By Bridgie Boggan
Now is a great time to make it a habit to manage your financial resources instead of your resources managing you. What is meant by that when we are stating that "Your money manages you"? Here is a well known example:
"There is more month than there is money so that new purchase, trip, or splurging will need to wait a month or two and maybe never. You've opted to instead delay and pay later making the problem much worst and your perceived lack of resources in control." Here are some proven techniques to making financial gains an achievable goal by repositioning and changing spending habits while gaining more control of your situation so that there are available resources and time to spend with friends, family or loved ones.
One of the most overstated, undervalued and available resource accessible to anyone is time. Effective time management when applied consistently is a key element toward making financial progress. Even spare time moments resourcefully used contribute toward steady progress when used in combination with any of the following:
1. Establish investments.
Based on your risk assessment it is determined the best type of investment program suitable for your personality type and financial situation by either doing the research for yourself, by attending that appointment with a financial planner or by inquiring through a brokerage. Purchase examples, of course, are stocks, mutual funds, bonds, money market funds, annuities, etc. Because these figures will fluctuate, fit into your schedule a time to assess your portfolio periodically to check your progress. Your return on your investment can be substantial or relatively consistent with proper selection and combinations.
2. Purchase real estate.
Buying property is another way to invest to create financial gain; and making improvements after the purchase increases the value of the property. Not only do you save money by placing regular payments into your real estate; but if strategically paid ownership accumulation can happen at a faster rate and with very minimal increase to your payment. One such company offering this type of arrangement with no processing cost added is at www.eMortgageManager.net. With this service the mortgage payment is split into two parts. Each half is paid automatically every two weeks. It's very effective and easy to set up. This is a triple win for those who use this strategy with a single purchase.
3. Take classes, take up a hobby or acquire a skill.
How do you spend most of your time? Do you waste valuable hours lamenting in self-pity, bad luck or a disadvantaged set of circumstances? Or will you take active control to resolve the situation?
If there is an interest there is a class for it. And now that there's the Internet taking a class is just as easy as leisurely clicking a link. There are many available classes that are free, or via email and some that may cost a bill or two to enter a site. Or if you'd prefer, take a class at local colleges or universities which offer that immediate one on one support available through that type of arrangement. Your local library or museum may schedule classes or speakers covering a variety of subjects, too. Some locations even award certificates after completion if that is your requirement. Increasing your knowledge or skills over the long term not only provides confidence and mastery of skills developed by use of what is called putting in your "sweat equity" by taking the necessary courses and steps, but it will also provide flexibility by creating for you a new source of income using your newly developed talent(s) or expertise.
You may offer for a fee a service, provide a product (or product line), to sell your knowledge or in any of the combinations listed through your choice of method at a profit giving you unlimited possibilities. When used separately or together the above suggestions work effectively over time giving to you the increase that you've longed desired. Use your spare time moments to work for you effortlessly and automatically... even with family, friends or loved ones.
Tuesday, March 3, 2009
Saturday, February 28, 2009
Create and use a Debt Checklist to See How you Stand Financially
By David Wilding
A Debt Checklist allows you to look at items and areas of your financial life. You need to examine these to gauge how you stand. Even if you believe you are in good shape take a close look at these areas to be sure.
Your Budget
Almost nobody likes this word, which is why so many people have problems with their finances and debt. You need to know how to budget money. In addition, you should be sticking to a spending plan.
Your Savings Account.
You should pay yourself each month. To do this you need have an account in place, in which you keep your funds. At least until you can move them to an account with a higher rate of return. Visit your bank or credit union to set one up.
Your Use Of Credit.
You need to review your use of credit to see how, what, and where you are using it. Using credit to pay your bills or buying groceries is a recipe for trouble.
Your Percentage Of Income For Debt.
Nothing makes it harder to stay with your spending plan than credit card payments. You are paying for your past while trying to purchase your present. If your percentage of income going toward debt exceeds 15 you could be headed for trouble. Any amount over 20 percent, you need to put on the brakes.
Your Minimum Payments.
These add up. If you are to the point where you can only make minimum payments on your debts, you will stretch your indebtedness far into the future. You don't want to extended like this. Find ways to add extra to one payment each month. Then when you pay one off move the extra payments to another.
Your Protection.
You need to put into place and maintain protection for your assets. Your home, autos, life, and health, need be insured. Make certain the protection is in line with the value of your assets and the needs of the people whose lives would be effected.
Your Retirement.
Two factors come into play here. You are going to live longer and life is not getting any cheaper. You should pay into an account for retirement every month. More is better. If you have been paying attention you'll know not to depend solely on social security.
Your Job Skills.
Things change and change rapidly. A constant update should be part of your plan. You need to be able to obtain better jobs, or sometimes any job. The more skills you possess the better your chances.
Your Money Skills.
Since money education is not taught in school you will need to learn on your own. You need to learn to manage your money, even if you turn it over to others. Become familiar with how credit and debt works, so it doesn't work against you.
A Debt Checklist allows you to look at items and areas of your financial life. You need to examine these to gauge how you stand. Even if you believe you are in good shape take a close look at these areas to be sure.
Your Budget
Almost nobody likes this word, which is why so many people have problems with their finances and debt. You need to know how to budget money. In addition, you should be sticking to a spending plan.
Your Savings Account.
You should pay yourself each month. To do this you need have an account in place, in which you keep your funds. At least until you can move them to an account with a higher rate of return. Visit your bank or credit union to set one up.
Your Use Of Credit.
You need to review your use of credit to see how, what, and where you are using it. Using credit to pay your bills or buying groceries is a recipe for trouble.
Your Percentage Of Income For Debt.
Nothing makes it harder to stay with your spending plan than credit card payments. You are paying for your past while trying to purchase your present. If your percentage of income going toward debt exceeds 15 you could be headed for trouble. Any amount over 20 percent, you need to put on the brakes.
Your Minimum Payments.
These add up. If you are to the point where you can only make minimum payments on your debts, you will stretch your indebtedness far into the future. You don't want to extended like this. Find ways to add extra to one payment each month. Then when you pay one off move the extra payments to another.
Your Protection.
You need to put into place and maintain protection for your assets. Your home, autos, life, and health, need be insured. Make certain the protection is in line with the value of your assets and the needs of the people whose lives would be effected.
Your Retirement.
Two factors come into play here. You are going to live longer and life is not getting any cheaper. You should pay into an account for retirement every month. More is better. If you have been paying attention you'll know not to depend solely on social security.
Your Job Skills.
Things change and change rapidly. A constant update should be part of your plan. You need to be able to obtain better jobs, or sometimes any job. The more skills you possess the better your chances.
Your Money Skills.
Since money education is not taught in school you will need to learn on your own. You need to learn to manage your money, even if you turn it over to others. Become familiar with how credit and debt works, so it doesn't work against you.
Wednesday, February 25, 2009
8 Ways to Sink Yourself Financially
By Rich Acheampong
1. Don't focus on your financial planning
The reason most people get into debt is because they don't spend enough time focusing on their financial planning. You need to get a grasp of where you're at financially. Personal budgeting of your income in relation to expenses and spending habits can be done with a money management software i.e. Quicken, Microsoft Money or Mvelopes Personal.
2. Failure to develop a good financial plan
No one would imagine going on vacation without planning financially for it. Yet when finances are concerned, many people don't plan. A good financial plan can be the difference between comfortable living and struggling to get by.
3. Waiting too long to invest
When making investments, time is of the essence. Compound interest earns money over time; so don't wait too long to save for retirement. The longer you wait to invest, the smaller your return on investment.
4. Marrying the wrong person
Who you marry has a huge impact on your finances. Couples with different views on money, create stress in their marriage. Divorce apart from the emotional pain and suffering causes financial heartache.
5. Habits
Personal budget planner would show you how habits can ruin your budget plan. Buying a $1 coffee each day cost you $365 every year. Imagine how much more money you spend by eating out regularly. If you smoke, the cost of cigarettes along could drive you to quit.
6. Running up credit card balances
If you carry unpaid balances on credit cards, you are already losing money in interest payments alone. Credit card companies have high interest charges that accumulate with unpaid balances.
7. Be under-insured
You need to protect yourself and your family from unforeseen emergencies, sickness, accidents and possible death. The goal is to make sure that you have proper financial coverage in case anything should happen.
8. Investing in things you don't understand
If I had a dollar for every sure fire stock tip I'd be rich. Then I'd lose that money by investing in those tips. Make sure you know what you are investing in, by asking a lot of questions, don't hesitate to get another financial opinion.
1. Don't focus on your financial planning
The reason most people get into debt is because they don't spend enough time focusing on their financial planning. You need to get a grasp of where you're at financially. Personal budgeting of your income in relation to expenses and spending habits can be done with a money management software i.e. Quicken, Microsoft Money or Mvelopes Personal.
2. Failure to develop a good financial plan
No one would imagine going on vacation without planning financially for it. Yet when finances are concerned, many people don't plan. A good financial plan can be the difference between comfortable living and struggling to get by.
3. Waiting too long to invest
When making investments, time is of the essence. Compound interest earns money over time; so don't wait too long to save for retirement. The longer you wait to invest, the smaller your return on investment.
4. Marrying the wrong person
Who you marry has a huge impact on your finances. Couples with different views on money, create stress in their marriage. Divorce apart from the emotional pain and suffering causes financial heartache.
5. Habits
Personal budget planner would show you how habits can ruin your budget plan. Buying a $1 coffee each day cost you $365 every year. Imagine how much more money you spend by eating out regularly. If you smoke, the cost of cigarettes along could drive you to quit.
6. Running up credit card balances
If you carry unpaid balances on credit cards, you are already losing money in interest payments alone. Credit card companies have high interest charges that accumulate with unpaid balances.
7. Be under-insured
You need to protect yourself and your family from unforeseen emergencies, sickness, accidents and possible death. The goal is to make sure that you have proper financial coverage in case anything should happen.
8. Investing in things you don't understand
If I had a dollar for every sure fire stock tip I'd be rich. Then I'd lose that money by investing in those tips. Make sure you know what you are investing in, by asking a lot of questions, don't hesitate to get another financial opinion.
Sunday, February 22, 2009
Steps to Financial Freedom
By Richard Pullman
Financial budgeting would give financial freedom which is the power to do what you will with your life without being forever bound by lack of money and over burdened by debt. This worthwhile goal can be achieved by anyone through careful budget planning and persistence. Just follow these steps:
Pay yourself
firstEvery paycheck,create a personal budgeting plan and keep some of your money for yourself. It takes money to make money, so goes the old saying. To achieve financial freedom, you'll need some seed money that can grow into a substantial nest egg.
Take a percentage or a fixed amount from each paycheck and add it to your seed money, at least 10%, if possible. This is your investment money. Do not use it for anything else. Every paycheck be sure to pay yourself first. With time and persistence you'll soon have the funds to start making profitable investments. You'll be a lender and not a borrower. Reinvest all profits and dividends to maximize the growth of your nest egg.
Control your spending with the help of a budget planner like Quicken, MS Money or Mvelopes personal. Make sure that your spending is less than your earnings. When you find yourself in a hole, the first thing to do is STOP DIGGING. You may have to create and follow a budget.
Creating a budget is easy; following it may be hard. Start our by tracking your current spending habits. Visit www.financesoftware.net for budgeting software that can help you. Summarize your spending into general categories such as Food, Clothing, Entertainment, etc. Then you can decide which categories you can cut and by how much. Continue to track your spending and do your best to stay within the budget setup for yourself.
Get free of debt
Debt is bad, "the borrower is the slave of the lender", and none of us wants to be a slave. There are some debts that may be helpful, such as business debts to increase profits, home mortgages, and car loans. Avoid any other borrowing, even pay cash for your car if possible.
Increase the size of the payments you're making. Pick the creditor who charges the highest interest and increase that payment by as much as you can. When that creditor is paid off, take the payment amount and apply it to the next creditor in your budget plan. Continue this process until all are paid off. Destroy and close all or most of your credit card accounts.
Build a contingency fund
Life is full of unexpected surprises; the car breaks down, the furnace fails, we lose our job, etc.. To prevent these occasional events from derailing your financial plans, you need to do financial budgeting for emergencies also. This will help you avoid borrowing or dipping into your seed money.
Every paycheck, take a percentage or a fixed amount of money and put it into your contingency fund. As the money in this fund grows, you will have financial peace that comes from being better prepared for life's little surprises. For life's big surprises, buy insurance.
Become an informed investor
In this day and age, there are endless opportunities for investments that can make your financial budgeting fail. In order to make money and not lose money, you'll need to start educating yourself.
As a start, here are some concepts it will be good for you to know. RETURN is how much profit you're likely to make on a given investment, usually expressed as a percentage or a range of percentages. RISK is the possibility of something bad happening, like losing money. A SCAM is a false investment opportunity presented by lying thieves trying to steal your money. DIVERSIFICATION is the strategy of not having all your eggs in one basket to spread and minimize risk. An INVESTMENT STRATEGY is a long term approach to making money. Visit www.financesoftware.net for more investment ideas and related budgeting software.
Give
Begin to give away some of your money. "For whatsoever a man sows, that shall he also reap." If you are religious, give to your religion. If you are not, then give to the poor, or to "save the earth", or whatever noble cause appeals to you.
Not only does giving help free you from the mental and emotional grip of money, God Himself will generously respond to more than repay what you have freely and joyfully given away.
Conclusion
You can make it happen. Establish your strategy and stick to it. Implement all these steps in your life and your financial freedom will soon come:
Financial budgeting would give financial freedom which is the power to do what you will with your life without being forever bound by lack of money and over burdened by debt. This worthwhile goal can be achieved by anyone through careful budget planning and persistence. Just follow these steps:
- Pay yourself first
- Control your spending
- Get free of debt
- Build a contingency fund
- Become an informed investor
- Give
Pay yourself
firstEvery paycheck,create a personal budgeting plan and keep some of your money for yourself. It takes money to make money, so goes the old saying. To achieve financial freedom, you'll need some seed money that can grow into a substantial nest egg.
Take a percentage or a fixed amount from each paycheck and add it to your seed money, at least 10%, if possible. This is your investment money. Do not use it for anything else. Every paycheck be sure to pay yourself first. With time and persistence you'll soon have the funds to start making profitable investments. You'll be a lender and not a borrower. Reinvest all profits and dividends to maximize the growth of your nest egg.
Control your spending with the help of a budget planner like Quicken, MS Money or Mvelopes personal. Make sure that your spending is less than your earnings. When you find yourself in a hole, the first thing to do is STOP DIGGING. You may have to create and follow a budget.
Creating a budget is easy; following it may be hard. Start our by tracking your current spending habits. Visit www.financesoftware.net for budgeting software that can help you. Summarize your spending into general categories such as Food, Clothing, Entertainment, etc. Then you can decide which categories you can cut and by how much. Continue to track your spending and do your best to stay within the budget setup for yourself.
Get free of debt
Debt is bad, "the borrower is the slave of the lender", and none of us wants to be a slave. There are some debts that may be helpful, such as business debts to increase profits, home mortgages, and car loans. Avoid any other borrowing, even pay cash for your car if possible.
Increase the size of the payments you're making. Pick the creditor who charges the highest interest and increase that payment by as much as you can. When that creditor is paid off, take the payment amount and apply it to the next creditor in your budget plan. Continue this process until all are paid off. Destroy and close all or most of your credit card accounts.
Build a contingency fund
Life is full of unexpected surprises; the car breaks down, the furnace fails, we lose our job, etc.. To prevent these occasional events from derailing your financial plans, you need to do financial budgeting for emergencies also. This will help you avoid borrowing or dipping into your seed money.
Every paycheck, take a percentage or a fixed amount of money and put it into your contingency fund. As the money in this fund grows, you will have financial peace that comes from being better prepared for life's little surprises. For life's big surprises, buy insurance.
Become an informed investor
In this day and age, there are endless opportunities for investments that can make your financial budgeting fail. In order to make money and not lose money, you'll need to start educating yourself.
As a start, here are some concepts it will be good for you to know. RETURN is how much profit you're likely to make on a given investment, usually expressed as a percentage or a range of percentages. RISK is the possibility of something bad happening, like losing money. A SCAM is a false investment opportunity presented by lying thieves trying to steal your money. DIVERSIFICATION is the strategy of not having all your eggs in one basket to spread and minimize risk. An INVESTMENT STRATEGY is a long term approach to making money. Visit www.financesoftware.net for more investment ideas and related budgeting software.
Give
Begin to give away some of your money. "For whatsoever a man sows, that shall he also reap." If you are religious, give to your religion. If you are not, then give to the poor, or to "save the earth", or whatever noble cause appeals to you.
Not only does giving help free you from the mental and emotional grip of money, God Himself will generously respond to more than repay what you have freely and joyfully given away.
