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10 Effective Things You Can Do When America is in a Double-Dip Recession
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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 Charles Chua from All About Living With Life. Enjoy!
According to Investopedia, a double-dip recession refers to a recession followed by a short-lived recovery, followed by another recession. The causes for a double-dip recession vary but often include a slowdown in the demand for goods and services because of layoffs and spending cutbacks from the previous downturn.
A double-dip (or even triple-dip) is a worst-case scenario. Fear that the economy will move back into a deeper and longer recession makes recovery even more difficult. A news item titled, “A recipe for economic disaster,” confirms that the stage is set not just for a double-dip recession but, worse yet, a depression and there are 10 signs the double-dip recession has begun.
What can you, as a normal citizen, do in such an adverse situation? I can think of the following ten ways to combat the worst-case scenario:
1. Hold tight to your job and be more productive: There will be more retrenchment as businesses contract. It is even more important for you to create extra value for what you can do. Show enthusiasm and work with your heart.
2. Start looking for a new source of income now: Is your spouse working? If not, can he or she contribute a new source of income? As jobs will be even harder to come by, rather than asking for help, just help yourself by starting a small business. As an example, if your spouse is good in pastry, he or she can start selling their delicious cookies, cakes, pies and muffins. The most important thing is to get started.
If you need some help coming up with ideas for a side-business, search around the Internet for a list of passive income ideas. In your search, keep in mind that with advances in communication technology that are available in today’s society such as online fax, Internet telephone, email, and teleconferencing, many jobs/businesses can even be run remotely from a home office.
3. Cut spending: Frugal living will be the key to hold out through this difficult period which is looming in the horizon.
4. Avoid getting into more debt: The wise move is to get rid of all debt and stay debt-free. Forget about what you want, just live with what you have and be happy.
5. Continue to learn and be more skillful: This is even more critical at this stage to update your skills and learn new things which are useful at your workplace. To be up-to-date is to be competent.
6. Stay positive: Do not allow the negative events to erode your positive mindset. Be sure of yourself, be confident, and most of all, be resilient. You will surely see the light at the end of the tunnel.
7. Stay healthy and fit: Stay calm, alert, and collected by staying fit and healthy. Exercise daily to cope with life’s adversities with energy and resolve.
8. Networking: Do not neglect to stay in touch with your circle of friends. You never know when you will need their help. On the other hand, do what you can when one of your friends is in distress.
9. Hold on to your investment in gold: You are lucky when part of your investment is in gold. Stocks and shares will suffer, but the real value of gold remains unaffected. In fact it gets better. You can count on your gold when it is necessary to turn it into hard cash.
10. Be alert to changes that are taking place around you: Stay in the know and react quickly before things get worse. Subscribe to Google Alerts on topics relevant to you and be notified as soon as it happens.
How about you all? What other effective behaviors do you try to focus on during tough economic times?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- @ Labeling time periods as a recession, a depression, etc –
- This is a very interesting post Charles! Thanks for sharing!
- Personally, I find it incredibly entertaining how utterly useless economists are in their ability to predict depressions and recessions.
- I once read that the top economists in the world can only accurately announce when a recession starts ONCE IT HAS ALREADY STARTED! Talk about ridiculous!
- Additionally, I feel that all too often, people let the fact that the media has labeled the current time period as a “recession” influence their decisions too much. This is especially true when it comes to buying and selling of investments.
- @ Starting a small business for a second source of income –
- While I do agree that a family finding a second source of income is beneficial during tough economic times, I do not feel that a small business is the best way to do this.
- Why do I feel this way? Simple. It’s a well-known fact that a large majority (I think I’ve heard 90%) of small business fail during their first year of operation. As such, the odds are not in someone’s favor to succeed in making short-term profits in a small business, particularly if the person is already hurting for money in a recession.
- Instead, a more sure way of getting crucial additional income in a recession is to simply take up a side/part-time job.
- However, it might also be prudent to start thinking of creating your side business, but to make it a more long-term goal.
