My Personal Finance Journey

Is There Really Such a Thing as Good Debt?

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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 post by MPFJ staff writer, Kevin Mercadante, who is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

We live in a world that’s awash in debt.

Complicating this fact is that debt has become so common in the average person’s life that we may not even perceive the threat that a truly is. That can cause us to take on debt that we would be far better off avoiding. At a minimum, we should develop a hierarchy as it applies to debt. We may decide that there are certain times that we should go into debt – and others when we just need to walk away from it.

This is  the essence of the good debt versus bad debt debate. We know that certain debts are just plain bad. Credit cards and other types of consumer debt are in this category. Then, there other debts that we might think of as good debts – and sometimes they are, but not always. But is there really such a thing as good debt?

This is hardly scientific, but I think that before we decide that a debt is a good debt – that is, one worth taking – we should ask a few important questions to help us decide:

  • Is what is being purchased with the debt life-altering in a positive way?
  • Is there a decided absence of reasonable alternatives to taking on the debt?
  • Will the debt put me in a hole that I’ll never get out of?

If the answer to any of these three questions is “no”, then what we are looking to purchase will not result in anything like good debt. If we use such questions as a litmus test of the debt, we will come up with a very short list of good debts – and even then there will be limitations.

A home mortgage – within limits

There can be times when taking a mortgage to buy a home is something close to a necessity – in many cases it really isn’t. Shelter is an absolute necessity, but owning the shelter that you live in isn’t always. But if you have a growing family, you may eventually need to own a home. Or if you have a business with certain physical assets that cannot be stored in an apartment or rental home, you’ll need to own.

On the flip side, if your purpose for buying a home is to trade up to McMansion, the home mortgage-as-good-debt argument turns into a leaky boat. Assuming that your purchase is a necessity, it’s obvious that you will be unable to pay cash for the house. If you need to buy, there’ll be no alternative to taking on a mortgage. Right there, the home mortgage will improve your life in a positive way, and there really aren’t any reasonable alternatives to borrowing in this case.

So far, it looks like a good debt situation! Where home mortgages get sticky is in that last test question – will the debt put me in a hole that I’ll never get out of? The answer to this question essentially separates good debt from bad when it comes to mortgages. If you’re buying a home that fits well within your budget, you’re making a large (more than the minimum) down payment, and taking a loan will be paid off in a reasonable amount time (certainly nothing longer than 30 years), the mortgage qualifies as good debt. If on the other hand, you are buying a home is at the upper reaches of your ability to afford, putting little or nothing down, and might even need to take a 40 year mortgage, you’re probably stepping into the bad debt zone. You’ll have a mortgage that can in fact put you into a deep hole that you’ll never get out of. A debt isn’t suddenly good just because it’s called a mortgage. It’s your ability to reasonably afford it, as well as the necessity of the purchase that make the difference.

Student loans – within even tighter limits

One of the biggest problems with student loans today is that it is effectively debt without parameters. You need to qualify for just about any loan you take based on your financial position. But student loans are the exception. You can get the loans without any income, assets, or credit history, and that’s what has made so many students take on more than their share of debt.

Like housing, a college education has the potential to improve your life, and for many students there really are no viable alternatives. This would seem to make student loans good debt by default. But the problem with student loan debt is its potential to put you in a deep hole – much in the same way as over buying a house with an out sized mortgage will. Once you have these loans, they are nearly impossible to get out of. You’ll have no asset to sell to payoff the loan, and generally cannot discharge them in bankruptcy. That’s a deep hole – especially if the debt is large.

If the debt is beyond your ability to repay in a reasonable fashion, than it is not good debt no matter what else it will do for you. Even though “the system” doesn’t impose limits on how much student loan debt you can take, you need to do this yourself. Decide how much debt you think that you’ll reasonably be able to handle with or without a college degree. (Many people take student loans but don’t graduate; they still owe the debt.) If you are borrowing anything beyond this limit, you’re voluntarily accepting a bad debt arrangement.

Medical debt usually is good debt, even if we don’t think of it that way

We don’t often think of medical debt in connection with debt, good or bad. But, the incidence of medical debt is on the rise, owing to higher deductibles and greater reluctance by insurance companies to pay for medical expenses.

Unless you are borrowing to pay for elective surgery, debt that is incurred to cover medical expenses almost always has a positive impact on your life, and lacks in any reasonable alternatives. This is an expense category where you often have to take on debt even if it will put you in a deep hole. If it’s a choice between saving your life or that of a loved one, and avoiding debt, you’ll naturally choose to save the life. Does this make medical debt good debt? I think so – even if it doesn’t feel like good debt. Medical debt is virtually a category all its own. Let’s call it necessary debt.

 　

What about car loans?

I don’t think of we can reasonably say that car loans come under the good debt label in any way. Sure, it’s close to impossible to buy a brand-new car without going into debt.

But, unlike the categories above, there’s always an alternative here. You may want a new car, but it’s unlikely that you absolutely need one. You can always buy either a less expensive new car, or a used one. With cars, it’s very possible to buy a vehicle that you can afford without going into debt at all. In fact, borrowing money to purchase a car is usually motivated by a lack of willingness to wait until we are able to afford the kind of car that we want to buy. That makes the good debt argument here very weak at best.

