Posts Tagged ‘emergency fund’

Leave Your Emergency Fund Alone!

Leave Your Emergency Fund Alone!

An artist friend named Linda (we’ll call her that to protect the guilty) has a problem. She’s incredibly talented and creates giant, sweeping paintings that, on average, each sell for more than $2,500.

That’s the good news.

The bad news? She never knows when she’s going to sell the next one AND she’s a “frequent abuser” of her emergency fund.

Linda said to me over coffee recently, “I’m hoping I sell a painting soon. Robert and I decided last night to vacation in Aruba and I have to buy the tickets.”

“That sounds fun,” I responded. “But what if you don’t sell one ahead of time?”

Linda sighed, and said a phrase I’ve heard many times before, “I guess we’ll dip into the emergency fund.”

(more…)

Why You Need to Start Saving for Retirement NOW! …A Success Story

I recently received this email from an actor who just finished working through the Artist’s Prosperity Home Study System:

Miata,

I just have to write and tell you how excited I am to have found you! I’ve been an actor for five years, struggling along with everyone else, and I finally decided that enough is enough: I need to put together a plan so I can really focus.

All of this time, I thought I had already been focusing on my art, when in reality, I was part-timing everything: my job, my family and my craft. Now, you’ve put me on a path that I don’t think I could have accomplished myself. I have an emergency fund, a separate checking account for my business, and for the first time, real hope for the future. While I have yet to score that elusive “great part,” my auditions are much better. I believe this is because I come in focused and without worrying about “how broke I am.” Sure, I still worry about money, but not in the “OMG, I need this role” desperate way that I have in the past.

Thank you again for what you do. I just wanted to let you know there are people out there who appreciate you very much.

Jessica

It is rewarding when we hear from folks who have started to take control of their financial futures, because the unfortunate truth is that many people simply never will.

I was just reading some statistics from a group called the Employee Benefit Research Institute. While most Abundance Bound readers are self-employed (and not employees of others), we frequently fall into these same traps and the results of their recent retirement survey weren’t encouraging: (more…)

5 Great Uses for a Tax Refund

In the 1986 classic movie Wall Street, Bud Fox (played by Charlie Sheen) is a young up-and-coming stockbroker who’s trying to make his mark in the world of finance. As he’s adjusting his tie before a big meeting with the titan Gordon Gekko, he says, “Life is made up of a few big moments. This is one of them.”

Well believe it or not, if you expect to receive a tax refund check, you’re coming up on one of your “big moments.”

Every year, many people blow this chance to get ahead. They spend their refund on a big, frivolous purchase or take a vacation. While these might feel like fine short term uses of a refund check, there are several that could change your life, remove your debt, or help you build your business or security.

Here are my five favorite uses for a refund check:

1)    Wallop some debt. Here’s your big opportunity to focus on your art more. If you’re drowning in debt, you may find that your attention is focused more on side-jobs and instant income opportunities than the big picture. Clear your mind by getting rid of some debt payments.

For best results, tackle smaller debts first. Wiping these payments out creates  breathing room for your budget. If possible, use the money you save on these payments to tackle bigger debts next. Soon you’ll be on your way to being “debt-free” and focused on your income opportunities instead of the mountain of bills on the counter. (more…)

Setting Goals That Stick in 2013

A couple weeks ago I wrote about the strange place I found inspiration for my 2013 goals. This week, I’d like to address New Year’s Resolutions head-on. Every year millions of people write out a fresh list of goals in the hopes of making the next twelve months better than the previous dozen. We creative people are no exception: in our world, it’s often the well-disciplined artist who ends up on the road to loftier goals, while the dreamer without clear, concise milestones spends another year chasing the same first-tier plans (and never can figure out why he doesn’t achieve anything….). You know the ones; they’re the artists with grand ideas, fantastic plans, and nothing to show for it except a series of excuses.

One mistake that even big businesspeople make, is that they set professional goals, but forget about the fuel to get them there. It might not be the most glamorous activity, but remember your financial goals; don’t just focus on your art. By making sure that your financial picture is healthy, you’re bound to have the fuel ready to have a wonderful 2013 in your craft. By placing well-executed goals, you’ll get where you want to go faster, and with less bumps along the road.

