When you relocate from one place to another, most likely, your salary will change and so will your cost of living. If you are moving, you need to be prepared and know how much to ask for when you are hired. By using the Cost of Living Wizard Calculator, you can see what your salary should be in the new city based on the cost of living.
For example, if you are currently earning $35K in Miami and want to move to New York, you will need to earn over $54K to have the same standard of living. However, employers in NY pay on average of 22% more than employers in Miami, therefore, you should expect an offer of close to $43K for the same position. Before you move, you should realize that, likely, there will be a gap in income and your standard of living will be lowered in this case.
Monday, February 28, 2011
Friday, February 25, 2011
Mint Goals
As a grad, you probably have student loan debt. Mint.com just released a new goal "Pay Off Your Loans." Go to Mint.com, choose the loan you would like to pay and adjust the slider bar to see how much you have to pay each month to pay off your student loan in a certain amount of years. This is great as it tells you how much interest you will be saving as well, which should serve as a motivator.
Pay off private student loans off first especially if they have been co-signed. However, if the interest on your federal loans is 7.9% and your private loans are at 3%, you might have to think about the value of money you will be losing when paying off the low interest loan. My interest rates are the same for private and federal and, therefore, I'm setting up to pay off the private loans in 5 years instead of 13.5 by doubling my payments.
Pay off private student loans off first especially if they have been co-signed. However, if the interest on your federal loans is 7.9% and your private loans are at 3%, you might have to think about the value of money you will be losing when paying off the low interest loan. My interest rates are the same for private and federal and, therefore, I'm setting up to pay off the private loans in 5 years instead of 13.5 by doubling my payments.
Thursday, February 24, 2011
Purchase Price to Rent Ratio
I earlier wrote a post about Renting vs. Buying with a link to a calculator. There is also a simple way to see weather you should buy a place or rent using the Purchase Price to Rent Ratio. What you do is figure out the cost of the house/apartment you are renting and divide that by the total yearly rent. If you get a number above 15, it is better to rent and if you get a number below 15, it is better to buy. For example: your rented dwelling is worth $250K, but you are paying only $12K per year in rent. Your number is 20.83, which is higher than 15, so, according to this formula, you should keep renting.
I could buy my apartment for 150K (at the low end) while my current yearly rent is $12,600. The Purchase Price to Rent Ratio is low, 11.91. It seems that I should buy the apartment, however, you must consider other factors. The association fees for my building are $500 per month and regularly increase. Therefore, buying would be more expensive.
The NY times calculator in the previous post accounts for the association fees, however, the Purchase Price to Rent Ratio is easy to use on the go.
I could buy my apartment for 150K (at the low end) while my current yearly rent is $12,600. The Purchase Price to Rent Ratio is low, 11.91. It seems that I should buy the apartment, however, you must consider other factors. The association fees for my building are $500 per month and regularly increase. Therefore, buying would be more expensive.
The NY times calculator in the previous post accounts for the association fees, however, the Purchase Price to Rent Ratio is easy to use on the go.
Wednesday, February 23, 2011
Checking Accounts - PerkStreet
I'm in the market for a new checking account. Looking at what's available locally is discouraging even when i live in a place with the largest concentration of banks. Citi and Chase still seem like the top choices due to ATM availability. However, their free checking accounts do not earn any significant interest and their debit cards are not even 1 point to a dollar. In addition to the low rewards, they have restrictions for free accounts such as direct deposit or a minimum balance.
A better checking account is one that can be found online. The one that came out on top for me is PerkStreet.
The Good:
The Bad:
A better checking account is one that can be found online. The one that came out on top for me is PerkStreet.
