Category Archives for Saving Money & Frugal Living

Cooking Holiday Meals on the Cheap

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

It’s that time of the year again. The food and wine are flowing and people everywhere are gathering for merriment and gift-giving. The holidays can be a real budget-crusher if you let them. There are gift lists, holiday clothes shopping and of course, parties to be given.

If you’re one that likes to host holiday gatherings you might be freaking out about what your entertaining expenses are going to do to your budget, but there are ways to entertain frugally. Check out these tips.

 

Keep Alcohol Purchases to a Minimum

Alcohol costs are a huge part of holiday entertainment costs and the expenses can add up quickly. You can save on alcohol costs for holiday meals a couple of ways.

The first choice is to throw a BYOB meal and provide only soda and mixers for guests. The second option is to have only a few bottles of inexpensive wines and/or beers served at your holiday party. Beer and wine vendors often promote specials on prices during the holiday season, and there are many small-time beer and wine producers that have great products but charge lower prices due to the fact that they’re still so little-known. By looking for that diamond in the rough you can get a good wine or beer for cheap.

 

Allow Your Guests to Share in the Meal Choices

Guests love being able to contribute to meals at parties and family gatherings. Simply write “bring your favorite appetizer/side dish/dessert to share” on invitations and let everyone have a hand in creating a bountiful holiday feast.  If you’re not comfortable requiring guests to share in the meal prep, be sure to say “yes” to anyone who asks you if they can bring anything.

 

Avoid Expensive Menu Items

Don’t serve prime rib roast for $10 a pound when you can serve turkey or ham for a buck a pound. Don’t buy a cake from the high-priced bakery down the road when the warehouse clubs have them for half the price. With a little creativity, you can put together a wonderful meal without spending too much.

 

Shop the Sales

There are a number of food products that always go on sale during the holiday season. Some include:

• Meats such as ham, turkey and prime rib roast
• Baking items such as flour, sugar and butter
• Side dish items such as potatoes, rolls and breads, vegetables and canned pie filling

If you’re serving a holiday meal, make your menu plan early and start checking your local grocer ads in the first week of October, buying early when possible if you can get something on sale. Remember that canned goods and other processed foods last for many months, and that many other items such as meats and breads can often be frozen for later use.

Also, don’t be afraid to go generic. Many generic items are simply name-brand items repackaged in different packaging, but you might want to do a trial taste-test run if you’re concerned about quality and/or taste.

For instance, Aldi sells a variety cracker pack that tastes nearly identical to the similar name-brand pack, but there are other generic items we won’t touch – such as generic macaroni and cheese – because the quality sacrifice just isn’t worth it.

When you’re shopping for list items, pay attention to the sales and the generic brands and save money when it doesn’t sacrifice quality.

 

Cook From Scratch

There is SO much money to be saved when cooking from scratch instead of buying menu items already prepared. Look online or ask friends for recipes for desserts and appetizers. Make your own stuffing and homemade mashed potatoes instead of using the boxed stuff. Put together your own cheese/cracker/meat trays and your own veggie trays instead of buying the pre-prepared ones from the store deli. Your meal will taste better, be healthier and you’ll save money in the process.

 

Decorate Thoughtfully

Decorating for holiday parties can be a huge expense if you’re not careful. Instead of decking the house out with oodles of flower arrangements and other expensive décor, simply use a few well-placed decorations to make the house feel special. Here are some ideas:

• Find décor at shops such as Michael’s and Joann Etc., but be sure to use their 40-50% off coupons
• Focus on decorating the tables with colored napkins and homemade place cards
• Get one or two silk flower arrangements to brighten up the dining or buffet table and the great room, provided you can find a great sale or find them for sale on eBay or Craigslist
• Add small, inexpensive touches such as themed salt and pepper shakers from Walmart

With a little forethought and planning, hosting a holiday meal can be an awesome experience that doesn’t break the bank.

How about you all? What is your favorite frugal holiday meal hosting tip?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/55935853@N00/5882056608/in/

7 Ways For New College Grads to Avoid Sabotaging Their Credit

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a 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.

Credit problems often start early in life, and it’s not just a coincidence. New college graduates can easily get involved in credit situations that can have very negative unintended consequences. Part of it is simply not knowing exactly how the credit world works. But another part is overconfidence – the assumption that you will be able to overcome any problems you can face.

But the best way to deal with problems, especially credit problems, is to not get into them in the first place. That’s because credit problems are much more easily avoided then they are repaired. Here are seven ways for new college grads to avoid sabotaging credit.

 

1. Learn the Fine Art of Delayed Gratification

Otherwise known as you don’t have to have it now! If you’ve struggled financially while you were in school, you may be tempted to “live a little” after graduation. After all, you worked so hard to get your degree, you deserve some of the finer things in life, right?

Wrong. You don’t deserve it until you can afford it. Commit that concept to memory. There’s nothing magical about landing your first job. Sure you now have a steady income, and hopefully a generous one at that. But you’ll also begin to watch your expenses rise in tandem.

It will be tough enough to pay for the necessities in life, let alone luxuries. Buy what you absolutely need to survive right now, and don’t begin living the life until you have the salary and bankroll to pay for it directly. A lot of young people go horribly wrong on this front when they begin paying for luxuries using plastic and various types of creative financing. It can end up being the beginning of credit hell. Don’t get into that trap.

