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.