Conclusion
You can make it happen. Establish your strategy and stick to it. Implement all these steps in your life and your financial freedom will soon come:
- Pay yourself first
- Control your spending
- Get free of debt
- Build a contingency fund
- Become an informed investor
- Give
Now, you're on your way.
Thursday, February 19, 2009
7 Power Habits that Build Financial Independence
By Steve Brunkhorst
Financial independence is having the freedom to support yourself through your own efforts. Here are seven fundamental habits that will help you achieve and maintain financial independence.
1. Express Gratitude
Financial independence begins with gratitude. Set aside a daily period to offer a sincere thank you for every blessing in your life. Include people, places, possessions, talents, and memories. Offer gratitude for your future dreams as though they were already in your possession.
Gratitude will allow you to attract the blessings you want. When they arrive, protect them from the thieves that could rob you of your financial independence.
2. Liberate Your Future
Debts of the past are thieves of the future. If you want financial independence, live a simple life style that does not create unnecessary personal debt. Living with class does not require being extravagant. If you are conservative most of the time, you can be extravagant at the right times.
Do not allow credit card companies to hold your future hostage. Take control. Seek professional help to get rid of credit card debt that robs you of high monthly interest payments. Borrowing is a tool that should produce a return on your investment, not cost your future security.
3. Commit to Wellness
Your health is also an asset that you need to protect. Wellness allows you to manage and enjoy financial independence. Get regular physical checkups and maintain a sensible physician-approved exercise program. These can help to minimize illnesses and maximize the rewards of a productive life.
Maintaining wellness requires an ongoing commitment. Another area of commitment that is equally important to financial independence is one of personal financial discipline.
4. Develop a Saving Discipline
A financially independent future requires saving, and saving requires discipline. As credit card debt diminishes, savings can begin to increase. An emergency savings fund of six to twelve months living expenses is a wise idea. However, you will want major long-term savings plans for such goals as education and retirement.
Do not expect the government to take care of your financial future. If you want to remain financially independent, take ultimate responsibility for every chapter of your financial life. That responsibility begins with wise investing and respect for money.
5. Invest Wisely and Respect Money
My father taught me to have several investments that produce an ongoing, passive income. This, he said, would allow me to remain independent if I were to become physically disabled. These investments are like "feeding geese that lay golden eggs". Passive income streams also provide additional capital to place in other financial growth investments.
Respect for money is the beginning of saving and investing. Respect for a dollar begins with respect for a penny. You will always have dollars if you take care of your pennies. Even the smallest of assets and investments need protection.
6. Protect Yourself and Your Loved Ones
In the article, Ten Traits of Successful Entrepreneurs, I wrote that one of those traits was making a commitment to protect the welfare of your family and loved ones. Ensuring the safety of your financial assets is part of doing this.
Adequate insurance coverage for your life, health, and property is a wise investment. You should also use professional legal, financial, and security services to help protect your business, property, and all the things you have worked to acquire.
7. Design Your Financial Independence with Qualified Help
Seek qualified professionals to help you design your financial future. You do not need to be a financial expert to become financially independent, but you must become financially literate. Seek professional guidance from experts in financial planning, taxes, and accounting. These people can work with you to help you realize your financial goals.
Begin today by seeking out professionals that can help you achieve your financial goals. Become financially independent in your own mind. Express gratitude for the blessings you will receive as if they were already in your possession. Avoid and eliminate unnecessary personal debt, and live a healthy lifestyle. Save with discipline, invest wisely, and respect your financial assets. Protect the assets you have worked to acquire, and you can enjoy the financially independent lifestyle that you have envisioned.
Financial independence is having the freedom to support yourself through your own efforts. Here are seven fundamental habits that will help you achieve and maintain financial independence.
1. Express Gratitude
Financial independence begins with gratitude. Set aside a daily period to offer a sincere thank you for every blessing in your life. Include people, places, possessions, talents, and memories. Offer gratitude for your future dreams as though they were already in your possession.
Gratitude will allow you to attract the blessings you want. When they arrive, protect them from the thieves that could rob you of your financial independence.
2. Liberate Your Future
Debts of the past are thieves of the future. If you want financial independence, live a simple life style that does not create unnecessary personal debt. Living with class does not require being extravagant. If you are conservative most of the time, you can be extravagant at the right times.
Do not allow credit card companies to hold your future hostage. Take control. Seek professional help to get rid of credit card debt that robs you of high monthly interest payments. Borrowing is a tool that should produce a return on your investment, not cost your future security.
3. Commit to Wellness
Your health is also an asset that you need to protect. Wellness allows you to manage and enjoy financial independence. Get regular physical checkups and maintain a sensible physician-approved exercise program. These can help to minimize illnesses and maximize the rewards of a productive life.
Maintaining wellness requires an ongoing commitment. Another area of commitment that is equally important to financial independence is one of personal financial discipline.
4. Develop a Saving Discipline
A financially independent future requires saving, and saving requires discipline. As credit card debt diminishes, savings can begin to increase. An emergency savings fund of six to twelve months living expenses is a wise idea. However, you will want major long-term savings plans for such goals as education and retirement.
Do not expect the government to take care of your financial future. If you want to remain financially independent, take ultimate responsibility for every chapter of your financial life. That responsibility begins with wise investing and respect for money.
5. Invest Wisely and Respect Money
My father taught me to have several investments that produce an ongoing, passive income. This, he said, would allow me to remain independent if I were to become physically disabled. These investments are like "feeding geese that lay golden eggs". Passive income streams also provide additional capital to place in other financial growth investments.
Respect for money is the beginning of saving and investing. Respect for a dollar begins with respect for a penny. You will always have dollars if you take care of your pennies. Even the smallest of assets and investments need protection.
6. Protect Yourself and Your Loved Ones
In the article, Ten Traits of Successful Entrepreneurs, I wrote that one of those traits was making a commitment to protect the welfare of your family and loved ones. Ensuring the safety of your financial assets is part of doing this.
Adequate insurance coverage for your life, health, and property is a wise investment. You should also use professional legal, financial, and security services to help protect your business, property, and all the things you have worked to acquire.
7. Design Your Financial Independence with Qualified Help
Seek qualified professionals to help you design your financial future. You do not need to be a financial expert to become financially independent, but you must become financially literate. Seek professional guidance from experts in financial planning, taxes, and accounting. These people can work with you to help you realize your financial goals.
Begin today by seeking out professionals that can help you achieve your financial goals. Become financially independent in your own mind. Express gratitude for the blessings you will receive as if they were already in your possession. Avoid and eliminate unnecessary personal debt, and live a healthy lifestyle. Save with discipline, invest wisely, and respect your financial assets. Protect the assets you have worked to acquire, and you can enjoy the financially independent lifestyle that you have envisioned.
Monday, February 16, 2009
Slowing Spending - The Key to Your Debt Plan Success
By David Wilding
Debt Plan Success can only be attained by personal budgeting. Anyone who embarks on a debt reduction program should know the rules for success. There are two. You need to stop adding to your debt. You need to manage personal finances, to pay it off quickly.
You also need to know the deck is stacked against you. The sellers of goods and services have gobs of information at their fingertips. They know where you live. They have a close approximation of your personal finance. They are aware of your interests. They also know your buying habits. These tips on budgeting will help you to manage personal finances.
The information to which they have access is endless. They know the age of your car through its registration. The appliances you have because of the warranty cards returned. Where you shop because of the credit and store cards you have used. How old your mortgage is and what you owe from public recording of the deeds.
Because they have this information, you end up on a number of lists. The sorting and use of these lists are an art and science which helps in household budgeting. It is the source of the mail you receive, the offers you are made, and the advertising to which you are exposed.
This makes for very effective advertising. They can target your "known" wants and desires. Huge amounts of money are spent to convince you to buy this or that product. You have heard how expensive Super Bowl ads are each year. They pay this type of money because it works.
Then to top it all off they make it so easy to buy. If you haven't done your budgeting, they provide you with credit, easy-pay plans, personal loans; anything to make your personal budgeting smooth. Many companies make as much from their financing divisions as they do from selling you their products. So what do you do? How do you fight this financial onslaught and win? It requires making a budget and planning your financials. You need to wring all the value you can from your budget plan. Become adept at making each dollar do the work of two.
You need to make budget plans for purchases. Even if that means that you think about it for just a few minutes before you plunk down your hard earn money. Justify your purchases; do you need it, does it make sense, can you do without? These are questions you need to ask yourself. They may fly in the face of the materialism which surrounds us all, but they need to be answered nonetheless.
Using a spreadsheet would be helpful for personal budgeting and financial planning. Anytime a purchase exceeds what you have in your budget plan tick down this list or use a money management software like mvelopes personal, ms money or quicken to keep track of it and see if it really makes sense to buy it.
Debt Plan Success can only be attained by personal budgeting. Anyone who embarks on a debt reduction program should know the rules for success. There are two. You need to stop adding to your debt. You need to manage personal finances, to pay it off quickly.
You also need to know the deck is stacked against you. The sellers of goods and services have gobs of information at their fingertips. They know where you live. They have a close approximation of your personal finance. They are aware of your interests. They also know your buying habits. These tips on budgeting will help you to manage personal finances.
The information to which they have access is endless. They know the age of your car through its registration. The appliances you have because of the warranty cards returned. Where you shop because of the credit and store cards you have used. How old your mortgage is and what you owe from public recording of the deeds.
Because they have this information, you end up on a number of lists. The sorting and use of these lists are an art and science which helps in household budgeting. It is the source of the mail you receive, the offers you are made, and the advertising to which you are exposed.
This makes for very effective advertising. They can target your "known" wants and desires. Huge amounts of money are spent to convince you to buy this or that product. You have heard how expensive Super Bowl ads are each year. They pay this type of money because it works.
Then to top it all off they make it so easy to buy. If you haven't done your budgeting, they provide you with credit, easy-pay plans, personal loans; anything to make your personal budgeting smooth. Many companies make as much from their financing divisions as they do from selling you their products. So what do you do? How do you fight this financial onslaught and win? It requires making a budget and planning your financials. You need to wring all the value you can from your budget plan. Become adept at making each dollar do the work of two.
You need to make budget plans for purchases. Even if that means that you think about it for just a few minutes before you plunk down your hard earn money. Justify your purchases; do you need it, does it make sense, can you do without? These are questions you need to ask yourself. They may fly in the face of the materialism which surrounds us all, but they need to be answered nonetheless.
Using a spreadsheet would be helpful for personal budgeting and financial planning. Anytime a purchase exceeds what you have in your budget plan tick down this list or use a money management software like mvelopes personal, ms money or quicken to keep track of it and see if it really makes sense to buy it.
- How much is it?
- Is this a sale price?
- If so what am I saving over regular price?
- What will happen if I don’t buy it now?
- Can I pay cash?
- How will It effect the budget setup? Where will the money come from?
- If not cash, what will be the credit cost?
- Is it worth it at the price with the credit cost added in?
- Does the purchase fill a need or a want? (think hard)
- Why do I need this item?
- Why do I want this item?
- Can I justify this purchase to another person?
- What would I say?
- Would I accept these reasons from someone else?
This should help in slowing you down. Couple this with not taking your credit cards with you when you shop. It does take work, but a little extra work is better than being a slave to your debt.
Now with the money you save go to work on your debt reduction plans. Work that side of the equation as hard as you do the spending side. Place as much as you can on your bills. Reduce and eliminate them from your budget plan.
Friday, February 13, 2009
7 Golden Rules to Financial Prosperity
By Irena Whitfield
Not Enough Money?
I believe that most people haven't got enough money for everything they wish to have - the more you have the bigger your plans, and you have a feeling that you have less and less money.
Whether you have lots of money or just so-so, you need to economize and take proper care of your money ie your income, expenditures, savings and investments.
Below I give you 7 Golden Rules to a Financial Budgeting for financial prosperity:
1) Always have several streams of income: never rely on one income from one source only.
2) As soon as you start to earn, start to put aside a certain amount to create an automatic money source: I remember I have always had my own portfolio since I was a child, and can tell you that I needed it several times. Even if you have property, you may find yourself in a situation when you need fast cash. In such a situation, you will not sell your property, but you can sell part or even the whole of your portfolio.
You don't need to start your portfolio with thousands of dollars, you can develop it.
You only need to set a rule that you won't touch it when you don't need it, and keep it for vital urgencies. To buy a better car or a bigger house is not an urgency.
3) Always have a budget plan to take care of your money personally: it's not necessary to do everything personally as soon as you can afford it but never allow any other person to have a right to handle your money without your knowing, or your express approval. If you think that you don't have time to supervise this or that it's not important, you will have to find it later for much more unpleasant things when you lose your money.
Many of you will 'hate' me for what I'm going to say now and I will receive lots of disapproving messages but I have to say it: don't even allow your spouse to do this - love and money is not the right association, and I know what I am talking about. Keep these apart.
Don't supervise your investments and expenditures only - Always strictly collect your money. Never allow people to owe you - again: with no regard to how much money you have, always demand every dollar you earn to be paid to you.
4) Strictly distinguish between expenditures and investments: it's very easy to put everything as cost or overhead: don't do this. Apply an easy rule: expenditure or cost is money thrown out of the window - you can't expect any return money on it, while investment is desirable (of course, not every investment is desirable) this should bring you more money, more property able to make you more money - the only questions you should carefully consider are whether you can/should afford such an investment at the moment, how much you're going to get back, how fast and whether it is acceptable.
5) Keep your expenditures at the minimum with no regard to how much money you have: expenditures are killing for everyone. It's useless to tell you stories about big fortunes lost by unwise costs. I'm sure you know many yourself from your neighborhood.
6) Avoid loans, don't borrow if you don't know for sure you can repay. Never purchase anything on future incomes or promises, which goes beyond your budget.
Just a little example: if I have a notice that a payment is on its way to my account and I need the money today for some reason (however, I can't see any reason like that :-) - never mind), I can borrow. But, if I think I will sell 1,000 books next week, I mustn't borrow.
7) You must always earn more than you spend. In case you don't earn more than you spend, then you must spend less. In other words, you must always be in green.
If you think that you can disrupt your budget setup by swapping your car every six months even if you should borrow, then it may easily happen that you won't drive anything in a very short time.
I don't want to waste hours of your precious time by long essays on savings and wise advice. Just adopt one principle and whenever you want to do something with your money (- whether it's thousands or millions or just a couple of bucks), just ask your self if your personal budget allows you to do this: take care of the pennies and the pounds will take care of themselves.
Not Enough Money?
I believe that most people haven't got enough money for everything they wish to have - the more you have the bigger your plans, and you have a feeling that you have less and less money.
Whether you have lots of money or just so-so, you need to economize and take proper care of your money ie your income, expenditures, savings and investments.
Below I give you 7 Golden Rules to a Financial Budgeting for financial prosperity:
1) Always have several streams of income: never rely on one income from one source only.
2) As soon as you start to earn, start to put aside a certain amount to create an automatic money source: I remember I have always had my own portfolio since I was a child, and can tell you that I needed it several times. Even if you have property, you may find yourself in a situation when you need fast cash. In such a situation, you will not sell your property, but you can sell part or even the whole of your portfolio.
You don't need to start your portfolio with thousands of dollars, you can develop it.
You only need to set a rule that you won't touch it when you don't need it, and keep it for vital urgencies. To buy a better car or a bigger house is not an urgency.
3) Always have a budget plan to take care of your money personally: it's not necessary to do everything personally as soon as you can afford it but never allow any other person to have a right to handle your money without your knowing, or your express approval. If you think that you don't have time to supervise this or that it's not important, you will have to find it later for much more unpleasant things when you lose your money.
Many of you will 'hate' me for what I'm going to say now and I will receive lots of disapproving messages but I have to say it: don't even allow your spouse to do this - love and money is not the right association, and I know what I am talking about. Keep these apart.
Don't supervise your investments and expenditures only - Always strictly collect your money. Never allow people to owe you - again: with no regard to how much money you have, always demand every dollar you earn to be paid to you.
4) Strictly distinguish between expenditures and investments: it's very easy to put everything as cost or overhead: don't do this. Apply an easy rule: expenditure or cost is money thrown out of the window - you can't expect any return money on it, while investment is desirable (of course, not every investment is desirable) this should bring you more money, more property able to make you more money - the only questions you should carefully consider are whether you can/should afford such an investment at the moment, how much you're going to get back, how fast and whether it is acceptable.
5) Keep your expenditures at the minimum with no regard to how much money you have: expenditures are killing for everyone. It's useless to tell you stories about big fortunes lost by unwise costs. I'm sure you know many yourself from your neighborhood.
6) Avoid loans, don't borrow if you don't know for sure you can repay. Never purchase anything on future incomes or promises, which goes beyond your budget.
Just a little example: if I have a notice that a payment is on its way to my account and I need the money today for some reason (however, I can't see any reason like that :-) - never mind), I can borrow. But, if I think I will sell 1,000 books next week, I mustn't borrow.
