Low-Effort Ways to Lower Your Spending

The following post is by MPFJ staff writer, Chonce. You can read more articles by Chonce over at her personal blog, My Debt Epiphany. Enjoy! 

Many times in the past, I used to tell myself I needed to earn more money in order to improve my financial situation and make all my money problems go away. Once I started earning more, I found that this thought process was wrong as my money problems didn’t subside at all.

This leads me to ask you: Do you have an income problem or a spending problem? Maybe you have both, but you can’t expect to fix your income problem and improve your situation without fixing your spending problem first.

Overspending can look very different depending on the person. You may be an emotional spender and make impulse purchases at your favorite store each week. You may buy one too many lattes. You may not take the extra effort to lower your expenses so you spend less on utility bills each month.

Whatever you spending habit is, there are so easy and low-effort ways to lower your spending so you can have more money to put toward your financial goals whether they are paying off debt, saving, or investing.

Leave Credit Cards at Home

If you tend to overspend when you’re out and about, research shows that we spend more with a credit card than we do with cash. I know that personally, having a credit card in my hand makes me feel like I have more flexibility. If I go over my budget with a purchase, it’s not as big of a deal since my account won’t go negative and I can always pay the expenses off in 30 days.

The only problem, however, is that sometimes you don’t pay your credit card balance off in full which can lead to debt. It may be better to take your credit cards out of your wallet, or even switch to a cash budget and utilize the envelope system when you go out so you can avoid spending extra money.

Invite Friends Over Instead of Going Out

Going out when friends is super fun I’m not going to lie, but it adds up over time. A great way to lower your spending on dining out and having fun with friends is to invite them over to your place instead.

My husband and I like to go out, but we also tend to stay in quite a bit and watch movies or play games together to save money. We like hanging out with each other, but when we invite our friends over too, it’s also super fun because we get to laugh and talk all together as a group.

You can host potlucks at your house or even prepare cheap meals and snacks like nacho dip, cookies, popcorn, etc.  and have a fun night in with your favorite people. You’ll save a ton of money if you do it regularly or even let other friends host you as well.

Unplug Electronic Devices You Aren’t Using

This is a super easy way to save money on electricity. Besides clocks and your refrigerator, you should take the extra minute or two it requires to unplug items in your home you aren’t using.

Electronic devices that are plugged in 24/7 take up a small amount of electricity each day, but it adds up. I personally can’t stand when my son leaves the television on when he’s done watching it or playing a game. And I’m sure his Xbox eats up quite a bit of energy as well.

Plus, it’s not good to leave things like chargers plugged into the wall because it can drain their battery.

Read Through the Circulars Before You Go Grocery Shopping

If your grocery spending is out of control, you’ll need to take advantage of more sales and deals. The good news is that grocery store savings are all around you. You should receive weekly sales and promotions at local stores in the mail.

Most promotions are time sensitive so make sure you check the expiration dates for the deals. Before I go grocery shopping and as I’m making my list, I always check out the circulars to see what sales are being promoted.

If you don’t like looking at sales papers, you can download an app that will gather all this information for you and provide you with coupons that you can clip digitally. Free apps like Grocery Pal and Checkout 51 are great for this.

Stop By a Consignment Shop First When Buying Clothes

Clothes can be pretty expensive but if you need to buy something, you have no choice but the spend the money right? Wrong. If you’re heading out to pick up some clothing items anyway, stop by a local consignment shop first to see if you can score any deals on gently used apparel first.

Stores like Goodwill have monthly discount sales where nice clothing is dirt cheap, and other stores like Plato’s Closet offers trendy clothing for both men and women. If you have kids, I’d recommend stopping by Once Upon a Child for some good deals. I purchased half of my son’s school clothes from there and saved a ton by doing so.

If you don’t have any of these stores near you, you can try online consignment shops like ThredUp.

How about you all?  What techniques do you use to lower your spending? What do you do with the extra money?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/alan-light/10891438675/

How to Start a Profitable Home-Based Business From Scratch

The following post is by MPFJ staff writer, Chonce. You can read more articles by Chonce over at her personal blog, My Debt Epiphany. Enjoy! 

Working from home is still a big craze on the internet these days. What some people may not realize is that it take a lot of hard work to work from home regardless if it’s a side hustle or a full-time business.

Yet and still, the results can be very rewarding. As someone who just quit my job to run my home-based freelance business, it was important for me to understand what to do in order to set up a profitable online business that could allow me to meet all my needs and financial goals.

Since I’m the breadwinner in my household and my family still has some debt, it was crucial that I set up my online business up for success. If you are in a similar boat and you want to work from home, one of the best ways to earn a good income is to set up a small home-based business.

Benefits of Starting a Home-Based Business

There are numerous benefits to setting up a home-based business and they include:

• Having the flexibility to work from home and cut out tedious tasks like dealing with commuter traffic.
• The ability to set your own hours (if you are completely location independent, you can work from anywhere)
• An unlimited earning potential. Since you control how little or how often you work along with other aspects of the business like sales and marketing, the sky can literally be the limit in terms of how much you can earn. If you don’t like waiting around for an employer to give you a small raise once a year, this can be a huge perk that allows you to have more control over your future.

If all of those benefits sounds good to you and you’ve been playing around with the idea of working from home or starting a full online business, here are a few things you need to do in order to set yourself up for success.

Brainstorm Business Ideas

First you need to determine what type of business you’d like to have. This initial step may take a while because it’s very important. You need to choose something that you are good at and something you can see yourself doing in the long run. In other words, it should be enjoyable and a passion.

It’s also important to focus on earning potential because going into business for something you’re passionate about and not earning money will just turn it into a hobby and won’t put bread on the table. Who will you serve and what type of demand exists in that industry.

