Cavalcade of Risk # 147 – Riskiest Start-up Businesses Edition – December 28th, 2011

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Welcome everyone to the December 28th, 2011 edition of the Cavalcade of Risk. The Cavalcade of Risk (or Cav of Risk for short), as is implicated by the name, is a bi-weekly blog carnival that features the top articles regarding risk management. Several of the realms of risk management covered relate to finances, insurance, and health.

My Personal Finance Journey is honored to be hosting the last Cav of 2011 this week. We’ve hosted the Cav two times thus far in 2011. On March 23rd of this year, we featured a bunch of very interesting articles and centered the Carnival around the theme of the riskiest jobs in the United States. What we saw was that fishing and logging-related jobs weighed in as the riskiest occupations, with MANY more deaths per 100,000 workers than the other top-ranking riskiest jobs. Next, on July 27th, we centered the theme of the carnival around the riskiest sports in the world. From this, we discovered that cave-diving, cheer leading, and horeracing all have inherent risks involved with taking on the hobby.

Continuing on with this theme of exploring high risk activities/jobs, the theme of this week’s carnival is the top 3 riskiest business start-up ideas in the market today. But, without further ado, let’s get on with the Carnival.

Listed below are this week’s Top 3 Editor’s Picks! Enjoy!

1. Nelson presents Not Everyone Needs Life Insurance posted at Canadian Finance Blog. Not everyone needs life insurance. This includes single people with no dependents to provide for and underage children not yet earning a meaningful income.


2. Emily Holbrook presents Extreme Risks of Reality TV Shows — Are They Insurable? posted at Risk Management Monitor. Fear Factor, Wipe Out, Survivor and even The Biggest Loser are all shows that put contestants at risk. And, in order to gain viewers’ attention (and ratings to keep advertisers happy), reality shows are constantly trying to one-up each other while in turn increasing their risk. So, how do these shows get away with it? Who would insure such insane acts? How do producers make sure they’re covered in case of an injury or death?


3. Ken Faulkenberry presents The Art of Position Sizing to Manage Money and Risk posted at AAAMP Blog. Learn how to use position size, scaling in, and scaling out to manage risk within your asset allocation.

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Risky Business Start-up Idea # 1 – Carpentry Contracting
This business idea made it on the risky business idea list because it is tied to the success/health of the housing industry. And, since that hasn’t been doing well the past 3 years or so, carpentry contracting has been in a permanent decline. 


In my personal opinion, I think that carpentry contracting isn’t as risky of a business idea as some of the others on the list. Sure, if the housing market continues as it has been since 2008, carpentry might be in trouble. However, I believe that eventually, the housing market will rebound, and this will fall off of the list.
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And, listed below are the best of the rest!

Louise from the Colorado Health Insider posted about Colorado HealthInsurance Website Receives Praise From HHS, saying, “Between the national recognition garnered by Rocky Mountain Health Plans 30-year partnership with Grand Junction physicians, the fact that Colorado has been so proactive already in terms of establishing the framework for a health benefits exchange, and the praise from HHS for the new health insurance transparency website, it would appear that Colorado stands out as a leader in health care reform..”


Jaan Sidorov MD presents HHS Blinks On The Affordable Care Act’s Essential Health Benefit posted at The Disease Management Care Blog. In this post, Dr. Sidorov looks at how Washington proposes to settle the controversy over the Affordable Care Act’s ‘essential health benefit.’ While the threat was that HHS would require an out sized benefit package, Dr. Sidorov says common sense prevailed.

Phil presents Backing Up Civilization posted at Transparency Revolution and discusses risk mitigation.

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Risky Business Startup Idea # 2 – DVD, Video, and Game Rental Stores
This business idea, in my opinion, is not only a risky business, but it is one that simply should be avoided. Period. Netflix and Blockbuster online/mail order rental services have completely taken over this market. 


Take a second and ask yourself one question – “how long has it been since you set foot in a physical video rental store?” For me, it has probably been about 4 years now. This business start-up idea is simply one that should be avoided. 
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Paul Vachon presents How to Save Money on Home Insurance posted at The Frugal Toad. Home insurance is one of the most important forms of insurance you can purchase and in most cases, is required by your lender. Not all homeowners insurance policies offer the same coverage so it is important to shop for a home insurance quote.

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Risky Business Start-up Idea # 3 – Coin Laundry and Dry Cleaning Businesses
In the source article listing these business ideas (see link below), it mentions that coin laundry businesses are risky because there are 1) many established players in the market already and 2) very high capital start up costs (just think about buying 30 washers! haha). In addition, there are low profit margins, and the franchise fees are very high. All of these factors make for a risky venture. 


However, setting the risk factor aside, I do believe that there will continue to be a market for these services/locations. People will always need to wash/dry their clothes, and especially in tough economic times, it’s unrealistic to think that EVERYONE will be able to afford a washer and dryer in their own home. So, all in all, I think that this business has risk, but since there is a demand, the risk can be managed. 
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FMF presents Ten Insurance Policies You Need To Own posted at Free Money Finance. There are an incredible number and array of different types of insurance policies that you can purchase and quite a few that you should own. You may look at the number ten and think that is just way too many, but when you get right down to it, they might be just right to keep you and your family protected.

Philip Taylor presents Fix Your Finances and Quit Your Day Job posted at PT Money Personal Finance. Discusses the risks involved in quitting your day job and how to get your finances in order if you are looking to quit.

Well – that concludes this edition. Thanks for tuning in!

You can submit your blog article to the next edition of Cavalcade of Risk (scheduled for the middle of January and hosted by Political Calculations) using the handy carnival submission form.

Also, if you are interested in hosting the Cavalcade of Risk in the future, just send Henry (the organizer) an email by clicking here.

***Photo courtesy of http://s0.geograph.org.uk/geophotos/01/53/75/1537512_ff3abfea.jpg
***Riskiest and safest business startup ideas ranking source – http://www.allbusiness.com/startups-risky-business-ideas/15561619-11.html

The Effects of TV Shows on Reality

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The following is a guest post written by Jason, the Frugal Dad. Check out FrugalDad.com for more personal finance advice and retailer coupons and deals.

How about you all? Do you watch a lot of reality TV? If so, what do you find draws you to watch the shows? If not, why do you avoid it?


What are the positive and negative effects of reality TV on today’s society in your opinion? 


Share your experiences by commenting below!


