Taking Stock by Jim Stovall

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I have written more than 50 books and well over a thousand of these syndicated columns that appear in newspapers, magazines, and online publications around the world. Every book and each column, including the one you’re reading now, has my contact information. You can imagine how many calls and email inquiries I receive. People often have questions about business, careers, relationships, education, and success, but the most frequent topic my readers want to focus on seems to be personal finance and investments. 

Inevitably, any discussion involving long-term investing touches upon the stock market. Most investors know, and financial experts agree, that long-term, the stock market is an investment worthy of consideration. While I have always believed in and profited from the stock market, please remember that it may not be wise to invest money in equities or common stock if you need those funds within the next five years. The vast majority of five-year periods throughout the stock market’s history have been favorable. However, if you’re investing for a year, a month, or a day, it can be very volatile and risky. Overall, I know that the weather will be generally hot in August, but if I’m betting on one specific day, it’s impossible to predict. 

United States Secretary of Defense Donald Rumsfeld once said, “There are unknown unknowns, there are known unknowns, and there are known knowns.” This philosophy is not only true in geopolitical matters but can help explain the stock market. 

When we think of unknown unknowns, we refer to things like pandemics, civil unrest, earthquakes, and other unpredictable external factors. While these events certainly impact the stock market since they are not predictable, we can only address them by staying invested for the long term and allowing the market to recover. 

When we think of known unknowns, they involve recessions, political campaigns, and seasonal marketplace events. We know that there is generally a year-end rally in the stock market, and the retail sector does well during the holiday season. If we invest for a five- or ten-year period, these factors become a non-event. 

When we think of known knowns, we generally refer to things we control, such as the approximate date we want to retire, when our kids will be going to college, how much we invest, and other predictable life events. If we think of the stock market as a small child climbing a set of stairs while playing with a yo-yo, we will have a powerful visual reminder. If we focus on the yo-yo, we will likely be nervous and stressed. But if we remain focused on the child as they slowly climb up the stairs, we will feel positive about our financial future. 

As you go through your day today, focus on what you know and stop worrying about the unknowable. 

Today’s the day! 

Jim Stovall is the president of Narrative Television Network as well as a published author of many books. He is also a columnist and motivational speaker. Follow him on Twitter (@stovallauthor) or Facebook (@jimstovallauthor). His latest book, coauthored with Greg S. Reid, is Passport to Success: Experience Next Level Living, now available wherever books are sold.

Paycheck to Paycheck by Jim Stovall

Recent government and industry statistics show that 70 percent of Americans are living paycheck to paycheck. This means that these individuals are literally less than a month from going into default on their obligations, and bankruptcy is not far behind. When you study the individuals who make up this 70 percent segment of our population, there are some interesting factors that I believe can teach us all some valuable lessons.  

The majority of the population who is living paycheck to paycheck have received several raises over the past five years. When you track their earning vs. spending, these raises make little or no long-term difference. In fact, in many cases, these paycheck to paycheck individuals are actually worse off financially several months after receiving an increase in income. This is because they use their increased income to secure more consumer debt.  

This consumer debt, quite often, is used to purchase things that are decreasing in value. Any time you are involved in an economic model that involves borrowing money, paying a high rate of interest, and acquiring assets that are not worth the amount of the obligation while they continue to go down in value, you are in a never-ending losing cycle.  

If you are one of these paycheck to paycheck individuals who makes up 70 percent of our population, let’s look at some steps you can take to break the cycle. 

1. Stop all consumer debt going forward. If you find yourself in a hole, literally or figuratively, the first step toward getting out of the hole is to stop digging. Cut up your credit cards and vow to never again buy anything involving consumer debt.  

2. Give your household a thorough financial checkup. Figure out how much money is coming in and where it is all going. You will be amazed at the amount of money you spend on things you had never really considered. I’m not telling you how you should spend your money, I’m simply saying it should be a conscious decision on your part. You work hard for your money, and it should work hard for you in the areas where you want to spend your income.  

3. Get on a budget. A budget is nothing more or less than you taking control and ordering your money to do what you want it to do. Your budget is not a confining, inflexible document. Instead, it is there to help you save your sinking financial ship. 

If you will follow these three simple steps, you will find yourself in the upper 30 percent of people in our society and well on your way to financial independence. 

As you go through your day today, remember you’re going to have to change your financial pattern if you’re going to change your financial results. 

Today’s the day!  

