Interview With A Guru – The Simple Dollar

Posted on March 10, 2011 by Jane Sanders

There are several amazing personal finance bloggers who lend their time and expertise to enhance your financial understanding. I had the chance to ask some questions of a true guru, Trent from The Simple Dollar. If you don’t already read this blog, you should. Here’s what he had to say:

1.  Some of my readers may be interested in following TheSimpleDollar. What value or overall message do you think your readers get from your blog?

The message of The Simple Dollar is that healthy personal finance is a
key component in living the life you want.  Having your money in order
reduces stress and generates opportunities.

2. You’ve become one of the most successful personal finance blogs on the internet. What are your plans and goals for TheSimpleDollar in the next 1-3 years?

My goal with The Simple Dollar is the same it’s been since day one,
and it’ll remain the same.  When there’s a person out there who’s
reached their financial bottom and is desperately searching Google for
some sort of answers that will help them get their life back on track,
I want to be there to help them start heading back in the right
direction and guide them along until they feel ready to fly on their
own.  That’s the goal of the site.

3. What advice do you have for a person who is just beginning to get their finances in order?

It really depends on how bad their financial state was before they
started getting their finances in order.

If I were to offer one piece of universal advice, I would tell them to
start setting some concrete goals for the future.  Write them down,
then come up with a plan for achieving them.

4. Given the volatility of the market in recent years, what do you see as the most responsible strategy for investing moving forward?

Invest in yourself.  Build a big emergency fund.  Pay off your debts.
Shore up your education.  Get yourself in a position so that when the
economy inevitably rebounds, you’re as ready as you can be to navigate
yourself into a better job or a higher paying position.

5. Finally, if someone was planning to launch a PF blog to help others along, what advice would you give him or her?

If you’re not doing something different than what’s already out there,
don’t do it at all – or at least don’t do it with the expectation of
making significant money with the blog.  You need to constantly ask
yourself what sets your site apart from the others, and if you can’t
easily answer that, go back to the drawing board.

What great advice! If you’d like to learn more about keeping your finances in order, check out his recent post on handling rising fuel prices.

Posted in Debt Elimination, Frugal Living | 2 Comments

How To Find A Happy Financial Balance

Posted on March 9, 2011 by Jane Sanders

I often discuss how the first and most important step toward financial stability is making a budget for your lifestyle. Uncontrolled spending and a general unawareness of just where your money goes is the fastest road to debt. Part of this plan involves trimming your expenses to the minimum necessary level, and many websites out there can help you do just that. Cutting out unneeded expenses is crucial, but it doesn’t mean you should eliminate the things you love from your life. Financial stability is all about balance, and your lifestyle should be, too.

Quality Things

You can live on a budget and maintain a high level of quality for the things in your life. Lets use a buying decision like choosing a new pair of pants as an example.

First, we’ll rule out the obviously frivolous options:

  • High end materials may be extremely nice and potentially impressive (to those who care), but that same $500 could potentially cover a month’s worth of living expenses or serve as a great emergency fund in your budget.
  • Designer labels and brand names are usually marked up significantly to pay for the status associated. Which means that you’re really just paying for their billboards and commercials. But we’re here for pants.

Now, some would advise you, as a budget seeker, to look for the best priced pants no matter what. This is a fine strategy, but it can have two effects:

  • It can leave you dissatisfied. Reaching your financial goals can take a long time and requires a lot of discipline. Some sacrifice is necessary, but you can burn yourself out by sacrificing things that will negatively affect your happiness. If you’re going to be wearing this pair of pants everyday and it costs 10% more for a nicer cut and material, I say go for it. You may have to make sacrifices somewhere else, but it will help you keep your resolve to win the war.
  • Cheap products sometimes don’t last as long. You may end up spending more in the long run by going for the lowest grade option. If the well-made (but not necessarily brand name) pair of jeans will last a year and the cheapest option will last only a few months, you’re setting yourself up to spend a lot more money than you have to.

Fun Activities

Are those bowling leagues you’re in necessary? What about the weekly movie rental? Or that daily mocha frappuccino? Nope, not one of those are essential to your survival. But they may be essential to your sanity. Most financial experts assess that it can take 1-3 years to free yourself from debt. That’s a long time to pinch every single penny from your life. It is important that you keep enjoying your life throughout the process. Perhaps you should cut the bowling leagues back to just your favorite one. Maybe consider getting your movies from the Redbox ($1 each) instead of the rental store ($4-6). Bring a coffee-maker to work and brew your own cup (10-50¢) instead of the daily Starbucks stop ($1-4). You can gain control and keep your pleasures.