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

• @ The world’s obsession with reality TV –
• Personally, I probably am not the best person to ask/comment about reality TV since the only reality TV shows I’ve really ever watched were Survivor and some of the series on the Discovery Channel, such as Dirty Jobs, Mythbusters, and Deadliest Catch. And, as far as I know, these shows aren’t the “stereotypical” reality TV shows that people most often think about.
• However, I do agree with the findings of the research study mentioned in the article above that mentions that many people choose to watch dramatic reality TV in order to feel better about one aspect of their lives or another.
• It could be argued that even with “light” drama reality TV shows such as Deadliest Catch and Dirty Jobs, people could watch these in order to feel more empowered/better about their own occupations. 
• Do I think this is why I watch these shows? I didn’t until I read this post, but now, it has made me stop and think….It could be that on a sub-conscious level, I like to watch Dirty Jobs to feel glad that I don’t have to deal with that sort of stuff in my day-to-day routine. 
• However, the conscious side of me says that I really like to watch the show just for the sake of it being interesting to find out what other jobs entail. 
• After all, I have started a business that involved scooping up dog droppings from other people’s yards, so I definitely don’t feel like I am “above” jobs that involve getting your hands dirty.
• However, it’s definitely an interesting idea to ponder, since it’s not often that you think about what’s going on at a subconscious level.
• But, one thing that is for certain is that reality TV is wildly popular in today’s society! I once heard that more people voted for the winner of American Idol than for the President of the USA. Crazy!
• @ How reality TV affects today’s society – 
• Another intriguing question is, how does reality TV affect the world’s population?
• First, I do feel that reality TV does shape our perceptions about what is considered “cool,” “attractive,” “socially acceptable,” as is touched upon by the article above.  
• However, another potentially harmful effect that could be experienced with a large portion of the world’s population being glued to the TV set for many hours each week is a decrease in productivity.
• For example, instead of watching reality TV (or any TV for that matter) 4 hours per week, could that time be used to start a side business to help secure your family’s financial future?
• Instead of watching TV, could you be studying more? learning new skills? doing your homework? The list continues….
• It’d be interesting to do a future post to investigate any linkage between hours of TV watched per week and wealth/financial success! It’d be cool to see what trends could be observed!

***Photo courtesy of http://farm4.static.flickr.com/3267/2873334814_c45bcd0527.jpg

Who Manages Money Better – You or Your Government?

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Often times, when I talk to individuals about the personal debt they carry (especially in the form of consumer debt), I get the feeling that they feel alone and/or isolated because of the money they owe. Because of this, they feel very unwilling to share the details of their debt or reach out to others to help them.

However, the truth of the matter is that there is no reason to feel isolated or alone because you carry debt. In fact, many individual people AS WELL AS entire governments of countries are facing problems with debt in today’s society. In this way, debt has truly become a problem/issue on the global scale.


The purpose of this post will be to take a look at the current levels of debt that individuals are currently carrying and then compare this level to the amount of debt that governments hold in an effort to see who in today’s society is doing a better job managing their finances – people or the government.

Current State of Individual Debt

Thanks to Creditcards.com and independent.co.uk, I was able to dig up the following statistics about personal debt in the world today:

United States

• The average college graduate in the US has approximately $20,000 in debt.
• The average credit card debt per household with credit card debt = $15,799. The overall average unpaid balance (includes people that pay off their entire balance each month) is $3,389.
• Personally, my takeaway from this pair of statistics is that once people decide to go down the path of having credit card debt, the magnitude of the debt becomes very serious/huge!
• The average household total debt – including credit cards, mortgage, home equity, student loans, etc – for all U.S. households is $54,000.

• The average household total consumer debt (excludes mortgages) in Europe is $2,068 USD. The average for the UK is about twice this value.
• I had trouble finding reliable statistics about the average total debt in Europe. However, there was one report from TheDailyBeast.com that mentioned that the average household debt in the UK was 183% of the average annual disposable income, and that this figure was very high for a European country. 
• According to BBC News, the average disposable income in 2008 in the UK was about $23,000 USD. 
• So, a rough estimate of the total household debt in the UK would be 1.83 x $23,000 USD =  $42,090.
• We’ll consider this a high figure for Europe. And, as a conservative estimate for the average European household debt, we’ll use half the UK value, equaling $21,045 USD.

Current State of Government Debt

So, above, we obtained an approximate picture of the current state of personal debts both in the US and Europe. Now, let’s take a look at how the money owed by the governments of these nations stacks up against the personal figures to see who is actually doing a better job managing their finances – people or governments.

According to a recent report, the following statistics give an overview of the current levels of debt carried by the governments of Europe and the US:

• By the end of 2011, the US government is projected to be carrying a per-capita debt of $32,000 USD. 
• In the year 2000, the per-capita debt carried by the US government was almost 3X lower at $12,000 USD. Wild stuff! It’s been a costly 11 years!
• By the end of 2011, the European governments, on average, are projected to be carrying a per-capita debt of $29,000 USD.
• In the year 2000, this average per-capita debt carried by European governments was almost 2X lower at $17,500 USD. 

Conclusions – Do You or Your Government Manage Money Better?

While I admit that there are many facets to analyze in determine the quality of “managing money,” examining the statistics listed above can give us a good indication of whether governments or individuals are performing better at staying out of (or at least minimizing) debt.

In the US, the average personal debt is almost 68% higher than the per-capita debt carried by the government. This data indicates that the US government, for all of the mistakes that it most likely has made, is doing a better job than its citizens at reducing debt.

In Europe, the opposite seems to be true in that the government seems to be worse-off at getting in to debt than the individual citizens. Using our rough average obtained for personal debt throughout all of Europe of $21,045 USD, we ascertain that this is almost 33% less than the per-capita debt carried by the government.

Thinking about these conclusions, they tend to make a lot of sense (at least to me personally).

First, I know for a fact that obtaining credit is MUCH easier in the US compared to pretty much anywhere in the world. For example, one of my Peruvian blogging friends was telling me that it is a HUGE process simply to get a small balance on a credit card in his country. I’ve heard similar stories from my Chinese graduate school friends, and I have experienced this tight-credit phenomena when I was living in Spain. Because of this, it makes sense that relative personal debt levels would be higher in the US than other locations.

Additionally, I know that the governments in Europe are “bigger” than in the US in that they offer more public programs. A good example of this is public health care. Thus, it at least partially makes sense that the government debt figures are relatively higher than personal debt in order to keep these government programs going.

An Outstanding Set of Questions To Ponder….

As is generally the case with global economic issues such as this, an investigation often generates an entirely new set of questions. Thus, an interesting set of outstanding questions to all of this is the following…..

It’s no doubt that individuals in the US are in large amounts of debt.

• However, are individuals in the US actually worse about getting in to debt and not paying it off because of a lifestyle/culture issue? 
• Or, do people in the US simply have greater access to credit and therefore, are more likely to get in to trouble with debt than people in other countries? 
• If people in other countries had the same access as Americans did, would they fall in to the same problems?
• And, if the amount of debt people are in boils down to an credit access issue, how do governments know if or where to draw the line between a good amount of credit for a healthy economy vs. extending too much debt? Or, should this be something that is set by free market forces?

Clearly, I don’t have the answer to all of this, but it’s something interesting to think about!

How about you all? What’s your take on the questions posed above? 


Share your experiences by commenting below!

***Photo courtesy of http://farm1.static.flickr.com/44/142421323_28d03a8c5a.jpg

Yakezie Carnival – 10 Tools I’m Thankful For in My Personal Finances – December 18th, 2011 Edition

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Welcome everyone to the December 18th, 2011 edition of the Yakezie Carnival!

About This Carnival

For those of you unfamiliar with the Yakezie Personal Finance Blog Network, it is the web’s largest, most involved, and most organized group of personal finance and lifestyle bloggers. Participants in the network collaborate multiple times throughout each day on the Yakezie forums and through other mediums. You can view all of the details at the “About Yakezie” page by clicking here.

