3 Steps To Financial Freedom

Most people find financial planning to be intimidating. 

It doesn't have to be!

However to reach financial freedom and enjoy a care free lifestyle, planning is necessary.

Once a solid three to six month emergency fund is in place and consumer debts are under control along with a great FICO Score, it is time to create a solid plan for the future.

Step 1 Consider Your Lifestyle

The first step is to consider 

the lifestyle that you want. 


Consider your needs

when you retire. Who will be 

a part of your life and what 

are their expectations. Think 

about what you plan to do 

with your time.

How will you live:

• Will your house be paid off by the time you retire?
• Will you be renting?
• Do you anticipate living in a retirement community?
• Where would you like to retire?
• Who are you retiring with and what are their needs?
• Are there people in your life you will still need to support?

What do you plan to do:

• Travel regionally, nationally or internationally?
• Enhance your learning, enjoy cultural activities?
• Develop your hobbies or take up an increased interest in sports or physical activity?
• Just take it easy and stay home with your grand kids?

While it is impossible to predict the future, the longevity and health of older family members is a good indication of what you may face.

Will you have special needs:

• Will you need medical support?
• Assisted living?
• What are the needs of your partner or other family members?

Step 2 Review your Plans and Circumstances

Taking some time to review your plans will probably give you an indication of how much money you will need to retire in the style you would like. 

Popular advice suggests these savings should generate an annual income of at least 75-80% of pre retirement income to maintain the established lifestyle – assuming that work related expenses, such as commuting, will disappear.

This may be an outdated concept. Most people still plan to have at least one vehicle after retirement. We now enjoy a period of inexpensive fuel, but it probably won't last long.

I would recommend targeting 80% to 100% of pre retirement income to truly enjoy retirement.

Step 3 Accumulate Savings

There used to be a time when people would be well prepared for retirement by saving 10% of their income.  Company pension plans were solid and most people retired from one company after a long career. These days people tend to migrate from company to company and may not stay long enough to qualify, or they may be contractual or entrepreneurs running their own business. The company pension of previous generations is a rarity these days.

Today people need to start by saving at least 15% of their annual gross income for retirement. Of course, the later a person starts, the more needs to be saved. 

It is unwise to rely solely on Social Security or any company pension plan.  To enjoy a comfortable retirement, personal funds are necessary. 

By retirement, a person should have savings equivalent to 12 to 15 times their final salary. 

Any change in interests, such as travel or expensive hobbies may require even more funds. Changes in health may also require additional funds to draw upon.

There are many retirement calculators available through a Google search that will help you determine your needs.

The best way to ensure a comfortable retirement is to leverage funds now. Smart investments now can yield substantial returns.

These steps are good places to start a more conscious and directed route to achieving your financial freedom. Read, reflect and take what will work for you.

Bottom line is that there is no blanket strategy. Each person must evaluate their own circumstances, needs and desires. Get the help you need to achieve financial freedom.


Above all, believe in yourself and believe that you will achieve your goal!

_________________________________________
Sources:

Lynda at Sonoran Sun | Private Equity Investments 

TOP 3 Improvements For Healthy Finances This Year

It is important to re-evaluate your financial needs at least once a year. 

Changes to your life and lifestyle – such as a change in relationship status, new job, relocation, or other significant change should be considered first. Planned purchases such as a new home or car often need a significant deposit which must be accumulated prior to purchase. In addition, increasing expenses from inflation should be noted. New goals should also factor into your review.

Here are three ways to get a great start:

1 Emergency Fund

Have a generous emergency fund. It’s a wise idea to keep the equivalent of six months worth of expenses in an emergency fund so you don’t accumulate debt if you lose your income.

Factor in costs for housing, insurance, transportation, food, medical, basic personal needs and (modest) entertainment expenses. 

If you have other necessary expenses, include them as well in your monthly projection. Then multiply by six and that is the amount you should keep in reserve.

If you have an older home, you may wish to create a separate emergency fund for that in case you have sudden necessary large repairs. 

Apply the same principle for an older personal vehicle.

