My Personal Finance Journey

All posts by Jacob A Irwin

How To Save Money in The Living Room

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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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Click here to enter my free $65.84 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to charity! Deadline to enter is May 31st, 2013.

The following article is by MPFJ staff writer, Miss T from Prairie Eco-Thrifter. If you want to learn how to live your dream life in a sustainable, healthy, and money savvy way, check out her site here.

How can you save money in the living rooms of your house?

In other articles in this series, we’ve talked about saving money by turning off lights when no one is in the room, adjusting the thermostat a few degrees and turning appliances off at the wall when not being used.

Are there any other ways that you can save money in living rooms?

Using the windows and drapes to control the temperature inside your living room is going to save you money on your heating and cooling bills. 

In summer, if you open the windows and drapes in the early morning, you will draw in the fresh, and usually cooler, morning air to lower the temperature of the room and freshen the atmosphere. As the day heats up, and especially before the sun hits that side of the house, close the windows and pull the drapes to help maintain the room temperature. You will save dollars by not turning on your cooling system until after midday. As the day cools down again in the evening, open your drapes and windows on the shaded side of the house, or where you will get a cool breeze blowing in, and let nature cool your house down again.

In winter, keep the drapes and windows closed in the morning. When the sun hits the wall of the house, open the drapes and let the sun warm the room and lift the spirits. As the warmth of the sun fades, close the drapes again to conserve the warmth in the room. Use drapes that are made from special insulating fabric for the best results. If you use this strategy in conjunction with adjusting the thermostat on your heating, you will certainly notice a drop in your energy bills.

Use ceiling fans to help with temperature control. 

In summer, they provide a gentle movement of air to cool you down. In winter, don’t ignore these great heating helpers. Most ceiling fans have a reverse function which forces the warm air in the room down towards the floor, keeping the warmed air where you need it and helping to keep the room warmer.

Consider ways in which the lighting in your living areas can save you money. 

Overhead lighting is usually very bright and may not be necessary in rooms where you are just watching TV, listening to music or having a quiet conversation. Change the bulb in your central lights to a low-wattage CFL to conserve power and use only as necessary to light the whole room. Use table lamps beside sofas and chairs for light as needed. By only turning on the lights you actually need, you could save up to a hundred dollars a year. During daylight hours, open the drapes instead of turning on the lights and watch your power bills drop.

When the time comes to replace or upgrade your electronic appliances in the living room, look for low energy usage and energy-efficient models so that you will be able to keep your energy bills as low as possible. 

Consider the size of the TV you buy; do you really need a huge TV that is going to use loads more power than a smaller one? Another little known fact about televisions – the factory settings on your TV may not be at the most energy-efficient levels, nor the most suitable for home viewing. Did you know that the brighter you have your TV, the more energy is uses? No, I didn’t either and I found I could adjust this setting several degrees lower and save money.

We now know that electronic equipment left on standby continues to use power, even though they seem to be turned off. However, these are often very difficult to get behind to turn off at the wall, so consider plugging them all into one power strip that you can put somewhere that is more easily accessible. It won’t be such a chore to turn off the TV, DVD player, computer etc and you will be more likely to do it regularly. When spending time on the computer, use the low power mode for as much of the time as possible to save energy as well as extending the life of the computer. Most people believe that a screen saver saves power but this is incorrect; set your monitor to sleep mode after a certain time or switch it off manually when not in use. Another misconception is that computers and other electronic devices last longer if they are never turned off; the best way to conserve power is to turn them off when not in use.

If you have more than one living room, such as a family room and a formal living room, you probably usually only use one room at a time. I know when we had a formal living room in our last house, we hardly ever used it. Another way to save money is to turn the heating or cooling off in the room you aren’t using. If you plan to use the room, you can always turn it back on ahead of time but in the meantime, you’ll have been saving even more off your power bills.

I’ve noticed a drop in our energy bills by putting most of these ideas into practice  While, on their own, they may seem minor, the most effective way to save money in living rooms is to put several small initiatives in place, rather than looking for one major to change.

How about you all? What techniques do you all use to save some money in the living rooms of your house? Have you used any of the strategies mentioned above?

 Share your experiences by commenting below!

***Photo courtesy of http://prairieecothrifter.com/wp-content/uploads/2012/08/iStock_000014230326XSmall-300×199.jpg

Are Expensive Professional Photographers Obsolete or Still Worthwhile?

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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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Click here to enter my free $65.84 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to charity! Deadline to enter is May 31st, 2013.

The following post is by MPFJ staff writer Travis. Travis is a customer blogger for CareOne Debt Relief Services, and also appears weekly at Enemy of Debt.  Travis candidly shares his personal journey to pay off $109,000 of credit card debt and the tips he’s learned along the way. As a father and husband, he provides a unique perspective on balancing debt, finances, and family.

My son was confirmed over the weekend, and as we were getting ready to leave for the church, my wife asked me if I had filled out the picture order form.

