My Personal Finance Journey

Carnival of Financial Planning – February 1st, 2013 Edition

February 1, 2013
/ Invest & Retire
/ By Jacob A Irwin

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Welcome to the February 1st, 2013 Edition of the Carnival of Financial Planning!

The Carnival of Financial Planning takes a long-term view of personal financial planning for individuals and families. The focus is on efficient and sustainable personal financial planning practices that can lead to lifetime financial security.

This edition is arranged by subject heading, so that you can browse efficiently.

Enjoy!

BUDGETING AND ECONOMICS

Little House @ Little House in the Valley writes Need Help Visualizing Financial Decisions? Try Planwise – There’s a free tool available online called Planwise. It’s a free online personal finance decision tool that allows you to input your expenses and income and set goals for yourself, such as pay down debt, buy a house, or take on a major expense. It also predicts your progress on paying off debt and potential affect of saving the remainder of your income through bar and line graphs.

Green Panda @ Green Panda Treehouse writes How Are You Going to Make Money? – How will you make money?

Grayson @ Debt Roundup writes Dang it! I Fought My Emotions and They Won – I have been fighting my emotions about a purchase for some time. After finally budgeting and saving for the purchase, I finally let my emotions win. You can’t win them all!

CAREER AND INCOME

Wealth Effect Blogger @ Your Wealth Effect writes Want to be Rich, Don’t be Fat – Thoughts on a Wall Street Journal article titled “Want to be CEO? What’s Your BMI?”

MR @ Money Reasons writes My Secret Wealth Goal – Today I’m going to reveal one of my secret wealth goals. If I can conquer this goal, I should be financially independent and on my way to becoming wealth.

James Petzke @ This Is Common Cents writes The Good and Bad of Self Employment – When planning your self employment career, make sure you consider the positives and negatives of that choice.

DEBT AND CREDIT

Maria @ The Money Principle writes Dealing with debt: change your mental attitude – Mentality is often underplayed when dealing with debt. Here I discuss three mental shifts that will help you pay your debt off and fast.

Michael Kitces @ Nerd’s Eye View writes An Efficient Solution To Implement Intra-Family Mortgage Loan Strategies – In this difficult borrowing environment, some potential homebuyers have found the best way to finance a purchase is not from a major commercial bank, but from the “family bank” instead through an intra-family loan. And as long as IRS guidelines are followed, the transaction can be remarkably appealing for the borrower – and a way for parents to earn a higher return while keeping the money in the family!

Hank @ Money Q&A writes Tips To Save Money On A Mortgage – There are a few solutions to make a mortgage more affordable. If paying down the principal in advance is feasible, it is an effective method to save money on a mortgage.

INVESTING AND SAVING

J.P. @ Novel Investor writes Tax Preparation Checklist – If you do your taxes or someone does them for you, here’s a tax preparation checklist to help organize everything and finish your tax return quickly.

Philip @ PT Money Personal Finance writes The JOBS Act and Crowdfunding: New Investment Opportunities for the Average Joe – What is crowdfunding and how could that change the way you invest in the very near future?

Jennifer Lynn @ Broke-Ass Mommy writes When quibbling over finances leads to a rift in friendship. – Sometime money discussions and escalate to bad feelings, read my experience and advice.

Mike @ Personal Finance Journey writes Eating Well but Saving More – You might not know it, but your bad habits can lead to costly meals. Here are some tips for saving money on food.

Ted Jenkin @ Your Smart Money Moves writes Money Unhappiness? It’s All About Expectations – Every year that the birthday clock turns another year I ask myself one simple question, Am I getting any wiser? Many say that gaining wisdom in life is

krantcents @ KrantCents writes Rich Man, Poor Man – Rich man, poor man is not intended to leave out women! I am really trying to examine the difference between rich and poor and help you achieve what you say is a goal. Most 18-25 year old say getting rich and becoming famous are important goals for them.

Pete @ Intelligent Speculator writes Adding Passive Income Flows: Buying A Farm? Am I Crazy? – An unconventional strategy worth exploring.

Jen @ Master the Art of Saving writes Why Didn’t I Get A PrePaid Cell Phone Sooner? – While I would love to have a shiny new iPhone and be able to get online no matter where I am, I’m not willing to spend that much money. Granted you can…

Suba @ Broke Professionals writes Why Can’t Men Remember Things? – Male traits set the guys up to fail when it comes to remembering names and other crucial details. Why memory matters, and why improving it can help your career.

JP @ My Family Finances writes Ways to Hoard Your Gold – While no storage method is perfect, there are many ways to hoard your gold. Just make sure you consider your own personal needs when making a decision.

Chris @ IRetireEarly.com writes Top 3 Advantages and Disadvantages of Mutual Funds – Mutual funds have been longstanding staples of the finance industry, but is mutual fund investing the right move for you and your financial goals? Check out the top 3 advantages and disadvantages of mutual funds.

RISK MANAGEMENT AND INSURANCE

Super Saver @ My Wealth Builder writes The Value of Health Insurance – In 2013, our medical insurance premium will more than pay for itself. I expect the billed amount for my medical treatments to exceed 50% of our annual living expenses. My out-of-pocket costs will only be a few hundred dollars.

Daniel @ Sweating the Big Stuff writes How Much Do You Need To Save To Switch Insurance Companies? – When your car insurance is up for renewal, how do you decide whether to switch? Use this guide to find out.

REAL ESTATE AND PROPERTY

Don @ MoneySmartGuides writes Create Wealth Through Property Investment – Read how to create wealth through property investments.

Daisy @ Add Vodka writes The Many Inspections Needed When Buying an Older Home – We are happily settled settling into our new house; many boxes are unpacked, we’ve been able to conquer some of the work required to make it a comfortable living space, and I’ve just been able to start sleeping better in our… Read our discoveries!

Dorethia Conner @ The Money Chat writes Was Your Mortgage Charged Off? – Mortgage charge-offs can throw a wrench into your financial planning and hit your credit rating. Learn about what you can do about mortgage charge-offs.

RETIREMENT AND TAXATION

A Blinkin @ Funancials writes Diversify Your Taxes, B!tch – Consider shifting some of your assets from a taxable account to one that is taxed later or never taxed. This way, you’ll be taxed on what you spend rather than what you earn. Checking accounts, savings accounts, stocks and bonds are examples of accounts that are taxed now. 401(k), IRAs, and annuities are examples of accounts that will be taxed later.

That concludes this edition. A big thanks to everyone for participating! Please submit your blog article to the next edition of Carnival of Financial Planning using our carnival submission form. Past posts and future hosts can be found by clicking here.

***Photo courtesy of http://www.flickr.com/photos/bohman/5206587246/sizes/l/in/photostream/

Carnival of Passive Investing # 26 – What Passive Investing Is and Is Not – January 2013 Edition

January 31, 2013
/ Invest & Retire
/ By Jacob A Irwin
/ 4 COMMENTS

Welcome to the January 2013 (the 26th total!) edition of Carnival of Passive Investing – a monthly collection of the best and most intelligent passive investing strategy articles around the internet! Some people foolishly want to beat the market (want being the key word), but we just want to invest with it.

As discussed in my introductory post for this carnival, the purpose of this carnival is two-fold:

To provide a forum to showcase articles and research in passive investing strategies (i.e. investing in ETFs, index mutual funds, etc. in such a way that one avoids employing active stock picking). By investing with the market, we are able to beat 70-80% of investment “professionals.”
To create a community of passive investment bloggers to connect and share expertise.

