Mastering Money The S.M.A.R.T Way Lesson 2

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Welcome To The Course, Mastering Money The S.M.A.R.T Way Without Working Any Harder!

 

Lesson #2

 

SPEND WISELY AND AVOID EXPENSIVE CONSUMER DEBT

 

In this module, we are going to learn how to spend wisely and avoid consumer debt.

 

Earn more than you spend.

 

“Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery”.

Charles Dickens, David Copperfield

 

Spending wisely means living within your budget, buying the things you really need and not indiscriminately shopping for things you want.

 

For instance, you need basic necessities such as food, utilities and a roof over your head, but do you really need Netflix?

 

Consumer debt

 

“Borrowing money at 18% to buy consumer goods is dumb”

Warren Buffett

 

The legendary investor Warren Buffett, whose Berkshire Hathaway company owns banks and credit card companies, actually warned investors against carrying a credit card balance!

 

Millions of Brits and Americans carry a permanent balance on their credit card – before the covid crisis, 110 million American had credit card debt paying a crippling average rate of 16%.

 

“You can’t go through life borrowing money at those rates and be better off,” Buffett added.

 

Buffett said that an old friend of his who came into some money and asked his advice on what to do with it. He asked if she had credit card debt. She said she did, and was paying an interest rate of about 18%.

 

“If I owed any money at 18%, the first thing I’d do with any money I had would be to pay it off,” Buffett advised her.

 

By paying off the balance, she would save more money on interest than any return she could earn by investing the money, whether in the stock market or in real estate or elsewhere, Buffett advised. He added, “I don’t know how to make 18%”.

 

If one of the greatest investors of all time admits that he cannot make more than the rate charged on a credit card, what makes you think you can?

 

You should still keep some money aside for a rainy day, but pay down expensive debt rather than keep cash in the bank earning less than 1% and don’t buy stuff which go down in value using credits cards.

 

How much are you paying each month on your credit card bill?

 

Chances are, you are paying the minimum amount required.

 

Paying the ‘minimum payment’ on your card balance will take between 10 and 20 years to clear the debt depending on the interest rate charged?

 

This practice is highly profitable for the card companies and extremely costly for consumers. UK card companies are now required to warn customers about the cost of paying off the minimum amount required.

 

Check your credit card statement now. If you are just paying the minimum ‘default’ figure, increase this immediately to a higher amount you can afford, or clear the entire balance.

 

Questions to consider

 

How much interest are you paying on your credit cards?

 

How do you use your credit cards?

 

How much do you pay off each month?

 

Would you still buy that gadget or item of clothing if you had to pay for it in cash or straight out of your bank account?

 

Albert Einstein said ‘compound interest is one of the most powerful forces on earth’.

 

Using compound interest to your advantage in saving and investing, will make you rich. Used against you by borrowing, it will make you poor and someone else rich.

 

At an annual interest rate of 18%, how long would it take for the investment or debt to double?

 

The Rule of 72.

 

The Rule of 72 is a simple way to determine approximately how long an investment will take to double given a fixed annual rate of interest. By simply dividing 72 by the annual rate of return, you can obtain a rough estimate of how many years it will take for the initial investment to double.

 

72/18 = 4

 

In other words, a sum of money invested at 18% pa will double approximately every four years.

 

Similarly, a debt with interest rolled up will double in four years.

 

You can see how powerful compound interest is when applied to debt. The average UK mortgage holder will pay over half a million pounds in interest over their lifetime.

 

Summary Lesson 2

 

The first step to becoming a SMART MONEY MANAGER is to spend wisely and avoid expensive consumer debt. By taking this step alone you will see a dramatic improvement in your financial and emotional wellbeing.

 

It’s not about how much you earn, but how you manage your money that counts.

 

You could earn more money by getting a pay rise, but unless you change your money habits, you’ll soon be back where you started.

 

Action Steps

 

Think about how you spend your money.

 

Start making a list of all your income and expenditure using your bank and credit card statements including all the standing orders and direct debits. You can use a notebook, spreadsheet or a smartphone app to keep your record.

 

Your list of expenditure will fall into two categories – Fixed and Variable.

 

Fixed costs, which can include:

 

·        Rent or mortgage

·        Food shopping

·        Utilities and energy

·        Regular bills

·        Club membership and subscription payments

 

Variable expenditure, which can include:

 

·        Clothing, coffees, drinks and treats

·        Meals out and takeaways

·        Repairs

·        Any other stuff you indiscriminately buy on a whim or because it’s ‘on sale’.

 

Simple money saving tips you can use right now.

 

If you are running short every month, think about where you can make savings.

 

There are so many ways of making savings from switching utility providers to finding a better loan or mortgage deal. Switching mortgage deals has saved me tens of thousands of pounds.

 

Here are a few simple money saving tips:

 

Cook your meals and cut back on eating out at restaurants and buying takeaways. Prepare proper meals using fresh ingredients instead of buying more expensive, and less healthy, ready microwavable meals?

