I ran across a family member who was having some financial problems a few days ago. For their privacy, I’m going to call them David and Nancy. Their situation is pretty common. Perhaps you know someone just like them.

David and Nancy seem like they have a good handle on finances. Both have good jobs with six figure incomes, are building equity in their home, and have built up a nice retirement account. At least that’s what everyone thinks.

Let me give you the grim reality of David and Nancy’s finances. They have several credit cards that are maxed out. They’ve had their water turned off a couple of times for non-payment. To make matters worse, they have tapped in their 401(K) to pay off debt. Since they are so strapped with debt, they were late a couple of times on their credit card minimum payment so the minimum payment amount and interest rate was increased.

 Now if you ask David or Nancy how they make or how much their expenses are each month, neither one would be able to tell you. They don’t really even know how much they bring home since it goes to the bank account via direct deposit. They don’t know how much they spend either because there is never enough paycheck at the end of the month. What they do know though is they have a big cash flow problem with their personal finances.

Sound familiar? Everyone has money problems from time to time, it’s important to get to the point that you are proud of your financial decisions and that you avoid common money mistakes. Listed below are three frequent money mishaps that create hardships in the family and undue stress in your day to day life.

1.       Not knowing where your money is going. Budgets may be boring but it’s extremely important to write down everything you spend over a two month period. Then establish a budget for each item and cut down on unnecessary spending.

2.       Don’t skip paying your credit cards. The most common debt to skip a payment on when money gets tight is the credit card, however doing so can cost you a whole lot more in the long run. Make sure that you pay at least the minimum payment to avoid increases in your interest rates and/or the minimum payment amount.

3.       Tapping your 401(k) to pay bills. Rather than “robbing” from your livelihood for old age, look for ways to increase you income.

“Just getting by” may be all you can do today, but set high financial goals for your future. Learn to manage your money instead of letting it manage you and don’t worry about keeping up with the Jones’ because they are having just as much trouble keeping up as you are. 

Quick tags: Credit Cards, Money Management, Debt Management

Summer is the time when most people reposition themselves in their home and workplace. Many people look for new housing when the kids get out of school for the summer. They make plans to be settled back into the groove of normal daily life by the time school starts back again.

Like housing, many people look for new jobs in the summer. Several new high school and college graduates hit the job market also, creating more competition for available employment. When more people than positions exist in the job market, it’s imperative that you stand out among the others. After all, who wants to go through the interview process any more than you have to?

Let’s face it. For most of us the interview is the single most stressful part of the job search process. A friend of mine used to say that she would rather stick the blunt end of a pencil in her eye than to interview for a job…. Needless to say, she stayed is one of those people that retired from the first job she ever had.

The reality is that she is a dinosaur and positions like that are extinct in this day and age. Job interviews are now a regular part of everyday life, so it’s vital that you properly prepare for it. In an interview, any number of things can go wrong so a big part of being successful is avoiding simple mistakes. As a hiring manager in several of my previous positions, I noticed a pattern of common mistakes. Review the following list of common interview mistakes to see if you’ve made any of these:

1. Failure to properly research the company: The interviewer will expect candidates to have done some homework. A big leg up to getting the position is to spend time researching and reading about the company you are interviewing with. At the least, you should know what the company does and who their biggest competitors are. If you haven’t taken the time to review the employer’s website and understand what they are recruiting for you are drastically reducing your chances of continuing successfully through the interview process.

2. Not knowing the position you’re interviewing for: Be familiar with the job description so you can draw on your experiences, talents, strengths and abilities to connect with company needs. Highlight how you’re suited to that particular job. Articulate how your previous duties are similar to the duties of this new position.

3. Not “selling” yourself: Market yourself! Define yourself. Tell the interviewer everything that makes you different from others. Know your major strengths and accomplishments as they relate to the position/company that you are applying for. Tell the interviewer just what you can do to contribute to the bottom line of that company.

4. Not asking questions: This is a big thing. How can you have a conversation with someone that doesn’t even have a question for you? It’s best to have at least 3-4 intelligent questions to ask the interviewer. It’s perfectly fine to have them written down in advance and to reference them at the appropriate time. It actually leaves a positive impression with most interviewers. Remember that interviews are an exchange of information and not coming in with questions could look like you did not prepare for the interview.

