My Personal Finance Journey

Carnival of Retirement # 7 – Retirement Statistics – February 20th, 2012 Edition Edition

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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 $141.20 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 February 29th, 2012.

Welcome to the 7th Edition of the Carnival of Retirement. If you want to submit a post for next week’s edition, please use the submission form. Next week’s edition will be hosted by Money Reasons.
Retirement is a long-term game. There are so many things you need to do to prepare for retirement, and it’s not just saving and investing. Of course, having a great retirement portfolio is best, but to get there, we need to live within our means and build wealth along the way. This edition includes many retirement articles along with posts that will help us get there.  Enjoy these great posts from around the Internet!


Also – since this is the Carnival of Retirement, I’ve added in several statistics that describe the current retirement landscape in the United States. Looking at the current picture, it seems that retirement is a topic that needs to be taken very seriously if people want to live well in their ‘golden years.’ So, it’s definitely good to have a carnival that brings this topic in to the limelight.
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Retirement Statistic # 1 – Currently, 35% of people over the age of 65 rely in an almost full capacity on Social Security alone for retirement needs.
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Top 3 Editor’s Picks


1. Kacie from Sense to Save published How much should you save with each paycheck to reach retirement goals?, saying, ‘Will saving 10-15% for retirement be enough for you? Or, say you’re maxing out retirement accounts, but got a later start. Will that be enough? Calculate how much you’ll need to save with each paycheck to hit your nest egg target.’


2. MMD from MyMoneyDesign published Which is Better – Points or No Points on Your Mortgage?, saying, ‘Will buying points when you get a mortgage or refinance save you a lot of money, or should you pass on them? I’ll show you how to calculate the difference and share my Excel worksheet to help you decide for yourself!’ 


3. A Blinkin from Funancials published Loyalty is for Losers, saying, ‘Remember years ago, when you could walk into a bank or a bar and they would greet you by name? If you visited an establishment enough, you would be known as a regular. This is not a desired outcome and here is why.’


Note from Jacob – This is a cool post because it definitely has been my experience that in the journey to retirement (whether it be working at a company, the bank/brokerage to accumulate retirement savings, or where to take out insurance policies), you almost seem to be indirectly penalized by staying in one place. For example, in my experience, one of the quickest ways I’ve seen to get a raise/promotion is to switch the company you work for. In addition, I’ve seen that if you stay with the same bank or insurance company, your rates tend to increase year to year (or you have fees tacked on). However, if you switch banks/insurance companies, you seem to get an immediate price decrease. 

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Retirement Statistic # 2 – In today’s society, each retired person’s benefits are contributed to by 3.3 workers, down from 16 workers per retiree in 1950.
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And, listed below are the rest of this week’s great submissions! Enjoy!

Dr Dean from The Millionaire Nurse published A Million Bucks? In My 401K? Ya Gotta Be Kiddin!, saying, ‘It’s not rocket science. It doesn’t take a street smart investor. How do you get a million bucks in your 401K? Read on, brother.’

Evan from My Journey to Millions published Never Assume a Person Has a Completed Estate Plan, saying, ‘Testamentary intent should be the most important goal but that is predicated on the fact that some form of estate planning is actually gets done!’

Marie from Money Spending Mommy published 6 Reasons to Update Your Will, saying, ‘Perhaps you, like many others, believe that once your will has been drawn up, that’s the end of the process. While wills have never been anyone’s idea of fun, it’s important to review your will on a regular basis. There are many reasons to pull out your will and give it a thorough review. Here are some of the most common reasons:’

Peter from Bible Money Matters published Lending Club Returns Continue Upward Trend at 11.44%. Lending Club Passes 500 Million In Loan Originations, saying, ‘I‘ve been investing with Lending Club for a couple of years now, and I’ve gone from a skeptic when I first started investing with the service, to someone who is convinced that Lending Club can be an integral piece in any person’s investing strategy.’

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Retirement Statistic # 3 – While the average retirement savings in the US is nearly $50,000, the median (so the amount which 50% of Americans have saved less than and 50% have saved more than, i.e, the 50th percentile value) is ONLY $2000. Wow!
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Kay Lynn from Bucksome Boomer published Save Money by Living a Simpler Life, saying, ‘Doesn’t it just make sense to live simpler? The fewer things you own, the fewer maintenance costs you will have, and the more you will save in the long-run! Live a simpler life, and you will start seeing your bank account grow beyond your wildest dreams!’


Miss T. from Prairie Eco Thrifter published 10 Reasons You’re Broke, saying, ‘If you always have more month than cash and never seem to get ahead or even to even, it’s time to look at some reasons you may be broke.’

FG from Financial God published Harper’s Plan to Cut Canada’s Old Age Security OAS Program, saying, ‘The Internet is afire with news that the Conservative government of Canada is planning to raise the minimum age for Old Age Security, as part of a comprehensive government-wide cost-cutting measure for the upcoming federal budget. ‘

Little House from Little House in the Valley published How Does Your Rainy Day Fund Stack Up?, saying, ‘According to Mint.com, 50% of Americans claim that they would have difficulty coming up with $2,000 for unexpected expenses. Around here, that’s what an emergency fund is for. However, I guess this is still a novel idea to many Americans based on data Mint.com collected. Check out the infographic yourself (click on the link to see a larger version on Daily Infographic):’

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Retirement Statistic # 4 – 36% of Americans report that they do not contribute anything towards retirement currently.
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Don from MoneySmartGuides published Investing: What You Cannot Control, saying, ‘This will be a two part posting on what you can and what you cannot control when it comes to investing. This first part will highlight four things you cannot control. Picking winning stocks, picking superior managers, timing markets, and one more…’

Jen from Master the Art of Saving published Tax Refunds- The Good, The Bad and Why We Get One Anyways, saying, ‘Financial experts along with many personal finance bloggers frown upon getting tax refunds. Why? They actually have a valid point—why loan the government…..’

Aloysa from My Broken Coin published How Realism and Creativity Can Help You Get Out of Debt, saying, ‘Sometimes I get frustrated with my life and myself because it seems that paying off debt is an endless process, a perpetual torture of saying no, a continuous refusal to spend on something that makes me happy. ‘

Dividend Ninja from The Dividend Ninja published It’s Only Castles Burning, saying, ‘Investor Seth Klarman, founder of the hedge fund Baupost Group, wrote a book on value investing, called Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor. Read an update on Klarman’s activities’

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Retirement Statistic # 5 – When retiring at the age of 65, 62% of people have less than $25,000 in savings.
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LaTisha from Financial Success for Young Adults published First Rental Property: Find Investors or Go It Alone?, saying, ‘Starting your first rental property? Deciding whether or not to take on investors has many advantages and disadvantages.’

Ryan from Early Retirement Investments published Why Your Children Should Open a Roth IRA at Age 18, saying, ‘These are the reasons why children should open at Roth IRA at 18 years old or earlier.’

Suba from Broke Professionals published The Definition of Broke: What Does It Mean?, saying, ‘I often catch myself saying I’m broke… but is it true? Just because you have no money in the bank doesn’t necessarily fit the definition of broke.’

Kanwal Sarai from Simply Investing published Top 3 Tips for Successful Investing, saying, ‘The beginning of the new year is a great time to plan for the future. Plan on how you will be able to earn more passive income this year than last year. Here are 3 tips to help you earn more:’

Daniel from Sweating the Big Stuff published Lending Club Returns at 15.87% in February 2012, saying, ‘I started investing in Lending Club in 2011, and so far my returns have been stellar. Using some smart criteria, I’ve been able to crush the average.’

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Retirement Statistic # 6 – For the next 19 years, 10,000 Baby Boomers will reach retirement age each day.
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Erika from Newlyweds on a Budget published So I think I need to reevaluate my goals, saying, ‘I think I made my goals too easy for the year because we’ve already completed a huge chunk. 1. Pay off credit card debt. We’re on track to pay this off by April 1. Hoping the move doesn’t put a wrench in our plans. 2. Contribute full company match to 401K. Done! I contribute 3 percent, read my other accomplishments’

Andy from My Retirement Blog published The 6 Most Reliable Ways to Save For Retirement, saying, ‘Many Americans are planning for retirement earlier than ever. While the reality is that tough economic conditions may force them to retire years later than they wanted, this is having the dual affect of encouraging more foresight and planning.’