It’s crazy to think that it’s been almost a year since I last hosted an edition of this Carnival that I started back in December of 2010. We’ve had some really great guest hosts over that time, and it’s been fun to watch the Carnival evolve. A big thanks goes out to everyone who has helped out! I deeply appreciate it!

Over the past year, I’ve noticed that we’ve gotten a lot of submissions that center around topics that are closely related and/or sound like passive investing, but do not quite fall in to this specific category of investing styles/personal finance interest and therefore, have to be excluded from the final selection of the carnivals. For example, of the 40 submissions for this month’s edition, 50%+ of them were not actually passive investing.

As such, I thought it might be nice to make the theme for this month’s Carnival as showing several examples of topics that are and are not passive investing to keep this distinction fresh in our minds. This isn’t meant to point fingers or criticize anyone, but rather is simply for the sake of continuous improvement to our focused goal here with the Carnival of Passive Investing.

Please enjoy and stop by my blog on my non-carnival days as well.

Listed below are this month’s top 3 editor’s picks!

1. Darwin presents Dollar Cost Averaging: Actual Results From the Past 10 Years posted at Darwin’s Money. 10 Years of Results crunched for how you would have fared if you dollar cost averaged into the market versus a one-time investment. Interesting results!

As Darwin points out, these are some REALLY interesting results. Essentially, the conclusion is that you experience a much higher gain during the 10 year period if you were to invest all of the money at one time in a lump sum fashion.

While I do agree with lump sum investing generally resulting in more money overall (it was also the conclusion that Jeremy Siegel came to in his amazing book, Stocks for the Long Run), I think it would be hard for people to do in real life if they were confronted with the task of investing a VERY large amount of money all at once (we’re talking along the lines of more than 1x their annual salary). In this case, it might be better for a person to invest half of the money now to get in to the market, and then invest the remaining half gradually over a few years. However, if it was a more modest amount of money (maybe $10k-$20k), I would likely just invest it all at once according to the correct asset allocation.

2. Michael presents Contributing to a Roth IRA When You’re Over the Income Limit posted at Financial Ramblings. Yes, there’s an income limit for making Roth IRA contributions. But guess what? There’s a very simple workaround that can be used by pretty much anyone.

3. John Schmoll presents Reader Question: Should I Invest in Mutual Funds or ETFs? posted at Frugal Rules. There are various similarities as well as differences between mutual funds and ETFs. If you do some simple homework you can determine which funds are better for you while also keeping down the costs associated with investing.

Congrats to our 3 winners this month! Listed below are the rest of this month’s spectacular passive investing articles, along with the author’s comments summarizing each piece. Enjoy!

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Passive investing is not – Analyzing/selecting individual dividend stocks to generate passive income.Passive income actually has nothing to do with a passive investing strategy. Passive investing also does not relate to creating passive income through starting a blog, affiliate marketing, or sales of products.

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PK presents Treasury Return Calculator posted at Don’t Quit Your Day Job. Any passive investor surely has taken a look at the GS10 series – the constant maturity on the 10 Year Treasury as computed by the Treasury. However, a chart of yields isn’t enough to tell what an investor would earn over a period of time. Well, one sleepless night and 8 cups of coffee led me to make this tool, which will calculate the coupon-reinvested return on the 10 Year Note for any period dating back to 1871.

My Money Design presents What are the 401k Withdrawal Rules for Getting My Money Back? posted at IRA vs 401k Central. Before putting too much money into your employers retirement plan, it helps to understand the 401k withdrawal rules and when you’ll see your money again.

Rohit presents No minimum balance and No maintenance fees Roth IRA accounts posted at The Money Mail. Returns in your Roth IRA can be reduced by the fees the custodians charge. You should select accounts that have no minimum balance requirements or annual maintenance fees. Some brokerage houses are now offering many free mutual fund options within Roth IRA but you will still have to pay for individual stock transaction. There are other criteria you should look at when selecting a Roth IRA account provider such as real time quotes and customer service. This article reviews the criteria to select a no-fee Roth IRA account and the other important factors you should look at when selecting a custodian for your retirement accounts.

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Passive investing is not – Assessing where the market will go in the future, even if it involves predicting the direction of an entire index, such as the S&P500.

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Philip presents Traditional and Roth IRA Contribution Limits Increased by $500 for 2013 posted at PT Money Personal Finance. The latest info on 2013 Traditional and Roth IRA contribution limits–including a breakdown of what it means for those under 50, over 50, and an explanation of why these limits matter.

Dan presents The 8 Largest ETFs on Earth posted at ETF Base. Here are the 8 largest ETFs on Earth. It’s worth checking them out to see tickers, assets under management and their low expense ratios.

harry campbell presents Be Wary of Frontloading Your 401(k) Contribution and Losing Company Match posted at Your PF Pro. January is a great time to re-assess your retirement accounts. It’s important to review your 401k contribution and at least consider re-balancing your accounts at the beginning of every year. You’ve probably made a couple New Year’s resolutions so why not add this one to your list? 2013 will be the first official year I’m able to max out my 401k since last year I received a raise about halfway through the year so I just missed out on contributing the full $17,000.

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Passive investing is not – Analyzing the activities involved in renting out a real estate property you own. However, assessing how a passively managed real estate REIT or index mutual fund might or might not fit in to your asset allocation would fall in to the category of passive investing.

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My Money Design presents The 403b vs 401k – How Are They the Same? How Are They Different? posted at My Money Design. Even though we have both types of plans, I didn’t always know what the differences between the 403b vs 401k. Here is what I found out about each one.

Rohit presents Comprehensive guide for Roth IRA posted at The Money Mail. A comprehensive post on Roth IRA that show you how to get started to make use of this powerful retirement saving option that is Roth IRA. You will learn about the contribution limits, the withdrawal options and where to get started. We also cover the most frequently asked questions for getting you to save for your retirement. Now there is no reason to start saving for your retirement.

Konvexity Institute presents This one concept from CFA level I QM curriculum can make a big difference in your wealth posted at konvexity.

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Passive investing is – Investing with the market through the use of proper asset allocation, index investing, ETFs, portfolio rebalancing due to market fluctuations, asset class evaluation, controlling investor emotions, etc.

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Michael Kitces presents Financial Planning Implications of HR8 – the Taxpayer Relief Act of 2012 posted at Nerd’s Eye View. The last-minute legislation this week not only averted the so-called “fiscal cliff” – it also brings about a number of significant changes to the tax code itself, and its permanence (unlike so many temporary rules and sunsets of the past decade) may herald in a new era of productive tax planning for portfolios!

Michael presents Are My IRA Contributions Tax Deductible? posted at Financial Ramblings. Curious if you’ll be able to deduct your IRA contributions? It depends on your income and whether or not you’re covered by a retirement plan at work.

Well, that wraps up this month’s edition. A big thanks to everyone for participating!

You can submit your passive investing posts for the February 2013 edition of the Carnival of Passive Investing (hosted by Frugal Rules) by clicking the link below:

Blog Carnival HQ – Carnival of Passive Investing – Submit Your Posts

***Photo courtesy of http://www.flickr.com/photos/andy_myers/7428258076/sizes/l/in/photostream/

You Get What You Pay For (A Cautionary Tale)

Click here to enter my free $51.95 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is January 31st, 2013.

The following post is by MPFJ staff writer, Kelly Gurnett. Kelly runs the blog Cordelia Calls It Quits, where she documents her attempts to rid her life of the things that don’t matter and focus more on the things that do. You can also follow her on Twitter and Facebook.

