Generic vs. Name Brands

If you want to slash your grocery bill dramatically, you cannot be brand loyal. Almost all stores carry a generic brand or a less expensive brand. You should try buying the store brand and test if the taste is the same as the brand you are used to buying. Some things just aren't.

I don't like sodas, but I sometimes as a mixer or on a random craving, it tastes great. However, even though I can't really taste the difference between Pepsi and Coke or Diet Coke and Coke, I can taste the difference between Coke and store brand cola at most places. I've noticed that Publix makes a good soda and don't mind buying their version of Sprite or Coke. However, you must experiment. If you don't try the other brand of hot dogs or cheese, you might not realize that it is the same or even better.

Know Your Worth

The largest asset you have is you. The greatest obstacle for you moving ahead in your financial life is your salary. If you could earn more, wouldn't it be easier for you to accomplish the things you want financially? The answer should be yes if you are not going to inflate your lifestyle with your salary.

Since you answered yes, it means that you must know when to move on. You have to know when you can no longer progress within your company and you have reached the challenge level or the salary level that you can. It might be hard to make a change sometimes, your company might have a 401(k) that's not fully vested or maybe they promised a bonus. However, remember that if you've reached the limit, seeking another job now will make your future 401(k) vest sooner and you will be able to prove yourself faster to get another bonus at your future company. Therefore, make goals of what you want to make in the future and make sure you are doing what you need to, to attain these goals.

If you thought that a particular stock you are holding would not increase in value in the future, but would only provide a stable low dividend, wouldn't you want to sell the stock and buy something that would give you a regular dividend that's larger and would have the potential to increase in value? Think of your job as a stock and see if it helps to analyze it that way.

Tax-Free Holiday

Seventeen states currently have a weekend or a week where, before school begins, you can purchase clothing, school supplies, and some times other items tax-free. This is a great time to take advantage of clothing shopping for yourself as well whether you are a student or not.

See if you state offers tax-free shopping dates and figure out where they are:

Wiki - Tax Holiday

Question Their Authority

Always question the authority or legitimacy of anything you see. I love calculators that tell me how much I should save for retirement and calculators that will help me do away with debt. However, keep in mind that certain factors are assumed in most calculators that are not solely based on math.

For example, the ING retirement calculator tells me I will need $1,000 per month if I want to travel internationally. To me, this seems insane. However, I can always find a deal and maybe some people cannot. Who knows, maybe my standards of living will raise this much when I am in retirement. However, I doubt it. There is always a better way to spend money or give money away than five star hotels.

Also, note that ING and other companies want your money in their accounts because this is how they make money. Maybe they are overestimating the total needed for retirement because they want more of your money. There is such a thing as saving too much for retirement. When you are currently not enjoying life because you are socking 40% of your income into retirement, the situation has gone too far.

Therefore, always think about where your financial knowledge comes from and what is the objective of your source.

Simple IRA Roll-Over

If you currently have a Simple IRA and no longer work for yourself, you can roll-over your IRA into a traditional one. The rule - you can do it after two years have passed.

Free or Cheap Fitness Options

Here are ten places to find free or cheap fitness classes:

1. Check with the local gym for discounted community classes, rather than a membership
2. Check your local YMCA
3. See if your local or community colleges offer cheap fitness courses or free community courses
4. See if your city's park association has free fitness courses in the parks such as Yoga or Tai Chi
5. Rent a fitness video at the library
6. Hire a personal trainer with a group of friends, the discounted rate is usually a deal - negotiate it further down as prices are flexible
7. Negotiate with your HR for a free gym membership nearby so you can attend at lunch time
8. Sign up for weekly trials of gyms in your area, most gyms will give out free 7-day passes
9. See if you have a friend who lives in a community that has a gym on site that you can visit
10. Run around your neighborhood

Exercise to a healthier, wealthier you!

Scholarships

Never give up looking for scholarships. I thought that scholarships for MBAs were not possible, however, recently I bumped into a full scholarship for a local MBA sponsored by a local community. This discovery started my search and I also discovered that you can receive a scholarship to the best school in the state by achieving a 700 or above on the GMAT. That score is a long shot for many, however, if you have two years to attend an MBA, keep studying and maybe you can attain that level. Most importantly, never stop looking. Try searching for the school that you would like to attend and 'full scholarship' to see what is available. Some of the scholarships I saw are not advertised, therefore, not guaranteed, however, everyone seems to get one if they are X or Y based on the forums.

Double Check Everyone's Math

If you owe anyone money: student loans, a mortgage, etc., then make sure that their math is correct. I've calculated my government student loan payment recently and found that it is incorrectly calculated. I am paying more in interest every month then I should be according to all the amortization calculators that I was able to run.

After writing them an email, they responded by lowering my payment by $1.50 per month, we will see how they will calculate interest this month. However, it is hard to argue what they are charging because, unlike Sallie Mae, the DLS Website does not calculate daily interest and the outstanding interest is always the same throughout the month and is around $10, while it should be around $70.

My Sallie Mae payment is also incorrect due to pre-payments, but at least they are calculating the daily interest correctly, therefore, I don't mind paying a few dollars extra a month. However, if you are having trouble repaying your loans, every dollar counts, therefore, do the math.

Re-shuffling your Portfolio

You should be saving for retirement, which means you are buying mutual funds, ETFs, stocks, bonds, or some other form of investments. You should look into your investments on a schedule. For example, once after the 90 day period that you are allowed to trade your no-load mutual funds without a fee and twice a year. Those dates should be memorable if you tend to forget to check up on your investments.

Just like checking your annualcreditreport.com on specified dates such as time changes and the 4th of July, you should set dates to re-balance your portfolio. If associating re-balancing with particular dates is not memorable enough, you should mark your yearly calendar with dates now. Almost everyone has a phone with a calendar capability and if you are planning to keep your phone for awhile, you should set your phone calendar with an alarm. Do it now.

Re-balancing is so important as you do not want too much cash, you also do not want investments that are failing and you would not buy today. If it's been awhile since your last close look, you probably bought new investments. You should know how everything fits together. You can use the Morningstar X-Ray to evaluate this.

Treasury Hunt

I've posted earlier regarding Missing Funds and how to find them. Here is one more way:

Treasury Hunt

If you or someone you know has purchased a savings bond in your name, it might be ready to be cashed. However, thousands of them go unclaimed. It is possible that you received them as a baby from your grandparents or as a child for a birthday. All you have to do is type in your social security number to see if you have savings bonds that have not been claimed. It's worth a try.

Credit Sesame

Here is another website that shows you your credit score for free: Credit Sesame. Out of the three: Quizzle, CreditKarma, and Credit Sesame, the third one has the highest score out of all and it's based on the Experian model, which is my lowest score of the 3 credit scores according to Fico.com. I'm not sure if that's good or bad, but it's nice to see a score well over 800!

Investment Advise - Invest in What You Understand

People often follow the news or stock picks by analysts and choose stocks based on this information. If you are going to invest in individual stocks rather than mutual funds, you really need to know what you are investing in.

The best way to pick stocks is to invest in what you know and understand. If you do not understand what a company is doing, like a new technology that they are heavily investing in, then steer clear.

If you work in a certain sector like the food industry, then you should understand who the big players are and who has the best business strategy. You should invest in those companies. You should be able to spot the red flags in industries that you are familiar with much faster than you would in a stock that you picked based on a newspaper article.

Therefore, always know the company or at least what they do, listen to the news to get extra information, and pick wisely.

Local Blogs

A great way to find free events in your area is to find a great local blog in your area. Do you have one that you use? Post the link and the city in the comments.

Miami - Miami FL On The Cheap

Before Taking out Student Loans

Before you take out student loans, do a cost basis analysis. Will you spend more or less than you are expecting to make in returns?

Let's say that you want to get an MSW and become a social worker and it will cost you 80K in grad loans. You currently make 30K and think that you can get 40K if you had an MSW. That does not seem like a good return. If you do a loan analysis on a 15 year, 80K loan at 6.8% interest, you will pay $710/month in loans for 15 years. The 10K increase (which is not guaranteed) would bring you an extra $625/month if you cut 25% out in taxes. Therefore, you will be loosing money the first 15 years.

However, if you are currently earning 25K and think that you can earn 40K with an MSW after spending $40K on a degree, then it's worth it. The loan ()using the same terms) would end up being $355/month and the potential increase would be $937/month after taxes. It looks like you would be profiting around $582/month. That seems like a sound investment.

Gifts for Close Family Members

I like giving gifts that will give back. I've given my sister the gift of a Roth IRA for Christmas one year. She now puts money in it on a regular basis and she's on her way to savings for retirement. Of course, you can only do this for a person you know well like your sibling or your child.

For my nephew that is coming soon, I was thinking of buying a small amount in an Educational Savings Account to kick start his college fund. Again, you must know the parents closely to make sure they won't already max out their child's ESA.

