Monday, December 7, 2009
Carnival of Personal Finance Roundup
Schedule A udpates here
Saturday, December 5, 2009
But get technical training and specialize when you can – that’s where the money is in Real Life.
Tuesday, December 1, 2009
Besides, the tax tips are out -- and Bankrate has a few of those as well. Okay, they have 7 tax moves to make before year's end.
And if all of this gives the English Major in you a huge headache, you can skip on over to the Bankrate Facebook link on Hidden Bargain Wines
Sunday, November 8, 2009
ING Direct was only paying me 1% or so of interest on my Roth IRAs and I didn't have options like Treasury Inflation Protected Funds (TIPS) or Index Funds in my 403 B, so I checked out TIAA-Cref. Its reputation is stellar and it's a non-profit organization that servers other non-profits like schools and hospitals. Nice to know their movitation considering what's happening with the greedy-guts on Wall Street.
It was a tiny pain to transfer the funds (took about 2 weeks to make sure the paperwork and money changed hands so I wouldn't have to pay taxes or penalities). But the guys on the phone really helped and I'm happy with my returns already. Next step is to transfer the funds out of AIG-VALIC. It's only a few grand, but I don't want anything to do with that company. No bonuses for me? Then no bonuses for them! Not a penny supporting the arrogance of those CEOs.
Tuesday, November 3, 2009
The good news this year is that the IRS has actually smoothed the way for people like me, and maybe you. The Standard Deductions this year are:
$5,450 - single or married filing separately
$10,900 - married filing jointly, or qualifying widower
$8,000 - head of household
AND, if you paid real estate taxes last year, you can enter them into the Standard Deduction Worksheet without having to fill out Schedule A, up to $500 for singles and $1,000 for MFJs.
Example, I am head of household, and paid $1100 in real estate taxes last year, then my new HOH standard deduction is $8,500.
There are other additions to the Standard Deduction that I might want to take, such as being over 65 years of age, being blind, or having a disaster loss. I live in a hurricane-prone state, we tend to do a lot of that type of entry.
But don't take my word for it, you know where the forms are -- www.irs.gov or your local library. And you can always go to H&R; Block or Jackson Hewitt to get tax help.
Monday, October 5, 2009
The IRS has added an option to increase your Standard Deduction by $500 or $1,000 (MFJ), as long as your real estate taxes are higher than those amounts.
Example: Sarah and John own their home and have an adjusted gross income of $50,000. They paid off their mortgage but still owe real estate taxes every year, which were $2,000 last year. They file Married Filing Joint, and get a standard deduction of $10,900, which reduces their taxable income to $39,900. By adding their real estate taxes to their Standard Deduction, it increases by $11,900, which reduces taxable income to $38,900. The difference in tax between the two income levels is $150 in taxes.
The ceiling on the deduction is $1,000. You can find out more about all of this at www.irs.gov or by consulting a tax advisor.
Most read blogs that you might also enjoy:
Jackson-Hewitt Tax School
New York Times Rent vs. Buy Calculator
Bounty Paper Towels Pricing Primer
Thursday, October 1, 2009
It took a while to download each first video, but it's a beautiful and empowering video message from real domestic abuse survivors who are doing well now. Lots of free financial resources for women from AllState -- kudos to this company!
I hope they put up the transcripts as well, for those who don't have broadband access.
Friday, September 18, 2009
Important tip from tonight's class -- You only have to keep your returns for 3 years. But if you need to correct your income records with Social Security, you will need all of your w-2s, 1099s and any other form that shows money coming into your household. I shredded all my returns that were more than 10 years old, and the w-2s went with them. Too bad, wish I had known this before. Maybe I'll learn where I can get a copy of old w-2s in the next class!
(disclaimer -- this isn't tax advice, please just use it as a reference to investigate further via the irs website or other irs sources!)
Tuesday, August 18, 2009
Monday, July 6, 2009
In the meantime, my returns are above 8% on simple loans.* That's a great thing!
Here's a clip from the e-mail...
"....In addition, if you have not seen it already, I am delighted to share that The Harvard Business Review named Lending Club one of the top 20 Breakthrough Business Ideas of 2009: http://hbr.harvardbusiness.org/web/2009/hbr-list/forget-citibank-borrow-from-bob"
It's an interesting turn around since I read on the Lazy Man and Money Personal Finance Blog about how the Lending Club hit a bump or two along the road to fame. But it seems to have righted itself quite well!
