Wednesday, December 2, 2009
Tuesday, December 1, 2009
Monday, November 30, 2009
Friday, November 6, 2009
A warning for frequent debit card swipers
by Kim Fusaro, Little Miss Fortune, Glamour, on Tue Oct 27, 2009 8:02am PDT
It may be time to defrost my frozen credit cards.
It may be time to defrost my frozen credit cards.
It turns out that using a debit card for every purchase—which I’m so guilty of!—is a bad idea.
From the smarty-pants over at ShopSmart, here are the do's and don’ts of using a debit card:
DON’T use debit cards for big purchases. They don’t offer the same protection that credit cards do. Credit cards allow you to reverse or dispute charges, and some will even extend the length of warranties.
DON’T use a debit card online. If you use a credit card, your liability for unauthorized charges is capped at $50, no matter what. If your debit card is lost or stolen, it must be reported within two business days to limit liability to $50. If a lost or stolen debit card is reported within 60 days, liability can go up to $500. If an unauthorized transaction is not reported within 60 days of the statement date (and the card hasn’t been reported lost or stolen), you’re on the hook for charges made after the 60th day until the report is made.
DO click on “credit” and sign for payments instead of giving a PIN. Card companies might extend the same zero-liability protection to debit cards as they do to credit cards if the debit cards are processed like the latter, but PIN transactions might not have that protection.
DON’T link your debit card to an account with a lot of money. Thieves can empty your debit-card-linked checking account, so keep just enough in the account to cover current purchases.
Eek! I’m guilty of all of the above! Regularly!
How ’bout you guys? Who else has broken these rules? I better not be the only one!
Wednesday, November 4, 2009
Top 9 Companies With The Best Job Security
by Michael Kling
Wednesday, November 4, 2009
With unemployment reaching and expected to surpass 10%, job security is one of the top desires of employees today. Along with good pay and benefits, people want to find a company that's not going to give them a pink slip any time soon.
Here's a group of companies that earn high marks in that regard. Nine companies on Fortune magazine's 100 Best Companies to Work For list for 2009 have never undergone layoffs - ever.
1. Nugget Market
This company has avoided layoffs because of careful job placement and shrewd labor management. Instead of laying off workers, the 81-year-old grocery store refrains from replacing employees who leave. Its stores are 15 miles from each other, making it easier to fill positions, and employees are trained to fit various roles. The Woodland, Calif.-based supermarket chain filled 173 jobs, for a 22% job growth in the year before the list was released in February.
Sandwiched between Goldman Sachs and Adobe Systems, the store ranked number 10 on the overall list. Store directors make an average of $116,440 in annual salary, and checkers, the most common hourly workers, earn $34,490. The store also offers 100% health care coverage.
This company has avoided layoffs because of careful job placement and shrewd labor management. Instead of laying off workers, the 81-year-old grocery store refrains from replacing employees who leave. Its stores are 15 miles from each other, making it easier to fill positions, and employees are trained to fit various roles. The Woodland, Calif.-based supermarket chain filled 173 jobs, for a 22% job growth in the year before the list was released in February.
Sandwiched between Goldman Sachs and Adobe Systems, the store ranked number 10 on the overall list. Store directors make an average of $116,440 in annual salary, and checkers, the most common hourly workers, earn $34,490. The store also offers 100% health care coverage.
2. Devon Energy
An oil and gas producer headquartered in Oklahoma City, this company takes a conservative approach to its finances, yet still treats its employees well. Ranked 13 on the overall list, it started a 401(k) retirement plan featuring company contributions of 11-22%.
Flexible and prudent management helps avoid layoffs. The company, which cut its operating budget before the recession, withholds raises in bad years but gives midyear pay increases in good times.
An oil and gas producer headquartered in Oklahoma City, this company takes a conservative approach to its finances, yet still treats its employees well. Ranked 13 on the overall list, it started a 401(k) retirement plan featuring company contributions of 11-22%.
Flexible and prudent management helps avoid layoffs. The company, which cut its operating budget before the recession, withholds raises in bad years but gives midyear pay increases in good times.
3. Aflac
Known for its quacking duck ads, this company sells supplement insurance. The company, based in Columbus, Ga., keeps its eyes on its budget and ears open to employees. Employee suggestions like telecommuting and flex schedules have saved it millions of dollars. Other company benefits include an onsite fitness center, subsidized gym membership and the largest onsite corporate child care center in Georgia.