Each week, the members and challengers of the Yakezie Network submit their best articles to be featured in the Yakezie Carnival. And, today, it is My Personal Finance Journey’s honor to be the host! We last hosted the carnival nearly three months ago on September 25th, when the theme of the carnival was highlighting several examples throughout history of selflessly helping others.


Today’s Carnival Theme

Being as that Christmas is only 1 week away and the holiday season is when I often reflect on things for which I am thankful, I figured it’d be cool to share 10 tools that I use in my personal finances and am thankful for as part of today’s carnival theme. You’ll find these interspersed in random order throughout the post listings below. Enjoy!

To get us started, listed below are this week’s Top 3 Editor’s Picks. Typically, when I host a carnival, it is quite clear what the three winning articles are. However, I find that when I’ve hosted Yakezie Carnivals, the quality of the articles is so high that I often find myself torn between about 8 articles competing for the top spots. 


1. Money Q&A: Three Christmas Gifts To Give Your Children That Keep On Giving – There are a few examples of Christmas gifts to your children such as Roth IRA contributions that will keep on giving long after the holiday season has ended.


2. Krantcents: Holiday Networking – Holiday parties can be a great for networking. Expand your network for the future.

3. Your Finances Simplified: Work Hard and Shut Up! – I promise you, that if you worked this hard at anything, your life would be different!  Mrs. YFS and I were at our local IHOP to take advantage of some of their seasonal pancakes and stumbled upon this very ambitious and dedicated employee who is the basis of my story.

And, listed below are the best of the rest! The selected entries are formatted as follows – 1) Blog title in bold, 2) Post title and link, and 3) a description written by the site owner about the post.

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10. Online Banking – No more balancing of the checkbook is needed, and all of my purchases are tracked automatically! Additionally, I can transfer funds via ACH over the Internet without deposit slips.
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Financial Success for Young Adults: Debt: The Elephant in the Room – Debt is a reality for most college students. Don’t be afraid to manage your debt so that you can have money to invest.

Barbara Friedberg Personal Finance: How to Live Well When Your Passion Doesn’t Pay Well (Part 3) – This article highlights 4 people who learned how to turn their passion into cash.

Debt Black Hole: How Much Do You Spend On Your Geek Collections? – Most Geeks take their collections (action figures, props, autographed pics, original art, authentic replicas, etc.) VERY seriously! But there’s always someone out there with a bigger collection- and more money to spend on it. What do you collect? Where does the money come from?

My Journey to Millions: Affording the Costs of Living – Presently, I’ve learned to compartmentalize things by remembering what I sometimes call the “random fund”. The random fund is small cache of money I mentally set aside that is used to pay for all the little random things life can throw at you.

Invest It Wisely: The Three Stages of Financial Freedom – Last week, I talked about the three stages of financial despair. This week I am going to look at the flip side, the three stages of financial freedom. We all want to get out of the rat race, but before we get there, we need to get out of the hole and onto level ground.

Money Cone: Selling Stuff on Amazon: A Step-by-Step Guide – How would you like to get rid of your old stuff and get paid for it? Toys, DVDs, gadgets, books, CDs… everyone’s got a few! But instead of junking them or even worse, letting them collect dust, why not sell them from the comfort of your home? With Amazon Marketplace, you can!

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9. Automatic scheduled payments and savings – In my finances, I try to automate as many things as possible so that they happen without me having to remember to do them (which helps prevent me from failing to do it). I have automatic payments set up on everything from paying my homeowner’s association fees and internet bill to saving for a trip to the Grand Canyon in 2012-2013!
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Live Real, Now: Fighting Fair – Arguments in your marriage aren’t–or shouldn’t be–intended to draw blood. Fights happen. If your goal is to win at any cost, you will both lose, possibly everything.

Investorz Blog: Why Being an Investor is an Ideal Career Path – There are two big decisions in life: who you’re going to marry, and what career path you’ll take. This post concerns the later. Here is why I believe that being an investor is the ultimate “job” one can have.

HowToSaveMoney.ca: Using Freezer Cooking as a Way to Reduce Your Grocery Budget – Don’t be intimidated by freezer cooking. It can be as easy or as hard as you make it. If you just simply double your recipes when you are cooking your dinner, you will have a stocked freezer and more money in the bank, before you know it.

Money Talks Coaching: One Big Savings Account or Lots of Little Ones? – The reason I’m a fan of having separate savings accounts is because it keeps the individual balances lower. It’s a psychological thing.

The College Investor: The Best Investment Advice I’ve Received – A personal story about the best investment advice received and how it paid off.

My Multiple Incomes: How Long Referral Traffic Spends On Your Site – A look at how long referral traffic stays on your site from major social media sites.

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8. Google Docs Spreadsheet – My my – where would I be without Google Docs spreadsheets? I use these little gems to track my net-worth movements from month to month, my spending in order to group the totals in to different categories, and my running monthly budget to make sure I’ve met all of my monthly requirements.
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The Frugal Toad: Estate Planning Basics – What You Need to Know – Have you ever thought about what would happen if you became incapacitated or died? What would happen to your home and other assets? Do you have a will and does your spouse know what your final wishes are? An estate plan is a set of legal documents that will make sure that your final wishes are taken care of.

Personal Finance Whiz: How To Live On One Income – A Budget For A One Income Family – Can you live on one income? It may not seem like it if you have always had a two income household. But, it’s totally doable. A year ago, I might have felt differently, but this year, we’ve moved to one income in our household.

Narrow Bridge Finance: What Is the Best Time of the Year to Sell Stocks? – As we approach the end of the year, some investors are going to try to minimize their taxes by selling stocks. Someone recently asked me when you should sell, and the answer can be complicated depending on your situation.

Beating Broke: DIY Disaster; or, Our New Deck – Be sure you do as much analysis as you can on the project, and budget for unforeseen issues, before you tackle any major DIY project. Also, it’s better to have it done right, than have it done cheaply, so if you get in over your head, find a professional to help you. Many will gladly charge a consulting fee to come and tell you what you need to do next. Find one that will, or hire one to finish the job so that it’s done right.

Bucksome Boomer: A Blogger Without Internet Is Like. . . – I like getting unconnected during vacations but those times are planned. Instead of running out to a fast food restaurant with free WiFi, I took and breath and decided to make the best of it. It wasn’t bad but thankfully the outage was only 16 hours.

Money Is the Root: How Well Do You Know Your Health Benefits – Until recently, the extent of my knowledge of my healthcare benefits was that I was insured. After all, we place such a high emphasis on simply being insured that we don’t know what’s covered until the worst happens.

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7. Cash Back Credit Cards – The credit cards really don’t benefit too much from having me as a customer (except for making money off of the point of transaction fees they charge vendors) since I never carry a balance month to month. Nevertheless, I really love that they give me the benefit of receiving 1-5% cash back on all of my purchases! Very nice!
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My Broken Coin: Is Hoarding The New Frugal? – My friend is a very frugal person: she counts every penny, she evaluates every purchase, and she does her research before she decides to buy anything whether it is a car or a pair of shoes. Read her story here!

Money Reasons: Controlling Christmas Costs – This is how I control Christmas Costs in the past, present and future. These are strategies that worked for me and perhaps will work for you!

