive and determined mindset is a move in the right direction, it takes much more to achieve a state of financial freedom. To get closer to living the life you want, here’s what you need to know to become financially independent, according to a few experts.

What Is Financial Independence?

“Financial independence is the state of having enough money saved and invested to cover your living expenses for the rest of your life without having to work,” said Claire Hunsaker, a chartered financial consultant and CFO of AskFlossie.

“It doesn’t necessarily mean retiring in the lap of luxury. For most people, it means choosing how they want to spend their days, without the constraints of a 9-5 job. Many financially independent people still work part-time managing their investments or at a company they own that provides passive or semi-passive income.”

How To Become Financially Independent

The steps to become financially independent aren’t particularly complex, but they do take time and commitment to achieve. “The key is to remember financial independence is a long game — it doesn’t happen overnight,” said Steve Sexton, financial consultant and CEO of Sexton Advisory Group. Here are the steps to take.

Calculate Your Future Financial Needs

Knowing the amount of money you’ll need to become financially independent is key when working toward your goal.

“You can do this by multiplying your future income by 30 to set your savings goal, utilize a retirement calculator online to create a forecast, or enlist the help of a financial advisor to get a more accurate picture of what your future financial needs could look like,” said Sexton.

Evaluate Your Spending

 To continue reading, please go to the original article here:

https://news.yahoo.com/become-financially-independent-according-3-130009694.html

10 Genius Things Dave Ramsey Says To Do With Your Money

10 Genius Things Dave Ramsey Says To Do With Your Money

Andrew Lisa   Tue, February 14, 2023

Dave Ramsey is one of the country’s most celebrated personal finance gurus, a famous radio host, a successful businessman and a best-selling author. He’s also a self-made man who started with nothing and built a seven-figure net worth and a $250,000 annual income by age 26.

Now in his early 60s, he has spent many of the years between getting even richer by helping other people build wealth of their own. Here’s a look at some of the choicest wisdom and most sage advice that Dave Ramsey has doled out along the way to his legions of loyal followers.

Eliminate Debt Before You Invest

The No. 1 rule of the Ramsey investing philosophy is not to invest a dime — at least not until you eliminate all of your toxic debt, which he considers to be pretty much everything but your mortgage. Ramsey insists that you can’t build wealth when your primary wealth-building tool — your income — is tied up in monthly finance charges.

Harness the Power of the Snowball Method

Eliminating debt is easy to talk about but hard to do, which is why Ramsey is a longtime advocate of the so-called snowball method. This debt-reduction strategy requires you to attack your debts in order of smallest to largest, allowing you to chalk up quick wins that close outstanding accounts while boosting your confidence along the way. Once it’s time to confront your truly scary debts, you’ll have momentum on your side — plus, you’ll be able to concentrate only on them now that your smaller debts are no longer nipping at your heels.

Build an Emergency Fund Before You Build Wealth

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/10-genius-things-dave-ramsey-120115148.html

How Much Money Is Too Much To Keep in Your Savings Account?

How Much Money Is Too Much To Keep in Your Savings Account?

John Csiszar  Mon, February 13, 2023

Can you have too much money in the bank? On the one hand, there’s an obvious joke answer to this commonly asked question — there’s no such thing as “too much money.” The reality, however, is regardless of how much money you have, in order to maximize your net worth you shouldn’t keep too much money in your savings account.

While savings accounts serve valuable functions, they aren’t “investments” in the strictest sense of the word. As you’ll see below, savings accounts typically act as a drag on your portfolio rather than an enhancement. That’s why there is definitely such a thing as having “too much money” in your savings account.

Negative Real Returns

Although savings accounts are FDIC insured and among the safest places to keep money for things like emergencies, in terms of an investment strategy, having too much money in a savings account is catastrophic. For starters, savings accounts typically pay among the lowest yields you can find in the investment world. While this may be a fair tradeoff for their security, they may actually reduce your net worth. After you factor in inflation and taxes, for example, the “real return” you earn on money in a savings account is typically negative.

