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“Why Can’t I stay On My Budget?

We don’t know of a single financial expert that wouldn’t advise people to make a budget and stay on it – assuming you’re not one of that fortunate 1%. In that case you’re probably not reading this article anyway so it doesn’t matter.

Why is it important to have a personal budget?

It’s basically for the same reason that every successful business has a budget in the form of a business plan. It’s because without a budget, it’s practically impossible to know where you stand financially and what will happen to you and your family in the future.

How did you arrive at your budget?

One of the principle reasons why people fail to stay on their budgets is because they didn’t budget correctly. Maybe they tried to make a budget too hastily and without doing the homework first. The first rule of budgeting is that you must know where your money’s going so that you will know how to allocate it in the future. The only real way to do this is to track your spending for at least a month and by this we mean all of your spending – right down to that candy bar you bought at work. After those 30 days you will need to divide your spending into categories. There are a zillion online sites where you can find a list of these categories but the major ones all tend to be the same – food, clothing, utilities, transportation, medical expenses, debt payments, entertainment and so forth.

If you need help making a budget, watch this video from Bank of America …

Your budget is too inflexible

If you’re having a really hard time staying on your budget the reason may be that it’s too inflexible. The best way to think of a budget is like a football team’s game plan. While the team’s coach might have a complete game plan in mind, he will watch the game as it unfolds and then make changes accordingly. If you’ve become discouraged because you’ve “busted” your budget in several categories, don’t give up. Review the amount of money you’ve allocated to each category and then make adjustments. You’ll probably find a category or two where you didn’t spend as much money as you had anticipated. Take the money out of those categories and assign it to the ones where you were unable to stay within your budget. The important thing is to review your budget regularly and then make corrections just as a ship’s captain will tack and jibe as the winds change.

You failed to set goals

Your budget doesn’t exist in a vacuum. If you’re unable to stay on your budget the reason might be that it’s not linked to your goals. What are your goals? Is your goal to retire early, buy a second home, sail around the world or pay for your kids’ education? Since the real purpose of a budget is to save money you need to ask yourself why you’re saving it. When you have goals your budget will help you make progress towards achieving them, which can keep you motivated to stay on your budget. What’s best is to have both short- and long-term goals. You could then see you’re making progress towards realizing a short-term goal without becoming discouraged because you don’t see you’re making much progress towards achieving a long-term goal – especially when things get tough. As an example of this it can be discouraging if your only goal is early retirement and you suffer a setback in your career and feel you’re not saving enough money to achieve it. But if you also had a short-term goal of taking a nice two-week vacation next year and you see you have almost enough money saved to pay for it, you might feel less discouraged and more motivated.

Your partner isn’t onboard

There’s an old saying that it takes two to tango. It also takes two for a budget to work. If your spouse or partner isn’t interested in budgeting or consistently fails to stay within your budget for whatever reason, the two of you need to have a serious talk. You should sit down with your spouse or partner and try to determine what can be done to get them to buy in. You will need to discuss your financial philosophies and have all your numbers available. You might be able to show him or her that your budget isn’t terribly restrictive and that there is room to make changes. Try to get him or her to understand that your budget is a roadmap designed to get you to your important goals. If your spouse sees he or she won’t have to make drastic changes in their lifestyle you may get more cooperation. If you can stay calm during this discussion – without getting upset – you may find your spouse will be more willing to work with you.

There was no emergency fund

Every budget needs to include an emergency fund. This is so that when you run into an emergency and, trust us, you will eventually run into an emergency, you will have the money to pay for it without having to run up debt. Most financial experts say that you should have the equivalent of six months of living expenses in your emergency fund. If the idea of saving this much money seems too awful, try for at least three months worth. If you don’t already have an emergency fund, make it a line item in your budget so that you’re saving money for it every month. One easy way to do this is to have the money automatically withdrawn from your checking account and deposited into your savings account each month. You might think of your emergency fund as a personal life insurance policy but that the “premiums” are yours to keep.

You didn’t give it a sufficient amount of time

If you made your budget just a few months ago and feel it’s just not working then maybe it’s because you didn’t give it enough time. One way to overcome this is to consider those first few months to be a sort of beta test and now you’ve learned enough to make a real budget. It can take time to smooth out a budget and for you to make changes in your spending habits. Don’t beat up on yourself if you haven’t been able you stay on your budget for those first few months. Professional athletes didn’t get to be the way they are overnight so don’t get discouraged if you haven’t become a professional budgeter in just a few months.

You just hate budgeting

If you find you just hate budgeting what with all that software, columns and rows of numbers, you need to look at other ways to manage your money that would eliminate this. For example, you might withdraw the cash you need for a week or two weeks at a time with the idea that when it’s gone, it’s gone. Or you might try the program Mvelopes, which is based on the old envelopes strategy for budgeting. This is where you divide your paycheck into envelopes based on your categories. Then when that envelope is empty, that’s it. You can’t spend any more money in that category. Of course, with Mvelopes this all happens digitally on your computer and not in actual paper envelopes.

If neither of these options appeal to you and you just hate budgeting, what can you do? You will need to do some research to see if you can find a money management plan that would help you achieve your goals without that terrible demon called budgeting.

10 Little Marriage Secrets Your Friends Won’t Tell You

Couple Using Laptop And Discussing Household Bills Sitting On Sofa At HomeAre you and your significant other starting to use the “M” word? Are you asking questions like should we get married? Do you want to get married? When should we get married? Or what would your parents think if we got married?

There’s no question about the fact that marriage can be a wonderful thing. Your husband or wife can be your best friend, your partner, your confidant and, of course, your lover. These are the things your friends will emphasize if you’ve discussed marriage with them. “Oh, yes, marriage is great.” “Marriage is just the best thing we’ve ever done.” Or “you really should get married – it’s wonderful.”

But while your friends are telling you how great marriage is, there are things they’re just not telling you and if they did, you might give the idea of marriage a second or even third thought. Here are 10 of these nasty, little marriage secrets.

Marriage is going the way of the dodo bird

According to the Pew Research Center, the percentage of American adults that have never been married has reached a new high. Two years ago, about 20% of American adults aged 25 and older (about 42 million people) had never been married. This compares with the 10% of those of that same age in 1960. There are several reasons for this. For one thing Americans are staying in school longer. They are also focusing more on their careers after they graduate and then getting married later in life. In fact, the median age for women getting married is now 27 and 29 for men, which is an increase from age 20 for women and 33 for man in 1960. But as you might guess there is one group of people where marriage is on the rise – same-sex couples. This has increased more than 50% to about 130,000 in 2012.