Sweating the Big Stuff: Give This Gift If You Want To Piss Off Your Husband – I love getting surprises, but there’s one I wouldn’t be too thrilled with. If Lauren ever does this to me, we’d have a problem. What do you think?

101 Centavos: Walk-away Negotiating – Learn about walk away negotiating, be prepared to use this technique if you have to.

Thousandaire: Thousandaire Countdown #2 – HTPC Rap – The HTPC Rap is my best (and only) rap song. It’s also the second best song I’ve ever done.

The Family CEO: The Top Three Things I’ve Sold Online – These are the top three things that I have sold online that were big wins for me!

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6. High Yield Online Savings Accounts – Have you ever gotten on a traditional brick-and-mortar’s banking website and looked up what interest they’re paying on regular savings accounts? These days, it’s around 0.05%. Yes, you read that right – there’s a zero before the 5! haha However, with these online money market savings accounts (that are also FDIC insured), you can get many times greater interest payments!
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Funancials: I Only Listen to Techno – crats – Technocrats are becoming very popular in within our debt-stricken governments. Greece and Italy have already placed two technocrats in charge of their countries, now which countries will follow?

Smart Family Finance: Will a College Degree Increase Your Odds of Becoming Wealthy? Gallup Poll Finds Half of the Wealthiest 1% of Americans Have a Graduate Degree – Do you want to better your odds at become part of the wealthiest 1% of Americans? Gallup polling results show that you should consider getting a graduate degree. Half of those in the top 1% of wage earners have one.

Finance Fox: Thinking of Going Back to Former Employer – Would You? – Returning to a former employer is a real trend, and it’s happening in all industries. The trend is appropriately dubbed as “boomeranging.” No one said all relationships are perfect the first time. Maybe the second time around is the charm.

Newlyweds on a Budget: The Biggest Myths about Marriage – Long time married couples have often touted these three soundbites as the best kept secret to a long-lasting marriage. But, I’m here to tell you why these are the biggest marriage myths of all time.

Squirrelers: The Albert Pujols $254 Million Contract and the Pursuit of Money by the Top 1% – Would you turn down a job that offered you several million dollars more per year than the next best alternative? Of course not! Then why do people complain when athletes switch teams and do this? This post covers the topic of hypocrisy when judging the top 1% – from the perspective of someone squarely in the 99%!

The Happy Homeowner: Maintaining Your Financial Plan During the Holidays – The holidays can be one of the most challenging times of year to maintain your financial plan. This article provides some easy ways to help you keep an eye on your bottom line as you shop for gifts, host & attend parties, and celebrate the season.

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5. Roth IRA’s – My Roth IRA is quite indispensable in my overall finances. Each year, it is one of the highest priorities to be funded in order to save for retirement and shelter money from taxes while it grows.
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Money Beagle: Saying Bah Humbug To Secret Santa – I said no way this year after last year’s debacle.

Novel Investor: Know The Wash Sale Rule When Selling Those Losers – The year end is a popular time to sell those loser investments for tax purposes. But, this strategy can backfire if you don’t knowing the wash sale rules.

Investor Junkie: Best 2011 IRA Promotions – The holiday season is here, and that means the end of the year is almost near. Now is the time for investors add money to your IRA account. If you currently don’t have one, now is the time to open an account. I’ve gathered up the best IRA investment promotions.

My University Money: Tracking Your Expenses – The First Step to Budgeting – Why track? Why not just do a budget? We’ll explain why.

20s Finances: Getting a Bank Loan – Learn about what factors you need to consider when you are going to take out a bank loan and why you should use it as a last resort.

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4. Online Charity Donations – Each year, I donate to a Multiple Sclerosis fundraising event called the Tour de Vine. I also rally fundraising support for the event from others as well. Being able to process donations online in a secure environment plays a big role in making the fundraising process go smoothly.
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Passive Income To Retire: Keep My Day Job? – In my plan to retire from passive income, I have often questioned at what point will I quit my day job. It is hard to pass up on some of the benefits that my day job offers. Find out what my plan is.

Living in Financial Excellence: Top 5 Reasons Debt Is Like the Matrix – Reasons why being in Debt is like the Matrix, the movie!

Prairie Eco Thrifter: The 30K Challenge: Online Money Bloggers – I was honoured when I received an invite from two of my blogging pals Derek @ Life and My Finances and Corey @ 20′s Finance to participate in a new year challenge. At first, when I read that I would be challenged to make 30K next year online, I almost fell out of my chair followed by writing an email saying “Are you nuts?”

Budgeting in the Fun Stuff: A Great Workout Music Playlist – Here is the workout playlist my husband put together for me to get me motivated. I really love the songs below, so don’t be too harsh, lol.

Cents To Save: Becoming A Full Time Caregiver – I have come to the realization that I will be my parents full time caregiver. As an only child, this is something that I knew might happen. Did I think it would happen now? No, not at all. I was pretty content enjoying my new home out in the country as a empty nester. But, with my mom’s recent diagnosis of Stage 4 brain cancer, things have definitely changed.

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3. Index Mutual Funds and ETFs – As a passive investor, I don’t trust myself in making investments in buying/selling individuals stocks. Instead, I invest the majority of my money in index mutual fund and ETFs.
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Cash Flow Mantra: Preparing SMART Goals for 2012 – Being an active blogger brings about many benefits, one of which is the fact that I end up reading a lot of material online and offline and so get to learn a lot of new things. One of the things that I learned this year is about goal setting and making my goals SMART.

Free Money Wisdom: The Bible and Finance: The Story of the Rich Young Man – The Biblical story of the rich young man is one of the more misunderstood and misinterpreted stories of the Gospels.

TotallyMoney: Easy Mince Pies – A simple mince pie recipe for the run up to Christmas

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2. Microloans – I’m a fan of placing a relatively small amount of funds each year in microloans for developing countries. For me, I see this as sort of a mix between investing and a donation. By doing these types of loans, you can really have an impact to get someone’s life going. To invest in microloans, I have found that Microplace.com is reliable.
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Don’t Quit Your Day Job…: What is the Net Worth of Members of Congress? – Ever wonder how your wealth compares to members of Congress? I’m going to go out on a limb here and tell you that they’re likely winning the horse race… a full 6+% of Congress is in the upper 1% of net worth in America. On the other hand, 30 members have a negative net worth. Make you think… remember, these folks set the country’s budget!

Saving Money Today: How to Improve Your Finances in 2012 – Twelve tips for improving your finances in 2012. Follow one each month and you’ll be in great shape in no time!

Former Banker: You Got Fired, Now What? – I got fired! What do I do now? How do I maintain my lifestyle? How do I start looking for a new job? Do I qualify for unemployment?

The Milionaire Nurse: Shoplifting: Top Ten Holiday Favorites – Businesses will have over a hundred billion in lost profits from shoplifting in 2011. This figure does not even take into account the revenue spent in loss prevention. Crowded stores during the holiday season make it even easier for shoplifting to occur. On top of that, the most popular items stolen change during this season of good cheer.

Family Money Values: Growing Your Blog with Staff Writers – Ever thought about getting help with your blog? What are the benefits of using staff writers; management tasks related to use of them; payment and legal aspects of their use; and the blog results seen from using them?