 

2. Work Off the Debts You Already Have Before Racking Up New Ones

There’s a better-than-even chance that you already had debt when you graduated. There’s probably one or more student loans, perhaps a modest car loan, and maybe even a credit card balance or two.

Before you begin adding any more debt to the list, first concentrate on paying off the debt you already have. If you don’t, then you will end up stacking debt on top of debt. Even if you have a healthy income, debt has a way of outstripping income, at least in part because it’s so easy to get into it.

Once you clear the deck of existing debt – with perhaps the exception of your student loans – you can then begin to contemplate the conservative use of credit going forward.

 

3. Make Sure You Pay Your Non-Loan Obligations on Time

If you’ve read many articles on credit, you are aware of how important it is that your debts are paid on time. But debts aren’t the only obligations that need to be paid when due.

There are other expenses you are likely to incur that may not show up on your credit report if you make your payments on time. But if you leave a bill unpaid, the vendor might report it to the credit bureaus. It’s unfortunate but true.

This is not at all unusual when it comes to utilities and cell phone companies. It can also happen when it comes to rent. If you leave an unpaid balance on an account, perhaps after making a move, the account can go into collection, and that will show up on your credit report. If the balance is particularly large, it could even become a judgment.

Whether it is a collection or a judgment, it will hurt your credit score. Do your best to make sure this doesn’t happen by paying all bills.

 

4. You Know Those Credit Card Offers Flooding Your Mail? Ignore Them

Many credit card companies aggressively court new college graduates. They are willing to ignore the financial stresses that come with transitioning from student life to adult life, in attempts to get into the new graduate’s financial life on the ground floor. They assume that as your financial situation improves, their business relationship with you will expand.

That may be good for the lenders – and it might even make you feel good on an emotional level. But by accepting too many of these offers it can be a one-way ticket to bad credit. The temptation to run up the balances may be too great to resist.

You should be able to get by with just one or two credit lines early in life. If you already have those, throw all of the new offers in the trash.

 

5. Never Assume a Lender Will “Understand” Why You Can’t Make a Payment

As a student, you may have grown accustomed to begging off mercy with teachers and professors for late or insufficient assignments. But the credit world is not so forgiving. Never assume that a lender will understand, and agree to float you through a lean time or two. Yes, they may agree to it verbally, but they will almost certainly give a negative report on your credit report nonetheless, hurting your credit score.

 

6. Never Let Credit be a Substitute for Income

Speaking of lean times, should you fall into one you must resist the temptation to use credit to make up for the lost income. The problem is that when you rely on credit to replace income, your debts grow much more quickly than you can imagine. And once you do get back on your feet, your progress will be slowed by all of the new debt you acquired when your income was soft or nonexistent.

The better route is to make sure that you have emergency savings to cover income disruptions. You should also have some sort of Plan B in regard to income. That isn’t to say that you need to be perpetually working a second job, but it will help to have one ready just in case.

 

7. Never – Ever(!) – Cosign a Loan for Anyone

When you cosign a loan for someone else you effectively concede your credit performance to that person. How so? If they have a late payment, you have a late payment. If the account goes into collection, you have a collection. To add insult to injury, if the lender comes after the primary borrower for the balance, and the primary borrower can’t pay it, they’ll come after you next. That’s the whole purpose of having a cosigner on a loan in the first place.

Cosigning a loan for another person is an outstanding way to get a bad credit rating through no fault of your own. Think deeply about that the next time you’re persuaded to be the nice guy/girl in someone else’s life.

I realize that all seven of these strategies kind of go against the natural flow of life. But understand that when you are young, the potential is great to do long-term damage to your credit. And if you do, it can haunt you for years. Do your best to stay out of these situations, and you can avoid the worst of it.

How about you all? What mistakes have you made regarding your credit score / credit history?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/83633410@N07/7658305438/in/

How I Grew Up Poor But Still Messed Up My Money As An Adult

The following post is by MPFJ staff writer,Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

I grew up in a poor family. For a while, we were really poor. I remember one time – shortly after my parents’ divorce – when we had zero food in the house. Aside from ketchup and mustard, the fridge and the cupboard were completely bare. My dad paid child support faithfully each month, but the monthly amount of support rendered by the judge was enough to pay the house payment and not much more.

The rest of our money came from government assistance until my mom taught herself to type and got a job as a secretary. It was during this transition period that we had the days of the bare cupboard. I vividly remember my mom sitting in the recliner, sobbing with fear over how she would feed her three young kids until the welfare check came in two days later.

You would think an experience so traumatic would make me keen on saving money and staying out of debt, but instead it had the opposite effect.

How could I go through the experience of living a life of poverty and still mess up my money as an adult? Here’s how.

I Thought That People Who Had Money Had Stuff

Somehow in childhood I learned to equate poverty with a lack of stuff and wealth with an abundance of stuff. So my goal when I started working at age fifteen was to own a lot of stuff. I bought all of the clothes my mom couldn’t afford to buy for me. When I got my own home and family, I made sure we had an abundance of food, clothing and whatever else I thought we needed.

I later learned that I had a subconscious fear of not being able to afford to buy stuff, but I didn’t make the connection between the stuff and the money (or lack of it) in my bank account. What mattered to me was that I could buy whatever I wanted, regardless of the means it took to purchase it.

The Cure

The cure for this mindset mistake was to learn to think long-term. The book, The Millionaire Next Door, really helped. It was through that book that I learned that wealth isn’t about having stuff, it’s about having financial security.

