Personal Finance 101 Posts of the Day 5/27/07

• Accumulating Money talks about in-service 401k rollovers.
• Boston Gal posts about how to keep your investment advisor from robbing you blind.
• The Simple Dollar tells us how to get past the need for keeping up with the Jones’.
• How I Save Money talks about how to simplify your budget.
• Not Made of Money talks about some store brand products his family uses to save money.
• Bankruptcy Law Network talks about borrowing money from a 401k to pay for debt.
• Fil-Am Personal Finance had a good post illustrating the benefits of starting saving early.
• Financial Jungle talks about closet index funds. (This is a really important think to look at wth all of your funds. Holding overlap can really mess with your asset allocation and cause you to get off track for your goals.)
  

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 4/16/07

• 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.

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 4/5/07

• 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 4/2/07

• 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.

10 Reasons You Aren’t Rich

From The Street, 10 Reasons You Aren't Rich covers some of the traps that people fall into that hold them back. (My comments in italics)

1. You Care What Your Neighbors Think This is huge! One of the reasons I'm leaving Washington, DC is that so many people around this area care about things like what you drive, where you work, etc. It gets old and really, the people worth knowing aren't the ones who care about what kind of car you drive or what kind of shoes you wear. Live your life in a way that makes you happy and comfortable and who cares what others think!
2. You Aren't Patient In today's world of easy credit and instant gratification it can be hard to wait to buy something until you have the cash. But, the advantages of waiting are: 1 - you save money in interest, 2 - you tend to appreciate things you have to work hard to get instead of those that come easily, 3 - waiting gives you time to decide if you *really* want something rather than just following your impulse, 4 - saving up gives you time to do your homework and find the best deal on whatever it is that you want.
3. You Have Bad Habits This includes your "Latte Factor." The three hardest things to give up are: coffee, alcohol and cigarettes. It's not a coincidence that they're also the most expensive and the worst for your health. Cutting back on those vices not only saves you money today but also in the future on health care costs.
4. You Have No Goals My Goal Setting 101 class is my least popular class but it's the one that I think people get the most from. The first question I ask is: "If you don't know where you're going, how will you know when you get there?" The answer to that question is: You don't. Without goals you're just floating along rather than moving forward with a purpose. IMO, goal setting is the most important part of financial planning but is also the most overlooked.
5. You Haven't Prepared This is why you need an emergency fund. It's a fact of life: Stuff happens. No matter how prepared you are, you aren't prepared for everything. But, you can do your best. The easiest thing you can do is establish an emergency fund. This fund should be in a cash account (or equivalent) that can be accessed quickly and without penalty. You should aim to have at least 3 months worth of expenses in your account though some people like to keep much more. When you figure out how much you need, take an honest look at your life. Is your job steady? Do you have dependents? Do you own a house? Do you have adequate insurance? The answers to those questions will help you figure out how much (or how little) you need to have in your account to be secure.
   
6. You Try to Make a Quick Buck When people approach me about the best way to turn $1,000 into $10,000 in a week I have 2 standard responses: 1 - go to Vegas. At least there you get free drinks while you gamble with your money. 2 - Re-read The Tortise and the Hare but this time, learn the lesson. When it comes to investing, the vast majority of the time slow and steady will win over the long run. Set your investment up, make it automatic and then forget about it except for when you re-balance twice a year.
7. You Rely on Others to Take Care of Your Money I'm a huge proponent of DIY. It's why I started Personal Finance 101. I saw the aftereffects of too many people who had gotten screwed by investment advisors who sold them bad products. There is no reason why someone can't manage their own money, particularly now that Target Retirement Funds exist. If you're just starting out, there are 2 books I recommend that every newbie read. The biggest thing to keep in mind: You are the only person who cares about your money!
8. You Invest in Things You Don't Understand I did this when I first started investing. I started buying stocks without knowing what I was doing. I just listened to what others were buying and followed the herd. Not only did I lose a *ton* of money to transaction fees, I lost a ton in the investment itself. Since then, I've sold off the losers, held on to the winners (I did get a couple right) and have stuck to funds. I have realized that not only do I not have the knowledge to pick stocks, I don't have the desire to learn the skill so funds are the way to go.
9. You're Financially Afraid I see this all the time, especially in those who lost a lot of money in the dot bomb. So many people who lost money during that time are too scared to invest in stocks again. Every time I ask them about their experience, they were always almost 100% in tech stocks and freaked and sold when stocks went down. When I explain to them what would have happened had they A - been diversified and B - stuck to an investment plan instead of freaking out they start to calm down. For those who are worried about investing in anything risky I usually suggest starting with a balanced fund like the Vanguard STAR fund. That fund is 60/40 stocks/bonds so, while it earns more than bonds it's not as volatile as stocks. I then suggest they start adding small amounts into more agressive funds once they're used to being a bit more agressive. I also forbid them from checking their accounts more than once every 6 months. Frequent account reviews are the worst thing people who are risk averse can do. Any little dip will freak them out and trigger a panic reaction.
10. You Ignore Your Finances I'm a big supporter of a hands-off money management style. But, that's very different from ignoring your money. To have a hands-off style, you first have to have a plan. Then, you can implement that plan, make it automatic and just check back a few times a year to make sure you're on track. Find the balance that works for you - somewhere between checking every day and checking once a year is good.
    

