Seriously. No questions? You all must know this stuff already

Thanks op, nice post, I'm waiting for the next one.

Maybe there's no questions cuz you explained so well.

No need for that earlier, now edited, freaked out post lol

Peace.

http://www.relfe.com/wp/money/want-earth-plus-5/

http://www.relfe.com/A06/wealth.html

HA! lol yeah. That was a bit cranky of me, I thought better of it. I'm pretty much making my brain available to anybody who wants to learn this. I haven't even scratched the surface yet. Guy's like us who are entrepreneurial are more than happy to share what we know. One of the few things I get seriously pissed about is when some people choose to be ignorant.

I met this kid, who's maybe 20. Really shy, quiet type and started a conversation with him. Turns out he makes at least $500 a day, trading stocks. He's like, "Oh yeah, I just set my stop loss orders in the morning before going to work. I made $800 off of Netflix stocks today. Netflix did really well today." With his shy little laugh lol.

We talked for hours. His thinking is exactly like mine. He's debt-free, pays cash for everything. The dude's twenty years old.  How awesome is that?

I asked him to teach me, and he's happy to. I'm seriously gonna sit indian-style, like a doe eyed little kid and learn from this guy. I don't give a fuck.

Shiiiiit I'm jealous now son, pls teach me too Master Splinter lol

side note: would you consider this as your signature?

not only is awesome but also seems to fit the personality lol

HAHA! Maybe. It's a little too abrasive. And yeah, I'm down to share anything I learn :)

Yo infinity

A few months ago I was gratefu enough to recieve some money from my grandma for my 18th birthday.I talked to my parents finacial advisor, and he seemed to know his shit (on top of that I know he was done very well over the years for my parents finacials), I ended up investing the money in a money market type account that can fluctuate depending on how well the specific market is doing. I checked out the past history of the market, looked at some visuals, and it appeared to be on it's way up. Now, I thought this was a good idea because it gave me an opportunity to make more money than earning a low interest rate in a savings account, however I could lose money too! Now whats your take on this?  Is it smart to invest in an account that has the potential to lose money, especially at my age where every dollar counts?

That's awesome dude! What a nice grandma.

You definitely don't want to put it in a savings account. The interest is shitty and doesn't even keep up with inflation most of the time. Although it would be safe. Investing has risks dude. Obviously you should probably go with your financial advisor's advice, but sometimes these guys are salespeople. They make commission off of selling you an investment, and depending on their character, may do what's best for them. I'm not saying your advisor is like that, but just watch out for it.

It really depends on what you want to do with the money man. If you want to invest it and keep it there for a really long time and let it grow, you may want to check out some mutual funds. Typically they go up and down, but over the long haul they average 8-12%. Some years it will go down, other years it might do 20%. A mutual fund is a collection of stocks in different companies, so you're spreading your risk out.

The other option is to use it to help pay for your college. That's what I would do personally. I don't recommend going into debt for school, if you can help it. It's a big burden, after you graduate. Especially if you graduate and then can't find a job. One of my buddies is doing his master's right now and he's paid for everything. He doesn't have anything to worry about. The student loan thing is kindof a mess.

Thanks dude!

Your defintely right about the college thing, that is defintely where I plan on puttin it. I was going to put it towards a car a few years into college, but like you said in your OP having a liability when i'm spending all this money on school is not a good idea. I'm better off using public transportation until im out of school completely, and I know all the schools im looking at have adequate bus routes and what not.

One thing that my roommate does is he buys electronics and stuff at thrift stores and pawn shops, fixes them and cleans them, then sells them on E-bay to help pay his way through school. He makes a pretty tidy profit on it. Apperantly he just scored this $2700 stereo for 30-40 bucks. But that was a really lucky find.

I haven't read this book, but I heard it's pretty good, you may want to check it out...

http://www.amazon.com/Debt-Free-Outstanding-Education-Scholarships-Mooch...

Solid Post.

Never actually had a handle on the terminology, especially not in english. So, thx, mate. Good work.

Also I agree with the over all message. NEVER EVER GET IN DEBT if you can evade at any cost. Because if you do somebody's got your balls in his fist.

Also I find the psychological costs of beeing in debt an important fact to consider. I  find that for many people that actually are in debt, even with a comfortable and and secure seeming long term plan to pay it off, the debt is like a slow hanging threat in the back of their minds... no good at all.

I use YNAB as a budgetting tool to manage my meagre finances. Recommend it.

YEAH! That's great that you're on a monthly budget. I tried Mint.com once but wasn't super impressed. Mine's just written out. It's nothing complicated, you just have to DO IT.

