10 Habits of Successful People

Recently I spent some time with a friend who in my book is well off. Without getting into personal details, I will just say that she was a medium six figures income, owns various personal and business properties and never has to worry about retirement.

During the time we spent catching up, I was able to get to know her better, what she was up to and observe some interesting behaviors that never made themselves evident in the past. Now that I think about her qualities and habits, they coincide with those of many wealthy people. Here are some of the qualities that people who are well off exhibit:

Habit #1: They work hard.

My friend paid her own way through school, worked long hours and never quit at anything. The assumption that people with money don’t work hard is so far from the truth that I believe many of us assume there is some sort of a shortcut to riches.

Habit #2: They live frugally.

I was surprised to learn just how frugally my friend lived her whole life after not seeing each other for a long time. Consistent savings are high priority in the lives of successful people. One of the reasons she was able to do well, was because of aggressive early savings that began during college years and allowed her to buy a business early in life. She bought her first business before buying a house.

Habit #3: They invest early and often.

With a habit of saving early in life, my friend was able to buy her own business as an investment in her own career and real estate. Fast forward many years and she now owns several homes in U.S., various rental properties, a large business park and large stock holdings. Interestingly enough she does her own type of investing which doesn’t fit the mantra of “The Intelligent Investor” that I’ve been reading about.

Habit #4: They don’t rent.

I’m the type of person who likes to rent apartments for my own reasons. I’m also the type who won’t get rich because of it. My friend refuses to pay money into anything that doesn’t generate a return. Renting is a waste of money in her book and I’m a big idiot for doing it. If you want to make money, don’t rent – buy instead.

Habit #5: They never pay more than they have to.

While out at lunch I had a chance to observe my friend’s tipping behavior and noticed something strange. She wasn’t tipping like me – a flat dollar amount with paper money. To most this is no surprise, but to me this was odd. Instead, she tipped an even 10%. Seeing this once was enough to conclude that she tips this way every time no matter the amount on the bill. She even put it on her card, which leads me to the next habit – spending.

Habit #6: They spend with rewards in mind.

Rich people pull out a wad of cash to pay for things, right?

Wrong.

They use credit cards to earn rewards. Any means that will extend the value of a dollar spent is taken into consideration. In my friend’s case, she used a frequent flyer miles credit card to earn bonus miles to help cover frequent flights she takes.

Habit #7: They finance purchases.

Although she doesn’t like to throw money away at rent, my friend is not afraid to take on new debt. She is all too familiar with mortgages and credit card financing. The trick is to act rationally and understand what’s involved. It doesn’t hurt to be financially literate to take advantage of financing mechanisms in a country that’s so eager to lend.

Habit #8: They seek out personal connections.

Whether the connection they make is good for business or good for the heart, people who are well off seek out and then value new friendships and acquaintances.

Over the course of our relationship I’ve come to learn just how many personal connections my friend has. Recently I found out that she has equally as many business connections. She values friendships, gives often to the needy and is extremely compassionate toward all aspects of human interaction. Personal connections with good people drive success.

Habit #9: They strive to achieve their goals.

Confidence, persistence and not accepting the possibility of failure are all characteristics of people who are well off, including my friend. They set goals and take steps to accomplish them no matter what stands in the way. You might imagine it helps to set achievable goals, not broad “I want to be a millionaire” type.

From our conversations it was easy to see that planning and taking steps to achieve goals was one of her strong habits.

Habit #10: They seek being content with what they have.

Don’t confuse this with “content with less”. My friend is always looking for opportunities to make more money, but money is not the number one motivator for her.

Family and friends are.

She works hard to provide for her family, to give to the needy and to enjoy life at every step of the way. If you were to take away all of her financial accomplishments in an instant, she would be perfectly content without any of it because of strong personal relationships she has developed over time. Actual possessions mean little to her which is evident in her frugal lifestyle. It’s the social experiences those possessions enable that make her content with life.

Well Off

Do you know someone who is well off and exhibits similar habits? Do you agree or disagree with anything on this list? This post was brought to you by this website only and no other.