Free From Broke : Tips for Holiday Tipping – The holidays creep up fast and all of a sudden you realize you need to tip people! But, who to tip and how much? Check out some basic guidelines and tips for holiday tipping.

Money Cactus: Wealth Creation Online: Untemplater Interview – Sydney took over the reins of Untemplater early this year and has been doing a fantastic job of delivering quality content and encouraging people to shatter the template lifestyle.

RamblingFever Money: A Socially Secure Christmas Story – A short story that compares one couples Christmas savings to the way that Social Security is funded.

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1. C.O.T.A.P. Folders and Microsoft Outlook Electronic Financial Information Storage System – Keeping track of detailed personal finance records can be a big pain, especially since the majority of records are being stored electronically these days. To manage all of this, I use a system of folders both on my computer/back-up hard-drive and Outlook email interface known as the C.O.T.A.P. system. In this system, a different folder is made for Clients, Output, Teams, Administrative, and Personal items. What I’ve found is that amazingly enough, most all documents fit in to one of these folders. Hence, the system works well!
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Sustainable Personal Finance: Sustainable Index Invest – Is oil sands producer Suncor really the best choice to go into a fund like this? Newmont Mining? Really? Where are the solar and wind power companies? What’s up with all the banks on there? What do they do to help the environment, besides recycling their bottles?

Faith and Finance: 8 Year-End Tax Moves to Consider at the End of 2011 – Before you know it, 2011 will be in the past and tax season will be upon us. Because it will be here sooner than you know it, now is a good time to look at what you’ll need to accomplish for your 2011 taxes before the end of the year

Watson Inc: 3 Powerful Ways To Decrease Your Financial Stress – These days people are fraught with economic stress.

How about you all? Which article in the listings above was your favorite? What personal finance tools do you use that you’re thankful for? 


Share your experiences by commenting below!


***Photo courtesy of http://farm4.static.flickr.com/3105/2602363529_aa2be7a127.jpg 

Easy Like Sunday Morning Weekly Recap and Roundup – # 5 – December 17th, 2011

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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Click here to enter my free $74.52 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 December 31st, 2011.

Each week (even though I missed the past two weeks! – Oops!), the purpose of the Easy Like Sunday Morning Weekly Recap and Roundup series is the same – for me to be able to connect with you, the readers, on a more personal (non personal finance informational transmission only) level, encourage community, and also to give back to the other bloggers around the blogosphere who have mentioned My Personal Finance Journey throughout the past week.

As far as the theme goes, the title of the roundup gives it away. The roundup theme is named after the Lionel Richie song, Easy Like Sunday Morning (which I play once a week while putting this together), to remind us of the importance of slowing down at least once a week to take appreciation for that which transpired over the past few days.

So, without further ado, let’s get started with this week’s roundup!

Weekly Updates from Jacob’s Personal Finance Journey and Life 

• As far as my life in general, since Thanksgiving, time has seemed to fly by at warp speed (please excuse the Star Trek analogy). 
• It seems like it was just yesterday that I was taking my Mom to the airport after she visited for Thanksgiving. And now, I am trying to finish up my last set of experiments before leaving next Friday to go home to Arkansas for Christmas. I am definitely looking forward to having some time back where I grew up. 
• So far this December, the weather has been strangely warm. As such, I’ve been taking advantage of the mild weather to get some good long runs in. Several weeks ago, I decided that I’m going to attempt my first ever FULL marathon in March of 2012. I’m planning to start small with a new flat trail marathon race located just an hour East of where I live that has only been going on for one year. So, if I do terribly, I won’t be too embarrassed in front of thousands of people.
• Generally, I like to try to get in a ski trip to Snowshoe, West Virginia in December before I leave for the winter break. However, the warm weather this year has delayed the snow-blowers from making large amounts of snow, causing only about 20% of the ski trails to be open so far. Because of this, I haven’t yet gone skiing, but maybe today, I’ll head over!
• Aside from running and itching to get out on the ski slopes, I have been staying busy attending the various Christmas/holiday parties hosted by various friends and groups I’m associated with. 
• Below is a picture taken at a recent Young Professionals Hollywood Christmas party. They had all sorts of fun wigs and props that people could dress up in, so I decided to slap on the Michael Jackson gloves and Mit Jager hair! haha Enjoy!
• As far as my personal finances go, there have been two primary occurrences since the last roundup.  These are discussed below:
• First, as mentioned in the last roundup, I had decided to open a self employed individual 401(k) account as a way to shelter some of my self-employed income from 2011 from the tax man. 
• Shortly after the last roundup, I was able to successfully open and fund a Vanguard Individual 401(k). It felt great to get this done before we got too close to the holidays!
• Because Vanguard requires a $3,000 minimum to purchase most any of their index mutual funds, I had to do some major reshuffling of my tax savings, December home loan payment, and December day-job income to free up these extra funds.
• However, things should return to normal once January rolls around. However, I will need to figure out my strategy for how I’ll contribute to my individual 401(k) account in 2012, since I now have more options for where I can invest any excess funds I have (home loan, Roth IRA, and now, a self-employed 401(k)).
• Second, in the past few weeks since Thanksgiving, (like many people) I have devoted a moderate amount of funds to buying Christmas presents for my family and friends. 
• I didn’t buy anything overly extravagant and stayed well within budget, but the purchases definitely add up. 
• As such, I think It’s important to remember around this time of year that only gifts that one can afford should be purchased. You’re under no obligation to give expensive gifts, so you should never go in to credit card debt simply over buying people presents. 

My Favorite 10 Posts of the Past Week

Guest Posts from Personal Finance Bloggers on My Personal Finance Journey

Over the past week, there was one guest post here at My Personal Finance Journey.


Rob Berger, founder of Dough Roller, posted about, “How to Ignore Market Volatility” Thanks so much Rob for the post! It was great to hear the strategies you use to keep the market ups and downs from adversely affecting your investing strategy. 

If you would like to guest post on my site, please click here to read more details about how to kick off the guest posting process. I’d love to hear from you!

Blasts From the Past

For the first 6 months after I started this blog, I pretty much “blogged in a cave.” What I mean by this is that I cranked out over 200 very good blog articles in this time period, but since I didn’t know any better, I didn’t reach out to other bloggers, get involved with the online community through commenting on other sites, or do any kind of site promotion at all. As you can imagine, some of the articles written during this time period didn’t get the attention that I think they deserved corresponding to the content contained.

The Blast from the Past section will feature one old My Personal Finance Journey article each week that I feel is high quality, but was published prior to my blog having any sort of real readership. This week’s article is listed below:

Beer – Bottled vs. Canned, Wine – Corks vs. Screw-Top – Which Are Better? – This post analyzes the somewhat controversial topic of whether or not the taste/quality of beer and wine is better when it is bottled vs. canned or packaged with a cork vs. a screw top, respectively. In an effort to seek an answer to these outstanding questions, I examine some of the research and studies that are available. Take a peek at this article – the answers might surprise you!

If you know of someone in the PF blogging world that is really doing amazing things, feel free to send me an email for consideration in future roundups.

