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How To Dramatically Improve Your Financial Life In Just Six Weeks

paying through a card in a pubWhen you look at your financial life what do you see? Do you see a big stack of unpaid bills? Bank statements you never bothered to open? A checking account that’s just about bottomed out?

Well, the good news, if you see this as good news, is that most of us have problems with our money. Our lives are demanding, we have busy stressful careers and our families eat up most of our calories and our energy. Again, if you’re typical you probably just don’t feel that you have either the desire or the time available to get your finances under control

Getting started

In your heart of hearts you probably want to have a better financial life but it’s tough to know where to get started. Fortunately, it’s not really that difficult. What you need is a monthly schedule to get your finances on track. It’s really not much different from having a daily and weekly routine for yourself. You need to develop a plan that will help keep you concentrating on accomplishing your financial and personal goals. And you can really get the majority of your money problems behind you in just six weeks.

Here’s the blueprint.

Week one: Create two or three personal goals

Sit down and think about your life and organize your future by creating a series of short-term goals. Then make an action plan to achieve those goals that has a timeline with some small steps to get you to where you need to go. Start saving money for those goals and you’ll reach them quicker. If you have a problem setting goals here’s a video courtesy of National Debt Relief that could help …

Week two: Make a spending plan

You’ve probably heard this 1000 times but if you’re now in a money in/money out cycle that leaves you grasping for pennies at the end of a month, this is the time to take the guesswork out of it. If you want to reach your goals and in time you will need to find ways cut your spending. Good places to start are entertainment, dining out, clothing and groceries. These are the areas where it’s usually easiest to cut spending. In comparison, it can be very difficult to reduce your spending on fixed expenses such as your rent or mortgage and any auto payments. The category of groceries is one where most people find they can reduce their spending without really sacrificing anything. All it takes is menu planning, careful shopping and some coupons.

If you find you’re having a hard time making a spending plan, you might book a session with your local, nonprofit credit-counseling agency. You would be assigned a counselor that will review all of your spending and help you create a plan for reducing it. Most of these agencies charge nothing or very little for their help and sometimes the most important thing you can do is have an objective, third-party person analyze your spending and help you develop a plan for cutting it.

Week three: Work on reducing your debt

Unfortunately, it’s easy to overspend especially when it comes to credit cards. When you don’t have enough cash to pay for something it’s just too darn easy to whip out that piece of plastic and charge it. But if you’re carrying a big load of debt, you may be paying so much interest that it’s weighing down your finances. Make a plan to get rid of any debt you have that that isn’t fixed such as a mortgage. You need to find ways to simplify your payables. If you have high credit card debt, you might check into a debt consolidation loan. The upside of one of these loans is that you would then have just one payment to make a month in place of the multiple ones you’re probably making now and that payment should be lower than the sum of your current payments. However, there are a couple of downsides to a debt consolidation loan. First, it will have a longer term such as seven or even 10 years, which means you’ll end up paying more interest over the life of the loan. And if you don’t have good enough credit to get a personal loan you may have to get a homeowner’s equity line of credit (HELOC) or homeowners equity loan. In either event, you would be putting your house at risk because if you were to default on the loan, you could end up out on the street.

Week 4: Consolidate your credit cards

How many credit cards are in your wallet? If you have three or more, this is just making your financial life that’s much more complicated. This means you have to keep track of all of those different transactions and balances and which days of the month you must make your payments in order to avoid missing one, which would damage your credit score. Instead, try to consolidate down to just one or at the most two cards. For that matter, you could transfer all of your credit card balances to a new 0% interest balance transfer card. You should be able to find one of that offers as many as 18 months interest free, which would give you a year and a half to pay down your balance before you would be required to pay a cent in interest. Plus, you would then need to remember and make just one payment a month.

Week 5: Put everything on autopilot

Take sometime this week to put your savings and your bill paying on autopilot. You know you need to pay yourself first and that you want to have a decent retirement. When you set up an automatic transfer each pay period from your checking to your savings account, it’s money you hardly miss because you never really see it. Ideally you should begin with an emergency fund equivalent to six months worth of living expenses. If that seems too daunting, try for at least three months worth. You should be able to pay all or virtually all of your bills automatically and electronically. That way you could stop worrying about missing a payment and having your car repossessed or your electricity turned off.

Week 6: Review your insurance policies

Take a few hours to sit down and review all your home, life, and auto insurance policies and their coverage so there will never be any unpleasant surprises. Do you know your coverages especially when it comes to disability? They might have changed recently. Even if you’re content with your current insurer you should comparison shop at least once a year. This is relatively easy to do through sites such as esurance.com and netquote.com. Be sure to check your auto insurance’s liability limits to make sure you would be adequately covered in the case of an accident.

If you have a will get it out and review it. This is especially important if your family situation has changed due to marriage or a birth. And if you don’t have a will you need to get one. It’s the only way you can control what happens to your money should you die suddenly and without warning. Otherwise, a court will likely be required to do this for you, which could be a very bad thing.

You might not be able to solve every money problem in just six weeks but if you follow this program you should be able to take much of the stress out of your life and get your money under control. The important thing is to focus on these easy-to-implement strategies. This will free up time for you because you’ll be worrying less and more able to focus on what really matters the most – which is living your life to the best today.

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.