For example, if you plan on running a travel agent business because you love helping friends and family plan their trips, decide who your target market will be to gain clarity.

You can look at the industry as a whole and see if there is potential for growth and what competitors are doing to bring in income. If you can see longevity in the idea in terms of income and your happiness, it may be worth looking into further.

Some top home-based business ideas include:

• Private Tutor
• Childcare
• Business Coaching
• Consulting
• Transcription
• Freelance Writing
• Virtual Assistant
• Accounting
• Web Design
• Photography
• Bakery
• Wedding Planner

Develop a Business Plan

After you’ve determined what you will be doing and who you will be serving, it’s time to write out a business plan. Your business plan doesn’t have to be super extensive, but it should be thorough, clear, and summarize the mission of your business and how you plan to grow it.

This will help you stay organized when making certain decisions regarding your services, clients you work with, partnerships you develop, etc.

You should also include some financial information in your business plan since you might need to show it to potential investors. Determine what your start-up costs will be, if you will be providing specific services or resources to the community, and how much funding you may need to meet certain business goals.

Find Funding

Depending on what type of business you establish, you may need funding from outside sources.

If you have low startup costs and can invest your own money into your business, that’s fine, but it’s best to avoid taking out a business loan if you can.

You can start by pitching family and friends to invest in your business, but don’t stop there. You can also reach out to private investors or ask if they can sponsor a project, event, or campaign you’re having.

One business owner I know who started a remote business in order to travel around the country with his wife pitched a well-known job board to assist him and they ended up sponsoring a documentary he was working on.

Depending on the type of business you have, you may be able to qualify for some government grants. The Small Business Administration offers different types of loans and grants to businesses but the requirements vary. You can learn more about SBA grants here and search for various different grants at Grants.gov.

Sort Out the Legal Matters

You may not have to legitimize your business by forming an LLC or S-Corp, but it could help you out around tax time. Entrepreneurs need to set aside a rather large amount of their earnings aside for taxes because they don’t have an employer to supplement it for them.

Depending on your needs, you may want to just be a sole proprietorship, or become a limited liability company (LLC) or an S-Corp. You can learn more about your federal tax responsibilities here.

Trusted sites like LegalZoom.com can help you legitimize your business and if you choose this route, you’ll also need to make sure you register your business name with your state and get a tax identification number.

It’s Best to Start On the Side

While all of these steps may sound overwhelming, it’s important to realize that you can go at your own pace when setting up your business. One of the best things I did to ensure that my business was profitable was starting it on the side of my full-time job more than two years ago.

I started out slow and paced myself. I made use of the extra time I had to get organized, gain clients, and execute my business strategy and slowly it started to pay off and I was able to replace the income I was earning at my full-time job.

It was a lot of trial and error though but it wasn’t as risky because I knew that if my side business’ income didn’t meet the goals I had for the month I could always fall back on my full-time job.

Starting your business off on the side is a great way to play it safe so you can reach success when you make the leap and leave a traditional job with steady income.

How about you all? Have you ever thought about starting a home-based business? Do you have any side hustles?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/duskblackwolf/4286862314/

What the ‘Hes’ Do Is More Valuable Than What the ‘Shes’ Do – Really??

The following post is by MPFJ staff writer, Marie. You can read more of Marie’s articles over at her own blog, Family Money Values. Enjoy! 

Ladies, work hard, study STEM, get a high paying job and close the gender pay gap – right?  Your efforts are an important and valued part of society, right?

Apparently not.

Three researchers analyzed Census data from 1950 to 2000 trying to figure out if women get paid less than men because they don’t go after the high paying jobs or if the high paying jobs lose their luster when dominated by women (the study’s ‘devaluation view’).

Guess what.  According to site Payscale :

“Ultimately, the evidence came down on the side of the devaluation view, meaning that occupations with more women pay less because they’re female-dominated.”

Women’s work.  Worth less.  Wrong and Wrong.

Computer science is a field that has changed from being female dominated to male dominated.

Computer programming used to be ‘women’s work’ way back in the 60’s and 70’s.  Grace Hopper (who most programmers will recognize as the woman who wrote the compiler that was a precursor to the  COBOL language and coined the term ‘computer bug’ due to a moth in her hardware) and the girls who programmed the University of Pennsylvania’s ENIAC computer in the 1940’s started it.

For decades after (until the early 1990’s), women tended to dominate the field.  I myself started programming in 1983 and there were a number of women right there with me.

Men weren’t being altruistic or favoring the woman’s movement back then.  They thought that programming was a low level skill that was akin to typing – not one of those ‘manly’ jobs.

In Stanford News article Researcher reveals how “Computer Geeks” replaced “Computer Girls” author Brenda D. Frink  explains how that changed into primarily a male dominated field today.

Two trends helped.  First, according to Frink:

“Male computer programmers sought to increase the prestige of their field, through creating professional associations, through erecting educational requirements for programming careers, and through discouraging the hiring of women. Increasingly, computer industry ad campaigns linked women staffers to human error and inefficiency.”

Secondly, sets of hiring tests were devised to help steer folks into jobs related to programming.  These tests were highly slanted to select male type traits.

Additionally, during the early 1990s, after the advent of personal home computing, geeking out on a home computer became a guy thing – like working on a car or playing football.  Families tended to give their boys access to the PCs, leaving the girls behind.  When it came time to attend computer classes then, girls were immediately at a disadvantage.

Oh, and did I mention that computer science fields are among the highest paying fields today in the 21st century?

I pursued a career in software development.  It paid more than any other job I could have found back in the 1980’s. Through the years, women continued to disappear from my companies. Most of my coworkers (both managers and staffers) were male.

