Gateway Church's Podcast
Obtaining God's Peace & Blessings in Finances - P3
I touched on two of these right here in the beginning. I've got them written out there for you. I think management-wise, when I'm looking at people for management and if you're wanting to be in management, there's three things you need to be able to do. You need to know how to manage cash flow, in other words, if you're running a business, if you're running a family, you've got to manage the cash flow that's coming through there. You've got to be able to manage people. If you're in a family, you've got to manage the people in your family. You may not be the best word, but you've got to create harmony. You've got to create motivation. You've got to do the things within a family or within a business, managing your people. Then the third thing is managing your time or managing the time of those that you're working with. I find, if I can find people in management who know how to handle budgets and handle cash flow, who know how to manage people, motivate people, work with people, and know how to manage their time and other people's time, you've got some of the basic elements for success in management. That's kind of a little extra deal. Then another thing I was asked, "What do you think are some important qualities for success?" We've read a lot of success books, but what are some things that we don't normally hear about that you think are important? I wanted to share some of those with you. One of them I put down is excellent reading skills. My desire is to know a little about a lot. I'm kind of like a doctorate is a guy who wants to know a lot about a little. He's made his doctorate in one little finite area, and he knows everything there is to know. Maybe more anybody else in the world about that one thing. My desire is to learn a lot about a little. I read a lot, and that's how I accomplish it. I took an Evelyn Wood reading course when I was a senior in high school, and I never really realized how important that was going to be, but it improved my reading skills and allows me to read about five magazines a week, cover to cover, business week, different magazines like that. When I need to study and when I need to read books, I'm able to read a lot of books. I've got a stack here of books I'm going to show you all later tonight. I've read nine books in the last three weeks. Reading skills are very important. I think that's overlooked some by our schools. It's overlooked by us as adults. We make excuses and say, "I'm not a good reader." Well, you can become a good reader. I wouldn't very good at a lot of things until I worked at it, and there's classes and there's skills and there's things that you might want to do if you really want to be a success, because you can gain a lot of knowledge nowadays by being able to just search it out and read it. It's free in a lot of cases, but you need to be able to read it. Another thing that's important for success is a great attitude. I find a lot of people with skill are overdone by people with great attitudes, so that's an important quality for success. Another one is super communication skills. To get along in life nowadays, communication is important, and your family, communication skills are important. A lot of times a person who is brought up in a family where you don't talk about things marries a person who always everybody talks about things, and they go through years and years of trying to understand why they don't communicate is because they've been brought up with different skills, and they've never learned how to communicate. This happens in a family, it happens in a business, it happens in a lot of situations. There's people who can't communicate in front of groups. There's people who can't communicate in a small group. People just sit quiet all the time, and I do believe in listening skills. Those are very important. That's why God gave us two ears and one mouth, but you also have to have good communication skills. It's an important thing, and if you need to take a Dale Carnegie course, if you need to take some speaking courses, if you need to do whatever, I think it's an important quality for success. So don't underrate the important of communication skills. Again, I hear a lot of people say, "Well, I just can't do that. I'm just not a good communicator. I'm not this, or I'm just a quiet type, or I'm just this, or I'm just that." Well, we're all born a little bit more naturally with one thing than another, but if we didn't in our life do anything except what comes natural, we wouldn't do anything but eat. That's about the only thing when you come out and you're born that happens naturally. You say, "Wow, I'm hungry!" And after that, everything else is kind of learned. So some things we work harder at than others, but we need to work through our life developing some of these important skills. Good education, don't have to really expand on that. I think that good education, the only thing I want to say about that, I'm not talking about going to school, I am still getting educated. I've been in my business for, this will be my 30th year that I've been in business. And I study, I study tapes, I listen to other business people, I read magazines, I'm learning and educating myself all the time. Don't think when I say good education, I mean that you do