BTW, I do not receive any kind of monetary reimbursement from The Lending Club besides the interest that I earn! You can, however...if you email me, I'll send you an email link to open an account. Since I'm an investor, anyone I send an email to who subsequently opens an account can earn an extra $25 immediately for investing or withdrawing -- your choice. That's how I got started -- another personal finance blogger helped me do the same. My personal email is email@example.com
I look forward to sending YOU some money!
Wednesday, June 3, 2009
Tuesday, May 5, 2009
I started out deducting $25 a paycheck 18 years ago and couldn't imagine how I would be able to live without that extra $25 every two weeks. Fastforward 18 years and I managed to get by quite well! I own my own car, have more clothes and shoes than I know what to do with, go out to dinner with friends, and have a retirement porfolio - invested mostly in cash and bonds - that is worth $100,000+. And this year I bit the bullet and began putting away the full $20,000 a year. How?
Being thrifty, living below my means and most importantly, saving on taxes. The new 2009 tax tables are available on the irs.gov website and here at a this personal finance blogger site No Credit Needed
As a single Mom, head of household, making $73,000 per year, my taxes are figured like this
If Taxable Income Is:
Not over $11,950
The Tax is 10% of the taxable income
If Taxable Income is over $11,950 but not over over $45,500
The tax is $1,1950 plus 15% of excess over $11,950
If Taxable income is over $45,500 but not over $117, 450
The tax is $6,227.50 plus 25% of the excess over $45,500
If Taxable Income is over $117,450 but not over $190,200
The tax is $24,215 plus 28% of the excess over $117,450
If Taxable Income is over $190,200 but not over $372,950
The tax is $44,585 plus 33% of the excess over $190,200
If Taxable Income is over $372,950
The tax is $104,892.50 plus 35% of the excess over $372,950
So my tax burden is $6,227.50 plus $6875 = $13,102.50
Whoa! I didn't itemize taxes last year, because I don't own a home, but I only paid abut $5,000 in taxes. (legitimately!)
By contributing $20,000 to my 403B this year my tax burden drops to $1875 + $6227.50 = $8102 or by $5,000.
(More correctly, I would say that my tax burden is deferred to when I begin withdrawing funds from the 403B and supposedly, my tax bracket will be lower.)
With various other tax savings such as insurance premiums taken out of my check before taxes, I am able to reduce my tax burden even more each year.
If you haven't started taking advantage of your workplace retirement auto deductions, don't fret too much (this is the Real Life Money blog and I get it!). It took my 10 years to convince myself that I could afford to put away the maximum amount into retirement. And it was easier when I began putting money into bond funds, rather than compound the fear with trying to figure out stock fund purchases that were offered to me.
Baby step of the week: investigate your employer's 401K/403B accounts and defer AT LEAST $25 a paycheck. It's a great habit to get into and it's Fun To Watch it Grow...
Monday, May 4, 2009
Michael Csikszentmihalyi (pronounced chick-sent-me-high) writes about the psychology of Flow in his book "Psychology of Optimal Experience. " It's that moment when time stands still and you forget to check your watch, you don't notice the temperature, you don't care if you are hungry, you are completely immersed in life. Athletes know about flow, it's the sweet spot on the tennis racket and the pure meditation on the golf course when you hit a perfect shot.
Flow comes when we have goals -- goals that are attainable. They help you concentate and crowd out petty distractions of the mind. It's not in the achievement of goals, but it's because lack of goals can lead to difficulty concentrating and avoiding distractions. Goals are structure, structure is good when the fears threaten to overwhelm you with negativity.
One vivid example in the book Flow is of prisoners of war who achieved flow by reciting stanzas in epic poems memorized in school. If that process can led to flow, then I know that we can achieve flow by reaching for financial independence and catching it...
I attended a lecture given by Csikszentmihalyi and took copious notes because Flow is WAY FUN. The key to setting your goals so that they engage your psyche is to setting them so high that they are a stretch, but not so high that you can't reach them (which produces frustration instead).
EXAMPLE: My goal is to say "bye-bye" to the corner office and to be my own boss, to employ family members, create more complex experiences in the every day world. The dream we all have -- to become my own family CEO, chart my own course, make my own decisions, hit that "cross over" point to financial freedom -- but that will take a cool $1,000,000 in conservative savings. I've got the equivalent of about half that in pension funds and retirement funds that can't be touched.
I've got 8 more years to do it all in. But just thinking about saving half-a-million is so depressing and overwhelming. Thinking about saving $50,000 a year is kind of overwhelming. But if I live on $2,500 a month, I can bank a good $40,000 a year. Wow...
So the goal is to make it on $2,500 or less THIS MONTH is a challenge.
