Think Your Way to Wealth

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My 2 children, ages 2 and 4, have gotten interested in money over the last month or so, the four year old a little longer of course. My evening routine usually consists of me coming home and emptying my pockets, including any loose change I may have acquired during the course of the day. My 2 year old daughter now follows me into the room where I empty my pockets, and starts asking for “muh-nee” (money). She then takes the money I give her, usually a quarter if I have one, and walks into the bedroom to put it straight into her piggy bank. That’s it. That is the game to her. My 4 year old son likes to play the “piggy bank game” as well, although he knows that he can buy things with money, and occasionally will ask if he can “get” something he saw on T.V. He now knows what money can be used for-buying things. As I was playing the piggy bank game the other evening, I started to think how the small difference of 2 years in age has effected how and what they think about money:

For the 2 year old-Money goes in the piggy bank- that’s where it belongs, end of story.

For the 4 year old-Money goes in the piggy bank, but it can also be used to buy things…Can I have that spiderman I saw on TV?

Thinking of my own attitude towards money, I used to be a lot like the 4 year old. I would put money in the bank, but then start thinking “What can I buy?” Lately, however, I have been thinking about money more like the 2 year old-trying to save, and actually enjoying putting money away, watching my emergency fund grow, beginning to pay down my CC debt, etc. Obviously you do “need” things, so you have to spend it sometimes, but it is a lot less frequent for me than it used to be.

It’s very easy to lose the connection between what it takes to earn money (time, hard work) when we are able to spend money so easily and are bombarded 24-7 with commercials and enticements to spend money. The hard part for me at least, has been getting back to the mindset of a two year old.

Image by G & A Sattler

Filed under: Psychology by RC - 1 Comment →

Did you get a large tax refund last year?

Did you like getting a tax refund if you did?

While it was probably nice to receive a “windfall”, if you are still in debt or not saving enough for retirement, wouldn’t you rather have next year’s money now, to pay off debt at a high interest rate or to save for retirement by opening a Roth IRA, or save it in a high interest savings account? More than two-thirds of tax filers get a refund every year, with an average refund of over $2000. That’s almost $200/month that could be in your pocket now, if your refund was about average. I got a tax refund this past year, and although it was nice, I am changing my tax withholding to minimize the size of the refund I get next year. Look at it this way: If you have credit card debt at 15%, not only are you paying the credit card interest rate on that money when you could be paying off the amount this year , but you are losing an additional few percent to inflation.

If you do owe credit card debt or don’t have the money to open a Roth IRA, or just want to be in control of your own money, you should really consider changing your tax withholding by increasing the number of exemptions on your W-4 . Estimate the number of exemptions you should have on your W-4 by using the IRS Withholding Calculator on the IRS website.
Tips For Using The Program

• Have your most recent pay stubs handy.
• Have your most recent income tax return handy.
• Fill in all information that applies to your situation.
• Estimate values if necessary, remembering that the results can only be as accurate as the input you provide.
• Consult the information links embedded in the program whenever you have a question.
• Print out the final screen that summarizes your input and the results, then use it to complete a new Form W-4 (if necessary), and keep it for your records.

While it’s easy to look at getting a substantial tax refund every year as forced savings, I am sure you can come up with better uses for that money now. If not, change your withholding anyway, set up a direct debit from an online savings account such as ingdirect, and force yourself to save.

Filed under: Debt Reduction, Taxes by RC - No Comments →

According to a recent New York Times article, and perhaps fueled on by the slow economy the U.S. is now experiencing, local police departments and “crime stopper” groups are seeing an up-tick of people calling in to report crimes or the location of criminals in order to cash in with the reward money. Along with rising gas and food prices, the increase in calls to Crime Stopper hot lines is apparently an economic indicator of the tough times we are facing in this country now, with some of the tipsters saying the needed the money to pay for utility bills or food for their families. Apparently, some of them do pretty well, with rewards ranging from $50 to $1000, and many averaging about $400. Sometimes callers make several calls per week, with some of the tip hot line operators recognizing certain caller’s voices. Supposedly, a lot of the reward money used to go unclaimed, but now tipsters are getting frustrated if they cannot collect the money right away. Some groups are even paying early under certain circumstances. Turning in 2 or 3 suspects a week, and you could make $700+/week, or much better than minimum wage, according to the article.

