Sunday, May 11, 2014

Bring all Debts Together

Putting your debts in one place is understandable and the phrase debt consolidation is well known. You may have even carried out a debt consolidation before.

If you want to simplify your life by putting all your debts together in one monthly payment, you may consider a debt-consolidation loan. These loans generally let you manage your debt at a lower interest rate over a set period.

Usually debt consolidation is not a viable option for most people. However, that doesn't mean you can't make one monthly payment to one organization to deal with your debts. Plus, with some debt solutions you are able to freeze your interest and charges meaning you can affordably repay your debt.

Putting all your debts together and having only one monthly bill each month is an effective way to better manage your finances. The disadvantage of dealing with more than one creditor and account is the risk of forgetting or overlooking a due date, and then having a late payment or late fee on your record. Through consolidation, you can decrease your monthly bills and combine your debts.

If you’re in debt, it’s important to consider all your options from debt consolidation to bankruptcy and make a choice that works best for your situation.

In today’s economy, the inability to pay your bills on time is often more the rule than the exception.

For some it feels like a never-ending cycle where you can’t afford necessities on your income, let alone pay for extras like vacations. Many resort to the use of credit cards or take out loans to pay for everything from groceries to cars.

In these kinds of situations it’s easy to fall behind on credit card and loan payments and either take out another loan to pay off the first set of debts or play musical chairs with your credit cards.

It’s common for people who are in debt to transfer balances owed to other cards until the last card standing is maxed out. When you get trapped in this cycle, what are your options to break free?

Generally, you will have only one loan payment that represents the debts being consolidated.

As with most loans, you will pay interest on the new loan, but if you have been making only minimum payments on your credit cards, chances are that the interest on those cards will be substantially higher than the interest you will pay on the consolidation loan.

A consolidation loan may be much less stressful too.

Having one monthly payment to focus on accumulating the money to pay for, makes it easier for you to control your finances and focus on making payments on other important assets not included in the consolidation loan such as your home, or on everyday life necessities.

Debt consolidation is akin to putting all your fruits into one basket.

You can consolidate your debt with a personal loan, but those can be difficult to qualify for if you're already struggling, and you run the risk of gaing more debt. Try paying off your debts one at a time.

To decrease the number of debts quickly, pay them off from smallest to largest. Pay the minimum on all but the smallest debt every month, and pay any extra you can spare on the smallest. When you get it paid off, move on to the next smallest. OR

To lose less money in interest, pay off the loan that's charging you the most interest. To find which is charging you the most interest, calculate it yourself by dividing the apr by 12 and multiplying this by the account balance, or just look on your statements. They will show "interest charged" or "new interest charges." The dollar amount next to it is the interest charges.

Pay down the account that's charging the most in interest by applying as much as you can after paying the minimum payment on the rest of your accounts. Review your bills every few months and switch if you realize another account has higher interest charges. Both of these methods work for paying down debts. Pick one and stick with it until your debts are gone, or at least down to comfortable levels.

You Have Options

One option is taking out a secured loan to pay off your unsecured debt, such as taking out a second mortgage or refinancing your home. But this carries risks. If you are already having trouble paying your bills, failing to pay a second or refinanced mortgage payment may put your home in jeopardy. You need to speak with a professional in order to accurately understand your options.

You may also consider borrowing against a 401k or other retirement plan to pay off your debt but you are essentially borrowing money from yourself to pay off money you have already “borrowed” so this option fundamentally doesn’t stop the cycle of debt. Depending on factors such as your age and when the loan is paid back, you may be subject to other negative consequences such as tax liability.

Any decision about borrowing money should be carefully considered. You’re safest bet is to speak with an attorney that specializes in bankruptcy and offers differing non-bankruptcy options.

While debt consolidation is only one possible solution to overwhelming debt, it should definitely be considered as an option by weighing the pros and cons and comparing them to other solutions. Making the right decision can affect your current financial situation and the future well-being of yourself and your family.

Monday, January 13, 2014

Do Borrowing Money is Advicable

Don't Borrow, Save Your Money for Future Goals or Emergencies

Do you need a new car or appliance? Do you need money for your kids clothes and schooling? Many people borrow money to handle emergencies or to purchase needed items. It costs too much to borrow money for these things. It is much cheaper to start a savings plan to pay for your emergencies and goals.

