Join Cashflow Cornerstones to set yourself on a path towards financial success.

Blog

Binge read all things wealth, debt, & lifestyle.

The Secret Drag On Your Investments

wealth Feb 15, 2021

If you're a consistent investor, CONGRATULATIONS. That alone is a major accomplishment!

If you're not sure how to invest, click this link to take my masterclass on getting started.

As hard as you are working to save and invest, I'm sure you would want to know if something was draining your investments behind the scenes. 

Well, something is.

It's your investing fees.

Fees come in several forms. The first is related to the investment itself. Each fund you choose has an expense ratio that represents the fund's internal operating expenses. It is represented as a percentage, and can be interpreted as the percentage of your returns that is taken from your account to pay for the fund's fees. 

Not sure what the expense ratio is for the funds you've invested in? Just google the fund's ticker (collection of capital letters representing the fund name). Click the Morningstar link. The expense ratio will pop right up. 

What's a good expense ratio? I prefer <0.10%. Most of my...

Continue Reading...

Backdoor Roth IRA

wealth Jan 18, 2021

Roth IRAs are one of the best tax-favored accounts to use for retirement investing. 

You invest "after tax" dollars (meaning your contributions are not tax deductible). The contribution limit for 2021 is $6000, unless you qualify for a catch up contribution. After age 59 and 1/2, all of the funds in the account can be accessed TAX FREE. Yes, you read that right. In addition, Roth IRAs have several other benefits:

  • You can withdraw your contributions (not the growth) at any time.
  • You can make a withdrawal without 10% penalty before 59 and 1/2 if you use the funds for qualified educational expenses (you will still pay income tax on the earnings portion).
  • You can make a withdrawal of up to $10,000 without any taxes or the 10% penalty before age 59 and 1/2 if you use the funds for a first time home purchase as long as you made the contribution >5 years ago (if it has been less than 5 years, you'll pay income taxes on the distribution).
  • No required minimum distributions in...
Continue Reading...

Make More Money

wealth Sep 30, 2020

This post may contain affiliate links. If you make a purchase, I will be compensated at no additional cost to you. For my full disclosure, click here.

 

You can only cut expenses so much. If you want to get out of debt faster, save more money, &ultimately build wealth - you need to increase your income! There are both short and long term components to this. Let's take a look at ways to do both.

Short Term
If you're trying to achieve an intermediate term goal, like pay off debt or hit a specific savings goal, increasing your income on a short term basis helps dramatically. I did this while paying off my student loans, and it is the only way I was able to pay off $161,000 in 16 months. There are a million ways to do this. Here are a few ideas....

1. Pick up overtime at work
- This is probably the simplest approach. If there is an opportunity for you to work overtime at your current place of employment, take it. 

2. Get a part time job
- Drive for uber, work...

Continue Reading...

Are You Covered?

wealth Sep 07, 2020

It's not enough just to build wealth, you have to protect it! You may not perceive yourself as having wealth, but if you have money in your checking account, a savings account, retirement account at work, car, house or all of the above - you have wealth! Let's talk about various types of insurance you should be considering to keep yourself protected. 

1. TERM LIFE INSURANCE
- If you have anyone who depends on you financially, you NEED life insurance. Term life insurance (as opposed to whole life, universal life, etc) is inexpensive. We all feel nothing will ever happen to us, but the unfortunate reality is that it's possible. It would be bad enough for your family to lose you prematurely. Don't add insult to injury by leaving them in financial disarray. 

2. LONG TERM DISABILITY
- Statistically, it is far more likely that you would need to utilize long term disability insurance than life insurance. A sudden inability to work could leave you financially destitute with...

Continue Reading...

So You Want To Be An Investor

wealth Aug 03, 2020

This post may contain affiliate links. If you make a purchase, I will be compensated at no cost to you. For my full disclosure, click here. 

Are you wanting to "get into the market" or "become an investor", but you're not sure where to start?

IF YOU HAVE A 401(K) OR OTHER WORKPLACE RETIREMENT ACCOUNT, YOU ARE ALREADY AN INVESTOR. 

Surprised? Most people don't realize that their retirement accounts are simply a big bucket labeled with the way taxes are applied, with INVESTMENTS inside. 

Let's review a few tips to make sure you are investing well. 


1. USE TAX FAVORED ACCOUNTS FIRST
- You cannot underestimate how much taxes will affect your investments over time. 401(k) plans offers pre-tax contributions that give you an immediate tax benefit. A Roth 401(k) or Roth IRA offers tax free withdrawals in the future, but requires contributions with money you have already paid taxes on. HSAs have tax benefits as well. All of these options...

Continue Reading...

