• Taxes – Gross versus Net, FICA versus income taxes…it’s all confusing to a teenager.  Actually, it’s confusing to a lot of adults as well (unfortunately), so if you don’t understand the difference, look it up, then sit down with your child when they get their first check and explain the differences to them.  It’s important for them to know what they make versus what they bring home, and where what they’re not bringing home is going.
• Bank accounts – Help your teen open up both a savings and a checking account.  It’s not only important for your teen to learn how to use a checking account, including balancing a checkbook (which you should teach them…again, learn how to if you don’t know, because you want your child to have a good financial start, don’t you??), but it’s also important for them to learn how to save money, like starting their own emergency fund, car fund or iPhone or iPad fund etc.  Delayed gratification is a very good lesson for a teen to learn, in a world of “My super sweet 16″ TV shows and teens who expect to be bought $200 blue jeans.
• Micromanaging – The above stated, let them mess up with the first paycheck.  New fancy shoes or video games might be awesome to have right then and there, but when they have no more money because they blew it all, don’t give in and give them money from your own wallet.  Let them see what it’s like to be broke.  It needs to hurt a little. 

This is a great article, so check it out!  Don’t let the opportunity to impart good financial lessons to your teenager pass you by!!!

My favorite item on the list has to be weddings, since I have somewhat of a personal vendetta against high cost weddings.  It’s not that I don’t want people to have a nice wedding full of memories, it’s just that I don’t think we need to spend an average of $19,000 (according to the article) to make these memories.  Friends and family make the memories of your wedding (trust me on this), not the decorations.  Use less expensive decorations/venues to cut costs.  Have a friend throw you a “stock the bar” shower as opposed to a lingerie shower, since we all know that the lingerie ends up on the floor anyway, and save a ton on booze.  Either way, cut your costs, and put that money into savings!

Another favorite off the list?  Kitchen gadgets!  We all love them and we all buy them (unless of course, you use your kitchen as a closet or can only cook 5 meals, and therefore eat our a lot), but do we really need them?  Be honest!  Do you really need that pasta maker?  Have you ever made pasta from scratch?  Or is it more likely that you bought the gadget and still buy your pasta pre-made from the grocery?  Whatever the gadget, chances are you don’t need it!  You should either save that cash, or put it toward something useful, like saving it up to buy a good set of knives or cookware!

There are 8 other items on the list, which I strongly suggest you check out!  Some are funny (electronic litter box, anyone??), and others are practical, but all are a waste of money!

We would like to take this time to wish everyone a Happy Father’s Day this Sunday, and would also like to notify you that we will be taking next week off from writing, as we celebrate the birth of our daughter.  As our regular readers know, we take family time very seriously, and think that spending time loving each other is a key element in a happy marriage, and of course, loving more and living better.  Therefore, that is what we’re going to do next week!  Have a great week next week, and we’ll see you soon!

I myself am currently named as an Executrix of an estate, although I hope not to have to be saddled with the job for many, many years, and, after I got to reading the little article on CNN Money, I began to wonder what the  basics of executing a will were, and whether or not I knew any of them.  I mean, I have no doubt that I can and will carry it out to the best of my ability, but I am no expert, and therefore, would like to have some tips on the process and legal issues that might arise.  The article I found surpassed my expectations.  From contacting the funeral home to contacting a lawyer (if necessary), this checklist has a little bit for everyone.  An important question raised is how to pay for the funeral if it has not been paid in advance.  Life insurance “isn’t paid in a week” as it says, and therefore the author recommends that the owner of the estate have money set aside for these expenses if they don’t pay for them ahead of time!  What a great suggestion!

This article not only has tips for the executor of the will, but also, at the bottom of the checklist it has some tips for the person with the estate.  This is fantastic, if you ask me, because more often than not, the issues that arise from a will (other than people being petty over material mementos) are because the deceased person doesn’t have their affairs “completely” in order.  For those of you with a will, I would double check this list to be sure you haven’t missed something.  The best tip (in my humble opinion) was to have a specific folder, binder etc. that is stored in a place that the executor and another family member know of that has ALL of your important information in it, from wills to passports to divorce decrees…and not copies either!  They need to be the originals!

I suggest to all of our readers to check out the article.  This just seems like information that could be useful for most of us in the future, especially if you follow our suggestions and get yourself our of debt and start building wealth.  You could have a “nice chunk of change” to leave to your family, and you don’t want them to get a headache from your gift!  Happy reading!

Obviously they both speak for themselves, but many times we either don’t think things through or apply them in our lives.  IF, for example, we are the average of the 5 people we surround ourselves with, and we surround ourselves with people who choose to be frugal and manage their money wisely, it stands to reason that we would find it easier to stick to our decisions as well.   

So, the question is, have you thought through the people you spend the most time with these days?  Are they the type of people you would want to be if you had to be someone else?  Would you let them step into your life and run your house and job/business in your stead, making all choices and decisions for you?  If you would not trust them to make the wise decisions you would make (or wiser even), then I say perhaps you need to reevaluate the friendship.  This doesn’t necessarily mean I want you to ditch all your friends that don’t “measure up”, but maybe you need to develop better relationships with friends who meet your new found requirements, or perhaps YOU need to be the role model for your friends, encouraging them in their endeavors.  Whichever of these choices you feel you were meant to do, implementing them isn’t difficult (just being aware of the choices in front of you with regard to your friends is a step in the right direction, but also, I find that deciding to be the type of friend you want to have makes a big difference as well, since so many people are NOT the type of friend they want to have), and the rewards can be plentiful, both in wealth and in personal fulfillment. 

So, I did a little math, and if these people, who don’t make above the poverty line, invested that 9% of their $13,000 a year, which works out to $97.50 a month, over 50 years with a 9% return over that time (reasonable rate of return), they would have a little over $1 million dollars at the end!  Yes, you read that right!  $1 MILLION dollars at the end!  That means that there is a good chance for ANYof those people earning $13,000 a year to have a million dollars when they retire, if they are disciplined enough to invest what they spend on a chance at instant gratification! 

And that’s the difference, isn’t it?  Most of us DO NOT win the lottery.  We know that it only parts fools from their money.  What truly helps people build wealth is discipline with their money and the ability to wait for the payoff over time.  Problem is, I don’t know if a poor person would believe me if I told them that they could have $1 million dollars when they retire.  However, given the study and the little bit of math above, we hope you decide that the lottery is a waste of money and perhaps saving to become a millionaire isn’t as hard as you once thought it was!