Known for its quacking duck ads, this company sells supplement insurance. The company, based in Columbus, Ga., keeps its eyes on its budget and ears open to employees. Employee suggestions like telecommuting and flex schedules have saved it millions of dollars. Other company benefits include an onsite fitness center, subsidized gym membership and the largest onsite corporate child care center in Georgia.
4. QuickTrip
Because this 24-hour convenience store is privately held, it can send profits back to its stores and workers instead of shareholders. Smart financial management has helped it thrive in the downturn. It offered over new 1,400 jobs last year. Wages and benefits are so good that over 200 employees have stayed with the company more than 20 years.
Because this 24-hour convenience store is privately held, it can send profits back to its stores and workers instead of shareholders. Smart financial management has helped it thrive in the downturn. It offered over new 1,400 jobs last year. Wages and benefits are so good that over 200 employees have stayed with the company more than 20 years.
5. The Container Store
The storage retailer, based in Coppell, Texas, froze salaries and watched spending to avoid layoffs. Still, it kept expanding last year, opening four stores and adding 70 employees. Extensive employee training makes the company stand out.
The storage retailer, based in Coppell, Texas, froze salaries and watched spending to avoid layoffs. Still, it kept expanding last year, opening four stores and adding 70 employees. Extensive employee training makes the company stand out.
6. NuStar Energy
Considering layoffs harmful to company productivity, NuStar management avoids them like the plague. The San Antonio-based pipeline and refinery operator also offers bonuses that can exceed $10,000 and 100% 401(k) matches for up to 6% of pay.
Considering layoffs harmful to company productivity, NuStar management avoids them like the plague. The San Antonio-based pipeline and refinery operator also offers bonuses that can exceed $10,000 and 100% 401(k) matches for up to 6% of pay.
7. Stew Leonard's
Known for flashy store displays, this privately-held grocery chain focuses on customer service and long-term sales rather than short-term earnings. CEO Stew Leonard Jr. says selling groceries is a stable business, which helps avoid layoffs. No matter how the economy is faring, people still have to eat.
Known for flashy store displays, this privately-held grocery chain focuses on customer service and long-term sales rather than short-term earnings. CEO Stew Leonard Jr. says selling groceries is a stable business, which helps avoid layoffs. No matter how the economy is faring, people still have to eat.
8. Scottrade
This privately-held online discount brokerage has cut bonuses instead of cutting employees. A conservative growth strategy has also helped it avoid layoffs.
This privately-held online discount brokerage has cut bonuses instead of cutting employees. A conservative growth strategy has also helped it avoid layoffs.
9. Publix Super Markets
A strong balance sheet with no debt helped this grocery chain acquire 49 stores and hire over 1,250 people last year. In its 79 years, it has never had layoffs. No wonder - it's entirely owned by employees.
Besides never laying off employees, at least as of early this year, companies on the list are also some of the best to work for. Treating employees well means good pay and benefits - two factors that are attracting all the right workers. (Preparation can help you land on your feet after getting the "old heave-ho."
A strong balance sheet with no debt helped this grocery chain acquire 49 stores and hire over 1,250 people last year. In its 79 years, it has never had layoffs. No wonder - it's entirely owned by employees.
Besides never laying off employees, at least as of early this year, companies on the list are also some of the best to work for. Treating employees well means good pay and benefits - two factors that are attracting all the right workers. (Preparation can help you land on your feet after getting the "old heave-ho."
Monday, November 2, 2009
5 Evil Things Credit Card Companies Can (Still) Do
by Julianne PepitoneSaturday, October 24, 2009
provided by CNNMONEY.COM
The credit card reform bill tries to help cash-strapped customers, but companies are coming up with new ways to boost profits.
The Bill
Credit card companies are socking it to consumers left and right.
They're hiking interest rates to as much as 36% and doubling minimum monthly payments, frustrating customers who are already cash-strapped and credit-crunched.
In an effort to curb these abusive practices, President Obama signed into law a credit card reform act in May that's rolling out in three parts over 12 months.
They're hiking interest rates to as much as 36% and doubling minimum monthly payments, frustrating customers who are already cash-strapped and credit-crunched.
In an effort to curb these abusive practices, President Obama signed into law a credit card reform act in May that's rolling out in three parts over 12 months.
At the same time, credit card companies have been hard at work coming up with new ways to boost profits while sidestepping the reforms.
