My Personal Finance Journey

All posts by Jacob A Irwin

Personal Bank Loans vs. Family Loans

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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 $51.95 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is January 31st, 2013.

The following is a guest post. Enjoy!

No one likes to be in debt, but taking out personal loans from time to time is often necessary, especially if the loan is for an investment – e.g. to buy a first house, finance your education, or get a start-up business off the ground.   
There are well-documented problems that borrowers can encounter with high-interest loans, whether that is caused by poor financial management, or taking out a reasonable loan but not understanding the terms. Even if we are unable to pay a loan back as quickly as we had initially agreed, there is help available for borrowers to consolidate their debt and get out from underneath it. In certain states and counties, debtors who get behind on their payments can actually wind up in private prisons run by contractors, even though debtors’ prisons have been mostly illegal in the USA since the Civil War.
However, if you find yourself blessed with friends or family who have disposable cash to hand (and like you), there is a great temptation to take a loan from a personal acquaintance instead of a bank or lending institution. And, it makes sense: it’s often quicker and easier, with less red tape and better terms (perhaps your friend or family member has even offered to let you pay back the loan interest-fee), and on a whole, it somehow feels less scary; no paper-work or intimidating payment reminders from the bank. But as they say, buyer beware.

Are family loans worth it?

The danger with borrowing money from someone you know is that money can become a divisive issue; indeed, it is an issue that has been known to destroy relationships and ruin friendships. In fact, an overwhelming number of marital problems and divorces are down to money-related conflicts, which should serve as a strong caution to even the most amiable friend or relative who might offer you financial help.
One major stumbling block with family loans is that people may not be honest with you – i.e., the money may be more important to them than they initially indicate. The importance of recouping that money, and the lender’s expectations as to how quickly you’ll pay them back, often goes unstated.
Furthermore, you may take their generosity for granted and assume they’ll ‘let it slide’ or that they’ll understand if you can’t make your repayments every month. It is easy to allow one month of non-payment turn into two months or four; sometimes, it turns into a year, with the hope or assumption that the loan has been forgiven. It is easy to imagine how this might fracture the relationship.
An interesting study was conducted by Carnegie Mellon University – we have a tendency, especially in situations where we are borrowing money from a friend or family member, to confuse fairness with self-interest. So at the end of the day, which is more important to you: money or your relationships?

How about you all? Would you be willing to give a loan to a family member or have you ever taken out one of these? If so, how did it work? Did it create any family stress? Did you have a written agreement?

 Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/ronnie44052/1486794482/sizes/l/in/photostream/

Have You Considered House Swapping For Your Next Vacation?

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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 $51.95 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is January 31st, 2013.

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

There is no place like home, but what if you could have the comfort of your home while enjoying a wonderful vacation in your favorite place in the world?

Home swapping or home exchange is the ultimate vacation alternative where people trade their homes at convenient times for both parties. Although it is a relatively new concept, vacation home swapping is remarkable and unique in many ways, gaining more and more popularity every day.

The Benefits of Vacation House Swapping

If you have doubts about the success of home swapping, consider the many benefits that come with this solution. First of all, it has exclusive characteristics, which no resort or hotel will ever be able to provide. Here are some of the most general advantages of vacation home swapping:

  • Privacy. When you exchange homes for your vacation, you will spend time in a private space where you can continue to get the pleasure and warmth of a home without the typical annoyance that comes with hotel or resort staying.
  • No Costs. There is no other vacation alternative where you basically spend no money on accommodation and you have a new place. Vacation home swapping offers a free place to stay and that basically reduces your costs to a minimum.
  • Freedom. Vacation home swapping offers the freedom of making your own schedule. You can enjoy home cooked meals or you can go to a restaurant. It is up to you. You can come at any time of the day or night without anyone checking on you.
  • Peace of Mind. When you are away from home, you tend to worry about your house and about what could happen in your absence. On the other hand, when you choose vacation home swapping, you can be rest assured that your home is in good hands, cared for by people just like you.
  • Culturally Rich. There is no better way to experience and understand a new culture or way of life than living in a real home where real people live their lives every day. You can get to feel the places you are visiting. You will be more than a simple tourist.
  • Friendships. Most home exchangers become friends. The connections that are created between exchange partners can transform into sustainable friendships that will last for many years, and that can open numerous doors and opportunities for both partners.


Things You Should Know About Vacation Home Exchange

Every year is a new possibility to engage in a new enticing vacation experience. With vacation home swapping, the experience is unique every time. There are countless possibilities, and you will be surprised at the diversity of choices you have. However, there are certain aspects that you need to consider before embarking on this wonderful journey. Here is a list of the most important ones:

  • You can trade all types of homes including condos, apartments, or vacation homes;
  • Vacation home swapping does not refer strictly to home exchange; it can sometimes involve trading homes over yachts, RVs over villas, and so on.
  • You should also consider including vehicles in the arrangement, which can make your stay easier and more convenient.
  • Home exchangers are generally adventurous people, eager to learn about new cultures and experience new life styles.
  • If you are worried about leaving your home in the hands of complete strangers you should remember that the “strangers” are entrusting their home to strangers, too

What To Consider When You Choose Vacation Home Swapping

Vacation home swapping is becoming increasingly popular among the ranks of doctors, lawyers, singles, and couples that want the reward of a new experience in a new setting. It is a concept that is based on mutual trust and respect as well as goodwill. As more and more people are offering their homes for home swapping, it is important that you know what you are looking for:

  • Setting: Most people want to spend their vacation in natural environments that are somehow different or even opposite to theirs. If they live by the seaside, they want to check out the mountains. Thus, you need to decide what type of setting you would prefer: picturesque mountains, sandy beaches, ocean sands, busy big cities, serene small towns, African deserts, tropical locations, or the Mediterranean air.
  • Country: Vacation home swapping is not limited to a particular country. People trade homes all over the world. You can get to spend your vacation in Italy while your exchange partners try out your bungalow in Canada. It is all about meeting needs at both ends. Many people dream about travelling to other parts of the world, and home exchange offers the perfect opportunity.
  • Timing: This is another important aspect of home exchange. You should have a list with the dates you would be able to travel to your new location. Just like with many other things, timing is essential. Carefully pick your dates without limiting your options to traditional holidays such as Easter or Christmas. You can choose any other dates around the year. Remember that Japan is most beautiful in springtime or that Switzerland is great in the winter. Every place has its charm depending on the time of the year.
  • Type of Home: There are people eager to experience new life styles, not only a new setting, a new city or a new country. That is the reason why you can exchange your home for a yacht, an RV, a mountain cottage, a seaside bungalow, or a vast apartment in New York. Again, the possibilities are countless.
  • Time Interval: It is also important that both exchange partners agree on how long the vacation will be. Some people have 7 or 10 days available for vacation while others have more or less.