If you are the parent of a child, you can request for college fund contributions instead of gifts. Below is a link to a letter that you can use as a template. Stick the letter in the invitation and people can choose to contribute or bring a traditional gift. I think this works great if your child is small. If you hold a birthday party for a little one, you will receive more gifts than you will know what to do with, therefore, the gift of contributions is a great idea.

Child College Fund Contribution Request Letter

There are also savings bonds and traditional stock certificates that you can gift to a parent for them to place into a college fund. Can you think of another way to gift a college fund contribution to a child that you are not close to?

New App - Entertainment Book

The Entertainment Book has now come out with an app, the Entertainment Book Companion. The app will tell you what discounts from the book are available near by!

Plans with Exceptions

If you have a financial plan,  you know where you are going and why you are doing what you are doing, therefore, it makes it easier to save and spend less. However, even Dave Ramsey has made exceptions.

Step one of the baby steps for Dave Ramsey is save $1,000 for emergencies while you are paying off debt. However, he does specify that if you earn less than $20K per year, your baby step one should be save $500 for emergencies.

Be flexible and mend everything to your on situation.

Necessities vs. Luxuries

The only way to manage your expenses is to realize what are necessities and what are luxuries. For necessities, all you need is shelter, food, clothes, and some bathroom products.

Shelter means a roof over your head in a safe neighborhood, not a nice condo in a nice area next to your work. Food can be as minimal as rice, beans, some fruits and veggies, and the occasional meat. Clothes means a couple of outfits for work and something to keep you decent in other times. And, bathroom products are your basic shampoo, soap, toothpaste, etc.

If you are spending money on anything else, you are spending money on a luxury. I'm not saying that you should never buy clothes again or eat rice everyday. What I am saying is that if you are in credit card debt, cannot understand how you could possibly squeeze any money from your budget for retirement, or are living paycheck-to-paycheck and are spending money on luxuries, then you have no excuses as you are able to make a change and be able to save up an emergency fund, funds for retirement, and finally money for something fun.

Everyone gives excuses as to why they are buying 'luxuries' and why they are 'necessities.' I've said that the reason why I pay for a downtown apartment is because having a car would be more expensive. However, I've lived in the suburbs before and have taken a bus. I just don't want to get back on the bus even though I would save hundreds of dollars a months.

I've heard people say that they use coupons and, therefore, the ready made food is cheaper. However, unless you are like the people on Extreme Couponing, you are probably still paying more. The way to know is to see what is the average price per pound for veggies, rice, meat, etc. I've found that using $1/lbs of food is pretty accurate if you stay to the meat on sale, whole chickens, and chicken drumsticks. Therefore, if a 16oz package of a ready made meal costs $2, I know I'm paying double for the convenience.

For clothes, people use the excuse of their work to shop. However, after you have a few work outfits, you really don't need many more. See if you can remember when your coworkers wore the same thing as they are wearing today. Most likely, you will not be able to answer that question or guess if they own 5 shirts or 20. If you can't remember their wardrobe, most likely they can't remember yours either.

Bathroom products can be expensive, however, if they are bought on sale, they can cost next to nothing. The trick is not to be brand specific, which is a downfall of many. Try out the shampoo on sale and you will most likely not notice the difference.

Just remember to ask yourself next time you shop if you are buying a luxury or a necessity.

Nontraditional Earnings

If you are a teacher, a student with higher summer earnings, an employee that depends on the tourism industry, a tipped employee, an employee that must rely on commissions, etc., then you know that a monthly budget is not easy to do.

However, you might be ahead of the curve as research shows that setting a yearly budget is more accurate as people tend to overestimate slightly and, therefore, have money left over in savings. A yearly budget is a good idea for the nontraditional earners as you can take the average of your yearly income, or the income from last year and base a budget on that for the entire year. Then, split the budget by 12 to get your monthly budget. This means that some months you will have to dip into your savings and some months you can put money away into your savings.

The tricky part of an nontraditional income is not the budget, it's the savings. You must separate your emergency fund from your 'slush fund.' Your slush fund should be used for the drier months, during the summer by the teacher, on colder months for an hourly CA resort worker, etc. If you stick to your new monthly budget, you should earn extra on some months to leave in this fund and use the extra on the slower months.

Windshields

If you are one of the unlucky people to have had your windshield broken, you know how unpleasant that can be because it is usually not the driver's fault. Because, it is likely not be your fault, you shouldn't have to pay for the replacement.

In fact, did you know that if your windshield is cracked or damaged by a rock falling from a truck, you can call up the truck company if you can get the name off the side or the back of the vehicle and some identifying information like the license plate. You can tell the company what happened, and often, the company will pay for the replacement of the windshield for you.

Also, if you woke up with a broken windshield or something hit you on the roadway, you may contact your state's Department of Transportation and explain the situation. The DoT should have a budget for this. I recently called the DoT for this issue and although, they had no specific person I could talk to, I spoke to the person who makes the budget and he asked that I submit all information to him directly for review.

Also, in many states such as Florida, if you have comprehensive insurance, they will cover the windshield replacement for any purpose.

Don't Skimp on Things that Matter

I'm looking for a new used car and yesterday I needed to run a CarFax report, however, CarFax no longer has an unlimited option. Therefore, I decided it would be best to run another report for $3.75 from CheckThatVin. However, that report only let me know that the title was issued 4 times and the title is clean. CarFax usually gives service information, the amount of owners, accident details, etc.

Therefore, I ran another report for $6.99 because it was supposed to be comparable to CarFax, however, that had similar information. I did find out that the car was never in a collision, but I knew I could get more information.

I wanted to see the service records and ended up going with CarFax nonetheless. Therefore, the first two checks were a waste of time and money since I ended up with the company I knew was good in the first place. I wanted to know as much as I could before I spent a large amount of cash on a used car.

Moral of the story: don't skimp on the things that matter like used cars.

Investments and Holding On

A lot of people hold on to bad investments that they know they want to sell simply because people want to recover any losses that might have happened.

I've been skimming through Suze Orman's Young Fabulous and Broke and bumped into some common sense knowledge that not everyone follows. You must learn how to let go of investments that are no longer working. Once in awhile review your stocks and mutual funds and see if you would still buy them today. If you wouldn't buy them today, why are you holding on to them now when you can be making a profit somewhere else? It might be difficult to loose money in the stock market, however, the missed opportunity cost and the potential for further losses is too great so get out of the investments that are no longer working for you today!

Library Benefits

I recently joined the local library because it's now a 5 minutes walk from my new apartment. The obvious benefits of joining a library and using it is to borrow books for free. However, I did not realize that libraries provide much more for their communities.

I'm guessing every library is different, but mine has started a new program where you can 'check out' a museum pass for ten popular museums in the city. The museum admission fee is waived with this pass.

Also, this week I picked a flyer that advertised free admission to a history museum that is across the street on the opening day of a new exhibit. On that day, if you RSVP, you may also attend a happy hour sponsored by local restaurants. The happy hour is free and will have beer, wine, and appetizers.

Joining the library has been paying off greatly so far.

50-30-20 Budget Calculator

In my earlier post, I talk about the Liz Weston Budget. Now, MSN Money has put up a calculator on their website see how your budget breaks up in percentages and if you are on track if you follow this budgeting method. Please click below for this budget calculator:

50-30-20 Budget: A simple spending breakdown.

There are so many ways to budget out there, however, you know hat you are on track if you fit the definition of a strong budget for each personal finance expert such as Liz Weston, Suze Orman, or Gail Vaz-Oxlade.

How much house can you afford?

MSN money has a useful tool to see how much house you can afford. Before, going to get pre-approved, have an idea of how much you really want to and can take out in a mortgage. Use this tool to find out:

How much house can I afford?

Mutual Funds Trading

Unlike stocks, mutual funds do not trade in the middle of the day. The stock market is open 9-4 eastern time and you can only buy and sell mutual funds at the end of the day. Therefore, even if you place an order during the day, it will not be executed until the end of the day. Also, if you want to see the value of your mutual fund, you must wait until the end of the day.

Mutual funds consist of a variety of stocks and it would be too difficult to compute the value of all stocks in a given mutual fund at a specific time as stock prices can change every second.

Flexibility

Setting financial goals is the best way to achieve what you want in your financial life, however, you must also be flexible.

Recently, I had to raid my emergency fund for a non-emergency purpose: advanced rent of 6 months. However, because I was willing to raid my emergency fund, I believe I received a better deal from my landlord.

Also recently, I made the mathematical calculation to see if it was better to pay off my private loan aggressively or to take it slow now because I am still paying capitalized interest which counts principal and interest as interest payments for tax deduction purposes. My goal was to pay the loan down aggressively, however, after doing the math, it did not make sense until the capitalized interest was paid off.

Therefore, it is always best to be flexible if it benefits you in the long run.

My financial goals are now the following:

1. Continue to contribute up to the match to my 401(k) (4% of gross salary)
2. Make my emergency fund what it was before
3. Contribute 11% of my gross salary to my Roth IRA
4. Then think about saving extra for increased student loan payments in the future

Debt and Savings

If you have debt, you are probably aggressively paying it off, or should be. If you follow the Dave Ramsey Plan (or a version thereof as I still believe in high interest loans should be paid first), you will try to pay everything off before you save money for an emergency fund or in your retirement fund.