Steve from Money Infant published Saving Money and Time Through Automation, saying, ‘Automation is one of the keys to unlocking your financial freedom. Chances are you already automate some of your savings plans like 401k and emergency savings’

Jester from The Ultimate Juggle published How to Accept Advice from Others, saying, ‘Who do you ask for financial advice. Find out who you should be asking for financial advice and learn how to accept it gracefully.’

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Retirement Statistic # 7 – 24% of US workers have postponed their target retirement age in the past year.
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PITR from Passive Income To Retire published Why Cash Flow is Important, saying, ‘Find out why cash flow is important in an early retirement plan. The importance of cash flow rests the 2 ways it helps me fulfill my dream.’

krantcents from KrantCents published Invest Your Tax Refund or Send It to Me!, saying, ‘Invest your tax refund or send it to me! It is all about choices. What are you going to do? I know some will pay down debt, add to savings or fund an IRA. If you are going to go out and spend it on dinner, clothes, electronic toys or something that will break, wear down, etc they you’re better off sending it to me!’

Jeffrey from Money Spruce published Wealthy, Successful Bloggers: Don’t Simply Follow Their Frugal 
Advice, saying, ‘I often wonder if I’m brainwashing myself with the stuff I just want to hear. Lately, I’ve been reading a lot of blogs, books, and other advice about self-employment and starting your own business. I’ve mostly convinced myself that working a 9-5 job isn’t the key to happiness and success in my life.’

Nathan Kim from Everyday Money Info published Roth IRA or Emergency Savings? Yes!, saying, ‘Instead of making the choice between funding your retirement or building up emergency savings, you can do both with a Roth IRA.’

Pat Huddleston from Investor’s Watchblog published Is Your Nest Egg an Adviser’s Piggy Bank?, saying, ‘Tips on how to protect your retirement investments’

Melissa from Fiscal Phoenix published Diversification to Reduce Risk, saying, ‘When you first start investing, you may be scared that you will lose money. Putting your money at risk is never easy especially when you have fear that you will lose that money. Well, there are a few ways to reduce or minimize the risk of losing money.’

    ***Photo courtesy of http://s0.geograph.org.uk/geophotos/02/25/21/2252194_77b5e5a4.jpg
    ***Retirement statistics courtesy of http://endoftheamericandream.com/archives/10-incredible-statistics-about-americas-coming-retirement-crisis-that-will-blow-your-mind and http://www.smartmoneyadvice.com/retirement-statistics.html and http://www.businessinsider.com/facts-about-retirement-crisis-2010-12#the-50-states-are-collectively-facing-517-trillion-in-pension-obligations-but-they-only-have-194-trillion-set-aside-in-state-pension-funds-11

    What Factors Contribute to the Increasing Cost of Car Insurance?

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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 $141.20 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 February 29th, 2012.

    The following is a guest post by Denver Burke. Enjoy! 

    What Factors Contribute to the Increasing Cost of Car Insurance?
    Many households are becoming increasingly cash-strapped, and one factor that is not helping many is the rising cost of insuring their vehicle. Car insurance premiums have continued to soar over the past twelve months, and a report from the motoring organization, AA, has suggested that motor insurance has risen by as much as 40%.
    With no corresponding rise in road traffic accident claims, it can be difficult for drivers to comprehend why they are being forced to pay so much. The insurance industry says that despite the spike in insurance premiums, very few firms manage to make much profit on their policies because of a number of other factors, which are having an adverse influence.

    Contributing Factor # 1 – Fraud

    Fraud is a real problem for car insurers, and the incidence of deliberately staged collisions is on the increase. During 2010, 30,000 staged collisions were recorded by the Insurance Fraud Bureau, with each incident averaging around £17,000. As the cost of fraud has to be absorbed by honest policyholders, the net result is an increase even for drivers who have made no claims.

    Contributing Factor # 2 – Rising Number of Motorists Without Insurance

     

    Another reason for the rise that may rankle with honest drivers is the number of motorists who are on the roads without insurance. The Department of Transportation figures suggest that approximately two million drivers do not have insurance, and 23,000 people are hurt by uninsured motorists each year. The vast majority of insurance policies cover damage and expenses caused by uninsured and untraceable drivers, a cost which once again trickles down to policyholders.

    Contributing Factor # 3 – Rising Number of Personal Injury Claims

     

    Personal injury claims also have a small effect and the Association of British Insurers estimates that approximately 10% is added to each premium to pay for the costs of claims. Many insurers have to pay hefty legal expenses when dealing with personal injury claims, a reason why there are calls for more structure to be brought to the charges.

    Contributing Factor # 4 – New Legislation for Male vs. Female Insurance Premium Rates

     

    One factor that has not yet fully been felt but will have a significant impact on premiums is the recent ruling from the European Court of Justice. The court ruled that using gender to differentiate premium rates was discriminatory, so from December 2012, no insurer will be allowed to offer separate rates for men and women. 


    Rates for women, particularly amongst younger drivers, are currently lower than those offered to men, as statistics show they are less likely to be involved in an accident. The change in law means that insurance for women will become more expensive to take into account the higher incidence of claims amongst men, whilst insurance for males is likely to drop slightly but not significantly.

    Contributing Factor # 5 – Increase in the Cost of Fire and Theft Insurance

    In the past, third party fire and theft insurance was a far cheaper option than comprehensive insurance, but now, the average quote for this is £1,533. This is an increase of 82% and much higher than the rise seen in fully comprehensive cover. The AA says that one of the reasons why third party fire and theft has become more expensive is because not all insurers now offer this and also because it is the type of cover usually taken out by higher risk drivers.
    The Office of Fair Trading is investigating the reasons behind the recent sharp rises in insurance and, and everyone waits to find out the outcome. Although it is possible to get a cheaper premium by shopping around, car insurance remains a vastly inflated expense for the majority of drivers.

    How about you all? Do you feel you are currently paying a fair price for car insurance? Have your premiums increased very much recently?  


    How do you feel about the issue of different genders being charged different prices across the board for various types of insurance? Do you think this is justified and fair or is discriminatory?


    Share your experiences by commenting below!

    Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

    • Good article here! To me, it’s always interesting to examine the reasons (and possible reasons) behind pricing differentials and changes for commonly purchased things, like car insurance.
    • @ My hypotheses for why car insurance premiums may be increasing – 
      • Personally, I have several hypotheses for why car insurance premiums could be on the rise, assuming that the total number of road accident claims has not increased (as mentioned in the study mentioned above).
      • Hypothesis # 1 –  With the unfavorable world economy, many people that are running low on money possibly elect to stop their insurance coverage in order to pay for other living requirements. Since there is a smaller pool of insurers to spread the overall risk among, insurance premiums for the remaining insurance clients could be increased.
      • Hypothesis # 2 – One of the primary ways that insurance companies work is that they take the small monthly premium payments from customers and invest the money in long and short term securities in order to make money. Since the interest rates on savings accounts are pretty abysmally low these days, the insurance money pool doesn’t grow as much, causing the company to tend to charge more in premiums from customers in order to make a profit and pay their expenses.
    • @ The occurrence of fraudulent staged accidents – Personally, I have never heard of this happening. Do people really stage fake accidents in order to collect insurance? Anyone out there have experience with hearing of people doing this?
    • @ Rising number of motorists without insurance – This factor makes a lot of sense to me. If someone else hits you who doesn’t have liability insurance, you and your insurance are stuck with paying the bill. This increases the amount that the car insurance company has to pay out, thus potentially increasing premiums for everyone.
    • @ Offering similar auto insurance rates for men and women – The issue of whether or not men and women paying different insurance rates is justified is rather fascinating to me.
      • As I found in the post mentioned above about how car insurance rates varied based on age, gender, and geographic location, it is clearly allowed by law in the United States to charge different rates based on gender.
      • In doing some research while writing these comments, I found out that legally discriminating based on gender and age seems to be allowable in the insurance realm (includes health insurance, where women sometimes pay 50% more than men), while discrimination based on race, color, religion, or national origin are not allowed in the field.
      • What is interesting to me is that discrimination based on age (well, as long as a person is of legal age) and gender is NOT allowed in most other realms of law – such as renting an apartment to a tenant or hiring for a job.
      • Looking at this current landscape, it begs the question of WHY age and gender discrimination is allowed in the insurance realm?
        • Of course, there is no one simple answer to this question, and I believe that this topic will continue to be debated for many years. But, it is interesting to think about nonetheless.
        • So, I’ll leave this question up to you all. Do you have any thoughts for why this is?