good in school. There's a lot of people who did lousy in school. There's a lot of people who made bad grades. There's a lot of people who didn't go to college. But they're well educated because at some point in their life, they said, "You know what? I'm going to get an education and I'm going to get it from reading, I'm going to get it from studying, I'm going to get it from applying myself in some other areas." So education and ongoing education all your life is an important quality for success. And then a productive work experience. You know, no matter what you're doing, you can have a productive work experience. There's a story that I really like in one of these books that I'm going to talk about a little bit later on. This was a New York Times bestseller, it's called Rich Dad Poor Dad. And I really like some of the stuff in here. There's some of the stuff I don't agree with. But an example, just a quick short one that applies to what I'm talking about in here. This guy had a dad who was a well educated, I think he had a doctorate's degree, he was a professor, and he taught him one system of economics, and he had a best friend who had a dad who, and they both lived in the poor part of town, they were both thought they were poor, but they went to school because of the way that lines were drawn with all of the rich kids in town, they thought. And one dad, his dad, taught him one set of values, and the other dad who kind of took him under his wing taught him a whole other set of values, and he would hear one thing here and one thing there. And one dad would just tell him and the other dad would let him experience things. And an example that is given in this book about where he really learned things was dad number two, his friend's dad, he said, I want you to teach me how to be rich. And so his dad says, Mike, his friend's dad says, okay, you guys go to work for me up here at the convenience store, and I want you to dust cans. And he said, okay, and he said, what are you going to pay me? He said, 10 cents an hour, and even back when this guy was working, 10 cents an hour, it wasn't anything. And he said, I was going to teach him how to be rich, and he said, yeah, I'll teach you how to be rich. And so he worked there three weeks, and Mike's dad never came around, never taught him anything, never told him anything, never did anything. So he said, I'm going to quit. This is ridiculous. All I got enough money to do is buy a comic book and a coke, and that's about it. This is a lousy job. I'm having to skip my baseball games on Saturday to do this, and on and on. And so he said, well, my dad said, you'd say that, and when you said that, he said for me for us to go talk to him. So his dad went talk to him, and he said, he said, you hadn't taught me anything blah, blah, blah. And they said, okay, well then, you want to learn? You promise you want to learn? He said, yeah. He said, okay. Here's the deal. You're not going to work for nothing. And the kid said, what? You're not going to work for nothing. And he said, yeah, you want to learn. You're going to now work for nothing. The guy said, well, maybe I'm really going to learn something now. Maybe he was just waiting to see if I work for nothing to teach me. So he says, okay, we'll work for nothing. So he works for nothing. A couple of weeks go by, and nobody said anything to him. The father hadn't taught him anything. He's like, man, this is even worse than it was before. I don't even have any money to buy a comic book or a drink or anything else. So he says, let's talk to your dad again. So he goes in to talk to his dad, and I'm trying to kind of shorten some of this for the time being. But his dad said, well, you know, right there in front of you is a lot of learning that you can do. I want you to look around, use your eyes, and think about how you can make money. I want you to use this experience I'm giving you as an opportunity to make money. So he went back and he thought about it. And they were looking around, and as they were leaving one day, they noticed that what happened when they had the comic book section is the comic books got out of date. And they took, and the lady cut off this deal on the front that was running the store and would put them all in a deal, and then the distributor would come in and would pick up those and give her a credit form and give her replacements that were new and tell her to toss the old comic books. And so they thought, hmm, there's some comic books. How can we maybe conceal those things and make some money? That's a good idea. And so he said, well, you have to talk to the distributor. I'm supposed to throw them away. So the distributor came and said, no, you can't sell those things. In fact, that's one of the requirements we're supposed to do away from, he said, but I can do this. I will give them to you if you promise not to sell them, and as long as you work here. You have to be an employee of this store to be able to have a right to have them, and you have to promise not sell them, and they said, okay. So they took the books, the comic books, and they took them to their basement. They hired their sister to run a reading room after school each day for a couple of hours and on the weekends, and kids would come in and read all the comic books they wanted for 10 cents an hour, okay? So