Wow! I though I was doing pretty good selling things on Ebay, but these guys have me beat by a long shot. The disturbing thing, though, is that it took hard economic times in some of these areas to entice people to turn in wanted criminals. I think that is more disturbing to me than the actual state of the economy. Any thoughts?

Image by Marc Coggins

Filed under: General by RC - No Comments →

A couple of weeks ago, I had to bring my wife’s vehicle to the mechanic, as her driver’s side window would no longer work. No only did it not operate, but the mechanism that held it up did not appear to be holding it any longer, causing it to fall into the open position while she was driving. While I normally like to attempt such repairs myself, this one seemed a little complicated, and I really did not have the time due to my busy schedule at work- I had a project with an upcoming deadline and I knew I would be working the next couple of Saturdays to get it completed on time. I also asked the mechanic to change the transmission fluid while I had it there as well. He gave me a very rough estimate of what it would cost, and told me he would call me later in the day with the final estimate. Shortly after lunch time, I realized he had not called me yet, so I called him up. He told me they were almost finished, and it should be ready in an hour or so. I mentioned to him that he had not called me back with the final price, and asked him what the total would be, and he told me it would be about $600 for everything. (from what he told me in the morning I was expecting in the $500 range, so I was not totally surprised.) I then asked him if he could do any better on the total price. Without hesitating, he told me he could knock off some of the labor charge for the window repair. When I went to pick up the car, sure enough, he knocked off about $150 worth of labor charges. All because I asked. Did I get that great of a deal? I am not really sure, it is hard to tell sometimes with services like car repair or services that are based on parts and labor charges. But I do know I paid less than I would have if I had not asked for a better price.

It never hurts to ask for a better price, the only thing someone can say to you is “No”. Obviously in certain situations, such as a retail establishment, where the price is clearly marked on an item it won’t work most of the time. But in situations where the price is not set or written down, it certainly won’t hurt to try.

Filed under: Saving Money by RC - 5 Comments →

Aaaah, the 3-day weekend! Happy Memorial Day to everyone, please take a little time this weekend to remember why Memorial Day is observed. While our country is not perfect, I believe most people who live in the U.S. would rather stay here than move somewhere else, and much of the freedom we enjoy today is due to the sacrifice of individuals in the past.

I participated in 3 carnivals/festivals this past week:

Prime Time Money hosted the 140th Carnival of Debt Reduction: Circus Day Edition and included my post “Why some College Students Manage Their Finances Better than Middle Aged Adults”. Great job on the carnival.

My favorite article from the Carnival of DR was:

Your Debt makes Your Decisions for You at the Happy Rock.

Money and Values hosted Carnival of Personal Finance #153: the Q & A edition and included my post “May 2008 I Bond Rates Go to 0.0%, Total Rate 4.84%-What Does This Mean?” My favorites from the Carnival were:

7 Personal Finance Planning Tips from Millionaire Money Habits.

Until the nation is broke, viva la credit card from Saving to Invest.

The Financial Blogger hosted the #126 Festival Of Frugality – If I Had A Car Edition and included my post” Will the Slow Economy Cause People to Give up Their Lattes and Bottled Water? My favorite articles from the festival:

Survive a Recession by Gather Little by Little.
The social acceptability of frugality by Five Cent Nickel.

Thanks to all of the hosts, be sure to check out the carnivals for some great personal finance reading!