1) I'm going to hit the dollar store instead of the mall.
2) Bring my lunch to work 3 days this week.
3) Stock up on the staples when they are on sale.
4) Read a personal finance blog tip every day.
5) Put some energy into a sideline business that will fund the fun extras like trips and dinners out(www.wineshopathome/conniemcleod.com is my current experiment). Do it with a friend so that we can enjoy the activity together and grow the relationship.
6) Dry my clothes on an indoor clothes line.
7) Investigate rental property
8) Turn off the lights when I'm not in the room.
9) Make coffee at home 3 times this week.
What's your goal for this month? This week? Is it doable? Is it a stretch?
Check out Bargaineering's personal finance blog for more psychological money games in a quick and easy video format.
Remember, Flow IS FUN...and making your money work FOR you, instead of you working for it, is a whole new kind of psychological high.
Friday, May 1, 2009
Top Personal Finance Blogs is a list of over 100 blogs about money, saving, couponing, investing, the philosophy of money, how to be cheap and still chic, definitions of frugal, I am exhausted reading them. And they all have Great Tips! Really. Smart people with wonderful advice.
But I can't put all of these tips into place in my life and still stay sane. Not with this personality. I'm sure there are others out there who feel the same way. And that's okay! Just because we shrug ourshoulders at the conversation about .25 off Bertolli sauce doesn't mean we can't be financially solvent and secure.
So if you are like me, and are looking for someone who is trying out the easy-to-use and successful ideas versus the just-massaging-you-inner-OCD steps, maybe we are money soul mates. Intellectual money friends.
I'll ferret out the real versus the crazy, and share, if you'll do the same. Email me when you want to vent...'cause this is Real Life Money. And I like to use money to give me time to spend with my firends. Lot more fun than reading the Yahoo Finance page.
So, it's the first of the month.
Pay your rent or your mortgage and check out these favorites posts on how to:
Act like a millionaire (even if you aren't one).
Save on Bounty Paper Towels
Somehow they work together. Amazing.
Tuesday, April 28, 2009
Maybe. Maybe not. If www.glassdoor.com is an accurate gauge of salaries, then most of us who are employed by others are making between $40,000 and $80,000 a year. Try saving enough to pay for a house, put children through private school, and then into college, fund a retirement plan (again!), pay for a car, pay for school loans...well, you get my drift.
A LOT of us are using personal budgeting software and most of us have finite resources, even the Millionaire Next Door has to do some planning. (Okay, so it's mostly around taxes, but that kind of planning counts too...)
Mint.com is an awesome free resource for aggregating all of your accounts into one overview. The first time I really understood my net worth was when I began using the full functionality of Mint.com about a year ago. There are glitches with auto-updates at times, and once I had to go through set up again with an account or two, but usually it's a smooth working beauty.
You won't find tax tools, cash flow analyses, or any of the super analytical high end programs. But you will get a nice monthly budgeting overview, along with the account aggregator.
Definitely give 5 thumbs up to Mint.com
If you have experiences with the program, please feel free to comment!
Sunday, April 26, 2009
Except, it didn't work for me. And the download was a big mistake on my part. After a couple of weeks of loving You Need A Budget's smooth workings, and getting excited about how the monthly categories move forward every month in a quasi Dave Ramsey esq virtual money envelope system, it all came to naught and I tossed the software in the recycle bin. Why? Three huge drawbacks for me:
- No way to categorize autodeductions of the paycheck. I do a lot of autodeductions, which is one way I have been building my portfolio into the the very low 6 figures (FINALLY!) I need to track that functionality. The answers on the forum as to how to auto flow a "money in, then money out into categories" in the same transaction was downright incorrect. It advised that you do something that wasn't supported by the software when I tried it. If I had know that before, I never would have tested the software! My mistake, should have asked.
- You have to download all your account information manually. UGH! I save money in several different ING accounts. Even though I only have $1,000 here and a $1,000 there, these are my little form of Laddered CDs. And I make more that way by taking advantage of higher interest rates (or what used to be higher interest rates). Downloading every single account would take me an hour or two every week.
- You almost have to go to a class or have a coach to figure out how to do your first month. It's probably a red flag when you notice that a software system is offering consulting by the hour for coaching you on the system!
To be fair, other than these drawbacks, YNAB is really good for your basic household budget. It's simple and smooth in it's operations. The categories work. If you have extra money in one category, it can easily be shifted to another. If you have money left over from one month in a category, it hops to the next month, and you can build a cash buffer category by category. I haven't found another software yet that does this well. (have you? If so, please share!)