Openness to New Options

One of the best things you can do for you happiness is to try something new. This has deep-reaching psychological effects that can change your whole outlook. It may even open you to new and cheaper ways to save money. Just because you can’t afford to play golf everyday doesn’t mean you can’t do something fun outside! Just because you’ve never “been a hiker” or “been a runner” or “been a reader” doesn’t mean you can’t start now! There are creative substitutes for nearly every activity. You never know what you might like until you give it a try!

So Go For It!

Gaining control of your finances is a long term lifestyle. You will have to make sacrifices and change many of your habits, but it’s okay to give up small battles if it means you’ll win the war. Keeping your drive to succeed will require emotional balance and extended resolve. Changing your life for the better and having fun in the meantime can coexist!

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TGIF Weekly Link Roundup

Posted on March 4, 2011 by Jane Sanders

There are so many great and giving writers on the internet who’ve made it their mission to help you improve your financial understanding. To make sure you’re getting a complete financial perspective, here are 5 of my favorites:

  1. Insights from Warren Buffet – Trent offers some great insight into the annual letter to shareholders from the financial master Warren Buffet (The Simple Dollar)
  2. 5 Ways to Save on Entertainment – Neal’s great tips cover the movie theater, home entertainment, live music, and even babysitting (Wealth Pilgrim)
  3. College Saving Tips – Kimberly has some great suggestions about developing a habit of savings and responsibility before you enter the real world (Alpha Consumer)
  4. Lessons in Life – JD offers up this great guest post highlighting a 8 fundamentals of living a happy, fulfilled life (Sources of Insight)
  5. Finding a System That Works – Not all savings plans and suggestions work for everyone. If you’re going to succeed, you have to find the one that works best for you (Get Rich Slowly)

Have a great weekend!

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How to Earn Extra Income Online in your Free Time

Posted on March 3, 2011 by Jane Sanders

One of the most important foundations of getting your finances in order is learning the financial equation. Your income minus your expenditures equals your potential savings. Your potential savings are what lead to you long term wealth creation and allow you to pay off your debts the responsible way.

To increase your savings, you can either decreases your monthly expenditures or increase your income. One method of increasing income that is becoming very popular is to earn money online in your free time. There are several ways to accomplish this, and they all require that you apply yourself. Outlined below are several methods to increase your coffer with some extra time and some extra effort:

Online Auctions

There are several sites where you can sell items, both new and used. Cleaning out your closet, attic, or junk drawer can yield items that haven’t been used or needed for a very long time. These may be useless to you, but treasure to someone else. There are a number of online auctions sites available, and they can help your product reach tens of thousands of people. You’ll need to factor in the costs involved in selling (listing fees and shipping costs), and the rest will be profit. Selling items that would otherwise be thrown away can result in that income boost you’re seeking.

Creating Classified Ads

If you wish to eliminate shipping costs and fees associated with auction sites, there are also many sites available where you can advertise items you wish to sell free of charge to a local group. In this case, the customer will usually come to you to purchase the items. If you feel uncomfortable having a stranger come to your home, you can arrange a meeting place for the exchange.

Online Surveys

The web is filled with sites where you can take surveys and be compensated for your time. Steer clear of the sites that make you pay for something before you’re offered compensation, and you’ll find several that are eagar to get your opinions on products and services and pay you for your input.

Data Entry

Some sites offer data entry positions that can be quite lucrative, depending on how much time you’re willing to devote to the activity. Be sure not to make any upfront monetary investment and find a company that will supply you with everything you need to get started.

Write Reviews Online

If you like to try new products, there are several websites who will provide you with samples of new products for your review. Sometimes these are even products that aren’t yet available to the public! Once you have tried the product, you’ll give details about your impressions of it, how it worked for you, and the pros and cons as you see them. It’s an easy writing task and can make you some added income in your spare time.

Earning extra money online is just one way to boost your income. Second jobs, part time work, market research, or creative entrepreneurship are other great ways. The important thing is that you apply yourself to your goal of becoming debt free the responsible way.

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How To Avoid Damaging Your Credit with a Credit Card

Posted on March 2, 2011 by Jane Sanders

A credit card can provide you financial freedom. But if you don’t use it properly, it can also send your credit score plummeting.