- @ Several other ideas I had for effective things you can do in a double-dip recession – Aside from the ideas listed above, I could think of several other important things I try to do during tough economic times.
- Regarding investments, first and most importantly, it’s crucial to not give in to all of the “hype” and panic sweeping around the market. During the 2008-2009 market downturn/recession, I saw all too many individuals sell a majority of their stock holdings very near the market bottom. And, what do you know?! I talk to them recently, and they have since bought back in to the market. These people are doing EXACTLY the opposite of what you should be doing to create long term wealth in that they are selling at the bottom and buying at the top.
- So, the bottom line is that during a double-dip recession, be sure to keep an eye out for buying opportunities when the market is low and maintain your appropriate target asset allocation through periodic rebalancing.
- During a double-dip recession, it’s also important (as Charles mentioned) to continue learning new skills. To this advice, I will add that it is good to start learning additional skills that can be directly related to increasing your company’s bottom line. Since jobs these days are very specialized, in order to do this, you may have to reach out to different departments than the one you work in and be willing to work after-hours.
- For example, let’s say that your normal job is working on the manufacturing floor facilitating the release of product. In this case, you could reach out to the supply or sales department of your company and see if you could help out in some way helping them break in to new sales markets. At the very least, your company will be impressed with the initiative you’ve shown, even if they don’t allow you to help out in multiple areas. If you’re going to do this, always be sure to get prior-approval from your boss before approaching another department.
- While this process of reaching out to new areas may be slightly painful, I believe it will pay off in the long run.
- @ Investing in gold –
- While gold is probably a good investment to have going in to a recession, prices of this commodity/asset will increase during a recession due to increased demand because of the security it provides.
- Therefore, it’s important to not give in to the “gold buying hype” during a recession because this will most likely only cause you to lose money in the long term.
***Photo courtesy of http://www.flickr.com/photos/aturkus/139818702/sizes/l/in/photostream/
How Can You Actually Benefit from Low Interest Rates?
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To me, it’s truly amazing how low interest rates are these days.
Furthermore, it seems that with each passing month, I log in to my savings accounts with ING Direct and Dollar Savings Direct only to find out that the interest rate I’m earning on my balance has only decreased closer and closer to zero (currently around 0.80-1.00% APY)!
The Current State of Interest Rates
According to MoneyCafe.com, the current prime interest rate decided by the FOMC in their August 9th, 2011 meeting is 3.25%. In looking at historical interest rate levels, I found that one has to go all of the way back to around 1955 to find interest rates that were as low as today’s levels. So, while today’s interest rates aren’t the lowest they’ve EVER been, they are incredible low for modern standards!
As a personal finance blogger and investor, I encounter many people who are very annoyed with how the low interest rates we’re currently experiencing are enabling them to accumulate little to no money in interest payments on their cash and emergency fund accounts. I’m not going to try to sugar-coat things by claiming this assessment is inaccurate of our current reality. However, I would propose that instead of focusing on the negative aspects of the current situation, we focus on the positive effects that low interest rates bring. However, this begs the question: what are these benefits, if any?!
The Effect of Current Interest Levels on Mortgage Rates
In my opinion, the most effective way that regular consumers/individuals can actually benefit (instead of receiving negative effects) from historically low interest rates is by taking advantage of this time to lock in low-cost fixed mortgages for purchasing primary homes or other forms of real estate.
In most of the personal finance books I’ve read, a family or individual purchasing their own home is typically quoted by these people as the “best financial decision they ever made.” Of course, there are many reasons why purchasing a home is a good financial decision. However, one of the key reasons for this is the tax advantages people receive in deducting mortgage interest from their income taxes and being able to do tax-sheltered exchanges when buying and selling their home.
How You Can Take Advantage of the Low Interest Rate Situation – Buying and Refinancing A Home
Currently, 30 year fixed rate home mortgages are being offered for around a 4.2% interest rate, approximately 1% above the prime interest rate of 3.25% mentioned above. In my opinion, an interest rate of only 4.2% is really not much at all (i.e. very cheap!), especially when you consider 1) that equities have returned an average of ~10% per year over the history of the stock market and 2) savings accounts were earning around 5% APY interest in 2005. As such, if you’ve been delaying purchasing a home for several years, now is a great time to “pull the trigger” and purchase while interest rates are low.
