Tuesday, November 26, 2002

Financial Planning

Its funny how when one is starving, all one's thoughts are consumed by food. Its amazing how when one finally obtains food, it looses its appeal. Every day that I didn't have something to eat, I would think of all the things I would make if I just had a piece of chicken, or if I just had a box of noodles. We were living on rice and water. Then my husband got paid and I was able to buy food and pay off some bills. So much relief, now I am just not hungry. I guess my stomach has shrunk a bit.

This time I set aside 60 dollars. That 60 dollars will be used if we run out of milk, diapers, food, or something important. Next check, I want it to be 120 dollars, and so on, so that we can grow a savings account and never have to go hungry again. Its not fair to my children. I made deals with my credit card companies and made payments. I should have my debt removed in 5 years. Now I am looking to the future. My two sons are going to want to go to college, and they will need cars, and then a retirement fund for my husband and I. I am looking into investment information. Its kind of fun. *smiles*

This is what I have figured out so far. I don't want to go into the stock market as I am not aware of the current trends, and its foolish to put everything in something so volitile. I will start with a simple savings account. As soon as I have $1000. I will open a CD account. Certificate of Deposit. I will place it in there for 5 years. Currently, the apy (annual percent yield) is 5.03% at the bank I am using. ( I will search around for better ones, later.) I will keep money in the regular savings account for emergencies, and holidays, etc. After 5 years of continually investing in the CD, I will close it and open a money market account, hopefully with $10,000. I have only studied my options for about two weeks, but I feel that once I start investing, I should go for mutual funds. A mutual fund is an account with many stock in the portfolio. At any one time, the individual stock may be going up or down, but since there is so much variety in the portfolio, the idea is that the majority of the stock will be going up, therebye yielding more money.

All the money makes the IRS (Internal Revenue Service: the guys and gals that make sure us American working folks pay our taxes and all that good stuff) hounds circle, so I plan to open IRA (Individual Retirement Accounts) and EIRA (Educational IRA) for my husband, me, and my children. It lets me have mutual funds and savings in the IRA and EIRA's, all tax free. They stay tax free until its time to take out the money.

So, I have an idea in my head of what I am going to do. All I have to do is save that first $1000.


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