It was the last straw. 

It started with the beginning of the new school year last fall.  The kids put on their newly purchased school clothes for the first time.  Both of my kids headed off to school picture day carrying an envelope with a check for $28 to pay for the the middle of the road package we normally buy.  In October came the email with the opportunity to purchase pictures from the Twin Cities Marathon which I completed just a week prior.  I really just wanted one picture, which would have cost me $25.  No thank you. Spring time school pictures rolled around in March, which we usually skip.
How much does a kid change in six months anyway?

Things really picked up at the end of the school year with pictures for Dance ($24), baseball ($28), and  Middle School Graduation Class Photo ($10).  Luckily, we’ve moved on from thinking pictures with Santa Claus and the Easter Bunny are necessary as well. 
There I stood looking at the choices available for confirmation pictures shaking my head.
Photography is big business because people want a record of their lives to look back and reflect upon.  Kids grow up fast, and parents feel guilty not being able to perfectly remember everything about their child at every phase of their life. 
Parents like to show other people their kids.  Photo packages come with pictures of all shapes and sizes to be displayed in offices and end tables everywhere.  Of course, there’s also the wallet size pictures that parents exchange with each other like trading cards and the photo magnet to stick on the refrigerator. 
But just how much use do you really get out of those pictures?  For our family, the 8×10 of each kid goes in a frame next to the fireplace, a 5×7 goes in my office frame and some get given away to family.  The rest stay in the envelope and get shoved in a drawer only to eventually settle to the bottom with the envelopes from previous years.  The pictures we give away end up in a frame for some period of time, then they too either get shoved in a drawer.  Or, they may be hidden behind the next year’s picture pressed together with the pictures from previous years like a layered time capsule.
The insane thing is that pictures themselves are dirt cheap.  I can take a picture and send it off to Walmart online and in an hour I can pick up as many 4×6 pictures as I want for 9 cents each.  What you’re really paying for is the photographer’s talent, time, and the rental of his professional equipment.
Years ago, the concept of using a professional photographer made sense.  Once upon a time, there was this thing called film that you put in a camera.  When the roll was used up, you took it to a local drug store and crossed your fingers that at you kept your finger out of the lens for at least one picture.  Hiring a photographer was essentially a guarantee that you would get decent pictures. 
But does it really make sense today? 

Times have certainly changed with digital cameras.  A person can take a picture and view it instantly.  If you don’t like it, you just delete it and yell, “One more!”  Technology makes getting a good shot so much easier especially with today’s high resolution cameras that are light years ahead of cameras that even the professionals used just a few years ago.   You can take dozens of rapid fire shots and be assured that you’ll capture a keeper.  Now that almost every phone includes a camera, digital photography is almost impossible to avoid.
If the purpose of taking photographs is to capture the stages and events of life, wouldn’t you want to take you own pictures anyway?  Let me ask you this:  What offers a better remembrance of your child: A stranger snapping a picture of Johnny with his hair combed perfectly sitting in front of an artificial backdrop, or you capturing him looking at back over his shoulder at you excitedly, but with just a little bit of fear in his eyes as he climbs aboard the school bus for his very first day of kindergarten?
Pictures like that capture the very essence of life.

The pictures we did buy over the course of the last nine months cost $118 for about 40 pictures.  In contrast, to physically print out pictures I took myself through Walmart, those 40 pictures would have cost less than $5. 
Grab your phones and your digital cameras people.  Take pictures.  Lots of pictures.  Capture those special events and those smiles.
Capture life.



How about you all? Do you think professional picture prices are out of control, or are they worth it? How much do you pay for pictures during a year?

 Share your experiences by commenting below!

***Photo courtesy of Image courtesy of graur razvan ionut / FreeDigitalPhotos.net

A Little Splurging is OK (It May Even Be Good for You)

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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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 Click here to enter my free $65.84 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to charity! Deadline to enter is May 31st, 2013.

The following post is by MPFJ staff writer, Kelly Gurnett. Kelly runs the blog Cordelia Calls It Quits, where she documents her attempts to rid her life of the things that don’t matter and focus more on the things that do. You can also follow her on Twitter and Facebook.


We’ve all heard of the “latte factor”— the idea that cutting back on regular luxuries, no matter how tiny (like that daily latte from Starbucks) can lead to big budget savings. And, it’s a good notion to keep in mind. Mindless splurges, big or small, have repercussions when we’re trying to live a financially smart life. It’s hard to pay down debt, build up savings, or meet any other money goal if you treat yourself too often.

But, being a miser and not treating yourself at all can be just as bad for your budget—and your happiness.

The Deprivation Factor

It isn’t always easy to be smart financially. We’re only human. As disciplined and goal-oriented as we may be, it can be tough to see our friends going out to eat, going to the movies, or grabbing that infamous latte and knowing we can’t afford to do the same. It puts our focus into a deprivation mentality—that in order to meet our money goals, we have to cut things out from our lives. Frugal living becomes a negative thing.