Personal Finance 101 Posts of the Day 3/28/07

• 7CM reminds us to Take a Money Day to Organize Your Finances
• Financial Baby Steps asks Should Personal Finance Be A General Education Class?. My answer is a resounding YES!!! The reason I started my business was because I kept hearing from way too many people who started their adult lives without even basic financial education and got themselves into trouble. It's horrible! My goal is to eventually start a non-profit geared towards requiring financial education in both high school and college. I think that the basics about credit and debt should be taught in high school before they start getting credit cards and digging a hole. In college they should expand on their basic education by teaching students about investing, retirement planning, goal setting and how to manage debt. Hopefully our government will wake up and take care of this.
• Wealth Building Lessons gives is Ben Stein’s Basic Rules of Retirement.
• Financial Hack talks about the benefits of low-cost living.
• Endless Gibberish talks about why they like credit cards.
• Ask Mr. Credit Card talks about drastic things you can do for debt reduction.
• My Wealth Builder illustrates how carrying debt can keep you from being wealthy.

Would you use a coupon on a first date?

John at Queercents wants to know.

It's an great question that I've never really thought of before. Dating is amazingly expensive in the beginning which makes me really uncomfortable. I'm not a fan of tradional dates, particularly not for first dates. I almost always have a first date at a coffee shop. There are a couple reasons for this:

1. It's quick and easy and low pressure. This means I'm not stuck having dinner for 2 hours with someone I don't like after the first 5 minutes.
   
2. It's cheap and easier to avoid that whole "who pays" question.
3. If things go well, there's always the option of extending the date to dinner or another activity.

If coffee isn't an option (for whatever reason) there are lots of other alternatives that are cheap/free so why not try to keep things on the cheap for both of your sakes? Try a museum, art exhibit, walk around town or a browse through a book store. Not only will you save money but you'll also have a built in conversation as you'll be able to talk about what you're seeing.

I recently had a first meeting in a book shop and we had a great time browsing and looking at all sorts of books before moving on and getting a drink. That's my idea of a great date.

Show me your creativity instead of your money and I'm much more likely to agree to date #2.

Personal Finance 101 Posts of the Day 3/27/07

• Debt Consolidation News has a good post about 50 common sense spending tips. I agree with most of them. Except # 20. I've taken long distance bus trips and no thanks, never again. I'll pay $250 for the flight to save 14 hours of my time. It's worth it not only for the comfort but also for the time savings.
• Save Money gives 4 Ways to Keep Your Credit Score High.
• The Simple Dollar talks about how to Follow Your Dreams. I love this post. Not enough people focus on goal setting. My Goal Setting class is the least popular of the Personal Finance Classes I teach but I really think it's the most important. You need direction if you're going to succeed and the key to that is to make your goals/dreams measurable and give yourself a timeline.
• The Consumerist tells us about 8 Free Personal Finance Management Programs (and a few paid ones)
• Anxiety Ended talks about how to save money and reduce anxiety.
• No Credit Needed talks about how to keep grocery costs under control.
• Personal Finance Advice talks about how to eat out without spending a lot of money.
• Kirby on Finance wonders if your ego is your own worst enemy.
• Financial Hack tells us 10 ways to simplify your finances.
• Free Money Finance doesn’t seem surprised that financial planners give bad advice.

Save money AND have fun? Sure!

The Simple Dollar has a great post on 10 frugal activities to do with friends and how to suggest them.

Since it can be hard to both have a social life and be financially responsible, it's important to come up with ideas of things to do that don't cost a lot of money. Trent makes several good suggestions including: book clubs, old movies and (my personal favorite) camping.

