Robert1958 – Page 30 – Personal Finance

November 22, 2018

DANGER OF DEBT

The disadvantages of being in debt

“The debtor is a slave to the lender.” Proverbs 22:7

Being in debt limits your options and opportunities in life! If you are in debt, you are chained to the borrower- in other words, you are your lender’s slave. Slavery as we know it was abolished a long time ago yet people are slaves in various ways and being in debt is one form which I am going to discuss here.

There are numerous disadvantages to borrowing money and being in debt and the main ones are;

1.When you use credit to make a purchase, you are spending more money on that purchase than the person who buys with their own money. In the long run, the difference between what you could have paid for stuff bought with your own money and what you actually paid for them with the interest added is quite substantial.

2.Being in debt limits your options in life! Someone with cash in the bank is able to travel to another town in search of work or has money invest or to purchase a household appliance which breaks down.

3.Being unable to meet the minimum payments required will affect your credit score or credit rating and credit card companies are likely to change the status of your card which will mean they charge you a higher interest rate in future.

4.Being stressed out over your debts can create health problems.

5.When you are in debt, you are setting a bad advantage to your children who then think that buying on credit and being in debt is normal.

The bottom line is “If you don’t have the money don’t buy it.” The crunch always comes when you have to pay the money back and for a lot of people that crunch comes with a life changing event such as a job loss, divorce, or death of a family member.

www.robertastewart.com

November 11, 2018November 20, 2018

CREDIT CARD DEBT

The peril’s of credit card debt

Credit is so easy to get and being in debt is so normalized that no one really blinks an eyelid if someone is up to their eyeballs in debt. In fact many of the books on finance contains a section on how to get out of debt. There is plenty of information on the internet explaining how to get out of debt but the question is, “Do you have the self-control and the determination to follow through with the advice?”

The first thing you need to do when you are in debt is seek help from a budget advisor or doing a google search on the subject.

Then you must cut up all of your credit cards and say “no more.” The next step is to figure out how you are going to repay the money. The sensible thing to do is to pay back the debt on the card with the highest interest rate and to make the minimum monthly payment on the rest. Once you have paid off one credit card pay off the next one with the highest interest rate.

Once you have paid off your debts then you can go about creating your financial portfolio-there is no point in having savings earning 5% per annum and at the same time paying say 15% interest on your debts.

The only exception to this rule is that if you are in New Zealand Kiwisaver and paid in at least $1040 per annum, you would receive $520 tax cret from the government which is the equivalent of receiving 50% per annum on an investment.

There is such a thing as good debt and bad debt! Good debt is when the value of what yoyu are borrowing the money for is increasing while bad debt is money borrowed for things which lose value over time-it is sometimes referred to as dumb debt.

An example of good debt would be to borrow money to purchase a house because the value of the house is likely to rise faster than the money borrowed against it and as more of the loan is paid back, you will have more equity in the home.

A bad debt would be borrowing for a motor vehicle because the value of the purchase declines over time and in so many cases, the money owing on the car is more than the value of the car.

An instance of stupidity is to borrow money to fund an overseas holiday because there is nothing to show for the debt.

Many people get in debt in order to purchase stuff they do not need, to impress people they do no like with money to do not have! Its all about maintaining a self image and keeping up appearances.

For sound money manager’s, the rule is “If you don’t have the money you don’t buy it.”

I have an ebook avalable called “Credit Score Magic” and you can get it here;

www.robertastewart.com

November 4, 2018

ATTITUDE IS EVERYTHING

Attitude is a key quality

If there is one quality that can help you in life more than any other it is attitude; a good one will take you further than a bad one.

Read this story of two men who entered a new town;

“The first man arrived at a new town and asked the wise man at the entrance, “What are the people like in this town?”

The wise man asked the visitor, “What were the people like in the town you just came from?”

He answered, “Oh they are back-stabbers, they gossip about you, they are unfriendly, and won’t do anything for you and are hard to get along with.”

The wise man replied, “You won’t like this town either because the people here are just the same as that you described.”