How about you all? How do you define good debt versus bad debt?

Share your experiences by commenting below!

 ***Photo courtesy of http://www.flickr.com/photos/90994597@N05/8268391582/sizes/n/in/photolist-dADEKy-acpH9H-9

Should You Include Emergency Fund and Specifically-Earmarked Savings in Your Overall Asset Allocation?

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Click here to enter my free $65.84 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to charity! Deadline to enter is May 31st, 2013.

On New Year’s Eve before the official start of 2013, I posted an article mentioning that I was updating my target asset allocation to a 70% equity / 30% fixed income split, up 5% from the 75% equity / 25% fixed income split I had been using since I started this blog in 2010. Using the 25/75% split in overall asset allocation, it boiled down to having 5% of my overall assets held in cash. 

 The reason that I changed my asset allocation targets to 30/70% stemmed from the fact that during the past year with the accumulation of specifically-earmarked vacation savings, dream and life values savings, and my emergency fund, I have tended to carry around 10% of my overall assets in cash-equivalent accounts. Since I like having this amount of cash on hand being saved for specific purposes, I figured it was about time for me to accept the fact that I need to change my target asset allocation percentages to account for this preference – hence the change.

When I made the change mentioned above, it seemed to make a lot of sense, and I didn’t think much of it at all. However, several days ago, a reader brought up the question below, which made me think about reconsidering my strategy:

 Should savings that are earmarked for specific short/intermediate-term needs (vacations, buying a car, home down payment, college savings, doggie emergency fund, buying a new $3,000 bike, saving for a pool, saving for a rental real estate investment) and one’s emergency fund be included in your long-term asset allocation percentages? Or, should it be considered as a completely separate basket(s)?

Let’s explore an answer to this question, shall we?

Reasons FOR Including These Savings in Your Long-Term Asset Allocation 

In the process of learning about personal finance through reading many of my favorite books throughout the past 7 years or so, there is one consistent message in the majority of them when they talk about investing – that money held in different baskets (Roth IRA, IRA, 401k, taxable investing account, etc) should be counted together as one common portfolio / asset allocation.

Because of this common theme around considering your investments (generally, the authors either explicitly or implicitly are describing retirement / long-term investing) as ONE portfolio instead of many, I imagine that many folks out there (like me!) carry this same strategy through to how they treat their cash savings earmarked for specific purposes and their emergency fund – they simply count these funds as part of their long-term asset allocation / overall portfolio.

 However, does this same advice actually still apply for one’s tactical cash savings?

On one hand, I suppose the argument could be made for including earmarked savings in your long-term asset allocation on the basis that…

  • Doing so will provide you with a more accurate, global view of your overall finances (it is YOUR cash after all, so why wouldn’t you count it in YOUR asset allocation?) 
  • Doing so gives you a more accurate feel for the level of secure holdings you are carrying.
  • If you’re like me, these earmarked and emergency fund savings were taken in to consideration when I calculated my fixed income asset allocation. 
  • Even though you’re investing for the long-run, if a financial emergency pops up, you’re going to use whatever money you have access to in your ENTIRE asset allocation, so why not treat it all as the same pile of money?

However, if we look in to the issue in a little more depth, do these reasons still hold true?

Reasons for NOT Including These Savings in Your Long-Term Asset Allocation 

Even though I do include my emergency fund and other intermediate-term cash savings in my retirement asset allocation, one thing that I do NOT include is the savings that I accumulate each year for paying estimated income tax from un-taxed self employment and graduate fellowship income. The reason for this exclusion is because the money comes in and out of my portfolio so quickly (1 year or less) that the only thing it would do is skew my asset allocation percentages to make me think I am holding more cash than I am. In addition, these estimated tax savings were not taken in to consideration when I calculated my fixed income asset allocation.

Reason # 1 – Including the Savings Makes You Think Your Holdings are More Conservative Than They Really Are

 When I really started thinking about it, I realized that it could be argued that including tactical savings in your asset allocation is wrong because it makes your investments seem more conservative than they really are.

An example illustrates this very nicely, in my opinion.

Let’s consider that someone has an overall net worth of $100,000. She uses a 40% fixed income / 60% equity overall asset allocation split. The fixed income allocation includes a $10,000 emergency fund (10% of the total allocation), which the investor has determined based on her specific monthly expenses to be enough to sustain her and her family for 6 months of life should she get fired from her job.

Let’s assume that the unthinkable happens. Her job gets downsized, and her salary all of the sudden vanishes. Fast-forward 6 months. Her emergency fund cash savings of $10,000 are now gone. If all else stayed the same, her asset allocation would now be 70% equity / 30% fixed income. If she had developed her asset allocation with her emergency fund in mind, then this might be all right. However, if not, she might be a little too much exposed to risk.

Reason # 2 – Earmarked Savings Cannot Be Rebalanced to Maintain Your Target Asset Allocation

 At first glance, a compelling reason against including earmarked savings in your asset allocation is that similar to your home, it really doesn’t make sense / is not easily possible to rebalance when it comes to your emergency fund or earmarked savings, since these amounts are specifically chosen for certain needs/values/wants.