Let’s talk about being a teacher.  It’s a truly stressful job.  They have 100 students (at least) every day that need to be educated with not only the subject that the teacher is charged with teaching but also the life lessons that some of our more lackadaisical parents “don’t bother to” or “forget to” teach their children at home (FYI…it is NOT the job of a school teacher to teach your children the good morals and values of our society…that is in YOUR jurisdiction!).  Needless to say, it’s a little overwhelming.  What’s more, the money system set up around the education system (at least the parts I know about, as I am not an expert) is ludicrous.  For example, the school system allots each teacher a certain number of copies that they are allowed to make per year on the copy machine, and if they want to make more, they have to pay for them!  That puts added and undue pressure on the teacher, because let’s face it, toner and copy paper are cheap.

 However, silly as it is, it is the workplace version of “living within your means”.  But not all teachers do.  They will either spend money out of their own pocket to buy supplies, or send home a list of supplies that the parent MUST provide for all of the various projects the teacher wants to do.  All I have to say is, my oh my, what a mess!  Teachers are given a budget.  They should have to work within that budget (and yes, I am absolutely certain that their budget is too low and doesn’t help much, but it is what it is).  By buying supplies out of their own pocket, they are saying that the budget is meaningless, and that sets the wrong example for the students.  I love the generous nature, but they shouldn’t take the burden on themselves and set a bad example for the children.  And if they decide to pass the cost onto the parent?  Well, the parents at home have their own budgets and money problems to worry about, and the decision to have all of these wonderful projects impacts them too!

So, what is a teacher to do since they’re being squeezed on both sides?  Get creative!  If they figure out less costly projects and methods for teaching the same lesson, they will be able to stay within the budget the school set for them without passing the cost on to the parents!  I know that the replacement projects won’t be as full of bells and whistles, but the object of the lesson is to teach something, and that usually doesn’t require fancy projects.  Also, as long as the teacher has a computer with an Internet connection, she can show the students whatever she wants to show them!  For example…let’s say the teacher originally wanted to have the students build volcanoes for science class.  All she has to do is have them read the chapter, discuss it in class, then show the students this on the projector.  It’s not AS cool, but it works and it’s pretty much free!

I’m not trying to pick on teachers, just so you know.  I just wanted to give an example of how we have a mental disconnect between living within our means at home and at work.  We shouldn’t be frugal at home and a spendthrift at work.  Apply the same principles at both places, and get creative on your savings!

Plugging in some numbers on Bankrate.com, a 30 year, 6% fixed rate mortgage on $150,000 runs about $899.33, whereas a 15 year 5% fixed rate mortgage (they will usually give a lower rate to a shorter term loan) on the same $150,000 is $1186.19.  Given this information, yes, it’s obvious that the 15 year mortgage is more money per month, even with a lower rate.   However, what I wanted to point out to you is that it’s a little less than $300 a month extra…to pay your mortgage off in HALF the time!  Not only will you be paying off your mortgage in half the time, but the total cost of that 30 year loan will be $323,757.28 versus $213,514.28 for the 15 year loan.  That means you save $110,243 over the life of the loan!  I bet you’d rather that money go toward retirement as opposed to lining the pockets of the bank!  I know I would!

So you say you can’t afford the extra $300 a month?  Well, what can you afford?  After making sure that you don’t have the type of mortgage that penalizes you for paying it off early, you should look into how much extra you can pay toward the principal per month (that doesn’t interfere with your retirement).  Every little bit helps, and you will save thousands more by paying it off early.  Another option, is that if you’re “Gung-Ho” about getting that 15 year mortgage, but can’t afford the payment on the loan amount, perhaps you should look at a less expensive property.  We all have to buy within our means.  This means that some people can afford a half a $500,000 house, and some can afford a $100,000 house.  You shouldn’t be upset or discouraged if you can’t afford the more expensive house…what you should be is excited when you pay off the house you can afford in only 15 years, and know that it is ALL YOURS!  I’d rather own a modest home then be drowning in debt in a nice home that I’ll never realistically own, and I bet most people would if they took the time to think on it.

So, my advice to you for saving on your mortgage is to consider spending a little more now on your monthly payment, as it will save you a bundle over the long run!

I love this tool, but I should tell you that it slightly deviates from our views in a couple of places:

• They suggest keeping your house payment under 28% of your gross income.  We suggest you keep it under 25% of your gross income.  I know it’s just 3%, but that can add up!
• They suggest that you keep your debt under 36% of your gross income (including house payment).  We want your goal to be no debt.  First, we want you to become debt free except for the house, then we want you to pay off the house.  Given this view, there is NO percentage that it acceptable debt to carry on a regular basis.
• We are in agreement on the emergency fund.  3 to 6 months worth of expenses is what you should aim for!
• Their diversification “bubble” suggests being conservative in your retirement savings, and making use of bonds and other funds that are less risky.  When you’re older, it is wise to be conservative with your money…this is true.  However, we prefer diversifying into good growth stock mutual funds. 
• Company stock is not something that we generally talk about, but we agree with CNN Money.  You shouldn’t hold too much of one stock, even if it is your employer.  Just because YOU have faith in your employer does not mean that they are doing well in the world market.
• Regarding life insurance, they suggest having 5 times your yearly salary in life insurance.  We suggest having 10 times your yearly salary.  This is supposed to be for income replacement.  So, if you don’t need to replace your income for anyone, then you don’t need 10 times your income, and probably not even 5.  You do, however, need enough to cover any final expenses and debt you might have.
• The last “bubble” of the calculator is about retirement savings, but doesn’t really tell what you should be saving…it only tells if you’re on track to retire at age 65.  As we have always said, you should save 15% of your gross income (minimum, if you can).  This should put you on track to retire with a very comfortable nest egg.

Use this tool as a loose guideline for your finances, but don’t forget to replace their information with our information from this post in the appropriate places. 

If you’re in the market for a home (hopefully your other debt is paid off, like we suggest, and you have a down payment), then you should be aware of what your family truly needs.  If there are 3 of you (mom, dad and baby), then a 4 bedroom house IS overkill.  If no one in the house cooks (or likes to), then you don’t REALLY need the chef’s kitchen now, do you?  You should get just as much house as is required by your families needs, that way, you can save more for the future and have your “comfortable” home paid off sooner. 