it was a good deal for kids to have comic books, and they were making about $10 a week, paying their sister a dollar or two a week, and they had a business, and the only requirement that they had was to stay working at this place for nothing so that they could get the comic books every week, okay? And they made a lot of money doing that. That's just an example of a story, but it's an example that hit me real strong because right wherever you're working, there are opportunities. Wherever you are, there are things you're overlooking and things you're missing. And if you sit there and gripe about the money you're making, gripe about not being paid enough, gripe about the opportunity, you many times are missing something that God has put right there in front of you that is a provision for income, so the long way of saying that your work experience can be productive regardless of what you're doing, look for a way to turn that into something from what you're doing. Okay, what is the easiest way to get rich? I've had some people been asking me that. You know, they said, hey, just cut to the important stuff. What's the easiest way to get rich? And there's a real easy answer to that question. Just inherit a lot of money. All you got to do is just inherit a lot of money and that's the easiest way to get rich. I'm not going to lie to you. But since most of us, that's not the situation, we need to have a plan B, right? We need to have a plan B that will work for the rest of us. Everybody's looking for a kind of like a secret success formula that will guarantee that you're going to have more than enough money when you get into retirement. And the secret success formula is two words, really, spend less. That's all that's to it. Spend less. Spend less than you make and invest the difference. Spend less than you make and invest the difference. There's a good book in here in the reading list, a guy's whole deal is how to teach you to learn, live on 70% of your income. Spend less and invest the difference. I'll give you an example of what happens and how I say that money isn't the problem. We all think money's the problem. Money's not the problem. I'll give you an example. They've done a lot of studies and one study they did, they took and took 100 people that had been inherited or given $10,000. Then they went back and checked with them a year later. Out of that, 80 of the people, 80 of the 100, guess what happened? Not only did they spend the entire $10,000, most of them went in debt and had additional liability, I mean they use it to put a down payment on a car, on a big new car and justify the fact that they had this $10,000 to go buy a $40,000 car when they might have bought a $20,000 car before and now they had a huge payment to make. A year later, not only didn't have their $10,000, not only didn't invest it, they had more bills than what they would have had if they hadn't even had the $10,000. Many times, money can be a curse and not a blessing. It can put you in worse shape than it is and that's sometimes why God, you say why doesn't God bless me with more because he doesn't want to put a curse on you. He knows that it would just be a reason for you maybe to go in debt. He's waiting on you to learn the lessons that you need to learn. 80 people out of 100 will spend it and increase their debt to buy something on credit. 16 people, 16% of the people would probably be very cautious with the money, would put it in some type of a account that would earn between 5 and 8% interest. That's good. I mean they're at least building something for the future, they're saying hey something's going on with it. It's money and I can count on it with the compounding that's going to go on. Four people, four people one year later, would have increased the money by 300 to 1,000%. By being able to start a business, make an investment, do something with it that was really productive. I mean our goal is to get into the 16%, it would be nice if we could get into the 4%, but don't find yourself in the 80% and wonder why God's not blessing you financially. What's the difference between these people, between the 80, the 16 and the 4? Most people when given money just spend more, they just spend more. More people invest more, you give somebody $10,000, most people spend it, smart people invest it and know the value, we talked about how 96,000 can grow to a million and that's just with 10% interest, if you have an investment that's a pretty good investment it can grow a lot faster than that. People who are going to be rich develop biblical financial habits. The Bible, we've studied these the last two weeks, have studied biblical financial habits. People who are going to be poor develop worldly financial habits. Worldly financial habits say buy it, buy it on credit, buy it now, you deserve it, go out and spend everything you've gotten in some. Biblical financial habits say always put back some, always have a store house, build a strong foundation, don't go into it, don't owe people. The biblical foundations are the foundations that work whether you're a godly person or not, you look around the world and just see. Poor people work for money, smart people are rich people, have money work for them, think about it. Are you working for money or is money working for you, which way is it? Most of us are working for