I Had a Poverty Mindset

A poverty mindset consists of the belief that “I’ll always be poor/struggling for money.” For many years I believed that wealth or a lack of it was a “luck of the draw” thing. One was either a “have” or a “have not” and whatever group they were lumped in with was up to the gods; individual actions have no effect.

The Cure

Ironically, it was discovering the world of personal finance blogs that cured me of this incorrect belief. Through PF blogs, I found story after story of people who were deeply in debt, yet they managed to dig themselves out of the hole and begin building wealth. The people who shared their stories taught me that a person’s financial situation boils largely down to daily, weekly, monthly and yearly financial choices.

I Used Spending as a Band-Aid

For years I dealt with emotional problems, relationship problems, work problems and any other problems by buying stuff. I “deserved” stuff was my reasoning. I spent money to heal, to celebrate and to confirm my worth as an individual.

The Cure

The cure for this problem came when I began to work to uncover long-held emotional problems and to work through them, one-by-one. Through this technique I began to establish unconditional acceptance of myself and to teach myself what I really deserved and what I truly desired where money was concerned: financial security.

I think the take-away here is that when a person is deep in debt, there are often misguided beliefs behind the problem.  If one can work to discover what those misguided beliefs are, and to exchange them with healthier mindsets, both financial and emotional healing for the long-term can truly begin.

Do you have any subconscious beliefs or life experiences that have impacted the way you handle money?

How To Save To Afford A Car

The following is a guest post Written by Max. Enjoy! 

So you have hit that point where you want to buy a new or used car, and are looking into methods to saving. Cars can be expensive; a new car’s average price can be up to $30,000. While used cars are less money, they can average around $13,000. Knowing what you can realistically afford is key to setting goals to hit. Simple math will tell you it’s as easy as spending less than you earn. However, It’s much easier said than done. Trying to save up a ten thousand dollars can be a very tough task. Setting out a plan on paper will help you be disciplined and consistent with your savings. When saving for a car there are a few things to consider beyond price. From insurance, to gas money and maintenance, the price of the car from the dealership is not the only price you will incur. Below are three steps you can take to save up for all of these costs.

Track your Expenses

This is step one. You must make note of how much you are spending each week, and on what. There are some cool phone apps like Mint that help you track all of your credit card purchases and divides them up into categories, and gives you averages. I have found that this is one of the more useful ways for me to plot out my monthly expenses. Once I figure out where I am spending my money, in which areas, I move on to step 2.

Cutting out what is Unnecessary

So now I’m at a point where I see what I spend on gas, groceries, restaurants, bars. I spend about 20% of my income on food. This number is a little bit higher than what I would like to spend. Ideally, I would like to spend around 15% or 10%. I think those are realistic goals for next month. So, on my fridge, or on a post-it-note on my desk I will write, “Spend less money going out to eat” and “Reduce weekly supermarket shopping by a few items.” These quick reminders will keep me in check, and do help me be more aware of my spending.  In the iPhone iOS 9 you can even set location based reminders. This means when you walk into the grocery store, you can get a pop-up that says “Spend less than you regularly do!” I find this feature particularly helpful.

Review Each Month

Cutting out unnecessary spending is essential towards saving money. But you may not be cutting out enough, or from the right areas in your life. Things like going out to eat, drinks, or even gas money can quickly add up. Each month you need to review your savings and plot out to see if you are on track to save enough. If you set a timeline like 12 months, you must evaluate if you continue to save at that level, where your projected savings are. This will help you revise your budget and your savings. Reforming your strategy and making tweaks each month will help you reach your goal. Feedback is the most important step in actually achieving your goals.

Hunting for House Help: Top Things to Avoid When Looking for an Estate Agent

The following is a guest post by Andrew. Enjoy! 

Even though you’re making the decision to sell your home, it’s going to be your estate agent who sells it for you. So, making sure you get the right estate agent is imperative when selling your property because this could mean the difference between not selling your home at all and getting a really good price.

The first thing to remember is that the estate agent is working for you and you’ll get the final say as to whether you sell your property for a certain price. The estate agent needs people like you to make a commission, so bear this in mind if you’re negotiating fees or being pressured into accepting a price that you’re not happy with.

How to Create a Shortlist of Agents

Before you start getting quotations and valuations from estate agents, it’s a good idea to create a shortlist based on a number of things. Some of the most beneficial recommendations you will receive are from your family and friends so find out who they used and whether they were happy with the service they received.

You should also try to build up some facts on various estate agents and your property. Look around to see how quickly a certain estate agent sells properties, how close to the asking price they get and what their success rate is. Furthermore, look for specialist agents if you’re selling a property that is unique or unusual, as their expertise will come in handy when marketing your home. You can check out the current properties an agent has to see whether they’re selling houses that are similar to yours. If they aren’t, they might not be the best choice for you.

What Marketing Does the Estate Agent Use?

You’re also going to need to find out what marketing the estate agent does on the properties they have on their books. And one of the main things to look at is what portals they’re using to advertise properties on, e.g. Zoopla, Rightmove and Primelocation. If their website isn’t the best, don’t worry about this too much, so long as they’re using some of these other popular avenues.

You should also check that the fee they’re offering you at the start includes this form of marketing and the property details that they’ll put together for you. If you can find an agent that includes all of this within their price, then it will be more straightforward for you. However, you may find that some require an upfront fee to produce brochures and that there may be other fees involved with advertising.