“Secret” Forumla for Living Comfortably

CNN Money has an interesting column where a financial expert advises readers on how to overcome their money woes and achieve goals. Those goals are typically short term and involve retirement combined with another goal.

Business CatI always find it fascinating to see other people’s finances at different stages of their lives, and most of all reading about recommendations from experts.

A typical column goes something like this:

Jane is a teacher nearing retirement. She has a $30,000 outstanding mortgage and $15,000 in credit card debt after helping her child with school financing. The goal is to retire in say… 6 years.

One thing most of these scenarios have in common is high debt balance and debt payment. Naturally, many financial advisers tell these people to maximize debt payments to eliminate it quickly so that they can better focus on saving more for retirement.

It’s simple advice and it works.

Combine that with advice on how to diversify your investments and you get the gist of all financial advice out there including that of most personal finance bloggers.

Secret Formula to Living Comfortably?

The formula to a good quality of living and decent retirement is no secret; it’s how we choose to approach it.

Pay off Debt + Budget Well + Save Money + Invest Wisely = Live Comfortably

A silly little formula (if you can even call it that) indeed.

So why are so many people still struggling?

Well, just as it takes a silly formula to establish a comfortable living, similar can be said for getting yourself into a big mess:

Earn Little + Don’t Plan + Don’t Invest + Accumulate Debt + Save Nothing = Big Problems

I know… it’s easy to generalize all life’s problems into one silly formula when life is nothing but simple.

At least having it written out like that gives us something to look at.

Most people seeking an answer to their money problems can find all they want to know in simple wisdom of the first formula. Yes, it’s very general and yes, you will need individual advice on how to achieve your own goal, but that’s why we have professionals who can help with just that.

It Takes Planning

Reading CNN Money column made one thing very clear to me: people who are asking for advice don’t have a continuous plan, or didn’t have one to get to where they are now. Had they met with an adviser earlier, most of their problems wouldn’t exist.

I’m not saying people can avoid having to pay for school with loans or credit cards, but having a solid plan for the future can’t hurt.

Do you have a financial plan or do you just wing it?

Why Being Jewish Pays

Fact: Jews make more money.

Before you rush into calling me prejudiced, hear me out. Although being Jewish and caring about wealth is a stereotype perpetuated with negative connotations, there is absolutely nothing wrong with being raised to value education, financial knowledge and family values. In fact, we can all learn from Jews.

SynagogueWhy Some Religions “Pay” More

Let’s forget about ethnicity and focus on religion. What does our religion have anything to do with wealth?

Well, it turns out – everything.

Religion shapes moral values, family values, educational values and… you guessed it – financial values. And it turns out Judaism does all of these things much more effectively than many other religions. However, before you throw bricks at me let’s consider a few things.

According to a study by Lisa Keister, at Ohio State University, Jewish people:

  • Accumulate more than twice the amount of wealth of an average individual with different religious affiliations.
  • Inherit twice as much from their families and more frequently.
  • Typically own twice as much stock.
  • Own much more valuable homes

The big question is why? I know I’m curious!

Keister proposes a very convincing answer: it’s their values, stupid! (ok, I got carried away with political catch phrases here.)

Education’s Effect on Wealth

Jews place more importance on a strong financial foundation early in their children’s lives. They invest in their children: better education, more savings, better social connections and a preference for strong community ties. Importance of building wealth is taught early and is a critical part of preparing for success. For example: on the date children come of age (Bar Mitzvah and Bat Mitzvah) parents, relatives and friends often give financial gifts, not just in money, but in investment and saving vehicles. This strong religious tradition sets a course for a child’s financial path.

Don’t take my word for it though, ask around!

Ever wonder why so many bankers, doctors and lawyers are Jewish? It’s because Jews value education. Adults establish early savings for their children and put them through the best schools money can buy. As a result, Jews earn more money in higher paying jobs, then repeat the cycle with their own children.

Alright, so they are pretended with better opportunities from early on, what else?

Jewish Investment Behavior

Since investment behavior is engraved early on in life, adulthood builds on to a strong foundation.

Fact: Jews prefer financial assets vs. real or fixed ones.

