All posts by Jacob A Irwin
Carnival of Passive Investing # 3 – Random Probability Examples Edition – February 28th, 2011
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Interested in receiving a free $25 Amazon gift card? Click here to sign up for my Cheapskate Jake “Cheapskates Need Love Too” giveaway! Or, click here to enter my free giveaway for 5 copies of H&R Block At Home Premium Edition .
As discussed in my introductory post for this carnival, the purpose of this carnival is two-fold:
- To provide a forum to showcase articles and research in passive investing strategies (i.e. investing in ETFs, index mutual funds, etc. in such a way that one avoids employing active stock picking). By investing with the market, we are able to beat 70-80% of investment “professionals.”
- To create a community of passive investment bloggers to connect and share expertise.
Please enjoy and stop by my blog on my non-carnival days as well.
Congrats to our 3 winners this month! Listed below are the rest of this month’s spectacular passive investing articles!
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Jon the Saver presents Rick Ferri and Passive Investing posted at FreeMoneyWisdom.com
Asset Allocation
Mike Piper presents Investing Life Insurance Proceeds posted at The Oblivious Investor, saying, “How would you invest a portfolio if you were expecting to need to withdraw from it for potentially 50 years or more?”
Rob Bennett presents Valuation-Informed Indexing #28: New Research Shows Valuation-Informed Indexing Beats Buy-and-Hold in 102 of 110 30-Year Periods | ValueWalk.com posted at ValueWalk.com.
Gyutae presents What Is Asset Allocation and Stock Investment Diversification? posted at Money Crashers.
Financial Planning
Mitch Archuleta presents Automate Your Finances to Win Big in Retirement posted at RothIRA.com’s Retirement Planning Blog.
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Index Funds
FMF presents Free Money Finance: Not All Index Funds Are the Same posted at Free Money Finance, saying, “One thing to remember when investing in index funds: not all of them are the same.”
Investing
BankMan presents Are Online Brokerages a Good Deal? posted at High Yield Savings Accounts, saying, “Are online brokerages a good deal for cheap mutual fund trades, or do they skimp on the features you need most to make informed investing decisions?”
Ryan @ CML presents Investing Lessons From Warren Buffett posted at Cash Money Life, saying, “Warren Buffett is one of the world’s greatest investors. Find out some of his best investing tips in this article.”
Note from Jacob – Even though doing what Buffett did (investing in individual stocks) is against the tenets of this carnival, we can learn some valuable lessons about employing a contrarian style of investing when we need to rebalance our portfolios to purchase more shares of equity index mutual funds when markets go down.
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Probability of having your identity stolen – 1 in 200 (So, pretty likely!)
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Jim Yih presents Understanding Index Linked GIC Products posted at Retire Happy Blog, saying, “There is a new breed of GIC (Canadian investment instrument) products that continue to guarantee your capital from losing money but provide some variability in terms of your investment return. These products are commonly known as index-linked GICs.”
Boomer presents How To Invest Your Money: Part Four – Building Your Portfolio posted at Boomer & Echo, saying, “The main focus of this series of articles is to discuss the psychology of investing, how to get started, finding your strategy, and building your portfolio.”
Michael presents Advantages of Buying a House With Cash posted at Consumerism Commentary, saying, “If you can afford it, there are some extreme advantages to buying a house with cash.”
Note from Jacob – Before deciding to buy a house completely with cash, it’s important to consider your overall asset allocation. This article gives some great insight in to this decision.
Michael Pruser presents Ally Bank’s 10-Day Rate Guarantee on CD’s posted at The Dough Roller, saying, “Boring ole CD’s may not give the greatest returns, but show me something else this guaranteed.”
Note from Jacob – CDs can be a valuable tool for housing the cash portion of your asset allocation in your overall passive investing strategy.
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Probability of being on a plane with a drunk pilot – 1 in 117 (Scary! I hope this one isn’t true!)
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Mutual Funds
Hemant Beniwal presents Bond Fund – Complete Guide posted at mutualfundlab.com.
Personal Finance
Carlos Sera presents A Tale of Might posted at Financial Tales.
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Probability of being considered “possessed by Satan” – 1 in 7000 (uh, OK…? haha)
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And, if you are a serious passive investing nerd like me, you might enjoy the following articles on Passive Investing that I came across on Get Rich Slowly and Free Money Finance while reading through this month’s submissions.