Another aspect of the “financial puzzle” to consider is the possibility of refinancing your home. At a high level, refinancing makes sense when you bought your house (and subsequently took out a mortgage loan) during a historically high interest rate period. For example, if I bought a house in the year 2000 when interest rates were around 10-11%, and I still had a significant amount of the loan outstanding, it would potentially save me thousands of Dollars to refinance my home now to take advantage of interest rates that are almost 50% reduced.
As a quick example of the magnitude of savings that are possible with refinancing, let’s assume that I still had $150,000 left to pay off on my mortgage that I took out for my $1.5 million McMansion I bought in 2000. If I refinanced from the 11% interest loan to a new 4.2% interest loan, it would mean that I would pay approximately $10,000 less in interest per year. If you ask me, that’s definitely worth the time to go through the refinancing process. Of course, prior to going through the refinancing process, you’ll want to check if in your situation, the fees that you’ll pay to make the transition won’t degrade the benefits you’ll receive in interest savings.
How about you all? How have the low interest rates in recent years affected you? Have you done anything to take advantage of the situation? Have you ever gone through the mortgage refinancing process? Are there any hidden fees that were encountered?
Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/jawspeak/213150426/sizes/m/in/photostream/
Couponology – Online Coupon Screening Resource
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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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If you’ve stopped by my blog before, you probably have picked up that I am a very frugal (maybe even cheap!) person. I enjoy saving money and am fairly effective at doing so.
However, one thing that I desperately fail at in life is taking advantage of coupons (both online or in newspaper/print resources) for my major and minor purchases. I think part of this failure stems from having convinced myself that I don’t need to use coupons since I already save a sufficient amount of money. After all, if I am shopping at Wal-Mart and buy most all of my groceries from the Great Value generic brand family, why would I ever need coupons to save additional money? Furthermore, I get slightly discouraged by how the coupons in newspapers seem to exist only to get me to spend more money buying things that I don’t need.
Other reasons for why I fail to use coupons are because 1) I think that the coupons for things I actually need to buy will not be available or 2) finding these targeted coupons will take far too much time. Because of these reasons, I am always on the lookout for new, improved resources that will make coupons for products I need more accessible and easier to use. Recently, I’ve been exposed to a new online coupon website/resource that meets these qualifications. The website is called Couponology.com.
Upon checking out their site, I found that Couponology offers the following features for screening through the overwhelming thousands of coupons available on the Internet to enable you to find ones that you actually need.
- Coupons by Store: This is exactly what it sounds like, with stores listed alphabetically. You’ll find coupon codes for many of the stores you probably shop at, including Staples, Eastbay, and Home Depot. You will also find Bath and Body Works coupon codes on the site.
- Truthfully, I was quite impressed by the sheer number of stores they have listed for coupons in their directory (~500).
- They also have a feature that enables coupon shoppers to request that additional stores be added.
- Coupons by Category: Sorting coupons by different categories proves useful when a shopper, for example, knows that he or she wants to buy a grill or some other type of home/garden hardware. However, he or she doesn’t care what store it is from (just wants the best deal available).
- Categories include Professional Services, Entertainment, Apparel & Accessories, Sporting Goods, Food & Groceries, Travel & Tourism, and all points in between.
- Best Online Coupons: From the looks of this sorting feature, it appears to be a listing of the most “valuable” coupons on the site. However, what determines most “valuable” is by nature, quite arbitrary.
- So, caution should be taken to shop around the site and compare prices on other products before buying directly from this menu.
- Most Popular: This coupon screening feature displays the most frequently-used deals on the Couponology.com site.
- Before buying a product using this feature, make sure that the item is something you previously determined that you need. If you don’t consider this, it can be easy to get caught up in buying something frivolous simply because it is on sale.