Over the years, the pay differential between my salary and the salaries of my peer managers (mostly male) in my geographic region diverged by more than 11 %.  How do I know that?  My HR department did a study one year and gave me an 11% raise to bring my salary up to the norm so I wouldn’t leave.  The worst part of it was that my own boss was mad at HR because they didn’t consult him so he could adjust his part of my raise downward to compensate!!!

It’s not just a pay gap issue.

Aside from gender pay inequality, work that women have traditionally done and are starting to do now – gets undervalued.

My case in point.  I was the high wage earner in our family – as a computer software manager.  I made more than twice as much as hubby, even before bonus’s and stock options and retirement benefits.  I’m not sure anyone in my circle even recognized that.

Hubby retired 3 years before me and went to work landscaping our 6 acres.  He cuts grass, plants or removes trees, picks up trash and plants gardens.  After I retired, I started a revenue producing website, managed rentals for our condo resulting in tax cuts and profits, and established myself as an author (through writing a book as well as for sites such as this).  Guess whose work is valued more by our friends and family?

His ability to retire early, in part, relied on my success in my field.  Yet few of our circle realized that, my contributions were mainly invisible.

In Quartz article; At work as at home, men reap the benefits of women’s “invisible labor”,  the author included information on a study done on tenured men vs women and reported:

“In December of 2015, Heather Sarsons, an economist completing her PhD in economics at Harvard, released a working paper: “Gender Differences in Recognition for Group Work (pdf).” As part of her study, Sarsons analyzed 40 years’ worth of publications produced by economists at top US universities. She found that women who wrote on their own had the same chance of receiving tenure as men. However, women who collaborated with men had lower chances. The value of the women’s contributions were erased.

Meanwhile, men who collaborated with women didn’t suffer any penalty. In fact, they were four times more likely to succeed. Sarsons’ working conclusion? Women get almost no credit at all for collaborating and are tacitly perceived as subservient employees. Their gender, essentially, renders them assistants by default.”

Again, women doing the same (or more) work than men and being undervalued.

Will it ever end?

My advice?  In your next life, be born male.

How about you all?  What are your thoughts on the man vs woman pay gaps? What have you experienced compared to your colleagues of the other gender?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/nickefford/26642377714/

4 Money Milestones You Should Have in Place Before You Have Kids

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

With the latest reports stating that it costs nearly $250,000 to raise a kid, it might be a good idea to have your money situation in order before you think about having kids. It also might be a good idea to get your money situation in order if you already have kids.

I should start off by saying that we didn’t start getting our money in order until the oldest of our four kids turned thirteen years old. I share this to encourage those starting late: it’s never too late to start getting your money together.

I remember having a talk with our oldest one time, expressing remorse and regret that all of her years as a child had been watching us struggle for money. I didn’t want to give her that same experience that I had as a child; one where money had been a constant source of fear because we never had enough growing up. Yet my husband and I fell into the same path with our kids that our parents fell into with us. A lack of education about personal finance had been passed down throughout the generations.

Oldest daughter answered my regrets with the heart of a champion. “Mom, what matters is that you are getting it together now. Even if it takes ten years to get out of debt, at least you’re getting out. You can spoil us then.”

Kids are resilient. They often have a wisdom that adults lose in the face of trying circumstances. It’s for them that we’re working on achieving the money milestones that are best in place before kids arrive on the scene. Here are four of my favorite money milestones that you might want to think about achieving before you have kids.

Get Your Debt Situation in Order

A best case scenario would be zero consumer debt (and a commitment to stay that way) and a very manageable mortgage (say, 25-30% of the primary income earner’s take home pay). When we had our first baby, both Rick and I were working. I had a great job: part-time, they allowed me to work from home and I made really good money.

I thought I’d work forever, but after kid number two came along I really had a heart to stay home and manage the kids and the house full-time.  Kid number two had a minor but time-intensive medical condition for the first year of her life that left me wanting time to care for her more than I wanted money.

I got laid off in a group layoff at my company when kid number two was 9 months old, and we chose for me to stay home, but money was tight due to our debt situation. We had borrowed based on two incomes. If we had to do it over again we would’ve bought a house based on hubby’s income alone and avoided consumer debt altogether.

Be Contributing to Retirement Accounts Consistently

“I haven’t arrived, but I’ve left” is a good motto when it comes to combining retirement planning and kid-raising.  It’s not necessary to be fully prepared for retirement, but it’s a good idea to be consistently contributing to either a 401(k) or an IRA of some sort. It’s tempting to stop saving for retirement during the kid-raising years so you can be sure to have money to cover kid expenses, but you’ll thank yourself if you keep saving for retirement because then your kids won’t have to help support you financially during retirement years.

Make Saving a Habit

A plush emergency savings fund is always a good idea, but even more so when you’ve got kids. All expenses double and triple when you add additional family members, so it’s a good idea to set aside a specific percentage of your paycheck into a savings account that can cover a new car need, an expensive bill or repair, or that can carry your family through during an unexpected reduction in income such as a job layoff.  It’s also a good idea to carry a sizeable life insurance policy if you don’t have enough money saved to be considered self-insured in your own eyes.

Have a College Savings Plan

College costs and student loan debt numbers are rising every single year. If you’re having a baby, it’s a smart idea to research the different college savings plans available in your state and to have a plan in place for how much you’re going to contribute to your child’s college education and to work that number into a monthly amount that you can include in your budget as early as possible. Time flies even faster when kids come along. It’s a wonderfully, beautifully hectic life where one day you’ll be bringing your kid home from the hospital and then next you’ll be teaching him or her to drive.

If you get a college savings plan in place sooner rather than later, you’ll lessen the financial burden of college on yourself and on your kids.

