Guilt Free Vacations

Are you feeling bogged down with debt? Don't worry, you are not alone. However, you CAN rise up and take that dream vacation. It's not just a fairy tale. Lots of people are finding out how and sharing their stories with us.

I read an article today over at Yahoo Finance: "Staying out of debt leads to first affordable vacation in years."
The article explained how an average couple found themselves, "in a continuous cycle of borrowing from this week's paycheck to pay last week's bills and desperately wanting to catch up and get out of debt."
However, they "finally had to sit down and ask, "Where's all our money going?""
Once they did that, they were able to prioritize their spending. Rather than just throw money away on things that didn't have value to them, they consciously spent or saved their money for things that did. The end result?

After climbing out of debt this year, my fiance and I were able to take our dream vacation to New Orleans. Everything was paid for outright, without any interest charges. We were able to enjoy the trip to its fullest, without wondering how it would be paid for.

This is my idea of a dream vacation! Paris, France.

Photo Courtesy of Flickr, Brooklyn Musuem

It seems that a common thread lately from personal finance bloggers is chronicling the personal success stories. JD at GetRichSlowly.com features a weekly Reader Stories, Trent Hamm at TheSimpleDollar features numerous Mailbags where he answers individual readers questions with his own opinion, Ramit at IWillTeachYouToBeRich also has featured success stories entitled Master's of Earning More.

It makes sense - that is how their own blogs were started. They were reporting on their own personal finance journey. Once they achieved their own success and continued to prosper with their new foundation in personal finance, they have all started showcasing the personal stories of other fellow readers.

This isn't a new tactic. Personal finance books have always included snippets of success stories from people that have been helped by following the proposed program or principles. In some ways, reader stories serve as a further testimonial that what the author is spouting out really does work and more importantly, that it works for more than one type of person.

Take heart in the success stories and realize that you CAN achieve your dreams, too. Others have done it. Look at their stories and try to identify what was their turning point. Identify what things worked for them and try to apply some of the principles and ideas into your own life. Not everything will work all the time, but there is a lot to learn from the experiences of others.

Stop dreaming and start sailing!

I Will Teach You To Be Rich Book Review

I recently picked up I Will Teach You To Be Rich by Ramit Sethi. Ramit has a great website and his book on personal finance is one of the funner ones to read. This is the book to read if personal finance is still a new word for you - then this is the book for you. Ramit has a targeted audience of younger twenty somethings.  As with all knowledge - if you aren't too put off by simple examples that don't exactly mimic your situation and instead apply the principle being taught - you will definitely learn something and most likely benefit, too. 

Ramit has boasted that his $10 book has helped people save thousands, maybe even tens of thousands of dollars. Boast might not be the right word, because some people have reported these savings on one of his videocasts. In fact, armed with the scripts in the book and a bit of extra confidence, I tackled the seemingly impossible task of negotiating the removal of some rather nefarious fees from one of my credit cards.

The real beauty of reading I Will Teach You To Be Rich is that Ramit remembers that there is a large psychological piece of the money puzzle that other personal finance authors and mathematics simply ignore. Ramit realizes that people are  lazy and want the easy way out. This is not to say that Ramit has uncovered the magic silver bullet. Quite the contrary, he is not fearful in telling people that they need to buck up and do the hard thing to get their finances initially under control. Yes, that might mean some work, but then he introduces what he terms your "Conscious Spending Plan". Ramit finds it ludicrous to cut out your daily latte - IF, that latte brings you significant happiness and pleasure to your day. Instead, cut mercilessly in areas that you do not care about so that you can splurge on the things that matter most to you. There is a HUGE difference between being cheap and being frugal.

Ramit dutifully covers the basics of checking accounts and savings accounts and preparing to invest for your future. One of the key messages of the book is the 85 percent solution. Don't worry about getting it 100 percent done, or even perfect. If you only get an 85 percent solution, that is still leaps and bounds ahead of doing nothing like the rest of the population. At least you'll have something to show for it.