- However, if you are out to have some pre-planned shopping fun, this feature may be for you!
- Free Shipping Codes: Even though shipping rates have become quite competitive in recent years, paying for shipping and handling can slowly eat in to money saved up by consumers for online purchases. As such, this feature allows you to view the various free shipping deals in the different categories in which you are considering purchasing products. After all, who doesn’t like free shipping?!
- Printable Coupons: This section of the site includes coupons you can print off and bring in to use in stores. I saw printable coupons for stores like Whole Foods, Sears, and Zales.
- While printing off a coupon and subsequently going shopping at a physical store can be both easier and more familiar to many shoppers, caution should be taken because often, the best coupon deals apply only to purchases bought online.
- Thus, it’s always a good idea to consider your online options before going to a physical store.
- Search Coupons: In addition to the screening options discussed above, Couponology also allows shoppers to search for specific items that have deals associated with them.
- In my mind, this is the most useful feature of Couponology, since going forward, I will most likely only use coupons to save money on larger, pre-planned purchases.
- For example, recently, I’ve been in the market to buy a new bicycle helmet. If I type in “bike helmet” in the search field, about 40 relevant bike helmet deals from multiple vendors come up that I can read through. Doing this saves me both time and money. Definitely a good combo!
How about you all? Do you use any online coupon resources to save money on purchases? If so, which ones? Have you used Couponology before?
In your opinion, do you feel that the money you save using coupons is worth the time and effort?
Share your experiences by commenting below!
Note: I received monetary compensation for this review of Couponology.com. However, the feedback expressed represents my honest opinion of the service.
***Photo courtesy of http://www.flickr.com/photos/24218656@N03/4589929510/sizes/m/in/photostream/
More Money and a Raise, Please!
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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 from Michael German. Enjoy!
The old adage that nothing is for certain except uncertainty resounds nowhere stronger than in today’s erratic job market. The figures are frightening; even when they jump slightly, most Americans today realize that the jump has more to do with people’s unemployment benefits expiring than it has with any real upturn in the employment picture.
We are told to be grateful that we have a job; that we should praise the heavens for the opportunity to stay chained to a desk for ten hours a day and jump at the whims of our over-educated yet highly under-qualified boss. And now you want a raise?
The Prospect of Getting a Raise
Having the audacity to ask for a raise is virtually career suicide these days, no matter how much you may truly deserve one. At best, your request will be greeted with mutters about the economy, at worst you will be laughed out of the office. Even companies not necessarily depressed by the economy have found that using the dreadful economy as a way to stave off raises and reduce the workforce is a Godsend. Imagine, being able to freeze salaries, lay off a nice proportion of your workforce, and at the same time have your remaining employees ever thankful to take on more work for the same pay, and all you have to do is say one word: economy. Lucky for them, but you still need to earn more money.
How to Negotiate a Raise
The best way to increase your job’s value is to increase your worth to the company for which you work. Guaranteed yearly raises are becoming a thing of the past. Most organizations these days offer instead, merit increases, meaning that your salary will be raised only if your performance has been raised from last year. The bar is raised every year, so you must strive to be not only the best you can be, but better than you were last year. While no one likes to admit it, but there are many who simply work by habit, bringing nothing new to their game year in and year out. These non-inspired employees fared as well as anyone under the old yearly raise system, but are sure to be left behind under the merit system.
Try to be the best at what you do. While not everyone can be the best at what they do, don’t worry, because most people are not even trying to be the best, and there are always situations where some coworker just has the knack, a gift that makes doing their job seem effortless for them. Instead of resenting those who can bang out work in an instant, try to learn from them, often they simply know a few shortcuts of which you weren’t aware. Also, even within the job description that you may share with fellow employees, there may be a single aspect that you can master better than anyone else, get a reputation as the best at something in the process. This will provide you will leverage when asking for an increase.