Online-only estate agents are another kettle of fish as some of these won’t advertise on popular property portals and can be limited in what they offer you. For example, they may offer you a flat-rate fee which is considerably lower than other estate agents but you may have to do all of the viewings, marketing etc. yourself, so always look into the finer details before deciding to go ahead with an online agent.

Check Out Their Fees and Their Valuations

The pricing offered by estate agents to sell your home will normally vary from around 1% to 2.5% + VAT (make sure you know if they’re including VAT in their prices). Based on a £300,000 home, you could be paying between £3,600 and £9,000 for the estate agent fees. That’s why it’s worth trying to get the estate agents to compete on fees.

When it comes to valuations, you need be open-minded with what the estate agent is telling you and that you’ve made sure you’ve done your research prior to them visiting. You may find that some estate agents will be overly optimistic with their pricing in order to get you to go with them before trying to talk the pricing down once you’ve signed on the dotted line. Equally, you may find that some are more straight-talking and will be honest about the realistic price you can get, telling you not to be fooled by any valuations that are too high.

By doing your own research and looking at similar properties in the area, you should be able to get a good idea of what your property should be worth. And, by asking more than one estate agent to come and value your property, you’ll be able to get a ballpark figure of your property’s value. Remember – you get the final say on what you want your property to be priced at, not them! However, being realistic could help you to sell your house in a quicker time frame instead of trying to push for a higher amount that is too optimistic.

Do You REALLY Want to Be Rich?

The following post is by MPFJ staff writer, Marie. You can read more of Marie’s articles over at her own blog, Family Money Values. Enjoy! 

Let’s face it, most of us aren’t part of the elite 1% financially.  Many of us live paycheck to paycheck.  A lot of us using part of that paycheck to service our debts.

As of 2014, in Canada, the median income was $78,870.  However, the average salary in Dec of 2014 was just over $49,000 (Statistics Canada). Canadian consumer debt topped out at $21,348 in early 2016 (CBC News).

Forty Nine Grand isn’t a lot to cover the cost of housing, food, transportation, education, health care and entertainment for the typical family of four, let alone trying to get those debts paid off and put something aside for old age.

Perhaps we struggle through our daily lives, rising groggily for that 5 AM buzzing alarm to hit the road to hang onto that 9-5 job; searching all avenues to find the best prices on the items we need or want to buy; choosing between paying down the credit card or the mortgage; and shopping that garage sale instead of buying retail while wondering how life would be different if we were rich.

Who hasn’t bought a lottery ticket, knowing the odds against winning are substantial?  The mere possibility of having gobs of money raises visions of luxury and abundance in our minds.

 

A Vision of what it is like to be Rich

Just think about it!  You would not have to work for a living, someone else would clean your house, mow your grass, and worry about paying the bills.  Vacations would be a blast – whether staying at your own vacation villas in different parts of the world, touring the world from the deck of your condo/cruiser or taking off in your private jet for a dinner meeting in another city.

You would never again have to decide whether to pay down the credit card or beef up your savings; wait to buy the latest tech toy; or dream about having your own swimming pool.

The vision is tempting, but is real life as a rich person really going to match that vision?  Probably not.

There is a reason that old saying ‘The grass is always greener on the other side of the fence” is still around.  Even Royals may wonder – as in the musical Camelot when GUENEVERE sings:

” What else do the simple folk do  To help them escape when they’re blue?  and King Arthur answers:

“They sit around and wonder what royal folk would  do And that’s what simple folk do”

Wondering how the other half lives is a prime pastime, allowing folks like Robert Frank (CNBC & Secret Lives of the Super Rich host) to even make a good living from exploring the topic publicly.

What being rich can mean

Becoming rich won’t make you a new person.  Being rich won’t fix most of the things you feel are wrong in your life.  Rich or poor, we all have issues.  We all make good and bad choices.  The rich just have more opportunity to make the bad ones!

 

What can be good about being rich

You have financial independence – no more trudging to that boring 9 – 5 job each day.  You can do what you want, when you want (as long as you know what you want!).  Riches usually bring a level of comfort to your situation.  It reduces stress to know that you have the backing to keep your life from tanking if a few things go wrong.

You have the financial ability to pursue multiple interests.

Lets face it, sometimes pursuing opportunities, hobbies or interests costs money.  You can set yourself up in your own business, move to that elite neighborhood so the kids can team up with neighbors in the know; start that charitable organization to help out your favorite cause or buy and restore that vintage auto.

Being rich provides opportunities to help others.  Money can help you make a difference in your world – allowing you to sponsor the education of a child in your area; helping out that senior who can no longer get out to maintain her home; or even just shoot off a check to your favorite political candidate.

Money helps you make more money. 

It can be a great passive income generator if you invest smartly – allowing you to maintain your new level of wealth and perhaps even pass it along to your next generation.

Riches can solve problems.

Having plenty of money may help alleviate some stress and help you sleep better – no more staying up worrying about paying the bills.

Wealth allows you to get where you need to be.  You don’t have to plan months ahead to catch a flight or get to that event – you have the backing needed.

If you have medical issues, wealth can help.  You can afford that special medicine or ignore the constraints of insurance.  In fact you may decide to enlist special health care, such as concierge doctors.

 

Some of the potential negatives rich people may experience

No matter how rich you are, it is probable that you can’t have all of the things you want all of the time.  Like the rest of us, you are limited to enjoying some of the things you want (but maybe all of the time) or all of the things you want (but maybe just some of the time).  Rich people still have to make choices about what they spend.