Improve Your Investment Returns with Vanguard’s Admiral Shares – Free Money Finance
The Beauty of Index Funds – Free Money Finance
Index Funds: The Investment Answer – Get Rich Slowly
Index Funds Win Again – Get Rich Slowly
Index Funds: Why Choose Anything Else? – Get Rich Slowly
Well – that concludes this month’s edition. Submit your blog article to the next edition (scheduled for March 31st) of Carnival of Passive Investing using our handy carnival submission form
The top editor’s pick of the March 31st, 2011 Carnival of Passive Investing will receive a $25 Wal-Mart gift card.
March’s Carnival will be our first “guest-hosted” edition of the Carnival of Passive Investing. Tom @ Canadian Finance Blog has been kind enough to volunteer to host!
If you are interested in hosting an upcoming edition of the Carnival, take a quick look at the hosting requirements, and then contact me with your preferred open slot in the hosting schedule.
***Photo courtesy of http://www.mathworks.com/help/toolbox/stats/multivariate_studentst2.gif
6 Overlooked Tips to Repair Your Credit
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Interested in receiving a free $25 Amazon gift card? Click here to sign up for my Cheapskate Jake “Cheapskates Need Love Too” giveaway! Or, click here to enter my free giveaway for 5 copies of H&R Block At Home Premium Edition
Today’s guest post comes to us from Charles with Credit Donkey.
6 Overlooked Tips to Repair Your Credit
Your personal finance journey begins with your credit score. A bad credit score can seriously limit your quality of life and should be avoided at all costs. Not only is your credit score responsible for whether or not you can qualify for a loan or credit account, but it will also determine how much you will have to pay for the loan in terms of interest payments.
Because credit plays such an important role in our society, it is important to make sure that your credit is in top shop shape. If you have had some credit challenges in the past, here are 6 overlooked tips to repair your credit:
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Do not wait to repair your credit
Waiting to repair your credit is a bad idea. You should pay your down your debt first and find out ways to rebuild your credit. A time will come when you will need a higher credit score as well as a credit report free of delinquencies so don’t wait to repair your credit. Commit to getting started today.
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Do not close your older accounts
A mistake that most people make while repairing their credit is that they close their older accounts. You should avoid doing this even if you are not using them. The reasoning behind this is because your credit score takes into account the length of your credit history. By closing your older accounts you simply lose a very important part of your credit history which will play a negative role in your credit score.
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Do not close your revolving accounts
If you are planning to close any revolving debt accounts that you may have, you need to first take into account your other revolving accounts that will remain. The reasoning behind this is because a large portion of the credit score is determined by your debt-to-the-available-credit ratio of your revolving accounts. By closing a revolving account, you will lose any access to that credit line, thus altering your available credit ratio and possibly having a negative effect on your credit score. If you want to stop using a credit card then it may be in your best interest to simply stop using it as opposed to canceling it.
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Do not charge more to your credit account
If you think charging everything to your available credit accounts will improve your score, then you are greatly mistakened. Generally, individuals with the highest scores are fiscally responsible and do not over leverage themselves with credit.
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Always correspond through registered mail
While corresponding with your creditors, it is necessary that you do so via registered mail. In the event that something gets misreported on your credit report, it is critical that you have a written account of any correspondence between you and your creditor.
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Be organized
It is really important to repair your credit in an organized and structured manner. You should make sure that you get all of your credit reports regularly in order to assess what strategies are working for you.
Following these simple tips for repairing your credit will take some time before you begin to see the fruits of your labor. However, implementing these strategies will hopefully get you in the habit of performing these fiscally responsible tasks on the regular basis.
How about you all? Have you tried repairing your credit? How did it turn out? What techniques and/or strategies did you employ?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- @Getting started today – The best way to get started reducing debt and repairing your credit is to collect your debts by making a list of all accounts, the APRs, and total balances due.
- @Revolving accounts – What is a revolving account? Does any one know? Is this just a credit card account?
- @Registered mail for correspondence – This is a great idea! And, one that I hadn’t explicitly thought of. Things do get lost in the mail, so you want to make sure you affairs are insured.