Sprinkled throughout the book you will also find a short piece written by some of the most admired personal finance bloggers. Entries from Get Rich Slowly and The Five Cent Nickel and The Simple Dollar among others all contributed. I appreciated the additions from these bloggers because I was familiar with them and I thought it was a rather unique way to collaborate with them in this manner.

In summary, if I was just starting out with personal finance and didn't want to fall asleep reading about asset allocation in my 401(k) or get lectured about cutting up my credit card - I'd think this was the best book out there. Understanding my current situation, having applied most of the principles, it was a good reminder of why I was doing things and in some instances, a call to further simplify them.  If you are at this stage of your own personal finance, then I'd suggest you visit Ramit's website I Will Teach You To Be Rich to learn how to advance you to the next stage of personal finance: Earning More Money. There is a definite focus on his blog and his products to help you earn more money. Inspiring as that all may be - it means nothing if you never take action. Decide today to take action!

Compound Interest Video Contest GetRichSlowly

I recently entered the Get Rich Slowly 2010 Video contest. From the website...

Get Rich Slowly has always been devoted to sensible personal finance. Since April 2006, JD Roth and other writers have shared stories about debt elimination, frugality, saving money, and practical investing with millions of readers. Now it's our readers' turn to tell their stories.

We are calling on real people like you to enter the contest by submitting a 2 minute-or-less video in one of two categories: 1) Personal Finance Tips and 2) Success Stories.

I was really excited to enter this contest for a few reasons.
Number one was the nice cash prize motivation. Although, it may have made my ability to be creative a little bit harder because I knew that my work was going to be in a competition. And the competition is really good!  You can check out the latest videos that have been submitted in the contest and learn a lot of cool tips or be inspired by some really great success stories.

This is my entry into the contest and just so happens to be the first official video that I have posted to YouTube. It's not my first foray into making movies on my computer. I am definitely still an amateur, but I have had the opportunity to put together and author a few movies that involved splicing clips of music, voice, pictures and video. I didn't do any acting in this little short piece. There just was not enough time!



I chose the topic of compound interest because it is one of the fundamental principles to finance. Interest can make or break you. If you are in debt you need to know how easily you can be a slave for the rest of your life. If you are saving money you need to understand why it is so important to start saving right now!


One of the first rules of successful personal finance is to pay yourself first. What does it mean to pay yourself first? It means your most important and your first step after getting paid should be to put money away for your future self. Save money for your future. Save for your retirement. Save for the days that you will not be working. Establishing the habit early in life will ensure you a comfortable lifestyle later in life.

Hope you liked it! Let me know if you have ideas or suggestions on the video. Or please, if you have a personal experience with compound interest that you would like to share - feel free to do so, in the comments below.

How to get Two Tax Refunds In One Year

Sounds tantalizing, doesn't it? Two tax refunds?! My tastebuds begin to buzz and I can smell the smoke coming from my pockets as they almost start to burn just thinking about receiving two tax refunds in one year. Is it legal? How can it be possible?

This year, I received my two tax return refunds in the same week. First, I received my 2009 tax refund via direct deposit, and second, my 2008 tax refund deposited back into my savings account after sitting in a fat one year certificate of deposit. Okay, so that sounded a bit anticlimactic, but when I look at my savings account it just feels awesome. My opportunities this year are two fold that of last year. Many people ask the question, "What should I do with my tax return?" The answers are varied and range from blowing it all on fun and gadgets to paying down debt. Some people already have mentally spent their tax returns even before they hit the bank.

Last year, I had the unique opportunity of delaying my gratification of receiving my 2008 tax refund in exchange for a special one year CD with a fat rate of 5.7%, available only through my local credit union. Back in 2005 my online savings account was earning me 5%, but in 2009, it was hardly even 1%. The offer of 5.7% was a steal of a deal. The conditions were that the CD had to be funded with your tax return refund. I was so glad that I didn't already have my refund spent mentally or on credit! 

How Should I Spend My Tax Return?

Around tax time a lot of people start asking the question, "What should I do with my tax refund?" If you feel lucky enough to be getting a tax refund, or your personal savings has been piling up this year, you are not alone. 