Being rich might make you a target.

Many really wealthy folks try to hide their wealth, attempting to avoid situations where relatives, friends and strangers ask for money.

Rich folks may have security issues.

Depending on wealth level and general public knowledge of their wealth, the rich may need to have safe rooms, bodyguards and may worry about their children being kidnapped and held for ransom.

Wealth can make you subject to lawsuits.

It is an unfortunate fact that the world is full of unscrupulous folks who might make unjustified accusations about you – filing lawsuits to try for some of your wealth.

Some rich folks work long hours at high stress jobs.

If you earned your wealth, there is a good chance you have been and will continue to put in long hours to keep the money flowing. Work life balance remains out of kilter and health issues can result.  Time away from home affects family life and relationships.   In fact, it can be a major complaint for children of first generation wealth producers.  They don’t really develop typical relationships with the earning parent.  That parent is not there.  The child is raised by surrogate parents, like nanny’s or sitters and can only see the parent from afar.

Having money may result in behavioral expectations.

The sad story of Princess Diana comes to mind.  The Queen, the Prince and others in the royal household had definite expectations about how she should look, speak and behave as well as the kinds of activities in which she should engage.  If expectations don’t match your desires, problems result.

Privacy may be at a premium.

Not only may you be surrounded at all times by household or other employees, you may also be subjected to pestering by the press, or the public.  What you do, say, spend on or wear may become news!

Managing household employees may not be your cup of tea.

Although it might be great to never have to dust or clean out a toilet bowel, I doubt if it is much fun interviewing or managing maids, gardeners, butlers and the like.  Having to let someone go is a stressful event, yet you can’t allow shoddy work, right?

You may lose your sense of worth or purpose.

If you become rich, you may find that striving for money and having it are two different feelings.  While you are striving, you are working towards a goal, making an accomplishment happen.  Once you are there, you may look around and say, so – now what.

Your kids may grow up spoiled.

Giving children everything even before they think of wanting it can lead to a sense of entitlement.  How do you raise grounded kids when you are rich?  What is your logical stance for having them learn the value of work – when you pay other people to do yours?

People may treat you differently.

Stories of lottery winners losing life long friends abound.  People knowing about your wealth can make them treat you differently, or cause them to expect you to behave differently (like pick up the tab for everything!).  Former friends may start to exclude or ignore you.  You may be treated with (undeserved) obsequious behavior by strangers in hopes of favors.

You may either give up some control over finances or spend a lot more time managing investments.

Having money brings the responsibility for making sure it is managed well.  Doing it yourself may eat up more time that anticipated.  Having someone else do it results in a loss of control and a less than desirable sharing of private information.

You aren’t inhibited financially from making really bad life choices.

If you have a propensity for drinking, gambling or drugs, finances are no longer an issue.  You may find yourself deep in an addiction cycle.

Likewise, you can’t blame a lack of funds for avoiding pursuit of opportunities that come your way.

Although many of us think we want riches, having them isn’t all cake and pie.  Money is only a tool.  It won’t make you a better person, give you everything you want or make your life paradise.

So, are you sure you really want that the rich life?

***Photo courtesy of https://www.flickr.com/photos/jayphagan/8610311915/

Training Plan: Endurance Cycling and Personal Finance

The following is a guest post by Troy Lambert from TroyLambertWrites. Enjoy! 

On March 11, 2016, I tore a calf muscle playing basketball with my son. I went up to shoot a three point shot, felt a sharp pain in the back of my calf like someone had hit me with a racquetball or stabbed me, and collapsed onto the court.

One week later on March 18th, I got married. It was the most expensive party either my wife and I have ever thrown, and it was a stretch to say the least. She has some health issues, and we took an unexpected and expensive trip to Seattle for treatment a little over a month before the wedding.

Financially and physically, we were at a low point. We needed a plan to get our finances back on track, and I needed to get back in the gym and on my bicycle. I didn’t know it at the time, but I would spend the last half of the summer training for a mountain bike race involving 53 miles of gravel road. Our plan for financial recovery and my training plan have some interesting parallels.

 

Moving Forward is Key

I’m a writer, and writing is a business. In both business and personal finance, we often hear that cash is king.

We ended the wedding with little cash, but with good cash flow. While physically injured, I had the potential for rehab and healing. That potential and our cash flow were more important than my actual strength or our financial position at the time.

 

Have a Plan

For our wedding day itself, we had a budget: planning a wedding is like starting a small business you plan to run for only one day and never expect to profit from. We suffered financial setbacks in that process, but managed to cut where we could.

Once we were past the big day, we needed a recovery plan. We needed to renew our savings and pay off any debt we incurred in the wedding planning process. However, just as in training for a cycling race, a general plan wouldn’t do.

• Specific short term goals need to be set. Whether those are miles for cycling or dollars for savings, these need to be reasonable and achievable, but aggressive enough that reaching your goals will not be easy.
• Milestones with a contingency plan need to be established. To successfully complete a race, you need to reach certain mile counts by specific dates set by your training plan. If you have not met them, you need to decide what that means, and how you will make them up, or reset your goals more aggressively. It is the same with savings and budget: aggressive milestones that stretch your income need to be set and established until you can achieve stability.
• Relax and Level Out. In every training plan you need to take days off for rest. During recovery from a financial setback, you need days off too, whether that is a date night out, or a family fun day where you allow yourself to splurge, at least a little. Once you have reached a certain financial or physical fitness level, adjust your plan to maintain your current level while allowing for growth at a more reasonable pace.