- Another tip that goes along with this is to make a detailed record of all interactions (emails, phone calls, etc) with the company that administer your debt accounts. This ensures that you know who to go to and blame in the event that a mistake is made.
***Photo courtesy of http://repair-credit-easily.info/repair-credit.jpg
H&R Block At Home Giveaway – Ends When All 5 Codes Are Taken!
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Interested in receiving a free $25 Amazon gift card? Click here to sign up for my Cheapskate Jake “Cheapskates Need Love Too” giveaway!
Happy Friday everyone! I am happy to report that last Saturday, I was able to get my tax preparation forms completed and sent off the the accountant. It took a few hours of focused effort on my part, but I am very glad to have finished it!
Seeing as how it is tax season and that many of my friends and readers out there have mentioned that they do their taxes online using tax software (Turbotax 2011, etc), I wanted to give away a little tax season “present!”
Or, in this case, 5 presents, to help you all get your taxes done and collect your refunds faster!
I will be giving away 5 free copies of the H&R Block At Home Premium edition (online) valued up to $55 each (to cover the sales tax or part of state filings). You can enter the giveaway by doing any/all of the following:
Note: You must leave a comment on this post with your email address and what steps you have taken to get points to win the software.
10) Participate in the Cheapskate Jake $25 Amazon gift card giveaway by clicking here and leaving a comment about your favorite cheapskate story!
Disclaimer: I was provided a review copy of the H&R Block premium online edition, but that did not influence the content of this giveaway. The giveaway copies are also provided by H&R Block. I am also an affiliate of H&R Block and after I send the code, I am not responsible for anything further.
How about you all? Do you all use an accountant or Do-It-Yourself tax software to file your taxes? Which do you think is better?
Share your experiences by commenting below!
***Photo courtesy of http://blogs.pitch.com/plog/block.jpg
The Digital Camera That I’m Glad We Splurged On
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Interested in receiving a free $25 Amazon gift card? Click here to sign up for my Cheapskate Jake “Cheapskates Need Love Too” giveaway!
Going along with these goals, the following is a Yakezie blog swap post from Derek at Life And My Finances, where he writes about his journey to debt freedom, money savings, and investing for the future. Check out my post When Splurging Was the Correct Thing To Do over at his site today!
At first, I was completely opposed to the idea. Since we were focused on getting out of debt, I did not see how spending $1,000 would get us to our goal. However, I enjoy messing around with technology, and was still intrigued at the idea of getting the best SLR camera on the market.
- Food = -100
- Wife’s play money = -150
- My play money = -100
- Gift money = -100
- Sell the laptop = ($200 gain toward camera)
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- @Buying a good camera – I definitely agree! Buying a good camera like this can be a great way to get started with your own photography business. I have several friends that have side-businesses photographing weddings. They get paid over $5000 per wedding, and many times, they’ll get flown around the country to the wedding location.
- @Planning for the big purchase – I applaud the way that you all cut back in other areas in order to save up money for purchasing the camera! It seemed like you all executed it perfectly. This is a great lesson for us all to learn – that it’s all right to splurge if 1) you have a logical reason and 2) you take time to plan out the purchase and don’t just do it impulsively with a high interest credit card!
***Photo courtesy of http://review239.com/images/20101123/3689/canon-eos-7d-18-mp-cmos-digital-slr-camera-with-3-inch-lcd-and-18-135mm-f.jpg
5 Things You Can Do Around the House to Save Money
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Interested in receiving a free $25 Amazon gift card? Click here to sign up for my Cheapskate Jake “Cheapskates Need Love Too” giveaway!
5 Things You Can Do Around the House to Save Money
You’re already cutting back and making changes to reduce your expenses. You may have switched to store brands for savings at the grocery store, and maybe you even switched to a carpooling routine for savings at the gas pump.
But, did you know that you could be saving even more by adopting some changes around the house? With a few adjustments to habits and products around the house, your family can save even more money each month without sacrificing comfort or quality of life.
As an added bonus, all of these adjustments will not only help reduce your bills, they will also help reduce your carbon footprint! You can’t beat that!
1. Turn off your lights and appliances when you leave the room.
This is a small habit change that can lead to big savings. Though it may seem inconsequential to leave your television or lights on in your bedroom when go downstairs to eat dinner, doing so all around the house could increase your energy bill substantially.