Before you start a savings plan, you need to decide what your future goals are for your saved money.  

Ask yourself

How much money do you need to meet your goals?

How much time do you have to save for these goals?

What interest can you earn on your money while saving?

You can save your money in different places like a regular bank, a savings and loan, or credit union. Before making your final decision on where to save, you need to ask these questions about these places:

What is the cost to open a savings account? Are there service fees or costs in making deposits or withdrawals?

What is the interest rate? This rate will vary from one savings institution to another.

What is the minimum amount you can put into savings? Some institutions require a minimum amount of money to open a savings account.

What is the maturity length? Sometimes you must leave your money in the savings plan for a certain length of time. If your withdraw your money too soon, you may lose interest and/or pay a penalty.

You can start your monthly savings at any amount you wish. The higher the interest rate for your savings account, the more money you will earn. Your money will grow larger over a period of time.

Here is an example of how saving $10 a month can grow over time:

3% interest
7% interest

There are a lot of strategies you can use to add more money to your savings. In your monthly spending plan, you can treat your savings just like another bill. Pay your savings account first, before paying your other expenses.

Other tips to help you save are: 

Have your employer put your savings directly from your paycheck into your account. This way you will not forget to put the money in your savings and you may not miss the money anyway.
Put all tax refunds, work overtime, gift money, refunds, and raises into your account.
Collect your loose change and as it grows monthly, put it in your account. Get your whole family involved in saving. Have everyone think of some ways to spend less money and put these savings in the bank. For example, by eating out less often by even one meal, you can put that money in the bank.

If you haven't started a savings plan, do not be discouraged. You can start now and watch it grow to meet your financial goals.

I have never met a man or woman who said, “I wish I had more bills. My life would be so much more enjoyable if I had more debt.” However, over the years, I have heard from tens of thousands of readers who are swamped by credit card debt, student loan debt, mortgage debt, and even family debt taken from parents, siblings, aunts, and uncles.

When you borrow money, you are renting someone else’s savings. The problem comes from the fact that you might introduce a liquidity strain if you lose your job, or you might pay higher interest expense, draining your personal net worth as the fruits of your labor go to those who funded your assets and expenditures. It is much easier to save money and come up with cash for investments when you aren’t paying interest to the bank, fees to your credit card company, late penalties to your mortgage holder, and charges bordering on usury to payday lending firms.

Here are some quick guidelines you should consider when managing the liabilities on your family’s personal balance sheet.

Generally, You Should Never Carry a Credit Card Balance

The first month you cannot pay your credit card balance in full, you have a debt problem. Most Americans do not have a problem with credit card debt because 1 out of 2 have none. Credit cards are fine as a matter of convenience and protection against fraud if you are buying over the Internet. I’m extremely fond of my American Express card because it allows me to cash in reward points for gift certificates to my favorite retail stores each year; recently, I’ve redeemed $2,000 at Barnes & Noble for books, $1,000 at Brooks Brothers for custom-made dress shirts, and $600 at Bergdorf Goodman for Brioni ties. The list goes on and has since I was in college; $1,000 at Williams-Sonoma for two new Ruffoni pots, $600 at Neiman Marcus for a bottle of Creed Sublime Vanille, or $3,000 at Tiffany & Company for a few sets of fine China.

Yet, in all of that time, I don’t think I have ever carried a balance at American Express, nor paid them a single penny in interest, even when I was leaving my parents home and had to support myself. If you can’t afford to pay cash, you have no business putting a purchase on a credit card. Period. No exceptions. End of story. You cannot go bankrupt if you don't have debt.
Generally, You Should Not Finance Your Purchase of an Automobile

Pay cash for your car. Your grandparents did it. Their parents did it. Unless you are taking advantage of a rare deal, such as 0% financing on your new vehicle during the recession when car dealers were desperate, it is better to write a check. Even then, it is better to write a check.

If you think that sounds impossible, you have been brainwashed by the consumer debt culture in the United States. By definition, when you buy a car, you have to “save” the entire purchase price plus interest and financing charges. You just send these into the bank in small increments but make no mistake, you ultimately pay the full purchase price. What is the difference between paying yourself first and putting the money in a checking account until you are ready to walk into a dealership? Delayed gratification. It’s about will-power and control. Yet, if you get ahead on your car purchases and begin paying for vehicles upfront, think of all the interest costs you can skip. That is extra cash in your pocket to spend, save, or give to charity. Over the years, the money really adds up as the cumulative effect of wise decisions allows you to retain more dollars for the same goods and services. This creates a virtuous cycle. It is one of the reasons the rich get richer.

