How To Invest Your Money: 2 Manuscripts - How To Budget And Stocks For Beginners

Millionaire Mind – How to Budget



[]Chapter 1: Debt – Is it Good or Bad?

[]Chapter 2: Assessing your Current Situation

[]Chapter 3: Where you can Save Money

[]Chapter 4: Internet and Mobile Devices

[]Chapter 5:  Efficient Energy

[]Chapter 6: Revisit your W-2 Form

[]Chapter 7: Plan for the Big Expenses

[]Chapter 8: Establishing Retirement Funds

[]Chapter 9: Starting a Savings Account

[]Chapter 10: Handling Credit Card Debt

[]Chapter 11: The Psychology of Saving

[]Chapter 12: The “Start Now” Budgeting Plan


Millionaire Mind Stocks – How to Achieve Financial Freedom


Chapter 1: Stocks or Mutual Funds?

Chapter 2: How to Start Small

Chapter 3: Pros and Cons of Investing

Chapter 4: Stock Analysis – Fundamentals

Chapter 5: Stock Analysis – Technical

Chapter 6: Trading Psychology

Chapter 7: How to Choose a Broker

Chapter 8: How to Build a Portfolio

Chapter 9: Risk Management

Chapter 10: Common Stock Investment Mistakes

Chapter 11: Tips for Investing Smart

Chapter 12: Your Start Now Plan




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[* Millionaire Mind*]

How to Budget


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The information provided within this eBook is for general informational purposes only. While we try to keep the information up-to-date and correct, there are no representations or warranties, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the information, products, services, or related graphics contained in this eBook for any purpose. Any use of this information is at your own risk.

The methods describe within this eBook are the author’s personal thoughts. They are not intended to be a definitive set of instructions for this project. You may discover there are other methods and materials to accomplish the same end result.

The information contained within this eBook is strictly for educational purposes. If you wish to apply ideas contained in this eBook, you are taking full responsibility for your actions.

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Most people have dreams, small or large, they have dreams. You might wish to travel around the world, seeing ancient and historic sites. Another person may dream of owning a five-bedroom house, with matching furniture, and raising two kids. Your dreams are important to you, but life requires money.

Unless you have a steady income, savings, and a budget for how to spend that money, you will have difficulty attaining some of your dreams. You certainly will not be happy if you cannot attain all your goals.

It does not matter how old you are. Whether you are just beginning your adult life, saving up for college, or in your 60s, you need to have a budget. You need to know what your expenses are, what your income is, and what you can save to ensure you are able to pay for the bigger ticket items you want.

You could also change your desires and wants to live a minimalist lifestyle. True happiness does not come from being a millionaire. Happiness comes from accepting what you have, what you can work for, and the people around you.

If you can accept what is around you and stop being disappointed in what you don’t have—you will find happiness.

Budgeting is a way to look at your lifestyle as it is and discover how to make improvements. Understanding how to budget will ensure that you can work towards some of the things you truly want.

This beginner’s guide will help teach you how to stay out of debt, how to save your money, and provide you with a “start now” plan to get your monetary life on track. Use this guide to figure out what is most important to you and how to get it.

Budgeting begins with a psychological change within yourself. The first step to getting a budget and saving money—is recognizing what you do that inhibits your ability to reach what you desire. Are you the type of person to make a purchase in the now? Perhaps, you are able to wait and save, before buying a big ticket item? Most people who are looking at a book about budgeting tend to buy what they want now, instead of waiting. Others are looking for a way to extend what little money they have, by learning tricks they have not thought of.

The answers are right here at your fingertips. You will discover how to save money on expenses, as well as the psychology of waiting for what you want.

Chapter 1: Debt – Is it Good or Bad?

Debt is rarely something you can avoid. There are purchases in life that could take you decades to make, if secured loans did not exist. However, there are also debts that reflect badly on your credit report, if you miss payments. These bad debts are unsecured, and the easiest to obtain. You might be familiar with them—credit cards.

Credit card companies make it extremely appealing to take out a card, increase the credit limit, and spend money. Unfortunately, the high APRs (annual percentage rates) make credit cards highly dangerous to your monetary situation.

Taking on Debt

In life, you will probably have one or more of the following:

  • Student loans
  • Car loan
  • Mortgage
  • Medical bills
  • Tax payments
  • Credit cards

Tax payments may occur if you have not withheld enough taxes from your paycheck or if you run your own business. A tax bill is a bad debt to have because the government penalizes you for late payments. You may be in a cycle of paying your tax debt for more than three years, depending on how much you can allocate towards the payment each month. It is definitely not a comfortable situation.

Credit cards are a crutch. Not only can you spend more than you have a need to spend, but credit cards make it easy to do so. Once you get into the cycle of spending with a credit card, the only way to truly stop is to cut them up and never get another card.

Student loans, car loans, mortgages, and medical bills are a part of life. To have a decent career that will pay you a livable wage, you have to go to a university or college. Most employers are not going to look at you if you have not attended a trade school, college, or university.

Transportation is imperative, but do you need a vehicle? It depends on where you live. If you live in a place without a bus system or other public transportation, then you need a car, bike, or to walk. Walking cuts into the time you spend with your family and earn money, on the other hand it is healthy for you. There are pros and cons, and you have to determine if the pros of having a vehicle outweigh the $10,000 to $30,000 debt you would undertake.

Everyone needs a place to live. Do you have to gain a mortgage? No, but there are more advantages to owning a home than renting a place. These advantages will be mentioned under “planning for big expenses.”

Medical expenses are also something you cannot avoid. Even with the insurance marketplace that was started a few years ago, you still have the possibility of incurring high medical debts. It is an unavoidable debt that you can plan for.

The Mindset

Budgeting requires a proper mindset. It is based on an understanding of good and bad debt. It is also based on the goals you have in mind and what will make you content in life.

Reaching true contentment is difficult. It doesn’t happen overnight, but there are ways to curb your desires. There are ways to alleviate the jealousies you may feel over what other people have.

The best lesson that can be offered is to realize the more expectations and desires you have, the more disappointed you will feel when something does not go well.

The truth about suffering in life is having desires rooted in material goods and pleasures. To end your suffering, you have to stop living a materialistic life. Happiness comes from those who are in your life and the pleasures you take in simple things.

Disneyland is a good example. Disneyland costs upwards of $1500 to $2000 on a vacation special, with a family of 4 or 5. When you go to Disneyland, the temperatures are often 70 degrees Fahrenheit and higher; especially, in summer. Millions of people go to the park each day. Your visit will be standing in long lines, with people pushing around you and being impatient. You will have 2 to 10 minutes on a ride, depending on the ride, but an hour or three hours wait just to get on the ride. The heat will make you hot and irritable. Kids will be impatient and not understand why they have to wait and be bored the entire time they are waiting. They will get hungry while waiting in line. They will get crabby. At the end of the day there could be tears or disrespectful behavior. The words, “this is so boring, why can’t I just get on the ride,” will haunt your brain.

Of course, at the end of the trip all will be happy. Your kids have something to gloat about to their friends who have not gone to Disneyland and they will remember the fun rides, but there will always be a tinge of dissatisfaction because of the long waits. If your child was not tall enough for certain rides that will overshadow the best parts or if a ride scared them, they will remember that more than the fun.

But, if you take your child on a hike, show them a cool bone or hike a rock formation, which costs nothing—your child will remember the entire outing as fun. For some children who don’t like being physical outdoors, it could be an inexpensive free concert in the park, movie, or a free market. An arts and craft fair, wool market, petting zoo, or taking them to a library or bookstore can all be free or inexpensive fun. It is the fact that you took your child out, had fun, and loved them that will matter. Just like you. If you go out and do something free, where you do not have to worry about the expense, you will remember the fun versus the worry over the cost.

If you are not suffering, then you are happy and there are certainly ways to be happy without spending hundreds of thousands of dollars.

[][][]Chapter 2: Assessing your Current Situation

Before you can correct your situation or create a budget for your current situation, you will need to assess where you are financially. Have you written down all of your income, expenses, miscellaneous expenses, and infrequent expenses? Most individuals go through their mind, a list of what needs to be paid and when. They do not actually sit down and look at their financial situation in black and white. If you have not done this, then you need to do so. There should be three categories for your list:

  • Income and Additional Income
  • Recurring Expenses
  • Nonrecurring Expenses

Income and Additional Income

For income, you should only write down what is absolute. Yes, there is a potential that your situation could change within the year. A person could lose their job. But, for budgeting purposes, you are going to assume that your job is secure. You will want to list your gross and net income. The net income is what you receive after taxes, 401K and medical insurance deductions come out of your check.

Secondly, if there are two household incomes, list both.

If you have a part time job, make sure this income is listed, regardless of whether you pay taxes on that money or not. If you do not work each week at this secondary job, then do not count it. For example, if you babysit 4 days out of the month and know this will not change you can write it down. However, if you never know when you will have income from a secondary job, then you should not include it. This is because it will not impact your budget. The funds cannot be 100% counted on.

For self-employed individuals, it is much harder to set up a budget in the same manner as a full time career with a salary or hourly wage. Each month can be a different income. For self-employed people, you will need to use last years reported gross income to determine a budget. You might not make as much this year, as last, so after the first quarter, you will need to re-evaluate your budget. You will need to determine your first four months’ average income, and plan accordingly.

Recurring Expenses

These are expenses that happen every month, every quarter, or every year. For example, electricity, water, sewer, gas, internet, phone, and TV, are usually the top recurring expenses. Student loan, mortgage, and car loan payments are also recurring.

You can split this category into two: unchanging and average expenses. Unchanging expenses are mortgages and student loans. You know each month you must pay a specific amount. It will not change. Average expenses are utility bills. Each month depends on your usage, so from month to month the bill can change a few dollars to over $100. Like changing income, you have to average the monthly bills to determine what you will payout for the year. In a month, you will budget for $100 on electricity, but the bill is $50, so that $50 extra remains in the electricity budget and when the bill becomes $150 in winter due to heating expenses, you have the extra $50 from the over-budgeting you did in a summer month.

Even groceries can be averaged per month to help you spend less on food and household items. It just takes being a little savvy in how you spend what you allocate for groceries.

Nonrecurring Expenses

These are expenses that occur throughout the year, but may not happen next year. For example, if your dishwasher broke and you replaced it last year, you won’t budget for it this year. You can plan for these things, to a degree. For example, if you bought your water heater 30 years ago, chances are in a year or two, you will need money to replace it. If the roof on your home was replaced 25 years ago, with 20- year shingles you need to budget for a new roof. If your vacuum says it is good for 10 years and it has been 11 plan for a new vacuum. If you bought tires five years ago, then have the amount of tread left on the tires, checked and determine how much longer you can drive on those tires.

You can always get information for most non-recurring expenses. Colds, flus, other illnesses, and emergent situations are things you cannot plan for. You can’t say, well this year a snow storm is going to cause a tree to break a window. You won’t be able to say, “gosh, I’m going to have a car accident this month.” While you cannot predict emergent situations and illnesses, you can still set a budget. Knowledge is very powerful.

Things that Affect Your Lifestyle

There are certain things many of us do not contemplate as we are setting up our adult lives. Yes, you plan for a certain career by gaining education to work in that industry. However, you cannot always plan for the job you gain. You might work in one field for five years, switch to a new field, or get a promotion that moves you half way across the country.

As you assess your current situation, you need to have a hard look at the cost of living in your area. You can do this by looking at websites and Forbes magazine. There are quite a few places that have started making cost of living comparisons.

You can assess where you live versus other cities and towns in the same state, as well as nationwide. It is a good idea to assess these concepts in the event that you can make your living situation better. Self-employed individuals, typically freelancers who can move around and not be in the same location to help their clients, have the option of moving to a place that offers a better cost of living for their income.

So, assess the cost of living, where you live, and determine if your career could be offering you a better salary.

Tasks for this Chapter

  • Assess the cost of living in your city/town/state.
  • Determine if where you live could be changed for a better budget: can you move your house for a lower mortgage? Buy versus rent to decrease monetary waste? Move to a new state for a better career and cost of living?
  • Career satisfaction and income is important. You don’t want to throw away a job that is providing you with enough income, but if your cost of living is too high versus your salary, a change may need to occur, including a second job.
  • Write out your income, recurring and non-recurring expenses. Add the expenses up and subtract the amount from your net income. Are you in a deficit, is there savings to be made, or are you breaking even?

Chapter 3: Where you can Save Money

Assessing your current situation helps you see just how much you spend on certain expenses. It is the best way to start determining where you can save money and greatly impact your happiness in life, by reaching the goals you have set. The following are a few of the areas, where you could really save money or even make money.

Groceries and Related Expenses

By far, food expenses are one of the largest ticket items that recurs each month, so you can survive. It is also an area that everyone overlooks for cutting back. There are three areas, where you can save money on groceries and related expenses.

Eating Out

Dining out is expensive and relatively unhealthy. Most restaurants overuse salt, making it dangerous to your health. You also tend to eat more calories when you eat out. Here are some suggestions for reducing your dining out expenses:

  • Share a meal with another family member. This reduces your portion size; plus, reduces the amount you pay.
  • Choose restaurants with healthier options, such as a diabetic menu or gluten free menu.
  • Choose 4 places, you want to eat out per month. Choose one day a week to eat at one of these places. Basically, choose your top 4 favorite restaurants or if you have 10 places you love to eat, rotate eating at these locations.
  • Limit yourself to one coffee from a store per week. Buy an espresso or Keurig machine to have your coffee at home.
  • Stop having coffee at noon, every day. This will remove the caffeine from your system, and help you sleep better.
  • Sleep better at night by establishing a new routine. Turn off all electronics 30 minutes prior to sleep, avoid caffeine and chocolate, and read a book or meditate.
  • Increase your exercise because sleeping better, getting more exercise, and not overindulging in coffee will help increase your energy, so you will cook at home.

Buying Household Items

Toilet paper, tissues, cleaning supplies, dish detergent, dishwasher soap, and laundry detergent should be an every 3 to 4-month purchase. These are items you can purchase in bulk from Sam’s Club, Costco or other warehouse stores. Buying small bottles means you spend more throughout the year. Buying one tissue box versus 8 or 12 at the warehouse store is more expensive.

Cleaning supplies are the biggest waste people spend money on. What is a Clorox wipe? It is nothing more than a hardy, moist towel placed in scented bleach. A bottle of bleach, gloves, and a rag will do everything Clorox wipes will do. Water and vinegar is also a great combination for cleaning hardwood, tile, linoleum, and walls. It is a recipe of ingredients your ancestors used and it costs less than $3 to $5 a bottle for cleaning supplies that can harm the environment.

In fact, medical supplies can also be something you save on. There are numerous medicinal herbs you can raise to help heal cuts, sanitize wounds, and even eat a healthier meal. If you do buy medical supplies, then go to the Dollar Store. Did you know the acne cream sold at the Dollar Store for $1 has the same ingredients as a cheap $3 to $4 brand at Wal-Mart? Even $1 hydrocortisone is the same. An anti-itch cream has 1% hydrocortisone. The brand name for $5 that is called Hydrocortisone has 1% in it. It is the same. So don’t buy into the brand name because there are things you can purchase that have the same exact ingredients and are less expensive.

It is going to take time to learn what you can and cannot purchase for less, but once you do, you can save money on household items.


Eating healthy means eating cheaply. Yes, fruits and some vegetables can become expensive depending on where you live and where they are imported from. However, you will have fewer medical bills by eating healthy and ignoring the frozen and canned food section. People who have switched to a non-gluten diet also feel more energized

There will be certain things that are more expensive, but as stated, in the end, if the healthy food is more expensive and you have fewer medical bills, you are actually ahead of the game.