How about you all? What money milestones do you think are important to have in place before kids come along?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/digitalsextant/29908738/

Millennial Money Problem: Saving Up 20% For a Down Payment on a Home

The following post is by MPFJ staff writer, Chonce. You can read more articles by Chonce over at her personal blog, My Debt Epiphany. Enjoy! 

Purchasing your first home is a huge milestone and the ultimate sign of adulthood. Many people like homeownership over renting because it allows them to have more freedom over what they can do with their home.

With that being said, home ownership is quite expensive, and according to Apartmentlist.com, of the millennials who want to be homeowners, a whopping 79% can’t afford it.

This is due to a variety of factors including the cost of living around the U.S. If you live in a busy metropolitan area, houses may be expensive near you.

Not to mention, you may need a sizable down payment to purchase  your home. It’s best to put at least 20% down if you want to avoid paying private mortgage insurance.

But if homes are priced around $250,000 in your area for example, that can mean you’ll need a down payment of around $50,000 which is a huge amount to someone who has student loans and an annual salary around $50,000.

Needless to say, purchasing a home is hard for millennials from a financial standpoint which causes them to rent longer than they wish. If you’re trying to come up with a way to afford your first home, here are some options to help you come up with a down payment.

Get an FHA Loan

I wanted to mention FHA loans early on because you don’t absolutely need to put 20% down on your new home even though it’s highly recommended. The Federal Housing Administration is a government agency that helps homebuyers (especially first time home buyers) get approved for a mortgage.

With an FHA loan, you are only required to put down at least 3.5% as long as you are a first-time homebuyer or military service member. While this type of loan helps make owning a home much more affordable for millennials, they’ll need to find a property that accepts an FHA lender first.

Also, putting less than 10% down on your home can be risky because you won’t start out with much equity. If the value of your home started to plummet and you barely put 4% down, you may be underwater for a while.

Also, when you put less than 20% down on your home, you’ll need to pay private mortgage insurance (PMI) which can add to the cost of your mortgage even though you can probably get rid of it later.

Given all the downsides of using an FHA loan, it’s still a solid option for millennials who don’t think they’ll be able to afford a home anytime soon. Plus, if you are planning on getting a starter home to occupy only for a few years, you might want to use the FHA loan since it won’t be available to you if you purchase a second home later down the road.

If you are not sold on the FHA loan yet or would prefer to consider other options to help you come up with a 20% down payment, here are some alternatives.

Extend Your Timeline

If you can’t afford a home right now but really want to be a homeowner, it can be hard to extend your timeline but it can allow you to save up enough money and make a wiser purchase. If you have kids, debt, or other expenses like planning a wedding, for example, it’s best to tackle one major goal at a time so you can dedicate all your attention to it.

It’s important to determine what your budget is for a home and how much you’ll need to put down. Then, set a timeline based on how much you can afford to save each month and not your emotional connection with a pretty home across town.

For example, if your budget for a home is $200,000 and you’d like to purchase a house in the next 5 years, that means you’ll need to save $40,000 for your down payment or $8,000 per year which adds up to $666.66 per month.

Let’s say you don’t want to wait 5 years and think you can do it in 4 years instead. That’s $10,000 that you need to save every year or $833.33 per month. It can be doable if you split that monthly amount with your partner and your income and living expenses can support that goal.

Cut Down on Living Expenses

Cutting down on living expenses is one of the best things you can do to boost your savings so you can reach that 20% down payment. You may want to cut or reduce smaller expenses like cable and other subscriptions, your shopping budget and other impulse purchases, and your daily coffee habit.

You can even cut larger expenses like your current living expenses. Living in a basic apartment that falls way below 30% of your income can help you save a ton or you can even become a one car family or see if you can move in with your parents or other relatives in order to save more.

Live on One Income

If you want to purchase a home with your significant other or spouse, you can leverage both of your incomes to help you reach that goal quicker.

Living on one income and using the other income to save is a strategic way to round up enough money for a 20% down payment.

My husband and I started living on one income when we got married and as a result, we paid down $4,000 in debt within our first 3 months of marriage.

You may need to cut some of your expenses and make some sacrifices to make it work, but you can start out by saving the lower income and living off the higher income.

Start Side Hustling

If you’ve cut expenses all you could and still need money to live off, you can always try to earn extra money through a side hustle. If the income from your full time job isn’t getting you to your goal quick enough, look into freelancing your skills whether it’s freelance writing, graphic design, photography, dog walking, or babysitting.

There are tons of things you can do in your spare time to earn extra money and you can throw all your earnings toward your down payment fund.

Again if you are planning to purchase a house with a spouse, both of you can establish a side hustle so you can earn twice the amount of extra money and avoid burnout.

When my husband and I were planning our wedding, I did freelance writing and blogging as a side hustle and he tested websites online and took surveys. Now, he is looking into becoming an Uber driver to earn extra money so we can pay off our debt quicker.

Use Extra Lump Sum Payments

If you receive any extra lump sum payments like a tax refund, bonus at work, or commission, you can put it directly in your house down payment fund.

If you have a birthday or special event coming up like a college graduation, you can request that family and friends make a contribution to your house down payment fund instead of buying you a gift.

The money can really add up.

How about you all? Can you think of any other great ways to save up for a down payment on a home? What has worked for you in the past?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/76657755@N04/6881505052/

Think Like You’re Self-Employed – Even if You Have a Job

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a freelance professional personal finance blogger for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

Employees sometimes pigeonhole themselves into very tight niches. They focus on very specific tasks and skill sets, which can enable them to do their job more efficiently. But one of the problems with this approach is that it can result in a very narrow focus, that can result in them being passed over for promotions, or even subject to layoffs.

