Category: Personal Finance

Financial Considerations for High-Income, High-Debt Professionals

Doctors, lawyers and other highly-trained professionals often have their sights on lucrative salaries once they complete their courses of study – but many are also saddled with a less pleasant graduation gift: outstanding student loans. For those who’ve landed a well-paying job in their desired fields, the dual reality of commanding a big salary while being encumbered with debt can lead to financial mistakes. But, as with many complexities in life, having a plan in place can help.

If you find yourself in the camp of high-income, high-debt professionals, consider the following four steps to manage your finances, pay down your obligations and pave the way to a confident financial future.

1. Spend wisely

The income you earn today may seem staggering compared to what you were accustomed to in the years before receiving your degree. Before you increase your spending, it’s important to take a step back and consider how to tackle multiple financial goals at once. Start by earmarking part of each paycheck for your future goals. Knowing you have dedicated savings for future purchases like a new home or sending your kids to college can help you have confidence in your everyday finances – including an occasional splurge. However, until you have your other debts paid off or dramatically reduced, it may not be prudent to take on a large mortgage or a loan for an expensive vehicle.

2. Manage your debt effectively

Keep up on student debt and if you can, consider accelerating your payments. Paying extra will not help you eliminate the debt sooner, but will reduce the total amount you pay in interest. Refinancing the debt to ease your monthly payment schedule may be an option, but given your likely cash flow, it may not be necessary. If you have accrued other debts such as car loans or credit card borrowing, repay them as quickly as possible. Make it a priority to reduce the impact that debt has on your monthly budget.

3. Start saving for retirement

A good rule of thumb for any young professional is to try to save 10 percent (and more, if possible) of their income in accounts designed to build wealth for the long run. While the idea of retirement may seem a lifetime away, starting to accumulate money in a retirement account as soon as possible can be especially effective. Those who begin saving for retirement in their 20s or early 30s can most effectively leverage the power of compounding interest. At this age, you have time on your side and the ability for your investments to grow over the decades to come.

4. Keep it all in perspective

You’ve worked hard to get where you are, and earning a big paycheck is a justifiable reward. Your professional and financial journey is just beginning, so treat your financial life as a marathon, not a sprint. At the very least, focus on living within your means. To the extent you are able, try to live even more modestly with the goal of paying down debts as quickly as possible. You never know what the future holds and what opportunities may arise. Your income level could change, either by your own choice or due to unavoidable circumstances. Take advantage of your good fortune today to strengthen your financial future.


5.5 Steps on How to Save for Your Big Play

What is the Big Play? The big play is that investment that gets you excited and it’s a little scary. It’s almost a sure thing when you pull the trigger. Now by saying a sure thing I mean you did the proper research on your investment. You know the risk and the reward. You have contingency plans on how to protect your investment and you are not speculating or gambling.

The problem with the big play is that most people don’t prepare for it. They do not have the funds or access to the financial resources for the big deal. The deal of a lifetime happens every week for those who can act on it. Deals are like money. They go to the people who pay the most attention to it. Are you ready to save for Your Big Play?

Playing Too Small

People are playing too small. They never invest enough for the big payoff. When you invest pennies and nickels you usually get a return of pennies and nickels. Small investment = small return. Large investment = big payoff.

“People never create wealth because they never invest enough in a deal to get a big payoff”. – Grant Cardone

People don’t create wealth because they don’t invest large enough into a deal to get a huge payoff. Creating wealth requires a surplus of cash and confidence. Sure you can create wealth over a long period of time with small consistent investments. You have seen the graphs of how your money can grow with compound interest. But I am talking about creating wealth now.

$100k Your First Target

Grant Cardone says you should save $100k before you make your first big play investment. Now he is not set in stone on that figure but that is a target most people can achieve with discipline.

Furthermore, to save that much you have to find ways to increase your income and it gives you time to study income-producing investments. Also with that time and discipline, other opportunities will open up for you.

5.5 Steps to Saving for your Big Play

1. Write Out Your Plan – Money gets bored and goes to the person who pays attention to it. Write out a plan on why you are saving for your big play and what you will invest in. If you don’t have an investment idea yet that is OK. It’s important that you make a commitment on paper that this money is for wealth creation only.

Money with no plans magically vanishes. You have experienced this before. Whenever you had extra money lying around it went quickly. The pizza man got it, you had to go to the new restaurant, a family member was suddenly in need, the kids needed stuff, and well… life just happened. Commit in writing how the money will be used.

2. Increase your income – You will never get wealthy without increasing your income. People miss this point. They start to save, cut back on their expenses, and pay off their debt. But they never intentionally increase their current income. Dave Ramsey, the creator of Financial Peace University says, “Income is your key to wealth”. The more you can increase your current income the more you can save.