However, if we examine how these cash savings fit within an overall portfolio, I feel this potential problem becomes a lesser issue. For example, in my portfolio, my emergency fund and earmarked savings fit in to the 10% cash allocation, which along with 5% TIPS and 15% short-term bond funds, makes up my 30% fixed income asset allocation. If the equity markets were to decrease significantly, I would find myself needing to sell these various fixed income asset classes to maintain the proper risk exposure. Naturally, I wouldn’t be able to sell my emergency fund savings, etc, but I would be able to sell my other cash accounts and bond mutual funds in order to maintain the right allocation. Thus, I think everything would work itself out fine.

Conclusion

Having investigated all of these considerations, what’s the verdict? Should your emergency fund and other short/intermediate cash savings be included in your asset allocation, or not?

As with many things in personal finance, I think the answer to this is that it depends. More specifically, it depends on how your fixed income asset allocation targets were calculated in the first place (but that either way is probably just fine).

  • If they were calculated solely taking in to consideration qualitatively how much variation in your portfolio you can handle whilst still being able to sleep at night, then I would recommend NOT including your emergency fund, etc in your asset allocation totals.
  • If on the other hand, your fixed income asset allocation target was calculated (as I did mine) more conservatively by considering both how much variation you can tolerate from a qualitative perspective and listing out your specific cash needs, then including your emergency fund, etc in your asset allocation calculations is fine!

How about you all? Do you include your emergency fund and short/intermediate-term cash savings in your overall asset allocation, or treat them as their own separate “pools?”

 Share your experiences by commenting below!

***Photo courtesy of http://farm4.staticflickr.com/3133/2695338561_b762408b97_o.jpg

Grow Your Own Vegetables In Your Conservatory

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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! 

Growing your own vegetables not only saves you cash, it also gives wonderfully tasty and organic produce that family and friends will love. You don’t need a large garden, or even one at all to grow your own either, it can be done in your conservatory, which is the ideal spot for many plants.
 
Here lately, growing cycles for many gardening enthusiasts seem to almost be disrupted due to later frosts. With a conservatory though, this can be avoided, and you can grow delicious vegetables all year round.
 
 

Making a start

Purchase some cheap propagation trays from a garden center or hardware store first, along with some good-quality compost, grow bags, a book on growing vegetable and plant food. It’s not necessary to spend a huge amount on pots and planters. Use your imagination, as anything can potentially become a planter. Instead, visit car boot sales and pick up cheap items that you think may be suitable, such as buckets, old drawers, small wheelbarrows, or whatever catches the eye. If they are a little worn, don’t worry, you can always add a lick of paint and some stickers to liven them up and match to your conservatory furniture.
 
Once you have these things, it’s time to decide what you’re going to grow, suitable vegetables for indoor growing include:
  • Tomatoes (smaller climbing varieties can be trained to climb trellis or arch and look beautiful)
  • Peppers (bell, jalapeno etc.)
  • Carrots (round ones do well in pots)
  • Radishes
  • Potatoes (seed tubers, plant and top up with compost as they grow)
  • Mushrooms (dark spot needed – buy prepared special compost with mushroom spawn and keep at around 50-60 degrees)
  • Peas and beans (dwarf varieties and mange tout can be used)
  • Herbs (basil, chives, coriander, dill, parsley, fennel, mint, to name a few)
  • Aubergines
This is by no means an exhaustive list, so you can experiment with other vegetables, or even fruit, or ask at your local garden center which veg are suitable for indoor growth. Don’t discount growing edible flowers either, if you fancy really jazzing up your culinary efforts.
 
 

Next steps

Once you’ve decided which vegetable you’re going to grow, raise the seeds in a propagator, which should be kept in sunlight. At this stage, it’s worth pointing out that you will need to know which vegetable can stand a little cold and which can’t stand too much heat.
 
Spring and autumn are the best growing times, as you may find the conservatory gets too hot in the summer. Pay attention to whether what you’re growing thrives in hot weather and direct sunlight, so that they don’t die on you and remember to check and water (if needed) a couple of times a day.
 
Once your seeds have sprouted and are looking healthy and strong, you can replant into planters or grow bags. Tomatoes and peppers are especially easy to grow and pendant varieties of tomato can even be grown in hanging baskets.
 
If you don’t want to go to the trouble of raising your own seeds, then you can buy seedlings at the garden center to give you a head start. Bear in mind that the veg that you choose are likely to be seasonal, so you can rotate your crops to ensure you grow all year round.
 
That’s really all there is to it, and as you can see, there is an abundance of things you can grow in your conservatory, so really get your imagination working and go for as much as you can. It’s also possible to grow fruits, although we wouldn’t recommend going tropical or planting an apple tree, but you can try your hand at melons, grapes and even strawberries.
 
Once you’ve tasted everything that you’ve grown with your own hands, you’re unlikely to ever want to use a supermarket for your vegetables ever again!

How about you all? Have you ever tried growing your own fruits or vegetables as a way to save some money? How well did it work out? How much do you think it saves you? Are the savings worth the time involved?

 Share your experiences by commenting below!

***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/1/13/Fresh_cut_fruits_and_vegetables.jpg

When To Rent And When To Buy – A Guide

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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 $65.84 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to charity! Deadline to enter is May 31st, 2013.

