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Posts Tagged ‘Financial planning’

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90 days same as cash…what a ripoff!

Wednesday, April 21st, 2010

Anything that sounds too good to be true is too good to be true.  Of this, I am sure.  The 90 days same as cash gimmick definitely qualifies as something that sounds great, but really isn’t.  Never ever fall for it.  Why?  I’ll tell you…

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!

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Bad news if you plan on retiring with a nest egg…

Friday, April 16th, 2010

Today’s article. 2009 Tax Season: Last Good Year for High-Earning Americans? is short and sweet, but very important.  Now, I know many of you will read what it has to say and decide that it has nothing to do with you, but the fact of the matter is that if you plan on retiring with a nest egg, then it does, in fact, pertain to you.

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.

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The single person’s struggle with bills and budgets…

Wednesday, April 14th, 2010

We talk a lot about couples on our website, but we aren’t oblivious to the fact that many of our readers are single, and that our single readers have different needs and questions than our other readers.  Our single readers have no one to be accountable to except themselves.  They have to do everything on their own.  That means they need a lot of information on how to plan for the future, and no one to help them acquire it.  What do they do when they want to make a budget, or start saving for retirement or pay off debt?  Well, these are the first 2 steps they should look at when they are ready to get on track. 

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! 

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Money education for high schoolers and college students.

Friday, April 9th, 2010

I stumbled across an article on Fox Business titled How to Speak Money Fluently, which led me to another website, FoolProofMe.com.  FoolProofMe.com is what I want to talk about today.

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.

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More about tax refunds and a friendly reminder.

Tuesday, March 30th, 2010

I was in the locker room at the gym the other day and overheard a conversation that disappointed me.  It was a discussion about tax refunds, and the 2 women were discussing how desperately they needed their tax refunds to pay off this and that.  I felt for them.  I mean, I know that they can’t be that desperate if they are still paying for a discretionary expense like a gym membership, but to know that people rely on their tax refunds for regular expenses is terrible.

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!

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Even more ways to save around the house!

Monday, March 22nd, 2010

I’m always talking about ways to save around the house, and today I have even more tips for you!  Check out the following ideas:

  • 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!

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If you save it, then you choose how to spend it!

Friday, March 12th, 2010

Today’s article is titled Spending a school fund on CNNMoney.com.  It brings to question a subject that many of us either don’t think will ever happen, or, at least we hope it won’t!  The question?  What happens when your child decides not to go to college, and you’ve saved lots of money in an ESA, 529 or other savings account for them to use on that schooling?  Worse, what happens when you have 2 children, and 1 of them used the college fund, and the other decides against school and says you should just give them the money?  I bet you can guess my answer!

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! 

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Why spending today costs more than you think…

Friday, February 19th, 2010

Once again we look to Dan Miller and his 48 days blog (visit the links section of our website for more info on Dan Miller) for an interesting article.  Today’s article, Look rich-die broke was inspired by a sign in front of a car accessories shop in Florida that read: “Rent your wheels and tires here”.

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.

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Saving on auto insurance!

Monday, February 15th, 2010

Premium prices on auto insurance are a killer.  Nobody enjoys paying more than they need to for insurance, so here are some ideas on ways to save some cash. 

  • 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!!

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Fees and mirroring…

Monday, February 8th, 2010

For most of us, fees are the type of bill that give us heartburn or headaches.  They stink!  And, if we’re actually paying attention to our bills, fees just irritate us to no end.  Especially when we see all the extra taxes on there lumped in with the fees, since we give Uncle Sam plenty out of our paycheck every year.  But noticing these fees is very important!  As a matter of fact, being vigilant and reading through your bills as they come in is very important, since not only might you be paying a fee you shouldn’t, but you could also catch a company in the practice of “mirroring”.

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!

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