Personal Finance 101 Posts of the Day 4/30/07

• Kiplinger’s talks about some specific finance situations that impact women.
• The Digerati Life gives 10 ways to simplify your finances.

Personal Finance 101 Posts of the Day 4/29/07

• No Credit Needed talks about credit card fees.
• Blueprint for Financial Prosperity talks about asset allocation.

Personal Finance 101 Posts of the Day 4/28/07

• Ask Mr. Credit Card gives some tips on how to reduce credit card spending.

Personal Finance 101 Posts of the Day 4/28/07

• Ask Mr. Credit Card gives some tips on how to reduce credit card spending.

Personal Finance 101 Posts of the Day 4/27/07

• The Frugalist gives 10 alternatives to credit cards for those who don’t want/can’t get one.
• Make Your Nut talks about the benefits of shopping at an ethnic market.
• MSN Money talks about 4 keys to good credit.
• We're in Debt talks about why renting to own is bad.
  

Payday Loan Victims

I read the following post about payday loan victims on All Financial Matters and I have the following comments to his views:

I agree! One thing I talk a lot about a lot in my Personal Finance 101 class series is that YOU are the only person who cares about your money and YOU are the only person who is responsible for the decisions you make regarding your money. Way too many people these days blame others when realistically the problem was caused because the person was uneducated and did nothing to change that situation. Education, or lack thereof, is a personal choice but again, it's typically blamed on others.

Personal responsibility is something that is definitely missing from today's society and I see it everywhere from the cashier at CVS to my co-workers.

The only advantage is that for those of us who are responsible, we stand out above the crowd and more doors open for us.

So what it comes down to is: take responsibility for your mistakes. Admit that you made bad choices, figure out how to change things going forward, and move on with your life. It'll take time and effort and, probably, sacrifice, but it'll be worth it in the long run.

Personal Finance 101 Posts of the Day 4/26/07

• Vanguard announces changes to its fee policies.
• Bargain-Value lists 13 mistakes they made with money.
• Frugal Journey talks about the things they get at the Dollar Store.

Horrible about posting! :-(

I know, I've been really behind in posting lately. I spent the last week in Oregon preparing for my move and I'm really focused on that right now. I'll do my best to keep up in the future but I'll probably be spotty until mid-May. So, thanks for hanging in there and to my new readers, thanks for coming by! I promise, I'll get better soon!

pf101

Personal Finance 101 Posts of the Day 4/25/07

• Ask Mr. Credit Card talks about the impact of credit on insurance rates.
• Free Money Finance talks about how much you should be saving.
• Zen Habits gives suggestions on brown bag lunches.
• Queercents talks about the pitfalls of renting your fist apartment.
• Make Your Nut talks about how expensive it is to NOT brown bag your lunch.
• The Simple Dollar takes a look at couples and money.
• Laws of Finance talks about the benefits of paying your credit cards online.
• How I Save Money lists 25 ways they save money.
• Prime Time Money talks about why paying off debt brings you success.
• Personal Finance Advice talks about the different debt payment strategies.
• Finance is Personal gives some advice to those just starting out.

Personal Finance 101 Posts of the Day 4/24/07

• Free Money Finance reminds us not to count on an inheritance to fix us for life.
• Willster’s Financial Blog talks about pre-paid cell phone plans. I plan on doing this when my current contract is up. I get VOIP for $30/year from yahoo so there’s no reason I can’t use that for most of my calls since I usually have my laptop with me.
• CFO talks about how to stick to a budget while using credit cards.
• Principled Discovery talks about what our junk mail says about the financial future of the country.
• Accumulating Money talks about the evils of payday loans.
  

