Foreigner's Finances

I want to learn how to play the piano, I want to learn more about different modes of wealth accumulation, I want to learn how to skateboard.

We often want to learn a lot of things, but they are often never accomplished because we either forget about our desires or they fall under the weight of our daily to-do lists.

Investing and saving for retirement is one of these “I want to learn how to do that” topics.

The big difference between learning about investing and learning piano is that 10 lost years of investing can cost you over $100,000 in your lifetime, while 10 lost years of piano playing will probably cost you a little less. You could become a world famous pianist – yes – but even pianists have to keep track of their wealth and plan for the future.

One of my goals last year was to set up a taxable investing account for short-term savings. It took me almost 4 months of procrastination to come to a conclusion – I have too much uncertainity over the next 5 years of my life to be investing in a taxable account.

At least once a day for those 4 months I thought about learning more about taxable investing. I thought about researching funds, brokerages, and figuring out how much I could invest.

A lot of the time I would think about these things, they would make my head hurt, and I would do the easier thing – go to Facebook, check my Google Reader, or check out ESPN for a new Bill Simmons article. All of these things required a lot less thought.

In reality, I was hurting myself and my bottom line by wasting this time. I was potentially losing money every time I closed my Google Finance tab and went over to Twitter.

Since losing days, weeks, months, and years of investing time can cost you a lot of money in missed opportunity, it’s important to force yourself through your procrastination about investing decisions.

So how do we get past the, “ugh, I don’t want to do this today” stage of investing, and actually learn about it?

Here’s 5 tips that’ll help you break through your procrastination:

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This is a guest post from Joel who is a Certified Financial Planner™, the owner of 4 different companies, a self professed Internet nerd, and currently working on many different web projects that range from a site for comparing health insurance to a site that helps people backup websites online.

Do you think that you have what it takes to be an entrepreneur? Do you sometimes get the urge to launch out on your own and be your own boss? In fact, do you not just “get the urge” every once in a while to become an entrepreneur but do you find yourself constantly wishing that you were out on your own as your current job just is not fulfilling?

As the owner of 4 different companies and a serial entrepreneur myself it seems that I am only satisfied when I am acting as my own boss and constantly creating any number of new projects that recently include a website for comparing car insurance companies to a website for reading credit card reviews to any other number of web related projects that strike up my interest (and even a BMI calculator website that I am somewhat ashamed to say told me that I am overweight – yes, my own website told me that I need to lose weight!).

Here are 10 statements that you can ask yourself as a true/false question as part of my 100% unscientific officially unofficial “Entrepreneur’s Test”. Let’s see how you do:

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I’ve been talking a lot lately about the importance of educating yourself about money before you start investing and saving for retirement.

Money education shouldn’t follow investing so if you have any interest start today. The benefits of even a little money education will pay-off huge in the long run.

I started learning about money after stumbling upon some personal finance blogs via Lifehacker. I decided to try out some books those sites suggested and I became enamored with the topic.

It sounds ridiculous, but those books opened my eyes to a whole new side of money that I never knew existed.

Here are 5 short reviews of those personal finance books that I read when I first started. I would recommend these books to any one and will always hold them close to my heart for everything they did for my wallet.

I would love to do full reviews, but with a lack of libraries in Japan I’m out of luck.

In the meantime enjoy the 5 micro-reviews!

The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich

The one that started it all. I was a naive 21 year-old and attracted to the “Millionaire” in the title, but the book was surprisingly simple and flipped on a hundred light switches in my head.

Author David Bach introduced me to the paying yourself first – taking a certain percentage of your paycheck – maybe 20-35% – and automatically saving that every time. No excuses, if you do this consistently your money will grow over time and you’ll be thankful you never skipped a paycheck.

This book prompted me to start tracking my money and introduced the idea that people knew how much was going in and out of their accounts – I literally had no idea and never once tracked a penny before this book.

Verdict: A great starter to make you excited about money and the future.

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The other day I received a question from a reader, Jack, on my 5 Minute Intro to Roth IRAs video post.

Jack asked:

A question for those of us abroad, or rather a request for clarification: I was of the belief that foreign-earned income which qualifies for the foreign-earned income exclusion cannot be used for a Roth IRA. You make no direct reference to this. Can you clarify at all?

Jack is correct. If you are working abroad and have no income in America, you cannot invest in a Roth IRA for the year(s) you are gone.

So why is this?

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Corinne and I have lived together since July and we share a majority of the bills including internet, water, gas, and car insurance. A problem a lot of couples run into when they’re trying to figure out their bills is who should pay for what?

It’s easiest to split the costs 50/50, but if each person has a different income amount this can cause some dreaded relationship tension. One person will have to pay a larger percentage of their paycheck, while the other person will then be able to pocket more cash every month.

After a little research, we realized that paying a percentage of the bills based on our income amounts worked best for our situation.

Here’s an example of the formula we use to split our bills so that no one’s feelings get hurt and every one’s paychecks are treated fairly.

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I recently had the chance to test drive Pocketsmith – the new budgeting and forecasting web application that allows you to insert bills and predict future cash flow.

The Pocketsmith team have done budgeting right. They’ve created a well-organized, attractive product that helps people not only organize their money, but peer into their future in order to appropriately plan for savings goals.

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Knowing what to do with your money isn’t inherently easy. It takes time to learn the steps, the tricks, and the right and wrong way to do things.

Sometimes we overlook the fact that a lot of people who are attempting to jumpstart their finances aren’t aware of the financial accounts they should have.

In the video below I introduce a simple way to visualize the important financial accounts for your life.

It’s called the Financial Family Tree and in 5 quick bullet points you’ll better understand what accounts you should have, what to look for when shopping around for an account, and why they’re so vital.

This is only my second video, so let me know what you like and dislike about the video in the comments below!

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In college, my girlfriend and I inherited a textbook business from a friend. We bought and sold textbooks on campus for 55 weeks and made $4,909. We not only made more than every person working an on-campus job, but we learned about the ins and outs of running a part-time business.

There are a million and one ways to save money, but sometimes it just helps to make more than your $9/hr job pays. That’s where a side business comes in. You don’t need to be 35 with a business administration degree to start; you can be 19 and a music major, 23 and unemployed, or 48 and happily employed with a family.

If you want to really want to get a handle on your money situation, look no further that improving your credit score.

Easily the most overlooked aspect of one’s finances, your credit score is the number that tells lenders how trustful you for credit cards, mortgages, and other loans. This one number affects whether or not you get a loan, the interest rate of the loan, and your credit limit for the loan.

The biggest purchases of your life – a house, cars , a  business, etc. – are effected by the size of your credit score and if it’s low, you’ll end up paying hundreds of thousands of dollars more in your lifetime just because you’re more risky to lenders.

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Over the weekend Seth Godin posted on his blog a link to a site called Vintage Ad Browser. It’s a massive collection of vintage ads broken into different categories and here are 10 of my favorite money ads from the past 150 years.

1918 – U.S. Victory Bonds

1953 – New York Stock Exchange

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