All posts by Jacob A Irwin
Do You Spend Rationally or Emotionally?
————————————————————————————————————————
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!
————————————————————————————————————————
Click here to enter my free $60 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 November 30th, 2012.
The following post is by MPFJ staff writer, Greg Johnson. 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.”
When it comes to doing simple math, most of us are more than capable of handling the basics. We know that 3-1=2 or that 1-4=-3. For the most part, we do these formulas without even thinking about it. It is almost second nature.
Furthermore, many of us deal with simple math problems every day at our jobs. Some of us even deal with complex mathematical problems that the average person would find difficult, if not impossible, to solve. We are obviously intelligent people.
So, why is it that so many of us have difficulty making the math work when it comes to budgeting and our personal finances? Isn’t budgeting simply a basic math problem?
While it is true that budgeting one’s finances doesn’t take a math genius, the fact is that our personal finances are more complicated than just looking at the numbers in a vacuum. If we look at it from a purely objective viewpoint, it is easy to see that spending $1,000 more per month than we are earning is going to put is deep in the hole. Rationally, we know that this is not a good thing. However, when it comes to money, there are other things/elements in play.
Rational vs. Emotional Spending
Ideally, we would all love to be rational spenders. However, emotions play a huge part in how we deal with our personal finances. The way in which we handle our emotional reactions to money can have a lasting effect on the security of our financial future. Some of us may decide to go shopping in order to lift our mood. Others may be experiencing a midlife crisis and decide to splurge on a new convertible. There are a range of different emotions that can effect the way that we save and spend money. However, the biggest emotional driver of our spending and saving is fear.
How Fear Affects our Financial Health
Fear is something that is the driving force behind many of the financial decisions we make in life. It is also an extremely effective marketing tactic used to get people to do or buy things. All you have to do is turn on the television to find out what sort of havoc fear is wreaking today. Oil prices may rise or fall based on fears of conflict in the Middle East. Markets may drop drastically, citing fears over government defaults. Lately, there has been a lot of talk mentioning a fear of the U.S. government falling off the fiscal cliff. Yes, those who would profit from fear can use that emotion to manipulate the financial markets…and there seems to be a lot of fear mongering going around lately.
On a smaller scale, fear affects many of the purchases and financial decisions that we make as well. Many of us fear aging, which is why botox procedures have become so popular. The fear of intruders propels the growth of the firearms and home security industries. Some folks will spend all of their money buying goods to prepare for whatever the next version of the apocalypse is. Still others decide to hoard their money out of a fear that they will never be able to make any more – or worse yet, fear that they will somehow lose it all. While it doesn’t relate directly to spending, many of us fear not being able to pay our bills – which is why we stay in jobs we don’t like rather than trying to find work that we do like. The emotion of fear pervades most of our financial decisions whether we like it or not.
While fear may seem like a bad thing, the fact is that fear can also motivate us to make good purchases. Fear of dying and leaving your dependents with nothing may motivate us to buy life insurance. Exercise and diet programs are the products of fearing an unhealthy lifestyle. The fear of not being able to keep the lights on or having a place to live also keeps us making mature decisions.
The next time that you make a financial decision, remember that there are a lot of people and companies out there who are looking to take advantage of your tendency toward emotional spending. In fact, many of them may even help to create fear in you so that you may decide to buy their products. Try and remove emotion from your financial decisions. Be rational. The better you become at removing the emotion, the better handle you will have on your financial health.
How about you all? Do you find yourself spending rationally or emotionally? Why?
Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/21313845@N04/2397388906
Should You Invest or Pay Off Debt First?
————————————————————————————————————————
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!
————————————————————————————————————————
Click here to enter my free $60 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 November 30th, 2012.
The following post is by MPFJ staff writer, Kevin Mercadante, who is a professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has a background in both accounting and the mortgage industry.
This is one of the most common – and complicated – questions in personal finance. If you have debt, should you pay it off before you begin investing? Or, should you concentrate your efforts on investing while gradually paying off your debts in the normal course?
There are compelling reasons in both directions, and which you choose may have more to do with personal circumstances and preferences than anything else. Let’s take a look at both.
Investing first and paying off debt gradually or later
There are solid reasons to favor investing as early in your life as possible–even if you have substantial debt.