The important thing is that all of these needs are met for both partners involved. Vacation home swapping is really more about exchanging lifestyles rather than exchanging actual properties. That is the reason why you should learn everything there is to know about your new vacation destination including transportation, amenities, places to visit, events, restaurants, neighbors, and everything else you may be interested in. In the end, home swapping is a written agreement that will ensure that both parties get what they want and set limits to what they can offer.

How about you all? Have you ever house swapped? If not, would you?

Share your experiences by commenting below!

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

What A Shark Tooth Necklace Taught Me About Saving Money on Souvenirs

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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 $51.95 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is January 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.

I’m not a sight-seeing kind of person,  I’m not a shopping person, and I’m definitely not a  souvenir buying person.
On a trip to Mexico with friends and family, we decided to spend an afternoon shopping at an open market.   Although I wasn’t thrilled with the idea, we all went as a group activity. While others loaded up on cheap t-shirts and trinkets, I just walked up and down the isles of vendors glancing at the products each was selling.  Nothing piqued my interested until I saw a gentlemen selling shark tooth necklaces.
I had always wanted one, and I thought a shark tooth necklace from Mexico would be a wonderful souvenir to remind me of a really fun trip.  The price was about $50, and although I am horrible at haggling, I negotiated the price down to $20.  I was quite proud of how much I was able to get the seller to come down, until I got back to our hotel and I found that they were selling shark tooth necklaces at the gift shop for about $12.  Admittedly, I didn’t like the style quite as much, so I was still happy with my purchase, and had a great story to go along with it.
Ever since then, I use the same methodology for souvenir shopping whenever we go on a trip.  I have the perspective that there is one thing that I’m going to buy to remind myself forever of the trip.  I don’t know what it is, or where, or when I will find it.  I just believe that I’ll know it when I see it.
I’ve tried to pass this same mindset on to my children.
We went on a family vacation to Florida several years ago with some good friends.  My then ten year old son had saved $15 from his allowance that he brought along in case he found something he wanted to buy.   Before we left,  I shared with him my story of the shark tooth necklace and how I searched and searched for the item I wanted to purchase.  I tried to imprint on him that a souvenir shouldn’t just be a mindless piece of junk, but something special that makes him instantly think of that particular trip.
As we went through the first several days of our vacation our friends bought their kids countless towels, T-shirts, hats, light up glasses, and every other piece of tourist junk that they begged their parents to buy.   Finally, they told their kids, “That’s enough, no more souvenirs!”
Yet, Tristan hung on to his $15.
On the second to last day of our vacation, we were walking through an amusement park when we ran across a vendor that was selling something that caught my son’s eye.  The item  was $14, and he asked if he could use his money to buy it.  Knowing that he had been looking diligently for just the right item, I simply asked him, “Is this what you’ve been looking for?”
He looked up at me with his big brown eyes and nodded slowly.  I was so proud of him for not giving into all the temptation of all the souvenir stands that flooded his vision during the trip, and for not blowing his money on the first piece of junk he saw.  He handed his money to the vendor, who placed the item into a small plastic bag and handed it to my son.  Tristan instantly took it out of the bag, and put it on.  He wore it for the rest of the day, as well as the plane ride home.
He continues to wear it today on special occasions. Every now and then he asks me if I remember where he got it.  We remember together our trip to Florida, and the $14 he spent on his very own shark tooth necklace.
How about you all?  How do you decide how many souvenirs to buy on a trip?  How much do you spend on souvenirs when you go on a vacation?


 Share your experiences by commenting below!

    ***Image courtesy of sixninepixels / FreeDigitalPhotos.net

    The Power of Negotiation and Options in Student Loan Repayment – Lessons from a Reader’s Experience

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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 $51.95 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is January 31st, 2013.

    One of my favorite things about blogging about personal finance is that once couple of weeks, I’ll receive a question from a blog reader asking how I would handle a certain situation in personal finance or about what other options he or she might have but has not yet thought of.

    I really enjoy this real life interaction because it allows me to use the knowledge base I’ve accumulated over the past 3-5 years to help regular folks optimize their situations. In addition, it exposes me to accounts of how some of the PF topics and theories discussed in the blogosphere actually work out in real life. Sometimes, the theory falls far from the application, and sometimes, it is spot on correct. It all really just depends!

    Shown below is a student loan repayment situation faced by a reader that recently contacted me asking about any options they may have overlooked prior to their discussion with a collection agency handling their loans:

    Thanks so much for letting me contact you about this huge struggle my husband, and by proxy myself, is going through. 

    He went to Lehigh Valley College, a now CLOSED school, for 1.5 years back in 2002/2003. He took out around 4 Sallie Mae loans and one federal loan for a total of around $40,000. The interest rates on the Sallie Mae loans were higher than most credit cards. He didn’t find a job right away out of school, and when he did finally find a job, it paid next to nothing. He couldn’t afford the payments they were demanding, so he just ignored them… and ignore them he did.  

    The federal loan is now paid because they garnished his wages and tax return for 2 years. The issue now involves the 4 Sallie Mae loans, which had been turned over to Allied Interstate (a collection agency) after he had defaulted. He made a deal with Allied to pay $375 a month for something like 13 years at an interest rate of essentially 0%. The total still to pay down at this point is to about $62,000 (down from $70,000 originally).  

    He is making about $42k a year with his job, which does thankfully include health insurance. He does not have any other significant debt aside from the student loans, and we do have an emergency fund. 

    Allied stopped taking the $375 per month loan payments in October because they started demanding higher payments. We contacted a lawyer at the beginning of November because they broke their agreement. We won the law suit. Now, the issue is that Allied sold the loan to another collection agency after we won the suit. So, we are going to have to go through all o the negotiations again. Since he took out 4 loans through Sallie, the new agency (NES) is referring to them as 4 loans rather than one loan as Allied did. 

    The $375 that we were paying with Allied was do-able. However, since he hasn’t had a payment taken out since the end of October, I told him to save the money he’d pay because NES probably will want a nice down payment. But, I think he’s spent it. He is a spender, I am not so much anymore. Like I said, I want to get it paid off, and the more he pays each month, the shorter the term of the payment. But I don’t know if he follows my logic on that. He just doesn’t want to change his lifestyle and current spending habits.  

    I cannot find ANYONE to help me. He signed for these loans, but under false pretenses. Every sort of loan payment help or loan forgiveness refers to federal loans. Seriously, I have done so much Googling on the subject and I am at a loss. I don’t know where to turn. If he deserves some sort of help with this issue, I want to be sure he gets it. 