    ***Photo courtesy of http://images.cdn.fotopedia.com/flickr-201099447-hd.jpg

    What Are Your Options For Borrowing Money in Today’s Economy?

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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 $141.20 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 February 29th, 2012.


    The following is a guest post. Enjoy! 

    What Are Your Options For Borrowing Money in Today’s Economy?


    Even in the current economic climate, there are still numerous ways of borrowing money when you need it. Your bank or other financial institution usually provides a range of personal lending options, such as an overdraft facility, loan, credit card, or mortgage, depending on your needs and financial situation.

    Overdrafts


    There are two main types of current accounts – a basic bank account or a standard bank account. Your bank will not allow an overdraft facility if you only have a basic bank account, as it is normally only offered to people with a bad credit rating. If you have a standard current account, then you can apply for an overdraft facility. Your bank, if it agrees to provide you with an overdraft facility, will allow you to go overdrawn up to a maximum level, either for a specific purpose or for use in case of need.

    An overdraft is usually used for short-term borrowing requirements because the interest rate can be quite high.  And, if you remained overdrawn for an extended period of time, the interest payments could be considerable.

    An example of when an overdraft could be suitable is when you need to pay for a holiday as soon as possible to secure a good deal and you are due a bonus in a few weeks time (i.e. you are certain that you can pay off the overdrawn money in a very short time period). To pay for the holiday, you could use your overdraft facility, and once your bonus is received, the money would be used to clear the overdraft. You would only pay a small amount of interest for the period that you were overdrawn.

    Secured and/or Unsecured Personal Loans


    If you wish to buy a car but do not have the funds to do so, you could take out a loan and repay it monthly over several years from your income at a monthly repayment figure that is affordable. Normally, you can expect the interest rate on a loan to be lower than that of an overdraft facility/account feature.

    Credit Cards


    A credit card is often used to buy an item that you do not have the money to pay for in one lump sum. The credit-card company will give you a spending limit that you can have on the card. You will be expected to make at least the minimum monthly repayments, which are based on a percentage of the amount outstanding.


    Interest rates on credit cards tend to be higher than those for overdrafts and personal loans. If, however, you were to clear the full balance outstanding on your credit card by the due date, then no interest would be payable, which would make it cheaper than using your overdraft facility. If you make a cash withdrawal with a credit card, the interest rate is normally significantly higher than if you used your card at the retailer to buy an item. You also pay a cash handling charge to the credit-card company, which would not be the case if you took cash out of your bank account.

    Mortgages


    Normally a mortgage is used to buy a house, and you would then repay it over many years, usually 15-30. Interest rates on mortgages tend to be lower than other forms of lending (because of the security that home ownership represents and the payback probability), but because of the lengthy repayment term, the interest over 15-30 years can add up to a considerable sum.
    However, some lenders will provide a further advance (probably in the form of a home equity loan) on a mortgage, for example to buy a car. The interest rate will be much lower than those for personal loans, so it can be a good alternative if you can repay it within a few years.

    How about you all? What options do you currently or have you used in the past to borrow money? How was your experience with it? Did you have trouble paying off the balance in a timely fashion, or did it go pretty smoothly?


    In your experience, has paying off debt been a bigger priority so far in life than saving for retirement? 


    Share your experiences by commenting below!

    Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

    • Overall, even though I am not the biggest fan of borrowing money/being in debt, I am also a realist and believe that since many people are short on money these days with no emergency reserves, it’s important to fully understand your options of where to obtain money if you truly need it. 
    • Personally, here’s my “mantra” on borrowing money that I feel people should shoot for in their personal finances: only borrow money (and pay interest on that money) in order to invest in and/or build appreciating assets. 
      • What this means is that in general, I believe that people should only borrow money to either:
        • Invest in a businesses, and 
        • Invest in other assets that are able to increase in value over time. 
        • I would also say that borrowing money to go to a public university (NOT an unnecessarily expensive private college, which, in my opinion, doesn’t provide enough of a return on your money to make it worth the cost).
      • All other expenditures should be handled through periodic savings, not through debt. Several examples of things that should not be funded through high interest rate debt are as follows:
        • Vacations/holidays.
        • Cars (It’s now more complex to fully explain why car financing isn’t a perfect solution since many auto dealers are now offering 0% interest rate loans. As such, this will be the topic of a future post).
        • Furniture.
    • So, described above is how I believe people should shoot for operating their personal finances and borrowing activities long term. 
    • However, I’ve learned in my dealings these past two years with blog readers and my friends that a lot of people in today’s economy either a) are already saddled with credit card and student debt and/or b) simply do not make enough money to save periodically in order to buy cars, furniture, or take vacations. Essentially, they feel that taking on more debt is their only choice.
      • As you can imagine, in this case, things become more complicated. 
      • For some non-essential items like taking a vacation or buying furniture, there are options for spending much less money (taking a cheap vacation near-by or buying used furniture come to mind).
      • However, for things like medical care or having an automobile to drive to work, these are essential items that are very difficult to do without in today’s society. 
    • So, all of this is to say that even though borrowing money is not ideal, it is important to know your options so that you can find the best deal. Just keep in mind that borrowing money should not be considered as “normal” in your life. It is only something to use in specific circumstances or when absolutely needed. 

    ***Photo courtesy of http://images.cdn.fotopedia.com/flickr-3274955487-hd.jpg

    $141.20 Giveaway – Community and Charity 10% Monthly Blog Income Give Back # 5 – February 2012 Edition

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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 10% give back giveaway fun rolls on for the month of February! 


    In case you missed the first (October), second (November), third (December), and fourth (January) 10% Blog Income Give Back, after doing some thinking at the beginning of October 2011 about what direction I want this blog to grow and evolve towards in the future, I decided that any income made from this blog would have more significance to me at a personal life values level if I knew that a portion were being given back to the following places:

    • 1) The readers – Obviously, without you here to read my articles and interact with my ideas, there would be no blog in the first place (let alone blog income). As such, it is only fitting that you receive a portion of any blog income.
    • 2) Charitable organizations – If you’ve read my blog before, you know that I’m a big believer in donating a portion of my money to charity. Each year, I donate between 5-10% of my income to the National Multiple Sclerosis Society as part of the Bike for MS fundraiser that I do. Beyond the good that is done by donating your money, getting used to contributing to charity is also a good practice to emulate the actions of affluent individuals (T. Harv Eker discusses this in his book, Secrets of the Millionaire Mind, which I would definitely recommend reading if you have a few hours).

    Because of these considerations, I’ve decided that each month going forward, I’m going to give away 10% of my net (after-tax) blogging income/profit to My Personal Finance Journey readers (5%) and to charity (5%). Listed below is how the process will work:

    • After each calendar month passes, I’ll tally up my net blog income and determine what Dollar value correlates to 10%.
    • I’ll post the giveaway (similar to this post you’re reading now), and you’ll have approximately 2-3+ weeks to enter.
    • Once the giveaway is over, a grand prize winner will be announced, and that winner will then select what charity they’d like to have 5% of my blog income sent to. Once the giveaway entry window ends, I’ll send out the money to the blog reader winner(s) and personally drop off the charity donation.  
    • So far, I’ve been very happy with the success of the October, November, and December 2011, and the January 2012 10% income give backs.
      • In October, $205 total was given away, with $100 being donated to the charity, GreenPeace.
      • In November, $201.40 total was given away, with $100 being donated to the charity, The Blue Ridge Area Food Bank. If you’re interested, you can view the details of me going to drop off the check at the Food Bank by clicking here.
      • In December, $74.52 total was given away, with $38 given to Big Brothers Big Sisters of Central Blue Ridge. You can view the details of the donation drop by clicking here.
      • In January, $196 total was given away, with $96 given to the Sexual Assault Resource Agency. You can view the details of the donation drop by clicking here.

    So, that’s the overall flow of things and a brief recap of what’s happened so far with the give back initiative. Now, let’s get in to the specific details for this month’s (February 2012) giveaway. 