Investing early leads to a larger portfolio. It is a fact that the earlier you begin investing, the faster you will build a large investment portfolio. The best way to demonstrate this is by example:
Investor #1 begins investing $5,000 each year beginning at age 25. With an average annual rate of investment return of 8%, by the time he turns 45, he’ll have accumulated $238,610.
Investor #2 begins investing $10,000 each year beginning at age 35. Also having an average annual rate of investment return of 8%, by the time he turns 4,5 he’ll have $151,069.
The two investors have each saved $100,000, and achieved an investment rate of return of 8%, but Investor #1 has $87,541 more in his portfolio – which is about 58% more. So, why the big difference in portfolio size by age 45? The time value of money! Investor #1 had an extra ten years of that 8% rate of return, and it made all the difference.
That’s what you get going in your favor when you begin investing early.
An investment portfolio creates a sense of financial stability. One of the biggest benefits of having an investment portfolio early in life is that it provides a cushion that gives a sense of financial stability. You will face different challenges in life, and all will be easier to deal with when you have some money behind you. An investment portfolio gives you financial strength and that can get carry through into nearly everything else you do.
Even if you have debts to pay, those debts will seem smaller and easier to pay if you have an investment portfolio already established and growing. You’ll be shrinking your debts, while you are growing your investments. And, by the time your debts are finally paid off, you will have an investment portfolio to build on – you won’t have to start from scratch.
Grow your way out of debt. There is a way of paying off debt that’s easier than making extra principal payments. If you at least make the minimum payments on your debts, and slowly reduce them, while you’re building your investment portfolio, you will eventually be in a position where your investment pile will be bigger than your debt pile. Rather than paying your debts off little by little, you can then pay them off simply by writing a check.
Let’s say for example, that you have $20,000 worth of debt and zero investments. Five years later you still have $15,000 in debt, but you also have $40,000 in investments. At that point, you can pay off your debts and still have $25,000 in your investment portfolio.
In this scenario, you have two financial goals: to invest money and to payoff your debts.
But, you chose to focus on only one of them – investing money. But, along the way, you accumulated enough money that you were not only building your investment portfolio, but you are also building up enough money to payoff your debts too. In a way, you ignored your debts in favor of your investments, but ended up achieving both goals anyway.
Paying off debt first and investing later
There are also compelling reasons for paying off debt first, then investing later.
Guaranteed rate of return. The rate of return on investments doesn’t stay in one place. One year, you can earn 5% on your money, the next you can earn 10%, and the following year you could take a loss of 7%. But with debt, if you’re paying 10%, that rate will generally be the same no matter what. By paying off the debt, you’ll be locking in a rate of return of 10% – that’s 10% that you won’t be paying on the money you owe. That’s a guaranteed rate of return that you could never find in the investment markets.
Even if you invest your money in fixed income vehicles, you can never match the rate that you will be paying on your debts. That’s because debt carries an interest rate that’s always higher than what the banks will pay you on money you invest with them (it it wasn’t, the financial companies wouldn’t be making any money!).
Investment markets fluctuate – debt doesn‘t. When you invest money in the financial markets, whether it’s in stocks, mutual funds, ETFs, commodities or even real estate – the value of those investments will always fluctuate. Sometimes they’re higher, sometimes they’re lower, but they seldom stay in one place. In the event of a prolonged decline in a financial market you could lose a significant portion of your investment value for several years.
This is not true when it comes to debt. The amount of money you owe on a debt is fixed, except for that portion which you have paid down. If you put your extra money into investments, rather than into debt payment, you could see the value of those investments drop while your debts owed would still be the same. If that were to happen, then paying off your debts would be the better investment.
Paying off debt leads to more money to invest. Perhaps the biggest advantage of paying off debt is that it will leave you with more money to invest. If you try to invest money while you are still paying off debts, it may be difficult to save a significant amount of money. There may even be times when you have very little money to save and invest at all. But once your debts are paid all of your extra money can be poured into your investment portfolio.
This allows you to concentrate all of your efforts on one goal at a time. Initially, you’re putting all of your money into debt repayment, and that should allow you to payoff your debts much quicker. Once that goal is achieved, 100% of your money can then go into your investment portfolio to build that quickly. Divide and conquer at it’s best!
What about your mortgage?
If you decide that you want to payoff your debts before you begin investing, should that include paying off your mortgage? Probably not.