The markets were undeniably devastated in 2008. The precipitous fall in stock prices scared people so bad that they fled the market in droves. For many people, they looked outside and saw that it was raining and decided that it was finally time to start saving for a rainy day. The rain fell so hard that the personal savings rate, as compiled by the Bureau of Economic Analysis, started growing at a rapid rate. Consumer spending during 2009 has also dropped considerably. 

Is this a good thing that Americans are saving more? Maybe. With all this extra cash you can finally build up your emergency fund, or boost your other savings goals. But are Americans really saving more – or just momentarily spending less? What is happening to those savings? If the extra money is just sitting in your checking account, it will likely float away when the economic weather improves. Stashing large sums in your savings account, besides for an emergency fund, isn't very practical right now, either. Your money should have a purpose or a goal. Make money work for you! If it is for retirement, get it back out there into that crazy rollercoaster stock market. Missing out on 2009 gains in the stock market only served to exacerbate the losses from 2008. 


Do you have debt? Get to work paying it down if it is an adjustable rate. Look into getting your debt refinanced, too. Interest rates are lower now than they have been in years. The future of interest rates will be going up only too soon. Now is the time to start a Dave Ramsey debt Snowball not a new LCD flat screen.


Because interest rates are so low, Certificate of Deposits, CDs, are dismal places to lock up your money. I shudder to think that my cash might only be earning a paltry 2% for the next few years once interest rates start rising again. When interest rates are high, debt is expensive, and saving pays nice dividends. When interest rates are low, debt is cheap, and saving pays poor dividends.

What you should do with your money today largely depends on current interest rates and future projections of those rates.


 

 

 

What can Disney's Pixar UP! teach us about Personal Finance?

Last summer we went to see the latest Disney Pixar movie: Up!  Wonderful show. I was excited to see that Carl and Ellie had a goal to travel and fulfill their dreams. It was not just a wish – it was a goal. They had a jar and worked and slowly their savings grew. Ultimately, as many of us know all too well, that jar had to be broken for a rainy day over and over again throughout their lives. Sadly, their goal became a wish and drifted out of reach.

Drifting was what my savings did for years. I was lucky one year and with the help of a good friend I opened up my Roth IRA for the first time. Another year, I allowed a fast talking salesman to part with my money. Other years I played the stock market, paid down student loans, or traveled.
I resolved to be a better saver after years of ‘saving’ with nothing to show for it. With the help of some good books, blogs, and friends, I have learned what it means to be a successful saver – someone that knows how, why, and where to save.

1)    Save Regularly
I accomplished this step by “paying myself first” or automatically deducting or transferring a portion of every paycheck into my savings account before anything else.
After establishing the saving habit, many of you will be inspired to create a debt snowball. That is great. But you can also create a savings snowball, too. Saving regularly is how you save successfully.

2)    Create Savings Goals
Goals, as in plural. Originally, when I only had one savings jar, like Carl and Ellie, it became the solution whenever any problem or opportunity arose. I learned that multiple goals are needed to address multiple events in life. Now, when I come home from Europe with an empty travel jar, there is tremendous peace of mind in having a full “Rainy Days” jar that can repair my broken and leaking water heater. Saving regularly, and with purpose is why you save.

3)    The Right Place at the Right Time
Where does all my money go? An IRA, money market, CD, high yield savings, rewards checking account.  Pretty much anywhere but my mattress. I have learned that in an emergency you need to get your money flowing faster than water out of broken pipes - so I put mine in a high yield savings account. Hopefully, your retirement is years away because you started saving young, right? So lock it up in an IRA or 401(k). Successful savers know where to put their money.
Learning the importance of saving money is an essential first step in declaring your financial independence. Along the way to achieving that independence it is equally important to know how to save, why to save, and where to save. Because saving regularly, with purpose, in the right places will make you a successful and happy saver.

What makes you a happy saver?

The Declaration of Financial Independence

One of the first steps to climbing out of the hole of debt or straightening out the wayward course of your finances is to wake up one day and decide that enough is enough!  From this day forward you will fight a battle against the old way of doing things that lead you to spend money you do not have. Today you will declare your financial independence!