Also, about the "psychological costs" of having debt. I'm really glad you brought that up. That is absolutely true. It effects you on so many very subtle levels. For example, if you run a business it's almost impossible to be in the right headspace. It's more powerful to be running TO something, than it is to be running FROM something. With debt, you're "running away." You lose your purpose can become perverted into serving your debt. It's much like desperate guys trying to fuck some girl. The desperation just seeps out of their pores.

The opposite is true. Without the debt you are "running to something." Without that debt over your head, you are able to have clarity/purity of purpose. It makes the process of trading with other human beings a pleasure for everyone involved. You can actually care about your customers 100%.

It's the same thing if you're an employee. Think about it like this: Being in the military and worrying about how to make your debt payments, while preparing for a combat mission, as opposed to having clarity of purpose. (This is actually a bit of a problem in the military from what I hear.)

It's funny I learnt this in my first year at school taking business/economy/finance classes. The thing is they never taught us how to get out of the debt pyramid and how to stay out of it...

I'm in for the second segment of this for sure. Thanks for posting man, was a good refresher from that first year at school, especially since I had a very bleak memory of learning that stuff..I blame it on the alcohol hahaha 

First year of college Grap? I never received anything like what I'm sharing in either high-school or college, but I wasn't a finance major.

Yeah, the universities benefit greatly from the student loan system. Actually I heard a story on the news today by the Washington Post about how the mega banks are paying universities millions of dollars to endorse their credit cards and bank accounts as "school sponsored" and almost mandatory. The banks will do just about anything to hook you while you're young. That's a big reason why I get so worked up and sometimes pissed about this, because I don't want to see you guys getting sucked in to this bullshit.

Right now, I'm trying to teach this stuff as if I was teaching my 19-20 year old self. The next part is coming.

Yeah man, I had a pretty badass teacher, he had a huge list of jobs and what not that he'd done. He was a cool guy. He taught it too use off curriculum. Hell, he even told us about all the bullshit text books they all "require" us to get in fact he made it so we didn't have to buy them and waste all that cash. Saved me like 300$! He basically taught us what no one else would, along with basics that you would normally have to figure out for yourself at some point in your life. Learned a lot from that finance class.

It pisses me off too knowing how much money is sucked out of our pockets from banks and schools lately too I've noticed. I get charged bank fees for the most ridiculous shit, never makes sense to me. Something like 15 transactions per month are free, anything over is a charge...and thats a student account. Same thing with schools, I think my first year of college tuition was 1250$ for 4 classes. This semester I just paid for cost me 1400$..for 3 classes... how that worked out was beyond me lol. It's not really a surprise to me anymore that all these students are butt-fucked when they finish school with debt and loans and the first few years of their careers(if they are fortunate enough to find work) most of their earnings go towards paying the debts off..

I mean I'm pretty fortunate my parents let me live at home rent free, without worrying about most bills except for a few things (phone bill, school stuff, extracurricular, etc.) but I know when I move out in a year or so when I transfer schools I'm fucked lol I feel for the others who are clustered with this debt and still have no idea how it works.....

Def in for the next segment man

Wow. That is AWESOME about your professor. That's great. There are a lot of people in that industry who are SERIOUSLY good, amazing, passionate people. A lot of the time people boil down into two groups, either they have the heart of a teacher or they have the heart of a salesperson. Like I told Meow. Sometimes those financial advisors are in it for themselves. It's the desperation and convolution of purpose. They have the hearts of salespeople. But every once in a while they have the heart of a teacher.

Yeah I completely agree, my uncle is a business owner and he does really well for himself it's amazing to see. Especially the way he started the business with next to nothing to create what he has now. He's got that teacher passion for what he does, I know quite a bit about businesses and how they operate in that field thanks to him and the cool thing is I understand it. Where as my economics class went right over my head, my teacher was so hard to follow, you could tell he couldn't care less lol so I know exactly what you mean with the grouping of teachers/people in general.

I think the passion creates the world of a difference in terms of sharing knowledge, helping out, etc.

I'm currently halfway through university building up the crippling student loan of £9000 per year... I have enough money saved up to pay this off and escape the debt pyramid, but I'll only be paying back £5 a month when I start working, and I could instead use those savings to invest in my business or put them to an otherwise better use. I've discussed this with a load of people and staying in debt does seem like the better option in this case, what would you suggest?

Only 5lbs a month? 

Yeah I hope thats a typo. Wouldn't you get raped by interest in the long run? Paying the minimum on debts in the US is a recipe for disaster.

Man. This is a great post. Mind if I ask what your background in financial knowledge is.

So your against going into debt starting a business due to the stress and psychological factors? I think in the community there is some common thoughts about going into debt and runing up credit cards is okay if your moving in the right direction business wise?