It might be better to think like your self-employed, even if you have a job. A self-employed person is always forced by circumstances to look at the bigger picture. That means being aware and prepared to deal with the bigger picture. That bigger picture focus can often expand opportunities, and produce new and valuable skills sets.

In truth, virtually every employee is really self-employed – they just don’t see it that way.

You’re a Self-Employed Person With One Client

Unless you’re in a union, you really are self-employed. But if you have a full-time job, it just means that you are self-employed with a single client. Yes, your employer is actually your client! You’re ability to earn a living is dependent upon your ability to deliver specific services, at a specific price. To the degree that you are successful, you keep your job, and even create opportunities for promotion.

Some people even have two or more jobs, which means – technically speaking – they actually have two or more clients.

This view of your employer as your client is more than just semantics. If you view your employer as a client, then you will want to keep them satisfied, so that they will see the value of your worth, and keep you as a service provider.

This is very different from the more common working-for-a-paycheck mindset that so many employees bring to the job. That’s often an attempt at earning the most amount of money, for the least amount of effort. Put another way – going through the motions.

But if you consider yourself to be self-employed, and you view your employer as a client, both the relationship and the work takes on deeper meaning.

In addition, viewing yourself as self-employed also tends to minimize the feeling that you are trapped. Since your employer is a client, the loss of that client at some point will simply mean that you move on to another client.

Take Ownership of Your Work

As a business owner, you would have to be prepared to stand behind your work. If you don’t, you will lose customers and clients. This is very different from the go-along-to-get-along thinking that often accompanies the more traditional view of work.

A business owner isn’t content to merely to get the job done, but also to make sure that his client is happy with the work performed. He knows that the client can always go elsewhere, so he carefully provides his products and services to keep the client coming back.

Still another aspect of self-employment is taking ownership of failure. The business owner takes responsibility for failure – after all, there’s no one else to blame. More important, she works quickly to rectify the problem, whatever it is. Mistakes are made, and obstacles are encountered, but the self-employed person always knows whose responsibility it is to make it all work.

This is vastly different than the efforts to deflect failure that commonly happen in organizations. But if you can become known as a problem solver – as someone who takes ownership of the situation at hand – you practically win by default. While everyone else is ducking for cover, you become the seen as the person who saves the day.

Developing a Keen Sense for the Bottom Line

If you’re self-employed, you’re always aware of profitability. For this reason, you will consciously work to do more of what’s most profitable, and less of what is least profitable. This is a critical concept in virtually any money-making venture.

Many employees don’t grasp that it works the same way in a large organization. Look around your company, you will probably notice that the people who move up the chain of command the most quickly are almost always people who are closely connected to profitability.

The more that you can do to either increase sales or decrease costs, the stronger your position in the organization will become. This is in no small part because management will recognize and appreciate that your goals and actions are more closely aligned with theirs than the other members of the staff.

Always be Building New Skills and Contacts

Self-employed people work in a highly competitive environment. Since there is strong competition for the client base in almost every business category, the entrepreneur knows that his skills and abilities must stand out.

That requires building new skills and contacts as a part of business-as-usual. Every skill that you acquire puts you in a position to fill or expand a different niche. Every contact that you develop becomes a potential partner, and an opportunity to network and synergize skills.

In addition, a network of capable contacts can give you the resources you need to get a job done that may be beyond your own skill set. This is a talent that every successful business owner must develop. It enables you to take on larger and more important assignments, and to complete them even if you don’t have the necessary ability to do them completely on your own. It represents the ability to leverage both people and skills.

Always Be Looking for New Opportunities

If you’re self-employed, you’re never “stuck” with one client. You are aware that there are other clients, and you are always open to the possibilities that they present. This can go a long way toward eliminating the fear factor many employees have in regard to their employers. If you think that your current employer is the only game in town – whatever the reason – you’ll work with a certain amount of fear. That kind of emotional state is never conducive to doing your best work.

As an employee, you may fear the loss of your job. But if you see yourself as self-employed, you’ll likely see the loss as inevitable – at least eventually. For that reason, you’ll always be on the hunt for new opportunities. You may even make it a practice to build a portfolio of potential opportunities. This is Self-employment 101 – the business owner is always aware that he can and will lose clients. For that reason, he’s always on the lookout for new ones.

In today’s hyper-competitive job market, having that kind of attitude is practically a survival skill by itself. It doesn’t mean that you are disloyal to your current client/employer, but more that you are aware of the uncertainties of the business environment that you’re operating in.

There’s one other benefit to the perpetual search for new opportunities. If you find enough of them, you may be setting yourself up to enter formal self-employment. If you identify multiple opportunities – that is, potential new clients – you may create a niche for yourself as an independent consultant.

In this way, thinking like you’re self-employed, even if you have a job, creates an eventual point of entry into actual self-employment.

Give it a try, and see what it does for your career.

How about you all?  Have you ever tried something like this to give your career a boost?  How did it work out for you?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/shimelle/877913815/

The Worst Financial Advice I’ve Ever Received

The following post is by MPFJ staff writer, Chonce. You can read more articles by Chonce over at her personal blog, My Debt Epiphany. Enjoy! 

People love to give advice. It’s natural. On the other hand, not everyone should offer up advice about every subject, especially if they aren’t confident their advice is completely sound.

Before I started educating myself about personal finance in order to improve how I manage my money, I received some pretty crappy advice from other people who seemed pretty misinformed about personal finance.

There are several myths out there about personal finance that need to be debunked so I’ll start by sharing some of the worst financial advice I’ve ever received and what

Don’t Worry About Taking Out Student Loans Because They Will All Be Forgiven in 10 Years

One day one of my coworkers who is really into education told me this. She had just received her MBA and was a huge role model and inspiration to me. Luckily, I didn’t listen to her advice though. I took out some student loans to help me get through college and I didn’t really think about the debt until it was time to pay it back.