If you have student loan debt that will be dismissed after a certain amount of years because you work for a non-profit, for example, you might not want to pay off the loans quicker than you should.

In my case, it mathematically works out better if I pay the minimum on the loan that has capitalized interest because the principal and the interest is currently tax deductible. Therefore, I'm not in a rush to pay that off until the capitalized interest is paid off.

For me and the people whose loans will get dismissed, a savings account valued at the same amount as the student loan is necessary to feel the debt freedom that everyone should want to experience. This way, if something happens - you quit working for the non-profit, decide to move, etc., you have the freedom to pay off the loan in full and be debt-free.

Netflix

If you find yourself renting movies at the store on pay-per-view, you should consider investing in the cheapest plan of Netflix. Now that you can watch hundreds of movies by streaming online, it seems like the way to go. You can also get the usual current movies from your queue. What's not to love about it?

Comparison Shopping

If you are looking to buy something, even if it's small like light bulbs, you can do a comparison search on Google Shopping. There of course are many other sites like Price Grabber and Nextag, however, I feel that the Google Shopping website is advanced enough now to service basic needs.

For example, I've been looking at mirrors for a long time. I found some for $10 at Ikea. However, after doing a Google Shopping search for wall mirrors, I found a mirror from Linen's and Things for $5, used 20% off coupon and received free shipping. Mirrors by the same company and of the same size went for over $50 on other websites. Not every deal is this good, but if you know what you want, you can walk away with great savings.

Micro Lending or Peer to Peer Lending Websites

If you are looking for a personal loan, great places to look are the micro lending or peer to peer lending websites. You apply for a loan and investors contribute a portion of that loan so that you have several people lending to you at one time. The interest rate is determined by what you want to pay, by what the investors want to pay, and your credit rating. Here are a couple of the more famous websites:

Prosper
Lending Club

The best use I can think of for this type of loan is for start-up money for a business. Don't consolidate your student loan debt using these websites as they won't come with perks such as IBR repayment or deferment options.

You could also be an investor to a person seeking a loan. The websites advertise high returns, however, be ware, as some of the high risk loan seekers do not repay and you, as an investor, will have to file for collections of your loan and you might loose the money you lent out. What I like about these types of websites is that you can lend $50 to 50 different people. This feature allows you to diversify yourself.

Tax Brackets Explained

There are several tax brackets in the US tax system. If you earn more money, you pay a higher percentage on some of your earnings. Here is how the tax brackets break down:

To see how this would break down for other statuses, visit the Money Chimp Website.

The key to understanding the tax bracket system is that if you currently earn $34,000 and you are filing as a single tax payer, you are in the 15% tax bracket. If tomorrow, you will receive a tiny raise and your salary will be $35,000, only $500 of that will be taxed at 25% and the remaining $34,500 will keep being taxed at the 15% rate.

Shipping - FedEx

If you are shipping something via FedEx, the cheapest way would be on a business account. You can easily create an account yourself at FedEx Open an Account Website. Not only are you saving money by creating an account, you are also saving your address and credit card information in the system, which allows you to use FedEx easily next time.

Monthly, Bi-Weekly, vs. Weekly Payment

Ever wondered how much difference a bi-weekly payment will make vs. a a monthly payment on a loan? How much difference is there between a weekly loan payment and a monthly loan payment?

Now you can see using this calculator:

RBC Mortgage Payment Calculator

Drinks at a Dicount

If you've been out recently to get a drink, you know that drinks and nights out can get expensive. There are several ways to lower that bill.

1. Find happy hours using apps such as 'Happy Hours'
2. Searching for free events in your city. For example, Chicago has a great website and app called Open Bar. However, since they seem to be on a hiatus for the summer, you can Google your city and free open bar and I'm sure you will get several results.
3. Sign up for emails with downtown associations. Usually when new places open, they serve free or inexpensive food and beverages.
4. Get daily deal website coupons
5. If you have a large crowd, bottle service might be the way to go in a club. Check the prices first since they can start at $100 and go up to thousands. However, if you have 10 people, it's cheaper to split a bottle then getting individual drinks. It will also usually earn you free cover saving $10-$20 at the door per person.

Buying Groceries

One way to save money on your grocery bill is to buy everything fresh and cook from scratch. Packaged food is usually a lot more expensive even with deals and coupons. However, packaged food is often easier and are a great way to go for a busy night.

There is an easy way to tell if you are getting a good deal or not. See what you usually pay for fresh food per pound and apply that pricing to packaged food. For example, most of the fruits, vegetables, and meat that I buy are around $.99/lbs, maybe $1.19/lbs. Therefore, I look at the packaging I buy and if 16 oz of something is about a dollar, then the package is a good deal.

You might spend $1.99/lbs on fruits, veggies, and meat on average, so, for you a 16 oz package of something should cost around $2, an 8 oz package should be a round a dollar and so on.

Saving 15% for Retirement Before the Match

Here are some reasons why you should save 15% of your gross salary before the match for your 401(k) from your employer:

1. Gross, because you can adjust your withholding so that you can take a lot or very little home
2. Gross, because you don't know how much your tax return or payment will be at the end of the year and gross never changes like your take home could
3. 15% before the match so that you will get used to saving 15% even if you start working for yourself, or move to an employer that does not have a 401(k) match
4. 15% before the match because your employer's match is probably not yet vested, so don't look at it as your money
5. 15% before the match just in case you quit your job and you do loose the un-vested amount
6. 15% before the match because if your employer's money is vested, it'll be a nice bonus

Student Loan Payments as Gifts

Are you getting married or is your birthday coming up? For any holiday that you know you will receive gifts, you can do a gift registry for student loan payments at Lily's List. It's a website that allows you to register your student loan payoff amount and your friends and family are then able to donate to make that student loan disappear. They have template emails that you can use so it doesn't seem odd to register your student loans instead of wedding china on your gift registry.

This is a great resource. Of course, if you will only be receiving gifts from your parents and siblings, for example, maybe it's better to just give them the account number to your student loans as Lily's List charges you $15 to register, and $2.75 for every gift amount received.

10 Ways to Cheaper Movie Tickets

Here are some ways to get cheaper movie tickets:

1. Buy them on daily deals sites such as Living Social or Groupon
2. Buy them through your AAA office
3. Use the coupons in the Entertainment Book
4. Join the rewards programs for the movie theaters such as the AMC MovieWatcher Rewards
5. Buy tickets through Fandango using coupon codes, search "Fandango coupon codes" in Google to find
6. Buy tickets on eBay
7. Buy Fandango gift cards on eBay
8. Buy them in bulk and at a discount at Costco
9. Buy them through a discounted site such as BulkTix.com
10. See your HR office, as sometimes, you can purchase discounted tickets at a corporate rate through them

Financial Clean-Up

If you haven't done so already, now is a great time to get your finances in order. Taxes are done; it's a fresh financial year. Now is a good time to start making folders for 2011 taxes: one for receipts, one for paycheck stubs, one for interest payments you make on your mortgage or student loans, etc.

If you start organizing now, taxes will be a breeze in April, or maybe you will be so organized that you can do your taxes in January and get it over with.

Now is also a good time to make some long and short term financial goals.

Here are mine:

1. Continue to contribute 15% towards retirement through 401(k) and IRA
2. Pay extra on my student loans, but just enough extra that I only pay $2,500 in interest in 2011
3. Have an emergency fund of 6 months that I don't have to touch because I have enough in checking as well (recently I pulled some money out because I had a family medical emergency, a car accident, and I want to prepay some rent to negotiate the rent down)
4. Start saving money on the side to pay off my private student loan in 2013 (as discussed in a previous post, my whole payment is currently interest because I am only paying capitalized interest and after doing some math, it works out better if I only pay $2,500/per year in interest for the tax deduction and then pay off my loan in full in 2013, when I won't be able to rack up the $2,500 in student interest payments for the tax deduction) - I would like to see $3,000 in this account by Dec 31st, 2011
5. Get a raise of around 13% from my current salary by April 2012 - currently supposed to get a raise at the end of May and then again in April
6. And of course, be able to take all my vacation days by going somewhere, buy Christmas presents for the family, and spoil my nephew-to-be

BBB

BBB or the Better Business Bureau is a company that rates other companies. One might think that if a company has a good rating such as an A, it is a reputable company, and if a company has a bad rating such as an F, then you could probably find another company to give your money to, however, that is not always true.

BBB is a paid for service. To be a BBB accredited business, a company must pay a membership fee. Once that membership fee is paid, it does not matter how many complaints the business could have, as long as the business responds to each complaint, then the problems are seen as solved. Only unsolved problems significantly affect a business' rating. Your business could have one negative complaint, however, because your business does not pay membership fees to the BBB, it will not be able to respond to that complaint and the BBB rating could drop straight to an F.