As anyone who’s ever been on a diet can attest, focusing on what you can’t have isn’t the best way to motivate yourself to stay on course. If anything, it just makes you want what you can’t have even more.

Yet that’s the way so many of us focus on making financial changes—by stripping away things we used to purchase, by denying ourselves things we want—and that often leads to a feeling of frustration. Sure, we know our long-term goals are smart, will bring us happiness, yada yada yada…but we live in the now, and right now, being so frugal all the time can make us kind of miserable.

Which is why treats—strategically and smartly granted (like one would do for children or pets)—can be exactly what we need to help us achieve our financial goals.

They infuse a little positive reward into the routine. They give us a much-needed break from all the striving and sacrificing. They give us something to look forward to now and again, so we don’t suddenly find ourselves blowing the bank on a super-pricey item because we just can’t take it anymore.

It Doesn’t Take Much

My husband and I are in a more frugal than usual situation at present. He recently lost his job due to disability, and we effectively had to cut our budget in half in the span of a month. Once you start moving past cutting the premium cable package and occasional massages and begin looking for ways to slash your grocery budget, you know you’ve gone beyond the point where the “latte factor” is even a consideration.

That said? We’re still finding ways to “treat” ourselves now and then. Because it makes it easier to be as stringent on a regular basis as we need to be.

Our treats aren’t nearly as grand as the ones we allowed ourselves before the job loss (a night at Dave & Buster’s seems like an unattainable luxury now), but they’re still treats in that they’re not strictly “necessary,” but they help take some of the pressure off. They give us a little reprieve from the stress of being a one-income household and let us just enjoy ourselves, even in the smallest of ways.

The fantastic luxuries we allow ourselves now? A movie at the dollar theater (with homemade popcorn snuck in). A container of the one-step-up-from-store-brand coffee. My occasional $3 box of hair color (typically 50 cents after couponing skills). They’re not huge, by any means, but they’re still treats. And, to be honest, I enjoy them every bit as much as I did our Dave & Buster’s outings, because I know how lucky we are to even be able to afford these little things.

So don’t starve yourself financially. Allow yourself a little treat now and then. Your budget will ultimately thank you for it (and so will your sanity).

How about you all? What special “treats” do you allow yourself, in spite of being on a budget?


 Share your experiences by commenting below!

***Photo courtesy of http://farm5.staticflickr.com/4142/4936746457_eb22f010ca_o.jpg

Tips for Riding Out Stock Market Downturns

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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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Click here to enter my free $65.84 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to charity! Deadline to enter is May 31st, 2013.

The following post is by MPFJ staff writer, . Greg is a proud husband, father, and debt crusader who is in the process of becoming debt free. Along with his wife, Greg co-founded the personal finance blog, Club Thrifty, where they encourage readers to “Stop Spending. Start Living.”

Unless you’ve been living under a rock, you have probably heard the news that the markets have been on a pretty sweet rally recently. At the time this was written, the Dow Jones Industrial Average was over 15,300, and the S&P 500 sat at almost 1,670 – both record highs.

Stock market rallies like these can make your financial year in only 6 months. Better yet, they build our confidence as investors. Heck, everybody feels like they are the next Warren Buffet when the market is going gangbusters. Yet, the smart investors realize that the market works in cycles.

Unfortunately, honeymoons don’t last forever. Whenever there is an extended period of rampant growth and excitement, there is almost always a little trouble lurking right around the corner. Being prepared for the downturn can help you from giving back your gains and losing your sanity.

Here are a few tips to help you ride out the next short-term market storm.

1) Invest for the Long-Term

Long-term investing is one way to help stave off the fear of down markets.

When you are investing, time is almost always your best asset. Why? Because time allows you to wait out the short-term fluctuations of the market. Even with the abysmal performance of the stock market over the previous 5-10 years, the stock market’s average annual rate of return over its history is still near 10%. Since we can not guarantee future performance, the best way to predict it is to look at past performance. Thus, if you invest over the long-term, past performance would indicate that it is likely that you will receive a near 10% return on your investment.

Investing with a short-term mindset makes you much more vulnerable to the short-term swings of the market. So, when it comes to purchasing a security, make a decision and stick with it. Fight your fear, and ride out the wave of discontent. While the belief that high markets will eventually come down usually is correct, remember that the inverse (markets that are down will usually go up) is also typical.

2) Don’t Try to Time the Market

This goes hand in hand with investing for the long-term. You’ve heard the saying, “Buy low, sell high?” In my opinion, trying to time the swings of the market will only get you into trouble. Guessing what the markets are going to do will only cause you headaches and cost you money.