I am a bargain-hunting frugalista of the highest degree. If there’s a deal to be had, a dollar to be saved, or a discount to be taken advantage of, I will sniff it out, and I will probably gloat to my husband afterwards about how much I’ve managed to save us.

But sometimes, as much as I hate to admit it, you have to pay more to get a product or service that will actually be worth your hard-earned money. It’s a lesson I’ve learned the hard way.

My Way-Too-Good-To-Be True Deal

I belong to a million daily deals sites, and one day this spring, I saw a deal for $200 worth of service from a local contractor for $50. It sounded too good to be true, but I couldn’t help myself—our “fixer-upper” starter house is always falling apart, and at the time I saw this particular deal, we were smack in the middle of a kitchen sink leak/flooded floor double whammy. My husband, bless his soul, had done everything he could do to fix the leak, but it was only getting worse. Then along came this fantastic deal, just when we needed it most, to save our kitchen and also save us a ton of money.

I don’t even remember the contractor’s name, but let’s call him “Bob.” Bob showed up in a beat-up pickup truck loaded with odds and ends, wearing a ratty sweatshirt, several day’s worth of scruff, and the air of someone who’d just rolled out of bed and wasn’t terribly happy about it. He took one look at our sink, said yep, he could take care of that, then disappeared to the hardware store for parts and didn’t return until the next day (still scruffy and looking groggily disgruntled). I didn’t like the looks of him—I knew that from the start. But I’d already paid for my discount voucher, our leak was not getting any better, and I figured it was a project simple enough that even Joe Handyman off the street would be able to take care of it.

I was wrong.

Bob “fixed” the leak. He installed new pipes that did not leak when we ran the water, and they continued to not leak for all the months since—during which he disappeared off the face of the planet and never did give us the extra hour of time we’d already “paid” for. Chalk it up to a lesson learned, I told myself.

I just had no idea how big of a lesson…

The Aftermath (and How It Should Be Done)

This past week, having saved up all our Christmas money to buy a new dishwasher, we had our new (reputable) plumbers out to give us an estimate on installation. (Let’s call them “ABC Plumbing.”) We got an estimate, alright—for the installation for the washer, and also for all the pipe work that desperately needed to be redone first before we should even consider installing a brand-new major appliance.

Turns out Bob wasn’t even as good at Joe Handyman off the street. Let’s put it this way: ABC Plumber asked my permission to take a picture of Bob’s handiwork for their website’s “wall of shame” warning against the perils of going with lowest-bid contractors. The piping worked, technically, but it wouldn’t work well for very long—and it certainly wouldn’t be able to withstand the pressures of adding a dishwasher to the system. We had paid for cheap work, and cheap work is what we got.

ABC Plumbing, on the other hand? They’ll admit right off the bat that they’re not the cheapest around. But they do the work right. They show up in a fully-licensed, fully-decaled van stocked with every part they might need to do the job (to code). They draw you sketches and show you exactly what needs fixing and why. They answer every question you can think of, and even those you didn’t know enough to think of. They have 24-hour emergency service. They even put a double-layer of plastic hospital booties on over their work boots so they won’t track any mud into your house, for crying out loud.

Will it cost a pretty penny to have them do the plumbing right? Yes. And it will be worth every pretty penny. Because sometimes you have to pay a little more for quality to save yourself from tons of hassle and expense down the line. Especially when it comes to something big, like your house or your car, it’s worth paying the professionals to do it right the first time.

The only good news in the story (apart from the lesson learned)? ABC Plumber informed me that what I got from Jim was probably worth about 50 bucks, so at least we didn’t pay $5,000 for shoddy work like too many of his other customers have.

That’s not much consolation, but it’s some.

How about you all? Have you every paid for a “cheap” product or service only to regret it later?

Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/magneticsphere/7320136700/sizes/l/in/photostream/

Trust Deeds: Are They Right for You?

January 30, 2013
/ Get Out of Debt
/ By Jacob A Irwin

The following is a guest post. Enjoy!

If you’ve ever been in financial difficulty and carried out some research into Scottish debt solutions, no doubt you will have heard of a Scottish Trust Deed. What with the huge number of adverts on the radio and television, it’s nearly impossible to not have heard of them at least! A lot of the adverts claim to ‘wipe out your debt’ and ‘cancel up to 90% of your debt’, which sounds like a dream come true!

However, can these companies come good on their promises, and is a Trust Deed right for everyone?

The facts

A trust deed is a formal insolvency solution that has existed since at least the 1800’s. Sometimes, it’s called a Scottish Trust Deed, but this is only because a Trust Deed is only available to Scottish residents. The way a Trust Deed works is that if your finances get out of control and you find yourself owing large amounts of money to various sources that you cannot afford to pay back, you effectively place your estate in the hands of a Trustee (a licensed insolvency practitioner), who is responsible for creating a plan that sets out an agreeable solution for both you and the people that you owe money to. This means that you agree to pay what you can afford each month towards your debts, while your creditors agree to give you some debt relief (meaning you don’t have to pay back the full amount that you owe all of your creditors).

Why is it useful?

A Trust Deed is a useful solution for individuals who have substantial debts because it allows them to contribute to their debts by paying an affordable amount each month. When I say ‘affordable,’ I mean that you contribute what you can after paying for essentials, like food, rent and bills etc. Your Trustee is the person who would help decide what’s essential, as he is the person who creates the plan for paying back your debts. A Trust Deed is also good for creditors because it means that they get to see some of the debt their owed repaid, rather than having to pursue someone through debt collectors and the courts etc.

The myths!

A trust deed can be a great solution for individuals with substantial debts. However, it’s not as simple as just ‘writing off you debts’. For instance, you have to be employed or have a regular income, as you are expected to contribute something towards your debts. Another fact is that your Trustee has to act in the best interests of both you AND your creditors! For example, if you own a house that has equity in it, unless you or a friend can cover that cost, you may have to realize the equity in your home to benefit your creditors. That means potentially selling and moving into a new house. There are ways to avoid this, but only a licensed insolvency practitioner can advise you on that. These are just a couple of examples of how Trust Deeds are not as simple as some companies would like to make them seem.

What can I do?

If you’re considering entering into a Trust Deed, then your first port of call should be to look online. There is an abundance of websites out there that will explain a lot of the ins and outs of Trust Deeds. Better yet, speak to a debt expert. A licensed insolvency practitioner will know best about whether a Trust Deed is right for you or whether another debt solution is best.

How about you all? Have you ever heard or or used a trust deed? If so, what are your thoughts about them?

Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/7259240@N03/5531511558/sizes/l/in/photostream/

The Perks of Being a Saver

The following post is by MPFJ staff writer, Greg Johnson. Greg is a proud husband, father, and debt crusader who is in the process of becoming debt free. Along with his wife, Greg co-founded the personal finance blog, Club Thrifty, where they encourage readers to “Stop Spending. Start Living.”

A few years ago, I read a great book called, The Perks of Being a Wallflower. Recently, Hollywood released a film adaptation. Although I have yet to see it, my friends tell me that it is a pretty good movie. The plot is essentially a coming of age story about an introverted boy named Charlie. The book follows several different events throughout Charlie’s life as he slowly learns to be less of a wallflower and begins to participate in life.

As I look back on the story, I see some parallels with the journey that I took when becoming a saver.

I used to wonder how people were able to afford the things that they had. I always thought that those who had nice things certainly had to have a lot of money. I realize now that some people actually can’t afford their lifestyle, using credit to build their castle full of belongings on a foundation of sand. Rather than follow my companions further down the road of debt, I have chosen to go the route of the savers – using solid savings techniques to enjoy my life to the fullest, both now and (I hope) in the future. I’ve found that I am now able to have the quality of life that I want simply by capitalizing on some of these perks of being a saver.