Therefore, be wary of BBB accredited businesses, they are not always what they seem. A better way to find out more about the business is to research the business online and to find reviews about the business (or individual) with which you will do transactions.

Installment Loan Utilization Ratio and Credit Limit

Some people see a utilization ratio of their installment loans when they check their credit report. If you see a utilization ratio of your student loans or of your auto loans, for example, do not be surprised that it's close to 100% or over 100%. For many student loans, expect to see amount owed greater than the credit limit listed as well, making it seem that you have gone over your allowed limit.

Do not worry. Student loans and auto loans are installment loans and, therefore, even though a report might show the same type of features that it does for credit card, it is not counted the same. The credit scoring agencies are able to tell the difference between revolving accounts (credit cards) and installment loans and know that if you just took out a loan of $10,000 for your car, then your utilization will be 100% on the first payment as the balance and credit limit will both be $10,000. If you have student loans with capitalized interest, it will say that your credit limit is i.e. $10,000, yet the balance is $14,000 because you have so far run up a total of $4,000 in interest costs.

Credit scoring agencies know and understand the difference and the only utilization ratio and credit limit that you need to worry about is that of your revolving accounts.

401(k) Loans and Why They are a Bad Idea

There are companies that will allow you to withdraw a loan against your 401(k) plan. It might sound like a brilliant idea for a new car or whenever you are planning to borrow money. You borrow money from yourself and pay yourself back, not a bank, with interest. Below are some things to consider.

FACTS:

1. First of all, if you need a loan, maybe you don't need to buy what you are thinking of buying. Your emergency fund should cover any real emergencies. You should save up for a car so you can buy it out right by making payments to yourself for the first 3-5 years of your auto ownership life, etc.
2. Some companies are not able to give you a loan from a 401(k).
3. Most have a minimum amount that you are required to take out such as $500-$1000.
4. If you are able to borrow, you should be allowed to borrow up to 50% of your vested balance and up to $50,000.
5. The term is generally 5 years, however, if a loan is used for a mortgage, you might be able to take out the loan for 15 years.
6. Typically, the interest rate that you pay back to yourself is prime plus 1%.
7. Payments are set up for automatic withdrawal from your paycheck.
8. There are usually loan and origination fees.

WHY IT'S A BAD IDEA:

1. There are origination and loan fees.
2. The interest that you will be paying yourself back will probably be less than the amount that you would have earned through market gains.
3. If you default on the loan, it will be counted as a distribution. Therefore, in addition to the regular taxes that you have to pay, there will be a 10% penalty fee on that amount. You also loose that money from your 401(k).
4. When you pay back the loan, you use your tax dollars to contribute to an account that should help to shelter your income. Therefore, you will be taxed twice. Once, when you repay the loan and then again when you pull that money out in retirement! Although, if you look at all of your money and not just the 401(k), you did take the loan and never paid taxes on that money, so when you are repaying the loan with taxed dollars, you are simply paying postponed tax on the the original loan amount.
5. If you quit your job or are fired, you typically have 60 days to repay your loan balance in full or the remaining balance will be considered as an early distribution causing you to be taxed on the amount. You will also have to pay a 10% penalty on the remaining unpaid loan balance.
6. The biggest factor, in my opinion, is that you cannot contribute to your 401(k) until the loan is fully repaid. This provision makes you miss out on the compounding benefits of retirement accounts and the employer match AKA free money.

Car Accidents and Insurance

If you are in an at fault car accident, you always want to make sure that the person you hit can get a couple of quotes from shops before you call up your insurance or make a police report. In Florida, you can make a delayed police report, which means that up to 5 days after the accident, you can make a police report at the station and you can use this police report for an insurance claim. This should be true in other states as well.

If you have the person get quotes and you can pay for the damage out of pocket, then you will not receive points on your license and your insurance will not increase. Another reason to get quotes is that it might be cheaper to replace the bumper out of pocket, than to replace it through insurance if you have a high deductible. Let's say, your deductible is $1,000 and the bumper you hit can be fixed/replaced for $500, then there is no point to involve insurance and receive points on your driver license as $500 is clearly less than the $1000 from your deductible.

Escrow Account

If you are renting through a realtor, the realtor might ask you to place a security deposit in an escrow account when you are placing an offer on an apartment. Be wary of this type of a situation.

If you place your funds in an escrow account, they are typically your funds to be put towards the move in cost of that or any other apartment. However, if you do not rent through your realtor, you might loose that money. This weekend, a realtor told me verbally that I can receive that money back, however, when I researched the company on the internet, there were a great number of negative reviews that stated that the potential renters submitted a deposit on a place, however, the place was rented out to someone else before their realtor were able to submit their offer. The renters were told that they could find any other place through their realtor and use the money in the escrow account towards the next apartment they found. However, the realtor fell off the map after that.

I can't reach my realtor now either. Thankfully, we did not submit a check. Supposedly, it is a rule of their company that if you do not rent through them, after a certain time, the funds in the escrow account are taken as their payment for "looking." Of course, not every company  is there to scam you, however, even large and known companies such as the one I dealt with this weekend can have unpleasant rules. Be wary of anything you sign and read up on the company before you do any business.

Discounts off the Listing Price

If you are looking for a place to rent, remember that the asking price is almost never the lowest price the realtor or the landlord is willing to accept.

With a landlord, you should negotiate like you would at a bazaar. Let's say a place is listed for $1,300/month. However you want to pay $1,150? Say that you would like to pay $1,050 and move up from there.

However, when a realtor is involved, you typically can ask what is the lowest price that the landlord will take. If the price is too high, ask if the realtor thinks that the landlord will accept your desired amount. Since you have no access to the landlord, it becomes more difficult to negotiate lower than what the landlord specified to the realtor.

The usual discount to aim for is 10%, however, if the apartment is listed for $1,275, for example, you should be able to take 10% off and round that down to $1,000.

Your Salary as Compared to Others

There are many websites out there such as Salary.com and PayScale where you can compare your salary to others. Knowing this information is important as if you are underpaid, you can use the data from these sites to ask for your worth from your employer. However, those sites are compiled by collecting data from individuals such as yourself, therefore, you have to trust that the users are entering accurate data.

A better way to see what you are worth based on your profession, would be to look at the US Bureau of Labor Statistics Website. The web page shows the industry that you are in, breaks it down by occupation, and shows the median (middle value) and the mean (the usual average) hourly wages and yearly salaries. You can also see how popular your profession is. By clicking on the profession, the website breaks down the numbers even further by select locations.

The website is also useful if you want to get the breakdown of unemployment statistics, inflation, and even how people use their time. It's a little hard to navigate through, however, it is packed with data.

Medical Tourism

Hopefully, no one will ever have to think about medical tourism, however, it's important to know that it exists if you are uninsured, or are under-insured. Medicine, surgeries, etc. has become so expensive in USA and Europe that the only choice left might be to travel abroad and have that same surgery for a fraction of the cost.

To find the best place for your needs, type in the condition, and the words cost and medical tourism into Google.

e.g. - "heart valve replacement medical tourism cost" - With this search, I find out that in the US this surgery could cost up to $200,000, while in India it seems to cost around $10,000.

I can't suggest which company you should use, as medicine is so personal. However, if you read the articles online, you can find out that the medicine and results in many of the cheaper places compare to that of the western world. Therefore, it's something that's good to know about even if you do not need the services right away.

Internet Rates

People pay an outrageous amount to have access to the internet. However, high speed internet should cost no more than $20/month. The trick is the willingness to switch once a year or so. If you are currently paying about $40/month for internet (average price), you can save $240/year by cutting that bill in half. Therefore, to switch internet providers once a year, you will be saving $240.

All you have to do is find a cheap internet by typing in "high speed internet" into a Google search. The top three results that popped up for me today are Verizon for $14.95, ATT for $19.95, and Comcast for $19.99. Then, call the current internet company and ask to cancel your service. When they ask why you are cancelling, say you are going with company X because they have a promotion for the next 12 months for high speed internet that costs $19.99 or X/month. The company will most likely offer you the same deal for the first 12 months because they don't want to loose you as a customer. After the 12 months, call again and quote your researched prices and if one day they say that there is nothing they can do, switch to that lower priced internet and start calling them once a year until they no longer want to lower your rate. If you make this call once a year, you can routinely save $240/year.

If you have a bundle, think if you really need that home phone. If not, then you could probably find basic cable for around $40-$60/month. You will have to call your cable company once a year too. If you still need a home phone, see if Vonage or a company like it, is cheaper. You might end up with 3 separate bills, but spending 30 minutes once a year to set up automatic billing is worth saving hundreds of dollars.

Renting

Looking for a new apartment could be daunting. However, there are several things that can do to ease your search:

1. Walking around the area where you want to rent and looking at building that have for rent signs. I suggest jotting notes and the phone number on a notepad as you can easily confuse which phone number belongs to whom.
2. Looking up Craigslist posts. Again, if you are going to write someone an email about a posting, include the link in the posting so you can refer to it later. 
3. Calling a realtor in your area. Some places, realtors are not that common for renting, however, in others like downtown Miami, it is highly unlikely that you will find an apartment if you do not go through a realtor. You can find them by going to Realtor.com. They should not cost you anything and they will do all the work for you. Try it even if renting through a relator is not common in your area.