Mortgage debt is different from other types of debt in two important ways. First, it is secured by a major asset – your house. That’s also an investment; in a real way this is a debt that you maintain in order to own a major investment.
The second factor is the length of the loan. Mortgage loans typically run from 15 to 30 years in length. If you have to wait that long in order to begin investing money, most of the advantages of investing will be lost. Even if you were to pay off your mortgage in only 10 to 20 years, too much time will have been lost to make up for the benefit gained. Once again, it’s the time value of money at work.
A couple of other factors to consider in connection with a mortgage are that 1) interest rates on mortgages are usually the lowest loan rates possible, and 2) mortgage interest is tax-deductible. Both remove much of the urgency normally attached to paying off debt.
Which do you think you should do first, pay off your debt or invest?
***Photo courtesy of http://www.flickr.com/photos/68751915@N05/6793832171/sizes/l/in/photostream/
It’s Black Friday – I Slept In!
————————————————————————————————————————
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!
————————————————————————————————————————
Click here to enter my free $60 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 November 30th, 2012.
As I made my way to the check out lanes, I saw a Nintendo Gameboy display. My son loves video games, so I tucked one under my arm. It took us another ninety minutes to get through the checkout, and when it was all over I was so exhausted that I felt like death warmed over for days.
***Photo courtesy of imagerymajestic / FreeDigitalPhotos.net
What Is The ROI Of Student Loans? – Is College Worth It?
————————————————————————————————————————
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!
————————————————————————————————————————
Click here to enter my free $60 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 November 30th, 2012.
The following is a guest post by Jon Haver of PayMyStudentLoans.com. Jon graduated with $22.5k in student loans and now that it has been paid off, wants to show others how student loan forgiveness and consolidation can help keep student debt from controlling your life.
If you are looking at the thousands of college graduates with an average of $26,000 in student loans and wondering if going to college or getting an MBA in Finance makes financial sense, this article hopes to provide some context. I will review my personal experience and whether or not the $22.5k in student loans I took on getting my degree was financially the right decision.
ROI for My Education / Student Loans
With so many variables, it is difficult to talk about the “average” student, so here is a personal example, mine.
Now, this calculation may not receive a passing grade in any finance class, but it is a simple calculation to determine if my college loans were a good investment…
Before I went to college, I “could” have received a full time job in a factory where I worked for $15/hr. Instead, I went to a university, spent everything I made on my $15k/year school, and graduated with $22.5k in student loans 5 years later. When I graduated, I was lucky and received an engineering job that made $30/hr.
In Summary:
- Pre-Education Earnings = $15/hr
- 5 years in school and graduated with 22.5k in student loans
- Post Education Earnings = $30/hr
- Average Raise = 4%
- Rate of Inflation = 3%
Assuming regardless of whether I went to school or not, I would earn a 4% raise per year and the rate of inflation would be 3%, here are the results if I could go back in time to the age of 19…
- Value of my Lifetime Earnings when I was 19 (without my college degree) = $1.5M
- Value of Lifetime Earnings when I was 19 (with my college degree) = $2.2M
So, for a $22.5k investment in my education, I received a $700k benefit, a 31x return on my investment.
Now, like I said, this calculation is far from perfect, but if you want to play with it, you can watch a video and download it from here – Student Loan ROI Calculator. There’s also a screen shot shown below so you can get a feel for the layout of the calculator.
When Does College Not Make Financial Sense?
So, for me, I am confident that I made the right financial decision to get an education. But, the question then becomes who is the “marginal” student who would be better off financially not going to school.
Excluding the obvious cases, like spending money on tuition and then dropping out (although I am not sure if Bill Gates or any of the other 10 richest dropouts are missing their tuition money).
For a positive ROI on $26k in students loans and 4 years in college, you need to increase your $/hr earnings by $8 over what you would earn without a degree.
This assumes you have an alternative to either make $20/hr or go to college.
If you can make $20/hr now without relying on other sources, then you will need to make $28/hr when you graduate to make your $26k and 4 years in college a good financial investment.
Factors This Simple Calculation Didn’t Consider
Life Experiences
This article looked at this question from a purely financial standpoint. I will leave it to others to determine the non-financial benefits of going to college.
Ability to Handle Job Change
The calculation above assumed you would have 1 job whether you went to college or not, and therefore, may not be appropriate. So, we should add an adjustment factor in for which option would provide you with a better ability to cope with a job change.