We’re into infidelity

Two years ago a research company affiliated with the University of Chicago found that some 12.3% of all married women and 19% of married men admitted that they’ve had extramarital affairs. While most Americans seem to favor monogamy, many of them would cheat if they thought they could get away with it. An interesting contradiction is that a survey done by the USA Network found that 82% of those that responded said they had “zero tolerance” for cheating but 81%, said they would cheat if they believed they wouldn’t get caught.

We planned our divorce before we planned our wedding

If you’re contemplating marriage have you thought about a prenuptial agreement? A recent survey done by the American Academy of Matrimonial lawyers found that about 63% of the attorneys queried said they have seen an increase in the number of people requesting prenuptial agreements. The major reason for this is probably the fact that so many people are marrying later in life and have amassed a significant amount of assets by the time they get married. This makes the idea of a prenup more attractive.

The more money spent on the wedding, the shorter the marriage

Another interesting fact is that the more money that is spent on a wedding the shorter will be the marriage – at least according to a study done recently by economics professors at Emory University. What they found in surveying 3000 couples is that those who spent $20,000 or more on their weddings were 46% more likely to get divorced than the average couple. In comparison, couples that spent between $1000 and $5000 were 18% less likely to split up.

Social media can kill a marriage

In the survey done recently by the USA Network, 86% of those that responded said that it’s much easier to cheat thanks to social networking and almost 33% said they had had an emotional or romantic relationship online. How can you prevent this? One thing you might try is setting time limits and boundaries on social media usage. For example, you might agree that each of you will spend no more than one hour an evening on Facebook, Twitter or whatever. But don’t start spying on your spouse’s use of social networking. This not only signals a lack of trust in your partner but if you’re caught could actually get you kicked out of the house.

Money keeps us together

According to the Emory study quoted above, the more money you make the more likely it is that you will stay together. Couples making more than $125,000 a year are 51% less likely to divorce than those that earn less than $25,000 a year. Of course, there is a strong correlation between earnings and education and people with better educations appear to be more likely to stay married. People with a high school diploma have a divorce rate of 42.8% by the time they reach middle age while only 26.5% of people with a bachelor’s degree or higher split the blanket.

You can’t be too old to get a divorce

While you might think that by the time married couples reach their 50s they would’ve gotten past the idea of divorce but this is not necessarily true. Adults that are 50 or older accounted for more than 25% of divorces in 2010, which is up from less than 10% in 1990. The good news is that the national divorce and annulment rate fell from four per 1000 people in 2000 to 3.6 per 1000 people in 2011. So more people are staying together and for longer.

The cost of our wedding left us broke

Do you know the average cost of a wedding? In 2014 it was $29,858 according to a survey that was done by TheKnot.com of 20,000 brides. This includes an average of nearly $13,000 for a venue (including the necessary food), more than $5500 for the engagement ring and $2400 for a photographer – and this excludes the cost of a honeymoon. Why is this? Couples that marry later are more likely to be spending their own money. This means they no longer have to stick to a budget set by mom and dad.

It was her idea to split up

Women initiate two thirds of divorces according to the Marriage Project. This is because, for one thing, divorce laws tend to favor women with regards to child custody. A less kind hearted explanation is that women are more likely to have unfaithful husbands than husbands are to have unfaithful wives. In addition, women have become stronger and more independent over the past 30 years, and are more confident that they can stand on their own. Many of them have well paying jobs so that the idea of being on their own doesn’t seem as frightening as it might have 30 years ago.

We sort of screwed our guests

Finally, as our economy has improved there has been an increase in destination weddings that have more lavish ceremonies. This means that the poor folks on the guest lists are spending more money accordingly. In fact, this year guests were projected to spend about $592 per couple on the average per wedding. Plus, they were dropping another $109 on gifts per wedding. One of the results of this is about 43% of us say that we have declined attending a wedding for financial reasons. This is based on a poll done by the nonprofit organization American Consumer Credit Counseling.

Love conquers all?

There is the old saying that love conquers all but this may not necessarily be true. What conquers all in marriage is usually a combination of hard work and compatibility.  But then as Jenna McCarthy points out in the following video, for women the secret to staying married might be as simple as making sure you’re always thinner than your husband …

Personal Finance For Kids: Inspire Your Child To Value Money

family buying thingsPersonal finance for kids seem like an important topic nowadays. With the growing number of students graduating from college with huge amounts of debts, a lot of them and their parents are asking themselves: where did we go wrong? How did we get into such a dire financial situation so early in life.

Before the Great Recession, not everyone was convinced that you should tell your kids about your finances. It was a subject that most of them want to keep between parents while the kids go play in the other room.

Well now, that is not the wisest thing to do. While we do not want our kids to start earning their keep at an early age, we do know that they need to understand the value of money early on. After everything that we have been through, it is never too early for a child to start learning about financial matters.

This is the reason why personal finance for kids is such an important topic that you need to learn.

Truths about teaching personal finance to children

We came across an inspiring article on Newsweek.com about this 8 year old boy who is earning millions of dollars off Facebook. His name is Evan and he is the star of EvanTubeHD. It all started as a hobby between father and son. Evan’s father, Jared, runs a photography and video coverage and they decided to do stop-motion clay model videos of Angry Birds – complete with special effects. It was such a hit that viewers started to request that they review toys and video games. Soon, the channel racked up 272 million views from all over the world in a few years. The whole family is in on the project now, even Evan’s little sister and mom. However, Jared is saying that he and his wife are careful about how they will handle the money streaming from the YouTube videos. They said that they maintain their business and do not rely on the money they get from the advertisements on their channels. Instead, they make sure it goes to savings and investment accounts for the children’s future.

While this huge amount of money is primarily brought about by the little boy, you can see how the parents of Evan is playing a huge role in making sure that this money will be put into good use for the benefit of the child. It is not indicated in the article if Evan is aware of the small fortune that he and his sister has but it is important to note how the parents are automatically using it to invest in the children’s future. That is a great way to teach personal finance for kids. Because of what Evan’s parents are doing, the kids future will be more secure. They can go to college without going into debt and they have some capital saved up in case they want to set up their own business when they get older.

Teaching kids smart money management skills early on does not mean you have to turn them into Internet superstars. It simply means you have to let them know the basic concepts like saving, spending and earning. A lot of parents concentrate on saving – which is okay but it is a bit incomplete.

According to Investopedia.com, teaching personal finance for kids should include the relationships between saving, spending and earning. They have to know where the money is coming from. That is how they understand why they need to save and spend the right way. Without telling them about earning, they will not understand the value of money. After all, money becomes valuable because you work hard for it. When you work hard for something, it becomes more important to you. That is the important concept that your children should grasp as they learn about money.