7) You must always earn more than you spend. In case you don't earn more than you spend, then you must spend less. In other words, you must always be in green.
If you think that you can disrupt your budget setup by swapping your car every six months even if you should borrow, then it may easily happen that you won't drive anything in a very short time.
I don't want to waste hours of your precious time by long essays on savings and wise advice. Just adopt one principle and whenever you want to do something with your money (- whether it's thousands or millions or just a couple of bucks), just ask your self if your personal budget allows you to do this: take care of the pennies and the pounds will take care of themselves.
Tuesday, February 10, 2009
A Simple Approach to Budgeting
By DR
I hate budgeting. I’ve tried using envelopes, Mvelopes, Quicken, and fancy spreadsheets and the results are always the same. I start off strong, but within a few weeks I lose interest in the time-consuming chore that budgeting can be. The problem is that I still need to manage my money. I confronted this problem about a year ago, and asked myself the following question: how do I effectively manage my money in as little time and with as little pain as possible? To answer that question I came up with a money management plan that doesn't require me to track all of my expenses all of the time, and requires a relatively small investment of my time each month. In this post, I'll share my plan with you.
Before I get to the steps I take, it's important to say that you should do what works best for you. You may need to or feel more comfortable tracking every dime you spend. That's great if it works for you. You may also take my plan and modify it in ways to make it work better for you. That's great, too. Budgeting should be viewed as a means to an end. Budgeting and money management are a means to allow us to spend and save our money in the most productive and efficient way possible. If you need 100 expenses categories to accomplish that goal, so be it. If you can do it with just 5 expense categories, great! It turns out that I use just one expense category most of the time. Here's how:
Save First
You've heard the expression, "pay yourself first." What that means is to set aside a set amount from each paycheck that you'll save, then spend the rest. That's what I do, and my budget looks like this (all percentages are based on gross income):
Savings: 15%
Spending: 85%
As long as I save 15% of my gross income and spend no more than 85%, I don't care how much I spent on groceries or entertainment or electricity. Unfortunately, the fun doesn't stop here. There are at least three potentially significant problems with this simple approach that you must watch for: (1) failing to save as much as you comfortably can; (2) spending more than you planned to spend; and (3) getting whacked by periodic or unexpected expenses. Recognizing these potential problems, I developed a simple approach to address each of them.
Failing to save as much as you comfortably can
How much money should you save? There’s no one right answer to that question. The goal is to achieve a reasonable balance between enjoying today and saving for tomorrow. For me that means saving between 10% and 20% of gross income. I view 10% as the minimum goal and 20% as a stretch goal. Today I save 15%. But what if I could comfortably save more? That’s one of the potential draw backs to my simple budgeting plan. In and of itself, it doesn’t tell you how much you can reasonably and comfortably save. To determine that number I prepare a budget template. I use a simple Excel spreadsheet that divides my monthly expenses into three categories: (1) fixed expenses (e.g., mortgage, telephone, cable); (2) variable expenses (e.g., groceries, entertainment, clothing); and (3) periodic expenses (e.g., car and life insurance, gifts, vacations). The fixed and periodic expenses are easy to determine by looking at past bills. The variable expenses can take some time to pull together, although if you religiously use a debit card like we do, the information is right there in your bank statement.
With this information plugged into my spreadsheet, I can get an idea of how much (or little) I can save. I can also see how making adjustments to my spending will increase or decrease my savings. What I don’t do is track all of my expenses each month according to these categories. The template is there just as a guideline to determine how much I can reasonably save. If I’m not at 10%, I look for ways to trim expenses in one or more categories. I also look to see if I can reduce my expenses in some relatively painless way in order to save even more. You can check out some of my painless money-saving tips, which I will regularly update with new tips readers and other bloggers have sent in. At this point you may be asking how I keep my expenses in check against this budget template if I don’t track all my expenses each month. Good question, and that brings us to problem #2.
Spending more than you plan to spend
So you have a simple budget plan that calls for 10% savings, but you end up spending more than the 90% left over. This happens to all of us. But rather than go to the extreme and start tracking every expense, I look at my expenses and determine what category or categories caused me the most problems. The problem expense areas are usually not a surprise to me. For us, it’s spending too much money eating out, buying too many clothes, or spending too much on the house. I know these are our problem areas because I’ve been managing our money for 15 years. If you’re new to managing your money, it won’t take long for you to identify the two or three problem areas in your budget. And here’s the point–track just those categories for a month. There’s no point in tracking expenses that aren’t causing the problem. Focus on the problem. You’ll spend a lot less time and your energy will be directed at the problem area(s) in your budget.
Having tracked the problem areas for a month, you’ll have a better idea of why your spending more than you should. If you must, put cash in an envelope for just these problem categories. When the cash is gone, you stop spending. Again, the point is to focus just on the problem areas of your monthly spending.
Getting whacked by periodic or unexpected expenses
I hate budgeting. I’ve tried using envelopes, Mvelopes, Quicken, and fancy spreadsheets and the results are always the same. I start off strong, but within a few weeks I lose interest in the time-consuming chore that budgeting can be. The problem is that I still need to manage my money. I confronted this problem about a year ago, and asked myself the following question: how do I effectively manage my money in as little time and with as little pain as possible? To answer that question I came up with a money management plan that doesn't require me to track all of my expenses all of the time, and requires a relatively small investment of my time each month. In this post, I'll share my plan with you.
Before I get to the steps I take, it's important to say that you should do what works best for you. You may need to or feel more comfortable tracking every dime you spend. That's great if it works for you. You may also take my plan and modify it in ways to make it work better for you. That's great, too. Budgeting should be viewed as a means to an end. Budgeting and money management are a means to allow us to spend and save our money in the most productive and efficient way possible. If you need 100 expenses categories to accomplish that goal, so be it. If you can do it with just 5 expense categories, great! It turns out that I use just one expense category most of the time. Here's how:
Save First
You've heard the expression, "pay yourself first." What that means is to set aside a set amount from each paycheck that you'll save, then spend the rest. That's what I do, and my budget looks like this (all percentages are based on gross income):
Savings: 15%
Spending: 85%
As long as I save 15% of my gross income and spend no more than 85%, I don't care how much I spent on groceries or entertainment or electricity. Unfortunately, the fun doesn't stop here. There are at least three potentially significant problems with this simple approach that you must watch for: (1) failing to save as much as you comfortably can; (2) spending more than you planned to spend; and (3) getting whacked by periodic or unexpected expenses. Recognizing these potential problems, I developed a simple approach to address each of them.
Failing to save as much as you comfortably can
How much money should you save? There’s no one right answer to that question. The goal is to achieve a reasonable balance between enjoying today and saving for tomorrow. For me that means saving between 10% and 20% of gross income. I view 10% as the minimum goal and 20% as a stretch goal. Today I save 15%. But what if I could comfortably save more? That’s one of the potential draw backs to my simple budgeting plan. In and of itself, it doesn’t tell you how much you can reasonably and comfortably save. To determine that number I prepare a budget template. I use a simple Excel spreadsheet that divides my monthly expenses into three categories: (1) fixed expenses (e.g., mortgage, telephone, cable); (2) variable expenses (e.g., groceries, entertainment, clothing); and (3) periodic expenses (e.g., car and life insurance, gifts, vacations). The fixed and periodic expenses are easy to determine by looking at past bills. The variable expenses can take some time to pull together, although if you religiously use a debit card like we do, the information is right there in your bank statement.
With this information plugged into my spreadsheet, I can get an idea of how much (or little) I can save. I can also see how making adjustments to my spending will increase or decrease my savings. What I don’t do is track all of my expenses each month according to these categories. The template is there just as a guideline to determine how much I can reasonably save. If I’m not at 10%, I look for ways to trim expenses in one or more categories. I also look to see if I can reduce my expenses in some relatively painless way in order to save even more. You can check out some of my painless money-saving tips, which I will regularly update with new tips readers and other bloggers have sent in. At this point you may be asking how I keep my expenses in check against this budget template if I don’t track all my expenses each month. Good question, and that brings us to problem #2.
Spending more than you plan to spend
So you have a simple budget plan that calls for 10% savings, but you end up spending more than the 90% left over. This happens to all of us. But rather than go to the extreme and start tracking every expense, I look at my expenses and determine what category or categories caused me the most problems. The problem expense areas are usually not a surprise to me. For us, it’s spending too much money eating out, buying too many clothes, or spending too much on the house. I know these are our problem areas because I’ve been managing our money for 15 years. If you’re new to managing your money, it won’t take long for you to identify the two or three problem areas in your budget. And here’s the point–track just those categories for a month. There’s no point in tracking expenses that aren’t causing the problem. Focus on the problem. You’ll spend a lot less time and your energy will be directed at the problem area(s) in your budget.
Having tracked the problem areas for a month, you’ll have a better idea of why your spending more than you should. If you must, put cash in an envelope for just these problem categories. When the cash is gone, you stop spending. Again, the point is to focus just on the problem areas of your monthly spending.
Getting whacked by periodic or unexpected expenses
It’s usually just when you think you’ve got control of your spending that the car insurance bill comes in the mail. In the past, this would drive me (no pun intended) crazy. Not any more. For periodic expenses, I simply add them up over the course of a year, divide by twelve, and put that much into my online savings account each month. When the bill comes in, I transfer the amount from savings to checking and pay the bill. For us, our periodic expenses include the following:
- Car Insurance (twice a year)
- Life insurance (once a year)
- Personal Property Tax (once a year)
- Gifts (throughout the year, but mainly at Christmas)
- Vacations (once a year)
For unexpected expenses, like a car repair, we use our emergency fund if we can’t include it in the monthly budget. Of course, we then have to add to our emergency fund, but that is what it’s there for.
As I said at the start, there is no one right way to budget. For us, the simple approach is the best, and we’ve managed to control our spending with the system quite well. If you use a different system, let us know what works best for you.
Saturday, February 7, 2009
51 Painless Money-Saving Tips
By DR
- Combine your cable, internet and telephone service. Companies now offer combined services that not only cost less, but offer the convenience of a single bill.
- Slow down your internet service. I went to the slower internet service option with my cable company and saved $15 per month. And I haven’t noticed a difference when surfing the Net.
- Send away for and follow up on rebates. After you buy a product with a rebate, send in the form that day. Then mark your calendar to remind yourself to follow up with the rebate company if the check hasn’t show up.
- Buy a refurbished Mac: I’ve written about this before because it is a great way to buy not only computers, but iPods and iPhones as well. You can check out the details on how to buy a refurbished iPhone here.
- Convert to a gas water heater. They are more efficient and will save you money in the long run.
- Request a reduction in the interest rate for your home equity line of credit. I did and my mortgage company agreed to reduce the rate by more than 0.50%. And if you are looking for a home equity loan,LendingTree Home Equity Loans is a great place to check out available options.
- Request a reduction in the interest rate on your credit cards. As with home equity loans, credit card companies sometimes are willing to reduce the interest rate. It can’t hurt to ask.
- Refinance you mortgage. If you can reduce your interest rate by one percent or more, it is often beneficial to refinance. This is particularly true for those with high rates due to less than stellar credit scores. If your score has improved, you may qualify for a better rate. I would start by asking your current mortgage lender about lower rates. Here’s a refinance calculator to help you determine if refinancing is right for you.
- Get rid of Private Mortgage Insurance. If your down payment was less than 20%, you are probably paying PMI. Once you have a 20% cushion through reducing your debt and home appreciation (yes, prices do go up from time to time), contact your mortgage company to start the process of removing the PMI.
- Get your books from the library. I love books and read every day. While I buy some of the books I read, most come from the library. Simply put, it’s hard to beat free.
- Get DVDs from the library. Many libraries now have movies on DVD that can be checked out. If your library offers this service, it sure beats paying Blockbuster or Netflix.
- Get DVDs from Red Box. If your library doesn’t offer DVDs, get your moves from Red Box. It costs just one dollar per night. You find Red Box locations here. Netflix is also a great, low cost and convenient alternative.
- Read magazines at the library or online. Too many magazines can cost a fortune. And how many times have you bought a magazine based on the cover and been disappointed by the lack of substance. At the library you can read magazines for free. And many magazines now offer their content for free online.
- Subscribe to magazines that are must reads. If you must have a certain magazine each month, subscribe. Subscriptions offer substantial savings over the cost at the newsstand. Update: Amazon offers some great deals on personal finance magazines.
- Buy your car over the internet: Search the internet for information on the car you want and then send e-mail requests to dealers for the best price. Even if the dealer is located in another state, the cost to have the car delivered may still be worth it. I paid $500 to have a Honda Odyssey shipped 500 miles and still saved $1,000 over the best local price available.
- Request a discount on trash service. For some reason this is a highly competitive business. If you get a better offer in the mail for trash service, call your current trash company and ask them to beat the offer. My trash service has reduced its rates twice in six months to match competing offers.
- Never pay checking account fees. I hate bank fees. With so many free checking account plans available, there’s no reason to pay a fee. And if the bank happens to charge you one, ask them to reverse the fee or take your business to another bank.
- Get a rewards card. There are many reward cards that pay out in cash or points that can be redeemed for travel or products. Many of these cards don’t have an annual fee. I recently traveled to my college reunion for free using points earned from a credit card. My favorite rewards card is American Express Gold Card. It does have an annual fee, although follow this link (American Express) to apply and the first year fee is waived. You can also check out my review of several travel reward credit cards.
- Don’t pay interest on credit cards. This is obvious, but I soon as you fail to pay off the credit card in full, the high interest payments start to eat away at your monthly budget. If the temptation to spend more than you can pay on a credit card is to great, get rid of the credit card (and ignore the previous tip!).
- Take advantage of 0% credit card offers. I’ve saved thousands of dollars using 0% balance transfer credit cards. Again, as long as the cards won’t cause you to spend more, they can offer substantial savings. Make sure, however, that you keep an eye on the balance transfer fee, which can wipe out your savings.
- Replace incandescent bulbs with compact fluorescent light (CFLs) bulbs. These bulbs use 75% less energy and last 10 times longer. They do take some getting used to, and they won’t work in every light fixture. But use them where it makes sense and save energy and money.
- Drive your car longer. The buy new versus used debate often overlooks the most important factor–how long you own your car. Drive it as long as you safely can for substantial savings.
- Pay your life insurance annually. Insurance companies charge you more if you pay monthly, quarterly or semi-annually. Pay once a year and you’ll pay less.
- Pay car insurance semi-annually. At least with my car insurance, they offer quarterly and semi-annual payment options. It costs more to pay quarterly, and twice a year is more convenient anyway.
- Increase insurance deductibles. Most of us don’t need to be insured for all losses over $100 on our car, for example. Although we wouldn’t want to pay a $250 or even $500 deductible, we could. If that’s you, find out how much you’d save from raising your deductible. I’ve raised my deductibles on my auto insurance and home owner’s insurance and saved a considerable amount.
- Think before submitting an insurance claim. My rule of thumb is that I won’t submit a claim on a loss that is less than twice my deductible. So for a $250 deductible on an auto loss, I’ll pay out of pocket any loss up to $500. Why? The $250 I’d receive from my insurance company is not worth the increased premiums I’m likely to pay. You may want to call your insurance agent to find out how a claim will impact your premiums before filing the claim.
- Get rid of your home telephone. This is a great way to save money. Many don’t do it because of the 911 service, and that’s understandable. But if you�re comfortable relying on a cell phone, there’s no reason to keep a land line. If you do, consider reducing your service to the minimum and only use the phone in an emergency.
- Consider VOiP telephone service. We use Internet phone service and have saved substantial money over Verizon service. The phone service has been very reliable, and you’d never even know the signal was being carried over the Internet. Phone Power is a great option for internet telephone service, which costs as little as $9.95 a month.
- Shut vents in unused rooms. This isn’t advisable if you have forced air heating, but shutting vents in unused rooms can save on your heating and cooling bill.
- Eliminate some cable service. Note that I’m not recommending getting rid of cable completely, although that’s certainly a way to save money. If you must have cable, take a look at all the charges on your cable bill and consider getting rid of some of the service. Try it for a month and see if you really miss those last 500 channels.
- Agree to limit gift giving. At Christmas our extended family and we go overboard when it comes to gift giving. Agree in advance to limit the gifts and save everybody some money.
- Get healthy. Your health will directly impact the cost of life insurance and, in some cases, can reduce the cost of your health insurance.
- Cancel the health club membership. Seems to contradict the previous tip, but evaluate how much you really use your health club. Less expensive options may include a gym at your work or a gym at your local parks and recreation center. Some offer pay as you go options rather than monthly fees, which can be great for those of us who aren’t as consistent in our routines as we’d like to be.
- Pass on extended warranties. A $129 two year extension on a $300 product is just not worth it. Warranties are insurance, and we rarely need to insure such a small amount.