Stock ownership occurs much earlier in life than for most people. Unlike a typical investor of another religious affiliation, Jews invest in financial assets before buying a home. This is meant to create continuous cash flow and allow for ongoing investment (Rich Dad, Poor Dad ring a bell?). Full disclosure: affiliate link.

Combined with generally better incomes and better investment opportunities through developed social connections (most often from attending services), those of Judaic faith enjoy faster accumulation of wealth and more control over debt.

Other Important Wealth Factors

Keister also hypothesizes that later child bearing and more time spent on helping children develop helps establish better financial foothold for kids.

Makes sense, right?

On top of that, communal exposure to social development creates a network of trustworthy and strong ties that can help financially at a later time.

What Can We Take Away From This?

I’m not suggesting you should drop your religion and take up Judaism. However, you simply can’t argue with basic facts about financial behaviors that set people up for a wealthy life:

  1. Save early, save plenty.
  2. Educate your children about financial management and establish their future by investing in their education.
  3. Be involved in your family’s financial well-being through constant communication and participation.
  4. Consider investing in yourself before bringing new life into this world only so that your child faces the same financial struggles as you.
  5. Consider investing in financial assets before jumping into real estate or fixed assets (especially when you’re young).
  6. Don’t discard religion – after all it helps build important bonds that will aid you in your quest for financial independence.

Fact: you don’t have to be Jewish to do as they do.

With that, I’d like to finish up this rather long train of thought that in all honesty deserves a much deeper discussion that what is possible to cover in a blog entry. For a full study and its findings I highly recommend checking it out here (PDF).

Finally, I’d like to conclude that these are my personal observations of what I found to be a very fascinating subject. I’m not an expert in investing and give no specific advice. Also, If I offended anyone in any way, I apologize in advance as this post was meant to look at financial connections to one religious group and not to offend any specific group of people.

For those looking for a good book on investing, check out The Intelligent Investor by Benjamin Graham (in collaboration with Warren Buffett). Full disclosure: affiliate link. He was one of the few investors who got away with profiting under the worst of market conditions. It’s a fantastic read, and a great start if stocks are not your thing yet.

Are you Jewish by any chance? Does any of this hold true for you? If you’re not, what are you doing to secure your future and increase earnings?

3 Tips to Stay Financially Afloat

The following post is by a good friend Steven Parks. Steven is a freelance writer who has been laid off in a series of layoffs last year. While struggling to find a new job, Steven has found ways to cut down on spending and eventually got into freelancing for additional income.

If you are unemployed or have been at some point in your life – I’ve been in your shoes.

While it takes some searching around to find your calling in providing an income for the family in these hard times, you can start being productive by cutting down your bills and reducing spending as much as possible.

Last year I lost my job that I will admit took good care of my family’s necessities. Luckily there was some money saved up but things weren’t looking up so great with job searching. With bills piling up and no hopes for a new job I decided to take drastic measures – cut down my bills and create my own job as a freelancer.

The following three steps alleviated my troubles and allowed me to focus on the important things and earning money once again:

1. Ditch The Unnecessary Bills and Lower The Ones That Aren’t Important

Cancel your TV and magazine subscriptions

The first thing I did was go through all of our family’s bills to determine which ones are just added conveniences versus necessities.

Cable bills, movie rentals, magazine subscriptions, yard and gardening services were all cut right away. My family hardly watched any TV with the exception of my daughter so I canceled the subscription and instead found an a-la-cart package that allowed me to pick and choose kid’s channels.

We stopped renting movies, because honestly the late fees were killing us all the time. No movies, no fees!

Magazine subscriptions were just an added bonus that had to go, while our neighbor kid mowing the lawn for some extra money wasn’t required either (I have a mower, I can do it myself). The goal here is to eliminate any expense that you can live without, and yes you can live without the ESPN sports package.

2. Take Advantage of Savings Opportunities When Shopping

When I decided that I would take steps to makes sure we never went broke, I realized that there is potential for great savings in bulk shopping. I had shopping club cards that I was not using and I have never considered using coupons.