The Good:
- 1% cash back on all purchases
- 2% cash back on all purchases if your account balance is over $5,000
- free ATMs in places such as Walgreens, CVS, and Rite Aid
- refund of up to $10 per month for non-network ATMs
- easily transfer funds from any bank account online
- monthly specials where you can receive up to 5% cash back - info should be on Facebook and Twitter
- online account that gives you checks
The Bad:
- limit of $1,500 transfer for a bank account per 30 days (if you want to deposit more you can through an ATM or by mail)
- if you want a refund for non-network ATMs you must email, fax, or mail the receipts from the ATMs that charged you
- apparently PerkStreet does not separate the rewards you earn per transaction, making rewards hard to track
Tuesday, February 22, 2011
A New(ly Discovered) Search Engine
Nowadays information is readily available, however, sometimes you just want a snapshot of what you are looking at or a clear 'yes' or 'no' answer. Here is a great search engine WolframAlpha. The search engine will tell you almost about anything with a quick snapshot. This is great for checking out a company if you want to buy the stock (type: Google), finding out the population, weather, and median home price of a city (type: Washington DC), by finding out how much you will pay in interest over a life of the loan (type: loan 10% interest 10 years $10,000), etc.
Try it out and look at the Examples page to see what else this search engine can do.
Friday, February 18, 2011
Student Loans - Is It Really Good Debt?
Student loans are the major burden for a recent graduate. It is usually talked about as 'good debt.' Good debt is usually a mortgage, student loans, or a business loan. All of these loans will help you increase your net worth in the future, theoretically. 'Bad debt' is consumer debt that is acquired by buying things.
So, technically student debt is good debt as your education will help you earn more money in the future. However, as a lot of students are doing, if you have taken out private student loans and paid much of the college bill through loans, you've probably borrowed too much. I borrowed a private student loan only in my first year for $9,000 due to a change in circumstances. I could have borrowed less, as I used left overs from the loan (which was around $1,500 per semester) to live a better life, travel a bit more, etc. I thought that the value of $1,500 was much more to me in college, than it would be while I was working. I did not consider interest. However, if I were to to do this again, I would have done exactly the same thing as I still believe that the private education I received is better than what I would have received going to a much cheaper college. I also believe that being able to travel every break (as I also received about $1,500 refund from the government loans in the last 3 years) has taught me more about the world.
However, the only reason I would do this again is because I ended up graduating with around $26K in student loans in total from a private liberal arts college with tuition of $45K per year. Half of it was federal subsidized loans and the other half was the private student loan that grew to $13K due to interest. Supposedly, if you take out about the same as your first year's salary after college, then you will be able to pay it back at the terms set by the lender. Of course there are programs such as IBR, however, you should aim to pay the least amount in interest. So far, I have not had trouble paying back my loans and I am aiming to have them paid off in 5 years or so.
Imagine you have $100K in private student loans, your monthly payment would be $1,150 with 10 year terms at 6.8% interest as calculated with the FINAID Student Loan Calculator. If you were making $27,600 a year, you would be spending 1/2 of your gross salary on your loans. That is unsustainable. Therefore, these kind of student loans are toxic or bad debt. If you had to pay $25K per year at the school you chose, you chose the wrong school.
Private loans usually means that you have borrowed all you could from the government, therefore, you are taking out loans that the government does not think you can afford. Consider that. Also, consider that student loans can pretty much never be dismissed in bankruptcy. There is only a small chance of dismissal if it is your second bankruptcy and you have included your student loans in the first bankruptcy. Also, private student loans do not usually have a fixed interest rate, therefore, if your credit goes down and the LIBOR goes up, your interest rate could sky rocket. Mine was at over 12% at one point when I had no credit history. You usually have to get a co-signer and you have no control over their credit score. Also, if you are unable to pay the loan, they are liable. This could ruin relationships and two sets of credit scores.
There are so many things wrong with private student loans and, therefore, I do not consider them to be good debt. I'm trying to get rid of the $11K I have left as quickly as possible.
So, technically student debt is good debt as your education will help you earn more money in the future. However, as a lot of students are doing, if you have taken out private student loans and paid much of the college bill through loans, you've probably borrowed too much. I borrowed a private student loan only in my first year for $9,000 due to a change in circumstances. I could have borrowed less, as I used left overs from the loan (which was around $1,500 per semester) to live a better life, travel a bit more, etc. I thought that the value of $1,500 was much more to me in college, than it would be while I was working. I did not consider interest. However, if I were to to do this again, I would have done exactly the same thing as I still believe that the private education I received is better than what I would have received going to a much cheaper college. I also believe that being able to travel every break (as I also received about $1,500 refund from the government loans in the last 3 years) has taught me more about the world.