Using a real-world example can help make this clear. In 2022, online savings account yields jumped up close to 4% thanks to the Fed aggressively raising interest rates to combat inflation. Across the country, savers jumped up and down with glee, as rates as low as 0.01% had been the norm in the not-too-recent past. But even with that major move in rates, savings accounts were still losers when it came to real returns in 2022.

Even if you could snag a rate of 4%, you’d have to make that money stretch in an environment where inflation topped 9% in June and finished the year at 7.7%. Net-net, even with a 4% savings account yield, you were looking at a negative real return somewhere between -3.7% and -5% throughout the year — and this was before factoring in taxes, which could have taken a bite of 20% or more out of your 4% yield.

FDIC Insurance Limits

If you’re in the fortunate enough position that you have hundreds of thousands of dollars available for savings and investments, there’s another reason why you’d want to avoid putting too much money into your savings account. While savings accounts carry FDIC insurance, the amount is limited to $250,000 per account holder for every account. This means if you open a savings account and dump in $1 million, $750,000 of that would be at risk in the event of a bank failure.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/much-money-too-much-keep-190015526.html

Why You Should Financially Imagineer Your Life

Why You Should Financially Imagineer Your Life

19. October 2017  Financial Imaginer

Back in Kindergarten my father once asked me: “Son, what would you like to do once you’re a grown up?” – of course I was dreaming all sort of things, most prominently wanting to become a bus driver, a pilot or an astronaut. These more ordinary dreams for boys of that age came to an abrupt halt only shortly afterwards as I unveiled the ultimate profession: Inventor.

Imagineering = a combination between “Imagination” and “Engineering”

Imagination: The creative ability to form images, ideas and sensations in the mind without any immediate input of the senses. Imagination helps make knowledge applicable in solving problems and is fundamental to integrating experience and the learning process.

Engineering: The application of mathematics, science, economics as well as social and practical knowledge to invent, innovate, design, build, maintain, research and improve structures, machines, tools, systems, components, materials, processes, solutions and organizations. The term engineering is derived from the Latin word ingenium, meaning “cleverness” and ingeniare meaning “to contrive, devise”.

Back in the days – and still today – my fascination for Disney comics was tremendous. Immersing myself in these fantastic stories and associating myself with the lives of all these marvellous characters was such an enriching experience. Eventually I picked a favorite. You might now think, since I’m writing about personal finance my hero and role-model would be Scrooge McDuck. Well: wrong! The ever-lucky fellow Gustav Goose? Wrong again!

My absolute role-model was Gyro Gearloose! The inventor!!!

Scrooge McDuck: “What did you do??”

Gyro Gearloose: “Well, you did say to make it as real as it can be, so I did!”

He literally blew my mind. Whatever he imagined, he found a way to make it happen: his outrageous creativity and productivity was pure genius. Once, he ran out of ideas and solved the problem by inventing a thinking-cap which empowered him to have more and better ideas! If he didn’t have his cap with him, he stroke himself on the head with a big hammer! His job was to make fantasy a reality despite all odds.

Gyro Gearloose’s main ambition was not so much to get rich and famous but rather helping the people of Duckburg to improve their lives. He is also known as being good-natured towards others. In one of his stories he actually persuaded Duckburg citizens to rebuild their whole city into a futuristic utopia which somehow worked out too well: Donald Duck only worked 1 hour a day and spent 23 hours sleeping which left him more bad-tempered than normal.

At the other end, Uncle Scrooge McDuck suddenly controlled an army of robots which collected way too much money for him – filling up his money bin to the point where good old McDuck couldn’t even jump and dive into his coins anymore as it was too full.

Only when Gyro’s robot invented another robot to replace Gyro himself as an inventor he decided Duckburg must be turned back to its old self. Wow! Elements of early retirement and artificial intelligence in a 1980’s comic book!

