Skid Row is a place that you probably never heard of. But it is a place in Los Angeles where impoverished families, drug addicts and schizophrenics fashion cardboard shelters from the merchants’ discarded boxes. And when times got hard, this is where you could find Orlando Ward. He was a high-school basketball star that later went on to play for Stanford. After a bad injury, he was never the same basketball player.
After his basketball career was over, he left Stanford to become a senior marketing representative for Xerox. However, this would be the start of a downward path as he became familiar with drugs and alcohol. He lost his job within 18 months. For the next few years, he continued to battle with cocaine and alcohol addiction. This addiction left him homeless and even landed him in jail a few times. His family supported him as long as they could until one day they refused to help him anymore.
Ward would go to the Midnight Mission for hot meals when he was hungry. Little did he know he would be running the place one day. Mission managers quickly realized that Ward needed to find something that would give him a sense of worth. His kitchen-duty assignment soon provided that. As Ward made progress, managers gave him more responsibility. He got a paying job in the stockroom, where he designed an Excel-based inventory system to smooth operations. In October 2000, Ward became the mission’s associate director for program development.
Today, Ward still visits Skid Row to help others just like him. He hasn’t forgot where he came from. But he is appreciative that he made it out. Moral of story: its not how hard you get knocked down, its how hard you try to get up.
They’re baaaack. Not evil spirits, but your children. In a recent Pew Research survey, 39% of all adults ages 18 to 34 said they live with their parents now or moved back temporarily in recent years. The return can have huge implications on retirement.
“The incremental expense of taking care of an adult child can potentially affect savings and emergency funds. In addition, expected retirement funds may be inadequate for this unforeseen situation,” says John Anderson, president of In Sight Financial Management in Berwyn, Illinois. If parents begin to struggle because they’re helping their children, that’s an eventual lose-lose for all.
Here are three ways to make the transition smoother:
1. Don’t offer a free ride. Maybe you weren’t into “tough love” when they were growing up, but now’s the time. Don’t give in to the temptation to reduce your retirement savings so that you can cover your child’s expenses. Instead, maintain your contribution levels and require your child to get a job (or any job that will pay the bills) if he or she isn’t working.
“Pre-retirees will be successful if they can keep their monthly contributions the same, if possible. Replenishing lost income in retirement is often more challenging. At a minimum, whatever short-term or extra employment your child can obtain should allow him or her to compensate you to the extent they can comfortably maintain their savings,” says Anderson.
2. Be upfront about your financial situation. Be clear and upfront about the household budget and how their return will impact your finances and retirement.
“It’s important to avoid non-essential expenses so that retirement can continue to be funded at, or close to, the same rate,” says Anderson.
3. Draft a contract. While you don’t want to toss them out too quickly, less they come calling again, view the situation like a contract.
“All parties begin with the end date in mind and it’s measured with certain milestones,” says Anderson.
If your child is unemployed and doesn’t find a job commensurate with their skills in a set period, let them know it’s expected they find part-time employment to cover their expenses, which at least could help them save enough to move out and perhaps take on a roommate. Revisit the terms of your agreement so communication is ongoing and differences are aired. Remember too, says Anderson, “Depending on your age, dipping into retirement funds also may have severely adverse tax implications.”
To buy or to rent? That is the crucial housing question.
Not long ago, many people would have favored buying. But since the bursting of the real-estate bubble, an event that saw millions of homes plunge in price, folks have grown more cautious.
Indeed, if the real-estate market collapse has a lesson to teach us, it is this: Buying a home should be considered a long-term investment—and if you don’t have a long time horizon, you should probably rent.
Scanning the horizon
If you’re a first-time buyer looking to finance a home purchase mostly with borrowed money, you may find that the prospective mortgage payments aren’t that different from what you currently pay in rent. That can make buying seem attractive.
That means that, before buying, you want to be reasonably confident you have sufficient time to build up some equity, either through price appreciation or by paying down any mortgage. With any luck, you will accumulate enough home equity to offset any softness in real-estate prices and also the cost of buying and later selling the house. Those costs include hiring a home inspector, title insurance, mortgage-application costs, legal fees and, maybe most important, the 5% or 6% commission you might pay when selling your home.