"Card issuers are making sure they can make up the lost money in new ways," said Bill Hardekopf of Lowcards.com, a research company funded by a commercial debt collector.
The first part of the law, which took effect in August, requires banks to give customers more notice ahead of major changes to their accounts, like rate hikes. Starting in February, limits will be imposed on when issuers can raise rates on existing card balances, and on new cards. In August 2010 some credit card penalty fees will be will reined in.
But no legislation can fully shield consumers from the credit card industry's ongoing efforts to boost the bottom line.
The worst part? "All of these hikes are taking place simply because they can," Hardekopf said.
"Card issuers are making sure they can make up the lost money in new ways," said Bill Hardekopf of Lowcards.com, a research company funded by a commercial debt collector.
The first part of the law, which took effect in August, requires banks to give customers more notice ahead of major changes to their accounts, like rate hikes. Starting in February, limits will be imposed on when issuers can raise rates on existing card balances, and on new cards. In August 2010 some credit card penalty fees will be will reined in.
But no legislation can fully shield consumers from the credit card industry's ongoing efforts to boost the bottom line.
The worst part? "All of these hikes are taking place simply because they can," Hardekopf said.
1. Rate Hikes
Interest rates are out of this world. "They've increased steadily over the past 5 years, and in general are higher than they've ever been," said Josh Frank, senior researcher at the Center for Responsible Lending (CRL), who says he's seen annual percentage rates as high as 36%.
No current laws cap credit card interest rates, according to Pamela Banks of Consumers Union, the nonprofit publisher of Consumer Reports, so technically the sky's the limit.
Interest rates are out of this world. "They've increased steadily over the past 5 years, and in general are higher than they've ever been," said Josh Frank, senior researcher at the Center for Responsible Lending (CRL), who says he's seen annual percentage rates as high as 36%.
No current laws cap credit card interest rates, according to Pamela Banks of Consumers Union, the nonprofit publisher of Consumer Reports, so technically the sky's the limit.
But the CARD act will help curb abusive practices. As of February, issuers won't be able to arbitrarily raise rates on existing balances. But cardholders will still be subject to interest hikes for late payments and various other infractions.
And card companies will be able to raise their rates as high as they want, whenever they want, on future purchases even after the reform bill kicks in completely.
And card companies will be able to raise their rates as high as they want, whenever they want, on future purchases even after the reform bill kicks in completely.
The act will bring protections for new customers; issuers will no longer be able to hike rates on new accounts in the first 12 months, unless the borrower is delinquent by more than 60 days or the increase is stated in the contract.
Keven Vallance recently saw the rate on his Sears card increase from 9.99% to 13.99% for no apparent reason. When Vallance called Sears Credit, which is owned by Citibank, a rep told him every cardholder's rate is increasing by 4%.
Citi spokesman Samuel Wang said in an email that the company has "adjusted pricing and card terms for some customers as part of our regular account reviews."
Consumer outrage is boiling over. Last month, a disgruntled Bank of America customer posted a YouTube video complaining her bank "jacked up my interest rate to a whopping 30% APR." Her rant went viral, and BofA dropped her rate back to its original 12.99%.
Keven Vallance recently saw the rate on his Sears card increase from 9.99% to 13.99% for no apparent reason. When Vallance called Sears Credit, which is owned by Citibank, a rep told him every cardholder's rate is increasing by 4%.
Citi spokesman Samuel Wang said in an email that the company has "adjusted pricing and card terms for some customers as part of our regular account reviews."
Consumer outrage is boiling over. Last month, a disgruntled Bank of America customer posted a YouTube video complaining her bank "jacked up my interest rate to a whopping 30% APR." Her rant went viral, and BofA dropped her rate back to its original 12.99%.
2. New Fees
Fees aren't just rising -- they're multiplying. Cardholders are getting slapped with fees they've never seen before.The hitch: New laws can address only existing fees and business practices; they can't predict what credit card companies will do in the future.
"Theoretically, they could create a fee for names that begin with 'J,'" said Lowcards.com's Hardekopf.
Fees aren't just rising -- they're multiplying. Cardholders are getting slapped with fees they've never seen before.The hitch: New laws can address only existing fees and business practices; they can't predict what credit card companies will do in the future.
"Theoretically, they could create a fee for names that begin with 'J,'" said Lowcards.com's Hardekopf.