    Details of February 2012 10% Blog Income Giveaway
    • $141.20 total blog income to give away – $71.20 to a My Personal Finance Journey reader and $70 to the charity selected by the giveaway grand prize winner (see bullet point below for additional details on how the charity selection will work this month).
      • $71.20 in the form of one prize available to one reader as follows – 
        • 1) Grand Prize = $71.20 Amazon Gift Card or $71.20 cash via PayPal.
    • The personal finance topic I want to place in the spotlight for discussion in the giveaway comments this month is if and/or how people are carrying health insurance coverage these days. 
      • Recently, I wrote a post about the  various options for obtaining health insurance coverage aimed at helping the millions of Americans who are having trouble affording regular health insurance, but yet do not make a small enough income to qualify for federal assistance programs for families below the “official” poverty level. This post was inspired by me hearing about several of my own friends who are facing this very dilemma, and I felt very strongly about trying to help figure out what options they had available.  
      • As such, I’m requesting that entrants leave a comment below this post about either #1 or #2 listed below:
        • 1) If you currently have health insurance coverage, what type of coverage do you have/where is it provided from (independent plan, employer plan, etc), and whether or not it is affordable.
        • 2) If you do not currently have health insurance, what are your barriers from obtaining it? What options have you looked in to for getting coverage that either worked or didn’t work?
    • Because of the success experienced in the November-January give backs with building relationships with local charitable organizations, I’ve decided that for February, we’ll keep how we select the charity that receives the 5% blog income donation the same as last month. Continue reading below for more details:
      • Instead of having each entrant specify any charity in the world, the goal for this month will be for My Personal Finance Journey to develop a relationship with one of the 7 charities listed below. The Grand Prize winner will select which of these 7 organizations receives the donation on behalf of the blog.
      • All of these charities were selected because 1) they are high quality organizations who do very good things and 2) they all have a significant presence/office in the area in which I live and operate this website (Central Virginia). 
      • I have contacted the local offices of these organizations and told them that they are part of the 10% blog income give back in February. After the Grand Prize winner is selected and the selected charity announced, I hope to be able to visit the local office of the organization, meet their staff, and present them with the money personally.
      • It’s been very fulfilling developing a relationship with the local chapter of the National Multiple Sclerosis Society through the MS150 fundraising bike ride I do each year, and I’m hoping that this experience will be just as awesome! I look forward to seeing which organization is selected.

    How to Enter the Giveaway – Deadline to Enter is Midnight, February 29th, 2012


    Like last month, I’ve decided to use the RaffleCopter giveaway management tool to handle sign-up facilitation for the February giveaway, so simply go through the steps listed in the widget below to enter the running for the prize and accumulate entry points.

    There is no limit to the amount of points you can earn. If you refer 10 subscribers – your name will have accumulated 170 entry points! Or, if you link to the giveaway more than once, you can accumulate those 7 entry points multiple times. You can also retweet the giveaway and/or share other My Personal Finance Journey articles via social media sites once per day. In the event of a tie, I will be using a random number generator to select the winner.

    Important instructions: After you complete an entry method, make sure to click and fill out the “I Did This” or “Enter” button in the widget so that I have a record of your points.

    a Rafflecopter giveaway
    <a href=”http://rafl.es/enable-js”>You need javascript enabled to see this giveaway</a>.

    Remember, the deadline for entries will end at midnight on February 29th, 2012 (a little over 3 weeks from today – the start of the give back). Good luck to you all! Please contact me if you have any questions. After the deadline for entries passes, the winner (one with the most points accumulated) will be contacted via email to receive their prize and select this month’s charity organization for the donation.

      ***Photo courtesy of http://www.flickr.com/photos/westbaltimoresquares/5680315829/sizes/l/in/photostream/

      January 10% Blog Income Give Back Charity Drop

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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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      A little over a week ago, the points were tallied from the My Personal Finance Journey January 10% Blog Income Give Back. Our Grand Prize winner was Donna B (also the winner of the November 10% give back as well!). As such, $75 in cash was transferred via PayPal to Donna. A big thanks to everyone for participating in the January Give Back event!  

      Having processed the the blog reader portion of the January give back, it was time to turn my attention to the question of which of the 8 local charities listed below would receive the $96.00 charity portion of the give back.


      After asking our Grand Prize winner, Donna B., which charity she wanted to see receive the $96 donation, she informed me that her choice was the       Sexual Assault Resource Agency. To me, it sure sounded like a great cause I could get behind and would be happy to support once again!  

      So, on Tuesday of this week, I took a lunch break at the lab and ventured off on my bike to drop off the donation at the Sexual Assault Resource Agency (SARA) office near downtown Charlottesville.

      It was a very nice clear and luke-warm February day out, and the outing made for a pleasant break during lunch. After biking the ~2.5 miles from the University where I work to a little East of the downtown area, I arrived at the specified office location address (see picture below). The office is located in a very pleasant neighborhood, which appeared to be a bunch of older houses converted in to small office buildings for doctors, lawyers, accountants, etc.


      Pulling up to the Sexual Assault Resource Agency Office in Charlottesville, Virginia to drop off the donation check! 
      Upon entering, I met Dale, the operations manager, and Margaret, the executive director, and handed them the donation check. 

      Margaret explained to me a little about the background of the Charlottesville agency, including how they are an independent organization (not part of a national chain) and have been in operation for 32 years now. The agency first started as a group of volunteers, but it has since grown to a full-time staff consisting of 10 professionals, including 2 full time counselors. Quite the success story! 

      Currently, they are serving the Central Virginia area through a combination of counseling services to sexual assault victims (about 500 people per year) and prevention programs to stop future transgressions. They also team up with local schools to put on multi-week workshops for 1100 children to help prevent sexual assault cases.

      If you’re looking to get involved in supporting SARA and live in the Central Virginia area, the big event they run each year is called the SARA Three 4 All, which will be held on April 14th. According to the event page, it is actually the world’s largest three-legged race, and they are looking to break the world record of 500 three-legged participants this year! Now, does that not sound awesome or what?!       

      CHALLENGES FACING THE Sexual Assault and resource agency of charlottesville

      When I asked if there are any particular challenges that SARA faces in the Charlottesville area, two primary things were mentioned, as discussed below:

      • First, since Charlottesville is home to a big University (University of Virginia – go Thomas Jefferson!), the number of sexual assault cases is naturally slightly higher since the young adult (under 25) age group is one of the highest risk groups for becoming victims. However, it was mentioned that this University phenomena is experienced nationwide, and is not isolated to only this area.
      • Second, I found out that the SARA agency in Charlottesville services a large rural population in the surrounding areas/counties. In fact, I learned that 1/3 of their clients in 2011 and 48% of their clients so far in 2012 were from rural locations.
        • Because of the small population-nature of rural areas, confidentiality of sexual assault (and receiving treatment/counseling for sexual assault) is of the utmost importance. And, as you can imagine, it is also particular challenge because we as humans are naturally curious people to learn about what others are doing.


      Overall, it was a truly great experience to see that what we do here at My Personal Finance Journey can have a real life impact. Through this charity give back that you all have helped to make possible, we are able to help a difference in either preventing future sexual assault cases and/or improving the life of a survivor. Just take a look at what a difference even small amounts of money can make (taken from SARA Donation tab on website).
        

      • $30 provides a new set of clothes for a victim seen at the Emergency Room whose clothes are collected as evidence.
      • $50 provides a therapy session for a child or adult victim of sexual violence.
      • $20 keeps the SARA sexual assault hot line running for a day.
      • $150 provides a full day of prevention programming to a local school.

      So, thank you all for helping with this journey, and remember to always live for a higher purpose and ask yourself what more you can do to help others. Also, be on the lookout for the February 10% give back event, on the way in the next few days! 

      How about you all? Is sexual assault a big problem/issue in your local community? Do you know what programs are available to help victims and prevent future cases?

      Are you supporting any charitable organizations this year? If so, which one(s)?

      Share your experiences by commenting below!

      What Do You Do If You Really Cannot Afford Regular Health Insurance?

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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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      In most personal finance self-help books I’ve read, one of the first, most important, and fundamental assumptions made before proceeding to discuss the usual personal finance topics such as 401ks, IRA’s, emergency funds, etc is that a person should have health insurance to protect themselves in the event of a health emergency. 

      Indeed, even in the My Personal Finance Journey Account Hierarchy, securing adequate health insurance is listed as the highest and most basic priority for your funds as they come in. However, no detail is gone in to about how to secure this coverage.

      Because of the very fact that health insurance is listed first in the pecking order, having health insurance is something that I think a lot of people take for granted in focusing their discussions about personal finance. This is either because they figure health insurance is provided as a health benefit at people’s work or they simply use the first funds they receive each month to pay the monthly premiums, and they have plenty of money left over to cover their other necessary expenses.

