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Income Building: Love Your Work

April 10, 2012 By Leave a Comment

Keep in mind 85% of your success will come from personal skills — attitude, enthusiasm, smile, tone of voice, etc. Only 15% come from your skills, regardless of age. Polish the 85% and your issue will not be an obstacle. – Dan Miller

Work get paid, don’t work don’t get paid…

We are all on straight commission, where we have a salary or not. If we don’t work we won’t get paid. So, it is important to be doing the kind of work that you love. In the last post we talked about using your passions and natural talents to find a field that you would love to get up every morning to go and do. But how do you find this work. One of the best books that I know is 48 Days to the Work Love  by Dan Miller. This book can take you step by step to finding meaningful work in 48 days. But it does take work on your part.

Plot course of action

Once you know what type of work that you would like to pursue. Start to research companies that you would like to work for. Send out cover letters and a résumé with a note that you will be following up in a week. Then follow-up! If you get an interview, make sure that you hand write and mail a thank you note to the company. Make yourself stand of from the crowd in some way. Be creative, depending on what your interests are, formulate a different twist on your résumé so that you will stand out.

Keep your expenses in mind

Since this is a personal finance blog, let’s think about how much money you will need in order to accept this dream job. List your basic expenses on a piece of paper or a spreadsheet. What is the bare minimum that you can live on?  But I thought the point was to build income? It is! If you are doing something that you are passionate about, you are more likely to work hard and get noticed. You are more likely to get raises and promotions. However, if your passion is making smoothies the local health food store, you may never earn a large income unless you open your own business, which we will take about next time.

If you have a low paying job that is your passion, you will have to cut your lifestyle to live on a lower-income. This may mean selling stuff, including possibly your home. If you can not live on the income that the job brings, you need to think of another job.

Full time Career, Part-time Job

It could be that the way you are going to save for retirement is to pay off your debt. If you have a great job and a good income already, you may just have to pay attention to where your money is going. If it is all going to service your debt and lifestyle, you may have some changes to make. The part-time extra job can help you to make more money temporarily, to pay off your debt. Once your debt is paid off and you are living on less than your salary, you will be able to start saving for retirement. If you continue to live above your means you will never save enough to retire with dignity and stability. Sacrifice now will pay off in the future when you have money for retirement.

Get pointed in the right direction with your career and you will be able to increase your income to either save more for retirement or to pay off your debt, so that you can begin paying for your retirement.

Tim and Kathryn Gerken are Financial coaches in Newcastle, WA. They serve their community in the greater Seattle area and are available to lead seminars and workshops on personal finance. Please contact us to find out more!

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Income Building: What is work for?

April 6, 2012 By Leave a Comment
A dream doesn’t become reality through magic; it takes sweat, determination and hard work. ~ Colin Powell

Your best wealth building tool is your income.

Many people who are trying to work their way out of debt, focus on the size of the debt and how to pay it off. The mountain in front of them is so large that they can not see around it to realize that the problem may not be the debt so much as the lack of income. Debt may be a symptom of a larger problem or it the debt may just be a lack of organization and paying attention to where your money is going. Over the next few blogs I will discuss the income side of personal finance and how building up your income can not only help you to pay off debt faster, but build your savings as well.

Create a life plan

When we begin to work, after we get out of school, we initially focus on making enough money to move out of our parent’s home and support ourselves independently. The boomerang generation, aged 25 to 34, is having a hard time doing this according to a recent survey. What you need is a life plan. One of our goals for our lives should be in a position to retire from work at a reasonable age and be able to support ourselves with our savings. In order to do this we must save a portion of our income each year that we work. In today’s society, many people spend more than they make each year, which works out to be a negative savings rate. This does not bode well for our future. So what is your plan?

How much money would you like to have?

To make a plan we need to start at the end and work backwards. How much yearly income would you like when you retire? Could you live on $50,000 per year? If your home were paid off, could you live on less or, if your home were paid off what would you do with extra income?Use this retirement calculator to help you determine how much you need to save for retirement. This may be a pretty depressing number, but it also may not be as bad as you think. Let’s just ay that you are now prepared to do what it takes to reach your retirement goals by working and saving.

What do I want to be when I grow up?

The next step is to figure out if your current job will get you to where you want to be. Are you happy with your current employment? If you could do anything or work anywhere, is this where you would choose? Take some time to brainstorm and dream. You want to be someplace where you enjoy getting out of bed and going to work. If you are doing work that you love your income will increase over time. What type of personality do you have? Are you a leader, a detail person, social or outgoing, loyal? Knowing your personality will help you to match your character traits and skills to a job that will give you energy, not drain you.

Identifying your strengths and weaknesses in the job market, getting additional training or seeking a new position where your strengths are an asset will get you pointed in the right direction to build your income and your retirement savings.

Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA. They serve their community by speaking, teaching workshops and coaching individual and families in personal finance.

Filed Under: Financial Goals and Habits, Financial Planning and Priorities, Personal Finance Tagged With: , , ,

College Loans- Counting the Costs

March 23, 2012 By Leave a Comment

Spring is in the air and with it many high school seniors are waiting anxiously to be accepted into the college of their choice. Our son will be entering college this fall and like many parents we have been saving for his education since he was young. But some families are not in the financial position to pay for college without accumulating debt. There are many options these days to finance college. The key is to graduate with no debt or as little debt as possible.

Communicate with your student

If you are unable to pay for college, communicate with your student about your situation. Help them to explore schools that have a lower tuition cost such as state schools or online distance learning. Another lower cost option is the local Community College, which can provide the basic undergraduate credits for a fraction of the cost of four-year universities, with transfer privileges to state schools. Help your student weigh the options and decide the best route. Many incoming freshman do not know what they want to major in and can take general educations credits at less expensive institutions. Scholarships are often a good way to defray some of the costs of tuition. There are many small scholarships that go unclaimed each year because students don’t apply for them. Ten scholarships for $500 will add up to $5,000 per year toward tuition costs.