- Take your lunch to work one more day a week than you do now. Eating out at lunch is fun, so I wouldn’t eliminate it completely. But taking lunch just one more day a week will keep money in your pocket.
- Buy low cost mutual funds. This is easy to miss because the money doesn’t come out of your pocket each month. But keep an eye on the cost of the mutual funds in your 401(k) and other investments. My rule of thumb is that no fund should cost more than 1% and the combined cost for all your funds should be less than 0.50%. If you don’t believe that even a half percent can make a big difference, read this.
- Take advantage of employer 401(k) matches. If your employer matches 401(k) contributions, do everything you can to take full advantage of that match.
- Use flexible spending accounts. FSAs allow you to pay certain medical, dental and child care expenses using pre-tax dollars. If your not taking advantage of these accounts, you’re wasting money. Enrollment at many companies is occurring now, so check with your HR department if you have any questions about FSAs.
- Get tires from Costco or other wholesale clubs. Simply put, they cost a lot less than buying them at the dealer or even a chain tire store.
- Keep tires properly inflated. It keeps you safe and costs less on gas.
Stop smoking. Need I say more? - Drink less alcohol. It costs money and ads calories.
- Buy term life insurance. Any other life insurance product is just not worth the extra cost.
- Buy generic over-the-counter medicines. They are exactly the same as their branded counterparts and cost less.
- Get organized and avoid missed payments. I’ve missed a payment or two because the bill got buried beneath a stack of papers.
- Get organized and avoid those late payment penalties. If you do miss a payment, call your creditor and ask to have the penalty removed. They’ll usually accommodate the request, at least the first time.
- Buy online when it saves you money. I’ve used Amazon to buy more than just books. It sells just about anything and sometimes at substantial savings.
- Consider MythTV PVR in replace of TiVo type services. I just ran across MythTV and am still investigating it. I pay $15 a month to my cable company for a DVR box and would love to save the money. If you’ve used MythTV, let us know how well it works. You can get more information about MythTV here.
- Use Open Source software when possible. I use GIMP instead of Photoshop. GIMP is free; Photoshop ain’t.
- Check the insulation in your home. Extra insulation can easily pay for itself in one or two years, and it helps save the environment, too.
- Buy energy efficient appliances. Look for the Energy Star on appliances and consider the annual energy cost before buying. More efficient appliances cost more, but you make up the extra cost and then some over the life of the product.
- Stay married. Yes, I did say 51 “painless” money-saving tips. Yes, I know that some marriages end because of abuse and other extreme circumstances. “Isn’t marriage about love”, you ask. Sometimes. “You don’t know my situation”, you say. True. But I lived through the emotional and financial pain of two divorces as a child, and I’ve been married to the same women for more than 19 years, so I know plenty. Am I telling you not to get a divorce? Of course not. I am telling you that divorce will wreck your finances and your spouse’s finances.
Wednesday, February 4, 2009
How to save yourself from recession
By Jagz
We all know that the world economy is not moving in a good way for quite some time now. Many of us are getting laid off and losing our jobs. We have to face this. It is a fact that we are diving into recession and need to find ways to save ourselves.
Stephen Gandel, Money Magazine senior writer discussed his view point almost 10 months back. He is quite optimistic in his post that the recession would not last long and the economy, especially US economy will bounce back but says “Keep yourself safe should the hard times stick around”.
Here are the few steps you can take to save yourself from recession. These are just short and snappy points but following these will surely save many of us.
1. Be brave: It is true that the things are in quite bad shape now and almost all of the economic gurus are saying that this recession is going to be bad. Many of us will find our friends losing their jobs or getting some nasty salary cuts. This is bound to happen and is law of economy. Recession is part of cycle and no one can stop it. Since it is a cycle, the things will become better again. All you have to do is to be tough and brave and this time will also be past.
2. Hold your job tight: You were one of those heroes who always had a strong grip on their job equation? You had the power to draw your own graph? Those good old days are over, at least for now. You are no more boss of your boss but now he has his powers back. Make sure you do not get into the issues which makes him unhappy. Try to give out your best and do not think what you are getting, just focus your mind on what you are giving The better is your output, more chances you will remain on your seat. Remember that there are many waiting outside your office for a vacancy.
3. Save Save Save: The time is over when you used to max out credit limits and never gave a second thought before making an expensive purchase. Save whatever possible. Minimum 10% of your pay should be saved in all conditions. You have always been told to save for the rainy days. Now it is raining heavily and it is going to rain for some time. Make a check list of your monthly expenses. There is no way you are going to eat less but you can always save on the big expenses you make. Cut on your apartment rent by downsizing on it. Even car can be downsized. Postpone your expensive dinners and your favourite addictions.
4. Take advantage of the good side: In recession the bank interests will go down. Try to pay as much debit as you can in this period. It is easy to say than done, but the smart ones will convert this down time into an opportunity. The share prices of companies are all time low. Make some good and wise investments. If you keep yourself strong, you will be at the top at the end of the day. You will have a better position in your company, better bank balance and lesser competition alive.
We all know that the world economy is not moving in a good way for quite some time now. Many of us are getting laid off and losing our jobs. We have to face this. It is a fact that we are diving into recession and need to find ways to save ourselves.
Stephen Gandel, Money Magazine senior writer discussed his view point almost 10 months back. He is quite optimistic in his post that the recession would not last long and the economy, especially US economy will bounce back but says “Keep yourself safe should the hard times stick around”.
Here are the few steps you can take to save yourself from recession. These are just short and snappy points but following these will surely save many of us.
1. Be brave: It is true that the things are in quite bad shape now and almost all of the economic gurus are saying that this recession is going to be bad. Many of us will find our friends losing their jobs or getting some nasty salary cuts. This is bound to happen and is law of economy. Recession is part of cycle and no one can stop it. Since it is a cycle, the things will become better again. All you have to do is to be tough and brave and this time will also be past.
2. Hold your job tight: You were one of those heroes who always had a strong grip on their job equation? You had the power to draw your own graph? Those good old days are over, at least for now. You are no more boss of your boss but now he has his powers back. Make sure you do not get into the issues which makes him unhappy. Try to give out your best and do not think what you are getting, just focus your mind on what you are giving The better is your output, more chances you will remain on your seat. Remember that there are many waiting outside your office for a vacancy.
3. Save Save Save: The time is over when you used to max out credit limits and never gave a second thought before making an expensive purchase. Save whatever possible. Minimum 10% of your pay should be saved in all conditions. You have always been told to save for the rainy days. Now it is raining heavily and it is going to rain for some time. Make a check list of your monthly expenses. There is no way you are going to eat less but you can always save on the big expenses you make. Cut on your apartment rent by downsizing on it. Even car can be downsized. Postpone your expensive dinners and your favourite addictions.
4. Take advantage of the good side: In recession the bank interests will go down. Try to pay as much debit as you can in this period. It is easy to say than done, but the smart ones will convert this down time into an opportunity. The share prices of companies are all time low. Make some good and wise investments. If you keep yourself strong, you will be at the top at the end of the day. You will have a better position in your company, better bank balance and lesser competition alive.
Sunday, February 1, 2009
100 Ways To Save Money During A Recession
By Recession Tips
1. Write it down.
2. Make a budget.
3. Pay yourself first.
4. Examine your monthly debits.
5. Be realistic about your cable television needs.
6. Ditch the land line.
7. Get an unlimited text messaging plan.
8. Talk to your spouse and/or children about your economic situation.
9. Shop with a list and stick to it.
10. Use coupon codes when shopping online.
11. Make day trips close to home instead of going on an extravagant vacation.
12. Develop a “prison workout.”
13. Buy a coffeemaker.
14. Drink lots of water.
15. If you’re a man, cut your own hair.
16. If you’re single, use an online dating service.
17. Wake up early.
18. Press “Mute” during commercials.
19. Sleep on it.
20. Avoid “convenience” stores.
21. Unless you drive a Ferrari, don’t buy premium gasoline.
22. Reduce your stress.
23. Clean out your closets and your garage.
24. Bring your lunch.
25. Pay more than the minimum credit card payment each month.
26. Pay off your high interest rate credit cards before low interest rate cards.
27. Bathe and brush your own pet.
28. Develop a charity plan.
29. Eat at restaurants on special occasions only.
30. Never sign up for store credit cards.
31. Be smart about who you let into your inbox.
32. Use your public library.
33. Have a snack and drink a large glass of water before going shopping.
34. Get a Netflix membership.
35. Use movie theater outings for special occasions only.
36. If you have pets, find a veterinarian who offers free ancillary care.
37. If you don’t drink, never “split the check” with people who do.
38. Take digital photos and store them on your computer.
39. Always carry an energy bar.
40. Use a water filter.
41. If you are single, go for a walk on your first dates.
42. Never use ATM’s that charge a fee.
43. Forget about picking stocks.
44. Buy store-brand trash bags.
45. Join a professional association.
46. Buy your clothing from outlet stores.
47. Never borrow money to pay for food, utilities or clothing.
48. If your employer matches 401k contributions, contribute (at minimum) the percentage they match.
49. Stay away from the freezer aisle.
50. Go outside for some fresh air and sunlight.
51. Call your credit card companies and ask them to lower your rates.
52. Buy dessert at the grocery store.
53. Become familiar with all of the benefits offered by your employer and use them.
54. Cancel your newspaper and magazine subscriptions.
55. Don’t leave your job until you have another one lined up.
56. Never buy anything located near the checkout counter.
57. Don’t use your checking account overdraft protection as a regular line of credit.
58. Trade babysitting nights with a friend or neighbor.
59. Ask for discounts on products and services.
60. Sleep for eight hours each night.
61. If you can’t pay all of your taxes, set up an installment plan.
62. Monitor your credit.
63. Avoid checking account overdraft and credit card over limit fees.
64. Use store discount cards.
65. Pay your bills on time.
66. If you’re signing up for a monthly service, ask for any setup fees to be waived.
67. If you can’t pay a bill, call your creditor and ask to work out a payment plan.
68. Ask your boss whether layoffs are planned at your company.
69. Open your mail.
70. Use dollar-cost averaging to invest in an index fund.
71. Trade in your booze and cigarettes for a gym membership.
72. If you have cable television, skip the HDTV purchase.
73. Never take an early withdrawal from your retirement account.
74. Take public transportation when possible.
75. If you have to drive to work, set up a carpool.
76. Buy generic prescription medication when available.
77. Use coupons for grocery shopping.
78. Don’t exceed the posted speed limit.
79. Consider public school for your kids.
80. Beware of phone/cable/internet bundles.
81. Turn down the heat.
82. Avoid flagship shopping districts.
83. Forget about keeping up with the Joneses.
84. Before making a large purchase, calculate how many hours of work it takes for you to make that much money.
85. Instead of giving a birthday or Christmas gift, write a heartfelt letter to someone.
86. Don’t buy lottery tickets.
87. Use positive self-talk to attract wealth and income.
88. If you work for someone else, start a side business.
89. Beware of the grocery shrink ray
90. Know how much you and your time are worth.
91. If you are single, do not get involved in any way with a spendthrift.
92. If you need to purchase an expensive item, bring competitors’ advertisements with you to the store.
93. Don’t read catalogs (even for fun).
94. Don’t lend money to your friends.
95. Don’t “invest” in “get rich quick” programs.
96. No one needs 50 pairs of shoes.
97. Do not go to Las Vegas or Atlantic City (or anywhere else where gambling is legal).
98. Diversify your sources of income.
99. Live like your parents lived.
100. Don’t go it alone.
1. Write it down.
2. Make a budget.
3. Pay yourself first.
4. Examine your monthly debits.
5. Be realistic about your cable television needs.
6. Ditch the land line.
7. Get an unlimited text messaging plan.
8. Talk to your spouse and/or children about your economic situation.
9. Shop with a list and stick to it.
10. Use coupon codes when shopping online.
11. Make day trips close to home instead of going on an extravagant vacation.
12. Develop a “prison workout.”
13. Buy a coffeemaker.
14. Drink lots of water.
15. If you’re a man, cut your own hair.
16. If you’re single, use an online dating service.
17. Wake up early.
18. Press “Mute” during commercials.
19. Sleep on it.
20. Avoid “convenience” stores.
21. Unless you drive a Ferrari, don’t buy premium gasoline.
22. Reduce your stress.
23. Clean out your closets and your garage.
24. Bring your lunch.
25. Pay more than the minimum credit card payment each month.
26. Pay off your high interest rate credit cards before low interest rate cards.
27. Bathe and brush your own pet.
28. Develop a charity plan.
29. Eat at restaurants on special occasions only.
30. Never sign up for store credit cards.
31. Be smart about who you let into your inbox.
32. Use your public library.
33. Have a snack and drink a large glass of water before going shopping.
34. Get a Netflix membership.
35. Use movie theater outings for special occasions only.
36. If you have pets, find a veterinarian who offers free ancillary care.
37. If you don’t drink, never “split the check” with people who do.
38. Take digital photos and store them on your computer.
39. Always carry an energy bar.
40. Use a water filter.
41. If you are single, go for a walk on your first dates.
42. Never use ATM’s that charge a fee.
43. Forget about picking stocks.
44. Buy store-brand trash bags.
45. Join a professional association.
46. Buy your clothing from outlet stores.
47. Never borrow money to pay for food, utilities or clothing.
48. If your employer matches 401k contributions, contribute (at minimum) the percentage they match.
49. Stay away from the freezer aisle.
50. Go outside for some fresh air and sunlight.
51. Call your credit card companies and ask them to lower your rates.
52. Buy dessert at the grocery store.
53. Become familiar with all of the benefits offered by your employer and use them.
54. Cancel your newspaper and magazine subscriptions.
55. Don’t leave your job until you have another one lined up.
56. Never buy anything located near the checkout counter.
57. Don’t use your checking account overdraft protection as a regular line of credit.
58. Trade babysitting nights with a friend or neighbor.
59. Ask for discounts on products and services.
60. Sleep for eight hours each night.
61. If you can’t pay all of your taxes, set up an installment plan.
62. Monitor your credit.
63. Avoid checking account overdraft and credit card over limit fees.
64. Use store discount cards.
65. Pay your bills on time.
66. If you’re signing up for a monthly service, ask for any setup fees to be waived.
67. If you can’t pay a bill, call your creditor and ask to work out a payment plan.
68. Ask your boss whether layoffs are planned at your company.
69. Open your mail.
70. Use dollar-cost averaging to invest in an index fund.
71. Trade in your booze and cigarettes for a gym membership.
72. If you have cable television, skip the HDTV purchase.
73. Never take an early withdrawal from your retirement account.
74. Take public transportation when possible.
75. If you have to drive to work, set up a carpool.
76. Buy generic prescription medication when available.
77. Use coupons for grocery shopping.
78. Don’t exceed the posted speed limit.
79. Consider public school for your kids.
80. Beware of phone/cable/internet bundles.
81. Turn down the heat.
82. Avoid flagship shopping districts.
83. Forget about keeping up with the Joneses.
84. Before making a large purchase, calculate how many hours of work it takes for you to make that much money.
85. Instead of giving a birthday or Christmas gift, write a heartfelt letter to someone.
86. Don’t buy lottery tickets.
87. Use positive self-talk to attract wealth and income.
88. If you work for someone else, start a side business.
89. Beware of the grocery shrink ray
90. Know how much you and your time are worth.
91. If you are single, do not get involved in any way with a spendthrift.
92. If you need to purchase an expensive item, bring competitors’ advertisements with you to the store.
93. Don’t read catalogs (even for fun).
94. Don’t lend money to your friends.
95. Don’t “invest” in “get rich quick” programs.
96. No one needs 50 pairs of shoes.
97. Do not go to Las Vegas or Atlantic City (or anywhere else where gambling is legal).
98. Diversify your sources of income.
99. Live like your parents lived.
100. Don’t go it alone.
Thursday, January 29, 2009
29 Ways to Save More Money During The Recession
Not sure how you'll survive the current economic crisis? Stick to these 29 money basics and you'll thrive anytime.
By Beth Kobliner
The financial gurus will be debating for years how we got into the mess we're in-and how we'll get out of it. But while the talking heads are talking, you'd like to know how to shore up your resources so you won't have to worry about every little hiccup in the stock market. Here are time-tested strategies you can master—how to spend less, reduce your debt, make the most of your tax breaks, and finance your retirement. The idea, says William Speciale, a Boston-based adviser with the financial planning firm Calibre, is to focus on what you can control: "Little steps can really make a huge difference."
Taxes
Forget the short form. Most taxpayers-65 percent of us, to be specific-just take the standard deduction. But you may save money by itemizing your deductible expenses. It doesn't matter if you use an online program (like turbotax.intuit.com or completetax.com), a current tax guide, or a storefront preparer. Out-of-pocket health care charges, business expenses (including some for job searches), and charitable donations are just a few of the items you may be able to deduct. Fill out the long form, known as the 1040, and compare numbers. If your total deductions are greater than $5,450 (the standard deduction for 2008 for a single person) or $10,900 (for a married couple filing jointly), you'll save money by itemizing when you file.