The following is a post by MPFJ staff writer, Toi Williams, who is a professional personal finance blogger of Fine Tuned Finances. She has backgrounds in personal finance, sales, and real estate.
Many of us have been conditioned to think that if we want something, the best way to get it is to buy it.

But, there are many situations where it may be better for us to rent the items that we want instead. It can be difficult to decide whether it will be more cost effective to buy an item or to rent one, but there are some guidelines that you can use to help you make the decision.

Here is how to decide when to rent an item and when to buy it:

Houses

One of the biggest expenses for any household is housing. Many financial experts will tell you that you should try to purchase a home as soon as you can because of all of the advantages of home ownership, but in some cases, it may be smarter to rent your home than it would be to buy it. Here is how to tell the difference.
When To Rent
One of the biggest factors when determining whether you should be renting a home instead of trying to purchase one is the amount of time that you plan to spend in the area. If you have just moved to a new area and are not sure if you are going to like it, it may be better to rent a home for your family for a few years so you can see how you enjoy the neighborhood. This gives you the option to move to another part of town without a great deal of hassle if you decide that a particular neighborhood is not for you.
People that have just secured a new job and have relocated to be closer to their employment may also find that it is more beneficial to rent a home at first. That way, if you find that the job is not what you thought it was or if your new boss is a tyrant, you will not have the weight of a home to sell holding you back from exploring other employment opportunities. It is also better to rent if you feel you may be promoted to another position at another location within a few years. It is never cost effective to buy a house that you will be in for less than five years.
When To Buy
If you have lived in the area for a significant amount of time and know that you will be living and working in the area for the foreseeable future, then it may be more beneficial for you to purchase a home in the area. Purchasing a home will often result in lower payments than you would have to pay each month while renting a similar sized home and you will receive the tax benefits from the government that are reserved for homeowners. You will also have more control over the property and what you can do with it, including decorating any way you want, obtaining pets, and changing the exterior of the home.

Clothing

Outside of tuxedos for weddings, many people do not think about renting clothing to wear, but you would be surprised at the amount of clothing that is available to rent for people of all ages and sizes.

Because clothing can be expensive, it often doesn’t make sense to buy all of the clothing items that you desire for all of the occasions that come up. Here is how you can make the decision on what choice will be best.

When To Rent
For almost every special occasion, it will be more cost effective to rent the clothing that you need instead of buying new items. Special occasion dresses for women can cost hundreds of dollars, and suits for men can be even more expensive. In most cases, the main clothing items that are worn for these occasions are only worn once and then are left in the closet for many years untouched. Special occasions when you should consider renting clothing include weddings (especially wedding dresses and tuxedos), proms, and captain’s dinners on cruise ship vacations.
When To Buy
It is best to limit your clothing purchases to things that you will be wearing frequently and things that will last from year to year. Staple items, like t-shirts, jeans, and work clothes are always good purchases because you will get your money’s worth of wear out of them. The cost per wear ratio gets even better if you are able to purchase these items when they are on sale or on clearance. You should also buy the clothing items that you know you may need multiple times over the next few years, like a black suit for job interviews and funerals. Purchase shoes that can go with multiple outfits instead of unique ones that only match one or two items in your closet.

Tools

Buying tools can be very expensive, especially if you need specialty tools for a home improvement project. Fortunately, you do not always have to buy a tool to be able to use it for what you need. In many cases, it may be better to rent the tool than to purchase it outright. Here are some signs that can help you make the decision.
When To Rent
If you will only be using the tool for a specific project, like remodeling the kitchen or removing a tree from the backyard, it is often more cost effective to rent the tool for the length of time that you need it. Once you have used the tool, you can return it to the home improvement store that you rented it from, paying a fraction of the price of purchasing the item and saving valuable storage space in your home, shed, or garage. Renting a tool is also good if it is the first time that you have ever used that particular type of tool, so you can see how it works and how you like it before you decide to buy.
When To Buy
If you know that you will be using a tool frequently or for multiple projects, it will be more beneficial to buy it and have it on hand than to run back and forth to the store to rent it every time it is needed. Tools that are purchased should be versatile and you should be comfortable in its use before you decide to purchase it. Every home should have a toolbox with basic tools in it to handle basic home and appliance repairs, but other specialty items, such as chainsaws, demolition hammers, and electric sanders, should only be purchased if you are sure that you are going to be using it multiple times during the course of a year.
How about you all? Do you typically rent items you use infrequently, or do you just buy instead? What items do you usually rent?
 
 Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/john_hall_associates/3110849717/

5 Common Career Tips in Finance

The following is a guest post. Enjoy! 

Even in an unstable jobs market, finance jobs remain an appealing option, with careers in the financial sector promising attractive starting salaries, quick promotion prospects and of course, big bonuses for the key players. 

However, times are tough, and there are often hundreds of applicants per job, at entry level and above. If you want to start or progress your career in finance, you’ll need to do some serious research to beat the competition. To start you on your way, here are five top tips.




Starting Out In Finance

Tip 1: Do the right degree.

In times gone by, there were many routes into a career in finance. New starters came from a variety of academic backgrounds, with new starters with degrees in the arts and humanities common place. In the boom times, a degree wasn’t even always strictly necessary, and many a wily 18-year-old was able to talk their way into a trainee position. However, times have changed and nowadays, employers are looking for targeted degrees. While mathematical and engineering degrees are still attractive, finance, accounting, economics and business degrees are best.