When It’s Time to Move On…
If there is just no way your company is willing to offer you some increase for all your hard work and perseverance, you may want to consider moving on. Some companies just refuse to raise a salary no matter how you profit the company, and some jobs simply aren’t very well-valued – but they may be somewhere else. If you‘ve made it a habit to network with those in your field maybe it’s time to utilize those connections. If you haven’t, start now. This also holds true for those considering striking out on their own.
Starting Your Own Business
Sometimes starting your own business seems the best answer. Now is the time all that networking can really pay off, as many companies under strict budgets which do not allow for hiring additional employees often outsource work to freelancers. This can be a great source of income until you have your own business up and running. Do be careful though, being your own boss is often a much more appealing in theory than in practice; anyone who has been there will tell you it is a twenty-four hour job. You will be sweating every dollar, as opposed to sitting and collecting that guaranteed weekly paycheck. Needless to say, start planning early, put some money on the side, and to keep finances straight, apply for a business credit card.
With any luck, your business will grow, and perhaps soon, you will be the one making the decision on who does and doesn’t get a raise. It may not be the circle of life, but it is at least the circle of business.
How about you all? Have you ever negotiated a raise with your boss or bosses? How did it go? What approach did you take? Do you feel that companies are using the bad economy as an excuse for not being as good to their employees?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- @ The flaws and inaccuracies in today’s unemployment figures/calculations –
- First off, I just want to say that this post brings up a lot of good points for us as working employees to keep in mind. It’s all too easy to get caught up in our job and forget to sort of “take care of our own interests.”
- Next, I’ll definitely agree that the unemployment facts (and the formulas that generate them) are far from perfect, as the stats ONLY include people that are ACTIVELY looking for jobs (not the ones that have given up after trying for X number of years).
- @ Asking for a raise being looked on as career suicide and the grim outlook on today’s job market –
- I am not in total agreement with the sort of grim outlook on employee/employer relationships expressed above.
- In my opinion, companies truly are hurting, and simply do not have the money to give raises that they may have used to possess.
- Also, I would not consider asking for a raise to be career suicide. If you can legitimately display that you benefit the company enough and subsequently ask for a raise in a very professional and courteous way, I think that at worst, the only thing your boss will do is say “no.”
- @ Yearly raises and bonuses shrinking in recent years –
- I am in agreement with the idea expressed in this post about yearly bonuses and raises being decreased in recent years.
- When I worked for a few years out of undergraduate studies for a Fortune 500 company, I was somewhat surprised with how hard it was to be recognized and compensated for hard/good work. It seemed to me that raises and promotions were more based on 1) time at the company and 2) how many times you moved around to different jobs. Don’t get me wrong, I was really happy at the company and enjoyed my time there, but I just was a little surprised with how hard it was to get noticed for good work.
- @ The best and easiest way to get a raise and promotion –
- As mentioned in the previous point, in my opinion, the best and quickest way to rise through the ranks in today’s job market is simple – move around to different jobs in different geographic locations in different companies as MUCH as possible.
- @ Whether it’s more profitable to be your own boss or work for a company –
- The distinction and differences between how much money you can make by being an employee versus starting your own company are quite interesting.
- In my opinion, if you want to make the most money possible over a short period of time, the best way to do this stay as an employee at a company.
- Starting your own business can be a good, interesting alternative and can also present promising prospects for long term profits. However, starting your own business is much more risky, is not for everyone, and is not a “get rich quick” method.
***Photo courtesy of http://farm1.static.flickr.com/26/61056391_31343afdc6.jpg
The Problem with Home Insurance Fraud and How it Affects You
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Hello everyone! Jacob here with you! I’ve finally emerged from the depths of PhD qualification exam preparation land (just took the test today!) and am ready to put more time in to my blog! I apologize for being a little elusive lately, but hey, life happens!
To get us started back on the right track, the following is today’s guest post. Enjoy!
The Severity of the Issue
Case Studies
How Does Home Insurance Fraud Affect You?