5. Not dressing appropriately for the interview: Regardless of the company’s actual dress code, professional attire and attention to detail still count in an interview. You can never be too professional. Remember that everything from your appearance to your tone of voice and the way you conduct yourself, all contributes to the impression that you make on the interviewer. To make that first impression a positive one, be presentable, dress professionally in a pressed suit and shirt and clean, polished shoes.

Quick tags: Current Events

The challenge of college exams are finally behind you. What a relief! Now you have a new problem to work through… those horrid student loans.

If you took out student loans to pay for your education, more than likely payback begins six months after graduation. Often that’s not long enough to land a job in your chosen field and settle in your new career. Before you know it the student loan bills start rolling in and you begin to realize just how many loans you took out. How are you possibly going to pay them all back, buy clothes to “dress for success” in your new position, pay for the gas needed to make the commute, keep the rent current and still be able to eat? Talk about overwhelming!

You may even be thinking that maybe this education wasn’t such a good idea. Even though you have a degree, you still have to begin in an entry level position. So how do you pay back those student loans? The simple answer; consolidate and conquer.

You still have to pay back what you borrowed, but with a student loan debt consolidation you make all of your monthly payments to just one lender in one payment. Many times that single payment is lower than the combined monthly total you were paying out each month, thus freeing up more cash for you to buy groceries with.

There’s probably several different ways to consolidate your loans, but four of the most common repayment plans are listed below. One is sure to be just what you’re looking for.

Standard Repayment Plan – If a fixed rate loan is what you’re looking for this is a good choice. The best part is that it gives you a maximum of 10 years to repay. Also the interest rates are very reasonable. According to federal regulations, calculating the interest rate on a consolidated loan disbursed on or after July 1, 1994 involves the weighted average of the interest rates of the old school loans that you are consolidating under the new one, rounded up to the nearest one-eight of one percent. Also, fixed interest rates on a consolidated loan cannot exceed 8.25 percent.

Extended Repayment Plan – If you think you need a repayment period longer than 10 years, you can stretch the time to pay off the loan to between 12 and 30 years (depending on the total amount borrowed). Again, the interest rate is fixed for that time period, and the payments are lower. Be aware that over time, you will end up paying a larger total amount because of the extra interest, but the lower monthly payments may be easier to pay.

Graduated Repayment Plan – If you are comfortable in your new career and feel like you won’t be in that entry level position too long, you can spread your monthly loan payments over a period of between 12 and 30 years. The downside of this plan is that the amount of your monthly payment will increase every two years.

Income Contingent Repayment Plan – If you have a family and other obligations, this repayment plan takes into account what’s going on in the day-to-day of your life. Income Contingent Repayment Plans are the favorite of most people because a reasonable monthly payment amount is determined based on your annual gross income, family size, and total direct student loan debt. Another advantage of this repayment plan is that it spreads the payments over 25 years.

If you still have a long time on your loans with many payments ahead of you, making a fresh start with a student loan debt consolidation will make your life easier. Think of it as refinancing your years of education so that you can free up money for more important things. No more juggling what’s due to whom and when. So choose the right answer for this exam. Select the repayment plan that works best in your new life and then live it!

Quick tags: Children and Money, Money Management, Debt Management

Can you believe that about 57 percent of Americans don’t have a will? According to a 2007 survey by Bankrate.com, the most common reason people give for not having a will is that they:

• don’t have the time
• don’t have the money
• don’t like dealing with lawyers

Only a very small percentage of people will admit that they just don’t like to think about dying and that’s why they won’t write a will.

In reality, most people don’t have a will mainly because it’s at the bottom of their “to do” list. We really don’t want to acknowledge that we will die someday. By creating a will we are facing, in writing, the fact that we will not live forever.

But let’s look at what can happen if you don’t have a will. Chances are the courts will be left to decide where all your personal property; your car, the dog, or family heirlooms will wind up. Even where your kids will reside and who will be responsible for them can be decided by an unknowing, uncaring court system. Making sure your children are left with a responsible adult should be a reason enough not to procrastinate and get that will written. If you don’t have children, you may want to leave donations to specific charities. Write a will and spell it out.