Don’t be tempted to dip into these funds for indulgences such as electronics or vacations. 

Discretionary purchases should have separate savings accounts!

2 Manage and Eliminate Debt

Once you have a plan to fill your emergency fund, the next best way to ensure financial health is to pay bills on time. This includes utilities, services, and credit cards. Set up a system to make all payments on time. When deciding on how much to pay over the minimum on any consumer debt, eliminate debt(s) with highest interest first.

If you are not able to make your minimum payments, there are debt consolidation agencies that may be able to help you. It would also be a good time to review your spending habits and eliminate anything that is not absolutely necessary for your survival.

3 Improve Your FICO Score

Paying your bills on time is a great way to improve your credit score. This is important if you are planning to refinance a car or home, or are planning a new purchase. It is a good idea to review your credit score three or four times a year. In this way you can also monitor for fraudulent activity and identity theft.

Contrary to popular advice, do not “cut up” and cancel your cards once you have paid them off---IF and only if they do not charge an annual or other fee. If you feel you may slip and use them again, put them in a safety deposit box at the bank (and leave them there!) The rental of a box will cost you about $20 per year and may be well worth the cost!

The reason this is a GOOD IDEA (again – only if there is no cost to you to have them) is that it increases your credit to debt ratio. What that means is that is better to owe $500 if you have $5000 of available overall credit than it is to owe $500 if your limit is $750.

It shows potential creditors that you are only using a small percentage of available credit – which makes you a better risk.

Some people don’t realize that you can get a free copy of your credit report (FICO) from each of the three major credit bureaus every 12 months. If you spread that out over the year, that is one free report every four months!

Learn more at www.annualcreditreport.com

These steps are good places to start a more conscious and directed route to achieving your financial freedom. Read, reflect and take what will work for you.

Bottom line is that there is no blanket strategy. Each person must evaluate their own circumstances, needs and desires. Get the help you need to achieve financial freedom.


Above all, believe in yourself and believe that you will achieve your goal!

_________________________________________
Sources:

Lynda at Sonoran Sun | Private Equity Investments 

Magical Manifestation

The word manifestation has such magical connotations.

It can be defined as bringing something into reality or committing to a visible expression of a goal, need or desire. 

For some people, the resolutions of New Year's Eve are already fading. Having a clear plan of what you want to achieve this year, month or even day is an important part of keeping your goals measurable.

Better Health? What habits will you change to improve?

Better Relationships? How will you get there?

Wealth? What will you do each and every day to achieve that goal?

Whatever you need or want to change in your life, set an objective and break it down into measurable steps based on your deadline. In this way you can measure your progress and adjust your course.

What will you get done in January? When February arrives, you can celebrate your success, or re-evaluate your plan to ensure you will achieve your goal by your target date. Don’t beat yourself up if you missed your target. Learn from the experience and revise your plan.

Believing in yourself and your ability to achieve is often undervalued. 

Reminders can help.

Write down your plan, create a vision board, tell people! Having a visual aid or public statement may keep you more accountable. When you keep it top of mind, you are more likely to take action.

One of my most useful tools is an old picture of the Caesar’s Palace pool. 

While I have never stayed at the resort, the postcard reminds me of the things that are important to me: swimming, finding time to relax, travel, luxury. 

Why I do what I do to make these things happen - all in a single image.

This short article from Maxie McCoy looks at some pros and cons of various strategies. It is a good place to start a more conscious and directed route to achieving your success. Read, reflect and take what will work for you.

Bottom line is that there is no blanket strategy. Each person must evaluate their own circumstances, needs and desires. Get the help you need to be successful.

Above all, believe in yourself and believe that you will achieve your goal in 2016!

_________________________________________
Sources:

Lynda at Sonoran Sun | Private Equity Investments 

Tug of War

There is a classic battle between financial strategists when it comes to retirement strategies and paying down mortgages. 

It can be a veritable tug of war! 

Some say being debt free is the most important thing while others would suggest that debt, as long as it is a mortgage, is not a bad thing.