Lucky I live in a city with lots of free activities but I bet your city has some great things going on too. If you need suggestions, head to a book store and look in the local interest section. There may be a book or two that will tell you about things you never even knew existed. Look in the local paper for festivals, art openings, etc. Search online for clubs and social groups. Be creative and if you don't start pre-existing activities start some of your own.

Good luck!

20 Small Ways to Save Big

Kiplinger's posted a great article about 20 easy ways to save money. How many do you do?

1. Give yourself a raise and bank it. Don’t lend Uncle Sam free loans. Adjust your tax withholding rate and get yourself a bigger take-home check.
2. Open a 401(k). If your employee offers 401(k) with company match and you decide not to participate, you simply let the free money slip away.
3. Raise your car insurance deductible. Higher deductible means lower premium. Go with $1,000 instead of $250. You might as well drive more carefully.
4. Pay off your credit card. What’s the chance you can earn a 18% return? Paying off the 18% APR credit debt will give you just that.
5. Go green. Buy a programmable thermostat and save on your energy bill.
6. Bundle up. Buy a bundle (phone, Internet and cable from one provider), save a bundle.
7. Use your employer’s FSA. One dollar saved on taxes is one dollar net income. That’s why you should contribute pre-tax dollars to flexible spending account.
8. Get a credit card with rewards. Why refuse the cashback for the money you have to spend anyway?
9. Kick the habit. Smoking can burn a hole on your wallet and your lung.
10. Brown bag it. Instead of spending $8 on takeout every day at work, bring a home-cooked meal with you.
11. Negotiate your rate. Got a good credit? Then call your lender for a more favorable rate.
    
12. Travel on the cheap. Forget about Travelocity, Expedia and Orbitz. Go to Sidestep.com or Site59.com to find a better travel deal.
13. Insure yourself. Use a high-deductible medical policy together with a health savings account can save your money on premiums now and medical bills in the future.
14. Make media free. Why buy DVDs and books when you can get them from your library for free?
15. Change your calling plan. If you use your cell phone for less than 200 minutes a month, you may be better off with a prepaid plan instead of a subscription-based plan.
16. Park your car. With gas price again on the rise, why not use public transit or carpooling (if possible) to save money on gas?
17. Ditch your gym. Check out your community centers first. Or better yet, put on the running shoes and hit the road because you don’t have to pay to stay in shape.
18. Reshop your auto insurance. It pays to shop for everything and auto insurance is no exception.
19. Learn to cook. Cooking at home is good for your body and your wealth.
20. Keep track of your money. How can you cut your spending if you have no idea where your money went?

The 5 biggest financial mistakes new graduates make

Graduation is an exciting time and you’ll probably experience more changes during the 6 months following graduation than at any other single time in your life. For many people it’ll be the first time you’ve had a full-time job making good money (you hope), the first time you’ve lived on your own, the first time you’ve lived in a different state (or country) and the first time you’ve been in complete control over what you’re going to do with your life. It’s a stressful time but also exhilarating.

Unfortunately, with the first blush of freedom, both personal and financial, many grads jump into situations without fully thinking them out. Below are 5 of the worst mistakes new grads make and hints on how you can avoid them.

1. Ooh, pretty, sparkly

It’s understandable, you’re finally receiving real pay checks, you have a shiny new job and it just makes sense to have a shiny new car to match. Unfortunately, financially speaking buying a new car is one of the worst decisions you can make. Most new cars depreciate 25% or more within the first year which means that you’ll be stuck paying full price for something that went on sale 10 minutes after you purchased it.

Instead of buying a new car it’s a much better idea save your money for a few months and pay cash for a used car. A 3-5 year old car can look just as nice as a new one and can cost half the price. If you really think that buying a new car is the way to go, do yourself a favor and try it out first. For 12 months, put the amount of your car payment into a savings account each month. Don’t forget to include the extra money that you’ll pay for the higher insurance coverage which you’ll need with a financed car.

If, after a year, you are able to easily save for retirement, pay your bills in full and on time and still make your ‘car payment’ then go for it. Use the money you’ve saved over the last year as a down payment on the car that you want. However, what you’ll probably discover is that the $400/month car payment that seemed so easy to make isn’t quite so easy now that you’re paying on student loans, credit cards, utilities, entertainment and all of the other expenses you may never have had. It’s usually about 6 months into the new car loan (when those student loans start coming due) that most new grads begin seriously regretting their purchase.

2. The super sized apartment with a side of furniture
3. The employee’s new clothes
4. Retirement? I’m only 23! I’ve got plenty of time!
5. Credit, credit, who’s got good credit?