That was it: Duckburg’s [most famous] inventor became my role-model. I wanted to become nothing less than an inventor myself! Helping the world become a better place with new ideas. A few years later, my aspiration to pursue a career as inventor became even stronger after having been exposed to the crazy scientist Dr. Emmett “Doc” Brown who managed to convert a fancy De-Lorean into a time machine. Marty McFly travelled back and forth in time and changed lives of others as well as his own to the better and worse!

That movie opened my eyes to how much you can affect your own future [with or without time machine]. Your future self will be the compound result of many small steps and decisions in life. If you take controlled, well directed steps towards an ambitious goal, you can get anywhere and change your faith. Little did I know about the miraculous power of compound interest back then, but this was about to change soon.

To continue reading, please go to the original article here:

https://www.financial-imagineer.com/why-you-should-financially-imagineer-your-life/

6 Tips To Protect Your Financial Future

Planning To Remarry After A Divorce? 6 Tips To Protect Your Financial Future

Sharon Klein   Fri, February 10, 2023

Make relationships easier to navigate and better protect your financial future.

As the calendar turned to 2023, many of us took a moment to think about resolutions. I want to lose 10 pounds. I want to read things that aren’t just about work. I want to learn how to play pickleball.

Or maybe this year I’ll give a relationship another shot. Maybe I’ll even remarry. Many of us think about this idea with an understandable degree of trepidation. Your last relationship ended badly. Maybe you got divorced.  But this year, as you look ahead with renewed optimism, there are six steps that you can take that might make relationships easier to navigate, leave you better protected for your financial future, and make you happier.

Now, admittedly, not all these ideas create conversations that are the easiest to initiate. Some carry with them some difficult presuppositions. Because of this, you may want to get some outside help. Hiring a skilled adviser can make all of this go down a little easier.

1) Get that prenup

Oh, start with the toughest one. No one wants to think about divorce when planning their wedding. But a better way to think of a prenuptial is that it’s not about the end, it’s about the start. A prenuptial agreement actually allows marriage to start on a stronger footing based on mutual understanding and honesty.

A prenuptial agreement lets a couple enter marriage with full financial clarity, spells out financial expectations during a marriage, and specifies clearly what will occur in the event of…well, you know the “D-word.” A prenuptial agreement can be particularly important in situations when each partner brings their own significant assets to a new union.

2) Trust…but verify

Planning is key to ensure your assets pass as you wish. A revocable living trust, which is set up during your lifetime and can be changed (or “revoked”) at any time, can be used as your main dispositive document instead of a will. Unlike a will, the provisions of a revocable trust kick in not just in the event of death, but also in the event of incapacity (think Alzheimer’s disease, a major stroke, or some other such disabling condition).

To continue reading, please go to the original article here:

https://www.marketwatch.com/story/planning-to-remarry-after-a-divorce-6-tips-to-protect-your-financial-future-ba2fe794?siteid=yhoof2

6 Life-Winning-Lessons From a “Who Wants to Be A Millionaire” Contestant

Who Wouldn’t Want to Be a Millionaire: 6 Life-Winning-Lessons From a “Who Wants to Be A Millionaire” Contestant

By Financial Imaginer

What would you do if you received a $ 1 million jackpot? How does it actually feel to receive a windfall? What to do with it and how could it impact your life in the short, medium and long run?

Let’s first think about what you could possibly do with a large financial windfall?

– splurge (Sir? The Lamborghini in same gold as the Maybach?)

– take a sabbatical and travel to exotic locations, sipping martinis all day long

– travel to Vegas (all or nothing)

– re-invest in lottery tickets

– buy a house and/or pay-off your mortgage

– invest all into Vanguard ETFs and draw an annual $40,000 forever (Trinity study, 4% withdrawal rate)

– keep calm and carry on

Here’s what a Financial Imagineer would do with a $ 1 million windfall:

Keep calm and carry on!

Keep calm and carry on!

You find this hard to believe?