Your kids should file a tax return. The Internal Revenue Service (IRS) doesn't care how old they are. If they earn more than $5,450 in a given year (in wages and/or interest income), they have to file-even if you claim them as dependents. And if they make less than that, they should still file because they'll get back all the money their employer withheld. Help them fill out the paperwork. It's a great learning experience that may earn them some extra cash.
Avoid a tax refund. You may feel giddy knowing you'll get a check from the IRS this spring, but you shouldn't. Getting money back means you're essentially lending money, interest free, to the government for the year. Better to have that cash in your account than lend it to Uncle Sam. So if you've been getting big refunds or have had a big life change (a marriage, a baby, a divorce, a radical increase or decrease in income), adjust the withholding allowances on your W-4 form. You can do that for your 2009 taxes now at irs.gov. Use the withholding calculator to determine the correct figure for you. Then print a new W-4, fill it out, and give it to your payroll department.
Avoid "rapid refund" programs. Sure, they sound great. After all, what can be better than getting your money fast? A tax-prep chain might try to get you to agree to one of these "instant" or "anticipation" options. Don't take the bait. This is not your refund. It's a loan—and a very high-interest loan at that. The average for 2008 was 123 percent. If you file electronically, even if it's through a tax chain, the IRS will deposit your refund directly into your bank account within a week or two.
Checking and Savings
Make sure your free checking is really free. A lot of banks advertise it, but read the fine print. If the minimum balance is steep-thousands of dollars, in some cases—look for a bank with no minimum requirement. This could save $100 a year or more. Bankrate.com is a good site for comparing accounts. (And don't waste $2 on ATM withdrawals at another bank's machines.)
Bank online. You'll be surprised how easy it is to pay bills, transfer funds, save automatically, and keep track of it all. In fact, gathering records at tax time will be a cinch. And by setting up the automatic bill-payment option, you'll help protect your credit score. Banking online is actually safer than banking at a brick-and-mortar institution. Banks have spent a fortune to make sure their sites are among the most secure on the Internet. Besides, most cases of identity theft happen the old-fashioned way—by crooks who raid your mailbox.
Keep your money in supersafe places. Aim to amass at least six months of emergency expenses, in case you lose your job or become disabled. Where's the best place to keep it? FDIC-insured bank savings, CD, and money market accounts are still three of the most secure places. (The government recently increased the limit it will insure to $250,000 per account until December 31, 2009.) Money market funds that invest in Treasury bills are supersafe, too, but low yielding. Internet banks and credit unions tend to pay higher interest rates, but go to fdic.gov and check to make sure they offer the same government-insured guarantee. Look into Series I bonds, or I bonds, which are just as safe and are guaranteed to keep up with inflation. They're also free from state and local taxes (and possibly federal tax, if you use them for college costs). The downside? You can't redeem them for at least a year. And if you cash them in before five years, there's a small penalty. Other savings options, including corporate and tax-exempt money market funds, are a bit riskier. Compare yields at cranedata.us.
Debt
Cut up your extra credit cards. But don't close the accounts. Yes, it's smart to reduce your temptation to splurge by destroying your cards. But if you actually cancel them, it could hurt your credit rating. Here's why: Lenders worry about how close you are to using all the credit available to you. If you close an account, you lose its credit line. As a result, you are using a greater portion of the reduced amount you can now borrow. How many cards do you need? While the average American household has nine, two or three active cards should be plenty.
Pay your bills on time. A single late payment means that you could pay a much higher interest rate on any future loans and on your existing credit card accounts. That's because even one missed payment can lower your credit score by as much as 100 points. That plunge means that lenders view you as a risky customer. If you're shopping around for a mortgage, you could end up paying as much as a full percentage point more. That's an increase that could ultimately cost you tens of thousands of dollars in interest. Set up automatic payments to make sure you're never late on your major bills. The sooner you can show lenders you're back on track, the better.
Pay $10 more each month. Most American households keep their credit balances at around $2,000, but about 10 to 15 percent carry balances that are $9,000 or higher. If you paid the minimum $224 required on that $9,000 balance each month, it would take you 31 years and over $13,000 in interest to pay it off. Increasing your payment by just $10 a month, to $234, until you've paid off the balance would save you $8,900. And you'd get rid of the debt in five years. (To check your own balances, try the calculator at bankrate.com.)
Put your savings to work. Many people who are deep in debt usually have some savings stashed in a bank account. They argue that they don't want to use their hard-earned savings to pay off debt. But do the math: It would make sense to keep the money in savings only if the bank is paying you an interest rate higher than the one your credit cards charge. Paying off a card with an interest rate of 13 percent is the equivalent of earning 13 percent interest on your money after taxes. There are no savings or investment options with that kind of guarantee. Experts caution that you still want to keep emergency cash on hand. A good rule is to take 5 percent of your paycheck to pay off debt and put an additional 5 percent into savings.
Pay more on your mortgage. You may have heard that because the interest is tax deductible, a mortgage is a good debt. But even if you're getting a tax break, you're still paying interest—and the longer you've had the mortgage, the smaller the tax break (because you pay less interest each year). As with all debt, paying it off sooner is better. So once you've paid off your credit cards and other high-rate debt, go ahead and add an extra payment each year (or spread it out over 12 months). If you do that over the life of a 30-year fixed loan with a rate of 6 percent, you'll shave roughly 20 percent off the total interest you pay. On a $150,000 mortgage, that means saving about $26,000.
Reduce your credit card interest rate. It may be time to get nervy with the credit card companies. If you pay your bill on time and your credit card company still raises your rates or lowers your limits, call the company's toll-free number (ask for the retention department) and explain that you're thinking of taking your business elsewhere. You may reap a rate reduction. No matter what you've heard about the current credit crunch, banks are still motivated to keep good customers. And check your accounts often. These days, banks are increasing rates even on good customers.
Get your credit report for free. You're entitled to one free report from each of the three credit bureaus (Experian, TransUnion, and Equifax) every year. Beware, though. Many sites advertising "free credit reports" are actually fronts for companies trying to sell you services—credit monitoring, debt consolidation, credit repair-most of which you don't need. The reports are free, but you'll be automatically signed up and billed for these products. Get your reports from annualcreditreport.com, which is sponsored by the three bureaus and the Federal Trade Commission. You can purchase extras on this site, too, but just stick with the free reports. If you want to see your credit scores (a numerical representation of how good a credit risk you are), you'll have to pay $48 at myfico.com.
Insurance
Shop around for car insurance. An online search and a few phone calls can turn up vastly different rates in the same area. You'll also want to ask about lesser-known breaks. For example, even if your kids are grown and out of the house, they might be able to get a substantial discount if they insure their cars through the company you use. One place to start is carinsurance.com. Once you've found the best rate, ask your insurance agent if he or she can match it.
Sign up for an FSA. Many employers offer flexible spending accounts as a way to set aside part of your salary for health care and child-care costs. You can pay for everything from Band-Aids to orthodontic work with pretax money, which translates into a discount of about 30 percent or more, depending on your tax bracket. But plan carefully. If you don't use all the money in your account within the year (at many companies, you have until March 15 of the following year to submit receipts), you lose whatever's left.
Keep grown kids on your health insurance policy. If you're going to end up lending (or giving) your children money for coverage, it's much cheaper to keep them on your policy as long as possible. In some states, you can do this until they are 26, whether they're still in school or not. (New Jersey will give you until they turn 30.) Some states require proof that they are single, without children, and that they live in the same state as you. For the rules where you live, go to statecoverage.net. Even if your state doesn't mandate extended coverage, your plan might, so call your human resources department for details.
Hold off on that long-term-care insurance. The soaring cost of extended nursing care has prompted many people in their 40s and 50s to sign up for long-term-care insurance in order to lock in a rate. It's true that the premiums go up as you get older, but not by the huge amount you might expect. According to data collected by America's Health Insurance Plans, a 65-year-old may end up paying just $126 more a year than someone who bought a policy at age 55. During those ten years, that person would spend close to $19,000 on coverage, even though he or she probably won't need it until age 83 or so (if at all). Depending on your health, the best time to buy is between 60 and 65. Until then, make retirement savings the priority, not long-term-care insurance.
Sign up for disability insurance. It helps protect your income in the event you become unable to work for a long period. Ideally, you should have enough to replace 60 to 70 percent of your salary. If your company plan doesn't provide this much coverage, consider buying more on your own. It can be costly, but it's worth it if you can afford it. Visit affordableinsuranceprotection.com or unum.com for quotes.
Think twice about life insurance. If you don't have dependents, you may not need it. If you do have kids or other dependents, you're probably better off with term life insurance until, say, your children are grown and can take care of themselves. It's generally less expensive than whole-life or other types of policies that build up value until you die or cash them in. Agents will tell you that whole-life insurance is a good investment because your money builds up tax-free, but these policies often have very high fees. You're better off putting that money toward your 401(k) and IRA instead. To comparison shop for term life policies, try term4sale.com.
Write your will. Although no one likes to think about dying, you need to. A will doesn't have to be a fancy contract that teams of lawyers slave over. It's just a written record of whom you want to entrust your kids and assets to when you die. You can write one using a simple boilerplate form and then sign it in the presence of witnesses (usually two people who aren't named in the will). The legal publishing company Nolo has a good template and instructions you can download for less than $25. (These templates are valid in all states except Louisiana. Of course, if your situation is complicated or you'd like a professional to look it over, consult an attorney. You can search for lawyers by state at actec.org.) You'll also want to make sure all the beneficiaries on your life insurance policies and bank and retirement accounts are up-to-date.
Retirement
Contribute to your company's 401(k). If your company matches funds, sign up. This will be the best investment you can possibly make. Typically, a company will kick in 50 cents for every dollar you save, up to 6 percent of your salary. That's the equivalent of earning an immediate 50 percent return-a rate you can't get anywhere. Yet incredibly, one in three American workers who are eligible isn't taking full advantage of it. With the matching funds, you can more than double the size of your 401(k) in 20 years, even if the stock market remains flat. For a family making $44,000, your contribution may cost you as little as $30 a week, money you won't even miss after a while.
Put retirement savings ahead of college savings. This sounds crazy to parents who need to come up with tuition money well before it's time to retire. But because of the tax breaks and the flexibility of retirement accounts, you're much better off contributing to a 401(k) or an IRA and taking out loans for college. Many people don't realize that the contributions you put in Roth IRAs can be withdrawn free of penalties at any time. That's very different from the college savings plans, called 529s, that smack you with a significant penalty if the money is not used for college. Another plus: Most schools don't count money in your retirement accounts when assessing how much financial aid they'll offer you. (For more detailed advice, check out Kalman Chany's book, Paying for College Without Going Broke.) Once you've saved the maximum amount that the government allows in your retirement accounts, then research 529 plans at savingforcollege.com.
Say no to company stock. Think of Lehman Brothers, Bear Stearns, and Enron. All were once on top, but when they went under, many employees were left without jobs and with retirement accounts that were overloaded with worthless company stock. You already have a huge stake in the company because you depend on it for your paycheck. Don't risk your retirement money as well. If your employer offers company stock as a 401(k) option, don't take it. If you get company stock as part of your matching-funds plan, sell it as soon as you're allowed to and switch that money into some other type of investment. Ask your HR representative for details.
Don't worry about Social Security. You've probably heard the dire predictions that anyone younger than 35 can't expect to collect Social Security. Even in bleak economic scenarios, though, Social Security will probably pay you 65 to 80 percent of your currently promised benefits. And with some fairly modest changes—like raising the retirement age or increasing payroll taxes for anyone earning more than $250,000 annually-the system can be shored up for decades to come. Make sure you're saving enough so you don't have to count on the program for your entire retirement income.
Stay away from individual stocks. In spite of what you may hear from your cousin the broker, buying the stock of a single company is generally not wise. It's essentially putting all your eggs in one basket-and paying broker fees that could eat up your earnings. In fact, you don't really need a broker. Instead of buying individual stocks, invest directly in mutual funds, which spread your dollars among a group of stocks. It's usually safer, cheaper, and simpler. But remember, you should do this only with money you can invest long term and can afford to lose in the short term.
Stick with index funds. You'll want to go with a special type of mutual fund called an index fund, which buys a little piece of each of the companies that make up established market benchmarks like the S&P 500. One of the best-kept secrets of investing is that in the long run, index funds perform at least as well as the funds that charge high fees and have a professional stock picker making the choices. And how are index funds doing these days? As of early December, they had actually lost less than the average stock fund run by the so-called experts. For a list of low-cost index funds, go to vanguard.com or fidelity.com.
Don't buy investment products from your bank. Banks sell a wide range of mutual funds, annuities, and individual stocks and bonds. These aren't FDIC-insured, and they tend to be more expensive than what you could get elsewhere because banks usually charge high sales commissions. Buy directly from mutual fund companies instead. Go with companies like Vanguard or Fidelity, which charge low fees and no commissions.
Build a portfolio. The rule of thumb is to put 50 percent of your long-term savings in stocks and 30 percent in bonds and keep 20 percent available in cash (that means in a savings or money market account where you can withdraw it at a moment's notice). In tough times especially, getting the right mix will depend on the risk you're willing to take and how soon you'll need your money. Stocks are generally more risky than bonds, but there are exceptions. For example, bonds issued by companies that are in questionable financial health-called junk bonds or, more euphemistically, high-yield bonds are a lot riskier than, say, stock in utility companies. Financialengines.com, which charges about $40 for a three-month subscription, is a great site for calculating the right mix.
Bonus
TipTake care of your health. Eat right, exercise, and get plenty of sleep. Says Rutgers finance professor Barbara O'Neill, "The last thing you want in a financial crisis is huge medical bills."
Keep Your Money Safe
Supersafe
***
Learn More
A clip-and-save guide to the sites in this feature.
Taxes
By Beth Kobliner
The financial gurus will be debating for years how we got into the mess we're in-and how we'll get out of it. But while the talking heads are talking, you'd like to know how to shore up your resources so you won't have to worry about every little hiccup in the stock market. Here are time-tested strategies you can master—how to spend less, reduce your debt, make the most of your tax breaks, and finance your retirement. The idea, says William Speciale, a Boston-based adviser with the financial planning firm Calibre, is to focus on what you can control: "Little steps can really make a huge difference."
Taxes
Forget the short form. Most taxpayers-65 percent of us, to be specific-just take the standard deduction. But you may save money by itemizing your deductible expenses. It doesn't matter if you use an online program (like turbotax.intuit.com or completetax.com), a current tax guide, or a storefront preparer. Out-of-pocket health care charges, business expenses (including some for job searches), and charitable donations are just a few of the items you may be able to deduct. Fill out the long form, known as the 1040, and compare numbers. If your total deductions are greater than $5,450 (the standard deduction for 2008 for a single person) or $10,900 (for a married couple filing jointly), you'll save money by itemizing when you file.
Your kids should file a tax return. The Internal Revenue Service (IRS) doesn't care how old they are. If they earn more than $5,450 in a given year (in wages and/or interest income), they have to file-even if you claim them as dependents. And if they make less than that, they should still file because they'll get back all the money their employer withheld. Help them fill out the paperwork. It's a great learning experience that may earn them some extra cash.
Avoid a tax refund. You may feel giddy knowing you'll get a check from the IRS this spring, but you shouldn't. Getting money back means you're essentially lending money, interest free, to the government for the year. Better to have that cash in your account than lend it to Uncle Sam. So if you've been getting big refunds or have had a big life change (a marriage, a baby, a divorce, a radical increase or decrease in income), adjust the withholding allowances on your W-4 form. You can do that for your 2009 taxes now at irs.gov. Use the withholding calculator to determine the correct figure for you. Then print a new W-4, fill it out, and give it to your payroll department.
Avoid "rapid refund" programs. Sure, they sound great. After all, what can be better than getting your money fast? A tax-prep chain might try to get you to agree to one of these "instant" or "anticipation" options. Don't take the bait. This is not your refund. It's a loan—and a very high-interest loan at that. The average for 2008 was 123 percent. If you file electronically, even if it's through a tax chain, the IRS will deposit your refund directly into your bank account within a week or two.
Checking and Savings
Make sure your free checking is really free. A lot of banks advertise it, but read the fine print. If the minimum balance is steep-thousands of dollars, in some cases—look for a bank with no minimum requirement. This could save $100 a year or more. Bankrate.com is a good site for comparing accounts. (And don't waste $2 on ATM withdrawals at another bank's machines.)