    Listed below were my preliminary thoughts on the situation:
    From what I am hearing, it sounds like the debt collection agency and Sallie Mae are really actually trying to work with you all already to get it paid off, first by reducing the interest rate, and then also offering to consolidate things (which sometimes, but not always, can be a good idea). I would first just double check what interest rate they will be charging going forward to make sure it is favorable, but that is one thing that would definitely be negotiable for you all. 
    Having established that, the next thing I would think about is what the current monthly payment will be with this new collection company and define whether or not it is do-able with his income?
    To be honest, if he is making $42k per year in his job, and just has one debt to pay off (the low interest student loan debt – no credit cards), $375 per month sounds like a fairly realistic amount (although painful). I think the real issue that needs to be addressed is his behavior, first from the side of actually realizing that he needs to send in payments for his debts (i.e. they aren’t going to magically disappear if he ignores them), and second, getting control of his spending.

    If I were you, I would sit down with him PRIOR to the call with the company and talk through his income/expenses to determine what is a feasible amount to be paying. They might be willing to give you an economic hardship deferral for other REAL obligations (such as utilities, low income, credit card debt), but not for the fact that money is low because he is overspending each month on consumer items.

    So, once you talk to the new collection company, determine what the new amount is you’ll be paying. Then, think about why it is or is not do-able to meet? Remember: it is to his benefit to pay down his debt sooner rather than later, provided that it economically feasible.
    If there is a good reason why it is not do-able, there can be other options to look in to such as an economic hardship deferral (which another reader I recently helped with student loan debt qualified for because his income was below $40k per year), although that may be harder to qualify for given his good income level and lack of other debts. 

    Listed below is an update from the reader after the call to the collection agency:

    We called NES today. They are consolidating the 4 loans into one, and they agreed to a down payment of $800 today, $700 by the 31st, and $400 each month thereafter. They are doing a matching pay program, so every dollar he pays, Sallie Mae matches it. We are down from 13 YEARS to 6 YEARS!!! He’ll have to pay taxes on what Sallie matches.

    So this is pretty much amazing. Of course, he didn’t save everything that the company should have been taking out since October and we’ll have to take some from my savings to pay the down payment, but it’s a relief regardless. He just has to remember to always have the money there because if even one payment gets bounced the agreement is void and we’ll have to pay the entirety of the loan without any help from Sallie Mae. 

    I have found a few websites to help him with the saving, including Smarter Bucks. Have you used this site? I am also going to help him get set up on Mint, like I am, so he can really look and see where his money goes each month. He’ll have $100 a week to spend as he wishes, whether it’s going out with friends or on electronics or whatever, so I hope he listens to my advice and is willing to learn how to budget. 

    I will think of this as a blessing in disguise. Thank you for your help.

    As you can see by reading the update from the reader after her and her husband’s call to the debt collection agency handling their student loans, they seem to have landed a pretty nice repayment deal! In fact, it actually appears that Sallie Mae genuinely does want to help them pay off the loan.

    Key Lessons to Learn from This Situation – Options and Negotiating in Student Loan Repayment

    According to much of the personal finance theory I’ve read the past few years, student loan debt is generally regarded as “not-that-bad” because 1) a college degree gives you a good return on investment by allowing you to attain a rewarding career, 2) it generally has a lower interest rate than consumer debt, and 3) it is generally much more flexible with the terms of repayment than other debts such as credit cards.

    While the first two points listed above are fairly straight forward and clear to see for most people, the 3rd point is the aspect I’ve discovered people with student loan debt are actually the most interested in. Essentially, they want to know what their options are and what is acceptable to negotiate in regards to student loan debt.

     Because of this inherent interest that people have in what options they have regarding student loan debt repayment, I thought it would be useful to review some of the lessons that can be gleamed from the reader’s experience above:

    • Lesson/Option # 1 – The interest rate of your student loans is definitely negotiable. 
      • The readers above negotiated the rate they were paying down to almost zero (~0.01%).
    • Lesson/Option # 2 – Look in to whether or not a student loan forgiveness program applies to your specific loan.
      • This was not applicable to the reader’s student loan. However, if you are going in to a career as a teacher, doctor, and other forms of public service, it is very possible to be eligible for loan forgiveness (especially if you have a federal student loan). At the very least, it is worth asking! 
    • Lesson/Option # 3 – Ask if your student loan provider offers matching for your loan repayments. 
      • This was a pretty sweet deal that the reader was eligible for (I didn’t know before now that matching of student loan payments even existing!). However, it’s hard to pass up free money such as this, so at the very least, it’s worth asking your student loan provider if this is available. 
    • Lesson/Option # 4 – Consider whether or not you would qualify for economic hardship deferral. 
      • Essentially, economic hardship deferral means that you can get your student loan payments reduced for a certain time period if your current income is low or you have a very high debt to income ratio. 
      • This is definitely a powerful option to consider if you meet the qualification(s). Again, at the very least, it’s worth having the discussion with your provider to ask. 
      • When you call, make sure to have all of your records handy, including your current income, debts, and all set expenses such as rent and utilities. 
    • Lesson # 5 – If you start to have trouble making the required and/or minimum payment on your student loan, inform your provider immediately. Do not ignore your loan! 
      • As we saw in this story with the reader above, by just going silent and ignoring his student loans, they did not go away – a default occurred and the loan was sent to a collection agency. On top of that, the reader’s credit score was likely also negatively impacted.
      • Instead, it is better for both parties to stay in communication and determine how best to work out the situation. 
    • Lesson # 6 – If you are having trouble affording loan repayments, isolate the real root cause.
      • In the case of the reader described above, they were having trouble with repaying their student loan. 
      • However, in talking through the details, the root cause/problem was not in fact an overall shortage of money. It was 1) making sure to acknowledge that the student loan needs to be paid in the first place, and 2) getting handle of spending levels to free up the necessary cash. 

    How about you all? Are you currently working on repaying student loan debt?

     If so, have you discovered any “hidden” options or negotiation points along the way that you wish you knew at the start of the process?

     Have you made any mistakes along the way as well?

     Share your experiences by commenting below!

      ***Photo courtesy of http://www.flickr.com/photos/justinstravels/4955154459/sizes/l/in/photostream/

      Making Up For Lost Time – A Late Starter’s Guide to Saving for Retirement

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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 $51.95 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is January 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.

      Are you in your 40s or 50s and are realizing that you don’t have enough in retirement savings to get you very far? 

      Luckily, it’s never too late to save for retirement; so here’s some strategies to help you make up for lost time.