Get a job

Working through college is always an option as well. It might take more time to complete a degree, but at the end of the term, you will not be burdened with student loans without a job to pay them off with. Many colleges have work-study programs and some employers will help with tuition costs, if you agree to work for them after and possibly during college. Nursing students, for example, can find hospitals to help with tuition on the stipulation that they work there for two years after graduation.

Loans

While we discourage student loans, we realize that many students will opt to borrow for their education. If you get a federally insured student loan, these can follow you until you are retired, if you can’t pay them off. Then the government can take payments out of your social security check. Federally insured student loans are not entitled to bankruptcy either.

Private student loans usually require a co-signer, such as a parent. In these cases, if the student can not pay the loan the consignee is liable for the payments.

Buyer Beware

The place where the most people get into trouble is after college. Student loan payments begin 6 months after graduation or upon leaving college. There are many students who do not finish college, cannot get a job, and have student loan debt to pay for years to come. Research the salary levels for the degree that you are earning. If the salary is low or moderate, the student will want to keep college costs including tuition as low as possible. Borrowing $100,000 for a degree as a social worker is crazy when the income levels for that position are traditionally low. Remember that your income will be your most powerful wealth building tool. Keeping student loan debt until you are 40, will severely limit your wealth building opportunities.

Plan ahead, communicate with your parents/students about financial management and costs for college. Know the risks of borrowing and you will be able to get pointed in the right direction to graduate college with minimal to no debt and begin your life with financial security.

Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA. They serve their community by teaching classes, speaking and coaching individuals and families. To learn more, please contact us.

Filed Under: Financial Goals and Habits, Financial Planning and Priorities, Our Blog, Relationships & Communications Tagged With: , , ,

How much income do you need?

March 20, 2012 By 1 Comment

In an article titled: The basics, some extras, savings: You need $150,000 per year, USA Today states that there are “Three groups [that] are experiencing higher rates of financial struggle: those with incomes between $100,000 and $150,000, those aged 18 to 34 years old, and women.”  This article puzzles me. The average household income in the United States is $49,445 according to another article in USA Today. So where is the extra $100,000 going as “basics”?

How do you know you need it?

In today’s world, marketeers have trained us that we need or deserve a certain standard of living. Everyone needs a cell phone, even a 10-year-old! Everyone needs cable television. Everyone needs a car, with a car loan attached. Unfortunately, just because you can “afford” the payments, does not mean that you should be buying the item. The most heavily marketed to group, 19-34 year olds, are dealing with the peer pressure of keeping up with the Joneses by being persuaded they need the newest and best toy or gadget.

Where is your income going?

I am certainly not saying that everyone should make $50,000/year and be happy with what they have. I am saying that those who make substantially more than the average need to take a hard look at their basics and think about where their money is going. If you can live on less than you make and eliminate your debt, you should have plenty of money at an income level of $100,000 – $150,000 per year. In fact you should be working your way towards becoming wealthy, not signing up for payments to every store you go into.

Create a cash flow plan and stick to it!

If you are having trouble balancing your income with your expenditures, go back to the basics. Food (not restaurants), utilities (not premium cable), transportation (something that is paid for), affordable housing and basic clothing. Consider going to a cash system, rather than credit or debit. Spending cash will register in your brain far more than swiping a card will. You consider each item with more care before you purchase it.

Savings is the key to wealth building 

The key to getting pointed in the right direction to a healthy financial future is to pay attention to where your money is going and constantly ask yourselves if a given purchase is the best use of your wealth-building resources. Remember the only person who will save for your future is you.

Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA. They serve their community through, workshops, seminars and individual financial coaching. Please contact us for more information.

Filed Under: Budgeting, Financial Goals and Habits, Financial Planning and Priorities, Our Blog Tagged With: , , , , , , , ,

How Do I Get Rich?

March 13, 2012 By Leave a Comment
“I always knew I was going to be rich. I don’t think I ever doubted it for a minute.” – Warren Buffett

Most people want to be someplace better

It is in our human nature to want to improve our position in life. If you live in the lower middle class you, want to be in the middle class. If you have a good car, you would like a better car. If your computer is not fast enough, you want a faster one. Advertisers and the marketers know this about human nature and feed that demand with their products and services. The credit card companies are the best at it, making us think that we need to borrow money from them in order to get what we want in life. One of the ways the credit industry has done this is with the FICO score. A FICO score is made up of your debt history.To find out how your score is calculated click here. There is no absolutely indication in this score of the kind of income you are earning or if you are actually winning with money. It is not a good indicator of wealth.

Is having everything that you want, but heavily in debt, worth it?

The problem with buying the next great thing, is that there is always something else new that comes around the corner. If you borrow for the car, the furniture and the big screen television, it won’t be long before you want a bigger and better version … while still paying on what you have. It is a huge trap to tell yourself the you deserve to have something new. 

The secret to getting rich…

…is savings. Your income is your biggest tool to building wealth. Wealth won’t happen with gold or platinum credit cards, airline miles or cash back. It will not happen by refinancing your home. It will only happen if you spend less than you make so that you can save and invest the difference. There is no magic formula or secret investment. You are the only one who can save your income. The sooner you start to save your income, the more time you will have for it to grow with compound interest. Get pointed in the right direction today. Pay yourself first, so that you can save for your future and build wealth.

Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA. They serve their community with classes, speaking and coaching in the greater Seattle area.

Filed Under: Financial Planning and Priorities, Our Blog, Personal Finance Tagged With: , , ,
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