Invest like Warren Buffet - How to pick the right stocks

Invest like Warren Buffet - How to pick the right stocks

Are you tire of trying to pick the right stocks. Just buying whatever billionaire Warren Buffett bought might be a great way to go. You don't even have to buy it the same day. Even if you bought months after his share purchases, you could still get up to twice the return of the Standard & Poor's 500 Index during the past three decades.

For example, investors would have earned an annual return of 24.6% by buying the same stocks as Buffett after he disclosed his holdings in regulatory filings, sometimes four months later, according to a soon-to-be-released study by Gerald Martin of American University in Washington and John Puthenpurackal of the University of Nevada-Las Vegas. The S&P 500 rose 12.8% a year in the same period.

It is really hard to beat the pants off the S&P 500, however, by following Warren's buying and selling," said Mohnish Pabrai, who manages $600 million at Pabrai Investment Funds in Irvine, Calif, you can. So how do you find out what good old Warren is buying? Check out stockpickr.com for a list of Warren's latest stocks.

Stock picks online - pick stocks like the pros

Stock picks online - pick stocks like the pros

I read a interesting article in Businessweek about a new website stockpickr.com that helps you with your stock picks. Here is what the article said.


Stockpickr.com was created by hedge fund hotshot James Altucher. The site helps investors see what the smart money is doing. Last year, Altucher got an offer he couldn't refuse. A much larger fund would give him more than $100 million to invest, leveraging the strategies that he had perfected, however he had to give up everything else on his plate. It was an offer Altucher, 39, could refuse, and did.

Instead, he and his fund partner, Dan Kelly, 32, decided to take their investing strategy to the masses. The result is the Web site Stockpickr.com, where investors can view the portfolios and latest publicly available moves of hundreds of successful pros, including Warren Buffett, hedge fund great George Soros, or mutual fund manager and Yale professor Martin Whitman. The best part about it is the site is that it is free. You just need to sign up to be a member. I think this site along with the Jim Cramer tools that I have listed in a previous post should get you on your way to some excellent and educated stock picks. And remember when I say education you really do need to do some research before you pick a stock.


Several million people have visited the site so far this year, and traffic has quadrupled since January. In April, Altucher sold his controlling stake to TheStreet.com in a deal that valued the venture at about $10 million.The Internet has allowed investors to tap into a world of data about companies and markets with the click of a mouse. But the flood of information can be overwhelming and difficult for ordinary investors to harness.

Now a new set of Web sites is springing up, like Stockpickr and GuruFocus.com, to help investors tame this information glut and use it to make smarter investing decisions. Altucher adds his own perspective on Stockpickr, focusing on the footsteps of value managers, those who buy deeply undervalued and out-of-favor companies. The site's visitors also form a virtual community whose members interact with each other, answering one another's questions and sharing knowledge about various strategies.Stockpickr's front page features annotated updates of the latest pro portfolios posted by Altucher and Kelly along with new ideas they've tested using historical stock data. Recently, Stockpickr was featuring the latest portfolios from Harvard's endowment, mutual fund star John Osterweis, and stocks whose characteristics are similar to those Buffett has invested in.

The great part is the site is free; it makes money from advertising. Following the moves of successful managers just from Securities & Exchange Commission filings can be extremely complicated for a layperson, says Tong Yao, a finance professor at the University of Arizona whose research helped uncover the advantages of piggyback investing. "Web sites like Stockpickr that can process the information and provide ready-made investment signals that are proven to work will be good news for investors," he says.

Stockpickr isn't the answer for someone who wants an automated investing plan. It doesn't produce a single preferred portfolio or replace the need to sort through many potential stock plays; it's more of an idea factory. One of the site's most popular features is a function to compare ordinary investors' picks with those of the pros. More than 100,000 people have posted their own portfolios. Their performances are tracked for all to see. The site spits back an Amazon.com (AMZN )-like suggestion list of stocks owned by professional money managers whose holdings are similar.

Users who post their picks and commentary give Stockpickr considerably more vitality than other sites, says Roger Ehrenberg, president of the research firm Monitor110: "It's not like a message board. It's more like a collaborative community."

31 ways to get out of debt

31 ways to get out of debt.

Found a great article at Dumblittlemen.com here is what they said along with my comments.

1. Write down your financial goal. A large goal is not likely to be achieved if you don't write it down. Type it out, print it out in large font, and post it up on your refrigerator. What is your goal? A 50% reduction of your debt? Complete debt elimination in two years? Whatever it is, be specific and write it down, and don't forget it. I think the righting down goals are great, however, you need a good system to determine if you are moving toward your goal or not. I recommend that your develop a simple net worth spread sheet on Excel to track on a monthly basis your assests and liabilities. Your assests are your savings accounts, investments, real property and so on. Your liabilities are all your debts, mortgage, credit cards, lines of credit and so on. Click here for an example.




2. Create rewards. People who are good at achieving any goal will tell you that rewards are important. Try to give yourself a treat at regular intervals, or little celebrations when a debt is paid off. Let them motivate you to succeed. Unfortunately, a lot of people have dug themselves a big hole by incurring too much debt. It can be a long haul getting out of this situation. When you reach certain milestones it is a good idea to take a break and celebrate. An example of a milestone might be, paying off your department store credit card, closing out the signature line of credit, consolidating all of your credit card debts into a lower rate. After you get to this milestone, go out for a special dinner or buy yourself a reasonably reward. But don't take on more debt during the celebration.




3. Think positive. This may be one of the most important tips on this list. Positive thinking may sound corny and trite, but trust me, it works. It's actually crucial to debt elimination. If you start letting negative thoughts get into your head, it will cause you to want to give up. And debt elimination is such a long-term goal that it's important that you not give up. When you feel yourself thinking negative thoughts, squash them and replace them with positive thoughts. Thinking positive is great and I highly recommend it, however, you need to also think critically and creatively. Spend time in a constructive manner thinking about how to get out of debt, how can you reduce your overall expenses, where can you cut back and plow more money into the debt elimination? Critical thinkinig is not negative if you are going about it with a problem solving mindset.




4. Stop digging. As the saying goes, if you're trying to get out of a hole, stop digging. It's important that you stop using your credit cards for spending, and slow down your spending, so that you don't get further into debt. Need to buy something but don't have the money. You'll need to find the money first, or wait until you have it, instead of using credit. This is exactly how you got into this problem. Unfortunately we are in an instant gratification society. A 25 year old couple wants the $500K house and they go out and take on the debt and buy it. Unfotutunately they are over their head immediately and cannot afford to buy window treatments or do any landscaping. You've seen these houses. What happens when one of them looses their job. Our society encourages this type of behavior. We have commercials for equity loans that talk about paying for a vacation with a home equity loan. Does this make any sense.




5. Make a list of debts. This is a difficult step for many, but necessary. If you're going to tackle your debt problem, you need to know what it looks like. Make a list of all your debts, their minimum monthly payments, interest rates, and total amount owed. A spreadsheet works well for this. Then total up the monthly payments and the total amounts owed to see what the damage is. Now that you have a clear picture of your debts, you can begin to make a plan to conquer them. See my comments above on developing a net worth tracking sheet.