Couple of tips about financial literacy for kids from parents

Of course, teaching personal finance for kids is easier as a theoretical lesson. However, that is not the best way for your kids to really grasp the concept. It all depends on the implementation and how you relate the financial concepts in the daily lives of the kids. The road towards financial literacy will only be successful if you include the practical applications of the concepts.

Each child is unique so there is no one formula in teaching kids about money. Parents should understand the mental capabilities of their children before finalizing how the financial lessons should be applied. But that does not mean you have to start from scratch when determining the activities that you will use to drive the lessons home.

We found a couple of suggestions from TheMint.org that you might find useful when it comes to teaching personal finance for kids. The site believes that learning about finances really begin at home and some parents have posted their suggestions in the Parent Blog page. Here are a couple of the suggestions you will find here – according to the seasons of the year.

  • The coming of fall means Halloween costs are around the corner. Encourage the kids to scout for candy and costume coupons online or in the local newspaper and tell them you will match the savings and put it in their accounts. Or, get them to create their own costumes from scratch and give a reward after.
  • Winter marks the start of the gift giving season. Teach the kids that giving is more important than receiving. Bring the kids to volunteer activities within the community. Ask them to come up with personalized gifts that the whole family can work on.
  • Spring does not really bring about too much expenses so saving lessons should be perfect during this time. Get them to save a part of their allowance so they can spend it during the summer break. Let them create a list of things they want to buy in the summer and activities they want to do and encourage them to save up for it. Give them rewards for chores they do around the house so their savings can pile up in time for summer.
  • In the summer, older kids should be encouraged to get summer jobs to help them save up for college. Talk to them about student loans and how you can both work on helping them avoid it. For smaller kids, let them come up with “staycation” ideas that can save you money on travel expenses. Camping in the backyard or sleepovers should be a fun activity.

The suggestions from the Mint website indicate that personal finance for kids can come in all forms depending on what the current season dictates. Make it timely activities so that the children will find it more interesting to work on. If they can relate to the activities, you can be sure that they will develop the interest to listen and participate in the lessons that you are trying to teach them.

Here is a video from the YouTube channel, Howdini, regarding teaching kids about money management. It features the thoughts of personal finance author David Bach about how he learned his first personal finance lesson from his grandmother. He also provided a couple of tips to encourage parents to seriously make their children great money managers.

17 Nuggets Of Wisdom That Could Help Improve Your Financial Life

Couple Using Laptop And Discussing Household Bills Sitting On Sofa At HomeLet’s face it. Thinking about personal finances isn’t much fun unless you’re a member of that fortunate 1%. Of course, if you’re a member of the 1%, you probably don’t have to think much about your financial life anyway. But if you’re like us and are a member of the other 99% then finances are something you think about a lot. You’ve probably read articles or even books about personal finance with advice about creating a budget, having an emergency fund, paying down your debt and so forth. Beyond this, there are some other things you could do that would help improve your finances and here are 17 of them.

Create a roadmap of your goals

Just sitting down and asking what are your goals can get you on the path to realizing them. Don’t be afraid to think big and pursue those really big dreams even if they don’t seem doable. If you want to increase the chances that you will succeed, create a spreadsheet and do some number crunching to make sure you will have enough money to fund those adventures.

Drive less

This may seem a bit radical but the less you can drive your car the better. While driving is very handy, it can also be incredibly expensive when you take into consideration the oil and gas, insurance and depreciation. Automobile accidents are very common these days and if you get into one – even if it’s not your fault – you would have to at least pay the deductible. If you do have to drive a lot, make sure you do regular oil changes and all of the maintenance recommended by your car’s manufacturer.Avoid products that could be dangerous

Avoid products that could be dangerous

The Consumer Product Safety Commission is now issuing hundreds of product recalls a year. This makes it hard to keep track of all of them. It’s easier if you sign up for alerts from the Commission or download an app that will alert you when a recall occurs. Be particularly careful when it comes to used baby products, as there has been a number of crib, stroller and highchair recalls.

Cut your spending dramatically

If you focus your attention on monthly expenses such as cable, phone and Internet, you should be able to reduce them and your spending dramatically. Once you’ve done this, get to work on some of your variable expenses like groceries. We know of one person that did all of this and managed to cut his spending by $1000 a month.

Use the new online tools

There are a wide variety of web-based tools and apps available to help you manage your money. The company Corporate Insight recently found there are more than 100 new startups with apps or software that could help you manage your finances. In addition, there are apps such as Shopular, RetailMeNot and RedLaser that make it easy to use coupons and discounts when you’re making purchases.

Commit to earning more

If you’re one of the many Americans that are under-earners, commit yourself to earning more money. The best first step is to promise yourself to earn more and to make sure you say “yes” to any opportunities you come across that would allow you to do it.

Keep your finances off of Facebook

While it might be fun to brag about your high credit score on Facebook, it’s much better to keep that kind of information off the Internet. Facebook and other types of social media are very public and are places where the scam artists hang out and look for financial information they could use to defraud you. When it comes to your personal finances, a good rule is that less sharing is better.

Review your auto and life insurance policies

Automobile insurance policies can have different deductible amounts, coverage limits and important limitations. These are things that could surprise you if you’re in an accident. Review your policies and make sure you understand them including your life and disability insurance. If there is insurance available where you work think about supplementing it with your own policies.

Be ready for an increase in interest rates

Interest rates are now very low. However, most financial experts say they will eventually rise and possibly more sooner than later. To get ready for this, you need to pay off any debts where your interest rates could rise, and if you are a homeowner you should think about refinancing if you haven’t already done so. If you are a first-time buyer and are looking to buy a home, you might want to think about doing it very soon so that you could get rates that are still low.

Reduce your tax bill

The ugly fact is that many people pay more in taxes than they really should. If you put money into a retirement account that is pre-tax, buy some municipal bonds or start your own business, you will pay less in taxes. If you’re part of a gay couple you might also check to see what refunds you’re entitled to for the past two or three years as the Internal Revenue Service now recognizes same-sex marriages for income tax purposes.

Trade for or rent a high fashion dress

While you may not be aware of this, you can rent and trade for high-end clothes on the Internet. For example, Tradesy makes it very easy to sell and buy seldom-worn fashion items including designer dresses. This gives you the opportunity to wear fancy clothes without buying them. There is also a number of websites growing in popularity such as Bag Borrow or Steal and Lending Luxury where you can rent accessories and dresses for that big party. While it will cost you some money, you will spend a lot less than if you were to purchase the items and will still look like a million bucks.