How about you all? How often do you feel that home insurance fraud occurs? Have you ever known any one in your community that has tried to get away with this type of fraud? What impact do you feel this type of behavior has on the rest of us?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- @ Home insurance fraud being the most common type of insurance fraud –
- I can definitely imagine that homeowner’s (or real estate in general) insurance fraud is one of the most common forms of insurance fraud out there.
- Why’s this, you might be asking? In my opinion, I think that the answer lies in that home insurance is a fairly broadly defined coverage, meaning that you define an approximate value of the goods in your house and get a policy to cover those in the case of a fire, tornado, etc. Because there is a significant amount of wiggle room in what’s included, this, in my opinion, motivates people to feel they can “game” the system easier.
- @ The consequences of home insurance fraud –
- As mentioned in this article, I think it’s important to point out that home insurance fraud doesn’t just negatively affect the person partaking in the activity if they get caught.
- In fact, when the insurance companies have to pay out more money than their complex mathematical algorithms plan, all of the honest insurance policy carriers simply have to pay more to compensate for the monetary loss.
- So, I guess what I am getting at here is that it actually benefits us all to watch out for fraud and strongly discourage this behavior. I know I don’t want to pay any more than I have to for my homeowner’s insurance policy!
- @ What motivates people to want to partake in home insurance fraud?
- In writing the comments above, I became interested in thinking about what exactly motivates people to partake in home insurance fraud. Is it greed? Is it desperation for money?
- While I think that the answer may lie in a mix of the two motivations mentioned above, I really am amazed at how many people think they can get away with insurance fraud, even though the insurance companies undoubtedly have entire departments dedicated to seeking out fraudulent claims.
- However, enough people must be getting away with this fraud in some shape or form in order for people to continue doing it!
***Photo courtesy of http://www.flickr.com/photos/23905174@N00/2524306151/sizes/o/in/photostream/
The Benefits Of Finding The Right Loan
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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. Enjoy!
Saving More Money Over Time
Selecting The Right Loan Product
Increasing Your Loan Knowledge
How about you all? What types of features do you seek out in a home loan? What resources do you use to research these loans before deciding upon one?
Share your experiences by commenting below!
***Photo courtesy of http://farm4.static.flickr.com/3645/3659091862_a93ec08853.jpg
Is the Buy and Hold Investment Strategy Right for You?
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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The following is a guest post by Tony Chou from Investorz’ Blog, where he teaches both novice and pro investors how to invest in the stock and commodities markets. Enjoy and be sure to get involved in the discussion by commenting below!
How about you all? Do you have any buy-and-hold investments? How have they done over the years? What investing strategy do you generally use to save?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- Howdy folks! Jacob here! Sorry I’ve been a little elusive on the blog as of late. I’ve been busy getting ready for my PhD Qualifying Exam next week (the report was due today, and currently, I am running on 2 hours of sleep).
- Great topic here Tony! I absolutely agree that buy and hold only really works if you’re not directly depending on the money you’re holding to meet your living expenses or other near-term financial goals.
- @ Confusion between the differences of buy-and-hold and a prudent passive retirement investing strategy –
- I think that often, people confuse the overly-simplified buy and hold investing strategy with passive investing.
- Although technically, buy-and-hold is a form of passive investing because it doesn’t involve timing the market, the proper way people are supposed to perform passive investing is through careful selection of an appropriate asset allocation coupled with periodic rebalancing.
- Because of the rebalancing, passive investing, in the correct sense, is much better than buy-and-hold.
- @ Getting sucked in to the excitement of selling during market downturns – I definitely agree with the statement above that the majority of investors lack (and lacked during the 2009 financial crisis) the resolve to hold on to their investments through big dips in the market. Many people I know sold up to half of their holdings at the very bottom of the market, causing them to lose much money. In my mind, this just further affirms my belief that people should avoid risky individual stock selection, choose an asset allocation that will allow them to sleep at night, rebalance periodically, and stick to it!
***Photo courtesy of http://www.flickr.com/photos/sercasey/324341982/sizes/l/in/photostream/
Tips on Saving Money for Winter – Yes, I Know It’s Summer at the Moment…
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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. Enjoy!