money. Poor people pay interest, smart people are rich people, earn interest. So who are you imitating? Are you imitating the world's philosophy, you're imitating God's philosophy? Are you imitating the philosophy of smart rich people? Are you imitating the philosophy of poor people who find themselves never quite having enough? Now you ask yourself, are you rich or poor? Well first, I want to say that as you well know, money doesn't make you rich and I want to remind you about what true wealth is. We talked about that the last two weeks. A person's wealth cannot be measured by how much money they have, you just can't do that. It's measured really by how many things you have that you would not take money for. Think about that. True wealth is not measured by how much money you have or how many things you have that you could buy with money. True wealth to me is measured by how many things you have that you wouldn't sell for any amount of money. I wouldn't sell my relationship with God for any amount of money. I wouldn't sell my relationship with my family. I wouldn't sell. There's some pictures I've got that I wouldn't sell for any amount of money. There's stuff that my grandmother gave me that I just wouldn't sell for any amount of money. It wouldn't matter how much it was. There's special things in your life, special memories that you wouldn't take anything from. A truly wealthy person is a person who has a lot of things in their life that no amount of money would they take for it, not a person who just stacked up a bunch of money. But most of you here learn about financial richness and financial importance. One of the ways I want to do this is to talk about the way that we value a company. We value a company with a process called Assets and Liabilities. It's a balance sheet and we have assets over here and we have liabilities over here. Any company has that. What happens? You take your assets, which are things of value, let's say you have assets and they total to $100,000 and you take your liabilities and let's say they're zero, that means your worth for the company is $100,000 because you have no liabilities, have 100,000 assets. The way most of our financial situation looks is we have 100,000 assets, we have 100,000 liabilities, 120,000 liabilities, and we have very little assets down at the bottom. Very little network, excuse me, down at the bottom. Let's talk about that word asset and liability. Some of you may not even know what an asset and a liability is, so I want to give you a real simple definition of what an asset is. An asset puts money in your pocket. An asset is something that's going to put money into your pocket. A liability is something that's going to take money out of your pocket. If you own a stock that's paying a dividend, that's just sitting there, they're sending you a check, putting money in your pocket, that's an asset. If you own a boat, I've had some of those, it's a liability. It's just taking money out of your pocket, you're buying batteries, you're paying for the stall to keep the thing in, you're having to get the motor tuned up, the rope is breaking, it's just a liability. A lot of you all consider that an asset, but it didn't. It's a liability, it's just taking money out of your pocket. Look at your assets, look at your liabilities, and determine how do we get more of these things in the future. When we spend money, how do we figure out how to spend it more on assets and less on liabilities? If we want to increase our net worth, rich people buy assets, poor people buy liabilities, rich own many assets, poor people own many liabilities. You say, well, what about a bigger home? Is that an asset or a liability? If two people have homes and one's a $100,000 home and one's a million dollar home, and they both have $20,000 equity in it, which one has more liability? The million dollar home has a lot more property taxes, a lot more utility bills, a lot more yard maintenance, a lot more everything. Sometimes the guy that's got the big home has just got a big liability around his neck. I see this all day long, I see people who put on the show like they've got a lot of stuff, but all they got is a lot of liability. Don't admire people with a lot of liabilities. You need to hold up as a role model, people who have a lot of assets. Remember, it's not how much you make, it's how much you keep that makes you wealthy. I can give you a quick example here. I may have told you a piece of this story before, but most of my life when I did have a mortgage on a house, I think all my life, but I hate to make that statement. All my life when I had a mortgage on a house, it was never more than one year's income. I took the extra amount of money and always invested it, invested in the business, invested it in something that was going to earn money. The difference in spending 20 years in living in a more conservative home and investing money every month is huge, other than saying, "What's the most home we buy?" You know, there's some financial people that say, "Hey, go for all the home you can get." I really think that's bad advice, unless you've got still the ability to invest the money and put it aside over there. Think about it. A $400 golf club or $400 in clothes are now worth next to nothing, but $400 in Microsoft stock back some years ago would be worth