Filed under: Roundups by RC - 2 Comments →

Teens are always looking for extra spending money; and the one thing they usually have in the summer is time. So instead of having them sit in the house all summer on the internet or text-messaging, get them out of the house and put them to work! Seriously though, encouraging your teen or child to start earning money and saving some of their earnings is a great way to lead them down the path of financial responsibility as well as learning to take personal responsibility. Here are 15 ways your teen can make extra money this summer.

Washing & detailing cars- A task that a lot of people don’t like to do; but everyone wants a clean car inside and out.

Babysitting- The old standard.

Household chores for others-Especially for elderly neighbors, or just someone too busy looking for a little help with cleaning, etc.

Pet sitting- Most people would rather leave their pets at home than board them when they go on vacation.

House sitting/watching- I used to do this one also for a couple of neighbors when they went out of town, taking in their mail, watering plants, etc.

Dog walking- Offer your services to neighbors who work.

Minor home improvement- Like painting, house washing, etc.

Cutting grass/yard work- I used to mow lawns myself when I was a teen, and it paid pretty well back then. They could also do gardening, raking leaves, etc. Many people don’t really like to do this themselves, but grass grows like crazy in the summer.

Lifeguard-The YMCA and country clubs are always busy during the summer months. if you have a pool, give swimming lessons to younger children.

Summer camp counselor- Another great seasonal job for teens.

Daycare centers- These usually have higher enrollments during the summer as well.

Tutoring- May parents are looking to give their kids an edge or additional contact time in certain school subjects during the summer.

Computer lessons/help- Let’s face it, most teens are a lot more computer literate and web-savvy than adults. Why not pass the knowledge along to others?

Sell things on Ebay- Old CD’s, movies, video games, and books are just a few things that can still be sold used for money.

Or have them get a part-time job at a restaurant, the mall, or even a fast-food joint.

Alternatively, you can pay your teen to do work for you, either for many of the ideas above; or for extra chores or projects you have been putting off and can’t find time to do yourself.

If they start earning money, it is great time to teach them about saving and investing a portion of what they have earned. Suggest to them that they save certain percentage, and open a high-interest savings account for them. If they are saving up for a big purchase, try out smartypig.com as a way to track their savings toward their goal.

Many of these ideas can translate into something they can do with their free time during the school year as well.

Any other suggestions for ways for teens to make money?

Filed under: Kids and Money by RC - 1 Comment →

I recently had a minor mishap with my cell phone. I am not exactly sure how it happened, but when I pulled my cell phone out of my pocket, the front lcd screen (or really the cover for the lcd) was cracked in a spider-web type pattern. Uh-oh, not good. My cellphone plan does not expire until October, so I basically was left with two options, I thought.
1.) Buy a new phone. Without a contract I believe this would probably cost me in the $200 range for a similar type phone, if not more.
2.) Sign up for a new 2-year contract, and get a free phone. The problem with this option is, although I have been relatively happy with my service from Verizon, I am not sure if I am even going to keep my phone line, as I have one through my employer as well, and I am considering transferring my number, as I use it very rarely, to a separate plan or even a pay-as-you go phone and just keeping my wife with Verizon to cut back on the cost.
After thinking about it for a while, I came up with a frugal alternative, although it is likely temporary.

So there’s the fix….

Scotch Tape!

It actually has held the screen together pretty well for the last few days, but I am not quite sure it will last too long.
After a little bit of searching, I came across a cheap fix (although not quite as cheap as scotch tape) on eBay. It is a replacement screen for the front, for about $3 plus shipping. I will likely be ordering one of of these and attempt to replace it to carry me until my contract is up in October. So instead of replacing a phone I may only keep for a few more months, I believe I have found a way to keep myself from buying a new phone or committing to a new two-year contract.

PS-I also came across a Motorola Razr V3 repair manual while looking online, if anyone is in need of one.

