Ten Money Saving Tips

Save Money Tip 1
Spend Less. This is not over simplifying the best way to save money! It is essential if you are serious about being a long term money saver and being able to save money every day. Review what you spend and look at ways you can save money. Consider making telephone calls for instance only at off-peak times. Do you really need to have newspapers and magazines delivered? Can you do without those coffees you buy at break time everyday - would a flask of coffee taken to work save you money? What about using the public lending library instead of buying books or music CDs? Once you start looking for little ways to save money and spend less you will quickly become an expert and really save money.

Save Money Tip 2 Establish a personal budget. This is essential for families and individuals and can be the fastest way to save money. You will instantly see your incomings and outgoings once you create your budget. You will not be able to save money unless you know how much money you have coming in, and how much money you have going out. Once you have prepared a budget of incoming money and outgoing money, you WILL be able to identify areas where you can save. It is MUCH more difficult to save money over a long period of time (the rest of your life?) without a budget.
Save Money Tip 3
Bulk is good. Think about shopping and buying in bulk. Save money grocery shopping by planning meals in advance and bulk-buying. You can also save money by cooking in bulk. This is a real way you can save money with little preparation and almost no extra outlay. Always purchase generics when you can. Prepared foods and convenience foods will always be much more expensive than the generic ingredients needed to make the food. Preparing food in bulk and in advance also gives you the opportunity to plan ahead and be more accurate in your budget. Save Money by buying in bulk whenever you can. One thing to be aware of when buying in bulk is to be sure that any product you buy will get used before it goes bad - you won't save money if you have to throw stuff away. Buying in bulk is not only a good way to save money it is also a good strategy for coping with and surviving emergencies. Save Money Tip Three

Save Money Tip 4
Make sure a sale is a sale. By this I mean do your price research before you commit to making an expensive purchase in a retailers money-off sale. You have to be sure the sale really is a sale and not a creative marketing strategy of the store to encourage you to spend your money without thinking. Once you have researched the true price of a product (any product) you are in a good position to take advantage of a sale, special offer or discount and really save money. "Buy one get one free", "50% off", and "Huge Discount" will only help you save money if the actual price you pay is lower than you would pay somewhere else for exactly the same product.

Save Money Tip 5
Buy used. Sure, we all like to buy new. But there are huge money savings to be made in buying used. Typically cars lose one-third of their value in the first 24 months from new. Why not buy a car 24 months old? Other items such as clothes can be worth even less just the day after new. Look for ways to buy "as good as new" items and save money. Typical products you might consider buying used to save money include: cars, clothes, electrical goods, garden items... tools and sheds, household items... pots and pans, the list of used goods where you can save money is endless.

Save Money Tip 6
Don't carry excessive debt. Some debt in our lives may be essential. We may need a mortgage to purchase a home, we may need to use our credit card to make purchases until pay-day, but your aim to save money should be to have as little debt as possible. Credit Card deb is typically the most expensive debt we may carry. You will be able to save money every month if you make it an absolute rule to pay off your outstanding balance every month. If you can have the discipline to do this you will save money by effectively having no debt, and thus no interest charge on your credit card(s).

Save Money Tip 7
Save Money. No, I mean really save some money. Each week or each month get into the habit of putting an amount, however small into your savings. You could start by saving a very small fixed amount each time and then move to putting in larger amounts once you begin to save money from your other money saving strategies. You will find that by saving money on a regular basis you will quickly build up a store of reserve money and also feel motivated to save more. The hardest part is to take the first step and start saving money - so START TODAY and save some money NOW! If you find it impossible to save money once you have it, consider having money deducted from your paycheck direct each month. This can be a great way to save money rapidly as once it is set up you will not notice it is being collected and your savings will grow with no more effort from you.

Save Money Tip 8 Shop Wisely. Consider markets, superstores, farmer's markets, local shops, marts and stores. Anywhere is worth checking out to see if you can save money. Farmer's Markets can be particularly good places to save money. Typically you are buying direct from the producer of the product so the savings are passed on to you. Use your bulk buying strategy here - farmer's markets often offer opportunities to save money by buying larger quantities of staples, for instance potatoes, rice or corn. Save money and shop wisely.

Save Money Tip 9 Eat in rather than out. This is a huge area where you can save money. A cup of coffee taken out could easily cost you TWENTY times (or more) what it would cost you to make it at home. So think before you drink when you are out. Eating is the same. Fast food restaurants are counting on you eating food that you perhaps don't really need at that time but buy just because it is quick. Why not wait until you get home and have a more nutritious meal and save money at the same time.

Save Money Tip 10
Use less. This money saving tip is a lesson we all need to learn. We live in a consumer society where waste is a huge problem. If we could all use and consume less there would be less waste, less power consumption, and the benefits for you are SAVING MONEY. Consider using less shampoo when you wash your hair, this may not mean washing your hair less effectively it means not flushing the excess shampoo and your money down the drain. What about saving on heating? Turn the thermostat down or put on extra clothes when you are cold. Turn off lights, the TV and the computer when they are not in use. Each little saving you make will build up and enable you to save money. Huge savings in energy can be made which will save you money and be good for our planet and the other people on it.

Tips For Money Savings on Food

Thinking of cutting down your expenses on food? Then you should read the following tips. They will surely help you on reducing your food expenses. They are by no means comprehensive but they will be very useful.

Money Savings on Food – Money Saving Tips

1.For coffee drinkers

It is a good idea to re-use the grounded coffee once. Using coffee grounds two times or more will not greatly affect the taste of the coffee. It is highly encouraged to do this using a filter that is permanent and avoid the paper variety. Keep the grounds refrigerated until using it the following day.

2.For bread lovers

Grocery stores sell bread that was made the day before at a much lower price. There is nothing wrong with eating bread that was made the day before since it still is good to eat. If you have a lot of space in your refrigerator, store a lot for bigger savings. If you will eat the bread, you can defrost it using your microwave oven. Re-heat it every 30 seconds to prevent the edges of the bread from getting too hard.   