Struggling with your current home’s mortgage payment?  Maybe it’s time you downsized!  Many people get into houses that they can’t really afford, and then think there isn’t anything they can do about it, but this isn’t true.  If you bought more house than you can afford, chances are, you’re struggling.  Now, many people like to blame the banks (and there are some at fault), but they are not the only place to lay blame.  It’s easy to find and attack a scapegoat, but in reality, many people who bought more home than they could afford should have known they couldn’t afford them.  I know that the interest only loans and the ARM’s made it difficult to understand the EXACT terms of the loan, but let’s be honest…if you were approved for a $200,000 home, and you make $20,000 a year, sirens should have been going off in your head.  You should have been confused as to why you could afford so much.  You should have paused during your jumps for joy…if you were jumping for joy, saying “WOW, look what I can afford”, that WAS the warning sign! 

So, now you have more home than you can afford.  Sounds like it’s time to downsize!  I know that it can be hard to sell a home in this market, but as long as you keep your price competitive, and keep the home looking great, then you’ve got a good chance.  And something else of note?  Even if you have to take on a small personal loan to get out of the house, you’re still better off.  For example:  Let’s say your house is worth $225,000, and you put it on the market for $230,000.  Someone offers you $215,000, and they pay closing costs.  Well, after looking (really looking) at your finances, you realize you can’t afford more than a $150,000 home.  It’s better to sell the house for the offered price, take on a $10,000 personal loan, and find a house for $140,000.  You’re going to be better off, even if you did have to “take a hit” on the other house, because you will actually be able to make your mortgage payment now!  Sometimes, you just have to look at the bigger picture!

Remember, sometimes saving money IS the obvious choice.  Don’t buy more than you should.  Sounds simple, so try and live by it!

As most of our readers know, just a few short years ago, the savings rate in the U.S. was in the negatives, and had been for a few years. That doesn’t even seem possible, does it? No, but unfortunately it is. So, what does it mean? It means that as a nation, we were spending more than we were bringing in. We were living beyond our means. Then, the economy started to tank and many of us woke up and started to save for the future. Out of all of the bad things that came with a down economy, this was a bright point. Now, however, we’ve decided that we were saving more than enough and that it is time to blow through our money again! WHY would we be convinced of this? Did we all suddenly wake up rich? I don’t think so! We need to realize that the more we save now, and the earlier we start saving, the more we will have when we retire!

The recent 1.5% decline in savings, if continued over 30 years could mean the difference between retiring comfortably and retiring on “just enough”. It could mean the difference between taking trips to fun locations when you retire, or having a need to have a part time job when you retire. I don’t know about you, but I’d say that it’s worth a few sacrifices now to get to retire without the stress of money problems. Getting out of debt now and saving for the future should be a top priority for all of us. Read the article. Get motivated. Then get started on saving, or try and do more than you already are!

When a person agrees to a 90 days same as cash gimmick, they are saying that they will pay the full amount (and not a penny less) within the 90 days allotted.  How many of these people actually do that?  Well, according to Dave Ramsey’s website (and a few others), only 12% of people who do 90 days same as cash financing actually pay it off within that time frame!!  Hello!  9 out of 10 people don’t do what they say they’ll do!  This means that you shouldn’t even think about doing this!  But you say, “Oh Emily, I will be the one that pays it off in time”.  Oh really?  Well, if you can make such a guarantee, then you should just pay cash in full in the first place! 

IF, however, you decide that you want to fall for the gimmick, and you don’t pay it off on time, the company will backdate the interest on your purchases to the 1st date of purchase.  And how much interest will you be charged from day one?  Probably around 24%!  So, you went from no interest to 24% over the entire length of time you have the loan (it is a loan, even if you didn’t realize it).  What a ripoff!

What you should know as a consumer is that there is NO financing option offered by any business that is a “good deal” for you!  They will always find a way to part you from your money.  Do the smart thing and just say no to their gimmicks!

The article  revolves around 3 tax problems…the Bush administration tax cuts, the Estate tax and the investment income tax.  The Bush administration tax cuts are about to expire.  This isn’t a concern for many Americans, but to those it affects, it will mean a large chunk of money out of their monthly budget. 

The Estate tax, however, will affect many more people, since it covers anyone who leaves behind an inheritance between $1 million and $10 million dollars.  Don’t think it’s a big deal to tax estates?  Well, If you’re planning on having a nest egg, saving your pennies now for retirement, then you should think it’s a big deal.  Many of you will reach the minimum $1 million dollar cut off, and if you fall into that estate range, you should know that your estate will be taxed at a 55%  tax rate!  And for most of us, we will just barely break into the $1 million dollar range, which means that you proudly managed to save up all of that money, only to have $550,000 of your $1 million dollars taken by the government.  Take my advice and start “gifting” (check into yearly limits on how much you can gift per person) some money while you’re alive if you fall in this category.

The last tax issue covered in the article is the investment income tax (also called a capital gains tax) that is slated to raise in 2013.  I know this sounds like it only affects people “on Wall Street”, but I’ve got news for you; If you have stocks, bonds, precious metals or property, and sell them for a profit (with few exceptions), then you will be feeling the raise in this tax.  Stocks and bonds outside of retirement accounts might not be something many people participate in, but lots of people buy and sell property, and if you do, you will feel the change!

I know it’s hard to look 20 or 30 years in the future and see how these things might affect you, but you have to go there.  You have to know what you’re up against.  These changes in the tax code will be painful on more of us than we are led to believe.  Remember, saving $1000 a month will (on average, based on assumed 8% return) put $1 million dollars in your bank account in 28 years.  That isn’t too far fetched.  You could definitely do that.  And given that fact, you should worry about how it will be taxed.

The first steps they should take toward getting their finances in order should be to find a person to whom they can be accountable.  This can be a parent, a best friend or even the pastor at their church.  It doesn’t matter who they choose, it merely has to be someone that they can trust with their private information that also has good financial sense (this doesn’t mean the person with the flashiest car or house, because those people are usually in debt themselves).  After finding someone to help keep them on “the straight and narrow path”, they need to sit down and write out their budget.  Don’t know where to begin?  Well, for now I’ll suggest this form to help you singles get started (be on the lookout for a better form from us in the future).  The important thing, no matter if you’re single or in a relationship, is that you’re on a plan and working toward a goal (hopefully to be debt free and saving for retirement). 