Estate planning professionals offer these five tips about wills:

1. Experts advise anyone with significant assets or minor children to have a will.

2. If certain assets have specified beneficiaries such as 401(k) plans, IRAs or life insurance, the will cannot direct how those assets are divided up.

3. When bequeathing specific personal property, be very clear and specific so that you don’t generate fights and misunderstandings later.

4. Despite what you may have seen in the movies, don’t make a videotaped will or write it by hand. You want a will that is legally valid and without question.

5. Review your will at least every few years and keep it up to date.

Don’t mess up your estate planning by waiting until it’s too late. Creating a will causes us to face our own mortality, which isn’t easy for most of us. But it is absolutely necessary. The effects of forgetting to write a will can be disastrous for many generations to come.

Quick tags: Estate Planning

Valentine’s Day is a special day to shower your sweetheart with roses, chocolate and special dinners. But what about the other 364 days of the year?

The day after Valentine’s Day is a good time to make sure you and your sweetheart are on the same page financially. Talking about money is never an easy task. Most of us were taught to be tight-lipped about financial topics by our parents. To help you with the subject of finances and make sure you and your sweetheart are both in agreement on money matters, consider these tips:

Have “the serious talk.” Tell each other where to find key financial information including checking, savings and investment accounts, mortgages and insurance policies. You should each also know where valuable and records such as birth and marriage certificates, jewelry or a safe-deposit key is kept.

Plan your future. Save for big ticket items like cars or a house. New cars depreciate right off the parking lot. If you want to drive a new car, save up and buy a one or two year old model because the depreciation has already been realized. Also, the current mortgage lending debacle should be proof enough that putting something down on your home is the right thing to do.

Increase your life insurance on each of you. This is even more important if you have dependents. Research indicates that the average married couple has less than half the amount of life-insurance coverage that experts recommend. Most have only enough insurance to replace their income for a little over 4 years. Remember that life insurance is available right away in the loss of your partner. It will not get tied up in an estate settlement that can last for many months.

Create a will for both of you. Be sure to include names of executors, guardians and trustees, especially if you have young children. Review it annually and update it as necessary. Make sure your sweetheart knows where it is kept.

Develop a contingency fund. About 70 percent of working adults say they could afford to take off only one month or less of unpaid vacation before everyday expenses would force them to return to work. Yet, nearly 1 out of every 3 workers over the age of 30 will suffer a disability or job loss lasting at least three months at some point in their career. It’s best to set aside the equivalent of 3 months paychecks in a savings (that you do not borrow from). It’s even better to put aside 6 months.

Being financially savvy is an important part of a healthy, happy relationship. All relationships go through less-romantic times, so making time to talk about finances shows that you’re committed to the relationship for the long haul and you want to be sure your partner has what they need…not just now, but always.

Quick tags: Estate Planning, Money Management

Many people look at money as a trade off. Although financial experts advise us to look at our personal finances as an unemotional, detached quest for an end result, that concept is as far from reality as you can get for most of us. After all, what we do with our money makes us feel good and reflects our personal values. On the other hand, overspending feels bad, even though the instant thrill of the catch is somewhat euphoric.

To gain control of our finances, we have to take the “feeling” component out of the activity and look at spending as a behavior. One of the talk show hosts said recently that it takes about 21 days to replace a bad behavior with a good one. Here are some ideas to get you started on your behavior makeover:

Don’t spend out of habit. We often waste more money than we should because we develop costly habits. Some of them are established because we think it helps us get around better in the working world. How many times have you stopped Starbucks on the way to work or grabbed takeout on the way home? If we think about the cost, we justify the spending by thinking that it’s faster to buy coffee than brew it and its certainly quicker to buy dinner than make it. What we have to stop and realize is that the goal is not to get to the finish line first, but to get there with the most money in the bank. Examine your habits and make sure that they’re not robbing you of more valued goals.

Don’t spend out of temptation. Americans are subjected to hundreds of marketing message daily. It’s extremely difficult not to get sucked into an endless maze of consumerism. Every day, we’re bombarded with messages telling us what we don’t have and what we need to buy to be like everyone else. If you don’t have some sort of system to filter those messages, you’ll get pulled in every time.