However, the only reason I would do this again is because I ended up graduating with around $26K in student loans in total from a private liberal arts college with tuition of $45K per year. Half of it was federal subsidized loans and the other half was the private student loan that grew to $13K due to interest. Supposedly, if you take out about the same as your first year's salary after college, then you will be able to pay it back at the terms set by the lender. Of course there are programs such as IBR, however, you should aim to pay the least amount in interest. So far, I have not had trouble paying back my loans and I am aiming to have them paid off in 5 years or so.
Imagine you have $100K in private student loans, your monthly payment would be $1,150 with 10 year terms at 6.8% interest as calculated with the FINAID Student Loan Calculator. If you were making $27,600 a year, you would be spending 1/2 of your gross salary on your loans. That is unsustainable. Therefore, these kind of student loans are toxic or bad debt. If you had to pay $25K per year at the school you chose, you chose the wrong school.
Private loans usually means that you have borrowed all you could from the government, therefore, you are taking out loans that the government does not think you can afford. Consider that. Also, consider that student loans can pretty much never be dismissed in bankruptcy. There is only a small chance of dismissal if it is your second bankruptcy and you have included your student loans in the first bankruptcy. Also, private student loans do not usually have a fixed interest rate, therefore, if your credit goes down and the LIBOR goes up, your interest rate could sky rocket. Mine was at over 12% at one point when I had no credit history. You usually have to get a co-signer and you have no control over their credit score. Also, if you are unable to pay the loan, they are liable. This could ruin relationships and two sets of credit scores.
There are so many things wrong with private student loans and, therefore, I do not consider them to be good debt. I'm trying to get rid of the $11K I have left as quickly as possible.
Thursday, February 17, 2011
File Your Taxes for Free
It's tax time. Did you know that it's easier to eFile as all you have to do is answer questions and all your forms will be automatically filled out for you. By eFiling, you do not need to fill out the tax forms yourself, the company through which you are eFiling will usually ask all the right questions so that they do not miss any deductions or credits for you, you get your refund faster, and there is a 70% chance it's free for you.
IRS eFile
Click on the link above to take you directly to the IRS eFiling site. If you have AGI of $58,000 or less, you may eFile with the IRS for free. Personally, I like Turbo Tax as they are user friendly and I have used them for years. However, Turbo tax will only allow you to eFile for free if you use their Basic Edition. I receive a 1099s as well as a W-2 and, apparently, the tax return is no longer basic. If you like filling out the forms yourself, you could also use the Free File Fillable Forms, link available at the above IRS site. This way, you also do not need to enter all your information and be told in the end that you do not qualify because you have too many forms.
Personally, I like to use Turbo Tax first to see what they can come up with and then, I don't mind filling the forms out myself.
IRS eFile
Click on the link above to take you directly to the IRS eFiling site. If you have AGI of $58,000 or less, you may eFile with the IRS for free. Personally, I like Turbo Tax as they are user friendly and I have used them for years. However, Turbo tax will only allow you to eFile for free if you use their Basic Edition. I receive a 1099s as well as a W-2 and, apparently, the tax return is no longer basic. If you like filling out the forms yourself, you could also use the Free File Fillable Forms, link available at the above IRS site. This way, you also do not need to enter all your information and be told in the end that you do not qualify because you have too many forms.
Personally, I like to use Turbo Tax first to see what they can come up with and then, I don't mind filling the forms out myself.
Wednesday, February 16, 2011
IRAs - 10 Things to Know - Penalty Free Withdrawals for Anything
Here are some things you knew and some things you should know about IRA accounts.
