Feedback

Hello,

I received some great feedback from several readers regarding my previous posts.  So, I would like to take some time to clarify a few things and expand on other items. I have paraphrased the questions and colored them in blue below. Please continue to send me feedback.  It helps me learn.

How does the title of the blog relate to the information you are writing about?

I decided on the title Keep Your Mind and Money Moving because in my experience as I increase my financial knowledge and apply what I have learned my family's money continues to grow.  When I get lazy then things start to slide.  I wanted the title to continually remind me of my intentions every time that I visit this site to write, and encourage me to stay on track.

I have also learned that money intended for investing should not be put into an account and left to sit; this includes a 401K, a savings account, a long term Treasury bond, or stock.  If  the money is parked in an account long term then I cannot use it in other investments, and my progress slows.  The money has to constantly be moving from one investment to the next and when possible working in multiple ways at once.  I will cover more on this at a later time.

The last paragraph in the "Getting out of Debt" post did not seem to fit the rest of the information.  Can you explain?

In the beginning of the "Getting out of Debt" post I mentioned that I was frustrated soon after my husband and I moved in together, because we were continually coming up short on the bills each month.  This led me to creating a list of financial goals with time lines to complete them.  Around the time that I was paying off my last college loan, my husband heard an interview on National Public Radio with one of the authors of the book Your Money or Your Life (see Recommend Reading page).  He thought that I might gain something from it after seeing the progress I had made with the debt, and bought the book for me as a gift.

My first impression of the book was that it was New Age mumbo-jumbo, and I was intimidated by it.  The book is made up of nine steps, that help you establish your relationship with money.  I read it through once without doing any of the steps.  After some of the fear had gone away, I read through it a second time and saw things that I missed in the first reading.  I knew it would be work, but I wanted to see where it would take me.

One of the steps involves tracking every single penny that comes into and goes out of your life.  It was during this process, as I was paying off my school loan and saving six-months of living expenses, that I discovered my husband and I were spending double on our groceries.

I learned a lot while following the steps in this book and plan on sharing each one with you in my next blogs.  It set up the foundation for me to pursue financial freedom.

What's next, considering interest rates on investments are so low? 

You are correct that interest rates on CD's and Treasuries are currently very low.  However, I have found when one investment opportunity is at the bottom of its cycle there is another investment that is taking off.

I do not invest in real estate yet, but it is something that I am looking into.  I think with interest rates being so low, and housing prices coming down after the bubble, that this is the time to start getting into buying rentals.  Just make sure that income from the rent can pay for all of the expenses.  I am not an expert in this investment by any means, but maybe you can learn with me.

Yesterday, the stock market dropped significantly.  For people who buy, hold, and hope that the stock price goes up this could have been a painful day financially.  However, if you invested in a way that makes you money when the market drops, shorting the market, you probably have a smile on your face.

My husband and I recently learned how to trade in stock options, a derivative of stocks.  We need less money than if we were strictly investing in stocks, and can make money when stocks are going up, down, or sideways.  There will be more on this in the future.

I think it is a good idea for everyone to at least invest one time in a short term Treasury Bill, either for a 3-month term or a 6-month term.  A Treasury Bill was my first investment.   It helped me gain confidence in trusting that I could learn how to invest on my own, and still get my original money back.  In these economic times I would not invest for terms longer than six months, because I am expecting interest rates will increase and you may need your money back in a short amount of time. You do not want your money stuck in a 30 year bond at 4.375% interest when everyone else is buying them up at 12% because the market has shifted. Disclaimer: In July 2010 the Treasury sold 29-year 10-month bonds for 4.375%.   I picked the 12% interest rate at random for this example. 

The one IRA that I have from a rollover in a 401K is currently invested in a short term Treasury Money Market fund through T.Rowe Price.  This is because it is low cost, and I am expecting the stock market to decline even more.  I am willing to take the risk of a low interest rate vs. losing my money in the short term in the stock market as I wait for it to decline and then recover.  This goes against keeping my money moving, but I am saving it in case of an emergency.  I already used a portion of this money to put 20% down on a foreclosed home for my family.

A little tip: First time homebuyers are able to take up to $10,000 out of an IRA without being penalized 10% if the money goes towards the purchase of a home. Please consult your accountant before removing money from an IRA or 401K plan.