6. Reduce expenses. See what you can do immediately to reduce your spending, whether it be cutting on things like buying coffee (make your own), eating out (cook at home), or shopping (just stop), or whether it be looking to cut out major bills like a second car payment or your yacht. If you can reduce expenses, even by a couple hundred a month, you can use that money to start paying down your debt. Whatever you free up from your expenses, dedicate that to making an extra debt payment (see the debt snowball below). What about the cable bill ($120 per month), the XM bill, the Netflix bill, and you are still going out to the movies? My dad use to use a very simple system for keeping track of spending, he had a little tiny pocket note book where he wrote down everything he spent. If you do this you will be amazed at what you are spending. Another thing to help you with spending is switch to only buying things with cash. When you see the money flying out of your wallet your begin to realize just how much you are spending. There really isn't any pain in handing someone your Visa and you get a little slip of paper back. It doesn't have the same effect as handing someone 6 $20 bills to pay for the dinner you just had.




7. Make extra cash. In addition to reducing expenses, you should see if you can bring in some additional income. Work part time, do some freelance work, sell some of your stuff on eBay, hold a garage sale, take in a boarder, rent out your yacht. Get creative. It doesn't have to be permanent, although you might decide to keep bringing in the extra income even after you're out of debt. With the extra income the you generate plow 100% of it into debt elimination first. I also recommend that you start to build up a rainy day fund as well. It may feel crappy working that extra job and giving up your Saturday's but you did spend the money before you earned it and now you are paying it back.




8. Make a simple budget. This is another step that many people dread. Well, it doesn't have to be complicated. Make a simple list of the things you spend on every month, including your minimum debt payments. Write down how much you spend on each one (and be realistic). Total it up. Then add up your income, and see if the income exceeds the expenses. If not, you'll need to reduce the expenses. I have approached this in a simpler fasion. My income goes into the checking account, if I cannot pay my bills each month from the checking account and I need to tap into savings I immediately know that I am overspending. It is the simple principle of cash flow. If you bring home $3500 a month and your spend $4000 you are either incurring debt or you are tapping into your savings accounts. Your credit union or bank statement should show you this right on top of the statement.




9. Watch for irregular expenses. Think ahead to expenses that may be coming up, like Christmas and birthdays, or insurance or home repairs or car maintenance or back-to-school shopping. These are things that don't happen every month, but that will definitely be coming up. Budget for them, saving a little so that you are prepared. It's best to include a small amount in your monthly budget for irregular expenses like this, so that you have the money when you need it. The best way to do this is with a special savings account. Lets face it if you have massive credit card debt you are not very disciplined. You are not going to take $20 a month and put it aside to pay for Christmas, vacation, or school tuition. It needs to be automatic. Treat these bills as normal yearly expenses, which are not really irregular since they happen each year and have that amount automatically taken out of your checking account each month and put into a special savings. If you usually spend $2400 on Christmas each year, you need $200 a month going into special savings or your Christmas club savings. If you spend $4800 on that spring vacation, you need $400 a month going into special savings. If your kids tuition is $3600 you need $300 a month for that. You get the idea. Why pay for these things all in one month and incur more debt. Spread it out and save for it all year long.




10. Save an emergency fund. This tip might seem strange in a list of debt elimination tips, but it's actually very important. Without at least a small emergency fund, you'll have an extremely difficult time reducing your debt. The reason is that when unexpected expenses come up (and they always do), if you have no emergency fund, the first thing you'll cut is your debt elimination payment so that you can pay for the unexpected expense. Either that, or you'll use your credit card and get further into debt. Try to save up $1,000 in a savings account to pay for these unexpected expenses and ensure that your debt elimination goes smoothly. Once you've saved up that $1,000, put it all towards debt. See my comments above about rainy day funds.




11. Stop using credit cards. Many of us have a problem with credit cards. If you're the type to pay your balance in full each month, and not carry credit card debt, you can skip this tip. If you don't pay your balance in full, cut up your cards or hide them and stop using them. The interest is extremely high, and it's way too easy to use a credit card. Credit cards are a convience and should be treat just as that and only that. Rule #1: Don't borrow money from credit card companies. Credit card companies are not your friends. There are lots of places to find cheaper loans. Credit card companies are not one of them.



12. Use cash. Instead of putting all your expenses on a card, try using the green stuff instead. Each payday, withdraw the amount of cash needed for your spending expenses in the simple budget you created (see above). Pay your bills online first, then withdraw the cash for groceries, gas, and other spending. When you run out of cash, you're out. It's that simple. This is very similar to the budgeting process that I described about using your checking account. Again it is all about cash flow. In this case it is actual cash flow. When you have flown through all the cash you are done and have to wait until next month.




13. Use a debt snowball. Popularized by financial adviser Dave Ramsey, the debt snowball is a simple method that works well for many people. First, identify at least $100 that you can use as your "debt snowball". Use this amount to increase your payment on your smallest debt, while paying the minimum on your other debts. Soon, your smallest debt will be paid off. Now take the total amount you were paying on that debt (the "debt snowball" amount plus the minimum payment for that debt), and use it as your debt snowball amount for your next smallest debt. Continue to do that, with your debt snowball amount building up as the debts are paid off, until all debts are paid off. An alternate strategy (and a popular one as well), is paying the highest interest debts first, as this will save you a little money in interest. This strategy can also be applied using one modification. First of all identify the debt that has the highest interest rate. Pay as much as you can on that debt first and the minimum on everything else. Do this with the extra $100 as well. After this debt is paid of attack the next highest debt.




14. Automate your minimums. Make the minimum payments for each of your debts automatic, so you don't even think about them. Either allow the companies to deduct the amount automatically out of your account, or use your bank's online bill pay feature and make them automatically recurring payments. I don't know that I agree with this tip? Not sure what paying the minimums automatically will do to help you get out of debt. I would have to think about this one.




15. Make the debt elimination payment a bill. The extra payment you're making on one of your debts (see debt snowball tip above), on top of the minimum payments, should be treated as a bill, not as an optional expense. That means, when you pay your bills, be sure to pay the debt elimination payment along with the rest of the bills. Don't let it be optional at all.




16. Get lower rates. Either find a balance transfer for your credit cards that will lower your interest rates (read the fine print carefully), or work out a plan with your current credit card companies to lower your rates. Many credit card companies are willing to lower interest rates if you tell them that you will move to a competitor with lower rates.




17. Monitor impulse spending urges. Impulse spending is the culprit that leads us to get into debt, and often keeps us there despite our desire to get out of debt. Learn to monitor your urges, so that you're aware of them and can control them. Often, when you get the urge to buy something, your heart beats faster and your breathing gets a little heavier. If you can get past these urges, you can control your spending.




18. Use a 30-day list. A good tool for controlling impulse buys is to use a 30-day list and to stick to it. Every time you get the urge to buy something that isn't absolutely essential (and by "essential" I mean things like groceries, not the latest iGadget), write it on the list with the date you wrote it on the list. Then don't allow yourself to buy it until 30 days have passed. Often, the urge or need to buy that item will have disappeared.




19. Stop shopping. Don't go to the mall or other usual shopping hangouts. Don't go places to "shop" -- only go to a store if you have something specific to buy (a need, not a want) and don't buy anything else. Get in, then get out.




20. Don't buy online either. Shopping applies to online shopping sites, such as Amazon or eBay. It's so easy to buy online that many of us do it way too often, and don't realize how much we actually spend. Stay off these sites if possible.




21. Eat at home. If you tend to eat out a lot, try cooking for yourself instead as much as possible. Make a weekly menu of stuff you like to eat that's not difficult to cook, make a list of the ingredients you need, shop for them, and then cook the simple meals each day. Eating out once in awhile is OK, but if you can make a dent in your dining out spending, you can often free up a lot of cash for debt elimination.