In reality, customers are seeing new annual fees, inactivity charges and more. Not of these charges are unheard of, but many fees that were unusual are becoming commonplace.
Earlier this month, for instance, some Bank of America customers were shocked to learn that their no-fee credit cards would be subject to a new annual fee.
BofA spokeswoman Betty Riess said the fees are part of a company test that affects 0.5% of all consumer accounts, and that the fees range from $29-$99.
The charges will be levied in February, and Riess said customers were chosen "based on risk and profitability" but have the option to reject the fees by canceling their accounts.
Fifth Third Bank recently introduced a $19 inactivity fee for customers who don't charge anything for 12 months, and Citibank is hitting some consumers with a fee if they put less than $2,400 on their card annually.
Earlier this month, for instance, some Bank of America customers were shocked to learn that their no-fee credit cards would be subject to a new annual fee.
BofA spokeswoman Betty Riess said the fees are part of a company test that affects 0.5% of all consumer accounts, and that the fees range from $29-$99.
The charges will be levied in February, and Riess said customers were chosen "based on risk and profitability" but have the option to reject the fees by canceling their accounts.
Fifth Third Bank recently introduced a $19 inactivity fee for customers who don't charge anything for 12 months, and Citibank is hitting some consumers with a fee if they put less than $2,400 on their card annually.
To address this problem, House Financial Services Committee Barney Frank (D-Mass.) has proposed a new regulatory body, the Consumer Financial Protection Agency, which would approve new credit card fees. While the House Financial Service Committee approved the agency, it remains to be seen whether legislation will pass; lawmakers are battling over this and other reform proposals floating around Washington.
3. Higher Minimum Monthly Payments
Banks are also demanding bigger and bigger minimum payments. Chase has bumped up the minimum payment for some consumers to 5% of the monthly balance from 2%.
For someone who carries a $5,000 balance, that means the monthly payment of $100 skyrockets to $250 -- a whopping 150% increase.
Consumer Union's Pamela Banks says her organization has compiled a wealth of anecdotal evidence that indicates such increases in minimum monthly payments are widespread.
"This is making payments virtually impossible for some people," she said. "It's throwing people off when they were living on a tight budget anyway."
Some good news is on the way, however. After February, card companies won't be able to increase monthly minimum payments by more than 100%. For example, a bank cannot increase a 2% minimum payment to any higher than 4%. And this so-called "doubling" will be allowed only once during the life of the card.
Banks are also demanding bigger and bigger minimum payments. Chase has bumped up the minimum payment for some consumers to 5% of the monthly balance from 2%.
For someone who carries a $5,000 balance, that means the monthly payment of $100 skyrockets to $250 -- a whopping 150% increase.
Consumer Union's Pamela Banks says her organization has compiled a wealth of anecdotal evidence that indicates such increases in minimum monthly payments are widespread.
"This is making payments virtually impossible for some people," she said. "It's throwing people off when they were living on a tight budget anyway."
Some good news is on the way, however. After February, card companies won't be able to increase monthly minimum payments by more than 100%. For example, a bank cannot increase a 2% minimum payment to any higher than 4%. And this so-called "doubling" will be allowed only once during the life of the card.
4. Fewer Rewards
Say goodbye to beach vacations and new iPods just for swiping your card.
Rewards programs have been enticing shoppers to charge a purchase rather than paying cash -- but card issuers are cutting back those perks.
"This is happening with a significant amount of cards," Hardekopf said, adding that many consumers are now receiving 1% cash back instead of the 2% or 3% they once enjoyed.
American Express recently cut its Blue Card's cash back policy from 1.5% to 1.25%. And all AmEx customers who make a late payment will no longer accrue points on their purchases -- however, those points can be reinstated with a $29 fee.
Say goodbye to beach vacations and new iPods just for swiping your card.
Rewards programs have been enticing shoppers to charge a purchase rather than paying cash -- but card issuers are cutting back those perks.
"This is happening with a significant amount of cards," Hardekopf said, adding that many consumers are now receiving 1% cash back instead of the 2% or 3% they once enjoyed.
American Express recently cut its Blue Card's cash back policy from 1.5% to 1.25%. And all AmEx customers who make a late payment will no longer accrue points on their purchases -- however, those points can be reinstated with a $29 fee.
5. Slashed Credit Limits and Canceled Accounts
Without so much as a call from the bank, some customers are learning their credit limits have been slashed by as much as 75%, or that their accounts have been closed altogether, according to the Center for Responsible Lending's Josh Frank.