Having a plan is one of the most important keys to success. However, it is rare for things to work out exactly as anticipated.

 

Priorities and Plan B

Contingency plans are one of the most difficult things to do under any circumstances. Whether in endurance training, personal finances, or business, the issues are similar. You have to anticipate what could go wrong and determine what you will do if it does.

Injury. Injury can be physical or financial. Essentially this is a loss that impacts your ability to achieve the final goal. In finances this can be any monetary setback, from job loss to an unexpected car repair or hospital visit.

Theft. While injury is accidental, theft is loss intentionally caused by someone else with the intent to harm you. Not only does this hamper your ability to achieve your goal, but can affect your confidence in your skills.

Acts of God. During cycling training, there was a wildfire in our area that filled the air with smoke to the point where it was unhealthy to breathe. While there were indoor training options, none of them truly replicate mountain biking on gravel adequately. Financially, natural disasters can occur that you are not prepared for.

How do you deal with these setbacks? First, set priorities. What are the most important financial obligations you need to meet, and what can be pushed off until later? Do you need to dip into savings?

Second, deal with the issue at hand. Whether that is shifting resources to cover an injury, reporting and following up on theft, or dealing with insurance or whatever method you have in place to cover Acts of God, taking care of the problem before it gets any worse is essential.

Finally, reestablish a recovery plan. This is your path back to Plan A, and stability. This may look different than your original plan, as you may have learned things through setbacks.

 

Ready, Set, Go!

You set out on your financial plan with a goal in mind. Whether that was simply to have a cushion in savings, a dream vacation, or purchasing a new home, at some point you will have reached the starting line of your goal. In cycling terms, it’s race day.

The first part is probably uphill. Races usually start this way. The first part of vacation will be the outlay of money for plane tickets and hotels. The first few months of owning a new home will be filled with furnishing and fine tuning the space to make it yours.

Things even out at the top. Once you have passed the initial expenses or the first hill of the race, things get smoother, and moving at a steady pace is the most important thing. Slowing down means you won’t reach the finish as soon as you have planned, speeding up means you may run out of energy or money before the finish.

Finish Strong.  It’s likely this one financial goal is not your last, nor are you only going to ride in one race, then quit and stop cycling entirely. Each goal accomplished gives you confidence to move on to the next, so finish each as strongly as you can.

There are many things we could compare to personal financial planning, but if we think of it in terms of endurance cycling, it can help us think in terms of the long run. Always moving forward, having a plan, setting priorities and having a plan B, we will be able to achieve our goals and then some.

***Photo courtesy of https://www.flickr.com/photos/tejvan/5044111293/in/

The Worst Financial Advice I’ve Ever Received

The following post is by MPFJ staff writer, Chonce. You can read more articles by Chonce over at her personal blog, My Debt Epiphany. Enjoy! 

People love to give advice. It’s natural. On the other hand, not everyone should offer up advice about every subject, especially if they aren’t confident their advice is completely sound.

Before I started educating myself about personal finance in order to improve how I manage my money, I received some pretty crappy advice from other people who seemed pretty misinformed about personal finance.

There are several myths out there about personal finance that need to be debunked so I’ll start by sharing some of the worst financial advice I’ve ever received and what

Don’t Worry About Taking Out Student Loans Because They Will All Be Forgiven in 10 Years

One day one of my coworkers who is really into education told me this. She had just received her MBA and was a huge role model and inspiration to me. Luckily, I didn’t listen to her advice though. I took out some student loans to help me get through college and I didn’t really think about the debt until it was time to pay it back.

However, I refrained from taking out more student loans just for the sake of having more money and I attended community college for two years and applied for scholarships and financial aid to keep the cost of college low so I didn’t have to take out tons of loans. I attended a state school and avoided expensive degree programs but still graduated with just under $21,000 in student loans which is a fraction of what some of my peers graduated with.

Once I started learning more about student loan debt and took on some more personal finance writing gigs, my research led me to find out that not everyone qualifies for student loan forgiveness. Actually, only a select few do and they must meet strict standards like working a government-funded job for 10 years.

There are quite a few federal student loan forgiveness programs available for government workers, teachers, and doctors but since I don’t work in those fields and don’t plan on having student loans for 10 more years, I don’t really qualify for forgiveness.

Keep Your Car for Two Years, Then Trade It In For Another One

This unhelpful piece of financial advice came from another coworker and my own mother shockingly enough. When I graduated college, I couldn’t afford to pay for a new car in cash but I desperately needed one since my current car had broken down for good.

I remember asking around and researching car loans as often as I could to learn more about what I could potentially be getting myself into. I remember asking one of my coworkers how someone is supposed to pay their car loan off before the car breaks down for good and she smiled and me and said ‘never’. Her advice was to do what she had been doing for the past 10+ years and finance a fairly new car, then wait a year or two and trade it in to get an even newer car.

Her car had all the bells and whistles like heated seats and windows, built-in navigation and so on. The idea of having a car note for the rest of my life didn’t appeal to me so I chose to finance a cheaper car with the hopes of paying off the loan quickly.

When I went into the dealership with the intention to refinance my car loan for a cheaper rate, the sales reps suckered me into considering the idea of trading in my car for a newer car with a higher loan. Their argument was that my car’s value was depreciating every day and the newer car they proposed would last longer.