However, I refrained from taking out more student loans just for the sake of having more money and I attended community college for two years and applied for scholarships and financial aid to keep the cost of college low so I didn’t have to take out tons of loans. I attended a state school and avoided expensive degree programs but still graduated with just under $21,000 in student loans which is a fraction of what some of my peers graduated with.

Once I started learning more about student loan debt and took on some more personal finance writing gigs, my research led me to find out that not everyone qualifies for student loan forgiveness. Actually, only a select few do and they must meet strict standards like working a government-funded job for 10 years.

There are quite a few federal student loan forgiveness programs available for government workers, teachers, and doctors but since I don’t work in those fields and don’t plan on having student loans for 10 more years, I don’t really qualify for forgiveness.

Keep Your Car for Two Years, Then Trade It In For Another One

This unhelpful piece of financial advice came from another coworker and my own mother shockingly enough. When I graduated college, I couldn’t afford to pay for a new car in cash but I desperately needed one since my current car had broken down for good.

I remember asking around and researching car loans as often as I could to learn more about what I could potentially be getting myself into. I remember asking one of my coworkers how someone is supposed to pay their car loan off before the car breaks down for good and she smiled and me and said ‘never’. Her advice was to do what she had been doing for the past 10+ years and finance a fairly new car, then wait a year or two and trade it in to get an even newer car.

Her car had all the bells and whistles like heated seats and windows, built-in navigation and so on. The idea of having a car note for the rest of my life didn’t appeal to me so I chose to finance a cheaper car with the hopes of paying off the loan quickly.

When I went into the dealership with the intention to refinance my car loan for a cheaper rate, the sales reps suckered me into considering the idea of trading in my car for a newer car with a higher loan. Their argument was that my car’s value was depreciating every day and the newer car they proposed would last longer.

The huge problem was that trading in my car for a newer one would have added around $4,000 to my loan at the time. While at the dealership, I called my mom for advice and she actually seemed like she was on the car salesman’s side and wasn’t opposed to me financing a newer car that would potentially last longer.

Again, thankfully, I chose against this, ignored the sales pressure and just kept paying off the current car loan I had. My car is a 2010 so it’s not super old. I really didn’t see any value in buying a newer car when I was already in enough debt as it is. The truth is, all cars depreciate in value over time and there’s no way around that fact. You can’t beat the system by leasing cars and trading in your current vehicle. You will end up spending a boat load of money in interest. If you always have a car loan, you’ll never be able to truly enjoy the perks of outright owning your own car and getting to ride the wheels off it.

I ended up making extra payments to pay off my car loan last year and I’ve never looked back since then. It was the best decision I could have ever made.

Wait Until You’re Old Enough to Save For Retirement

Retirement is probably my weak spot when it comes to financial literacy. I still have many working years left before I can consider retirement so I used to refrain from learning anything about retirement.

Whenever I was interested or mentioned investing money into a Roth IRA I had a certain friend who would make comments about me worrying too much about the future.

“Why are you worrying so much about retirement when you have so much time? You sound like an old lady,” she once told me.

Now, I resent the ‘old lady’ comparison, but one thing she said was right. I do have plenty of time…plenty of time to get started with investing early that is. With retirement, the earlier you start contributing to your 401(k), Roth IRA, or any other retirement account, the better because you give your money more time to compound and grow over the years.

Yes, the market fluctuates, but it always consistently improves year after year which almost guarantees if you invest a lump sum amount today, your contribution will grow significantly over the next 10-20+ years.

By investing in retirement early in my 20s, I’m practically ensuring my chances of becoming a millionaire by the time I reach traditional retirement age. If I invest aggressively, I may even be able to retire early.

Once people reach the ‘old lady’ stage and start thinking about retirement, it’s often too late to grow their wealth. This is why I look forward to investing as much as I can while in my 20s.

Be Careful Who You Receive Advice From

This is my big takeaway after receiving some pretty bad financial advice over the years. Most family members and friends mean well and want to help, but it’s important to educate yourself about personal finance by utilizing credible resources that are available on trusted websites, at institutions like your bank, and from financial experts with a proven track record.

Yet and still, you shouldn’t always believe everything you hear and take the financial advice you do receive with a grain of salt. Most financial topics and issues don’t have a one size fits all solution because everyone’s situation is different.

How about you all? What is the worst financial advice you’ve ever received?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/87913776@N00/6928145100/

When is it Investing? When is it Gambling?

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a freelance professional personal finance blogger for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

With the stock market being at record highs, now is an outstanding time to pose this question. Market tops bring out excesses. This includes investors who are looking for easy money profits. But that’s not investing – it’s gambling.

In truth, your objectives and strategies will define whether or not you are an investor or a gambler. Let’s review some of the parameters that will help you to understand which.

When Is It Investing?

Investing places value on many of the following strategies:

Investing in fundamentals. You’re looking for companies with a strong track record of increasing earnings, strong brand loyalty, and solid financials. If the fundamentals are strong, the day-to-day price fluctuations are less important. The long-term deck is stacked in your favor.

Understanding that price does matter. You recognize that just because a stock is a good investment of $30 a share, doesn’t mean that the same will be true when the stock is trading at $60. Stock value must be considered relative to fundamental value.

Respecting risk. You have a keen understanding that stocks can fall in value as easily as they can rise. For this reason, you are highly selective as to what you invest your money in. You will always do your best to be invested in stocks that have minimum downside risk.

Building a balanced portfolio. This is really the process of investing around risk throughout your entire portfolio. You work to make sure that your portfolio is balanced between growth and income, as well as between various market sectors. While this may limit growth in bull markets, it also minimizes risks in bear markets. You’re willing to maintain that balance because you’re in for the long haul.