Detailed IRS IRA Guide
- For single tax payers, your contributions limits to a Roth IRA begin phasing out at incomes of $105,000. For married tax payers, the contribution limits phase out when your income reaches $167,000. These numbers are changing yearly.
- You may withdraw contributions without penalty at any time for any purpose. Only the earnings will be penalized with a 10% tax if you withdraw them before you are 59 1/2 of age or you do not use the funds for qualified events. Speak to a professional before you make this move as the tax law is always changing.
- Even if you are not a US citizen, you may open an IRA and claim the Retirement Tax Credit. You must have US earnings and fit the criteria of the credit.
- You may withdraw all of the contributions and earnings you made penalty free if you have made all the contributions within that tax year.
- You can use $10,000 of your IRA funds to purchase, build, or rebuild your first home, penalty free.
- You may use your Roth IRA account as a 529 plan or a savings account for grad school as distributions that you use for qualified education expenses can also be withdrawn tax and penalty free.
- You can roll your 401(k) over to a Roth IRA when you leave your job.
- You may have multiple IRA accounts as long as you contribute a maximum of $5,000 per year in all of your accounts.
- Funds in retirement accounts are not included in your assets to calculate financial aid. If you have limited funds, this is another reason to save for grad school in an IRA and not in a 529 plan, which usually have minimal investment choices.
- You have until tax day of the next year to contribute to an IRA, therefore, it's not too late to contribute to an IRA for 2010.
Detailed IRS IRA Guide
Tuesday, February 15, 2011
The 4% Rule
Here is another way to look at retirement and how much you should have saved. Many of the calculators I see online overestimate your needs. For example, the calculators think that just because you want to travel, you will need an extra $1K-$2K per month. I have managed traveling on a lot less and I know I could continue this when I am older as well. Therefore, a way to always know what you will need as the total sum in retirement is to see how much you want to earn. Let's say that you want to earn $40,000 a year in retirement. If you can make a 4% yearly return on your money (which is conservative), then you'll need $40,000/.04=$1,000,000. You can adjust this as times or living expectations change. However, there is always an easy way to calculate what you will need in the future. This is of course a rough estimate as it does not calculate taxes, social security, etc.
To see how much you need to save per month to reach your goal use this Bankrate Savings Calculator.
To see how much you need to save per month to reach your goal use this Bankrate Savings Calculator.
Monday, February 14, 2011
Prioritizing Savings
If you have limited resources, you need to prioritize your savings. As discussed in the previous post, there are lots of goals you can make, but how to choose which one is more important? Here is my list:
I'm on step 4. I raided my emergency fund to put $2,000 in a Roth IRA to get the IRS credit, so I am back down to 4 months of expenses, which I can bring back up to 6 in April. Once I have 6 months, I think I will split my extra money between building an 8 month emergency fund and paying down a private student loan currently at 6.25% until I have full 8 months of an emergency fund. After my emergency savings account is fully funded, then I will pay off the student loan fully while still contributing to the IRA account so that my retirement contributions are at least $2K per year while I qualify for the retirement savings credit.
- build $1,000 or 3 month emergency fund (based on your gut feeling)
- maximize your 401(k) up to the company match
- pay off toxic debt such as credit cards or anything higher than an 8% interest rate (car, private student loans)
- build an 8 months emergency fund
- max out your Roth IRA
- pay down any other debt
- build an emergency fund of 1 year of expenses
- invest/save for a down payment/wedding/etc.
I'm on step 4. I raided my emergency fund to put $2,000 in a Roth IRA to get the IRS credit, so I am back down to 4 months of expenses, which I can bring back up to 6 in April. Once I have 6 months, I think I will split my extra money between building an 8 month emergency fund and paying down a private student loan currently at 6.25% until I have full 8 months of an emergency fund. After my emergency savings account is fully funded, then I will pay off the student loan fully while still contributing to the IRA account so that my retirement contributions are at least $2K per year while I qualify for the retirement savings credit.
Friday, February 11, 2011
Entertainment Book
A smart way of attaining your financial goals such as having more money to pay down on your student loans is by reducing your expenses. One of my favorite ways is through the Entertainment Book. Search for the book through Upromise and you can get $14 off the purchase and 14% back in your Upromise account.