Kick something off on Kickstarter

More than one hundred thousand projects have been launched on this site and about 44% achieved their goals as of December 2013. You don’t have to be a celebrity to use Kickstarter to fund that creative idea of yours. If you do go for it, promote your project first on Facebook and Twitter and to your friends. Make a great video and, above all, have a very appealing product like the Coolest Cooler that just raised millions of dollars.

man holding credit cardsGive gift cards

While gift cards might seem a little soulless, they really are an ideal gift in a lot of ways. And this reduces the time and strain of gift giving. The majority of people say they really like to get these cards. If you choose cards that are retailer specific (think Cabela’s or Ace Hardware), they generally don’t have fees or penalties for delayed use. Be careful about gift cards from the credit card companies as they generally come with fees that can range from $4 to $6.95. Also, you can get some additional protection by registering the card in the event it is stolen or lost.

Watch out for online scams

It’s easy to buy items on websites like Craigslist but there are fraudsters that prowl these sites. To make sure you’re safe, always arrange to meet the person face to face when paying cash for goods. Be sure to meet some place public and if possible bring along a friend for added protection. And under any circumstances do not wire money before you see the item, as this is how much fraud occurs

Talk to your honey about money

Finances are one of the biggest reasons why couples end up splitting. You should always be honest with your spouse or partner. One good idea is to make a periodic “money date” to review your finances, talk about the big decisions and consider each other’s financial mindset. Do this and you should be able to work together to set and reach big-money goals whether it’s buying a home or traveling to Europe.

Stop worrying and be happier

Finally, sitting around and worrying about money can waste a lot of time. One recent study found that 36% of the people queried said that they spent at least two hours a day worrying about their money or managing it. There are a number of free resources available that can help reduce some the strain of personal finances and save you time to boot. So get busy, find a few apps and stop worrying so much.

Wake Up, People! You Absolutely Must Know These Things About Your Credit Score

Video thumbnail for youtube video 6 Tips For Simplifying Your Financial LifeA study done in 2013 revealed some amazing facts about how ignorant many Americans are regarding their credit scores and credit reports. For example, 2/5ths of those surveyed did not know that credit card companies and mortgage lenders use credit scores to determine their eligibility for credit. Another 2/5ths incorrectly believed that personal characteristics such as marital status and age are used to calculate credit scores. Between 25% and 33% did not know when it is that lenders must inform borrowers of the credit scores used in their lending decisions. More than 25% do not know how to raise or maintain their scores. And 36% incorrectly believed that credit repair agencies are usually or always helpful in improving credit scores and correcting errors in credit reports.

Wake up, people!

If you don’t understand credit scoring and credit reports you could be facing big trouble. If you’re not aware of this, you definitely need a good credit score to qualify for an auto loan, a mortgage and other financing. And if you make just one misstep such as forgetting to pay a credit card bill, you could be on the slippery slope to serious credit problems.

Do you know who compiles your credit reports?

Your credit reports are compiled by the three major credit bureaus – Experian, Equifax and TransUnion. The information they use comes from banks and the financial institutions with which you do business and includes every credit contract you’ve ever had related to debt. Debt collectors even report to the credit bureaus. So if you have an old unpaid medical bill, this could pop up on your report and damage your credit score.

In addition, the three credit bureaus collect information from public records on tax liens, court judgments and bankruptcies. Any time you apply for any type of credit (called a credit inquiry), this will be reported to the three credit bureaus. In turn, the credit bureaus provide your credit report to the lenders when you apply for new credit.

Banks and credit card companies aren’t the only ones that access your credit reports either. Cell phone providers, landlords, insurers and utility companies will also ask for a credit report in determining whether or not they want to deal with you.

What about employers?

According to the Fair Credit Reporting Act, employers can check your credit reports but they have to get your permission to do this. Of course, if you’ve applied for that dream job and your prospective employer has asked to check your credit reports, you’ll probably feel pressured to say yes. If you say no this would be as good as saying that you have poor or bad credit. And under no circumstances are employers or prospective employers permitted to check your credit score.

The inverse ratio

There is an inverse ratio to credit scores. The higher your score the lower the interest rate you will be charged on an auto loan, a personal loan, credit card, and a mortgage. Even your auto insurance will cost less if you have a high score. Conversely, the lower the score, the higher your interest rates will be.

One freebie a year

You can get a free copy of your credit reports once a year. This is a perk that was legislated by Congress a few years ago. There is a website, www.annualcreditreport.com, where you can get all three of your credit reports either simultaneously or one at a time. Alternately, you can get your credit report free from each of the “big three” credit bureaus. You should get these reports and review them carefully to make sure they do not contain errors. If you do find an error in one of your reports you need to immediately dispute it with the appropriate credit bureau. What some people do is get their report from one of the credit bureaus every three months, which is a way to monitor their credit and immediately spot any fraud.

Man climbing range of credit scoresThey won’t include your credit score

Your credit reports will contain a lot of information but they won’t include your credit score. While there are a lot of different credit scores floating around the most important one is your FICO score as this is the score that most lenders use in determining whether or not to extend you credit. You can only get your FICO on the website www.myfico.com.

Where else to get your credit score

Getting your credit score used to be a fairly big job. But it’s becoming much easier. You can get your score free on websites such as CreditKarma.com and CreditSesame.com and from the three credit reporting bureaus. These won’t be your true FICO score but should be close enough to give you a good idea of how you stack up. Whatever your number is, don’t fixate on it. The important thing is to understand how you stand in the range being used. FICO scores range from 300 to 850. This means that a score of 800 would put you in the range of very good or excellent credit. However, the VantageScore, which was developed by the three credit reporting bureaus, has a range of 501 to 990. It also assigns a letter grade to scores. If you were to have a VantageScore of 800 you would be ranked as C or Prime, which wouldn’t be as good as an 800 FICO score.

It’s becoming easier

If you have a Discover card you’re probably seeing your credit score every month on your statement. The credit card companies, 1st Bankcard and U.S. Bankcard have said that they will soon be sharing FICO credit scores and related information with their customers. This is in response to the US Consumer Financial Protection Bureau (CFPB), which has been urging the credit card companies to do this because it believes the more information a consumer has, the better a job he or she will do in managing their credit. While this has not yet proven to be true, it certainly can’t hurt for people to be able to see their credit scores every month and whether they’re getting better or worse.

How your score is calculated

No, your age, marital status, number of children or any other personal information is not used in calculating your credit score. It is based on six factors: Your payment history, debts owed, length of credit history, amount of available credit, types of credit and your credit inquiries.

If when you get your credit score you find that it’s either poor or bad there’s nothing you can do about your payment history. History is, after all, history. You also can’t do anything about your length of credit history. However, there is one factor you could get to work on – which is your debt-to-credit ratio. It’s calculated by dividing your debts owed by the amount of available credit you have. For example, if you have available credit in the amount of $10,000 and $5000 in debts owed, your debt-to-credit ratio would be 50%. Since this accounts for 30% of your FICO score this is an area where you could do something to affect it positively. The two alternatives are to either pay off some of your debts or ask one or more of your creditors to increase your credit limits. Do either one of these and you would lower your debt-to-credit ratio and this should have a positive effect on your credit score. If you’d like more tips for improving your credit score, watch this short video courtesy of National Debt Relief.