Bank online. You'll be surprised how easy it is to pay bills, transfer funds, save automatically, and keep track of it all. In fact, gathering records at tax time will be a cinch. And by setting up the automatic bill-payment option, you'll help protect your credit score. Banking online is actually safer than banking at a brick-and-mortar institution. Banks have spent a fortune to make sure their sites are among the most secure on the Internet. Besides, most cases of identity theft happen the old-fashioned way—by crooks who raid your mailbox.
Keep your money in supersafe places. Aim to amass at least six months of emergency expenses, in case you lose your job or become disabled. Where's the best place to keep it? FDIC-insured bank savings, CD, and money market accounts are still three of the most secure places. (The government recently increased the limit it will insure to $250,000 per account until December 31, 2009.) Money market funds that invest in Treasury bills are supersafe, too, but low yielding. Internet banks and credit unions tend to pay higher interest rates, but go to fdic.gov and check to make sure they offer the same government-insured guarantee. Look into Series I bonds, or I bonds, which are just as safe and are guaranteed to keep up with inflation. They're also free from state and local taxes (and possibly federal tax, if you use them for college costs). The downside? You can't redeem them for at least a year. And if you cash them in before five years, there's a small penalty. Other savings options, including corporate and tax-exempt money market funds, are a bit riskier. Compare yields at cranedata.us.
Debt
Cut up your extra credit cards. But don't close the accounts. Yes, it's smart to reduce your temptation to splurge by destroying your cards. But if you actually cancel them, it could hurt your credit rating. Here's why: Lenders worry about how close you are to using all the credit available to you. If you close an account, you lose its credit line. As a result, you are using a greater portion of the reduced amount you can now borrow. How many cards do you need? While the average American household has nine, two or three active cards should be plenty.
Pay your bills on time. A single late payment means that you could pay a much higher interest rate on any future loans and on your existing credit card accounts. That's because even one missed payment can lower your credit score by as much as 100 points. That plunge means that lenders view you as a risky customer. If you're shopping around for a mortgage, you could end up paying as much as a full percentage point more. That's an increase that could ultimately cost you tens of thousands of dollars in interest. Set up automatic payments to make sure you're never late on your major bills. The sooner you can show lenders you're back on track, the better.
Pay $10 more each month. Most American households keep their credit balances at around $2,000, but about 10 to 15 percent carry balances that are $9,000 or higher. If you paid the minimum $224 required on that $9,000 balance each month, it would take you 31 years and over $13,000 in interest to pay it off. Increasing your payment by just $10 a month, to $234, until you've paid off the balance would save you $8,900. And you'd get rid of the debt in five years. (To check your own balances, try the calculator at bankrate.com.)
Put your savings to work. Many people who are deep in debt usually have some savings stashed in a bank account. They argue that they don't want to use their hard-earned savings to pay off debt. But do the math: It would make sense to keep the money in savings only if the bank is paying you an interest rate higher than the one your credit cards charge. Paying off a card with an interest rate of 13 percent is the equivalent of earning 13 percent interest on your money after taxes. There are no savings or investment options with that kind of guarantee. Experts caution that you still want to keep emergency cash on hand. A good rule is to take 5 percent of your paycheck to pay off debt and put an additional 5 percent into savings.
Pay more on your mortgage. You may have heard that because the interest is tax deductible, a mortgage is a good debt. But even if you're getting a tax break, you're still paying interest—and the longer you've had the mortgage, the smaller the tax break (because you pay less interest each year). As with all debt, paying it off sooner is better. So once you've paid off your credit cards and other high-rate debt, go ahead and add an extra payment each year (or spread it out over 12 months). If you do that over the life of a 30-year fixed loan with a rate of 6 percent, you'll shave roughly 20 percent off the total interest you pay. On a $150,000 mortgage, that means saving about $26,000.
Reduce your credit card interest rate. It may be time to get nervy with the credit card companies. If you pay your bill on time and your credit card company still raises your rates or lowers your limits, call the company's toll-free number (ask for the retention department) and explain that you're thinking of taking your business elsewhere. You may reap a rate reduction. No matter what you've heard about the current credit crunch, banks are still motivated to keep good customers. And check your accounts often. These days, banks are increasing rates even on good customers.
Get your credit report for free. You're entitled to one free report from each of the three credit bureaus (Experian, TransUnion, and Equifax) every year. Beware, though. Many sites advertising "free credit reports" are actually fronts for companies trying to sell you services—credit monitoring, debt consolidation, credit repair-most of which you don't need. The reports are free, but you'll be automatically signed up and billed for these products. Get your reports from annualcreditreport.com, which is sponsored by the three bureaus and the Federal Trade Commission. You can purchase extras on this site, too, but just stick with the free reports. If you want to see your credit scores (a numerical representation of how good a credit risk you are), you'll have to pay $48 at myfico.com.
Insurance
Shop around for car insurance. An online search and a few phone calls can turn up vastly different rates in the same area. You'll also want to ask about lesser-known breaks. For example, even if your kids are grown and out of the house, they might be able to get a substantial discount if they insure their cars through the company you use. One place to start is carinsurance.com. Once you've found the best rate, ask your insurance agent if he or she can match it.
Sign up for an FSA. Many employers offer flexible spending accounts as a way to set aside part of your salary for health care and child-care costs. You can pay for everything from Band-Aids to orthodontic work with pretax money, which translates into a discount of about 30 percent or more, depending on your tax bracket. But plan carefully. If you don't use all the money in your account within the year (at many companies, you have until March 15 of the following year to submit receipts), you lose whatever's left.
Keep grown kids on your health insurance policy. If you're going to end up lending (or giving) your children money for coverage, it's much cheaper to keep them on your policy as long as possible. In some states, you can do this until they are 26, whether they're still in school or not. (New Jersey will give you until they turn 30.) Some states require proof that they are single, without children, and that they live in the same state as you. For the rules where you live, go to statecoverage.net. Even if your state doesn't mandate extended coverage, your plan might, so call your human resources department for details.
Hold off on that long-term-care insurance. The soaring cost of extended nursing care has prompted many people in their 40s and 50s to sign up for long-term-care insurance in order to lock in a rate. It's true that the premiums go up as you get older, but not by the huge amount you might expect. According to data collected by America's Health Insurance Plans, a 65-year-old may end up paying just $126 more a year than someone who bought a policy at age 55. During those ten years, that person would spend close to $19,000 on coverage, even though he or she probably won't need it until age 83 or so (if at all). Depending on your health, the best time to buy is between 60 and 65. Until then, make retirement savings the priority, not long-term-care insurance.
Sign up for disability insurance. It helps protect your income in the event you become unable to work for a long period. Ideally, you should have enough to replace 60 to 70 percent of your salary. If your company plan doesn't provide this much coverage, consider buying more on your own. It can be costly, but it's worth it if you can afford it. Visit affordableinsuranceprotection.com or unum.com for quotes.
Think twice about life insurance. If you don't have dependents, you may not need it. If you do have kids or other dependents, you're probably better off with term life insurance until, say, your children are grown and can take care of themselves. It's generally less expensive than whole-life or other types of policies that build up value until you die or cash them in. Agents will tell you that whole-life insurance is a good investment because your money builds up tax-free, but these policies often have very high fees. You're better off putting that money toward your 401(k) and IRA instead. To comparison shop for term life policies, try term4sale.com.
Write your will. Although no one likes to think about dying, you need to. A will doesn't have to be a fancy contract that teams of lawyers slave over. It's just a written record of whom you want to entrust your kids and assets to when you die. You can write one using a simple boilerplate form and then sign it in the presence of witnesses (usually two people who aren't named in the will). The legal publishing company Nolo has a good template and instructions you can download for less than $25. (These templates are valid in all states except Louisiana. Of course, if your situation is complicated or you'd like a professional to look it over, consult an attorney. You can search for lawyers by state at actec.org.) You'll also want to make sure all the beneficiaries on your life insurance policies and bank and retirement accounts are up-to-date.
Retirement
Contribute to your company's 401(k). If your company matches funds, sign up. This will be the best investment you can possibly make. Typically, a company will kick in 50 cents for every dollar you save, up to 6 percent of your salary. That's the equivalent of earning an immediate 50 percent return-a rate you can't get anywhere. Yet incredibly, one in three American workers who are eligible isn't taking full advantage of it. With the matching funds, you can more than double the size of your 401(k) in 20 years, even if the stock market remains flat. For a family making $44,000, your contribution may cost you as little as $30 a week, money you won't even miss after a while.
Put retirement savings ahead of college savings. This sounds crazy to parents who need to come up with tuition money well before it's time to retire. But because of the tax breaks and the flexibility of retirement accounts, you're much better off contributing to a 401(k) or an IRA and taking out loans for college. Many people don't realize that the contributions you put in Roth IRAs can be withdrawn free of penalties at any time. That's very different from the college savings plans, called 529s, that smack you with a significant penalty if the money is not used for college. Another plus: Most schools don't count money in your retirement accounts when assessing how much financial aid they'll offer you. (For more detailed advice, check out Kalman Chany's book, Paying for College Without Going Broke.) Once you've saved the maximum amount that the government allows in your retirement accounts, then research 529 plans at savingforcollege.com.
Say no to company stock. Think of Lehman Brothers, Bear Stearns, and Enron. All were once on top, but when they went under, many employees were left without jobs and with retirement accounts that were overloaded with worthless company stock. You already have a huge stake in the company because you depend on it for your paycheck. Don't risk your retirement money as well. If your employer offers company stock as a 401(k) option, don't take it. If you get company stock as part of your matching-funds plan, sell it as soon as you're allowed to and switch that money into some other type of investment. Ask your HR representative for details.
Don't worry about Social Security. You've probably heard the dire predictions that anyone younger than 35 can't expect to collect Social Security. Even in bleak economic scenarios, though, Social Security will probably pay you 65 to 80 percent of your currently promised benefits. And with some fairly modest changes—like raising the retirement age or increasing payroll taxes for anyone earning more than $250,000 annually-the system can be shored up for decades to come. Make sure you're saving enough so you don't have to count on the program for your entire retirement income.
Stay away from individual stocks. In spite of what you may hear from your cousin the broker, buying the stock of a single company is generally not wise. It's essentially putting all your eggs in one basket-and paying broker fees that could eat up your earnings. In fact, you don't really need a broker. Instead of buying individual stocks, invest directly in mutual funds, which spread your dollars among a group of stocks. It's usually safer, cheaper, and simpler. But remember, you should do this only with money you can invest long term and can afford to lose in the short term.
Stick with index funds. You'll want to go with a special type of mutual fund called an index fund, which buys a little piece of each of the companies that make up established market benchmarks like the S&P 500. One of the best-kept secrets of investing is that in the long run, index funds perform at least as well as the funds that charge high fees and have a professional stock picker making the choices. And how are index funds doing these days? As of early December, they had actually lost less than the average stock fund run by the so-called experts. For a list of low-cost index funds, go to vanguard.com or fidelity.com.
Don't buy investment products from your bank. Banks sell a wide range of mutual funds, annuities, and individual stocks and bonds. These aren't FDIC-insured, and they tend to be more expensive than what you could get elsewhere because banks usually charge high sales commissions. Buy directly from mutual fund companies instead. Go with companies like Vanguard or Fidelity, which charge low fees and no commissions.
Build a portfolio. The rule of thumb is to put 50 percent of your long-term savings in stocks and 30 percent in bonds and keep 20 percent available in cash (that means in a savings or money market account where you can withdraw it at a moment's notice). In tough times especially, getting the right mix will depend on the risk you're willing to take and how soon you'll need your money. Stocks are generally more risky than bonds, but there are exceptions. For example, bonds issued by companies that are in questionable financial health-called junk bonds or, more euphemistically, high-yield bonds are a lot riskier than, say, stock in utility companies. Financialengines.com, which charges about $40 for a three-month subscription, is a great site for calculating the right mix.
Bonus
TipTake care of your health. Eat right, exercise, and get plenty of sleep. Says Rutgers finance professor Barbara O'Neill, "The last thing you want in a financial crisis is huge medical bills."
Keep Your Money Safe
Supersafe
- FDIC-insured bank savings, CD, and money market accounts
- FDIC-insured credit unions
- Series I bonds
- Money market funds that invest in Treasury bills
Somewhat Riskier: Corporate and tax-exempt money market mutual funds
Riskiest: Bank investment products not FDIC-insured Individual stocks***
Learn More
A clip-and-save guide to the sites in this feature.
Taxes
- irs.gov: Calculate withholding, track refunds.
- turbotax.intuit.com and completetax.com: Tax-prep software.
Checking and Savings
- bankrate.com: Compare accounts.
- cranedata.us: Compare yields on investment accounts.
- fdic.gov: Determine whether your bank is FDIC-insured.
Debt
- annualcreditreport.com: For your free annual credit report.
- myfico.com: For your numerical credit score.
Insurance
- actec.org: Search for an attorney to write or review a will.
- affordableinsuranceprotection.com and unum.com: For rate quotes on disability insurance.
- carinsurance.com: Compare rates.
- nolo.com: For templates and instructions on writing a will.
- statecoverage.net: For the specifics on health coverage in your state.
- term4sale.com: Compare term life insurance policies.
Retirement
- fidelity.com and
- vanguard.com: Low-fee, no-commission index funds.
- financialengines.com: Determine the right mix of stocks and bonds.
- savingforcollege.com: Research college plans.
From Reader's Digest
Monday, January 26, 2009
10 Popular Myths that the Credit Bureaus want you to believe
This is a very interesting read about 10 popular myths concerning your credit report by David Ruocco, who is a veteran and expert in the mortgage industry.
In today’s credit tightened environment only about 60% of people qualify for a mortgage based on their current FICO score. That is a far cry from 18 months ago when seemingly everyone qualified. As such, improving and maintaining a good credit score is even more important during these times, and not just because you may want to buy a house someday.
Maintaining good credit scores are important for auto loans, credit cards, short terms loans, utility bills, or even screening for certain jobs. Relax… fixing your credit report may not be as difficult as you may think. Here are a few myths to consider:
Myth No. 1 – It is easy to dispute a credit report. Consumer’s can resolve their own issues.
To be honest, it is simple to challenge a credit report. However, as an everyday person, it’s amazingly difficult and frustrating to get results from the credit bureaus. Here’s why.
This is a little-known fact. More complaints to the Federal Trade Commission involve credit bureaus than any other type of company. The major credit bureaus have paid fines of $2.5 million over the years due to failure to respond properly to charges.
The main objective of credit bureaus is to protect their profits. They are NOT government agencies. They are for profit organizations. Anytime they have to investigate a consumer disputes it eats into those profits. Investigations take up time and energy too. The credit bureaus do everything in their power to make restoring your credit exceedingly difficult, short of sparking more massive lawsuits.
Attempting to restore your own credit means you must be willing to spend time learning about the process. This is why it is so difficult when you are inexperienced. It most cases you may be less effective than if you hired a professional. Realize that credit restoration will most likely take longer than you expected.
Myth No. 2 –A negative item that is successfully removed from your credit report will simply reappear again.
The reality is that a creditor has 30 days to verify a dispute. If the credit bureau has not heard from the creditor within that time frame, they must delete the item from your report. Sometimes the bureaus will perform a soft delete. This is where they delete the item from your report but, will reinsert the item if they hear from the creditor within a week or two of the 30 days.
If this happens, the item can be disputed again. However, most of the time, once an item is deleted, it is gone for good. By using our preferred attorney’s, you can be sure your item will be disputed over and over again until it is removed. We have experienced a 96% success rate with this.
Myth No. 3 – Bankruptcies, foreclosures and tax liens can never be taken off your credit report.
Approached correctly, any negative listing can be removed. That is why it is best to work with a professional. They have the experience and know how to remove these items.
Myth No. 4 – The credit agency permits a 100-word paragraph to be entered on an account to explain the situation. Creditor’s take this statement into consideration when they’re weighing they’re options about extending credit.
This seems reasonable, but it’s not correct. When we talk about creditors, we’re talking about companies who are loaning money – for credit cards, mortgages, cars, department store credit cards. Very few of these companies will consider any information you submit in a paragraph explanation. The only items verified on the statement are the negative items on your report.
The first thing we want to delete from your credit file would be the 100-word explanation. In essence, the explanation is seen as an admission of guilt. It’s actually the last thing you want to do. It verifies that something happened. You don’t want to do that.
Myth No. 5 – Paying off a past-due account (like a collection account or a charge off) will change your account to a “paid” status and it will no longer reflect negatively.
It is nearly impossible to completely fix your credit unless you settle your unpaid debts. However, as strange as it may sound, paying off a debt can have a negative impact on your credit rating. Aside from bankruptcy, which can appear on your credit report for up to ten years, negative items may be kept on your report for up to seven years. The date of last activity starts the 7 or 10-year time period. Making a payment “resets” the clock because it is considered new activity. So if this item was two years old, when you make a payment on the collection, the two years are wiped away and you start at day one again. It appears to the credit scoring computer as an item that happened yesterday.