We always encourage our readers to leave comments with questions they might have and today is no exception.  Single or married, feel free to ask us what steps to follow up with, or any other questions you might have! 

Normally I am a big fan of Dave Ramsey’s School Curriculum, and although I still am, FoolProofMe has one feature that Dave Ramsey’s education tools don’t have:  They are free (thanks to contributions from credit unions and non-profit organizations).  FoolProofMe is a program that has specific lessons (based on age group) teaching people about finance.  They show young people what happens with their finances when they make poor decisions regarding money in their web based videos.   On the website you can find individual programs for high school teachers to use in their classrooms, college kids, as well as for parents who are home-schooling their children and grandparents, which is the same set up as Dave Ramsey’s school curriculum.

Whether you choose one of these options, or simply send us your question regarding helping you or your young child/friend with a money question (we will soon be adding a feature for you to be able to leave an anonymous question), you need to choose some method.  Our population needs this education.  It is crucial.  Without a financial education, we aren’t capable of making the informed financial decisions that we all face as adults.

In general, it’s not a good idea to even have a a tax refund.  It’s better for your bottom line as well as mathematically to get that money in your paycheck throughout the year, instead of giving the government an interest free loan for a whole year, but I understand that some people just like to get that lump sum at the end of the year.  That’s fine.  However, if you choose to get the lump sum refund for your taxes from the government, you shouldn’t be counting on it for regular bills or expenses.  This money should be used to pay down debt, start (or add to) an emergency fund or invest for your retirement.  These choices will help better your life and your future, whereas buying a big screen TV will only give you short term entertainment.  Do yourself a favor and don’t budget your tax refund into your budget!

Also, I wanted to share a friendly reminder.  Tomorrow is the first day of April, which means that summer is only a couple of months away.  Have you started planning your vacation yet?? More specifically, have you started planning how you’re going to pay for your vacation?  If not, now is the time to start!  Review your budget and see if there is money left over (assuming you have no debt other than your house and are already saving for retirement) for a vacation, and if there is, you should start saving for it now!  Nobody likes to be caught off guard, and that is usually what happens at Christmas time and vacation time.  People are always surprised that vacation time and Christmas came as quickly as it did, and so they aren’t prepared.  This reminder is an effort to be sure that doesn’t happen to our readers!

• If you haven’t done an energy audit of your house, then you should!  Contact your local utility company to see if they will do it for free (they usually will), and if not, then check out energystar.gov, and use their guide to do it on your own!
• Buy and use a programmable thermostat.  These things are great.  We love ours!  We set it to lower the temperature in the house at night when we go to bed, since we’re going to be under the covers anyway, and raise the temperature shortly before the alarm clock sounds.  It’s a great way to save a few bucks!
• Buy CFL bulbs!  Compact fluorescent bulbs will save you money over the long haul and the last longer as well.  I won’t deny the color is a little different and the bulbs  look weird, but they are well worth it!
• Put on or take off that sweater!  I know that our preference is for a nice temperature controlled house, and most people don’t have a problem with putting on the sweater in the winter, but it’s just as important in the summer!  I know that we can only take off so many clothes, but the wearing lightweight fabrics, fewer clothes, and running the thermostat at a higher temperature is a great way to save in the summer.  We all (well, a lot of us) love to go to the beach, right?  So why is it that we can stand high temps at the beach and not in our house?  I say if the temperature is hot, deal with a little heat and raise the temp!  For each 1 degree you lower (in the winter) or raise (in the summer) your temperature, you will save roughly 1% off your bill each month!

As of Saturday, we are officially in spring.  Make these tips part of this years spring cleaning to do list, and save yourself some money this summer!

If the child decides not to go to school, there will be penalties in an ESA or 529 account that isn’t used for schooling, so you can just kiss some of that money goodbye.  Now, this isn’t a totally terrible thing, since had you not saved it for education, the money would’ve been taxed anyway, but I’m sure it will still sting a little.  I don’t have a huge problem with a child that decides not to go to school, financially anyway, because it’s not impacting your budget, only (possibly) their future. 

My problem, as I’m sure our regular readers know, is with the child who asks for (demands?) the money you saved for their education, to be paid out to them in cash, since you paid for their siblings education.  In spite of what your child seems to think, your money is NOT their money.  I know that you want to be fair with your 2 children, but this money was set aside for their education, not for their amusement.  It’s your money, and if the child decides not to go to school, it should STAY your money!  Like the article says, if the child wants money, tell them to get a job! 

Like furniture rental places, you can apparently also rent the rims you’ve been dying to have for your car as well, that way, you can look cool, and rich, even if you’re broke.  Dan Miller has a knack for talking about topics that are important to me, and there are few things that get my blood boiling more than people who spend themselves into debt chasing status.  He highlights the new book from Thomas Stanley, author of The Millionaire Next Door and The Millionaire Mind, both of which are excellent books (I will be buying and reading this newest addition to his works).  This new book highlights some of the habits of the truly rich (as opposed to those who only appear rich), which, in general, does not include renting your rims. 

Read the post, and go buy (or check out from your local library) Thomas Stanley’s newest book, Stop Acting Rich.  Let’s all begin to be open minded to the idea that having fancy things (for status) and spending obscene amounts of money on weddings and “McMansions” are not the real way for the average person to become wealthy.  Once you stop believing you are going to simply luck into a fortune, or become famous and rich out of the blue, you can focus on becoming rich the way most people do…through saving, working hard, and striving to be the best at their passion so they can advance themselves in that particular field over the years.

• Raising your deductible can save you plenty of money, if you are able to cover said deductible when and if you are in an accident.
• Skip the collision insurance if your car is worth less than 10 times what you’d pay in a year for the collision insurance.  Need to know what your car is worth?  Got to kbb.com to find out!
• Check into other discounts that your auto insurance offers, like good driver discounts and good grades for teens.  Another option to check into?  Combining home owners insurance and auto insurance at the same company can save you money too!
• Check around and compare prices at insweb.com.  You might be able to lower your rates by up to $300 less than what you’re paying now!  

Good luck!  If you have any other ideas that could help lower auto insurance, feel free to share them in the comments section!!