The net/net

What all this boils down to is that your credit score pretty much rules your credit life. And since your credit score is based on your credit reports – or how well you’ve used credit – the best policy is to always use it sensibly.

4 Rules On Allowance Money To Teach Financial Lessons For Kids

two kids holding moneyIf you are wondering if you need to tell your kids about your finances, the answer is a huge yes. As long as you think that they can understand the concept of money, you may want to start teaching them financial lessons for kids.

Some parents make the mistake of waiting until their kids are older before they start discussing money matters with them. Some people wait right before their children are packing up to live on campus for their college education. While the financial lessons will be of most use when they are away at college, teaching them the lessons right before their leave will be futile. It will be too late.

You see, the best lessons are not taught in theory – they are lived. So if you want to have children who have a great financial sense, then you need to start teaching them while they are young.

According to a study published on SDState.edu, financial literacy goes beyond just teaching the right knowledge and skills about financial management. It is also important when it comes to the economy in general. When a person has good personal finances, that affects the economy of the country. If people do not have debt, they will have the power to buy things in cash without compromising their future ability to buy more. In an economy that is 70% dependent on consumer spending, that is good news.

The study mentioned that when you impart financial lessons for kids in your own home, these will be taken with them when get older. And the best place for children to learn is with their parents – at home. That is part of the responsibilities of child-rearing. You need to make sure that your children at well equipped with the knowledge and skills that will keep their finances healthy so their generation can influence the nation’s economy in the future.

4 rules when teaching your kids about money using their allowance

But of course, teaching kids smart money management skills is easier said than done. After all, if we as adults still find it hard to put the lessons into practice, it will be more challenging for kids.

The first dilemma here is, how do you go about teaching financial lessons for kids? There are certain concepts that you need to teach them like budgeting, saving and smart spending. But how can you put these concepts into terms that they can understand?

The answer to that is in their allowance.

According to an article published on PsychologyToday.com, the allowance of a child is a powerful thing. This is the very first money that any person will receive that comes constantly. Not only that, this is the first cash that your child can choose to use under their own terms. The article said that this is the first time that a child is exposed to the concept of personal choice.

Believe it or not, some parents do not believe in giving their kids allowances. That is because they are unsure about how their children will react to it. You want to be able to teach your children how to manage their money and the only way you can do that is by letting them rule over their own finances.

Of course, parental guidance will always be needed. This is why you should try to implement these 4 rules on your child’s allowance money so they can learn the right financial lessons for kids.

  1. Define what the allowance is for. While your children are still young, you are still responsible for most of their financial needs. But that does not mean their allowance will not be used on some of their needs. For instance, you can tell them that their allowance will be intended for their personal expenses while they are in school. That includes food and school supplies that do not exceed a certain amount of money (e.g. $10). Or you can give them a sizable amount of money that will not only include school expenses, but also any entertainment purchases (e.g. video games, ice cream, hanging out with friends, etc). Some parents impose a rule that makes their kids responsible for buying their own toys and that the only time they will receive toys is during birthdays and holidays.
  2. Teach them to allocate money. This is where budgeting basics come in the financial lessons for kids. You can give your kid $5 a day – $3 will be spent in school, $1 will go to their piggy bank and the other $1 will go to a charity of their choosing. Let them understand why all these are important – especially the last two. It might take some time for them to willingly give towards savings and charity. However, if you impose this rule long enough, it will become a habit that they will take with them until they grow old.
  3. Allow them to decide. The $3 that they are allowed to spend in school can be something that they will have free reign over. While there may be purchases that you will not agree with, let them make it. Just be sure to point out when a certain purchase might endanger a future spending that is more important. For instance, when summer is coming up, tell your kids that they will not be receiving as much allowance money as they used to (or they will not be receiving any at all). It might be best to start saving more so they have money to spend during their summer days.
  4. Let them learn from their mistakes. While you may feel bad when your kids are left out by their friends because they do not have the money left to spend, do not bail them out. That is a lesson learned. You can be sure that the next time they are faced with another spending choice, they will be more cautious about whether that expense is necessary or not. It is your job to remind them of the consequences – but not to save them when they make a mistake. Let your kids struggle but let them feel your support. For instance, if they ended up spending all their money and could no longer afford to buy a toy, help them make a savings plan so they can buy that in the future.

Techniques that will develop positive financial habits in children

Hopefully, all of these rules will help keep your child from student debt problems. These financial lessons for kids will teach them that being responsible with money is not a choice, it is an obligation.

After the Great Recession and with the current news about the still growing student loans, it is very important that we teach the next generation not to make the same mistakes of their elders. In fact, various states understand the importance of teaching personal finance to children.

According to the data found on CouncilForEconEd.org, 50 states and the District of Columbia have included economics in the K-12 standards. 19 states require personal finance lessons to be taught in the classroom. This is 5 more compared to 2011. All of these hope to boost the lessons that parents should be teaching their kids back at home.

Apart from these, there are other things that you can do as parents to help you children become better financial managers. Here are some tips that we have for you.

  • Come up with games that specifically teach your children about money (e.g. Monopoly, Life, etc).
  • Discuss the household budget in front of your kids. This is a great way for them to know the current financial situation at home
  • Let you kid tag along in shopping errands. Give them something to do like adding everything that you put in your cart so you both know how much you are required to pay when you check out.
  • Open a bank account. This will make them feel more of an adult when it comes to saving their money.
  • Let them look up to you as an example of how to manage money wisely. In the end, the best way to teach financial lessons for kids is to live it.

6 Tips For Retiring With A Million Dollars

Happy old couple looking at a cameraIf you’re like millions of Americans you watched the program “Who Wants To Be Millionaire.” You might have also wondered, as did many Americans why there wasn’t a question mark after the word Millionaire. But that’s not the important point here. The important point is that you would undoubtedly answer the question with, “Me, I want to be a millionaire”. And if you follow these six tips as faithfully as, you’re almost guaranteed to retire a millionaire.

It’s okay to start saving late

Naturally it’s best to start saving when you’re young. As an example of this, if you start saving $5000 a year at age 25 you would have $1 million by the time you reach 65. However, you could start saving when you’re 50. Of course, you will have to save a lot more every year. As you may know, beginning at age 50 you can start setting aside $23,000 a year in your 401(k) instead of the normal $17,500. But don’t stop at this. If you’re 55 or older you can also sock away $4300 pretax into a Health Savings Account towards your medical costs. This can turn into $1 million very quickly in retirement as you could invest the money and then spend it tax free for qualified health costs. As an example of this, if you and your partner contribute the $7550 max annually to a Health Savings Account starting at age 55 you would have $112,000 saved by 65 and would be more than halfway towards the $220,000 an average couple spends on health care in retirement. If you spend that on medical bills when you’re older, you would avoid having to take money out of your 401(k) that much longer and this will help you stay on your $1 million goal.

