9 Pieces Of Financial Advice From Wise Men

There are no secrets to successful financial planning and investing. In fact, the core principles have routinely been shouted from the roof tops for at least 200 years in pamphlets, handbills, sermons, speeches, books, radio shows, TV programs, audio tapes, DVDs, blog posts, tweets, and probably even Snapchats.

I recently came across a list of well-known money-related quotes that pretty much distills the financial wisdom of the ages. Here are my Top 9.

“Rather go to bed without dinner than to rise in debt.” – Ben Franklin. This two-century-old gem pointedly reminds us of the corrosive effect of debt, and wisely urges us to avoid it. Yes, there is “good debt,” including mortgages and business loans, which helps build assets. But many Americans carry too much “bad debt” from credit cards and other consumer loans that were used to finance a lifestyle beyond their true means.

Related: When Good Debt Goes Bad

Related: Actionable Steps You Can Use To Get Rid Of Credit Card And Mortgage Debt

“In investing, what is comfortable is rarely profitable.” -- Robert Arnott. A good reminder that risk is an unavoidable part of investing. And, the higher the risk, the higher the potential returns. In shaping an investment strategy, you need to honestly assess your risk tolerance and create a diversified portfolio that includes some acceptable higher-risk investments. The younger you are, the more risk you should consider.

“Know what you own, and why you own it.” – Peter Lynch. Seems obvious, but many investors have lost track of their holdings, or never fully knew them. The journey to financial success is like any trip. You need to know both your destination and how you are getting there. Otherwise you’ll get lost, or take much longer than necessary to arrive. Review your portfolio on a regular basis and tweak it as needed.

Related: Why You Should "Own Your Age" In Your Investment Portfolio

“Speculation leads you the wrong way. It allows you to put your emotions first, whereas investment gets emotions out of the way.” – John Bogle Successful investing is a marathon. You need to set specific goals, settle on a strategy and execute that strategy consistently and dispassionately – year in, year out. Jumping in and out of the market based on fear or greed is bad for both your nest egg and your stress levels.

“Personal finance is not rocket science. Personal finance is about 80% behavior. It’s only about 20% head knowledge.” – Dave Ramsey. Discipline is everything. It’s not enough to say you are going to cut your spending and increase your savings. You have to actually DO IT. Consistently.

“I will tell you how to become rich. Close the doors. Be fearful when others are greedy, be greedy when others are fearful.” – Warren Buffett Be wary of the ‘hot thing.” Be careful about jumping on the latest investment trend. Seek out the upside opportunities when things are looking bad. When Apple stock recently took a slight tumble, smart investors saw that as a “sale” on a great stock, not a sign to dump their shares.

Related: 7 Smart Ways To Get Started Investing

“The four most dangerous words in investing are, ‘This time it’s different.’” – Sir John Templeton.   Beware of false prophets, both purveyors of doom and sunshine sellers. Learn a bit about the market -- it’s history and patterns.

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” -- Paul Samuelson No day trading. No. Day. Trading.

Related: Does Day Trading Add Up?

“If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.” -- John Bogle   There will be market ups and downs over the course of your investment journey. A few will be dizzying. But over the past 100 years the market has moved steadily higher. Keep your perspective. Remember: The current value of your portfolio means very little if you are 20, 30 years away from retirement.

Related: 6 Completely Terrible Pieces Of Financial Advice

Download The Wela app to get started on your financial journey today.

9 Most Important Things To Know About Personal Finance

There are so many crappy lists on the Internet, most of them designed to get advertising in front of your eyeballs. We have our own non-crappy list to share. It's our list of fundamental truths of personal finance and investing. 

1. It Ain’t Rocket Science – Money guru Dave Ramsey has observed that “80% of personal finance is behavior” not education. You don’t need to be an expert on the stock market or high finance to start building for the future. All you really need is a solid plan and the commitment and discipline to stick with it over the years.

2. Start Early – Time can provide a powerful tailwind for your investments. The sooner you start saving for retirement, the more time your money has to take advantage of compound interest – a process in which the interest on your savings earns more interest. We should start saving for retirement from Day One of our first job. If you haven’t started yet, do it today! Waiting just 8-10 years to launch your savings program can really slow your growth and reduce the size of your potential retirement nest egg.

Related: Entrepreneurs - Why They Need Financial Planning Too

3. Set Goals – If you don’t know where you’re going, you’ll never get there. Carefully define your savings objectives, whether it’s a house or retirement. Visualize them in detail. Then, figure out how much you need to reach that dream. Use that information to craft a plan to reach your goal.