I will be the first to admit that it is sometimes difficult to decipher fees when the bill comes in, but that’s no excuse for not knowing what is happening on your account.  If, after pouring over the bill for a little while, you still can’t figure out what is going on, call the customer service line and ask them to explain it.  A nice added benefit?  If you’re more vigilant about bills, it might carry over into your bank account, and then you won’t be charged overdraft fees (if you were overdrawing in the first place, because let’s face it, you shouldn’t be).  Overdraft fees from banks are one of the biggest stupid taxes around.  If you pay attention to how much you have in your account, you won’t be charged.  It’s only when you are unaware that they happen, and no one should be unaware of what’s going on with their money.

Now, how about “mirroring”?  Mirroring is a practice of charging you twice in the same month for only one month’s service, by companies who have access to your bank account because you’ve set them up on an auto pay function, where they have access to your account.  I use this feature myself, although, truth be told, I’m very sceptical of it.  We check our bank statement carefully each month to ensure that mirroring does not occur, and it has happened to us in the past.  Usually it’s not terribly complicated to get adjusted, if you catch them quickly.  The problems start to occur when you haven’t noticed the problem over the course of months, or a year, and them try to get your money back.  They have had it for a year!  It doesn’t always go well if you wait.  Remember, if you give a company access to your account, then you have the responsibility to yourself to ensure that they are doing right by you and only taking what they are supposed to take.  Never let them take advantage of you!

Today’s article, titled, How much should I save?by Donna Rosato, is an in depth look at an entrepreneur and her retirement portfolio.  The entrepreneur is hoping that a financial planner who looked at her portfolio will “bless it” and tell her good job.  Unfortunately, like most people, she isn’t saving as much as she thinks she is!  Most people think that by saving anything, or by getting their “company match” in a 401k program that they are set for retirement…they’re not.  Yes, it is good to get that company match, but if that is ALL you’re saving, you won’t be able to retire with the same lifestyle you have now, and that is where the misconception comes in for a lot of people.  They think, “oh, well, as long as I get my company match, I can retire living at the same level I live at right now”.  WRONG!  If it were that easy, we’d all retire with no debt and a vacation condo!!  As the financial planner in the article figures out, the entrepreneur is saving less than half of what she needs to retire at her current lifestyle level. 

What is going on here?  As adults, we underestimate things…it’s what we do.  For example, we underestimate the amount of calories we take in in a day (to the tune of 20%-40% from what I have read) and we underestimate how much we should be saving.  So, how do you keep from underestimating things?  Get some help!  You can pay for it, or get the free kind.  Either will be better than nothing, but if you’re paying for it, be sure that the expert isn’t just trying to sell you products…if they are, then they DO NOT have your best interests in mind!  Need some basic (and free) ideas on how much you should be saving?  Check out this link at CNN Money, to get a rough idea of where you are and what you need.  Some extra tips are to be diversified, preferably in growth stock mutual funds, and, the article and I agree, that small cap, mid cap, large cap and international funds are all good places to invest your cash.   Whatever you do, figure out what you need to retire.  Don’t just think that a 6%-8% contribution to your 401k is enough.  Max it out!!  Start contributing to a Roth IRA!  HAPPEN to your life…don’t let your life HAPPEN to you!!!

First of all, stick to your budget, but allow yourself a little indulgence on rare occasion.  Why?  Well, it’s my opinion that everyone only has so much willpower to give to something, and eventually they will break and indulge anyway, so little indulgences keep away the big ones.  So, what types of indulgences are little?  Well, when you’ve got your finances locked down, and you’re buying basic needs only when it comes to groceries, TV and movies/shows etc., on occasion it wouldn’t hurt to buy a nice meal from the grocery.  Make that a special family night with a nice meal and some board games or something.  Or, you could save a couple of bucks every week out of your grocery budget to take the family to the movies or some other inexpensive activity.  Your choice!  The point is to indulge occasionally to keep you focused and on task, without blowing through your budget.  If you never treat yourself, you might fall off the wagon.  Notice to those of you who are “used to” treating yourselves…this does not mean you can do your normal “treating”…no mani/pedi’s, or blowouts, or daily cupcake from the specialty $10 a cupcake store, or expensive clothes/shoes/tools.  This is a small indulgence.  A $20 pick me up a couple of times a month.  If you can’t stick to that, you’ll never get out of debt.  And no, you don’t “deserve” those mani/pedi’s, because they are what got you into debt in the first place! 

Trying to do 2 or more hard things, like getting out of debt and quitting smoking (for example) at the same time, means even more added stress to your willpower.  You have to give a little slack and indulge yourself  while getting out of debt, because the alternative,in this example, is indulging in smoking.  Not cool.  And indulging a little there would save you money anyway, since once you quit smoking, you would have a ton of cash to put toward paying down your debt!

What’s the take away?  Get on a budget.  Pay off your debt.  Learn to live like an adult who doesn’t get everything they want every time they want it.  But stay on this path for the long haul by making the occasional small ticket splurge!

No matter what your ultimate goal is, more than likely you need to plan for it!  Are you planning for this goal that you want to achieve?  Are you working toward it as I’m typing this?  If not, then how do you ever expect to achieve it? 

Planning out your life usually gets you just as excited as doing your taxes, but is just as necessary (don’t want the government coming after you, do you?) because it not only maps out what you need to do, but gives you a sense of purpose to work toward for your future.  Basically, you can’t reach your destination if you don’t have a map to go by.  So, what are some ways to plan for the future?

First, you need to brainstorm.  What is your goal?  What credentials or money do you need to achieve your goal (college, or capital to get started?)?  Is the place you live in a good place to work toward that goal, or is there another place better suited to the goal (i.e., marine biologists shouldn’t live in the desert).  What type of friend and family network do you need to make this goal a reality?  If your goal is for a certain career, are you sure that the career is suited to your personality (i.e. if you don’t like paying attention to details, accounting is probably not a good career path for you).  If your goal is to retire wealthy, have you written out a budget and figured out what percentage of your income you need to save in order to do so (the money isn’t just going to appear, and social security, if it’s still around, definitely won’t let you live “comfortably”). 