The huge problem was that trading in my car for a newer one would have added around $4,000 to my loan at the time. While at the dealership, I called my mom for advice and she actually seemed like she was on the car salesman’s side and wasn’t opposed to me financing a newer car that would potentially last longer.

Again, thankfully, I chose against this, ignored the sales pressure and just kept paying off the current car loan I had. My car is a 2010 so it’s not super old. I really didn’t see any value in buying a newer car when I was already in enough debt as it is. The truth is, all cars depreciate in value over time and there’s no way around that fact. You can’t beat the system by leasing cars and trading in your current vehicle. You will end up spending a boat load of money in interest. If you always have a car loan, you’ll never be able to truly enjoy the perks of outright owning your own car and getting to ride the wheels off it.

I ended up making extra payments to pay off my car loan last year and I’ve never looked back since then. It was the best decision I could have ever made.

Wait Until You’re Old Enough to Save For Retirement

Retirement is probably my weak spot when it comes to financial literacy. I still have many working years left before I can consider retirement so I used to refrain from learning anything about retirement.

Whenever I was interested or mentioned investing money into a Roth IRA I had a certain friend who would make comments about me worrying too much about the future.

“Why are you worrying so much about retirement when you have so much time? You sound like an old lady,” she once told me.

Now, I resent the ‘old lady’ comparison, but one thing she said was right. I do have plenty of time…plenty of time to get started with investing early that is. With retirement, the earlier you start contributing to your 401(k), Roth IRA, or any other retirement account, the better because you give your money more time to compound and grow over the years.

Yes, the market fluctuates, but it always consistently improves year after year which almost guarantees if you invest a lump sum amount today, your contribution will grow significantly over the next 10-20+ years.

By investing in retirement early in my 20s, I’m practically ensuring my chances of becoming a millionaire by the time I reach traditional retirement age. If I invest aggressively, I may even be able to retire early.

Once people reach the ‘old lady’ stage and start thinking about retirement, it’s often too late to grow their wealth. This is why I look forward to investing as much as I can while in my 20s.

Be Careful Who You Receive Advice From

This is my big takeaway after receiving some pretty bad financial advice over the years. Most family members and friends mean well and want to help, but it’s important to educate yourself about personal finance by utilizing credible resources that are available on trusted websites, at institutions like your bank, and from financial experts with a proven track record.

Yet and still, you shouldn’t always believe everything you hear and take the financial advice you do receive with a grain of salt. Most financial topics and issues don’t have a one size fits all solution because everyone’s situation is different.

How about you all? What is the worst financial advice you’ve ever received?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/87913776@N00/6928145100/

Personal Credit Repair and Long Term Savings

The following is a guest post. Enjoy!

Lots of people don’t understand personal credit at all. They don’t know anything about their own credit histories, and they certainly don’t know what their credit score is if they even understand that concept at all. The thing is, credit history has a lot to do with how you’ll be able to save and grow your money over time, and a good credit score is essential for borrowing and employment opportunities that will give you the most advantages in life. Understanding your credit score is very important. We’ll show you how to improve it if it’s not so good, and we’ll explain why that’s important.

Your credit history is important because it tells a story about your financial life. There will be times in your adult life that you have to borrow money. You might want to buy a car, go to school, or buy a house. When you ask a financial institution to let you borrow the money you need to do one of these things, the lender will have to do some thinking about how much they trust you with their money. Your credit history tells them the info they need to know: whether or not you pay your bills on time, how much you rely on credit to live your life, etc. Your credit score wraps up all of this history into a single, three-digit number. Instead of reading your entire history, a lender just takes a peek at that number and makes their decision.

The end result is that you’ll pay either a lot or a little for a loan. If your credit score is bad enough, the lender probably won’t give you a loan at all.

As you can see, credit history is important. In order to save the most money on loans over the course of your life (and credit card interest, as well as a few other details), you’ll have to improve your credit score. But how is this accomplished? Credit scores, like we said above, reflect the way you use your money. If you pay your bills on time, don’t take out lots of loans in your everyday life (Credit cards and whatnot), and generally live beneath your means, you will appear to be financially responsible. This is great news for your potential lenders, and for your credit score.

As you establish long patterns of good credit and personal finance behavior, your credit history will have long stretches of excellent reports. As these excellent reports accumulate end on end, your credit score will rise. You can do your own research to find out specific ways that credit scores can be improved. There are a lot of details in this area, more than we can cover in a single post. But be encouraged, because no single step is that difficult. The hardest, possibly, is eliminating debt. Once that’s done, all of the rest of the procedures are pretty easy. In the end, you’ll have a great credit history and an awesome credit score, and you’ll see your financial life improve gradually as a result.

4 Factors to Consider When Buying a Central Air Conditioning Unit

The following post is by MPFJ staff writer, Melissa Batai.  Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food.  She blogs at Mom’s Plans where she shares her family’s journey to healthier living and paying down debt.

When we bought our house two years ago, we knew that the air conditioner was as old as the house, 17 years, and would need to be replaced in the near future.  Just a few weeks ago, our air conditioner started making a terrible ruckus and then stopped working all together.  Did I mention that we live in Arizona, and the temperature was 111 degrees that day?