Generally, You Should Pay Off Your Mortgage As Soon As You Can

I had a great grandmother that was so against using debts, due in part to emotional scars left over from the aftermath of the Great Depression, she paid cash for a house despite living in one of the poorest zip codes in the country and working in a shoe factory. She spent less than she earned and shoved the remainder in the bank. Over time, she built up enough to move into a nicer place without a mortgage payment. One of my other grandmothers would obsessively mail the bank every extra penny she could find, wiping out a 30-year mortgage in less than 7 years, despite having six children!

This isn’t unique to my family. The Federal Reserve estimates that 1 out of 3 homeowners in the United States has no mortgage against his or her property. Their castle is owned outright, lock, stock, and barrel. They are no better than you are.

You can do it, too. In the end, it is about priorities. Only a few years prior to the recession, many of the people who are now losing their home were cashing equity out of their house, using the property as a reservoir to be drained. When the recession hit, and recessions are as inevitable as the phases of the moon or the coming of the tides, they were wiped out and found themselves in foreclosure.

You don’t have to live that way. If your home isn’t paid off, or if you don't have enough money to wipe out the mortgage immediately, you have no business spending money on luxuries. Take the cash and send it into the bank. It isn’t “your” home until the title deed is in your name, locked in a safe deposit box with no lien attached.

Generally, You Should Not Take Out Student Loan Debt to Attend College

Unless you are studying for a highly lucrative industry that has a very low unemployment rate and generates significantly above-average household income, you need to find a way to pay cash for school. Looking at recent data, it is clear that a significant portion of student loan debt is now due to room and board charges, which have ballooned over the past 50 years as colleges now offer health clubs, swimming pools, air conditioning, high speed Internet, and other amenities. If you need to work your way through college, or it takes five or six years to graduate, but you can do it debt-free, that’s probably the way to go. It is difficult to get ahead if you start out on day one with a degree and interest charges racking up in the background.

In this respect, not all college degrees are created equally. Here is a list of the best paying college degrees. Here is a list of the worst paying college degrees. The earnings prospects are better in the former list compared to the latter. If you find yourself on the list of worst paying career paths, you need to be even more cautious about the money you borrow.
Don’t Buy That It Isn’t Possible to Live With Little or No Debt

If you grew up in a situation where using consumer debt was the norm to fund purchases, it may be difficult for you to understand that this behavior is not healthy or necessary. It essentially puts you in a prison that you, yourself, erect, bar by bar, with each signature on a promissory note or account application. Instead, live below your means early in life and use the surplus cash to buy assets that grow in value or, better yet, throw off more money. Wash. Rinse. Repeat. Over time, compounding can do the rest.

Expenses should be lesser than Income

No matter how much you make, if you spend more than you make, you are on your way to getting poorer and poorer. In other words, a billionaire who spends more than he makes is worse than an average person who spends less than his income. Spending more than what you make basically implies that you are borrowing to cover that extra expenditure, which ultimately leads you into debts.

So if you have been spending more than you make, you need to quit, and instead begin spending less than your income. That is the only way you will be able to save some money, avoid debts and afford a healthier financial lifestyle, take care of emergencies and make investments. Here are some suggestions to help you quit spending more than you make:


It is important to know how you are spending your money. So you should make a budget, which shows all your income sources and your expenses, usually on a monthly basis or whatever time frame you prefer. Just make sure that your expenditure is less than your income, and then stick to this budget, while also devising means of cutting on some non-fixed and unnecessary expenses.


Open a savings account and make saving a part of your lifestyle. The best way is to have some a certain amount or percentage of your income going directly into your savings account. And when you are making your budget, don’t include this money. Just assume you don’t have it available for you and work with whatever else you have left. At the same, continue adding some more funds into your savings account whenever you get a surplus out of your budget.


If it was not on budget and in plan, you need to think twice before you make that purchase. Even when you think you want it, is it necessary? Do you really need it? Don’t buy an item the first time you see it. First go home and think about it and see if it fits within your budget and if it is something that you really will need. Otherwise, keep that money.