Personal Finance 101 Posts of the Day 4/23/07

• Credit Card Blog lists 10 reasons why everyone needs a credit card.
• Debt Consolidation News talks about how to get a pre-nup signed. I know it’s a touchy subject for a lot of people but I’m personally in favor of pre-nups. People argue that it means you’re assuming the marriage will fail but IMO, all you’re doing is being realistic. There is a chance that the marriage will end and if you address that in advance it probably means you have great communication which will probably help your marriage last.
• Blueprint for Financial Prosperity has a great post on why it may make sense to NOT roll over a 401k to an IRA. I agree with him and I get asked this question all the time in my classes. There are times when it makes sense to leave your money in a 401k. Typically they are when you have access to investments that would otherwise be closed to you.
• Free Money Finance talks about asset allocation.
• Enhanced Life talks about the excuses people make for not saving.
• Life of a Resident Alien gives 22 tips on how to build an emergency fund.
• An Engineering Approach to Money talks about why it’s good to fund your Roth early.
• 3 Debt Consolidation talks about different debt consolidation methods.
• Canadian Financial stuff talks about how even our northern neighbors hate payday loans.
• Queercents talks about developing a spending plan.

Personal Finance 101 Posts of the Day 4/21/07

• Blunt Money talks about how to set goals.

Personal Finance 101 Posts of the Day 4/20/07

• Ask Mr. Credit Card talks about how to choose a consumer credit counseling service.
• All Financial Matters has great advice for college grads.
• We’re in Debt lists 7 warning signs you’re spending too much.
• Free Money Finance talks about ways to earn extra money.
• My Two Dollars talks about the financial benefits of doing what you love.
• Mint talks about how to jump start your credit when you’re young.
• Your Credit Score Secrets outlines 5 steps to fix your credit score.
• Laws of Finance reminds us of an often overlooked budget item.

Personal Finance 101 Posts of the Day 4/19/07

• Ask Mr. Credit Card talks about how to increase cash flow for debt relief.
• The Consumerist talks about why financial planners are bad.

Personal Finance 101 Posts of the Day 4/18/07

• Web CFP talks about the tax consequences of mutual funds.
• Young and Broke talks about why young people aren’t saving.
• Credit Card Lowdown talks about 10 common credit card scams.
• Edith Yeung talks about the 7 habits of highly effective money managers.
• Money Walks talks about the difference between being frugal and cheap.
• Zen Habit tells you how to make your finances automatic. I’m a huge supporter of this and it’s something I stress in my Personal Finance 101 classes.
• Get Rich Slowly tells us how to fight the urge to splurge.
• Everybody Loves Your Money talks about keeping up with the Jones’.
• Aridni talks about 3 steps of financial planning.
• Debt Consolidation News gives us the lazy man’s guide to budgeting.

Personal Finance 101 Posts of the Day 4/17/07

• Pro Bargain Hunter compares personal finance blogs.
• The Wise Bread lists his own take on the 7 deadly sins.
• My Simple Life lists 20 ways to keep from spending money.
• The Simple Dollar suggests ideas on things to do during a money-free weekend.
• Smart Money talks about how to save money when going out.
• The Motley Fool talks about putting your retirement savings on auto pilot.
• The Motley Fool talks about rolling your 401k to an IRA.
• Personal Finance Advice talks about ways to cut grocery costs.
• Free Money Finance debates debt payment methods.
• Journey to Financial Freedom takes a look at payday loans.

Personal Finance 101 Posts of the Day 4/16/07

• Everybody Loves Your Money lists the 13 top money saving ideas of all time.
• Frugalist lists 15 ways that being frugal makes you happier, healthier and sexier.
• The Digerati Life explains how much a car really costs.

Take control of your employer retirement plan!

This post is inspired by Broke Now, Rich Later's post on getting a Roth 401k offered at his company.

I love to hear about people like BNRL who are taking control of their retirement options at work. There are too many people who are stuck with horrible investment options at their jobs but prefer to complain about it than to do anything. They just assume that since it's what's in place, it's what the company thinks is best.

In reality, what probably happened is that a representative of your company who knows nothing about benefits was sold a policy that sounded good at the time. They may not have known about things like sales loads, expense ratios or asset allocation options so they trusted the sales person to set them up with a good plan. Unfortunately, what likely happened is that the company got stuck with an expensive plan with bad investment options (like the one I saw recently with no international but 5 bond funds) and, that's what will reamain until someone who knows better comes along and makes an issue out of it.

You should be that someone. For your benefit and the benefit of others in the company.

Will it be easy? Nope. It will take time, effort and persistence. And, it may never happen. But you don't know if you don't try.

If you are going to go down this path, there are things you should be prepared for.