Security

I’m sure that you know someone who panics every time the tiniest financial hiccup interrupts their life. You know, that person whose financial world is in shambles the second that an unexpected expense pops up?

I used to be that person. The reason people panic isn’t because the hiccup is overly expensive. It is because they haven’t planned for anything to go wrong. Getting a flat tire shouldn’t cause somebody’s finances to spiral into a tail spin. However, if you haven’t saved enough money in an emergency fund, you don’t have that security to fall back on.

It took me some time to learn this lesson. Now that I have, my life is filled with a lot less stress. I rarely have to worry about something breaking. If it does, I simply get it fixed. I can do this because I finally learned how to save.

Do the Things You REALLY Want to Do

For years, I spent money frivolously on sports jerseys, music, movies, and nights out on the town. However, I never had enough money to actually do some of the really cool stuff that my friends were able to do. I was never able to go to a major Spring Break destination. I didn’t go and see any concerts. Why? I didn’t understand how to save my money.

Over the years, I’ve finally figured out what I really enjoy doing. Now that I’m a saver, I actually have the money to do them. Sure, I could go out to eat four nights a week, but I’d rather save my money so that I can travel. Being a saver has allowed me to take some really fun vacations with my family, and I can do it multiple times a year now. I can go and watch my favorite bands play live in concert. I can take my wife on a Mediterranean cruise if I wish. My new mindset has allowed me to do the things that I truly find enjoyable in life.

Flexibility

Saving money gives you a lot more flexibility in your life. Being a saver may mean that you are eventually able to open your own business. Don’t feel like being an entrepreneur? Cool. Maybe you can retire early. Perhaps you can eventually take a job that you find enjoyable for less money than you are making now. Maybe you would like to pack up all of your belongings and move to Belize. Being a saver gives you all of these options…and more.

For me, making the choice to become a saver really changed the way that I look at life. Like Charlie, I am now actually participating in life the way that I want to, instead of just being a spectator. I hope that you might make even a small change and begin saving money today. Find out what the perks of being a saver can mean to you!

How about you all? Are you a saver? If so, what has becoming a saver meant to the quality of your life?

Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/alancleaver/4279482716/

3 Tips To Pay Your Home Off Sooner

January 29, 2013
/ Invest & Retire
/ By Jacob A Irwin
/ 4 COMMENTS

The following is a guest post. Enjoy!

If you’ve considered buying a home but haven’t taken the plunge yet, one of the scariest things about it can be the time frame you’re looking at. Whether it’s your first home, a new home, or just a frustration that your current home is taking so long to pay off, let’s talk about a few steps you can take to pay off your home sooner.

Understanding Compound Interest

A friend once said that your first mortgage payment probably only buys you your front door. He meant that at the beginning of a mortgage, almost your entire payment goes towards interest. The idea of building actual equity in your home a few hundred dollars at a time can be pretty disheartening.

The real problem is that pretty soon, you’re going to be paying interest on your interest. If you haven’t done this math before, let’s take a brief example.

On a $200,000 loan, let’s say the current mortgage rates are about 3%. 3% of $200,000 is $6,000. But, that’s just for one year. Over the life of your mortgage (say 20 years), you’ll end up paying over $65,000 in interest!

But, compound interest also works in your favor. The earlier you put additional money down on your home, the more years you save paying the interest on that portion. For example, if you pay a lump sum of $10,000 in your 10th year of your mortgage, you’ll pay off your home about a year and a half sooner than you would have otherwise.

If, on the other hand, you pay that $10,000 on the FIRST year you own your home, you’ll own your home about two and a half years sooner. It’s the same amount of money, but you cut an entire extra year off of your mortgage.

1. Accelerated Payments

Your bank probably offers accelerated bi-weekly payments. By paying half your mortgage payment every two weeks, you’re actually making 26 half-payments per year instead of 12 full payments. That’s the same as an extra month’s payment every year. It’s automatic, you’ll never even notice it’s happening, and this alone will take a couple years off your mortgage.

2. House First, Furniture Second

Don’t fall into the trap of buying new furniture and renovating every room when you first move in. Remember – every extra dollar counts, so take a deep breath and spend a year or two living with your old stuff and pay the house down first.

3. Lump Sum It!

Bonuses, tax refunds, and other found money should all go towards your home. Lump sum payments really contribute to knocking down the principle and will save you a ton in interest down the road.

Have fun playing with the numbers and realize the power that decisions you make now will have over the life of your mortgage.

How about you all? Do you think it’s a good idea to try to pay off your home loan as soon as possible? If so, what strategies have you implemented successfully to meet this goal?

Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/surf98/400887772/sizes/l/in/photostream/

Working Off Your Holiday Debt Overhang

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.

The holiday season ended just a few weeks ago, but if you are like most people, the memory still lingers on – and you have the credit card bills to prove it. The holiday season, and in particular Christmas, can create large expenses that just beg for at least an occasional swipe of plastic.

By now, the bills are in and you’re in an excellent position to fully assess the holiday damage. If you spent a little too much and ran your credit cards up higher than you’re comfortable with, now is the time to do something about it.

The risk of letting your debt roll into next year

Big debts always start out as small ones, and the small ones often originate at the holidays. It’s easy to do – the holidays can leave you inundated with expenses. Not only are there gifts to buy, but there are also decorations, special dinners to plan and prepare, extra restaurant meals and, very often, holiday related travel. The cost for all this can run well into the thousands, and it can be a real cash flow killer. Credit cards can seem like the logical solution.

Using credit cards to deal with a rash of unusual expenses isn’t bad advice in of itself. Where the problem comes is when those debts are just rolled forward, rather than immediately paid off. Once you get comfortable with even a small level of debt, larger levels are more than possible.

Perhaps the best way to use credit cards responsibly is to get into the habit of paying them off immediately. The last thing you want to do is to face next holiday season while still carrying debt from the last one. You can take care of that problem by paying those debts off now.

Time to go on a spending diet

If you spent too much money during the holiday season, you can balance that out by cutting back on your spending now. One of the advantages to doing that early in the year is that there are no major holidays, nor is this a traditional time of the year for travel and vacations. The lower expenses should enable you to direct extra cash flow into debt payoff.

You may even consider using the early part of the year as good time to go on a spending diet. Good financial habits are best established early in the year, that way you can carry them forward through the rest of the year. Seize the opportunity in this the quietest time of the year to cut back on any unnecessary spending, and free up money for other purposes.

Fast forward debt payoff

If you can find or create extra room in your budget, do your best to direct it into payoff of your holiday related debts, and any other debts that you’re carrying. This is an excellent time of the year to clear the decks for other money moves.

Paying off debt is always a worthy effort because the elimination of any debt will also remove a monthly payment from your budget. The more of those you can clear out, the more money you will have for everything else that you want to do.

At a minimum, you should want to payoff your holiday related debts so that they are not still hanging around when the new holiday season comes.

Start savings for next holiday season

Here’s a novel idea: instead of relying on credit cards next holiday season, plan now for cash on the barrel. You can do that by paying off your current debts, and then once you do, to begin saving money for next season.

Banks used to offer “Christmas club accounts” specifically for this purpose, and many employers would allow you to direct deposit money into such an account. While those accounts are probably still out there at certain banks, they don’t get the publicity they once did. Perhaps this is because customers are more interested in chasing yield on their savings, rather than on keeping their money safe for a dedicated purpose.