      Current Landscape of Retirement Savings

      You’re not alone, by the way. A survey conducted in 2011 by the Employee Benefit Research Institute found that more than 60% of workers in their 40s and 50s had less than $50,000 saved or invested for their retirement. Experts claim that even savings in excess of this amount may not be enough to allow people to live out their lives in comfort.

      The important thing at this point is not to panic. We tend to make the wrong decisions when we are stressed out, so this has to be avoided at all costs. OK, so you probably should have started some sort of financial plan when you were younger, but you can’t change that now. What you can change is your money management from now; that’s a positive step, getting panicked is not.

      You still have time – at least 25 years if you’re in your 40s, 15 years if you’re 50s. With a committed approach, you still have time to save enough to fund your retirement. Your options might be more limited than when you were younger, but there are still effective strategies you can implement. It doesn’t have to take forty years to fund a decent retirement; consider the entrepreneurs who have gone from relative poverty to millionaire in 15 years and retired at age 40.

      Creating a Budget

      Before you can start to plan how you are going to make up for lost time, you need to know what your current financial position is. This means you need to create a budget, often creatively called a life plan, an income and expense spreadsheet, or some other fancy name by financial advisors who don’t want you to react badly to being told you have to have a budget! A well-designed budget is great wealth-creating tool, but it will need to be updated at least twice every year to stay relevant.

      How Much Money Will You Need for Retirement?

      So, just how much is enough for retirement? The cynics would say it depends on how long you intend to live!

      Of course, to a certain extent, this is true. The other figure that’s needed to crunch the retirement numbers is the age you retire at; at least this one is more under your control!

      The popular thinking is that you need 80% of your current income to be able to maintain your lifestyle in retirement. However, if you can reduce this figure, you will take some of the pressure off. Here’s an example of the power of this concept – allowing for a rate of return on investment and savings of 4%, for every dollar you don’t need in retirement, you cut $25 off the amount you have to save. How’s that for incentive for you!

      Consider ways you can reduce the amount you’ll need in retirement. Maybe travel is not for you; you probably won’t have the kids to support; you won’t have the same transportation costs; you won’t need to be saving for retirement; you might down-size your home or live in a cheaper area. Finding ways to reduce your retirement spending eases the burden on saving enough while you are still working.

      Utilize Tax Favored Investment Accounts to Your Advantage

      Playing catch up has been made easier for the over 50s group, due to the increased contributions that are allowed to be made into retirement accounts like IRAs, 401k and other employer sponsored plans. In 2012, the allowable annual contribution to a 401k is up to $22,500 for over 50s; others are restricted to $17,000.

      As an example, if you start making the max contribution at 50 years of age and continue for every year until you retire at 65, at a 5% interest rate you would have amassed over $500,000. Any employer-matched contributions are then the icing on the cake!

      Working During Retirement? – Another Possibility

      Planning to continue working into retirement, even on a part-time basis, is another strategy for making up for lost time. Do your research now, so you can plan for this possibility. It might even be possible to start a small side-business while you are employed. Make enquiries about consultancy work in your current field – your expertise could be sought after. The same example used above, about reducing the amount you need to save for retirement, can also be applied to earnings. If you can come up with a plan to earn around $10,000 a year in retirement, this equates to $250,000 you don’t need to have saved before you retire.

      So, now it’s time to stop thinking and stressing about how you are going to make up for lost time and take some action!

      Start now to get your financial position down on paper; get those figures out of your head and do the calculations necessary to plan your retirement. Look for where you can cut spending so you can lift your retirement savings. Create a financial plan that will allow you to enjoy your years of retirement.

      How about you all? Are you making up for lost time? If so, what is your game plan/strategy?

        ***Photo courtesy of http://prairieecothrifter.com/wp-content/uploads/2012/12/iStock_000000847554XSmall.jpg

        10 Financial Mistakes From the F-R-I-E-N-D-S Television Series to Avoid

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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 $51.95 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is January 31st, 2013.

        Prior to meeting my girlfriend in 2010, I had probably only seen a handful of Friends episodes in my entire life. This is especially shocking to some people, given the fact that the show was airing for 10 years during my “prime” TV-watching ages of ~8-18 years old.

        However, the girlfriend quickly introduced and subsequently hooked me on to Friends (after all, it was/is her favorite sitcom) after we started dating. She owns the entire 10 season discography on DVD, and we have probably gone through the entire series 8 times since 2010. A lot of the time, we actually aren’t even watching it; we just have it on in the background while we are working on the computer and doing other things around the house. So, it’s probably not as much time wasted as it might sound at first! It also works out well that we both now like Friends so much because we don’t have cable TV at our house. It’s pretty funny because we will go on trips where we stay at hotels that have cable TV, but we will still end up finding nothing else on and simply watching Friends when it is showing on the various available networks!

        Despite my deep love for the Friends television series, often times when I am watching Friends, I am simply amazed at the many serious financial mistakes that the characters make on the show. Now, I definitely realize that this is a fictional show that is meant to be funny, and this is likely one of the big reasons why the writers incorporated these financial flops in to the show. After all, if they made a show where someone was saving 50% of his or her paycheck and living very frugally, the ratings would absolutely tank because it would be boring, right?!

        On the other hand, I also often wonder (and maybe worry a little bit) if given the fact that the financial mistakes were displayed in arguably the most popular TV series of all time, do these bad financial behaviors somehow get normalized in to our society and made to seem as the ‘right,’ ‘cool,’ and/or socially-acceptable thing to do?

         Because of these factors, I thought it would make for an interesting discussion to review 10 of the bad financial lessons/mistakes of the characters in the Friends TV series in this post. I look forward to hearing you all’s thoughts!    

        Financial Mistake # 1 – Failing to Consider Your Latte Factor

        The Latte Factor is a topic that I learned in the very first book I ever read about personal finance and frugal living, David Bach’s Automatic Millionaire. As you’ve probably already heard, the idea behind the Latte Factor is that if people buy a latte from Starbucks everyday for $4, this compounds to a lot of money over time. However, the same idea can be applied for all sorts of luxury purchases made everyday (snacks, regular coffee, vending machine items, etc).

         In the Friends series, all six characters (Chandler, Joey, Monica, Rachel, Ross, and Phoebe) have a Latte Factor to the 1000th power! 

         They go to the Central Perk Coffee House multiple times every day and seem to spend about $5 or more each time. If you do the quick math, they probably spend $3000-$4000 in coffee every year! Yikes! Talk about a financial hole to recover from already.

         The sad thing is that even though this sounds like a terrible financial predicament, I imagine that a lot of people in bigger cities go to restaurants and coffee houses in this same manner. It’s definitely something to think about if you fall in to this behavior pattern category. Try doing what I do and get your coffee fix at home before you leave for work!