It took four days and more money than I like to part with to get a new air conditioner.  Thanks to our own research and consulting with several air conditioning companies, we took a crash course on choosing the right air conditioner for our house and budget.  Here’s what we learned:

There Is a Limit to SEER Savings

How efficient an air conditioner unit is judged to be is measured in SEER, which stands for Seasonal Energy Efficiency Ratio.  Air conditioners on the market today typically range from 14 to 24 SEER.  Our 19 year old air conditioner that was original to the house had a 10 SEER, which isn’t even available on the market anymore because every new air conditioner is much more efficient now.

The higher the SEER rating, the higher the price you pay initially for the unit.  However, after a certain point, the models are so efficient that you don’t recoup the savings for the initial price of the unit in energy saved.  Rarely will buying the highest SEER save you the most money; you have to find the perfect point for your budget and your climate.

In the end, we chose to go with a 16 SEER unit.  That seemed to be our perfect point between money paid upfront and recouped costs in energy efficiency over the life of the unit, as it is for many people.  “According to Ed Purvis, vice president of the heating, ventilation, and air conditioning company Emerson Climate Technologies, a unit with a SEER rating of 16 or more could save you about $415 a year (compared with an older, low-efficiency model)” (US News).

Your air conditioner sales person should have a chart to show you initial cost of the unit versus savings over the years based on SEER rating, but if you want to do research first yourself, this SEER calculator is fun to play with and very informative.

Choose the Right Tonnage

Air conditioner units are measured in tonnage, i.e., 3-ton, 4-ton, 5-ton, etc.  The tonnage does not refer to the unit’s weight but rather it is “a measure of an air conditioner’s ability to cool.  One ton is the ability of your air conditioner to cool 12,000 BTUs (British Thermal Unit) in an hour.  Likewise, a “2-ton central air conditioner is able to cool 24,000 BTUs per hour” (asm-air).  BTU “is the amount of energy required to heat or cool one pound of water by one degree Fahrenheit.  So a 1-ton air conditioner can cool 12,000 pounds of water by one degree every hour” (asm-air).

What size unit you need depends on many factors: where you live geographically in the country, the square footage of your home, and the type of air conditioner that you’re installing, just to name a few factors.

Getting the right tonnage is important.  If you choose an air conditioner that has too much tonnage for your home, you will likely suffer with an air conditioner that quickly cools your home but then turns off, allowing the temperature inside to rise again.  This air conditioner will turn off and on all day long, which will not be good for your electric bill.

If the tonnage is too small, the air conditioner will likely run constantly trying to cool your home, which is also not good for your electric bill.

Our old air conditioner was 5-ton.  When we got a quote from one company, they also suggested a new 5-ton air conditioner.  However, the company that we ultimately went with measured how much insulation our home has and also plugged into a computer the layout of our home, where the evening sun hits and the square footage to determine that we actually only needed a 3-ton unit, which we went with.

This chart, which gives a rough gauge of the tonnage you will need based on the geographical location of your home and the square footage, also placed our needs as 3-ton.

Consider a Variable Speed Fan

There are two types of air conditioners—standard and variable speed.  The standard air conditioner is the one that many of us are familiar with.  When it turns on, cool air comes out full blast, and when it turns off, nothing comes out.  Throughout the day, the air conditioner cycles on and off as the temperature in your house rises and cools.

An air conditioner with a variable speed fan, by contrast, comes on full force when the temperature rises, but then, when the temperature cools to the desired level, the fan turns down to a lower setting and continues to circulate air through your duct work and your home.  This type of air conditioner “saves energy by operating at lower speeds, but energy savings also results from avoiding repeated stops and starts, a process that requires a large amount of electricity” (Angie’s List).

The Bottom Line Isn’t Everything

Buying a brand new air conditioner unit can certainly cause sticker shock.  For many, the tendency maybe to go with the least initial damage and purchase the air conditioner that is the cheapest with a single fan and a lower SEER rating.  However, remember that central air conditioning units usually last 10 to 20 years, so that gives you plenty of time to recoup your initial cost in lifetime energy savings.

Consider that “air conditioners with a variable speed handler generally cost about 30 percent more than standard units, according to Chris Cunningham, owner of Service Plus Heating Cooling Plumbing in Fishers, Indiana.  But he calls the added expense a worthwhile investment because of the energy savings, the lessened wear and tear on the system, and especially the comfort increase.  ‘It runs longer with lower output, gets out the humidity and balances the house’s environment,’ he says. ‘That’s worth every bit of the additional third of the cost’” (Angie’s List).

When deciding between air conditioning companies, make sure to check online reviews from a variety of sources.  In addition, consider what other perks come with the install.  For instance, the company that we went with will send a service technician out for free twice a year to service our unit for the next two years.  In the spring, they’ll service the air conditioning unit, and in the fall, they’ll service the heater.  In addition, the air conditioner comes with a 10 year warranty on parts and labor, so that will save us in the years to come.

In the end, we decided to go with a 3-ton, 16 SEER air conditioner with a variable speed fan.  Our old unit had NOT been energy efficient.  Thanks to this new unit, we’re looking to see significant savings on our electric bill.  Considering that we live in Arizona and often run an air conditioner eight months of the year, energy efficiency was as important to us as the initial cost.  (I’m not going to lie, though, paying for the unit upfront was painful!)

How about you all? Have you recently replaced a central air conditioner unit, or are you planning to in the near future?  If so, what other factors are you considering?

Share your experiences by commenting below!

***Photo courtesy http://www.idpinthat.com/edit/445