Essentially, trying to time the market is gambling. Luck plays a major part in the success of somebody with this investing mindset. What most of us should be doing is trying to eliminate luck from the equation as much as we possibly can. Unless you are a very experienced day trader, the fact is that you should probably be investing your money for the long-term. The “everyman” would be wise to only purchase securities that he plans to hold onto for at least 5 years, preferably 10. If you assume that attitude, you are bound to make money in the good times and ride out the valleys that the market will eventually throw at you.

3) Stick to Your Plan and Don’t Panic

When the stock market is riding the tidal wave up, it is easy to get excited and want to invest all you have in stocks. Of course, the opposite is true as the wave crests and the market begins to come crashing downward. Terror can easily set in as you realize all of the gains you worked so hard for are slowly, or quickly, washing away. However, sticking to your plan in both the good times and the bad can help you to avoid those gut wrenching feelings of sheer panic.

By creating and maintaining a set asset allocation, you can rest easy knowing that your overall financial plan is suited to help you make money in the good times and minimize losses during the bad. Furthermore, keeping to a relatively strict asset allocation plan will help you to diversify your wealth so that you are not too heavily invested in only one type of investment – like stocks or real estate. You should meet with a financial professional to help you determine your specific plan based on your investment horizon (the length of time you plan on investing) and your personal risk tolerance. Once you have your plan, stick with it. Keeping with a well thought out program will protect you from getting greedy during the upturns and self-defeatist during the rough times.

How about you all? What are your tips for staying sane through the ups and downs of the market? How do you protect your assets from market fluctuations?

Share your experiences by commenting below!

***Photo courtesy of http://commons.wikimedia.org/wiki/File:MICEX_Index_graph.png

How To Save Money When Setting Up A New Home

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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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Click here to enter my free $65.84 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to charity! Deadline to enter is May 31st, 2013.

The following article is by MPFJ staff writer, Miss T from Prairie Eco-Thrifter. If you want to learn how to live your dream life in a sustainable, healthy, and money savvy way, check out her site here.

There are so many things to consider when setting up a new home, especially if it is your first home. There’s lots of stuff to buy, redecorating to be done, maybe even some renovating, and it all seems so very expensive.

Well, read on, because here are some great ideas to help you save money when setting up a new home.


Get Organized

Organization is the key when taking on any big project, as it helps you understand what has to be done and what order it all needs to be completed. This can save you money right there; when you have a time-plan, everything flows smoothly and you don’t waste money having to do things more than once. Make lists for everything so nothing is forgotten. You need a list for what to buy, what to do and when to do it.

Consider which things on your list are necessary to have straight away and which can wait. 

I found the best way to sort this out was to ask myself if the item was a need or a want. A ‘need’ is something you can’t live comfortably without, like a refrigerator. A ‘want’ is something that would be nice to have but you could live without it, like a second TV or artwork for the walls. Focus on the ‘needs’ when just starting out and you will save money by spreading the expense; when you are settled in a bit you can save up for or manage to pay for the ‘wants’.

The next step, after you’ve made your lists, is to do some research. 

Don’t be tempted to just rush out and start buying; there are much more money-saving methods for getting the many things you need, when setting up house for the first time. First of all, ask around your family and friends to see if anyone has a spare/old/no-longer-used refrigerator, TV, vacuum cleaner, microwave oven, washing machine and whatever else you need. You might be pleasantly surprised at what people have stored away that they don’t use anymore and would be happy to let you have. It’s fine to have second-hand goods when you’re starting out; it cuts costs dramatically at the time and then spreads the expenses of getting new things over time. As these second-hand goods wear out or you find you have the cash, you can then replace them gradually, in your own time. This also reduces your stress levels!

Take Advantage of Thrift Stores

I’m sure you will have crossed several items off your list with this strategy and saved hundreds, if not thousands, of dollars. The next step is to scour the thrift stores, auction houses and second hand shops to see if you can find a few more things at amazingly low prices. These outlets are a great place to find sofas, dining tables and chairs. If you are little bit of a handy person, like me, you can restore older furniture to make it look like new; this is a great way to co-ordinate pieces with your new décor. I bought a beautiful old oak dining table that had seen better days but was solid and sound. I sanded it off, filled a few dents in the surface and then re-polished it. It only took me a couple of weekends and our friends thought it was a new piece of furniture! It cost me under $50 for the table and the reno, plus a bit of my time.

Now you will be left with items you might need to buy new. 

Again, research will save you money when setting up a new home. Go online to compare prices and check out your local stores to find where the best deals are. Be prepared to negotiate; you ‘ll be surprised how many stores are happy to drop their price. Look at different models and don’t be temped to buy more than you need. You are just starting out; there is just you or maybe a partner as well; do you really need a 12 seat dining table or a huge family-sized refrigerator? This is what I mean when I say don’t buy more than you need. Later on, when you are able to spread your expenses, and the need arises, you can upgrade to the bigger, better pieces. Right now, it’s more about getting yourself set up without going into huge amounts of debt to do it.

