Financial literacy - Grow your bottom line
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Retirement is so important and it is so hard to catch up if you get behind. And you should have a small amount of savings, $500 is enough to start. And then you can start on your toxic debt: credit cards.

Once you get the toxic debt paid off, then you can look at building up your emergency fund. I can't agree with the folks who say focus on paying off your credit cards before you do anything else because they are only looking at one thing -- the interest rate you're paying on that one card -- not at the damage you're doing to your overall finances.

It's hard for people because once they realize how destructive that debt is, they want to get rid of it right now. But it's that impatience that got them in trouble. They need to hold off and breathe and look at the bigger situation and maybe take a little longer to pay off that debt to make sure that they've got their future secured.

q_v2.gif When people think about building wealth, they think about investing in the stock market in a lot of cases. The stock market has generated good returns over time. But lately the market has been very volatile. Do investors take a leap in faith by continuing to invest in the stock market in an attempt to get higher returns?

a_v2.gif The stock market is always volatile.

They frequently go through periods like this where they go sideways and they go down and all that -- but the people who manage to build wealth are the ones who invest anyway, that just stay the course.

It's really impossible to time the market accurately. You could pull out all your money and stuff it under your mattress, but then you're going to miss the big rally when it happens. By the time you get back in you'll have missed most of those gains. It's hard to do for some people.

For me, we've always had it on automatic, we invest no matter what and our net worth just keeps growing. Even in bad times, if the market doesn't do well, we just put more in, buy those stocks on sale.

If you have a diversified portfolio and you don't fiddle with it all the time, eventually you're going to do fine. You're going to come out ahead.

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Our brain tells us that whatever happened in the recent past is what is going to happen forever, and that's what leads to these bubbles. Because people think that dot-com stocks will go to the sky or real estate will never lose value, and they all pile in and they forget that everything is cyclical.

Then when things go bad our little reptile brain tells us that everything will always be bad. Things will never get better and I have to take my money out now.

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