The Entertainment Book is great if you ever go to the movies, eat out, go to the zoo, buy groceries, etc as it's filled with coupons for 50% off or Buy One Get One Free. Even if you use the book only a couple of times, it will pay for itself. One coupon that I recently discovered is a rebate for purchases made on Hotels.com. Not only do you earn loyalty reward points through the website, often book the cheapest hotel rooms, but you can also get a rebate of up to $250 using the Entertainment Book.
The Entertainment Book is great if you ever go to the movies, eat out, go to the zoo, buy groceries, etc as it's filled with coupons for 50% off or Buy One Get One Free. Even if you use the book only a couple of times, it will pay for itself. One coupon that I recently discovered is a rebate for purchases made on Hotels.com. Not only do you earn loyalty reward points through the website, often book the cheapest hotel rooms, but you can also get a rebate of up to $250 using the Entertainment Book.
Thursday, February 10, 2011
Financial Goals
The whole point of learning and keeping up with your finances is to attain our financial goals. What are your financial goals.
Here are some examples of goals:
What are you saving/hoping for? Whatever it is, my favorite tool to keep an easy track of your savings and goals is to open up a high yielding savings account (see my earlier post where to find one), and set up a goal in Mint (see an earlier post about this website as well). You can set up multiple goals as long as you have a different account for each goal and keep track of your progress. Mint will tell you if you are on track, behind, or ahead on your goals and the amount of time it will take you to reach them.
Here are some examples of goals:
- Save X amount in an emergency fund
- Save X amount of months of expenses/salary in an emergency fund
- Save X amount for retirement this year
- Save X% of each paycheck for retirement this year
- Max out your IRA
- Pay down my student loan in X amount of years
- Pay double the minimum on my debt
- Save for a vacation
- Save for graduate school
- Save for a down payment
- Buy a car with cash
What are you saving/hoping for? Whatever it is, my favorite tool to keep an easy track of your savings and goals is to open up a high yielding savings account (see my earlier post where to find one), and set up a goal in Mint (see an earlier post about this website as well). You can set up multiple goals as long as you have a different account for each goal and keep track of your progress. Mint will tell you if you are on track, behind, or ahead on your goals and the amount of time it will take you to reach them.
Wednesday, February 9, 2011
Upromise
Upromise started off just for Sallie Mae Student Loan customers to reduce their loan amounts. The way it works is: if you ever shop online on sites such as eBay, Travelocity, OfficeDepot, etc., then you can earn a percentage of your purchases. By searching for a retailer you want to shop at through the Upromise site, and clicking on the link to redirect you to your retailer, you earn a percentage of each purchase into your Upromise account.
In the past, you were only able to deposit those funds against your student loans. However, now you may also receive a check or deposit it into your Sallie Mae Bank account. If you deposit it into the Sallie Mae bank account (currently earning 1.25% interest), you are also eligible to receive 10% of your Upromise earnings at the end of the year as a bonus.
There are many ways to earn money in your Upromise amount. In addition to earning a percentages of your purchases online, you may also earn extra Upromise cash by using a registered credit card at participating restaurants. You could also join e-Rewards and redeem the money you earn by filling out surveys for Upromise cash. Many companies also award a dollar amount for joining or trying their services. For example, ServiceMagic pays $4 for getting a quote for any services you may need around the house.
Therefore, Upromise is a great deal. If you shop online anyway, you should sign up and get your friends and relatives to sign up and add you as the beneficiary.
In the past, you were only able to deposit those funds against your student loans. However, now you may also receive a check or deposit it into your Sallie Mae Bank account. If you deposit it into the Sallie Mae bank account (currently earning 1.25% interest), you are also eligible to receive 10% of your Upromise earnings at the end of the year as a bonus.