The Ideal Investment

wealth Jul 27, 2020

Health Savings Accounts (HSAs) are amazing investment products for retirement. If you're not using one, you are missing out. I know this may seem odd, but let me explain why. 

An HSA, in its most basic form, is intended for medical expenses. It combines the pre-tax benefits of a 401(k) contribution with the tax free growth of a Roth IRA. 

Here is the full scoop:

1. MONEY ROLLS OVER EACH YEAR
-Unlike an FSA, the money rolls over if unused in that year. It's not a "use it or lose it" system. 
2. CONTRIBUTIONS ARE PRE TAX
- Contributions are pre tax if you contribute through an employer. If you purchased your own plan, they are tax deductible. 
3. GROWTH IS TAX FREE
- Probably the best feature!
4. MONEY CAN BE USED FOR MEDICAL EXPENSES AT ANY TIME, TAX FREE
- Just make sure you keep qualifying medical receipts. This essentially gives you a separate medical emergency fund in addition to your regular emergency fund. 
5. MONEY CAN BE USED AFTER 65 FOR ANY REASON PENALTY...

Continue Reading...

Financial Independence

wealth Jul 13, 2020

This post may contain affiliate links. If you make a purchase, I may be compensated at no additional cost to you. For my full disclosure, click here. 

People talk a lot about "financial freedom" or "financial independence". But what does it really mean? There are so many different variations of this out there and different people use different terms. We will keep things simple. 

Financial independence means you can live entirely off of your investments. 

Some people utilize stages to describe financial independence. One example is the following:


1. FINANCIAL SECURITY
- This means your investment returns could cover your bare minimum expenses, with no thrills or extras. Few people will quit their job at this stage (unless they have some source of additional income), but it allows you the security of knowing your investments could cover your major bills should you need them to. Some people call this "lean financial independence". 


2. FINANCIAL INDEPENDENCE
-...

Continue Reading...

How To Increase Your Savings Rate

wealth Jul 06, 2020

This post may contain affiliate links. If you make a purchase, I will be compensated at no additional cost to you. For my full disclosure, click here.

 

The key to wealth is your overall savings rate. I say this ALL THE TIME. Recommended savings rates vary from 10% (see books like The Richest Man in Babylon), 15-20% (Dave Ramsey), and upwards of 50% (see the entire FI/RE movement). Regardless of if you are saving nothing at all, or just a small amount, increasing your savings rate even slightly will make a HUGE difference in your future.

But how do you increase your overall savings rate when you're already feeling strapped for cash?

Here are a few suggestions:

1. GET ORGANIZED
- If you're not tracking your expenses routinely, it is nearly impossible to know where you can cut expenses to increase your savings rate. A monthly budget is a fundamental requirement. 

2. PAY OFF HIGH INTEREST DEBTS
- Carrying high interest debts is the equivalent of running a race with...

Continue Reading...

Your First Million

wealth May 25, 2020

This post may contain affiliate links. If you make a purchase, I will be compensated at no cost to you. For my full disclosure, click here

 

Becoming a millionaire isn't as hard as you would think. For ease of numbers, let's talk about how to become a millionaire using only your retirement accounts. This is an incomplete picture because your home and other accounts contribute to your net worth and would help push you over the millionaire net worth mark, but for simplicity we will use only retirement investing for now.


SO HOW MUCH MONEY DO YOU HAVE TO SAVE MONTHLY TO BECOME A MILLIONAIRE BY 65?


This varies depending on your current age, as one of the major contributors to the end balance is how much time you have left before age 65 for compound interest to work in your favor. Let's look at the numbers by age. We will assume you are starting with an initial investment balance of 0, and that you receive an 10% rate of return.


  • AGE 25 - $171/MONTH
  • AGE 30 - $280/MONTH
  • AGE 35 -...
Continue Reading...

What Am I Investing In?

wealth May 18, 2020

This post may contain affiliate links. If you make a purchase, I will be compensated at no additional cost to you. For my full disclosure, click here.

When you go to select your investments within your 401(k), other retirement account, or miscellaneous investments, how do you know what investments you're choosing? Remember, a 401(k) or Roth IRA is simply a tax designation for an investment. The tax treatment matters greatly, but so does what you choose to invest in within it. 

HAVING A BASIC UNDERSTANDING OF YOUR INVESTMENT SELECTIONS WILL EMPOWER YOU TO MAKE BETTER CHOICES.

Let's review a few basic investments types:
1. ACTIVELY MANAGED MUTUAL FUNDS
- When you select a mutual fund to put your money in, you are selecting a group of stocks and/or bonds. What stocks and/or bonds are in each mutual fund have been selected by a professional who is actively managing the fund - or in other words buying and selling assets he or she thinks will maximize your dividends. 
2....

Continue Reading...
1 2
Close

Get free money tips & tricks