3.When buying from the grocery

Before going to the grocery, you should have already made a list of all the things that you really need. Prioritize basic goods and avoid buying things that you do not really need. Observe the prices indicated on the displays. Remember, branded products cost considerably more than store brands. It is also a good idea to keep the receipt of your previous trip to the grocery and make it as a basis for your purchases on your next trip. To have higher savings, buy more of the product. You can always store it in your refrigerator or in the house to minimize your trips to the grocery store.

4.When eating outside

If you are going to eat in a pricey restaurant, the best time for you to go there would be during lunch. Food during lunch usually costs less and this will be to your advantage. When staying at the hotel on your trips, it is a good idea to check if they also include breakfast in your total room charge. You should also find out where the locals eat. Chances are, they will eat where the food is great and the price is even better. When going around, carry with you some snacks. A chocolate bar, chips, and cookies will go a long way while strolling around.

Eating cheaply does not necessarily mean eating bad food. Look around and you will be suprised at the options you can choose from. Take time and consider your choices so that you will not only eat a lot but save some money also.

GOLD ETF

Indians account for 23 per cent of the world's total annual demand for gold. And now we have got one more way to invest in the yellow metal.

Benchmark Mutual Fund launched India's first gold Exchange-Traded Fund (ETF) on 15 February followed by UTI Mutual Fund's gold scheme on 1 March 2007. Others like Kotak Mutual Fund and Prudential ICICI  Mutual Fund have also firmed up plans and are expected to follow suit.

Gold ETFs have been a much-anticipated development. These are expected to address issues of higher prices, purity, costs of insurance and storage, and liquidity associated with investing in physical gold. What does this mean for an investor? Should gold be included in his portfolio? What value will it add to his holding and overall investment strategy? These are questions that will determine whether gold ETFs will be as big a success in India as they have been in countries such as the US, the UK and Switzerland.

What are gold ETFs?

Gold ETFs are open-ended mutual fund schemes that will invest the money collected from investors in standard gold bullion (0.995 purity). The investor's holding will be denoted in units, which will be listed on a stock exchange.

These are passively managed funds and are designed to provide returns that would closely track the returns from physical gold in the spot market.

An investor can buy and redeem the units either directly from the mutual fund, subject to certain stipulations, or from the stock exchange.

For example, in Benchmark Mutual Fund's scheme, the units will be allotted in such a way that the value of each unit will correspond to one gram of gold. This means that if an investor invests Rs 10,000, when the price of 10 gm of gold is Rs 9,650, he will be allotted 10.20 units (Rs 10,000 - 1.5 per cent entry load / 965). Each unit will initially represent one gram of gold though this will come down gradually  when gold is sold to meet fund expenses.

Benchmark Mutual Fund allows its investors to buy and redeem the units after the new fund offer, either directly from the fund (subject to certain stipulations), or from the stock exchange.

UTI Mutual Fund's scheme allows investors to redeem units only through authorised participants, or by selling in the secondary market. The price of the units in the secondary market will, to a great extent, reflect the price of one gram of gold.

Other funds such as Tata Mutual Fund expect to allot units at face value (Rs 10,000 - entry load/10). The net asset value (NAV) of these schemes would reflect the value of the underlying gold. The price of these units in the secondary market would reflect the NAV and the supply and demand of the units.

Benchmark and UTI will appoint market makers (authorised participants) who will buy and redeem gold units from the fund as well as in the secondary market. This is expected to keep the price of the units in the secondary market close to the fund's NAV and the spot price of gold. 

Why choose Gold?

Gold holds its own in any investment evaluation on its strengths as a hedge against inflation, value in the event of political uncertainties and its traditionally negative co-relation with other asset classes such as stocks, fixed income securities and commodities.

The value of goods and services that gold can buy has remained stable unlike currencies that have seen significant fluctuation. A study spanning a 400-year period has shown that the basket of goods and services that gold could buy over the period has remained the same.

Gold protects your portfolio from volatility because the factors, both at the macro-economic and micro-economic fronts that affect the returns from most asset classes do not significantly influence the price of gold. Just after 9/11, while stockmarkets and bonds crashed across the world, gold held steady and, in fact, rose on that day by six per cent. 

For a given level of returns from a portfolio, the risk or volatility can be reduced by adding gold to it. Similarly, crises such as wars, which have a negative impact on prices of most asset classes, have a positive impact on gold prices since the demand for gold goes up as a safe haven for parking funds. It is the only medium of exchange  completely free of credit risk as it does not imply a liability for any other entity. 

What returns can you expect?

The 35 per cent return that gold has delivered in the last one year and 170 per cent absolute return in the last five years is not par for the course. In the period 1970-1982, gold prices had a compounded annual growth rate (CAGR) of around 21 per cent while inflation grew by 14.1 per cent over the same period. But in the following 23 years, inflation grew by 7.6 per cent while gold prices grew by 7.78 per cent.

Over the long term the realistic returns from gold would just beat inflation. Factor in entry loads (a high 2.5 per cent for UTI-Gold) and annual fund management costs of 1 per cent or more, and the returns are not appealing, though the costs are expected to come down in the long run.

However, in the short and medium term investment in gold can be very rewarding considering that the prices have come off the highs quite a bit and the indicators all point to a revival in the price rally.

Further, global demand for gold is 1,000 tonnes more than supply. With no new mining capacity coming through, most of the gold is being recycled. Inflationary pressures in the world economy are positive drivers of gold prices. The central banks of Russia, China and West Asian countries are giving strong buying support to gold prices.

Gold prices could also go up due to demand from gold ETFs, as they did in the London Stock Exchange in 2004. Investing in gold requires constant evaluation of international developments especially of crude oil prices, unfavourable geopolitical developments and the strength of the US dollar.

Gold ETFs are passively managed funds and, hence, not geared to exploit positive or negative trends. However, the investor can vary portfolio allocation to gold ETFs to take advantage of these trends.

Why gold ETFs?

There are enough reasons why gold should be included in any investor's portfolio whether in physical or paper form. Investing in gold ETFs will give the investor all the advantages of investing in gold while eliminating drawbacks of physical gold -- cost of storage, liquidity and purity, among others.