Rate of Salary Increases
You will have to ask yourself which job is more likely to get bigger raises each year.
Keeping Up With the Joneses
This factor is interesting. Based on the studies documented in the book, The Millionaire Mind, if you graduate college with a high paying job, you will want to make up for lost time and spend more than your non-college educated self to attain your “picture-perfect-life.”
How Did You Do – Did You Get a Positive ROI on Your Student Loans?
***Photo courtesy of http://www.flickr.com/photos/davidg37/8019253411/sizes/l/in/photostream/
Do You Really Need X to Live?
————————————————————————————————————————
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!
————————————————————————————————————————
Click here to enter my free $60 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 November 30th, 2012.
But, how many of the things on our monthly budget are really must-haves? Consider these five things that you may not need after all:
1. TV service. With things like Hulu and Netflix streaming, there is really no need to pay a hefty cable or satellite bill every month. Few people ever watch TV live anymore, between our hectic daily schedules and our impatience with commercials thanks to skip-forward options. So, rather than storing a ton of episodes on your DVR, why not just watch them as you get a chance through a free (or drastically reduced) service?
2. A music collection. I know, I’ve added hundreds of tracks and playlists to my iPod, too…but maybe I can cross updating that data off my future to-do list. Because thanks to sites like Spotify, you can save as many songs as you like on your own customizable playlists (and share them with friends) for free if you’re willing to put up with ads or for a nominal fee if you’re not. (You can also get rid of your Sirius XM subscription thanks to sites like Pandora, which also offers free or paid options.)
3. A gym membership. Unless you absolutely have to have that pricey membership fee hanging over your head to force you to keep exercising, there’s no need to pay exorbitant prices for access to workouts you can just as easily do at home. Invest in a movement-sensing gaming system like the Xbox Kinect or Playstation Move, and you can do any number of workouts, from Zumba to yoga to your own personalized, digital-trainer-led fitness program, on your own time and in the comfort of your own home. Or, just go the good old-fashioned DVD route.
4. A second car. Plenty of couples with kids, jobs, and the whole shebang manage to survive with just one car. One spouse will carpool with coworkers or take public transportation. Spouses will work different shifts so sharing is easier. You realize you can walk to the corner store in 10 minutes instead of driving there in 1, and you will be okay. (It may even be fun to get out in the fresh air!)
Cars eat up a huge amount of our budgets. Between gas, maintenance, insurance, and parking, having one less car can save you tons of money.
That said, who says you even need one car? If you live way out in the country and have to drive 20 miles to get to anything, then yes, I would consider it a necessity. But, if you live in a city or suburb with readily available public transport, you may not need a car at all. Should you find you need one on occasion (like to pick up a friend from the airport), plenty of car-sharing services like Zipcar are springing up all over the country to meet this occasional need.
5. A big house (or a house, period). The longstanding American dream of owning a home has shifted, thanks largely to the skepticism caused by the mortgage crisis. But, it’s more than a matter of concern over buying more house than you can afford—it’s a matter of all the expenses and obligations that go along with home ownership, which many people are beginning to rethink.
Yes, some may argue that renting is like pouring your money down the drain (or into someone else’s pockets), but when you rent, you have your maintenance (indoors and outdoors) taken care of for you. If something breaks, someone else foots the repair bill. If it snows, someone else plows the driveway. Plus, you have much more freedom to pick up and move than you do when you’re locked into a 30-year mortgage and have to face the hassles of selling to “get out.”
Home ownership is a big commitment, with many ongoing costs (always more than you expected, as any home owner can attest to). So think twice before adding that white picket fence to your “every grownup should have ___” list.
How about you all? What things in your life do you currently pay for but think you could probably live without to save some money?
Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/brizzlebornandbred/4934882110/sizes/o/in/photostream/
Best Ways to Save Money During the Holiday Season
————————————————————————————————————————
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!
————————————————————————————————————————
Click here to enter my free $60 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 November 30th, 2012.
This is a post by MPFJ staff writer, Jeff. Jeff writes about Sustainable living and finances at his website, Sustainable Life Blog. Jeff also really loves the holiday season!
For me, the holidays are one of the most expensive periods of the year.