22. Maintain your focus. One of the hardest things about achieving a long-term goal such as debt elimination is the tendency for our focus on that goal to fade away. Focus is the key to achieving any goal, and to achieve a long-term goal, you have to find ways to maintain that focus. Having a debt-elimination partner, or joining an online forum, is a good way, as is posting your goal or a picture of your goal somewhere visible. Also keep a debt diary or email yourself reminders every so often. Do whatever it takes.




23. Leave yourself wiggle room. It's unwise to eliminate all extra spending and dedicate it all to debt elimination. That's a recipe for disaster. You have to give yourself some spending money to eat out or buy things now and then (but much less frequently than before), or you will begin to feel deprived and eventually give up.




24. Brown bag it. If you eat out a lot for lunch, try packing a lunch and eating at work. This can save a lot of money over the course of a month. It requires buying stuff to make for lunch, and a little time in the morning (or the evening before) to pack it, but it's worth the extra effort. Bonus: it's usually healthier too. Ever wonder how we got to the point where goint to lunch costs $11 a person? How did we get to that point. If you don't like to bring your own lunch find cheaper places to buy lunch. Get carryout instead of full service. You don't have to tip and drinks are cheaper.




25. Find free entertainment. Entertainment is another expense that can greatly hurt your debt elimination efforts. And it's one that you can reduce drastically in most cases. Instead of going out at night, or going to a bar, or going to the movies, or whatever you do for fun that costs money, find ways to have fun for free (or at least for cheap). Staying home and reading or doing fun things at home, or going to the park, or exercising, or spending time with family or friends, can all be a lot of fun without costing a lot of money. Lets face it as I stated before we are an instant gratification society. Another problem is we are never satitisfied. We just want more and more. We come home from a weekend of RVing or a week long vacation and the following weekend my kids are asking me what are we doing this weekend. They are looking for more entertainment. I am feeling taped out and they are ready for the next adventure.




26. Reduce big expenses. The big expenses, like housing and auto, can often be reduced by a large amount if you examine them carefully and give them some thought. Of course, making a reduction in these expenses isn't as easy as cutting out your morning latte, but they can make such a big difference that it's worth the effort. Housing costs, for example, should be no more than 33 percent of your household income (as a general guideline of course), including mortgage payments, property tax, and both property and homeowner's insurance. Shop around for lower insurance rates, refinance your mortgage, or look for ways to reduce utility costs. If you are house poor and live in an area where you can sell your house, sell it. It is no fun be a slave to your home. You will be amazed at the relief that you will feel by down grading the size of your home and the size of your payment. Make sure you put all the extra cash flow into debt reduction.




27. Look for bargains. Some people are born bargain hunters, and the rest of us have to learn the skill. Whenever you're going to purchase something, take the time to do the research, find the best prices, look out for sales, even ask for discounts. If you can get bargains on your purchases, you can reduce your expenses by a good amount.
    Look for free or used stuff first. Instead of buying something when you need it, see if you can find someone else who has the item but doesn't need it. Send out an email to friends and family, letting them know what you need. Or look on craigslist.com or freecycle.org. If you can't find it for free, try finding a used version of it for cheap, at garage sales, thrift shops, eBay, etc. Two words of advice, buy used. Go to garage sales, if you don't do that find someone who goes to garage sales a lot and tell them what you need. Chances are they will find it at a fraction of the cost like 10 cents on a dollar. Buy used cars as well. You know how it goes, you buy a new and in one year it doesn't look like a new car anymore. Why not start with a nice clean used one that is 10K cheaper than a new one, and in one year you will have a car that looks like a used car.




28. Debt free? Save, then spend. When your debt is finally paid off, save 60 percent of what you were using to pay debt, and enjoy the other 40 percent. This will allow you to feel the freedom of being debt free while saving for your other goals.
    Educate yourself. If you're going to tackle a problem like debt, it's best to arm yourself with information. Do some research on the web, read "Your Money or Your Life", read Dave Ramsey. Go to the library instead of buying these books, if you are like my wife and like to read paper backs, buy them used. You can get them for $.25 on a garage sale. Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence




29. Get creative. Getting what you need and what you want without spending much is an art form. It can be done with a little imagination and creativity. Find new ways to meet your needs without spending a lot. It can actually be a lot of fun.
    Spend 60 percent of your income. A good guideline used by many people is to make your necessary monthly expenses equal only 60 percent of your gross income. For the other 40 percent, divide it among savings, debt payment, and spending.




30. Be patient. Debt elimination doesn't happen overnight. You didn't get into that debt in a month, and you won't get out of it in a month. For many people, it can take several years. While you may be enthusiastic about eliminating your debt, and want to do it right away, realize that you're in this for the long haul. Now settle in to your new lifestyle, and savor the thought of being free of this debt burden.




31. Enjoy yourself. If you absolutely hate your new frugal lifestyle, you won't last in it for very long. Learn to enjoy yourself, enjoy finding ways to be frugal, and reward yourself for eliminating debt. You'll be much more likely to stay in it for life.

CEO Pay Executive Compensation

Tired of your boring job? Feel like you will never get ahead? Looking for ways to increase your compensation. You need to be the CEO of the company. Executive compensation was on a tear in 2006. Here is just a snap shot of some of the highest paid CEO from last year.

1. Merrill Lynch CEO, Stanley O'Neal $91 million
2. AT&T CEO, Edward Whiteacre, $60 million
3. Coca Cola CEO, Neville Isdell, $32 million

Check out this chart from the Wall Street Journal on Executive Compensation for 2006. I don't know how someone survives on $91 million a year, but I am willing to try.

Businessweek just did and interesting article on the relationship between a CEO home size and the stock performance. There study indicates that company stock of the CEOs who have a smaller home tend to do better than the ones who have the mega mansions.

Related reading: Rites of Passage at $100,000 to $1 Million+: Your Insider's Lifetime Guide to Executive Job-Changing and Faster Career Progress in the 21st Century

I hope you enjoyed this post. If you have a question or a idea make sure you leave a comment and I will try to research it and write about it. Final thought if you enjoyed this post why not Subscribe to Strategies for Life its free.

12 Steps to becoming a millionaire as an employee

Kiplinger.com had another article that talked about becoming a millionaire while you are an empolyee. The article title Making It Big on a Paycheck by Follow these 12 steps to become a millionaire as an employee. Here is what they said with my comments.

A number of the people profiled made their millions as entrepreneurs. But working for the Man doesn't mean you have to be a wage slave or resort to buying lottery tickets to strike it rich. The trick is to maximize your income on the job (and know when to move on), make the most of your employee benefits and tax breaks to pocket more cash, and use that extra money to start investing. Here's what to do:

1. Keep your eyes peeled for better ways to do your job. Streamline a procedure, shave costs, create a new profit center, become an expert on a specific topic, volunteer for a company committee, anything that will make you stand out as a prime candidate for a promotion or a pay boost. I wrote an article Top 11 ways to get noticed at work which covers this topic in detail. Many people will leave work right on time at 4 pm while the boss hangs out and works his but off until 5:30 pm and they wonder why they don't get ahead. You have to add value to you company. It is an information society, use your brain, think and help find a way to make the company better. Over time you will get noticed.
2. Don't be afraid to negotiate. In a study of master's-degree graduates from Carnegie Mellon University, economics professor Linda Babcock found that those who negotiated their first salary boosted their pay by 7.4% compared with those who didn't bargain. As I have always been told you get what you negotiate. The only real time that you can negotiate your salary is when you are coming an going. You really cannot negotiate when you are already and employee, you might have a little chance when you receive a promotion but even then when you get a promotion the company already has something in mind in regards to the salary increase.
3. Get your ducks in a row and your numbers on paper. If possible, quantify how much your efforts add to the company's bottom line. If that's not feasible, spotlight your value with comparable salaries for workers in your position from a Web site, such as Salary.com, or from a professional association. This helps prime your boss that you are really underpaid or he/she should think about a good merit increase next year instead of the 3% he/she was thinking about offering you. If your boss really values you and you know you are underpaid and now they know it. They will get the clue that you are probably looking around and might pursue outside opportunities. So, if they want you to stay they will have to figure out a way to keep you. Note: This only works for a while and you cannot continue to extort larger pay increases from you boss. It will get old and eventually the boss will grow tired of the game. If you really feel you are underpaid test your options outside of your company, see point 4.
4. Plot your strategy when it's time to move on. Create a professional-looking page on MySpace that tells prospective employers why you're an exceptional candidate, recommends John Challenger, of the outplacement firm Challenger, Gray & Christmas. And don't neglect more-conventional networking: Join a professional association, or show up at school reunions toting business cards. I guess I would have to disagree here with the MySpace comment. There are not too many sites on MySpace that are professional in nature. You might be better off posting the resume on Monster.com or on Hotjobs.com.
5. Milk your benefits. Contribute as much as you can to your 401(k) and other tax-deferred retirement plans. You'll not only build a bigger nest egg, but you'll also cut your tax bill. In the 25% federal tax bracket, every $1,000 you contribute to a 401(k) trims your taxes by $250. And you'll save on state income taxes, too. The goal here is to become a millionaire. You can only save so much so why allow your employer to help you get there faster. For most people the 401K is also one of their largest tax deductions and the best way to defer income.
6. Flex your tax-saving muscle. Contribute pretax dollars to a flexible spending account to pay for dependent care or out-of-pocket medical expenses. If you set aside $1,500 per year and you're in the 25% bracket, avoiding federal income and Social Security taxes means Uncle Sam will subsidize almost $500 of your expenses. I use this all the time, the thing to be careful on is how much to save. One year we contributed $3000 because we were paying for my daughters braces. So that was easy we just submitted the bill every month. Last year I only contributed $1200 and it was difficult to spend so everyone got glasses and contacts at the end of the year to use up the funds.
7. Review your tax withholding. If you're expecting a refund this spring, you're having too much tax withheld from your paycheck -- and making an interest-free loan to Uncle Sam. That's no way to become a millionaire. Put more money in your pocket by using our withholding calculator and then filling out a new Form W-4. I have never been very good at this. On the other hand this does have an advantage of being a forced savings. We usually apply our tax refund to paying off a debt or saving it for kids college or something else.
8. Stash savings in a Roth IRA, if you're eligible. Withdrawals in retirement, including decades of compounded earnings, will be tax-free. This year, income-eligibility limits for a Roth increase to $114,000 for individuals and $166,000 for married couples.
9. Invest like crazy. Don't delay. The quicker you get a jump on putting money aside, the easier it will be to stuff a seven-figure cushion. If you start at age 25, for example, investing $286 per month will get you $1 million by age 65, assuming you earn 8% annually. Most people now days to do not have pensions. You have to save your way to retirement. In general, I think you need about $3 million to retire so it is 40 years of savings and the earlier you start the better.
10. Invest automatically, either through your employer's retirement plan or by setting up a regular deposit to a mutual fund or broker. You'll never miss the money, and you'll avoid two big mistakes: buying too much when stock prices are high and not buying at all when prices fall. Another automatic savings that I have found to be very useful is a special savings account. These accounts are great to help you pay for things like Christmas, vacations, property taxes or whatever. Don't you hate it when the Christmas bills come in January and you think how and I going to pay for these. Use a special savings account and pop in $100 or $200 per month and when January Christmas bills come you just pay them off from that account. This of course works if you have maintained a budget and have not run over the amount you have saved. Either way it helps ease the pain in January.
11. Watch for fund fees. The more you pay, the tougher it is to earn an above-average return. The typical hedge fund, for example, takes 20% of any gains, and that's a huge hurdle to overcome. A better bet: no-load mutual funds with low expense ratios of 1% or less. If you trade individual stocks, watch those commissions. Picking the right mutual fund is always a challenge. I prefer not to pay loads on funds. Additionally make sure that you have good diversification and don't hesitate to get a good financial planner.
12. Keep it simple. Be wary of get-rich-quick schemes or sales pitches for complex investments, such as oil-and-gas partnerships, that trade on the millionaire cachet to lure investors into buying high-fee products they don't understand. Most millionaire households accumulate their wealth over the long term by sticking to a regular investing plan in a balanced portfolio. Unfortunately there are not a lot of sure fire ways to get rich quick. If there were everyone would retire at 35 and have a great life. The number one rule of Warren Buffet is don't lose money.

I hope you enjoyed this post. If you have a question or a idea make sure you leave a comment and I will try to research it and write about it. Final thought if you enjoyed this post why not Subscribe to Strategies for Life it free. Free is good right?

8 Point Plan to Become a Millionaire

Kiplinger.com, March 2007 had an interesting article that I actually listened to on their Podcast titled Yes, You Can Make a Million. Whether you're an entrepreneur or you earn a salary, take a lesson (or two) from 11 people who made it.

Maybe a million bucks isn't what it used to be (there are nine million households worth seven digits in the U.S. today). But by the same token, making a million is a more-attainable goal than ever. Not there yet? Then let us inspire you with the stories of 11 men and women who started off just like you and then made it. Each of them offers advice you can use. And we'll add our own 12-point plan for launching you on your way to your first million. The rest, as they say, is up to you.

In summary the 8 points are:

1. "Believe that it's going to happen"
2. Seize an opportunity.
3. Exploit your talents.
4. Learn the ropes
5. Have a plan
6. Put in the time
7. Be patient
8. Take a chance

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How to transistion into a new career

CNN had an interesting article titled Following Your Dreams and Seven Tips to Transition to a New Career. Here is what they said along with my comments.

Whether you're in an industry that's desperately seeking workers or one that's continually announcing layoffs, you've likely toyed with thoughts of dropping everything to follow your dream career. But making that leap is often difficult. Another option that is very popular when looking at career changes is the change from employee to business owner or self empolyed. A lot of people end up starting their own business when the find that labor contractions in their particular industry make it difficult to replace their previous position.

For some workers, now might be a good time to consider a switch. The national unemployment rate was 4.6% in January -- and 2.1% for those with a college degree -- according to the U.S. Labor Department. The employment picture "really gives job seekers a cushion that doesn't always exist," said John Challenger, chief executive of outplacement firm Challenger, Gray & Christmas. Another thing to consider when make a career change is the state that you live in. The unemployment rate varies a lot between states. See chart also from CNN.

"There is a lot of demand right now for skilled workers" in many industries, he said. If the job change you make doesn't work out, you're not necessarily facing a dire job market, he said. Here are seven tips that career counselors say will ease any transition:

1. Think career shift, not wholesale change
Don't think you have to make a 180-degree career turn, said Barbara Moses, a Toronto-based career-management expert, president of BBM Human Resource Consultants Inc. and author of "What's Next: Find the Work That's Right for You." Often, those who wish to change jobs "conjure some kind of Madonna-like reinvention," Moses said. That's often requires going back to school and, after that pricey endeavor, it's likely you'll end up in an entry-level job in your new field. This has always been a concern of mine. My wife always wants us to move to Florida. The problem is that I would in the automotive industry and not the banking industry. Most likely I will end up taking a big step backwards if I was to change regions and careers. "Typically, employers will not pay you for that 15 years of amazing management experience you've garnered over the years," Moses said. "Five years and a very expensive education later, they're 50 years old and unemployed." Instead, she said, consider a career shift. Apply your skills to a new industry or job type. "Take those skills ... into a stronger industry like health care or energy," Challenger agreed. "Look for new companies with better environments, more recognition, better pay, less commuting, room for advancement -- whatever it is that's driving you crazy," he said. I do find some of my friends and associates that have been able to effectively change industries and regions of the country by appling this strategy. I am glad to see them find success in this.