And in today’s financial world, that’s trouble. Lenders of all type, whether they’re passing out mortgage loans or the financing for a new car, rely on your three-digit credit score to determine whether you’re too risky for their business. If your score’s too low? You either won’t qualify for a loan from traditional lenders or you’ll be hit with excessively high interest rates on the money you do get to borrow.

If you want to borrow money today at the lowest interest rates, and have access to the benefits of elite credit cards like Chase Sapphire like you’ll need a credit score of 720 or higher — usually — on the popular FICO credit-scoring scale.

To reach such rarefied levels, you’ll need a credit score that’s free from financial dings.

Unfortunately, credit cards when you use them irresponsibly can cause a lot of these dings, preventing you from getting that low interest rate loan, or better card.

Late Payments: Consider late payments. They’re killers for your credit score. If you make a habit of paying your credit card late, expect your three-digit credit score to fall steadily.

There’s a reason for this: If you pay your credit card bills late, there’s no reason for mortgage, auto or personal lenders to think you won’t do the same on a 30-year fixed-rate mortgage or a home equity loan. These issuers of larger loans look at you as a high risk to default on the money they lend to you.

This gives you a lower credit score.

Missed Payments: Worse than late payments are missed payments. Let’s say you have a
gas credit card, and forget to pay your bill, not only will you get hit with a late-payment fee from your card provider — not to mention that many card issuers will bump up your interest rate to a sky-high penalty rate that can often reach 29 percent or higher — you’ll also do serious damage to your credit score.

Lenders don’t like to work with borrowers who miss their payments. That’s why if they’ll even lend to such borrowers they’ll hit them with high interest rates. These rates offer lenders who are taking a risk an added measure of financial protection.

Too Much Debt: You can damage your credit score, too, by running up too much debt on your credit cards. Borrowers with high amounts of credit card debt make lenders nervous. They view these borrowers are being far more likely to run into the financial problems that can cause them to default on their loans.

Carrying too much credit card debt from one month to the next is one of the three most common causes of a damaged credit score, joining paying your bills late or not paying them at all.

Credit Repair: There is some good news, though, even if you have committed the above credit card sins: Repairing your damaged credit is a relatively simple task, however it does requires a lot of persistence.

Vow to make all of your monthly payments on time. And vow to do this each and every month.

And remember this: While using a credit card in a financially foolish way will sink your credit score, using one wisely will improve it. If you pay your bill on time every month and refrain from running up too much debt, you’re showing lenders just how responsible you are with your finances.

Demonstrate this pattern long enough, and you’ll be rewarded with a high credit score.

Posted in Uncategorized | 1 Comment

7 Tactics Credit Card Companies Use to Extract Their Pound of Flesh

Posted on February 22, 2011 by Jane Sanders

As if it isn’t enough to charge massive interest rates on your balance, credit card companies have also built numerous fees into your agreement, which they use to extract additional cash from you whenever they can. The more aware of these fees you are, the better chance you have of avoiding them. Good luck!

1. Balance Transfer Fees

So you’ve decided to transfer the balance on one of your cards to a card with a lower interest rate. Good for you! The downside is that you’re going to be charged for that. Typical transfer fees are around 3%, which can add up if you’re transferring a large balance.

2. Over-the-limit Fees

Make you know exactly what your credit limit is and don’t go over it. This can be especially confusing when transferring a balance a new card. Although recent laws have made it so that you can never be charged more than the amount you go over, these fees can still add up.

3. Late Payment Fees

Make sure you mail your check or make your payment online well in advance because if it’s even slightly late you’ll get charged up to $25. These fees can get even larger if you’re late more than once in the same 6 month period.

4. Phone Payment Fees

Forgot to pay your bill and now it’s the day before it’s due and it’s too late to mail a check or schedule an online payment? You can pay over the phone to avoid late fees, but it’s going to cost you.

5. Annual Fees

Psyched about that sweet rewards program card you just signed up for? There’s a good chance that those rewards come with a hefty annual fee, often up to $135. An no-annual-fee cards are no peach either. That’s often a marketing slogan used to distract you from the other fees.

6. Travel Fees

Planning to travel outside of your home country? Visa and MasterCard add a 1% exchange fee for the privilege of using your own money. Many banks also add an additional 2% on top of that. These fees can really add up over the course of a long trip.

7. Transaction Fees

In urgent need of cash? Guess what, you’ll be charged for that too. Many cards charge up to 5% for cash advances, often with a minimum fee of $10. Check you card agreement too, because cash advances frequently come with a higher interest rate too.