There’s money spent traveling to visit family and for gifts for loved ones. It seems like that gets me in the “spending spirit,” and I start to buy more things for myself as well. Of course, some of those are purchases that would have been made at some point, but that’s not always the case. Sometimes, I just buy things because I’m spending money anyway, and think to myself, “Well, what’s the harm in spending an extra 10 bucks?”
In order to make the holidays enjoyable (and easy on the pocketbook), I thought long and hard about the best ways to save some money this holiday season. While there are things that have to be paid for no matter what and whose price is largely outside our control (mostly plane tickets and gas), there are still plenty of ways to save this holiday season.
Share the Cost and Time Commitment of Making Meals Among Members of the Family
In my family on Thanksgiving, everyone above the age of 12 or so is responsible for a dish to bring to the table. This was one of my favorite traditions growing up, because it was fun for me to make a dish for Thanksgiving, and it really gave me a sense of ownership of the meal. I had something I could be proud of to serve (typically, I made the cranberry-orange relish). As I’ve gotten to the ripe old age of almost 30, I also have noticed that this is a great way to communicate and spend time as a family while working on a large project. Now, my uncle, dad, and I cook the turkey every year, and I look forward to spending some time with them (typically outside) chewing the fat, and babysitting the turkey that we are cooking for the year.
Go See Free Parades!
The day after Thanksgiving, there’s always a parade downtown where my aunt lives. The parade for me is kind of like the kick-off to the Christmas season, and is always fun to see. The best part about the parade is that it’s free, of course! We all dress warm, pile into the cars, and head downtown and find a spot to park along the parade route. There’s usually a group giving out free hot chocolates, and we are able to have a fun, free and entertaining night, after all the stress of putting together a huge meal.
Most towns that I’ve been around on Thanksgiving have a parade. If you’re unsure about your town, check the website for the city, or ask some friends. Those that have lived in the area a while will know. If you look hard and come up with nothing, there’s always the classic Macy’s Thanksgiving Day Parade. The parade is typically live on TV.
Take Advantage of the Leftovers
Don’t forget about the staple of everyone’s Thanksgiving, the leftovers. When I was younger, I used to really enjoy the leftovers, then after about a week of turkey sandwiches, it got old fast. One of the best ways to make the leftovers more palatable is to find some unique way to use them in other dishes. There are plenty of great recipes out there, but one of my favorite collections of recipes is from the New York Times Mark Bittman, and here are his 20 favorite Thanksgiving leftover recipes.
Another great place to look is the Food Network. My wife is a vegetarian, so we usually leave the turkey leftovers for some of my other family members, but at our table there’s always plenty of food, and plenty of leftovers!
These are just a few ways to save on holiday expenses. Remember, the weekend is about family and being thankful for what you have – and that’s always free!
What sort of traditions do you have on Thanksgiving? Do you normally stay at home or visit out-of-town relatives? Do you have any great leftover recipes? If so, please share them in the comments!
***Photo courtesy of http://www.flickr.com/photos/antonellomusina/66644342/sizes/l/in/photostream/
Is a CSA (Consumer Supported Agriculture) Right for You?
————————————————————————————————————————
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!
————————————————————————————————————————
Click here to enter my free $60 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 November 30th, 2012.
What Is a CSA?
Where Can You Find a CSA?
How to Find Out More
What Are the Risks with a CSA?
Other Types of CSAs
***Photo courtesy of http://www.flickr.com/photos/48424574@N07/5041040139/
Carnival of Financial Simplicity # 14 – November 18th, 2012 Edition
————————————————————————————————————————
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!
————————————————————————————————————————
Click here to enter my free $60 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 November 30th, 2012.
Welcome one and all to the 14th (November 18th, 2012 edition) Carnival of Financial Simplicity, a weekly roundup of the top 20 posts demonstrating how simple financial success can be. This is My Personal Finance Journey’s first time hosting the Carnival, so a big thanks to Nick for letting us host!
To most of us, simple and finance are two words that do not often seem like they belong in the same sentence together. After all, the financial media has made it seem like we have to use incredibly sophisticated individual stock selection analysis techniques in order to achieve financial success and ‘beat the market.’ Furthermore, after you open a checking, savings, or credit card account these days, it seems like another competitor comes out with a better deal or product that makes us want to continually adjust our holdings to greater lengths of complexities.
