Stealth Wealth

The best time to start investing is...
There are a few pithy (and reasonably accurate) endings to this statement. It's true that the best time to start was 20 years ago and the second best time is today...IF...
1. You have eliminated consumer debt, and
2. You have an emergency fund
Consumer debt robs from your future. It does no good to have $5,000 in the bank and $5,000 in consumer debt - especially if it's high interest debt. If you add up what you own, subtract what you owe and come up with a number less that 1, you have some work to do.
An emergency fund is really just insurance. It protects your wealth-building plan from derailment It keeps you from having to borrow money - from your own retirement as well as well as from others - to handle those annoying things that pop up, like car repairs, or appliance replacements.
A well-run budget will force you to create good spending and savings practices, and lead to great investing options. Budgets are simple; the math is elementary but the behavior takes some effort. Simply write down how much money you think you will have for next month's bills (this month is almost over, so let's look forward). That includes money you get this month that will be used to pay everything on time next month. Start "spending" that money on paper... first is the Rent or Mortgage, then Food, then Utilities, then Basic Transportation (include loan/lease payments, gas, insurance and maintenance). after that, give yourself an amount to spend on other things, like gifts, charities, haircuts, sports, entertainment, vacations). When you get done spending, if you have money you didn't spend, pile it on debt, or, if you have no debt, start beefing up the emergency fund. Before you know it, you'll be safe from emergency expenses, free from payments, and investing in good growth mutual funds, and headed toward a dignified retirement.

Teachers, if you get your entire summer pay at the end of June, take that total and divide it by 5. Multiply that amount by four and put that amount in a savings account. On the 15th and on the 30th of July and August, transfer one fourth of that amount from savings to checking. Voila - normal paychecks!
The breakdown:
If you normally get a $2000 paycheck, and you normally get paid on the 15th and 30th, you received $10,000 on June 30:
$2,000 for 6/30,
$2,000 for 7/15,
$2,000 for 7/30,
$2,000 for8/15, and
$2,000 for 8/30...
or the equivalent of 5 paychecks.)
Put $8,000 in savings (keep $2,000 for this pay period)
Withdraw
$2,000 on 7/15,
$2,000 on 7/30,
$2,000 on 8/15, and
$2,000 on 8/30
This works best with the JBC Simple Set-Up:
- One checking account where all income is deposited, and from which all expenses are paid.
- One Savings Account attached to checking, used for monthly deposits for future expenses (Gifts, Vacation, Tax prep, etc.)
- One online savings or money market account for your emergency fund (3-6 months of household expenses in case of a real emergency like a layoff or pandemic).
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