MONEY matters

Imagine having peace of mind. How does that make you feel? What image or thought enters your mind? I think for many people, it’s a feeling of abundance, of having enough of what you need and then some. Perhaps most importantly, in this state of consciousness, money worries are non-existent and you feel financially secure. So how do you get here?

First, you need to ask yourself how much is enough? If you have a significant other, this is a money and lifestyle conversation that offers you both an incredible opportunity to set common goals and work as a team.

There’s a new flurry of Your Money or Your Life readers discovering or in some cases rediscovering this amazing jewel of a book. This is great news on many levels and I’m grateful to be hearing from many of you. From the recent calls and emails I’ve received, what’s most on your mind seems to be how to achieve financial independence (FI) early rather than later in life. Early semi-retirement is a huge boomer trend by the way and one I feel that’s still operating below the radar screen of mainstream media, but I’m sure, not for long.

If you work in the corporate world, you know you’re in trouble when the leadership of the organization starts talking about the need to “increase productivity”. This is a clever euphemism for working two, sometimes three jobs for the price of one. Profits stay high for the corporation while your quality of life sinks.

Now that the dust has settled from the Great Recession and people are finding the courage to look at their investment statements once again, a new reality is setting in for many people as well as many new questions.  How do I retire with enough financial security so I don’t have to worry about money and how long will it take to rebuild my nest egg?

It’s hard to know how long it will take for the stock market to fully recover and the same holds true for the real estate market. Even jobs that once felt very secure no longer feel that way in this post crash economy. With so much out of your control, what can you control? The answer is and always will be your spending.

As stock markets around the world, including ours, continue to rise, investors that pulled their money out of the market last year are beginning to get restless. It’s reported there’s between $3-5 trillion dollars in cash sitting on the sidelines. If you’re someone preparing to invest in the market again, be mindful of the following:

As many of you know, I spent three years working at Fair, Isaac, home of the FICO credit score. Fortunately, I still have some good sources that work there. Here’s the latest news on some changes that are coming our way in terms of how your score is calculated.

I was back on the East Coast for a couple of weeks. The humidity was on full display. Who needs a sauna when you have 90% humidity? But allow me to digress.

If you live in California, you now have the right to put a “security freeze” on your credit file. A security freeze means that your file cannot be shared with potential creditors. A security freeze can help prevent identity theft. Most businesses will not open credit accounts without first checking a consumer’s credit history. If your credit files are frozen, even someone who has your name and Social Security number would probably not be able to get credit in your name.

This easy to follow ‘how to’ link includes sample letters specific to California residents as well as toll free numbers to all three credit reporting bureaus, Experian, Equifax and Trans Union.

It’s hard to predict what the economy will look like two, five or ten years from now. It’s even harder to predict what the stock and bond markets will look like down the road. So with all that uncertainty, it’s better to focus on what you do have control over vs. what you have zero control over.

And that brings me to the “number”.  By the number, I’m referring to the amount of wealth you need to accumulate by the time you’re ready to retire and stop working for money. I believe this number is vitally important to not just your financial well being, but to your overall well being as well.

You may have noticed the vast amount of new products being churned out by Wall Street lately.  Now I’m all in favor of more options, yet the amount of new “products” being introduced to investors on a daily basis is staggering. Besides regular old fashioned mutual funds, stocks and bonds, we now have a slew of ETF’s, ETN’s,  ishares, global ETF’s, brand new sector funds, and the list goes on. The marketing departments of these large investment houses are well aware that investors like the shiny new objects in the window and as such are catering to our need for buying something new and exciting. Index funds, diversifying your portfolio is so 2008 they’ll tell you, come over here and play the new game…

I like ETF’s and for many investors, they compliment your investment portfolio very nicely.  But just because the marketing departments have sliced and diced markets into a zillion new ways to invest, doesn’t mean that it’s the right option for you.