Although I had no interest in becoming an extreme coupon clipper, I made it a priority to keep an eye out for coupons on items I purchased. Buying regular household items in bulk from Costco saved quite a bit of money over the long run. Even though I didn’t have a Costco card to begin with, it wasn’t difficult to borrow a relative for a day of shopping.

3. Buy Used

Kids are notorious for being careless with their clothing, not to mention the pace at which they outgrow them. Instead of going low-key and shopping at Wal-Mart we went a step further and began hunting down weekly garage sales.

Kids hate used clothing, but trust me when I say this – they don’t care about it as long as it’s not for school. School clothing has to be new and cool, that’s the rule!

As for my own purchases, I made sacrifices by buying used light weight jackets instead of shopping for design brands. I also purchased gently worn shoes at garage sales, you’d be amazed what people try to get rid of when they move (I think the pair I bought last weekend was in someone’s storage for its entire existence.)

When the dryer went out, we stopped using it entirely.

Luckily, the climate here in California is warm year-round. To avoid the energy costs associated with dryer use and the cost of replacement of the unit we simply purchased some strong rope and hung it outside.

It’s been working like a charm and I won’t bother to estimate the amount of money we’ve saved in electricity charges and initial replacement fee.

If you live in a colder climate, consider shopping around for deals on Craigslist. People are constantly moving and sometimes don’t bother taking older appliances, creating a perfect opportunity for you to buy great used products. I’ve bought so many things on Craigslist for huge discounts that it’s become my number one website to check before buying anything.

If you are able to, look for freelance work to hold you over until you can find a steady job.

In Summary…

  1. Cut back … a lot
  2. Shop smart
  3. Buy used
  4. … and … look for another job!
Have you lost a job and found yourself stranded? What are some things that helped you get through those tough times?

10 Cheapest Cars for 2013

Everyone remembers their very first vehicle. Mine was a 1998 Buick Century – a real burgundy beauty! Oh, the days we’ve shared together, the memories, the horrors we endured. At that time that’s all that was affordable to me.

Fast forward to October 16, 2012 and you’ll find me driving an almost-new Nissan Versa. Cars have come a long way in become more affordable and you’ll notice that the vehicle I drive is rather cheap compared to the entire selection of brands and models out there.

To find out just how cheap, I’ve compiled a list of 10 brand new budget cars that are fairly affordable for an average person:

1) 2013 Nissan Versa S – $11,990

2013 Nissan Versa

For old-school drivers who prefer manual over automatic, there’s the new Nissan Versa S. Starting at an amazingly low $11,990 the Versa never seizes to amaze me. As a Versa owner myself, this is the top vehicle on  my budget auto-shopping list. This full size sedan packs a lot more punch for the buck with a 109-hp engine. With an average of 31.5 MPG, gas savings are plentiful (for all of us here in California that’s a huge relief). My personal Versa favorites include the size of the trunk (it seems to fit just about anything there) and the fact that it doesn’t feel as cheap as some of its competitors. From experience, Versa’s acceleration is already quite slow so I can’t imagine any less horsepower in a vehicle of the same price range.

Versa website.

2) 2013 Chevrolet Spark LS – $12,245

2013 Chevy Spark

With gas prices on the rise, anyone will be happy to drive the new Chevy Spark which will average 32.5 MPG. A go to vehicle for every-day life and work commute, the 84-hp Spark LS is priced attractively at $12,245 MSRP. Spark is the newest creation by Chevy to complete its vehicle lineup with a mini model for the urban hipster. Available with a built in command deck to access all of your audio, video and smart phone linkup. If safety is your thing, rest assured your you’re covered there with Spark’s 10 standard air bags. Chevy isn’t kidding about this one, they are throwing in a 5-year, 100,000 mile warranty to compete with the current market players. The Spark is a serious contender for those on a budget.

Spark website.

3) 2013 Smart ForTwo Pure Coupe – $12,490

2013 Smart ForTwo

The so called unboring, fun car to drive. You’ve all seen a Smart cruising around by now and have your own impression of this compact vehicle. The 70-hp engine coupled with a five-speed manual transmission promises to make for a fun drive. Smart ForTwo comes with a 48 month/50,000 mile warranty – somewhat subpar with the other budget vehicle choices but one to keep in mind nevertheless. Expect combined fuel efficiency of 36 MPG and some of the most thought-through safety features matching those of a racecar’s roll cage.