Those monthly mortgage payments, however, shouldn’t be your only worry. You also need to consider your chances of amassing some home equity during the time you own the house. Therein lies the problem: Not only is there a risk that property prices could decline, but also buying and especially selling real estate can be hugely expensive.
The hope, of course, is that a hot property market will banish such concerns. But on that score, you shouldn’t be too optimistic. While home prices posted impressive annual gains during the housing bubble, the longer-term historical averages are quite modest—barely ahead of inflation, in fact. With that in mind, before you buy, you probably want to be reasonably confident you will keep a house for at least five years and preferably seven years or more.
Don’t just think about time horizon, however. Also give some thought to your job security and the stability of your income. If there’s a risk you could be laid off, buying a home probably isn’t a smart move unless you have significant savings to fall back on. Even if you’re unlikely to lose your job, you may be asked to relocate to another city. If you have to sell a year or two after buying, there’s a significant risk you will lose money after all costs are figured in.
“There’s another reason you might rent: Perhaps you can’t currently afford the home you would be happy owning for the long haul.”
Biding your time
In fact, for many people, there are strong arguments for renting. While you don’t build up home equity, you typically also don’t have to deal with the cost and hassle of home maintenance and yard care.
In addition, you don’t have to pay property taxes or insurance, except renter’s insurance for your personal possessions. On top of all this, renting doesn’t tie up money that you would otherwise use for a down payment.
As a renter, when you move, you don’t have to worry about big transactions costs. Yes, you might pay moving costs and your new landlord may want the first and last month’s rent upfront, plus a security deposit. But these expenses will almost always be less than the cost of buying and selling.
Indeed, the ease of moving is one of the key benefits of renting—and it may appeal to more than just those early in their career. Retirees might rent so they can give a new community a one-year trial before committing to buy a house. There are also many rental communities geared to seniors that provide recreation and perhaps on-site dining facilities.
To be sure, as a tenant, you face the risk of rent increases. But if you owned your home, your bills for property taxes, homeowner’s insurance and utilities would likely increase periodically as well, and you also face the risk of shelling out large sums for major home repairs.
There’s another reason you might rent: Perhaps you can’t currently afford the home you would be happy owning for the long haul. If you buy a home and quickly sell because you’re dissatisfied, it could be a costly blunder.
By continuing to rent, you will have time to amass more money for a house down payment. That may allow you to buy a larger home and possibly put down 20%, bypassing the need to take out private mortgage insurance. While you’re waiting to buy, you may also see your income rise. That, too, should allow you to purchase a more expensive home.
You have to admit, this is COOL! What I love must about this story is the mother challenging her son to learn. This led to him doing research which led to him investing at an early age. To be 15 years old and worth $50,000 is pretty cool if you ask me. What would be even cooler is if we all challenged our children the way this parent challenged hers.
Before he buys any stock, he looks for certain ratios. First, he said he looks for the P/E (Price to Earnings) Ratio. A valuation ratio of a company’s current share price compared to its per-share earnings.
Market Value per Share / Earnings per Share (EPS)
For example, if a company is currently trading at $43 a share and earnings over the last 12 months were $1.95 per share, the P/E ratio for the stock would be 22.05 ($43/$1.95). In general, a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E.
The ratio for this is Annual Dividend Per Share divided by Price Per Share.
Next is the dividend yield ratio. A financial ratio that shows how much a company pays out in dividends each year relative to its share price. Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position – in other words, how much “bang for your buck” you are getting from dividends. Investors who require a minimum stream of cash flow from their investment portfolio can secure this cash flow by investing in stocks paying relatively high, stable dividend yields.
Third ratio is to consider is the growth ratio. The amount of increase that a specific variable has gained within a specific period and context. For investors, this typically represents the compounded annualized rate of growth of a company’s revenues, earnings, dividends and even macro concepts – such as the economy as a whole.
There is no secret that Antoine Walker was one hell of an NBA player. He played for the historic franchise Boston Celtics and Miami Heat. During this process, he made close to $110 million dollars. The question is, “How in the hell did he become broke?” I guess after a couple of big houses, exotic cars, and stupid spending habits, well, one can become broke. What he should have down is taken the investment approach that Ulysses Lee “Junior” Bridgeman took. He took $350,000 and turned it into $400 million dollars.