2. Translate your skills
Break down what you do into broad skills. For instance, "a journalist is someone who uses words to tell a story," Moses said. That skill might be in demand at a TV production company or in a lobbying firm, she said. Once you've described what you do in broad terms, assess your tastes. "Do you work best in a fast-paced environment or do you prefer to work on one or two things at a time? Do you get your energy from people or do you prefer to work by yourself?" Moses said. "Develop a profile of your skills, your best/worst environments, the kind of features in a job that you need to feel happy and engaged." Your list of skills and job tastes will help you make the move to a new industry, she said. "If you've got 15 years of experience in one industry, it is very important that you drill down to the underlying components of that work, so when you go to sell yourself to a new employer, you're not completely mired in the identity of your previous job," she said. You want to "disentangle your identity from your job, job title and industry." This is an excellent point. A friend of mine got into sales and he went from selling carpet to fork lifts to car parts. In other words the selling skill that he has can be applied to many industries. Make sure that you find a new career that takes advantages of the skills that you have already developed.

3. Time for self-reflection
People usually go about making a career change the wrong way, says Andrea Kay, a Cincinnati-based career counselor and author of "Life's a Bitch and Then You Change Careers." "They say, 'what's out there?'" Kay said. "Wrong question. The question is, 'What's in me? What are my most joyful skills? What do I know about? What do I want to know about it?" she said.
Your imagination will come in handy, she said. "Your fears are going to get in your way," Kay said. "If you cannot have a clear picture and imagine what it is you see yourself doing, it's going to be hard to convince others that it is doable." It would be great to find a job that you really love. Most people I know do not love their job. Actually, I only know 2 people that really love their jobs. You have to be careful that you don't jump from one job to the next before considering how well you would be matched to that type of work or industry.

4. No goals, no go
People often say, "I work all day. How am I supposed to incorporate a career change?" Kay said. "It's doable if you sit down and decide, number one, what's my goal, by what time do I want to accomplish it, what's reasonable considering that I'm working full time and ... what do I need to cut out? TV? Time with friends?" she said. "People have preconceived ideas that they won't be able to do this. They say things like, 'I can't afford it' or 'I don't have time,'" Kay said. Instead, ask questions. Rather than saying, "I can't afford it" find out how much money you're likely to spend on the new endeavor. "You don't know what it's going to cost you time-wise, money-wise, relationship-wise. You need to poke around at your preconceived assessments and see what's accurate and what's not," she said. Only then can you decide whether it's worth it. "Do I want this badly enough to sacrifice the time that I will miss with my family? What am I going to have to cut out? Am I willing to do that?" Kay said. The power of writing down your goals is really quite amazing. If you right down where you want to be in 5 years you are ahead of most people because the majority of people do not have any goals at all. The next important step in accomplishing goals is to list the actions, information, time, and money that you will need to accomplish this goal. After you have completed your brainstorming and orgainzed all your actions the next step is to start working systematically completing the actions on your list.

5. Research the possibilities
"After you've done your online and book research about your new career direction, you're ready to talk to people who can give you real feedback," Kay said. When you talk to others, don't focus on specific job titles. "If you approach it with openness to the possibilities ... you'll go way beyond your little world of a title," Kay said. For example, she said, one client, an engineer, wanted to become an industrial designer. People in the field told her to attend an upcoming trade show. "Sure enough, there were speakers, industrial designers, people from corporations. She came away from that energized, full of information she hadn't even considered -- and even a job title that fit what she was looking for but that she wasn't aware of until she came in touch with it," Kay said. Also, while still at your job, write up a list of the people you know. "You've got to devote time to having lunch with people, talking to people ... your referrals will help you be successful," Kay said. Then, "target your search to fast-growing industries, said Eva Wisnik, president of New York-based Wisnik Career Enterprises. Read the local paper's business section regularly, she said. "Which companies are getting a lot of venture money? Which companies are leasing more space? Which are moving into the area, or are going public, or have the fastest growing revenues?" This is really good advice. One suggestion that I have is to read the local business magazine. My work subscribes to Crain's Detroit I really enjoy flipping through this magazine because not only does it talk about the automotive industry (which by the way has not been doing good for the last three years) it focuses on all the other businesses and industries in our region. It just gives you a really sense and feel for the other possible places to work in your region.

6. Think like a recruiter
Say you want a job selling financial products to young people. What kind of skills would a recruiter want to see? A recruiter would "want someone who could quickly establish rapport with a younger person [and] you'd obviously want somebody with an understanding of financial products," Moses said. Then, write your resume pairing examples of your expertise with what a recruiter would want. "Maybe you organized a successful fundraiser which focused on 20-something guests," Moses said. This process improves your resume, and helps to identify any gaps. If you don't have direct experience with young people, maybe now's the time to organize that fundraiser. This is a popular Anthony Robbins strategy, "Act as if you are in charge even if you are not". The one caveat here is to have a level of expertise that will allow you to indicate that you have some knowledge or ability in that particular topic. Getting the appropriate experience or even surogate experience as the article suggests will help you not only build the resume but also your confidence.

7. Learn the lingo
You don't necessarily need another degree, but consider your local community college for a class to improve your skills. "I do not think people need whole new degrees. Look for that hands-on training that will help you walk in the door adding value," Wisnik said. "You want to sound like someone in the industry already. That helps you sound like an insider versus someone who is trying to get in. It's the lingo, the training." Another route: Join a professional association at least six months before you make the jump, Wisnik said. Such groups often offer certificate programs and workshops, or even training courses during industry conferences, as well as networking opportunities. This is great advice. Don't be a dinasuar, take a computer class learn a new skill. Keep up to date on the industry. There is an old saying that says if you read 15 minutes per day on a particular topic in one year you will be an expert on that topics.

I hope you enjoyed this post. If you have a question or a idea make sure you leave a comment and I will try to research it and write about it. Final thought if you enjoyed this post why not Subscribe to Strategies for Life it free. Free is good right?

Want more money, how to ask for a raise

CNN had an interesting article on how to ask for a raise. Here is what they said along with my comments.

Want more pay? Some disturbing news. Asking for more money takes some cajoling, but more so for women than men, experiment suggests. Quick confession: I really dislike dealing with demanding, arrogant women. But just for the record, I also really dislike dealing with demanding, arrogant men. In both cases, the phrase "vexation to the spirit" comes to mind.
My equal-opportunity displeasure isn't shared by everyone, apparently, at least not at the office. A few items to remember, the only real time that you can ask for more money is when you are coming and going. That is, when you are interviewing to work at the company or when you have given your notice that you are leaving. Don't expect more than an annual increase of 3% to 4%. The really only way to get ahead inside the same company is to take on more responsibility and get promoted. You most likely will have difficulty asking for a raise about and beyond the normal merit without getting promoted.

In a study conducted by Carnegie Mellon economics professor Linda Babcock, male and female subjects were asked to evaluate videotapes of job interviews with a man and a woman who had completed a company's 1-year management training program and needed to be placed in a division. The subjects looking at the tapes were asked: How willing would you be to hire these people for your department?