Appliances plugged into the wall, such as computers, are also easy to forget, but leaving these things on and idle can add to your monthly energy bill. To lower your costs, make it a habit to never leave the lights on in an empty room and to make sure that all computers and televisions are off before you leave the house for the day.
2. Hold off laundry day until you have a full load.
You may be tempted to wash your favorite t-shirt the moment it gets a ketchup stain, but refrain from tossing it into the washer all by its lonesome. Instead, hand wash the item.
Washing machines and dryers use an enormous amount of water and energy, so to optimize the use of those machines, wait until you have a full load of laundry to wash. This way, you will at least be using that energy and water to wash and dry an entire pile of clothing rather than just one item. It is also recommended to pay attention to load size and dryer heat settings to match your laundry’s needs so that you do not end up unnecessarily increasing your energy and water bills.
3. Switch to Compact Fluorescent Lamp (CFL) bulbs.
The initial cost of purchasing a CFL bulb is much greater than the cost of purchasing a regular incandescent light bulb. However, CFL bulbs have a greater light output while using less energy as well as a longer lifespan than regular light bulbs. This means that not only could you get 60 watts of light while using only 20 watts of power using a CFL bulb, but you also will have that bulb for approximately 15 times longer than a regular bulb. All in all, the savings you incur from using CFLs more than makes up for their higher initial cost. Couple these savings with the habit of turning off the lights every time you leave a room and your energy bill will shrink before your eyes.
4. Switch to low-flow faucets.
Just as is the case with CFL bulbs, the initial cost of low-flow faucets is much higher than the cost of just leaving the ones you already have in place. However, the savings you incur from your reduced water bill means that your new faucets will eventually pay for themselves. These faucets work by reducing the amount of water coming out while still maintaining a satisfactory amount of water pressure with less water waste. Chances are that once you install the faucets, you will not even notice a difference until your much smaller water bill arrives.
5. Turn up the thermostat in the summer when you leave and only put it where you need it to be when you return.
For whatever reason, the popular belief is that you should leave your air conditioner humming along even when nobody is inside to enjoy that climate because it wastes more energy to return a home to optimal temperatures than it does to just keep it frosty all day long.
However, this is simply not true. Hike up your thermostat to something balmier while you’re gone to give your air conditioner a break, such as setting it at 78 or 80 degrees rather than leaving it blowing away at 70 degrees. The fact of the matter is that having your air conditioner on all day wastes far more energy than just turning it on when you get home.
In addition, do not be tempted to set your thermostat at an absurdly low temperature if you are feeling overheated. This will not make your air conditioner cool down your home faster. The truth is that your air conditioner will cool your home at exactly the same rate whether you set it at 63 degrees or 73 degrees. Save yourself the trouble of turning your home into an ice box by just setting the air conditioner to your actual desired temperature the first time around.
How about you all? What techniques do you use to save money around the house? Have you used any of the ones in the list above?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- @Turning off electronic appliances when leaving the room/house – I definitely agree with this, and I try to make sure to do it as much as possible upon leaving the house. However, I am not as good at turning off lights when I am just going to the other room.
- Does any one know if unplugging appliances helps save more money than just turning off the switch? Someone told me that appliances can draw electricity without being turned on.
- @Laundry – I get in trouble with this because sometimes, I hold off on doing laundry until I have TOO much to fit in one load. And, I usually end up having to run one full load and another partial load. This probably wastes money, and is something I need to improve upon.
- @Low Flow Faucets – Another idea in line with this is the idea of replacing your antique toilets with newer models that draw less water. I know my parents house (built in the 1800’s) has a downstairs toilet that draws an enormous amount of water per flush.
- @Saving money by turning up the thermostat when you leave in the summer – Building upon this idea, I normally turn off the A/C completely when I leave for work in the summer to save even more money.
***Photo courtesy of http://www.tony4greathomes.com/wp-content/uploads/2009/11/Saving-Money-by-Cutting-Home-Energy-Losses.JPG
3 Tips for Getting the Most From Your Credit Cards For Your Credit Scores
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Interested in receiving a free $25 Amazon gift card? Click here to sign up for my Cheapskate Jake “Cheapskates Need Love Too” giveaway!
The following is a guest post from Marc Chase, President of Product Development for My Credit Group, a website dedicated to helping consumers with managing their credit.