Some experts suggest that paying off the mortgage will give home owners invaluable peace of mind. As a top priority, these experts favor becoming mortgage free and suggest restraint with discretionary purchases or offering financial assistance to family members. They favor large lump sum pay-offs to become mortgage free as quickly as possible when the home owner is approaching retirement.

This may be a good strategy for some if there are savings or a steady source of income to rely on to cover expenses.

What these strategists sometimes fail to mention is that they are assuming that a person has enough contingency funds to sustain themselves in case of an emergency.  

In retirement, the classic recommendation of having three to six months of living expenses on hand as a safety net still applies. If paying off the mortgage depletes these reserves, then the home owner is left vulnerable in case of unexpected expenses.

Other experts suggest it may be a better course of action to maintain a substantial reserve and to use these funds to make mortgage payments, if needed. In this way the retiree can avoid assuming high interest consumer debt for unexpected expenditures such as emergency home renovations or repairs, or even sudden medical expenses by using cash from savings.

It is not prudent to think of retirement funds as a reserve. Cashing out at the wrong time, such as a period of poor performance, can precipitate a loss. Cashing out when performance is optimal should also be avoided, when these funds produce cash flow. This should only be done as the last course of action if circumstances are dire.

Bottom line is that there is no blanket strategy. Each person must evaluate their own circumstances, income stream and potential for risk with their home and other expenses to enjoy a safe and secure retirement.

_________________________________________
Sources:

Lynda at Sonoran Sun | Private Equity Investments 

The Tightrope To Retirement

The Walk - is the cinematic story of Philippe Petit, the French high-wire artist who devised a plan to walk on a tightrope between the towers of the World Trade Center. 

Historically it was a feat of great daring that took meticulous planning to cross from one point to the other. Petit planned and trained for six years for the tightrope crossing know as the Artistic Crime of the Century. He had to calculate the sway of the buildings, how to get the wire across, the impact of wind at that altitude, weather and many other factors to cross the fixed distance.

While this is a daring and historical accomplishment, the one thing that made it easier was that Petit had a fixed goal in mind. He knew how far his destination was and what he needed to do to accomplish his goal. Petit had a plan.

By contrast, retirement is a far more challenging and nebulous prospect. A person cannot know where they will end up, what supplies they will need for the journey or how long the journey will be.

The thought is so overwhelming that some people choose to ignore the prospect of it.

Indeed there are many risks in everyone’s future. That’s the scariest thing about the unknown.

The biggest risk to your retirement is… living it. 

It is known as “longevity risk” and refers to the possibility of outliving one’s retirement funds.

Most people know that they must plan for retirement. But when no one can really know what the future holds, how is that achieved?

The best way to plan for your future is to be over prepared. 

That may sound silly, but since life expectancy is steadily increasing and market volatility is here to stay, running out of income and funds during the retirement years is a distinct possibility.

The alternatives may not be pleasant.

Some people believe that the government will provide for them - especially during retirement. However, the rate of senior population is increasing steadily over other population demographics. By the year 2035 it is expected that 20% of the population in America will be over the age of 65. It may become completely un-sustainable for government programs.

Each person must plan for their own future to have security and peace of mind.

Over the next few weeks I will be sharing some strategies to take the fear out of outliving your funds.

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Sources:

Lynda at Sonoran Sun | Private Equity Investments 

Characteristics of Our Aging Population:Human Aging— A Recent Phenomenon 

Philippe Petit -From Wikipedia, the free encyclopedia

Complaints, Conspiracies -- and China. Oh My!

The Trans-Pacific Partnership deal that was tentatively reached on 5 October 2015 is an expansive agreement forged by 12 participating Pacific Rim countries.

It allows countries making up 40% of the global GDP to lower or abolish tariffs, making trade cheaper and promoting business in all countries involved. It includes international trade, environmental issues, labor and intellectual property rights – most notably the hot contentious issue of bio-pharma patents. 

The absence of China from this potential trade agreement was often mentioned, but rarely explained by the North American media.

By contrast QQ.com, Asian social media, has been abuzz since the announcement of the agreement earlier this week. There was talk about China being shut out of this deal from both camps. Those who feared this would negatively impact the Chinese economy by isolating it from the “outside world” and from others who think China does not need to be part of such a partnership.