 

Drink less alcohol. How often do you go to the pub of bars and how much do you spend on a night out?

 

Buy less coffees and make your own. How many visits to Starbucks do you make each week? You can make fresh coffee for a fraction of the price of Starbucks.

 

Save a fortune on credit card interest. You can save by switching to a lower rate or interest free deal which can help you increase your payment towards reducing the balance. Just Google ‘best credit card deals’ and you’ll find hundreds of offers which can save you money.

 

Use cards only when necessary and try to clear the balance in full each month to avoid interest charges.

 

Review insurance every year. Insurance companies make it easy to auto-renew your household and motor insurance every. Making the effort to shop around could save you hundreds of pounds.

 

Review your mobile phone contract and utility providers. Reviewing your phone contract or plan is a great way of saving cash and you don’t have to change providers. Call your provider today.

 

Your expenditure list will immediately help you identify any obvious targets for cutting back, like that subscription you no longer need or the recurring payment you’d completely forgotten about – we’ve all been there.

 

I cover many more money saving ideas in my free Money Tips Podcast.

 

I’m not saying you should give up having fun and live a reclusive life living like a miser. You can enjoy life more if you live debt free within your budget, save for the things you really want and increase your income when you want more.

 

You don’t have to follow the “I want it now” crowd!

 

Thank you for listening and congratulations on completing this module. In the next module, we will cover further steps on managing and respecting your money.

 

Would you like to learn how to become financially free without working any harder and spending your life exchanging your time for money watch this free on demand training now to learn how to become financially free without working any harder.

As a thank you, I will give a special free gift which can help transform your finances when you attend the online training.

If you enjoyed this and found it helpful, please like and share with your friends and follow me on social media to give more people free value. 

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How Will Higher Inflation Will Affect You - UK Inflation Jumps To 3 Year...

UK Inflation Hits 3 Year High - Stocks Fall And Gold Rises On Investor Fears

UK inflation reached the highest level since August 2018 prompting a drop in share prices as investors looked for the safety of gold.

The price of gold was up this week following the latest UK inflation figures, which saw CPI rise to 2.5%. Despite the pound's recent strength, gold climbed to £1,311.59 per ounce.

Elsewhere, stock markets are subdued following the news, with the FTSE 100 down 0.46% at 7092 points, Spain's IBEX 35 down 0.26%, and the Shanghai Composite down 1.07%.

The data, from the Office for National Statistics, repeats what has been said for the past few months now: inflation is rising as food, clothing, fuel, and second-hand cars are all costing more. The Land Registry group also confirms that house prices are up 10% year-on-year, putting the average property value at £254,624; less than £1,500 off March's all-time record of £256,000.

What does this mean for the economy?

If you enjoyed this and found it helpful, please like and share with your friends and follow me on social media to give more people free value. 

Would you like to learn how to become financially free without working any harder and spending your life exchanging your time for money?

Watch this free on demand training now to learn how to become financially free without working any harder.

Click on this link to watch the free training now https://bit.ly/3wLWqx2

How To Build A Secure Future And Avoid A Bleak Retirement Without Workin...

The baby boomer and millennial generations are facing an uncertain future with job insecurity and drastically reduced state and private employer pension benefits.

How can you avoid ending up living your retirement days in poverty?

There are a number of steps you can take, but it starts with your mindset and habits.

Change your spending and saving habits.

How? Changing a long-held habit is easier said than done, right?

Not something you can easily do by yourself.

The answer is to get help and guidance instead of trying to do it all alone.

Take a course or programme, get a mentor or a coach.

What’s the most effective, proven way to lose weight?

Join a weight watchers’ class or group. Why, this will give you education, support and accountability.

What’s the most effective, proven way to quit smoking, drinking or drugs?

Enter into a programme, class or group.

Millions of people ‘try’ to lose weight, quite drinking or gambling on their own, but most fail and go back to the same old habit.

That’s why organisations like Alcoholics Anonymous and Gamblers Anonymous have been going for so long because they have helped millions of people change a habit through a combination of coaching and mentoring and learning.

Want to get fit or a six pack? Get a personal trainer.

Want to improve your golf swing? Get a coach, like all the best players do.

Do you want to improve your financial situation?

Do you want to stop making the same mistakes that got you to where you are today?

Do you want to be financially free and retire early?

Get a Money Mastery Coach.

A Money Mastery coach can help guide you through the financial maze and show you a clear path to financial freedom without the pain of trial and error.

These 3 Money Secrets Will Make You Wealthy Without Working Any Harder

Are You Fed Up Struggling Financially?

Firstly, I just want to thank you for taking the time to join me today. Money problems are one of the biggest causes of stress and relationships breakdowns. I can remember my parents having some almighty rows over money!

I’m Charles Kelly and for 25 years I worked as a Financial Adviser helping thousands of people solve their money problems. I was successful, but it wasn’t until I discovered the secrets to mastering money that my clients started achieving amazing results.

I’m also the author of three books including, “Yes, Money Can Buy You Happiness” and “Borrow and Grow Rich”.