over a million dollars now. Would you really have the stocks typically? I really have the golf club or those old clothes that you gave away and I grew a long time ago. Most people spend rich people invest. It's just a principle that's there. You know, I've also wondered what causes us to spend money we don't have. I think it's the same thing that causes us to take drugs. It's kind of a weird thought, but it's the same thing that causes to take drugs. There's an empty or an unhappy feeling that we've got. There's something missing. There's kind of, we need something in there and, you know, in people who take drugs, it's like this is going to make me feel good for the moment or this is going to dull out the pain in my life or this is going to, you know, make it better. And the reality is it doesn't last very long. It may not even make you feel better and it's going to make you real sick in the long term. Well, money is the same way. A lot of people go out and they feel bad, they feel unhappy, they feel joyful, they feel down, they don't feel good about themselves. So they go spend some money and it temporarily maybe gives them some joy, but long term just like drugs, it pulls you down, it digs a deeper hole, it causes additional problems and it will ultimately lead you to your ruin, it will cause bigger and bigger and bigger problems. So the same unhappiness, the same like a joy that causes people to do unhealthy things causes us to make unhealthy financial decisions. If we've got an issue in our life, we need to deal with that. We need to come to God. We need to come to Godly counsel and deal with what's going on in our life where we don't have to try to treat it with things that are really going to be unhealthy for us. We've got to turn to God for our joy, we've got to turn to God for our answers, we've got to turn to Him for everything. I've been threatening to do this with you guys, I'm going to give you the SAT test that we've been talking about. Just think about yourself on some of these things and see how you score, if I think there's 11 questions here, we'll let you see what your score is and we get through, I'm not going to call on anybody, but you may want to just ask yourself, and really we're going to do this, it's either that's me or that's not me, just ask yourself if that's you or it's not you, yes or no, see yourself doing that. I told you this one last week, I'm the kind of person who sneaks food into the movie theater. Is that you or that not you? I told you last week my life does that. I do too but my purse always looks funny. I'll split an entree with somebody I just met to avoid having to pay for an entire meal. I just met somebody sit down, they said hey do you want to split an entree and you think yeah that'll save me some money, would you do that or would you kind of go no, not me, not me. I know the exact price of everything I'm wearing right now, is that you or not? Are you that cost conscious on what you spend and where you get it and how much it was, did you think about it enough, I know the exact price of everything I've got on right now. Number four, I try to compare prices on the internet before I make any kind of a major purchase. I guarantee I do that on everything. I'm amazed at the money that I can save during that. I had to buy two printers a few weeks back and I priced them at CompUSA and several of the local places and they had some good prices, what appeared to be good prices, they were discounts and what have you. I did some shopping with shopping robots on the internet and I bought two printers for the price that I could get one for very locally and it would shift to me, it was at my door in a couple of days, didn't have to get out and pipe the traffic or anything so are you the type that shops internet before you make any major purchase. I refuse to dry clean if I can worship myself, is that you or not. I never buy lottery tickets because I believe the odds are greater than the fact that I would suddenly turn to solid gold, is that you or not. I rarely buy anything at a 7-Eleven or convenience store that I could get cheaper at the supermarket. Is that you or not. I try to cook for myself at least four nights a week or I try to cook for my family at least four nights a week, my wife cooks for our family four nights a week, we cook for ourselves four nights a week, however you want to say it, or if you're single I cook for myself four nights a week because it's cheaper and it's healthier, is that you or not. I get a bonus at work and I immediately pay off my debts or invest it in an interest-bearing account, is that you or is that not you. I shop sometimes at secondhand stores, is that you or not. I use coupons at the grocery store and check the papers before making any purchases. Okay, eleven questions there. If you've got seven or more of those, as yes that's me, congratulations that's a great job. You're doing a lot of things you need to be doing to really watch your money. If you're somewhere between three and seven, three and six I guess, then join the club. You're like most of the rest of the people in the room and if you're less than that, you're going to really be interested in the reading list when we get to the end of this session tonight. Okay, you know what's happened is the world has really changed but our education