Citibank recently closed what a spokesman called a "limited number" of MasterCard gas cards co-branded with Citgo, ExxonMobil, ConocoPhillips and Shell.
"People go to make a purchase, and they find out about these huge changes only when they're denied," Frank said. "It's a shock, and it's been happening a lot."
Even cardholders who don't charge anything might find their accounts abruptly closed, Frank said. With credit losses at a record high, companies see inactive cards as a red flag and close the accounts to avoid the worry of future writedowns.
"Usually cardholders have this credit line available for an emergency, for this kind of current economic situation," Frank said. "But now they're turning to it when they need it, and it's gone."
Without so much as a call from the bank, some customers are learning their credit limits have been slashed by as much as 75%, or that their accounts have been closed altogether, according to the Center for Responsible Lending's Josh Frank.
Citibank recently closed what a spokesman called a "limited number" of MasterCard gas cards co-branded with Citgo, ExxonMobil, ConocoPhillips and Shell.
"People go to make a purchase, and they find out about these huge changes only when they're denied," Frank said. "It's a shock, and it's been happening a lot."
Even cardholders who don't charge anything might find their accounts abruptly closed, Frank said. With credit losses at a record high, companies see inactive cards as a red flag and close the accounts to avoid the worry of future writedowns.
"Usually cardholders have this credit line available for an emergency, for this kind of current economic situation," Frank said. "But now they're turning to it when they need it, and it's gone."
What's a Cardholder to Do?
Consumers must pay close attention to the terms of their contracts, staying alert to any changes.
"It's boring reading, and it can be hard to understand, but that's where everything is spelled out," said Lowcards.com's Hardekopf.
Of course, while there are laws aimed at helping consumers, legislation can't do it all.
"As we close the loopholes on some things, they open up elsewhere," said Consumer Union's Banks. "Reform acts don't cover everything, and cardholders have to watch out for their own accounts."
And if you don't like your credit card's new terms? "Shop around -- you are not married to your card," Hardekopf said. "It's a partnership, not a lifelong contract."
Consumers must pay close attention to the terms of their contracts, staying alert to any changes.
"It's boring reading, and it can be hard to understand, but that's where everything is spelled out," said Lowcards.com's Hardekopf.
Of course, while there are laws aimed at helping consumers, legislation can't do it all.
"As we close the loopholes on some things, they open up elsewhere," said Consumer Union's Banks. "Reform acts don't cover everything, and cardholders have to watch out for their own accounts."
And if you don't like your credit card's new terms? "Shop around -- you are not married to your card," Hardekopf said. "It's a partnership, not a lifelong contract."
Sunday, November 1, 2009
AlertPay Program
First I thought it’s just a hoax so the first invitation that I received, I just disregard it.
Then I came across this bulletin about the same program with AlertPay, it was so convincing I just figured “What the heck!” $12 is just a small amount compared to how much I spend playing the Lottery which is by the way an average of $20 a month for 15years and I haven’t won yet. So I immediately transferred the amount as indicated and fallowed all the instructions.
First 3 weeks was kinda slow because I just posted to very few social networks like Friendster and Facebook.
Then I got a tip that I should post to social networks or any group of bloggers with the same interest which is “Money” which I did then money just keep on coming.
I’ll keep you posted for more tips on how to earn BIG TIME!!!
Then I came across this bulletin about the same program with AlertPay, it was so convincing I just figured “What the heck!” $12 is just a small amount compared to how much I spend playing the Lottery which is by the way an average of $20 a month for 15years and I haven’t won yet. So I immediately transferred the amount as indicated and fallowed all the instructions.
First 3 weeks was kinda slow because I just posted to very few social networks like Friendster and Facebook.
Then I got a tip that I should post to social networks or any group of bloggers with the same interest which is “Money” which I did then money just keep on coming.
I’ll keep you posted for more tips on how to earn BIG TIME!!!
Saturday, October 31, 2009
Is it possible to live on half of one’s income?