11 Financial Things You Should Have Done Before Turning 30

woman smilingIf you’re close to or about to turn 30, this is a fairly significant milestone. Your youth is behind you and you are now definitely an adult. With adulthood comes some great responsibilities and number one on your list should be to take charge of your finances. We understand this doesn’t sound like much fun and that personal finance can sound like a very dry topic. But it cannot be denied that financial things play a huge part in our lives, that money is always one of the top stressors and that it can cause the biggest discord among couples. In fact, every report we’ve seen ranks finances as the second biggest reason for divorce – right behind communication or lack thereof. We hope that you already have your personal finances at least somewhat under control. You should have a reasonably good idea as to where your money’s going and how your spending stacks up against your earnings. Beyond this, here are 11 goals you should have achieved by now. These goals are, of course, not for everyone and some of them may not be feasible for you. However you should keep these in mind as general guidelines. And if you haven’t yet achieved them, it might be time to sit down and write out a plan for accomplishing them.

You should have saved up for the big expenditures of life

You should be thinking about, anticipating and saving up for the big expenses of life. You will need to factor in your wedding, children, a pet, a house and other similar big ticket items. If you plan for these events, you’ll be adjusting your lifestyle, you will be able to afford those expenses and you will not have to go into debt to pay for these items. You should probably try to budget a realistic amount to cover these expenses so you don’t have to go into debt. Of course, another good idea is to forgo some of these expenses and question if they really are necessities.

You should be living within your means

By now, you should know about living within your means and also enjoying life. You should be able to put priorities on your spending and then save in other areas so you can enjoy those “guilty pleasures”. Even if that pleasure is just a daily latte, you should be able to indulge yourself so long as you’re cutting your spending aggressively on other items. Also, be careful about comparing yourself to other people. What they skimp on may not be what you want to give up.

You should have emergency savings

We hope you already have an emergency fund. Most experts say this fund should be the equivalent of six month’s worth of your living expenses and some say it’s even better to have a year’s worth as a better buffer. Of course, it’s easy for those experts to say this. If you find that it’s extraordinarily difficult to save the equivalent of six month’s of living experiences, try for at least three. Life is full of unanticipated issues such as an automobile accident, a serious illness, a friend or family member who suddenly needs financial help or losing your job. If you don’t have an emergency savings fund your only alternative will be to go into or further into debt.

You should be maxing out your 401(k) contribution

If your employer offers a 401(k), you should max out your contribution or at the very least meet your employer’s match. A 401(k) is really the workingman’s best friend. The money is taken out of your salary before you even see it – making your donation practically painless. If your employer does match your contribution this is like free money. While the stock market probably won’t continue to grow the way it has the past several years you could still earn good money by choosing the right stocks or mutual funds for your 401(k). And if push comes to shove you could borrow from your 401(k), which means you would be borrowing from yourself and the interest you would pay you would be paying yourself. And that’s not a really bad deal.

You should be a master of automation

You should by now have learned how to master the art of automation. If you send a chunk of your salary automatically to your savings every month you would be paying yourself first. And when you save money, you can tap into the power of compounding interest. This is when you earn interest on your savings, which is added to your savings and you then earn interest on it. If you automatically save as little as $50 a month for 30 years you would end up a millionaire – thanks to the power of compounding interest.

You should have a Roth IRA

If you have a conventional IRA, good for you. That’s money that you save pretax, meaning it’s money you don’t have to pay taxes on. However, the downside to this is that you will have to pay taxes on the money when you begin withdrawing it. In comparison, with a Roth IRA you pay taxes on the money you deposit into the account but it’s then tax-free when you withdraw it.

You should have written a will

None of us wants to think about our “final destination” but there’s no way to avoid the fact that your life will ultimately come to an end. If you don’t have a will, you will die intestate. If this occurs, a person will be named as your executor and will decide what happens to your property. Under intestate succession laws only spouses, and registered partners (if you live in a state where that’s an option) and blood relatives can inherit. This means any friends, unmarried partners or charities would get nothing despite any intentions you might’ve had to the contrary. So, if you haven’t done this already, go to an attorney or a site such as LegalZoom and get a will prepared That way you will be able to control exactly where your money and your properties go.

You should be paying off your high interest debts

If you haven’t done this already you need to sit down and make a list of your debts in order from the one that has the highest interest rate down to the one with the lowest. Once you have your debts prioritized, you need to concentrate on paying off the one that has the highest interest rate. Of course, you will need to continue to making at least the minimum payments on your other debts. But when you pay off the one that has the highest interest rate, you automatically save the most money, which you can then use to begin paying off the debt with the second highest interest rate and so on.

You should have a decent credit score

If you’ve been handling your finances sensibly, which means keeping your credit card debts under control, you should by now have a fairly decent credit score – of 750 or above. Most lenders look at credit scores in ranges as follows.

  • Very good or excellent – between 700 and 850
  • Good credit score – between 680 and 699
  • Average credit score – between 620 and 679
  • Low credit score – between 580 and 619
  • Poor credit score – between 500 and 579
  • Bad credit score – between 300 and 499

If you haven’t seen your credit score recently, you can get it from www.myfico.com for $19.95 or free if you sign up for a trial of the company’s Score Watch program. It’s also possible to get a version of your credit score at sites such as www.creditkarma.com. If you have a credit score lower than 680, you may have some work ahead of you to get it raised. The reason for this is because there’s an indirect ratio that exists between your credit score and how much interest you will be charged on a credit card or a loan. In other words, the higher your score the lower interest rate you will be charged.

You should have already read several good personal finance books

While some people like to think you can master personal finance instinctually, this is just not the case. If you really want to be on top of your personal finances you need to have by now read several books. If not, you need to get to work. You should probably start with Your Money or Your Life ($12) and Total Money Makeover ($18). Beyond these, the simple fact is that you just can’t read too many books about money management.

You should know how to negotiate

Finally, by now you should have had some practice negotiating – over your salary, with service providers and others. While there are areas where it’s simply impossible to negotiate – like at your neighborhood supermarket – there are also many other areas where you can save money if you know how to negotiate successfully. If not, here’s a video with some good information about the art of negotiating.