Look for opportunities to increase your income at your current job. Can you generate more tips? Are their bonuses you are missing out on? Can you perform other duties? Could you bring in more customers? Is overtime available? Can you get paid on referrals? How about getting a second job?

3. Cut Expenses – Another way to create surpluses of cash is to come up with a monthly budget and cut all the expense that is holding you back. Go through your monthly bank and credit card statements. There is crap on there that you didn’t need to buy. Cut back to the bare minimum. Don’t go into any more debt. Certainly, if your spending is out of control. Go get help. Understand there is hidden money in your monthly spending. Go get it.

4. Open Up A Sacred Account – This is an important step. Open up a high-interest savings account. This is the start of your savings plan. I recommend an online bank with a limited number of transactions per month. Importantly, an account where it takes a couple of days to get your money. Limited access will curb your impulses.

Give your sacred accounts names also. This makes it real and personal. I call my sacred accounts The Big Play, The Big Dividend, and Sweet Jesus. These accounts are sacred. You don’t ruin sacred ground. Once your money goes in that’s where it stays until you are ready to invest.

Understand emergencies happen. The temptation will entice you to dip into your sacred accounts. Opportunities will arise that will be calling for your money. This is why you have a written plan to keep you on point. Don’t dip into your sacred accounts. They are off limits.

5. Decide on how much you will save each month – I teach my students to come up with a monthly budget that they can live upon. Then we put all the extra money into those sacred accounts. We Save It All. Income spikes, income surges, raises, bonuses, and extra windfalls. Save It All! This is not the time to buy shiny objects.

Increased income goes into the sacred accounts too. This is why you have created a budget. All the extra money from eliminating spending and increased income will grow quickly. I have seen students who cut $1k a month from their spending and add it to their sacred accounts.

5.5 Earn and Learn – IDEA + HARD WORK x TIME + DISCIPLINE = SUCCESS. This is the success formula. Use it to build your sacred accounts for your Big Play. Learn while you earn. Study investments, read books, go to seminars, and prepare yourself for Your Big Play.

Charles Fitzgerald Butler, is an author, entrepreneur, and expert in internet marketing. Charles has a passion for helping people start and run successful home businesses. You can partner with Charles and start building multiple income streams from your home. Charles’ goal is to help all who partner with him achieve cash flow and profits from their business.


How To Earn a Pretty Profit With Diamond Investing

People who are looking to invest and make money often do so by heading to the stock market. There is a definite risk in going that route, especially in recent years when the markets have been so volatile. If it’s a safer way to profits that you are looking for, investing in diamonds is the way to go. Investing in diamond is an excellent way to recover market losses, while also creating profits that are then available for other investing opportunities.When investing, you are essentially using your money to try and gain profits without any undue influence from the people or companies in which you are investing. There are definite terms and conditions in place in each transaction, which may differ in each investment. It is the type of work called for in the investment that plays a role in the agreement or contract set forth by the individual or company.

Let’s now take a moment to talk about how your investments are affected when a company starts to suffer losses. Companies seeking money from investors usually do so when they are in a tight financial spot that requires them to seek financial help. They turn to the general public when looking for that financial assistance. In these types of situations, the investments made are often in the form of shares, investment bonds, or debentures, with the investor receiving a share of profits if the financial tide turns for the company. These investments are a loan of sorts, with the advantage to the company being that they do not need to pay interest. Each investor, or shareholder, receives dividends and profit share that is dependent on the type of contract signed at the time of the investment. In the case of diamond investing, the investor receives a diamond in return for giving money to the company. They do not receive any interest or profits from the company after that transaction, but they are free to sell the diamond for a profit when the value of diamonds on the open market is on the rise.

One of the great benefits of owning a diamond, besides the status and luxury of the gem, is that it will never see its value decrease, even in cases where the demand for diamonds decreases during a particular period. The supply and demand elements that so often drive the stock market are simply not in play with diamonds, making this investment one where you simply cannot lose. Given the status and luxury of diamonds, which are very often held by kings and queens of many different countries, your investment will be one that is very wise indeed.

The diamond market never experiences a decrease in value. One thing to be aware of is that there are two kinds of diamonds out there: miners across the world dig for natural diamonds, but there are also some synthetic varieties that are hand-made in a laboratory, with the synthetic diamonds often on the market alongside the natural stones, which can help drive inflation. Diamond companies fall under the category of either a public or private limited company, with that distinction usually dependent upon the part of the world where the company resides. Some companies also fall into the semi-government category, which is where the company is owned in part by the government and in part by the residents of the country.