Do You Have A Plan?

The saying those who fail to plan, plan to fail is very true. I am definitely an example of this but when it comes to my finances I am turning this around. During this recession (yes, I said recession) people who failed to plan are feeling the heat; including our government. When it comes to money there are three plans everyone should have: savings, investing, and debt management. In addition to these plans, there are two things everyone must do: get a copy of your credit report and get identity theft protection.

By law we are all entitled to one copy of our credit report from the three credit bureaus each year. You can get yours at AnnualCreditReport.com. Your credit report is important in getting identity theft protection. There are programs out there but you can check with your bank and credit card companies to see what programs they have in place. To learn more about identity theft and what you can do to protect yourself and your children, check out the Identity Theft Resource Center. Do a search for children and you’ll find a fact sheet about identity theft and children. Getting your credit report and identity theft protection is a good start in increasing your financial education.

Increasing your financial education helps whether you are faced with a recession or good economic times. For products dedicated to increasing your financial education go to RichDad.com. Robert Kiyosaki, best-selling author of Rich Dad Poor Dad, is concerned about the chasm between the rich and poor and the disappearing middle class in the United States and has created many excellent resources to help you be a “have”. Some products that I recommend are his book with Donald Trump, Why We Want You to Be Rich; Rich Dad Poor Dad; and Rich Woman. Robert, his wife Kim, and Donald not only give advice about wealth but they give you a history of money and what they did to chart their path towards success. The best thing about them is that they don’t need our money. These are people who never have to work another day in their life but do because they are concerned about the way the country and the world is heading when it comes to money. Below are some other resources that will help you create a savings, investing, and debt management plan.

Savings
The experts say you should have retirement savings and 3-6 months of “rainy day” funds. Now that we are in a recession I would agree you should continue or start saving for retirement. I would also have 12-24 months of “rainy day” funds. The recession and the amount of natural disasters we’ve experienced in the last few years leads to this conclusion about “rainy day” funds, not to mention the amount of layoffs. Not only should you be saving for retirement and a rainy day but for charitable giving/tithing and for investing. A simple way to begin saving is to see what savings programs your bank offers. Bank of America offers the Keep the Change Program while Wachovia has the Way2Save program. Both programs help you to automatically save when you use your check card to make purchases or pay bills online. You can also go to Money Advise to get online budgeting tools if you don’t have budgeting software like Quicken or Microsoft Money.

Investing
There are many things people can invest in but it mostly breaks down into paper assets (stocks, bonds, IPOs, etc), real estate, and businesses. A lot of people invest, at the basic level, in paper assets and this is a great way to start. To learn more about investing in paper assets go to Morningstar. There is a premium membership but there is a lot of information that can be accessed for free. To learn more about IRAs, 401Ks, etc. check out your bank web sites. To learn more about real estate investing and investing in businesses, visit your local library. Donald Trump, Robert Kiyosaki, Robert Allen, Wendy Patton, and Dwan Bent-Twyford are some of the real estate gurus you may want to study. Also check out the Learning Annex. It has online and in-person classes in cities around the country. It also hosts a real estate and wealth expo every year, usually in the fall.

Debt Management
We all should have a plan for eliminating our “bad” debt. The difference between good and bad debt is leverage. Bad debt is debt we have to pay for ourselves. This includes consumer debt, student loans, and mortgages. Robert Kiyosaki has a CD with his wife Kim called How We Got out of Bad Debt that you can get at RichDad.com. It gives a simple plan to attack the debt you have in life by coming up with an extra $100-$200 a month. The plan will help you get out of debt sooner than you can even imagine. Another good resource is DebtAdvice.org. This site is sponsored by the National Foundation for Credit Counseling to help consumers deal with debt issues.

The best way, I’ve found, to deal with money is to be proactive. Learn as much as you can so you don’t become a victim to the so-called experts and salespeople who want to tell you what to do with your money but may not practice what they preach. Ultimately it’s your life and your money and you should be in control.