Gold ETFs are transparent investment vehicles that will have to conform to rigid regulations on investment norms and valuations. This assures the quality of gold that the fund will invest in and transparency in calculation of NAVs and, consequently, the market price at which these units will trade.

Gold ETFs allow investment in gold in small denominations, which makes it easier for the retail investor to participate. On the secondary market, the minimum lot is one unit. This enables the investor to accumulate units over time and reap the benefits of rupee cost averaging. The units can be redeemed either from the fund directly or from the market.

Further, investing in paper gold gives investors tax advantages over investing in physical gold. Gold ETF units held for more than one year qualify for long-term capital gains at 20 per cent, whereas the holding period in physical form has to be three years to qualify for long-term capital gains. For less than three years, the gains are taxed at 30 per cent. Also, gold held in paper form is not liable for wealth tax.

Should you invest?

Stability, reduced volatility in a well-diversified portfolio, inflation-plus returns, convenient investment vehicle to get tax-efficient exposure, are all good reasons to invest in gold ETFs. However, if you are looking to trade in the metal to take advantage of short-term price fluctuations then you are better off trading in futures on the commodities market. The fund management cost, however low, will reduce the returns. If you are looking for high long-term returns, then equity markets are a better option.

The launch of gold ETFs has widened the range of asset classes offered by mutual funds. These funds can definitely form five to 10 per cent of a portfolio as a form of insurance.

However, there are certain issues that investors must keep in mind while doing so. Liquidity may become an issue for small investors who want to exit, especially in times of crisis. Finding buyers at a fair price in the markets may become a problem if you need to convert to money.

Redeeming units directly from the fund may not be an option available. Again, during periods of financial crisis like hyperinflation or failure of banks, the large investors may convert paper holdings to physical gold. Small investors who do not have this option may be left holding illiquid paper. In such a situation, gold loses its edge as a store of value.

On the returns front, while gold ETFs can add lustre over smaller periods, the returns they generate in the long term are not very encouraging. Entry loads and fund management costs further reduce returns. You could consider buying the units in the secondary market, where brokerage costs may be lower than the applicable entry load.

If an investor is clear about the reasons for investing in gold and the issues related to it, there is every reason to include gold as an asset class in the portfolio and the gold ETF may be just the ideal vehicle to join in the gold rush.

---

'Gold's an all-season asset'

Sanjiv Shah, executive director, Benchmark Mutual Fund, the fund house that launched India's first gold exchange-traded fund (ETF), takes us through the nuances of the fund. 

Why should one invest in a gold ETF? 

There are many reasons. It is easier to hold gold and there is no wealth tax on paper gold as in the case of physical gold. Also, long-term capital gains at 20 per cent is applicable after just one year. You can also borrow from a bank against gold BeES (Benchmark Exchange Traded Scheme), also called GB, as it is legitimate collateral.

We believe that gold is a very good hedge against inflation, and given the geo-political risk globally, gold is a very good, all-seasons asset. The purchasing power of gold remains constant irrespective of the situation. 

While gold ETFs' expense ratio will be akin to that of equity funds, their taxation status would be equivalent to debt funds. Isn't this a disparity?

Not really. Higher allowable expense ratio is irrelevant as gold ETFs will have a lower expense ratio, even lower than debt funds. By virtue of being an ETF is in itself an attempt to keep the expense even lower.

GB's expense ratio is capped at one per cent. Currently the custodian charges are high, but you can expect these to drop on the back of the growth in assets. Management fees are negligible. Our endeavour is to reduce our expenses. 

How do investors buy Gold BeES? Investors in smaller towns don't seem to have access to as many brokers.

GBs will be listed on the National Stock Exchange (NSE). All you need to do is go to a broker, just like when you buy a share, and tell him you want to buy a GB. You need a demat account and a broker account. With a presence in 500 towns and 30,000 terminals across the country, NSE has the best network in India.

Can investors surrender their existing gold jewellry to you and in exchange for gold BeES units?

No, not yet. We don't have the infrastructure to be able to check the quality of gold that investors may want to surrender in lieu of gold BeES units. We would love to do it in future. At present, we are trying to work out a system where investors get physical gold when they redeem gold BeES.

How will you check the quality of the gold that your authorised participants (AP) will deposit with you?

The custodian will check the quality of gold surrendered. Besides, we are taking physical gold only from authorised participants with whom the custodian and we have a comfort level. And, unless the custodian certifies and confirms that the gold submitted by the AP matches their standards, we will not issue creation units. That keeps a check on quality.

Is your custodian completely responsible for the security of gold that forms the underlying asset of a gold BeES?

Bank of Nova Scotia, world's largest custodian of gold ETFs, is our custodian. They understand the gold market pretty well.

Managing Your Four Pillars of Wealth Creation

You may have attended seminars that teach you different strategies on how to manage your financial wealth wisely.

Have you ever wondered what YOUR REAL WEALTH is? You may have become so caught up in earning money and making more profits that you have lost sight on the things that really matter in your life. These things include your health, your family, your contentment, and your happiness.

The four pillars to wealth creation includes your financial wealth, your physical health, your mental wealth and your spiritual wealth. In order to have a completely successful and happy life you need to keep these four areas of your life in balance.

Sadly, you may have noticed or know of a seemingly successful business person who does not enjoy and appreciate the real wealth in their life. They may drive the best cars that money can buy or live in houses that you might only dream of but what good is all of these things if they are suffering from poor health, their family life is falling apart, or they have been dishonest and lost their integrity in order to acquire them. They may be experiencing severe health or family problems that all the money in the world will not cure.

If you are a person who is constantly on the move to find a better business or better investment opportunities, if you are always in a hurry and you never have enough time, just take a few minutes to reflect on your life and make sure you are not compromising your health or your family to achieve these goals. For you who do not take this time to reflect, it is important that you to realize these three things.

The first is the fact that only you can manage your spiritual and mental well-being as well as your physical health because you are in control of your actions and your feelings.

The second thing you need to realize is that you need to let past failures go, if you don't they will continue to haunt you and you will suffer needlessly.

The last essential thing you should remember is that it is possible for you to lose sight in what is really important in your life when you concentrate too much attention on things that really don't matter when you are lying on your death bed.