Posted in Credit Card Debt | 1 Comment

The U.S. Debt is Just Like Yours, Only $14 Trillion More

Posted on February 16, 2011 by Jane Sanders

There’s a debt growing in the world, and it puts yours to utter shame.  Whenever you ever feel like you’re in over your head, just imagine the number $14,022,951,724,594.93.  That would be 14 trillion dollars, and it’s the current United States Debt.  That’s over $45,000 for each of the 310 million U.S. citizens.  Your situation suddenly seems more manageable doesn’t it?

The national debt is the the balance of all the borrowed money dating back to 1776.  This debt typically grows during war (because they’re expensive) and declines during peace (because spending decreases).

Just like your credit card limit, the government has a legal debt limit, which was set last year at $14.3 trillion.  According to Treasury Secretary Timothy Geithner, we will hit that ceiling by the end of March.  He warns that this would lead to “a default by the United States,” resulting in a “long-lasting tax on all Americans,” drive down home values, and diminish retirement savings. On a smaller scale, this is what exactly what happens when you default on a one of your loans.  Massive interest rates kick in, late fees pile up, repossessions begin.  It’s not a good place to be, but how did we get here?

More than half of the $14.3 trillion debt was amassed in the past six years.  Over that time, the nation was involved in two major wars and the steepest economic slump in 80 years.  Since September of 2007, the deficit has increased an average of $4.16 billion per day!

To prevent catastrophe, Congress will either have to approve an increase in our credit limit, or drastically cut expenses to stay within the current limit.  With 71% of U.S. citizens and most of the majority party in Congress (Republicans) opposing an increase in the debt ceiling, there is sure to be an extensive battle on Capital Hill in the weeks ahead.

So why are we discussing this current event?  Because it’s a fantastic lesson. Fundamentally, the government has fallen this deep in debt for the same reason most people do: because they were spending money they did not have on things they did not absolutely need.

And their only way out, in the long term, is the same as yours: stop spending on non-essentials to stop the deficit from growing further, and begin applying that money to pay off your debts.

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TGIF Weekly Link Roundup

Posted on February 11, 2011 by Jane Sanders

I’ve really enjoyed several great posts in the finance blog community this week. To make sure you’re getting a complete financial perspective, here are 5 of my favorites:

  1. Valentines Day Savings Ideas – If you’re trying to find some ways to save money next Monday (reminder, that’s Valentines Day), check out Chris’ post. (Wise Bread)
  2. Securing Financial Documents – Making sure your financial documents on your computer can save you a lot of headaches, read Nickel’s ideas (Five Cent Nickel)
  3. How Fitness Can Improve Your Finances – Believe it or not, staying in good shape can have an affect on your wallet, Brad can explain. (Enemy of Debt)
  4. The Importance of An Emergency Fund - Living on a tight budget is great, but you have to make sure you’re ready for the unexpected, Don’s explains. (Money Reasons)
  5. Frugal Ways to Spend Valentines Day –  Did I mention that Valentines Day is coming? If your on a tight budget (good for you!), here are some ways to make it special. (Gen X Finance)

Enjoy your weekend!

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5 Reasons Why Getting Out Of Debt Is Harder Than You Think

Posted on February 7, 2011 by Jane Sanders

Are you struggling with too much debt? Then here’s one piece of advice that will really help – don’t believe those ads that tell you it’s easy to get out of debt in just 12 months and only pay back 25% of what you owe! Sure, there are ways to get out of debt and make your financial life much easier. Like the old saying goes, “if it sounds too good to be true it probably is.” Why is it so hard to get out of debt? And what can you do to make it easier? Here are some answers, along with some helpful tips: Continue reading →

Posted in Debt Elimination | 2 Comments

Beware of Con Artists Posing as Debt Collectors

Posted on February 1, 2011 by Jane Sanders

Today on Reddit an interesting thread came up involving debt collection:

Okay, so I get a call this afternoon from a debt collection agency that says they’re located in Florida. I did some checking while on the phone with the guy and found out that they are legit and do exist. Anyway, here’s the story.

I get the call in the late afternoon after getting home from work. The guy on the other end asks me to confirm my identity by asking me my name. When I confirm it, he then names off my father and half-siblings whom I haven’t seen but for one day 16 years ago and asks if I’m the correct “John Doe” (he used my real name, though). Identity confirmed, he then proceeds to tell me that I have a cousin named “Leonard” (not the real name) that died in a dirt bike accident and that while the owner of the bike paid off his debt, Leonard still owed $14,000 on a car loan. Continue reading →

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