Anything that happened yesterday affects your credit score more than something from two years ago does. This will damage your report, as it looks like the credit bureau forced you to pay up. Since you can do more harm than good, even though your intentions are right, it is always best to work with a professional when trying to restore your credit.
Myth No. 6 – Some people believe that a poor credit report can be off-set by building new credit.
Even one negative item on your credit report can have serious negative consequences. In today’s computer world, the decision to approve a new loan is rarely made by a human being. Your score is determined by a computer program. One negative item can send interest rates soaring.
You can have a small amount of negative credit a year or two ago. The last year or two has been great. A couple of those older accounts, regardless of how much good credit you now have, can cause you to be declined for additional credit, make you pay higher interest rates and waste thousands of your hard earned dollars.
Myth No. 7 – Credit bureaus are part of the government and are unquestionable.
The credit bureaus are in business to make an impression on their stockholders since they are publicly traded companies. They are NOT agencies of the government. In fact, the industry is one of the most heavily regulated. It has recently been revealed in a survey, by an independent group, that over 70% of all credit reports have an error on them. Due to the prevalence of mistakes, consumer protection legislation has been drawn up which allows the consumer the right to challenge the bureaus and force them to remove any incorrect data, information that is out-of-date or data that cannot be verified.
Myth No. 8 – It is against the law for creditors to remove a negative-listing on my credit record. Negative-listings are required by law to remain on the credit report for at least seven years.
When talking to collection agencies, credit grantors or the credit bureaus, keep in mind that you can expect to be given all kinds of quasi-legal drivel by people who are over worked and under trained. The law states that negative information must be removed after seven years. It sets a maximum, but not a minimum. The credit bureau can remove an item whenever it suits them.
Myth No. 9 – Many people share a belief that by getting a federal tax ID or altering a few numbers of their social security number, a new credit file will be created.
It’s extremely difficult to create a new credit file by this scheming, not to mention illegal, activity. A lot of people do it, but a lot of people also get into big trouble for doing it. This is not something that you want to do.
It might have worked 10, 15 or 20 years ago. But because of all the computer linking systems now, giving fraudulent information on a credit report is nearly impossible to get away with, let alone the fact that it’s a criminal offense.
It’s in your best interest to hire adequate representation. Face the music and confront the credit bureaus, armed with the rights that Congress has granted you through the consumer protection laws.
Myth No. 10 – Credit counseling services can help you restore your credit.
Credit counseling services are agencies that are set up to help you renegotiate your credit cards and other debt. They put you on a budget and you make one payment to them. They in turn pay all the bills for you.
People who are in debt or who are trying to avoid going bankrupt can seek help from these nonprofit consumer credit counseling services. (CCCS’s) However, these companies are controlled and funded by the credit bureaus and the credit grantors, like the big credit card companies. They actually fund these agencies.
Your creditors will usually make a note on your credit report if you’re working with one of these consumer credit counseling services. Potential credit grantors are scared off by this almost as much as a Chapter 13 bankruptcy. Some of the worst credit reports out there have been participants in a credit counseling service or similar program.
Want to learn more about taking control of your credit report? Then take a look at this very informative video; http://www.35minutevideo.com/.
Dave Ruocco is a loan officer with Apex Lending Inc and specializes in helping release his clients from the “credit prison” that too many people find themselves in. When you or one of your friends finds yourself needing real answers and real solutions to credit issues, you can confidentially contact him at 305-669-1704 or at druocco@apexlending.com. Visit his website at http://www.flmortgageresources.com/clb-credit
In today’s credit tightened environment only about 60% of people qualify for a mortgage based on their current FICO score. That is a far cry from 18 months ago when seemingly everyone qualified. As such, improving and maintaining a good credit score is even more important during these times, and not just because you may want to buy a house someday.
Maintaining good credit scores are important for auto loans, credit cards, short terms loans, utility bills, or even screening for certain jobs. Relax… fixing your credit report may not be as difficult as you may think. Here are a few myths to consider:
Myth No. 1 – It is easy to dispute a credit report. Consumer’s can resolve their own issues.
To be honest, it is simple to challenge a credit report. However, as an everyday person, it’s amazingly difficult and frustrating to get results from the credit bureaus. Here’s why.
This is a little-known fact. More complaints to the Federal Trade Commission involve credit bureaus than any other type of company. The major credit bureaus have paid fines of $2.5 million over the years due to failure to respond properly to charges.
The main objective of credit bureaus is to protect their profits. They are NOT government agencies. They are for profit organizations. Anytime they have to investigate a consumer disputes it eats into those profits. Investigations take up time and energy too. The credit bureaus do everything in their power to make restoring your credit exceedingly difficult, short of sparking more massive lawsuits.
Attempting to restore your own credit means you must be willing to spend time learning about the process. This is why it is so difficult when you are inexperienced. It most cases you may be less effective than if you hired a professional. Realize that credit restoration will most likely take longer than you expected.
Myth No. 2 –A negative item that is successfully removed from your credit report will simply reappear again.
The reality is that a creditor has 30 days to verify a dispute. If the credit bureau has not heard from the creditor within that time frame, they must delete the item from your report. Sometimes the bureaus will perform a soft delete. This is where they delete the item from your report but, will reinsert the item if they hear from the creditor within a week or two of the 30 days.
If this happens, the item can be disputed again. However, most of the time, once an item is deleted, it is gone for good. By using our preferred attorney’s, you can be sure your item will be disputed over and over again until it is removed. We have experienced a 96% success rate with this.
Myth No. 3 – Bankruptcies, foreclosures and tax liens can never be taken off your credit report.
Approached correctly, any negative listing can be removed. That is why it is best to work with a professional. They have the experience and know how to remove these items.
Myth No. 4 – The credit agency permits a 100-word paragraph to be entered on an account to explain the situation. Creditor’s take this statement into consideration when they’re weighing they’re options about extending credit.
This seems reasonable, but it’s not correct. When we talk about creditors, we’re talking about companies who are loaning money – for credit cards, mortgages, cars, department store credit cards. Very few of these companies will consider any information you submit in a paragraph explanation. The only items verified on the statement are the negative items on your report.
The first thing we want to delete from your credit file would be the 100-word explanation. In essence, the explanation is seen as an admission of guilt. It’s actually the last thing you want to do. It verifies that something happened. You don’t want to do that.
Myth No. 5 – Paying off a past-due account (like a collection account or a charge off) will change your account to a “paid” status and it will no longer reflect negatively.
It is nearly impossible to completely fix your credit unless you settle your unpaid debts. However, as strange as it may sound, paying off a debt can have a negative impact on your credit rating. Aside from bankruptcy, which can appear on your credit report for up to ten years, negative items may be kept on your report for up to seven years. The date of last activity starts the 7 or 10-year time period. Making a payment “resets” the clock because it is considered new activity. So if this item was two years old, when you make a payment on the collection, the two years are wiped away and you start at day one again. It appears to the credit scoring computer as an item that happened yesterday.
Anything that happened yesterday affects your credit score more than something from two years ago does. This will damage your report, as it looks like the credit bureau forced you to pay up. Since you can do more harm than good, even though your intentions are right, it is always best to work with a professional when trying to restore your credit.
Myth No. 6 – Some people believe that a poor credit report can be off-set by building new credit.
Even one negative item on your credit report can have serious negative consequences. In today’s computer world, the decision to approve a new loan is rarely made by a human being. Your score is determined by a computer program. One negative item can send interest rates soaring.
You can have a small amount of negative credit a year or two ago. The last year or two has been great. A couple of those older accounts, regardless of how much good credit you now have, can cause you to be declined for additional credit, make you pay higher interest rates and waste thousands of your hard earned dollars.
Myth No. 7 – Credit bureaus are part of the government and are unquestionable.
The credit bureaus are in business to make an impression on their stockholders since they are publicly traded companies. They are NOT agencies of the government. In fact, the industry is one of the most heavily regulated. It has recently been revealed in a survey, by an independent group, that over 70% of all credit reports have an error on them. Due to the prevalence of mistakes, consumer protection legislation has been drawn up which allows the consumer the right to challenge the bureaus and force them to remove any incorrect data, information that is out-of-date or data that cannot be verified.
Myth No. 8 – It is against the law for creditors to remove a negative-listing on my credit record. Negative-listings are required by law to remain on the credit report for at least seven years.
When talking to collection agencies, credit grantors or the credit bureaus, keep in mind that you can expect to be given all kinds of quasi-legal drivel by people who are over worked and under trained. The law states that negative information must be removed after seven years. It sets a maximum, but not a minimum. The credit bureau can remove an item whenever it suits them.
Myth No. 9 – Many people share a belief that by getting a federal tax ID or altering a few numbers of their social security number, a new credit file will be created.
It’s extremely difficult to create a new credit file by this scheming, not to mention illegal, activity. A lot of people do it, but a lot of people also get into big trouble for doing it. This is not something that you want to do.
It might have worked 10, 15 or 20 years ago. But because of all the computer linking systems now, giving fraudulent information on a credit report is nearly impossible to get away with, let alone the fact that it’s a criminal offense.
It’s in your best interest to hire adequate representation. Face the music and confront the credit bureaus, armed with the rights that Congress has granted you through the consumer protection laws.
Myth No. 10 – Credit counseling services can help you restore your credit.
Credit counseling services are agencies that are set up to help you renegotiate your credit cards and other debt. They put you on a budget and you make one payment to them. They in turn pay all the bills for you.
People who are in debt or who are trying to avoid going bankrupt can seek help from these nonprofit consumer credit counseling services. (CCCS’s) However, these companies are controlled and funded by the credit bureaus and the credit grantors, like the big credit card companies. They actually fund these agencies.
Your creditors will usually make a note on your credit report if you’re working with one of these consumer credit counseling services. Potential credit grantors are scared off by this almost as much as a Chapter 13 bankruptcy. Some of the worst credit reports out there have been participants in a credit counseling service or similar program.
Want to learn more about taking control of your credit report? Then take a look at this very informative video; http://www.35minutevideo.com/.
Dave Ruocco is a loan officer with Apex Lending Inc and specializes in helping release his clients from the “credit prison” that too many people find themselves in. When you or one of your friends finds yourself needing real answers and real solutions to credit issues, you can confidentially contact him at 305-669-1704 or at druocco@apexlending.com. Visit his website at http://www.flmortgageresources.com/clb-credit
Friday, January 23, 2009
50 Ways to Save Money during a Recession
By Cheap Lee
Let’s face it. An economic crisis is no time to have money troubles. But, most of us can’t help it. We work hard and try to live the life we want. Sometimes the cards are not dealt in our favor. Even if we have picked up some personal finance lessons along the way, we still seem stuck in mud. We have become blind sighted by our current economic crisis, and need to adjust our situation to live as frugally as possible in order to make what we have last.
Now we may not be able to sell our SUV or home in the next month or two, but there are some alternative ideas to help cushion the economic blow to your wallet.
1 – Buy generic versus brands. Branded items, like Cheerios, Charmin, Christian Dior, are so ingrained in our conscious as superior that we forget that other items exist. Unfortunately, we also forget the impact on our wallets. By starting to buy generic items we can start to see savings of $25 or more on a shop
2 – Rethink entertainment. Instead of buying $10 a piece movie tickets or spending $5 at the video store, consider joining Netflix, where you can download free movies to your computer or get several movies delivered to your door for the cost of less than two movies tickets, or consider other forms of cheap entertainment. $40 a month
3 – Downsize the dinner options. It feels almost luxurious to go out for dinner, knowing others have prepared a delicious meal so you don’t have to. And it may seem one meal won’t kill you but saving $10 by eating at home or skipping the $5 appetizers or saving $5 on tips with counter service can easily add up to $200 to $300 for the entire month.
4 – Dump cable TV. I have eliminated cable a long time ago, and just rely on Internet service. Not having TV may seem hard at first, but the result has been a life changer for me. I am more creative, like writing this blog, and have more free time to pursue the things I want to do. For $50 of savings a month, I can make it without the boob tube.
5 – Re-examine insurance. While health insurance for some is a must have, there are supplementary insurance you might pay that may not have a pressing need at this moment. Talk to your insurance professional to see what costs can be reduced or eliminated.
6 – Kid’s allowance. Don’t let them push you around. Yes, you want to give them the best, but in order to genuinely secure a better future for them, determine what is important to them now and what is important to their future.
7 – Electricity. During the summers and winters, this bill can get mighty large. Call your local utility company and ask them what steps you can take to cut your electricity bill. Switching to CFC bulbs (twirly bulbs) is a good start, but more of your electric bill will come from A/C, heat, hot water, the dryer and that new plasma TV you bought.
8 - Credit Cards. You can’t stop making credit card payments, but at least you can call them to negotiate better rates. Use some of the credit card offers to help negotiate a better rate. $20-$40 or more a month on $10,000 balance
9 – Carpooling/Telecommuting/Bike or Walk to work – All these options can equate to saving a weekly $50 tank of gas, reduce wear and tear, and decrease potential maintenance costs.
10 – Cell versus home phone. Decide which is needed more and eliminate the other. If you can, I would consider eliminating the home phone because there are cheaper options like Skype for home telephone services. And if your phone company won’t give you Internet access without having local phone, give high-speed cable from your cable company a try. For the light computer users, trying going to a free WiFi area or the library, and get connected there.
11 - Ask the boss to go corporate casual or just casual. Wearing casual clothes may not only be more durable and last longer, but you can also skip the pricey dry cleaning bill
12 – Cancel Memberships. If you have gym memberships you don’t use or memberships to organizations you don’t go to, cancel them. Unless you use these types of memberships weekly and it helps you to focus or acts as a personal getaway, take the opportunity to consider alternatives, like jogging, biking, etc.
13 – Storage Facility? Do you have a storage facility that you use for your junk? Sell it and then cancel the storage unit. A recent WSJ article says people who use a facility with short-term intentions end up keeping them for 5 years. $100 month
14 – House cleaning/pool service/lawn service/pest control. Can you do any of these services on your own? Borrow a lawn mower or pool brush from your neighbor if you have too. $25 or more a month
15 – Sell your stuff. Unless it may be super valuable for eBay, have a garage sale or post your items on Craigslist. Sure you won’t get top dollar in this environment, but you may something
16 – Rent out a room. There are plenty of folks who need a simple place to stay, and renting out a room maybe a good short-term way to raise money. But before you do, I highly recommend preparing a few hurdles for any prospective tenant like a criminal check, a credit check and a rental history check, along with reading a few good books on renting out to a tenant or calling a licensed real estate agent for help. Without the right preparation and legal documents, this too becomes a legal or financial nightmare.
17 – Renegotiate your mortgage. You may or may not have any money you can refinance, but you can definitely talk to your bank or a mortgage broker about lowering your rate. Although you may incur additional costs, a lower rate may offset them if you can get a significant drop in your rate.
18 – Private versus Public School. If you are paying monthly for private school, you can either put your kid in public school or renegotiate a lower tuition based on your changing financial situation
19 – Beer/Colas/Coffees. These beverage items are the real cost killer when you add it up. Your $4 lattes, $4 beer or twice a day $2 soda or $2 bottled waters add up to $120 a month alone. Tap water is free and healthier for you.
20 – Use coupons. As goofy and “grandma” as it sounds, clipping coupons still works. Sunday newspapers or popular coupon sites are still great sources for coupons.
21 – Change you supermarket. As recent Wall Street Journal article compared several well-known supermarkets chains to a Wal-Mart Supercenter on the exact same food items, and found Wal-Mart to be significantly cheaper. Savings: $15 or more on full grocery shop.
22 – Haircuts. While Supercuts and Hair Cuttery are a great start for cheap haircuts, I can usually find a local barber charging even less. Since they don’t need to pay royalty fees or franchise fees, they can charge a few bucks less. If you are brave enough to do it on your own, go for it.
23 – Dog food. It may be tempting to go for the cheaper brand, but changing a dog’s diet is not healthy for them. Instead, buy the “Costco” size and store in a cool, dry and bug free place.
24 – Pet Medications. I use heartworm and flea medication every month for my dog, Rudy. I order from an Australian company, Petshed.com. They are cheaper for the flea medication and they also offer a generic medication for heartworm prevention. Here are also other things you can do for Fido.
25 – Skip Lotto. In tough times, more people play the lotto lowering your odds of winning, which is pretty low to begin with. If you must, once is enough.
26 – Dental Care. Teeth cleanings are a must, especially if I have to look at you. But taking properly taking care of your teeth will help to keep future costs and recommended visits down. Keep in mind; most times cleaning are done by the hygienist, not the dentist, so your costs shouldn’t be more than $50. I can usually find some specials in the local paper.