Once you have brainstormed and figured out all the things necessary to achieve the goal, then you put them in chronological order or order of necessity, whichever seems to make more sense for your particular needs.  Now, you have a map.  Start at the top of the list and work at it, one item at a time.  For example, if the first thing you need is an education, then that is where you start.  Use the same process of identifying how to achieve each item on your list, as you did to make the list, and you not only have a plan/map to achieve your ultimate goal, but it should be easier to achieve it, because you aren’t scrambling to figure things out on the fly.

Don’t know what you want to do, or what your ultimate goal is in your life?  That’s ok.  Take time to figure it out.  If you bounce around for a few years longer than your friends, it’s OK.  It doesn’t make you inferior, it just means that your interests are too varied to settle on one thing at that point in your life.  However, once you do figure out your passion, take these steps to get a plan in action!

I hate to see people suffer, and those people that have lost their jobs are in my prayers.  However, the falling home prices are only an immediate concern if you are trying to sell your house and/or have lost your job.  If you have a stable income and are contented in your home, staying there for a few years (decade, maybe?) isn’t a big deal, so neither is the drop in value.  Debt, is, as always, a major concern for us.  If you are employed, you should be making a budget, sticking to it, funding your emergency fund and getting out of debt.  If you are unemployed, then you are in an income crisis, and that should be your main concern…along with food, shelter (that doesn’t mean a “McMansion”) and basic utilities (i.e. lights, water and heat).  You can’t focus on paying people back what you owe until you get stability back in your life, so put them on hold, even if it takes a few months. 

I would like to make a point for our readers though: with roughly 10% unemployment, that means that 10 people out of 100 are out of work, which is the same as saying 90 people of 100 are employed…it’s terrible for those 10 people, but overall, it’s not a catastrophe.  And those 90 out of 100?  They are shopping!  Maybe less often than before, and they might be spending less than before, but they are shopping…at least, that’s the way it looks EVERY time I drive past/go to the mall.  The place is packed!  As usual, I can’t find parking there, and the Christmas season was just as bad as usual.  Now, like I said, I know this isn’t the case everywhere, but the media’s version that everyone everywhere is suffering terribly, in houses they can’t afford, without jobs and piling up debt.  This isn’t true either.  The truth, as usual, is probably somewhere in the middle.  Some are suffering, some aren’t.  If you are suffering, I wish you luck and speed in your job searches and in getting out of debt, and if your job and home life are stable and “secure”, work hard to keep it that way, and help those who need it, either with prayer, food donations or job contacts (etc.).

As I said above, we also go over our budget reports to understand what is being under-funded and what is being over-funded.  We look at EVERY budget item.  Last night, we had to increase the money funding our medical budget and our grocery budget (I swear the grocery stores just keep raising the prices!).  Now, you might be asking “how do you increase a line item?”, and the answer is simple; Something else has to be cut back.  We took the money from our monthly savings (grudgingly) to fund the additional money needed for the medical and grocery budget items.  What if you have no savings?  Then you have to cut back on another line item, like cable, telephone or Internet.  Is your budget so slim that you don’t have ANYextras?  Then you need to try cost cutting to bring your spending in line with your budgeted amount, or increase your income to cover the overages.  It’s simple math…your budget must be balanced!  If there aren’t enough funds, you must cut back, or make more!

Now I challenge you to have your own budget committee meeting (if you’re single, you still need to have the meeting with just yourself, or a friend/family member you trust to share this info with)!  Sit down and figure out how much you spent on all your expenses this last year!  How much did you go over? Under?  Do you even have a budget?  First things first, you need a budget.  Get out a pen and paper, and write down all of your expenses, in order of importance (1. housing, 2. food, 3. electricity etc.), then write down your income.  Assign amounts to each category.  If you run out of income before you reach the bottom, then you either need to cut back your expenses, or increase your income.  Did you reach the bottom with money to spare?  Great!  If you have debt, use the money to pay it off, if not, start saving an emergency fund for 3-6 months worth of expenses, and after that, for retirement! 

It’s our opinion that money works for you and not against you if you watch it like a hawk.  Don’t give yourself the opportunity to mess up!  Start this year off right, and take your budget committee meeting to the kitchen table tonight!

Generation Y is a term applied to those people currently 22 to 33 years old, of which, I am a member.  These people are typically the offspring of Baby Boomers, and according to many in the work force, are nothing like their parents, especially in how they view their jobs.  In the past, this (my) generation has been characterized as a bunch of job-hoppers.   But now that they and their friends are experiencing layoffs and financial problems, the number of those surveyed that had changed jobs in the last 2 years dropped from 40% to almost half of that, and almost a quarter of them plan to stay with their employer until they retire…now there’s some surprising information!

Another interesting thing of note, however, is that the economy and higher rates of unemployment have changed the optimism and confidence typically displayed by this group of people, and they are becoming more financially conservative…all I have to say is that it’s about time! 

Apparently, a new survey shows that 41% of Gen Y-ers have become more fiscally conservative in the last year, and nearly 2/3 say they’re “trying to save more now than a year ago”.  I think that is incredible!  To know that a lot of people from my generation are waking up and saving is great.  And as far as retirement, in the last year the number of Gen Y-ers that are saving for retirement rose from 18% to 53%, but the majority of them are only focused on an emergency fund (which is a good start!).  Considering that more than 30% of Gen Y-ers owe more than $5,000 in credit card debt, saving for an emergency and/or retirement is a nice change of pace. 

No matter what their motives, the Generation Y group has started to notice the benefits of saving money and job security.  I have feared that my fellow Gen Y-ers would never learn this lesson, but I am happily wrong.  Maybe it was the economy, maybe it was the fact that it became cool to be a “recessionista”…or maybe it was that we got tired of hearing the word “recessionista”, and started watching our money to get people to quit using that word…either way, it happened, and hopefully it’s here to stay!

Dan Miller has pointed out other products in this post, however, that might not necessarily be able to be pigeon-holed in the need category.  He talks of the fancy tennis shoes that have come about in the near past, that help with stabilization and have a broader base, and their new counterparts that are narrower and simulate running barefoot at $245 a pop (I spent a lot of time deciding which way to go on this very topic when I decided to start running)!

Another product, Bling H2O, that has been on MTV is encrusted with Swarovski crystals that spell out “bling” on the bottle.  The funny part is that the water comes from Tennessee, and probably isn’t very “blinged-out” on some guys farm.  That doesn’t stop them from sealing the bottles with a cork and calling it “Limited Edition”.  The funny part is the price!  This water can be bought for $441 dollars a case (12 bottles) or $36.75 a bottle.  Can we say ridiculous?  Funny thing is, people are buying it! 