Keep in mind that it is not even necessary to set foot on a university campus to earn the right Master’s degree. Most of these degrees are available through online institutions, so you can take your courses in your spare time without worrying about commuting or finding parking before class. A Masters in Business Intelligence, for example, is a degree program offered online that brings mathematical concepts and technology together, and is definitely needed in today’s business world. A Masters in Organization Development and Leadership is another excellent choice because it provides you with the skills necessary to take a leadership role in the business world. While searching for the right degree program, also don’t forget to explore what options you have available to you regarding financial aid.

Tip 2: Choose the right job for your personality.
 
There are a huge number of different careers within the financial sector, and if you want to succeed, it’s important to choose the right one for you. If you’re gregarious and money-driven, for example, you may well want to pursue a career in financial sales. However, if you’re more of the shy and retiring type, the cut throat world of sales may not be for you. That doesn’t rule you out of a career in finance though – why not explore options in accounting or underwriting?
 
Tip 3: Look for local companies.
 
Massive, multi-national firms may have more jobs available, but they’re also likely to attract a higher number of applicants for every position, and you’ll have a fight on your hands to outshine the others. If you target smaller, local companies, however, there may not be as many finance positions available, but the competition is likely to be substantially less. This may be the way to go if you don’t have a great deal of experience to put on your CV – smaller family firms are often more willing to mentor new starters.



Starting Out and Moving On

Tip 4: Network Network Network.
 
This is one for graduates and executives alike. If you’re still studying or pursuing a BS in finance, you should join finance and business-related groups and societies, particularly ones that host visits from figures in the industry. This stands for successful executives seeking promotion and new opportunities too. Join organisations for financial professionals and aim to build professional relationships with people in other companies, so you’ll be the first to hear about new positions coming up.
 
Tip 5: Expand your knowledge

 

It’s very well-known all there is to know about your specific department or role, but when it comes to battling for promotion to the top jobs, bosses will be impressed by employees with the widest knowledge of how the company operates as a whole. Make it your business to understand what your colleagues actually do – this will improve your demonstrable people management skills and foster better communication will make your job easier, and make it easier for you to succeed.

How about you all? Do you have or have you ever thought of embarking on a career in finance? If so, what do you think is the best way to get started?

Share your experiences by commenting below!

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

  • One thing I have noticed throughout the years is that in the world of finance, the school from which you earn your undergraduate/graduate degree in finance really does matter more so than in other professional fields.
  • Therefore, if you’re really interested in getting the best start in finance, you might want to try to your best to go to a top-tier MBA school.

How to Save Money When Hosting a Barbecue

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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 $65.84 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to charity! Deadline to enter is May 31st, 2013.

This is a post by MPFJ staff writer, Jeff. Jeff writes about Sustainable living and finances at his website, Sustainable Life Blog.

Now that summer is unofficially here with the arrival of Memorial Day, it’s time to break out the bbq grill and get ready to enjoy it.

Summers are always a great time to catch up with friends, relax, and spend some time enjoying the nice weather. My wife and I are going to one wedding that’s relatively close, as well as a week trip to Alaska, but other than that, we will be sticking close to town and having/attending bbq’s with family and friends!

Hosting a lot of BBQ’s can get expensive quick, so we’ve thought of a few ways to keep our costs down:

  1. Don’t go overboard. Every time we have people over for a big bbq, we always talk about what a great time it was and how much fun we had. In addition to all that, we plan how much we spent and realize that we can do about 1 good bbq per summer without totally wrecking our progress on our other goals.
  2. Get help. Typically when we have a big BBQ, everyone asks what they should bring. Don’t feel like you need to provide everything yourself – you’ll just end up cooking the whole time instead of spending it with the people you invited. Have guests bring dessert and salads, and you provide the main course and the drinks. This is a great way to save money and get people invested in coming!
  3. DIY – Lots of great BBQ foods can be easily made at home for a fraction of the cost. You can make your own bbq sauce, your own coleslaw, and baked beans. The list goes on and on, and they will typically taste better than what you buy at the store.
  4. Change your meat options. Lots of the money we spent at our last bbq was because of the burgers we chose to make. They involved 3 different types of meat, and ended up being the most expensive part of our meal (If you’re interested, I believe it was the first one on this list). They were very, very good, but the next time we had a bbq, we switched to chicken for the main meat, with a bit of hot dogs and a few burgers for those that did not want chicken. Changing meats saved us a ton of money.
  5. Go easy on the fuel. Lots of people add too much charcoal to the grill when cooking, and end up leaving quite a bit of semi burned coals on the grill that have to be extinguished, and cant be reused again. You don’t need the whole 10lb bag for just a few people and you can easily get by with about 30-40% of the bag. If you’re using a gas grill, you only need the heat on high initially when cooking, once the outside is seared turn the heat down and it cook on a lower temperature.


 Those are some of our favorite tips for grilling during the summer and keeping costs down. 

What are yours?

Share your experiences by commenting below!

***Photo courtesy of http://www.great-grilling.com/images/basic-burger2.jpg

Navigating Your Finances – A Life Skill We Can All Learn

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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 $65.84 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to charity! Deadline to enter is May 31st, 2013.