This is an excerpt from Wisdom for Winners Volume 2, which is now available to listen to on Audible. Jim Stovall is the president of Narrative Television Network as well as a published author of many books, including most recently Will to Win. He is also a columnist and motivational speaker. Follow him on Twitter (@stovallauthor) or Facebook (@jimstovallauthor).   

Financial Planning for the Birds by Jim Stovall

Birds are among the most fascinating creatures on earth. Bird watching is one of the most popular hobbies. I believe people enjoy watching birds because birds have mastered the art of flight. Most birds are able to fly, but they do it in different ways.  

Birds are able to propel themselves through thin air by using three different methods of flight. Most birds achieve flight by flapping their wings. This great effort on their part causes them to have enough momentum so that the air flowing under their wings creates lift. Some birds, after they have flapped their wings for a period of time, are able to glide. They can, in essence, coast using the momentum they have previously generated by flapping their wings. The most elite performers and the rarest in the bird world are able to soar. These enlightened creatures, through understanding air currents and thermals, are able to use the environment around them and their understanding of it to fly for hours and many miles with very little or no effort on their own part.  

When it comes to money, we can all learn from our friends the birds.  

Most people among us know no way to survive financially other than flapping their wings through working at a job and living paycheck-to-paycheck. These people work hard and spend every penny they earn—and often a bit more—thanks to our culture of credit.  

Then there are the individuals who have flapped their financial wings long enough to save a few dollars so they can glide for a relatively brief period of time on the income that their previous effort has brought them. While this is better than frantically flapping through your entire financial life, there is still a far better way to travel. 

There are a few elite financial birds among us who have mastered the art of soaring. They started out by working hard for their money while they were learning how to make their money work hard for them. These successful financial flyers can use the financial environment around them via interest, dividends, and capital gains much like the eagles use wind currents and thermals to reach heights others cannot even imagine.  

The next time you decide to go bird watching, don’t forget the financial lessons our feathered friends can teach us. 

As you go through your day today, commit to soaring financially like the eagles. 

Today’s the day!  

This and other motivational pieces by bestselling author Jim Stovall can be found in Wisdom for Winners Volume Three, an official publication of the Napoleon Hill Foundation. 

Rainy-Day Umbrella by Jim Stovall

In the annual survey of American’s savings rates, an alarming trend is emerging. Reports show that 60 percent of American households could not cover a $500 car repair from savings. This, reportedly, would force them to increase their credit card balance, borrow from family and friends, not pay one of their other bills, or do without a necessity in their monthly expenses.  

I have been more impoverished than most people, and I’m grateful to say today I enjoy a level of wealth that exceeds all but a handful of my readers. This gives me a perspective that many people don’t have.  

In the process of going from overwhelming debt to building significant assets and security, there are a number of meaningful milestones. I remember paying off all of my credit card debt and committing to never carrying a balance again. I remember buying a used car and, eventually, a new car and paying cash for them. I remember paying off the mortgage on my home, and I remember writing the biggest check I have ever written in my life and giving it to charity. All of these milestones are significant to me as I look at my financial life, but they pale in comparison to the feeling of having a fully-funded rainy-day or emergency account.  

It is frightening to comprehend that the majority of Americans would be thrown into financial turmoil over a $500 car repair. Most of these individuals are not poor people, they are poor managers. Prudence dictates that we have insurance to cover medical emergencies or damage to our home or car, but we must also have funds to handle or self-insure the ongoing expenses of life.  

If you’ve owned and operated an automobile for any length of time, you realize it’s not a question of if but when you will be forced to deal with a car repair. Five-hundred-dollar car repairs are not unusual. In fact, they are inevitable.  

Our busy lives are filled with unanticipated expenses whether it’s uninsured medical and dental procedures, appliances that need to be replaced or repaired, costs surrounding kids and school fees, or any number of financial bumps in the road, being able to cover these costs from a pre-established rainy-day or emergency fund is one of the greatest feelings you will ever enjoy. If you want to improve your financial life as well as your mental health and family dynamic, stop playing financial Russian roulette with expenses that you know are eventually headed your way.  

As you go through your day today, establish a rainy-day fund that will keep you and your family safe and dry. 

Today’s the day! 

This and other motivational pieces by bestselling author Jim Stovall can be found in his Wisdom for Winners series, each title in which is an official publication of the Napoleon Hill Foundation. Listen to these inspirational collections of Stovall’s writings now on Audible: Wisdom for Winners: A Millionaire Mindset, Wisdom for Winners Volume 2, and Wisdom for Winners Volume 3.