Great post, helps tie things together and isn't really thinking you see too often. What is part 2? I'd love to eventually hear more of your thoughts about where to put extra funds and savings if not a savings account

Thank you. Over 6 years running a business and a Ph.D. in D-U-M-B (mistakes that is). If there's a dumb thing you can think of to do with money, I've probably done it.  Plus I've read everything on this subject I could get my hands on.

infinity do you invest in real estate?

I plan on going into the medical field and working a typical 8-4 schedule, but I wonder if I could do real estate on the side.

Ouch dude. So you're looking at 36k, when you get out? I suggest, you get crackin now and start trying to knock some of that down. I sure wouldn't try to start a business with 36 grand over my head. That's asking for a lot of pain. I made that mistake when I was 22. But I didn't have nearly that much debt. When the shit hit the fan, I crumbled under it. Like I said earlier, check out E-bay or something. If you want to get into entrepreneurship. There are literally TONS of little "training wheels" businesses you can start for next to nothing. For like £100. I don't know what the economy's like over there, but maybe look at something online?

@ Ice, no I absolutely 100% don't recommend that. Especially not on a startup business. Even worse with credit cards! 18% yearly interes ratet! That's suicidal. Would you take your credit card and use it to purchase stocks that gave you *at most* 12%. That's not exactly equivalent, but you get the idea. Like I said, no millionaire says they made their money using credit cards.

At the end of the day this is just my humble advice. But look. In addition to everything else I've said, if you start a business, Shit will hit the fan. Not if... WILL. It's much safer and usually just as fast to "cashflow" everything. And keep emergency money on hand for trouble. Meaning, you take the money you make and use it to expand the business. It's awesome when you get momentum and the majority of the money is going straight to your pocket, instead of paying down debt! Really good feeling.

Naw not yet man. I'd love to, but I certainly don't have the money to throw down yet. Investing in real estate is another skill all on it's own. A lot of people I know LOVE real estate. Actually this is an area where you pretty much have to have debt because most of us don't have that kind of cash. But it's a bit safer to do that. It's secured debt like I mentioned earlier. My mentor Doug, who started me off in entrpreneurship, invests a LOT in real estate. He owns houses all over. One thing he mentioned to me was that he wished he had financed his properties on a 15 year mortgage instead of a 30 year.

There are a lot of "get rich quick" gurus out there trying to teach people to "flip" houses, and you can do it. But it's a good way to get into serious trouble too.

That's not something I'm knowledgeable about though. And I'm only sharing tips to build a solid financial life.

Budgeting

Ok, this part's gonna be a little boring. And pretty much common sense. I'm putting this out because this is something my parents never taught me. And probably some of you as well. The first thing that needs to be done is to get on a "zero based budget." This is something we should ALL be making a habit. We all know we should, but a lot of us don't. So I'm gonna say, it's time to sack up and make it a habit. It takes less than an hour to de every month, but it's an immensly useful tool. Your income is the most powerful tool you have for building wealth. It needs to be made as efficient as possible. You might be surprised at how much more money you have when you start paying attention to your spending.

This form isn't bad. You can print it off. http://christianpf.com/media/budgetingform.pdf
OR do like Chris and use software. I prefer a written one.

"zero based budget" means that every dollar or (lb) lol that you make has a name and you're telling it where to go, before the first of the month, every month. Every month is different so you can't just make a "one size fits all."

• Expenses must be prioritized. What's most important? Survival necessities. Shelter, food, utilities. It's up to you to prioritize the rest.
• If you have a safe, or lockbox, one little tip I can give you, that some people like to do is to use envelopes and label them for each expense. Then you put cash in them. If say, your "eating out" envelope is empty, you don't eat out. If you can't afford it, you don't buy it.

Now how to kill off debt.

Step 1: Build a $1000 CASH Emergency Fund as fast as humanly possible.

I totally stole these from Dave Ramsey btw. His steps are stupid simple and very effective. I see no reason to change what works. So first thing is to get $1000 as fast as possible. This is for emergencies only. Shit happens. Cars break down. Stuff blows up. It doesn't help you trying to pay off loans and then have to go backwards and go into debt again. I've never had to use mine, fortunately, but it's nice to know it's there. After you have your emergency fund in place and you are committed to doing this, cut up any credit cards you have. You won't be needing them anymore. Debit cards are fine.

Step 2: The Debt Snowball

So after you do step 1 you're gonna pay your debts off one by one, using your monthly budget of course. Smallest to largest. In my case, if I remember right, I had...
$150 little unpaid bill that went to collections,
$500 in credit card debt
$5000 medical bill
$7500 in school loans.