Giveaways

Blog Carnivals Featuring My Personal Finance Journey Articles

Top 10 Referring Sites to My Personal Finance Journey This Past Week

However, I have several other domain names purchased, and I am currently learning WordPress Self-Hosted to get these sites live as soon as time allows! I’ll be sure to keep you all updated on progress.

Well, that wraps up this week! If you have any suggestions or recommendations for things you’d like to see in this weekly roundup, just let me know by sending me an email!

As always, thanks to all the readers for creating such a great community here at My Personal Finance Journey. Your interaction is what keeps me going on this blog!

Until next time – Jacob

Opening and Managing a Self-Employed Individual / Solo 401(k)

So, you’ve decided that you want to open up a self-employed retirement plan for your small business. Next, you spent hours pouring over all of the information you could find from the Internet, personal finance blogs, your accountant, your friends/family, and the IRS (whose information is put together in a coded format that is seemingly more cryptic than a 2000 year old extinct civilization for some reason or another) over the various self-employed retirement plans such as a SEP IRA, SIMPLE IRA, and Individual 401(k).

And, after all of that, you came to the conclusion that an individual / solo 401(k) is the option that is best suited for your needs. 

This was my conclusion as well, after having done the legwork of deciding which self-employed retirement plan was right for me. After coming to the conclusion that I wanted to open up an individual 401(k), I figured that the actual opening process would be a breeze. After all, I’ve opened many online savings, checking, and IRA accounts in the past several years, and it usually only takes about 10 minutes each go-round!

However, what I found was that there was a significant lack of clear, no-nonsense information on the Internet regarding what I actually needed to do to physically or electronically open an individual 401(k). As such, the purpose of this post is to guide you through the individual 401(k) account opening process, using my experiences as a basis for helping you move forward with opening your account.

Before we get started, I would like to commend you for having made it this far in the self-employed retirement account decision making process. As confusing as the account opening process can be, I do have to conclude that actually deciding which self-employed plan to choose in the first place is much harder than the steps needed to open an account. So, pat yourself on the back!

Step 1 – Decide What Provider You’ll Use for Your Self-Employed Individual 401(k)

Naturally, a logical place to start setting up your new individual 401(k) account is deciding what company/brokerage/investing house will serve as the “home” for your plan. This is a very important decision, and you’ll want to make sure that the investing house you choose to hold your 401(k) is 1) a reputable name and 2) offers the types of investing instruments you prefer.

Personally, as a passive investor, I believe that 95% of business owners are best off placing their retirement funds in low-cost index mutual funds or ETFs. My two favorite investing houses for this application are Fidelity and Vanguard. For me personally, Vanguard was the natural choice since I had compared Vanguard vs. Fidelity previously, and had came to the conclusion that Vanguard offered lower-cost mutual funds and ETFs.

However, you should choose an investing house that you are comfortable with. Surprisingly, it’s very difficult to determine from the normal “individual investors” page that first shows up on most brokerage websites whether or not they offer self-employed retirement plans. As such, the best way to find the self-employed plans that a brokerage offers (if any) is to do a Google search for “PLACE NAME OF BROKERAGE HERE small business.” For example, I had trouble finding the listing of self-employed plans on the Schwab.com and T Rowe Price websites, but I very quickly found the relevant sites listed below when I performed the Google search.

Schwab.com – Small Business
T Rowe Price – Small Business

Step 2 – Download the New Individual 401(k) Account Application Form

After deciding upon an investing house in which you want to place your individual 401(k) retirement funds, it’s time to get started filling out the actual opening application form.

It is my understanding that unlike regular individual IRA’s, taxable investing/stock trading accounts, and online savings accounts, individual 401(k) account application forms CANNOT (unfortunately) be filled out and submitted online. Thus, you must locate and download a copy of the account application on to your computer.

Note: Once you download the application, don’t automatically just print out the entire document. See below for more details.

The individual 401(k) account application download link generally is found on the same page that gives a description of the retirement plan. For example, the link (listed below) to download the account application form for Vanguard can be found on the individual 401(k) account description page. Generally, there will be two account applications – one for employees, and one for employers. Since you’re the business owner and are setting up the plan, you’ll want to fill out the one for employers. If you decide to add your spouse to the plan at a later date, you’d download the employee application.

Vanguard.com – Individual 401(k) Account Application

Step 3 – Locate the Summary of Instructions for Filling Out the Application and Apply for an Employer Identification Number (EIN) Online

In these instructions, one key thing to notice is that generally, in order to open a self-employed individual 401(k), you cannot simply use your Social Security Number for identification purposes. Instead, you have to either have or newly obtain what’s called an Employer Identification Number, or EIN. Essentially, this number serves as an identifier for your business with the IRS, much like a Social Security Number does for a normal employee.

If you already have an EIN, great! If not, you need to get one before you even think about proceeding with filling out individual 401(k) account application. I’ve listed some guidelines below for how to go about getting an EIN.

• First, read this web page from the IRS that documents what an EIN is, why you need one, and the responsibilities that come with having this identifier.
• Then, click here to visit the IRS’s online EIN application service for obtaining an EIN.
• When you are filling out the EIN application (either online or on the phone), be prepared to provide the following information about your business:
  • 1) What will the business’ legal name be for tax purposes? This may seem straight-forward, but I actually hadn’t thought about this before calling the IRS to obtain an EIN. Ultimately, I decided to simply keep the legal entity name as my name, since with my business, I could possibly be offering multiple services under the same tax-reporting entity.
  • 2) What date do you want to set as when your EIN will go in to effect? They will also ask you what you want to set as the effective date for when your business started. For this, I simply used January 1st of the year when I first started earning income from my self-employed business.
  • 3) What legal address do you want to set up for your business? Here, you have the option of designating what address you want to have linked up for reporting purposes to your EIN. You’ll need to decide if you want to set this as your home address, office address, P.O. box, or a small-business mailbox at a UPS or Fedex shipping center.
  • 4) Do you want your EIN to be set up for your business in general, or just for your self-employed retirement plan? Yet another thing that I didn’t know about before obtaining an EIN myself was that EINs can be set up for a range of entities. For example, you can choose to have the EIN set up only as an identifier for your self employed retirement plan, or, you can choose to have it represent your business from a more general tax-reporting standpoint. Personally, I choose to have my EIN be linked to my business in general, not just as an identifier for my retirement plan, since I’d want to use it to report self-employed income on the 1040 Schedule C.
  • It’s important to be careful in choosing the details selected above, as these exact elections will need to be used when reporting your taxes from self-employed business operations. 

Step 4 – Determine If You Can Legally Avoid the Annual Account Maintenance Fee

After obtaining your EIN, you are armed with all of the information you need to fill out the account application. Nice work! However, by now, you’ve probably noticed that most of these self-employed retirement plans involve a yearly fee in order to keep your account open and in good standing. This is a fee in addition to the normal expense ratios carried by the individual investing instruments you choose for your account. For example, Vanguard charges a $20 annual account maintenance fee for self-employed retirement plans.

However, the good news is is that the brokerage houses often provide ways to get out of paying this annual fee. For example, you can often qualify to be “excused” from this fee if you meet one of the following criteria:

• You have had an individual account with the investing house for X number of years.
• Your individual (not self-employed retirement accounts) accounts have a balance of greater than $50,000-$100,000.
• You sign up to receive electronic account documents, saving the investing house the cost of sending you these documents via hard-copy in the mail.