Winter can be a pretty pricey time for households, especially with Christmas – traditionally the most expensive day of the year – coming in the very middle of the season. So, there’s really no better time to look at ways you can save money, starting by looking at your home and the places where you’re leaking cash from your budget each and every month.
One of the best ways to save money on your home could, conversely, be to spend a little bit more in some key areas. If you’ve got some money stored away or are earning more than your spending, now is an excellent time to look into how insulating your home or getting boiler insurance could end up saving you cash in the long term. Here’s a guide to how this works, with a few other top tips thrown in for good measure.
Batten Down the Hatches
If any of your windows are cracked or your doors are damaged, now is the time to do something about it. Over time the problems are only going to get worse, while also reducing the efficiency of your home. So, consider replacing cracked windows and investing in a new door if you’ve got a noticeable draught.
Get Boiler Insurance
With recent winters bringing the harshest weather on record, it’s no surprise that many home emergency companies also reported record numbers of boiler breakdowns and burst pipes. With this in mind, it’s worth considering how boiler cover could end up saving you money in the event of a breakdown or heating issue. Many also come with a complementary annual service – and as 12-monthy check-up is highly recommended by experts in terms of keeping your home a safe and efficient.
Insulate Your Home
Although the outlay can run into four figures if you go all-out and insulate your loft, cavity walls, pipes, and water tanks, you’ll more than recoup this in the money you save on your heating bills over the coming years.
Keep Your Garden in Check
If you fail to protect your yard’s plants and grass before winter, you’ll have to spend time and effort getting it back to the way you want when spring swings round again. So, move your delicate plants indoors – ideally to a conservatory or heated shed – in containers and cover plants that are staying in the ground with sheeting. If you’ve got a fish pond, put a tennis ball in the water – you can pull this out if the water freezes over to ensure your fish have access to oxygenated water.
How about you all? What preventative (or strategic) measures do you take to save yourself some money during winter time? Have you tried any of the ones listed here? If so, how did they work out for you?
Share your experiences by commenting below!
***Photo courtesy of http://search.creativecommons.org/?q=save%20money%20winter
How Much Is Bad Credit Costing You?
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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The following is a guest post. Enjoy!
There are many reasons why people end up over their heads with more debt than they can afford to repay. Some graduate from college with the knowledge that the credit card debt they racked up during their carefree college years will be around to haunt them for the rest of their life! Some borrow money for large purchases during times when they can easily afford to repay their debts – only to have a major change in their income a few months later.
Whatever the reason – having too much debt and falling behind on your payments can cause you to pay extra on utilities and car insurance, and can make it difficult to rent an apartment or borrow more money in the future.
How Much is Credit Card Debt Costing You?
One of the most expensive forms of credit people generally have is credit card debt. The higher your interest rate, the more the debt will cost you. For example, if you have a $5,000 credit card balance, your minimum payment will be about $200 a month. If your credit card charges 18% APR, (and you never made another purchase on the card) it would take you over 11 years to pay it off and pay over $2,800 in interest. The $5,000 you charged on your card is actually costing you $7,800 – and this is if you never make a late payment.
That’s the literal cost of excessive, high interest debt – but what else do you pay more for when you have bad debts?
Utility Accounts Cost More When You’re in Debt
If you have a history of making your payments late or have a low credit score, utility companies – particularly the electric company, may require that you pay a deposit before you can turn service on in your name.
Car Insurance Premiums Are Higher When You’re in Debt
Your car insurance premium takes your credit score into consideration, too. For some reason, car insurance companies decided that if you have excessive debt and a low credit score, you’re at risk for more accidents and therefore need to be charged more money for car insurance.
You May Find it Difficult to Rent an Apartment
Many landlords run credit checks before renting apartments. If you have excessive debt that has caused your credit score to drop, you could face problems finding a place to live. If a landlord or rental company does allow you to rent despite excessive debt and a low credit score, they may charge you a higher security deposit or even a higher monthly rent.