...So about $13K, which wasn't bad, but it was still quite a bit for a 23-24 year old. So the first thing you do is, while paying on them, you're going zap that smallest one first, then take the payment there and add it to the next one. Once that one is destroyed, you take what you were paying on those and roll those over to the next biggest one. Rinse and repeat until you have freed up your income. So this has a cumulative effect.

Step 3: Save for 3-6 months of expenses.

Self explanitory, shit happens.

BTW You can read Dave Ramsey's book, it's called Total Money Makeover. But I've pretty much read it for you and summarized the concepts.

---

Now you're set up. Your income is freed up for building your little rock solid "asset empire" that isn't based on debt.  Your "net worth" has just gone up. Net worth = assets - liabilities. Not complicated but it's pretty powerful. You're basically in a position where you can "cashflow" assets. This stuff will take a lot of work but trust me, gettting out of debt is step 1 of building wealth.

Revenue - is the gross income of a person or business. Meaning before expenses. Your gross income is revenue, but then you have to pay taxes, medical bills, rent, food etc. Your profit is the money that you keep at the end of the day. <<--This is very important. I'll be talking about this later. Very very important.

This is another little "rule" of money: It's not how much you make, so much as how much you keep.  So we're trying to remove as many drags on our income as possible.

That was perfect man. The exact thing I'm trying to do is budget things out. I may not have many expenses but if I can accumulate enough cash to pay for school, I'd be golden.

Pretty much going to implement this right away, especially with the new job under way, I'll be able to figure out how much I can spend to survive, save and stow away. Too useful.

I'm in for the next installment of course.

I'm curious on how to ration out money in terms of spending it on yourself though, for example, say you want to go shopping for some new clothes or buy say..a new tv. How would you incorporate all this into the necessities and what not? 

Being in a little bit of debt should not stop you from starting a business if you are willing and able. That's just another social narrative. For some guys debt is just a reality, they need something telling them what to do in that situation. I hope this whole thing isn't dedicated to getting out of debt and avoiding debt at all costs? Now obviously racking up credit card debt is the foolishness of the young, but not starting a business until you're debt free is bullshit. 

Debt sucks. :(

hur hur, it's £5 a month when you begin earning over £20,000 annual here. It goes up to like £10 a month when you begin earning a decent salary. Most people never pay it off because the repayment rate is so slow. So unless there's any hidden clauses that seems like a good investment

We're talking about setting yourself up for a lifetime and building good habits right now, that are key. Like paying attention to your money. Living within your means and not buying stuff you don't need. 8 out of 10 startup fail with in the first three years. If you're going to set someone who's just taking their first steps on a path to entrepreunership success, wouldn't it make sense to help remove tripping hazards

I'm not advising anybody to wait, or use getting out of debt as an excuse. Actually if you can start a little business, It can only help to up your income. But taking out loans to finance something is dumb especcially if you're a noob at it. Like I said before, I'm giving this like I was teaching it to my 19-20 year old self.

You can certainly start a micro business for $100-500 while working on getting out of debt. Like I told Darkrain, check out E-bay. Start a website. There are millions of little E-commerce niches out there. I read a story about a dude who sells frozen rats on his website lol.

You'd only be paying 0.17% annual interest on 36k. That's crazy. I would take a really close look at that though man. Just make sure it doesn't come back to bite you later.

As far as your savings goes, I wouldn't advise you to dump it into a startup right away, until you know what you're doing. Take little baby steps. Learn how to make that cash register ring, don't just blast in there. That's a special feeling when you make that first sale in your business, and it "clicks' in your head. You're like holy shit! I can do this!

The budget is all about prioritization. You pay for necessities first; housing, food, water/electric bills, phone, gas for your car etc. Then set aside money every month for things you want, like a TV. How much you budget would depend on your income and how fast you want it. My budget for clothing every month is $30.

I think I see what you're saying here. I kind of have been aiming to set mine up like this... about 20% of whatever I make that month, no matter what goes into savings for school. then the last 80% I divide up. So I guess I would put aside 110$ for Training Fees, 25$ in Drop In Fees, 60$ for the Phone Bill, then the rest would be my spending money on whatever I want (going out food, movies, shopping, etc.)

I'll have to narrow it down better I believe, especially since I work in a Bar now and I'll probably have 2 set days a week for sure, it's just the tips that might make it harder to gauge how much I would make. I guess it's a different type of job to have a set/estimated budget in check for?

Oh shit... watch this.

Yeah, if your income is not fixed, like bartending, where a lot of your income comes from tips etc, you're going to do a lot of it in percentages. That's pretty much how you have to do it for a business as well, because some months will be better than others. So you allocate 20% or so for taxes, 5-10% of revenues for gas etc.