But you don’t need a special account, you can establish your own Christmas club account in any way that works for you. This could be a matter of setting up a dedicated savings account at a local bank, or even quite literally putting cash in a cookie jar each week. Whatever allows you to accumulate the amount of money you will need for the holidays will work.

The payoff is that when next holiday season comes, not only will you not have last year’s debt, but you’ll also have a reserve of cash that will make facing the holidays so much more pleasant. You will be able to buy what you need, when you need it, without having to worry about carrying fresh debt into the new year.
Now is the time to make that happen!

How about you all? Do you make it a habit to save money specifically for the holidays?
　
Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/22338369@N07/6602762571/

Carnival of Personal Finance #397 – Favorite Superbowl Commercials – January 28th, 2013 MONSTER Double Edition

January 28, 2013
/ Blogging
/ By Jacob A Irwin
/ 15 COMMENTS

Welcome to this week’s Carnival of Personal Finance, a weekly listing of the top personal finance articles around the blogosphere in the following categories – taxes, money management, investing, career, debt, frugality, credit, economy, finance, real estate, saving, and budgeting.

With the Superbowl being only a little less than a week away, the theme for this week’s carnival is a listing of several of my favorite commercials (available on YouTube) from this event over the past few years! Even if you’re like me and are not the biggest football fanatic, we all love the Superbowl commercials, right?!

As you may have noticed, there was no Carnival of Personal Finance last week due to a scheduling mix-up. Therefore, we are doubling up in this edition, so you might see a couple blogs with multiple articles listed in order to catch us up (around 80 posts total – hence the name, MONSTER edition!). I hope you enjoy the posts and that you can stop by My Personal Finance Journey on my non-carnival days as well!

Listed below are this week’s top 5 editor’s picks. Congrats to the five winners! Some truly great articles here!

1. Peter from Bible Money Matters presents How to Save Money On Just About All of Your Regular Monthly Bills, and says, “Today I thought I’d look at some of the main areas of spending that people have every month – their regular monthly bills. Often people take those monthly bills for granted, not even thinking about how they can save money on those regular expenditures, just taking it on faith that they can’t get those bills any lower.”

2. Roger Wohlner from The Chicago Financial Planner presents Life Insurance as a Retirement Savings Vehicle – A Good Idea?, and says, “If approached by someone trying to convince you to use life insurance as an investment vehicle for retirement or any other purpose be very leery and ask many questions. Make sure this is a good deal for you and not just for the rep trying to sell you the policy.”

3. Harry Campbell from Your Personal Finance Pro presents Is Restaurant Week Even a Good Deal?, and says, “Have you heard of restaurant week? Most large metropolitan cities have some form of it, but the general idea is that you pay a discounted rate for a three course price fixed dinner at a top restaurant in your city. In San Diego, the options are for $20/$30/$40 dinners at over 150 restaurants. There are obviously quite a few options and three courses for $20-$40 may sound like a good deal but I’m here to tell you, it’s not.”

4. Suba from Wealth Informatics presents Are you using all the credit card, insurance and workplace perks, and says, “Most people don’t take advantage of all the perks available for them from different sources like credit card, insurance company and their workplace. It is leaving money on the table.”

5. MyFIJourney from My Journey to Financial Independence presents Man Up and Admit Your Money Mistakes In Order to Learn and Improve, and says, “It’s fun to talk about our success with money. How much we saved, or how much our investments have risen in cost. But equally important is to admit our failures so that we can learn from them. Here, I provide a roll call of my biggest financial blunders from having no budget to failed investments. Hopefully everyone can learn something from my mistakes.”

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Favorite Superbowl Commercial #1

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And, listed below are the rest of this week’s great article submissions.

Michael from Financial Ramblings presents Should You Pay for Your Kid’s College?, and says, “You might think that paying for your kids college helps them out by relieving the pressure to work while going to school. But you might be wrong…”

Adam from Adam Hagerman – Financial Coach presents Behold The Power of Compound Interest, and says, “When people ask me what my first piece of advice would be regarding personal finance, I always say “spend less than you earn”. However, I always have to add in a second piece of advice on compound interest. If people understood the power of compound interest, I can guarantee you that they would be saving more earlier on in life.”

Jeff Rose from Good Financial Cents presents 4 Practical Money Skills You MUST Teach Your Children, and says, “One of the best things you can teach your children is the skill of money management. Here’s the most basic practical money skills that everyone should have and how to teach them to your children.”

Michal from Dough Roller presents How To Max Out Your Retirement Savings, and says, “Max out your retirement savings with these 7 tips”

Andy from Saving to Invest presents How Tax Refunds Are Spent and Received, and says, “With an average of $854 spent during the holidays and an average consumer credit card debt of $8,721, income tax refunds are a big source of funds to meet debt obligations. ”

Michael Kitces from Nerd’s Eye View presents An Efficient Solution To Implement Intra-Family Mortgage Loan Strategies, and says, “In this difficult borrowing environment, some potential homebuyers have found the best way to finance a purchase is not from a major commercial bank, but from the “family bank” instead through an intra-family loan. And as long as IRS guidelines are followed, the transaction can be remarkably appealing for the borrower – and a way for parents to earn a higher return while keeping the money in the family!”

Paula @ Afford Anything from Afford Anything presents Myth: Only Rich People Invest, and says, “Rich is the result of, not the prerequisite to, investing.”

Dividend Growth Investor from Dividend Growth Investor presents The Dividend Kings List Keeps Expanding, and says, “The following companies have each managed to increase dividends for over 50 consecutive years in a row. This is particularly interesting, since this period covered several recessions, a few oil shocks and one embargo, a few wars, inflation and a lot of change in the global economy. These companies not only managed to prosper during that tumultuous period, by adapting and embracing change, but also did not forget to reward their loyal shareholders with a dividend raise. ”

Pauline from Reach Financial Independence presents 13 money resolutions for 2013: Enjoy!, and says, “This is the last post of the 13 money resolutions for 2013 series. Once your finances are in order, it is time to use money to enjoy life. Many people have a hard time finding the right balance between saving and spending, especially the frugal ones. Money is meant to be spent on things that make you happy.”

Emily Reeves Grammer from the pastor and the bartender presents $794.87, and says, “This article details our home-buying process and offers tips on how to buy within your budget.”

Emily from PT Money Personal Finance presents Why Millennials Are Delaying Homeownership, and says, “There are multiple reasons you’re not seeing many twentysomethings purchasing homes. And chances are, you won’t see those numbers increase anytime in the near future either.”

Ray @ Financial Highway from Financial Highway presents RRSP Deadline 2013 – Limits & Options, and says, “The RRSP season is upon us! Every bank, every bank branch and every teller will remind you to contribute to your RRSP before the deadline. If you have a financial advisor, they have probably already contacted about your RRSP contribution. With so many people vying for your RRSP contributions, who should you trust?”

Nicole from Grumpy Rumblings of the Half-Tenured presents Delaying gratification, and says, “Nicole and Maggie discuss a simple trick to keep up your willpower for saving. Tell yourself you can have it later.”

Kristen from My Dollar Plan presents 11 Free or Cheap Winter Activities at Home, and says, “The warm weather makes it easy to keep busy without spending a ton of money but what about when it’s cold outside? We have some ideas!”

Eric from Narrow Bridge Finance presents Getting Going on Retirement Savings, and says, “We all want the ability to retire at some point in our lives. While the definition of retirement may be different for some of us, we want financial freedom when we are older to do what we want.”