How To Quit Living From Paycheck to Paycheck

man looking tired with workIf you’re like many Americans you live from paycheck to paycheck. We can empathize because we’ve certainly been in that position. But when you’re living this way, you’re skating on thin ice and peace of mind becomes a very elusive goal. One recent study revealed that 38 million American households live like this – spending all of each paycheck. Of course, many of these 38 million households own their homes or have retirement accounts but very little or no cash on hand.

What happens when the unforeseen occurs?

The biggest problem if you live from paycheck to paycheck is what happens in the event of an emergency. You could have an auto accident or lose your job. There could be a natural. If you have no cash to fall back on what do you do in the event of an unforeseen occurrence? The fact is that if you live from paycheck to paycheck this can be a disaster. It’s not good from an emotional standpoint, either. When you do have an unforeseen event your only option is to get into or fall further into debt. Debt has a way of ballooning and your stress level can balloon along with it.

How can you break the cycle and quit living this way? Here, with our thanks to Lifehacker, are 13 real life stories of people and what they did to stop living from paycheck to paycheck.

We started a small emergency fund

One couple said their first step was creating a small emergency fund. They felt this gave them some peace of mind in the event of an unanticipated problem. They said this was the biggest part of stopping the paycheck-to-paycheck cycle. They understood that it requires time to create a true emergency fund but felt that even a small one could help them whenever unexpected expenses came their way. They kept the money in an easily accessible savings account. It was in a separate account because that almost made it “out of sight, out of mind.” When they check their account balances on their main accounts the money isn’t there so they aren’t tempted to use it. However, they did know that it was there and available if they needed it.
For this couple, step two was to start paying down debt. They felt this was another big part of getting out of the paycheck-to-paycheck cycle.
Finally, this couple said that a large part of breaking the paycheck-to-paycheck cycle was creating a spreadsheet to track daily expenses. This allows them to keep track of all expenses and income on a day-to-day basis. This also permits them to plan ahead as they can see exactly how much money they will have in two months or even two years.

I opened a second bank account

In addition to just “saving” and “making a budget” another guy we’ll call John calculated just how much money he would need to live plus a few additional bucks to make things comfortable. He then had his direct deposit salary split into two bank accounts. He put the money he needed to live comfortably directly into one account and the extra money into a new secondary account. He knows like the previous couple that there is other money available should he actually needed but that it’s a mental thing — that it’s just much easier to save money when it’s not in the same bank account he uses every day.

We flattened our monthly spending

A second couple sat down and calculated what their annual expenses were, which included things such as Christmas spending, school fees, car repairs and maintenance, vacations and so forth. They totaled these expenses and then divided it by 12. This resulted in a “monthly payment.” As an example of this if they budgeted $1200 for vacation and divided it by 12, they knew they had to save $100 a month. Once they knew this monthly total, they deposited that amount into their “Annual Savings” account. What this did for them was flatten their monthly spending so that they knew exactly whether or not they had enough to eat out that month or do something that wasn’t in the budget. It also made it possible for them to pay off their mortgage years early so they now use cash to pay for everything they need and even a few things they just want.

I paid off my student loan debt

One young man said that his finances had been a struggle mostly because of his student loan debt and that he wanted to get rid of it as quickly as possible. He has a graduate degree but works in a nonprofit so his paycheck barely covers his living expenses. Despite this he tries to save a couple of hundred dollars a month out of his main income. He is trying to build an emergency fund so that he won’t be wrecked by an unexpected expense or forced to use credit cards. He is eating very cheaply including a lot of lentils, beans and rice. He watches for supermarket deals on meat and lives in a small studio apartment. All this has helped him not only save money but also break the paycheck-to-paycheck cycle.

I started doing freelance writing

A really good way to break the paycheck-to paycheck cycle is to find extra ways to make money. One woman did this by doing freelance writing. She is unable to do this full time to develop a client base as her regular day job often requires 60+ hours a week. But this certainly does help. In addition her boyfriend will soon be moving in with her. They make about the same amount of money so if they share the rent, car payment, utilities and food costs they will be able to lighten their financial load considerably. She reports that this should allow them to start saving in earnest fairly soon and break out of that cycle for once and for all.

I cut the cable

Do you spend somewhere in the neighborhood of $100 a month for cable TV? A guy we’ll call Robert totaled this up and realized he was spending $1200 a year to watch TV just a few hours a day. He eliminated his cable service and changed his cell phone plan, which got him down to $15 a month while his friends were still paying from $50-$100. He also stopped eating out and learned to cook. He found that this also helped him make new friends. He discovered that when he shopped at farmers markets and places where you can get real food, it opened his eyes to a lot of tastes beyond cheese, sweet, salt and deep-fried – and he has save massive amounts of money.

My wife is becoming an electrician

How would you feel if your wife became an electrician? A woman in Oregon got sick and tired of working retail. She was earning the maximum for her type of job at $14.50 an hour and couldn’t earn any more without going into management, which she felt was its own special hell. Her husband encouraged her to get training that was offered for women interested in the trades. She took this training and is now three years into an apprenticeship as an electrician. The schooling she got to learn her trade was free and she gets paid about two times as much now as previously, and will make even more after she’s completed her training. Her husband advises people to look to trades and trade schools instead of colleges these days. They need more people, pay really well and offer great benefits. It’s way better than what the service industry and retail jobs offer and at the same time you end up with a profession you can be really proud of.

I live off of other people

One man admits that he makes ends meet by living off of other people. He also rents rooms dirt cheap instead of apartments. These rooms are usually cramped and small but they cost less and sometimes there are odd rules like the time he lived in a commune where everyone shared everything. He preaches you should watch what you spend and spend only on those things you really need.