Conclusion: For the beginner to personal software, this software is a good way to build up a visual of how important cash buffers are and how each dollar can be put to work (love that concept on the YNAB site). When they upgrade the software so I can auto download and figure out the glitch in the autodeductions, I'll be a little closer to choosing it over Quicken.
If you like the envelopes budgeting concepts, check out these links.
You Need a Budget
Saturday, April 25, 2009
All of us could use a little help from time to time, especially in the financial arena. This is a guest post by Edward Clark, of the Lohengrin Group, a financial planning service located in the deep South. He describes how financial planning helped one of his clients save her million dollar nest egg that had been hatched from the poorest of beginnings.
"Sonia came into our office with a tale that should be in a book. She wiped her glasses with a beautiful handkerchief with her initials on it and said, “OK, but it’s kind of complicated.” And off she went. Sonia’s story was so captivating that we just listened as she spoke for half-an-hour.
She said that she was born in Russia well after the Communist revolution, and was caught in the ongoing chaos that ensued after the Communists took charge, but before the 2nd World War started to creep into the region. Renegade soldiers went through villages in her part of the Ukraine, searching for Jews, literally raping and pillaging peaceful villages, burning many of them to the ground as they killed with impunity. Her village had been spared, but one never knew.
Sonia said that she was the youngest of five sisters, ranging from age 11 to 19, and also has three brothers, two older and one younger. As Stalin seized absolute power, they were no better off. They were forced to work on collective farms, sharing the fruits of their labor with all for the good of the “Mother Country”. They had brutal “political officers” in the village watching their every move, and if they didn’t like anything about you, they could have you hauled away forever, beaten, brutalized. Sonia and her sisters experienced the soldier’s brutality one night, and they were left for dead. Her family’s possessions were confiscated.
It turned out one of the soldiers was a kinder man, a kid, actually. After his buddies left their home to go make more trouble, he stayed behind, secured a horse and cart, and told the girls to get out of town under the cover of darkness. By daylight they had made it to the next town, one that had been spared their village’s fate, and got help from the townsfolk. They all survived, and worked for while saving money, then escaped into Poland, then England, and eventually here, coming through Ellis Island.
Some of her sisters married and had families, and Sonia got married as well, but after the incident in her village, she said now that she looks back on it, she probably had emotional scars that left her somehow attracted to men that were, well, real jerks. Even so, she was a smart cookie and during her marriage she found a way to scrape together enough money to buy stock in the factory where he both worked. After divorcing her husband, she never remarried, but she did keep buying stocks. When the wall caved in, in 1929, she wasn’t even concerned. She knew these were long term investments, and even after the drop from the crash, she still had a higher value than what she had put in, although not much. But she sat tight, and as the years went by, she slowly became a millionaire.
By the time she came to me, she developed some very close relationships with her nieces and nephews and some not so close relationships (A couple of them were too much like her ex-husband for her liking). She had written and re-written several versions of her will over the years, and had kept changing it as the situations of her life changed. She admitted that she was recently diagnosed with cancer, and was worried about her advanced age, and her prognosis of getting better. Her doctors told her that with new treatments, she had a chance of recovering completely, but, Sonia wanted to see what would happen to her estate when she passed on.
We had an attorney review all her documents, and she told Sonia that she hadn’t updated her estate wishes since 1993, and that she had some of her relatives named as beneficiaries whom Sonia no longer had any relationship with. Plus, we told Sonia if the government does bring back estate taxes as they are threatening to do in 2011, and Sonia survives long enough for the estate taxes to come back, she will pay over half of her net worth in taxes
Then, of course, there is the problem of her stock portfolio having dropped 47% since its value at the beginning of 2008. We sat down with Sonia and the attorney, and worked out a plan to have Sonia:
- Utilize income and estate tax planning strategies to work on reducing income taxes now, and reduce or eliminate potential estate taxes if the government keeps their promise to confiscate 55% of people’s assets. This includes gifting strategies, charitable giving strategies, and re-titling assets.
- Establish a Living Trust and other trusts to control her estate during her lifetime, and remove most of the assets from taxation.
- Use her life insurance policies for further charitable giving since Sonia doesn’t need the coverage any more, and the cash values and face values can be used to help charities…while saving Sonia a bundle in taxes.
- Rearrange her portfolio to minimize capital gains taxes, (Sonia actually has them since she has held much of her stock for decades) and reposition some of the freed up cash into low risk, tax deferred savings vehicles.
We’re glad she came in to see us. I would have hated to see her beaten by our IRS as badly as she had been abused by the soldiers in her home country.