And the people over at ING Bank have made that possible. They have a blog and a website where savers unite and you can sign the Declaration of Financial Independence. I enjoy banking with ING. They are my favorite online bank and they have offered very competitive savings rates. One of the most handy features they have is the ability to add 'sub-accounts' and nickname them. I have my standard FREE checking and HIGH interest rate savings accounts, but I also have five, yes 5, other savings accounts. Some are named, "3-month emergency fund", "Next Car Fund", and my favorite even though it is empty right now, "Vacation Fund."

As the money rolls in from each paycheck it gets automatically divided up into each account. No more tracking what each goal was worth in Excel. Just simple and fun budgeting. If you think you would like to try out an account or two or three over at ING, just email me and I can send you a referral link. Right now, if you sign up on a referral link, you will receive a $25 bonus. And I get a bonus of $10, too. Win, win.

My Favorite Deal Sites

An integral part of my frugal nature is to buy things I want on when they are on sale. I rarely pay full price on my wish list. This does two things for me. One - it ultimately leaves items on my list for quite some time. This forces me to really consider whether I really want the item, or if I just wanted it in passing one day and can really do without. Two - I end up spending less than I anticipated which allows me the freedom to buy more things on the wish list than the original budgeted amount would have allowed. This system has worked for me on numerous occasions. I am happy with the purchases that I do make and get to make more of them than I usually anticipate.

How do I do it? I browse around deal sites and keep a section of my bookmarks reserved for "Deals".

Almost daily I stop by Woot! and see what they are offering as their daily deal. The real draw for me to their site is more my daily dose of humor than for shopping for a new gadget or thing. Woot! always provides an interesting product description that can leave you smiling for hours. They run their site on the impulse buy because their deals are only up for one day. Through their continued success they have expanded into five different venues. Shirts, Kids, Wine, and a portal at Yahoo! Shopping.
In the few years I have been stopping by - I have only purchased something that happened to be on my wish list. And this has only happened three or four times. It doesn't help your frugal nature to visit if you succumb to the impulse buy temptation. I once purchased some USB hubs and they mostly gathered dust. :(

Another daily visit goes to SlickDeals. This site is forum based with user submitted material. Once a thread becomes more active it can get promoted and if the deal is 'Hot' enough it can land on the front page for all to partake. This site is a great resource for finding decent deals on all types of products from all types of stores - both brick and mortar and online versions. It can also serve as a great place to find out what you should expect to be paying for a future purchase, finding freebies like magazine subscriptions, software free after rebate, etc.

I recently picked up a cordless drill and impact drill from Home Depot because I was alerted to a special deal and rebate combination that I would not have found by browsing the store in person or online.
The greatest benefit I derive from Slickdeals after finding a deal I like is to follow the commenters. They often have extra information and tips that has proved invaluable for me.

What if you know what you want to buy and are ready to purchase? RetailMeNot is the place to visit right before you place your order. You can check for coupon codes for 10% off or free shipping codes. This has saved me a bunch of money on several occassions.

Other avenues for saving while shopping?
Microsoft is heavily promoting Bing through their generous cashback program.
Newegg is a great place to find your electronics and computer anything for great prices. Combined with Bing or Slickdeals and you will find yourself very happy indeed.
Bensbargains.net is another site like Slickdeals except each find is an individual entry and always includes a photo.
BeatMyPrice is a wonderful resource for finding the lowest price on your item.
Amazon also has joined in on the daily deals fun, too, with their gold box deals.

The thing to remember about daily deal sites is that if that item wasn't already on your wish list - you shouldn't buy it. Sales and profits are often about that unintended purchase. Just think about how many extra items you bought the last time you went to the grocery store to just pick up some eggs and milk. You came home with two more bags of stuff, right? So remember to use these links as a resource. Otherwise, you may find that you are a valuable resource to those companies who keep offering you unbelievable deals.

What are your favorite deal sites? Where have you saved the most money? Where have you fallen victim and spent more than you should? :)