Another tip about saving money when setting up a new home is not to rush into buying lots of decorating ‘extras’. Take some time to settle in and get to know your new place. If you’re anything like me, you’ll probably move the furniture around numerous times before you are happy with the placement. Wait until you’ve lived with your stuff before deciding on a firm decorating scheme. This will save you money because you won’t buy something that doesn’t fit in.

Setting up house is so much fun, whether it’s for the first time or the tenth. There’s going to be lots to do and even more you need to buy, but by using some of these ideas, you will certainly save some money in the process.

How about you all? How have you saved yourself money when getting a new house/apartment set up after a move?

 Share your experiences by commenting below!

***Photo courtesy of http://prairieecothrifter.com/wp-content/uploads/2011/10/iStock_000016696172XSmall-300×198.jpg

Help Your Child Open a Roth IRA with His Summer Job 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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Click here to enter my free $65.84 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to charity! Deadline to enter is May 31st, 2013.

The following post is by MPFJ staff writer, Melissa Batai. Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food. She blogs at Mom’s Plans where she shares her family’s journey to healthier living and paying down debt.

Summer is upon us, which means that many high school and college students are picking up summer jobs.

Whether they’re working as lifeguards, camp counselors, or waiters at local restaurants, these students will likely find themselves more flush than they’ve been in several months.  (Of course, flush is a relative term here, but still, teens will have some money to spend.)

When I worked during the summers, I wasn’t too financially savvy.  I used the money to pay for my car and gas, and I had fun with friends.  Chances are that’s what most teens do. Some more financially savvy teens may be setting money aside to buy a car or to pay for part of their college education, which are both worthwhile goals.

But, what if you’re a parent of a teen and you suggest that they use some of their money to do something they’ve likely not thought of doing before–opening a Roth IRA?

How to Open a Roth IRA for Your Teen

If your teen has a source of earned income, she can open a Roth IRA account, with your help.  You’ll need to serve as the custodian of the account since she can’t open the account herself.  (The account will be hers alone when she is of age.)  You’ll just need proof of her income. 
Keep in mind that not every brokerage offers Roth IRAs for teens, but a few that do include Vanguard, Janus, Schwab, and T. Rowe Price.

Benefits of Setting Up a Roth IRA for a Teen

They’re likely already in the lowest tax bracket.  Because teens typically earn a low wage and can’t work that many hours, especially during the school year, they’re likely already in the lowest tax bracket.  That means they’ll pay very little in taxes on the money before they invest it.   When they pull it out at retirement, they won’t pay taxes on their withdrawals.

They can withdraw the money as a down payment on a house or for college.  To maximize the power of the Roth, it’s best to keep the money in the account and let it grow.  However, if they needed to, they could use their contributions for a down payment on a house or for college without tax or penalty. 

CNN Money warns though, “You and your child should know that earnings money taken out for qualified higher educational costs, while free of early withdrawal penalties, will be subject to income tax.”  In addition, the earnings money taken out from the Roth may be considered income, which could have an impact on your child’s financial aid award for the next year, so proceed with caution with this option. 


Having a Roth IRA will not affect their student aid eligibility.  Simply having a Roth IRA will not affect a student’s financial aid availability as it is not included when the school calculates how much the child can afford to contribute to his own education.

How to Convince Your Child This Is a Good Idea

Convincing your teen to part with her money to invest it for retirement that will be 50 years away is not easy.  However, there are some strategies you can use to convince her.

1.  Start when she’s a tween, offer her simulated interest.  To help your child understand compounding interest, when she’s perhaps 10 or 11, have her put some money in the bank.  If she leaves that money there for 1 year, you’ll match her dollar for dollar.  If she leaves the money there for 2 years, you’ll give her $2 for every $1 she contributes.  This will help her understand the power of compounding interest and delayed gratification.

2.  Give your child a set amount to add to the account, and you add the rest.  If your teen is making $3,000 this summer, have her contribute $500, and you contribute the rest that you would like to see her invest.  (Your teen’s account can be funded up to the amount she earns in a year or $5,500, whichever is less.)

3.  Match your child’s contributions.  If your child agrees to contribute $500, then match the amount she saves.
Convincing your teen to invest in a Roth IRA may be a hard sell, but it’s worth trying.  Your teen’s few thousand dollars invested today could grow to a few hundred thousand by the time he’s ready to retire.  Imagine teaching your child now how to save for his future. 
In addition to the initial monetary perk, you may also convince him to be a lifelong saver.  If he continues to contribute to his Roth throughout his lifetime, he could easily have over a million dollars in that one account by the time he retires. 

How about you all? Have you ever tried to open up a Roth IRA for your child or tried to convince them to start saving money at a young age?

 Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/oldrebel/8726635625/

Are People Born Frugal?

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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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Click here to enter my free $65.84 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to charity! Deadline to enter is May 31st, 2013.

The following post is by MPFJ staff writer, Catherine Alford. Cat is a freelance personal finance writer who blogs at www.BudgetBlonde.com.

Ever since I was a little girl, I have been very aware of money.