I have a small savings habits

While you might be able to save big by cutting out those large expenditures like cable or entertainment, it’s also possible to do as this man did and develop small savings habits. He learned to cut his hair with a buzzer rather than paying for a haircut every month or so. He asks his friends and family to give him Amazon gift cards for Christmas and his birthday and uses them when he needs to replace something such as work shoes. He also learned the value of eating an early dinner and buying his drinks pregame instead of at the sporting event where you pay lots more. He also now walks to work.

budget on top of moneyYNAB has been a godsend

YNAB or You Need A Budget is a program designed to help people create and stay on a budget. “Jim” says it has been a godsend. It helped him go from being in serious trouble every month to having a surplus and a savings account for expensive trips. He found that it was amazing how much control he had over his finances when he could see where his money was going. He feels YNAB is better than most other budgeting systems because it links his home computer to his cell phone enabling him to enter all information about this spending immediately. If he sees that one of his budget items has gone red (spent more than he had budgeted) he just moves money around to fix it.

I had a “realization”

One person commented that his break through was when realization stepped in – and he realized he was just living from paycheck to paycheck. What he did to break the cycle was to first learn minimalism — that possessions don’t make you happy. He had always hated the thought of having to stay accountable but has learned the benefits of it. He tracks every single dollar he spends. He reports that there are plenty of apps out there that do the job very well. He also maintains a large gap month in and month out. This is the gap between his income and his expenses and, of course, the larger the gap the better.

I paid off my auto loan three years earlyMan leaping with joy Rev 1

One person stopped the paycheck-to-paycheck cycle when he realized that his money was being spent on a lot of little things over the course of a month. He stopped buying little trinkets because they were just a dollar or a shirt because it was on sale. He eliminated cable TV and switched to a cheaper phone plan. He said he has also gotten better about shopping for groceries. By doing all this he was able to save several hundred dollars a month and used the money to pay off his debts. He was able to buy a car and pay it off three years early. He now makes sure that he has at least $2000 in the bank for unexpected emergencies. He found that one of the best things about paying off his car is that he could then raise the deductible on his insurance to a higher amount, which has also saved him money.

I pay myself first

This is an idea that was popularized by Warren Buffett. The secret according to one commenter is to make savings and investments part of your budget. Know how much you’ll invest each month in your 401(k), in paying down your debt and putting in your savings account. Put these funds into their respective categories immediately. If at all possible set it up so that the money is automatically withdrawn from your checking account and deposited into those other accounts. He found that if the money isn’t just sitting there all month he’s less tempted to spend it on a whim.

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.

4 Good Financial Habits That Can Go Too Far

woman looking at her credit cardYour financial habits are hands down, the key to improve your financial situation. It does not matter how much income you earn. If you implement the wrong habits because of incorrect financial concepts, then you have no chance of getting out of a bad economic situation.

Some people have grappled with the idea of what habits should and should not be implemented in their personal financial condition. There are so many misconceptions out there that it can be quite confusing to know which should be followed or not.

Take for instance our belief that credit card debt is caused by irresponsible spending. While it is true that your spending can lead you to unmanageable credit card balances, that is not the whole reason why you have credit card debt. According to a study done by Demos.org, there are other factors affecting your credit card spending. Things like your education, insurance coverage and children are part of the reasons why you are currently suffering from credit card debt. You have to understand these things before you can truly and completely be free of your compulsion to spend using your cards.

Just like this misconception, there are also a lot of things that you should know about financial habits. It is not a simple good and bad habit. You have to go deeper than that concept to truly understand what is right and wrong for you. Sure it is easy to say that you should practice only good financial behavior. But you have to know that there are certain habits that although they have good motives, can turn out of be really bad for you.

4 good habits that can ruin your finances

In truth, anything in extreme is never good for you. It is true what they say – too much of a good thing can also be bad for you. That being said, let us discuss 4 financial habits that will not do you good if exaggerated.

Saving too much for the future.

A lot of people might disagree here. In fact, financial experts love to preach this: we need to always think ahead into the future because we owe it to ourselves to have a good retirement. They say that we need to pay ourselves first – meaning we have to make sure that our retired future self will be well provided for. There is some justification to this but remember that you should also let yourself enjoy the present. We need to save but not to the expense of our present life being too miserable. What need do you have for millions of dollars in your retirement if you will only spend it on expensive medical treatments because you exhausted your body trying to earn money to save? Saving can save your life but you need to set a limit. Plan what you need to save up for and cut your present self some slack once in a while.

Cutting back on your unnecessary expenses.

This is another of the financial habits that can really tear consumers apart. Some people believe that cutting back on that latte is imperative if you have a lot of debt to pay for. There are also people who will tell you not to treat yourself to a spa or a massage because that money could go to your savings. If you think about it, these make a lot of sense but here’s what you should consider. Some unnecessary expenses are needed for you to be motivated enough to pursue your financial goals. People may think that the morning latte is a waste of money but if it gets you going in the morning, then indulge yourself. If that is important to you, then buy that unnecessary item. Just make sure that when you do so, it will not make your expenses bigger than your income or it will not put you in debt. But if you have the extra cash to spare without making your savings contributions for the month zero – then give yourself the needed pampering. You do not have to completely let go of these things to find financial happiness. In fact, it might be just what you need to be motivated.

Comparing prices.

We all want to get the best value for our money. However, you do not want to spend forever trying to figure out and compute what product to use. While we do not want to waste our money, you do not want to waste your time either. Take for instance couponing. It is true that this can help you lower your expenses but it is just too tedious and time consuming to do. If you have the option to work longer hours to earn more, wouldn’t you want to spend it earning instead of clipping coupons? Are you really saving if you are too obsessed with saving pennies on each purchase you make?

Forgoing professional services.