      However, in today’s economy with many people out of work, facing tight budgets, or having to take ANY job that comes their way in the stale job market, I’ve begun to realize (after talking with several friends facing this problem) that many people are 1) left to obtain independent health insurance coverage, 2) unable to cover the cost of an independent health insurance plan because it is so expensive, and 3) earn income above the poverty level and as such, do not qualify for government health coverage.

      Because of this realization, I thought it would be valuable to discuss today about the various options that exist (if any) for people that are having trouble affording this crucial life need. 

      But first, let’s take a step back and look at the health insurance landscape we are currently facing…

      How Many People Do Not Have Health Insurance in Today’s Society and What Percentage of Full Time Jobs Do Not Include Health Insurance?

      Looking at the big picture, I suppose the “revelation” that people are unable to afford health insurance shouldn’t come as too much of a shock to me. After all, I’ve probably been hearing for about 8 years now about the statistics of how 16.3% of the US population is without health insurance (source – CNN) . And, since I have faith in people and believe they are not dumb, it’s reasonable to believe (hopefully) that they would pay for health insurance first and foremost. The CNN article above stated that the average cost of an independent health insurance plan for a family is now up to $13,770. Personally, I would say that this figure falls in to the “unaffordable” category for most middle class families.

      Yet another fascinating statistic to look at (also sourced from the same CNN article above) is the percentage of employers that offer health insurance to their full time employees. To my shock, only 55.3% of employees have health insurance through their employer – down from 65% in 2000.

      I suppose this decrease in company health insurance coverage makes sense with the recession we have experienced and companies trying to cut costs. Looking at this statistic, it really makes you feel thankful if you are one of the ones that gets health insurance through your employer. Personally, I had no idea that this figure was this low.

      So, What Do You Do If You Cannot Afford Health Insurance?

      It’s clear that the numbers shared above do not paint a very pretty picture – with approximately 50 million Americans without health insurance and only half of employers paying for health insurance plans.

      Putting politics aside (please – this is not a politics blog), it leaves a person asking the following – “With the high price of health care, what are my options within my control if I simply cannot afford standard health insurance? I don’t want to get hurt and owe $80,000 for the surgery bill.”


      Listed below are several things I could come up with after searching around and applying some interpretations of my own. I will approach this issue by taking the perspective of someone that is above the poverty level, earning $20,000-$30,000 per year. I’ll also assume you’re not yet old enough to qualify for senior citizen coverage through Medicare, are looking for a somewhat long term solution, and cannot afford COBRA extension coverage through your old job.

      Option 1 – If you’re 26 years of age or under, get on your parents’ health insurance plan – 

      I know. I know. This option won’t work for the many of you out there reading who are above 26 years of age. But, it’s worth mentioning since young adults age 19-25 represent one of the largest groups of un-insured in the nation. The CNN article above mentioned that some 70% of young adults in this age group are uninsured. This is simply amazing. Please, don’t think you are invincible. Talk to your parents to get on their health insurance plan if this is at all possible.

      Conclusion for Option 1 – Great if you’re 26 or younger, but useless for everyone else.

      Option 2 – Get coverage for your family (or at least your children) through Medicaid / Children’s Health Insurance Program (CHIP)

      Listed below are the eligibility requirements for Medicaid/Children’s Health Insurance Program:

      • Pregnant women earning below $20,000 for a family of two.
      • Parents (the Medicaid.gov website says that income limits vary by state). 
        • However, I would guess that it’s unlikely that you’ll be able to qualify unless your income is lower than $15,000-$20,000.
      • People with disabilities with income up to $2,000 (not very high!). 
      • On the other hand, the government places a priority on trying to get health insurance for children. Families with incomes up to $44,000 can qualify to place only their children (not the parents) on Medicaid. Furthermore, families with incomes above this can qualify to get their children health coverage through the Children’s Health Insurance Program.


      Conclusion for Option 2 –  Medicaid and CHIP are great for people below the poverty level, but useless for higher income earnings that are simply going through a tough time in life or earning $20,000 – $30,000. However, your child (not you though) can still be covered through these programs if you earn a higher income. So, that’s one positive thing to give you peace of mind. 

      Option 3 – Get reduced rate group health insurance coverage through organizational memberships


      As a result of involvement in present or past jobs or hobbies, many people have become members of professional and/or formal organizations during their lifetime. However, one thing that a lot of people do not know is that many of these organizations will have pre-negotiated group discount rates on health insurance that they offer to members. Now, they won’t directly pay for part of your health insurance like an actual employer will, but these discounts can defray the costs.
      So, take a second and think about any professional, union, chamber of commerce, or alumni organizations you are a part of currently or have been a part of in the past. Next, go to Google and search to see if one of the benefits of being a member is getting a discount on health insurance. If you are not a member of any organization, you might think about joining one that offers health insurance discounts. A good way to start doing this is to search for the phrase “membership benefits health insurance” in Google. 
      While writing the paragraphs above, I thought to myself – “This sounds great, but really how much of a discount can a person get from these organizations? It can’t be all that much, can it – enough to make health insurance affordable?”

      So, let’s take an organization that I am a part of as a result of my graduate school job – The American Chemical Society. In briefly searching around their website, I found that they do offer a group insurance program. Great! However, when I went and tried to find what sort of discount members generally receive for getting health insurance with the organization, I couldn’t find anything. 
      Furthermore, in doing an exhaustive search on the Internet, I could find no disclosure of any estimates for how much of a discount people get for health insurance when it is purchased through a membership organization. This is partly understandable since as you can imagine, the rates for health insurance vary quite a bit person-to-person. However, since there were no instances of people saying, “HEY! I SAVED $200 PER MONTH BY GETTING COVERAGE THROUGH THIS ORGANIZATION,” it makes me think that the savings aren’t that great. But, you may be able to get more complete coverage through an organization with fewer barriers to entry than searching for health coverage by yourself.
      Conclusion for Option 3 – Overall, it’s worth checking to see what sorts of rates you can get through membership organizations and determine if it is affordable. Even though you can probably get more complete coverage through one of these organizations, I have not seen the evidence yet to convince me that you will save all that much. Anyone have more experience with this option than me to prove I’m wrong and/or set me straight?

      Option 4 – Get a part-time job that includes health insurance benefits


      In researching while writing this post, I came across the option of obtaining full health insurance benefits (where the company pays part of your premiums) through getting a part time job at certain companies, many of which I found out were very common companies that you see around town. Phil @ PT Money put together a great list of the companies that offer health insurance to part time employees as well as the qualifications needed. 
      Instantly, I became a fan of this option, especially thinking of people without health insurance who are between jobs or only working part of the week. Another reason why I like this option is that it really puts you in the driver’s seat of controlling your financial well being. 
      The only drawback to this option (aside from any competition to get these jobs) is that there is a 20 hour per week working minimum to qualify for obtaining health insurance with many of the jobs. So, if you already work one job, it will by no means be a “piece of cake” to obtain coverage this way, but I think that the peace of mind that you’ll obtain in knowing that your family is taken care of will make the 20 hours per week well worth it. For example, the 20 hours could be knocked out by working 5 pm to close twice per week and then on Saturday/Sunday.
      Conclusion for Option 4 – In my mind, a great option for people to really take charge of their financial well being and obtain health insurance paid for in part by their part time employer. However, you have to be willing to put in the hours to qualify.

      Option 5 – State-specific affordable health insurance programs


      Continuing with the list brings us to the somewhat variable option of affordable health insurance plans funded at the state level. As you can imagine, you’ll have to check with your state’s Department of Health website for the specific details of the program offered in your state (usually, a good way to find this to Google, “cannot afford health insurance + your state).
      For example, Washington State offers a Basic Health Plan to limited income earners who make 133% of the poverty level (so less than $20,000) and the State of Virginia offers low income earner coverage through the Virginia Health Care Foundation.
      Conclusion for Option 5 – No guarantee that you’ll be able to get coverage from a state program (especially if you earn above the poverty level), but it’s worth checking at the very least.

      Option 6 – A “Mixed Bag Approach” Using Emergency Only Insurance Coverage + Low Cost Health Care Options

      The last option I found (and optimized slightly) when researching about this topic was a somewhat mixed approach. It was also one of my most favorite (along with getting on your parents plan if you’re under 26 and getting a part time job that has health insurance) because it is very concrete and doesn’t hinge on income level requirements, etc.