Step 5 – Discard Overwhelming Amount of Excess Paperwork Included in Individual 401(k) Account Application

As I mentioned briefly in Step 3 above, once you download the account application, your system will almost go in to shock upon noticing that the entire application is something crazy like 104 pages!

However, the good news is is that only about the first 20 pages or so of the application actually are required for you to fill out.

The remaining 80-90 pages contain page…after-page……after-page…..after-page……of tax code amendments, self-employed retirement plan rights, and plan descriptions that your brokerage is required by law to provide to you. They mention (only officially because they are required by law to do so) that you need to “read the entire packet.” However, I did NOT find that to be necessary one bit. Instead, what I did was flip through the 80 extra pages once and then narrowed my focus to the first 20 pages that matter.

Step 6 – Fill Out ONLY The Sections of the Account Application That The Instructions Explicitly Ask You For

Having narrowed your focus to the areas of the account application that actually matter, you’ll want to again locate the account application instructions. These generally can be found on the first two pages.

Once you locate the instructions, simply follow what they instruct you to do to complete your application. The account applications for Vanguard’s individual 401(k) that I had to follow are listed below:

• Fill out Individual 401(k) Plan Adoption Agreement
  • Essentially, the purpose of this section of the account application is to say, “Hey, I am a legitimate self-employed small business, and I would like to open an account with your brokerage.”
  • Filling out this section requires you to provide the following types of information:
    • Adopting employer name (name you chose when getting an EIN).
    • Address.
    • Employer Identification Number (EIN). A Social Security Number CANNOT be used.
    • Legal business structure (partnership, sole-proprietorship, etc).
    • Name of plan.
    • Effective date of plan
    • Attachment A – Vanguard is legally obligated to provide each plan adopter with an Attachment A that allows for space in which you can claim any additional provisions or account benefit protections. However, if you are not a tax-professional, do yourself a favor and throw this page away. If it is sent in with your application, it will not be accepted. 
• Fill out Individual 401(k) Plan Authorization Form
  • The purpose of this form is to designate WHO within your organization has the power to administrate the plan, access private banking and account information, and who can contact Vanguard on behalf of your retirement plan.
  • This section is somewhat confusing because for many common-folk self-employed business owners (such as you and I), it’s not entirely clear whether you have the power to be this all-mighty “plan administrator.”
  • However, this is exactly what is appropriate to do! Place your name (as the business owner) as the plan administrator. You have the absolute power! haha
• Fill out Individual 401(k) New Account Form for Each New Plan Participant (Only You, if You Are the Only One in Your Small Business)
  • Having filled out the two forms above to request to set up your plan and designate who can administrate it, it is now time to open the sub-accounts within the plan for all employees.
  • For the most part, people reading this will probably be single-person run business (or maybe run a business along with their spouse). If this is the case, you’ll just fill out one New Account Form to open up your “employee” sub-account in the self-employed retirement plan.
  • Remember: In an individual 401(k) as the sole business owner, you have the ability to contribute to retirement both as your sole-employee and also as the employer. It’s quite a nice set up for achieving tax benefits!
  • To fill out this section of the application, it’s good to have the mindset that you will remove your business owner “hat” for a moment and place back on your employee “hat.”
  • The following information is needed to fill out this section of the form:
    • Name, address, Social Security Number, etc.
    • Which mutual fund you want to invest in and what amount (you’ll actually link up your bank account and fund the account later on once your online profile is established in the Vanguard system).
    • Primary and secondary beneficiaries.

Step 7 – Mail In Account Application and Wait

After filling out the three sections of the application discussed above, simply mail the forms in to the mailing address provided multiple times throughout the application. In about 10 days or so, you’ll receive an email from Vanguard saying that they’ve received your application.

Funding and Managing Your New Individual 401(k) Account

In this same email you’ll receive from Vanguard after the 10 day waiting period, there will also be a link that you can click to go to Vanguard Small Business Section of their website where you’ll set up your Individual 401(k) administration account.

Setting up Your Individual 401(k) Small Business Account

Setting up your 401(k) account in the Vanguard Small Business system is not completely straight-forward.

For example, if you already have a Vanguard Individual account(s), you will be unable to use the same user name and password that you used for your Individual sign-on with your Small Business Account. Additionally, you’ll be unable to view your Individual Vanguard holdings from your Small Business account profile. In most cases, you actually have to sign out, clear your browser cookies, and then log-in to the Individual Vanguard page in order to view your personal holdings.

Funding Your Individual 401(k) and Viewing Your Account Positions

Funding your 401(k) and viewing your investment positions is also not entirely straight-forward.

In order to fund your Individual 401(k) either with employer contribution or employee-salary deferral funds, this action must be done while logged in to your Vanguard Small Business administration interface. The process of selecting the investment you want is much like using the normal individual Vanguard interface.

However, once the money is taken from your bank account and the mutual fund is purchased, you are only able to view the overall account balances from your Vanguard Small Business interface. In order to actually see what mutual funds you are holding and the value they possess, you must be logged in to your normal Individual account. This makes it sort of a pain to manage multiple accounts. However, it is set up this way with larger companies in mind in order to protect the privacy of the individual employees and what investments they are holding.

How about you all? Have you ever opened an Individual 401(k) account or another type of self-employed retirement plan? If so, where did you choose to invest the funds and why? Did you find the account opening process overly cumbersome or pretty straight-forward? 

Share your experiences by commenting below!

Also, if you’re wanting to read more about the individual 401(k) account opening process, Flexo from Consumerism Commentary wrote up a great piece on this which can be accessed by clicking here. It definitely helped give me a guide to opening my individual 401(k) account. Thanks Flexo!

***Photo courtesy of https://www.flickr.com/photos/cafecredit/30994123601/sizes/l

Home Ownership and Mortgage 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 $74.52 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 December 31st, 2011.


The following is a guest post contributed by Genworth Financial. Enjoy!

How about you all? If you’ve gone through the home-buying and home-loan acquisition process, did you have to pay for private mortgage insurance on your home loan? If not, how did you avoid paying this fee? 


Do you think a 20% down-payment is too high of a level to pay in order to avoid paying private mortgage insurance?


Share your experiences by commenting below!


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

• @ Special federal loan programs based on your occupation – 
• I admit that I wasn’t aware of any of these special programs that you could use if you have a certain occupation to avoid paying private mortgage insurance. 
• Does anyone else have any experience using these?
• Additionally, I have heard of some companies helping secure favorable mortgage terms with employees that move for a job change. These people usually can secure a pretty sweet deal too! It’s possible that in these cases, the company could in some way help with paying the mortgage insurance. 
• @ Getting the seller to help you out with paying private mortgage insurance – 
• This is truly an amazingly opportunistic idea! Kudos for coming up with it!
• It really is hard to imagine that just several years ago, houses were being bought and sold like crazy and now, 4-5 years later, sellers are SO DESPERATE to sell/find buyers that they’ll even bend as far as paying mortgage insurance for the potential buyer. 
• However, as a buyer, it is my personal opinion that you have an obligation to use all of the tactics at your disposal to try to get the best deal for yourself and your family! Therefore, this strategy of getting the seller to potentially pay for your PMI is worth a shot at the very least!
• It also reminds me of how ALMOST EVERYTHING in the home-buying/selling process is negotiable – inspection fee, home repairs before sale, real estate agent fees, closing fees, ALL OF IT! And, it never hurts to at least ask if the seller or buyer is willing to cover certain non-traditional costs if you have the “upper-hand” in the transaction process.