Having a long-term view. You understand that stocks fluctuate in value. For that reason, you absolutely favor investments that are likely to perform well over years, and not just the next quarter or two.

Understanding a sector, or the general market. You recognize the value of investing in different sectors, but you also know that sectors can fall out of favor. For example, you understand that just because energy is critical to the economy, doesn’t mean that it’s always a good investment. You also recognize that while you can’t time the market, there are better times to be buying than others.

Having well-defined investment goals. You’re not just investing to make money, but rather to reach specific goals. This can include investing to pay off your mortgage, pay for your children’s college education, start a business, or to retire. The existence of investment goals forces you to create specific strategies that enable you to reach those goals with the highest level of predictability.

Minimizing trading. True investors don’t trade. They invest in companies for the long-term. They recognize that trading is highly speculative, and subjects you to paying very high transaction costs, which lowers your overall investment return.

When Is It Gambling?

Gambling is more opportunistic in nature, and often includes the following practices:

Betting on trends. If a stock or a sector is doing well at the moment, you load up your money there. In fact, you’re on a constant lookout for trends that can be exploited for fast profits.

Following the herd. This can include jumping into popular stocks or sectors, but it can also involve investing primarily in rising markets. You wait for bull market trends to be firmly established before getting in, then often follow the herd by selling only after crushing losses. The emphasis on following the herd often sees you buying and selling at the worst possible times.

Ignoring yield. Not that growths stocks are bad investments, but you may ignore dividend yield in favor of the prospect of bigger returns from price gains. But though dividend paying stocks may grow more slowly, they’re often better long-term investments because they maintain the practice of returning some of the profits to shareholders.

Ignoring fundamentals. If you’re investing in trends or following the herd, the underlying strength of the companies may not be critically important. But while the trend may produce impressive short-term gains, it’s the fundamentals that make for the best long-term plays.

Timing the market. The problem with market timing is that it’s impossible to call with any real accuracy. And even if you get it right from time to time, it’s totally impossible to do with any consistency. Timing also ignores the underlying strength of individual investments, as it emphasizes price swings more than anything else.

Buying stocks on tips. Though you may not know much about a company, you’ll buy the stock if you hear about it from a source you consider to be credible. Or at least you buy and hope that the source turns out to be credible.

Looking for the quick hit. This is probably the most defining characteristic of a gambler. While an investor will develop a long-term strategy to earn steadily compounding returns over years or decades, a committed gambler is always on the prowl for a quick profit.

Investing in what you don’t understand. A gambler may not be terribly interested in specifically what it is he’s putting his money into – the main consideration is the potential of the stock to produce a positive return, and in the shortest possible time frame.

It may be that the main difference between investors and gamblers is emotion. While the gambler thrives on the prospect of a quick profit – even if it doesn’t happen often – the investor is mostly looking to remove emotion from the investment process. She’s more interested in steady, if unspectacular returns over the very long-term, to keep her portfolio moving steadily forward.

Both the gambler and the investor see themselves as investors, but guess which one does better over the long-run? That message may once again assert itself with the market flying so high as it is. Gamblers tend to be the biggest victims when record markets reverse.

How about you all? Have you ever seriously analyzed if you’re an investor or a gambler? What did you discover?

Share your experiences by commenting below!

****Photo courtesy https://www.flickr.com/photos/101332430@N03/9677861633/

How We’re Teaching Our Kids Good Money Management Skills

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

As we work our way out of tens of thousands of dollars in consumer debt, we’re keeping our kids informed of nearly every step along the way. We’ve been open with them about our situation from the beginning of our debt payoff journey, from the starting debt numbers to the drop in debt, to some increases in debt due to family crises and the subsequent drop in debt again.

We’re keeping them involved in hopes that they choose to avoid debt and not make the same money mistakes that we’ve made over the course of our marriage. We’re using several different strategies in order to teach the kids good money management skills while they’re under our roof, hoping that they’ll bring those skills with them as they head out into the adult world. Here’s a list of some of the more important things we’re teaching our kids about good money management skills.

We Teach Them About Debt’s Consequences

When we first began our debt payoff journey, we sat down with the kids and explained the perils of our debt situation. We started with a sixty-five percent debt-to-income ratio and LOTS of consumer debt. We told the kids our debt numbers and how much in monthly payments we were paying each month. We also explained to them what interest was and how much of our monthly payments were going to the loan and credit card companies via interest each month.

When we first began our journey, our interest payments totaled nearly $1200 a month. The magnitude of that dollar amount and what other more fun things we could be doing with that money shocked them, just as it shocked us when we sat down and figured it out.

We want our kids to know how much an excessive amount of debt affects current and future wealth-building goals so that they work to avoid debt, especially “bad” debt.

We Don’t Let Them Borrow from Us – Usually

One of the house rules for our kids is that if they want something, they have to save for it. We want to teach them to get into the habit of saving for things instead of borrowing for things. Yet on occasion, if one seems set on borrowing money, we’ve let them borrow it.

This has only happened once, and with our oldest. She was taking an interest in archery and wanted a bow and arrow set of her own. The price? $257. This was not in our budget at the time, so after much pleading and negotiating we allowed her to use her birthday money ($100) to purchase the set and to borrow the rest of the money from us.

She was only twelve at the time so she didn’t have a job. The money she earned at the time came from her small allowance and other miscellaneous paid-for chores, as well as from Christmas money that year.

Madelyn hated every bit of the three months it took her to pay off her debt. We required fifty percent of her allowance each week, which meant her own spending cash was cut in half. We also required all of her Christmas money that she received that year to get the debt paid in full. It may sound harsh, but we wanted her to understand the feeling of bondage that debt can have, and at the end of the experience, she did.  She said, “I’m never, ever borrowing money again.” We hope she sticks to that promise.

