Personal Finance for People Who Hate Personal Finance: A Jargon-Free, Stress-Free Approach to Managing Your Finances

By Gregory Bresiger

A jargon-free, stress-free approach to managing your finances.

Some of the top writers in Personal Finance have contributed to this eBook, including my business partner, Gregory Bresiger (who's articles have appeared in the New York Business Post. He has also been a writer for Financial Advisor Magazine and Financial Planner Magazine)

This book will help you easily understand the complexities of finance. No matter your age, background or financial situation, we guarantee that your financial goals will seem closer to reality after reading this eBook.

• Language: English
• Publisher: eBookIt.com
• Release date: Apr 26, 2016
• ISBN: 9781456606923

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INTRODUCTION

By Liam Judge

Personal Finance is a daunting subject for the first-time investor. Part of the problem is that there are so many choices. Indeed, someone starting in personal finance, with little in the way of experience, can quickly be overwhelmed.

And in these rocky times, a time of roller coaster markets, things can be difficult for those just starting out.

Still, inexperience with the subject isn't the only reason for this book. For many of my elders, the fabled Baby Boomers, personal finance isn't exactly beer and skittles.

That brings me to the reason why my baby boomer business partner, Gregory Bresiger, and I have written this book: Our goal is to provide help to those needing vital personal finance guidance. Our aim is to give easy access to the meat and potatoes of Personal Finance.

The book is also designed to bring selected articles from some of the top Personal Finance writers. We have also added some of our own pieces in order to keep the work up-to-date.

More importantly, the book is designed to be simple.

We have written it in a style that will help someone just starting out put together a portfolio of investments and make commonsense decisions about money, which, unfortunately, doesn’t come with instructions.

The book can also help someone who has always wanted to start a savings and investing plan but was intimidated by the jargon.

This is a book that you will return to again and again, no matter your stage of life. So whether you're a newbie to Personal Finance or just looking to take your finances to the next level, we promise that you will benefit from this information product.

And now here is a bit about ourselves. I am a 26 year old entrepreneur/information publisher from County Tyrone, one of the six counties of Northern Ireland. In my free time, I like going to music concerts and watching live NASCAR races on TV.

My 59 year-old business partner Gregory Bresiger is a career business writer from Kew Gardens, Queens. By the way, Queens is a middle class section of New York City where Archie Bunker lived.

Gregory loves Beethoven and baseball, a curious combination. But then Gregory is a curious guy.

We thank you for your interest and hope you enjoy the book.

SECTION 1: SMART SPENDING & SAVING

CHAPTER 1

SPEND WISELY

The Holy Grail of Financial Health. Do you want

$3.4 million? Then read on.

By Gregory Bresiger

If you're a serious sports fan, you can understand one of the key principles of personal finance. As a fan you probably have come to the conclusion that offense, scoring, is the sexy part of almost every game.

People come to the park to see home runs or goals or touchdowns. Not nearly as many people relish defense. Defense, preventing runs or goals, is not the exciting part of the game for the casual fan.

Yet it is the most important reason why most teams win championships while other teams score a lot but never seem to get the brass ring. Serious fans understand the difference between what is exciting and what is critical.

The same distinction operates in personal finance.

Making money is exciting. But most people seem to think the goal of financial independence is achieved once one starts making good money.

Then, many people mistakenly believe, one can spend as one likes without regard to commonsense or an understanding that the good times in everything we do, including our prime earning years, usually come to an end much sooner than we expect.

You Got It Made! No, You Don't!

Good incomes often get eaten up in the course of decades of reckless spending. This leaves many people, once their prime earning years end, in a financial mess they never escape. Sometimes people are in a financial mess even in the middle of their prime earning years.

Some people with high incomes can and have ended up filing for bankruptcy or living out their last years in a reduced lifestyle.

By contrast, many people of modest incomes who learn personal finance defense at an early age can end up financially independent. That's despite never having a great income.

How? They were able to save and invest on a regular basis thanks to their commonsense spending and saving practices (For more on the latter, please see the retirement saving chapters).

Therefore, they were able to use the compounding effect to their benefit over long periods. The compounding effect is when credit or debit balances get big enough that interest starts to generate interest.

Do you want this effect working for or against you? The answer is obvious, but it is how you actually run your financial life that matters most.

Buffett or Trump?

Compounding is the technique used by credit cards to make money from clients, who are often told they only need to pay the minimum. It's also why Warren Buffett, starting out as a middle class person without any big salary, eventually became a billionaire. And despite his incredible wealth, Buffett still has a waste- not-want-not money mindset.

Indeed, billionaire Buffett continues to live in the same modest home in Omaha, Nebraska that he bought back in the 1950s. He still loves eating McDonald’s hamburgers and drinking Coke.

By contrast, Donald Trump came from a rich family in a ritzy neighborhood of New York called Jamaica Estates. He urges people to spend and think big.

Yet he is worth a fraction of what Buffett has. Trump's free spending ways, by his own admission in his book Trump: Surviving at the Top, nearly pushed him into bankruptcy.

Indeed, in his book, he admitted that at one time he had a net worth that was less than that of a homeless person.

However, the Buffett live sensibly & don't waste money philosophy is why some people usually achieve their goals and have lives free of financial stress.

This is one of the messages of Thomas Stanley's interesting book, The Millionaire Next Door.

Stanley writes that Being frugal is the cornerstone of wealth building.

Yet frequently the big spenders are promoted and sensationalized by the popular press, Stanley writes. His work examined how people became wealthy. Before anything else, they learned how to play defense at an early age and continued those habits throughout successful financial lives.

This frugal philosophy doesn't mean a person lives without some of the pleasures of life. It merely means that he or she obtains them gradually within a budget.

It also means the person knows exactly how something will be paid for without resorting to credit or other gimmicks that lead one to enjoy something now, but ultimately pay a higher price over the long term.

These financial sleights of hand remind one of the fiscal scams of governments. So often governments of all kinds promise too much, and then debase the currency, using inflation to legally steal the property of average Joes through higher prices for goods and services.

On the other hand, the sensible frugal philosophy also allows the person to have the peace of mind that comes from knowing that a purchase is not frivolous; that it will not hamstring a budget for years to come and that there is cash to pay for it.

Think of the millions of Americans now in trouble who bought huge homes in the last ten years when smaller ones would have better fit their budgets.

Think of former Tonight Show second banana Ed McMahon, who recently died broke. How could that have happened? In his wildly successful career, Ed McMahon probably made $100 million or more. Yet, toward the end of his life, when he bought his last house, instead of buying a mere $500,000 home, he opted for a super deluxe $5 million property in a private complex.

The obvious happened. Financial disaster followed for a talented man who never should have had to worry for a minute about his finances.

The Problem

Let me give an example of how this frugal philosophy idea can be applied. I live in New York City. It is a monster metropolis that is jammed with cars, which are heavily taxed by the city and state.

This city has tons of mass transit. It is badly run by a state agency. But trains or buses are still available in almost every neighborhood. Still, many people of middle or modest incomes, who don't really need a car, own one or two.

Are these people likely to achieve financial independence anytime soon or even in 20 or 30 years? Unlikely. Let's examine why.

First, given car payments, interest on the payments, maintenance, tolls, insurance and myriad other costs; let us assume that one pays $12 thousand a year in total car costs. That's quite a bundle for someone living in a place like New York City, where an average annual household income is $45,000 to $50,000.

So that means about 27 percent of one's pre-tax