I had my own little safe, and I kept a running total of the amount of money I had in it. My parents paid me $0.01 per page of every book that I read, so I spent my summers absorbing Nancy Drew, collecting the amazing fee of $1.00 per 100 pages, and putting it safely in my box. I never wanted to waste my money, and I liked counting it. I guess you could say that even as a young child in grammar school, I was pretty frugal. I just didn’t know to call myself that yet!

Interestingly enough, my parents raised all three of their children the same way, with monetary incentives for good grades and the ability to make choices about the money we received for our birthdays and other holidays. Yet, while my siblings are both extremely intelligent professionals today, I am the only one who borders on obsessive when it comes to frugality as an adult. My two siblings both work hard, but they allow themselves rewards for their hard work. That’s a concept I’m still working on.
So, this leads me to the question posed in the title of this post: Are people born frugal?

Argument #1: Yes, People Are Born Frugal

It seems that in my case, I have always been this way.

When my parents gave me $200.00 a month “allowance” during my college years, I never asked for more. I carefully planned how I was going to use it, and if I wanted to go on spring break, I used money that I earned from my own job to do so. This is not something they specifically taught me or expected of me. It’s just how I am. I never wanted to ask them for more than they gave me. Even today, I find it very difficult to accept help, even when I need it.

Now, before you think I’m patting myself on the back here and singing my own frugal praises, I definitely want to acknowledge that I’ve made my own fair share of money mistakes. I’ve gotten into thousands of dollars worth of credit card debt and then gotten out of it. I even took out more student loans than I should have, and I cringe every month when I send in the payments.
Yet, even when I was in credit card debt, it wasn’t because I was snatching up Louis Vuitton bags and buying my friends rounds of drinks. The debt came as a result of stretching myself too thin, not having a savings, and my husband quitting his job to go to school. Still, knowing what I know now, I could have easily avoided it.
Even on my darkest debt days, I was still hunting down coupons and deals. I was still a frugal person at heart. I just didn’t have a good handle of budgeting and saving (yet!)


Argument #2: No, People Are Not Born Frugal 

The other side of the argument is maybe people aren’t born frugal. Maybe people have to learn this trait from their parents or from experience.
For example, there are a lot of people who write about the habits of their parents and grandparents and the ways in which they are frugal, like canning vegetables and hanging clothes on the line. Those are things we can actively learn by watching.
As for experience being a teacher, there are tons of personal finance bloggers who I admire who had a history of reckless spending and turned it all around to become some of the most money savvy people I know. In their cases, they learned frugality from getting in over their heads and actively seeking a way out.
Experience is a great teacher, and perhaps it can show people that being frugal doesn’t necessarily mean you are poor or someone to be pitied. It actually means that you are pretty smart with your finances.

What Do You Think?

Do you think that people are born frugal? To take it a step further, do you think frugality is a skill that can be learned or an inherent trait that we are born with?
What is your own personal experience with frugality? Did you have frugal parents who showed you the way or did you learn about money management from your spouse or a friend?
I’d love to hear your thoughts. As for me, I think I’ll always be a frugal person at heart regardless of how much money I might make in the future. It’s just who I am. However, I do plan on getting much better at rewarding myself for my hard work and not feeling guilty when I do spend my hard earned money on something I want! That will take time, but it’s something I’m actively working on. Now, let’s hear from you.

Share your experiences by commenting below!

***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/a/ae/Smooches_(baby_and_child_kiss).jpg

City Living: The Perfect Lifestyle for the Retired?

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The following post is by MPFJ staff writer, Melissa Batai. Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food. She blogs at Mom’s Plans where she shares her family’s journey to healthier living and paying down debt.

Which is the better location?  The city or the suburbs?  It’s the age old question.

When you’re younger and have a family to consider, you may decide that the suburbs are better.  After all, the suburbs often have better schools, houses are cheaper, the kids have more room to play, and it’s quieter.  The list goes on and on.

But, is living in the suburbs always the better choice? 

What happens when those in their 30s and 40s, the ones who moved out to the suburbs for all of the benefits offered to young families, age?  What happens when they are now in their 70s and 80s and can no longer drive?  How do they get around?  Their kids may live far away and public transportation is nearly non-existent.

While we’re used to thinking the city is a good locale for those who are young and haven’t started families yet, it’s also a good place for seniors to consider living.

Benefits of Living In the City for Seniors

1.  Minimal lawn maintenance.  If you buy a house in the suburbs, you’ll likely get a decent size lawn that you may enjoy caring for as well as making more beautiful with flowers and other decorations.  However, as you age, the lawn may switch from a form of relaxation and entertainment to a chore that is increasingly difficult to do.  If you live in the city, you’ll likely have no lawn work to contend with.

2.  Clear roads and sidewalks.  Many areas of the country get hammered with snow and ice for several months of the year.  Ice covered roads and sidewalks can be treacherous for anyone, but for a senior who is at risk of serious injury from a fall, the danger is even greater.  Many cities do an excellent job removing snow and ice, making it easier for seniors to get around.

