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Finance  Keys to Building Wealth  Disposable/Discretionary Income  Compound Interest  Rate of Return  Financing  Interest Rate  Sinking Fund  Debit Card vs Credit Card  Crisis Living  Debt Consolidation  Bankruptcy

Keys to Building Wealth  Discipline is vital for financial success.  Discipline leads to wealth.  Discipline is often the missing ingredient in many financial plans.

Income Disposable Income= Money left over after taxes. Important for companies that produce and distribute necessities. (NEEDS) Discretionary income= Money left over after taxes, paying for food, shelter, and clothing. Important for companies that produce and distribute luxury items & entertainment. (WANTS)

Compound Interest  Albert Einstein once noted that the most powerful force in the universe was the principle of compounding. In investing, this manifests itself through something called compound interest. Put in its simplest terms, the phrase compound interest means that you begin to earn interest income on your interest income, resulting in your money growing at an ever- accelerating rate. It is the reason for the success of every person on the Forbes 400 list and anyone can take advantage of the benefits through a disciplined investing program. Benjamin Franklin was famous explaining to people that it was the best way he knew how to get rich.

Compound Interest

Compound Interest Tables - The Value of $10,000 Invested In a Lump Sum 4%8%12%16% 10 Years$14,802$21,589$31,058$44, Years$21,911$46,610$96,463$194, Years$32,434$100,627$299,600$858, Years$48,010$217,245$930,510$3,787, Years$71,067$469,016$2,890,022$16,707,038

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Rate of Return The rate of return on an investment, expressed as a percentage of the total amount invested. Rate of return is usually, but not always, calculated annually. also called return.

Calculating the Rate of Return on Investments  Let's say you invest $100 in stock, which is called your capital. One year later, your investment yields $110. What is the rate of return of your investment? We calculate it by using the following formula: ((Return - Capital) / Capital) × 100% = Rate of Return Therefore, (($110 - $100) / $100) × 100% = 10% Your rate of return is 10%.

Rate of return

Where You Put your Money Does matter 4%8%12%16% 10 Years$14,802$21,589$31,058$44, Years$21,911$46,610$96,463$194, Years$32,434$100,627$299,600$858, Years$48,010$217,245$930,510$3,787, Years$71,067$469,016$2,890,022$16,707,038

Financing The act of providing funds for business activities, making purchases or investing. Financial institutions and banks are in the business of financing as they provide capital to businesses, consumers and investors to help them achieve their goals.

How Much Does Financing Really Cost? Auto loan amount: $10,000 Auto loan term: 48 months Interest rate: per year 10.0% Monthly auto loan payments: $ months X $ = $12,174 You just paid an additional 21.7% for your car.

How Much Does Financing Really Cost? Auto loan amount: $20,000 Auto loan term: 60 months Interest rate: per year 10.0% Monthly auto loan payments: $ months X $ = $25, You just paid an additional 27.5% for your car.

Interest Rate The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Interest rates are typically noted on an annual basis, known as the annual percentage rate (APR).

What Can Impact The Interest Rate You Pay?  Credit score  , , , , 800+  Item being purchased  New car, used car, house, student loan, visa card  Length of time being financed  3 years, 5 years, 15 years, 30 years

Sinking Fund Simply put, sinking funds are a reserve of money set aside for some purpose.

Sinking Fund vs Emergency Fund  With a sinking fund, you know what the money is for and you know (about) when you are going to use it. If you want to buy a $10,000 car and are saving $555 a month into a sinking fund, you know that you’ll use the money in 18 months, and you know what you’ll use it on. The sinking fund is for the known; the emergency fund is for the unknown.

Where Do You Keep A Sinking Fund?  You want to have a sinking fund in a place where you can easily get to it. The bigger the amount, the more secure you want it. If you are saving $25 a month for four months so you can buy a birthday gift for someone, it’s probably all right to keep an envelope hidden somewhere in your home (though you must make sure you don’t cheat by spending the money on late-night pizzas).  But if you are saving for a car and have hundreds or even thousands of dollars lying around, a simple savings account at the bank is probably a better idea. You can get to it easily, and you don’t risk having a pile of cash lying around if someone breaks into the house.

Debit Card VS. Credit Card Credit or debit? That question will sound familiar to anyone who has presented their credit card or debit card when making an in-store purchase. But before you even get to the register, you should ask yourself that very same question in order to decide if you want a debit card or credit card in your wallet. Putting something on “plastic” used to mean one thing—using your credit card. But these days, debit cards are also a big part of the “plastic” world. Do you know the differences and which one is better for you.

Card Security Value

Crisis Living

Debt Consolidation Myth: Debt consolidation saves interest, and you have one smaller payment. Truth: Debt consolidation is dangerous because you treat only the symptom.

Bankruptcy Bankruptcy is a painful, life- changing experience. It hurts. Too many bankruptcy filers never really recover from their financial distress because they never learn new ways to manage their money.

Bankruptcy Chapter 7 bankruptcy, which is total bankruptcy, stays on your credit report for 10 years. Chapter 13 bankruptcy, which is set up like a payment plan, stays on your credit report for seven years. Without a doubt, it’s a long process that will follow you around for years, even after it clears off of your credit report.

Where Bankruptcy Doesn’t Help Alimony Child Support Debts that arise after bankruptcy is filed Loans obtained fraudulently Some debts incurred in the six months prior to filing bankruptcy Some student loans Some taxes