Filed under: Frugality by RC - 1 Comment →

One of the keys to improving your personal financial situation is educating yourself. The more you learn and know about debt reduction, money management, investing, retirement options, and building wealth, the more likely you are to achieve your personal finance goals, whatever they may be. There are a multitude of venues you can rely on to learn more about money management, investing, and debt reduction, and other money related topics. Here are some of the “main categories”, and some specific examples of each.

Printed Material

Books- I have always been a big fan of reading, so books are still one of my favorite sources of financial information. Whether the topic is debt reduction, investing, frugality, or any other facet of personal finance, there is likely a good book dealing with the subject. A few of the more popular titles regarding personal finance and investing include the following:
The Total Money Makeover by Dave Ramsey-Debt Reduction
Your Money or Your Life- Debt Reduction/Money Management
The Millionaire Next Door-Becoming Wealthy

One of the most prolific sites for personal finance book reviews is the Simple Dollar, and Trent’s 52 Books, 52 Weeks, A Buyer’s Guide is a great place to get an overview of many of the most popular personal finance books available today, or check out his book review category for even more.

Newspapers- While you may think that the newspaper is a dying media, but you can still learn a lot by reading the Money or Business section of your local newspaper every day. Financial papers such as the Wall Street Journal, or the New York Times money section can be great for improving your financial knowledge as well. Instead of paying for a subscription to these newspapers, check out your local library or ask a friend or relative who gets the paper if you can have their old copies.
Magazines-There are a great number of personal finance and money magazines available, which you can read at your local library, borrow from your friends or family, or subscribe to, usually for a reasonable fee compare to the newsstand price. Some of the more popular magazines are Smart Money, Money Magazine, Kiplinger’s, and Consumer Reports, which are all great magazines for educating yourself and making smart choices with your money.

Audio

I had listed a few radio and podcast sources, but J.D. at Get Rich Slowly recently posted a great resource article on Twelve Top Personal Finance Podcasts, which covers most of the PF podcast available. Check your local radio stations as well for money or finance related radio shows as well.

Internet

-There is a plethora of financial information available on the internet, both commercial sources as well as personal websites or blogs. You should always use any financial advice, such as investing with caution, of course, but there is really a great deal of good information available on the internet.

Yahoo Finance- One of the better sites for up to date news and financial information.

MSN Money Community-Contains news, blogs, and articles on saving and spending money as well as many other personal finance topics, such as frugality and investing.

PFBlogs.org- A great personal finance aggregation site, with over 1000 personal finance, investing, and real estate sites aggregated.

People

-Talking to other people about money related issues and topics can be a great way to discover what others are doing in a situation similar to yours, or how people invest, spend, save for retirement, etc. While you shouldn’t try to “keep up with the Joneses”, you don’t have to get into specifics about someone’s income to discuss spending and saving money, either. These days, just about everyone is willing to talk about the economy and topics such as how to combat rising gas or food prices. Now of course, you should always take any financial advice such as the the latest “hot stock tip” with a grain of salt, but discussing money topics with others can be a great way to learn how others manage their finances. Finding a professional financial adviser can help you with details of your personal finances as well.

What do you do with all of this new financial information?

Ask Questions- Ask questions of your friends and co-workers, and don’t be afraid to ask a blogger, a writer or a radio show host questions.

Perform Your Own Research-As with any advice, you are always well advised to do your own research to confirm or verify what you have read or heard. Dig deeper into the topic until you are satisfied with the results. After all, it’s your money.

Filed under: Books, Building Wealth by RC - 3 Comments →

With graduation season here, thousands of bright-eyed (O.K., at least a few might still be bright-eyed) new graduates are entering the workforce for the first time, embarking on their new careers or vocation. Quite a few will make more money in their first year out of college as they have over their entire lives thus far. When you look at it that way, it is not so surprising that many recent graduates get caught up in a spending frenzy, purchasing a new car, wardrobe for work, with many entering the “hyper-consumerism” sector as well as the workforce. The start of your career is the perfect time to start implementing good money habits and building wealth. Here are 10 great ways to start off on the right track with your personal finances.