        Financial Mistake # 2 – Never Cooking a Meal at Home

        For me personally, cooking meals at home/avoiding spending large amounts of money at bars along with being debt free are probably the two most effective ways that I have been able to save over 50-80% of my income for the past 4-5 years.

        As any regular Friends fan will know, the Friends characters (Chandler and Joey especially) eat out a whole lot! There is one really funny scene that I like to watch several times where Joey and Chandler are sitting around their apartment, and Joey asks Chandler, “What do you want to do for dinner tonight?” Chandler then says in a joking way that indicates that cooking will never happen in a million years, “I thought we might stay in and cook here.” They both then laugh! It’s pretty funny stuff!

        Again, even though I/they get a laugh out of this, it’s actually a pretty serious situation and financial roadblock faced by many young people today, especially students in undergraduate or graduate school. They feel they are too busy or too young to need to cook at home, so they end up getting take-out or food at a restaurant for most meals. Along with costing a great deal of money that these young folks really don’t have, eating out generally is less healthy for oneself than cooking at home.

        Financial Mistake # 3 – Spending Your Life Savings on Your Wedding

        If you’re a Friends watcher, you probably remember the season when Chandler and Monica finally get married (Of all the relationships in Friends, I think their relationship is my favorite because they are very cute together and fairly low drama, unlike some of Ross’ relationships). When they are just starting the wedding planning process, Monica regrettably finds out that her Dad spent all of the money he had saved for Monica’s wedding on a beach house and a Porsche. Nice!

        After crying about it a little bit because she is heartbroken that she can’t have the wedding of her dreams, Chandler makes the mistake of mentioning that he has some money saved up. Upon telling Monica how much he has saved up his entire working career thus far, she immediately wants to spend it all on their wedding, and does just that! This is great financial planning in action folks, isn’t it?!

         However, again, my worry is that this behavior is not far off from the reality/norm in our society these days, especially with how expensive weddings are. One person I went to high school with was given the choice by her parents of having $40,000 for a house or $40,000 for a wedding. Apparently, the couple spent all of the money plus some extra on the wedding, including a $5,000 wedding cake! Nice!

        Financial Mistake # 4 – Borrowing and Loaning Money to Friends

        One thing that is very inspirational in the Friends series is to see that the six friends are very loyal and dedicated to each other. However, one financial mistake that they often make with this dedication is loaning money to each other. One example I can think of off the top of my head was hearing that Joey owed Chandler like $20,000 for unpaid rent loans and acting classes over a period of 7 years! Quite crazy!

         From my experience and what I’ve read over the past few years of personal finance blogging, loaning money to friends is almost always a bad idea. Why is this? First, it creates a strain on the friendship in that you “owe” something to one of your good friends. Second, loans between friends have a very unlikely chance of being repaid. Just think about it – if you loan money to someone who has credit card debt, do you think they will make sure that they pay the credit card company in full or you (with no legal contract) first?

        If you do feel the need to loan money to friends, I would encourage several things. First, see if you can just give them the money as a gift. Since the money likely won’t be repaid anyway, it might be worth just taking the repayment obligation out of the whole situation. Second, if you still feel that a loan situation is needed, make sure to put the terms in writing, with the help of a legal professional (read, lawyer) if it is a large sum of money.

        Financial Mistake # 5 – Purchasing Last Minute Plane Tickets

        Generally, if people want to get a good deal on an airline flight, they generally purchase a ticket between 30-60 days before their desired departure date.

        However, in the Friends series, it’s truly amazing how often they go to the airport and purchase a dramatic, spur-of-the-moment plane ticket to some far off destination (Chandler going to Yemen) or to confess their love for someone leaving (Ross with Rachel and Emily). Generally, they drop about $2000-$3000 on this flight at the drop of a hat!

        While I’m pretty certain that most logical people don’t operate this way (it just makes for good comedy!), it is a good reminder that you can get yourself in to a big financial hole if you don’t plan your trips ahead of time!

        Financial Mistake # 6 – Buying Lottery Tickets

        Whenever I go to the local Kroger here in Virginia to pick up any amount of groceries, there are always at least several people in line at the machine buying lottery tickets. 

         Why is this? I simply don’t understand the whole lottery ticket buying reasoning. Do they really think they are going to win? Do they do it for fun and know they are going to lose the money? Do they do it just to support the education charity that the lottery funds? I don’t know. However, I do know that the chances of winning the lottery are less likely than me getting struck by lightning. TWICE.

         Despite this, several times throughout the Friends series, they talk about buying a fairly sizable amount of lottery tickets and sharing the winnings among each other. Ross tries to be the voice of reason in saying that it’s highly unlikely to win, but no one listens! 

        Financial Mistake # 7 – Violating Terms of Your Apartment Lease

        Being as how the Friends series is primarily set in the two apartments of Chandler/Joey and Rachel/Monica, there are quite a few funny moments when the six friends do some pretty questionable things to their dwellings. 

        In one episode, Monica, Rachel, and Phoebe make a fire in a trash can in their living room and have to call the fire department to put it out. The entire season, Monica and Rachel are violating the Rent Stabilization Act of New York since their lease is still in Monica’s grandmother’s name. In another season, Monica punches holes in the wall of Chandler’s apartment to find wiring for a mysterious switch.

         All of this is to say that in the real world, it is to your benefit financially to be a good tenant by 1) having renter’s insurance, 2) following the terms of your apartment lease, and 3) being honest with your landlord. 

        Financial Mistake # 8 – Investing in Stocks When You Don’t Have Any Clue About Them

        In general, I believe that no one (not even investing professionals) really has that much business investing in individual stocks. Why is this? Because they cannot guarantee me that they can beat the market for the next 20 years, despite their heroic past performance.

        However, in one episode, Monica, while looking for a way to make money between jobs, takes this to the extreme! She decides to day-trade stocks that have symbols similar to her initials and the initials of people she knows! I’m pretty sure it didn’t work out too well for her.

        Financial Mistake # 9 – Being a Less-Than-Stellar Employee

        To my amazement, despite the fact that most of the Friends characters are not very good employees, they seem to do pretty well in advancing in their careers. Let’s just take a quick look at some of the things that they tend to do wrong (which would be pretty disastrous for normal people from a career/financial perspective).