system hasn't. We're still turning out students that can't balance checkbooks, don't understand the cost of credit cards, we haven't teach them how to really run the rules of money and so unfortunately since we're not taught in school we have to teach it at home and if we don't we learn hard lessons. Life teaches hard lessons. By the time we learn those lessons it's too late to even teach our kids. They're often gone and beginning to make some of the same mistakes again so learn as soon as you can the rules of money. I told you about how much I'm against credit cards and I heard this week on the radio something that just really infuriated me. I heard about that they've uncovered that OU has made a deal with a credit card company to let this credit card company have an office there on campus and solicit the students and give them the names and help them as far as soliciting the students for credit cards and it was uncovered that they've got a ten year deal and that the credit card company is paying OU $13 million plus like three quarters of a percent interest on every charge that the students make from now on and that's how big a money the credit card companies are making to be able and that's why they want to get in young. Why do you think cigarette companies advertise Joe Campbell and advertise young they want to get them hooked young. Why do you think credit card companies just the minute that you're old enough to get a credit card they're wanting to send you credit cards they want to get you hooked early they make a lot of money on this stuff. Once the greatest investment loss is a loss of a missed opportunity you have because you didn't have cash. I want to give you a quick example on this from my personal experience not because it makes me look good but it's an example of what happens if you do have cash and you can make some examples. I had invested about $100,000 back when I was there was about ten years ago and I had done real well with some of my investments and that had grown to about $350,000 and I was pretty excited about what I had done with it but I really you know was still always on the lookout for something that was a good investment and I was driving up and down the freeway to Dallas and I came across this piece of property that was sitting vacant along right there on airport freeway and this was back when the FDIC was selling off properties that had gone back and then repossessed and there were some really good deals out there on landing things and this property had previously sold for a lot of money but had been defaulted on it and gone back and and I prayed about it and said this property is worth a lot more money and I think we can buy this thing for let's go ahead and take our investment and put it in the property so we did we put $350,000 in that property and about a year, year and a half later we had an opportunity to sell the property we had a buyer on the property and meanwhile I was wanting to buy some property to be able to put a new business on and so what I did was call the 1031 exchange which means you don't have to pay tax on your gain on the property you take that property and exchange it for another piece of property that you're buying and even though your property goes up and down you've gone from 350 to 750,000 in one year about a year and a half and I didn't have to pay any tax on that because I traded it for another piece of property that was worth more than 750,000 but I was able to buy it for some hundred fifty thousand dollars and two years later that property is now appraised at a million and a half and I've got my affinity getterships up on it. That is from a hundred thousand dollar investment that I had that I was willing to make you know about ten years ago and let it go along and it's grown to a million and a half value and so I can't tell you enough about what would have happened if I hadn't had saved that money and had the cash I could close fast on that property it was a cash offer that I made I said I'll have you checked in two days on this property it was a cheap price but the FDIC was wanting to do deals for cash they had other offers on the thing but they were to go get financed I said cash money right here right now and boom they took my offer you need to be able to have the ability to deal in cash if you want to get some good deals on things that the only reason I was able to do it because of the costlessness in my financial investing so we talked I've talked a little bit about investing and what is investing investing is managing risk now somebody was saying the other day they said well isn't investing just gambling and it can be it can be there are people who are gambling on the internet every day playing the stock market in my opinion because they're really not making good sound decisions on the investments that they're making but investing means that you've investigated that you have managed your risk you've minimized your risk because of what I call due diligence you've checked out the company you've checked out the prices you've checked out this you've checked out that and you're investing a cautious amount of money for instance one of the things that they tell you to do an investment strategy is to never put over 10 percent of your money in any one investment in any one company if you had a hundred thousand