4. Budget – We too often think of a budget as a straightjacket or prison cell. But it’s actually an empowering tool that allows you to see where your money is actually going, better control your spending and stay on track towards your goals. If you don’t have a budget, you are flying blind in one of the most important aspects of your life – your finances. We guarantee you will get at least three significant surprises when you start analyzing your spending. “I spent how much at Starbucks last month?!

5. Spend Less Than You Make – Common sense, right? But it’s incredibly easy in this easy-credit, consumer-driven world to live beyond our means. Try to save at least 15% of your income.

6.  Pay Yourself First – You can’t spend money you never see. Arrange to have your savings deducted from your paycheck via the 401k plan and/or direct deposit into a brokerage account.

Related: Why Investing In Your 401k Is A No-Brainer

7. Always Take Free Money – If your employer offers to match a percentage of your 401K contribution – and most do -- maximize that benefit by contributing to the match limit.

8. Don’t Go House Crazy – There is nothing worse than being ”house poor.” A too-big mortgage payment can really limit your ability to save – and spend on other things you need and want. So, when shopping for a new house is careful not to over-buy. Think very carefully about what you actually need in a home. How many square feet? How many bedrooms? How big a yard? How important is it to live in that trendy neighborhood? Stick to those parameters in your search. And remember: You don’t have to spend every dollar the bank is willing to lend you.

Related: How Do I Know How Much To Spend On My House?

9. Protect Yourself – A complete personal finance plan includes provisions to protect the life and future you are building. Life insurance and estate planning are key to making sure your obligation to your loved ones is met, even after you are gone. If you don’t have life insurance start shopping for it today. (If you haven’t reviewed your policy in a while, do that. Make sure your benefit reflects any changes in your situation.) As soon as that’s done, make your will and get it filed. You can use an attorney or an online legal service like LegalZoom.com.

Related: Do You Need a Will?

So, there you have it – the most useful, least misleading list in the history of the Internet.

Have questions? Not to worry. Just Click the button below. 

Wela Whip - This Is Getting Ridiculous, HBO Worth $20 Billion, Millennials Buying, Myers-Briggs Flawed, Rise of Curse Words

This is getting ridiculous Malaysia Airlines is really getting hit on the chin in 2014. First they lose a plane and now one of their planes was reportedly shot down. All 280 passengers and 15 crew members were killed. Reports are suggesting it was shot down near the Ukraine - Russia border. If this is true, it's really sad. Conflict is terrible no matter what, but even more so when innocent people are harmed. Read More

Is HBO worth $20B? Rupert Murdoch certainly thinks HBO is worth it. In fact, he's willing to buy all of Time Warner just for the rights to HBO. He must be a huge Game of Thrones fan... or could it be True Blood? Either way Time Warner has rejected the initial offer, but don't count Mr. Murdoch out just yet. He might just go hire Ari Gold to help. Read More

$20 million in revenue... all based on a flawed product Do you remember the Myers-Briggs test? Well, studies (and even its creator) say it's flawed. The arguments are wide ranging as to why it's not valid, but one point that stands out is that the creator based the test off of personal experience and not research. He made the test up! This could be good or bad news for readers depending on whether you agree or disagree with the results! Read More

Hey realtors! Millennials are looking to buy Surprise! The millennial generation (18-34) is actually buying homes. Trulia recently saw the millennial generation's homeownership rate rise 0.9% in 2013. It looks like those roommates we have had since we were kids (our parents) are out! Read More or Sign up for our home buying boot camp to get ready to buy your own home!

Curse words finally find their calling... predicting economic cycles I don't know who cares about this sh**, but it's good cocktail material. A recent study by Bloomberg showed that CEO's language loosened a bit during rough economic times. In the good times, CEO's tend to wane off these F***ing words. It looks like we are in ok times right now though. Read More

Wela Whip - Chick-Fil-A Cows Are Pissed, An Uber Problem, and The Cupcake Fad Crumbles

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Roosters are impotent and the Chick-Fil-A cows are pissed! A key breed of rooster is having fertility problems that would trouble us all. The world's largest chicken breeder has discovered a genetic issue (without a solution at the moment) that is reducing the roosters' ability to reproduce. However, the problem for all of us is that it has led to a rise in chicken prices... which spells trouble for the Chick-Fil-A cows! Read More

An Uber problem For a company that relies on social media going viral, this turns the age old adage "any press is good press" on its head! A recent DC Uber ride went bad... really bad. The Uber driver got into a high-speed chase and put the passengers in real danger. Thankfully no one was hurt. Up to this point, people have been trusting in Uber's screening process for drivers, but this may cause a rumbling... a rumbling that Uber needs to quickly chase away. Check out the passenger's account of the event. Read More