Through it all what is most important is in knowing who you really are, being honest with your self and being able to examine your self properly so that you will know what truly makes you happy and satisfied.

I wrote this article not to tell you that money doesn't matter because it does. The real question here is "What are you willing to sacrifice to have more money?"

Here are two questions you need to ask yourself.

The first is to ask yourself whether you will allow stress from your work or business to hinder you from having the joy in your life you want. It is possible to become so caught up with problems involving your work that you might not notice that you are continually making your body suffer from stress and neglect.

Then the next thing you need to ask yourself is whether you will continue to give time to activities that will not provide a significant improvement in your way of life.

You may have heard of time management skills and its importance, are you allocating your time wisely to fruitful pursuits? Are you using your time to bring balance into your life? Charles Munger, Warren Buffett's business partner in Berkshire Hathaway said that he uses the first hour of his day on improving him self and the next 9 hours of the day he sold to the highest bidder to provide a living for his family and money for his investments.

It is important to answer these questions honestly to determine if you are really living a balanced life or has your life become out of balance? The key2wealth.net web site is dedicated to providing balance in your life using the four pillars of creating wealth in your life.

Treasure Hunting

Find new uses for the financial tools you have lying around the house! Life insurance, investments, and even your credit cards are all waiting for you to find a new purpose for them - one that will increase your wealth and get you on the road to financial independence.

I'm a financial educator by calling and by profession. But when you get to know me and my family, you will discover fairly quickly that we are collectors of old, fun or unusual things. Some people might call it junk, and in fact that's exactly where my husband finds many of our treasures - in the junk other people throw out.

Garbage to Gold 
We've all heard the saying, "One man's trash is another man's treasure." Well, in my family, we find so many treasures that we have turned it into a side business for my husband. He is very handy so it's pretty simple for him to take an old rusted, broken such-and-such and give it a quick sanding, glue and some paint and 'voila' - it's better than new.

Now it's not junk that I want to write about. Well, it sort of is. Treasures are all in the eye of the beholder, right? In other words, how you perceive something will give it either value, or not. The trick is to see value from multiple perspectives.

Let's look at junk for a minute more, then apply the concepts to financial items.

I'm looking around my office for an item I can use as an example of some junk that has been re-purposed, and realize there are too many items to choose from.

I have a rusted watering can holding silk roses on my desk, a post office sorter holding up my desk and organizing my papers, a carpenter's nail box holding my paperclips and sticky notes, an old lampstand holding my pen, a solid maple wooden kitchen counter as my desk top surface, faded drapes, remade into blinds, a very high-tech keyboard tray rescued from a dumpster, and one of my all-time favorite junk makeovers is my office chair covered with an old leather coat.

A Second Look at Everyday Items 
While I'm not suggesting you all become junk collectors, I'd like to share with you some of the questions we ask when we see something discarded at the side of the road or offered inexpensively at a garage sale:

What could this be used for? Who could use this? How could we re-make, or re-do this? Where could it be used? Why would someone want this? What would need to be done to re-purpose it? How much time and/or money would that take to accomplish?

Now let's look at financial things: credit cards, mutual funds, life insurance, real estate, your job or profession. Start asking some of the questions above, and rather than the usual answers, keep asking and soon you'll start to come up with answers like this:

· You can use credit cards to increase your wealth and help you reach your goals;

· Mutual funds are a fabulous way to expand your financial knowledge and learn investment savvy;

· Life insurance has wonderful applications for you while you're alive;

· You can purchase real estate for purposes other than providing the home you live in or an investment property you rent or flip;

· Your job or profession has multiple ways you can earn income from while still meeting the requirements of your employer and without you having to work overtime or pick up another job or contract.

Concentrate on the possibilities 
The key is to keep asking yourself and others and never let yourself answer the question with a 'can't' or a 'but' or an 'I tried that', or something similar that says, 'that will never work'.

How do you know? How important is your reaching your goals? I realize it is easier to look at your current situation and think it's all junk, that you've "wasted your money, your time, and coulda, shoulda, woulda done things differently if only..."

However, step number one is to start where you are. The past is gone and the future hasn't arrived yet.

Where you are is where you're supposed to be. The search for your treasure starts here and will take you on an amazing journey uncovering hidden gems along the way. You'll climb some mountains - maybe even climbthem sideways or backwards, and find new and interesting uses for the transactions you make every day.

You are treasure hunting for your goals and dreams so you need to learn to see the 'junk' in your life as beautiful jewels that all add up to your overall life's wealth. 

Hot Tips to Grow Your Super

The superannuation industry in Australia is going through a remarkable period of growth and media awareness. (We have all seen the recent frenzy of advertising activity, press and TV coverage.)

Today, ordinary people are now realising that a Government pension won't give them the lifestyle they want in the years when they are not earning an income. The need to save money for the future is more than a hot topic, it has become a big wake up call to millions of workers who have low superannuation savings.

The standard superannuation contribution by employers is currently 9% of your salary, but the reality is this is not enough to cover basic living expenses and bills in retirement, never mind that elusive trip of a lifetime overseas. 

So how about some easy ways to grow superannuation? Here are five top suggestions.

1) Regular contributions really add up.

Starting early pays off. By putting more money each week into your superannuation account, (in addition to the 9% employer contribution) the difference can be remarkable. For example: if you added $50 a week starting from the age of 25, this grows to over $160,000 extra by age 60.

2) Hold a garage sale. Turn trash into treasure.

No spare cash? Look around your house for old furniture, sporting goods and electrical items. Put the proceeds from your weekend sale into super. Your contribution will earn compound interest until retirement.

3) 3 million Australians have unclaimed superannuation. Are you one them? Go to http://www.unclaimedsuper.com.au

One in three workers have unclaimed super. It's a huge statistic. In total, there's AU$7.2 billion, or an average of AU$1,600 per account waiting to be claimed by Aussie workers. It may not seem a large amount, but if you dropped $10 in the street, you'd quickly pick it up! What's more, this is a no cost service and it also allows you to transfer old super into your current superannuation account.

4) Roll your super into one fund. Pay less fees.