Coupons also exist. Buy a newspaper, sign up for coupon sites like All You, and take advantage of the healthy coupons. You will spend more on cake mix, cookies, and other unhealthy foods, if you use coupons. However, when and if, there are coupons for healthy foods like yogurt, you can save money. Again, it takes being savvy, finding the deals, and seeing if the coupon is really as good a deal as shopping at a different store.


Many people spend too much on clothing. There is a cycle to retail. Unless, a pair of pants, shirt, underwear, socks, or other clothing has a hole, start getting into the retail cycle for buying items.

Yes, designer stuff is all the rage, but you can find some pretty great outfits at outlet stores for half the cost. You can even get name brands at certain outlets. In retail, clothing is always brought in ahead of the coming season. Half-way through a new season, the sales start and by the end of the season you can get clothing that is 50% or more off. By getting into the cycle of buying clothing during these sales, you can lower your clothing expenses and improve your budget.

Furthermore, if you do feel a need to buy new clothing, then start an online store. Sell your old clothing that is in good shape, so you recoup some of your expenditure on your clothing. Even if you have a garage sale and get rid of most of your clothing, you can recoup a few dollars.

Family Activities

No one wants to stay home all the time. Yes, it can be fun to play a game, have family movie night, and run around the lawn or backyard. But, there are so many things you can experience in life. You don’t always want to stay home.

There are ways to enjoy family activities without killing the budget. For example, if you go to a movie, just purchase the movie tickets. Most theaters have a cup they can provide for free for water. It may not seem fun to avoid concessions, but honestly, the costs are just too high. The mark up on concessions is extremely high, so the theater can make a profit. The cost of tickets is set to cover the cost of bringing the movie to the theater. In fact, movie theaters break even on their expenses for the movie, labor, and overhead through the movie tickets. If a movie doesn’t perform then the concessions usually ensures the theater can remain open.

The point is, for family activities you can save money by being smart. If you have a zoo in your hometown or close, you can pay for a membership, go to the zoo often, and take a picnic lunch versus buying a meal there.

You can also search your local listings for free events, such as music festivals, movies, rodeos, arts and crafts, wool markets, and other events. If you have children, then educating your children about these events is important, even if you find them boring. If there are any parks, campgrounds, or coupons to places, then go for the inexpensive fun.

You don’t always have to spend money to have fun. Telling stories, jokes, walking, biking, and other activities can be just as fun as Disney or places like it.

Home Furnishings and Decorating

The number one rule on home furnishings and decorating is to sell your current items for as much as you can get. Make sure you are getting money for your old items, unless they are extremely dirty or damaged. If no one is willing to pay, then get the right off for donating the items.

Like with decluttering your home, you want to stick with the rule—if you bring something new in, then something else must go, preferably for a little cash.

For example, if you have decorations that you are tired of for the holidays, try to sell what you have before you buy new things.

Also shop smart. There are certain furniture stores that don’t provide quality. In a year or even less that expensive item can break down or become damaged. Shop in a place that offers a good product for the value. If you do have an issue, call, use the warranty, and get it replaced. Don’t let things like warranties go because they are there for any problems that arise, at least with reputable stores.

If you want to change your decorating scheme, look around, shop, and then make purchases. One store can have the same item, but for more or in some cases less than another.

Holiday Spending

Holiday spending is definitely an area where you can save. You are not being told to go to the seedy hotel on the outskirts of the projects, but to find a package that is all-inclusive and reasonable. You don’t have to stay in a multimillion dollar resort, where celebrities hang out. You can choose a modest hotel and be comfortable. You can also elect to do the top most important things, versus trying to do everything and spending more than you need to.

There are packages that include a day at this park, a day at another park, and so on. One of the best ways to spend less on holidays you set up, is to ask local forums about things to do.

Don’t go to TripAdvisor or Hotels.com. Instead, find a forum that is created by locals, where they talk about cool things they have done in their home town. You can find things that are inexpensive. For example, you could pay $10, walk around New York City, try ten restaurants, and get a great meal and a tour of the city. You could also pay hundreds for a tour bus, eating in high end restaurants and never have another vacation.

Research is the key to spending wisely on a holiday.

Tasks for this Chapter

  • Research what you spend on the expenses listed in this chapter.
  • Determine where you can save, by conducting research on how to save on certain items and holidays.
  • Change your mindset to believe in the facts versus the hype of a brand name.
  • Get ready to plan for these expenses with a budget.

Chapter 4: Internet and Mobile Devices

Another area you can save money on is your internet and mobile devices. It is also an area that has become one of the greatest expenses in our lives. We cannot seem to forgo the electronic world and technology now that we have it. Yet, we are also creating a dependency on it. There is a whole movement called, unplugging, where people get off the grid, away from technology, and enjoy a few weeks or the rest of their life without the “must haves” of today’s era.

It is understandable that you may not be able to unplug all the time. If you have a job where you are on call over the weekends and evenings, then you can’t distance yourself, but that does not mean you shouldn’t save money on your expenses.

*Internet *

Internet companies attempt to sell you the highest megabytes per second downloading speed they can. They are in the business of making money off their service. But, you do not have to buy into the jargon. Yes, streaming TV, running multiple online shows, and computers on the internet is better with a faster speed. However, you can also unplug the kids from multiple devices and have family time.

The average household can survive on 12 Mbps downloading speeds for multiple devices. It may require a little buffering depending on the amount of electronics using the internet and whether you are on a busy IP address, with other users. However, the internet is built so that multiple people use the same IP network, which is why 12 Mbps can be enough for your regular usage.

You also have the option of bundling your services with most companies. You could bundle your mobile phone, internet and TV for a lower price than having each one individually.

Each year, you should assess your package and determine if it is working for you, if there is a new, less expensive package, and how you might be able to lower your rates.


Television fits this category considering that most companies provide TV and internet. TV is also one of the main areas that people overspend on. Why spend $100 or more on TV?

CBS offers free access via computer browser. Their shows will stream anywhere from one day past the regular airing up to one week. Some shows are limited access for a week simply because of new broadcasting deals. The point is, you could train yourself to be a week behind on a favorite show and watch it the same time a new one is airing, so you don’t feel left out.

ABC, NBC, and several other networks also offer free access after a certain period of time has passed. You don’t have to miss out on your shows, just because you don’t have cable or satellite.

Furthermore, most seasons are coming out in the summer or six months after they air on Netflix, Hulu, Amazon, or on DVD. You could wait for your shows, binge watch them, and still pay less than a steady TV payment.

SlingTV is an innovation by DISHTV. Certain channels such as HGTV, TNT, A&E, FYI and Disney are available via SlingTV. You can pay $20 to $30 a month for this option. Think about it. If you have SlingTV and free local channels, you are spending less than the typical Internet/TV package.

Now there are some cases where you may pay $50 a month for TV and internet. It is reasonable because you get most of the local and specialty channels you might want to have.

However, paying any more than $75 per month for internet and TV is too much. Things like HBO, Showtime, Starz, and other movie channels are too expensive for what you actually get. Some channels offer a new movie every week, others have changed to every two weeks, and some are a new movie each month.

You usually see the same movies on these movie channels as are streaming on Netflix, Hulu, and Amazon Prime. Additionally, they are old movies from the 80s, 90s, and early 2000s versus new. They also play them over and over and over again.

There are savings you can find by reducing your TV bill, either in a bundle or on what you are willing to pay for. Additionally, why be so stuck on TV and miss out on all the adventures you could be having? Cut your TV expenses for those holidays, amusement parks, and other family activities.

Mobile Devices

Another gimmick is the mobile phone industry. Whatever happened to picking up a phone and making a call? It turned into texting, social media, and a must have the latest phone culture! Don’t get stuck in the cycle.

Unless you have major problems with your phone, such as no new updates to the software, broken screen, or software problem, don’t get a new phone when your plan allows.

It is not the line cost of having multiple phones. For example, you might pay $10 for each additional line, but somehow your bill is still $200 each month. What exactly are you being charged for and is there a way to switch providers to gain better costs?

It is difficult to determine because unless you are in a city, chances are your coverage with certain providers is not worth the change.

You also have to consider if owning a tablet is really worth it. Are you using the tablet or always using your phone? Is it a “necessary” convenience to have?

For some individuals a tablet is necessary because they don’t have a laptop computer. It enables them to do work or personal business while on the go. However, for most it is just another device that costs money and allows access to videos all the time.

Tasks for this Chapter

  • Assess what you are paying for internet, TV, and mobile devices.
  • Are there savings by switching to a new company?
  • Can you save by bundling services?
  • Do any of the companies you use have employment discounts? Some places like Verizon give a discount if you work at a certain location or in a certain industry, such as a nurse.
  • Do you need everything that you have, i.e. tablets and phones, movie channels, etc.?
  • Switch if the savings are worth it. The value of services has to be there, otherwise you get what you pay for.

Chapter 5:  Efficient Energy

Another expense that many people spend a great deal on is energy to keep their house air conditioned or heated. It is an expense that we tend to feel we cannot do anything about. However, it is simply not true. There are a lot of things you can do to lower your energy bills. It takes changing your mindset and using self-discipline.

Lights and Electronics

One of the biggest areas that people waste money on regarding energy is on their lights and electronics. If you do not know how much your items draw, there are places to find out, as well as tools you can use to see how much energy you are drawing.

Certain items cannot be unplugged: fridges, stoves, washing machines, and dryers. The plugs are too inconvenient. For some houses a microwave can be difficult to unplug.

However, anything else that is easily accessible should be unplugged when it is not in use. For example, remove the plug from the outlet, not just from the device. If you have a tablet and you need to charge it, charge it and then remove the plug from the wall. A plug can draw minute energy even if it is not charging a device. While minute, it adds up.

Lights are another example. If you are not in a room or reading, then don’t have every light on in the house. Have one energy efficient lamp in each room for reading or watching TV.

Unplug your TV. Even off, your TV is drawing quite a bit of energy.

If you own your home, think about installing solar panels. It is an expense at first, but the $10 to $30 bills you get all year round makes up for the installation costs.

Window Coverings

Window coverings, whether curtains or blinds are necessary. There are two things these things can do for you. The first is to reduce heat escaping in the winter. If you live in the mountains, northern states, or other cold places, then you want to have window coverings. Windows are designed to breathe a little, so air can leak in making your heater system work overtime. Leave the window coverings down, except when the sun is coming around to provide warmth. On days where the temperatures are below 30 degrees Fahrenheit, leave the window coverings down.

If you live with a lot of windows and plenty of sun, in the summer, you may find you are using a lot of air conditioning simply because you are leaving the window coverings open. There are more suggestions that can be made, but basically, find out what you can do in your home to reduce energy using window coverings.

Digital Thermostat

A digital thermostat that you can set to a specific temperature is going to reduce your expenses. You can set your home to a warmer or cooler temperature, while you are at work. Why have a constant 68 to 72 degrees Fahrenheit in your home, if you are not going to be there? Instead, turn it down to 65. An hour before you come home, have the thermostat set to increase to your ideal temperature. When you go to bed, studies have proven that a cooler room is better for sleeping. With a digital thermostat you can control your expenses and thus have a better budget for the things you do want.

Weather Stripping

Weather stripping can plug the large holes that cause air to leak into your home, whether cold or warm air. Make sure you have plugged the holes.

Wearing more or less Clothing

Why not dress for the weather and reduce your bills? You know if the weather is cold then you shouldn’t go around in shorts. Dress appropriately and use blankets. Get up and walk around if you get cold. In warm weather, dress with less. There is no shame in going around the house in a comfortable bathing suit versus fully clothed, to be comfortable and save for the things you really want.

*Tasks for this Chapter *

  • Figure out how much you spend on energy and what your current energy usage is.
  • If necessary, hire someone to come in and see if there are any weak areas in your home that could be repaired or updated to lower your energy costs.
  • Turn off and unplug all that you can.
  • Make sure you adjust your lifestyle to accommodate the seasons.
  • Get information on energy efficiency techniques and find out what others have done that you might employ.
  • Spend the money on energy efficient bulbs, versus those that use more energy and have a shorter lifetime.

[][][][]Chapter 6: Revisit your W-2 Form

You have a dream, a goal, correct? Perhaps you want to buy a motorcycle, taking a once in a lifetime vacation? There are ways to make this happen with an appropriate budget. A part of the method is to save on your recurring expenses. Another option is to revisit your W-2 form and make it highly favorable to you at tax time.

This is particularly helpful for anyone who has a business or works as a self-employed freelancer, and has a part-time job. Your W-2 form can ensure that you do not owe taxes at the end of the year, and instead get a refund. It is like a checks and balances system. You check that you want taxes withheld and at the end of the year, you get money back. For a lot of people, it is irritating to give the government more money than necessary, but there is one reason to do so. You have it taken out, so you are not tempted to spend that money.

The government is going to withhold a certain amount of taxes each paycheck. The amount is based on how you fill out the form. If you claim 0, then you get more taxes taken out than if you claim 1, claim children, or other deductions that you can claim. Unfortunately, you can only claim 0 if you are single or if you are not the parent claiming children. If you have children, then you have to claim them; especially, if you file a joint tax return.

IRS. gov

The IRS website is a beautiful tool. It will tell you what you may owe in taxes based on your income and deductions. The more deductions you have, the less you will need to pay in taxes. Using the website can help you budget for tax season and ensure you have enough taken out of your check.

For example, if you are self-employed, you can determine how much to send in estimated tax payments to cover your taxes. If you have two jobs, where one is a part-time position that uses a W-2, you can have more funds taken out to cover your self-employment tax.

Beyond claiming 0 or any dependents, there is a little box in the second half of the W-2 form that asks if there is an amount you want withheld from your check, as additional taxes. You can have any amount withheld.

A reason to consider this is to save up for your holiday. If you expect a refund check, then you can plan a holiday with that money. You won’t earn interest on it, like in a savings account, but you also have it taken out before you even remember the money exists.

It is also a way to cover you, if your deductions are not the same from year to year. You might have a deduction for a mortgage this year, but next year you sold the home, gained equity, which is considered income, and now you owe more in taxes than usual.

Sometimes planning for taxes can save you in the end. You don’t end up having to come up with a large payment or worse setting up a payment agreement, where you have to pay a certain amount each month.

Another helpful concept with assessing your W-2 is gaining peace of mind. Those who don’t have to worry about possibly paying taxes will be able to sleep better throughout the year, as well as during tax season.

Tasks for this Chapter

  • Assess your projected tax payment based on deductions and income.
  • Determine if you have the funds to have more taxes withheld than are currently taken out of your check.
  • You do have to assess where you can save in other areas and then see if you can have more withheld. If it will be too tight because you need every last penny, without having anywhere you can cut expenses, then don’t change your withholding amounts.

[][][]Chapter 7: Plan for the Big Expenses

The big expenses in life need to be planned for. Whether you are looking to buy a car, home, or have children, you want to budget for these expenses before you take the plunge.

The biggest mistake many people make is jumping into an expensive purchase, without doing their due diligence. For example, if someone knew their car needed $1,000 in repairs and the expense was worth it, but they didn’t have $1,000 right then—what is the best option?

A. Is the best option taking out a loan for a new car that would eventually cost $12,000?


B. Is the best option finding a lender willing to provide $1,000 in a secured loan, using the collateral of the current car to get the repairs done?

Option B is the least expensive option. Yes, the person is hindered for a time because they need the car for work and other driving needs. However, if it is possible to get the loan for $1,000, then the person can pay it off much earlier, with the money they would have used for a new car loan.