The second visitor arrived at the same town as the first man and asked the wise man at the entrance, “What are the people like in this town?”

The wise man asked, “What were the people like in the town you just came from?”

The second visitor, who came from the same town as the first man, answered,”The folks in that town were really good, they looked after one another, They would bend over backwards to help even a stranger, They are a really friendly bunch of people.”

The wise man replied, “Then you will really enjoy this town because the people here are just the same as the town where you came from.”

Notice the vast differences in attitudes between the two men? In all kinds of situations attitude is important, whether it is playing sport, at work, in church, or at home. It is a fact that some people like the first man in this story are always mouthing off at something or somebody and it never occurs to them that there is a common denomonator in all of these situations. If they have a problem with their bank then instead of dealing with it they jump ship and sign up with another bank. They are the same when it comes to relationships. Their negative attitude can be catching if you spend too much time with these people.

At the end of the day, having a good attitude will stand you in good stead and that is something that “you” and “you” alone are responsible for.

www.robertastewart.com

October 29, 2018

STORY OF THE DONKEY

The moral of this story?

There was an old man, his grandson leading a donkey to town and while they were on their way they came across someone who said to them;

“Why don’t you both just ride the donkey? It will save your legs.”

So the old man and his grandson both got on the donkey’s back and continued on their way but further down the road, some one said;

“Hey look at those two people sitting on the poor donkey. Someone should report therm to the S.P.C.A.” (Society for the prevention of cruelty to animals)

So the grandson said to his grandad, “I will get off and lead the donkey and you can ride it.”

But further down the road, a passerby saw this and said, “Thats not good, the poor lad walking while the old man is riding the donkey, I should report the man to C.Y.F.S.” (Child, youth, and family)

So the old man got off the donkey and told the lad to hop on the donkey’s back but further down the road someone saw this and said, “Look at that, an old man walking while the boy is sitting on the donkey.” “The young these days.” that person said.

So the old man got off the donkey and both the old man and his grandson walked along the road leading the donkey as they had done so as the originally set off on their journey.

What is the moral of this story? Other people can take away your power to think for yourself if you allow them to. Everyone has choices that they have and it is up to their discernment to make the right choices. Unfortunately there are some people who think that your life should be a carbon copy of theirs and cannot accept other people’s point of view especially if it differs from theirs. Family members can be the worst offenders in this regard.

Then there are those who don’t want to make their own choices for fear of making a wrong choice for fear of making a mistake so what they do is ask someone for their opinion on something hoping that it will line up with what they want and if they are told what they want to hear they will have someone to blame.

www.robertastewart.com

October 25, 2018

Kiwisavers losing out.

Kiwisaver’s missing out of $thousands$

15% of those in kiwisaver are not making the most of kiwisaver and are missing out on thousands when it comes time to reap their harvest. That is because they are in default kiwisaver funds. What this means is that when you join the kiwisaver scheme you nominate which fund to join, growth, balance, or conservative but if you do not nominate wich fund to join then one will be chosen for you and that is always a conservative fund which has a return of 5% compared to 7%+ for other funds.

It is also important not to chop and change funds according to market conditions. Otherwise it can cost you in the long term.

The following table will give you an example of how much you could be missing out by not getting the most out of your savings.

Amount in kiwisaver 5% return 7% return

10,000 $500 $700

20,000 $1000 $1400

30,000 $1500 $2,100

40,000 $2000 $2,800

50,000 $2,500 $3,500

This difference takes place every single year so that by the time you reach retirement age the differences between how much you could have saved and how much you will actually get will be quite huge. There lies the beauty of compounding interest because your money has earned a return and this money is also working for you.

www.robertastewart.com

October 16, 2018

5-steps to setting goals

5-Steps to setting financial goals

Setting goals can motivate you and help you achieve your goals but before are able to set any goals you must know what you want. This is the first step to setting your goals. Unless you know where you want to go how are you going to know when you have arrived? It would be similar to purchasing a travel ticket without specifying a destination and of course the person at the travel agent will be unable to help you. Unless you know where you are going how will you ever know when you have arrived? The first step to setting goals is “Having goals.”