I’m going to uncover 3 money secrets and a simple system for truly mastering money to help you start building real wealth and ultimately live the life you truly deserve.

Secret 1: Your Money Mindset has got you where you are today – not the economy, the government or your parents.

It’s far more about what’s in your head than in your pocket.

Most people have been programmed to think that “money is scarce” and hard to come by, that you have to “work hard for money” or you “need money to make money” – Not true!

Some of us are programmed from an early age by our parents. My dad would say things like “we can’t afford it”, “money doesn’t grow on trees” and “do you think I’m made of Money?”!

This language creates a ‘scarcity mentality’ which can stay with us for the rest of our lives unless we take action to change our mindset, our language and habits.

In my early life, I constantly struggled with money. I was making a good salary, but no matter how much I earned, I never seemed to have enough!  

I would fall behind on my bills and have creditors chasing me. Being broke is no way to live, which is why I wrote Yes, Money Can Buy You Happiness.

Then I discovered a mindset shift that turned my finances around. Once I learned this, I started accumulating money and have never been broke since. 

So, it’s not how much you earn, but how you manage it that counts.

Making a lot of money alone will not make you rich!

I’m sure we all know people who have made and lost fortunes, as I discuss in my book.

Secret 2: You can’t improve what you cannot measure. 

The next step is to take stock of where you are right now. Most people have no idea of how much they spend.

Think of yourself as a business, even if you are an employee.

Make a list of all your current commitments, income and regular and variable outgoings. Then list your assets and liabilities – your balance sheet – to calculate your ‘net worth’. You can do this on a spreadsheet or on a notepad. Then, repeat this every month and start balancing the figures monthly like any solvent business should do.

Secret 3: Focus on building your net worth.

The rich buy assets, which appreciate in value, and build their net worth over the long term.

The poor spend their money on liabilities, which go down in value, and rarely if ever build assets and net worth.

I haven’t got time in this short presentation to cover everything - which I go though in my book and SMART MONEY MANAGER courses in more detail.

But I hope these simple mindset shifts and steps alone will open your mind and set you on the road to prosperity.

If you enjoyed this and found it helpful, please like and share with your friends and follow me on social media to give more people free value. 

I’m offering free discovery coaching calls to three people this week. Message me if you’re interested or email charles@charleskelly.net

UK Property Boom Continues As House Prices Soar By 10.9% And Sales Forecast To Rise To The Highest Level Since The 2007 Market Peak

Wow! During the worst recession on record, British house prices jumped by an annual 10.9%, the most in almost seven years, and they look set to rise further as people search new homes after the pandemic, one of the country’s largest mortgage lender the Nationwide said.

Almost 70% homeowners considering a move said they would still go ahead even without the unlikely extension of a tax incentive by Chancellor Rishi Sunak, Nationwide said, according to a survey it conducted in late April.

The latest figures demonstrate the scale of the surge in house prices which hit a new record high at an average of £242,832, according to Nationwide, which whilst not the official Land Registry data is widely respected by the industry.

Nationwide added that house prices were 1.8% higher than in April.

Nationwide said there was scope for annual house price growth to accelerate further in the coming months, given how weak the housing market was in early stages of the pandemic.

However, if unemployment rises sharply later in 2021 - when Sunak's jobs protection programme is due to expire - there was scope for activity to slow, perhaps sharply, it said.

Official data from the Office for National Statistics has shown that house prices in March jumped by just over 10%, the largest annual rise by that measure in nearly 14 years – prior to the 2007 peak and later property and stock market crash.

Not all areas are booming and parts of London are seeing sharp price reductions on flats.

Coastal hotspots - in Devon, Cornwall and Dorset - have seen house prices rise by as much as 48% in a year as people ‘escape to the country’!

One million Britons fear losing homes when eviction ban ends - as up to 400,000 tenants have already been served notice or told to expect it due to unpaid rent over pandemic, The Daily Mail reports.

The tenant eviction ban expired on 1 June, which could see thousands of people with rent arrears evicted by bailiffs.

·        Ban lifted meaning bailiff-enforced evictions can take place from now

·        Government introduced ban to support renters through the pandemic 

·        Charity says that 400,000 renters have already been served with eviction notice

·        A further 450,000 households are in rent arrears according to research

The Joseph Rowntree Foundation said 400,000 have already been served with an eviction notice or told they may be evicted and a further 450,000 households are in arrears with rent, JRF said. 

In practice, possession claims leading to eventual eviction could take 6-12 months to go get through the county court system, which is already overloaded with all manner of legal cases.

Over 60% of buy-to-let landlords own just one property and many of whom are paying mortgages with little or no chance of recovering thousands of pounds of rent arrears built up during the lockdown.

Other news

The UK is likely to further restrict overseas travel taking Portugal OFF the ‘green list’

Apple wants staff back in the office by September.

If you enjoyed this and found it helpful, please like and share with your friends and follow me on social media to give more people free value. 

I’m offering free strategy coaching calls to three people this week. If you’re interested, email charles@charleskelly.net