Big expenses may come up as an emergency; however, how you handle the emergency is the difference between a possible bankruptcy and surviving through a tough financial time. If you go with your knee jerk reaction and correct the problem of “now” you could be making a financial mistake that warps your budget for years.

When it comes to the big expenses, you want to always assess the situation. Look at all possible solutions and if you can’t see them have someone else examine your situation. There is nothing wrong with getting help in emergent situations, when the expense is going to be more than you can afford or should allocate to that expense.

If the expense is non-emergent, such as buying a new car because you are prepared to do so or you have saved up for a motorcycle, boat, or special trip, then you still need to conduct due diligence. You still need to research what you wish to purchase and budget for it, by saving the money.

Something that we never consider with big purchases is how we will feel when we can truly afford it.

Buyer’s Remorse versus Elation

When you purchase something you cannot truly afford, you have buyer’s remorse. You regret the purchase, wonder if you can take it back, and eventually settle into paying for it on a credit card. A person that waits may change their mind, find a better product, and know they have the money for the purchase. In the end they feel elation from making the purchase with the money they saved up, knowing they can afford it.

Chances are you would prefer not to feel buyer’s remorse or the embarrassment that comes from returning a large ticket item because you could not afford it.

You might not feel buyer’s remorse years down the road, depending on what you purchased, even if you couldn’t afford it and things were tight. It depends on the situation. For example, say your parent was diagnosed with a terminal illness and they always wanted a large screen TV. You would probably regret not getting the TV because you can’t afford it versus spending the money on a credit card to make their last years a little better.

As always you have to assess the situation, the need versus want, and determine if what you are buying is something you won’t change your mind about in a year, two years, or three years.

What if you want to buy a motorcycle in 2016, but in 2019 when you can afford it, you have decided that a motorcycle doesn’t fit your life? Then you didn’t make the purchase and have the savings for something that does fit your life. Yes, you could buy it, sell it, and recoup some costs, but if you are going to sell it in six months, a year, or three without using it, then you wasted money.


Children are expensive, but the rewards are well worth having children. But, you also have a responsibility to those children. You have the responsibility of providing a safe, consistent life. A life that is filled with anger and worry, particularly over money, is not going to make your children feel secure.

If at all possible, plan for children. Determine the medical expenses of the pregnancy, labor and delivery and start saving up. You should be able to get an approximation of costs. You should also start a savings account for your child before they are even born. This account is for the expenses you will face, including college.

Putting $100 in a savings account for five years can provide you with $6,000. This is a good start and it can grow with the right investments. A Roth IRA is a good savings account to set up for children because you can build it, without touching it, gaining interest, and making your money work for you. In the end, you will have money for certain child care expenses or you can save it for college.

Real Estate

After 2007 and the following years of recession, it may not seem like real estate is the best way to invest your hard earned income. But, it is simply not true. Real estate is a tangible expense. It is something you live in and gain equity from versus renting. Renting is giving someone else money to live comfortably. You never get a return on renting. The money is just gone, poof, never to be seen again.

As you pay your mortgage, you lower it each month, and when you decide to sell your home, you recoup your losses, as well as potentially earn a tidy profit from the sale.

A mortgage is one of the best loans to have, if you need to have one. It is something that will be repaid if you sell the property and if you do not, then you have equity. Equity remains in a home, as long as the house is kept up and updated. Equity is the value your home is worth minus any mortgage you owe on it. In 30 years, your home can increase and decrease in value, but as long as it remains above the price you bought it at, you can recoup the money you spent on the home.

Ideally, you would want to take the money you make and save up, using investments, savings accounts, and Roth IRAs to grow your savings until you can buy a home without a mortgage. This is rarely an option today, with the rising housing prices.

Do your research and shop for a house within your budget and a mortgage with the best interest rate.

Tasks for this Chapter

  • Make a list of your life goals: children, a house, vacations you want to take, big ticket items, etc.
  • Determine the priority of this list. What matters most for you to have?
  • Sit down and determine the amount of money you need to save to realize the top goal on the list. If it is a house, you generally need 20% as a down payment of the purchase price.
  • Be realistic in what you can afford over a period of time. If you are adding a mortgage to your budget, can you support the monthly payment, not just the down payment?
  • Are there added expenses to the big ticket item you wish to have? A house requires maintenance, cleaning, new appliances, roof, and other things over the years.

As always conduct your research, determine the real costs behind the items you wish to buy or the goals you want to reach that require money. Once you have assessed the full picture, determine realistically how long it will take based on the budget you will create, to get what you desire.

[][]Chapter 8: Establishing Retirement Funds

When you are young, you think “I have time for all that and more.” Unfortunately, the reality can set in quickly and before you know it, you are no longer 20, but 40 and without a retirement fund. We also have more temptations now than our parents and grandparents had. There are so many things we want to do, to buy, and enjoy.

However, you have responsibilities to ensure that your retirement is set up, so you don’t have to worry about your old age when it arrives. You don’t want to work 40 to 60 hours a week once you turn 65 or even 70. Anything you can do to prevent this, as well as make certain you can reach certain dreams after you have worked hard, then you need a retirement fund.

A Piece of Wisdom

Yes, planning is good. Yes, having a retirement account is necessary, but don’t forget to live. If an affordable opportunity arrives, take advantage of it. Life is never certain, but you also shouldn’t live in worry.

A couple married young. They were 20 and enjoyed 40 plus good years together. For nearly eight years, they saved, took a few trips, and prepared to be financially solvent and stable for their children. The husband died from early onset dementia at 63.

If the two did not live life, travel, and enjoy, as well as take their kids traveling and saving up, they would not have experienced any of the dreams they had. A lot of couples wait for the grand European tour until retirement, but what if?

Setting up a retirement fund and budgeting doesn’t mean you won’t take advantage of opportunities. You will. However, you also want to make certain you are ready for retirement expenses.

Setting up a 401K

The best way to get a retirement fund going is to have a 401K through your workplace, if it is available. The money is withdrawn from your check before taxes and placed in an account. Most companies will match a percentage of what you put into the account to help you grow the account.

It is an investment account. It will grow with the type of mutual fund you decide to put your money into.  Many 401K plans will have choices that you make from the offerings they provide. It has become more popular to choose mutual funds that are geared toward the year you will be retiring. They allow for the proper mix of what will be the safest way to grow your retirement fund with fewer worries about losing your capital. If you are closer to retirement, then the money won’t be placed in a volatile investment which could lose a significant sum of money. There wouldn’t be enough time to recoup losses before you stop working.

The same is true if you are younger, the investment you choose may take more risks knowing that you have time for the ups and downs of the stock market to be replaced. If you had investments during the latest recession and didn’t panic, you may have come out ahead or at least broke even. True you lost on the investment in the short term, but stayed the course and made back the losses and probably gained more profit. The reason for this is that you didn’t have to try to plan when to re-buy into the market. It can be tricky to know when the best time to purchase stocks and bonds again after such a long recession.

If you don’t want to use your companies 401K or they don’t offer one, then you need to invest on your own. There are many companies out there that can help you with this. Fidelity, Charles Schwab and Edward Jones are just some of the names you may be familiar with. They have representatives that can look at your finances and your retirement goals and suggest where to place your money. They will manage it for you and you can make changes when you decide to do so. The thing to watch out for with this type of investment idea are the fees associated with some of the funds. Certain ones can carry incredibly high fees which defeats the purpose of saving. Your financial manager or financial planner will address these options with you.

If you want to try to do it yourself there are several places that you can train online. For a fee, you can take the various levels of training and then practice with a paper account until you are ready to invest with your own money. Hands on types may feel this is the best fit for them. If you are a person that needs to have control over your investments, then this could be a viable option for you.

Once you have decided on which method you are going to use for your retirement, implement it as soon as you are able. A good rule to follow is to pay yourself first and then everyone else. While this may seem impossible, even a small amount put away for emergencies and retirement can grow into a sizable sum. Generally, the experts say to take out 15% of each paycheck, more if you are in your early 20's or 30's and put it to work making you more money. If this is too steep an amount to start with do 5%. You can always find small ways to limit spending and put 5% into retirement.

If you are paid twice a month, earn $13.00 an hour and are paid twice a month the investment of $52.00 per paycheck is 5% of your gross income. Look at your expenses and see where you can cut down. You might cut down on that specialty coffee every day or eating lunch out a few times a week. Once you become budget minded, you will find ways to save and get excited about it, too. 

Tasks for this Chapter

  • Choose a retirement fund option: 401K, stock market investing, or another option.
  • Budget the best percentage for your retirement fund, 5% or higher.
  • If you start out low, and have debts to pay down, then get your debts paid quickly and allocate that savings towards your retirement.

When choosing an investment option, make sure you are comfortable with it. Don’t just go with what your financial advisor suggests. They are experts, but if you are going to worry about losses, then it is not going to do you any good to invest in high risk-high reward stocks, bonds, or mutual funds.

[][]Chapter 9: Starting a Savings Account

A savings account is different than your retirement fund. You may still wish to use a Roth IRA style of account. Roth IRAs tend to have higher interest rates, but there are also penalties associated with early release of the funds. A Roth IRA is better, if you know in a certain time period you will not be accessing those funds.

You might wish to have a regular savings account and also a Roth IRA. In this way, you pay into an account that will grow faster with interest, as well as requiring a certain amount paid in each month. It keeps you regular about saving money, without having instant access.

A savings account at your local bank should be used as an emergency and fun fund. This is the account you will place any money you have left over after you pay your expenses, taxes, and into your retirement accounts.

It is the money you are saving for some of those big ticket items like a motorcycle, new TV, or emergency needs such as a sudden car breakdown, tire blow out or other emergency expense.

The Rules

  • You should have six months of expenses and mortgage money in your savings account. In the event that you lose your job or become ill, this money can make the payments for you.
  • Experts state someone in their 20s or 30s should be putting 20% of their income in savings accounts. This includes retirement funds. Ideally, you will break 20% of your income into retirement, Roth IRA, and savings.

The first rule is fairly obvious. You want to be protected in the event the unthinkable happens and you lose your job or are on disability for a little while. You can move through your savings pretty fast if it is only enough to cover a month or two.

The second rule is less obvious—it hinges on financial analysts. Financial analysts have done extensive studies regarding financial independence, debt, and secure retirements. These individuals arrived at a conclusion. You need to save 20% of your income in you are in your 20s and 30s because you have enough time to gain financial independence before you are too old to enjoy it.

It is understandably difficult to make this happen. Emergencies crop up out of nowhere. Suddenly an unplanned event happens like a death, marriage, or child and you need the money you were trying to save.

Most Americans today struggle with getting savings set up because life makes it difficult. They don’t have a high paying job or an emergency happens. One spouse loses a job or another person doesn’t have two incomes, but neither do they make a livable income. There are ways to fix these problems. You have to be willing to make some very tough cuts, to fit your current income versus the life you wish to live.

Those who make money work hard, remain strong, and rise in the face of adversity. They do not let things get them down and they are not afraid of taking a second job, just because it is not a glamorous position. While working extra shifts or taking a second job isn’t ideal, but it doesn’t have to be a long term proposition if you save your money wisely. Getting ahead by working more for a year or two could see you having a great retirement as well as a happy life in the meantime.

Budgeting can be a lifestyle rather than a punishment. Don’t think of it as a bad thing, but as a way to incorporate more joy and happiness in your life. Saving for that special vacation or affordable home should be something to look forward to and getting there a quest not drudgery. If you can change your mindset as well as your budgeting process life can be wonderful. The burden of not having enough to live on now or in the future will be lifted.

Tasks for this Chapter

  • Shop around for the best savings account. It may not be the bank you have your checking account with. Many of the internet banks or small banks have been swallowed by the larger banks due to the financial crisis, but if you look hard enough, you might find a bank willing to offer a better savings account than your own.
  • Your savings account needs to provide you with the highest interest rate offered in today’s market. It won’t be very much, maybe not even more than 1%, but it is still earnings on your invested money.
  •  Choose a savings account that does not give you easy access. If you can make a transfer from your savings to your checking with a few clicks of the mouse—it is too accessible. You will be tempted to touch that money, even if it is not an emergency.
  • Make sure if you are saving 5% or more in a retirement account that you are at least putting 20% of your entire income into a savings account. It might take a little time to work up to 20% because of credit card debt, but trust in the truth—you won’t miss the money if it is automatically removed from your view each month. You’ll barely remember that it was part of your income.
  • When you do get a savings account, ask for your employer to divide your check. Put the money you want to save directly into your new savings account and have the rest of your net income deposited into your checking. In this way, you won’t have to think about transferring the money. It just goes there. It is an out of sight, out of mind concept.

[][]Chapter 10: Handling Credit Card Debt

Credit card debt, if you already have some, is the first thing you need to handle in order to establish a decent budget. Credit cards provide you a way to pay for goods, but it is rare that you can find an APR below 15% nowadays. If you do not pay off your credit card each month, then you end up paying more for the goods you purchased due to the interest rate you are charged.

It is a difficult cycle to end. You don’t want to suffer from credit card debt. It is far better to adopt a mindset that says, “if I can’t pay for it, then I don’t need it.” You will get a few tips on changing your mindset and the steps for improvement, soon.

For now, let’s assess what you should and should not do with credit cards.

How to use a Credit Card

If you feel insecure without a backup emergency plan, then take out a credit card. This credit card needs to be placed in a safe for emergency purposes or in a different area of your wallet or purse. You never want your credit card to be next to your cash and debit card. You basically want to forget about having the card. If you see it and are reminded that you have it, then it is easier for you to consider using it for big ticket purchases that you should be saving up for.

There is one more way that you can use a credit card; however, it takes a very self-disciplined individual to use the credit card this way. Most people do not have the self-control to use it in the manner about to be described.

  • You get a credit card for the rewards it provides, such as 1% cash back, air miles, gas rewards, etc.
  • You use the card for groceries, gas, airline tickets, and other purchases.
  • However, when using the card for purchases, you go home and pay the exact amount you just spent with the card.
  • You will not let your credit card carry a balance, even for a day.

It is true that if you pay your card in the same month that you put the charges on the card, you will not be charged the interest rate. It is only when the card carries over to a new month. However, leaving the amount on there for the entire month and then paying it off can lead to trouble.

You are tempted to spend the money you have in your checking account on other items versus paying off the card. If you are going to use a card for rewards, then you must pay the amount off right away. You will know exactly what you spent in a day as long as you keep the receipts.

You also have technology that makes it possible for you to pay the correct amount to your credit card from anywhere you are currently located.

There is one rule to this usage that you must always follow:

Never use it to spend money you do not have, but will have!

Most people are paid biweekly. You know exactly when your money is coming in, but if you are spending money, you do not yet have, then you could start on a debt cycle you are unable to get out of. You will justify waiting to make a payment to your credit card. You’ll start to say, “when I get paid, I’ll pay this off.” You should only ever spend what you have on a credit card, if you want to make rewards.

The rewards are great, but for most people they start the credit card debt cycle that is never ending. So rather than get into that situation, don’t have credit cards. Ignore the rewards and pay for what you can afford. If you follow the method of ignoring credit cards, then you will never be tempted to overspend.

Paying off Credit Cards

Studies have shown that the average American has at least three credit cards in their wallet. Worse, these three credit cards have at least half of the credit limit spent. These same Americans do not have the savings to pay off the debt. They can only pay the minimum payment, which means 30 years later they may pay the debt off—that is if they do not add to it.

There are steps for handing credit card debt. They start with understanding your income, expenses, and finding any savings and leftover money in the month. You will learn more about a “start now” budget process, but for now here are the steps for getting rid of your credit card debt.