There are many ways to earn money in your Upromise amount. In addition to earning a percentages of your purchases online, you may also earn extra Upromise cash by using a registered credit card at participating restaurants. You could also join e-Rewards and redeem the money you earn by filling out surveys for Upromise cash. Many companies also award a dollar amount for joining or trying their services. For example, ServiceMagic pays $4 for getting a quote for any services you may need around the house.
Therefore, Upromise is a great deal. If you shop online anyway, you should sign up and get your friends and relatives to sign up and add you as the beneficiary.
Tuesday, February 8, 2011
Retirement
How much should you save for retirement?
IRA maximum is $5,000 per year until you are 50 years old. Is that enough or too much? The 401(k) limit until age 50 is $14,500. You can find out what amount you need to save by using some calculators online. There are a variety out there that will tell you what you need to save per year or what you need in total to attain your goal.
Here are some of my favorite ones:
AARP Calculator - Tells you what percentage of your income you should contribute to retire by a certain age. Also tells you the age you will retire if you keep contributing the percentage that you are currently contributing
FINRA Calculator - Shows you a schedule of exactly how much you should contribute each year. Every year, the contribution grows so that you are not overwhelmed by a large amount from the start.
CNN Money Calculator - Tells you the likelihood that you will attain your goal for retirement with a percentage. For example, "We believe there is an 80% chance, you will attain your retirement goal."
Also, you might find it helpful to see how much social security you will be getting in the future by plugging in your social security number and other info on the official SS website: Social Security Online Services. You have to have enough working credits to get the personal estimates at this website, which means that you have to have 10 years of working experience.
If you can't get your personal estimates through the website, you can estimate your future social security through the Social Security Online Services - Quick Calculator.
IRA maximum is $5,000 per year until you are 50 years old. Is that enough or too much? The 401(k) limit until age 50 is $14,500. You can find out what amount you need to save by using some calculators online. There are a variety out there that will tell you what you need to save per year or what you need in total to attain your goal.
Here are some of my favorite ones:
AARP Calculator - Tells you what percentage of your income you should contribute to retire by a certain age. Also tells you the age you will retire if you keep contributing the percentage that you are currently contributing
FINRA Calculator - Shows you a schedule of exactly how much you should contribute each year. Every year, the contribution grows so that you are not overwhelmed by a large amount from the start.
CNN Money Calculator - Tells you the likelihood that you will attain your goal for retirement with a percentage. For example, "We believe there is an 80% chance, you will attain your retirement goal."
Also, you might find it helpful to see how much social security you will be getting in the future by plugging in your social security number and other info on the official SS website: Social Security Online Services. You have to have enough working credits to get the personal estimates at this website, which means that you have to have 10 years of working experience.
If you can't get your personal estimates through the website, you can estimate your future social security through the Social Security Online Services - Quick Calculator.
Monday, February 7, 2011
Renting vs. Buying
Before even considering if you should be a home owner, you should have a 20% down payment to minimize the risk of foreclosure and to avoid paying the mortgage insurance. You also should have a full funded (whatever that means for you) emergency fund since home emergencies can come up regularly. Some even advise that you should build a separate home emergency fund valued at 1-3% of the purchase price.
Once you have both of those criteria, it is smart to see if you should purchase a piece of property for yourself. The NY Times "Is It Better to Buy or Rent?" Calculator is great for determining just that. Have you considered association fees, insurance, taxes, maintenance, and closing costs? The property costs more than just the price tag. Do you know how long you are going to stay in that property? The break even point can come 10 years after the purchase. If that is the case for your situation, are you prepared to wait that long before your investment pays off?
Having lived several years in CA, I always thought that buying is better than renting, however, now that I live in Miami (a renter's market), I can see that there is no way I could afford a house in the area that I am renting and break even, even after 30 years. Therefore, landlords seem unavoidable in my foreseeable future.
Once you have both of those criteria, it is smart to see if you should purchase a piece of property for yourself. The NY Times "Is It Better to Buy or Rent?" Calculator is great for determining just that. Have you considered association fees, insurance, taxes, maintenance, and closing costs? The property costs more than just the price tag. Do you know how long you are going to stay in that property? The break even point can come 10 years after the purchase. If that is the case for your situation, are you prepared to wait that long before your investment pays off?