There were two scenarios for each job candidate – and for the sake of consistency, the candidates were played by the same actors in each scenario. When the candidate was asked what he or she thought of the salary for the position, in one scenario the candidate said it was just fine. In the second scenario, the candidate said in a somewhat cocky manner he or she would rather be paid at the top of the salary range for the job and would like to be considered for a year-end bonus. I always tell sales people you have to ask for the order, the same goes for job interviewing. You get what you ask for or you might not get what you ask for but you could get more than they originally offered. A lot times when you are asked your current salary it is wise to understand what market rate salaries are for your particular job. If you don't know you could be selling yourself short. Additionally when they ask what is your current salary you have to watch for a potential trap. If your current salary is below market and you have a good understanding of what this job should pay you need to stress what your salary expectations are if you were to receive and offer. In other words don't worry about that fact that you might be making $20,000 less than you expectation. If you have the skills and education and know what the market rate is for this job go for it.

The women evaluating the tapes said they were less likely to hire both the male and female candidates in the scenarios where they asked for more money. The men in the study, however, said they'd only be less inclined to hire the female candidate who tried to negotiate. They didn't penalize the male candidate for doing the same. Both the men and women rated the female candidate who asked for more money as being highly demanding, while in the scenario where she just accepts the salary offered they gave her high marks for likeability. After you have had an initial interview and might be called back for a second don't hestitate to find out what the salary range is by asking the hiring person. I like to say before the second interview, "I want to make sure that I am not wasting your time I just want to make sure I understand the salary range for this job." If they tell you a range and it is in the ball park of what you are looking for you should keeping moving forward with the interview process.


It's not that women can't negotiate successfully for more money, but they might do better for themselves if they used a softer approach, said Babcock, who coauthored the book "Women Don't Ask: Negotiation and the Gender Divide." (The same approach, it seems, might work for men with female bosses.) Babcock cited research that has shown that working women are as effective as their male colleagues when they use a more social style to make a point and relate to coworkers. I'd prefer it if everyone at work exhibited more graciousness and relatedness to colleagues, subordinates and bosses alike. But in lieu of that, it's disturbing that women more than men might have to carry that burden alone or risk being penalized financially. A way to get around this point is to get and offer first. In most cases if the company gives you and offer they will negotiate. But you have to judge the situation as to how early you negotiate. Usually I wait until they have given me a written offer and then I will negotiate. In general get the offer and then cross the t's and dot the i's. There is a good book on this called In Business As in Life, You Don't Get What You Deserve, You Get What You Negotiate I could not agree more. A good friend of mine does and excellent job of this and I am always amazed at what he negotiates for himself when he changes jobs.

Also disturbing is that women often aren't even bothering to ask for more money, according to Babcock. She notes women are 2.5 times more likely than men to say they feel "a great deal of apprehension" about negotiating, and they tend to undervalue their work more than men.
She found women's salary expectations are up to 32 percent lower than the expectations of men in the same job. And when women do ask for money, Babcock's research suggests, they tend to ask for and get less money than their male counterparts.

Making your move
Working up the courage – and a compelling argument – for why you deserve a raise or a bigger starting salary takes some doing for everyone. So here are some negotiating tips from Lee Miller, coauthor of "A Woman's Guide to Successful Negotiating":

1. Time your move: Approach your boss with requests for a raise a few months before your review because by the time the review rolls around, chances are he or she has already settled on a number and gotten approval for it from on high.
2. Prepare: Compile a list of your accomplishments in the past year and new responsibilities you have assumed. And find out what the market pays for the type of job you have or seek. Networking with acquaintances at other companies or in professional groups, as well as checking salary surveys, can give you a good ballpark range.
3. Avoid the empathy trap: If it's true that women are more effective at work when they use a social style, then women can use their relationship-building skills to their advantage. "It's always harder for someone to say no to you if they know and like you," Miller said.
   But it's just as easy for a woman to avoid asking for something for fear of jeopardizing her relationship with a boss. "It almost never hurts to ask. While you may not get everything you ask for, you will be amazed at how often you get most of what you want," he said.
   Imagine you're negotiating on someone else's behalf: It's hard for everyone to negotiate for themselves, but women especially so, Miller noted. So pretend you're representing a client's best interests. "If you do your homework you will know what is fair and reasonable to ask for," Miller said. "Don't settle for less."

Moonlighting and other things you do to get by

Found and interesting article on The dark side of moonlighting here is what they said:

Having two jobs can help ease your financial burden, but with double the pressure, both jobs and your mental health can suffer. Achieving work-life balance is already a juggling act. Throw a second job into the mix, and it can become a lot harder to perform. Having a second job can really help when you are saving up for a special expense like paying for college or paying off your credit cards. If you are going to work this hard having a second job make sure you plow the money into something that will help you get ahead. You will have virtually no life when you are working 2 jobs so try to make it count.

More than 5 percent of U.S. workers hold more than one job, according to the Bureau of Labor Statistics. Willie Floyd Brunson has been part of this group for decades. A transportation manager by day and a security guard by night, Brunson says the cost of living in the Washington area has driven him to an 80- to 90-hour workweek. ''To maintain good living conditions, I have to work two jobs,'' he said. ''You can't do it on one job,'' he added. Think about that number 5 percent of 300 million people is a big number can you say 15 million people. Unfortunately, if you do live in an area were the cost of living is high you may need to work that extra job.

Brunson, who is preparing for a second marriage and perhaps a new family, said he wouldn't consider quitting the night job. He describes himself as ''old school,'' saying that as a man it's his responsibility to pay the bills. It's not easy -- while the decision to moonlight was ''financially rewarding,'' he said, "emotionally it wasn't.'' Those who hold two jobs must occasionally reweigh the money against the minuses. You have to give this guy a lot of credit he is being responsible and trying to do the right thing. There does approach a point though when you need to think about how you are going to get ahead in life and not have to work two jobs all the time. Education and skills are the way for you to get ahead in life.

For about four years, Tiffany Guarascio, now a staffer for Rep. Frank Pallone, D-N.J., took on extra work. She had started waiting tables while a college senior and kept some shifts when she got her first ''real job.'' But when Guarascio started working on the Hill in 2004, she cut back to waitressing on Sundays only, at an establishment owned by a friend. The job was flexible -- 'It was very easy to say `I need a month or two off,' '' she said -- and it became a social outlet. But last summer, when Guarascio recognized that the service she was providing was starting to reflect her resentment over working so much, she quit. It's important to know when your are over doing it. Remember all work and no play make you a dull person. If you work all the time and never relax you will suffer from career burn out.

PRODUCTIVITY
Taking an additional job primarily to make extra money can be stressful and unproductive, according to Renee Lee Rosenberg, an author and career coach with the Five O'Clock Club in New York. Her clients with second jobs often ''get very angry and depressed and start resenting their primary work also,'' Rosenberg said, and sometimes, with better budgeting, a second job isn't really necessary. This is a key point. When your bills are too high you need to consider if you lifestyle is out of control. Cutting back and living within your means if the surest way to a happier life style.

She stressed the importance of researching what a job requires before saying yes, so you can know whether ``you can function the next day.'' Some second jobs can lead to more enjoyable primary jobs. ''It builds an opportunity to build a new network and ultimately it may develop into a new career,'' said Kathy Blanton, a career management consultant for Spherion in Nashville, Tenn.

BALANCE AND HARMONY
By day, Mike Graglia manages a team working on education in Africa at the World Bank in Washington. A few evenings a week he teaches yoga. He wanted to do more yoga and figured teaching would be the next logical step in his practice. He often schedules his flights to Africa around his yoga commitments and swaps classes with other teachers when he's out of town. It's common to find Graglia at the yoga studio with a suitcase -- either coming back from a trip or on his way out. ''I love both my jobs, and they balance each other out,'' Graglia said. ``Yoga is a genius one because it keeps you healthy and keeps you moving.''