Studies suggest that the Chinese economy stands to dip negligibly as a result since it enjoys trade partnerships with 120 other countries. However conspiracy theories abound on the social media platform. There are fears that the eventual inclusion of India into the TPP will greatly impact the Chinese economy. They fear China will be force to make concessions by the USA and its partners. And while confirmed that China and the US are not enemies (thank goodness!), there is mistrust and fear over Sino-US competition in the Asia-Pacific region.

Interestingly, while China’s media is pointing fingers at the TPP and India, China is negotiating its own free trade agreement, the Regional Comprehensive Economic Partnership (RCEP). Negotiations began in 2012 and will cover trade in goods, services, investment, economic and technical co-operation, intellectual property, competition, dispute settlement and other issues.

While the TPP agreement appears to cover more trade between richer countries of the world, these countries are also slower-growing than RCEP ones.  RCEP nations have outpaced TPP ones in GDP growth: 

Covering about half the world’s population, the RCEP countries pose a formidable alliance:

India is sometimes described as the “swing” country: a potential future partner in TPP and a negotiator in the RCEP.

These past weeks US and Canadian protesters expressed concerns over issues such as dairy industry protection, higher drug prices and increased job loss over the fear of “NAFTA on steroids.”

“The TPP would expand the North American Free Trade Agreement (NAFTA) "trade" pact model that has spurred massive U.S. trade deficits and job loss, downward pressure on wages, unprecedented levels of inequality and new floods of agricultural imports.”

The TPP will remove trade barriers across 40% of the global economy for North American industries. It offers the opportunity to evolve global trade and business models that have come with rising global economic integration. This particular agreement represents a valuable opportunity to gain a foothold in Asian economies. With market access to partnering countries for goods and services, business and investment opportunities will abound.

One has to wonder why any country wouldn’t consider a trade alliance as part of a positive protected environment. Especially when faced by a rival trade agreement covering one half the world.

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Sources:

Lynda at Sonoran Sun | Private Equity Investments 

Some "demonized" TPP impact on China's views

Thought the TPP was a big deal? China’s rival free trade pact covers half the world’s population

Trans-Pacific Partnership (TPP): Job Loss, Lower Wages and Higher Drug Prices

Can Investments Be Powered By Perpetual Motion?

Mankind has long been looking for a perpetual motion device. 

Used as an endless supply of energy, it would be formidable source of power. 

Imagine having power without having to work for it!

Some people wish there was a way to get income without having to work for it. This is defined as Passive Income on Wikipedia:

Passive income is an income received on a regular basis, with little effort required to maintain it. It is closely related to the concept of "unearned income".

It is a wonderful idea, but most people eventually realize that passive income is a myth. At some point in time, most investments require work.

Some people think that profits from stocks are passive. What these people fail to realize is that stocks must be constantly monitored and researched. These days, with all the volatility in the markets, not only do stocks require a lot of attention, they have also become a source of great stress! That hardly sounds passive – or healthy.

Other people believe that having rental properties is a great way to earn passive income. This is usually great – until something goes wrong at the property. Most owners aren’t ready to deal with broken plumbing in the middle of the night, or other emergencies. The time needed to maintain a rental property and sometimes even just to get the rent can often be as much as a full time job!

Those who have tried these options without success often settle for investment accounts where they get very little or no interest for their money – while banks get richer and report record breaking profits!

Earning respectable amounts of passive income seems like a myth, indeed.

But what if there was a way to get significant income without having to do anything. No work, no research – no worries! Nothing except looking at your bank account and watching it grow. Safely and securely… month by month!

Imagine the possibilities that extra income would open up for you and your family!

To learn more, send me a message with your contact info. We will arrange a time to discuss options tailored to your needs.

As the financial world sits and wonders what will implode next, I have realized that my own smart money has been safe and secure, growing and giving steady returns…elsewhere.

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Sources:

Lynda at Sonoran Sun | Private Equity Investments 

Passive income - Wikipedia, the free encyclopedia