He was born in Chicago where he played basketball all through his high school years. He continued playing basketball throughout college at the University of Louisville, where he graduated with a Bachelor’s degree. Bridgeman was drafted by the Lakers in 1975, and he ended up being traded soon after to the Milwaukee Bucks. During his NBA career players didn’t have multi-million dollar NBA player contracts. Most of the players that made a lot of money received fortunes from endorsement deals.
In 1985 Bridgeman’s peak salary was $350,000 during the time he played for the Clippers. During the off seasons, Bridgeman started to plan for his future by learning the Wendy’s franchise business. He spent a lot of his time working at a local Wendy’s to learn the true culture of the company. At the end of his NBA career, Bridgeman owned three Wendy’s, and now he has over 160 locations. He also invested in the Chili’s franchise, owning more than 120 in America today. He even owns 45 Fannie May stores and also employees over 9,000 people.
Bridgeman is now the second largest Wendy’s franchise owner in the world. His contribution to his family started with his passion for basketball that transformed smart investments to immense wealth. Brickman has been married for 35 years showing his commitment to family and success. All three of his children have MBAs and are contributors to the family business.
Whats The Lesson
Bridgeman didn’t worry about keeping up with the Jones. He invested all of his money wisely and bought assets that would make him more money. That is the lesson in this story. Antoine Walker chose to do the opposite and bought things that really didn’t have value. And secondly he didn’t have any income coming in after his NBA career was over. Case in point, you should make money to buy assets that make more money.
I want this article to destroy the mindset of the person who thinks you need a lot of money to invest and be successful. As you will hear through out this site and in the video further down in this article, self-education is key. If you do not educate yourself on the topic of money, you will never have any money. Before we talk about who Earl Crawley is, lets talk about how the small guy can win.
It is important that you stay in your lane financially. Don’t worry about what the latest car is, who is wearing the latest fashion, or what is the latest technological gadget. Those who try to keep up with the Jones’s never do. Money management is one of the most underrated concepts in the urban community. It is important to pay yourself first before you pay anyone else. Let me repeat this: it is important to pay yourself first before you pay anyone else. This include mortgages, car notes, utilities and whatever else. If you are working hard for yourself, it only makes sense to pay yourself first. Whether it is something small like $20 dollars a paycheck, or something bigger like $200 dollars a paycheck, make sure to live in a way that you are paying yourself every two weeks. What you pay yourself should be the money you invest.
Let your money work hard, not you
Has your mother or father ever told you to work smarter and not harder? This single concept is how the rich stay rich and the poor stay poor. Your money should be making money, not just sitting in a checking account. Your checking account should consist of the bare minimum for you to survive from month to month. In order for you to do this, you will need to create a budget and figure out how much money you have coming in and how much money you have coming out.
The rest of the money you have left over should be split into two categories: Rainy day fund and Investments. I believe that 30% of what you have leftover should go into your rainy day fund while the remaining 70% should go into your investments. When your money is making money, well, you are working smarter and not harder.
View how Eric Crawley turn $12/hour into 1/2 million dollars
Talk to those who are knowledgeable
Those who are knowledgeable on the subject and successful love helping others. As crazy as this sounds, people who are at the top love the idea of helping someone get to the top as well. Do not be afraid to open your mouth and ask for help. Self-education is the best education you can have. It would also be advantageous to begin reading books and blogs that deal with investments. Continue to seek knowledge regardless of what age you are, what status you have in life, what race you are, and etc.
And finally, what are mutual funds
After watching that video, I hope that you are inspired by Earl Crawley. He mentioned a key point in the video about mutual funds. If you paid attention, he invested only $25 a month into a mutual fund. That eventually turned into $25,000. This is probably the point your mouth should be open, taking notes, and getting excited about mutual funds. Lets take a look at exact what a mutual fund is.
An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund’s capital and attempt to produce capital gains and income for the fund’s investors. A mutual fund’s portfolio is structured and maintained to match the investment objectives stated in its prospectus.