***Photo courtesy of http://farm6.static.flickr.com/5014/5547563982_d4d6bedafe.jpg

$74.52 Giveaway – Community and Charity 10% Monthly Blog Income Give Back # 3 – 100,000 Total Site Visitors Celebration December 2011 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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In case you missed the first (October) and second (November) 10% Blog Income Give Back, after doing some thinking at the beginning of October 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).

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

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 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” button in the widget so that I have a record of your points.

<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 December 31st, 2011 (~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 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/msvg/4260624212/sizes/l/in/photostream/

Buying the Right Foreclosed House in Today’s Market

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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 Amanda Green. Enjoy!

Although recent indicators suggest that the housing market may be showing signs of life, trying to sell your home can still be a very difficult process these days.

Buyers are few and far between, realtors have been raising their fees, and lenders are tightening the purse strings for those looking for a fixed rate mortgage. Due to these reasons, more Americans are staying put than ever before. Our nation, historically defined by such trends as suburban growth and Western expansion, has ceased to be a mobile one in the face of economic struggles.

While there are many reasons, then, to stay in your current home rather than selling it, you still may be tempted to take advantage of the current buyer’s market. This is especially the case when it comes to foreclosures.

Although most bank-owned houses would carry little appeal on the open market (almost seeming like damaged money), there are foreclosed homes out there that are located in great neighborhoods, that have been recently updated and meticulously maintained, that would represent a considerable improvement in space from your current home – and that can be had for a fraction of the normal price. If you are diligent enough, then, there’s no reason why you shouldn’t be able to find the gems that pepper the foreclosure market.

But how can you pick out a gem when you see it? Here are a few considerations to keep in mind:

Know The Neighborhood

This is the essential first step to take when examining a foreclosed home. Even if the home is nice, the neighborhood may be lacking when it comes to safety and economic stability; most foreclosed homes sit in impoverished areas or on the exurban outskirts of cities.

But, if you do your research, these issues can be quickly resolved. Check the neighborhood’s foreclosure rate, its crime rate, and the reputation of its public schools. Websites like greatschools.org and city-data.com can be very helpful here.

Know The History

A foreclosed home that is being auctioned off for $50,000 may at first seem like a steal. But, once you look into the home’s history – its construction, its original cost, its past inhabitants – you may realize that the construction was shoddy, the place was left in disrepair, and that it may have been greatly overvalued during the housing bubble. For this reason, it is important to fully understand the history before buying something primarily because it seems like a great deal.

Think Long-Term

In today’s market, buying a foreclosed home with the intention to quickly turn it around for a profit is a highly risky endeavor. The housing market will not match the pre-2007 bubble anytime in the near future, and most foreclosed homes sit in areas that burst thoroughly when the bubble popped.

If you find a beautiful, recently-built, foreclosed home in an exurban suburb, you certainly may have found a great place to live for the next 20 years. But, don’t expect that you can quickly make a profit on this purchase – no matter how nice the home or how undervalued it may seem.

These are just a few considerations to keep in mind when searching for appealing foreclosed homes. In this buyer’s market, those gems are certainly out there, but don’t let yourself get fooled by a fake.

How about you all? Have you ever purchased a foreclosed property either as an investment or primary/secondary home? 


If so, what attracted you to do so? What “red flags” did you have to be very cautious about?


If not, what made you stay away from looking at foreclosures?


Share your experiences by commenting below!

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

• @ Lenders being tight with fixed rate mortgages these days – 
• This one is definitely true these days and very consistent with my experiences. 
• When I was first trying to obtain a mortgage to buy my condo in early 2010, the mortgage broker I was working with was highly selective in what he needed in order to give me a mortgage. 
• Essentially, he wanted to see a guarantee that I would be employed for more than one year in my current job. This was pretty amazing, when you compare it to stories during the real estate bubble years when you pretty much could get a mortgage just for having a beating pulse! 
• @ The over-hyped danger of foreclosed homes – 
• So, I’ll be the first to admit that I have absolutely ZERO experience buying or selling foreclosed real estate property. 
• However, it is my un-educated opinion that the dangers of foreclosed real estate properties are slightly exaggerated in today’s society. 
• When I was looking around town for condos to buy with my real estate agent, I inquired first about many properties selling for cheap prices (naturally, being the cheapskate I am). 
• However, almost immediately, she recommended against ANY of the properties on the list I put together, either citing safety reasons or problems with the title or foreclosure. 
• Personally, I just thought it odd that the real estate agent immediately dismissed the properties just for the foreclosure reason. 
• I began to wonder – has it been her experience that foreclosures just aren’t worth the effort for normal real estate purchasers who simply want to find something as quickly as possible…??? Could be…
• What’s you all’s take on this? Are the headaches of foreclosed properties really that bad that most people should just ignore them?

***Photo courtesy of http://www.flickr.com/photos/aldon/2753028529/

November 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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Several days ago, the points were tallied from the My Personal Finance Journey November 10% Blog Income Give Back. Our Grand Prize winner was Donna B., and our 2nd place prize winner was YourFinancesSimplified.com. As such, last Friday (December 2nd), $26.40 and $75 in cash was transferred via PayPal to YFS and Donna B., respectively.

Having processed the the blog reader portion of the November give back, it was time to turn my attention to the question of which of the 10 local charities listed below would receive the $100 charity portion of the give back.

• Boys and Girls Clubs of Central Virginia
• Blue Ridge Area Food Bank Network
• Big Brothers Big Sisters of Central Blue Ridge
• The Nature Conservancy
• Habitat for Humanity of Greater Charlottesville
• Meals on Wheels of Charlottesville-Albemarle
• United Way Thomas Jefferson Area  
• Sexual Assault Resource Agency
• Charlottesville-Albemarle SPCA 
• Alzheimer’s Association of Central and Western Virginia  

After asking our Grand Prize winner, Donna B., which charity she wanted to see receive the $100 donation, she informed me that her choice was the Blue Ridge Area Food Bank Network. She choose this charity since many food banks are stretched very thin in supplies and funds during the holidays trying to feed everyone. To me, it sure sounded like a great cause I could get behind and would be happy to support.  

So, on Tuesday this week, I soldiered off in the pouring Virginia rain on my bike to deliver the $100 check to the local Blue Ridge Area Food Bank Network branch. It took me about 20 min to bike to the Food Bank, and when I got there, rest assured I was completely drenched (see picture below).

After taking a couple pictures, I stopped by the administrative office, filled out the check for $100, asked if they were busy this time of year (the office manager said that they definitely were!), handed over the check, and then donned my rain gear to head to work at the lab!

Overall, it was a truly great experience 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 add another pallet or so of food to the stores of this Food Bank, and hopefully, enable someone to have a happier holiday season.

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.