3.  Access to public transportation.  Some seniors are driving well into their 90s.  My great uncle Andy was delivering Meals on Wheels to people younger than him when he was 92.  However, he’s a rarity.  As people age, they may lose their ability to drive.  However, within the city, there is plenty of public transportation available from buses, trains, and taxis. 

Alan Entine, who retired to San Francisco to be near his grown daughters says, “‘Sure (big cities) are expensive in terms of housing, but the day-to-day living in San Francisco isn’t that much more expensive.’ And there are bargains, too.  ‘On the Muni (San Francisco Municipal Rail) system, as a senior I pay $10 a month for a pass and I can have unlimited bus and train rides for a month'” (Bankrate).

4.  Access to low cost entertainment.  There is so much to do in the city, and contrary to popular opinion, it doesn’t have to be expensive.  In a city with universities, you can enjoy free book readings, low cost theater performances, free music concerts.  These are the perfect events for those who want to mind their money or stretch their retirement dollars further.

5.  Opportunities to volunteer.  Many people once they retire like to keep busy and stay social.  Volunteering as my Uncle Andy did is often a great way to do this.  From volunteering at a museum to volunteering to give walking tours of the city, the possibilities are endless.  If you volunteer as an usher at a theater, you can watch the show for free, which is an extra bonus.

6.  Chance to take low cost classes.  Many colleges and universities offer low cost or free courses to seniors.  If you live in the city where universities are in close proximity, you can continue learning and even pursue a degree or interest that you were too busy to study before you retired.

We’re used to thinking of the city as a great place for young people to live before they get married and have children, but the city doesn’t offer benefits just for them.  Retired individuals can also benefit from the plentiful, low cost entertainment as well as the many opportunities to volunteer.  As they age, individuals can also benefit from the public transportation and low maintenance life style.

How about you all? Would you consider moving to the city when you retire?


Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/16179216@N07/8230568960/

Should You Lend Money to Family and Friends?

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

Lending money to family and friends is usually done with the best of intentions. But, this is also a potentially difficult area from both a financial standpoint and a personal one. You want to help a friend or family member, but if something goes wrong you could lose more than money.

What are some considerations you should take into account before lending money to family and friends?

Carefully consider the reason for the loan

Since the stakes are high in making this kind of loan, you should give careful consideration the nature of the relationship, as well as to the purpose of the loan. There are necessary loans and luxury loans, and which it is could impact your decision.

A necessary loan is one that you almost have to make. It will be one to cover a critical need, and doing so is basically what family is all about. An example is a loan to a close family member for an emergency – such as to cover a sudden medical expense. You might go ahead with it without much thought.

And then there are luxury loans, and this is where it gets more complicated. If the loan is to an extended family member to cover the down payment on the purchase of a car, that will also involve a car loan, this is a situation you may want to avoid entirely. But if you are loaning money for the purchase of the first car to your own child, that would be one you’d probably make, even though it is not an emergency situation.

Seriously consider the possibility and outcome of non-payment

When you loan money to family and friends, there is always the risk of losing money, but there’s also the possibility of destroying a family relationship. You have to consider this carefully before extending such a loan.

Some people will make the loan because they fear that if they don’t then the relationship will be destroyed anyway. But, that kind of situation is usually forgotten in a short period of time. Loan defaults however, are not.

If the friend or family member does not pay you back, or pay you back fully, you may harbor negative feelings sufficient to destroy the relationship. Alternatively, the friend or family member may come to resent your efforts to collect money from them. They may even believe that as a family member, you should forgive the debt entirely.

Blood may be thicker than water, but it’s not always thick enough to overcome money disputes. If you believe that there is a real potential for this to happen, you might be better off taking the bitter pill up front by saying no, rather than allowing it the blowup later when the family member can’t pay.

If you make the loan, be sure to formalize it it writing

If you do decide to proceed with making the loan, you should formalize it with a written agreement.

This is partially to protect yourself in the event that the situation becomes a legal matter. But, it is mostly to spell out the specific terms and requirements of the loan. That will put the borrowers responsibilities in black and white, that way there will be no dispute as to what was expected.

Since there is already a relationship complicating the business aspect of the loan, there’s also the possibility that it will be viewed as a casual arrangement. Absent a written agreement, the relative may assume exactly that and not feel any specific responsibility to repay or to pay in a timely manner.

Lend with no expectation of repayment

This is actually a biblical directive – lend money, but do so with no expectation of repayment. In effect, this will make the loan into a gift. But, this also means that you probably should not make a loan to any friend or family member who you are not prepared to give a gift to (always remember to consider gift tax laws as well is you decide to go this route!).

The friend or family member can pay the loan back if they’re willing and able, but from your standpoint, you will view it as a gift. If the loan is not repaid, you will not feel slighted and the relationship will be preserved.