If you have worked casually or moved around from State to State, you may have several superannuation accounts with low balances - and you're paying fees for each one of them. Fees are taken from any investment returns you have made which mean less money in your account. The higher your fees are, the harder your fund's investments need to work to provide adequate returns.

It makes sense to consolidate all your balances into one account. One fund is easier to manage. Less paperwork to worry about. And of course, you save on paying fees. It is important to look around and select funds which charge low to reasonable fees.

5. Choice of Fund. Your personal situation.

On July 1st 2005, a major industry initiative took place with the launching of "Choice of Fund". Are you one of the many eligible workers who can make a new choice about which fund you belong to and where your super is invested?

A word of advice, do your homework. Don't just listen to your mate Bob!

Compare industry performance and past results. Look at the entry fees and exit charges you may have to pay. Review member benefits such as life insurance coverage. (Will you need a new medical to get the same coverage you currently have?) 

Changing funds could be a good move, or may not improve your returns at all.

The final tip. Whatever you do with your super, think super carefully.

A Different Way to Look at Debt

The majority of 'financial gurus' will advise that, in order to become rich, you should work hard and pay off debt. They believe that all debt is bad and that the less debt you have the better.

However, sometimes this is not the case and the advice of 'get out of debt' can be extremely limiting and can actually STOP someone (like yourself) from becoming rich.

In order to get rich you need to understand the different types of debt, and you then need to use the good kind to make yourself rich. The two types are:

1. Bad Debt - This is the one that you have to pay for, that takes money out of your pocket each month in repayments. Usually credit cards, personal loans, car loans or home loans.

2. Good Debt - This is the one that puts money into your pocket, that earns you money that you wouldn't have been able to earn otherwise. Eg. Debt from purchasing a positive cashflow property where rental income is great than all expenses.

The thing that determines the good from the bad is the effect it has on your cashflow. The good adds to your cashflow each month, the bad takes away from your cashflow each month. Good debt makes you richer and richer, bad debt makes you poorer and poorer.

In order to look at debt in a fresh way you need to look at your debt in terms of cashflow, not in terms of the overall figure or net worth. So instead of saying "I have $20,000 of debt" say "My debt costs me $100/week".

By looking at debt in this fresh way (looking at cashflow instead of the figure) you can begin to see whether your debt is good debt or bad debt.

For example if you think all debt is bad then when someone says pay off all debt you will agree with them. But if you look at your debt and you see that your $20,000 of debt is making you $1,000/month, then the advise to "pay off all debt" is stupid advice.

By looking at debt in terms of cashflow you can become financially free quicker and you can easily reduce the stress of your debt.

My wife and I had around $20,000 of personal debt from before we got married. That figure "$20,000" was quite overwhelming for us. But, by looking at debt in terms of cashflow, we can then see that our debt is currently costing us $100/week.

By looking in terms of cashflow I have shifted my thinking and am now looking at ways for our debt to cost us $0/week. Then it will have no effect on our cashflow and we can keep it as long as we want.

If I just looked at debt in terms of the amount of the liability, I could miss opportunities to make money while I was busy paying off my debt.

I am not a financial advisor and this email is purely to educated and to get you thinking. Don't take this email as advise for your personal situation. I am not saying that you should rack up loads of consumer debt if you can make it so that it costs you $0/month. I just want to offer an alternative to the way everyone thinks about
debt and money.

Let me share with you my method of getting rid of my debt so that I will become rich in the process:

1. Minimize bad cashflow from my debt - Lower the cashflow from my debt for $100/week to about $10 through different financing options and lowering interest rates. 

2. Use the money I would have used to pay off debt to buy assets - Instead of paying $100/week I am only pay $10 per week so I have $90 per week left to invest in assets that generate an income for me. For me those assets will be positive cashflow real estate. 

3. Allow my assets to cover the costs of my debt - Because my assets are making money each week I can then use that money to offset the costs of my debt. My debt now costs me $0. 

4. Allow my assets to pay off my debt - Inflation causes the income
from my assets to go up, while my debt repayments stay the same, so over time I can make extra repayments onto my debt from the income my assets are generating me. 

5. Have no debt and a bunch of assets - At the end of it I have payed off all my debt without working hard for it, and I now how a bunch of assets that are STILL generating me money every week. So I am now richer than before.

If I was to just pay off my debt then I would have worked really hard and payed off my debt, but I would have nothing to show for it at the end of all my work. At least this way I end up with no debt AND assets that generate me income.

So think about your debt in terms of cashflow and think about ways you can cause your debt to cost you $0/week or even make you money.

Becoming financially free in just 5 years is possible for anyone. It doesn't matter what your current financial situation is, you can become rich and never have to work again in just 5 short years. You don't need a high paying job or a get rich quick scheme, you just need real training on creating real strategies for getting rich

How To Deal With Your Creditors

However far you are along the road of financial/debt problems, the same principles apply to dealing with your creditors.

However rude, intrusive, threatening the correspondence/telephone calls FROM your creditors, your correspondence/phone calls TO your creditors must be:

* Calm
* Brief
* Factual
* Relevant
* To the point

You must create the impression that you are efficient, knowledgeable and trustworthy. The person dealing with your correspondence is merely doing their job, which is acting on behalf of their employer -- to whom you probably owe money. This person probably has the opposite point of view from you, but it is not personal and you must not let it become so.

Just as you would, this individual will respond better to a person who appears to be calm, and believable, and know what they are doing.

How can you appear calm and believable, efficient, knowledgeable and trustworthy, when you possibly owe more than you can afford and have probably made past mistakes? The answer is that your past history is less important to the person dealing with your account than your present attitude and what that promises for the future.

That is not to say that what you have done in the past has no relevance, or that you can go on to make promises you don't keep - far from it. However, if you acknowledge your current problems, explain your past mistakes if required, and most important of all, do everything you say you will do from now on, you CAN improve your relationship and situation with your creditors.

If you react with anger, if you are agressive, if you fail to keep your promises, you will merely make your problems worse.

Be calm, be prepared, and make these all-important first steps work in your favour.

Mend Your Money Mistakes

Don't tell me you haven't made any money mistakes - better yet, don't tell yourself you haven't made any money mistakes.

