A lot of people hold on to bad investments that they know they want to sell simply because people want to recover any losses that might have happened.
I've been skimming through Suze Orman's Young Fabulous and Broke and bumped into some common sense knowledge that not everyone follows. You must learn how to let go of investments that are no longer working. Once in awhile review your stocks and mutual funds and see if you would still buy them today. If you wouldn't buy them today, why are you holding on to them now when you can be making a profit somewhere else? It might be difficult to loose money in the stock market, however, the missed opportunity cost and the potential for further losses is too great so get out of the investments that are no longer working for you today!
Showing posts with label Suze Orman. Show all posts
Showing posts with label Suze Orman. Show all posts
Thursday, June 16, 2011
Tuesday, June 14, 2011
50-30-20 Budget Calculator
In my earlier post, I talk about the Liz Weston Budget. Now, MSN Money has put up a calculator on their website see how your budget breaks up in percentages and if you are on track if you follow this budgeting method. Please click below for this budget calculator:
50-30-20 Budget: A simple spending breakdown.
There are so many ways to budget out there, however, you know hat you are on track if you fit the definition of a strong budget for each personal finance expert such as Liz Weston, Suze Orman, or Gail Vaz-Oxlade.
50-30-20 Budget: A simple spending breakdown.
There are so many ways to budget out there, however, you know hat you are on track if you fit the definition of a strong budget for each personal finance expert such as Liz Weston, Suze Orman, or Gail Vaz-Oxlade.
Tuesday, April 19, 2011
Suze Orman Expense Sheet - Budget and Emergency Fund Planner
Another great budgeting tool is on the Suze Orman's website, Suze Orman's Expense Sheet. You enter your emergency fund amount and break down how much you spend each month by category. Then, Suze lets you know what your essential expenses are and based on that how large your 8 months emergency fund should be.
If a budgeting category is off from the national average, the cell will highlight yellow and by hovering over the cell, you can see what the national average is. If you are spending less, that's great. However, if you are spending more than the national average on a category, you should reconsider that expense even if you have an above average income.
At the end of the process that takes 2 minutes, Suze will tell you to beef up your emergency fund if you do not have 8 months of essential expenses. If your emergency fund fits the bill, she'll say that you should aggressively pay down any debt.
If a budgeting category is off from the national average, the cell will highlight yellow and by hovering over the cell, you can see what the national average is. If you are spending less, that's great. However, if you are spending more than the national average on a category, you should reconsider that expense even if you have an above average income.
At the end of the process that takes 2 minutes, Suze will tell you to beef up your emergency fund if you do not have 8 months of essential expenses. If your emergency fund fits the bill, she'll say that you should aggressively pay down any debt.
Monday, April 4, 2011
Unemployment and Emergency Funds
Everyone knows that they should have an emergency fund. However, everyone seems to struggle with how much they should have. Dave Ramsey says $1,000 until you pay off all debt but the mortgage, then 3-6 months of expenses. Suze Orman likes the full 8 months of expenses (and currently of take home pay) in the emergency fund. Liz Weston wants you to have at least $500 in the bank so you don't bounce anything. She says that having a large emergency fund is great, but does not specify the amount. The amount, is really whatever you are comfortable with.
However, if you are like me and you want to have more information before you know what you are comfortable with, one way to establish your emergency fund is to base it on the unemployment rate. Therefore, you can look at the general current unemployment rate (March 2011) and see that you need 9.2 months in an emergency fund. You can tailor this to your location as well by selecting the city or state on the left hand side. You could also look at the raw national statistics and determine your current unemployment rate by sex, age, ethnicity, educational attainment, etc.
However, if you are like me and you want to have more information before you know what you are comfortable with, one way to establish your emergency fund is to base it on the unemployment rate. Therefore, you can look at the general current unemployment rate (March 2011) and see that you need 9.2 months in an emergency fund. You can tailor this to your location as well by selecting the city or state on the left hand side. You could also look at the raw national statistics and determine your current unemployment rate by sex, age, ethnicity, educational attainment, etc.
Friday, March 11, 2011
Dave Ramsey's Baby Steps
Dave Ramsey is a hugely popular financial adviser. I like listening to his radio show just to see what his opinions are, even though a lot of the times, I do not agree with what he says. Here is the just of what he advises through his 7 baby steps:
I still believe in Suze Orman's idea of saving an 8 month emergency fund and then paying down the debt like student loans. Of course, if you have credit card debt at high interests and you feel pretty safe at your job, you could get by on a smaller emergency fund until your credit card debt is paid off.
I also think that Liz Weston has a point when she says that you can never catch up on your contributions for retirement. Therefore, I think that getting the employer's match in a 401(k) is a priority over paying for debt.
See my blog post on Prioritizing Savings to see what my personal 8 steps are.
- Save $1,000
- Pay off all debt, but the mortgage (this includes student loans)
- Save 3-6 months in an emergency fund
- Invest 15% of your income in retirement
- Fund college education for children
- Pay off your home
- Build wealth and donate
I still believe in Suze Orman's idea of saving an 8 month emergency fund and then paying down the debt like student loans. Of course, if you have credit card debt at high interests and you feel pretty safe at your job, you could get by on a smaller emergency fund until your credit card debt is paid off.
I also think that Liz Weston has a point when she says that you can never catch up on your contributions for retirement. Therefore, I think that getting the employer's match in a 401(k) is a priority over paying for debt.
See my blog post on Prioritizing Savings to see what my personal 8 steps are.
Thursday, January 27, 2011
Emergency Fund
Everyone needs to have an emergency fund. The amount of the fund varies. Most experts will agree that you need at least 3 months of your expenses. Suze Orman, on the other hand, believes that everyone needs to have 8 months of pay in their emergency fund. What is comfortable for you, depends on how stable your job is, what your expenses are, how much debt you have, and what type of personality you have.
What is important is that you set an amount for yourself and try to achieve that goal. You should save at least 10% of your salary, however, 25% would be something to strive for. You could start with 10% and every paycheck, month, or year up it by 1%. You would not notice the 1% decrease in the take-home pay, however, your savings, over time, would.
Personally, 6 months of expenses is enough while I pay down a private student loan and put some away in a Roth IRA. I do not have dependents and my job is pretty stable, however, I sleep better at night when I have a larger financial cushion.
An interesting way to determine your financial fund would be to align it to the current unemployment rate. Therefore, since the US currently has 9% unemployment, it would be wise to save 9 months of expenses as it would take longer to find a job.
Use these calculators to see other methods of calculating your emergency fund:
What is important is that you set an amount for yourself and try to achieve that goal. You should save at least 10% of your salary, however, 25% would be something to strive for. You could start with 10% and every paycheck, month, or year up it by 1%. You would not notice the 1% decrease in the take-home pay, however, your savings, over time, would.
Personally, 6 months of expenses is enough while I pay down a private student loan and put some away in a Roth IRA. I do not have dependents and my job is pretty stable, however, I sleep better at night when I have a larger financial cushion.
An interesting way to determine your financial fund would be to align it to the current unemployment rate. Therefore, since the US currently has 9% unemployment, it would be wise to save 9 months of expenses as it would take longer to find a job.
Use these calculators to see other methods of calculating your emergency fund:
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