For times when every little point can matter, here are 3 little-known tips to getting the most out of your credit score from your credit cards.
One of the most important and misunderstood aspects of maintaining a good-looking credit card account on your credit report is having the proper credit card utilization. For example, most consumers may not realize their credit utilization is broken down by credit score models into 2 categories: your individual vs. cumulative utilization; in other words, how each account looks on its own and how it affect your credit profile as a whole.
Not that there’s anything bad about having retail credit cards, but typically, they’re geared towards sub-prime borrowers and come with added fees not found on regular credit cards. Generally speaking, these might only be a good idea for consumers working with credit repair services, looking to improve their low scores; if you can get a bank card or regular, unsecured credit card, go with that option instead.
Ask most people when they should pay their credit cards, and they’ll typically tell you they pay when they get the bill. But did you know that if you wait until the due date, you’re already too late?
How can you avoid this? Find out your when your card company’s statement date is, and make sure your credit cards are paid at least 2 days before that time.
This last one is a little tricky. A lot of consumers like the idea of transferring some or all of their balances from one card to another, especially if they’re undergoing credit repair or are just trying to clean up their finances. This strategy makes sense if you’re saving a ton of money in interest fees, or if you were recently offered a new card with an introductory offer.
How about you all? Have you used any of these tips before? What things do you do to get the most out of your credit cards?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- @Using your 2 cards with no balance for small purchases every month or else your account will be closed.
- Does any one know if the credit card companies will actually terminate your account due to inactivity? I didn’t think that they could. I just thought that it improved your credit score to have a running history of transactions on each account (that you naturally pay off each month).
- @When to pay your credit card balances – This is genius! I didn’t know that the credit cards don’t give you a chance to pay down your balance before sending the numbers off to the reporting agency to calculate your credit score! Good tip here!
- @Balance Transfers – Another thing to look out for here are fees. Many credit cards will offer you a low 0% APR on your transferred balance, but before it hits the account, they’ll slap it with a 5% transaction fee. This could further add to your debt! Watch out!
***Photo courtesy of http://swipecard.org/wp-content/uploads/2011/02/Credit-Card-Swipe1.jpg
Sharebuilder Review Guest Post Up Today at Investor Junkie!
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Interested in receiving a free $25 Amazon gift card? Click here to sign up for my Cheapskate Jake “Cheapskates Need Love Too” giveaway!
Good evening everyone! Have you ever wondered if investing with Sharebuilder.com is right for you?
If so, I’d encourage you to check out my guest post/review of Sharebuilder.com’s brokerage service that went up today over at InvestorJunkie.com. You can read the review by clicking the link below!
InvestorJunkie.com – Sharebuilder Review by Jacob
Topics covered in the review include the following:
- Account types
- Investment options
- Fees and commissions to expect
- Review of the online-investor interface.
How about you all? Have you used Sharebuilder before? What was your opinion of their investment options, fees, etc?
Share your experiences by commenting below!
***Photo courtesy of http://www.debtkid.com/wp-content/uploads/2008/02/sharebuilder-account.JPG
After Learning to Save, One Must Learn to Invest and Where
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Interested in receiving a free $25 Amazon gift card? Click here to sign up for my Cheapskate Jake “Cheapskates Need Love Too” giveaway!
The following is a guest post. Enjoy!
After Learning to Save, One Must Learn to Invest and Where
How about you all? What types of financial instruments do you use as investments? Do you find that you generally have a set level of tolerance for risk that determines what vehicles you use?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- First, as mentioned above, it is imperative to follow the account hierarchy of needs to determine where you need to be committing your money. For example, if you don’t have health insurance, you have no business spending money on stock investing.
- For the most part, I agree with the list of investments above, going from low risk to high risk profiles.
- @ Real Estate – One way to minimize the risk of real estate investing while still maintaining diversified exposure to this economy sector is through the use of Real Estate Investment Trusts (REITs – either in the form of an index mutual fund or ETF).
- @ Stock Investing – Many unbiased, academic studies have proven that passive investing strategies through the use of index mutual funds or ETFs beats 70-80% of professional “active” money managers. I would encourage you all to learn more about this form of investing!
