1. 4 Important Things to Remember About Money that People Like to Forget You can't get something for nothing. If it seems too good to be true, it probably is. Live within your means. The best way to save more is to spend less. Finally, the average American is 5 times better off financially than 67% of the people in the world. Remember this the next time you lament about being broke.

2. GET RID OF BAD DEBT Bad debt is money owed on depreciating goods like cars and credit cards; good debt is money owed on on appreciating goods like homes, real estate, jewelry, art, & education Pay off all credit cards and high interest loans. There aren't any investments that will pay more than what a credit card charges. Why put money in a 3% savings account when you are paying 20% on your visa? When your debt ratio starts to push beyond 25-33%, you're in danger. Debt________ = Debt Danger Ratio Annual Income Example: You make $30,000/year but owe $15,000 in loans. Your debt ratio is 50%.

3. MAKE A BUDGET Spending less is the only way you'll have money to invest. Stick to your budget, even if you have to use desperate measures. SAVE 10% FOR RETIREMENT If you save 10% of your income every month starting in your early 20's, you'll have plenty for retirement.

4. SAVE AN ADDITIONAL 10% FOR OTHER EXPENSES You'll need money for a house, kids, vacations, home improvements, etc... Americans save less than 5% of their income versus 10% for Germans and 15% for Japanese. BUILD A SAFETY NET You should have 3-6 months worth of income saved for emergencies (like losing your job). This is NOT spending money.

5. Consequences of Overspending PAY MORE TAXES. The more you spend, the more sales tax you pay. Plus you have less money to fund retirement accounts which save you money on income taxes. HARDER TO BUY A HOUSE (OR ANY OTHER TYPE OF LOAN). Banks will be less likely to loan you money for a home, school, or business if you have outstanding debts. CONSTANT INSECURITY. Living paycheck to paycheck can be stressful, especially when the economy turns sour.

6. Two Things To Know Before You Start Investing Now that you have gotten rid of your debt, you're ready to start investing. In order to invest wisely and appropriately, you need to know two things: –your net worth and –your marginal tax rate.

7. NET WORTH is your Total Assets (savings, pension) - your Total Liabilities (student loans, credit cards, car loan). If your net worth is... LESS THAN HALF OF YOUR ANNUAL INCOME : Bad news, but you're in the majority. Get rid of debts first & then build a safety net of 3-6 months income. MORE THAN HALF OF YOUR INCOME BUT LESS THAN A FEW YEARS : Okay, especially if you're younger, but if you don't have a house, you should reduce spending & accelerate saving. MORE THAN A FEW YEARS' INCOME : Good. You're on track to meet reasonable financial goals.

8. MARGINAL TAX RATE is the rate of tax that you pay on your last or highest dollars of income. For example, if you make $30,000, you pay 10% tax on every dollar between $0-7,550. You would pay 15% tax rate on every dollar from $7,551- 30,000. SINGLES TAXABLE INCOMEFEDERAL TAX RATE $0 - 7,550 10% $7,551- 30,65015% $30,651- 74,200 25% $74,201- 154,800 28% $154,801- 336,55033% over $336,550 35%

9. Mistakes INVESTING WITH IGNORANCE Don't buy an investment based on a sales pitch, timing, or a friend's recommendation if you don't understand what you're buying or its risks. Ask questions. Timing is when you invest or sell your investments by timing the market; i.e., you always try to buy at certain times when you think the market will be lowest and sell when you think it’s at its peak. Timing can also be when you day-trade. Day trading is buying and selling stocks, bonds, and mutual funds within a day.

10. Mistakes PAYING HIGH FEES AND COMMISSIONS All fees & commissions come out of your pocket, & there is no proof that more expensive investments yield better results. NOT DIVERSIFYING Putting all your money in one place is neither profitable nor safe. You're either risking too much or not enough. IGNORING TAX CONSEQUENCES Your growth and value of your investments will depend tremendously on your MTR. Know your MTR when making investments.

11. Investment Types: LENDING Lending investments mean that you make money by lending someone--the government, a company, a bank--money for a certain amount of time at which time they agree to return the principal (original amount loaned) plus interest. examples included CDs (certificates of deposit), treasury notes & bills, and corporate bonds. ---benefits: safe and easy to purchase; make more money than savings accounts ---downfalls: inflation rates can change the value of your investment; don't make big money off of bonds

12. Investment Types: Bonds Bonds are lending money to the government (local, state, or federal) or a corporation. You are guaranteed the principal (the amount you loan) plus interest for a certain time period (6 months to 30 years) If it is a corporate bond and the company has financial trouble, you are paid before the stockholders. This is one the reasons bonds are considered a safe investment. Types of bonds include CDs (certificate of deposit), Treasury Bills (T-bills), Savings Bonds, etc... You can compare bond rates at bankrate.com

13. Rule of 72 You can calculate how long it will take your money to double in a lending investment by following the Rule of 72 Divide 72 by the interest rate you are earning on your investment and that equals the number of years it takes your money to double. Example of Rule of 72: If you are earning 6% on your CD, divide 72 by 6 and you will find it takes 12 years to double your money. (72/6 = 12).

14. Investment Types: OWNING Owning investments mean that you make money by owning something--land, stock (part of a company), gold. You make money if its value goes up and you sell. ---benefits: make the highest profits of any type of investment; power & voice in your investment ---downfalls: highest risk investment with no guarantees; can be time consuming to manage SafeRisky Least ProfitGreatest Profit

15. Investment Types: Stocks Stocks are shares of ownership in a publicly held company, aka, a corporation A stock market is a public place to buy and sell stocks; some famous ones are the NYSE, NASDAW, and local stock markets like the Pacific Stock Exchange On average, over the past 150 years, stocks earn a 10% return. This accounts for lows, highs, recessions, etc...

16. Things to consider when buying stock Stability. How long has the company been around? What is the outlook for its future? Past Record. How has it performed in the past? What kinds of ups and downs has the company endured? Price-Earnings Ratio. This is the ratio of the price of the stock to its actual earnings. If the ratio is high, it usually means that the company is overvalued, that the price of the stock doesn’t actually represent the value of the company. Amazon.com is a good example--it hasn’t made a profit yet, but its stock is valuable.

17. Final Thoughts & Words of Advice START EARLY. Starting when you’re young, even if you don’t have much money, earns you considerably more money than when you start later with more money. INVEST REGULARLY. Put money in every month, and don’t worry about “timing” the market. INVEST AS MUCH AS YOU CAN. Investing even $10 more per month will net you tens of thousands of more dollars later.