The following is a guest post. Enjoy!

There’s a constant stream of news stories these days about how busy most of us are in this global, connected, high-speed ultramodern 21st Century world. We find ourselves working longer hours and having less time to spend during our leisure time. One result of this is that it can be all too easy to put off chores and tasks that we really know we should tackle but just never seem to find the right time to get started on.

Financial spring cleaning

In much the same way as tending a garden needs a bit of TLC on a regular basis to stop it from becoming overgrown and out of control, our finances also need a regular focus of attention to help make sure everything’s on the right track.

In the broader sense, this can mean looking at all aspects of your personal finances. And, it is just incredible when you start to see where savings can be made. Something as simple as switching from one brand to another, or cancelling an under-used contract for a gym or DVD rental can claw back some much needed cash from the inevitable monthly expenditure. It doesn’t need to be about living frugally – it’s more about always keeping an eye on where the money goes and how it could be used to better effect.

Assessing your financial products

As creatures of habit, many of us will stick with a provider simply out of familiarity. In fact, it’s probably quite normal to use, say, the same utilities company for your entire adult life. But doing so can mean spending more than is necessary – if you shop around, there may well be deals and offers that will suit your budget and requirements better.

The same goes for the financial products that you have. Credit card interest rates differ, and it’s often the case that transferring your balance to another card can mean having an introductory period which is interest free – all the better to pay the money back without added cost.

It can be very useful to set a date for your financial spring clean – a day or evening when you look at everything from your current account and any credit cards or loans as well as savings accounts too. The latter is a particularly interesting area of personal finance – and even a cursory look at the savings section of sites like Money Saving Expert (MSE) demonstrate that the interest on saving can vary dramatically from one provider to another. One example MSE gives is of an ISA that offers 0.1% interest, which as MSE highlights is not only pretty low – it ‘underpays the market leader by £450’ – which is a lot of interest going unearned for those who have ISAs with that level of interest paid on them.

Finding products to suit your requirements

But, it isn’t all about reassessing the products you do hold. Having a close look at your finances also means seeking out any products you don’t currently hold that could enhance your life, save you money, or provide contingencies for unforeseen circumstances. The benefits of health insurance, for example, can bring about serious benefits in terms of peace of mind and allow you to get on with the important things in life without worrying.

Bringing it all together

While it may initially seem daunting to haul all those policy documents out of the desk drawer and to compare providers and so on, it’s one of those things where getting started is the only really challenging bit. Once you’re looking at the detail and seeing where money can be saved or more usefully spent, a sudden sensation often takes hold – and it’s the realization that you have grasped more control over your finances. And to go back to the garden metaphor I’ve used above, this means that you’ll be able to nurture and prune even more effectively as time goes on – and hopefully everything will be rosy.

How about you all? Is there anything in your personal finances that you working on optimizing in the near future?

Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/fatguyinalittlecoat/7090297073/sizes/h/in/photostream/

The Plaintiff’s Options When Receiving a Structured Settlement Annuity

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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 $65.84 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to charity! Deadline to enter is May 31st, 2013.

The following is a guest post. Enjoy! 

Any individual that was seriously injured in some type of vehicle accident might be awarded a large sum as a condition of the lawsuit. If the plaintiff’s suit was successful, they will likely receive a court order judgment in their favor. One of the most popular ways of disbursing money from a lawsuit is through a structured settlement payment plan. This is often offered as an alternative to a lump sum of cash. It is usually up to the judge in the case to decide which type of payment is best for the plaintiff.

A Purchased Annuity

In the event that the plaintiff was ordered to receive a structured settlement, as a condition of the judgment, they will receive payments over time. Typically, the defendant in the case can purchase a face value annuity, which is equal to the money that is owed to the plaintiff. However, they can pay a significantly lower amount to an insurance company or annuity company in exchange for a policy that will make the payments to the plaintiff.
An annuity is nothing more than an investment instrument that is sold by an annuity or insurance company. As a condition of the agreement with the defendant, the insurance company will make routine, scheduled payments to fulfill the obligations of the settlement. As a result, the plaintiff in the case (the annuitant) will receive a monthly or annual guaranteed income that lasts for a pre-determined length of time.
 

What to Consider

In some cases, the plaintiff in the case is offered a lump sum of cash. It is often recommended by their attorney, and the judge, to invest all or some of the proceeds into some form of investment instrument. If the plaintiff’s specific type of lawsuit excludes them from paying taxes on the money received, he or she will still need to pay any taxes off of the profits or interest earned by the investment tool. In many cases, the lump sum of money offers more favorable alternatives to the plaintiff including flexibility of how and when the money can be spent.
 

Provided Security

Typically, the judge in the case chooses for the plaintiff to receive a long-term structured settlement annuity in lieu of receiving a large sum of money. This is often the result of statistics showing that many individuals that receive huge amounts of cash will blow it on big-ticket items. As a result, the structured settlement annuity is designed to protect the plaintiff from their own actions.
 

Selling the Annuity

There are many incidences where selling a structured settlement annuity makes better financial sense for the plaintiff and his or her dependents. Most states have rules and regulations that must be followed by both the annuitant (the plaintiff) and the purchaser of the annuity. These safeguards are in place to ensure that the annuitant gets the better part of the deal, and fully comprehends exactly how much money he or she will receive once the court approves the transfer. The process begins with obtaining numerous structured settlement quotes from reputable companies that are eager to purchase the annuity.