PK from Don’t Quit Your Day Job… presents Basel Equity and Its Impact on Banking and Lending, and says, “Most of the world may have their eye on Davos, but Cameron has his eye on a different part of the country… Basel. ‘Basel’ is shorthand for a number of treaties and ‘suggestions’ for bank leverage – and Cameron wonders what that means for you.”

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Favorite Superbowl Commercial #2

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Glen Craig from Free From Broke presents The Best 0% Balance Transfer Credit Cards 2013, and says, “Pay off your credit card debt faster with the a 0% balance transfer credit card. Here are the best 0% balance transfer credit cards that will help you pay down your principal.

Big Cajun Man from THE Canadian Personal Finance Blog presents Voo Doo Emergency Funds, and says, “Where is your emergency fund, and is it safe?”

Suba from Wealth Informatics presents Sell your stuff: Make money by getting rid of your clutter, and says, “Sell your stuff for two valuable resources & money & space. Here is a complete guide to getting the most money for your stuff.”

Jon from Novel Investor presents How To Save More Money Now, and says, “Savings is the foundation of a successful financial plan. That is why many of us want to save more money now. The hard part is knowing where to start.”

ee from NZ Muse presents Can we all realistically expect to love our jobs?, and says, “We don’t all have this first world luxury, and quite frankly, I don’t think it’s anywhere near possible. The numbers don’t stack up.”

Lazy Man from Lazy Man and Money presents Unemployment Adventures: Jobs Aren’t the Same Anymore, and says, “The recession has changed things in ways we didn’t imagine. As in any situation, survival boils down to who can adapt, not who is best at the status quo. Like Dory in Finding Nemo says, just keep swimming.”

Investor Junkie from Investor Junkie presents Is It Possible You Are Saving Too Much for Retirement?, and says, “Though I don’t plan on formally retiring really ever (that is a topic of a whole other post), it is possible to be lopsided and have too much in retirement accounts and not enough in taxable investments. With retirement accounts it’s possible you are saving money on taxes now, only to get walloped with a bigger tax bill in the future.”

Money Beagle from Money Beagle presents Today Is The Day To Stop Making Excuses, and says, “Don’t fall trap to the easy way out of blaming others for your money issues. Take control today!”

Peter from Bible Money Matters presents Maxing Out Your Investment Accounts: How Much Can You Contribute and Invest This Year?, and says, “If you do want to max out your contributions to your Roth or Traditional IRA – or your 401k type accounts, it’s best to plan ahead and plan on making regular deposits throughout the year to fund your account. When you make the contributions in small amounts with each paycheck it really doesn’t hurt as much.”

Revanche from A Gai Shan Life presents Disaster Insurance: Hurricanes, earthquakes, and floods!, and says, “Not everyone lives in natural disaster hot zones but sometimes even those of us who do can use a reminder of what we’re meant to be prepared for, and how to protect ourselves. “

Miss T. from Prairie Eco Thrifter presents Are You Financially Ready for Kids?, and says, “If you’re someone who is contemplating having a child, it is definitely a responsible question to ask yourself “Am I financially ready to have kids?” Before you answer, here are five other questions to ponder that will help to provide you with the clarity that you seek:”

Pat S from compounding returns presents Recovering from the Holiday Debt Hangover, and says, “How to recover from holiday debt”

Jon Rhodes from Affiliate Help presents How To Save Money AND Improve Your Life, and says, “Often when you make a financial saving your life suffers in some way. This article explores the possibility of not only making financial savings, but also having these actually improve your standard of living.”

Dan from ETF Base presents The 8 Largest ETFs on Earth, and says, “Here’s a review of the 8 largest ETFs on earth. Important info! Ticker symbols, assets and expense ratios.”

Darwin from Darwin’s Money presents How I Negotiated 10% Off My Purchase When No Sale Was Being Offered, and says, “Proof that you can negotiate ANYTHING! See how I negotiated 10% off a major purchase when no sales were being offered.”

Tony from You Only Do This Once presents A Quick Guide to Using the Cash Envelope System.

Mochi and Macarons from The Budgeting Tool presents Could having too much money make you suicidal?, and says, “Could having too much money make you suicidal? A study shows that people who live in richer neighbourhoods tend to commit more suicide. Is it related to living in those rich neighbourhoods? To money? To jealousy or not having money? All interesting things to think about.”

Glen Craig from Free From Broke presents 8 Places to Research Your Potential House Before You Buy a Home, and says, “You want to buy a home. Awesome. But make sure you know everything you can about the neighborhood you plan to look at and the houses there. See 8 places to research.

Michael Kitces from Nerd’s Eye View presents Permanent Portability Of The Estate Tax Exemption – Is It Time To Bypass The Bypass Trust For Good?, and says, “Getting a proper Will has long been made more complex by the estate planning techniques that are necessary to avoid estate taxes for middle class families, where even just prudent life insurance could cause estate taxes. With the fiscal cliff legislation, however, estate planning may have been permanently made a whole lot easier!”

Div Guy from The Dividend Guy Blog presents Dividend Investing Goals for 2013, and says, “What are your dividend goals?”

Kurt Fischer from Money Counselor presents Can You Freefile?, and says, “If your Adjusted Gross Income is under $57,000, there’s no need to buy your own tax preparation software. Check out Freefile instead.”

Mike from Experiglot presents Where Are You Keeping Your Money?, and says, “Where is your money being saved?”

Lance from Money Life and More presents Debt Pay Off Updated – January 2013, and says, “In December 2012 we decided it was time to open up to you, my readers, and gave our very first debt update. As a quick review, I originally wrote Our Debt Pay Down Strategy to explain where my girlfriend and I are in terms of debt. Currently we only owe for her student loans and the townhouse mortgage.”

Green Panda from Green Panda Treehouse presents What to Know Before You Apply For a Mortgage in Your 20s, and says, “Have you been thinking about buying a home?”

Mike from The Financial Blogger presents Is it Worth Trading Time For Money?, and says, “Have you been giving all of your time away for money?”

Rohit from The Money Mail presents What assets to use to produce passive income?, and says, “Looking for ways to make money without working for it? Welcome to the world of passive income. In this article I cover the various assets that you can use to produce passive income. Some of these assets classes have existed since a long time and some of these are fairly new. Generating passive income is difficult but you can work towards it to have a steady cash flow when you retire. If you can do it before retirement age, then you can even retire early.

Amanda from My Dollar Plan presents Get More Out of Your Business Travel, and says, “If you travel for business, this is a great read!”

Spencer from Military Money Manual presents My 1 Year Plan: Where I Want to be Financially on Dec 31, 2013, and says, “My 2013 game plan for my finances”

Nicole from Grumpy Rumblings of the Half-Tenured presents Consumption value of chores, and says, “Is a weekend spent doing chores instead of spending money out wasted? Nicole and Maggie discuss how you spend your time depends on what your individual utility function and budget constraints are.”

Philip from PT Money Personal Finance presents 52 Week Money Saving Challenge: Start with $1 and End with $1738, and says, “If you haven’t been in the habit of saving money, this simple challenge is a great way to get the ball rolling.”

Jeff Rose from Good Financial Cents presents IRA Contribution Deadline, and says, “Taxpayers will have until Monday, April 15 to make their 2012 IRA contributions. Even if you are just now opening an account you want to contribute toward last year first. Once the deadline passes you cannot contribute for that tax year in the future.”