Remember the tortoise and the hare

You’ve undoubtedly heard the Aesop’s fable about the tortoise and the hare. It’s when a hare challenges a tortoise to a race. The hare takes off like it had been shot out of a cannon and soon leaves the tortoise behind. However, the hare becomes so confident of winning that it stops and takes a nap midway through the race. When the hare wakes up, it sees that the tortoise, which has been crawling slowly but steadily, has reached the finish line. What this translates into if you’re working to become a millionaire is that the best way to reach your goal is by saving money and investing slowly and steadily, rather than trying for that “big idea” that will yield a fast payoff.

Be an “average” investor

While some experts will say that you have to be a great investor in order to reach that million-dollar goal, this is not necessarily the case. A better answer is to invest in what are called value stocks. If you’re not familiar with value shocks they are the shares of overlooked companies that are trading at a discount. These stocks not only beat the shares of fast-growth companies by about 1.4 percentage points a year over the long run but also outperform them in 73% of the rolling 10-year periods since the year 1979. If you buy a total stock market fund you’ll be evenly split between value and growth. When you get new money to invest, add funds like the Vanguard Windsor II until value gets to around the 60% to 65% of your equities.

If you’d like to learn more about value investing and value stocks, watch this video courtesy of National Debt Relief ..

Have a few rental properties

It’s not necessary to be a full-time landlord to reach that $1 million goal. You can do it with just a few rental properties. If you begin with a single rental now and add two or more as you can, you will boost your net worth by seven figures in just a bit over 20 years. Plus, you will not only enjoy rental income, you will also get increased equity. The rule to remember is to make your profit when you buy but then realize it when you sell. Make sure the rent you get from any property you buy will exceed your mortgage, taxes, insurance and maintenance. You also need to realize that you will have a vacant month every year or two. If you hire a property manager, this will eat up 5% to 10% of the rent. Buy multiple properties that are near each other or buy a multifamily unit to increase your return. You would then be able to use a single maintenance team or property manager, which would cost less than hiring someone for each house. The expenses on duplexes and triplexes can be 10% to 15% less than if you had two or three single-family residences. It’s also a good idea to buy locally because that puts you in a better position to help with repairs or spot changes in the market. If you can pay cash for those properties you would be a stronger buyer. But if like many people you must borrow the money, get a mortgage rather than tapping into the equity in your home.

Build a business

If you sweat the small details, owning even a boring business can make you rich. The fact is that about 25% of all millionaires run their own firms. Most of them say that the secret of their success was not the fact that they had a big idea. The majority of seven-figure businesses are pretty run-of-the-mill. The secret is in managing your other Cs – credit, cash flow, customers and inCorporation. If you handle these correctly this will help you save as much as you can while you’re running the company and make your enterprise more appealing to potential buyers when it comes time to sell. Experts say that it may also be better to set up the company as an S corp, rather than a C corp. If you choose for your business to be an S corp and end up selling the business for $1 million, the money would pass through to shareholders and be taxed as ordinary income. If you’re in the highest tax bracket you would pay $466,000 in taxes but this would be a savings of $118,800 vs. the taxes you’d pay if the company were a C corp.

Get a significant boost in your income

If you’re an employee and not a business owner, you’ve probably seen how hard it is to get a big raise or promotion these days. What probably seeing instead is an increase in your income of just 2% to 3% a year. While this is okay, it’s the big career boost that can help you get to that $1 million. As an example of this, if you earn $100,000 and can get a 15% jump in your paycheck, this will keep paying off even if you then go back to the annual 2% or 3% cost-of-living raise. Bank the extra money every year and in 10 years you’ll have another $200,000 saved. What can you do if the prospects for getting this kind of a boost in your income are not great? Then aim for a lateral move into another department that generates revenues. Staff roles in some companies are held to a lower cap than those closer to the customers. The fact is the closer you are to sales and marketing, the better are the chances that you can earn that turbo boost in your salary. Failing that a recent study showed that hiring is up and 25% of all companies are looking to add executives in the next six months so your best move might be to a new employerl

There are a lot of myths attached to the idea of becoming a millionaire before you retire. But the six tips you have just read are not myths. They are the keys to retiring with $1 million to have a happy and stress free life after work.

2 Factors That Contribute To A Successful Frugal Lifestyle

woman smilingA frugal lifestyle is not something that you can just decide to do overnight. In most cases, learning how to live frugally is tougher than you think because it involves a complete turnaround of your consumerist way of thinking.

But the thing is, excessive consumerism have led to most Americans being in debt. We have gotten used to the idea that bigger is better. While that may be true, we have pursued it blindly despite the fact that bigger is something that we truthfully cannot afford.

The time has come for us to embrace the idea that frugality is the way for us to correct the bad habits that consumerism have deeply engraved in all of us.

But what exactly does a frugal lifestyle mean?

We found a simple yet spot-on definition in one of the articles on PTMoney.com. It defined frugality as making intentional choices with your spending. It is very clear when it said that it is not about being cheap. Although your goal will be to spend less so you can maximize your limited income, you will be doing that not by being cheap. What you will do is to define what you think are the important and priority expenses and separate them from those that are not. Those that are not included in your priority list – those are the expenses that you will be cheap with. That is because you have decided that these are unnecessary expenses and that removing them from your life will not benefit you at all.

A frugal lifestyle, when implemented correctly should not deprive you. That is because you will make sure that the expenses that are important to you will be funded. But even that decision to fund it will still be done wisely. For instance, a home is an important expense but frugal thinking will tell you that you do not need it to be too big for your needs. It will just be right and frugality will teach you that being excessive does not mean you are better off. You will learn how to be content and accepting that will make you feel surprisingly free.

2 important characteristics of frugal living

The same article from PTMoney also said that the importance of living a frugal life stems from the fact that we need to correct our spending habits. Unless we find a way to change that, it will not matter how much we earn. We will always be at a deficit because we do not know how to spend our money wisely.

That is why you need to start learning how to live a frugal lifestyle. But the thing is, this way of living does not come naturally. Consumerism is something that a lot of us got used to that changing it will be a struggle.

But the good news is, this change is possible – if you do it one step at a time. There are two important factors that you can concentrate on first and you will realize that accepting the frugal changes will be a lot more easier to adapt to.