While your situation might not be the same as Sonia’s, you shouldn't take that to mean your planning needs aren't just as critical! PLANNING BEFORE TAKING ACTIONS IS THE MOST FUNDAMENTAL, AND IMPORTANT ELEMENT OF FINANCIAL SUCCESS!!!"
Wednesday, April 15, 2009
I don't use a budget. I don't like the idea of having a small bag determine how my financial life flows, it's too restrictive. I prefer to think of my monthly cash flow as a spending plan. It gives a feeling of bounty, when in fact, many of us who feel poor are actually rich in resources.
For example, my spending plan includes $200 per month for health insurance. I don't see that as an expense, I see it as something that I purchase in order to protect myself and my family from catastrophic financial burdens. That's a good plan!
The most important spending plan that I ever ran across is called The 60% Solution by Richard Jenkins on MSN money. He was wondering if adding all these receipts in personal software was really helping him control his money. Here is an excerpt from the article:
"After analyzing our spending patterns over a couple of years using our Microsoft Money data file, I determined that we needed to keep our committed expenses at or below 60% of our gross income to come out ahead at the end of the month.
Basic food and clothing needs.
Essential household expenses.
All of our bills -- even such non-essentials as our satellite TV service.
ALL of our taxes."
The other 40% of dollars are divided up into Long Term Savings (10%), Short Term Savings (10%), Retirement (10%), and fun money (10%). That last 10% is so that you feel good about life and can continue to face the office every day, is my guess.
So, it's not just a budget -- it's a way of looking at the overall picture that helps you make the important decisions.
"The key is keeping a lid on those committed expenses. You can categorize them if you want, but it isn't really necessary. In fact, you could make a budget with just three categories: committed expenses, fun money and irregular expenses," Jenkins writes in his post.
The most powerful paragraph is:
"Now, let's take the really hard case: Even excluding debt payments, reducing your committed expenses to 60% still seems like an impossible goal. If that describes your situation, the odds are good that you're facing one of the following problems:
*You have a more expensive home than you can afford.
*You've committed to car or boat payments that are larger than you can afford.
*Your children are in a private school that you can't really afford.
*There's just a big, ugly gap between your income and your lifestyle.
If it's one of the first three, you can undo the damage by slowly unwinding the commitments you've made and choosing something less appealing but ultimately more appropriate."
I took Jenkins' advice and closely looked at my 60%. That's when I realized that my house was pushing my "have to" expenses into 75% including mortage, mortgage interest and maintenance, fees etc. and there wasn't any way I could continue to do that at my salary and recoup half of what I was putting into the house. Once I sold my house, I had a six-figure nest egg and I'm still saving each month because I'm renting instead of owning (which is a good deal, btw, just check out the New York Times Rent Vs. Buy calculator).
Take a look at it, slowly if you have to, but add up your expenses and see if you can do the 60% - 40% break out. (Or somewhere close 65-35, etc.).
What happens when you do that? Please let us know in your comments below...
Tuesday, April 14, 2009
I devoured every financial planning book on the market, many of them are recommended in my blog like Dave Ramsey's Financial Peace and Andrew Tobias' The Only Investment Guide You'll Ever Need. Learning from others lifted me out of financial despair. That information, mixed with a lot of encouragement from friends along and a full-time job with benefits, steadied me along as I rebuilt my life. These books and these tips on the blog allowed me to finance my child's sub-Ivy league college education and build a year of emergency account funding now stashed in very safe investments in ING Direct savings bank accounts.
This is not professional advice, just sharing of a journey. Learning to manage money, while still enjoying the wonderful things in life (a very French skill), gives you freedom, power and joy. My real name isn't Coco, but Ms. Chanel is my inspiration. She built garments of great quality and taste. Living within your means doesn't mean being cheap or miserly, it can be quite the opposite, allowing you to buy the best, even on a financial plan like the 60% solution.
I want this freedom and power for my daughter, your daughter, anyone else who is willing to go for it. The pay off is self-respect and confidence.
Saturday, April 11, 2009
This is the first post in a series on how I've used good personal finance books to build a six-figure nest egg over the past 9 years. Maybe these steps will work for you!
Now I know that the odds of me becoming a Millionaire are pretty slim, considering my age and the big bumps in my history. But I know I can do better than I am doing now because I have a history of success -- and you will too, if you follow at least some of these steps.
So I'm working millionaire habits into my life by doing some of the things (not all of the things) that millionaires do as outlined in several books, the first of which is The Millionaire Mind, by Thomas J. Stanley, Ph.D. I've recommended it before, and continue to learn more from it. Here is how you can follow some of the advice from that book and add to your net worth.