      Essentially, this strategy is based on the purpose of insurance in general at it’s most bare-bones level being to protect you from financial disaster by not letting you go in to multiple ten’s of thousands of Dollars in debt (not to pay for routine visits to the doctor, etc). Using this underlying purpose in assuming that health insurance is A MUST, this strategy involves the following steps:

      • Get a high deductible coverage insurance policy (essentially, the cheapest policy available with no office visit coverage). By high deductible, I mean high – something to the tune of $10,000.
        • Kevin from Out of Your Rut found that for a married couple with 2 children, a normal health insurance policy with a deductible of $1000 would carry a monthly premium of $1213. However, when the deductible was increased to $10,000, the monthly premium went down to $303. This makes the coverage go from non-feasible to feasible, but still a pain.
      • Once you have the policy, you will only use it in the event of a major surgery/injury, since you would have to pay $10,000 to access your coverage and you have no office visit stipulations.
      • For routine health care (prescriptions, doctor visits, etc), do not go to the emergency room. Even though they are required by law to treat you (and only collect payment on about 70% of the patients they see), this is one of the most expensive places to receive treatment. 
      • Instead, take advantage of free and/or affordable community health care clinics available in your area.
        • To find one of these discounted clinics, click here to go to the US Department of Health and Human services page where you can perform a search.
        • When I searched around my area, I found about 4 federally supported/affordable health care centers within 50 miles.  



      In putting this post together, I was thinking about any negative aspects to mention about free clinics – such as strict low income requirements or long wait times. Therefore, I reached out to my Mom, who worked in a free clinic several years ago for her experience. Her input is quoted below, in the true full sentence form that she always writes emails in no matter what the topic or brevity of the message (she reads this blog by email feed and will probably think it’s neat to be included here):

      I last worked in a free community health clinic in 1994. We had good staffing and all people were seen during each clinic period in the evening. They had to wait several hours, some waiting for about 3 hours. All services were free, including some medications. People could show up at the clinic and be seen. There were not many restrictions on receiving this care. 

      Conclusion for Option 6 – While not perfect, using a high deductible health insurance plan coupled with community health care clinics can save you from bankruptcy by providing you with health coverage for expensive surgeries/injuries at a feasible cost.

      To wrap up this post, today, we’ve explored 6 options for people that are having trouble affording health insurance. While none of them are as ideal as simply having a full time job that you commit yourself to (and then have weekends off) that provides low cost health insurance, they are worth exploring in order to obtain health care coverage. It is my belief that having health insurance is STILL the most important financial priority, so it really is essential to not take this lightly and obtain coverage. Thanks for reading!

      How about you all? Do you have health insurance? If so, did you obtain the coverage from your employer or through an independent plan? What do you pay for health insurance premiums each month?


      Have you ever tried any of the 6 options mentioned above or know anyone that has?


      Share your experiences by commenting below!

        ***Photo courtesy of http://farm4.static.flickr.com/3110/2898187808_744e8b82a5.jpg

        Festival of Frugality # 322 – February 7th, 2012 Edition

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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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        Welcome frugal personal finance fans! Thanks for stopping by.
         
        My Personal Finance Journey is very proud to be hosting this week’s edition of the Festival of Frugality. 
         
        For those of you that are unfamiliar with the Festival, its purpose is to spotlight excellent ideas that are floating around in the blogosphere to help readers squeeze a few extra pennies, nickels, dimes, or quarters out of every dollar. And, in this age, I believe that we all could use some good advice on how to do this!
         
        So, without further a due, let’s get on with the Festival!
         
        Shown below are the top 3 picks out of this week’s submissions. Congrats to the winning article from Squirrelers. I’ve been a big fan of their work over there since about day 1 that I started blogging, so I am always happy to read one of their pieces! 
         
        Top 3 Editor Picks

        1.  Squirrelers presents Hara Hachi Bu and Money: The 80% Solution posted at Squirrelers.

        In this post, Squirrelers proposes the idea of applying an Okinawan approach to regularly eating until a person is 80% full, called Hara Hachi Bu, to personal finance (saving/spending in particular). Specifically, it is proposed that a person can start getting much further ahead in their personal finances by examining their current level of expenses, and trying to spend only 80% of the current expense level going forward.

        Personally, I really liked this idea/approach. It gives people somewhat of a concrete methodology and goal to use to start saving more – rather than just recommending to “save more.” I think I’ll put this on my list of things to analyze for own personal finances as well and see if I can cut 20% in any areas.

        2. Mr. Money presents Do You Save Your Pocket Change? For One Indiana Man, It Adds Up To a New Car Every 10-15 Years posted at Smart on Money.


        In this post, Smart on Money shares the somewhat amazing story of an Indiana man who has purchased not just one, but several, cars using only spare change that he has accumulated throughout his lifetime.


        I found this to be a very cool story! I didn’t know people were saving up to buy whole cars with spare change. I keep all of my spare change that I generate in a jar and usually cash it in and deposit to my savings account once it gets full, but probably do not spend enough cash to accumulate the level of change needed to buy a car.

        3. Annabelle presents Which are most frugal: cats, dogs, or babies? posted at Shopping Detox.


        This post shares some concrete estimated total costs (along with some awesome pictures!) for cats, dogs, and babies in order to determine which saves the most money over their lifetime. 


        I would agree with the conclusion that cats are probably the most frugal as well – mainly because they require fairly little interaction, eat less, and can be left alone for longer periods of time than dogs and babies. 

        And now, on to the best of the rest!


        KT presents 3 Tried and True Ways to Find Money to Snowflake on Debt posted at Personal Finance Journey.

        Corey presents Furnishing Your Apartment from Ikea? posted at 20s Finances.

        Suba presents Simple Home Maintenance Anyone Can Do posted at Broke Professionals.

        Erika presents How do you talk about money with your husband? posted at Newlyweds on a Budget.

        YFS presents 10 Easy Tips for Saving Money on Car Insurance posted at Your Finances Simplified.

        Jester presents Unexpected Crisis posted at The Ultimate Juggle.

        Jen presents My Biggest Financial Fear posted at Master the Art of Saving.

        Wayne presents Cheap Romantic Dates posted at Young Family Finance.

        John presents Frugal Living is All About Creating the Debt Free Magic in Your Life posted at Married with Debt.

        Hank presents How To Raise The Next Millionaire Entrepreneur posted at Money Q&A.

        Eddie presents Airline’s Charge to Check Bags = One Big Cash Grab posted at Finance Fox.

        FG presents Is Canada Immune to a Financial Blowup? posted at Financial God.

        A Blinkin presents Are You A Mental Accountant? Grand Finale posted at Funancials.

        Evan presents How I Saved $80 with Sprint and Why You Should Read Personal Finance Blogs posted at My Journey to Millions.

        Money Cone presents This one thing will make a huge impact on how your car handles in snow and ice posted at Money Cone.

        Matt presents Can You Live Debt Free and Still Have Credit Cards? posted at Living in Financial Excellence.

        Jon the Saver presents We Won What? posted at Free Money Wisdom.

        Peter presents Home Workout Programs can Be a Cost Effective Alternative to a Gym Membership posted at Bible Money Matters.

        Justin presents How to Throw a Super Bowl Party on the Cheap posted at Money Is the Root.

        Evan presents Our Frivolous Guilty Pleasures posted at Smart Wealth.

        Miss T. presents How to Keep Your House Clean without Spending a Lot of Green posted at Prairie Eco Thrifter.

        Beating Broke presents Take a Challenge to Start the New Year Off Right posted at Beating Broke.

        D.J. presents 5 Tips to Slash Your Food Budget posted at The Family Wallet.

        Marie presents Money Saving Tips for New Parents posted at Money Spending Mommy.

        Cash Flow Mantra presents Getting More Miles Out of the Old Van posted at Cash Flow Mantra.

        FMF presents Saving $2,000 a Year by Eating Samples at Costco and Grocery Stores posted at Free Money Finance.

        Teacher Man presents More Rewarding: Earning vs Saving posted at My University Money.

        John presents A Review of Food.com: Your Online Cooking Resource posted at Passive Family Income.

        Kay Lynn presents 4 Things That Used to Be Too Expensive posted at Bucksome Boomer.

        Marie at FamilyMoneyValues presents Win Rich Dad’s Cash Flow 101 Game posted at Family Money Values.

        Everything Finance presents Can You Live a Cash Only Life? posted at Everything Finance.

        Glen Craig presents Don’t Underestimate the Cost of Living When Deciding Where to Live posted at Free From Broke.

        Glen presents 5 Kids Expenses to Budget For – Apart from College posted at Parenting Family Money.