  • Determine how much money you have to pay towards your credit card debt.
  • Calculate your net income.
  • Allocate funds to utilities, TV, internet, mobile devices, groceries, fuel, and other monthly expenses. Do not include the credit card monthly minimum payments.
  • Call your credit card company or companies. Determine if any credit card you currently have, has a 0% balance transfer deal.
  • Ask the credit card company what percentage they charge for the transfer. This transfer fee is usually 3%, but it can be higher.
  • If no credit card company that you have your credit cards through is offering a balance transfer deal, determine if your credit is in good standing and shop around for a balance transfer deal with another company. Only take out this new credit card if they can approve you for your entire credit card debt. If you cannot obtain a credit limit that matches the debt you have, then do not open a new card. It is not worth opening a new card unless you can consolidate all of your credit card debt to one card with a 0% APR.
  • If the 0% deal is not possible, assess your current situation. Ask your credit companies if they are at least willing to reduce your APR. Most will not, unless you are in good standing and have never had any credit problems like collections or bankruptcy.
  • Whether the credit card companies are willing to lower your APR or not, you will want to choose the card with the highest APR to pay off first.

Additionally, you will want to see about transferring a balance and whether the 3% fee is negligible based on the savings. For example, if you have three cards:

  1. 12% APR with 50% of the credit limit available
  2. 20% APR with 25% of the credit limit available
  3. 23% APR with 75% of the credit limit available

You might find that transferring the amount you have on the card three to the 12% APR credit card, actually saves you money in the end, despite the 3% fee. However, it may not. The point is, calculate the costs you will have to pay for the transfer versus what you will pay out in interest until that amount is paid off. You know that 12% is less than 23%, plus the 3% fee is a onetime fee rather than a continuous 3% each month. Overall, the savings may be worth the transfer.

You won’t know until you make calculations. If you can get one card gone, then you only have to worry about two. Of course, there has to be enough on one card to make the full transfer or at least enough of a transfer that you can pay off the third credit card in a month or two.

Ideally, you want to consolidate all cards into one. It may not be possible, so always start with the highest interest rate. Get this one gone by paying the minimum balance to your other cards. Pay all extra money to your highest interest rate credit card, until it is paid off.

After one card is paid off, go to the next highest APR credit card. You are now paying the minimum to that card, plus everything you paid to the first card you paid off.

By the time you get to your last credit card, you are making a higher payment because you are paying the minimum payment from the other cards, plus the extra money you have during the month.

As soon as you get that last credit card paid off, you have all of that money you were paying out in a month to put towards your savings or a special vacation.

Unfortunately, it can take quite a while to get everything paid down, depending on how high your balances are and what you are able to pay towards these cards for the month.

A Final Word

You still need to pay a portion of your income into a savings account, whether it is easily accessible or a retirement account. Even, if you are only putting away 5% of your income in savings, you are at least planning for an emergency.

A lot of the time credit card consumers put all their money into paying off their card, then have to turn around and use the card in an emergency because they do not have any savings. You don’t want to use your card as you are paying it down or after you have paid it off.

Additionally, you need to cut up each credit card and close the account the minute you have paid it off. You don’t want to leave temptation lying around.

This chapter will not have a tasks section because you have been given the outline of what to do. It is time to start now, in figuring out how to pay off those credit card debts.

[][]Chapter 11: The Psychology of Saving

A little about the mindset you have, has been discussed, but now it is time to truly determine the things you can do to improve the psychology of your spending. These will help as you analyze the “start now” budgeting plan.

Your Upbringing

How we are raised can in part determine how we spend money now. Psychological concerns and stress can lead some individuals to spend money incorrectly.

A young woman was raised without her family having a lot of money. She was also the last of 5 children. She had hand-me-downs, no eating out, and no toys that were truly her own. When she grew up, she was very stressed whenever she did not have enough money to pay for items. In fact, she would go out on spending sprees buying clothing and other items because she “deserved” to have a little fun and live a life, even though she could not afford it. She was “tired of not being able to enjoy life,” even after working so hard for the little income she could make. She knew she should not spend the money, but she could not stop herself.

This young woman’s husband would put a cushion in her account. He would put $500 in the account, but not let her see the bank statements or record it in her checking account register. She was always safe to spend money, and was told to spend some money on herself, and she would. Occasionally, she would overspend, but there was the cushion in her account.

You can have parents that provide you with many things, but teach you responsible spending, and you can still overspend your income. You can also have parents who spend and spend, buying you whatever you want, and you figure you can do the same because you weren’t taught responsibility.

If you can understand the psychology behind your spending habits from your upbringing, then you can start to change your mindset.

How do you spend your income now?

You have to be very analytical and truthful when you assess how you spend. You will write down what you make and what you spend. This will help you see the black and white of it all, but you also need to go deeper now.

If you overspent last month, why did you do so? Were you overly stressed? Did you feel tired that you could not buy what you wanted? Were you frustrated? Did you think you had the money to spend, but did not sit down to analyze your budget and all that needed to be paid? Did you forget about a bill?

Analyzing your current spending habits, along with the emotions you are feeling will help you determine what you need to do to correct your mindset.

How do you want to spend your money?

What is your ideal situation, with the money you are making now? What are your goals? What do you hope for later in life, as well as when you reach retirement? Are these goals materialistic or are they something that will truly make you happy to the point that you can keep to your budget?

What will make you stick to your budget?

Tasks for Changing your Mindset

Once you have assessed your upbringing, current spending habits, and how you wish to spend your money in the future, you are ready to follow the tasks outlined here:

  • Write your short-term goals on a poster board.
  • List the short-term goals by cost and importance.
  • Write down your long-term goals.
  • List these goals by cost, importance, and the reasonable date of reaching that goal.
  • Assess the list, are there things you don’t really need or truly want, but think you would like to have? Sometimes we want something because we see it and it sounds great, but after thinking about it, we know it will sit and gather dust for 75% of the time. Motorcycles, gaming consoles, and other products tend to sit more often than they are used because of our busy lives.
  • Remove anything that you do not think you will have time to truly enjoy.
  • Now assess your list goals again, determine if you want to re-order anything in order of importance. Do so if it needs to be changed, otherwise, you are now ready to post this board somewhere you will see it. You want to look at this board each day. Take a picture so it is in your phone too.
  • When you go shopping, pull out your phone, look at the short and long term goals you have. Is there something in your cart that you can forgo buying in order to save up for the true goals you have? For example, if you are buying brownie mix that is $2.50 is it more important to you than one of your short or long term goals?

Yes, $2.50 is not much, but what if you pick that product up each time you go shopping? Let’s say it is a latte for $2.50 and you get one each week. You are spending $145 each year for one latte a week. Imagine if you are buying a latte for $2.50 on a daily basis! It is $912.50 for a latte at $2.50 for 365 days. Now let’s use reality. Most tall lattes at Starbucks are about $4, and you probably leave $1 tip. If you did this each day, then 5 times 365 equals $1825. You could be spending that much on your coffee. Let’s say you don’t get coffee every day, but sometimes you spend $5 on lunch, so it still equals $1825.

What could you do with $1825? You could go to Disney. You could visit Europe, Canada, go on a Caribbean Cruise or buy a used motorcycle.

You can see from simply determining what you are spending and assessing your true goals, how you can begin to change your mindset.

A dose of reality is often the best way for you to limit how much you spend on items in the now versus saving up for the things you truly want. Yes, it is nice to spend money on something you want like a new blouse because it makes you look great, but need versus want is what truly determines if you reach your ultimate life goals.

Tasks for this Chapter

  • Set your goals
  • Take a picture of those goals or have them in your wallet
  • Look at your goals every time you want to buy something you want versus need
  • Take a breath or ten breaths
  • Analyze your emotions, your stress level, and why you feel you must have it
  • Use meditation at home to release your stress and feelings of “deserving” something special
  • Reevaluate your emotions and your desires to spend money now versus on your goals later on

[][]Chapter 12: The “Start Now” Budgeting Plan

You have reached the budgeting plan that you can start now. You have been through this book doing the tasks at the end of each chapter. Now it is time to determine the best way to get those goals you have set.

  1. Take your current income.
  2. Collect your receipts.
  3. Organize your receipts into categories: utility bills, mortgage, dining out, household and groceries, personal expenses (clothing), fuel, phone, TV, internet, and other monthly expenses you might have.
  4. Add up each category to see what you have spent for the year, so far or take last year’s receipts and do the same.
  5. Now add up all the expenses.
  6. Subtract the expenses from your income.
  7. What is the number? Do you have a negative number? Is it a positive number? Write that number down.
  8. In what categories of expenses can you save? If you need to go through your where to save money tasks and determine where you can save.
  9. Call the companies and reduce your expenses, ask for any loyalty customer deals, and reduce as many of your expenses as possible regarding bills you have.
  10. For groceries, fuel, and other expenses that change, determine what you can eliminate to save money. What foods are not necessities? Is there a way to save fuel based on how you drive, where you go, and how many stops you make? Adjust your life to focus on what you want more versus what you want now.
  11. Reduce eating out to 1 time a week. Spend more on healthy foods at the grocery store, including items you will take for lunches.
  12. Go to a bank and open a savings account with $50 to $100, whatever their minimum requirement is. You are actively saving now.
  13. At work, ask to fill out a new W-2 form.
  14. If you have a 401K, start tracking it on a weekly basis. Make adjustments to your investment if you are not seeing a decent return. Speak with an advisor if you feel you need advice.
  15. Speak with a financial advisor anyway. A financial advisor can assess your spending, living expenses, and retirement accounts and make adjustments you might not have thought about. There are free services and for a while places like Fidelity will be able to offer you advice without a fee. This free banking advice may change if certain votes are passed.
  16. Make an extra credit card payment, even if it is only $5. It might seem silly, but making an extra $5 payment, right now, will bolster your confidence and make you feel as though you have accomplished something towards your budget and debts.
  17. Look at vacation packages. You do not have to buy, but simply research, set up alerts for better pricing, and make you feel as if you are going to be able to go. However, as you do this, make sure you are entering reasonable dates. If your budget, even with new savings, will not allow for a vacation this year, then look at the dates when you know you can.
  18. If your goal is to buy a new car, home, motorcycle or other big ticket item, start researching what you want. How much does it cost? What are long term costs? How long is the product life? Where can you buy this item? Following through on research helps you feel an accomplishment towards that goal, even if you cannot reach that goal for another year, two years, or five years.
  19. Today, do not buy one thing that is desired. Forgo the coffee from Starbucks, don’t eat out, or don’t buy something unhealthy from the grocery store. Cut out one thing for your daily routine that is desired, not needed.
  20. Remember that your suffering and overspending, usually comes from a lack of happiness within.

The Envelope Method

This is also a “start now” plan you can follow through with today.

  1. Go to the ATM.
  2. Remove the money you need for expenses, all expenses, unless you are going to make a payment today or in three days via ACH.
  3. Put that money in envelopes marked for the expense: TV, internet, phone, gas, groceries, household, etc.
  4. Leave the money in the envelope until you need it.
  5. Use cash for gas, groceries, household items, and all expenses that you cannot pay via ACH payments.
  6. When an ACH payment is approaching put the money back in the checking account, set up the payment, and pay the bill all within 48 hours. If the bill is automatic each month, just put the money in 24 hours before the payment will be removed from your account.
  7. Take only the envelope of money you need for a purchase.
  8. Place the receipt in the envelope after you have made that purchase.
  9. What is left in the envelope is for the next time you need to buy groceries, household items, or gas. For example, on your electricity payment put what you need in your bank account, pay the bill, and if you have money left over, leave it in the envelope. This money will be used next time. You may have money left in that envelope until winter when your bills increase again. Now, you will be able to use that leftover cash you allocated based on the average amount.
  10. Pay all money forward to the next month for the expense, versus spending it. If you find after three months you have money left—allocate it to savings. This does not include bills that change like energy and gas. Groceries, you might find you have started to save $100 a month on your expenses. This money can now be put into savings or spent on your credit card debt.

The idea of the “start now” budgets are to get you doing something now, so that you stop feeling anxious and like nothing is ever changing. By bolstering your confidence towards saving, you will start to enjoy what you do have and not what you cannot afford.

Furthermore, you will start having so much fun saving, you will begin to look for other ways you can start to save.

Here is one last way you can start gaining a better financial situation:

  • Go through your home.
  • What have you not used for six months, not because it is a holiday decoration, but because you do not have time to use it?
  • Set anything you have not used in a pile.
  • Take pictures of each item.
  • Sit down at your computer.
  • Open a sale website like Facebook, Craigslist, eBay, etc.
  • Start posting each item, with a description, image, and cost.
  • Upload it, tag it, and link it with each item you have for sale.
  • Repeat this process, until all items are online.
  • Wait for people to see the items and contact you.
  • Take that extra money and put it in savings.

If your items are not sold after two months, it is time to set up a garage sale. Host a garage sale on Friday, Saturday, and Sunday from 7am till 2pm, or until all items have been sold.

For the items that are not sold, donate them, take the deduction on your taxes.

Do not include this extra income in your budget. Forget about it. It is now in your savings. It will be used when you reach your primary goal for the first item you want.

These methods allow you not only to gain extra income, but declutter your home, as well as get your budget set up.

There are software programs you can use to design your budget. If you have trouble writing things out or starting your own budget in an excel spreadsheet, then get a budget program and start assessing your situation.

As you follow through with these methods of reducing expenses, and saving money, you will start to fall into a routine each month of adjusting your budget for your true expenses. Sometimes you may have a yearly bill, medical bill, or quarterly bill to pay, but as long as you budget for it each month, and have savings you can start to lead the life you truly wish to have.


Thank you again for purchasing this book! 

I hope this book was able to help you with your needs and to satisfy your reading pleasures. 

Now you know that how to budget your income is not hard, but it does take common sense, self-discipline, and the desire to live a debt free life. It is understandable that you might have some setbacks as you attempt to get your budget on track.

No one can change their behaviors in a day, but you can adopt a new routine, so that you stop adding to any debt you have. As soon as you put your mind to changing your mindset about how you will live and the things you truly need, you can have a better life.

Suffering comes from wanting too much and being jealous of what you don’t have, instead of loving what you do have.

Use those “start now” steps to get started and prepare your budget. If you do break the budget, don’t worry. Worry and stress will have you breaking that budget each month. Instead, own your faults, create a tighter budget, and work on your mindset, so that you don’t go with the “I want it now,” attitude you have had.

Finally, if you enjoyed this book, please take the time to share your thoughts and post a review on Amazon.  It would be greatly appreciated!

Thank you and good luck!


Millionaire Mind – How to Budget is going to take you through some simple, easy to start steps. Before you reach the end of this book, you will have tasks you can start immediately and start to feel comfortable about your financial situation.

You will discover how your mindset can be hindering your spending habits. You can stop letting your “want now” attitude from getting in the way, just as soon as you finish this book.

Unlike other guides available to you, this one is set up for easy reading, where you learn some real life methods for solving your debt issues, as well as getting a budget that will help you reach those goals and dreams you have.

You know there are things you wish to buy or places you want to see. It will take time. You will have to correct any debt situation you have, but rather than a lot of stories about what someone else did- you now have a guide that will take you through the steps of assessing your situation, find where you can save, and much more.


  • How to view your income and expenses
  • Determining your recurring and non-recurring expenses
  • Where you can save money and how to save that money
  • How to pay off your credit card debt

Act now, so you can be debt free in a reasonable amount of time. Each person has a different amount of debt, so while someone might be debt free in a year, you may need five years.