Step one-Knowing what you want

Knowing what you want or at least setting a goal to achieve something because it is something you think you want is all very fine but you have to know why you want to achieve something; in other words “What motivates you to want that something?” Before you can answer that question you really need to ask yourself this one “What gets you up in the morning?”

Step two-Knowing what motivates you

Knowing what you are capable of doing is an simple as giving it a go. People often short change themselves by setting goals that are not challenging. They stay close to their comfort zone and never venture away from their own well-worn beaten track and stay within their own self-imposed limitations. To achieve anything worthwhile means you have to take risks and that means you make mistakes occasionally but “He or she who never made a mistake never made anything.”

Step three-Knowing your capabilities

There will be lots of people willing to give you advice but you have a choice whether or not to accept it. Problem is there are so many people who will expect you be be a carbon copy of themselves. Such people will tell you what you can and cannot do and place limitations on you. Sadly, they will criticize you for not doing anything with your life and then once you come out of your shell they will be the first ones to point the finger at you for your mistakes. Best thing to do is spend less time with such people, there are kind people out there who will encourage you in your endeavors.

Step four-Knowing who to listen to

This sounds obvious but you must take action in order to get anywhere in life. Your life will not progress unless you take some type of action but this should be actions that lead to your objectives. Some folk make the mistake of taking actions which are not compatible with their goals and so after a while they have gone back into their old ways. If you have no vision then you will return to the past.

Step five-Take action

www.robertastewart.com

October 11, 2018

MESSAGE TO INVESTORS-“Don’t Panic.”

Important not to panic during sharemarket drop

It is important not to panic when the markets are falling as has been the case recently. Whether you have a grand or two in shares or have 1000s invested in the sharemarket, it is best to ride it out the storm and just let the markets bounce back in your favour as no doubt they will. That is if you had followed the basic rules of investing.

The most important rule is to never invest in the markets money which you cannot afford to lose. If you are saving for a house then the sharemarket is not the place to invest your money-you should instead go for more conservative investments. The worst thing that can happen if you had invested your house deposit money in the sharemarket is to find that the value of your investment is reduced when it comes time to withdrawing your money.

If on the other hand you were investing for your retirement then you can afford to take risks as this is a long term investment and you will be able to take advantage of the gains in the market which for decades have outweighed the falls. Some financial advisors would tell you to scale back to more conservative funds the closer you are to retirement but that all depends on how soon after retirement you actually need the money. This is particularly relevant for those with kiwisaver accounts (NZ retirement savings scheme). (Not necessarily applicable in your own country).

It is also important to diversify your investing so that your risk is spread out over several companies and industries. If you have the means to play the market directly then this is the most important rule to follow. It will help you to withstand a sharemarket down turn better because some companies fare better than others during an economic downturn.

This week’s sharemarket down turn is a timely reminder to exercise commonsense when investing money by not placing all of your eggs in the one basket and to ride out the storm.

This article is not intended as financial advice but rather is the sole opinion of the writer.

Bob

www.robertastewart.com

October 8, 2018October 8, 2018

Taking a punt on the Melbourne cup

Melbourne cup clues that count

There are quite a number of systems for selecting the Melbourne Cup winner using past statistics but in recent years winners of the famous race have taken random routes on their way to cup victory. There does not seem to be a set pattern as far as which leadup races to use as a guide to finding the winner of the Flemington’s famous race. Take a look at the recent winners and you will see what I mean;

2017 winner Rekindling’s last race before the Melbourne Cup was the English St Leger in September. He became the first horse since Irish raider Vintage Crop in 1993 to have won the race on his Australian debut. About 100 other horses had tried to emulate Vintage Crop’s success in winning the Melbourne Cup on their Australian debut since but none had suceeded prior to Rekindling although many had gone close to it. Many Melbourne Cup systems eliminate horses making their Australian debuts and therefore did not select the 2017 winner.