Everyone makes them and I don't mean just the big ones - on a day-to-day basis, we are all guilty of making money decisions that are not supportive of our bigger vision for our life.

Let me start then, by sharing with you my big mistakes from last year because a big part of mending money mistakes is to know what they are.

Mistake #1 - Not Looking After Yourself 

I did not take enough time to look after myself. While I love my work and almost everything about it, believe it or not there are other things I enjoy doing.

Because there is always something fun and exciting and necessary to do, I did not take the time to exercise enough, go to bed early or take time out to just be.

I know that last year I was more a human doing than a human being, and that if I continue on this path, I will wear myself out and end up no good for anyone.

All work, even enjoyable work, is not a balanced life or sustainable lifestyle.

Mistake #2 - Neglecting Time With Family and Friends

I did not spend as much time with my family and friends just for fun.

I am extremely fortunate because I work from home and my family is around all the time.

We make an extra effort to plan travel together, and while we probably spend as much time together as we can given work, school and other social commitments, we did not take the time to just 'hang out' together and play a game, watch a movie, go for a hike, or bike-ride or putter around the garden.

Mistake #3 - Failing to Follow Up and Stay in Touch 

I did not communicate enough with my clients and prospective clients. And, I did not stay in touch with all the amazing people I have met throughout the year.

Throughout the day, there are always lessons and situations that come up that are valuable teaching opportunities.

For some reason, I have not taken advantage of all the amazing technology available to share these thoughts with you.

It is one of my commitments for this year - to be more consistent with the blog, audio, video and written communication.

Mistake #4 - Trying to Do Everything On Your Own

I continue to fall back on an old habit - trying to do everything myself.

This isn't because I don't have great people to help me, it's just that for most of my career it was me.

I was self-employed and if something was going to get done, it was going to happen because I made it happen.

Well, in a corporate environment, if something is going to happen it's because the team made it happen.

Mistake #5 - Starting Something New Before the Prep Work is Done

And, the big one, I started something before something else was done.

This mistake needs to be written into an entire book.

Let me summarize by giving you an example, because in 2007, I experienced the money mistake that I see again and again and again with my clients and the people I meet, just in different circumstances:

I put a budget together, but before the money was completely pulled together, I marched forward.

That single mistake has cost me stress, money, lost opportunities and the most valuable thing of all - time.

Starting something new before completing something else is a common money mistake.

It's the mistake that people make when they start saving for something - they buy it because it goes on sale, not because they have the money for it; and it's the mistake people make when they retire - they leave work because they have reached a certain age - not because they have arranged their finances to live a financially independent life.

Find the Right Sequence 
This mistake could be the biggest of all that needs mending for most people - to do things in the right sequence.

We have to look after details in the right sequence.

We have to look after ourselves before we can look after others, and we have to look after the details before we can realize the big picture.

Don't Slip into Crisis or Windfall Planning 

The out of sequence financial plan is everywhere with the constant tendency to jump the sequence and go right for the quick fix and to do the urgent and immediate activities rather than the not urgent but important ones.

It's constant and yet we all know the sad statistics of lottery winners who end up with very little money left, if any, within a few short years of their winnings.

That same lure is what we call windfall planning.

It's why people who receive inheritances, divorce settlements, and debt consolidations continue to struggle with money.

Take Stock of the Good You Have Done 

When we focus on what we did wrong and at the same time try to set goals, we are just creating a bigger gap between where we are and where we want to be where the bridge to connect the two is a flashing light telling us "we'll never make it because we're no good - look at all the bad things you did before, what makes you think you can get to the other side and have those goals?"

So while it's extremely important to be aware of your shortcomings when mending money mistakes, and setting and writing new goals, it is even more important that you take stock of what good you have.

And that good becomes the first step of the sequence that connects your current situation to your goals and dreams.

To start the year off and mend your money mistakes, take stock of these important first 3 steps - in sequence:

1. Where are you today (what is good and what can you do better?)

2. Where are you going (what are your goals and dreams and why?)

3. What do you have to work with (specifically, what financial and non-financial resources do you have to build your bridge with and mend your money mistakes?)

And lastly, step 4 would be to ask for support... so, how can we help? 

Which Credit Card is Right for You

If you're in the market for a new credit card, there is a bewildering array of cards to choose from. There are even more incentive offers, so how can you decide on the card that is best for you? Here are some of the factors to consider.

What Kind Of Payer Are You?

The most crucial question is whether you are a person who clears the credit card every month or whether you always leave a balance on the credit card.

If you pay up at the end of every month, then you can go for a credit card that offers an incentive. If not, then you need to look at the annual percentage rate (APR) on the card. If you know what your typical credit card balance is, look at the illustrations given by card issuers to give a guide to how much you might have to repay over time.

Taking An Interest

Even with interest rates, you need to be careful. Although your new credit card may come with a 0% balance transfer rate, this is not the only rate to think about. Look at the rate on purchases or other transactions to see what you might be paying. And remember that any payments you make are likely to pay off the transferred balance first, while any new spending accrues interest.

Hand in hand with the interest rate goes the interest-free period. This is the delay between spending money on the credit card and being charged interest. This can vary considerably depending on the card you choose. The interest free period can be as much as 56 days. And it's how you use it that counts. If you put major spending on the credit card after the statement date, you have a month till the next statement, and then a few weeks to make the payment. This can be a good way of managing cash flow.

Look At The Fees 

There are three types of fees that count with credit cards. The first is the cash withdrawal fee. Many credit card issuers charge you for withdrawing cash at an ATM. These fees can be around 2% of the transaction. The percentage is even higher when withdrawing cash abroad. If you must use the credit card, then you're better off making one large withdrawal so you don't pay the minimum fee each time. 

Getting Some Cash Back 

Some credit cards offer annual cashback deals which are great for people who clear their balance every month, but not so good for others. If you don't clear your balance, the interest charged will wipe out any cashback gains. There are also reward points schemes that allow cardholders to earn money from their spending – and spend it again with a variety of high street and online retailers.

Paying attention to these items will help you to choose a credit card that will match your financial situation.

Insuring against loss of income

For young people in particular, their biggest asset is their income-earning ability 

Not all people have enough income protection insurance.