We are all smarter than a 15 year old...right?! The Organization of Economic Cooperation & Development is conducting research to discover how financially competent today's youth are with this 10 question quiz. Thankfully we were able to pass the test (see our results here). Take a stab at it and let us know, on our Facebook page, how you did. This has television show written all over it... right Jeff Foxworthy? Read More

The cupcake fad crumbles Monday morning was a sad day for cupcake lovers. Crumbs cupcakes closed the doors to all their bakeshops after defaulting on their debt. The company was the poster child for the cupcake fad, so it will be interesting to see the ripple effect. Nevertheless, this hasn't stopped people from trying to sell 'supposedly' the stores last cupcake... for $250! Seems like a bit much for a stale cupcake... Read More

The $44,000 potato salad A Kickstarter campaign of potato salad has raised over $44,000 and the campaign has 22 more days on it. What's the money going to be spent on? Actually it's going to be spent on a Labor Day party in Columbus, Ohio. Although we do love potato salad, we didn't think it could help us raise enough money for a down payment! Read More

The significance of today's date: 7-11 For us 7-11 means the gas station with awesome Slurpees. Here is a commercial that helped us bring back the memories. Read More

Retirement Doesn't Have To Be Scary

America, it's time to get your act together. We are in big trouble when it comes to financial freedom, and ever being in a position to retire. The numbers and statistics for people nearing or in retirement are scary.

75 percent of retirement age Americans have less than $30,000 in savings.

1 in 6 older Americans live on less than $22,500. These are people you know.

Today we have five people working per one retiree, but by 2050, there will be less than three people working per retiree. That means less and less people supporting our social security system.

Americans 55 and older account for 20% of all bankruptcies typically because of medical and funeral expenses.

1/3rd of all Americans have absolutely zero confidence that they will be comfortable in retirement.

It's easy to be nervous about the financial picture that is playing out in America. But you don't have to be! You can reach a happy retirement with the correct information, planning and preparation, and maybe even earlier than you think! There are a certain set of financial milestones that you should reach to be an early and happy retiree. The best part, is that they are more obtainable than you might realize.

If you are in your 20s, 30s or 40s, it's time for you to get on the road towards a happy retirement. Yes, now. Not when you are 10 years out from retirement. You just need the right information to focus and set goals that will put you on the path to a happy retirement.

To get you started, below are a mix of traits and steps that I uncovered through my 2013 National Money and Happiness Survey - that unhappy retirees do that you should avoid.

Most unhappy retirees don’t plan to pay off their mortgage until well after the age of 65. Happy retirees typically have their mortgage paid off well before age 65. Make a plan to pay off your mortgage as quickly and realistically as possible. Happy retirees also don’t necessarily own McMansions, so don’t feel like you need a mortgage that has you spending 33 percent of your income a month. Instead, opt for a more reasonably priced home that requires less than 20 percent of your monthly income.

Start saving early. Many unhappy retirees delay saving any money until they hit 55, while some never start. This action (or inaction) puts them at a serious disadvantage. Read my previous blog on why it pays to start saving today.

Unhappy retirees have a higher propensity to be divorced. Divorce isn’t just a separation of you and your partner, but also of both of your savings and income. On top of that, happy retires tend to have more social hobbies (think volunteering and traveling with a spouse), and divorcees don’t have a built in partner in crime.

How many children do you have? Unhappy retirees tend to have fewer kids than happy retirees. If you have just one child, sorry, but you do not fall into my happy retiree category. Yes, kids might be expensive, but they’ll keep you active and engaged. So hop to it, and start making those babies!

Do you drive a BMW? That brand was the top driven luxury car of my unhappy retirees! Check out what “Fubu” commented about BMWs at the bottom of Clark Howard’s blog about cars and credit.

Bottom Line

It’s easy to fall into the unhappy retiree camp, or even worse, not have retirement as an option. Learn to avoid the pitfalls that will inevitably take you there, and start saving today. All this information is in my book, You Can Retire Sooner Than You Think , and there’s a reason it’s an Amazon best seller. Don’t just take my word for it, though - check out the book reviews on Amazon. You can also take my Money and Happiness Quiz at WesMoss.com to quickly learn if you are on track to be a happy or unhappy retiree.

Wes Moss, the Chief Investment Strategist for Wela, writes a weekly blog for AJC.com. You can find his original article here.