DIY – this is another of the financial habits that we are being encouraged to pursue. There are things like debt relief or financial planning that we can do on our own but this is not always applicable for everyone. Again, time is a factor here. But even if you have the time to work on something on your own, make sure that you can do it properly. There are certain tasks that are best left in the hands of  professional because the cost of making a mistake will end up making you spend more that you should. While it is a great idea to do it yourself, make sure that you really have the capabilities to do it correctly.

Learning to balance your present needs with your future goals

We are not saying that these financial habits are bad. We are just saying that they should be done in moderation and with a deep regard for present circumstances. Being wise with your spending and saving more money are great habits to have. However, you have to learn how to balance your present needs with that of your future goals.

There is this article on Forbes.com that discussed how even spending on experiences instead of material things may not make you happy. The article mentioned that if you focus on life experiences, it does not necessarily mean you will be happy with your spending. You have to take into consideration what is valuable to you as a person.

For some people concentrating on buying for the sake of experience could work but for others, it may not. For instance, buying clothes is more of materialism than experientialism. However, if you are in an industry wherein you need to portray your professionalism through your outward appearance then buying clothes is something that you know you have to do.

What we are trying to point out is this. The financial habits that you should pursue may or may not be according to what the majority is doing. Sure saving for retirement is a good idea but if it is keeping you from enjoying your life today, then you need to rethink how you can save for retirement without depriving the present.

All it really takes is to know what is in moderation. Even the good financial habits, when done in extreme can do you more harm than good. Do not be too blinded by your need to succeed financially. First and foremost, understand yourself and your financial personality. Once you have that knowledge firmly in place, you will know what you truly deserve out of your money. After all, it is just a tool to help you thrive in this life. Everything else, the rules, the control, the plan and the implementations are all up to you.

Want To Be Super Rich? You’ll Need To Have These 8 Traits

money raining on womanWho doesn’t want to be super rich? If you were to stop 10 people at random on the street and ask them if they’d like to be super rich, we’d be willing to bet that all 10 will say, “Yes.” The fact is that being super rich could be really fun. If you don’t believe us, just check out the mansion that Robin Williams is now selling or the fact that Steve Ballmer can pay $2 billion for a basketball team. For further proof there’s the yacht owned by David Geffen with its five floors, 82 rooms, and a basketball court.

Of course, most of these people did not become super rich overnight. They worked long, hard hours and they had these seven traits.

1. An entrepreneurial spirit

There’s an old saying that you can’t get rich on someone else’s paycheck. And this is basically true. Most of the super wealthy got that way by going into business for themselves. There are plenty of doctors, lawyers and corporate executives who are in the group of $5 million-plus but those who start their own businesses tend to end up being worth even more.

2. Always on the clock

People who have built successful businesses tend to view the 40-hour workweek as a sort of part-time schedule. The typically work 60-to 80-hour workweeks. And working vacations are usually the norm.

3. Very high energy

If you don’t have a high energy level, it’s unlikely that you will ever become super rich. Most very wealthy individuals have a ton of energy, don’t require much sleep and generally have upbeat attitudes.

4. Visionaries

Most of the super rich are visionaries. These are what are called “force of nature” people. They have the ability to look at situations and see possible futures. Once they spot a possibility they also have an incredible ability to focus their energy and efforts on it.

5. A high level of confidence

One psychologist says that most of his super rich clients got their wealth by possessing an “expansive, healthy grandiosity.” This means they have a sense that they can do anything. These people are also open to creative ways to achieve their goals. They have a great deal of confidence in themselves and others and totally believe that the world will accommodate their business ideas. Also some of the very wealthiest have what’s called a “narcissistic personality disorder.” In other words, they think they’re very special, require a lot of admiration, have a high sense of entitlement and don’t have much empathy for others.

6. Discriminating

Many of the super rich understand they are not the smartest person in the room on every possible issue. However, they know to surround themselves with people who are and who will help them realize their vision. Here’s an interesting fact — those who do best are those that move past sole proprietorships and partner with others to expand their companies.

7. Modest

Despite what you might see in movies or on television most multi-millionaires actually live very modestly. Some of the very richest have chosen to not increase their lifestyles in lockstep with their growing wealth. Some even continue wearing old plaid shirts – or at least the men do.

8. Tolerant of risk

If you start your own business, by the very nature of things you will need to be a risk taker. However, there’s no need to be an investing gambler. Most of the super rich have short-term investments but a longer time horizon than other investors. Like Warren Buffett, they will invest in a stock or companies then stick with it as long as it makes sense to them. However, they won’t go all in on one bet. Of course, there’s always the one person who bets it all on something, gets lucky and then gets out. However, this is not the recipe that works for most people.

Getting started on the road to being super rich

As noted above if your true goal is to become super rich your best bet is to start your own company. Of course, there is a negative to this and that’s the fact that in most cases you won’t have money to start that venture. As many people have discovered you can have the greatest idea in the world since the Internet but if you don’t have the money to put it into effect, you’re doomed to failure. The good news is that there is now a way to raise money to fund your amazing idea. It’s called crowdfunding.

What is crowdfunding?

This is where you collect money from backers – that’s the “crowd” – to fund your initiative. This is usually done on an Internet platform. Your initiative could be anything from a nonprofit to fund schools or emergency funds for an ill person to creating and selling a new product. It could even be for financing your startup company.

As you might guess, crowdfunding models require a number of participants. This includes the people such as yourself that propose the idea or project to be funded and then the crowd of people who support your proposal.