        Little House presents Are We Betting Against Death with a Life Insurance Policy? posted at Little House in the Valley.

        SavingMentor presents Calling Retentions Can Really Slash Your Bills posted at HowToSaveMoney.ca.

        Lisa presents How to Save Money on Your Super Bowl Party posted at Thriftability.

        Lindy presents Making Cards, Not That Hard posted at Minting Nickels.

        Marissa presents How much is commuting costing me? posted at Thirty Six Months.

        Dr Dean presents Five Per Day: Keeps the Doc Away? posted at The Millionaire Nurse Blog.

        Melissa presents Do You Really Want a Typical Valentine’s Day? posted at Fiscal Phoenix.

        Paula presents How Much Will It Cost to Maintain a House? posted at Afford Anything.

        Kennedi presents How Stores Trick You Into Spending More posted at Face and Fitness.

        Kurt Fischer presents Airline Ticket Purchase Timing posted at Money Counselor.

        Roger the Amateur Financier presents Frugal Friday – Automobile Maintenance posted at The Amateur Financier.

        Mama Squirrel presents That’s one frugal makeup bag (crochet projects) posted at Dewey’s Treehouse.

        Amanda L Grossman presents The Zero Sum Financial Game: Ideas to Help You Juggle the Month posted at Frugal Confessions.

        Aloysa presents Spending That I Can Afford posted at My Broken Coin.

        Well, that wraps up this week’s posts! They sure were some great ones and very interesting to read through!
         
        Get your articles in early for next week’s Festival (Festival of Frugality #323 – host to be determined).

        Also, let Ryan (the Festival organizer) know if you are interested in hosting as well. It’s a bit of work, but a great way to get your blog out there and meet new folks in the process! I just took a quick look at the schedule, and it appears that almost all of the hosting dates are open for the rest of this year. So, there is plenty of opportunity!

         
        If you were included in this list, please don’t forget to link back to the festival here. Thanks!

        ***Photo courtesy of http://images.cdn.fotopedia.com/flickr-2630539049-hd.jpg

        Options Investing – Does it Deserve a Place in Your Personal Portfolio?

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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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        Out of the numerous investing and personal finance topics we have discussed so far on this site, one topic that has not yet been addressed in any kind of detail is investing in options contracts.


        Why has this topic not yet been covered? The answer is pretty easy – because I don’t personally invest in options since I employ a passively managed approach to investing using ETFs and index mutual funds, and do not trust myself to correctly make predictions on price movements of stocks/ETFs/indices.

        However, just because I personally do not use options does not mean that learning about this type of derivative investment lacks value. In fact, I believe that it is important to have a sufficient understanding of all investment options available so that you can know how and why markets respond the way they do, and you can then act in a rational manner.

        What is Options Investing?

        For some reason or another, in receiving my finance undergraduate degree, the professors seemed to REALLY enjoy going in to a lot of depth about options investing strategies. Looking back on it, I hypothesize that probably most of the detail was taught from the perspective that we would potentially use it if we got full time jobs working at investing firms. I’ve since learned that from a personal finance perspective, there is no need to go in to SO much detail to understand what options investing is, and a basic understanding can get you a long ways. So, let’s start there, shall we?

        Essentially, an option is a derivative financial instrument (derives its value from the underlying security the option pertains to) in the form of a contract between the buyer of the option and the seller of the option based on price movements of the underlying security.

        • The options buyer pays an upfront price (called the premium) for the right (not the obligation – hence the name, “option”) to execute a future transaction at a specified price (called the strike price) before a specified expiration date.
        • There are two basic types of options – call options and put options
          • Call options give the contract buyer the right to purchase shares of a security (security means that options are not limited to only individual stocks) at the strike price.
            • This generally makes the buyer money if the price of the security increases.
          • Put options give the contract buyer the right to sell shares of a security at the strike price.
            • This generally makes the buyer money if the price of the security decreases.

        Let’s just go through a quick example to help illustrate how this process works:

        Currently, the price of a call option for the Gold ETF (ticker symbol – IAU), expiration Feb 18 2012, $14 per share strike price is $2.90 per share. The ETF is currently trading at $16.82 per share.

        Since you think the price of the Gold ETF is going to increase, you buy this call option for 10 shares, paying 10*$2.90 = $29.00 for the contract in the form of a premium. If, by February 18th, the price per share has increased to $20, you would exercise your option to buy 10 shares at $14 (the strike price) and then automatically sell them at $20 per share for a final profit of $31.00. (10 shares * ($20-$14) = $60 – $29 premium for contract).

        On the other hand, if you were wrong about the price movement, and the price actually decreased, you would not exercise the option at all and only lose your $29 premium to the options seller. Make sense?

        What Uses Can Options Investing Have in Your Portfolio?

        In my mind, options investing can play one of two roles for investors:

        • Making money – 
          • This one is fairly obvious. Since options do not require you to actually have the money to buy the underlying securities, you can potentially make a lot of money if you are good at predicting price movements without much capital cost.
        • Hedging risks for your other investments/operations – 
          • Perhaps a more applicable and fascinating potential use of options to me is that options can be used as a hedge for risk in a person’s investments or business’ other operations.
          • For example, if you run a business operating abroad and have a significant asset stake tied up in the faith that another country’s currency stays strong, you can use a put option to make some money in the event that the currency in the other country gets devalued.
          • Also, a put option could be used to provide some upside potential in the event that huge losses are realized in the long positions in your retirement savings.
          • The put option mentioned here is probably the most basic type of hedge you can create using options. For some additional reading on more complex strategies that are available (covered calls, straddles, butterflies, etc), I recommend the following resources:

        How/Where Can You Invest in Options?

        If it sounds like options are something you want to try your hand at in your personal portfolio/investing strategy, I’d recommend that you start off with only a small amount of “play” money until you gain more experience and comfort with the process.

        When it comes time to actually sit down at the computer and start investing in options, it’s fairly easy to find a brokerage in which to open an options trading account. This is because most, if not all, of the major discount brokerages online now offer options trading accounts.

        Whenever you make your final selection of the brokerage that you want to house your options account, be sure to remember to search around the Internet for any promotional account sign up offers that are often available.

        How about you all? Do you currently or have you in the past invested in options as part of your investing strategy? Why or why not? 


        If so, how did it work out for you? Did you lose or make money?  


        Share your experiences by commenting below!

        ***Photo courtesy of http://farm4.static.flickr.com/3231/2944592688_3f3de8a417.jpg

        What Do You Refuse to Go Cheap On?

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        Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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        The following post was written by me and originally published on Nov 4th, 2011 on My Broken Coin as part of a “Yakezie blog swap.” The topic of this blog swap was to discuss a certain thing or category of things that we absolutely refuse to go cheap on in our lives. Below is my take on this topic. Enjoy! 


        When the host of this blog swap (Jon from Free Money Wisdom) introduced the common topic as describing an area of our personal finances that we refuse to be cheap about, I have to admit that I was somewhat intrigued.

        Why is this, you might be asking? Well, if you’re somewhat familiar with the personal finance blogosphere, you probably know that the topics of frugality and saving money are widely popular. They are so popular, in fact, that you might even be hard pressed to look through your blog reader and NOT see a post titled something along the lines of “How I saved $1000 on a vacation” or “7 ways to save money this winter.”

        Now, there is of course good reason why these types of posts are so prevalent, as people are looking to personal finance blogs for ideas for how they can squeeze a few more Dollars of savings out of their monthly needs in the difficult economic climate. And, I can’t say that I blame them at all!

        However, it is fascinating to hear the opposite of the frugal-to-death approach to life, do a little soul-searching, and find out where we each draw the line as far as how cheap we go with specific items.


        For me personally, I refuse to go cheap on 1) buying sports equipment that will help me to compete better in cycling and running races and 2) buying equipment that enables me to exercise without (or with minimal) pain.

        I Never Go Cheap on Competitive Sports Equipment and Expenses

        For me personally, there are three life values (“life pillars,” if you will) that I need in order to feel as if I am leading a fulfilling life. These are as follows: 1) health/exercise, 2) time with family or friends, and 3) contributing to society and making a difference. As such, each of these values holds a very high priority in my life, and I always strive to do the best I can in each of them.

        One of my favorite ways to go about achieving the health and exercise life value is through competition in long-distance endurance sports such as cycling (which I used to do quite a bit but don’t anymore due to bio-mechanical issues) or half marathon running races. Essentially, anything that involves going up mountains for multiple-hour periods, I’m there!