Financial management

The first factor that you should concentrate on is learning how to manage your money. If you find it hard to wrap your head around the changes that frugality will teach you, then you can focus on something less intimidating – like money management. If your financial management skills suck, you will find it hard to start a frugal lifestyle. So you need to start by learning the right financial management skills.

Managing your finances begins with a budget. You want to check out both your income and your expenses to see how it fits together. Is your income higher than your expenses? Or is it the other way around? If your expenses are greater than your income, then you need to correct that. Your budget will help you accomplish this task by showing you just how much you are capable of spending. You can distinguish which expense is the priority and which ones you can let go off. Looking at your budget will help you organize your finances so you can make better spending choices.

Financial management in a frugal lifestyle is not only about budgeting. It is also about smart spending and most of all, saving. If budgeting is about planning, the implementation of financial management is manifested in your spending and savings. When you have these things covered, then you are making the first important steps towards a frugal living.

Debt reduction

The other factor that will help make a frugal lifestyle easier to implement is debt reduction. Take note that we are not saying you should eliminate debt. You still need debt to be present so you can keep your credit score up. This will come in handy in your financial life. But we are encouraging you to reduce your debts so it will not compromise your finances as you are trying to implement frugality. A frugal mindset will frown at wasting money. That includes wasting it on unnecessary interest rate payments. So get rid of your high interest debts so your money will not be wasted on making your creditors rich.

According to the latest study done by TransUnion.com, consumers have started to prioritize taking on secured debt instead of acquiring credit card debt. The latter is notorious for encouraging unnecessary spending and high interest rates. This change in the consumer payment pattern is said to be influenced by the Great Recession. This is a good sign because it shows that most of us do not look at debt as the cause of our problems. We learned that it is our own financial behaviors that got us in debt.

Realizing the role of our behavior in financial success is the key to implementing frugality. That is because frugal living is all about changing your behavior.

Frugal ideas that will get you out of debt

In most cases, people are motivated to live a frugal lifestyle because they want to get rid of their debts – or at least get it under control. Frugality can help you save money so you can increase your debt payments and thus pay off more of your balance.

Here are some frugal ideas that you can use to help solve your debt situation.

  • Conduct a yard sale. This will help you organize and declutter your life and at the same time, earn extra money to send to your creditors.
  • Choose to save the change that you have at the end of the day. For instance, any quarter that you have at the end of the day should go straight to your piggy bank. Whenever this bank is full, send this extra money as payment for your debt. Then fill it up again.
  • Use coupons. These are great tools in frugal living. If you think that those coupon ladies on TV are weird – well they are not. They are in fact, more wiser than you think. Couponing is a great way to save money so you can grow your debt payment fund. And it is actually a growing industry. According to an infographic published on Visual.ly 2 out of 3 Americans have used coupons in the past. If you haven’t done the same, then you are part of the ⅓ who have yet to enjoy the benefits of couponing.

These are only a couple of the things that you can do to help yourself pay off your debt faster. Although a frugal lifestyle is not devoid of debt, it is definitely not ruled by it.

8 Signs That You Need To Implement Financial Management

checklistFinancial management is a critical part of growing up. It dictates how well you are able to handle income and dispense the same for payments on your expenses and other loans. It restricts your purchases and tells you what is important and what can wait. It tells you as well what you can do to increase your income to meet financial targets. Financial management can also be a potent tool against debt.

This is important to share when there are about 20 million college students on an average at any given year according to Asa.org. That is a lot of college seniors entering the workforce where they will be earning on their own and experiencing life in full blast. The walls of their colleges and universities has now grown bigger to accommodate a lot more responsibilities. On top of these is developing financial management in running their money.

It starts with a desire to get their finances in order. There are still  a good number of Americans who are not able to balance a checkbook. The 410 (k) retirement fund, investments and emergency funds are alien to them. These are some of the foundations of financial management and college graduates and even some seasoned professionals needs to understand this to survive financially.

8 signs that you should start working on money management skills

As you go through life, there are pit stops where you need to make decisions and add some financial tools in your arsenal. Some of these can start as early as when you get your first job and for others, it could be as late as a few years before retirement. Whenever it happens, you should be able to discern these signs and know that it is time to work on your financial management skills.

When you start earning your own money

As soon as you leave university, the first order of business is not a vacation with your friends or a cruise with your partner. It should be to look for a job because your expenses and loan payments will not wait for your to finish a good time. If you have student loans, six months is a short time for a grace period and you need to start making payments after. Getting a place to stay, applying for utilities and others will require you to have a steady income.

When you get a job, income will not be too far behind. And when you start earning your own money, it is a clear sign that you need to implement proper financial management. This will put order in your finances and ensure that your monthly salary will not only last you until the next paycheck but will actually provide financial security for you in the long run.

When you already have a bank account

Forbes.com shared that there are about 7.7% of American households who still do not have their own bank account. That is approximately 1 in every 13 American families. There are mixed sentiments on how the banking system helps consumers but it cannot be denied that it is one of the safer ways to keep money and allow it to grow. When you open your own bank account, it is another step up  that needs proper management of your finances.

When you are saving for a goal (e.g. retirement, etc)

Having financial targets is another clear sign that it is high time for financial management skills. These can be in the form of emergency funds or retirement funds. In fact, there is only about 18% of Americans who are confident that they have enough funds for retirement according to Statisticbrain.com. Having financial goals is also a clear sign of financial maturity as you are already planning ahead and not just for the moment.

Here is a video explaining how saving for retirement might need to be done until 68 years old:

When you are responsible for paying monthly bills

Being able to pay for utilities such as water, electricity, phone, internet, and cable is another benchmark on the need to implement financial management. You need to be able to juggle your income with your expenses to avoid coming out short at the end of the month.

When you have started taking on credit

Taking on credit is another sign of financial maturity. Adding expenses on your card or taking out a payday loan to fix some part of the house needs proper management of finances. Without it, you might just end up in a store sale using up the loan you took out for another unnecessary expense.

When you start monitoring your credit

Monitoring your credit comes from the need to understand where you are putting your hard earned money. What items are you buying and where you can cut down on expenses. Financial management will help immensely at this point because it can provide a clear direction on how you can proceed after monitoring your credit.

When you  have started investing

Investment is a by-product of forward thinking and once you start delving into the world of investments, you will need financial management to guide you through your options. In fact, investing is one key to financial independence. It can help you plan for your future and hopefully retire at the time when you want to, not when you need to.

When you start paying your taxes

Making tax payments is a sign that you are already earning your own money. This calls for the need for financial management not only to monitor your income but to check as well if you are remitting the right amount for your taxes. Tax refund is a great surprise at the end of the year but it actually stems from wrong tax calculation. That would have been money you could have used for investment at the early part of the year. Instead of just giving the government an interest-free money, it could have earned a few dollars somewhere else.