dollars you're investing in the market you'd never put more than 10,000 another method is to put 10,000 dollars in 10 stocks and that way you've lowered your risk if one of these companies gets in trouble this is another way to do that is by getting in a mutual fund that owns a variety worth of stocks but again you might get into a variety of mutual funds at the same time so one of the things I suggest is no load mutual funds for people who don't know a lot of stuff about it I like no load mutual funds and I like real estate if you're if you have a knack for real estate if you understand real estate and if you can can real estate sometimes is not very liquid it's not easy to get rid of I don't like having debt on real estate but if you if you know enough about it it is something also to get into but it's not just for the thing that hard if you're just kind of thinking let's go jump into real estate one of the reasons I like no load mutual funds and what I mean by no load is I mean there's no commission the typical investment that you buy there is a two to an eight percent commission that is paid like if you buy a mutual fund from a broker there's typically either an upfront or when you sell it at the end commission that goes to the broker of somewhere between two and eight percent there are investments called no load mutual funds that you actually buy directly from the mutual fund company and they say no load they mean no commission and you can buy straight from vanguard fidelity some other people their investments you can go on to the internet and sign on to swab or etrade or fidelity or any of the ones there and they have a computer page where you put in I want low risk I want this or I want this and they will give you a rating according to who's got no load who's got commissionable which one how they performed in the last years you can get more information in three minutes on a computer nowadays as a novice that knows nothing then a stock broker could give you in a day 10 or 15 years ago so the information is available at your fingertips to make some fairly good decisions if it's something that you're you're interested in and you're wanting to do I would suggest looking at the Susie Orman's book she's got a list of 800 numbers and and of companies and stuff like that her book is look on page 263 and you'll see that list you'll hear her on a lot of talk shows she was on talk show this week in fact a good morning America or something her book nine steps to financial freedom she's an investment banker stock broker lady and 263 touches some stuff about no load funds and about different people you can call on that so if you're interested look look at that you can I'll leave his books up here you can look at him afterwards another program that I like there are several of the banks that have what's called a share builder program I know Wells Fargo has won and what a lot of people do is they take a certain amount of their check and invest it every month like they'll take two hundred dollars out of their check their paycheck and invest it every month and that can get expensive if you're going out and paying stockholder commissions so banks like Wells Fargo have a a division that does investments and you go into their share builder and for two dollars they will buy at same amount of stock every month so if you wanted to buy twenty dollars or you wanted to buy two thousand dollars worth of stock every month or every four months or every six months or whatever period it was they will automatically do that on the time tell you've told them to do it on and they'll do it for two dollars a trade so there are some programs out there that are pretty reasonable to be able to make monthly investments because I know the first thing you're going to say is well you know if I start saving two hundred dollars a month what am I going to do with it I don't know where to put it put it into it to one of these mutual funds put it into an index fund an index fund is a fund that indexes a certain thing for instance there's one that indexes the standard and poor there's one that indexes the NASDAQ index called QQQ there's one that indexes the Dow Jones average so you've got different index funds and you actually buy one stock and you're buying all of those like if you buy QQQ which is the NASDAQ fund or you buy DIA which is the big board you buy a hundred stocks that they own you're buying an interest in a hundred stocks or in fifty stocks or in thirty stocks just by buying one stock so one transaction actually buys you thirty or fifty or a hundred different stocks it's called an index fund and you can do that on the two dollar deal each month through share builder so I mean there's some indexes you can buy that just save you a lot of this trouble if you think generally the market's going to be going up buy into the Dow Jones average or buy into the standard and poor average or buy into the NASDAQ if you like technology you buy a little bit of it each month and just have it come straight out of your bank account and that way you don't have to go through the temptation of well I've got to save it I've got to do this I've got to do that it's just a direct deduction that's automatically done whatever intervals you you set up another question that people have asked is what is a 401k I've mentioned a