        Since I strive to do the best I can in these races, I am willing to spend extra money (if needed) to buy equipment, travel to races, and enter races that will enable me to achieve peak performance. Listed below are some various expenses and pieces of equipment I’ve purchased over the years that have enabled me to achieve peak performance in both cycling and running races. I’ve also included the price so that you can see that by no means did I SAVE any money by purchasing these items.

        Running and Cycling Race Equipment/Expenses I’ve Purchased Over the Years (the Non-Cheap Variety)

        • Cycling Purchases – 2001-2006
          • Road racing bike (multiple purchases) – > $4,000.
          • Biking shoes – $300.
          • Biking pedals and cleats – $150.
          • PowerTap power meter and training tool – $1,200.
          • Biking helmet – $200.
          • Biking clothes – $500 or more total – an ongoing expense because things wear out periodically.
          • Aerodynamic time trial wheels – $1,200.
          • Heart rate monitor – $200.
          • Car bike rack – $400.
          • Cycling training camp in Texas – $600-$800 per year.
          • Race entry fees – Average of $50 each for > 20 races per year.
          • Travel to races + hotel fees – A lot. I don’t even want to guess!
        • Running Purchases – 2008-Present
          • Race entry fees – $70-$120 per race for half marathon road and trail running races.
          • Garmin ForeRunner GPS and heart rate monitor watch – $150.
          • CamelBack hydration pack (for trail running races and training) – $100.
          • Technical material (self-wicking) socks, t-shirts, and shorts – $200 – variable.

        Wow! Seeing all of these various expenses listed out like this really reveals 1) how expensive the sport of cycling is and 2) how much cheaper it is to do running than cycling!

        I Never Go Cheap in Order to Exercise Pain Free

        As I mentioned above, I used to compete quite frequently in long-distance cycling races (I made it to being a Category 2 racer before I had to stop racing). However, in the 2004-2005 time frame, I developed some bio-mechanical issues that started causing knee and Achilles tendon pain while running or cycling.

        Ultimately, these bio-mechanical issues (flat feet and a slightly curved back) forced me to have to scale back my cycling activities to recreation-only levels, but I still am able to compete in running races, which surprisingly only minimally cause pain after long races. Throughout the process of trying to correct these defects and even today in my training, there is not much I wouldn’t do or spend to be able to exercise pain free.

        Listed below are the various treatments and products I’ve bought over the years to keep me “on the exercise pain-free train.” Again, I’ve listed the prices to illustrate that exercising pain free has not been, in itself, FREE.

        • To treat/cope with my flat feet….
          • Special ultra-arch-supportive running shoes – $130 – multiple pairs in order to find the right fit.
          • Custom molded orthotic shoe inserts for my running shoes – $500
          • Custom molded orthotic shoe inserts for my cycling shoes – $300
        • To treat/cope with my slightly curved back causing misalignment in my bike position…
          • Laser-assisted bike fit session in Boulder, Colorado with one of the world’s experts on bike fitting – ~$600 + plane travel to and from.


        Conclusions


        All-in-all, I think it’s great that so many bloggers in the personal finance blogosphere are writing about creative ways to live cheaply and save money these days. However, it is an interesting change of pace to take a step back and think about where I draw the line about being cheap/frugal. This is especially true for me since living in a frugal manner and having a savings-mindset are so deeply incorporated in to my way of life, so much so that I sometimes take it for granted. 
        Lastly, I think it’s important to point out that it’s perfectly OK for people to have things in which they indulge themselves (i.e. not be cheap). However, the key to working these specific indulgences in to a financially successful life is to balance them with other areas where you SAVE money. Having this balance, as is the case in so many other areas of life, is crucial to success. 
        PS / Note from Jacob – One of the many things that I love about personal finance blogging is that finances penetrate in to a person’s life on so many levels, and these many levels are revealed in the blog posts that are written. For example, by simply reading my guest post above about an area I refuse to go cheap on, you’ve learned 1) about my intimate life values, 2) about the competitive sports I’ve participated in throughout my 26 year life, and 3) the Achilles tendon and knee injuries I’ve had that affected my life values. Amazing, is it not?! In this way, personal finance blogging can often be more about life in general than simply about optimizing your finances! End deep philosophical thoughts of the day…



        How about you all? What areas of your personal finances do you simply refuse to go cheap on? Why do you feel this way about these specific areas? 


        Share your experiences by commenting below!

          ***Photo courtesy of http://www.flickr.com/photos/ecastro/3053916892/sizes/l/in/photostream/

          Beyond the Dollar: Measuring A Company’s Real Performance

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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 Vanessa Mackay. Enjoy! 

          Beyond the Dollar: Measuring A Company’s Real Performance

          There are three primary measures of financial performance in every organization’s financial statements:

          • Profit 
          • Return on equity, and 
          • Balance sheet strength 

          While these are crucial quantities to evaluate, by themselves, they cannot provide full information. The two considerations that do not directly appear on financial statements are non-financial performance measures, such as employee turnover rates. These have a real effect on your bottom line.

          Here we’ll look at the main hard measures of performance and how to harmonize them with soft measures.

          Profit


          Profit is not merely the results of business activity. Particularly in a difficult economy, there are limits to what organizations can do to increase profit through higher prices or business expansion. Increasing internal efficiency increases profitability without affecting the customer, but it requires astute management and a positive, results-driven organizational climate. Not every business can engage performance the same way. For example, businesses in the agricultural or industrial sector may see the engagement of employees rise significantly in incentive-based programs like the pay for performance model. In more creative fields, extrinsic rewards may not be as effective.   

          Though it is important to assess both gross and net profit when assessing any organization, the profit statement alone cannot provide any direct information about internal efficiency or employee motivation. Assessing return on equity (ROE) and return on assets (ROA) can provide some insight, however.

          ROE and the DuPont Identity


           Of course, return on equity is an important ratio to assess, but it almost always is expressed as net income ÷ total equity. The DuPont Identity provides a simple approach to arriving at ROE using more detailed information. The benefit for the financial manager is that the DuPont Identity demonstrates that ROE is affected by three inputs: operating efficiency, asset use efficiency, and financial leverage. If, for any reason, ROE is unsatisfactory in any respect, the DuPont Identity highlights the area in which to look for the reasons.

          All of the values necessary for deriving ROE using the DuPont Identity can be found on the balance sheet or directly derived from balance sheet reporting points. The DuPont Identity reduces to [(Net Income ÷ Sales) x (Sales ÷ Assets) x (Assets ÷ Total Equity)]. The result is the same as dividing net income by total equity, but it provides much greater insight for assessing the organization’s performance.

          Non-financial Measures:

          Employees


           There are several non-financial measures that affect financial results, either directly or indirectly. Some of these are:

          • Employee motivation
          • Employee turnover rates, and 
          • Customer retention rates

          Highly motivated employees not only work better, they also are likely to provide management with workable ideas regarding more efficient operation. Everyone knows that replacing employees is a costly activity, but the inconsistency it creates in organizational learning can serve to inhibit the organization’s progress in employee motivation and customer retention.

          Customer Retention


           All marketers are well aware that it is more costly to locate and secure a new customer than to retain an established one. Certainly, the organization needs to develop new customers on a continuing basis, but customer retention also needs to be a point of ongoing performance management. Maximizing both customer acquisition and customer retention leads to greater performance.

          How about you all? How does your company measure it’s performance? Do you think too much or not enough emphasis is placed on financial measures?


          Share your experiences by commenting below!

          Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

          • Overall, I think this post gives a well rounded view of the various considerations to keep in mind when evaluating how a/your company is doing. 
          • I believe it is well stated above that while profit, ROE, etc are very important, they are not the only thing to keep in mind when seeing how a company is doing. This could be particularly important when trying to value the company and assess whether or not to invest in it. 
          • For my blogging endeavors, since it is run as a one-person sole proprietorship, the only real concrete financial performance measure I like to look at is monthly revenue, expenditures, and profit positions. 
            • The thing I want to keep an eye on is that I keep expenditures around 20% of gross revenue (as a general target.
            • Since the business I run mostly requires the investment of my time, I’ve found the 20% expenses/revenue ratio works well.
          • However, there are MANY non-financial performance measures, which, truthfully, are much more important to me than financial measures, since blogging is not my main career/job. You can view these performance measures in my blogging goals 2012 post from early in January. 
            • Some of these include number of guest posts I do for other sites, amount of comments, and site visitors/readership. 
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