2016 winner Almandin had won the Bart Cummings Stakes on the first Saturday of October at his last race. I’m not sure what the race was called previously but whatever it was it has not featured as a leadup race in any previous Melbourne Cup winner since the 1980s, possibly longer than that.

2015 winner Prince of Penzance finished 2nd, beaten by half-a-length in the Moonee Valley Cup at his final outing prior to winning the Cup. The last time a Melbourne Cup winner started in the Moonee Valley Cup prior to their Melbourne Cup success was in the 1980s.

2014 winner Protectionist started in the Herbert Power Stakes at his previous start prior to winning the Flemington feature. The Herbert Power Stakes had not featured as a leadup race among Melbourne Cup winners since the 1980s, maybe longer than that.

Based on all of this, who knows which route this year’s Melbourne Cup winner will take so it would pay to focus only on those factors which count. One factor that seems to stay constant is that the majority of Melbourne Cup winners will be among the first 4-6 favourites and because the field is often quite open, you can get odds of around 5-1 on the favourite. Backing each-way may be the way to go as you will get a good each way price if your horse finishes second or third, even fourth if you are betting with the British bookies. The place portion of youer bet can save you if a longshot blows punters away as was the case in 2015 when 100-1 outsider Prince of Penzance was successful.

Many punters will get greedy and tery to win the trifecta or first four. The odds of winning one of these types of bets are stacked against punters, the huge dividends only mean that thousands of punters are putting their money into the pool with only a few taking out so my advice is to forget them.

I have an ebook with all of the stats + Melbourne Cup systems to try and you can purchase a copy here for just $10 NZ

www.melbournecupmethod.wordpress.com

September 30, 2018September 30, 2018

WORD OF WARNING FOR BITCOIN PLAYERS

New Zealand man caught in a bitcoin scam

Investing your hard earned savings requires commonsense but greed often interferes with a person’s sound judgement and this was evident when a Christchurch man lost his life savings of some 300 grand in what was described by police as a bitcoin scam as reported in the Christchurch press.

The number one rule of investing is to NEVER place all of your eggs in the one basket. Whatever possessed someone with this amount of money to do this? I mean you do not accumulate that amount of money without a certain degree of intelligence. It just goes to show that intelligence is not the same thing as wisdom.

The other rule that was broken was “NEVER purchase bitcoins with money you cannot afford to lose.” If you are going to play the cryptocurrency market then play it with discretionary money; this is money you may have otherwise spent on holidays and travel, or other things that are nice to have but not necessary and that really is a question of knowing the difference between needs and wants.

It appears that both rules were broken by this hapless investor who contacted police to warn others of his loss and pitfalls involving bitcoin.

The investor claimed that as he invested money in bitcoin, his wallet (a crypto currency term) grew larger and he invested more but when the value of his bitcoins shrunk due to the volatile nature of cryptocurrency, he invested more and more money. Someone from the website where he had invested his money kept phoning him and pressured him to invest more. The investor regrets having sent the bitcoin exchange his private details.

The lesson here is to NEVER feel pressured to invest money into any scheme-if you do, tell the other person, “I will speak to my financial advisor first.”

One common denomonator of scams is that they do not want you to discus the matter with anyone else so telling the other person you are going to talk to others about this will test them out.

Three things about bitcoin to keep in mind are;

1-They are highly volatile which means their value can move up and down very quickly. It is important this; “When there is the chance for capital growth-there is also the chance for capital loss,” and this applies to other investments such as the sharemarket, property, coins, or cryptocurrency.

2-Crypto currencies are not regulated in many countries and that includes New Zealand and therefore you have no protection if your investment turns to custard as a result of fraud.

3-Crypto Currency websites are being targeted by internet hackers who will attempt to steal from the wallets of others.

I have an ebook about investing in bitcoin which will help you understand the various aspects of this form of investment if you would like to call it that and you can order it here;

www.robertastewart.com

September 16, 2018

Goal-setting strategies

Strategies for goal setting

“Run the race in such as way as to attain the goal.” Philippians 3:16

There are a number of strategies you can use to motivate yourself to achieve your goals. It is all about what works for you for what may work for one person may not necessarily work for someone else.