27 – Gift cards or cash, instead of gifts. Give a gift card instead of a gift, or better yet, give cash and avoid the transaction fee. You will keep yourself from spending more than you should. If you do decide to buy a gift card, make sure the gift cards aren’t store specific either. While Uncle Fred loves Home Depot, he may need to pay some bills or get food instead.
28 – Canceling certain newspapers. Think about canceling the daily paper, and just have the Sunday paper delivered. The Sunday newspaper can be a goldmine for coupons, and use the online version for the rest of the week.
29 – Downsize the department store. Target, Wal-Mart and other stores can offer substantial savings to those who are in need of clothes. You would be surprised what great stuff they have, but pay attention to those return policies. Goodwill or other consignment shops can also provide some valuable treasures. But, purchase only what you need. Cheap doesn’t mean free for all.
30 – Spend time with the kids. If you don’t spend time with the kids, they will want to spend time with their friends at the mall spending your money.
31 – Washer/Dryer. Use cold only for washing clothes, and hang dry what you can. The hot water and the dryer can get pretty expensive to run.
32 – Electronics. Shut down your computer and unplug electronics when they are not in use. Surprisingly, electronics still drain electricity even when they are off. This includes cell phone chargers, too.
33 – Car Repairs. Having to repair your car when you are already tight on money is no fun. Here are some things I have done to bring down the cost: (1) most mechanics will offer a free diagnostic, (2) call at least 3 other mechanics with the specifics of the problem and ask for a quote on the labor (you’d be surprised the difference in price), (3) ask about using after market parts or bring your own parts and (4) don’t be forced into doing something you don’t want.
34 – Be aware of ATM fees. A recent trip to an ATM machine costs $3, plus what my bank charges me. Fortunately, I use a discount broker that covers this cost on both ends. If you are not so lucky, find convenient banks to where you normally get funds or just draw out a little more than usual and keep most hidden at home. Replenish as needed.
35 – Pricing out gas. Be cognizant of the differences in gas prices. While a penny may not make a difference, 20 cents for a 20 gallon tank saves $4 every time. Use Costco, Wal-Mart, and sites like Gas Price Watch to help spot the lowest cost stations.
36 – Need to do some traveling? Use price aggregators sites like Kayak or Trax.com (my favorite) to find lower fares for flights, hotels and car rentals.
37 – Negotiate. When was the last time you tried to negotiate on price? Start with smaller objects, and graduate to hotel rooms and other services or products you buy. If you talk to the right person, you can negotiate almost anything.
38 – Watch the “stupid” fees. These can come from returning videos late to overdrawing your balance to overdue books. Take a moment to figure out what you normally do wrong to cause fees and setup a simple system like using “Post Its” to correct your habits.
39 – Stop the Catalogs. Junk mail, like catalogs, can entice even the ever meager into a full-blown impulse purchase; get rid of the temptations.
40 – Quite Smoking. What a great reason to kick the habit! It costs too much, and your insurance premiums go up because of it.
41 – Re-examine last year’s taxes. If you have the time and gumption, there may have been a few deductions you may have missed. If they are large enough, the government may owe you money.
42 – Walk-In Clinic. For less serious emergencies or injuries, a Walk-In Clinic may offer the same service as a hospital with less cost. But first, see what the local clinic is able to do and not do. Then, take notice of their hours of operation so when an emergency comes up, you can make the right choice. Some pharmacy chains like CVS now have nurse practitioners who can diagnose and prescribe, at lower rates.
43 – Challenge your property assessment. Since the values of homes have gone down in the last few years, you may be able to challenge the city or county on your property taxes. Do some research to see if this is plausible, and then contact your municipality. Weigh your options.
44 – Moving can be a headache, but it doesn’t have to be expensive. You may want to consider alternatives like U-Haul, Penske or Budget Truck. Call all three and negotiate between them. Once a quote is secured, contact a local personnel service that specializes in manual labor to help with the move.
45 – Re-shop for car insurance and homeowner’s insurance. Consider switching carriers. I switched to Geico and didn’t have to change my deductible at all. I saved $40 a month. In addition, talk to your agent about alternatives to your current homeowner’s insurance.
46 – Larger grocery shops. Going to the grocery store once or twice a month will force you to buy only what you need and reduce your urge for impulse buys (outside of dairy, of course). Always make a list before you go.
47 – Use the library. Depending on your location, this can be a great place for books, DVDs and CDs. Some smaller libraries are able to broaden their reach and thereby your selection with other regional libraries. Keep that in mind to find more of what your want.
48 – Go on a diet. I am not talking about joining an expensive diet program, but check a few books out of the library and educate yourself. Diets usually mean less costly food, or sometimes just less food consumption in general, which translates to less out of your pocket.
49 – If you must buy something, use a site that compares prices, like Pricegrabber, Pricescan, Bizrate, Nextag, Shopping.com, eBay and Froogle. One neat site I like is Priceprotectr.com. This site helps you make sure you made a great deal by informing you if your item drops in price up to 30 days after purchase. Price adjustments are good not only for online items, but brick and motor retailers often offer adjustments for many items they sell like clothes or tools for a limited period of time.
50 – Try to fix it yourself first. I never started out being great a something, like fixing the computer, changing the spark plugs, or a number of other things I picked up along the way. But I surprise myself when I first learn how to do these things from a “How To” book or YouTube video. Obviously, you want to start small and simple to help build your skills and confidence. Whenever an opportunity presents itself, always take a moment to consider the possibility.
Let’s face it. An economic crisis is no time to have money troubles. But, most of us can’t help it. We work hard and try to live the life we want. Sometimes the cards are not dealt in our favor. Even if we have picked up some personal finance lessons along the way, we still seem stuck in mud. We have become blind sighted by our current economic crisis, and need to adjust our situation to live as frugally as possible in order to make what we have last.
Now we may not be able to sell our SUV or home in the next month or two, but there are some alternative ideas to help cushion the economic blow to your wallet.
1 – Buy generic versus brands. Branded items, like Cheerios, Charmin, Christian Dior, are so ingrained in our conscious as superior that we forget that other items exist. Unfortunately, we also forget the impact on our wallets. By starting to buy generic items we can start to see savings of $25 or more on a shop
2 – Rethink entertainment. Instead of buying $10 a piece movie tickets or spending $5 at the video store, consider joining Netflix, where you can download free movies to your computer or get several movies delivered to your door for the cost of less than two movies tickets, or consider other forms of cheap entertainment. $40 a month
3 – Downsize the dinner options. It feels almost luxurious to go out for dinner, knowing others have prepared a delicious meal so you don’t have to. And it may seem one meal won’t kill you but saving $10 by eating at home or skipping the $5 appetizers or saving $5 on tips with counter service can easily add up to $200 to $300 for the entire month.
4 – Dump cable TV. I have eliminated cable a long time ago, and just rely on Internet service. Not having TV may seem hard at first, but the result has been a life changer for me. I am more creative, like writing this blog, and have more free time to pursue the things I want to do. For $50 of savings a month, I can make it without the boob tube.
5 – Re-examine insurance. While health insurance for some is a must have, there are supplementary insurance you might pay that may not have a pressing need at this moment. Talk to your insurance professional to see what costs can be reduced or eliminated.
6 – Kid’s allowance. Don’t let them push you around. Yes, you want to give them the best, but in order to genuinely secure a better future for them, determine what is important to them now and what is important to their future.
7 – Electricity. During the summers and winters, this bill can get mighty large. Call your local utility company and ask them what steps you can take to cut your electricity bill. Switching to CFC bulbs (twirly bulbs) is a good start, but more of your electric bill will come from A/C, heat, hot water, the dryer and that new plasma TV you bought.
8 - Credit Cards. You can’t stop making credit card payments, but at least you can call them to negotiate better rates. Use some of the credit card offers to help negotiate a better rate. $20-$40 or more a month on $10,000 balance
9 – Carpooling/Telecommuting/Bike or Walk to work – All these options can equate to saving a weekly $50 tank of gas, reduce wear and tear, and decrease potential maintenance costs.
10 – Cell versus home phone. Decide which is needed more and eliminate the other. If you can, I would consider eliminating the home phone because there are cheaper options like Skype for home telephone services. And if your phone company won’t give you Internet access without having local phone, give high-speed cable from your cable company a try. For the light computer users, trying going to a free WiFi area or the library, and get connected there.
11 - Ask the boss to go corporate casual or just casual. Wearing casual clothes may not only be more durable and last longer, but you can also skip the pricey dry cleaning bill
12 – Cancel Memberships. If you have gym memberships you don’t use or memberships to organizations you don’t go to, cancel them. Unless you use these types of memberships weekly and it helps you to focus or acts as a personal getaway, take the opportunity to consider alternatives, like jogging, biking, etc.
13 – Storage Facility? Do you have a storage facility that you use for your junk? Sell it and then cancel the storage unit. A recent WSJ article says people who use a facility with short-term intentions end up keeping them for 5 years. $100 month
14 – House cleaning/pool service/lawn service/pest control. Can you do any of these services on your own? Borrow a lawn mower or pool brush from your neighbor if you have too. $25 or more a month
15 – Sell your stuff. Unless it may be super valuable for eBay, have a garage sale or post your items on Craigslist. Sure you won’t get top dollar in this environment, but you may something
16 – Rent out a room. There are plenty of folks who need a simple place to stay, and renting out a room maybe a good short-term way to raise money. But before you do, I highly recommend preparing a few hurdles for any prospective tenant like a criminal check, a credit check and a rental history check, along with reading a few good books on renting out to a tenant or calling a licensed real estate agent for help. Without the right preparation and legal documents, this too becomes a legal or financial nightmare.
17 – Renegotiate your mortgage. You may or may not have any money you can refinance, but you can definitely talk to your bank or a mortgage broker about lowering your rate. Although you may incur additional costs, a lower rate may offset them if you can get a significant drop in your rate.
18 – Private versus Public School. If you are paying monthly for private school, you can either put your kid in public school or renegotiate a lower tuition based on your changing financial situation
19 – Beer/Colas/Coffees. These beverage items are the real cost killer when you add it up. Your $4 lattes, $4 beer or twice a day $2 soda or $2 bottled waters add up to $120 a month alone. Tap water is free and healthier for you.
20 – Use coupons. As goofy and “grandma” as it sounds, clipping coupons still works. Sunday newspapers or popular coupon sites are still great sources for coupons.
21 – Change you supermarket. As recent Wall Street Journal article compared several well-known supermarkets chains to a Wal-Mart Supercenter on the exact same food items, and found Wal-Mart to be significantly cheaper. Savings: $15 or more on full grocery shop.
22 – Haircuts. While Supercuts and Hair Cuttery are a great start for cheap haircuts, I can usually find a local barber charging even less. Since they don’t need to pay royalty fees or franchise fees, they can charge a few bucks less. If you are brave enough to do it on your own, go for it.
23 – Dog food. It may be tempting to go for the cheaper brand, but changing a dog’s diet is not healthy for them. Instead, buy the “Costco” size and store in a cool, dry and bug free place.
24 – Pet Medications. I use heartworm and flea medication every month for my dog, Rudy. I order from an Australian company, Petshed.com. They are cheaper for the flea medication and they also offer a generic medication for heartworm prevention. Here are also other things you can do for Fido.
25 – Skip Lotto. In tough times, more people play the lotto lowering your odds of winning, which is pretty low to begin with. If you must, once is enough.
26 – Dental Care. Teeth cleanings are a must, especially if I have to look at you. But taking properly taking care of your teeth will help to keep future costs and recommended visits down. Keep in mind; most times cleaning are done by the hygienist, not the dentist, so your costs shouldn’t be more than $50. I can usually find some specials in the local paper.
27 – Gift cards or cash, instead of gifts. Give a gift card instead of a gift, or better yet, give cash and avoid the transaction fee. You will keep yourself from spending more than you should. If you do decide to buy a gift card, make sure the gift cards aren’t store specific either. While Uncle Fred loves Home Depot, he may need to pay some bills or get food instead.
28 – Canceling certain newspapers. Think about canceling the daily paper, and just have the Sunday paper delivered. The Sunday newspaper can be a goldmine for coupons, and use the online version for the rest of the week.
29 – Downsize the department store. Target, Wal-Mart and other stores can offer substantial savings to those who are in need of clothes. You would be surprised what great stuff they have, but pay attention to those return policies. Goodwill or other consignment shops can also provide some valuable treasures. But, purchase only what you need. Cheap doesn’t mean free for all.
30 – Spend time with the kids. If you don’t spend time with the kids, they will want to spend time with their friends at the mall spending your money.
31 – Washer/Dryer. Use cold only for washing clothes, and hang dry what you can. The hot water and the dryer can get pretty expensive to run.
32 – Electronics. Shut down your computer and unplug electronics when they are not in use. Surprisingly, electronics still drain electricity even when they are off. This includes cell phone chargers, too.
33 – Car Repairs. Having to repair your car when you are already tight on money is no fun. Here are some things I have done to bring down the cost: (1) most mechanics will offer a free diagnostic, (2) call at least 3 other mechanics with the specifics of the problem and ask for a quote on the labor (you’d be surprised the difference in price), (3) ask about using after market parts or bring your own parts and (4) don’t be forced into doing something you don’t want.
34 – Be aware of ATM fees. A recent trip to an ATM machine costs $3, plus what my bank charges me. Fortunately, I use a discount broker that covers this cost on both ends. If you are not so lucky, find convenient banks to where you normally get funds or just draw out a little more than usual and keep most hidden at home. Replenish as needed.
35 – Pricing out gas. Be cognizant of the differences in gas prices. While a penny may not make a difference, 20 cents for a 20 gallon tank saves $4 every time. Use Costco, Wal-Mart, and sites like Gas Price Watch to help spot the lowest cost stations.
36 – Need to do some traveling? Use price aggregators sites like Kayak or Trax.com (my favorite) to find lower fares for flights, hotels and car rentals.
37 – Negotiate. When was the last time you tried to negotiate on price? Start with smaller objects, and graduate to hotel rooms and other services or products you buy. If you talk to the right person, you can negotiate almost anything.
38 – Watch the “stupid” fees. These can come from returning videos late to overdrawing your balance to overdue books. Take a moment to figure out what you normally do wrong to cause fees and setup a simple system like using “Post Its” to correct your habits.
39 – Stop the Catalogs. Junk mail, like catalogs, can entice even the ever meager into a full-blown impulse purchase; get rid of the temptations.
40 – Quite Smoking. What a great reason to kick the habit! It costs too much, and your insurance premiums go up because of it.
41 – Re-examine last year’s taxes. If you have the time and gumption, there may have been a few deductions you may have missed. If they are large enough, the government may owe you money.
42 – Walk-In Clinic. For less serious emergencies or injuries, a Walk-In Clinic may offer the same service as a hospital with less cost. But first, see what the local clinic is able to do and not do. Then, take notice of their hours of operation so when an emergency comes up, you can make the right choice. Some pharmacy chains like CVS now have nurse practitioners who can diagnose and prescribe, at lower rates.
43 – Challenge your property assessment. Since the values of homes have gone down in the last few years, you may be able to challenge the city or county on your property taxes. Do some research to see if this is plausible, and then contact your municipality. Weigh your options.
44 – Moving can be a headache, but it doesn’t have to be expensive. You may want to consider alternatives like U-Haul, Penske or Budget Truck. Call all three and negotiate between them. Once a quote is secured, contact a local personnel service that specializes in manual labor to help with the move.
45 – Re-shop for car insurance and homeowner’s insurance. Consider switching carriers. I switched to Geico and didn’t have to change my deductible at all. I saved $40 a month. In addition, talk to your agent about alternatives to your current homeowner’s insurance.
46 – Larger grocery shops. Going to the grocery store once or twice a month will force you to buy only what you need and reduce your urge for impulse buys (outside of dairy, of course). Always make a list before you go.
47 – Use the library. Depending on your location, this can be a great place for books, DVDs and CDs. Some smaller libraries are able to broaden their reach and thereby your selection with other regional libraries. Keep that in mind to find more of what your want.
48 – Go on a diet. I am not talking about joining an expensive diet program, but check a few books out of the library and educate yourself. Diets usually mean less costly food, or sometimes just less food consumption in general, which translates to less out of your pocket.
49 – If you must buy something, use a site that compares prices, like Pricegrabber, Pricescan, Bizrate, Nextag, Shopping.com, eBay and Froogle. One neat site I like is Priceprotectr.com. This site helps you make sure you made a great deal by informing you if your item drops in price up to 30 days after purchase. Price adjustments are good not only for online items, but brick and motor retailers often offer adjustments for many items they sell like clothes or tools for a limited period of time.
50 – Try to fix it yourself first. I never started out being great a something, like fixing the computer, changing the spark plugs, or a number of other things I picked up along the way. But I surprise myself when I first learn how to do these things from a “How To” book or YouTube video. Obviously, you want to start small and simple to help build your skills and confidence. Whenever an opportunity presents itself, always take a moment to consider the possibility.
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