1) Buy a used copy from Amazon, if you want to buy one that you can mark up in. I've gotten books from Amazon.com's used sellers as low as 15 cents -- shipping has been the biggest expense. Otherwise, get it from the library.
2) Studying and copy the success factors:
a) Hire a good CPA. I hired a CPA to review my tax forms this year. It helped me save hours of work around a confusing issue with my 529 plans for my daughter. Does this sound counterintuitive? I thought so, until I hired someone who handles small businesses. She understands my situation and saved me enough money by pointing out an obscure deduction that her fee of $150 was paid for.
"More than 2/34d of self-made millionaires in America rely on the advice of CPAs and attorneys." A direct quote from page 153 of the Millionaire Mind book.
Also, after taking a 12 month diary of the lifestyle activities of millionaires, it was surprising to see how much time wasn't spent on yachts, eating out or traveling. 85% of all millionaires inteviewed spent time consulting with a tax expert. No other activity was as common among all the millionaires interview (733). You can see other results on page 373 of the book.
Considering how much of my income is eaten up by taxes, I can only imagine how much a millionaire spends, so the time allocation makes sense. I'm going to spend more time learning about legitimate tax deducations. I file under head of household until my daughter is 23, so I don't have to do too much bobing and weaving, but I need to start getting my house in order for that day.
b) Millionaires clip coupons and shop at Sam's or Costco. I went to Sam's today to load up on toilet paper, and cat litter. Toilet paper was .002 per sheet (36 rolls * 200 sheets per role = 7200 sheets at $14.83 per package for Quilted Northern). Charmin was twice the price.
Cat litter was .34 cents per pound for Fresh Step. I splurged on the name brand because I live in an apartment and don't want the adored cat causing a stink, so I paid a little higher than my target rate of .325 per pound, which is available with the off brands.
I saved $10 because I used a gift card that I earned as a special when I renewed my Sam's Club membership.
c) According to Dr. Stanley's research, more millionaires spend free time with family and friends than yachting. They understand how much value friendships bring to happy lives.
So I took a walk with a friend of mine today who is going through a rough time. We got to reconnect!
I also want to entertain at home at least once in the next 30 days. So I have a wine tasting at my home scheduled for early May. Cheaper than going out...
There is a tremendous amount of information in Dr. Stanley's book. In the interest of full disclosure, if you buy through the link to the right of my blog, I do get a small fee. But I recommended this series of books a long time before I had any particular interest in promoting the product. And I recommend getting a free or used copy if you can, I'm a big fan of the library system!
More steps to becoming Financially Free coming soon. Have you tried any of the steps mentioned above and been successful? Or hated them? I'd love to hear your thoughts...please comment below.
Friday, April 10, 2009
The tax retention info is a table format that gives you a template to follow for tax info. Don't let fear of paperwork and taxes keep you from investing and saving!
How Long To Keep Records
Thursday, April 9, 2009
Several of the frugal bloggers and money bloggers have mentioned the on-line lending companies, where you sort of act like a micro-lender, with the site as the go-between. It's called "Peer Lending." I've read enough about the service to finally give it a shot. I spend $100 on a great night out on the town...why not take a small, calculated risk that might help out a service trying to go fill a need that the financial institutions are missing.
It's pretty simple.
1st - I funded my Lending Club account with $100. That took a couple of days to process through paypal and my credit card. I didn't want to use my debit card just in case the group is shadier than it looks.
2nd - I browsed a list of "notes" available to buy. Individuals are offering 7.5% and up to those who might help them reach a goal. The goals are as varied as purchasing a used car that the individual can't get financing for, to helping someone pay the dentist.
Lending Club does all the background and credit checks, and gives each lender a risk score. Individuals also report credit ratings, annual income, debt to income ratios, and number of delinquent payments in last 3 years. Sometimes Lending Club is able to verify that information. If so, it is noted with an asterik on the form.
3rd - I read backgrounds and profiles on the people I considered lending to. Each borrower gets a pot of money pooled from several lenders. For example, I am one of 1,500 people giving up at least $25 each to a borrower looking to buy a Honda Civic 2002.
4th - once the loan "closes" through Lending Club, I should have interest deposited into my account each month.
I'm not endorsing the process in any way...just reporting on my adventure with it. There are prospectus(es?) to read - and disclaimers to check. Please do your due diligence before trying any of this at home. Hopefully, my adventure with the program will give you information that will reduce your risk with this type of service, help you avoid it altogether, or perhaps even help you find a way to generate more interest income.