You will definitely have those items that are necessary and therefore you have got to spend on them. Nevertheless, you should always try to think of how you can spend less on them. For instance, you can park your food to work, take the train/bus, use coupons, etc. Such practices will not stop you from leading a similar lifestyle. Rather, you will save more on similar items.


Look out for sales and special offers before you go shopping. Check out different stores to see if there is a better deal somewhere else. Comparison shopping can be a little tedious but it is usually worth the effort, considering that you will most likely find a better deal somewhere. Most household items are not sold at similar prices in all stores, so it is in your best interest to do your homework first.


In other words, don’t try to stretch yourself to the limit even when it is something you like. For instance, you might feel you want that mansion across the street, but if that mortgage you are about to undertake seems like it is too much for your budget, then you cannot afford. Take on a financial life that you can afford and not one that will put you into debts.


If you have some money saved from your budget at the end of the month, you don’t have to spend it. Instead, put it aside or move it forward to the following month or budget period. This way, you will have some money to save or pay for an item you need without going over your expense limit.

Sunday, January 12, 2014

Work for yourself and not for Money

Making a lot of money working at a job you hate is not worth the money!! Long back i quit the jobs frequently. I hated in the pursuit of happiness. Being stuck with a job you hate is an awful place to be. I was stuck in a mundane atmosphere that offered little variety in day-to-day tasks.

I was bored, un-stimulated, and un-motivated. I needed a lively environment where my creativity could thrive. I always had a passion for writing and knew that in order to be happy I had to pursue something that interested me.

My dad told me that everyone is supposed to hate his or her first job, BUT WHY? Why must we settle for the pre-determined typical post-grad admin or finance job just to make money? Honestly I’d rather be dirt poor doing something I love than slaving away in a miserable work environment doing sh*t I hate. C’mon ain’t nobody got time for that.

“Success is not the key to happiness. Happiness is the key to success. If you love what you are doing, you will be successful.” 

The primary issue holding people back from switching career paths is money. Many people cannot afford to take a job that pays less than their current salary, but sometimes this is a necessary risk, as it was in my case. In order to switch careers I needed to take a close look at my lifestyle and recognize where I could cut back.

There are many different areas of your life where you can make financial adjustments, such as reducing living expenses, not taking on new debt, and paying off old debt.

“Doing what you like is freedom, liking what you do is happiness.”

Of course it is scary to take risks especially the risk of financial security, but you need to do what makes you happy. The more you feel the hopelessness of the situation, the worse it will feel. This will make you hate your job even more and resentment will start to build. You resent the meaningless tasks, the co-workers, and the fact that you can’t afford to leave. You begin to only focus on the negative aspects of your job. Because of this everything about your life will start to feel tainted by this frustration. The worst part of this is that it makes an already terrible situation appear much worse than it really is.

So many people I know are stuck in jobs they hate without an escape route in sight. Why does money motivate people over happiness? This is a concept I just do not understand. How much money does one person really need? Is your lifestyle so “fulfilling” that you’d exchange it for your happiness and wellbeing? Of course you have bills to pay, but it may be time to re-evaluate your priorities.

Dreams + Work = Success

Happiness comes from your own actions. If there is something deterring you from reaching happiness, you need to make changes! You need to figure out what you’re good at that will make you happy on a daily basis. It may involve sacrifices, but if it means pursuing something you love, it will be worth it in the end. You may need to stick at your current job for a while before you are ready to move on, but simply knowing you have something greater coming your way can be enough to motivate you through the tough times.

All your dreams can come true if you have the courage to pursue them. You need to find what drives you and do whatever it takes to get you there. Remember, find a job you love and you’ll never work a day in your life!

Wasting of Time

Entrepreneurs are typically so focused on saving enough cash to stay alive that you don’t see them blowing money. It’s rare to see fat expense accounts or even market rate salaries. While spending too much isn’t the problem, spending on the wrong thing at the wrong time often is. Here are eight common mistakes:

-Spending too much too early. 

If you don’t have a product yet, don’t spend much on anything other than developing the product.

-Not spending enough. 

When the flywheel is really going, it might be necessary to spend money on increasing sales and marketing to grow even faster. In other instances, it becomes essential to spend more building the architecture and systems to stay ahead of the growth.

-Hiring a sales team early on. 

If you have an enterprise product under development, having a big sales team before you have a product is a mistake., where I am a board member, is a great example of a company that did not invest in sales until it was necessary. Instead, it invested its resources in developing a great product. And the founders and early employees pitched the service wherever they went—including while waiting in line at the supermarket.