Remember to always negotiate the listed price. Realtors advise that you can get 10% off, however, I've gotten 20% off by starting low and offering to pay some months up-front. The factors you can negotiate is price, lease term, how much to pay upfront or for security deposit, utilities, etc. Therefore, if you are willing to dish out 6 months upfront, most places won't mind putting you on a month-to-month lease after that, for example.

Federal Student Loan Consolidation

So you've heard about the federal student loan consolidation option and want to know more? Here are some answers to your questions. Remember that you can only consolidate federal student loans with federal student loans.

Why do it:

• You want a lower payment on your federal student loans 
• You want all your federal student loans to be in one place (you must have taken these federal loans out at different banks to want this)
• You have a variable interest rate that you want to fix

How does the interest work:

• The average weighted interest of your loans is taken, therefore, you do not gain an advantage consolidating student loans into the same term that you currently have as the payment will be the same

How is the monthly payment lowered with consolidation:

• The term of your loan "resets," you may pick a 20 year repayment or a repayment based on your income, for example

How can I know what my payment will be before applying:

• Use this online calculator

Are there fees:

• No

Where should I go to apply for a consolidation:

• Direct Consolidation Loan Website

Excel Templates

I just discovered a great way to have your own financial calculators that you can modify. For example, recently I have been struggling with the fact that I am paying off capitalized interest on my private student loan, which means that the whole payment is currently tax deductible. I had two options: pay off an extra $300/month on that loan or save that $300/month in a savings account.

Mathematically, it turns out that I should save $300/month in a savings account for the first 2 years and then pay off my student loan with those savings in the third year after I have paid off my capitalized interest. There is no way to run an amortization schedule where you can change the payment amount after 24 months and add a lump sump payment in the beginning of the third year. However, that and more can be done with Excel Templates.

I also like the fact that in an Excel template, you can save the worksheet and return to it when you feel like it. If you were to use the BankRate amortization schedule, for example, then you would have to reenter your data each time you wanted to change up your payment.

Excel templates offer amortization of payments, monthly and yearly budgets, expense trackers, net worth analyzers, gas and mileage logs, etc. New templates are added by users, so new ones can sprout up any time. Modify any of the templates to meet your specific needs.

Your Tax Payer Receipt

So, taxes are over, unless you filed an extension of course. If you want to see where your tax dollars went, you can check it out at the White House Tax Receipt Website. It's crazy to think that $48 out of every $1,000 went to education, student financial aid, employment services, and training for people with disabilities, while $74 of that same $1,000 went to paying interest. No wonder, the students today have the most student debt ever and no wonder the US public educational system lags behind other countries.

Selling your Books

If you have a lot of books lying around from college days or otherwise, you could make some extra money if you are never going to look through them again. Of course, the obvious place to sell books would be on Amazon. You can start a seller account and manage your inventory easily. The #1 tip for selling on Amazon is to check your account frequently and make sure that your books have the lowest price.

If your books are not selling on Amazon as quickly as you would like (a month or two), then you could try a book buyback option. The one that I have used the most is Abebooks Buyback. With a book buy back, you type in your books' ISBN numbers and they tell you how much they will pay for them. If you have a lot of books, this might be the way to go. If you accept their prices, they will print you a mailing label and all you will have to do is to box them up and drop them off. The only drawback to buy backs is that they often require you to reach a certain total before they buy your books such as $15.

However, there are many buy back companies out there, just Google them and you'll find a ton. You might have to look through many websites to find the best price, but you can copy and paste all the ISBN numbers at ones, making the check a lot quicker.

New IRA Brokerage

A couple of days ago, I opened a new IRA Brokerage account. I picked Charles Schwab out of all the discount online brokerages because of the following factors:

1. Great website (TD Ameritrade was a contender, but I heard that sometimes the website is unavailable and that's not acceptable even as a rumor, especially if you want to do some trading on the spot)
2. Easy search for mutual funds
3. Largest amount of no-load funds available (I like no-load mutual funds for the IRA account as overall they are less risky than individual stocks)
4. Funds available from multiple families (important as I want the greatest diversity to find a fund that is highly ranked)
5. Great customer service (I received a welcome call, unlike when I opened ShareBuilder)
6. Low start-up costs (Fidelity and Vanguard are great companies, however, they require initial deposits of $2,500 and $3,000 respectively)
7. Overall highly ranked and reviewed online

Rule of 72

If you need to quickly figure out how long it will take you to double your money at a certain percentage rate, you can divide 72/percentage rate. For example, you found a mutual fund with an average return rate of 8% and you invested $1,000. You'll have to wait 9 years (72/8) for the investment to become $2,000.

Personal Finance iPhone Apps

After reviewing the apps for a months or so, here is my list of the useful personal finance iPhone apps:

1. Mint.com - see what happens to all of your money
2. All your banks such as Chase, which even allows you to take a picture of your check to deposit instead of visiting an actual branch or an atm
3. PayPal - Monitor your account and send money to friends easily
4. Investment accounts such as ShareBuilder to monitor your holdings
5. Zillow.com - useful if you are looking to rent or buy or are just interested in the prices of the houses around your location
6. LoanCalc - See how much sooner you will payoff any loan if you increase your minimum payment
7. Pay Off Debt Lite - See what percentage of your debt you have paid so far since the beginning to motivate you to pay more
8. Credit Card accounts such as Amex to allow yourself to pay your bills from your phone
9. ScoreAdvice - See what you can do with your credit score to improve it
10. Ask Dave - Although I don't always agree with what he says, he does have some good advice, this is an app with clips of his radio show
11. NPR News - the Money Matters radio program releases some great shows on personal finances
12. Local stores such as Walgreen's app to see what's on sale this week
13. Daily deal apps such as Groupon to see the deals of the day
14. News websites such as CNN money to keep up with the current personal finance news
15. Coupon Sherpa - coupons for retail stores near you, although coupons seem to be available for only a few stores
16. GasBuddy - will help you find the cheapest gas near you
17. Kayak - to find the best travel deals
18. Around me deal apps such as AAA Discounts (must have AAA membership) state discounts available using your current location
19. Bar code scanners such as ShopSavvy will help you find the best deal online or in stores
20. Key Ring - if you forget your loyalty card, you can scan the card on your Key Ring app instead
21. Check-in apps like Yelp that allow you to check in to a restaurant or a shop and  receive a discount or a freebie

If you have other personal favorites, let us know in the comments.

Retirement vs. Emergency Fund

If you do not have a full (whatever that means according to you) emergency fund saved up, you might want to dedicate all of your funds towards the emergency fund and not save anything for retirement. However, I think there is another option that most people do not realize. Your Roth IRA can serve as a temporary emergency fund while you do not have the emergency fund build up all the way.

Most people do not say that all Roth IRA contributions are available for withdrawal anytime without taxes or penalties. Only the earnings on those contributions will incur penalties if withdrawn early. However, this is true.

Therefore, If you have an excess of $500 a month after fulfilling all your expenses and the 401(k) contribution (if it has a match). You have no emergency fund and you require an additional $300/month in retirement savings to be able to save the suggested 15% of your gross income. Instead of putting the entire $500 towards the emergency fund, put $300 in a Roth IRA and $200 in the emergency fund.

If you have a serious emergency such as a job loss or a medical accident you cannot cover, remember that you can withdraw the $300/month you have been putting in to the Roth IRA. The danger in this is that your holdings can go down. Therefore, you can hold all of your Roth IRA investments in cash until you have build up your emergency fund. The more real danger is that you will now always see your Roth IRA as an emergency fund and will empty it if an "emergency," such as a friend's wedding, arises. Don't ever take money out unless it's a real emergency. Remember that you can never replace it.

The main reason for this maneuver would be that if your emergency fund needs 8 months of expenses, then you will need a year or two to build this up. You can only contribute $5K in a Roth IRA per year and if you do not contribute one year, you miss out on that amount.

2011 Withholding Calculator

Now that taxes for 2010 are done, it is time to look into what is being withheld from your paycheck. If you received a large refund for your 2010 taxes, or had to pay a lot to the IRS, this is for you. However, everyone should have a go and make sure that their W4 form is correct with the HR.

Fill out the IRS 2011 Withholding Calculator and see the amount of allowances you should claim. Once you know the number, check with your HR office or your online pay system to see how many are currently listed on your W4.

Goals

To all who are struggling achieving financial goals:

1. Don't plan for an emergency fund of 8 months of expenses if you don't have anything in the bank. Start small, say $1,000 and go from there.
2. Break your goals down to bite size achievable ones.
3. If you push yourself too hard, your saving system can break.
4. Use a system to track your goals for motivation. Mint.com is great for that.
5. Make your goals public to motivate you. You can do that by sharing your goals with family or friends, or publicize them in a place such as NetWorth IQ.