What can I say? It's an experiment that just might pay off....
Monday, April 6, 2009
529 plans are a huge help.
I deposited $10,000 of my house sale proceeds into a 529 plan gauranteed interest only account for my daughter last year.
$900 - The Louisiana plan matched my $10,000 deposit with a 9% addition to my account in part based on my AGI (under $50,000).
$634 - in contribution interest.
$126 - state tax credit
That's a 16.6% return on the $10,000 investment, 15% if you don't live in the state. And you don't have to live here to take advantage of the Louisiana 529 plan.
The money in the 529 plan is going to pay for her apartment rent, food and tuition not covered by scholarships. The tuition not covered by scholarships each year is about $5,000.
Whew. She's a Junior!
Check out Louisiana's 529 plan here.
I don't work at the Louisiana Office of Student Financial Assistance and make no money for promoting it.
Sunday, April 5, 2009
When I was deep in Mom Land, my biggest Easter expense was on church shoes and clothes for the family, and we skimped a bit on the meal. Other expenses included cards to far-flung family members and an Easter basket or two. This year I will probably spend the most money on gas dollars to travel to see friends and family during the long Easter week-end.
The survey found the majority of people (64.0%) will bargain shop at discounters this year, up from the 58.8 percent who shopped there last year. Still, about one-third (32.5%) will head to their favorite department store for Easter merchandise, one in four (22.5%) will visit a specialty store, 11.4 percent will shop online and 5.9 percent will buy Easter apparel from a specialty clothing store.
Since most of us will be spending the money on food, let's look at a frugal yet fabulous $28.42 Easter dinner with Wal-Mart pricing, based on april 5-april 11th retail flyer, Louisiana
$4.00 – Angel Food Cake
$1.50 – Fresh Strawberries – 16 ounces
$2.50 – dinner rolls, 24 count
$6.32 for 4 pound half ham, spiral-sliced
$3.00 – whipped cream
$1.50 – asparagus, one pound for steaming
$2.26 – sweet potatoes (2 pounds X $1.13/lb)
$1.50 – pound of butter
$3.50 – soft drinks 12 cans
x .09 tax
Save your dollars for the shoes, is my motto! Pair the money you save on Easter dinner with the Shoe Carnival $5 off coupon, and you've got pretty Easter shoes to wear to church, or the beach, or on that road trip you may be planning.
Friday, April 3, 2009
Mint.com has a nifty feature where you can analyze trends in your spending by category, comparing it to other cities and the US as a whole. According to my Mint.com program, the US is spending between $89-$120 per month on personal care...which includes hair cuts. It seems hair cuts/color, etc., is the big swing factor. My highlights run about $120 every six weeks, and a cut is about $35. I've gone an extra week between coloring before, which could save me $120 a year.
Shampoo is pretty expensive too, especially if you color your hair -- that investment has to be protected! Real Simple Magazine editors suggest measuring the shampoo used very carefully. A quarter sized dollop is about all you need.
Personal Care spending is not an area I want to skimp on too much. It's important to take care of yourself, is my mantra. (because then I can take care of others, too). But, at the same time, what's the point of wasting money or products?
Thursday, April 2, 2009
But how do I spruce things up without spending all my revenues on home furnishings?
More ideas from Real Simple Magazine that I'm going to try are below. I'm going to start small, but try to buy great quality items that will last. The bathroom shower curtain comes first, along with some new towels for the guest bath.
Overstock.com and apartmenttherapy.com, here I come!
The average person spend $2775 a year on home improvements. The good news here is that I sold my house last year and don't have any home improvements! The bad news is that I need to buy some household furnishings like a bed, shower curtain, new bedding, new furniture. I suppose I can hold off on that for awhile.
The average person spends $588 per year on personal care products. I've spent $275 on personal care products and it's only April 1st. May need to tighten the belt here.
The average person spends $749 a year on clothing. I've got $960 budgeted to spend each year on clothes, and I've already spent $360 dollars this year, which is a few over where I should be, and I'm already high on the total budget set. Won't be buying any clothes until May or June in order to catch up.
It's good to do a quarterly check on how your spending habits are beginning to slip a bit. I'm definitely going to watch those areas of discretionary spending that I can control, like personal care and clothes.
Penny wise and pound wise is the way to go...