It's amazing that so many financial planners don't talk about it. 

About 35 per cent of people insure themselves for income protection - and the vast majority of those people are self-employed. 

Many people in full-time employment rely on an income protection through superannuation that they may not actually have. 

A lot of people think they have protection through super when they don't. 

Also, people don't understand the difference between total and permanent disability benefits and temporary disability benefits. 

Take a moment to check your policy: the answer may surprise you.

Attitudes to income protection can be baffling. 

If you don't have an income, then there are all the other things that are dependent on that - you can't pay the mortgage, you can't feed the family. 

A lot of people could only go a month or two without income.

Ask the population if they have home and contents insurance and 90 per cent would say yes.
But they don't think they have to insure themselves, and they're the ones generating the money to pay for all this.

Then there's redundancy. 

Many mortgage providers offer - and sometimes insist on  mortgage insurance.

It's estimated that ten per cent of people have taken income protection with their mortgages over the long term. 

But that's more historical than current; it used to be more like twenty per cent and now it's more like five. 

People feel a lot more confident.

This sort of insurance means that if you lose your job, or your ability to earn income for another reason, the policy will continue to pay your mortgage. 

Periods vary with policies but can be one to two years.

Some institutions require people to get mortgage insurance, particularly if they are gearing heavily in their mortgage. 

If the loan to value ratio is above 80 per cent, for example, many lenders will require mortgage insurance ... with good reason for doing so: at the 80 per cent level, about 1 per cent of mortgages default. At the 90 per cent level the default figure climbs to 2.5 per cent.

Then there's the loss of income from an untenanted rental property. 

Landlord insurance can cost as little as a couple of hundred dollars and covers, for example, defects in the building or damage caused by a tenant. 

But if you can't rent it just because it's unpopular, you can't protect against that - it's a case of looking closely at the quality of the product in the first place.

Life Insurance: How much is enough?

The Two Approaches to Setting Life Insurance Policy Amounts 
You can use one of two approaches to estimate how much life insurance you should buy: the needs approach or the replacement-income approach.

Using the needs approach, you calculate the amount of life insurance necessary to cover your family’s financial needs if you die.

Using the replacement-income approach, you calculate the amount of life insurance you need to equal the income your family will lose. Let’s look briefly at each approach.

You need how much? 

Using the needs approach, you add up the amounts that represent all the needs your family will have after your death, including funeral and burial costs, uninsured medical expenses, and estate taxes.

However, your family depends on you to pay for other needs, such as your child’s college tuition, business or personal debts, and food and housing expenses over time.

The needs approach is somewhat limiting.

The task of identifying and tallying family needs is difficult, and separating the true needs of your family from what you want for them is often impossible.

Replacing Income 

Using the replacement-income approach for estimating life insurance requirements, you calculate the life insurance proceeds that would replace your earnings over a specified number of years after your death.

Life insurance companies sometimes approximate your replacement income at four or five times your annual income.

A more precise estimation considers the actual amount your family members need annually, the number of years for which they will need this amount, and the interest rate your family will earn on the life insurance proceeds, as well as inflation over the years during which your family draws on the life insurance proceeds.

Note: Do remember as you quantify the income you want to replace that Social Security provides generous survivors benefits if you’ve qualified.

Calculating Replacement-Income Amounts with Excel

If you’ve got access to a computer running Microsoft Excel, the popular spreadsheet program, you can use your computer to calculate the amount of insurance you need to replace a specified number of years of income.

Suppose, for example, that you want to buy enough life insurance to replace the income from a $50,000-a-year job for 15 years.

If you figure your family will earn 5% on the life insurance proceeds should the worst case scenario occur, you enter the following formula into a cell in an Excel workbook to calculate the replacement income life insurance amount:

=-PV(5%,15,50000)

Excel returns the formula result 518,982.90 indicating that you would need roughly $520,000 of life insurance, invested at 5%, to payout $50,000 a year for 15 years.

Two Calculation Tips 

If you want to factor in inflation because you’re trying to replace income over a long period of time, you should use a real rate of return rather a regular, or nominal, rate of return.

To calculate a real rate of return, subtract the inflation rate from the interest rate in the formula.

For example, if you expect 2% inflation, you could replace the formula shown earlier with this formula:

=-PV(5%-2%,15,50000)

Here’s a final calculation tip:

You probably want to round up your number. For example, if the formula provided earlier returns the value 518982.90, you might want to round up this value to $600,000. Or $750,000.

Editor's Note: Financial Services Online provides a free online calculator that uses a combination of replacing income and needs approach in helping to determine the amount of life insurance cover you may need.

16 Simple, Everyday Ways to Save Money

Here are 16 of the simple, everyday changes that have worked for us.

1. Use a coupon, absolutely whenever possible. I was really surprised by how many money-saving opportunities are out there when I knew where to look.

For local purchases, get an “Entertainment Book” each year and you will save on those inevitable everyday expenses ranging from dining out to accommodation and admission to movies, theme parks, etc.

For online purchases, stick to the reputable retailers. You certainly will not save any money if you are the victim of fraud or if you are simply unable to return an item. And before you start shopping, always look for a coupon code that will allow you to save on your purchase. In the past, many online retailers sent out promotional codes as a series of letters or numbers that could be entered at checkout. Now, many retailers use a button or text link that automatically activates your coupon when you click through, so it is often a good idea to find the coupon first, before you start to shop.

2. Shop around. The internet is an amazing tool for researching products and retailers, as well as for comparison shopping. We make nearly all of our large purchases online. It is also important to know where to shop. For holiday gifts, plan ahead and check out the big online discount stores. Many offer significantly reduced prices on trusted brands. And you can get great delivery rates too, even on large gifts. I once had an enormous game table shipped to me for $2.50.


3. Keep a running list of gift ideas for your loved ones. I have found that when I am confident that a gift is perfect for the recipient, I am much less likely to overspend. But that kind of inspiration rarely hits me during the pre-Christmas rush, so I need to keep a list going the whole year through.