Make your spending match your values. Close your eyes and think about the things that make you happy; that give you joy and make you feel energized. Do you see yourself in a room full of doodads or a room full of friends and family? Are you camping out in nature or hanging out at a resort? Is this vision close to the way you currently live your life now? If you see yourself taking vacations with family and friends, is it something that is funded by your job and your budget? Everyone has a limited amount of spending power. So, when we buy one thing, we’re giving up the opportunity to have another. That trade-off is what’s known as an opportunity cost. We must make good choices so that our spending makes us happy with our choices.

Don’t think just about stuff. Spend thoughtfully. Just buying stuff will only make more clutter in our life. Instead think more about what to buy and spend your money on things that make your life richer. If spending more time with friends and family is important to you for example, remodel your kitchen to create a big open area where everyone can gather. Not only do you make it easier to spend more quality time with those you love, you also increase the value of your house.

Think about the opportunity costs when you’re making trade-offs. Sometimes this could mean looking at where you can streamline things and choosing what can be eliminated so that your goals are met. For example, maybe you drive an older car as a tradeoff for taking several vacations a year because that’s something that you really want to do. Don’t become a prisoner that is trapped by material choices. Eliminate the doodads.

Quick tags: Value Shopping, Money Management

Every New Year’s Eve thousands of Americans make resolutions promising to be more productive. Just like most other resolutions, the productivity promise is routinely broken. We have trouble changing the habits that caused us to be unproductive in the first place.

Our brains are full of “to-do” lists that just can’t seem to get done. Have you noticed that you can’t meet your goals, regardless of how many hours are in a day? Absolutely! We all have too much to do and too little time.

But the strange thing is; everyone has experienced times when everything seemed effortless and progress was endless. So how do we capture this energy and state of mind and reproduce it? Like many of you, I have searched for the answer to this question for years. I’ve used planners, calendars and PDA’s. I’ve even left myself voicemail and sent email to myself in an effort to keep myself on track. All of these things worked … but only for a little while.

Just like lots of things in life, about the time you give up looking for a solution; it drops in your lap. A co-worker, overhearing a discussion I was having with myself, gave me a copy of Getting Things Done: The Art of Stress-Free Productivity. That was when my life really started to change. I couldn’t believe that I was actually finishing things. Organizing my life in one place was the single most important thing that was slowing me down. Also helpful was the four D’s— Do it, Delegate it, Defer it, or Drop it. Those principals can empty an inbox faster than you have ever done it before.

Today we have so many things that pull us in many directions. Our family, friends, current job, and even future career path often move in conflicting directions. Juggling all that was very stressful to me before reading this book and applying its methods. Getting Things Done offers practical processes that allow you to clear your mind, allowing your thoughts to organize, form effective results, and increase productivity. It’s totally amazing how it works!

Anyone who is feeling a little overwhelmed with their life should give this process a try. You’ll be really glad you did. Go for it… Be all you can be!

Quick tags: Current Events, Value Shopping

According to a recent national survey by the Consumer Federation of America and Wachovia Bank, 52 percent of Americans say they can’t afford to save or they are not saving adequately. That’s more than half of all Americans, approximately 157 billion people! It’s no wonder that fiscal fitness was the number one New Year’s resolution in this country – even above physical fitness, which has been monopolizing the media lately.

Where do we begin on the path to fiscal fitness? A couple of points come to mind. First, think before you spend. Then second, take time to enjoy what you’ve got and use it to its fullest extent.

We could also use the program offered by SNL’s Chris Parnell. In the skit he teaches financial success to Steve Martin and Amy Poehler from the book called “Don’t Buy Stuff You Can’t Afford”. It’s terribly good advice and a must read for every American. What most Americans don’t realize is that while debt may bring short-term gratification, it causes long-term bondage. Because as credit card debt mounts, your credit card payments increase, leaving you less money to buy stuff with. So you end up putting more stuff on the card. Which makes you have even less money to use to buy stuff… and the cycle is off to a great start. So now you have to work more hours or two jobs to make just the minimum payments, taking time away from your family or activities that you enjoy doing. So you put more stuff on the card and the cycle continues to grow.

But you can stop it at any time. Just learn to say “NO!” to yourself and those around you. That’s the hardest part. Once you have that accomplished here are some other things to keep in mind:

Know your spending limits: Live below your income, and you’ll never feel poor. How can you do that? The hardest part is saving up for big ticket items like appliances or cars.

