October 19, 2005

Long-Term Financial Plan

Lately I've been working on creating a comprehensive long-term financial plan. As much as I think and learn about personal finance, I have yet to put all of my goals and plans down in one place. So I thought I'd do it here, and maybe we can learn something from each other.

If you have something to share -- if I may have forgotten an important goal, or step, or if there perhaps is a better way to accomplish something -- feel free to jump into the discussion with a comment below. If you don't know your long-term financial plan, do this along with me!

I'm going to break this up into steps, and share each one with you as I tackle it. I'll do step 1 today, and link up to the other ones so you'll know when they're done. Here are the steps as I see them:

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Posted by Frank at 8:07 AM | Comments (10) | TrackBack

October 17, 2005

Inflation Calculator

With all the talk about interest rates and immense savings growth over time, it's important be conscious of the effect that inflation will have on your money.

Inflation is the (generally) slow but steady increase in the price of goods and services that is caused by an increasing supply of money. Or you could think of inflation as a steady decrease in the value of money. The bottom line: a dollar just ain't what it used to be.

Calculate the Inflation Effect

This calculator will tell you what your dollar will be worth in the future, as well as how much money it's going to take to equal today's value of that dollar. It's something to remember when you're planning how much money you might need for important future purchases and plans.

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Posted by Frank at 8:43 AM | TrackBack

October 13, 2005

What is Your Net Worth?

You know that the most important measure of financial health is net worth. So how do you figure out what yours is? It's actually pretty easy.

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Posted by Frank at 8:32 AM | Comments (2) | TrackBack

October 11, 2005

What is Rich?

I have a problem with surveys that determine the richest people in the world, or in a country, based on their income. After all, it's not how much you make, it's how much you have. Would you rather make $50,000 and have a million dollars in the bank, or make $200,000 and be a million dollars in debt? Some people would say the person who makes $200,000 is four times as wealthy. That's what those surveys say. I say that's bull.

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Posted by Frank at 8:15 AM | Comments (10) | TrackBack

October 3, 2005

The Importance of Regular Savings

Over time, I have realized that without certain good habits in place, my finances quickly get out of order. Perhaps the most important habit that I have learned is regular savings.

Regularly contriubting to savings account is important on several levels. Of course, it's good to have an emergency fund available for any of the countless situations for which you would need extra cash. And it's also important to save for planned major expenses, like a house or college. But there are other, more subtle reasons to build your savings account.

For example, it wasn't until I had saved a certain amount of money that I started really paying attention to things like interest rates. That led to a deeper understanding of things like compound interest. I also started educating myself about things like retirement accounts and investing in stocks and mutual funds. When you have savings, these things suddenly affect you. You have motivation to learn something that you never would have before, and that feeds into the desire to save even more. It's a positive self-feeding cycle.

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