We Have Them Help us With the Monthly Budget

Each month we show the kids our monthly budget so that they understand where our money is going that month. We also ask for their input about changes we can make to the budget that can help improve our situation. Not only does this help them to understand the restraints that debt brings, it helps them to understand why we say “no” to certain extraneous purchases. When they see where the money goes each month, they don’t complain when we’re not going out to eat or shopping frivolously for clothes or toys.

We Teach Them the Importance of Saving and Investing

Using online savings calculators and our own savings and retirement accounts as examples, we show our kids the results of saving money and the ups and downs of investing. We explain the benefits of saving, such as having money available for car and home repairs and other bills. We also encourage them to put a portion of their own money into savings.

I’m sure that each of our four kids will manage money in a different way, but we take comfort in knowing that we’ve taught them responsible money management methods and that we’ve taught them of the dangers of debt and the importance of saving. I have a feeling they’ll do much better than we have with money.

How about you all? What money management skills do you feel are important to teach to children?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/62030038@N02/8402437512/

How to Confront and Overcome Financial Failure

The following post is by MPFJ staff writer, Chonce. You can read more articles by Chonce over at her personal blog, My Debt Epiphany. Enjoy! 

Financial failure is something we all experience from time to time. Whether you manage your finances well or not, it’s natural to experience a budget failure or fail to meet one of your goals every now and then.

Financial failure is important because it teaches us very important life lessons through experiences we’d rather not relive. They key to coming out on top, is confronting your financial failure early on and overcoming it so you can continue on the path toward financial success.

Start with Confrontation

First assess your situation and accept the fact that you messed up. This is a crucial first step because it’s so hard for people to do. If you don’t accept your failure however, you can’t move on.

If you’ve been living above you means, accept that. If you’ve gotten lazy with your goals over the past few months and lost motivation, accept that. Whether you feel guilt, shame, or frustration, it’s better to acknowledge it so you can move past it and forgive yourself.

Find Out Where You Went Wrong

Sometimes it’s hard to tell when you’ve failed financially and what led to the downfall. If you set annual goals like I do, you may not see the results you’re looking for until later in the year.

However, if you realize your situation has changed and your goals now seem unachievable, you’ll have to realize that and make some changes.

For example, I originally planned to have all my student loan debt paid off by the end of the year. Once I realized that would not be possible since I wanted to pay for my wedding in cash, I realized I needed to make some changes to my goal. That’s not necessarily a financial failure as it’s more of a shift in priorities.

On the other hand, if you set out to save 30% of your income this year and that involved cutting back on expenses like dining out and you failed to do so, you need to identify what caused you not to meet that goal.

Maybe it was the fact that you got tired of budgeting some months or failed to meal plan and got tired of cooking. The convenience of restaurant food is very tempting and odds are there are some factors that led you to give in to that temptation and dismiss the other intentions you had for your finances.

Scratch Everything and Come Up With a New Strategy

Once you’ve confronted the issue and determined what led you to fall short, you’ll be ready to scratch everything and start over. This involves finding better ways to maintain your motivation and developing more realistic goals.

For example, a solution to your excessive dining out issue may be limit dining out instead of trying to cut it out completely. Track how much you spend on restaurant food each month and try to cut that number in half and assign that expense a budget category that way you don’t feel deprived but you’re still saving money.

Other financial failures may be more serious like messing up your taxes or having to pay more interest on your debt since you didn’t prioritize it and pay it off the previous year. It’s crucial that you come up with an effective and realistic game plan to bounce back from your financial mishaps.

Also, start tracking everything more closely and paying yourself first. Have weekly budget meeting either on your own or with your partner to make sure you’re staying on track. You can also team up with an accountability partner so you can motivate each other and track your progress.

I also take care of my financial priorities before anything else when new income hits my bank account. It’s not only fun but it also ensures that I’m staying on track with the goals I set for myself and I can avoid financial failure.

Continue to Educate Yourself

Financial education is the key defense mechanism to financial failure. I’ve made quite a few financial mistakes in the past and most of them were due to the fact that I wasn’t financially literate.

Yes motivation and realistic goal setting could have very well helped me succeed, but it’s hard to be motivated when you don’t understand what you are actually working toward. When it comes to my debt, I’m motivated to pay it off not just so I can say I’m debt free and be able to go on shopping sprees whenever I want.

I want to pay off my debt because I understand interest is eating up my hard earned money and debt is holding me back from other things I want to do with my money like save up for a home and invest. I understand that if I apply for a mortgage, lenders will look at my debt to income ratio and it will factor in what type of loan I’ll be able to get.

I want to retire some day, and I can’t do that with debt. If I pay off my debt earlier, I might even have extra money to put toward retirement so I won’t have to wait until I’m 65 to stop working. These are the true driving reasons behind wanting to pay off my debt aside from wanting a better life overall for myself and my family. All of these reasons help motivate me, but I never would have understood their importance if I didn’t educate myself about personal finance and continue to seek out more knowledge and information.

Read books and blogs, listen to podcasts,  talk to you bank, attend financial literacy events in your area, and do everything you can to learn more about how to manage you money so you can overcome financial failure and avoid it in the future.

Stay On Top of Everything

Your money issues could also be improved quicker once you become more alert and realize that you can make changes every single day as opposed to just once a year. If you want to refinance your debt, create a new budget, or ask your employer for a raise, you can do that at any time, not just in December or January when everyone is reflecting on their goals and plans for the year.

Try to view each month, week, and day as an opportunity for a fresh start, that way you have nothing holding you back from overcoming financial failure.

How about you all? Have you experienced financial failure before? How did you overcome it?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/86530412@N02/8226451812/