Avoid Becoming a Victim of Debt
Having access to credit is necessary for most of us – it is necessary when you want to rent a car, book travel or hotel rooms, or buy anything online or over the phone. Using credit cards and other forms of credit irresponsibly will not only cost you more in interest payments for the debt itself – but causes you to pay more money in other areas of your life, as well. If you establish good personal finance habits, you will save a lot of money, which you would have given to the banks otherwise.
How about you all? Do you know of any additional indirect effects of being in debt and/or having bad credit?
Also, another thing that I’m curious about is to get the readers’ input on whether or not you think that 1) large amounts of consumer (credit card) debt, 2) fiscal responsibility in one’s personal finances, and/or 3) bad credit should be considered in someone’s application for employment?
Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/myloonyland/430367107/sizes/l/in/photostream/
Are You Balancing Frugal Living With Fun?
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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 I wrote 3 months ago for Money Talks Coaching Blog as part of the 7th Yakezie Personal Finance Network blog “swap,” a monthly event where participants of the Yakezie group pair off and exchange posts on a common topic.
The topic for this particular month was “balancing frugality with fun.” You can check out the original copy of this post over at Money Talks Coaching by clicking here. Also, be sure to read Ashley @ Money Talks Coaching’s swapped post on my site at the following link – Balancing Frugality With Fun
So, let’s see. Frugal fun. At first glance, this phrase might seem like an oxymoron. After all, is the purpose of having money not to spend it doing things that we enjoy? Why does one even need to be frugal?
In my opinion, balancing frugality with fun is important because all of us (unless we are super-wealthy) need to save a certain amount of money in order to live comfortably and indeed have fun (there’s that word again!) during our retirement years.
Listed below are several of the techniques that I employ to both 1) be frugal and 2) have fun living at the same time. Enjoy!
Know Your Budget
Automate Your Savings
As I mentioned in the previous section, I don’t feel that budgets, in the general sense, work for most people. What I mean by this is that let’s say you make $5000 per month in your job. Your budget can tell you that your target is to save $2000 of this for your emergency fund. However, if you merely leave the money in your account with the intention of deducting it at the end of the month, you will likely find that you have spent this money earmarked for your savings.
Because of this, the method I promote is the idea of automating your savings each month. This can be done by setting up recurring, scheduled money transfers from your checking to savings account 1-2 days after you get paid. By doing this, you trick your brain in to thinking that you don’t have access to those funds anymore.
And, with the money you have left in your account after your required automatic transfer, you can spend as you need to on entertainment or regular monthly expenses.
Balancing Frugality With Awesome Vacations
At times, it may seem impossible to live frugally and still somehow have enough money saved up to go on the type of vacation that will leave you with lasting memories for many years.
However, the way that I balance frugality with vacations is to 1) decide how much I can afford to save each month for a future vacation, 2) use this monthly savings target to calculate realistically, when I will be able to take the vacation, and 3) set up an automatic monthly transfer (at the beginning of the month) to a savings account set up specifically for the purpose of vacation savings.
In this way, I ensure that I go on the vacations I want and be frugal at the same time.
Live and Save According To Your Purpose-Focused Financial Plan
- Determine the importance and purpose of money in your life
- Determine your life values
- Determine your life dreams
- Automate your finances so that you can accomplish your life dreams and values.
Basically, by implementing my Purpose Focused Financial Plan (and most importantly, automating it), I ensure that I accomplish things each month that are fun and provide value to me at a deep level. And, having fun with these things that really matter helps me to resist the need to spend money on frivolous, often more costly, “fun” activities.
For example, my automated Purpose Focused Financial Plan dictates that I save/spend money each month for doing at least one cycling or running race (which I really enjoy and fulfills my life value of healthy living) and for a future vacation the Grand Canyon (one of my life dreams).
Make Saving Money a Fun Hobby
How about you all? How do you balance frugal living with fun?
Share your experiences by commenting below!
***Photo courtesy of http://farm3.static.flickr.com/2783/4473975639_2753cee7fc.jpg