  1. Gain steps on changing your mindset
  2. Finding new income pathways
  3. How to start right this minute in creating a budget

You are ready to take the next step. You are already thinking of ways to change your spending habits for a better life—now you just need the how!




[]Millionaire Mind

Stocks: How to Achieve Financial Freedom



The stock market is a centralized exchange market that deals in $55 trillion or more annually. The total market capitalization is defined globally versus each country. The United States has the largest market share, Japan comes in second, and the London Stock Exchange is a close third, sometimes second. The stock exchange in each country provides a place for stock traders, both people and companies, to trade stocks.

Companies list their shares on the stock market to make it more open to the public versus a private sale, which can also happen. A private company may sell stocks to investors, but not allow their shares on the exchange. The type of stock trading the average person does is via the over the counter market (OTC).

Your trades are going to be through a dealer, usually a company like Charles Schwab, Ameritrade, Fidelity, or Edward Jones. The centralized market allows companies to put their shares on multiple market exchanges around the world, instead of their local market. For example, Nestle trades on the New York Stock Exchange, but Nestle is located in Switzerland. Novartis is another Swiss company that appears on the NYSE.

The stock market contains numerous players, including companies, stock traders, large investors, banks, insurance companies, hedge funds, pension funds, and sometimes governments. There are a couple of ways the stock exchange may work. The NYSE is an open outcry market, where bidders stand on the floor calling out numbers in order to purchase stocks. There are also virtual exchanges that work based on a network of computers, where traders enter the market electronically. The NASDAQ is an example of an all-electronic market.

You can become a part of this world. You have electronic platforms at your fingertips that allow you to start trading in the stock market in a matter of minutes. Throughout this book, you are going to learn some beginner concepts to help you gain the millionaire mindset you need to start trading with success.

You will learn whether stocks, mutual funds or ETFs is right for you. You need to understand the best way to invest the stock market for you, not for another person. You are not going to start trading like Warren Buffet in one day.

It will take time. You need to understand trading analysis, risk versus reward, and how to choose the right broker, so you can make the earnings you desire. Let your dream of owning a second home, taking a one of a kind vacation, or retiring comfortably come true. It just takes trading stocks wisely and you can be set for the rest of your life.

[][]Chapter 1: Stocks or Mutual Funds?

Stocks are traded individually. You can choose to purchase shares in a specific company because you believe you are going to make a profit, with the investment. You choose one versus a group of stocks to invest in all at once. Mutual funds are different. Mutual funds are a pooling of money from various investors, where a mutual fund manager is going to invest the money based on specific objectives. With mutual funds, it is often about trading a specific index like the S&P 500.

You may decide to invest in both, or just one. You also want to make certain you understand your other option. There are three ways the typical investor will start “playing the market.” They are ETFs, stocks, and mutual funds. ETFs are exchange traded funds. They are similar to mutual funds because the money is spread across many stocks. However, ETFs are traded like stocks, meaning you choose which shares you want to buy and sell, versus mutual funds where you need to redeem the shares. ETFs are indexed stocks, which are typically passive versus actively managed for growth.

Before you start investing in the stock market, you want to know what option is the best for you. ETFs are usually in addition to stocks or mutual funds. They are a passively managed situation to get into when you are trying to limit your risk and gain long term growth.

For now, the concentration will be on stocks or mutual funds, and which one might be better for you.

The Four Step Assessment

There is a four step assessment you can use to determine whether you are going to be more comfortable with stocks or mutual funds to increase your wealth.

Step 1: Your Savings Phase – what is your age? In your 20s and 30s, you might have considered 401Ks and Roth IRAs because of what they can provide you. First, 401Ks offer you a way to invest in mutual funds via your employment. Many companies allow you to contribute funds into your 401K, choose an index, and they will contribute a percentage to your fund as well. Roth IRAs are long-term savings accounts that allow you to build money over time for retirement. At this stage in your life, you are building up a retirement fund with the idea that you still have 30 to 40 years before your retirement. A slow and steady race to your retirement savings is fine. You also have other contributions to make, such as saving for a house versus investing in the market with all your earnings. Most mutual funds allow you to begin an investment with $1,000 or less. Mutual funds also tend to be great for beginner investors, who want to set up a diversified portfolio. Stocks require a strategy. Having experience in life and in investing is best, which is why people usually wait until they have a fine tuned approach and are in their 40s before actively trading in the market. A portfolio is also better with $50,000 versus a couple of thousand. So your current savings and experience should help you determine whether mutual funds or stocks are the right investment.

Step 2: Taxes – stocks provide a better tax outlook. You or your stock portfolio manager are responsible for taking gains and losses on your taxes. If you have a portfolio manager, then you have a deductible fee for your tax return. You will pay capital gains taxes when you make gains, but you can also earn a deduction when you have losses. Mutual funds are usually about making profits all the time. Mutual fund managers tend to sell off the funds that are creating losses, so you still see a gain. It means that more often than not, your mutual fund investment is a capital gain versus a loss. Your fund value is going down, but you still gained a profit from the sales of certain stocks in the fund. This is one area where stocks are better. You can ride the wave of losses and wait for the market to come back. You can also take a minimal loss and thus a deduction on your return.

Step 3: Being Hands on or not – mutual funds are set up to be a hands off approach. You tend to “set it and forget” about it. Your mutual funds are managed by the type of investment you are in and only when you want to sell some shares or change to a new fund, do you usually take a hard look at how much money you are making. Stock investors want their shares to be making a profit versus a loss. They want the control of making it happen and will sell to minimize their losses in a bad decision. If you want to have control of your investment, you need to invest in stocks versus mutual funds. Additionally, mutual funds offer less transparency, than stocks. This also has to do with the amount of risk you are willing to take on, while being in control or not having as much control. The smart investor knows their risk/reward ratio and makes certain they are comfortable with it.

Step 4: Mutual funds are like the subway system. You hop on and ride the subway car with everyone else, and the system decides where the stops are. You end your investment with everyone else. Stocks allow you to manage your portfolio like a limo. You have the professional navigation you need based on a custom tailored investment package that will fit your goals, provide risk management strategies, as well as meet your income goals.

For the millionaire mindset, you have to be willing to take charge of your investment portfolio, diversify into various investments, and above all meet your income goals. To do this, you might actually find that it is not a decision of one or the other, but rather a grouping of mutual funds, ETFs, and stocks. Your stock investing can be the high risk, high reward, while your mutual fund and ETFs earn money over a long period of time.

The savvy investor knows when to ride the market, when to diversify, and overall how to make a profit through various investments. You never want all your investment apples in one cart, otherwise you could sustain a considerable loss on a market turn.

[][]Chapter 2: How to Start Small

The goal anyone has in stock investing is making money, with their money. Not everyone starts off with the same investment capital. You may have $1,000 to fund your account. It is a small way to start, but not impossible. You just need to be a savvy investor.

Here are some tips on how you can start small:

  1. Look for high volume movements.
  2. Assess stocks for liquidity.
  3. Monitor the indicators.
  4. Understand the investment needs to be short-term.
  5. Watch the news.

Volume in the stock market is about the market movements. If there is a high volume of interest in a stock, there is going to be more movement in that stock on a daily basis. Day traders look for movements, hop in for a short amount of time, and make a profit. It all has to do with how the money is being moved in the market.

A stock that is not moving quickly in a short time has less active volume. Traders are either getting into the stock, where they will wait for years or not getting into the stock at all. You want high volume, with high liquidity.

High liquidity is the money side of things. There is a lot of money invested in the stock and that money is making the stock share price move. The movements are what you want to assess and trade on. You will learn more later about analyzing the market. For now, you just need to know that you are looking for stocks with high volume and liquidity.

You also need a stock that has positive indicators. These indicators can be company news, whether employees are purchasing their company stock or selling it, any new deals or purchases, and company stability.

For anyone investing with $1,000 or even less, you need the quick short-term turnarounds, with high profit. You want to choose stocks that you can make $100 or more on each time you invest. The more profit you earn, the more capital you will have to start investing in numerous positions.

At the beginning you are going to invest in short-term stocks. Short-term stocks provide you with a way to increase your portfolio in a short amount of time, versus waiting years to try and buy bigger paying stocks. Now, you may not be able to earn $100 each time you invest. You might find you only made $20 and then on another investment you made $200. The point about choosing appropriate stocks for your $1,000 investment is that you are looking for big movers. You want the stock price to increase, in large dollar amounts not pennies. Penny stocks are for day traders with capital. If someone is investing $100,000 in a stock that is moving by the penny, they are going to get a nice return. If you invest 20% of your $1,000, your return is peanuts.

So you want the stocks that are going to have large movements, a small investment per share, and all in a short time. Another thing you have to be worried about when investing in stock shares is the commission. You always have to factor the commission into your potential profit. If you pay $5 in commission, then you want to earn more than $5 on a stock investment or you are just breaking even.

Let’s look at an example from Google stock price listings. Apple was near 93.40 USD per share. However, in 2015 around the same time, the price was actually 132.54 USD per share. Four years ago it was at 100.01 USD per share. Apple stock was above $100 for several months, but it has gone way down. Anyone who bought stock in Apple and rode the profit to 132.54 would have made money, but if they did not sell at that point, and still own it today, then they have lost nearly $40 per share. In another five years, Apple could be closer to $200. You have to understand the market before you can truly understand what your shares will do when you invest.

Apple is a solid company, which is why most individuals buy in when the price goes down and then wait for it to become higher before taking their profit. As a long term investment it works. You let the market have its ups and downs, eventually getting a great profit. However, it comes at a cost. Let’s say, you don’t want to spend more than 20% on any stock investment, since you have $1,000 to spend. It means you can only use $200 of your $1,000 to invest in any company. If apple is at 93.40 USD, then you can barely gain more than 2 shares in the company. Two shares will not offer a great return. If the stock moves to 94.40, you have made $1 per share, which means you have earned approximately $2 per share for your $200 investment. Only if the stock goes from $93 to $193, would you gain a decent earning, but this could take 5 years. It could take six months.

Meanwhile, your funds are tied up in something that is not moving and not providing a great return.

Let’s take a look at HP or Hewlett Packard. This tech company has seen significant changes. Two years ago it was at 40 USD per share. Today it is closer to 12.26 USD per share. The news on HP is that the company will split. It will have an enterprise section that deals in software, services, and hardware. It will also have the PC and printer side. The enterprise tools account for 50% of the company’s. The news believes with the company split, there will be more value in the enterprise side, thus more value to shareholders. Buying in with the split could turn $12 into a tidy sum, possibly even bring it back to the $40 or more per share HP was trading at two years ago.

If you purchase $200 worth of HP, it means you have purchased about 16 shares. If the stock price moves from $12 to $40, you earn a profit of $28 per share, which is $448 total profit. If this happens within 30 days’ time, then you have successfully made $443 in profit, while just letting the company restructure. This is not to say it would happen, but rather to give you an example.

News indicates this “rocket stock” will increase greatly after the company is restructured and the new enterprise HP stock is up for public investment. Experts believe a nice little profit is to be made in a short time period. You could hold onto one stock for years and only make $100 in profit or you could find stocks that are going to shoot to a new 52-week high in a matter of days or months. When you have $1,000 to invest you want to make certain you are earning with greater potential per investment.

Also on short term buy-ins, you are watching your stock more closely. You are analyzing it to see if it will remain steady, causing losses, or making you quick money. You’re working harder for your profit, but also getting more benefits.

The examples are a perfect world. Investing is certainly not perfect and many decisions can impact how you are going to trade in the market.

What you want to pay attention to is how you can make a large amount of money in a short period of time, while maintaining your risk/reward ratio. If you can do this, then you can start small and grow your investment capital to buy into some of the larger stocks like Google. Google is 685 USD per share. It actually hit over 700 USD per share before going down to $685. A movement of $15 is a great profit, if you have the capital to hold enough shares. Imagine a person that bought Google stock when it first when public? The cost of a share was $85, when it went public in 2004. Now 12 years later the cost is $600 more than it was in the initial public offering.

If someone bought 100 shares, they would have invested $8,500 in Google. If they left these shares alone and the profit was 600, they would have made $60,000 in profit. What if the person saw that Google was going to take off and decided to buy more shares at $100? Perhaps investing a further $10,000? The second 100 shares would have earned $58,500, nearly $60,000.

There are stocks you can make a great deal on, if you have the capital. So, while you are starting out small, your millionaire mindset needs to focus on what potential profit can you earn with a small investment. What companies are going to rocket to a whole new level like Google that will turn you from a small investor to one with plenty of investment capital?

Never be sorry you have to start small. It is possible. Work with the mindset that even a small investment can turn great profit, so that you are able to grab a hole of the companies that are able to increase more than $100 per share and remain above that mark.

[][]Chapter 3: Pros and Cons of Investing

Every type of investment vehicle is going to have pros and cons. The stock market pros and cons are going to be listed, but before they are:

  • Keep in mind that you are the only person who can decide if the advantages are truly worth investing your hard earned capital. If your trading psychology is too afraid of risk despite the potential profit, then investing in the stock market may not be for you. Outline, your own feelings to determine how you feel about the ups and downs of the stock market.

Pros for Investing

The stock market provides abundant choices. There are over 2,000 companies that trade on the NYSE. You also have stock markets around the world, where you can invest in other companies. You can decide on whether you invest in stocks, mutual funds, or ETFs based on the risk you wish to assume, but overall you have the potential of choosing among various products to earn dividends and profit based on share price.

Investment opportunities are broken into categories, such as tech, energy, oil, gold, silver, and many more. You can be diversified within the market by holding shares in a variety of industry sectors.

The stock market has liquidity. It means you are able to buy and sell stocks almost instantly to gain a profit, as well as to gain a profit. Real estate takes time. You have to find a buyer, one willing to pay the price you have set. In the stock market, you can set a sell order to protect your position and sell out taking your profit. You don’t have to wait for someone else to make a move before you close your position. The money is also back in your account to trade with again that same day. Real estate can take 90 to 180 days if it is not a cash transaction, and at least 30 days if it is a cash transaction. For this reason, you know that you want to be in an investment that offers liquidity and where others are playing with their liquidity to increase or decrease stock prices for their profit.

Even small investments have the potential to offer substantial returns on your investment. Yes, it can take some work to find a big winner; however, you still have a higher return, nearly 12% more in stocks than with bonds and savings accounts. In fact, current 5-year savings accounts are only offering 20% interest. You could make 20% on one trade in a week, if you choose correctly.

Cons for Investing

Volatility is both a pro and a con. However, it is in the con category because volatility can quickly turn around on you and create a significant loss. Volatility means giant market movements in a short amount of time. If you buy-in expecting the stock to increase, it may have hit the day’s ceiling and actually create a loss for you. In the same way, the stock could make a huge profit within a few minutes.

Volatility is mainly a con when it comes to time. Stock investing is time consuming, when you are trying to catch the volatility of a stock. You need to monitor the news, experts, and technical indicators to determine if your position is still beneficial or if you need to sell and take your profit. Whether you have mutual funds or stocks, you still need to assess your position on a frequent basis to determine if you are truly making the money you wish to or if you need to switch products to gain a better profit.

It is no lie that it is possible for you to lose money, including all of your investment capital, when you “play” the stock market. However, by learning how to assess the market, which experts to listen to, and doing your market analysis, you can protect yourself from losing money. It is all in how you approach the market versus the volatility and time it takes to invest. If you are willing to take the disadvantages of investing, perfect your trading psychology, and train for investing, then you are going to be successful.

It is going to take being savvy and having the millionaire mindset to truly gain in the market. It will also take time. Someone who starts investing in their 20s, has time to have some losses, as well as more gains. They also have time to learn. If you are already in your 40s, you have a lot of catching up to do, but you can and then you can succeed and gain financial success.