INQUIRER.net
Q: In my family, I am known to be a spendthrift. I like buying new things for our house, and of course, new clothes and gadgets for me. I know I can afford this since I am still single and living with my parents. In fact, when I look at my finances, I know that I am still living within my means. However, I am also thinking, maybe it’s time I stop my spendthrift ways. My father challenged me to live on half of my income. Is that possible at all? - Margie
Q: In my family, I am known to be a spendthrift. I like buying new things for our house, and of course, new clothes and gadgets for me. I know I can afford this since I am still single and living with my parents. In fact, when I look at my finances, I know that I am still living within my means. However, I am also thinking, maybe it’s time I stop my spendthrift ways. My father challenged me to live on half of my income. Is that possible at all? - Margie
A: When you’re single and earning well, it’s easy to spend for new things for yourself and your family. After all, you have worked hard and deserve more than just a pat on the back. And it’s nice to spend for the people you love. But spending more than you should — and often at that — will set you up for tough times later on.
The key phrase is “more than you should.” How do you know if you’re spending more than you should?You’re spending more than you should when:1. you spend all your take home pay, leaving nothing left for savings;2. you spend for things like new gadgets you may not necessarily need, yet don’t have the basics : health insurance, life insurance (in case you have dependents), an emergency fund for calamities and other crises, and a retirement fund; andIf you can relate to at least one of the above, then it’s time to rethink your spending.Financial experts always advise people to “Live within your means.” That means not spending more than you earn. Another advice that’s worth heeding is “Pay yourself first.” That calls for taking out money as savings as soon as you get your paycheck and before you even spend on anything.Your father has challenged you to live on only half of your income. Is this possible? If you are earning well, this may really be doable. That means allotting 50 percent of your take-home income for savings and investments. However, in case you are just earning enough to cover your needs and a little more than that, then living on one-half of your income may be too radical a strategy to pursue. Maybe you can live on three-fourths of your income then, leaving one-fourth for savings and investment. If this is still too steep, then aim at least to live on 90 percent of your income, and save the remaining 10 percent for savings and investment. This is the minimum ratio anyone should observe in order to build up a stable financial future. In any case, take out the money for savings and investment (pay yourself first) before other expenses are paid for.How can you know if you can live on half of your income? Start by listing down your expenses for one whole month. Include everything, from utility bills to discretionary expenses, even little things like candies or bottled water you pick up on the way to work. Tally your expenses for one month. You may be taken aback when you see how much you spend on seemingly little things or things you can do without. Try taking these out of your spending list, alongside things that are just wants, plain and simple (examples: a new cellphone or mp3 player). Look at your discretionary expenses too, such as food. Have you been eating out often? How about limiting those trips to the restaurant? Subtract an amount that you think you can take out from this figure.You may find out that half of your income may be enough to meet your needs with room for a few wants. If this is the case, then by all means, take up the challenge your father has laid out for you. If you’ll need at least three-fourths of your income for your needs and little wants, then live on three-fourths of your earnings. Adjust more if necessary, up to 90 percent of your income as discussed above.In all cases, make sure to set aside the amount you aren’t going to use for your living expenses as savings and investment. Build up an emergency fund that will equal at least six months’ worth of your living expenses. Take out health and life insurance coverage. Invest your money in assets that may earn for you, such as money market funds, bond funds, balanced funds (combination of bonds and stocks), and equity funds, which you may want to earmark for your retirement. Since you are single, you may want to look at the future and start saving up for a place of your own as well.That’s the great motivation for you—the future. Save up for a secure one starting today.
Thursday, October 29, 2009
6 Simple Steps to $1 Million
Let's face it; we all don't make millions of dollars a year, and the odds are that most of us won't receive a large windfall inheritance either. However, that doesn't mean that we can't build sizeable wealth - it'll just take some time. If you're young, time is on your side and retiring a millionaire is achievable. Read on for some tips on how to increase your savings and work toward this goal.Stop Senseless Spending
Unfortunately, people have a habit of spending their hard-earned cash on goods and services that they don't need. Even relatively small expenses, such as indulging in a gourmet coffee from a premium coffee shop every morning, can really add up - and decrease the amount of money you can save. Larger expenses on luxury items also prevent many people from putting money into savings each month.
Unfortunately, people have a habit of spending their hard-earned cash on goods and services that they don't need. Even relatively small expenses, such as indulging in a gourmet coffee from a premium coffee shop every morning, can really add up - and decrease the amount of money you can save. Larger expenses on luxury items also prevent many people from putting money into savings each month.