450 platforms

As of two years ago, there were more than 450 crowdfunding platforms. Of course, if you have a project you want to crowdfund you will need to do your own due diligence in order to determine which platform would be best for you depending on your project. This is because there are some important differences in the services provided by the different crowdfunding platforms. As an example of this, CrowdCube and Seedrs are both designed to help small companies issue shares over the Internet and then receive small investments from registered users in return. However, there is even a difference between these two as CrowdCube is meant for users to invest small amounts and then acquire shares directly in startup companies. On the other hand, Seedrs pools funds to invest in new businesses as what’s called a nominated agent.

Other platforms such as SellaBand and Kickstarter replace traditional intermediaries such as venture capitalists. They link project initiators, designers and new artists with committed supporters who believe strongly in the persons behind the projects and provide monetary support.

Recent Kickstarter projects

As an example of projects that were successfully launched on Kickstarter, there was the Pebble: E-Paper Watch for Android and the iPhone. The total amount pledged by supporters of this project was $10,000,845. A total of $8,596,474 was pledged in a Kickstarter campaign in support of Ouya, a new type of game console. A role-playing game titled Project Eternity raised $3,986,929 and Form 1, an affordable, professional 3-D printer garnered $2,945-885 in crowdfunding.

As you can see from these examples, the initiatives that do best on Kickstarter tend to be those in the technology sector. But don’t despair if your idea does not fit in this category. The movie Gosnell was crowd funded on the platform IndieGogo as was Canary Home Security and the health scanner Scanadu Scout. The movie Road Hard was crowdfunded on the platform FundAnything and the Tesla Museum found its crowdfunds on Indiegogo.

Finally, here’s a video courtesy of National Debt Relief on the Where Next, How Far, and What Are the Limits of Crowdfunding?

But the net/net of this is if you have a brilliant idea and the ability to sell it to others you could get crowdfunding, turn your dream into a reality and be well on your way towards becoming super rich.

3 Very Big Questions (And Answers) About Personal Finances

young woman looking at credit cardPersonal finances are a bit like your health. You need to keep an eye on them just as you need to watch what happens to you physically. If you’re smart you’ll have a physical exam once a year just as you should give your personal finances the occasional checkup. And you probably have questions about your finances just as you have questions about your health. Recent college graduates were surveyed regarding their questions about personal finances and here are the three that came up most often.

Why not have just a debit card?

Since credit cards can be very dangerous why have one? Why not just use a debit card instead? Yes, credit cards can be troublesome. However, they do come with some benefits. If you have a credit card and use it responsibly, this will help your credit score. Second, merchants sometimes require a credit card rather than a debit card. If your identity is stolen, undoing the damage from a stolen credit card can be easier than with a debit card. If you run into a dispute with a merchant, it’s often better to have used a credit card as your credit card issuer will help you settle the dispute. Plus, almost every credit card now comes with rewards that can be beneficial – assuming you don’t go into debt or end up having to pay high interest.

The cons of debit cards

The money comes out of your account immediately when you use a debit card. In comparison, with a credit card you get a short-term free loan and your money stays in the bank earning a return. In fact, with most credit cards you would get at least a 27-day free loan every month. Given today’s historically low interest rates this may not amount to much but interest rates will go up eventually.

Is it better to have no credit or bad credit?

The problem with bad credit is that it’s very hard to fix. If you have bad credit the first thing you must stop running up more debt. You will need to create an emergency account and a budget that will require you to do and buy only what your income will cover. In addition, you will need to pay all your bills on time and in full, and pay down your debt. This includes everything even any accounts you have that were charged off. As you can imagine, this will require a lot of discipline and commitment – no matter why it was that you developed bad credit in the first place. If you have no credit it’s fairly easy to establish good credit. The reason why you want to do this is so that you will have it when you need it to get a home, a new car or for some other major purchase. You need to responsibly handle your savings and checking account and should get a debit card with no over-limit protection and maybe a secured credit card. If you have a secured credit card and use it responsibly then after six months you should be able to get an unsecured car with a low credit limit and no over limit protection. Of course, while you’re doing this you will have to pay all of your bills on time.

Girl looking worriedWhat’s the best way to pay off credit card debts?

The first thing you need to do is create an emergency savings account to make sure that if something happens you don’t fall into more debt. You also need an honest and realistic budget so you can see what you spend your money on and whether it is a wish, a want, a luxury or a convenience that you could do without. Once you have done these things the next step is to get to work and pay off those credit card debts as quickly as you can. There are several schools of thought as to the best way to do this. The financial guru, Dave Ramsey, recommends what he calls the snowball method of paying off credit card debts. What this amounts to putting your debts in order from the one with the lowest balance down to the one with the largest. You then focus all of your efforts on paying off the one with the lowest balance while continuing to make the minimum monthly payments on your other credit card debts. When you get that first debt paid off you will have extra money you can use to pay off the credit card with the next lowest balance and so on. Dave calls this the snowball method because like a snowball rolling downhill you will pick up more and more momentum as you pay off each debt. However there are other financial experts that believe it’s best to put your credit card debts in order from the one with the highest interest rate down to the one with the lowest. You then concentrate on paying off the one with the highest interest rate first as this will save you the most money. Which of these two methods would be best for you? It really boils down to a matter of personal choice. The important thing is to pick one and then stick to it.

How it used to be

Until very recently it was easy to understand how to handle credit cards to keep from having them negatively affect your credit score. All you had to do was… • Make every one of your payments – at least the minimums due – on time every month • Be sure to keep your balances below 30% of your credit cards’ credit limits. Of course, it’s better to have an even lower percentage but the difference that 10% or 20% make to your score is really very minimal when compared to 30%. • Make sure that you apply for a new credit card only when you need it. Your credit score can be negatively affected if you have a lot of recently opened accounts.