4. Budget. Of course, it is important to know what you are really spending. For years, the budget I had in mind was really more of a “wishful thinking” budget. But this quickly led to debt. It pays to get realistic. Whether you use a computer program or a simple ledger book, make sure you know where your money is really going.

5. Save for the future. Take 10 percent of your income and put it in savings, right off the bat. Now you know what you need to cut back on (or how much more you need to earn) to shore up the deficit.

6. Plan ahead. You will want to make sure you have money in the bank for emergencies. Experts say you should have three to six months of living expenses set aside, for those just-in-case times. It sounds like a lot, but start socking away money each month, and it will add up fast.

7. Get organised. When your home is organised, you will be less likely to spend money on items that are already hiding in the nether reaches of your closet and drawers. The same goes for your refrigerator and kitchen cupboards. Purge and organize before you shop.

8. Simplify. There is a certain romance to the “simplify your life” movement. And having too much stuff really does weigh us down. Take a look at everything in your home. If it does not add joy, beauty, meaning, or usefulness to your life, give it away. And when you are tempted to buy something new, it must pass the same test.

On a quarterly basis, go through your house and ask yourself these same things again. Go through your closet, attic, garage, and basement and purge those items that do not add genuine joy, beauty, meaning or usefulness to your everyday life.

9. Reduce, reuse and recycle. A simple lifestyle, for me, is about reducing my urge to over-consume. It is about being kind to the environment. It is about spending less money on material things, so that I have more time and money to spend on memories with my family. Make changes that will help the environment and your purse at the same time. Install water saving kits on your toilet. Write on the back sides of paper. Use reusable containers in your lunches. All these little things really do add up, and it is important to show our children how we can all be part of the solution.

10. Shop without your kids. I know that if I get a shopping cart at Coles and I do not have a list, I will spend $150. If the kids are with me, I will spend even more. This is another reason it makes sense to do your shopping online. You are less likely to purchase the incidentals.

11. Make sure that your credit card is paying you back via an incentive program. I found a credit card that allows me to earn points on my daily purchases toward our annual vacation trip, including airline miles and hotel accommodations. Since most of my expenses each month are incurred at the grocery store, I found a card that rewards specifically for these types of purchases. Of course, you will need to make sure that you are paying off your balance each and every month. Paying a high interest rate on your credit card will quickly negate any savings you accrue on your incentive plan.

12. Lower your interest rates. If you are carrying a balance on a credit card, give the credit card company a call to see if they will give you a lower rate. Sometimes, it is just that easy.

13. Shop around for insurance. The money you pay for car, home, life and health insurance can vary greatly. Do some research to find out if you are getting the best rate.

14. Be wary of the influence of TV commercials and print ads, especially on your children. We hear fewer cries of “I want that!” when we keep our kids programming to those channels rely less on advertising dollars, such as the ABC and some pay TV channels.

15. Play “Time Warp.” This is a technique I first learned from “My Monastery is a Minivan,” by Denise Roy, and I use it quite a lot. It goes like this: When you are tempted to make a purchase, mentally fast-forward through the life of the item. For example, in her book, Roy thinks she needs new candleholders. She imagines spending time at the mall to find them, soon having to clean them, and then, years down the road, packing them in the giveaway box. She shirks the purchase and soon rediscovers the heirloom candleholders that are packed away right in her own home.

I like to play this "fast forward" technique in reverse, too, asking: What new clothes did I buy last season? (Sometimes, I can not remember). Where are those "I have to have it" items now?

16. Keep your mind on abundance. When you are thinking about money, it is really important to get out of the poverty mindset. Too often, when we are focused on saving money, we are living from a perspective that focuses on lack and scarcity, which tends to bring about more of the same. It has been really helpful for me to make a conscious effort to see the world as infinitely abundant and to rest in the notion that my needs will be taken care of. This is generally a simple matter of thinking more about what I *do* have than what I do not have.

All my days of penny-pinching have certainly proven to me that it truly does not take money to make us happy. Many of my fondest memories have occurred in the smallest homes. My child’s favourite playthings tend to be the inexpensive items that were never designed to be toys at all.

And it is the simple, everyday pleasures that are the sweetest, when enjoyed together.

Create a Personal Budget in 7 Easy Steps

If your financial situation is out of control it may be time to create a personal budget. This could be the decision that gets your finances back on track because it takes back control of what your money is doing.

You want your money to work for you not your creditors, which is exactly what it is doing if you are living payday to payday. Instead of paying interest to them why not make it yourself?

A personal budget will do many things for you.

The most important thing it does is let you make informed decisions about how you spend your money.

It will show you exactly what you income and expenses are and lets you make adjustments to ensure a sound financial future.

Other then taking the time to get started, creating a budget is relatively easy.

You will need a notebook or legal pad and a pencil. Draw a line down the middle of your paper, label one side income and the other expenses, and you are ready to go.

1. Gather up your last three months worth of pay stubs and any other records that show income. Total them up and divide by three to get your average monthly income. That number gets written down at the top of the income column.

2. Now for the fun part. Gather up all your bills, credit card statements, and checkbook register and start itemizing a months worth of expenses in the expense column. For those bills that fluctuate each month you can use the three month method as used in step one to get a solid average. Add all those expenses up and write the total down at the bottom.

3. This is the step most people fear. Compare your income to your expenses and see which one is more. If you expenses are higher then your income then you have a problem that needs to be fixed. Chances are you are making up this shortfall with credit of some sort. You can't build a sound financial plan if you are in debt, it's that simple.

4. Now that you have everything written down it's time to look it over carefully. Target unnecessary expenses and start cutting them. A budget gives you the power to free up money that can be used for more important tasks.

5. You can also use your newly created budget to start prioritizing your debts and which need to be paid off first. This gives you a game plan to get out of debt while actually being able to see positive results, which is a major part of good money management.

6. As you get better at budgeting you can start to refine and track your long term financial plans. You can manage savings accounts, investments, emergency funds, and retirement accounts using your personal budget.

7. Patience is required when first starting out because it won't work perfectly those first few times. Most people need 3 or so months of budgeting practice before they start to really get the hang of it.

Your financial future is in your hands. Nobody can build it for you.

If you create a personal budget you will take the first step to attaining your financial goals.