However, my belief is that this is simply not the case. Your finances do not have to be complex in order to achieve success. In fact, I would argue that the simpler and more boring your finances are, the more success you will likely obtain. This is definitely my belief when it comes to investing (i.e. passive investing beating 70% of professional stock pickers).
So, without further ado, let’s get on to the top 20 articles demonstrating some awesome ideas on how to keep your finances simple!
Spending and Budgeting
Average Joe presents 3 Steps to Better Homeowners Insurance posted at Average Joe’s Money Blog. In this article, Joe shows how one of his clients was able to add an additional $40 a paycheck to their 401K plan by shopping for new homeowners insurance.
John presents Easy Car Maintenance Tips to Make Your Car Go the Distance posted at Modest Money. If you’ve ever owned a car, then you have probably spent money repairing it. My cars always seem to break down at the most inopportune moments. By implementing some easy car maintenance tips, you can help further the life of your car and save yourself thousands of dollars in future car repairs.
Jeff Rose presents Parents: Avoid the #1 Mistake When Saving For Your Kids College posted at Good Financial Cents. Every parent wants to provide for their children; to give them a better life than they had. This often carries over into helping them pay for college.
David Leonhardt presents My best financial tip posted at Self-help Happiness Blog. This blog post is part of the Blog for Financial Literacy campaign, where each participant offers up their best financial tip. Most people who are miserable about money are miserable because they have ignored this one simple tip: don’t spend more money than you have.
Glen presents Credit Card vs. Charge Card: What’s the Difference? posted at Credit Card Smarts. We tend to forget that credit cards and charge cards are different animals. Even though they are similar you need to know what makes each different.
Young presents Using Groupon, Living Social and Other Sites Like Them To Check Out a New City posted at Young And Thrifty. One of our most popular articles on this blog is the one Young wrote concerning sites like Groupon and Living Social, as well as lesser-known sites that offer similar discounts. We expand on it.
Darwin presents How Much is Too Much to Leave Your Kids? posted at Darwin’s Money. How Much is Too Much to Leave Your Kids? This article delves into estate taxes and personal responsibility to understand.
Bob presents How to find the lowest price for holiday flights posted at ChristianPF. If you don’t yet have plane tickets for your upcoming holiday travel, then this would be a perfect time to start researching fares. In order to help you get the best price on your plane tickets, you should learn how to use the ITA Matrix website.
Ted Jenkin presents Do You Eat Out To Much? posted at Your Smart Money Moves. If you’ve noticed that your disposable income may be sneaking out the back door of your family finances, one of the causes could be between the lunches and dinners that you eat out every week. So, how can you fix this hole in your budget?
Savvy Scot presents The Saver: In Which Category Do You Belong? posted at The Savvy Scot. WARNING: This post may cause a realisation! The Savvy Scot broadly categorises the 3 different types of saver – Disciplined, Occasional and Horrendous – the question is; are you really the type you think you are? Oh and there is $50 to be won by reading here too…
Making Money
FMF presents Our Trip to DC (And a Few Ways to Save) posted at Free Money Finance. From October 12 to October 17 our family took a trip to Washington, DC. I thought I’d share with you what we did, the financial impact of the trip, and a few savings tips we picked up along the way.
Vanessa presents Myth! Working overtime isn’t worth it because the government takes more than I earn posted at Vanessa’s Money. For five years I worked for a group of people who argued that working more than 35h a week meant that you’d earn less money after taxes were deducted. I did the math to prove them wrong.
Danny Kofke presents Is Time More Important Than Money? posted at One Money Design. A recent online survey done by Mom Corps, a staffing firm, shows that 42% of working adults are willing to give up a portion of their salary to have more flexibility at work. Would you do the same?
Suba presents Early retirement strategy on one income : Can we still retire early with our income cut in half? posted at Wealth Informatics. We want to retire by 40. The goal just got more challenging with me quitting my job, thus cutting our household income in half. Is it still possible for us to achieve this dream?
Miranda @ Financial Highway presents How To Make Money posted at Financial Highway. Even the best of times, one of the most common questions asked is, “How to make money fast?” While an increase in income can ease the way things work in your personal economy, it won’t necessarily solve all your problems. You will still need a plan for the wise management of your financial resources.
Investing
Infinite Banker presents How to get the Highest Rate of Return from your Qualified Plan posted at Becoming Your Own Bank. Learn how you can get the highest rate of return out of your qualified plan.