***Photo courtesy of http://sharkinvestor.com/pics/timeless-investing.jpg
Helping A Friend Get Out of Debt – Part 1 – Collect Your Debts
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Interested in receiving a free $25 Amazon gift card? Click here to sign up for my Cheapskate Jake “Cheapskates Need Love Too” giveaway!
This article was chosen as an editor’s pick in the 96th Carnival of Money Stories hosted by our friends at Squirrelers.
Several weeks ago, one of my friends (we’ll call him Debtor Dan for privacy reasons) asked me if I could help him look at his consumer debts and current finances to see if I could identify any areas for improvement and/or to help him pay down his debt faster.
After explaining my normal “protect-myself-in-this-sue-happy-society” disclaimer about not being a certified financial professional, I said, “Sure! What a great learning experience for me since I haven’t ever (luckily) had consumer debt debt to pay off.”
What will follow is a three part series detailing the steps I’ve recommended that my friend take in order to get him on the fast lane to being debt free! It is my own personal adaptation of the great advice contained in two of my favorite (and most straight-forward) personal finance books for debt management plans, I Will Teach You To Be Rich
by Ramit Sethi and Debt Free for Life
by David Bach.
Enjoy, and be sure to share you experiences by getting involved in the comments.
Facing the Truth Can Be Scary
Prior to beginning this endeavor, I had read in many personal finance books about how nerve-racking and embarrassing debt can be for individuals. However, it never really hit home for me until hearing about it first hand from Dan.
My friend would tell me in length about how ashamed he was of his debt because he accumulated it during his undergraduate university days and had since changed his ways. Debtor Dan also proceeded to tell me that I was the only non-credit-company human being who knew the concrete numbers/magnitude of his debt. However, I was very glad that he accepted my help and was open to sharing the details because ignoring the problem will only make it worse.
Where Should You Begin?
When Debtor Dan and I first sat down to discuss our plan of attack, he naturally had a lot of questions.
One thing that he was wondering about was if there were any “higher-tech” financial remedies other than just the old-fashioned gradual debt repayment approach. In particular, he asked about debt consolidation loans and debt counseling.
From what I’ve read, I personally do not think that debt consolidation loans and debt counseling is worth the time and effort unless your financial situation is such that a) you are on the verge of bankruptcy or b) making your minimum payments results in you not being able to feed yourself or your family.
In Debtor Dan’s case, he really was living quite comfortably, but just wasn’t seeing any results in paying down his credit card debts each month with the minimum payment.
So, there would be no shortcuts or fancy remedies here. Only hard work and time would be needed to get Debtor Dan out of debt! With that settled, it was time to get started.
Collecting Your Debts
The first part in creating what I like to call a Debt Free Action Plan, Collecting Your Debts, is also the hardest part. It is where one will have to come face-to-face with the shear volume of debt that they have accumulated.
To help you complete this step, I’ve put together a handy spreadsheet that you can download at the following link – Google Docs Spreadsheet – Collect Your Debts. The table is also shown below.
On the spreadsheet, simply fill in the following information:
- List out the name of all of the debts you have with an identifier in the first column.
- This includes car loans, home loans, credit cards balances, pet care loans, furniture loans, computer loans, student loans, etc. If you owe money to someone, put it here!
- In the 2nd and 3rd columns, fill out the total amount outstanding that you have to pay back and the annual interest rate (APR), respectively.
- In the next 3 columns, list the minimum monthly required payment, the due date for that payment, and the monthly amount that you are currently paying on the loan.
- Leave the last (green) column blank, for now.
- Lastly, the most important step in this is to then use the Excel Sorting function to sort the rows based on which debt account has the highest APR. The highest APR should go on top, while the lowest should be placed in the last row of the spreadsheet.
So there! You did it! That was the hard part. You tallied up all of your debts and are now ready to get those balances slashed to zero.
In Part 2 of this series, we’ll take a look at the things Debtor Dan and I did to calculate the target monthly payments going forward (in the last green column). After doing this next step, your Debt Free Action Plan will be complete.
How about you all? Do you currently keep track of the total amount of debt Share your experiences by commenting below!
***Photo courtesy of http://blog.abn.org.au/wp-content/uploads/2010/01/collect-money.jpg
How Travelers Can Reduce Bank Fees
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Today’s guest post comes to us from Matt. Matt contributes to CreditCardCompare.com.au, an Australian website where Aussies can compare frequent flyer cards from a variety of airlines.