        • Falling asleep during a meeting with your division VP – In one episode in Season 9 or so, Chandler is in a big meeting at his company with his boss’s boss, falls asleep, and accidentally volunteers to head up an office in Tulsa. Aside from setting a bad image for yourself, you obviously don’t want to put yourself in this type of position where you get moved without knowing what you’re getting in to! 
        • Taking 4 hour lunch breaks – Many times in the Friends series, the characters will be at the Central Perk Coffee House until 4:30 PM and say, “Well, I guess my lunch break is over!”
        • Blatantly lying on your resume – Several times throughout the series, Joey lies on his resume. First, he states that he had 10 years of dance experience with a ballet, when in fact, he has no experience dancing professionally. Second, he stated that he could speak fluent French, when in fact, he cannot. Ross also lies on his resume that he did a year long paleontology dig in Cairo, when in fact, he just went to Cairo on a vacation for a few weeks or something with his Dad. 

        Financial Mistake # 10 – Dating Your Students, Employees, and Roommates

        Our last stop on the Friends TV series bad financial lessons/mistakes list brings us to the item of dating your employees, students, and roommates.

         This happens NUMEROUS times throughout the Friends TV series because, of course, it makes for great comedy and an interesting story! However, in the real world, if you are not careful, this type of behavior can not only slow you down in your career/cause you financial stress, but can also get you completely discredited and even fired from your job. 

         Let’s take a quick look at some of the examples from Friends. First, Ross starts dating one of his 19 year old students, Elizabeth, from the class he teaches at NYU. Next, he starts dating a professor/co-worker, Charlie, who is another teacher in his department at NYU. Rachel also embarks in some of this behavior, dating her assistant who works for her (Tag), her temporary replacement (Gavin) who had taken over her job during Rachel’s maternity leave, and her roommate (Joey). In all of these cases, there are a couple close calls in getting in to trouble with their employers, but luckily, nothing ever happens. However, in the real world, one can hardly expect to be so lucky, so it’s best to avoid this type of behavior.

        How about you all? Have you ever made any of these same mistakes amplified in the Friends TV series? 

         Share your experiences by commenting below!

          ***Photo courtesy of http://www.flickr.com/photos/ivantortuga/2619877988/sizes/l/in/photostream/

          Make 2013 The Year You Step Outside Your Own World and Do for Others

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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 $51.95 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is January 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.
           
          If you look at most people’s New Year’s Resolutions, they are extremely self-centered.

          My guess is that the top two resolutions are to get in shape/lose weight and to gain a handle on finances, whether that means making more money or paying down debt.  These resolutions are about me, me, me.

          Unfortunately, most people fail within the first month or two of making resolutions, yet they continue making the same ones every year.  As Dr. Phil says, “If you keep doing what you are doing, you are going to keep getting the same results.”  Instead, why not make 2013 the year you reach outside yourself and give willingly to others?  You may be surprised by the difference it can make in your life.

          Giving Is Selfish, but It Benefits Both Parties

          I read another blogger say that volunteering and donating are selfish acts.  I had to do a double take and re-read the line, but after some consideration, I had to admit that he is right. Volunteering and donating are selfish acts because we enjoy the way we feel when we do something good for others.
          However, these so called selfish acts come with benefits on both sides.
          Every year, Jacob bikes for MS.  Sure, he enjoys biking and donating to charity, but the MS Foundation also benefits from the donations he is able to raise.  Essentially, both sides benefit. If you have a boat that you no longer use, you can donate it. The organization that accepts the boat will sell it at auction and give the money to a pre-approved charity. In return, you not only receive the satisfaction of knowing that your generosity helped those in need, but also a tax receipt in the amount for which the boat sold. This is a true win-win situation because your donation provides everyone involved with some benefits.

          Giving Cultivates Gratitude

          There is something about volunteering and donating that can change your own behavior.
          For years, my husband and I had talked about sponsoring a child through World Vision, but we were never sure if we had the money to do so.  This year, even though we have debt, we decided to sponsor a child who is 8 years old, just like our son, and born on the same day as our son.
          Two amazing things happened.  First, my son, who is never really good about doing his chores even though they are attached to monetary payments, suddenly started doing them regularly because he wanted to use some of his money to help sponsor the boy, Janvier.  Now, he regularly donates about $5 to $10 to help pay the monthly sponsorship fee.
          Second, my work, which I had been hoping to increase, suddenly increased and continues to do so.  It is almost like by opening our purse strings a bit and giving, the world gave us more.   (Of course, I am not saying there is a correlation or that this will happen to everyone, but many people speak of this phenomenon.  As they give, they get more in return.)  While initially we weren’t sure we could afford the monthly sponsorship fee, we now know that we can.
          Giving can change your life, largely because you step outside yourself.  Humans tend to be very self-centered, and by doing for others, you often realize how good you have it.  While you might bemoan the fact that you “only” have $300 to spend on Christmas gifts, if you take the time to donate a basket of food to a needy family, you will see how grateful they are.  Suddenly, the $300 you have seems like more than enough.
          It is easy to get caught in the trap of envying those who have more than you, especially if you watch television and see the lavish lifestyles others lead.  However, if you look at your own life, you will see that you probably have more than enough.

          Donate and Volunteer As You Can

          If you are looking to make a difference by donating or volunteering, you don’t have to make a commitment for years as we did with our sponsored child.  Instead, you can choose one time donations such as donating some of your extra dry goods to the local food pantry or serving in a soup kitchen one day.  Make it a goal to do one act of good at least every month.
          As New York City Mayor Michael Bloomberg said, “We’re put here on this earth to share and to help each other. . .and nothing I will ever do – or you or anybody else that’s generous – will give you as much pleasure as you get when you look in the mirror just before you turn off the light and say, ‘Hey, you know, I’m making a difference.'” (Christian Science Monitor).
          You may find that as you step outside yourself, your own financial issues begin to resolve themselves.
           
          How about you all? Do you volunteer or donate regularly?  What has been your experience?


          Share your experiences by commenting below!

          ***Photo courtesy of http://www.flickr.com/photos/usdagov/6550470383/sizes/l/in/photostream/

          Should Alternative Assets Be Part of Your Asset Allocation?

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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 guest post by Mario Favela from Gator Finance. Enjoy! 

          Alternative assets are any investment excluding stocks, bonds, or cash. Collectibles, real estate, precious metals, art, and wine are all included in this definition. Other examples are commodities, hedge funds, leveraged funds, and Master Limited Partnerships (MLPs).

          In this post, we will focus on some of the more mainstream and accessible alternative assets.

          Should You Own Alternatives?

          They should be a part of your overall asset allocation strategy. They typically have a low correlation to stocks and bonds, which means they do not move in the same direction. In the past, illiquidity and high cost kept them out of reach for most retail investors. Today, Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs) allow smaller investors to more easily buy and sell alternatives. Alternative ETFs do have higher expense ratios than the average stock or bond index ETF. That cost is minimal when you consider the amount of diversification these products offer.

