Personal Finance Blog by Debit versus Credit

Achieving Wealth and Prosperity

November 14, 2008 | Filed in: Personal Finance | 3 comments

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As a personal finance blogger I find it interesting to read other personal finance blogs not only to learn from these individuals but also to see how they perceive money and the world around them. You can always find links to some of my favorite finance blogs in my blogroll, but today I want to talk a little bit about a fantastic personal finance blog that has been around for a while now: MoneyNing.

I bring up MoneyNing for two reasons. The first reason is that David knows his stuff and he is committed to sharing with his readers what he’s learned from his own financial life. The second reason is that I’m actually being featured on his blog today with a guest post that I wrote about my journey to prosperity.

A Journey To Prosperity

For today’s post I’d like to expound a little bit more on the goals that I’ve set for myself on my journey to prosperity. Before you continue reading here you definitely ought to check out Debit and Credits Plan to Prosperity over at MoneyNing (clicking the link will open in a new window) and then come on back for some further clarification.

Ok. Did you read it? What did you think? Please if you have any comments related specifically to that article leave them over at MoneyNing. Otherwise let me help you understand a little bit more about my financial goals.

Being Rich Requires Thinking Rich

Like I mentioned over at MoneyNing I think that being prosperous is so much more than just being lucky. It requires hard work and dedication to achieve wealth. As an example let’s take a look at the worlds richest man, Warren Buffett. This is a man who has worked hard and smart every single day of his life. His wealth didn’t come easy to him, but because he was willing to learn and willing to work hard he’s been able to achieve extraordinary things. Being extraordinary doesn’t just come from hard work though, it requires some level of goal setting and follow-through. Think of it this way: If you want to be rich then you need to learn how to be rich.

I’ve set several goals for myself. Let me share them with you now, along with how I plan to achieve them:

• Be in a position to retire by the age of 55

I will contribute as much as possible to my 401k retirement plan. Currently this number is 10% of my income.
I will make smart financial decisions such as only buying a house that I can easily afford.

• Build my personal net worth to $1 million plus dollars

I will keep my liabilities (debt) to a minimum by buying only what I can afford.
I will make smart investment decisions to grow my net worth at a minimum of 10% a year.
I will continue to save money out of my paychecks beyond what I’m saving for retirement.

• Avoid debt as much as possible

I will not use my credit cards for everyday purchases unless I have the cash set aside to pay them off immediately.
I will not make foolish decisions and purchase things that I can’t afford with cash and that I don’t really need.
When I make large purchases (such as a house or car) I will compare my options and borrow as little as possible.

Those are the goals that I’ve set for myself; my roadmap to prosperity, if you will. Do you have a plan to achieve prosperity? I want you all to sit down and think about what you really want out of life and how you can achieve it. It might require some cutting back at first but in the long-run you’ll thank me, but more importantly you’ll thank yourself.

Tags: 401(k), 401k plan, achieving, Debt, prosperity, retirement, saving, wealth

Keep Investing In Your 401k Plan

October 8, 2008 | Filed in: Investing | 5 comments

Here’s a question for you: If you put $5,000 dollars into your 401k plan this year and your employer also puts $5,000 into your 401k plan and over the course of a year your investments lose 40% of their value… assuming all of this, how much would you have lost?

The answer may surprise you.  You’ve actually not lost anything - you’re at a gain on your 401k plan at this point.  Remember that 401k plans are usually matched by your employer, and quite often dollar for dollar up to a certain percentage.  Assuming that the $5,000 you contributed was the maximum that your employer would match you immediately net a 100% return on your money.  After all, you put in $5,000 and so did they.  Now if that entire amount ($10,000 at this point) lost 40% of its value you’re down to a 401k plan value of $6,000 dollars.  All from an initial investment (out of your paycheck) of $5,000.

Guess what that means?  Your 401k plan portfolio has still gained 20%.  That’s a fantastic return on your money by any standard.  Things might be dramatic out there in the world of money, but you have to remember that you are in it for the long run, and with the exception of those who plan on retiring sometime in the next 5 years you ought to maintain your 401k plan investments.

Don’t let the news frighten you, don’t check your investments daily and most of all don’t go looking for bad news without thinking about what good can (and ultimately will) come from the difficulties we are now facing.  But most of all don’t sell out of your 401k plan and PLEASE OH PLEASE continue to invest in it.  You’re practically guaranteed a positive return, even with negative stock returns in the 30-40% range.  After all your employer is likely giving you FREE money, just for taking advantage of their 401k retirement plan.

Tags: 401(k), 401k plan, Investing, Retirement Planning