Find another way to help without making a loan

If you would prefer not to make a loan, or you have made loans to family and friends in the past and gotten burned, you might see if you can find other ways to help.

For example, you may decide to provide them with money for trade. You can decide to buy something from them that will provide at least some of the cash they need. Alternatively, you could have them do some work for you in exchange for the amount of money that they need. In this case, they’ll have the money that would’ve been a loan, but you will be compensated in exchange. That will be a win for both parties.

You may also advise them either to avoid the purchase, or to buy something that is less expensive that will not require a loan from you. In this way, you might actually be helping them to avoid taking on an obligation that they really cannot afford the first place. It’s a bit risky, but far less so than if you make the loan and face the possibility of default.

How about you all? Have you ever made a loan to a family member or friend? Did you formalize it with a written agreement?

What happened to the relationship as a result of the loan being paid or not paid back? 

 Share your experiences by commenting below!

***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/9/99/Making_friends.jpg

Pros and Cons of Taking the Bus Versus Driving

The following post is by MPFJ staff writer, Shondell of Call Me What You Want Even Cheap. At her site, she blogs about her recent car loan, mortgage pay off, and a whole bunch more. Check out her blog right here!

 Given a choice, most people probably would drive rather than take the bus. Driving provides easy mobility and the flexibility to go anywhere the road goes. However, there is no such thing as a free meal, and driving comes with its own set of problems. Taking the bus, on the other hand, limits your mobility to the bus and presents you with other problems such as overcrowding. But, it has its pros too, such as lower cost and reduced stress in a traffic jam.

So, here are the arguments for and against both driving and taking the bus. Let’s start with driving first.

The pros of driving:

  • Ease of mobility: Driving your own car, you can go wherever you want as long as the place is accessible by road. You can drive hundreds of miles without having to get off.
  • Comfort: The comfort provided by the beautiful, cozy and air-conditioned interior of your car is unmatched by any bus seat. There can simply be no comparison. You can even rest and sleep in your car when you are tired. I don`t know if I would sleep on a bus.
  • Convenience: You don’t have to wait for any schedule, you can drive your car anytime you like. You can also stash all your stuff in your car trunk and leave it there until you feel like taking it out. Try doing that on a bus!
  • Personal security: As long as you drive safely, you are safer in your own car than in a bus where you are an easy target for people trying to rob you or harm you.
  • Privacy: The privacy you get in your car is comparable to the privacy you get in your own home. You can talk and sing to yourself without the risk of people staring at you.

 

The cons of driving:

  • Car insurance: You have to buy insurance for your car every year, and it can make quite a dent in your budget. If you have multiple cars, then car insurance can really take the fun out of driving when the time comes to buy insurance.
  • Repair and maintenance: Your car is a machine, and it can’t run without regular maintenance. The annual cost of servicing, repair, and maintenance can be quite high depending on the type of your car and how you drive.
  • Higher cost: Although gas is not as expensive in the US as in many other countries, your car can consume a lot of fuel if you have to drive long distances regularly.
  • Stress in traffic: Driving can be highly stressful when you are stuck in a traffic jam, which is a fact of life in cities, especially during rush hour. Driving-related stresses can cause heart diseases and psychological problems.

 

The pros of taking the bus:

  • Free to do other things: Since your hands and feet are not occupied, you are free to read a book, type a text message, watch the passing scenery or close your eyes and sleep.
  • Meet interesting people: Since thousands of people take the bus daily, you will get the opportunity to meet interesting people. If you don’t mind talking to strangers, then you can even strike up a friendship with some of them.
  • Less costly: Since you don’t have to pay for insurance, car repairs and maintenance, taking the bus is a lot less costly than driving your own car.
  • Less stressful: Since you are not in charge, taking the bus is infinitely less stressful in a traffic jam. In fact, you can look out of the window and amuse yourself by watching a sea of cars stuck in traffic

 

The cons of taking the bus:

  • Lack of privacy: With so many people sharing a confined space, and some of them actually staring at you, you have no privacy on a bus. You cannot talk or hum to yourself without attracting several pairs of curious and disapproving eyes.
  • Reduced personal security: If anyone wants to harm you, then a bus provides an easy setting. I have heard of many situations where people were attacked on a bus.
  • Chances of theft and robbery: A lot of theft and robbery take place on moving buses. If you are not careful, you can easily become a victim.
  • Racial/Sexual harassment: If you are a woman or belong to a minority ethnic group, you may become the victim of sexual or racial harassment on a bus. Starting with verbal abuse, the harassment can often take the form of physical abuse.

Most people who own cars choose to drive whenever they feel like it. It`s convenient, often reliable, and for the most part, safe. I know many people who would never be seen taking the bus. I have done both and can appreciate the good and bad in both.

How about you all? Which do you prefer – taking the bus or driving? Why do you choose one over the other?

 Share your experiences by commenting below!

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