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How to wipe out holiday debt.

Kiplingers has a great article titled Wipe Out Holiday Debt. Here is what they said along with my comments.

Don't be lured into using a home-equity loan or line of credit to consolidate your bills. Consider these options instead. The holidays are past, and the credit-card bills have arrived. It's time to face the music, and it isn't necessarily jolly. Households with at least one credit card spent, on average, $1,534 this past Christmas, according to CardWeb.com. If you don't happen to have enough cash on hand to pay the entire balance, the Ghost of Christmas Past could haunt you for months or even years to come. For example, if you make just the minimum monthly payment -- $38 to start on a card with an interest rate of 16% -- you'll be paying off your balance until 2020, when you will have handed over $1,471 in total interest. First of all never make just the monthly payment, if you spend $1500 at Christmas and are only going to pay the minimum payment you spent way to much at Christmas. To get a quick view on how long it might take you to payoff your holiday debts start check out this article on financial calculators. You need to have a plan on how to pay off your credit card debt. Second, you need to establish a budget each year for your Holiday spending. I also recommend the you establish a special savings or Christmas club savings account now to help save for 2007 Christmas bills.

Consolidating bills via a home-equity loan or line of credit isn't a silver bullet.
Even if you lower the interest rate, you'll be tempted to simply stretch out the payments. And borrowing against your home has risks you may not anticipate. The best solution is to bite the bullet and pay down the extra debt quickly. You may be able to lower your interest rate simply by calling your credit card issuer, or by transferring the balance to another card. Think twice about home-equity borrowing. Transferring your credit-card balances to a less-expensive home-equity line of credit or loan is an option most financial planners discourage. "I hear all these ads touting how home-equity borrowing will let you 'eliminate debt,'" says Glenda Moelenpah, a financial planner in San Diego. "But they really just let you change it and take on greater risk, too, because you use your home as collateral." Translation: If you can't make the payments, you could lose your home in foreclosure. There is a saying that is in the personal finance world that says never use credit for something that looses value. For example, do you want to pay interest charges on all the dinners you ate out last year? Do you really want to still be paying on the dress that your daughter wore to the dance once? Transfering your bills to a home equity loan only stretches out the problem. Additionally, a lot of people will continue to use this year over year as a place to sweep up all they recent debts into and the problem will continue to grow.

Moelenpah says sales pitches often emphasize the tax deductibility of the interest that you pay. But she points out that the law lets you deduct only the interest on "acquisition indebtedness" -- what you paid for the house -- plus $100,000 of other home-equity borrowing. When you sell, you'll have to pay off any outstanding home-equity debt at closing. If you've borrowed more than the value of the home or if its market value has fallen, you could find yourself "upside down" -- owing the bank money at closing. That's not a happy place to be. Because of those risks, Moelenpah says she's reluctant to advise clients to consolidate debt with home-equity borrowing unless they take steps to avoid having the same problem again next year. My opinion is you need a place to live. I don't want to have to worry about being upside down on my mortgage or thinking about where I am going to live it I had to be foreclosed on. The problem with consolidating the loans and places you home equity on the line is, when you do get in trouble on the home equity side you will never ever remember where the debt came from. Was it the vacation to Florida, Christmas presents, the new flat screen TV, or just enjoying yourself.

If you do go that route, a home-equity loan imposes more discipline than an home-equity line of credit. With a home-equity loan, you get a lump sum and pay closing costs. The loan will require a fully amortized payment of principal and interest every month -- typically over five or ten years. Plus, rates are running a half point lower, on average (currently 8.21%), than on home-equity lines of credit, according to HSH.com.

How to pay it down fast
Rather than take on the risks of borrowing against your home to consolidate your credit card bills, consider these tips for disposing of debt from Money Management International, a nonprofit credit-counseling agency affiliated with the National Foundation for Credit Counseling. Another thing to consider is to sell some stuff online. I think this works great. Every fall my wife and I get busy selling some of our kids old toys, clothes and electronics on eBay. It really helps when you go into Christmas with $500 in the Paypal account. Then we try to buy stuff used on eBay which works out great because it is like we are recycling money. We sold the Nitendo 64 and the money went toward the PS2. Wow what a concept.

Track the damage.
List all your creditors, how much you owe to each and the interest rates. Total it. Post it where you'll see it, and update it monthly. I saw a recent article on how to keep your New Years resolutions and it talked about posting your goals on the refigerator. I thought that was a good idea. I suggest the bathroom mirror as well. That way when you decide you are going to go out and party this weekend, you might remember to not put it on the credit card. Set a mini budget for the weekend of say $40 and then thats it. When it is gone you have to stop. Don't keep increasing the problem.

Create a budget and a 90-day repayment plan.
Figure out where you can cut and apply the extra funds toward your debt (see Build Your Budget for help). In the example above, you'd have to come up with $525 a month to pay off the debt in three months, and you'd pay $41 in interest. If the best you can do is $250, it will take you seven months and cost you $78 in interest. You know it is funny how you meet people that complain about being broke all the time and you find that they have a $60 per month cell phone bill, digital cable of $100, go to the movies all the time and wear only designer clothing. If you are paying off credit card debt it might be time to cut back and free up some cash. Switch to a pay as you go cell phone and don't use it much. Drop down to basic cable only and subscribe to Netflix for $9.99 per month. You really never watch all the stuff on digital cable anyway. Try buying a pair of shoes that is not a brand name and above all just plain cut back on the spending.

Hide your credit cards.
If you have to use credit, don't charge anything you can't repay in 90 days. Not only do you need to hide the credit cards, you need to stay out of the stores. It is always amazing to me how we will goto the store for bread and milk and we come out and the bill was $90. How does that happen. One thing you also need to do is when you are shopping work off a list and don't buy anything that is not on your list. It is a tough thing to do and you need discipline but it will help.

Pay strategically.
Make at least the minimum payment on all your cards to avoid late charges and any sudden increases in your interest rate. Dedicate extra funds to the cards with the highest interest rates. I really think if you are juggling multiple credit cards you need to consider some type of debt consolidation. I am not recommending a home equity loan but getting 5 or 6 different credit card bills per month can be very frustrating and hard to juggle.

Reduce your interest rate
The lower your interest rate, the more your monthly payment goes to pay down the principal you owe. This might be a good time, especially if you have a good credit record, to ask creditors to lower your interest rate. Scott Bilker, founder of DebtSmart.com, suggests letting the bank know that it will lose you as a customer if it doesn't. If they say no the first time, try again. You might score with a different customer service rep. Or you could transfer your balance to a card offering a 0% introductory rate -- but only if you'll repay your debt fully before the rate rises. Most people might be reluctant to do this type of negotiations. Consider finding a cheaper loan source like a credit union. Consolidate everything into one personal loan and the stop taking on more debt.

Get ahead of the game
To avoid the specter of holiday debt next year, credit counselors recommend that you start saving now. Hey, I already said this about setting up special savings or Christmas clubs. Here is how you do it. Divide what you spent this year by 11 (February through December), and stash the result each month in a savings account. A Christmas Club account at your bank or credit union won't pay much interest, but it will impose a penalty on any withdrawals before the holidays. If you're disciplined, you could open an account with HSBC Direct, which pays 5.1% interest, or ING Direct, which pays 4.5%. Remember this has to be done automatically, you will not have the discipline to save it manually, have your pay check deposited into your checking account and the special savings withdrawn directly from your checking account each month.