Smart ForTwo website.

4) 2013 Ford Fiesta S – $13,200

2013 Ford Fiesta S

This new subcompact may seem small to some, but shouldn’t be mistaken as a vehicle for a small person. Roomy on the inside and stylish on the outside, Fiesta makes my top 10 picks. Being one of the top contenders in price range is nice, but what’s even nicer is averaging 33 MPG combined fuel efficiency and it’s standard features such as power locks and mirrors, air-conditioning, tilt-and-telescoping steering and an auxiliary audio jack. Powered by a 120-hp engine, Fiesta sits smack down in the middle of the rest. And that color, isn’t it pretty?

Fiesta website.

5) 2013 Toyota Yaris L – $14,370

2013 Toyota Yaris L

When my mom went shopping for a Toyota, it was the first year the Yaris was out. The Yaris set a standard for many of today’s subcompacts and has been evolving ever since. Although sedan version of Yaris is no more, there’s much to be excited for in the improved-look hatchback. Averaging 34 MPG, the 106-hp engine makes Yaris just a bit less snappy then many of its competitors. However, don’t be fooled by horsepower alone, the new Yaris makes up with style and versatility where others fall short. Roomy, efficient, safe – this car shouldn’t disappoint.

Yaris pricing announcement.

6) 2013 Kia Soul – $14,400

2013 Kia Soul

SUV’s will have to watch out for this Small Utility Vehicle, pushing the boundaries of boxy designs and high fuel efficiency. With 31 MPG combined fuel efficiency, slick design and roomy interior, Kia has a soul! The Soul baseline model comes with a 1.6-liter four-cylinder engine with 135-hp. Expect standard climate control, power windows, locks and mirrors and satellite radio. What makes this vehicle stand out from the rest is it’s practicality. Perfect for short and long distance driving, with ample space and great features, this boxy car may just be the perfect contender for the top 10 cheapest cars in 2013 list.

Soul website.

7) 2013 Hyundai Accent GLS – $14,545

2013 Hyundai Accent

Perhaps the best contender in the subcompact 2013 lineup, the Hyundai Accent looks sharp and boasts 138-hp 1.6L 4-cylinder engine. With 9 colors to choose from, that’s almost double the other competitor choices. The automaker has designed the new Accent with interior space and exterior style in mind and seems to accomplish both goals with elegance. If considering a Hyundai, be sure to take a look at warranty details as my good friend from See Debt Run has mentioned having issues with getting his honored. Overall the Hyundai Accent is looking like an excellent competitor in the 2013 lineup and is not to be overlooked when shopping for a budget vehicle.

Accent website.

8) 2013 Honda Fit – $15,325

2013 Honda Fit

When shopping for a reliable vehicle, Honda has always made the top of my list. Nobody can argue Honda’s record for producing quality, affordable vehicles. The new 2013 Honda Fit base model comes standard with a 5-speed manual transmission 1.5L 4-cyl. engine. It’s not the EV version that costs a few extra bucks but it’s the same stylish vehicle Honda has had great success with in the United States. Only when you see inside this vehicle that you can really appreciate the art and beauty of it’s design. Practical, spacious and creative, the Fit is perfect for short and long distance driving. The only thing that disappoints a bit is the sub-par combined 29 MPG which should have been around 37 in my opinion.

Fit website.