Pay credit cards in full each month: Now this is easier said than done. Even if you are carrying a balance before you started this new fiscally fit persona, you can still pay each month’s new charge amounts plus what you were paying for the minimum payment on each card.

Protect yourself with insurance: Big catastrophes can totally derail your good plans. Explore low-cost insurance options to cover home, car, medical and perhaps even home repair costs. Reducing risk and practice good health habits can help reduce those unforeseen circumstances.

Devise a strategy: Set up a budget and stick to it. Budget for investments and savings and set aside money for discretionary spending. Don’t overspend and try to rob Peter to pay Paul… it never works! .

Cut corners: Shop discount and dollar stores and online for bargain rates on items you need (and remember the difference between need and want!). Use coupons and split costs with friends when possible.

Ultimately, live on half your income. By limiting your expenses, establishing lifestyle limits and habitually putting a portion of your income into investments and savings each month you will be above average and truly financially free.

Quick tags: Credit Cards, Investments, Money Management, Debt Management

Whether you’re a twenty-something embarking on the responsibility of managing money for the first time or a financial late bloomer under pressure to get situated for retirement, making good financial choices is not easy. If you’re not financially savvy, setting up a budget that can be followed might seem virtually impossible. On top of that, everyone has a different opinion on money matters. Myths repeatedly upset our efforts to manage spending, reduce debt, increase savings and make good investment decisions.

Take a look at these common myths that present financial hurdles:

Myth: Its always best to open a savings account at a brick and mortar bank. These days you’ll probably get a much higher yield on your money by going online. Better still, these accounts are FDIC insured and often require little or no minimum balance.

Myth: You need to make more money before you can start saving. Don’t believe it! The truth is that you have no way of knowing when or if your income will increase. Focus on managing your money in a way that allows you to minimize debt.

Myth: Sales shopping saves money. For some people, shopping is as addictive as drugs. But sales aren’t always saving you money because you usually buy twice as much just because it’s on sale and the sale is only a savings if you really need the item. Also, store owners know that sales often lead to the purchase of items that normally wouldn’t be purchased. So you haven’t really saved anything.

Myth: Saving for your child’s education is more important than saving for retirement. No parent can be faulted for wanting to provide for a child’s education, but don’t do it at the expense of your retirement. With this in mind, make sure to put a healthy percentage of the money available for savings toward your own future as well as your child’s.

Myth: Zero percent interest on credit cards saves money. Not necessarily true. When you take out a credit card with zero interest, you aren’t really saving money. You’re just delaying payment for items you already have use of. Harsh consequences come if you don’t pay the money back within the zero percent period and you have to pay the higher interest rates of 18 percent or more on those items.

Myth: You don’t need to track your spending if you have overdraft protection. Banks make over $17 billion in overdraft fees last year. Wouldn’t you rather put that money in savings?

Myth: Interest-only mortgages make homes more affordable. An increasing number of home buyers, especially first-timers, opt to pay only the interest on their mortgages and nothing off the capital. The truth is that interest-only mortgages only allow you to fool yourself into believing you are buying a home, when you’re really only buying the difference between the purchase price and current value. Decreases in value will also leave you with negative equity and even more to debt to repay.

Myth: Refinancing your home pays off. The truth is that when you refinance your home, you aren’t saving that much money in the long run unless you shorten the term. For example, if you refinance to get smaller payments, you will probably have to finance for another 30-year term. This means that if you have already paid 10 years of mortgage, then refinance for another 30, you have basically extended your loan to a 40-year mortgage. Sit and do the math and see if you are really saving anything. The only way to save money with a refinance is to refinance for a lower rate and a shorter term.

Myth: You can time the market. Research from Fidelity shows that the longer you leave your money invested, the less likely you are to lose money. Invest your money for at least ten years and try not to worry about it.

We all try hard to do the best we can when it comes to our finances. Stop listening to all that advice out there and take the time to sit down and put a pencil to it. You could be surprised how myths are actually costing you your hard earned money.