One of the main advantages of mutual funds is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult (if not impossible) to create with a small amount of capital. Each shareholder participates proportionally in the gain or loss of the fund. Mutual fund units, or shares, are issued and can typically be purchased or redeemed as needed at the fund’s current net asset value (NAV) per share, which is sometimes expressed as NAVPS. (via http://www.investopedia.com/terms/m/mutualfund.asp)
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I can honestly say this is a complicated topic to write about. Economic disparity started when we were stripped of our heritage and turned into slaves. We never really recovered from that. Each time we tried to make money as a community, they burned it done. If you are unsure as to what I’m talking about, reference the bombing of Black Wall Street. The answer to fixing economic disparity is urban unity. As simple as that answer sounds, we have never been further from urban unity as we are today.
Prior to the drug epidemic that ravaged our communities in the 1970’s and 1980’s, we helped one another and worked as a unit. We all knew we were part of the struggle for equality. We were all we had. We had the Black Panther Party, the activity of the Moorish Science Temple, the NOI, and the Civil Rights Movement. We were marching all over this country for one another. We were fighting for one another, even dying for one another. After segregation was ended (by far one of our greatest mistakes economically), and drugs were introduced to every urban community in the United States, we were destroyed economically. Understand that segregation forced us to open our own businesses and provide for ourselves. It forced us to become independent of their economic structure. The consequence of this was that we were generating revenue for ourselves without their help (reference Harlem, NY as an example). We were farmers, bankers, restaurant owners, inventors, and etc. Funny how after segregation ended, those same farmers, bankers, restaurant owners, and inventors were no longer in business. So what has the end of segregation and drugs done for us? Sure, their are some urban individuals that made it. Hell, we have a black president. But what about the majority of people? What happened to them?
The Pimp Game
I’m not here to debate what or who God is, what religion is right or wrong, and so on and so forth. What I will tell you is only in the urban community do we have a church on every corner or 2 churches on the same block. At first glance, you may say it is nothing wrong with people wanting to preach the gospel to their community. Sure, that is fine and all, however, when you have 5 to 7 churches in the same community all fighting for the same dollar, you are hindering the urban community economically.
These storefront churches are collecting small amounts of money that they live off of. They don’t get enough money to support the urban community. Therefore they are taking from the urban community, but not giving to the urban community. We have too many Chiefs and not enough Indians. Lets think about this. When you drive in a white wealthy community that is thriving economically, do you see a church on every corner? Have you ever seen two churches on the same block? Case in point, they have one church (two at the most) to every community. Everyone gives tithes to this one church and this one church supports the community in every way possibly, including economically. As far as mega-churches are concerned in the urban community, well, we won’t go there.
We went from the era of Muhummad Ali’s, Jim Brown’s, Kareem Abdul Jabbar’s who were very outspoken about the treatment of their people to the era of Michael Jordan’s, Kobe Bryant’s, and LeBron James’s who really just play the sport they are paid to play. Hip-Hop started off with Afrikan Bambaataa’s and KRS-ONE’s who spoke knowledge into every rhyme. Now we have Chef Keef, Young Thug, and Drake who raps about not a got damn thing (well, they rap about how much money they make and how they spend it on strippers and drugs, that’s the cool thing to do, right?). The mindset of some young black men is very simple: money, cars, clothes, and hoes. It is this mindset that is detrimental to the urban community economically. Success is now determined by how much money you make, what type of car you drive, how big your house is, and a bunch of other bullsh*t. When the true meaning of success is really described as when you affect someone else’s life for the better. Success is being unselfish and giving of yourself to improve someone else’s life. It will take this mindset for us to become economically sound. Our true power will be in us working as a unit.
The urban community spends billions, if not trillions of dollars per year. Yet we do not own our own stores in our communities. We allow outsiders to come in and put liquor stores, grocery stores, chicken shacks, and clothing stores on every corner of our community. We spend money there every single damn day and they don’t invest one damn dollar back into our community. Am I the only one that sees a problem with this? Let me ask you this. Can we open up liquor stores, grocery stores, chicken shacks, and clothing stores in their communities and be supported by them?
Adjustable rate mortgages have taken a bad rap and were partly the blame for the sub-prime mortgage crisis back in 2007 and 2008. Truth is, adjustable rate mortgages are a great mortgage tool, if used correctly. It allows for a lower rate versus a fixed rate which results in a lower mortgage payment. Its how you use it that will determine if it benefits you or hurts you.