Seasoned travelers use proven banking techniques that avoid unnecessary fees but protect funds from theft. Carrying large amounts of U.S. cash is not a wise decision. But, using credit cards, ATMs, and checks while overseas can incur large fees for each transaction.
Every bank has methods for avoiding these fees and will answer the depositor’s questions when information is sought prior to departure. Informed travelers avoid costly bank fees because they complete research as a major portion of trip preparation and then use recommended methods for access to funds. Described below are some of these methods.
- Know your bank’s fee schedule – Ninety days prior to departure research the charges that will be assessed for accessing your account from foreign countries. ATMs are available in most countries, but the fees will add up quickly when the foreign bank and the domestic bank charge fees for each transaction. Research the fees associated with all foreign transactions including ATM, credit cards, and wire transfers.
- Choose a bank with partners – If the primary checking account resides in a locally-owned bank, open another checking account in a major bank with partners in the destination countries. Access to your account is available through partner banks in those countries with reduced fees. Notify the bank that you will be traveling so foreign transactions will not shut down access to the account.
- Open a second account – As insurance against loss of access to your funds, open another checking account at the same bank so that funds can be accessed if the bank system shuts down your account before you can address the situation. Notify the bank of your strategy so they can help you achieve the correct result.
- Establish a money market account – Place enough money for travel in each of the two basic checking accounts and move all other funds into a money market account that has online access. If one of the other accounts is breached, only the travel funds will be lost, but you will have access to money to continue travel and get back home. Look for a money market account that will pay interest on your money and allow you to access it easily.
- Use credit cards for large purchases only – Every credit card transaction will incur fees for currency exchange and use outside the United States. Pay for hotel bills and other major expenses with a credit card, but pay for every other transaction with the local currency.
- Rarely use an ATM – Unless you have access to an ATM that will not charge a fee, only access the ATM for large withdrawals. Avoid ATMs in airports, hotels, and public places because they charge exorbitant fees that will add up quickly and reduce the balance in the checking account that holds the travel funds.
- Exchange money – Avoid exchanging money at the airport upon your arrival. When you reach the hotel, ask where the best place to exchange U.S. currency for the local currency is located. The locals know where you will pay the most favourable exchange rates. Visit the exchange for large transactions and avoid small amounts of money. Make certain you are given small bills at the exchange because most merchants cannot change large denomination currency.
- Monitor exchange rates – Take note every day of the exchange rate between the U.S. dollar and the local currency. If the exchange rate becomes favourable, exchange a larger sum of money to take advantage of the rate. Make local currency last longer if the exchange rate becomes less favourable by postponing unnecessary purchases.
- Take travelers checks – Most large hotels can cash travelers checks, so purchasing travelers checks prior to departure may be the most favourable way to carry sufficient funds for the entire trip. Record the numbers on the travellers check and make two copies. Leave one copy with a person of trust here at home and take the other copy on the trip, but store them separately. Replacement requires the exact check numbers.
- Record account numbers – Write down all checking account numbers, credit card numbers, ATM card numbers, and travellers checks numbers prior to departure and make two copies. Leave one copy with a trusted person and carry the other one, but keep it in the hotel safe with your passport.
Travellers must remember that financial practices overseas are not similar to those used at home. Convenient access to money is very costly because of the bank network access that is required to process every transaction. Awareness is the only way to reduce the fees associated with convenient spending tools. Adopt a local mindset when traveling overseas and use similar tools to the people who live and work in the area.
How about you all? Have you ever been traveling and were hit with unexpected bank/ATM fees? How do you avoid paying too much for access to your money when traveling abroad?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- The methods expressed in this article are very useful. In my experience traveling abroad, each time you access money using an ATM, you are charged ~$5 USD by the local bank and then ~$3-$5 USD from your domestic bank in the USA.
- Credit card foreign currency transaction fees can be even worse. Generally, the fee that your credit card will charge each time you make a purchase abroad is 3%. So, as discussed above, it is important to only use your credit card for emergencies and for larger purchases when you need to conserve your cash.
***Photo courtesy of http://media.rd.com/rd/images/rdc/slideshows/6-Ways-To-Avoid-Exces-Travel-Fees/6-Ways-To-Avoid-Exces-Travel-Fees-01-sl.jpg