(Source: Real Simple Magazine, March 2009)
Sunday, March 8, 2009
They often buy pre-built homes, or foreclosures
Have shoes resoled or repaired
Have furniture re-upholstered
Raise the thermostat setting on the air conditioner during the summer
Thomas J. Stanley, Ph.D., author of the Millionaire Next Door, has compiled even more interesting insights into the Millionaire Mind that I believe we can all use to become more financially solvent, even if we never make it to millionare land. In my case, every $250 I add to my net worth is another day that I don't have to work for someone else. (note: Not wanting to be subject to a boss' whims seemed to be a big millionaire motivator, as well).
Stanley interviewed 733 millionaires, or those who have a net worth of $1 million or more, and created the Millionaire Mind. The paperback edition is out now, and your local library probably has copies. Amazon's service selling the books used is also good, I've never had a problem getting a good used copy from their associate sellers.
I'm a big fan of Stanley's books because they debunk the debt lifestyle that many pursue to appear affluent. Most millionaires drive American made cars, have nice homes that equate to a percentage of their annual income (average $277,000 or so), have fun but don't spend a fortune doing it. What I learned that we can all use --
Something you can do today -- have a friend watch the energy meter on your home twirl around spening your hard earned cash, while you switch appliances on and off one at a time. I used information from Michael Blue Jay's Saving Electricity Site that I only found because of the Get Rich Slowly blog I follow (thank you J.D.!)
You'll find out what draws the most energy to run. In my case it was the dryer. "Wow!" My friend said, "you ought to be down here seeing this wheel go to town when you turn on your dryer!" Michael estimates about .35 cents per load of clothes, which doesn't sound like much. But I dry clothes several times a week, (at least 5) X 4 weeks per month is an extra $7-$8 per month. But I've saved more than that on recent electric bills, so maybe wattage in my area is more expensive.
Here's how I did it... I installed an Inside Dryer system with a porch line for the sheets. I clip up my clothes most days to a shower curtain rod I installed in my laundry area. And the sheets go on the porch. I live in the south, it doesn't take long to dry the sheets and towels, and best of all -- they smell wonderful!
My most recent energy bill topped out at $110. (Down from $145 the month before). That's $35 I can use to buy stocks these days, so maybe I won't have to work for someone else for the rest of my life. Or...I could use some of it just to go out and have fun, buy a book, a hat, whatever I please. Because I've earned the money, none of this will be on credit, or taking dollars out of the grocery budget, instead.
The Millionaire Mind - I highly recommend this book for reading...or purchasing (from a discount book seller of course!). Sorry Dr. Stanley, I'm sure you understand why...
Wednesday, February 18, 2009
The lesson that I see we can all take to the bank here? Save more for retirement, we can't expect 8% gains. Frugal living pays off. The Millionaire Next Door is a plumber, and that's okay because it's an honest living.
Speaking of frugal living, here is a price comparison spreadsheet sample you can use. I had already created one from scratch when I read a blog on GRS outlining this very process. All my friends who laughed at me -- well, just enjoy knowing that you might be getting the best price on Tuna at Walgreens if there is a sale going on. See my "target pricing" table below. The section highlighted is just Tuna. It's an ongoing project! Share if you have scored Tuna for less than .20 per oz...
CANNED TOMATOES BEANS SOUP TUNA SALMON
Target Tuna, Water Packed, Market Pantry per Oz $ 0.200
Wal-Mart Tuna, 5 oz., gv,albacore in water $1.08 per Oz $ 0.216
Wal-greens Tuna, Chicken Sea, 5 oz, Albacore $0.99 per Oz $ 0.198
Saturday, February 7, 2009
I used it and I LOVE IT, LOVE IT, LOVE IT!
But I have to be careful not to share it with my friends who just bought a house, because they get a little green around the gills when they realize how much they are really spending on housing.
You just go here...Rent vs. Buy Calculator. and enter your rent versus the cost of what it would take to buy a comparable place.
I sold my home last year, and am renting. It took a major psychological shift to get there! (Me? A Mom? A Citizen? A board member...A...a...a...renter???!!)
But I love my apartment and am saving $2,000 a year by renting. In fact, at my rental rate, I can't buy a condo or another house at $170,000 per year (which is comparable to the quality of my condo) and come out ahead, even after 30 years. Even with a 50% down payment. That's $85,000 folks!
One day I'll buy again, just because I believe in owning a place. But I know that I'll be paying a premium to do it.
In the meantime, I'm just a smug renter who doesn't have to worry about finding a new roofer, painter, or lawn boy.
Maybe it's because I live in South Louisiana. This part of the country drips with warm weather, great food, free music festivals and ot...
Yesterday was my last day at Megacorp (gulp) and I'm not 65 years old yet, I'm not even 59 1/2! Anxious? Excited? Terrified? Ye...