That said, it's important to realize that it's usually not just one item or one habit that must be cut out in order to accumulate sizable wealth (although it may be). Usually, in order to become wealthy one must adopt a disciplined lifestyle and budget. This means that people who are looking to build their nest eggs need to make sacrifices somewhere - this may mean eating out less frequently, using public transportation to get to work and/or cutting back on extra, unnecessary expenses.
This doesn't mean that you shouldn't go out and have fun, but you should try to do things in moderation - and set a budget if you hope to save money. Fortunately, particularly if you start saving young, saving up a sizeable nest egg only requires a few minor (and relatively painless) adjustments to your spending habits.
Fund Retirement Plans ASAP
When individuals earn money, their first responsibility is to pay current expenses such as the rent or mortgage expenses, food and other necessities. Once these expenses have been covered, the next step should be to fund a retirement plan or some other tax-advantaged vehicle.
When individuals earn money, their first responsibility is to pay current expenses such as the rent or mortgage expenses, food and other necessities. Once these expenses have been covered, the next step should be to fund a retirement plan or some other tax-advantaged vehicle.
Unfortunately, retirement planning is an afterthought for many young people. Here's why it shouldn't be: funding a IRA early on in life means you can contribute less money overall and actually end up with significantly more in the end than someone who put in much more money but started later.
How much difference will funding a vehicle such as a Roth IRA early on in life make?
If you're 23 years old and deposit $3,000 per year (that's only $250 each month!) in a Roth IRA earning and 8% average annual return, you will have saved $985,749 by the time you are 65 years old due to the power of compounding. If you make a few extra contributions, it's clear that a $1 million goal is well within reach. Also keep in mind that this is mostly interest - your $3,000 contributions only add up to $126,000.
Now, suppose that you wait an additional 10 years to start contributing. You have a better job and you know you've lost some time, so you contribute $5,000 per year. You get the same 8% return and you aim to retire at 65. When you reach age 65, you will have saved $724,753. That's still a sizeable fund, but you had to contribute $160,000 just to get there - and it's no where near the $985,749 you could've had for paying much less.
Improve Tax Awareness
Sometimes, individuals think that doing their own taxes will save them money. In some cases, they might be right. However, in other cases it may actually end up costing them money because they fail to take advantage of the many deductions available to them.
Sometimes, individuals think that doing their own taxes will save them money. In some cases, they might be right. However, in other cases it may actually end up costing them money because they fail to take advantage of the many deductions available to them.
Try to become more educated as far as what types of items are deductible. You should also understand when it makes sense to move away from the standard deduction and start itemizing your return.
However, if you're not willing or able to become very well educated filing your own income tax, it may actually pay to hire some help, particularly if you are self employed, own a business or have other circumstances that complicate your tax return.
Own Your Home
At some point in our lives, many of us rent a home or an apartment because we cannot afford to purchase a home, or because we aren't sure where we want to live for the longer term. And that's fine. However, renting is often not a good long-term investment because buying a home is a good way to build equity.
At some point in our lives, many of us rent a home or an apartment because we cannot afford to purchase a home, or because we aren't sure where we want to live for the longer term. And that's fine. However, renting is often not a good long-term investment because buying a home is a good way to build equity.
Unless you intend to move in a short period of time, it generally makes sense to consider putting a down payment on a home. (At least you would likely build up some equity over time and the foundation for a nest egg.)
Avoid Luxury Wheels
There's nothing wrong with purchasing a luxury vehicle. However, individuals who spend an inordinate amount of their incomes on a vehicle are doing themselves a disservice - especially since this asset depreciates in value so rapidly.
How rapidly does a car depreciate?
Obviously, this depends on the make, model, year and demand for the vehicle, but a general rule is that a new car loses 15-20% of its value per year. So, a two-year old car will be worth 80-85% of its purchase price; a three-year old car will be worth 80-85% of its two-year-old value.
In short, especially when you are young, consider buying something practical and dependable that has low monthly payments - or that you can pay for in cash. In the long run, this will mean you'll have more money to put toward your savings - an asset that will appreciate, rather than depreciate like your car.
Don't Sell Yourself Short
Some individuals are extremely loyal to their employers and will stay with them for years without seeing their incomes take a jump. This can be a mistake, as increasing your income is an excellent way to boost your rate of saving.
Some individuals are extremely loyal to their employers and will stay with them for years without seeing their incomes take a jump. This can be a mistake, as increasing your income is an excellent way to boost your rate of saving.
Always keep your eye out for other opportunities and try not to sell yourself short. Work hard and find an employer who will compensate you for your work ethic, skills and experience.