It is in the sporting arena that you will see goal setting quite common. A lot of sports people will tell you that theyu do not intentionally go out to break records, it just happens but then a lot of them do use strategies to motivate themselves.

Athletics and fun runs/road races have been my sports in the past. I remember one 10k road race I did where I felt rather lethargic during the first half of the race-this was at the Isle of Bute Highland Games at Rothesay in Scotland in 2011. At the half-way point, I decided to challenge myself to see how many other runners I can overtake during the rest of the race. I manage to pass 22 runners.

As an athlete or rather a former athlete, I know that satisfaction of reaching one’s goals whether that be running a personal best or just completing the race. To me it all depends on the circumstances. I have come back from serious muscle strains which have put me out of action for over a year and on my first race back I may set myself a target of just completing the race and as my fitness increases my goals will be more demanding.

It is important to keep in mind that you are running your race and you should not allow others to determine how you are going to run it. No one can run your race for you. It is all well and good to take advice but you must still take responsibility for how you are running this race we call life. Once again I will use a race I competed in as an example.

It was 1998 when I competed in a vets 1500m race in Aberdeen. There were just four of us in the race and according to the form book I was expected to finish third. Two of the entrants beat me in a 1500m race a month earlier. On that occasion they ran past me in the last 200m. On this occasion I was confident of causing a surprise as I was a lot fitter and was in that zone but I knew I would have to make sure the pace was strong because if it was a slow pace and a sprint home then I was done as the other three were faster than I was.

Prior to the race, One of them asked me how I was expecting to go, I replied, “I’m just going to play it by ear” but I knew exactly how I was going to run the race.

“On your marks, set, bang.”

The race was under way and I dropped back to last place waiting to see if any of the others will set a strong pace but I was cruising with such a slow pace being set and it stayed the same for the first 400m and I decided that I will have to set a stronger place but waited until we reached the straight so as not to cover any extra ground then I looped the field and took over with about 900m to run and gradually increased the pace. This continued for a lap and as we reached the “bell” lap I was full of running that I really make sure that never left anything on the track and opened up a lead on the others. At the 200m mark I still had lots to give but heard footsteps behind me but dare not look back and in the last 100m I had my eyes fixed firmly on the tape and crossed the line in front. I felt so good that I could have gone another lap.

This is a good example of running your race in such a way as to win the prize. Life is like that, you have to run your own race as not all of us have the same calling.

It is important to start small when setting your goals and then when you have accomplished your goal set yourself a more challenging task.

My old headmaster at primary school told us of how a runner started from scratch. In those days there were telephone poles along the road and as the headmaster was saying, this runner jogged to one telegraph pole then walked to next one, jogged to one telegraph pole then walked to the next one etc. after a week or so, he jogged to two telegraph poles and walked to the next one etc. After a week or so, he jogged to three telegraph poles then walked to the next one etc. After a period of time, he was fit enough to jog the entire distance without stopping to walk.

Your personal goals and where you are at in terms of fitness and health will determine what your goals are if you decide to take up running.

You have to be realistic and start from whatever position you are in but at the same time not fall into the trap of believing that your circumstances are your lot in life. The same headmaster who told us about the telegraph pole training method also said there is no point in doing all of your training on the one-day and not train for the other six days of the week because you will be stiff and sore for days the next day. It is best to take your time and do a little each day.

A lot of people set a goal to give up smoking on 1st January and for those people these next two stories may give you some encouragement.

Years ago a lady told us how she was a 70 cigarette a day smoker. She cut down on cigarettes by one smoke day day so that after the 70th day she had finally given then up and has been a non-smoker ever since.

A girl I worked with in Aberdeen told us that her nan had given up smoking and had put the money she would have otherwise spent on cigarettes and had bought an item of furniture once she had saved enough. My colleague told us that her nan can see all of the stuff she had bought with money that she would have previously spent on cigarettes.

People use different kind of strategies to motivate themselves to achieve their goals and it is what works for you that counts.

Happy goal-setting

Bob