-Beefing up on administrative matters in the beginning. 

Building HR or finance teams too early is not prudent. Initially, those can—and should—be outsourced.

-Falling for office space. 

Most entrepreneurs are frugal, with one exception: some become enamored with office facilities. While many entrepreneurs start in a garage, apartment or the dorm room, there are others who fancy a cool location or space to grow into—that’s something that can be very costly.

-Paying full salaries. 

Offering high salaries at an early stage is a recipe for burning cash. Everybody should be taking a risk. Compensation should be a combination of salary and equity.

-Underutilizing all of the available resources. 

If you need help, ask for it from your advisers and board. Don’t think of your board members just as people who tell you what to do; put them to work. The best entrepreneurs know how to leverage their network and are not shy about asking for advice and introductions.

-Wasting time. 

Time is just as valuable as capital and managing it well is just as crucial. You have to do as much as you can every day, week, month and year—utilizing time effectively is one of the most important skills in an entrepreneur’s arsenal.

Wasting Time Is like“Wasted Money”
Some people might say, “Well, that’s a waste of time.” When I hear that, I simply recognize that the person is saying that an afternoon of playing games with friends is not something that they value. Because, in the end, that’s all a “waste of time” is: time spent doing something that you don’t really value. The same is true of money.

What Isn’t a Waste of Time (or Money)?
On the flip side of that coin, what things aren’t a waste of time or money? I identify two groups of things that are not a waste of time or money.

First, things that provide genuine personal value to you are not a waste a time or money. Playing board games forces me to think deeply and it also provides a powerful avenue for socializing – those things provide genuine personal value to me. Others might find board games boring and a pretty poor avenue for socializing and thus they might view it as a waste of time.

The difference is in what provides genuine value to me, not to you. We are all different, with different skills and talents and different interests and different personal values.

Second, things that provide genuine value to others are not a waste of time or money. I’m referring to work here, but also to volunteerism and to helping friends. If others value what you’re doing (and are willing to compensate you in some way for it), then it’s not a waste of time.

I keep thinking of that young man finishing that skateboard. It looked fantastic. Skateboarders would pay well for that type of skill.

A wonderful ideal is finding a way to do something that falls into both groups: it provides value to you and to others. For me, writing falls into this category.

Success Comes From Being Alert and Minimizing the Waste
Successful people attempt to minimize the time and money they spend on things that do not provide genuine value to them or to others. They also look for ways to spend their time and money on things that provide more value to them or to others than whatever it is they’re currently doing.

This requires focus. You have to evaluate everything you do in a given day. “Why am I doing this?” “Is it something that I really personally value?” “Is it adding value to my life?” “Is it adding value to the lives of others?” “How much value am I really getting from this in terms of personal growth, financial gain, or relationships built?”

Asking those questions will lead you to some surprising revelations. For me, for example, I found that spending twenty minutes with my eyes closed in a dark room while trying to focus on clearing my mind of all thoughts was far more relaxing (and thus valuable) than an hour spent watching television. I found that making dinner for my family (and often with them involved in the process) added far more value to my life than the time spent going out to dinner with them. I found that getting adequate sleep each night was far more valuable than cutting an hour of sleep out to “get more done.” I found that practicing the piano was just as relaxing and far more valuable (for me) than that same amount of time spent playing World of Warcraft. I found that spending some time each week reading and some time writing a short story or two was more valuable than spending that time forcing myself to write something strictly based on personal finance.

And, yes, I found that playing board games with some close friends, alternating between focusing on how to win and focusing on good conversation and exchange of ideas, is an extremely valuable way for me to spend my time on occasion.

When someone tells you that what you’re doing is a waste of time or a waste of money, don’t be afraid to rethink what you’re doing. At the same time, don’t assume that it actually is a waste of time or money, because that definition depends on you, not them.

Figure out your small handful of true core values, follow them in whatever you do, and they’ll always lead you to success.

Working for Others

Working For Someone Else Is The Worst Way To Make Money

I find it hard to believe that some people still buy into this whole employment safety thing.

It is much safer to work for yourself than to be employed. By being employed you have only one income source and it is never smart to have only one way to get paid.

When you work for yourself, you can create many income streams and if one stream dries up, you can create many more of them. This is as safe as it gets.