          Tax Implications

          Investors should be aware of possible unforeseen tax implications. It is better to hold some alternatives in tax-deferred accounts like Individual Retirement Accounts (IRAs). Tax laws constantly change which can make it difficult for investors to be sure exactly how the IRS will treat income and gains from year to year. Each individual situation is different.  Please consult with your tax advisor before purchasing alternative investments.

          How Much Should You Allocate?

          Let us say you have decided to include alternative investments in your portfolio. How much should you allocate? Remember that they are risky. Best not to have more than 15% of your total portfolio invested in them. For example, if you have $100,000 to invest, you would put no more than $15,000 into alternatives. You might invest $5,000 in REITs, $7,000 in commodities, and $3,000 into a hedge fund ETF.

          List Of Alternative Assets

          Here are some of the more common and easily accessible alternative assets available. This is just a short list to get you started, keep in mind that there are many other alternative investments available.

          Silver And Gold

          Physical metal backs the shares of both the COMEX Gold Trust – IAU and the Silver Trust – SLV ETFs. The IRS taxes them at ordinary income tax rates, due to their structure as grantor trusts. Investors also have the option to buy and store gold and silver bullion, coins, or jewelry. This can be more expensive due to storage costs.

          Diversified Commodity

          DB Commodity Index Tracking Fund – DBC tracks 14 physical commodities including, oil, gas, gold, sugar, corn, soybeans, zinc, and copper. This is a futures based fund, although some commodity ETFs use swaps and options.

          Master Limited Partnerships (MLPs)

          MLPs are publicly traded limited partnerships that trade on exchanges like stocks. They derive at least 90% of income from natural resources, commodities, or real estate. The iPath S&P MLP ETN – IMLP tracks energy MLPs. There can be tax benefits for holding limited partnership, and they are liquid and trade like stock.

          Real Estate Investment Trusts (REITs)

          REITs earn most income through collection of rent. REIT ETF – VNQ offers exposure to North American real estate. SPDR DJ Wilshire Intl Real Estate – RWX is composed of real estate holdings outside the United States.

          Merger And Acquisitions (M&A)

          The IQ Merger Arbitrage ETF – MNA tracks a merger index and invests passively in companies that are merger and acquisition targets. Some short exposure, meaning the fund can profit during down markets.  

          Hedge Funds

          Hedge Replication ETF – HDG tracks the performance of hedge funds. This is a fund of funds and a good way for investors to add hedge exposure to their portfolios. Hedge fund managers operate under less regulatory restriction, and in theory, make money in both up and down markets.

          Leveraged ETFs

          Leveraged ETFs magnify market returns. For example, Ultra Short S&P500 – SDS makes money when the stock market goes down. Ultra S&P500 – SSO makes double the amount of the S&P 500 when markets are up. Better to hold leveraged ETFs in tax-deferred accounts.

          Conclusions and Personal Applications

          Holdings on this list can add value, but are not always appropriate for every investor. Keep it simple and make sure you understand what you are purchasing before you buy. For example, I do not have any of the alternatives listed above in my investment accounts. I keep most of my liquid assets in equity and cash. I do own physical real estate as well as gold and silver stored in a safe deposit box. These three simple alternatives are easy to understand and research, and they diversify my overall portfolio. Customize and adjust your alternative asset mix according to your own personal needs.
          Alternative assets should be an important part of your portfolio. You can lessen their inherent risk by using basic asset allocation rules. Make them a small part of your overall asset mix. Trim positions if they begin to skew your percentages. Used properly, alternative assets can diversify your investments, help your returns, and improve your chances of reaching your retirement goals.

          How about you all? Do you incorporate alternative assets in to your investing strategy/asset allocation? Why or why not?

          If you do, which categories of these alternative assets do you own?

           Share your experiences by commenting below!

            ***Photo courtesy of http://www.flickr.com/photos/digitalcurrency/2438118193/

            Reader Profile – Pauline from Reach Financial Independence

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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 $51.95 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is January 31st, 2013.

            Today in the ongoing Reader Profile Series, we’re getting to know MPFJ.com reader and enthusiastic commenter, Pauline, from the site, Reach Financial Independence. Let’s all give Pauline a big round of applause for sharing her life with us and listen to her story! Enjoy! 


            1. Please tell everyone a little bit about yourself (background, education, family situation, etc).

            My name is Pauline. I am 32 and was born in Paris, France. I graduated 10 years ago with a Masters in Business, and wanted to try a different approach to life after spending the last two years of college working part time for a big firm. I knew the cubicle life was not for me and wanted an early exit.


            I backpacked my way around the world for a year, then worked in Guatemala, Spain, and the UK for six years, holding in each country jobs that had to do with my college skills. From a law firm to an IT software company, my goal was to save as much as possible to avoid setting foot in an office ever again. I thought it would take me until 40, but I was able to ”retire” from the corporate world at 29.
            Since I left my last job, I have lived in Morocco for a year, traveled across North America and Europe for a year, and lived in Guatemala for a year.

            I have now settled in Guatemala where I bought a lakefront property three months ago, and have started to fix up a house I hope to turn into a guest house. I am working on this project with my boyfriend. We have no kids.

            2. Describe your current financial situation (who works in your family, how your income is, your expenses, etc.).

            My boyfriend is a retired lawyer. He owns a cattle ranch and has one of Guatemala’s most extensive art and coins collection from which he makes an occasional profit. Most of his income comes from selling cattle at the moment, and he is also an expert in flipping things, buying low and selling higher.

            My income comes mainly from several investments. I own a three bed flat in the UK that has positive cash flow, and just sold a flat in Paris that used to generate rental as well. Instead of keeping that money in a savings account to live off it for a while, I chose to reinvest the money in my Guatemalan property to force myself to generate more income from it. I also own a coconut farm, some cattle heads, and a few other investments that one would qualify as unusual, that produce a solid passive income. I like tangible investment and would rather see a calf or a coconut than imagine a virtual share of an online company.

            On top of that, I make a little bit of active income, writing articles for travel French and Spanish websites, and my blog is also generating a nice income, but I’d rather not count the hours! A few clients from my old jobs occasionally contact me for translation jobs and other virtual tasks. I get paid in Euros, British Pounds, Dollars, and spend in Guatemalan Quetzales, so sometimes I make a bit of money trading currencies.


            I have brought in six figures in 2012 and hope for an even better 2013! A great part of 2013’s income will hopefully come from the development of 90 acres of land that came with the house into residential properties.

            My expenses are:

            Shared Expenses– We split everything in half for the house. All the rest, each of us decides how to spend their  money.