When to use an ARM
ARM’s (adjustable rate mortgages) typically come in 3, 5, 7, and 10 year time periods. This means your rate will be fixed for the for first 3, 5, 7, or 10 years. After this period ends, then your rate will adjust based on the LIBOR or SIBOR. Typically the rate will increase which increases your payment.
You would typically use an ARM for the following reasons:
Time: If you know that you are not going to live in a house more than three years, then it may be advantageous to be risky and get a 3 or 5 year ARM. This will allow you to get a lower payment and keep more money in your pocket.
Lower payment: If you can not afford the payment of fixed mortgage, you can elect to get a 3 or 5 ARM to keep the payment low enough so you can afford it. However, during this time period, it is important that you work on your credit and finances so that you can refinance when your ARM is set to adjust or when fixed rates are looking sexy.
When not to use an ARM
Its very important that you understand the mortgage product you are selecting when purchasing a house or refinancing. If you want to be in your home for the long term (over 10 years), then an ARM is not the right product for you. Don’t allow yourself to be put in any mortgage product for the sake of qualifying for a house. If the only way you can qualify for a house is through a ARM mortgage, then you really can’t afford the house. Sounds simple enough, right?
What happened during the mortgage crisis?
A lot of people in the urban community were given ARM mortgages in order to get a lower payment. However, these same people had very low credit scores and a poor credit history. Why does that matter? It matters because when their ARM expired, they didn’t have a high enough credit score to refinance. Real estate markets change all the time. Guidelines change all the time. What was acceptable 2 years ago may not be acceptable today. So the only option was to sale of foreclose on the property. This where an ARM mortgage product can hurt you. Bottom line, they should have never been put in an ARM mortgage anyway.
Pay attention. You are about to become 37% more awesome.
1. This is the only rate you qualify for
If you are going for a FHA or conventional loan, there are a series of rates you qualify for. For FHA, as long as your credit score is above a 620, then the rates will not change based on your credit score. To keep it simple, a 620 and a 720 is the same in a FHA loan. So in a FHA loan, the lowest rate you qualify for may be a 4.0% while the highest may be a 6.0%. However, in a conventional loan, your credit score will dictate what series of rates you qualify for. The lower your credit score, the higher the rate. The higher the credit score, the lower the rate. Just like FHA, conventional may qualify you for a series of rates between 3.0% and 5.0%. So what dictates which rate you get? Read #2.
Credit cards can help get you out of a rough spot, but they can also put you in a rough spot. The difference between a credit card hurting you and helping you is you being educated about how credit cards really work. The purpose of a credit card is not for everyday use. It is kind of like a emergency fund. However, their are some things you need to know about a credit card before you decide to use it.
1. Understand the interest
In fact, credit card companies often rely on the fact that you will not understand how your interest is constantly compounding. Therefore, you need to protect yourself by understanding how compounding works in relation to credit card interest. The term “compound interest” means that any interest charges are added to the principal (which is the amount you originally borrowed) so that your debt grows exponentially.
If you have a $100 debt and it accrues 10% interest every month, then the first month you will be charged ten dollars (100 x 0.10). With compound interest, that ten dollars is added to your original debt, so now you have $110 of debt. The second month you are again charged 10% interest, which this time comes out to eleven dollars (110 x 0.10), so now you have $121 of debt. Compound interest has a big impact on how credit card interest works. Most people know their APR, which stands for Annual Percentage Rate. In general, your APR is supposed to equal the approximate percentage you will pay in interest over the course of a year. However, the actual amount you will pay is often slightly higher than the APR.
2. How it affects your credit
Most people are unaware of how credit cards affect their credit. Credit cards can be a great way to build good credit and maintain a good credit score, if used correctly. However, if you are maxing out your credit card and not making timely payments, then you will destroy your credit. Credit cards were not invented to be used as another source of income. So if you have 4 or 5 credit cards that are close to being maxed out or are maxed out, your credit score will be lowered.
3. How to use them wisely
Use your credit for monthly purchases such as gas, coffee, and small purchases. Payoff the balance every month. This will help you avoid paying interest on the credit card and will contribute to raising your credit score. Remember, credit cards are suppose to be used as an emergency fund or very small purchases. Do not get in the habit of going on shopping sprees, buying stuff on vacation, or going to the All-Star Game via your credit card