And this is Dan Miller’s point:  If you fill a “need” you can make a living.  If you fill a “want”you can get rich.  I agree with him wholeheartedly, I am simply dismayed at the reason for such a statement to be true.  In our instant gratification, want the best, have to be famous society, wants and desires trump needs.  We all have desires, and I think that’s OK.  But when we start to go into debt to obtain them, something is wrong.  When we start to think we “deserve” them, we are out of touch with reality, because the truth is that you don’t “deserve” anything just for being you…you have to earn it!  As sad as it is, however, it’s how things work today, so if you can find a want and fill it, go make yourself rich!

These loyalty programs are similar to those of the credit cards, where you earn points toward cash back or other “prizes”. As usual, however, it takes a TON of points to earn anything worthwhile. Luckily, a debit card doesn’t put the consumer further in debt, and these cards give the banks 1%-3% fee per transaction (However, lobbyists for retailers are trying to get that fee capped). UN-luckily, to use these new programs, many banks are charging yearly (or monthly) fees. This means that you have to use your debit card all the time and HOPE to earn the rewards while paying a fee for the PRIVELEGE to be in the program! How fun, right?

Our advice? If you can’t control your spending, and are detached from your debit card, the way you were from your credit card, and it’s not like spending money because it’s plastic…stick to cash. If you can handle using a debit card, use it. We don’t have a problem with them, since the money comes directly out of your checking account…but be aware, overdrawing on your checking account with you debit card is NOT responsible, and if that is you, GO BACK TO CASH! On the subject of loyalty/reward programs? We think you should just skip them. It takes crazy amount of effort to get anything, and costs a yearly fee on top of it!  What a waste.

You see, it’s become part of our culture to shop-shop-shop.  Retail therapy, they call it.  Think about that statement.  They want you to come and spend money to make yourself feel better.  Is that the way we should be relieving stress/improving our mood?  I don’t think so.  It’s an instant gratification thing.  We are like children with a shiny new toy…retail therapy!  How ridiculous!  Sounds like we’re simply encouraging ourselves to act like children.  I think we should act like adults.  Adults save up for things.  They have delayed gratification.  They don’t get retail therapy, they relieve stress by being with friends and family (or getting a REAL therapist, not one that doubles as a satchel purse and is called Louis Vuitton).  This, is why I like lay-a-way.  It allows people who don’t have the cash to pay for something all at once an option that doesn’t charge high interest and isn’t a credit card.  As a bonus, you don’t get the merchandise until you pay for it in it’s entirety, so it teaches delayed gratification!

I should note that we don’t really use lay-a-way ourselves, because, as most of you know, we save up throughout the year to pay for the things we want.  We have a Christmas category in our budget, that receives money each and every week.  This ensures we will have the money that we have determined we want to spend on the holiday, in time for said holiday (and in case you’re wondering, we determine the amounts in all budget categories at our “new year new budget” committee meeting, held in January).  If however, you haven’t been keeping up with your budget (and I really hope you have), then lay-a-way is the way to go for you.  Just remember this phrase…I WILL NOT use credit cards on presents!

So, what is a reverse mortgage?  Well, you can read the full description here, but a simple explanation is that it is a loan for senior citizens, used to release (give back to the owner) the equity of the property as one lump sum or multiple payments over time. The home owner’s obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves (usually going to a long term care facility). 

Today’s article (CNN Money Blog post) is titled Reverse mortgages: Sub prime mess déjà vu?, by Carla Fried.  It looks at how a lot of retirees are taking out reverse mortgages, since they have insufficient nest eggs to carry them through retirement, and how a lot of people, Comptrollor of the Currency John Dugan included, think these financial products have some of the same characteristics as sub prime mortgages.  Considering the mess to which the sub prime mortgages contributed, that should definitely make us be wary of these products.

Some resources to check into, if you want to learn even more about reverse mortgages and their pitfalls, are as follows:

• AARP.org – A section on this website is dedicated educating seniors on reverse mortgage basics, their alternatives and ways that the financial product might be abused.  Check out the web page here.
• U.S. Department of Housing and Urban Development – An informative website put on by the government.  It’s not as suspicious of the reverse mortgage product as the AARP website, but it still speaks of the dangers of scam artists peddling information that they give away on their website for free!

I know that there are some people who think these products have their place, but I have to disagree.  As I have said, I’m fine with 15 yeaar fixed rate mortgages, but products like these, just seem to part people with their money.  Make your own choice, but don’t say I didn’t warn you.

The article centers around Chad and Stephanie Grant, from San Diego, who are both 31, have been married 7 years and are starting a family.  They make a very good living, with a nice nest egg already started, but not a very big emergency fund.  The article points out that they have a few actions to take to be ready for baby.

If you are in the same situation, trying to start a family, I have a few tips:

• You MUST have an emergency fund of AT LEAST $1000, but preferably 3-6 months worth of expenses.
• It’s a good idea to find out what the total cost of doctor visits and delivery will be and save that amount (or as close to it as you can) to pay cash for your baby when it’s born.  It’ll be nice not to finance your child, right?
• Now is the time to get diversified, as the article points out.  Make sure you don’t have all of your retirement “eggs” in 1 basket.  You should diversify between small, mid and large cap funds, and international funds.
• Insurance!  We all know that health insurance is important, but life insurance is equally important when you are starting a family.  If you die, something has to replace your income!
• A Last Will and Testament is important for you and your spouse, but when you have a baby, it’s IMPERATIVE.  If you don’t have a local lawyer, or don’t have the cash for a lawyer, then go to USLegalForms.com and do it yourself on the cheap!
• And, of course, stock up on diapers (or ask for gift cards to buy diapers)!

That’s it!  Check out the article, and use these tips to get you on track, if you aren’t already!  Good luck, and I look forward to your questions and comments!

On their website, I found a section that has calulators for a ton of different things. Check them out here. Want to know if you’re saving enough to retire as a millionaire? They have a calculator for that! Want to know if you can survive the cost of living in another city/state? They have a calculator for that! There are several calculators to choose from, and from what I’ve seen, they are all user friendly.