1. Whoever chose the plan, if they're still there, probably won't like that you're trying to change it because it will make them look bad. So, be *very* delicate in how you approach this. Don't make them wrong, just point out alternatives.
2. You should be willing to do this on your own time unless your company assigns this to you as a project.
3. You'll get much further if you have people standing behind you so rally the co-workers but don't be obnoxious by complaining about how horrible the benefits plan is. This will not make you any friends in management and those are the people you need to convince.
4. People like numbers but they like charts and graphs too. This is a sales pitch and you should treat it as such. Offer concrete examples and run the numbers of how this will impact the company and each investor bottom line. For example, if the cheapest fund in your selection is a S&P fund with a 1.15% ER (don't laugh, this is a real example) then run the numbers. Show the difference that a 1.15% ER will have on $10k invested over 30 years. Compare that to $10k invested in VFINX (Vanguard's S&P fund) with an expense ratio of .18% and you will have a nice fat number to show them.
5. Follow the chain of command. Nothing will tick people off more than if you skip them and they hear about it from someone else.
6. Provide expert commentary. If your company is ok with it, find a consultant to hire to set up the new plan. If you're flying solo and have to convince them, do your homework and bring in supporting documentation from known sources.
7. If at first you don't succeed try, try again. If you're automatically shot down, then you need to really rally the troops. Start a grass roots campaign for financial education and get a petition going. Make your point clearly and without emotion. Whatever you do, don't lose your cool.

There are other things, but that should get you started. I'm hoping that BNRL will post about how things are going for him so others can get ideas to use.

If you do decide to go down this path and they agree to change the plan/policy/whatever, see if you can shoot for the stars and get them to implement an auto-enrollment policy. I am a huge supporter of these for two main reasons (the first one is most important to me).

1. It will get the people who otherwise wouldn't enroll on their own to start investing. People don't enroll for lots of reasons, most of which are excuses so if you make it opt-out instead of opt-in, most people won't complain. True story: Recently I was presenting a basic financial education seminar at a local small business. At the end of the seminar I did a little poll to see how many people in that office were enrolled in the 403b plan which had just started a matching program. I was not surprised to learn that a full 2/3 of the people attending the seminar were not enrolled in the plan. ALL of them intended to enroll but just hadn't gotten around to it or didn't understand the process. The solution: everyone got their forms, sat around the table and we got them all enrolled right then. If that company had an auto-enrollment program, all of those people would have been participating the whole time (some had been there for 3 or more years) and they would be much further along the road to retirement.
2. It will benefit the company by getting more money into the plan. This will do a few things: 1 - they will probably get better deals on plan fees. 2 - it will help with non-discrimination testing. 3 - it will allow highly compensated employees to contribute more if they've been phased out.

If you decide to take this all on, then good luck! If you have any questions, just ask I'll be happy to help in any way that I can.

Personal Finance 101 Posts of the Day 4/14/07

• Frugal Zeitgeist talks about marriage and money.
• My Money Blog discusses renting vs. buying.
• Money Walks gives ideas on how to teach kids about money.
• Free Money Finance talks about the 10 best money moves you can make.
• Blogging Away Debt wonders who’s responsible for your debt.

Personal Finance 101 posts of the day 4/13/07

• Uncle Bill shows us that negative savings isn't always negative.
• Grad Money Matters talks about whether you should loan money to friends and family.
• Personal Finance Advice wonders if you can save too much for retirement.
• Aimee’s Blog talks about marriage and money.
• Crazy Money talks about the dangers of mental accounting.
• 3 Debt Consolidation talks about DIY debt reduction plans.
• Smart Money lists 5 sneaky bank fees to watch out for.
• Aridni talks about the value of your time. This is a great thing to keep in mind. You should use it in lots of areas but particularly when you're spending time doing research for investing. Whenever I have a 'stock picking guru' bragging about his returns I ask him what his return was minus taxes, fees and the value of his time spent on research/execution. That always stops them dead because most people don't think to include the time they spend researching as an expense for investing.
• Money and Happiness Blog talks about some of the best kept finanical planning secrets.
  