            • Mortgage – $0. We were able to buy the property in cash but are putting a lot of money into repairs, with over $10K in the past three months.
            • Food – $300. Trying to lower that to $200 this year. This is very high for Guatemala, but we like to eat and rarely go out. Includes alcohol and expensive things such as cheese or bacon that come at a premium here.
            • Gas – $100. Weekly trips to the supermarket and to buy building materials cost $20, plus the occasional visit somewhere. We use my boyfriend’s car, so I occasionally pay for half of the repairs.
            • Utilities – $50. $10 for gas, $40 for electricity. No heat or AC but we have an electric water pump to pump water from the lake and with the works around the house, lots of drill and other electric usage. Otherwise, just a fridge, blender, deep freezer, and a couple of laptops and phones. The shower also has an electric heater, but we rarely use it.
            • Handyman – $200. I don’t want to have a maid, but this guy does all the heavy lifting, gardening, maintenance… and will stay once the works are over.
            • Animals/garden – $20. We have 9 hens and a rooster, and couldn’t find the courage to butcher our Christmas turkey, so he is around too. They eat corn and bird food at the end of the day to come back to the cage. I started a small garden, more for entertainment than saving on the grocery bill since vegetables are ridiculously cheap here.
            • Property taxes – $30. I don’t know exactly how much that will be. The lakefront plot is leasehold from the state, and there is property tax on the 90 acres piece of land that came with it.
            • Accountant – $20. We pay an accountant since we bought the property together through a company, of which we each hold 50% of shares. We don’t have other assets in common.
            My Own Expenses

            • Internet – $50. Bad provider, slow connection but in the middle of the jungle, you can’t hope for much. BF has a smart phone plan. this is just for my laptop USB modem.
            • Fun money – $50. I don’t really know what goes there lately since we moved to a remote place, but this is usually treats and expenses for when I am alone.
            • Travel – $250 or $3K yearly. For a trip back to France for a month and another trip somewhere.
            Total $710. That should be my budget once the works on the house are over. For the moment, it is more like WAY much I don’t want to know! haha. I am not including the costs of my UK flat since they are covered by the rents. I just add the surplus to my monthly income. I also pay taxes in four countries. that amount changes every year, and it is quite the headache.

            3. What are the current financial challenges you are facing (saving, paying off debt, student loans, merging finances after recently being married, etc.)?

            I have a goal to repay over $25K of debt this year, on top of my usual $1,000+ UK mortgage and loans payments. I have already paid $9,500 thanks to the windfall of my French property sale and hope to repay a 0% credit card of $10K before the deal runs out in June.
            Investing in the 90 acres land development is the second goal this year, and I hope to sell a few plots as we go in order to avoid selling other investments to keep going. Repaying that $9,500 of debt was a decision to push me to speed up the development instead of relying on that cash and take things easy. I usually prefer to keep the ”good debt” and invest my cash, but I was tired of never seeing the end of my loans, so 2013 is the year I will crush my debt.
            My other challenge is to keep my boyfriend on a budget, a word he doesn’t know, especially for groceries and treats, as well as saving energy. He says we only live once and money is meant to be spend, but I prefer to be careful and keep investing. I try to pick my battles, but sometime,s we strongly disagree. I would have preferred to make our house live-able and invest the rest in the development, but he insisted on building a third room first that will set us back $10K when finished. He won!

            4. What are your plans for the future (retire early; build your career, etc.)?

            My plan for the future is to keep building wealth by doing things I enjoy. I want to convert the two guest rooms in my house into a small B&B, and if business picks, up maybe add some extra rooms to the lakefront plot, develop the 90 acres piece of land, and maybe invest in a couple more rental properties.

            I would like to enjoy a simple life here in Guatemala and have the freedom to travel a couple of months per year to visit friends, family, or discover another part of the world.
            I also hope to start a family someday and spend as much time as I want with them without having to worry about money.

            5. What’s your best piece(s) of financial advice and/or your general philosophy on personal finances?

            My philosophy and advice is to be happy. You can’t measure yourself against anyone else but the person you want to be. If you aren’t your best self, there is some room for improvement, but don’t base that improvement on others, namely the ‘Joneses.’ I am content with my little house, having no car, and very little personal possessions. I don’t need more, and you probably don’t need many things in your life. Trimming the fat will help you reach your goals faster and see more clearly what you really want out of life.

              ***Photo courtesy of http://reachfinancialindependence.com/

              How Not to Buckle Under Pressure When Everything is Happening at Once

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              The following is a post by MPFJ staff writer, SK. SK writes about the reasons we get into debt, changing the patterns that get us into debt, and examines small business ownership and real estate investing at her blog, American Debt Project.


              If you have ever been surfing, you know the importance of not letting one wave get you caught in a set of waves that hold you down and knock you around. But, beginners always end up going hard for the first wave of a set, excitedly standing on their board before losing their balance. Your reaction to getting knocked off your board is going to set up the next couple of minutes, and if you go about it the wrong way, it’s going to be a very rough couple of minutes. 

              What’s the proper response? The first thing you want to do is grab your board and get back on it, and start paddling directly towards the next wave so you can get over it before it breaks. The beginner response is usually to stay off your board as you process falling off and going through “the washer” for a few cycles before looking around in a daze to figure out where the shore is. By this time, your board is somewhere by your side and the next wave is sitting on top of your head, about to knock the wind out of you again. Even though it seems scary, beginners start improving as soon as they learn how to handle a bad wave and getting right back on their board to paddle out strong for the next set. 

              The good news is that life can be handled pretty much the exact same way.

              There are periods in your life where you will deal with many important tasks and events at once. You know that this is the time when you need to perform, but it’s still going to be tough, a little scary, and sometimes there is a temptation to just stand there and look at the proverbial wave as it’s about to beat the crap out of you. I am right in the middle of one of those times in my life right now. Everything is happening, and I am not sure if I can handle it. I have become so focused on making sure everything goes well in my new job, new venture, new engagement, that I have let living my regular life completely fall apart. And that’s a mistake.


              As of today, I am getting back on track. 

              Getting to work early. Sending funny texts to my friends again.  Taking at least 30 minutes to exercise each day. Reading and taking quiet time at the end of the night. The trick of handling all those big important tasks is responsible time management, doing what you say you’re going to do when you say you’ll do it and all, but it’s all about not letting the monster wave engulf you and overtake everything. In surfing, you have to respect the ocean because she will cripple you if you underestimate her power. In life, we learn to respect our big responsibilities but without letting them take over the entirety of our being. 

              How about you all? Have there been times in your life when you’ve felt too much is going on for you to handle? If so, how did you handle it?

              Share your experiences by commenting below!

                ***Photo courtesy of http://www.sxc.hu/photo/1411469

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