Having lived several years in CA, I always thought that buying is better than renting, however, now that I live in Miami (a renter's market), I can see that there is no way I could afford a house in the area that I am renting and break even, even after 30 years. Therefore, landlords seem unavoidable in my foreseeable future.
Friday, February 4, 2011
Budgets
How to Build One and How to Stick to One
As discussed in my Cash Flow Blog Post, you could use Mint.com to set up your budget as it automatically tracks the amounts you spend in each category for you. However, another important part of building a budget is seeing if you are spending too much in one category or another.
Gail Vaz-Oxlade's Budget Worksheet will help you see if you are overspending in one area or another. Go to the site and at the bottom of the page, there is an option to download it as Excel as well. She says that housing should be 35%, which I believe is a little high. I think around 30% is more reasonable. Also, there is only room for 10% savings and I think that 15% is better. She is Canadian and they have a better retirement plan, therefore, their savings do not have to be as high. I think if you cut back 5% from the housing and add it to the savings, you'll be doing great if you are able to spend within that budget. Transfer whatever numbers you come up with to the Mint.com budget, which will help you stick to it, and you'll be set!
Always remember that the more you can save the better. If you are earning $30K after taxes, for example, you are only saving $4.5K if you are saving 15%. This means that you are not even maxing out your Roth IRA, which you should. This also does not allow any room for saving for emergencies, a down-payment, grad school, or a vacation. Therefore, always remember that the more you can save, the better you will be off in the future.
As discussed in my Cash Flow Blog Post, you could use Mint.com to set up your budget as it automatically tracks the amounts you spend in each category for you. However, another important part of building a budget is seeing if you are spending too much in one category or another.
Gail Vaz-Oxlade's Budget Worksheet will help you see if you are overspending in one area or another. Go to the site and at the bottom of the page, there is an option to download it as Excel as well. She says that housing should be 35%, which I believe is a little high. I think around 30% is more reasonable. Also, there is only room for 10% savings and I think that 15% is better. She is Canadian and they have a better retirement plan, therefore, their savings do not have to be as high. I think if you cut back 5% from the housing and add it to the savings, you'll be doing great if you are able to spend within that budget. Transfer whatever numbers you come up with to the Mint.com budget, which will help you stick to it, and you'll be set!
Always remember that the more you can save the better. If you are earning $30K after taxes, for example, you are only saving $4.5K if you are saving 15%. This means that you are not even maxing out your Roth IRA, which you should. This also does not allow any room for saving for emergencies, a down-payment, grad school, or a vacation. Therefore, always remember that the more you can save, the better you will be off in the future.
Thursday, February 3, 2011
Credit Report and Score
Your must know your credit score if you are going to apply for any credit as your interest rate depends on it. Your credit report is what determines your credit score. Therefore, you should look at your credit report regularly to spot any inaccuracies. The best place to check your credit report is from the free website Annual Credit Report where you can check three credit reports from the three different companies: Equifax, TransUnion, and Experian. I suggest looking at one report every 4 months so that you can check your free credit report 3 times a year.
As for the credit score, most companies charge even when they say the credit score is free. Or, they charge if you don't cancel their service, which some people forget. Therefore, there are two great truly free credit score websites available: Credit Karma and Quizzle. My Credit Karma score has always matched one of my scores that I have purchased from MyFico.com exactly. Quizzle has always been around 80 points lower than the average of my three scores, which have always been only a few points away from each other or equal. However, you can get a rough idea of where you are by getting both of these free scores.
Wednesday, February 2, 2011
Mutual Funds
I am starting a Roth IRA this year partly because I'd like a nice retirement, but also partly due to the available IRS Retirement Credit.
Since I am new to investing, I'm going to start with mutual funds. I strongly believe in the freedom to buy and sell if I needed to without considering the commission, therefore, I am choosing NTF or no load funds only. You do not pay a commission to buy or sell these funds.