4 important concepts of financial management

Financial management has four key pillars that consumers need to understand. It is beneficial to know these points in order to practice proper management of your finances.

  • Budgeting. Income has to be treated as the output of your hard work. You should put importance on how you use it and this is where budgeting comes in. Understand the important expenses and forego those that you can live without.
  • Saving. At this day and age, not a lot of people has an excuse not to save. Even technology has made saving easier. This is an important aspect of financial management because it allows the consumer to have funds for future use.
  • Smart spending. Similar to budgeting, spending smartly allows you to weed out your needs from your wants. It helps you identify and prioritize the important spending items in your budget.
  • Credit monitoring. It is important to be on top of your finances and monitoring your usage of credit can give you a great overview of your habits. Where you spend too much and where you can make improvements are just some of the advantages of checking your credit spending.

Financial management is an important tool in putting sense in your finances. Some people say that it is not how much you earn but how well you use what you have. This is where proper management of your finance kicks in. As long as you see the signs along the way, financial management can guide and steer you in the right direction.

10 Things Your Parents Didn’t Tell You About Personal Finances

Girl looking worriedIf you were fortunate your parents sat you down at some point and you had “the talk.” No, not the talk about sex. The talk about personal finances. Or maybe you were like me and your parents never discussed money with you. I guess mine thought I’d either figure it out on my own or just sort of pick it up by osmosis. In any event I finally did learn the important lessons about personal finances but in some cases it was definitely the hard way – like the time my wife and I decided to have a home custom built for us when we hardly knew what a mortgage was.
Even if your father or mother did have “the talk” with you, the odds are that there were some things they neglected to tell you that are important and here are 10 of them.

1. Being in debt is like indentured servitude

If you’re not familiar with the term indentured servitude the online encyclopedia Wikipedia defines it as, “a voluntary labor system whereby young people paid for their passage to the New World by working for an employer for a certain number of years”. The reason why debt is like this is because basically what you’re doing is sacrificing future earnings (working for a credit card company) in exchange for instant gratification (passage to the new world). How do you avoid going into debt? It’s pretty simple. If you have a credit card make sure you pay off your balance on time every month. Ditto store charge cards, and an auto loan – if you have one. I understand that it takes a certain amount of self-discipline to do this but it will pay off in the years ahead when you’re not sending 20% or 30% of your hard earned income off to a credit card company or companies.

2. If you need to ask your boss for a raise, you need a new employer

Assuming that you come to work every day on time and are good at your job you should earn a raise without having to ask for one. If you work for a corporation you probably get an annual review accompanied by a raise of some kind. If not, you’ll be at the mercy of your employer. But, again, if you’re doing a good job you should earn a raise without having to beg for one. And if you do have to beg for one, you might want to think about finding a new employer.

3. You can’t manage your money if you don’t track your income and outgo

The cornerstone of good money management is to know how much you earn and where your money’s going. Most of us do know how much we earn but if you’re not tracking your spending, it’s like playing baseball without keeping score. You may believe you’re ahead but you could actually be falling further and further in debt. There are a number of smart phone apps available today that make tracking spending drop-dead simple. Alternately, you could just use a pen and a notepad. But whichever method you choose it’s important to note all of your expenditures right down to the penny. Add them up at the end of the month and you’ll then know whether you’re winning or losing. If you find that you are losing – or spending more than you earn – you will need to find areas where you could cut costs.

If you would like more information about tracking spending here,  courtesy of National Debt Relief, is a video  that reveals three ways to do this.

4. Only suckers play the lottery

If you’re carrying a boatload of debt don’t think that playing the lottery is your way out. A very smart person once said, “Lotteries are for the mathematically challenged.” We have radio commercials for our state’s lottery that generally ends with words like, “chances of winning the Powerball lottery are one in 25.4 million”. You have a better chance of getting struck by lightning than winning a one of those lotteries.

5. Shun those credit card “convenience” checks

“Convenience” checks are those that you receive periodically from your credit card company or companies. They might seem like a convenient way to get cash but the interest rate on these things are often anything but convenient. Convenience checks usually come with a fee of 3% or 4% of the amount you’re borrowing, plus a very high interest rate. Most credit card companies charge the same interest rate on a convenience check as cash advances. This means the interest on a convenience check could be twice that of purchases.

6. A spreadsheet can help even the most disorganized

Even if you’re a very disorganized or scattered brained person a spreadsheet could help you successfully manage your personal finances. You could use one to track your spending, create and stick to a budget and help you pay off your debts. If you don’t have a spreadsheet program such as Excel, there are free ones available through OpenOffice.org, Google Docs, Kingsoft and a number of other sources. While it may take you 30 minutes or an hour to set up a spreadsheet once you’ve done this it probably won’t require more than a few minutes a week to keep your personal finances under control.

7. Patience is a huge virtue when it comes to saving money

You’ve undoubtedly heard the old story about the tortoise and the hare. When it comes to saving money, the tortoise is clearly the winner and by a wide margin. This is due to compounding interest. You could put as little as $50 a month in a savings account and end up with several hundreds of thousands of dollars. If you’re not familiar with compounding interest it’s basically where you earn interest on interest. For example, if you put that $50 into a savings account that pays 2% annually, you would have $612 at the end of the year and $1236 at the end of year two – or your $612 plus $600 plus 2%.

8. Money won’t buy happiness

A friend of mine used to say that while money won’t buy happiness it will rent a bunch of fun until happiness comes along. But that, of course, isn’t really true either. Real happiness doesn’t come from having enough money to buy a bunch of stuff. Nirvana comes from financial freedom. You might think that the guy that drives an almost new Lexus is better off then your friend who drives an old beater but this is often not the case. The guy in the Lexus may be up to his belly button in debt while the friend in the old beater has more than $100,000 in his 401(k). If you live prudently and save a good portion of your income the day will come when “no man will be your master” and you will be financially free, which is true happiness.

9. Not everyone needs a budget

We don’t know of a single financial guru that doesn’t preach the importance of having a budget. But the truth is that not everyone needs one. Some people just instinctually know how much they’re spending versus their income and how to keep the former from getting ahead of the latter. You may also not need a budget if your finances are relatively simple.

10. Frugality is not the be-all and end-all

You may have read some of the many articles regarding the importance of living frugally. Of course, living frugal is never a bad idea. However, frugality has its limits. You could cut your spending to the very bone and still not have enough money to create an emergency savings account or to invest. The best answer sometimes is finding ways to earn more money. For example, this might be harsh but you could get a second job. Our economy is mostly back to what it was before the Great Recession and there are many companies now hiring part-time employees. These jobs generally don’t pay much – usually nine dollars or $10 an hour – but 20 hours a week could go a long ways towards funding your savings account or making investments.

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