Michael presents Why Rebalance Your Portfolio? posted at Financial Ramblings. Simply stated, rebalancing your portfolio helps you to reduce tracking error and keep your risk in check. Nothing more, nothing less. Sure, you can “let your winners run” in hopes of capturing higher returns, but that comes with increased risk.
Emily presents The Great Debate: 15-Year vs. 30-Year Mortgages posted at Evolving Personal Finance. I lay out all the figures that show that a 30-year mortgage has an advantage over a 15-year mortgage in terms of net worth outcomes and then list all the mitigating factors that make those numbers less relevant. Which do you prefer, numbers or psychology?
Debt Reduction
Glen Craig presents Are You Ready to Fall Off the Fiscal Cliff? What You Need to Know if the Bush Tax Cuts Expire posted at Free From Broke . The fiscal cliff is coming, the fiscal cliff is coming! Is the so called tax cliff the impending doom many think it is? See what the fiscal tax cliff is all about.
Nick presents Anti-Snowball Method to Payoff Debt and Save More Money posted at My Dollar Plan. There is a method that has been around for a while now called the “Snowball” method of paying down, and eventually paying off, credit card debt. If you’re familiar with it, you know it gives you a boost psychologically by getting smaller debts paid off quicker, then allowing more money to be used for larger debts. However, if you’re more interested in saving on interest payments, there’s another way.
***Photo courtesy of http://www.flickr.com/photos/bjornmeansbear/4773836932/sizes/l/in/photostream/
Make Public Transportation Work for You (and Save Money)
————————————————————————————————————————
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!
————————————————————————————————————————
Click here to enter my free $60 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 November 30th, 2012.
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. Please welcome her to the MPFJ family!
I live in Southern California, which is generally synonymous with car culture.
Heck, we even have Cars Land at Disneyland, which looks like an old Western town you might find along the 10 freeway 100 miles east of Los Angeles. We love our cars, and we do a lot of single-rider driving in our vehicles. I grew up here and never rode a bus until I was studying abroad in Spain, when the miracle of public transportation hit me. It’s only 55 cents to ride the bus, and it saves me a 30-minute walk or a 6 euro cab ride? What is this magical bus concept, I must know more! I’ve been much more receptive to public transportation ever since, and the following are a few tips to get over your hesitation to use public transportation.
1) You’re paying for it!
That’s right, you are paying for public transportation in your region already! Whether it comes from property taxes or a special sales tax (in LA, all future rail projects are funded by Measure R, a half-cent sales tax for the next 30 years), taxpayers fund public transportation. And it’s a lot of money! New capital projects are incredibly expensive. Light rail lines cost anywhere from $100 million to $3 billion dollars, and bus rapid transit projects cost up to $100 million dollars. Service costs money as well, and all of these costs are funded in part by local taxpayers and in a smaller percentage with federal funds (still your money). So, if you see a brand new bus line or light rail in your town, try it out and see if you can use it for some of your transportation needs. After all, it’s out in place to serve your community and you paid for it!
2) Use public transportation for simple but long routes
I use public transportation fairly often, but I am lazy. I like to keep things simple. If I see the route I need to take has 4 bus transfers, I’m just going to drive. But, a rapid bus that goes straight from my house to downtown LA? I’ll take it. The $6 Flyaway bus that goes from LAX to Union Station? Nice! If you regularly find yourself traveling across town, research your public transit options—they might be easier than that drive you’ve been doing daily. Plus, it’s more than likely going to be less stressful for you doing the driving yourself!
3) Bring your pets, your bike, and your headphones
Not every bus or train allows pets, but you would be surprised to see that many do. Most buses also now have bike racks in front of the bus and you can bring your bike onto a train as well. Don’t forget music or a book to read- the best part of not driving is that you can actually use your time to do something productive! I recommend listening to a Joe Rogan podcast or Pandora’s Urban Comedy station.
4) Stay safe and alert
No matter what, you should take common sense precautions for safety. Don’t fall asleep on the bus, don’t mad dog anyone, and sit closer to the front. But, be sure to give up your seat for disabled people or seniors.
Public transportation doesn’t have to be uncomfortable. Check out your service’s website and learn about the routes, schedules and fares. You can find a route to take every now and then or even more frequently to save money and try something different!