Bottom Line
You don't have to win the lottery to see seven figures in your bank account. For most people, the only way to achieve this is to save it. You don't have to live like a pauper to build an adequate nest egg and retire comfortably. If you start early, spend wisely and save diligently, your million-dollar dreams are well within reach.
You don't have to win the lottery to see seven figures in your bank account. For most people, the only way to achieve this is to save it. You don't have to live like a pauper to build an adequate nest egg and retire comfortably. If you start early, spend wisely and save diligently, your million-dollar dreams are well within reach.
Glenn CurtisMonday, October 26, 2009
Wednesday, October 28, 2009
Top 10 Money Tips for Women
by CNBC StaffWednesday, October 28, 2009
When it comes to women and finance, sometimes there's a disconnect between what women know and how they act, their ability as achiever and their financial underachieving, and between the power they have within reach and the powerlessness that rules their actions.
Financial expert Suze Orman gives her list of the top 10 money tips for women to follow:
1. Listen to Your GutWomen are compassionate toward those in need. Instead of going with their gut, they sometimes overlook the obvious and make an emotional money mistake. "A friend, relative, loved one will approach you saying, 'I need to borrow $5,000.' You'll think 'I don't want to' and yet you say 'OK,'" Suze explains. So, think twice before you say yes if your gut is saying no.
2. NEVER Co-Sign for ANYONEIf a friend or family member asks for you to co-sign on a loan, it's probably best to say no. Suze says more often than not, the borrower will default or pay late and you risk losing money or lowering your credit score because as the co-signer, you are ultimately responsible for the loan. Say no out of love, not out of fear.
3. Save Yourself FirstIf you don't have enough to save for your child's college fund and your retirement, your retirement takes precedence.
As explained in Suze's book "Women & Money," women think they are actually helping their children by paying for their college or wedding. It's a myth. You help your children by saving yourself first. If you retire without ample money to support yourself, you will become a financial burden to your children. There are plenty of loans for college, but there are no loans for retirement.
4. Don't Hand Over Finances to Your Husband or PartnerSuze says women often hand over their family financial matters to their partner because they are either scared, lazy or following an old-fashioned role.
Being in control of your financial destiny requires that you be an active participant -- not just by paying bills, but in overseeing your investments, too. Suze: "Take this step and I think you will be surprised how this helps your relationship."
5. Don't Put Yourself on SaleDon't treat yourself like you're on sale. If you're reluctant to put a real value on what you do, then it diminishes who you are. As Suze explains, women tend to devalue what they do.
This creates a vicious cycle: "When you devalue what you do, it becomes inevitable that you -- and those around you -- devalue who you are." Women will settle for less. They may offer discounted prices on their services or accept a smaller raise, even when the company is doing well. They have to ask for what they know is "right."
6. Protect Your Assets: Get a Pre-Nuptial AgreementThe basic rule is that you are jointly entitled to assets accrued during a marriage and you are on the hook for debts accrued during the marriage. Anything you bring into the marriage is not automatically shared. Protect your assets.
7. No Blame, No ShameTwo of the heaviest weights women carry (invisible twin obstacles of the past) are the burden of shame and the tendency to blame. Suze explains: "If you don't feel confident in your knowledge of how money works, you hide behind the shame of it, deferring decisions to others or staying stuck in a pattern of inaction. You blame society, your parents, your husband/partner or all of the above. Blame renders you powerless and shame only serves to hold you back." You have to go and find out about personal finance for yourself.
8. Take Care of Your MoneyWomen nurture people and things that are important to them. So take care of your money the way you do your husband/partner, family, friends, pets, plants and clothes. Cherish money like all of the other irreplaceable items in your life. Find wise investments, save and don't throw it away on meaningless things.
9. Don't Make Your Underage Children Life-Insurance Beneficiaries -- It's a No-No!Life insurance companies will not make a payout to children under 18 years of age. Suze suggests you create a trust account and name the trust as the beneficiary of your life insurance policy.
10. Own the Power to Control Your Own DestinyGive to yourself as much as you give of yourself. Power comes from who you are, not what you have, and the transformation starts with how you allow others to treat you. Do what's right, rather than what's easy.
Suze says, "Remember to muster up your courage and silence your fear ... keep your eye on the goal, on what you really want to accomplish, no matter what anyone says or does to deter you. Just keep moving forward."
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