Wed 28 Sep 2011
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David113@gmail.com Email me and I will send you a budget sheet, balance sheet, and cashflow sheet. Excel format, basic, but they do the trick. Email, receive, use.
It is hard to think about the impact a daily market swing can have on a million dollars.
Yet, somehow, we are all expected to get there.
A dollar at a time, a hundred, even a thousand, it cannot be a one time contribution.
But, after inflation, a 4% return on $1,000,000 will ‘only’ be $40,000.
‘Only $40,000′ when today, a SEVERE number of Americans are unemployed, underemployed, and living below the poverty level.
When I was unemployed, I lived with my parents and it was a blessing
Without support, depleting savings, debt accumulation, and long term variables are introduced
What to do?
“According to the US Census, in 2007 5.8% of all people in married families lived in poverty, as did 26.6% of all persons in single parent households  and 19.1% of all persons living alone.”
2011 Federal Poverty Level
United States Department of Health and Human Services (HHS) figures for poverty in 2011
Family Unit 48 Contiguous States
and D.C. (I took out Hawaii and Alaska, they skewed the numbers)
I do NOT know what to do to create jobs, I have ideas, but that is a later post;
Savings and impact on future lifestyle choices, that is what I have dedicated my personal life towards,
They say that knowledge is power, and as with all power, Force TIMES Mass DIVIDED by Surface Area = Impact
Force = Savings Rate (Increased savings rate = increased mass)
Mass = Total Amount Invested (The weight of the sledgehammer, Time most greatly increases mass)
Surface Area = Desired Duration of Effect (Building a sustainable income, paying off immediate bills, future planning)
Compound Interest Calculator (Thank you MoneyChimp)
Toss $10/Wk into a savings account earning 4% for 2 years and you have $ 11,032.32
Toss $10/Wk into a savings account earning 4% for 5 years and you have $ 29,291.47
Toss $10/Wk into a savings account earning 4% for 10 years and you have $ 64,929.03
Toss $10/Wk into a savings account earning 4% for 20 years and you have $161,039.85
Don’t get me wrong, I won’t say that $10/wk is going to solve your problems
It is manageable for most, but far from ideal
The rule that I work on is : You should work at least one hour per day towards your future
If you have debt : You should work at least one hour per day towards reducing your debt
Ideally, you are doing both
I like a crisp $20 as much as the next guy
For every $500 you save at 4%, you are getting an extra $20/yr
For just $10/wk at 4%, you can increase your annual paycheck by $208…in 10 years
It is only 10 $20s (works for me) but do it for five years and you’re talking $1,040 (That’s 52 $20s, $20/wk)
It might be hard to consider saving $10/wk for one hundred years
But, after 25 years, you can continue to save that $10 and spend what you were saving before
Welcome to the world of compound interest
This sounds dumb….at $10/wk
But save $100/wk for a year and increase earnings by $208 (at 4%)
Save for 5 years and you increase earnings by $1,040 (52 $20 bills, one per week)
Earning $10/hr, $100/wk is 25%
Earning $15/hr, $100/wk is 17%
Earning $20/hr, $100/wk is 14%
Earning $20/hr, $100/wk is 10%
At $10/hr, working 10 hours (25%) for savings is excessive
At $15/hr, working 6.8 hours is almost extreme
At $20/hr, working 5 hours is reasonable (1/hr/day)
While 5 years is hard to imagine,
Try to imagine 40 years,
Or building just $4,000 in ‘passive income’ instead of just $520,
Or even $40,000 (requires $1,000,000 at 4%)
Simple math, not many variables, but not so simple
40 years at $10/wk = $51,389.80
40 years at $100/wk = $513,897.99
40 years at $200/wk = $1,027,795.98
I won’t blow your minds with ‘how little’ one million is in 40 years
But to get to $1 million in 40 years, you need to save $200/wk
Take a look at your paycheck and the taxes coming out
Chances are, if you don’t have a degree, these numbers daunt you
Chances are, if you are earning, you’ve got college loan payments
Other obligations, things that are more important
Even if you are on the path, looking at that $125K+ as a ‘cash reserve’ is a mistake
Choose the path, stick the path
Don’t think you’re somehow ahead of the game at six figures and that you can go spending
Keep savings, maybe tap the interest as extra spending,
But for the most part, save, keep savings, save, save, save, grow, save, be patient
I am not patient,
I made a mistake,
I saved too much,
I did not keep enough liquid and accessible.
Emergencies come, it is best to be prepared for those too.
I get it, I look at the data and have those ‘WTF moments’
If you don’t…you’re not tweaking the numbers enough
David113@gmail.com Email me and I will send you a budget sheet, balance sheet, and cash flow sheet. Excel format, basic, but they do the trick. Email, receive, use.
Everyone faces moments when they are without capital,
Predict those moments, build cash buffers,
$2,000 emergency, have the cash liquid and ready
I have all of the information ready.
Need help with a 401K to ROTH 40K conversion?
Company to company 401K transfer
I live for this stuff…
If you current company’s HR staff cannot cut it, I can,
First come, first serve, but I have coffee
Free service, firstname.lastname@example.org