A new factor in credit scoring

But now there’s a new factor in credit scoring as the three credit bureaus are now using the amount by which you pay down your cards each month in calculating your score. It’s likely that other bureaus and scoring companies will soon follow suit. What’s the purpose of this? It’s to differentiate between people who pay down their balances in full each month (“transacters”) and people called “revolvers,” who carry forward their balances from one month to the next. The theory behind this is that people who pay off their balances each month are likely to be more credit worthy and so deserve higher scores. A spokesperson for FICO, the company that invented credit scoring, has said that it is still studying the data and hasn’t yet changed its systems. In addition to having invented credit scoring, FICO is the company whose credit scores are used in more than 90% of all lending decisions made in the US.

How this could affect you

If companies in the credit-reference industry and FICO begin to differentiate between “revolvers” and “transacters,” the “revolvers” could see their scores being downgraded even if they always make the minimum or higher payments on their credit cards on time every month. And this could lead to a significant change in how people view their credit cards and there could soon be fewer “revolvers.”

Bad news for the credit card issuers

In turn, this could be bad news for the credit card companies. Would you use your cards to borrow if you knew that this would probably make your home, auto and other loans more expensive? For that matter, the interest that credit card companies garner from those that roll forward their balances every month is an important revenue stream. One of the best-kept secrets of the credit card business is that people that always pay their balances on time are referred to as “deadbeats,” because they generate little or no profit for the credit card companies.

Don’t Let Money Problems Drive You To Divorce

Studio shot of a young couple fightingA lot of things in life happen by accident. But divorce isn’t one of them. Whether you’ve been married two years or 25 problems cab build up. When you allow those annoying little issues to continue without being resolved they can quickly become cumulative. And before you know it petty disagreements have turned into shouting matches.

Can you guess the number one reason why couples divorce? Believe it or not, it’s due to a lack of communication. When couples don’t share their feelings, it quickly creates distance. If you keep your feelings to yourself and don’t tell your partner what’s happening, this can quickly lead to problems.

But how about the number two reason? Did you guess that it’s finances? If the two of you talk money, this can make your life better or in some cases worse. If you find that money is a constant source of disagreement, your marriage is almost certain to end up in divorce.

The problem of income disparity

One thing that often causes problems is an income disparity between the husband and wife. Historically, the husband was the major breadwinner. Today, not so much. In fact, according to a study done recently as reported in the Washington Post, nearly four in 10 families with kids under 18 are now headed by women that are the only or primary breadwinners for their families. And the percentage of mothers that are married and earn more than their husbands rose from 4% 1960 to 15% in 2011. This has given rise to the stereotype that when the woman is the biggest breadwinner, the husband will suffer from feelings of emasculation and a bruised ego and that the partners will fight more than other couples.

However, it turns out this is not entirely true. Money magazine has done surveys with results suggesting that in those marriages where the women earn as much or more than their husbands they are at least as happy and as hot as marriages where there is the traditional earner relationship – and in some cases, more so. One indicator of this is marital satisfaction. In those households where women earn as much or more than men the couples were as much in love as everyone else. In fact, six in 10 gave their relationship a five or “very much in love” on a scale of 1 to 5. They were also a bit happier – 83% said they were very or extremely happy vs. 77% of families where the wives earned nothing at all or less than their husbands.

What to do if you’re having money problems

Most experts say that the first thing you need to do to level out things is do a financial and emotional inventory. This is where you sit down and calculate how much that each of you earns, your levels of debt and your shared expenses. That way you can develop long-term objectives. The emotional component is this could help you decide who’s best qualified to take responsibility for the family’s finances and manage the bills. This can also help you determine the payment arrangement that would best suit your egos and your needs. What makes the most sense is to assign money management to the person who is better organized, more interested in them or thriftier. What this means, and most research support, is that couples shouldn’t decide who controls the money based on gender or income. However, it is important that the person that makes the money decisions doesn’t forget to consult with his or her spouse.

Be transparent

Both you and your partner should be able to access all accounts that are online such as bill paying and banking. This is not only useful in the event of an emergency but will also give the two of you a good picture of your finances. There are websites like Mint.com that are free and where you both can get access to all your financial accounts. This would allow the two of you to keep track of your debt and your spending. You should also get together a couple of times a month to make sure you agree as to what’s happening with your money.

Make decisions together

It’s important that the two of you make decisions together. Each of you should be willing to ask when you need help, agree to compromises and even admit if you feel you’ve lost control. Sometimes all it takes is to just call or text your partner and say, “Is this worth it? Can we really afford this? What’s your take?” It’s crucial to confess when you don’t know something. This allows your partner to give his or her opinion and maybe even save your financial fanny.

Lose that possessiveness

If you’re not the one managing your family’s finances it’s important that you lose possessiveness of your money. You need to be ready to yield control of all decisions that have to do with your finances and maybe even some of the lifestyle you feel you deserve and can afford. Never forget you’re in a partnership.

The best system is one where each person keeps some financial independence but that there is also shared responsibility. You should have three “buckets” of money that need to be managed –mine, yours and ours. For the accounts you label “ours” you will need to decide on a “price level” – or that amount at which you will discuss things before making a purchase. If you set up individual accounts (the “mine” and “yours”), this should help reduce fights over money. If you want to buy something you can use the “mine” account without having to ask your partner for permission. In addition, the money in your account can also provide a safeguard in the event of a financial emergency.

Couple+ArguingIf you married your opposite?

As you may already know, most of us marry our money opposites. If you’re a saver and a worrier you may find it difficult to understand why your freewheeling spouse wants to take a costly vacation. In turn, she may feel frustrated when you claim you can’t afford it. Try to remove the emotion from your discussion by looking at hard numbers to determine whether your spouse’s spending is really interfering with your ability to build an adequate emergency fund or to save for your retirement. If so, you will need to discuss the issue. When you do this try to structure the conversation around the goal and not your partner’s free-spending ways.