Looking through all the above options, this clearly appears to be the most boring choice. But hey, I’ve got a rather personal story for you guys today. Let me explain.

Once upon a time, I won a windfall myself.

I wanted to be a Millionaire.

We write the year 2001, my most crazy side-hustling days: During daytime, I was usually studying business administration and economics. Frequently, after sundown, you’d find me baking up to 200 pizzas each night at the first pizza home delivery franchise in my hometown. Saturdays, you’d find me advising clients at a bank counter and Sundays I’d be running the local polling station in our village.

Some wondered if I’d ever catch some sleep.

One evening, I was sitting on our couch watching the Swiss edition of “Who wants to be a Millionaire” on TV3. Somehow, none of the contestants ever seemed to make it past the first 10 questions. It got boring and frustrating. It quickly became painful for me to keep watching. I knew and appreciated the show from abroad and generally liked it because you usually learnt something while watching – infotainment. The entertainment value of the local version was rock-bottom. This tickled a nerve.

Instead of applying the ordinary way, I sent a feedback letter asking them to invite more suitable candidates in order to improve the infotainment value of their show. Little did I know that my written rant would be read and acted upon. Before I knew it, we – my then girlfriend and myself – got invited to participate as contestants at the TV show “Who Wants to Be a Millionaire”.

Turn sound on, click “play” and listen as you read on!   https://www.youtube.com/watch?v=OYVAxLJE1ww

To continue reading, please go to the original article here:

https://www.financial-imagineer.com/who-wouldnt-want-to-be-a-millionaire-5-life-winning-lessons-from-a-who-wants-to-be-a-millionaire-contestant-for-anyone/

Your Gravity Defying Money Bazooka

Your Gravity Defying Money Bazooka

By Financial Imaginer

What if there was a financial super weapon which can be used to multiply the firepower and reach of your money in ways you’ve never thought possible before? What if such a weapon is widely available already and unlocking it only takes a few well directed steps? What if you’d like to learn more about this? Read on.

Spoiler alert: Having been working in Wealth Management for most of my professional life, your gravity defying money bazooka and most powerful tool to build and multiply your wealth is: Credit!

Recently Jay Z rapped about how crucial he believes credit is for financial freedom.

from 2:29

“You wanna know what’s more important than throwin’ away money at a strip club? Credit

You ever wonder why Jewish people own all the property in America?

This how they did it

Financial freedom my only hope

livin’ rich and dyin’ broke

I bought some artwork for one million

Two years later, it worth two million

Few years later, it worth eight million

I can’t wait to give this to my children”

In this post we will first discover how money is made and multiplied in our world. In the second part of the post we will explore how to apply this knowledge for your own investments and pursuit of wealth.

Part 1: The Money Multiplier

Do you have cash in your pocket right now? Chances are, the answer is yes. Money, we all use it, want it and think about it. But did you ever reflect in more detail about where your money actually came from and how it’s being released into the system? Instead of arranging a field trip to the money factory, let’s explore further here.

Step 1: Central banks add [virtual] money in the form of credits to the balance sheets of the various commercial banks.

Step 2: The commercial banks will then release it to the end users in the economic system, be it in the form of account balances or in cash.

The fascinating outcome of this money game is that after a while, the final amount of money in the system will DIFFER from the original amount of money issued by the central bank as in step 1. In fact, it will be a multiple of the original amount!

Surprising? How come?

Well, commercial banks engage in two distinct types of activities. One on each side of their balance sheet: Deposit-taking and lending. Are they allowed to lend out the same amount as customers have deposited? No! Banks have to withhold a certain percentage of all deposits as a safety requirement. How much is defined by the so called “reserve ratio”. The reserve ratio or withholding rate can only be amended by the central bank.

How does that work in real life?