Your 401K - A Ballooning Explanation

Finance topics are to the masses as spiders are to arachnophobia. We just want to stay away from finance. Mainly because it’s too confusing and usually finance stuff is for grown ups… and none of us want to grow up! (I understand!)

Trying to simplify finance is similar to explaining art… because they are both abstract.

With this, I went to the drawing board and tried to draw out a finance topic relevant to many of us… the 401k.

After looking at my drawing, I realized how abstract art really is (and also why I am not an artist, and how much credit should be given to artists).

How I determined to explain a 401k will show just how abstract my drawing was, or maybe just how bad I misinterpreted my own piece of art. (At the bottom of this piece you will see my art come to life!)

Blowing up our savings

A lot can be learned from blowing up a balloon. We can learn a lot about a 401K when we take a look at the process of blowing up and ultimately deflating a balloon.

A balloon is filled with air, while a 401K is filled with mutual funds. To me, air and the makeup of the molecules is difficult to understand… I was awful in chemistry. Mutual funds can be just as difficult to understand to some, but these are what fill up a 401k.

They are investments that help the 401k grow. Check out this infographic on another investment, an ETF, which is very similar to a mutual fund.

If we were to just take one deep breath and try to fill up a balloon, we would be limited to how big the balloon would get. But if we got more people to provide one big breath, we could get an even bigger balloon.

The same can be true for a 401K. We are limited to the amount we can contribute each year, but we can get some additional money added by our employer. This helps our 401K get bigger, faster!

Deflating the balloon

It’s time for retirement. Blowing up the balloon has worn us out, so we stop; this is the same as retiring from the job we love.

Here is the catch.

We must live off the air from the balloon for the rest of our life.

We now have two options: pop the balloon and get all the air out at once, or pierce the balloon and take a little air out over a longer period of time.

When you pop the balloon you will capture the most air, but we will also lose a lot of air during the process. The air that is captured from the balloon must now be used for the rest of our life… ouch! The lost air really hurts us.

Needing money from a 401k is similar. We can take all of it out at once (we have to be 59.5 in order to not incur penalties). But one caveat… just like we were hurt with a lot of lost air in the balloon, we will be hurt with having to pay taxes on the entire amount! This will drastically decrease the amount that we have the ability to utilize for the rest of our life… not the best option.

Option two would be to pierce the balloon. Take small amounts of air out every year and then reseal (work with me here) the balloon.

With a 401k, we can do this and spread out the tax consequences, while letting the money stay within the 401k (which is tax advantageous). We can just take out what we need to live off of every year.

Don’t be a whippersnapper

I’ve experienced it multiple times and it sucks.

I am getting close to finishing blowing up a balloon and someone thinks it will be funny to pop your progress. I had come so far and to see it all pop in front of my eyes by a little whippersnapper is the worst!

Well, with a 401K we have the opportunity to be our own whippersnapper.

The money within a 401K can be taken out before 59.5… WAHOO! Hold on for one second. It comes at a cost. You must pay taxes on the entire amount and then also pay a 10% penalty.

By being foolish and looking to utilize the 401k (retirement funds) for current needs, you become that obnoxious whippersnapper. Young you will make old you very mad.

Don’t be the whippersnapper!

Oh, and about that image I drew… here it is

401K-drawing

 

 

Get Out Of Debt

We’ve all been there. Things get crazy in life, and you think, “Well, I’ll just put this on my credit card for now. It won’t take me too long to pay off.” Then expenses just seem to keep popping up, and it gets harder and harder to pay off your initial debt, and you may even keep adding to the pile.Well it’s time to stop this downward spiral, and get out of the debt trap. Below are several steps you can take to become debt free.

1)      Assess the situation

It’s time to sit down, and take a good hard look at all your expenses (not just your debt). Pull up your bank account(s), any debt that you have, and any reoccurring monthly expenses. Get all this information in front of you and your significant other. Now look and see exactly where your money is going. Create a T-chart with one side for income (what you’re actually taking home) and the other for required monthly payments. This should include expenses that you can’t adjust, like mortgage or rent, the electric bill, etc.

Subtract the expenses from the income and circle this number.  This is how much free cash flow (FCF) you have on a monthly basis.  We are going to use this to pay down debt along with enjoying life!

Reduce your circled number above (FCF) by your minimum debt payments.  Then start listing your “Nice To Have” expenses such as entertainment.  After reducing your FCF by minimum debt payments and entertainment.  Hopefully you end with a positive number, and your expenses don’t outweigh your income.