Do you look forward to large annual income-tax refunds that you use to pay down your credit-card debt in a lump sum? Moelenpah says a better strategy is to adjust withholding downward and apply the extra monthly income to your credit-card debt. And Moelenpah offers this "radical" approach to gift giving if you're carrying credit-card debt: "Maybe next year you can't afford to buy any gifts," she says. "Of course, that doesn't mean you can't give them." A box of homemade cookies may be more meaningful than another cashmere sweater, and you won't be paying for it for the next 20 years. Another thing to think about on gift giving is to set a limit. It is incredibly hard to buy something for everyone that is under $20. However, maybe that is what you have to do this year. If you don't want to disappoint your kids really consider buying used stuff. You kids won't care if the get a used Sony PSP. They really just want a PSP. Good luck and pay it down fast.

Top Eight Ways to Financial Security

I found a great article at Kiplingers.com, Eight Keys to Financial Security. Here is what they said with my comments.

Key 1: Invest in yourself
Your own earning power -- rooted in your education and job skills -- is the most valuable asset you'll ever own, and it can't be wiped out in a market crash. Keep your earning power growing through continuous education, training and personal development. If you work in a field prone to periodic layoffs or falling earnings, think about a career change, especially if there's something else you've always dreamed of doing. This is great advice, did you ever meet a person that is in there 50s and you think man what a dinosaur. Or for that matter someone in their 30s that is just a complete neanderthal. You know the person that never heard of an iPod or Palmpilot. They seem completely computer illiterate in a computer age world. Take a course, get a hobby that helps you keep up on things. Read the latest management books in your field, subscribe to a trade journal. The world changes fast and you need to work hard to keep up on the changes. Additionally, there is absolutely nothing wrong with studying the classic business books either, a lot of ideas are timeless but you need to apply them to your work and your situation. As Zig Ziglar says, "help enough other people get what they want and you will be rewarded by getting what you want." It is always important to go the extra mile and having the right skills will help you go the extra mile with less effort. Don't be afraid to ask you boss, your peers, and your bosses peers for advice. Try to find a mentor inside your company to coach you. One of your bosses peers might not be a bad idea. Develop the relationship slowly and make sure you have confidence in what you are telling the person.

Key 2: Protect yourself and your loved ones
Before you acquire any financial assets, make sure you have enough insurance against life's big risks -- serious illness, disability and early death. Most people, young families in particular, are woefully under insured, especially for disability. When an emergency arises, you and your family will never regret having "wasted" all those annual premiums on insurance you "don't need." (Learn how to build your financial emergency kit.) I don't like having to pay for life insurance, long term disability, house insurance, car insurance, etc. No one does. But I do sleep a lot better knowing that if I was to die my family would be taken care of. Or if I was disabled I have long term disability (LTD) to pay me 2/3rds of my salary. It really would be a tragedy to skip the $40 a month payment for LTD and then if something happened I would really feel stupid. If you work for a company that doesn't have this type of insurance look for other options like buying insurance through an outside company or and association. The key to keeping it affordable it increasing your deductible. The higher the deductible the less the premium in most cases.

Key 3: Borrow sparingly
Use credit only to purchase things of lasting value: a home, education, maybe a car. Pay cash for everything else such as clothing, travel, entertainment and furniture. Even better, take advantage of the credit card company's free 30-day loan by charging responsibly and paying off the bill in full every month. Do you know anyone who got into big financial trouble because they didn't borrow enough money? I don't. This is a popular topic and one of the questions that I answer most frequently. You need to pay your debts off and like the article said only use debt for things of lasting value. Think about using special savings account to save for things like Christmas bills, vacations, or that big screen TV. We have 2 special savings accounts that we use, one to pay for Christmas bills and the other to pay our property taxes. I got tired of these 2 bills every year, Christmas bills comes in January and the taxes comes in February. Now we just transfer the money from our special savings account. Make sure if you are using a credit card the you only use ones that are free with no annual fee, has as low as possible interest rate, and better yet pays you back with cash back like the Discover card.

Key 4: Pay yourself first

If you feel you never have any money "left over" for investing after you pay all your bills, try reversing the bill-paying process. Make the first check you write each month a deposit to your mutual fund, money market or brokerage account. Then pay all your regular monthly bills, finishing up with the credit card bill. If you're having trouble paying that last bill, trim your discretionary spending -- but keep paying yourself first. Better yet, have your investments automatically deducted from your check or your checking account. Make sure you take advantage of your employers 401K. This is by far your best investment option. It they are matching your money you want to make sure you are maxing this out. We started savings for our kids college expenses the year they were born. It doesn't matter if you can't save a lot you still need to get started on it and keep it going.

Key 5: Don't go for the home run

In investing, as in baseball, those who swing for the fences do hit the occasional home run. But they strike out a lot too, and their lifetime batting average -- average annual total return -- suffers accordingly. So shy away from highly volatile stocks, Initial Public Offerings (IPOs), buying on margin and commodity trading. Don't try to time markets, because no one does it consistently well. Use dollar-cost averaging to invest regularly in markets good, bad and lackluster. Have the patience to wait out the occasional (and inevitable) bear markets. I use to try and hit home runs. Thinking I could time the market. I tried playing with stock options, trading and timing stocks, chasing the latest mutual funds. The number one rule of Warren Buffet, one of the most successful investors of all time says, his rule number 1, Don't lose money, rule number 2, refer to rule number 1. This is amazingly true, if you started with $100,000 and invested it for 20 year at 6% you would have $123,000. If you lost have the money in the first 5 years with risky investments, you would have to earn 13.5% over next 15 years to reach the same value. I am pretty sure I can earn 6% on my investments, however, I am not sure I know how to earn 13.5%.

Key 6: Diversify, diversify, diversify

When tech stocks were flying high in the late '90s, safer investments like bonds, CDs and less-volatile blue-chip stocks were derided as sissy stuff. Diversification was considered boring. But successful investors have always known that any one class of assets -- stocks, real estate, bonds, cash -- will have its day in the doghouse and its day in the sun. That's why you've got to own all of them, in a mix that's right for your age, income, family responsibilities and tolerance for risk. I finally broke down and got a financial planner. I was tired of losing money, I thought I was diversified but I was not. You need to have diversification in order to protect your investment. Don't keep all your eggs in one basket the old saying goes.

Key 7: Live simply today for a more comfortable tomorrow
Deferred gratification is no fun, but it's the only way I know to fund your long-term goals -- college for your kids or grandkids, that vacation home you've always wanted, early retirement, a generous bequest to your alma mater. Take a close look at your current lifestyle, and if you see a lot of spending that is dispensable, consider it found money for the bigger dreams in your life (see The Invisible Rich). This rule applies even more if you are living beyond your means. If you are saving for your kids college, funding your 401k, and have built up a rainy day fun, feel free to go on the $4000 vacation, or buy the extra fun car. But if you are suffering from credit car debt and don't have any savings. You might want to think about rolling the spending back.

Key 8: Give generously to create a better world

Your own financial security depends far more than you may think on the financial, physical and spiritual health of others in your community, our nation, our world. When you share your good fortune by donating your money, time and talent to charity, you help create a stronger economy and a healthier, safer world. So give generously to education, your church, social-service agencies, the arts, medical research -- whatever you value most. It feels wonderful, it's the ultimate in enlightened self-interest and it's the right thing to do. So things are going well for you, you got the promotion, the raise, and the big bonus. You should be proud. Now think about the little people and less fortunate. You know that basket on the alter at church that is for the food pantry? There are people that don't have enough to eat. Think about writing a check to the food pantry on Sunday.