To continue reading, please go to the original article here:

https://www.financial-imagineer.com/your-gravity-defying-money-bazooka/

Time Bandits

Time Bandits

By Financial Imaginer

Time is the most valuable asset you got. Do not let anything or anyone steal or ruin it. In our modern world, we’re surrounded by time bandits. Identify them. Sort them out. Live life by design.  No matter if you’re a beggar or a billionaire, we each got the same 24 hours per day. The difference between moving ahead or staying back is simply in how we make use of and invest our time.

Time Bandits – the Monty Python movie.   Time bandits didn’t make history – they stole it!

Make sure you keep them at a safe distance so they don’t steal your potential, to make history.

What are time bandits?

They are those things, activities or people that drain you of your energy and time to leave you back less productive, less focused, and in the end; less happy. For many, time bandits may be what holds us back from going out there and chasing our dreams.

Time bandits come in different forms. Some of them are hard to spot. Others have already taken over your habits. That’s why this post will go in details and attempts to show some ways to dispose of your time bandits in order to increase YOUR chance to financially Imagineering your dream life!

Media

Ever heard the word “media-junkie”? Well, these are people that are hooked up with their media outlets permanently and have trouble letting go. They’ve become addicted to consuming ever more content. Whether or not they do something with the things learned is the big question here.

Media time bandits could be:

Watching TV/ Netflix

Watching the news

Social Media

Youtube

Video Games

Don’t get me wrong, these things are all good and fun at times.

The problem comes with unintentional overconsumption. Rather than just letting your precious time float away while engaging in any of the above, use media with intention. Watch a certain show with a purpose or target. The goal can be to simply have fun. Engage on social media for staying in touch with people you care about. Watch Youtube to get inspired, entertained or learn something. Play video games to train (not drain) your brain.

To continue reading, please go to the original article here:

https://www.financial-imagineer.com/time-bandits/

Living Through a Recession is Difficult

Living Through a Recession is Difficult

By Financial Pilgrimage

One of my biggest worries with the historic bull run during the past ten years is people have forgotten what it’s like to live through a recession. While this technically isn’t a recession yet, we’re most likely headed in that direction since a recession requires two consecutive quarters of negative gross domestic product (GDP) growth.

Suppose the current situation with COVID-19 turns into a more prolonged recession. In that case, we will all know someone who loses a job, files for bankruptcy forecloses on a home, or severs a relationship due to financial reasons. If predictions are accurate, we may know someone who falls victim to the virus.

What stood out most during the Great Recession was the number of individuals who were not just unemployed but underemployed. Time after time, I would meet individuals working jobs that paid significantly less than their previous roles. I remember my co-worker whose husband lost his job in his mid-50s. It took him nearly five years to find a new job comparable to the former.

They were struggling to make their house payment and almost lost their home at one point. Then there was the former human resources executive who worked the register in my work cafeteria. He was just grateful to have a job and eventually was hired on in a different role more in line with his background.

It’s tough to describe what living through a recession is like when you’ve never done it before. For several years people have been talking about missing the run-up in the market that started back in 2009. It’s easy to sit here today and look at the massive gains over the past years and wonder how anyone could have gotten out of the market back in 2009.

Living through a recession is a much different story. The media coverage and end-of-world scenarios were just as prevalent in 2008-2009 as in the past few weeks. Eventually, if you don’t turn off the news, you start to believe it. While it’s essential to stay informed, it’s equally important to know when to step away and focus on what you can control (this advice is primarily for me).

Stick to Your Long-Term Plan

Going through a recession as an investor is like going through a bad break-up. The first time it happens, you are completely miserable and wonder if you will ever shake the depression. After the second or third time, it’s still miserable at first, but you come to understand that the pain will go away with time, and you’ll become a stronger person on the other side.

A large percentage of the workforce will be going through a significant downturn for the first time. Most everyone under the age of 30 has never gone through this while in the workforce. It’s easy to say “stocks are on sale” when a 5-10% correction is erased in a couple of months. It’s much more difficult when the market drops 35% in a few weeks and the uncertainty becomes overwhelming.

To continue reading, please go to the original article here:

https://financialpilgrimage.com/lessons-learned-great-recession/