[][]Chapter 4: Stock Analysis – Fundamentals

Stock analysis is conducted in two different ways. Most stock investors understand that they must look at both types of analysis in order to assess how the market will move. If you fail to look at the big picture, you could find yourself with significant losses.

Here is a recent news situation that will bring the point about looking at the big picture before analyzing one specific time frame.

On June 24, 2016, it was announced that the British majority vote went to exiting the European Union.

This little blurb seems short and you might wonder why it would affect the NYSE at all, after all, it is a blurb about Britain. However, if you remember anything about your history, then you know the European Union was established to provide economic stability for countries after World War II. The union was established to provide fair trade. It has become much more than a tool for economic stability. It has become the power that sets laws in Europe for countries that belong to the union.

There is a debate that the EU is trying to extend beyond its powers with allowing immigrants from numerous countries to live in several of the EU countries including the UK, France, and the Netherlands. It is causing instability, as well as extreme fear in legal residents due to terrorist activity.

The proposed vote to leave the union has its valid points, but it also causes great concern over trade in the UK. A lot of the exports the UK makes are to the European Union. The trade relationship ensures that products imported and exported are fairly traded, but more that the EU countries are the ones receiving most of the goods between EU countries. In other words, as much as the UK exports, they also import from other countries that are a part of the EU.

The trade relationship is going to be greatly affected by this. The UK is going to have to make new agreements that are separate from the EU, and it is not clear how this situation will resolve. If it works successfully in the UK, other countries may start to leave the EU too. It could be the end of a decades long trade agreement that worked best before globalization. It could also lead the UK to realize that they must remain a part of the EU to remain stable.

Whatever happens, one thing is known right now. Upon the announcement that the vote was to leave the EU, the UK’s Great British Pound or GBP was at its lowest against the USD (US dollar). Certain stocks also became unstable and the market suffered losses after the announcement.

One piece of news greatly affected the stock market, and numerous companies trading on various world stock exchanges. Anyone invested in stock shares would have seen losses. If they sold out of their positions and set up short sales, then the potential earnings were there. Of course, one would have to believe the UK would vote against staying in the EU.

This real news story is very important because it explains why you need to pay attention to fundamental analysis.

What is Fundamental Analysis

Fundamental analysis examines the economy, companies, and industry groups. The goal is to try and forecast what is going to happen in the stock market based on future price movements.

When you examine the company level, you assess the economic date based on the current growth and stability of a company and compare it the future growth and stability potential of the company. The idea is that a stock’s share price is a fair value of what the company is worth based on stability and growth. A stock can also be overvalued and undervalued. However, the thought is that the price of a stock will eventually work itself out to be the fair market value.

Assessing a company is only a part of fundamental analysis. The industry group is another aspect to assess for stability and growth. Is there just one company in the world that sells a “Fitbit” type product? No. There are many companies that are trying to gain the market share for their innovative technology that combines health and time, with one’s mobile phone. You have more than one company that sells computers, and virus software. Companies belong to an industry group, which is a category the company fits into when it comes to the products or services they sell.

You have several oil companies that you can invest in. But which oil company has the fair market value price, which company is over or under priced? Which company is attracting the interest of investors, so there is a potential earnings opportunity? These are the factors you need answers for. When you assess an industry group, you want to see which company in that group is the most stable, which one is projected to grow, if any company is undergoing a stock split, or if a company is overvalued and will be losing value in its stock price.

When you find the company that is going to show a stock price movement, then you invest. You stay around as long as the stock is increasing or decreasing in price, while you make a profit.

When it comes to the economy, you have to look globally. You cannot just look at the economy in your country anymore. It used to be that you wanted to focus on the country the company is in; however, globalization has made it possible for a company to grow nationally and internationally. It is also possible for a country’s economy around the world to affect a company. Yes, you want to know if the company’s economy is doing well. Is the economy gaining stability? Is it showing improved strength? Is inflation too high, too low, or just right? Are the interest rates going to change? Is the economic sentiment positive, negative or neutral?

When you have an understanding of the overall economy, industry groups, and potential changes within a company, then you can determine whether or not to invest.

Steps to Assessing Fundamentals

  • Find a company you are interested in investing in.
  • Examine the world economy and the company’s country of origin economy.
  • Look at the industry group. Is there a company in the industry group that is performing or expected to perform better than the company you are interested in? Is the company you have chosen to assess the best looking in the industry group?
  • Determine the news of the company. Is the company undergoing restructuring that should turn to more value? Is there growth in the company? Has the company lost its market share to another in the industry group? If there is any news about the company, you will be able to find it.

News will include more than what might appear in Google News, other online sources, and on the TV. News could include information about the owners or employees of the company. For example, is the CEO buying more shares of the company? Is there any issue with the current staff running the company? You need to know as much as you can with regards to news. Not only big things like what is happening in the world, but also what is happening inside the company. If an executive is getting ready to retire, this could signify a change in how the company is run.

You may discover there is not a lot of things happening that are newsworthy about a company. You might also find that it is the strongest in the industry sector. When you have assessed the fundamentals, you need to move on to look at the technical aspects.

Technical analysis is just as important, and part of the larger picture. Before getting into what technical analysis requires, there are statements left to be made about fundamentals.

What if the company is not the best?

What if you find the company you were initially researching is overvalued or undervalued? What if the projection in the news is for this company to lose against others in the industry?

Just because you spend time researching fundamentals of a company and its industry group, does not mean you need to invest when you find something is not attractive. You can always choose to invest in a different company within that same industry group. If you find the industry group as a whole is not going to perform well, then leave it and move on.

You are not obligated to invest simply because experts say you should or because someone else is. Rather, you need to assess the fundamentals to see if something gains your interest. If the industry group as a whole is overvalued and not going to become closer to fair market value, then set it aside. In a month, reassess and consider, is a company in that industry group looking better? Is there a potential for you to make a profit?

Sometimes waiting is the answer, versus going with a trade. You have to figure out when to enter the market, just as much as knowing when to exit and when to hold your position in light of fundamental analysis information that is unfavorable.

It goes back to the news about Britain leaving the EU. Scotland may need to leave the EU because Britain is, which also means Northern Ireland will be affected. If the UK completes its leaving of the EU, what does this mean for UK companies? Is it a positive situation for the US or North American companies to start generating positive income and growth; therefore, is it wiser to stay in the market for US based companies?

Due to the economic turmoil such a vote and decision is causing, do you want to remain out of the market? There are always going to be questions to assess on a global, industrial, and company level. If you need to wait to see how a big economic move by a major country in the world will turn out, then you need to wait.

You have to protect yourself and your financial goals.

[][]Chapter 5:  Stock Analysis – Technical

Technical analysis is the second type of research you need to do when examining the stock prices of a company. Technical analysis is based on past price movements that have been charted. Your goal is the same—to figure out how the price is going to move, but you are using graphical data to determine the answer.  There are several ways you can look at graphed data.

The Types of Graphs

Candlesticks, price points, and bar charts are just three types of graphs and charts that are used when assessing technical data. Candlesticks are complicated because you have to learn what the dark and light colors mean, as well as the box and line on either end of the box. Bar charts are also difficult because they look at a slice of time, but not always in the easiest manner.

For a novice, you want the simplest graph, which is a price graph that indicates a specific time frame and graphed points. For example, if today is $93 for Apple shares, and tomorrow is $95 per share, then you would graph $93 and $95, to indicate that from one day to the next the price when up $2 per share. Over time, several points are made on the graph, showing you a line as the price goes up and down.

The line graph in most stock programs can be hovered over to check the price at any given time, in any given time frame. For example, you might elect to see a 5-year graph, then narrow it to 1-year, and narrow it still until you eventually see 1 day’s price movements.

The Dow Theory

Charles Dow created a theory at the turn of the century, around 1900. He is also known for the Dow Jones. There are three theories that he stated, which are important today.

He stated that the price will discount everything, price movements are not random, and you should assess the what more than the why. Those who follow Dow’s theory believe that technical data reflects all information, including market sentiment, news, industry groups, economic stability, and current price movements. It also reflects what all traders are doing with a stock.

Dow also believed that prices trend. There are also points when there is no trend, where the continuation of a pattern is sideways versus an up or downward trend.

Dow stated that one must look at what the current price is and what the history of that price movement is in order to discover where it is going to go. He firmly believed in supply and demand impacting a company’s stock price. After all, it is not a stretch to believe in supply and demand, since it is how the economic world works. A demand for something when the supply is low is going to drive the price up. A high supply with a low demand is going to drive the price down. If supply and demand are fairly evenly matched, the price is going to remain neutral. If supply is low and demand is low, there is also a sideways trend and vice versa when supply and demand are both high. Dow believed you could trade on the high demand of a stock to gain profits or you could short sale a company when the supply increases while the demand declines. This will matter when it comes to support and resistance.

Major Stock Indices

There are various stock indexes you can assess as part of technical analysis. You have the S&P 500, Dow Industrials, NYSE, and NASDAQ. You can do a broad market analysis to see how these indices are reacting to price movement, news, and economics.

You can then look at the specific sector analysis, where you look to see which groups are stronger and which are weaker within the broad market. For example, is the tech group doing better than oil? Once you have a category, you can then start to look at individual stocks for analysis as a way of identifying the strong and weak stocks within that industry group. You are looking at the numbers, graphed price movements, as well as a comparison of numbers based on the broad market, specific group, and stocks within that group.

Technical Indicators

Graphs can be used to see technical indicators. Indicators are something investors “see” as a change or continuation of a pattern. Again, let’s consider Apple. Apple when from $132 to $93. The price went down over a period of time. This means it was in a downtrend. If a price went from $80 to $115, then the price is in an uptrend. A downtrend means the stock is losing value, while an uptrend means the price is gaining value. Remember, you have to assess if a stock is under, over, or fairly valued. Stocks that are undervalued will try to balance out to be fairly valued by gaining in value, while over priced stocks will try to rebalance to the fair market value by losing value. It can take quite a bit of time for a stock to reach a balance again.

The key point is that you want to look at the technical indicators, which show whether or not a pattern is going to continue or change.

One of the most used and understood technical indicators is the support and resistance. You also have the overall trend, which assess the moving average for a specific period of time and momentum like the MACD.

The first thing you want to do when you are looking at indicators is assess the overall trend. What is the broad trend for 5 years and then again at 52 weeks? Is there an up or down trend? Has the stock been trading sideways, meaning little movement up or down, during the broad period? Sometimes with stock prices a movement can be in an uptrend for several months, even a few years, but something changes and people begin to see the stock price as overvalued. You could enter the market on one of these points and lose big if you try to follow the trend. Yet, you do need to understand how the market moved in the past, to see if there are frequent trend changes and when these trend changes occur.

For example, Apple stock tends to surge on positive news of a new product. The iPhone 6S made small waves in the market price. However, it was not as significant as an earlier release of the iPhone series. The reason was the small changes made to the actual phone as compared to an earlier phone version that had undergone major updates not only in size, but options.

Sometimes new products change a current trend for a time based on whether or not stock investors see the product as significant. The normal moving average or trend of a stock might change for a short time, but then go back to what it looked like before. This is where you need to learn technical analysis, so you don’t make a mistake in following a trend that is ending based on other factors.

Support and Resistance

Support and resistance are definitely easier to trade on because there is a cap on the up and down trends. The support is considered a low for the stock price. It is a low that is consistently hit, when a price hits the resistance. The resistance is a cap at a price that is consistently hit on an uptrend.

To better explain this, let’s say you are watching Google stock prices. Google makes it to $715 per share 15 days out of a period of 30 days. Those other 30 days the price goes down to $685. So in a period of 30 days, there was a consistent movement, where the stock price when from 685 to 715, gaining $30. The price when then lose this $30 in a matter of, let’s say, 4 hours. The next day it would steadily go up again until it hit $715 and drop again. It would generally take 1.5 days for the price to hit the resistance of $715 and only a half day for the price to drop to the support line.

However, in our example, the price never made it below $685 and it never made it higher than $715. In a normal example the price may not hit the support and resistance absolute price each time. Sometimes, the price might be $687 before turning back to an uptrend and ending at $712 before going into a downtrend. The point is, over a period of time a certain maximum and minimum are not exceeded. There is a continuation of an up and down trend with specific maximums and minimums that you can set your “watch” by.

It allows you to trade within these parameters making money on each up or down trend, as long as you are watching the market.

The Breakout

The breakout is another type of trend, which is when a sideways trend or the support/resistance lines are broken. Let’s say, for Google the price moves up to $730 and drops to $695. The price then goes beyond $730 to $800. The price started at $685, increased to $730, had a short drop to $698 and then made a new high of $800. This is a breakout of the support and resistance trend. A person riding the trend to $790 and selling out from $685, would make a lot of money. A person that believed the current trend to the resistance line was still in place, would have made money, but lost on the breakout, unless they entered again at $695 and rode the trend to $800 before selling again. A breakout can just as easily be a downward trend.

There are indicators in the market that show whether this will happen. It is your duty to learn the indicators, which can be head and shoulders, double peaks, and many others.

For technical analysts who believe all you need is a graph and to sight patterns, you will believe the news, economic factors, and industry factors are already assessed and charted.

There are actually programs that do this for you. Invest Tools is one company that will put up three green or red arrows indicating whether you should buy or sell a stock. These indicators are an assessment of fundamental and technical concepts.

If you do not have a program such as this, then you need to do your own research and look for all the indicators. If you see three positives, then you can feel comfortable that the trend is going to change or continue within the support and resistance.

It is going to take you time to learn how to read the market based on both fundamental and technical concepts. It is understandable that you want to start trading today. You want a start now plan. But, part of the start now plan is learning. If you have never looked at a stock chart before, then you need to learn the most popular indicators, how to read the graph, and figure out the patterns that people trade on.

If you don’t do this, then you could see significant losses, potentially, losing your entire capital and be unhappy with the market. Don’t let yourself become market shy or fear the market. Rather than get into this type of situation, where you bad mouth the market versus your own skills, look at examples, read the charts, and practice.

[][]Chapter 6: Trading Psychology

Trading successfully requires the right mindset. You need to learn how to take a look at who you are and determine if you can truly trade for a profit without making some of the common mistakes that new traders make.

Trading psychology is the term associated with how your emotions play into the investments you conduct. A person can be a low risk trader, meaning they like a hands on approach with a manager. They are constantly checking their investment portfolio and assessing if there is too much risk. A high risk trader is more involved in the trading process, monitoring each investment and determining when to sell to gain as much as possible from their investment, without sustaining huge losses.

There is a lot more that goes into trading psychology than being low, medium, and high risk. A lot of how you trade may be affected by your emotions. Many experts state that you should trade like you are a robot. You should trade without any emotions affecting your judgement.

It is good in theory, but can you do this? Can you truly turn off your emotions and trade like you are not messing with your retirement, savings, or other money? Let’s find out.

Who are you?

The first thing we need to do is assess who you truly are. It might sound like a metaphysical question, but how well do you really know yourself? How honest are you to you?

There is one person who knows that she is a low risk investor, but needs some medium risk investments in order to gain a retirement fund. Her investments should be high risk given her age; however, she knows she gets uncomfortable with the up and down of the market, and the potential huge losses she could sustain. She does not want to lose all of her investment funds, nor worry, but she will worry even in relatively safe funds.

Another person doesn’t assess his investments. He just goes for whatever looks good. He takes chances. He doesn’t like losses at all and when they happen he starts trying to get his money back by taking even more risks, until finally he has no capital left. This person blames the market for his losses.

Which person do you think has a better trading psychology?