When you work for someone else, you are paid for the time you spend in the office. That’s the worst way to measure your worth because everyone’s time is limited. You cannot expand or shrink the time, therefore there is a limit to what you can earn.

When you are self-employed, the amount of money you earn depends not on the amount of time you work, but on the quality of ideas you think of. Ideas can be worth billions, as you can see in many great success stories such as those of Richard Branson (no introduction needed) or Larry Page and Sergey Brin (google founders).

When you are an employee, the company decides when you come to work and if you can have holidays on particular days. You can only go on holidays for a limited time period. It is as though you have a strict parent who regulates your every move.

Of course, it is much easier to get employment than to make your own company successful. But even though you would spend a year building your company, the rewards you get are so much worth it. Yes, you have to work harder than just by working for someone else, but it does not feel like work because you know that you are building something for yourself. That feels more like a pleasure than a chore.

For example, sometimes I work on my products, coaching and this website from early morning till late evening, but I feel so proud of myself once I accomplish something great. It is so worth the effort that I put in.

Employment is a lazy option to earn money. Yes, it is easier to get employment and the rewards are instant – you get paid after a month or even less for your effort. But such benefits have a limit and you become a slave doing everything you are told to for the company’s benefit.

When you are working for yourself, you are free. Free to do everything you can think of, free to express your creativity. Of course, if you want to start working for yourself, you will have to be okay without earning any money first. It takes time to build something great. But once money starts rolling in, you earn increasingly more income. You establish more and more income sources, those income sources get stronger and you become financially independent.

Most people will not be patient enough to wait for their businesses to become successful. Depending on how dedicated you are to building your company, it may take a year or two, or sometimes more, to earn only from your own business. But for me that seems more than worth it, even if it would take 5 years for a person to become financially independent. It is better to spend 5 years building something great and finally becoming free than to spend 40 years working for the company you hate and owning nothing that you can be proud of.

We are so used to instant gratification. We all live it, getting served within minutes, watching any program we want, ordering online – that is all good, but it keeps shortening our patience. So when you finally decide to build something of your own, you are faced with previously unknown problem – it takes time.

So there are two choices available for everyone: you can either easily find employment and be instantly rewarded, but be a slave for all your life. Or you can start making something great out of your life and get rewards (freedom and money) later.

To me, freedom is much more important than money. Like my friend said, “I would rather be homeless than ever work for someone else” – I completely understand that. Once you experience freedom, there is no turning back.

Miser or being Frugal

There are valuable lessons to be learned from the spending habits of the ultra rich. The world's frugal billionaires did not get wealthy by driving modest cars. But some of their lifestyle choices may be able to tell us something about the attitudes that make and keep some people wealthy. Stories abound about the things well-known billionaires do that border on extreme frugality.

We’ve heard and read about Monaco’s Prince Rainier buying sets of socks in matching colors and designs so that when one gets lost or worn out, there is always a ready match, eliminating the need to buy a new pair. In the same manner, much has been written about the old Omaha home of 20th century’s most successful investor Warren Buffet, which he bought in 1958 for $31,500, and his old Lincoln Town car with plate number THRIFTY that he traded for a 2006 Cadillac.

And while frugality is a common trait among first-generation filthy-rich who knew the hard work involved in creating and amassing wealth, some of the younger sets are not to be out-scrimped.

Last year, Facebook founder Mark Zuckerberg came under fire for not tipping after lunching in Rome, where meal gratuity is not really expected, except when you are an American, or famous. Social critics failed to note that the kid wears hoodies and flip-flops and was fine with dorm meals before he gets to billionaire status. Of course, there’s the Duchess of Cambridge Kate Middleton (daughter of self-made British millionaires) famously known for her preference for DIY and her frugal fashion sense despite marrying royalty.

It is noteworthy that the billionaires on our list are not just your typical, run-off-the mill frugal types who clip coupons, grow their own mint leaves and buy, use and hold on to their second-hand cars. What we have rounded up are super-rich individuals who are so tightwad it can be said that they literally skate through cheap avenue. Know what these shocking habits are, and see if you can pull them off yourself, even without the additional digits in your bank account.

Next time you're sitting on the bus and dreaming of that hot new sports car (which will require a big fat loan!), take a look at the ordinary-looking older gentleman sitting next to you.