Personal Finance 101 posts of the day 4/12/07

• Young and Broke talks about how people aren't saving these days.
• Broke Now Rich Later tells us how he's campaigning for a Roth 401k at his job.
• Consumerism Commentary asks if personal finance should be required in high schools. He says no but I strongly disagree.
• The 6 Month Project talks about ways to trim your budget.
• Mighty Bargain Hunter talks about pre-packing your lunch to take to work.
• The Thinking Men talk about how you can get a free credit report.
• Yahoo Finance has an article about how deluded people are about their retirement prospects.
• Free Money Finance asked his readers for suggestions on how to save on a small income (read the comments).
• Fool for Travel gives some great tips on how to save money while traveling.
• MSN Money talks about payday loans and their huge interest rates.

Personal Finance 101 Posts of the Day 4/11/07

• Ask Mr. Credit Card discusses debt repayment plans.
• 3 Debt Consolidation talks about debt reduction mistakes.
• My Personal Finance Odyssey talks about the US savings rate.
• 5 Cent Nickel talks about how to prioritize your retirement contributions.
• The Bargain Queen gives us a lesson in bargain shopping 101.
• Make Your Nut talks about credit scoring and the 7 year myth.
• Canadian Dream lists 10 signs your retirement plan isn’t going to work.
• Everybody Loves Your Money talks about finding the balance between living for today and saving for tomorrow.
• Free Money Finance talks about how Social Security is a rip-off.
• Queercents talks about 101 ways to save a buck or two.

Personal Finance 101 posts of the day 4/10/07

• Young and Broke lets us know that Minnesota is going to require financial education in school. And can I just say: About freaking time!!! Hopefully more states get with the program!
• Care One lists 101 ways to save one dollar a week.
• Ask Mr. Credit Card talks about what he’s learned from 10 years of marriage.
• Web Financial Planner wonders how rich is rich enough.
• Queercents talks about the US savings rate.
• Investments and Loans tells how to build your emergency fund.
• Debt Consolidation News talks about why home ownership may not be for everyone.
• Free Money Finance talks about the disconnect between what teens know and what they think they know (shocker!) about money.
• Free Money Finance talks about taking responsibility for your financial decisions.

Personal Finance 101 Posts of the Day 4/9/07

• Get Rich Slowly talks about choosing to fund a retirement account vs. paying off debt.
• Debt Free talks about the statute of limitations on old debts.
• Blueprint for Financial Prosperity asks if married couples should combine finances.
• Living Almost Large talks about the risks of being a stay at home parent.

Credit reports. What's on yours?

Oh Cash has a good post about what's included in your credit report and how you can improve your score.

There's a lot of great information in this post I just have a couple of comment.

1. It's usually not a great idea to close old credit cards. This is bad for a couple reasons. 1 - it removes that account from your average age calculation which will lower your score. 2 - it removes that credit limit from your utilization which can hurt your score. Instead, you should try to keep your oldest card open as long as possible. If you must close credit card accounts it's best to close the newest accounts with the lowest limits.
2. Another way to increase your score is to have someone with good credit add you as an Authorized User to their account. With most companies this effectively gives you the history associated with that card which can give you a quick and easy boost. This is a better option than getting a co-signer since with an AU you are not financially tied to anyone.

The biggest thing to remember is that it's important to check your credit on a regular basis. You can get 1 report free from each of the big three credit agencies by going to www.annualcreditreport.com. I usually suggest spreading them out and getting one every 4 months. This gives you ongoing access to your report throughout the year.

Personal Finance 101 Posts of the Day 4/8/07

• Sameer Writer talks about the advantages and disadvantages of socially responsible investing.
• Mint talks about what to do now that you’ve graduated.
• The DINKS talk about how to pay off debt.
• The Frugal Law Student talks about what it means to be frugal when you’re wealthy.
• Investments and Loans talks about the evils of credit cards.

Personal Finance 101 Posts of the Day 4/7/07

• Personal Finance Odyssey talks about applying the 80/20 principle to personal finance.
• Debt Consolidation News talks about how to get your expenses under control.
• Ask Mr. Credit Card gives tips on how to choose a debt consolidation company.
• 1031 Exchange Lowdown talks about things that keep people poor.