If you said person A, then you are right. She is going with funds she feels safe in, versus trying to handle a riskier situation she knows she would lose sleep over. Our second example was a revenge trader. This person didn’t do his homework, but worse blamed the market and tried to get his losses back on each successive trade, only to continue losing money.

You don’t want to be a revenge trader. You don’t want to ride the highs and lows of your emotions just to try and gain money. This is not how the most successful investors are. Do you think Warren Buffet is going to invest after a significant loss for the pure satisfaction of making all his money back?

No, he is not. He is going to look at the investment, why it didn’t pan out, learn from the mistake and have 10 more investments already lined up to go. In fact, Warren Buffet has said in interviews that most of his day is made up of reading. He reads and reads, and takes decisive actions based on what he knows. He stays within his knowledge base and does not try to overextend himself into areas he knows nothing about. Given his status as one of the wealthiest investors in the USA, it’s fair to say, he knows a thing or two.

How to be Successful

If you want to be a successful investor that becomes a millionaire, then you need the right mindset.

  • Stay within your strengths. What do you know about the various industries in the world? Do you have a lot of knowledge about oil, science, medicine, or technology? You want to choose the industries you are interested in based on your basic knowledge.
  • What are you willing to read about day in and day out? The more you read, the more you are going to learn. Thus, what are you willing to read, so that you can learn and invest with more success?
  • How do you react when it comes to money matters? Are you the type of person that gets upset with losses, even if it is only $10? Do you tend to get very excited with a win and let your emotions rule?

As soon as you can answer these questions, honestly, you will have an understanding of who you are, how you will trade, and how you will become successful.

If you know that you are a revenge trader or you ride the profits until you lose because of your excitement, then you can work on curbing this behavior in yourself.

Here are a couple of suggestions:

  • Walk away from your computer when you complete a trade.
  • Write down how that trade went, whether you lost or gained money. What were your initial emotions? Did you stay within your trading plan?
  • If you are not calm, listen to music, meditate, or get out of the house. Do not trade until you are emotionally calm again.
  • Work on improving your emotional reactions in the rest of your life. Often times how we react to money situations is how we react emotionally in the rest of our lives.

These suggestions sound simple, even filled with common sense. You might be nodding or going “I know all this,” but can you put it all into action? The reason it has to be said, is that people tend to get emotionally involved in their investing and forget to step back, assess, and work on their overall emotional behavior.

Your trading psychology is probably the biggest area you have to work on before you can trade with real money. If you do not work on becoming a “robot,” then you could end up losing your entire capital and your financial stability. Don’t let it happen.

[][][]Chapter 7: How to Choose a Broker

You are going to need a broker. Today brokers work online, as well as offline. Finding the right person to handle your needs is based on a few things about your trading needs. Let’s assess your trading requirements before assessing broker details.

  1. Do you want to be a hands on trader? Remember this question from an earlier chapter? It is going to apply to the type of broker you choose, as well as the type of investment you make. If you want to trade mutual funds because you want less control, then you will need a broker you can speak with. You will want a broker who will manage your account, as well as offer you a trading platform online to check your investment. If you want more control and stock investments, then you can usually go with a broker that offers you an electronic trading platform and less management of your portfolio.
  2. What is the risk you are willing to assume? Brokerage accounts with personal fund management are going to help you when you need it. There are electronic brokers that have hands-on tutors and money managers. They can answer questions for you and help you read technical indicators.
  3. How much money do you have to invest? The more money you have to invest, the more options you have when it comes to brokers, but you can also find yourself in trouble with scams. Investing a sizeable amount without a money manager can be great if you are in control and willing to spend each day assessing your stock investments. If you don’t have the time, then you are going to need someone you trust to manage your portfolio, someone you can speak with and see often.

These three points will help you determine if you want a local broker who can help walk you through each investment or if you need to look for an electronic platform that offers tutorials, webinars, and 24-hour access to help.

Now let’s assess what your broker should be able to offer you:

  • Full service or not: some brokers offer full service, meaning they are on hand with everything you need to invest. A broker with full service options tends to charge a higher commission than the self-service option.
  • Assess the fees. Are you being charged $5 per trade or is the commission higher? You want an affordable commission, where you are getting the services you need, without spending too much. Many self-service electronic platforms will only charge $5 to keep the commissions affordable for the small budget investor. Keep in mind that this is per trade, meaning an open and close position is actually $10, instead of just $5 for the open and close.
  • Account minimums: most platforms require a certain minimum to be in your account. It is possible to find someone willing to provide you with an account, when you only have $1,000 to start. Other’s may have discount minimums if you sign up for other tools or their courses. Ameritrade, for example, requires $3,000, unless you already have an Invest Tools account. You do need to find an account, you can actually open and afford. With banks, who hire brokers on staff, you may be able to invest with as little as $500. The returns won’t be high, but it will get you into a mutual fund, until you can grow your investment amount for other options.
  • Margin is an option with some brokers. Margin means you can leverage more than you have in your account. Typically, you need a higher amount to begin an account, but you also have more funds you can risk in the market. The downside is you have to cover your losses. If you use leverage and lose big, you may have to sell your home or find another way to pay it back. It is risky and not something you want to start when you are new.
  • Are you able to make a withdrawal from your account with ease? Some investment accounts charge fees to withdraw a small amount. Others, may make it a fee if you drop below the minimum. You definitely need to check the rules with regard to minimums and withdrawal options.
  • Regulatory standing for the brokerage firm: If you are choosing someone local, then you definitely need to check on the regulatory standing. This standing indicates if the broker is trustworthy or if they have complaints filed against them. You want a company that is in good regulatory standing. All brokers have to be licensed in order to provide you services. It doesn’t stop the scammers from getting in, but if you know what you are looking for with regards to the license and regulatory standing, you are more likely to be safe.
  • Services offered—what other services are offered by the broker? If you decide you want to trade mutual funds, bonds, ETFs, short sales, options, binary options, and Forex can you with the broker you have chosen? If you know you are going to increase your diversity, then you definitely want a broker that can offer you the chance to diversify into other markets.

Remember, you have to protect yourself. If you fail to assess your broker correctly, you could suffer huge losses and the broker would not be held liable. You are asking a broker to make a move based on their education, your risk desire, and the market. Markets can turn against you, and a broker may not warn you quickly enough. When you choose a broker, assess them for all bullet points mentioned, as well as how well they listen to you.

You want to feel comfortable with the person you are working with. They should not be a friend, but they should be a knowledgeable person who listens to what you need and provide advice for the type of trader you are.

[][][]Chapter 8: How to Build a Portfolio

Stock investing requires you to build a portfolio, to gain diversity in your investments for better overall profit. Building a portfolio will take time and be directly linked to the amount of funds you have to start your account. At first, you may not be able to have a large portfolio. You may have two stocks, you are investing in, instead of ten. Do not give up. It is going to take time, based on your capital, but that doesn’t mean you won’t be able to build your portfolio.

Start small. In the first month, you may only invest in one stock. This is acceptable. What you want more than anything is to ensure that your portfolio is able to grow and develop, not that you lose all you have to invest in, within one investment.

Building your Portfolio, the Correct Way

  1. Start with a risk/reward ratio, you are comfortable with. Most people tend to invest with a 1 % risk and 2% reward. It means if they invest $10, then they are trying to earn $20 in profit.
  2. Assess the amount of your starting capital that you are willing to risk in the market. If you are only willing to lose 1% of your $1,000, then make certain that your first transaction is for $100, where you buy as many shares as possible for target earnings that will be 2% reward.
  3. After, you gain a profit on your first investment, don’t invest that profit. Keep the profit in your account.
  4. Look for a new stock to invest in. Again, use only the 1% or whatever the amount is you are willing to lose.
  5. Invest in the next stock and keep the profit from it.
  6. Slowly build up your capital.
  7. Once you have doubled your capital, it is time to start diversifying into more stocks at a given time.
  8. Choose wisely, but choose a couple of stocks from different industries. You never want to choose two stocks that belong to the same industry. You would be hoping to make a profit off of both, but in fact, you will lose on one and gain on the other, or you could lose on both because you chose wrong.
  9. At first, as you build your portfolio, you are going to buy into stocks. Later, you might do some short-sales, meaning you sell the stock to open a position on the basis that it will go through a downtrend. It is an advanced concept.
  10. With your newly acquired gains, you will start to hold long positions, as well as short positions. You still want your short positions because this gives you a chance to make a quick profit. However, you want long positions to open the field for more gains over a longer period of time.
  11. A long position should be something you know is going to increase steadily, even if there are a few setbacks. You expect in a year, two years or even ten years that the investment will double or triple from what you originally bought the stock for. With long positions, you are not going to panic about market movements. You are going to hold steady and weather any storm that occurs. Stocks like Apple and Google are safe haven stocks. They continue to increase, even if they see a downtrend and losses in the short term.
  12. Start investing in a mutual fund. Again, it is diversifying and building your portfolio. A mutual fund allows you to make money over a period of time, just like a long term investment. The S&P 500 mutual fund is one option. It tends to bounce up and down, but for retirement accounts, it generally pays off. Of course, you do need to choose wisely based on current market sentiments and economic factors. The point is that there is a time to invest in mutual funds to gain another egg in your portfolio.
  13. Spread your capital around to more than stocks. You can invest in savings accounts, ETFs, and bonds. Again, there is a time and a place for these investments. Bonds are something you invest in for the long term, with a low risk, just as you can put some funds in a Roth IRA for several years at a low risk, decent reward.
  14. Your main investment will be with stocks; however, don’t forget about the other products and letting your money sit when the market is not looking favorable.

One of the greatest issues people have is in choosing high risk, high reward scenarios, but then getting into the market when it is not favorable. There is a time and a place to wait before investing. There is nothing wrong with waiting, when the market is in turmoil, such as with the EU news about Britain leaving the union. Waiting can show you new opportunities, as well as keep your portfolio protected.

The best thing you can do to build your portfolio is to assess, diversify, and wait until the market is in favor.

Also ask about some safe investment options, when the market is out of favor. Your broker should be able to tell you a few places to put your money so that it is safe and still earning you a little. Sometimes building your portfolio is about taking profit only and not selling out of your entire position.

To better understand this point, you need to understand risk management. Risk management is a concept that keeps you in tune with your risk/reward ratio. It might just be the key to ensuring your portfolio continues to grow versus having a higher loss to profit ratio.

[][][]Chapter 9: Risk Management

Risk management is about more than choosing a risk/reward ratio that you are comfortable with. It is about placing an entry into the market and then protecting your investment with a proper exit strategy. Whether you invest in mutual funds, ETFs, bonds, forex, or stocks, you need an entry and exit strategy.

The Entry

When you enter a stock position, you want it to be an entry with protection. If you say you want to enter with GTC, it means you are leaving the entry position open until you cancel it. GTC is good until cancelled. The broker can fill the order whenever the terms you have set are met.

There is also the market price. The market price is the current price a stock is selling for. Yet, when you watch the market price you will see that it fluctuates because other people are also buying or selling the stock. If the price is 93 and you do not want to buy in if it hits 95, then you have to place an order that will not fill the order unless it meets your requirements.

If you do not set an order for anything other than the market, then you are going to have your position filled at whatever the price is, when the software or broker is done selecting the “submit” button on the computer. It could fill at the 95, instead of the 93 and you could find that the price is now going into a downtrend.

It is better to set a limit order. A limit order states that you wish to buy or open a position at a specific price. If this price is met, then the order will fill. If the price is not met or the market moves against your position, then the order is rejected.

A rejected order is perfectly acceptable. It might seem wrong; especially, if the market does move in the way you expected, but what if the market moved against your position and you bought in? You could end up with significant losses.

The entry needs to be sculpted around your risk/reward ratio, ensuring that you only enter into a new position when you are prepared for minimal losses.

You also need to expect that the price may decrease for a short time after you buy in. If this does happen, you have to keep yourself from panicking. It is an emotional reaction that may make you feel you have to sell because the price dipped, but that is where your exit strategy and risk management come into place.

The Exit

You are going to time your exit from the market with the idea of gaining the best profit possible. This means you set risk management orders that will follow your profit or loss and keep it minimized.

One option you have is called a stop loss. A stop loss is set at a specific amount. You might say that you bought into a stock at 93 and you do not wish to lose more than 5% of your stake. Let’s say you used $500 for the investment. 5% of this investment would be $25. You would set a stop loss $25 off the purchase price. If the market price dips to $25 below what you bought the stock for, then you are automatically going to sell the stock. Your position will close. You will lose 5% of your investment, but on the other hand, you have not lost any more than that. It is not the most ideal.

There are other exit strategies you can employ for better risk management protection. There is the trailing stop loss. It is a stop loss, but this time it trails behind the price movement. Let’s say, you bought into a stock for $93 per share, and spent $500. The price started to move to $100 per share. You set your stop loss at $25 or 5% off the initial buy-in price. Now, the market price is $100, so your trailing stop loss is at $75. When the price increases to $125, then your trailing stop loss is at $100. If the price dipped back to $100, you would find your position closed, and you would have made $7 per share. Ideally, you want to make as much profit as possible.

However, you also want to protect your position in the event that the market goes against you. There are always potential issues with the market moving against you. It is better to have protection in place, where your position will automatically close versus ending up with a loss.

You also have orders like taking profit. A taking profit order allows you to take only the profit you have made, but leave your position open. These types of options ensure that you get the profit, and minimize your losses.

You may find that you want to close your position before any risk management order is placed. It all needs to be based on your initial entry and exit strategy.

In fact, you should determine at the outset how much profit you may be able to make and set up an exit point. You might go in and ensure the exit point is placed at the proper moment, thereby canceling any risk management protection. The key is that you make sure you are exiting the market with a plan.

Any strategy or plan that you change has to be for a good reason. In other words, let your risk management orders protect you and only change them if you know the market is going to make you a better profit. You have to have evidence that the market breakout is going to continue its trend and ensure that you always have an order in place that will protect a sudden movement against your position.

The idea of any risk management protection, with an entry and exit strategy is that you minimize your losses. You may need to sell out early from a current position because it is going to cost you. You can let your risk management keep the loss small or you can sell immediately.

There is often a great argument on whether you should move stop losses or protection orders. You should not. The suggestion is not for you to change how far the risk management order is from your position, but to sell out early if losses are happening. If you take profit and ride the trend for more profit that is okay too. You just don’t want to make your losses bigger by removing risk management orders.

So exiting early is fine. You can always exit to save yourself significant losses; especially, if it is clear that the market is not going to rebound and save you from further losses.

[][]Chapter 10: Common Stock Investment Mistakes

Investing is like a business or at least it should be to you. Warren Buffet is just one of the many investors that has become a millionaire by treating his investments like a business. He deals mostly in trains and commodities, but he also makes certain to diversify his portfolio. You owe it to yourself and the hard earned money, you have made, to ensure that you are not making common investment mistakes. You want to be smart about how you are investing. There are seven common mistakes that most people make when investing. If you avoid these, then you will be more than halfway to succeeding in your financial goals. You definitely want to have financial freedom. Continue to think about the financial freedom you want, and you will be less likely to let these mistakes happen.