He could be Ingvar Kamprad, the founder of Ikea, who uses public transport frequently.
And when he's not catching the bus, Kamprad drives a 14-year-old Volvo 240 GL.

He's not the only billionaire with a modest taste in cars. Last year Warren Buffet, the world's most successful investor, auctioned his unpretentious 2001 Lincoln Town Car - with its famous ?THRIFTY? number plate - on eBay to benefit a charity. He replaced it with the middle-of-the-range Cadillac DTS.

More billionaires with modest cars: Sergey Brin, the co-founder of Google, drives a compact Toyota Prius, a green hybrid car, and Steve Ballmer, who succeeded Bill Gates as CEO of Microsoft, drives a 10-year-old Lincoln Continental.

"Ikea people do not drive flashy cars or stay at luxury hotels." - Ingvar Kamprad 

These wealthy people did not get wealthy by driving modest cars. But their cars may tell us something about the attitudes that make and keep some people wealthy.

In the first place, it's important to understand that it's not stinginess that dictates their choice of transport - even though any one of them could buy a Maserati or Rolls Royce without even looking at the price tag.

Buffet alone has given millions to charity, and encourages the shareholders of his Berkshire Hathaway Corporation to do the same. Kamprad generously supports many philanthropic causes through IKEA, including UNICEF. Ballmer of Microsoft donated $10 million to Harvard University and when Brin and his partner listed Google, they gave 1% of the company's equity and profits to a new Google charitable foundation in perpetuity.

These men are not tightwads. But they certainly are careful about what they spend their money on. One thing all of our frugal billionaires do have in common is the fact that they know what's important to them, and a high status car is not one of those things.

"From my (Russian) parents, I certainly learned to be frugal and to be happy without very many things. I still look at prices. I try to force myself to do this less, not to be so frugal. But I was raised being happy with not so much." - Sergey Brin 

Most of the billionaires we've talked about had fairly modest backgrounds. Kamprad was a farmer's son from rural Sweden. Buffet's father was a middle class stock broker. The Brin family were penniless refugees from Russia and Ballmer's father worked for the Ford Motor Company for 30 years and was middle manager when he retired.

Buffet still lives in the home he purchased for $31,500 in 1958, which is not to say that all billionaires are so frugal. Mukesh Ambani, the world's 14th ranked billionaire, is currently building a 27-storey family home in Mumbai incorporating three levels of workshops and parking for his family's 128 imported cars. But it's the frugal rich who should interest us, since they, like ourselves, started with modest means - and to some degree, still choose to live the same way.

Frugal habits seem to be hard to shake off. Buffet, who would probably never go into debt except to borrow the capital to invest for even more profit, sent his daughter ?round to the Cadillac dealer to pay for his new mid-range car in cash. Brin tells how he still feels bad if he leaves food on his plate at meal times.

"A very rich person should leave his kids enough to do anything, but not enough to do nothing." - Warren Buffet 

Our frugal billionaires have a few other things in common. They started businesses from scratch and built them up through their own hard work. And they are self confident enough to please themselves - the more money they make, the less likely they are to spend it just to impress others.

The simple truth is that step one in creating wealth is to set aside some money you would have spent on something else in order to save and invest it. The more frugal you are, in the sense that you spend money on what is important to you rather than what is important to other people, the more you will be able to invest.

"Money can't buy happiness. Last year I had $48 million, this year I have $50 million - and I am no happier." - Arnold Schwarzenegger

On the other hand, to be frugal is not to deprive yourself of all of life pleasures. If you love classical music, and you want to spend $20,000 on a music system, that's ok - as long as you are spending this money to impress yourself, and not the world at large.

Similarly, if you are going to go into debt, it should be in order to borrow investment capital that can produce income and growth. Don't go into debt just to buy a bigger and better wide screen TV.

Above all, it's critically important to understand that being thrifty alone is not enough to create wealth. It's what you do with the money you save that matters.

That is why a personal financial plan is so important - it defines a goal, and a goal is a real incentive to keep on being disciplined, because you know there will be a reward at the end of the journey.

But how do you draw up such a plan? For many people the missing link between the desire for financial security and the reality of attaining it is a trusted advisor. A personal coach for your finances who will work out a program to tone up your investment muscles and work out a routine you can stick with.

Finally, no matter how much you want to be rich, we should remember that money is not everything. As Warren Buffet reminds us, ?Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.?