Now, why do I think it’s a good idea to use these calculators? First, it’s always a good idea to think about your money and your future. The more you plan for it, the better the outcome, in my opinion. Also, these calculators should help those who are less knowledgeable with money matters be able to figure out if they’re saving enough, can afford the house they want and how quickly they can pay off their student loans etc. The only thing I would say is that this site doesn’t have a auto loan calculator which a lot of people need. I found a great one at Bankrate.com. Check it out here!

So, go check out the article. It is a very cool read. Anyone who is trying to decide between a gravy boat and 1 place setting of china for a good wedding gift should consider this option instead. No, it’s not on their registry, but they probably won’t end up with 2 of them, and people need this type of gift, whether they know it or not!

A good lawyer is a necessity for those people who want to be resposible with their lives and money. At the bare minimum, you should have a will drawn up by a lawyer. Yes, I know that it is cheaper to go to one of the websites out there that offer the forms to be filled out for a fee (usually less than the fee the lawyer charges), however, the form can’t tell you important things about the law that a lawyer either knows off the top of his/her head, or knows the best place to research the answer. Here’s an example: In Kentucky (your favorite southern couples state of residence), if you are married with children, and have no will, when you die, your assets (that do not have beneficiaries identified) are divided up amongst your spouse and either your children or your parents! I would’ve thought it would all go to my spouse, and I would’ve been wrong. Thanks to my lawyer, I now know better.

Most people wait too long to go to a lawyer, and for my part, I don’t know why. When you are sick, you don’t wait too long (think pneumonia or death) to go to a doctor! If your car starts smoking, you don’t wait to take it to an auto mechanic! So, why do people wait until they are in a mess to see a lawyer? I honestly do not know. They shouldn’t, because seeing a lawyer when the problem is minor costs a whole lot less then seeing a lawyer when the problem is huge! Lawyers are there to help you. They are experts on the law, the way a doctor is an expert on your health. If you need legal advice, don’t Google the problem…look for a lawyer! Some words of advice: You should research or ask around (friends or neighbors) about a lawyer you are thinking about hiring. Make sure that their work ethic and personality line up with yours. You should be able to feel comfortable with your lawyer. If you aren’t comfortable with your lawyer, you won’t be as likely to ask for their help, or tell them the whole story, which means they might not fully be able to help you.

Today we are featuring a local lawyer who has just opened his own practice in the Frankfort Kentucky area. Doug Howard is an attorney licensed to practice law in Kentucky, Indiana, and Ohio. He is originally from Frankfort, Kentucky where he currently resides with his wife and children. He graduated from the University of Notre Dame with a B.A. in History and earned his law degree from the Catholic University of America in Washington D.C. Doug’s approach to his law practice is refreshing. I believe he cares about doing the right thing, teaching his clients about the law as he goes, and the best part is that he doesn’t speak in legalese! If you would like to get in touch with Doug Howard, please check out our “links” page to send him an email!

Brief summary: Financial literacy organizations aim to teach young people about finance and credit before they get into debt.

We hear in the news that times are tough. Depending on where we live around the country we may even be experiencing some of the pain first hand. And while there are some out there doing a lot better than the news would lead you to believe, there are others that are going through nothing less than their own personal, financial apocalypse.

Unfortunately, by the time someone’s financial problems make the news, it’s probably too late for them to spare themselves some pain through personal finance education. They are already enrolled in the school of hard knocks.

So what happened? We all know that grandma’s way of handling money was quite different that what we see from the jet-setting, prime-time TV show characters (and, dare I say, reality TV stars?). When did we lose the “use what you have, live within your means, and pay with cash” principals our parents were raised on? We really are victims of our parent’s success. For two generations, since the Great Depression, times have been really good. Unfortunately, we all got caught up in the excitement of flush times, never thinking they would end, and made the critical mistake of forgetting something- to hold a little something back in case the good times ended. However, in all likelihood there was never a friend or loved one standing there beside us, congratulating us on our successes while gently reminding us that we should save… just in case. We certainly didn’t get that from TV, news, movies, magazines, or even the government!

The message has been that we need to increase “consumer spending” to keep the good times rolling. The government encouraged universal home ownership, and while we all want everyone to have a good, safe home, we all know that not everyone is cut out to be a home owner. In one sense the sub-prime crisis facing the global financial system can be considered the result of a failed government policy to combat homelessness (or maybe just renters…). Another take is that the evil banks took advantage of the little guy and forced him to sign his already battered credit score away at the point of a pen. Others point the finger to the irresponsible borrowers (home buyers, credit card holders, and people in debt to loan sharks…) for signing up for the ride. The truth is somewhere in between all these. We just had a big money party, and now we’re waking up with the hangover.

And all the while, nobody was telling us that party would end. Nobody would have listened if there were. But now things are changing! People are waking up, rubbing their heads and pocket books, and are demanding to know who could have averted the crisis. They want to know how they could have seen it coming. And then they think back to grandma and how she never had anything fancy, but seemed to have everything she needed. And then the realization comes… “If only I had done things differently…”

Well, now there are plenty of messages out there, like ours, promoting personal responsibility and personal finance education. In this transcript of a radio story that aired on Voice of America, we hear that people are out there taking high school and college students by the ear, so to speak, and teaching them about the true cost of debt, including credit cards and student loans. They are trying to reduce the number of students who file for graduation and their bankruptcy at the same time. They are getting the point across that getting a college degree may just not be worth the student loans, if the income after graduation cannot pay the loans back for decades. They are letting people know that employers are looking at credit histories when making hiring decisions and that some jobs, like law enforcement, are out of reach to those with a history of bad financial decisions.

Wish your kids, “Happy National Financial Literacy Month!” And take them to the Financial Literacy Month website, put up by Money Management International. Each day of April, you can take a step toward financial well being, while setting a good example for your children. If you are the kid, ask your parents to work through the site with you, and maybe you’ll teach your parents a thing or two.

There is no such thing as perfect personal finance. You just need to get the education for yourself that you didn’t get elsewhere. It’s not something you can get finished within a day, a month, or even a year. It only takes small positive steps toward a goal over the long term to make a big difference. Learn a little bit today. Practice it often. You will be rewarded for a lifetime.

Voice of America is a multimedia international broadcasting service that broadcasts approximately 1,500 hours of news, information, educational, and cultural programming every week to an estimated worldwide audience of 134 million people. It hopes to teach the world American English and promote a positive view of the United States of America.