 

 

Some Financial Goals to Act On

Emergency Fund – If you don’t have a cash reserve, now’s the time to start one. Anything can happen…and probably will….in 2013, so you’ll want the protection to know that when bad news occurs, you’ve got the money in the bank to easily get through it.

What’s a good reserve? Generally, I recommend having at least three months expenses in a safe place away from market fluctuation (like a bank account). (more…)

Overwhelmed With Financial Planning? Here’s Where to Start

A friend recently said, “I don’t know how you keep all of this straight…what the Dow Jones is doing, what’s a good rate on a credit card, how a will works, the right type of life insurance. Ouch! It makes my head hurt.”

You may feel the same way about your financial picture. Between your craft, family, friends and obligations, it seems like a huge hassle to remember everything you need to know.

But there’s good news: it’s not that difficult.

I imagine you might be thinking, “Ha! Easy for you to say. You do this every day.”

I understand that it’s a whole new world for many of our readers, but I’m serious: it’s not that difficult.

Sure, you might not understand every point about finalizing a mortgage or how to tell a good mutual fund from a bad one, but like any task, if you organize it correctly, it’s easy to see what you really need to know now and what can wait for later. (more…)

From the Mailbag

Miata,

Should I pay extra on my mortgage? I’m making a little extra money right now and I’m thinking paying off my house is a good idea.

 

– Jon

Hi Jon,

This is an intensely personal question. Certainly, less debt is always a step in the right direction, but there might be better choices to grow your net worth more quickly.

Here are a few areas to think about before tackling extra mortgage payments:

  • Is your credit card debt paid down? If not, this is a greater priority. Credit card debt is more harmful to your credit score and is usually at a higher interest rate.
  • Do you have an emergency fund? If not, put extra money into a savings account so that if you have financial trouble down the road, you’ll have funds available.
  • Are your long term goals met? If you’re saving enough for retirement, college or other priorities, then pay down your mortgage.

A mortgage is tax deductible, low interest debt in most cases. Because money paid into a mortgage can’t be used for other goals, I usually look toward other options before paying it down.

5 Lessons from 2011

This time of year I like to look back over the last twelve months and reflect. For me, life is about making mistakes–mentors have told me that if you don’t make any mistakes, you aren’t moving fast enough. This year has been a whirlwind, so I must have made some real doozies!

While it certainly can be difficult, I try not to dwell on my missteps as long as I learn from them. At this time of year, I also like to learn from events and the mistakes of others. There are five that I think are well worth reflecting on before we march into 2012:

1) Don’t Wait on Government…In Fact, Don’t Wait.

Politics seemed to enter our life more than ever this year, with Republicans and Democrats waiting to the last minute before passing legislation in several key areas, including funding to keep the government open!

I’ve met people who’ve said that they can’t do any long-range planning because they’re unsure what measures the government is about to pass, or they aren’t sure if the tax structure is going to change, or they want to wait and see who the next president is.

Most artisans work on a 1099 income basis, so some important areas such as health care and small business taxes can have a big impact on your bottom line.

….but does this mean you should wait?

Waiting on the government doesn’t make any sense to me. Is it better to have a plan in place that you may need to adjust or to have no plan at all? I’d always prefer to revisit my plan when the government finally decides their actions, than be held hostage to whatever political problems crop up.

The Bottom line: Plan now and adjust as events occur. (more…)

Build Your Financial House of Brick

Remember the three little pigs? Sure you do. The moral of the nursery rhyme was simple:  build your house right the first time and it won’t be blown over.

In the arts, we’ve all heard this advice before. It’s the quality of our work that brings people back. We’ve watched suspiciously as performers with gimmicks shoot to the heights of fame for a few brief moments; but it’s only quality work that helps ensure a long, prosperous career.

Or in other words, using three little pigs speak:  If you’re building your house, make it brick.

I’ve often heard financial planning referred to by professionals as a house. A foundation laid on the sandy ground of debt and scattered income is bound to fall later. For the average person, building consistent, dependable income and paying down debt are jobs number one and two.

But we aren’t average, are we? (more…)