How about you all? Have you all ever received any settlements from a court case? If so, how was the settlement paid out?

Share your experiences by commenting below!

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

  • When deciding whether to receive a court settlement as a lump sum vs. an annuity, the thing that I would look at are the fees/expenses involved and also the rates of returns offers.
  • In many cases, annuities can involve higher fees and not be worth it in the long run than simply taking the lump sum and investing it yourself. Of course, there are pluses and minuses on both sides!

***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/d/dc/My_Trusty_Gavel.jpg

Introducing The 3rd Annual Debt Free Direct Tour de Personal Finance Competition – Submit Your Best Posts Today!

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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 $65.84 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to charity! Deadline to enter is May 31st, 2013.

I simply love the Tour de France.

There is truly something magical about watching this particular 3 week cycling race unfold in July each summer. In the race, the riders cover nearly 2,000 miles, including stages through the majestic Alpine Mountain range and the sunflower and vineyard fields of Southern France. As an avid cycling fan and past Category 2 road cycling racer (I raced once-upon-a-time from 2001-2005), July is a truly a glorious time of year.

For the 3rd year in a row in July 2013, MyPersonalFinanceJourney.com will be hosting the Debt Free Direct Tour de Personal Finance. The Tour de Personal Finance is a month-long Tour de France-themed personal finance-blogging competition. In 2011-2012 (the first two years for the event), thanks to AWESOME participation by the PF blogger community, the Tour was a great success. This year, I’d love to have you participate once again! 

WHAT IS THE GOAL OF THE TOUR DE PERSONAL FINANCE?

The goal of the Tour de Personal Finance will be to crown the best (voted by readers – read below for details) personal finance blog article written during the last year.

HOW THE TOUR DE PERSONAL FINANCE WORKS

The Tour de Personal Finance will be conducted each year in July during the same time period in which the Tour de France cycling race occurs. The format/layout will be as follows:
  • Personal finance bloggers will submit their best, highest quality post from the past year (only one post) to me via email (see below for details of how to submit a post) before July 1st.
  • The posts will separated in to brackets based on the category of the article. Next, the posts will be paired off using a random number generator..
  • The paired posts will “compete” against each other each day in a stage (what they call each day of racing in the Tour de France), which will be posted on My Personal Finance Journey.
  • Readers will comment on the post to vote for which post they think is better. The post with the most votes each day will be declared the STAGE WINNER.
  • The stage winners will move on to the next round, where they will square off against other stage winners. Again, the best post each day will be voted for by the readers.
  • The blog author will be allowed to vote for him/herself. Others will most likely do it, so you should too! But, no gaming of the system will be allowed. Entrants will, however, be allowed to ask their friends to vote for them, promote the contest on their site, etc.
  • At the end of the month, the final winner of the competition will be crowned the Maillot Jaune (or the yellow jersey, which is given to the overall winner of the Tour de France each year). Ties will be broken by me. 
We greatly appreciate Debt Free Direct for being the title partner of the 2013 event and for all their great support. If you’re interested in learning more about the help and advice Debt Free Direct offers to people in debt or their money saving tips on how to prevent building up debt, click here.

WINNERS’ JERSEYS

In the Tour de France, there are 4 main winners’ jerseys that are fiercely contested. These include the Yellow Jersey (overall winner), Green Jersey (best sprinter), Polka-Dot Jersey (King of the Mountains), and White Jersey (best-placed young cyclist). 
As such, along with crowning the overall winner with the Yellow Jersey (as mentioned above), the Tour de Personal Finance will recognize 4 winners each July, as described below:
  • Yellow Jersey – Winner of overall competition. Article voted “best” by readers. See “Changes in This Year’s Event” section below for details on the prize for the winner and the charity selection component. 
  • White Jersey – Goes to highest placing, new blog (judged by how far they get in the competition and how long they have been blogging).
  • Green Jersey – Goes to the blog whose article wins a single stage “the fastest.” In other words, the Green Jersey goes to the blog who wins a single stage by the biggest margin against their competitor.
  • Polka-Dot Jersey – Goes to the best blog article entered which details information on “climbing” out of the debt “mountain”.

HOW TO ENTER

If you are a personal finance blogger and are interested in participating, entering is very easy! Just send the following information in an email to Jacob@mypersonalfinancejourney.com to enter by June 15th, 2013.
  • Name and URL of blog.
  • URL and title of your best article from last 12 months.
  • A concise 2-5 sentence description of the post (this will be posted on each stage’s announcement, so really SELL why post should win!).
  • The month and year in which you started blogging (will be used to determine White Jersey winner).