couple times about a 401k 401k typically that 401k by the way if you hear about these different things that's that's typically the section of a law that refers to that if you go to the actual code there's the books about this thick that is the code of all our income tax laws and what have you and if you go to section 401 item k it talks about an account that corporations can set up and they can employees can put money into and then the company matches some percentage of that typically and it has a vesting period of when that money that the company is put in becomes yours sometimes it's a couple of years or whatever but anyway the company is adding to your money you're getting a deduction so let's let's take it for instance let's say that you make fifty thousand dollars and you you can put up to fifteen percent of your income into a 401k so let's say that you put ten percent put five thousand dollars in there instead of being taxed on fifty thousand dollars you're taxed on forty five thousand the five thousand that you put into a 401k each year is not taxable income at this point the only time that it will be taxed is when you retire and you pull it out on a slower amount at hopefully a lower rate at retirement and all of this that normally would be taxed you're growing your tax like if you're in a 30 tax bracket you're getting that 30 percent we saw what money would do a 30 percent is growing for all those years and then you have to pay your taxes instead of having to put in a net amount so a 401k investment if your company offers it is a very good way to save money and it also is good because normally the companies match a percentage of what you put in it's a way it's one of the few things in America where savers are rewarded savers the more you put in i've got employees at my company that max it out at fifteen percent a year they get rewarded because i put a percentage of whatever they put in you know here's two people that earn the same amount of money one of them every year i'm giving a bonus of x percent a fifteen percent to of what they're putting in and another one i'm giving zero bonus to they're determining their own bonus whether they're a saver or not so i love the 401k plan because it rewards savers now one thing i want to remind you about it if you take your money out early there's a ten percent penalty you can borrow money out of it as long as you pay it back but i don't suggest doing that either there's a few other exceptions if you need to use it for this this this or this you can take it out without having a penalty but there are some penalty provisions in there so you need to be aware of that if i was given a choice of borrowing from my 401k or taking a second lean on my house which one makes the most sense which one would you do okay second lean robert says and reason for that is you can charge off a lean on a home there's not a lot of debt that you can charge off you can charge off a lean on the home if you take out a debt on your 401k you're having to pay back the interest to yourself but you're paying interest and that's not deductible if you pay the interest back on a second lean it is deductible another thing is a Roth IRA you may have heard about this this is something that came out in the last few years it's named after the senator i believe it is who introduced the bill senator Roth and a Roth IRA is a individual IRA IRA by the way individual retirement account is what that means and what that's for is people who don't work in a company and who want to set up their own individual retirement account and a Roth is is one of the new vehicles that we've got out there and one of the reasons that that people like hit you you do take on a Roth IRA and you pay taxes on the income when you put it in but whatever earnings there are on that income for however long it is in there you don't pay taxes on until you draw the money out and there's no penalty the reason some people like the Roth is if they're not sure that they're going to have to draw the money out and they don't want to take a chance on the penalty issue they go ahead and pay their taxes put it in let it accumulate all the earnings in that are tax-free you have to pull it out you can pull it out without a penalty most of the penalty provisions kick in up to 59 and a half years of age so if you pull your money out anytime after 59 and a half there's there's never any problems or any penalties which is about any of the IRA loss okay let's look at some do's and don'ts you all have asked me to kind of just get down to the basics and tell me what i should be doing what i shouldn't be doing so i gave you a list here of things let's just kind of run down through them real quickly don't buy lottery tickets you got better odds of being hit by lightning i i call lottery tickets attacks on stupid people if you want to buy a lottery ticket just think about it now i want you to put this in your mind i want you to walk up and say hey i'm stupid could i buy one of those stupid tickets that really is what it is the odds of winning are terrible i mean there is just just no chance that you're going to do it i know some somebody wins but aren't you amazed they sell 15 million tickets and nobody wins this week we're going to carry it on over town next week yeah 15 million to one you you [BLANK_AUDIO] [BLANK_AUDIO]