Net Worth - The Millionaire Next Door

Some of you might have heard about the formula presented in the book - Millionaire Next Door by Stanley and Danko that determines your target net worth.

The formula looks like this: Target Net Worth = Your Age X Annual Pre-Tax Income / 10

However, everyone knows that after college, you most likely have a negative net worth. Therefore, many people have come up with their own formulas to compensate for that. Here is one I like by the author of the Simple Dollar Blog:

Target Net Worth = (Your Age – 27) X Annual Pre-Tax Income / 10

The second formula gets me a lot closer to my current net worth. It's off by $3K. The top formula places me about $90K off. 

Lower Your Credit Utilization Ratio

Credit utilization ratios look at how much credit you use opposed to how much credit you have available to you on all credit cards. If you are using too much of your available credit limit, your credit score can be negatively affected. Ideally, the credit utilization ratio should be below 10%. However, many financial advisers will say below 30% is fine. Therefore, if you have a $3,000 credit limit on all your credit cards, you cannot spend more than $1,000 per month if you want the credit utilization ratio to be below 30% and no more that $300 if you want the credit utilization ratio to be below 10%.

Opening more cards could be a solution as your available credit would go up and, therefore, your credit utilization ratio would go down. If you do not want to open any more cards as having the inquiry for the application for credit will appear on your credit report for 2 years and will also negatively affect your credit score, there are other solutions. It's simple. Pay your credit card twice a month to lower this ratio. If you have a total credit limit of $3,000, but constantly make around $600 in purchases per month, pay $300 of your credit card charges before a statement is created to lower the statement balance to $300, making your credit utilization ratio 10%. Credit Karma has an estimator to see what your score would be if you made any changes. See what happens when you lower your credit card balance. Remember that your statement amount is your credit card balance weather you pay it off each month or not.

Suze Orman Expense Sheet - Budget and Emergency Fund Planner

Another great budgeting tool is on the Suze Orman's website, Suze Orman's Expense Sheet. You enter your emergency fund amount and break down how much you spend each month by category. Then, Suze lets you know what your essential expenses are and based on that how large your 8 months emergency fund should be.

If a budgeting category is off from the national average, the cell will highlight yellow and by hovering over the cell, you can see what the national average is. If you are spending less, that's great. However, if you are spending more than the national average on a category, you should reconsider that expense even if you have an above average income.

At the end of the process that takes 2 minutes, Suze will tell you to beef up your emergency fund if you do not have 8 months of essential expenses. If your emergency fund fits the bill, she'll say that you should aggressively pay down any debt.

NetWorth IQ

There are several ways to track your net worth. The most convenient for me, has thus far been Mint.com because it does everything automatically. However, another way to track your net worth is through NetWorth IQ. Here are it's advantages and disadvantages.

Disadvantages:

1. You must manually enter all your data
2. All other people's data is manually entered as well and might not be accurate for comparison
3. You must enter your data every month to see the progress

Advantages:

1. You can track your net worth with a graph
2. You can see the percentage change in each category
3. You can make your net worth public so other people can comment on your progress
4. Making your net worth public might motivate you to get that number up
5. You do not need to give out personal login information
6. You can compare your net worth to others your age, or in your occupation, for example
7. You can also compare each category such as student loan debt, credit card debt, or retirement assets to others in your demographic groups

E-File Your Taxes

Monday is the last day to file your 2010 taxes. The quickest way to file is to e-file. You can do it for free is your AGI is lower than $58,000. Many people automatically assume that they cannot e-file even if their AGI is below $58K because they have a Schedule C, royalties, or some irregular circumstance. However, this is not true. Each company has it's own restrictions and limitation and many companies allow all sorts of forms to be filed and they are just as easy as Turbo Tax.

Go to the IRS website to see a list of companies that you can use to e-file.

If you are receiving a return, elect to have it deposited directly into your bank account and receive your refund in around 14 days. And, next year remember to file early to eliminate the stress of filing at the last minute and get your refund earlier. Of course, if you owe to the IRS, it would be beneficial to you to file on the last day possible.

Student Loan Capitalized Interest

I recently noticed that for tax purposes, the student loan interest that is deductible is anything above the principle. Therefore, since my loan right now is higher than the original amount due to capitalized interest, the entire monthly payment is deductible for tax purposes. Something to keep in mind as you start to prepare for the 2011 taxes.

Bookfinder

Do you read a lot of books? You should be renting these from the local library as they are free. However, often times I find it easier to buy a book and keep it for however long I want and then when I no longer want it, resell it. If you like to buy books, you should try to find the cheapest that you can find, it's not always Amazon. One website that compares books and always gives me the cheapest choice is Bookfinder. Try it out for your next book purchase.

Discounted Gift Cards

If you don't have to pay full price for something, why do it? If you spend money at AMC, Walmart, Baja Fresh, The Home Depot, Kohl's, Borders, well you get the idea, then you can purchase discounted gift cards to make your purchases. Here are three sites where you can get a gift card of your choice at a discounted price.

Gift Card Granny
GiftCard.com
Plastic Jungle

You could also try eBay to see what gift cards are available.

The sites above are also great if you received some gift cards and no longer need them. Let's say you have an AutoZone gift card and no car, you can sell the gift card on one of these 3 sites or have people bid for it on eBay.

ING Compare Me

Ever wonder how you are doing compared to others your age that earn approximately the same income? There is a way to compare debts, savings, retirement options, etc. Go to ING Compare Me and fill out some questions.

Couponing

One way to save money on your grocery bill is to use coupons. You can sign up for the Sunday newspaper only and most likely you can sign up through Groupon or a similar site. Today, for example, there is a Groupon in LA for one year of the LA times Sunday newspaper for $10. You can recuperate your $10 pretty quickly if you look at the coupon section.

The trick to couponing is to clip the coupons that you think you could use. Then, you should look through the weekly store flyer and make a shopping list of the items that you need and preferably that will include the items on sale that week. Then, you should look through your stack of coupons and see if you can use any of them. If you base your grocery list on the coupons, you might end up buying something that you do not need.

To be more organized, create a couple of envelopes. One for the coupons expiring this month and one for the ones expiring after that. You can also further divide them by food items and household items. This way, you can flip through only the coupons that are expiring the soonest when you go shopping as sometimes you know that you will need to buy mayonnaise next week and even though it is not on sale, your coupon is expiring so why not get the mayo at a discount.

Other than getting your coupons from the Sunday newspaper, you can also look at the coupon websites such as Coupons.com and other sites. You can try the manufacturer's site for coupons that they post directly and lastly you can contact the manufacturer themselves complimenting them on the products you like. This will usually mean that you will receive some coupons directly from the manufacturer in the mail. Sometimes, the manufacturers send out coupons for the full value of the item.

For motivation, you can watch the new Extreme Couponing show by TLC. You can download the first episode free on iTunes.

Opt-Out of Junk Mail and Unsolited Phone Calls

Most everyone has received a letter from a credit card company stating that they have been pre-approved for a certain credit limit at a certain low APR. If you want to stop receiving those pre-screened letters, you can opt-out. Go to OptOutPrescreen.com and submit an electronic request, which will opt you out for 5 years or a request by mail, which will opt you out permanently. You can always opt back in through the website.


Opting out will reduce the junk mail, save paper, help prevent identity theft, and will disallow credit scoring agencies from giving out your name, address, and credit score to any credit card company that pays to ask.

If you receive unsolicited calls from telemarketers, you can put yourself on the Do Not Call Registry. This will not prevent companies that you have given your phone number to from calling, but it should stop any new solicitations. Also, when anyone from an unwanted company calls, tell them that you are on the Do Not Call Registry and that should ward some of them off as well.

If you receive a lot of magazine offers, donation requests, catalogs for local businesses that you have not asked for, or bank offers, the Direct Mail Association might be responsible. To opt out of their mailing list, go to the DMAchoice website. You have to register first and then you can 'manage' what type of mail you want to receive.

MorningStar X-Ray of Your Portfolio

If you hold several stocks or mutual funds, chances are you are not aware of the percentage of your portfolio that is in US stocks or in utilities. A great way to know the exact breakdown of what you hold by percentage is to do the MorningStar X-Ray. You can also do this before you buy an additional stock or mutual fund to make sure that you are saturating your portfolio in one type of area (unless that's what you are looking for). It's always best though - to go for diversification.

AAA

Depending on where you live, AAA can be a great investment. In CA, AAA costs $48 a year. If someone in your household has AAA, then adding you on would only cost $25. However, in FL it's $66 for the first person and $30 for the second. The benefits differ by area as well. For example, the CA one also offers free Credit Monitoring, but the FL one has a vehicle theft reward of $1,000. However, the main benefits are the same. You can have 3-4 free tows/unlocking services a year and you have access to the AAA discounts.

AAA discounts are given at a lot of places such as Denny's (FL, GA, TN), Amtrak, Courtyard by Marriot, Barnes&Nobles.com, FTD, the Walmart Pharmacy, Target.com, Payless, and many more. You can download the AAA discounts app and see what locations near you accept AAA discounts. If you use the card right, then it can save you more money than you are spending on the membership and you have the protection of the tow service.