Personal Finance 101 Posts of the Day 4/6/07

• Fire Finance talks about the risks of payday loans.
• Money Walks give 10 tips on how to master your savings skills.
• Ririan Project lists 22 myths that can cost you money.
• Wealth Building Lessons talks about how to increase your FICO score.
• Saving Simply talks about why tax refunds are bad.
• Bankruptcy Law New York posts about why he hates pre-bankruptcy credit counseling.
• Money Walks talks about how to become a saver.

Personal Finance 101 Posts of the Day 4/5/07

• Debt Free talks about how to save money every day.
• Interest.org has a great article about credit card tricks and tactics that you should know.
• An old post from Matt Hutter talks about how to save money on credit cards.
• The Frugal Law Student tells us 5 things you should never buy new. #2 is my downfall. I buy 90% of my books used but I never borrow them from the library.
• Frugal Zeitgeist talks about why cheaper isn’t always better.
• My Financial Journey talks about finding the balance between living and saving. I highly recommend every frugal person read this! It’s important information.
• Advanced Personal Finance talks about what financial records you need to keep and which you can toss.
• Frugal for Life talks about the benefits of frugal living.

Personal Finance 101 Posts of the Day 4/4/07

• PF Blog asks if $1M is still enough
• Money Smart Life asks if you should use your emergency fund to pay off debt.
• 12 Years wonders what ever happened to frugality.
• Grad Money Matters tells us to stop blaming our credit cards!
• Personal Finance Advice talks about debt reduction mistakes.
• Money, Matter and More talks about how to save money and time by making left turns.

Personal Finance 101 Posts of the Day 4/3/07

• Money and Such has a funny post about when to ditch your financial planner.
• The Finance Buff talks about who pays for credit card rewards.

Interest Only Loans

All Financial Matters has this to say about interest only mortgages. Here are my comments on the topic.

I agree, that IO loans are a great option for people that use them correctly. I personally wouldn't invest the money in the market, though that would probably be the most financially agressive thing to do. What I would do would be to have the IO loan with the low IO payment but continue to pay as if it was the 30-year loan. This would substantially reduce the length of my mortgage.

IO loans were initially developed so people with unsteady income (sales people, etc.) could have a low fixed rate which would allow them to make minimum payment and also catch-up payments throughout the term of the loan. This would keep them on track for paying it off in 30 years (or fewer) and wouldn't be such a shock to the system when it reverted after the IO portion finished.

It was NOT intended to do what it has been used for recently (sorry commenter Joe) which is to let people get into houses they can't afford with traditional mortgages. All this new use has done is guarantee that when it comes time to adjust a lot of people are going to be in trouble and will have to sell (if they aren't upsidedown on their mortgage). It's like a credit card. If you don't make more than the minimum payment you're going to get in trouble.

Personal Finance 101 posts of the day 4/2/07

• Blueprint for Financial Prosperity talks about Saving Beyond 401k and Roth IRA.
• Resident Alien lists 25 rules to grow rich by.
• Free Money Finance talks about how it’s the little splurges that can get you.
• Grad Money shows us how to get into the swing of cooking at home.
• Consumerist talks about how to stop living paycheck to paycheck.
• Make Love, Not Debt talks about how they developed their budget without killing eachother.

Personal Finance 101 Posts of the Day 4/1/07

• Picture of Wealth talks about relationships and money.
• The Simple Dollar talks about retirement benchmarks.

Refund Anticipation Loans Part 2

In January I wrote this post about how tax prep firms were getting into the Refund Anticipation Loan (RAL) business.

Now, according to this NY Times article, fewer people are making this financial mistake. Apparently the number of these loans has decreased 22.5%. All I can say is THANK GOD! These loans made me sick because they allowed people who know better to prey on those who don't. Lack of knowledge isn't a great excuse, but there is a level of trust involved when someone hires a financial professional of any sort (tax, investment, etc.). People assume that the person they're hiring isn't going to screw them over. Unfortunately that is what often happens.

The solution? Education! Education! Education! I keep talking about it, eventually I'm going to do it. I want to start a non-profit that is dedicated to getting financial education in our school systems. Until that happens though, I call on all of you! Particularly those of you who have kids. Get involved with your kids school and get the parents together to lobby for financial education requirements. The squeeky wheel gets the oil so come on people! Squeek loud!