  1. Investing without a plan is the number one mistake many people make. They figure they can just get into a stock, make a profit, and do so with ease. However, it is quickly learned that without a plan mistakes can be made. One of the biggest mistakes is not having a protection order in place. You learned about this already and how important they are to your investment strategy. Do not become a person without a plan. Have an entry point, exit point, and risk management orders in place. From there, you can ensure that you have met your goal, managed your risk, and made a profit. Investing with a plan is more than just investing in an individual stock. It is also about investing to build your portfolio. You need to have a plan that ensures a profit/loss ratio, where you are gaining a profit versus losses at the end of the year. You also want to make certain your portfolio has enough diversity, which again takes planning.
  2. Looking at the small picture. A common mistake is not looking at the big picture. If you are looking at a 4-hour time frame, how do you know what happened during the rest of the day? Is the 4-hour time frame showing you the trend from yesterday? Do you even know what that trend was? Could you be seeing a rebounding trend or a new trend? If you do not examine the correct time frame, then you could be assessing the trends you do see in correctly. Never forget to look at the big picture.
  3. Another mistake, which is also time related, is about when you start investing. If you start investing when you are 70, then you are entering retirement. You should have your financial freedom set now and not looking for ways to quickly grow your capital. If you need financial funds to send your kids to college, you don’t want to invest when they are 16. You want to be investing all of their life. You want to have an appropriate investment plan based on the timing of your needs.
  4. Paying too much attention to someone else’s stock analysis. Yes, financial media does have its place. It is there to help you discover some stocks you may not have heard of. It is also there to provide projections for these stocks. Yahoo and Google are two companies that were talked about when Google was going public. If you listened to the news, you might have invested in Google that same day. The point is that the financial media has its place, but you also cannot make the mistake of giving it too much attention. Do you know who the financial media is? They are experts hired because they know the market, but they are also investors. If they like a stock, they are garnering attention to create a market movement in their favor. They may also be trying to get the market to move in favor of a company. It is not that they are paid for this, but in general people are going to talk about things that can be beneficial to them or to the economy as a whole. You have to be able to see through the jargon and hype, to determine if there is really something worth investing in.
  5. You do not want to be over confident in yourself or your investment managers. Depending on whether you have investment managers, you cannot let the person at the helm of your investment account make decisions without proper input. If you are the manager, then you know you need to stick to your plan. You need to have your strategies in place to cut your losses and earn a tidy profit. However, you should not be overconfident that you know exactly what is going to happen or that someone else will who is in charge of your account. You need to have certain benchmarks that are met to turn a proper profit. Get on the right train with being a robot, versus emotional.
  6. Most people do not walk away when they are emotional. Instead, they try to stick it out and make a profit even in a bad situation. You don’t want this to be you. Take your losses and learn from them. Write a journal that explores why you lost, gained a profit, and what you can do better to correct your mistakes in the end.
  7. A lot of investors forget a very important concept—you can have losses, and take less profit. The key is to have a profit at the end of the year. Let the losses go. They are not going to help you if you dwell on them. Rather, they will hinder you. Set up your trades so you see a profit, but don’t go for the amazing profit. Yes, a breakout could happen and you earn $100 more per share than planned. However, you don’t want to ride this tide, and end up losing. It is far better to stick with the minimum profit. Take that profit, and if the market looks good, stay in the investment with only your capital sum and the risk/reward ratio that you can handle.

If you can avoid these 7 mistakes, then you are on your way to getting a proper “start now plan” in place. You still have a lot to learn, but you are gaining that knowledge right now. You know you want to be a smart investor. You also know that you need to truly understand fundamental and technical analysis to ensure you are trading with an appropriate eye for stocks.

[][]Chapter 11: Tips for Investing Smart

Do you know for 100% certainty that a particular stock will hit a certain price point? No. Is there speculation that a stock will hit a certain price point? Yes, you can speculate and predict that a stock might go to a certain price before it turns around into an opposite trend. However, not even the experts can say that something will happen with 100% accuracy. The way to play the stock market is to be savvy, unemotional, and smart. You have the power to be this way. As you have learned there are common mistakes, a “start now plan” that you can use, but it will all come down to whether you follow the tips for being a smart investor.

Tip 1: Overall Profit

Your goal to financial freedom is about an overall profit. You are investing for the long term. You may not gain a profit each year. The plan is to take risks, but minimize those risks, so that you do have an overall profit for the year. How do you do this? By managing your risk.

You go into a stock with an idea of the potential profit you can make. You do so by assessing the current trend. Remember the support and resistance trend. This is where it becomes extremely handy.

The smart investor knows, if they look for the resistance and plan for the profit based on the resistance, there is more likelihood of a successful trade. If the stock breaks out from the resistance to climb higher, then the investor is right there to take the additional profit.

You will cut your losses, and when possible maximize your profit beyond what your research told you was possible. You do not want to lose sight of the goal—to gain an overall profit throughout the year.

This means if you have a loss of 20%, then you are trying to have a profit of 40%, to more than break even. It may take time. Some years you may only have the option of breaking even or taking a loss. It is not fun, when the situation arises, but again, your aim is an overall profit. Your mindset has to be on the overall gain versus any short term losses you sustain.

The best thing you can do, is calculate the potential profit based on the resistance line. If the stock indicates a potential profit of $100 per share, then you should try for $80 per share. In this way, you have a profit, but you didn’t try to gain all that you could in the event the market doesn’t trend in the way you expect.

Some profit is better than none at all. Remember this tip and you will succeed at being a smarter investor.

Tip 2: Waiting for the Right Entry

It cannot be said enough, there is a right time to enter the market. You are probably anxious to get into the market. You want to start investing today and turn a profit. But what does the market say about that? Is the market willing to work with you in your endeavor? Sometimes the market has nothing to offer you. Sometimes all stocks are stagnant because the news is so terrible, no one knows how to react. At other times, the market is like 2008. The subprime mortgage crisis created panic among many investors. Market sentiment was at an all-time low. People were selling out of stocks right and left, taking as much profit as they could, but also sustaining heavy losses. The people who rode through the turmoil, suffered losses, but in the end they actually gained. The reason they gained, was because they rode the market out. They stayed in stocks that would bounce back and didn’t panic like everyone else.

You have to know when to enter the market and when to wait. In a time when there is bad news, there are still ways to invest. You can find what would be considered a “safe haven” stock. In the forex market this is USD currency. For stock markets, these safe havens are found in industries that are never going to close down.

You know the world is always going to need oil. People are always going to want to invest in gold because it is the backing for the world’s currencies. People need groceries to survive. Companies that can grow or remain steady in their value throughout a tumultuous time are the avenues, you want to look at when you want to invest.

These stocks are not a place to always hang out. Sometimes they can be overvalued, but you can also use them to get into the market and make a small profit, when other things are not working out for you.

Tip 3: Use Paper Money

Smart investors study. They constantly study. Warren Buffet reads. You can read too, but you can also study using paper money accounts. If you are afraid of the market, but want a profit, then learn how to read the market through an investment that doesn’t involve an actual loss. You do not want to lose, but you also have to learn how to lose because it happens to everyone. Paper money is a great way to work out some anxieties, find your confidence, and get a strategy in place that you can follow. It is about testing your current knowledge, testing out new knowledge, and finding a way to invest that satisfies your risk level.

At the end of the day, you can reset your paper money account. However, you can also be in the mindset that you are only going to use the same amount of capital that you have to trade with. You can set parameters for acceptable loss and try different trends, patterns, and analysis methods.

Tip 4: Use a Journal

No matter how you trade, you need a journal. You can set this up on your computer, in a notebook, or in some other manner, but you need a journal. The smart investor tracks everything. Yes, most of the programs track your investments for a year up to three years, but this does not mean that you shouldn’t keep a record of more than the profit or loss you sustained, the initial investment, and when the order was filled.

Those pieces are important, but what about the strategy you had in place? Was there something about the strategy that worked even better than you thought? Was there a trade you made that was a huge loss, but it was not due to a mistake? Unless you record these various occurrences, you won’t have a way to track your progress, your mistakes, and your winning strategies.

Smart investors take their investments seriously, like it is a career, whether they have a money manager or whether they make investments on their own. If you wish to become a millionaire with your investments, you need to determine the best course of action for your capital. The “start now plan” is going to give you ideas on what you can do today. It will provide some options for getting ready to invest. Take these suggestions, what you have learned, and prepare for the investment life.

Tip 4: Subscribe to Papers

The Wall Street Journal, IBD and other financial papers can help you see companies and their stocks. You can learn a little news, but more importantly, you can discover what might be on interest based on the graphs and other information supplied. These papers can be a starting point for your research.

[][]Chapter 12: Your Start Now Plan

Your start now plan is to get you ready to invest. If you have some of the steps already fulfilled, then you can move on.

  1. Get your capital together. Your capital funds need to be only funds you can afford to lose. Do not use a paycheck that you need or forgo buying certain important items just to save up. Your capital should not be equity in your home, where you take out a loan with an interest rate. It is money you can afford to lose, even if you don’t want to lose it.
  2. Open an investment account. This is after you have done your broker homework. You have already followed through on how to choose a broker and found a company that will fit your investment capital.
  3. Make sure to send in the ID information the broker asks for. Only when the paperwork is processed can you begin your real money account.
  4. While, you are waiting for approval and your funds to be set up in your real money account, take advantage of training materials. Listen or read through information your broker supplies. If they offer a paper money account, start trading with your fake money.
  5. Do not invest any of your money, until you have had practice with fake funds or using a journal to record trades you would have made with real money. Practicing is a necessary step in your start now plan. Yes, you want to invest money, but you don’t want to lose it all. It would be great if you could pick up this book, read through it, and make savvy investments and become a millionaire overnight. It doesn’t happen that way. Instead, you have to prepare. Make sure you can handle investing like a robot and without the common mistakes.
  6. Research the market and find a position you are willing to invest your money in. When you are confident you are not emotional and you know how the market is going to move, invest a reasonable percentage of your capital.
  7. Set up your entry and exit points, with risk management protection in place.
  8. Let your position remain open until your exit strategy is met.
  9. Take your profit.
  10. Repeat the steps.

Your start now plan is about getting everything ready to invest. It will include starting with one stock at a time, and slowly building your portfolio as the market provides positions. It is not about jumping straight into the market with the first stock you feel you would like to buy. You are not to get into the investment market, until there are the proper indicators. It is not a start now plan to lose money, but a “start now plan” to ensure you make a profit. You may not be able to act on an actual investment right away. It might take a few months until a proper position is available or until you find the stock that will offer the right investment.

While this is a guide to getting started, your plan has to work for you, not work against you. A lot of people make the mistake of entering because they are tired of waiting and then their losses are extensive because they didn’t wait. Don’t fall into that trap. You are reading this book. You are studying concepts of fundamental and technical analysis. Now, you are going to ensure you have your capital and account open and ready for the right moment to enter the market.

Let your decisions work for you.


Thank you again for purchasing this book! 

I hope this book was able to help you with your needs and to satisfy your reading pleasures. 

Stock market investing takes the right mindset; especially, if you want to become a millionaire while trading stocks. It doesn’t happen for everyone, but for those who truly apply themselves, you can use investing as a way to set yourself up for life, financially.

You have a start now plan to follow. You are also prepared with the knowledge required to invest. As long as you use this start now plan, you will prepare yourself to enter the market, avoid common mistakes, and continue to learn and gain a bigger profit over time.

You have it in yourself to trade stocks. Whether you will trade stocks each day and make it a career or trade over the long term, it is your choice. Just make certain you have prepared your start now plan based on the type of trader you want to be.

You are going to make your goal. Believe in yourself and start trading with confidence.

Finally, if you enjoyed this book, please take the time to share your thoughts and post a review on Amazon.  It would be greatly appreciated!

Thank you and good luck!


Are you wondering how you can turn your retirement funds into financial stability? This book is going to teach you beginning stock information to help you achieve financial freedom.

As a beginner’s book, it takes a look at easy topics you can learn quickly and start applying to your trading system. It is not meant for the advanced investor, who has already been trading for several years and is ready to move up in their trading plan.

There will be plenty for you to learn after you have read this book, the aim is to ensure you have a “start now” plan that you can use to start small and be a successful trader. Yes, it will take time and education, but in the end you will be on a better path to financial freedom.

Get your millionaire mindset in place and start learning these topics today:

  • How to start small, investing in stocks or mutual funds
  • How to build your portfolio slowly over time
  • Common mistakes
  • Trading Psychology

You will also learn:

  1. A step by step plan for entering and exiting the market
  2. Fundamental and technical analysis
  3. Risk/Reward ratio
  4. Risk management techniques

You owe it to yourself to become successful as you trade. Take it slow, practice, and when you feel comfortable you will have a “start now” plan for launching yourself into the market, using your money.


Christina Sorgis a passionate Money & Finance Author who creates and resides in Switzerland. Born and raised in Austria, her passion for writing and finance began early on and it has stayed with her ever since.

For three years, Christina worked abroad in Canada for a company that she founded and previously worked as an Insurance Underwriter. She quit her job at the age of 50 to pursue her writing career and take care of her family. Additionally, Christina holds a Diploma in Economics from the University of Vienna.

When she isn’t writing, Christina enjoys to hike and ride her motorcycle. Most importantly, she loves spending quality time with her wonderful husband of three decades, children, and grandchildren.

Currently, Christina Sorg is in the midst of working on her upcoming book entitled, “How to Budget: A Guide for Beginners” and plans on releasing many other finance-related books. Her number one mission is to educate people about the ins and outs of finance so they can stay 100% debt-free and use that money to experience the fulfilling life that they have always dreamed of.

How To Invest Your Money: 2 Manuscripts - How To Budget And Stocks For Beginners

Investment Bundle: How to Budget and Stocks for Beginners Millionaire Mind: How to Budget is going to take you through some simple, easy to start steps. Before you reach the end of this book, you will have tasks you can start immediately and start to feel comfortable about your financial situation. You will discover how your mindset can be hindering your spending habits. You can stop letting your “want now” attitude from getting in the way, just as soon as you finish this book. Unlike other guides available to you, this one is set up for easy reading, where you learn some real life methods for solving your debt issues, as well as getting a budget that will help you reach those goals and dreams you have. You know there are things you wish to buy or places you want to see. It will take time. You will have to correct any debt situation you have, but rather than a lot of stories about what someone else did- you now have a guide that will take you through the steps of assessing your situation, find where you can save, and much more. What you will learn How to view your income and expenses Determining your recurring and non-recurring expenses Where you can save money and how to save that money How to pay off your credit card debt Act now, so you can be debt free in a reasonable amount of time. Each person has a different amount of debt, so while someone might be debt free in a year, you may need five years. Additional Lessons Gain steps on changing your mindset Finding new income pathways How to start right this minute in creating a budget You are ready to take the next step. You are already thinking of ways to change your spending habits for a better life—now you just need the how! Do you want financial freedom? Are you wondering how you can turn your retirement funds into financial stability? This book is going to teach you beginning stock information to help you achieve financial freedom. As a beginner’s book, it takes a look at easy topics you can learn quickly and start applying to your trading system. It is not meant for the advanced investor, who has already been trading for several years and is ready to move up in their trading plan. There will be plenty for you to learn after you have read this book, the aim is to ensure you have a “start now” plan that you can use to start small and be a successful trader. Yes, it will take time and education, but in the end you will be on a better path to financial freedom. Get your millionaire mindset in place and start learning these topics today: How to start small, investing in stocks or mutual funds How to build your portfolio slowly over time Common mistakes Trading Psychology You will also learn: A step by step plan for entering and exiting the market Fundamental and technical analysis Risk/Reward ratio Risk management techniques You owe it to yourself to become successful as you trade. Take it slow, practice, and when you feel comfortable you will have a “start now” plan for launching yourself into the market, using your money.

  • Author: Doctor Enlargement
  • Published: 2017-02-11 19:35:14
  • Words: 30548
How To Invest Your Money: 2 Manuscripts - How To Budget And Stocks For Beginners How To Invest Your Money: 2 Manuscripts - How To Budget And Stocks For Beginners