 

2)      Set realistic goals with a time frame

If there is money left after reducing FCF for “Nice To Have”s, we can put those funds to work paying off your debt.  If not, or if you would like to put more towards debt, cut excess:

For example, maybe you can cut your entertainment budget, and put some of that money towards paying off your credit card. It can be hard to cut back on things like going out to eat with friends, but you can always get creative when finding a way more budget friendly way to hang out, like hosting a potluck at home where everyone brings a dish.

Now that you know exactly how much you want to put towards your debt, figure out exactly how long it should take you to pay off your smallest debt amount outstanding. Once you’ve figured out these numbers, write it down. Congrats! You’ve set your first goal.

 

3)      Take action

Now, each month, you’ll know where to cut your expenses so you can put the money you’re able to save towards paying off your debt! Watch your progress as your debt shrinks. This can really help motivate you to continue paying it off, and keep your debt from feeling overwhelming.

Remember that if you miss one month, that it doesn’t mean you should miss the next month. Don’t beat yourself up if you didn’t reach your goal for one month. If you couldn’t make the full payment of your goal, try and make a partial, and if you can’t do that, just remind yourself that this is a marathon and not a sprint. Building debt takes time, and so does paying it off.

 

4)      Remember you are not alone

Most people are more motivated when they have a partner. Whether it’s at the gym or a group project at work, it can help to motivate you when you’re being held accountable to your goals. Wela wants to be your personal finance partner. Our debt tool will help you write out your goals, and help hold you accountable to paying off your debt. Don’t worry, Wela’s personal financial advisors have seen it all when it comes to debt, and we never judge.

You can sign up for your Wela account here to get started taking the above steps to start paying off your debt today.

 

Don't Miss This Dream!

You have worked hard today, it’s time to take a break. We all love to dream about all our fantasies coming true.  For women, it may be dinner with Brad Pitt.  For men, it may be Prom with Mila Kunis.  For me, it would be drinks with Jennifer Anniston… she just never ages!

Whatever it is, let’s dream together for a couple of seconds….

The Situation

In light of Mark Zuckerberg’s massive profits from stock options last year ($3.3 billion to be exact), let’s look at some houses that may tickle our fancy….

The List

5. Think Wimbledon, water park and New York… And you come up with this beauty in Southampton, NY.  It’s selling at a bit of a premium, but who doesn’t like grass tennis courts and sweet pools, live a little!  For a just over $43 million, you can have it!  http://bit.ly/SouthHampton

4. Here is 7.6 acres on a lake, with seclusion in New York!  Unheard of.  This beauty is a deal.  After a recent price cut of nearly $20 million, we can buy privacy for just over $49 million.  Along with the luscious acres of green grass, we get a wine cellar the size of our current house! http://bit.ly/SecludedNYC

3. We are going back, back to Cali.  Picture this:  sitting inside your house, with your walls, literally, open, sipping some Dom Pérignon, overlooking the Pacific Ocean!  Well, this beauty in Malibu, California allows for that and it only costs $54 million! http://bit.ly/BacktoCali

2. Maybe walls opening up to the Pacific wasn’t enough?  Well, with this special property, not only do living rooms open to the Pacific, you can play tennis while looking at the Pacific and your bedroom walls open up to the Pacific.  There is nothing like a little Pacific breeze to wake you up.  It’s only $3.5 million more than house number 3… might as well splurge! http://bit.ly/MalibuBaby

1. This one takes the cake!  Despite not having the ocean, this house wraps everything into one.  With this, you get seclusion like no other (basically have your own island), amazing views, nearly 51 acres to roam and 12 bedrooms, enough for your closest friends.  Oh, and you get a grass tennis court, pool and a rose garden overlooking, basically, your own lake.  All of this in Connecticut for $130 million! http://bit.ly/TakingtheCake

Reality makes me sick

Most of us are sitting here and looking at these homes only dreaming to one day be INVITED to one of them.  For Zuckerberg, with just what he earned in 2013, he could buy all five of our favorite spots and still have multiple billions to utilize to buy furniture, boats, tennis gear and whatever else he needed to make these places even more awesome!

That’s disgusting.

Well, for me at least, it’s back to reality.  I just woke up from my luxurious dream (slobber and all) and am back on Facebook… helping to feed the already giant beast!

I do have some more reachable dreams in reality, though. So real in fact, I’ve set goals to achieve them. YourWela.com now has a tool that after signing in through the Stack Up tool allows you to input your dream. Whether it’s a car or a down payment on a house, you just put in how much you need to save and the amount of time you have to reach your goal, and then it helps you track your progress.

If your goal is one of the houses above, I hope you either have a long time to achieve it, or the paycheck to reach it quickly!