Master the basics

Studies show that women step up their game more as they earn more money. However, both partners need to understand the family’s finances regardless of who earns how much. Some financial planners have said that it is particularly dangerous for wives to remain in the dark about the family’s finances because they tend to live longer than their husbands. You should schedule time at least twice a year to sit down with your spouse and review what you owe and what you own. Then make sure you talk about how these numbers match up with your short term and future financial goals.

Say “thanks” and really mean it

If your goal is to level the emotional playing field when it comes to money, it helps to recognize those things that each of you brings to the marriage, financial or in other ways. Don’t make the mistake of equating income with having the ultimate power in the relationship. Be sure to always involve your partner in financial decision-making. In other words, share the power.

Four and A Half Simple Steps Towards Getting A Financial Education

Smiling couple with laptop

There are studies showing that millionaires spend an average of 8.4 hours a month planning and managing their finances. Would you like to be a millionaire? Are you spending eight or more hours a month managing your finances? The mistake many people make is just not devoting enough time to their personal finances. What you should do is set up a recurring date on your calendar for your Money Date. That means allocating about one hour or so a week, which certainly isn’t very much when you consider how important your finances are. When you have your Money Date you should update your family budget, review any expenses you have that are upcoming and pay your bills though you should, of course, automate as many of them as you can. Finally, be sure to review your checking and savings accounts for accuracy and discuss any other financial matters that are pressing.

You could actually make your Money Date fun. You might dance, light candles, listen to music or do whatever it is that would make personal finances fun for you. The reason for this is that the more fun it is, the more likely it is that you will continue to have Money Dates and consistency is what’s critical.

2. Spend 20 minutes a week reading about personal finance

Most experts say that it would be a mistake for you to try to learn all about personal finance at once. Instead, you should break up your learning into palatable chunks. As an example this, allow 20 minutes a week (in addition to your Money Date) to read about personal finance. Just choose just one topic a week and read about it until you understand it thoroughly and then move on to something else. For example, if you would like to learn more about managing credit card debt, you might get the book “The Total Money Makeover” by Dave Ramsey. Among other things, this book will teach you what Dave calls the “snowball” technique for paying off debt. This is where you organize your debts from the one with the lowest balance down to the one with the highest. You then do everything possible to pay off that credit card with the lowest balance while continuing to make the minimum payments on your other debts. Once you have that first debt paid off, you will have extra money to pay off the debt with the second lowest balance. In addition, Dave’s book will also teach you how to save money and create a budget. If you work your way through this book in small chunks, you’ll master at least one thing about personal finance a week.

3. Find a mentor

As you begin to learn about topics such as saving, spending, credit, debt, retirement strategies, investing and so forth, choose people you admire and think of as smart money managers to be your mentors. While there is a lot of financial talk out there, most of what your family members and friends tell you about money is probably wrong. Instead, talk to your mentors and other entrepreneurs that you know that are successful in handling their finances. Be sure to ask them about both their successes and failures.

You can actually learn from the mistakes of others. In turn, this can help you avoid a lot of financial mishaps. Do keep in mind that discussing money can be a sensitive thing for many people. This means you should start small and then try to work your way up into more in-depth conversations. And always thank people for their advice.

4. Test out strategies

Most successful business people learned that the best way to determine if a business idea will work or not is to test it out. When it comes to your personal finances, you should follow the same philosophy. The fact is that some financial strategies work better for some people than others. Think about budgeting as an example. There are dozens if not hundreds of different ways to budget your monthly your expenses and income but you really won’t know what works best for you until you give it a try. You might attempt some different budgeting systems and then discover, as have many people, that the best solution would be a spreadsheet you custom design yourself – based on your needs, your income and your life style.

5. The one-half step

I titled this article “4 1/2 Steps Towards Getting A Financial Education” because there is actually a fifth step but I realize it’s not for everyone. It’s to hire a Certified Financial Planner. A Certified Financial Planner could not only mentor you but he or she would also help you stay on track on your financial journey. Regardless of where you stand financially, it takes dedication and commitment and continued financial education to succeed. If you can afford a Certified Financial Planner and if you believe that he or she could help you better understand personal finance and remain on track in terms of your commitment and dedication, then this could make sense for you. However, if you’re just starting out on your financial journey and you don’t have much money, then you might be better off following the first four simple steps towards a financial education and holding off on hiring a Certified Financial Planner for a few years.

A new free tool called Manilla

A free tool that could help you on your financial journey is Manilla. It would make it easier for you to manage your  bills and other accounts on your mobile, tablet and desktop called Manilla. It’s from the Hearst Company and is free. It’s a secure digital mailbox service where you store all your financial documents. Manilla even includes a Bill Share tool that could help you during next year’s tax season, as it will eliminate the need to gather and organize all of your documents before the April 15 deadline.

Kiplinger’s recently named Manilla to its Personal Finance’s 2013 Best of Everything List. Also, CNBC had it on its list of the 10 best financial apps for 2014. The way it works is that you add all your financial documents to Manilla. It then gives you one secure access point to all your household accounts and services. You can use it to manage and share your household bills, travel programs, entertainment, financial and brokerage, magazine subscriptions and healthcare accounts so that you will always know your balances and due dates. In short Manilla can simplify and organize your financial life. Manilla’s features are even available on the go as there are iOS and android mobile apps available for it that have been rated four stars by its users. This means that you only need one password to get an organized view of all your account information, emails and text reminders to pay bills, check out expiring subscriptions and manage daily deals. Plus, it offers an unlimited amount of storage along with easy document retrieval.

Here courtesy of National Debt Relief is a brief video that explains more about Manilla’s features and benefits …

 

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