How about you all? How often do you use the public transportation in your area? Which mode of public transport do you like the most?
What things have turned you off from taking public transportation in the past?
Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/elsie/11834681/sizes/o/in/photostream/
5 Ways to Raise Money-Smart Kids
————————————————————————————————————————
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!
————————————————————————————————————————
Click here to enter my free $60 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 November 30th, 2012.
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.
In a national survey by Ipsos America Inc., a top-notch research company in the field of finances and marketing, it was found that 89% of the parents in the United States consider themselves important contributors in the financial management skills of their children and in raising money-smart kids.
Jessica Cecere, regional president of the South Florida branch of the nonprofit credit counseling and education organization called CredAbility, supports this. Every time the counselors assist their clients in managing their finances, they would always say something along the lines of “I wish somebody had taught me this when I was younger.” Brad Smith, president of BMO Harris Bank in Kansas City, says “it’s never too early to start talking to your kids about money and the world of finance.” He adds further that “financial learning should start at home. Even very young children can learn basic money skills, while older children can be taught about the stock market and the importance of setting financial goals.”
Though financial responsibility can be learned in school (but it is not often, if ever, taught in US schools), it is important for parents to instill the value of money themselves. This way, the children can develop good financial habits as they grow up and avoid getting into financial trouble as an adult when the economy becomes tougher and when the unemployment rate goes up.
Raising money-smart kids should start as early as possible, with the simplest yet most effective steps like the following:
1. Save with Piggy Banks
Piggy banks may seem trivial, but these toys provide the first lessons in saving and learning the value of money. Cecere of CredAbility says “when children are 5, 6, and 7, they can’t really understand the idea that one day something may happen, and you may need to rely on your savings. But, if somebody has a habit of saving and they always have, they will get that when they need it.”
It is also advised to teach them how to separate and compartmentalize their savings to effectively budget what money they have on hand. Three separate piggy banks labeled “give”, “save”, and “spend” not only budget their coins but also teach the lessons behind each term—giving, saving, and spending.
On a larger scale, these lessons can be helpful once they are taught the importance of contributing financially to the household. The parent`s occupations can be used as a jump-off point for this discussion. Aside from learning the value of saving their own money, the children will understand the hardships behind earning and this will, in effect, teach them not to ask their parents to spend money on unimportant material things.
2. Open a Bank Account
After the simple lessons of piggy bank savings, the child may be ready to have his/her bank account. As parents, you can open a savings account on their behalf and teach them how they can earn interest. After they have regularly set aside their money for saving, tag them along to the bank and deposit the money in their account. It is important that they be familiar and comfortable inside a bank even at an early age.
3. Have an End Goal
Saving money can be easier if the kids have specific items to save for. For example, if they ask you to buy a bike, you could say that they can save for it themselves from the cash gifts that they get for their birthdays. These goals can even push them to get a summer job and earn their own money for something they want.
4. Take them Shopping
No, not for toys, but to buy groceries for the whole family. This will give them a picture of how much money is spent on everyday necessities. This will also show them how much they need to spend for day-to-day living and how much they need to save to purchase luxuries if they want to.
Cyndi Finkle, mother and blogger of “Practical and Meaningful,” shares a tip: “Send your kids to one section of the market with a list of fruits and vegetables that you want and give them $20 to spend. They will ask questions and figure out how much of each thing they can get and start to understand the principles of money.”
5. Talk investments.
After learning the ropes of saving and banking, a young adult should be ready to learn about investing.
Educate him/her with the concepts of buying stocks and a balanced investment portfolio. Teach him/her that the newspaper’s business pages should not be ignored as it contains the stock prices that he/she needs to learn how to read. Give him/her tips on risk-taking when it comes to investments, making informed decisions based on previous stock prices, and observing price changes over a span of a week. It is best to cite companies he/she is familiar with as examples, like McDonald’s or Disney.
After tracking a company’s stocks for some time and with a small sum of money in the bank, a young adult can now consider an actual investment. Lay down the various investing instruments that are available. Encourage them that investing at an early age can result to more money in the long run and that this can help them pay for college or even a car after graduation.
How about you all? What are you doing to teach your kids about money?
***Photo courtesy of http://www.callmewhatyouwantevencheap.com/wp-content/uploads/2012/11/money-smart-kids.jpg