9) 2013 Kia Forte LX – $15,400

2013 Kia Forte LX

The Kia forte is a vehicle that is a little bit larger the subcompact, but a little bit smaller than a midsize vehicle. Just like most vehicles in this class, the Kia forte has received a European-styled look. The styling is very clean, crisp, and has graceful lines. The gas mileage is about average at 26 for the city and 36 for the highway. This is pretty reasonable considering it’s powered by a 2.0 L, 156-hp four-cylinder engine. It comes with a six speed automatic and the LX models have a six speed manual transmission. The performance of this vehicle is very value conscious and has just enough power to do the job.  The front seats have adequate amount room for the average size adult, but the rear seats are little snug for adults. If you don’t mind getting a little cozy, you can probably squeeze three people in the back in a pinch. The base forte is for the budget conscious and does not come with air-conditioning. You’ll be surprised to know that all models come with Bluetooth, Sirius satellite radio, steering wheel controls, and voice activation.  The upper end models include features such as fog lights, trim and upholstery upgrades, XM traffic, upgraded climate controls, pushbutton start, 16 inch alloy wheels and a lot more upgrades.  Get your own Kia forte for $15,400!

Forte website.

10) 2013 Ford Focus S – $16,200

2013 Ford Focus S

If you’re looking for an economical but sleek and stylish car that is under $16,500, this is the car for you. This car is tech focused and a very fun car to drive. The interior feels more like a European sports sedan rather than a budget conscious car. There is plenty of leg and head room for people that are 6 feet and taller. The base model comes with a 2.0 L direct injected four-cylinder engine that produces 160-hp with 146 foot-pounds of torque. Not bad for the base model.  Now, if you’re looking for a little more performance and handling, step up to the focus ST. This version is an absolute rush and has a whopping 240hp turbocharged eco-boost engine. This propels the car from 0 to 60 in just 6.3 seconds, with a top speed of 155 mph. The cars well-equipped and has several options such as a Sony sound system, HD radio with Sirius satellite radio, sports seat, a sport suspension.

Focus website.

But Wait, There is More…

For the super frugal who’s out shopping for a new car, you may want to wait for the Nano. India’s Tata has redesigned its mini car Nano to arrive here in U.S. within 3 years. Price tag? Somewhere below $10,000. What this is going to do to prices of used cars is anyone’s guess, but I have a feeling it’ll be the new alternative to used cars.

Would you consider buying one of these cars brand new? If so, which one?

Ask Nicely, Save Some Money

What’s worse than getting a bill for a $54 late fee when you accidentally entered the toll road without paying?

Getting one for $110, knowing the toll was only $1.50, had you paid it.

This is exactly what happened to me a few days ago when I opened my mailbox and found a letter from the toll roads, informing me I had evaded the toll penalty and was subject to a registration lien.

While trying to make sense of a road split in front of me, split seconds decided the fate that would follow soon after I made the wrong choice. You see, I had just moved to a new town and went out to find my local Trader Joe’s location. Despite receiving guidance from a GPS device, I managed to get lost when I encountered a confusing road detour.

Ughhh … detours!

An extra two miles and one headache later I got to my destination. One and a half months later I would receive my first and only notice from the toll roads.

Feeling Upset

As you can imagine I became very upset to the point of almost crying. Spewing every cuss word imaginable, I hastily google’d for similar incidents to see if there was an easy resolution. Yelp yielded nothing but 1-star reviews from people who were ready to rip the toll roads a new one. Take a look for yourself:

The toll roads website provided an area where I could pay the violation or start a dispute. As soon as I saw a link for disputes, a post by Jason Steele at PT Money flashed in my memory. Jason detailed accounts of getting various desired results such as reduced fees and application reconsideration just by talking to the credit card companies directly.

Asking Nicely

Keeping in mind his personal experiences, I figured maybe if I explained everything that happened in a nice manner, a human being on the other end would undo the error of goofing up the first violation notice. More so, if I’m lucky enough, maybe even erase the fee entirely! Needless to say I filled out the form and waited.

The next day to my surprise an email arrived in my inbox stating that the fee has been reduced from $110 to $31!

I guess my decision to ask before acting really paid off. Even though the violation fee was not removed completely, I managed to get the error removed and even reduced the original fee down to $31. I know some of you would disagree that this is not a perfectly favorable outcome. However, it felt like a huge boulder was lifted off my shoulders, and the idea of not wasting an extra $79 made me really happy.

Jason was perfectly right, if you just reach out and ask, good things will come.

Do you think I should have further called to try and negotiate complete dismissal of the violation fee? After all, my car was caught by the toll camera.