However, after signing up for the Roth IRA on ShareBuilder (where I already have a brokerage account due to a $50 incentive), I was a little lost about choosing the actual mutual funds. I looked at Standard & Poor's, The Street, MorningStar, etc. ShareBuilder advised I look at Lipper's detailed ratings. Choosing from 200 NTF funds from various fund families was no easy task until I bumped into US News Mutual Funds website.
The website easily compares MorningStar, Zack's, Lipper's, Standard & Poor's, and The Street ratings. Also, there is a lot information on each fund including the history of the returns, management, MaxFunds.com scores, etc. Searching for each stock (and remembering to select the right stock from the family in the drop down menu) left me with only 3 funds that I feel are rated the highest by all. I also wanted a semi-consistent return of at least 5%.
I'm not sure about all the details that the websites base their scores on, yet I feel that if several popular websites recommend a fund, it must be doing well. There is no way that even an experienced financial adviser can know everything about the management, the return, the risk, the average return, etc of each of the 200 funds I was considering. Therefore, now I need to choose 2 from IDROX (Real Estate should go up soon, the inconsistent return history is due to the inconsistent real estate market), ACMVX (I wanted to invest in the Republic Services stock, but finding it as the top stock in a highly ranked fund is even better), and PTTDX (great looking fund with mortgage backed securities).
Update: Went with ACMVX and IDROX. PTTDX is government based and invest a lot in low paying US Treasury Bonds as well as Fannie Mae, just didn't feel right.
Since I am new to investing, I'm going to start with mutual funds. I strongly believe in the freedom to buy and sell if I needed to without considering the commission, therefore, I am choosing NTF or no load funds only. You do not pay a commission to buy or sell these funds.
However, after signing up for the Roth IRA on ShareBuilder (where I already have a brokerage account due to a $50 incentive), I was a little lost about choosing the actual mutual funds. I looked at Standard & Poor's, The Street, MorningStar, etc. ShareBuilder advised I look at Lipper's detailed ratings. Choosing from 200 NTF funds from various fund families was no easy task until I bumped into US News Mutual Funds website.
The website easily compares MorningStar, Zack's, Lipper's, Standard & Poor's, and The Street ratings. Also, there is a lot information on each fund including the history of the returns, management, MaxFunds.com scores, etc. Searching for each stock (and remembering to select the right stock from the family in the drop down menu) left me with only 3 funds that I feel are rated the highest by all. I also wanted a semi-consistent return of at least 5%.
I'm not sure about all the details that the websites base their scores on, yet I feel that if several popular websites recommend a fund, it must be doing well. There is no way that even an experienced financial adviser can know everything about the management, the return, the risk, the average return, etc of each of the 200 funds I was considering. Therefore, now I need to choose 2 from IDROX (Real Estate should go up soon, the inconsistent return history is due to the inconsistent real estate market), ACMVX (I wanted to invest in the Republic Services stock, but finding it as the top stock in a highly ranked fund is even better), and PTTDX (great looking fund with mortgage backed securities).
Update: Went with ACMVX and IDROX. PTTDX is government based and invest a lot in low paying US Treasury Bonds as well as Fannie Mae, just didn't feel right.
Tuesday, February 1, 2011
Missing Money - Unclaimed Property
Did you know that if a company ever owed you money and could not find you, they could have placed the money into the unclaimed funds. To check to see if you any unclaimed funds, you could check two great sites:
Unclaimed
Missing Money
Please remember that the reason the company could not find you was because you moved, so look for all states that you have previously held an address at. Check your friends and relatives. Every time I have checked, I have always found money for friends, unfortunately never for myself though.
You could also check out your favorite celebrity for fun to see their previous addresses or who owes them money.
Unclaimed
Missing Money
Please remember that the reason the company could not find you was because you moved, so look for all states that you have previously held an address at. Check your friends and relatives. Every time I have checked, I have always found money for friends, unfortunately never for myself though.
You could also check out your favorite celebrity for fun to see their previous addresses or who owes them money.
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