Khaleef Crumbley from Faithful With A Few presents Discovering the Right Business for You, and says, “With the economy showing little hopes of improving greatly, more people are looking to start their own business Here’s how to discover the right one for you!”

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Favorite Superbowl Commercial #3

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SB from One Cent at a Time presents Truecost of buying home- other hidden expenses, and says, “There are sizable hidden costs associated with home buying which may inflate your buying price up to 5%. Know these costs before looking for a new home and save more money to provision for these costs as well. “

DPF from Digital Personal Finance presents How Frequently Should You Check Your Investments?, and says, “Sometimes, we all have our obsessions. When it comes to investment performance, there are many people who are obsessed with checking on stocks daily – or even hourly. This post discusses what might actually make sense for most of us.”

TTMK from Tie the Money Knot presents Should Money Make Someone Attractive?, and says, “As the saying goes, money isn’t everything? However, for many, having money can make a person very attractive in the eyes of some people. This post starts an open discussion of just how important should it really be, and in what way.”

Ray from Squirrelers presents Drink Tap Water to Save Money, and says, “People spend a lot of money annually on drinks of all kinds. I’ve been there. What about drinking more water – tap water – to save money while being healthy?”

Mike Collins from Wealthy Turtle presents Would You Borrow From Your 401k to Start a Business?, and says, “You need capital to start a business, but is it a good idea to borrow from your 401k and risk your retirement years?”

Sean Owen from Renewable Wealth presents Do What You Love, but Don’t Expect to Get Paid For It, and says, “My article focuses on the need to ignite passion in others, not just in yourself, to be a success.”

Pauline from Reach Financial Independence presents 13 money resolutions for 2013: #8 be happy!, and says, “We live in a world where we always want more, and never have enough. Reflecting on what you have and being content about your current situation will help you limit your spending, and achieve further money goals quickly.”

Jon from Novel Investor presents Fiscal Cliff Tax Changes That Impact Your Return, and says, “The Fiscal Cliff tax changes retroactively restores several tax credits and deductions for the 2012 tax year that could impact your 2013 tax returns.”

Michael @ Excess Return from Excess Return presents Why A Strong Dollar Will Be Bad For Your Portfolio, and says, “Interest rates are low. Quantitative easing measures, pumping hundreds of millions of dollars into the American economy, are high. The fed has, for years, been following a course of flushing the dollar down the pan”

Myscha @ Financial Highway from Financial Highway presents 9 Winning Ways to Build Passive Income.

Lazy Man from Lazy Man and Money presents Exposing the MLM Tool ScamWorld (with Bonus: Neucopia Scam Analysis), and says, “I got an email recently suggesting that I expose a dark underbelly of the dark underbelly known as MLM. When it comes to MLM, it’s probably more appropriate to call it an onion of evil. You pull off one layer and there’s another one underneath. I’ve written before about The Business of MLM (or What Gives Freddy Krueger Nightmares). What I forgot to mention in that article is the MLM tool scams… which is like inviting Jason Voorhees and Michael Myers to the party.”

PK from Don’t Quit Your Day Job… presents 2012 S&P Return, and says, “Comparing apples to apples is the name of the game when it comes to investing. When using the S&P 500 for comparison, you should use the ‘total return’ index – which factors in dividend reinvestment. Here’s how much of a difference it made in 2012.”

Young from Young and Thrifty presents Passive Income: How to Get It, and says, “I had a wise friend once tell me that no one really can become wealthy through their day job, and that people usually become wealthy through money that they put away from their day job, through passive income.”

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Favorite Superbowl Commercial #4

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Teacher Man from My University Money presents Goals for 2013, and says, “With everyone talking up their goals for the New Year, I figure I’d better jump on board here before the train leaves the station.”

Pat S from compounding returns presents Investing Basics: Understand Your Company, and says, “Investing Basics: Peter Lynch Style”

Edward Antrobus from Edward Antrobus presents How to Save Money Shaving, and says, “Shaving can be an expensive part of your personal hygiene routine. Ignore the marketing hype and learn how to save over 25% on your shaving needs.”

Miss T. from Prairie Eco Thrifter presents The Difference Between Looking Rich and Being Rich, and says, “The reality is that they only look rich to outside observers. It probably doesn’t occur to these outside observers, and probably not even to many of these men’s friends, that these guys aren’t rich. Their so-called wealth is actually debt.”

The Happy Homeowner from The Happy Homeowner presents Yes, My Boyfriend is Paying Me Rent, and says, “My boyfriend recently moved into my condo and I’m definitely charging him rent. In fact, we’re splitting everything down the middle. Read more to find out why!”

Grayson from Debt RoundUp presents The Day My Personal and Financial Life Changed, and says, “I never knew how much my life would change until my son was born. I realized that I would have to tighten my budget and learn about all of the proper savings avenues in order to provide financial security for my family.”

Eric from Narrow Bridge Finance presents What Does My Credit Score Mean?, and says, “A common saying tells us that our credit score is the only grade that matters after we graduate from school. It is used for new credit, mortgage loans, phone accounts, job applications, and even dating. If it is so important, it is a good idea that you understand it.”

Colin Williams from humble savers presents What Is The Real Cost Of Coffee, Snacks And Lunch To You?, and says, “This post includes a Free calculator that will instantly tell you how much money you are really spending on coffee, snacks and just about any other items. It highlights how much money you could have if you saved it instead. For an example, your daily cup of coffee can easily cost you more than $90,000”

eemusings from NZ Muse presents The dangers of recommending a friend for a job, and says, “Mixing work and friendship – is it a good idea?”Neal Frankle from Wealth Pilgrim presents An Easy Budgeting Process That Works, and says, “Just about everyone I know has a budget. But how many have a budgeting process that works? Very few. That’s a shame because a good budget will help you spend less money, enjoy your life more, worry less, have a wonderful retirement and never get into debt. Just about the only thing a good budget won’t do for you is cure the common cold.”

Jason Price from One Money Design presents Best Ways to Achieve Your Savings Goals this Year, and says, “Looking to save more money this year? Most people want to achieve savings goals and I’m convinced you can’t do it unless you do these three things.”

Lance from Money Life and More presents Four Ways to Split Expenses at Home, and says, “Splitting expenses is a often a touchy topic when you’re living with a significant other, roommates or family. If everyone doesn’t agree it can get pretty nasty fast. There are a few ways to split expenses between yourself and those you live with but I’m going to highlight four of the most common ways today.”

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Favorite Superbowl Commercial #5

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Well, that concludes this week’s edition of the Carnival of Personal Finance! To all of this week’s participants – it was an honor to be able to read and get involved with such high quality articles! Please remember to link back to this post if your article was included here and to promote via social media when possible.

Next week’s carnival (#398) is scheduled to take place on February 4th, 2013. Be sure to submit your articles for next week’s edition, using the following handy submission form.

Also, if you’re interested in hosting a future edition of the Carnival of Personal Finance, you can apply using this form.

How about you all? What is your favorite Superbowl commercial of all time?

"$25k for the 25th Anniversary" MS150 Tour de Vine Challenge Launch!

January 27, 2013
/ Blogging
/ By Jacob A Irwin

This year, for the 5th year in a row, I’ve decided to ride in the Bike MS Tour de Vine in Charlottesville, Virginia in order to raise support for the National Multiple Sclerosis Society. The date of the 150 mile tour is June 8-9, 2013.

My “$25k for the 25th Anniversary” Challenge

In the past 4 years, with everyone’s help, we have raised an inspirational amount of money for multiple sclerosis (MS). The total you helped me raise for MS in the 2009-2012 events is $16,285.67.