Create a budget and stick to it-

Based on your new salary, whatever it may be, create a budget and stick to it. You can adjust your budget as the months go by, but you will have a hard time keeping your finances under control without it, especially when you first start your career. Starting now will lead to far less problems in the future.

Start an emergency fund-

Setting up an emergency fund will keep you from falling into debt when unexpected “emergency” expenditures come into your life, as they always do. Check out Emergency Fund 101 to learn more about why you need one and how to start one.

Save as much for retirement as possible as soon as you start working-

When you first start out, try to maximize your retirement contributions, to the greatest extent you can. By starting early, the power of compounding interest, and time, will allow you to build wealth much easier than someone even five or ten years older.

Don’t get caught up with the credit card shuffle-

It’s OK to have a credit card, or even two or three. The problem starts when you start abusing them and using them to purchase things you cannot afford. If you don’t have the money to pay for something, set a savings goal and save up until you have the cash to pay for it.

Don’t upgrade your lifestyle right away-

There’s no need to start “Keeping up with the Joneses” right when you start your career, although many people do, as I did myself. You have plenty of time to save up for things you want or think you need, there’s no need to rush while you are still trying to find your financial footing.

Start checking your credit report on a regular basis-

Now is also the time you will likely begin to really build your credit report, so take care of it. Check out www.annualcreditreport.com (this is the one and only government- sponsored free report site) to assess your credit report and do it on a yearly basis.

Avoid taking out loans to pay for things-

It’s OK if you are buying a house, or even a car, but for a car try to limit the length of the loan to 3 years, or even better, save up and pay cash. Definitely don’t finance other consumer items, such as furniture, electronics, etc.

Pay attention to your student loans-

If you have student loans, don’t neglect them. Also, don’t defer them if you are able to start paying them off right away, as they are still accruing interest. Look into loan consolidation as well, as you may get a better interest rate if you consolidate.

Set financial goals-

Whether it is a down payment for a house, or certain retirement savings goals, set some goals and try to achieve them. If you don’t set goals, you will find it hard to achieve your financial dreams.

Keep your life and finances simple-

Try to live simply and frugally, and you will keep more of your money in your pocket. Don’t over-complicate your finances either.

Image by CarbonNYC

Filed under: Building Wealth, Career by RC - 8 Comments →

I’ve been neglecting the yard this spring, so today I will be spending the majority of the day (or at least as long as I can last) catching up on yard work, as long as the weather holds out, which it should.

I participated in the Money Hacks Carnival # 12, The 12 Labours of Heracles this past week, which was hosted by the G Blogmaster at Can I Get Rich On A Salary, who selected my article ” The Easy Way To Budget for Irregular Expenses using a Separate Checking Account” as an editor’s pick. He did a great job with the carnival, so be sure to check it out.

My favorite readings from the past week:

Dividends 4 Life wrote about Seven Important Reasons for Dividend Investing. I have been keeping an eye on dividend stocks and trying to learn about dividend investing lately, and Dividends for Life is a great blog for learning about dividend investing.

Mrs. Micah on on Dining Out Frugally Without Stiffing On the Tip . I am not a big fan of stiffing wait staff, either.

Cancel some monthly charges before taking on others @ Mighty Bargain Hunter.- Good advice to follow before adding another recurring expense.

Breaking Bad Habits to Build Your Frugal Fu @ Frugal Fu- Good advice on making small changes to eliminate those bad spending habits that keep you from reaching your financial goals.

7 Ways to Squash Your Credit Card Debt by Melissa @ Master Your Card. Great tips for making a dent in your credit card bills or other debt.

David at Moneyning is on his honeymoon and giving away at least $1095 in celebration. Congrats again to David and be sure to get over to his blog and subscribe to his feed to get entered in the contest.

Filed under: Roundups by RC - 4 Comments →