Other benefits include appreciation days. For example, last year in Miami AAA offered free admission to the Seaquarium. Regular admission price is $30-$40. Also, in most states you do not need to go to the DMV/BMV to register your car or turn in a smog check. That can be done at the AAA offices. The local offices can also provide you with maps, personalized travel 'trip-tiks,' and discounts on such things as movie tickets.

It's something to look into.

Unemployment and Emergency Funds

Everyone knows that they should have an emergency fund. However, everyone seems to struggle with how much they should have. Dave Ramsey says $1,000 until you pay off all debt but the mortgage, then 3-6 months of expenses. Suze Orman likes the full 8 months of expenses (and currently of take home pay) in the emergency fund. Liz Weston wants you to have at least $500 in the bank so you don't bounce anything. She says that having a large emergency fund is great, but does not specify the amount. The amount, is really whatever you are comfortable with.

However, if you are like me and you want to have more information before you know what you are comfortable with, one way to establish your emergency fund is to base it on the unemployment rate. Therefore, you can look at the general current unemployment rate (March 2011) and see that you need 9.2 months in an emergency fund. You can tailor this to your location as well by selecting the city or state on the left hand side. You could also look at the raw national statistics and determine your current unemployment rate by sex, age, ethnicity, educational attainment, etc.

Easy Conversion for Hourly Wage to Salary

Quick tip: If you quickly need to know how much your wage per hour equals in yearly salary, you could do it in two seconds. Multiply an hourly wage by 2,000 and the result will be the actual salary with two weeks of unpaid vacation. For example, $25/hour is $50,000 a year per this rule. Actually, it is $52,000. However, most hourly positions do not have paid holidays, so take away two weeks for vacations and you will get $50,000.

The Liz Weston Budget

Budgeting is always in question. I've written a post on budgeting earlier, please see Budgets. However, it's always great to see other opinions as well. Liz Weston is a supporter of the 50/30/20 budget.

This means that 50% of the budget should go to your needs such as shelter, food, transportation, minimums on debts, and utilities. I think 50% for needs is great because in case of a job loss, you can easily survive on half of your income by working part time.

30% of your income should go on wants like clothing, entertainment, and dining out. This is perfect, however, for those who are saddled in debt or are behind on retirement savings, this is a little too much. I would spend half of this on debt repayment or catch up contributions, if I had excessive debt or were behind on saving. If, for example, someone does not have an emergency fund, they should not go out and spend 30% of their money on things they want, but do not need.

20% of your money should go to savings and debt repayment. I think you should be saving a minimum of 15% for retirement per year, therefore, leaving you with 5% for debt repayment. 5% is unrealistic if you have a lot of debt.

Therefore, this is a great budget to follow when you have a fully funded emergency fund, you are on track for retirement, and you have a low debt ratio. I would consider a low debt ration to be below 10% of your take home pay or even lower.

Kiplinger - Archives

Yesterday, I was looking through the Kiplinger magazine archives on Google Books. They have full online issues of magazines starting from 1947. Personal advise has obviously changed since then, especially since now we have more complicated products such as IRAs and ARM mortgages.

Here are some things that I found interesting.

Mortgages:

• Feb 1957 - When you borrow for a mortgage, make sure that you borrow reasonable amounts. A safe amount for a monthly payment on a mortgage is no more than 25.6% of your take home pay. You are probably okay with 28.8% of your take home pay. If the mortgage is over 33.2% of your income, you are going into the risky territory. The higher your income, the less mortgage that you should take out as it will be harder to maintain in time of a job loss.
• Feb 1957 - If your rent is 15% of your take home pay, you are either economizing or getting a break. If your rent is 25% or more of your take home pay, you are stretching it. Mortgages can be a higher percentage of your income as you will keep the home after it is paid off.
• Sept 1961 - The government approved 40 year mortgages. The article strongly advises against them as it would take you 29 years on a $12,000 mortgage at 5.5% to reach the tipping point, which the article describes as your loan being worth as much as the house. This example does not include a down payment. Graphs that were used clearly demonstrated that 15 year mortgages were the way to go as it saves a ton in interest costs. In fact, the magazine was trying to show that, due to interest, your monthly payments would only be slightly lower in a 40 year mortgage than in a 15 year mortgage. I did the math and the payments were $98.05 for a 15 year mortgage and $61.89 was for a 40 year mortgage. Doesn't seem like a large difference to us now, but the 15 year mortgage payment is more than a 1/3 higher. However, the magazine showed the difference per dollar borrowed, emphasizing that the difference is not that great.
• Mar 1964 - The average down payment declined from 28.4% to 24.5% in a year. The average mortgage term went from 19.7 years to 24.5 years in the same year. Please note that the average down payment was more than 20% in either case.

Student loans:

• Jul 1958 - First student loans are discussed. The loans have a 36 months term at 4.5%. Students are borrowing a few hundred dollars a year.
• Apr 1964 - 72 month terms for school are discussed.

There is much more information in those magazines. It is also interesting to see how, through the history, the down payments became smaller, the loan terms became longer, more types of loans became available such as personal loans and credit cards, and those other types of loans became more popular.

Cut Your Bills - Insurance

Insurance is something unavoidable, if you own a car that is. However, many people overpay simply because they stick with the insurance agency that gave them their first quote or they never compared rates. A great company for comparing rates is Insurance.com. This site allows you to fill in the forms once and get quotes from several companies.

However, it does not hurt to get quotes from other companies that you do not see on the Insurance.com list, or even those that show up, just to make sure.

Upromise.com will offer $5 if you request a quote from Liberty Mutual, even if you do not sign up for their insurance.

Make sure to compare insurance rates every time your insurance expires as you might be able to get a better deal elsewhere. Also, make sure to pay your premium in full for the 6 months. Usually, it will lead to great savings.

When to Start Saving for Retirement

So, you've heard people say that the sooner you start saving for retirement, the better. If you are till not saving for retirement or are not saving enough, you probably were not shown the numbers. Use this CALCXML - Savings Calculator to see how much you would loose for every year that you delay savings.

Money in your 20's

Money management skills should be learned as early as possible and the 20's is a great place to start. Here are 10 financial projects you should take on in your 20's:

1. Learn to live on less than you make. Many people who find their first job, go all out with a new wardrobe, a new car, decorations for the new apartment, etc. Control your spending and only spend what you can afford with the money you have. See the Cash Flow blog post to see how you can see your cash flow with ease.
2. Start saving. Use the budget worksheet to see where you are overspending if you are unable to spend 15% of your take home pay. If you have large student loan payments, try to cut down in all areas to free up some space for savings, even if it's $5/month.
3. If your company offers a 401(k) match, start putting in the minimum amount you have to put in to get the full match.
4. Build an emergency fund in a high interest savings account.
5. Maintain a good credit score. Make sure you are never late. Automating your bills is an easy way to make sure of this.
6. Pay down on your student loan or any other debt with any extra funds that you have. If you receive a gift, a tax refund, or a bonus, try to apply it directly to your debt. See the Debt Pay Off Methods to see how you want to tackle your debt. See how even $5 per month extra will make a difference in your debt by using the Bankrate Amortization Calculator.
7. Save for retirement. Starting early is one of the best things you can do. Use a retirement calculator to see how much you should save. Start small if you can't contribute the full amount you are advised and increase your contributions yearly.
8. Designate separate savings accounts for various goals. Retirement should be saved in a 401(k) and an IRA. You should also have separate savings accounts for an emergency fund, grad school, vacation, car, down payment, etc. You can save in each account simultaneously or take it one step at a time and once your emergency fund is full, save for a vacation, once you have enough in that account, you can save for grad school and a car, etc.
9. Get health insurance. One accident can ruin all of your plans. 
10. Earn more money. Ask for a raise at the annual review or find a job that will pay you 15%-20% more and present the offer to the current employer. Be ready to leave for the new job if the offer isn't matched.

Kelley Blue Book

Just like you need to know the value of your house to calculate your net worth (See Blogpost Zillow), you need to know the value of your car.

To estimate the value of your car, you can go to Kelley Blue Book (KBB) and enter your car's information. KBB is also useful if you would like to sell your car. Once you are ready to sell, enter your car's information and use the private party value as the basis of your listing. The buyer will probably want to bargain with you and bring the value of the car down, but at least you have a place to start.

Ebates - $5 for Signing Up

Like Upromise, Ebates pays you to shop online. Upromise can be directly linked to your Sallie Mae account and you can involve your relatives to participate and gift all their money to your loan account. For Ebates, you receive cash, yet you usually receive a larger percentage.

Just for signing up, you'll earn $5 in cash. If you keep shopping, you could earn a percentage of all your purchases on your Ebates account. Your money is automatically transferred from Ebates to Paypal in $5 increments.