This year, with the MS150 Tour de Vine celebrating its 25th anniversary, my mission is to reach a total of $25,000 raised overall!

In doing the math, this means that $8,714.33 is the target amount that we need to raise this year! Can this amount be obtained? I challenge you to join me in this bold effort to say that, YES, it is indeed possible!

However, reaching this years target will definitely not be easy. As with many things, it will truly take a community effort to make this work.

In order to get a larger number of people involved with this goal and to increase awareness, I’m requesting donations in $10 amounts.

If you are interested in making a $10 tax-deductible donation to sponsor my participation, please just click on the link below. Once on the page, scroll down and click the link titled, “Make a Donation” or “Donate to Jacob” just below my picture to enter your information. (The whole process only took 3 min when I went in and made the 1st contribution for this year).

Jacob’s 2013 MS150 Tour de Vine Fundraising Page

Additional Steps I’m Taking to Meet the “$25k for the 25th Anniversary” Challenge

As the name suggests, obtaining this goal of raising $25,000 overall this year will be quite CHALLENGING. Because of this, I’m embarking on several additional fundraising steps this year that I have not done in the past:

1. In order to encourage young adults to get involved in the personal finance habit of donating to charity (which often is only adopted later in life), MyPersonalFinanceJourney.com will not only match, but DOUBLE any money donated to my MS ride by people under the age of 30 years old. This is on top of the 5% of my blog income I’ll donate each month to the MS150 cause as part of my monthly 10% give back.
2. Throughout the weekends of the spring and summer, I will set up and ride my bike trainer outside of various Harris Teeter’s, Wal-Mart’s, Target’s, Kroger’s, and the Downtown Mall throughout my hometown area here to promote the MS Society and raise funds.

About MS

Every hour of every day, someone is diagnosed with multiple sclerosis. Bike MS is a ride that connects friends, families and co-workers. Each mile we ride brings us closer to a world free of MS.

Millions of people are affected by MS and the challenges of living with its unpredictable symptoms. Multiple sclerosis interrupts the flow of information between the brain and the body and it stops people from moving. Symptoms range from numbness and tingling to blindness and paralysis. The progress, severity and specific symptoms of MS in any one person cannot yet be predicted, but advances in research and treatment are moving us closer to a world free of MS.

Why I Ride the MS150 Each Year – My Connection with MS

Often, people ask me why I ride the MS150 bike event each year and/or why I have chosen to support the MS Society cause with such dedication.

Unlike others who ride in the event, I cannot claim to have a really motivational personal connection to the MS-disease (sorry!). For example, I personally don’t have MS, I don’t know of any of my family members that do, and none of my friends have developed the disease (fingers crossed that it stays this way!).

However, in the past 5 years, I have become very passionate about supporting the MS Society cause! I first got introduced to the cause and event while working for my old company in 2009. Our Grateful Tread Team Captain knew that I was a big fan of cycling and had raced for several years in the past. Because of this, he asked if I wanted to ride on the Grateful Tread team in the 2009 event. I thought it sounded like a lot of fun! Why not, right?!

After riding the event in 2009, I became instantly hooked by the people and cause of the MS Society/MS150. The MS150 Bike Ride allows me to have a lot of fun participating in my favorite sport, cycling, while at the same time, raising funds to support the highly worthwhile cause of creating a world free of MS.

In the past 5 years through my involvement with the Blue Ridge Chapter of the MS Society, it has been very inspirational to be included in some of the chapter’s events. In 2011, I attended the dedication ceremony of the James Q. Miller MS Clinic at University of Virginia, one of the most comprehensive MS care clinics within a 4 state radius. In addition, I was invited to attend dinners in 2011-2012 honoring new inductees in to the MS Society Hall of Fame and to reveal several new medicines being developed to combat the disease.

At all of these events, perhaps the most significant thing I always remember are the stories from the actual MS patients being helped by the MS Society by our fundraising efforts. Compared to other diseases, the thing that really makes MS so difficult (for the patients and caregivers) is that the disease is not fast acting (i.e. it does not kill someone in two months after diagnosis). Instead, MS can potentially affect a patient for decades, often accompanied by a long slow decline in motor function. Being someone who relies on exercise and movement for fun, health (both mental and physical health aspects), and sport/competition, I am very motivated to support the MS Society cause to rid the world of this disease which robs people of their ability to participate in the activities that enhance quality of life.

Lastly, it is fairly interesting how my life activities and multiple sclerosis have converged over the past 5 years. When I first started doing the MS150 ride in 2009, I worked with a cancer vaccine. Since then, I have returned to graduate school and am studying Alzheimer’s disease, which is coincidentally in the same category of neurodegenerative diseases as MS! In addition, my girlfriend now works for the MS clinic here at University of Virginia doing clinical research trials for MS. In other words, it is safe to say that my relationship has grown with MS over the past few years, and it is truly a pleasure to be a part of the MS community! 🙂

I’ll plan to give periodic updates on my fundraising progress and what matches MPFJ.com does in the next few months.

Thanks so much for reading and your continued support!

Jacob

Personal Bank Loans vs. Family Loans

January 27, 2013
/ Get Out of Debt
/ By Jacob A Irwin
/ 4 COMMENTS

The following is a guest post. Enjoy!

No one likes to be in debt, but taking out personal loans from time to time is often necessary, especially if the loan is for an investment – e.g. to buy a first house, finance your education, or get a start-up business off the ground.

There are well-documented problems that borrowers can encounter with high-interest loans, whether that is caused by poor financial management, or taking out a reasonable loan but not understanding the terms. Even if we are unable to pay a loan back as quickly as we had initially agreed, there is help available for borrowers to consolidate their debt and get out from underneath it. In certain states and counties, debtors who get behind on their payments can actually wind up in private prisons run by contractors, even though debtors’ prisons have been mostly illegal in the USA since the Civil War.

However, if you find yourself blessed with friends or family who have disposable cash to hand (and like you), there is a great temptation to take a loan from a personal acquaintance instead of a bank or lending institution. And, it makes sense: it’s often quicker and easier, with less red tape and better terms (perhaps your friend or family member has even offered to let you pay back the loan interest-fee), and on a whole, it somehow feels less scary; no paper-work or intimidating payment reminders from the bank. But as they say, buyer beware.

Are family loans worth it?

The danger with borrowing money from someone you know is that money can become a divisive issue; indeed, it is an issue that has been known to destroy relationships and ruin friendships. In fact, an overwhelming number of marital problems and divorces are down to money-related conflicts, which should serve as a strong caution to even the most amiable friend or relative who might offer you financial help.

One major stumbling block with family loans is that people may not be honest with you – i.e., the money may be more important to them than they initially indicate. The importance of recouping that money, and the lender’s expectations as to how quickly you’ll pay them back, often goes unstated.

Furthermore, you may take their generosity for granted and assume they’ll ‘let it slide’ or that they’ll understand if you can’t make your repayments every month. It is easy to allow one month of non-payment turn into two months or four; sometimes, it turns into a year, with the hope or assumption that the loan has been forgiven. It is easy to imagine how this might fracture the relationship.

An interesting study was conducted by Carnegie Mellon University – we have a tendency, especially in situations where we are borrowing money from a friend or family member, to confuse fairness with self-interest. So at the end of the day, which is more important to you: money or your relationships?

How about you all? Would you be willing to give a loan to a family member or have you ever taken out one of these? If so, how did it work? Did it create any family stress? Did you have a written agreement?

Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/ronnie44052/1486794482/sizes/l/in/photostream/

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