Quick tags: Value Shopping, Credit Cards, Investments, Money Management, Debt Management

Having dinner with my twenty-something children is always very enlightening. Their conversations are generally colorful, fast-paced and include topics ranging from the latest technology to the cost of ramen noodles. One issue consistently surfaces though; the fact that it’s really hard for young people trying to make on their own.

While some young people are irresponsible and make poor financial choices, there are many more out there that are trying to be fiscally responsible. That can be difficult when you earn less than $25,000 a year. Students fresh out of college, or paying their way through college, have limited earning potential and a bundle of unfamiliar expenses. Starter jobs typically pay lower salaries, several with no health insurance benefits. One bad illness or injury could create years of financial problems for someone without health insurance. In addition, employers often expect a certain image so clothing can be another unneeded expense.

One of the biggest expenses young adults face is housing. Rents are high so it’s common to find a roommate. But sometimes that can be more of a problem than a solution. I’m sure you’ve heard of (or possibly encountered) the deadbeat roommate who shares your utilities and groceries but never pays for their part. Setting up house can be expensive too since you need everything but the kitchen sink to get started.

Don’t forget the biggest credit burden… college loans. It seems unreal the first time you see the loan balance you now have to get paid down.

But life’s challenges build character, right? Every generation has faced hard times when getting started, especially if you’re not able to get much help from the family. How does a person get off on the right foot?

Here are some tips that will help young adults get off to a good start:

Get some inexpensive health insurance. This will transfer a great deal of risk from you to the insurance company if, heaven forbid, you have an accident on a jet ski or a snow slope. A great to shop health insurance is ehealthinsurance.com. It’s a simple way to get quotes, compare policies and and apply online. You should look for something that takes care of annual well visits, but more than anything make sure it has good hospitalization coverage. If you have questions or need advice, ehealthinsurance.com has licensed professionals to help you. You may even be able to get your parents to pay part of the premium.

Build a good credit file. Credit, good or bad, will follow you for a lifetime, so don’t be lax. Good credit will also save you a lot of money (and hassles). If you have poor credit, you will pay more for everything including apartment deposits, car loans, and utility deposits. The best way to build good credit is to get two credit cards from a major card. Select from either Discover, MasterCard or Visa. Stay away from department store cards, even if they offer ten percent off of purchases or a free T-shirt. They are not worth the credit inquiry because they generally have high interest rates and offer very little in return. Once you have your two new credit cards, use them very carefully. Remember danger lurks when you don’t pay them off totally each month. Select one card to use for daily expenses while you save the money in your bank account to pay it off at the end of the billing month. The other card should be an emergency only card. Make your emergency card the one that offers the lowest interest because if you have to use it, you may have to carry the balance for more than a month. Use this card only for emergencies such as major car repairs or medical procedures. Don’t talk yourself into using this card for anything that’s not truly an emergency. If you think you could be tempted, put the card in a plastic bowl of water and place it in the freezer. That should make you give some thought to whether it’s truly and emergency if you have to thaw it out to use it. Watch your credit report closely. Use a credit monitoring service from a credit reporting agency like Experian, and run your credit report often. Check for errors in the reporting, and dispute unfair or inaccurate items on your credit report if they arise. The small monthly fee they charge is well worth the investment.

Know your financial position. Create a budget and stick to it. There are several financial social networking websites such as www.mint.com, www.wesabe.com and www.buxfer.com that are geared to helping twenty-somethings keep all of their finances in one place. You can track your expenses and check your account balances from your cell phone. Some sites even show you how much you’re spending compared to everyone else. Remember, it’s not what you earn, but how you spend what you earn that will make you wealthy.

Pay yourself. Contribute to your company’s 401(k), at least to the amount that your employer matches. That’s just free money. If you can scrape up a little more, deposit $25 a month into a Roth IRA. It may seem like a sacrifice now, but the power of compounding interest will pay off big time in the future.

Live within your means. There will be plenty of time to enjoy the good times later on. Don’t succumb to the latte factor. Take your lunch instead of eating out. Drive a ten year old car that’s paid for. Polish your own nails. Get your haircuts at chain stores. Take those hand-me-downs that the family is offering. Being twenty-something, poor and on your way up is a normal stage in the circle of life. Embrace it and wear it proudly! Besides, it’s good material for those “remember when” conversations that take place when you’re forty-something.

Quick tags: Children and Money, Money Management