SOME INFORMATION ABOUT LAST YEAR’S EVENT

You can view how the 2012 Tour unfolded by viewing the competition bracket at the following link – 2012 Tour de Personal Finance Bracket. You can also view a sample of some of the Tour de Personal Finance Stages, the introductory post explaining all of the details, as well as the post-race awards recap from past years by clicking the links below:




SOME EXCITING NEWs / CHANGES FOR THIS YEAR’S TOUR

  • Last year, there were 52 different personal finance blogs/articles that participated. For the 2013 event, I am targeting to have 64 different blogs/articles competing. This should be do-able since I’m getting started organizing things 2 weeks earlier than last year! 
  • I will be reserving the reader portion of my 10% monthly blog income give back event for both June and July as prize money to the Yellow Jersey winner (~$50). The Yellow Jersey winner will also select a charity of their choice to receive the charity portion of the 10% monthly blog income give back (~$50).
  • Lastly, in the 2013 event, I have actively been seeking out platinum, gold, silver, and bronze sponsorships from various companies and advertising representatives in the PF realm. I am proud to announce that Debt Free Direct has enthusiastically jumped on board as our platinum/title partner, so you’ll be seeing some information about what they offer interspersed throughout the Stages of the event. I will be donating half (50%) of all sponsorship proceeds to a charity selected by the overall competition winner (Yellow Jersey), which will be really fun! 

I look forward to another great event this year and reading your posts! 

***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/4/4a/Bradley_Wiggins,_2012_Tour_de_France,_Stage_19_close-up.jpg

How To Save Money in The Living Room

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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 $65.84 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to charity! Deadline to enter is May 31st, 2013.

The following article is by MPFJ staff writer, Miss T from Prairie Eco-Thrifter. If you want to learn how to live your dream life in a sustainable, healthy, and money savvy way, check out her site here.

How can you save money in the living rooms of your house?

In other articles in this series, we’ve talked about saving money by turning off lights when no one is in the room, adjusting the thermostat a few degrees and turning appliances off at the wall when not being used.

Are there any other ways that you can save money in living rooms?

Using the windows and drapes to control the temperature inside your living room is going to save you money on your heating and cooling bills. 

In summer, if you open the windows and drapes in the early morning, you will draw in the fresh, and usually cooler, morning air to lower the temperature of the room and freshen the atmosphere. As the day heats up, and especially before the sun hits that side of the house, close the windows and pull the drapes to help maintain the room temperature. You will save dollars by not turning on your cooling system until after midday. As the day cools down again in the evening, open your drapes and windows on the shaded side of the house, or where you will get a cool breeze blowing in, and let nature cool your house down again.

In winter, keep the drapes and windows closed in the morning. When the sun hits the wall of the house, open the drapes and let the sun warm the room and lift the spirits. As the warmth of the sun fades, close the drapes again to conserve the warmth in the room. Use drapes that are made from special insulating fabric for the best results. If you use this strategy in conjunction with adjusting the thermostat on your heating, you will certainly notice a drop in your energy bills.

Use ceiling fans to help with temperature control. 

In summer, they provide a gentle movement of air to cool you down. In winter, don’t ignore these great heating helpers. Most ceiling fans have a reverse function which forces the warm air in the room down towards the floor, keeping the warmed air where you need it and helping to keep the room warmer.

Consider ways in which the lighting in your living areas can save you money. 

Overhead lighting is usually very bright and may not be necessary in rooms where you are just watching TV, listening to music or having a quiet conversation. Change the bulb in your central lights to a low-wattage CFL to conserve power and use only as necessary to light the whole room. Use table lamps beside sofas and chairs for light as needed. By only turning on the lights you actually need, you could save up to a hundred dollars a year. During daylight hours, open the drapes instead of turning on the lights and watch your power bills drop.

When the time comes to replace or upgrade your electronic appliances in the living room, look for low energy usage and energy-efficient models so that you will be able to keep your energy bills as low as possible. 

Consider the size of the TV you buy; do you really need a huge TV that is going to use loads more power than a smaller one? Another little known fact about televisions – the factory settings on your TV may not be at the most energy-efficient levels, nor the most suitable for home viewing. Did you know that the brighter you have your TV, the more energy is uses? No, I didn’t either and I found I could adjust this setting several degrees lower and save money.

We now know that electronic equipment left on standby continues to use power, even though they seem to be turned off. However, these are often very difficult to get behind to turn off at the wall, so consider plugging them all into one power strip that you can put somewhere that is more easily accessible. It won’t be such a chore to turn off the TV, DVD player, computer etc and you will be more likely to do it regularly. When spending time on the computer, use the low power mode for as much of the time as possible to save energy as well as extending the life of the computer. Most people believe that a screen saver saves power but this is incorrect; set your monitor to sleep mode after a certain time or switch it off manually when not in use. Another misconception is that computers and other electronic devices last longer if they are never turned off; the best way to conserve power is to turn them off when not in use.

If you have more than one living room, such as a family room and a formal living room, you probably usually only use one room at a time. I know when we had a formal living room in our last house, we hardly ever used it. Another way to save money is to turn the heating or cooling off in the room you aren’t using. If you plan to use the room, you can always turn it back on ahead of time but in the meantime, you’ll have been saving even more off your power bills.

I’ve noticed a drop in our energy bills by putting most of these ideas into practice  While, on their own, they may seem minor, the most effective way to save money in living rooms is to put several small initiatives in place, rather than looking for one major to change.

How about you all? What techniques do you all use to save some money in the living rooms of your house? Have you used any of the strategies mentioned above?

 Share your experiences by commenting below!

***Photo courtesy of http://prairieecothrifter.com/wp-content/uploads/2012/08/iStock_000014230326XSmall-300×199.jpg

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