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By Rich Wallace
As Einstein said “Everything should be made as simple as possible but no simpler”. With that thought in mind, I will define 5 simple steps to a solid financial plan. But first let me digress. For over 20 years, I was involved in the design, manufacture, test and launch of communication satellites. These satellites are in a geosynchronous orbit so that they appear to be fixed when viewed from the earth. Your TV satellites are in this orbit and that is why the dish (I would call it an antenna by the way) on your house is stationary. In order to achieve a geosynchronous orbit, the satellite has to be about 22,300 miles from the earth. Now, bear with me. Once the satellite reaches 22,300 miles, it is never coming back to the earth. This situation leads to many implications. One, the satellite has to be near perfect because if anything goes wrong, the satellite capability is lost. There is no ability to bring the satellite back to earth and repair it. Many of these satellites cost over 100 million dollars. A 100 million-dollar piece of space junk is a painful business experience. Two, we want to test the satellite very thoroughly on the ground before launch and any little “blips” in testing get enormous scrutiny. They get enormous scrutiny because those blips could be the indication of a lurking problem of defect. Yet in all my experience in solving these types of blips, it almost always came down to one key thing that was the cause of the difficulties. It was quite amazing to me that such a complicated system and complicated difficulties could be reduced to one key item. Now many times there were many dead ends and confusing information but in the end, the cause was in a large majority of cases one primary thing. And once that cause was known, then the solution path was evident. Well, your financial plan is not as complicated as building a satellite but as in the satellite, a few key things can make all the difference. And just like in the satellite world, there is a lot of confusing and complicated information. Information from newspapers, TV, family, friends, the radio, the company that your worked for and on and on. The key thing is to cut through all the noise and confusion and find the essence of the activity. For me the essence of a financial plan is the following 5 steps. I believe that if you can implement these 5 steps that you will have a solid financial plan and one that is far superior to most of your peers. It is as simple as possible but no simpler. The 5 steps in order are: 1) Eliminate all credit card debt 2) Contribute to a 401 K plan if possible up to the limit of the match 3) Save some money 4) Build an emergency fund 5) Invest in a one Stock Index Fund and one Bond Fund In part 2 of this article, I will explore these steps in more detail. Article Source: http://EzineArticles.com/?expert=Rich_Wallace
http://EzineArticles.com/?Make-It-Easy---Your-Financial-Plan-,-Part-1&id=489775
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