Some examples of merchants and their cash back offers:

1. Groupon - 3%
2. Mint.com - $1.50
3. Entertainment.com (Entertainmnet Book) - 17.5%
4. Snapfish - 6.5%
5. ATT - $50
6. Netflix - $10
7. AMEX Gift Cards - 1%
8. Walmart - 2%
9. eBay - 1%-4%

Pretty much anything you buy online can be bought through Ebates and, therefore, you could earn cash back. It ads up quickly.

Your Money Personality

Want to know how you spend/save your money compared to others? Take the Money Personality Test to see.

Money Max Coach - Money Personality Test

Just make sure to answer honestly. Throwing $10 in your IRA when you have an extra $10 (once every couple of months) is not really regularly saving for retirement. My result as a Hoarder is spot on besides the fact that I would like to create wealth and the fact that I do not mind risky investments as long as it is a limited amount of my assets.

Restaurant.com

If you ever go out to eat, one great way to do so is by buying gift certificates on Restaurant.com. Restaurant.com offers gift certificates to restaurants usually at a 50% discount. Although there is usually a clause about how much food you have to buy, it usually ends up the amount that you would spend anyway. Buying a $10 gift certificate for $5 to a burger joint is still a good deal if I have to spend a minimum of $20. Two burgers and two drinks is usually $20.

Many restaurants will automatically add tip on the pre-discounted amount. Usually the tip is 15-18%. However, there are many restaurants that do not have the tip included, just read the fine print. I don't like going to places where the tip will be automatically included, I feel I don't get as great of a service as the waiter already knows that I am forced to pay 15-18%. I'd rather pick my own tip amount and it will only be 15-18% on an exceptional service. I used to be a waitress too at one point in my life and I think the society has moved to accept tips as mandatory, but I think if the customer had to wait a long time, didn't get what he ordered or the waitress showed the customer attitude, minimal tip, if any, should be left. Therefore, I always seek the restaurants that do not automatically add tip to your bill.

Now, Restaurant.com seems to offer more than restaurants in some places as well. For example, in Miami, Restaurant.com is offering a sunset cruise at a 50% discount.

You can buy Restaurant.com gift certificated at the website itself. However, there are ways to get the gift certificates at deep discounts or free:

1. Most likely you have some miles that are expiring with an airliner that you do not fly often. Usually, you can trade in your expiring miles for Restaurant.com gift certificates in their miles mall. I received my first ones through United.
2. You could buy Restaurant.com gift certificates at a deep discount on eBay.
3. American Express usually has free 30-day trials of services that will give you Dining Dough certificates for free as an incentive. Just make sure to cancel the service that you are trying.
4. Some retailers will have special promotions for Restaurant.com. For example, I recently received $50 in Restaurant.com gift certificates for purchasing $50 worth of goods at Drugstore.com.
5. You could use coupon codes on Restaurant.com to get certificates for pennies. Google "Restaurant.com coupon codes."

Zillow.com

If you own a home, you need to know the current value of your home to calculate your net worth. The best site for that is Zillow. Zillow will not only give you the current value of your home, but will also give you fun statistics like your locations Walkability score which looks to see how close you are to closest school, grocery stores, bars, etc. If you are looking for a house, this is a great way to see how much houses in your area are going for.

I look at the website for fun. It's fun to see that I can buy an apartment in downtown Miami for 25K, it might be in a run down area, but the luxury apartments are less than a mile away.

Estimate Your Tax Refund

If you haven't done your taxes yet and are expecting a return, then maybe an estimate of your return would be a motivator. TurboTax is great for doing your taxes or at least filling everything out and seeing what the refund will be and then trying to do get the same number yourself on paper copies.

Another great feature of TurboTax is their TaxCaster  - Free Tax Calculator. In less than a minute, you can receive a rough estimate of your return. I think mine is roughly $100 off.

Save the link for next year and play with your numbers in December so you know what to expect before 2012 rolls around and while you are still able to make some changes in 2011.

Pay Yourself First First, No Really

Every personal finance adviser out there says to pay yourself first. There are websites dedicated to the concept. However, many of us still don't do this simplest thing. For the longest time, I figured I was disciplined enough not to have to do this. However, since I've started a couple of month ago, it has done wonders.

Paying yourself first is as simple as setting up a new savings account (if you don't have one yet) and setting up automatic transfers of at least 15% of your take home pay. It sounds so simple, but paying yourself first lets you see the money that you have left over.

Since I am saving for a couple of things right now, I have one slush fund for the 15% savings and then I distribute from there to other savings accounts based on what I feel I want to accomplish first.

This 15% is the starting point for my savings. I also contribute 4% of gross pay to a 401K and I always end up transferring more out of my checking and into my savings. However, keeping the funds separate and having the automatic savings plan of at least 15% going into my slush fund, helps keep me on track.

Annual Credit Report Three Times a Year

If you haven't checked your credit report in 2011 yet, make sure to do so at the free site provided by the credit scoring agencies at Annual Credit Report. There are 3 credit scoring agencies: Equifax, Experian, and TransUnion. Therefore, you can check your report thrice a year for free.

Most people who know they should check their credit reports and don't, forget to do it. Therefore, you should create a system that reminds you. Putting it on the calendar does not work for me. If the calendar does not work for you either, you could mark the days that you have to check your report by, for example, day light saving days and your birthday. Therefore, you check your credit report every time the time changes and around your birthday or other memorable day like the 4th of July. I do better at associations for remembering things and, therefore, this method works for me.

I also struggle with remembering which agency I checked last. Therefore, it might be easier if you do them in an alphabetical order. Check Equifax, then Experian, then TranUnion. Or, maybe you can check the agencies starting with an E on day light savings days and TransUnion on your birthday or whatever memorable day you chose.

Whatever system you use, make sure to check the credit reports to make sure you did not experience identity theft, there are no errors, and you have been on track with paying down your debts.

E-Miles - Free Miles

Most airlines give away free miles through email subscriptions, a dining program, magazine subscriptions, etc. Another way to get miles is through looking at advertisements and possibly answering a few questions. e-Miles Miles for Minutes is a website that gives away miles or points for companies such as AirTran Airways, Alaska Airlines, Continental Airlines, Delta Air Lines, Frontier Airlines, Hilton HHonors, etc. Check to see if your airline is there and fly sooner.

Dave Ramsey's Baby Steps

Dave Ramsey is a hugely popular financial adviser. I like listening to his radio show just to see what his opinions are, even though a lot of the times, I do not agree with what he says. Here is the just of what he advises through his 7 baby steps:

1. Save $1,000
2. Pay off all debt, but the mortgage (this includes student loans)
3. Save 3-6 months in an emergency fund
4. Invest 15% of your income in retirement
5. Fund college education for children
6. Pay off your home
7. Build wealth and donate

 I think having a step process works for most people. However, not every household has the same factors in their financial life. I do have to credit him with saying that cheating baby steps in some circumstances might be okay, however, he does not seem to endorse it. I've heard his say, for example, that if you have an unstable job, you should increase the savings that you do in baby step one. However, he is never clear with how much.

I still believe in Suze Orman's idea of saving an 8 month emergency fund and then paying down the debt like student loans. Of course, if you have credit card debt at high interests and you feel pretty safe at your job, you could get by on a smaller emergency fund until your credit card debt is paid off.

I also think that Liz Weston has a point when she says that you can never catch up on your contributions for retirement. Therefore, I think that getting the employer's match in a 401(k) is a priority over paying for debt.

See my blog post on Prioritizing Savings to see what my personal 8 steps are.

Value of Your Car

Many people spend crazy amounts on their car payments. Usually those car payment are for 3-5 years. So, if you drove an old car for the first 3-5 years of your life and paid car payments to yourself, at the end of the 3-5 years, you should be able to pay for your car outright. While you drive your new car you have no payments, therefore, once again you can make payments to yourself and at the end of another 3-5 years you can buy another car outright, if you want. You have to be disciplined and treat those car payments to your separate savings account as a bill. Paying interest on the car payments to a loan company is like paying someone to make sure you put that money away. Do you really need to spend 5%, 10%, 20% of the value of your car on having someone look over your shoulder?

Also many people buy cars that they are unable to afford. A car's value together with all other motorized things in the house (i.e. boat, plane, motorcycle, ATV) should never total more than half of your salary. If it does, you have poured too much money into something that you cannot afford, especially if you are making payment on it. Therefore, if you just started working and are making $30K, and have signed a car loan for a brand new $25K car, you have overspend by $10K.

And, since new cars loose much of their value within the first few years, it is always a smart idea to buy a used car, even if it's just a couple years old.

The Math of Retirement

There are all sorts of numbers that you can calculate to see how much you will have in retirement. The truth is no one can predict how long you will live or what your medical costs will be, for example. However, there are some numbers that you could use as estimates without having to use complicated calculators.

• Always save at least 10% of your salary for retirement
• Have at least 10 years of your final pay in retirement before you do retire
• Never withdraw more than 4% of the principle of your total holdings in retirement to make sure you don't deplete your retirement fund (this means that you should be okay with living on 4% of the total amount you have as well)

Just remember 10, 10, 4 and you should be set.