About two months ago, I let my family and friends know that I decided to do a "giftless" Christmas this year. My thinking was, if the entire nation is struggling financially, there is no point in making things any worse than what they already were. And as hard as it has been, because I love Christmas time and shopping for the most "thoughtful" gift I can find, I have been successfully been able to stay my course. I have made every effort to avoid the dreaded trap of "oh it's on sale" and even though my head keeps saying "wow, this person would love that, or that person could really use this", I am pretty proud of my ability to control myself and keep the idea of the "giftless" Christmas in full effect.
Now what I noticed is this: during the Holidays friends and family ask a lot of questions.....and come to think of it, so do strangers. It's usually "Happy Holidays, are you done with your shopping yet?' or "Merry Christmas, only 5 more days left, did you get everything you wanted yet?" And this year, I have made it my mission to pass on the idea of the "Giftless" Christmas.... So everytime I get one of these questions, I explain that "I'm not doing gifts this year" and usually I get this look of "how could you?" or the usual comment is "oh, my kids would be so mad at me if I did that". And the more and more I got these types of looks or comments the more I thought about what Christmas has become.
Christmas isn't "Christmas" anymore. It's the "shopping time" or "sale holiday" or "gift giving or getting time". We as a people have lost so much perspective about what the holidays are supposed to mean. So as a result of my little experiement, I have decided to change my mentality. Because this year and every year before this, has been a GIFT, regardless of what was in that box that was wrapped so nicely. I don't mean the gadgets and the gizmos (everyone who knows me, knows I love my techy stuff), I truly mean the time you spend with your loved ones.
I was looking through pictures of last years Christmas and I was remembering my sister laughing because she had Plantains under the tree by accident, and my niece singing to music, and my nephew goofing around with my other half. I remember my dad showing up at some point, asking for his usual cup of soda, everyone telling him it's bad for him and my mom bringing her awesome food to the table as we enjoyed a little cocito that was my cousins recipe. What I remember most of last year, was the time we spent together as we walked around Rockefeller center, which happened to be the first time my brother in law had ever been there during the holidays. I also remember that my younger sister and her fiance weren't there and how we all felt their absence.
My point is this. This Christmas season for us is so much more about family and friends than anything else. And, honestly, it took, this idea of not buying gifts to make me really realize it, and also as I write this, to realize that it was never about the gifts anyway. Yes it's fun to see their faces when they open something that you know they really wanted, and it's great to feel that other people took the time to do something thoughtful for you in return but I think we have lost the true meaning of Christmas.
In the end, I have found it again and in the process, have saved myself and my little family even tougher financial times this coming year. When I open my credit card statements, the balance will have decreased for the first time in years and when i look at our bank statements, I will not see extra gas purchases for trips to the mall. And I am hopeful that this little idea of "RE-GIFTING" Christmas back to ourselves will catch on, so that others may truly experience the feeling of satisfaction I have right now, as well as in the future.
Happy Holidays to everyone, and a VERY Happy New Year.
Irene M Cruz
Paycheck Distribution Coaching....
Please follow us at www.facebook.com/paycheckdistributioncoach
twitter and linked in IreneMCruz
Wednesday, December 22, 2010
Monday, December 6, 2010
Organization of Receipts-Paycheck Distribution Coaching Style!
Anytime you purchase a product or service your bound to get a receipt right? Well most people just throw them away (especially if they are for small items) and a lot of the time the big ticket item receipts get lost in the shuffle. Now I know there are those of you out there who are organzied enough to keep your receipts and use them to your benefit (for budgeting purposes), if this includes you, keep reading you might find a simple tip that can help you further. So lets start with the simple stuff:
1. ASK for a receipt! Every time you purchase something! There are many places that don't automatically give you a receipt so you need to ask. EVERY TIME!
2. KEEP ALL OF YOUR RECIEPTS! This includes ALL of the small ticket items too. I don't care if it's for $1.00 or $10,000.00. If you pay cash, check, credit card, or debit doesn't matter. KEEP them all.
3. Put a note on the receipt at the register!- This is handy because you know why your buying the item at the time you bought it. A lot of times, you can get home, and weeks later when your organizing of just cleaning off your night stand, you can look at a receipt and wonder.....what did I buy and why? There are basically 5 different categories for your receipts. Food, Entertainment, Everyday (like Gas or tolls), Education, and Debt. See a detailed explanation below:
a. Food- now this can be groceries or it can be eating out so make sure you specify. Any time you don't cook at home it's considered eating out so they need to be counted seperately. Oh and don't forget your daily coffee in this equation. This category includes anything that you drink or eat when your NOT at a bar or at the movies.
b. Entertainment- this is play time. So if you like to go to the bar on thursdays, the movies on fridays, bowling on saturdays or anything else that would cost you money for fun, that's what this category is for.
c. Everyday- this is the necessities category. Like gas for your car, the bus or train pass, taxi fare, tolls to get to and from work. It also includes the bigger things like Mortgage/rent, car payments, utilities, cable, internet, phone, and other things that are needed for everyday living. If you utilize interent banking, print out the receipt that you get for paying your bill online! You will understand why soon.
d. Education- now wether your paying for your childs education or your own, don't forget to include any books, cd's, or dvd's that you use for that purpose....and NO the latest Harry Potter book doesn't qualify. If you take seminars or webinars....don't forget to include these too.
e. Debt-this would include any debt payments (don't include your car payment or your mortgage in here). This would be credit card debt or line of credits that you are paying.
Now that we have our categories figured out for each receipt let's move on to how to organize them. Some of you have heard of the 6 jar method for your money. Well after much consideration and a bit of personal troubleshooting of this method, I realized that the jars are more useful for receipts instead of money. And I'm sure you will understand why in a moment.
Once you have saved all of your receipts....and categorized them as you get them by putting your little note on them at the register....now it's time to seperate them into your 5 categories. But where do you put them? Some use file folders, other use accordian style folders. I suggest you use Jars. Jars are easier to fill and with them being out in the open, it keeps your goals fresh in your mind.
So, if you like the dollar store, go pick up 5 Generic Jars that you can put a sticker on (just make sure it's big enough to hold your receipts for a while). It is preferred that they are clear and see through so you can see your progress! Take each sticker and mark it with a category and stick it on the jar (make sure it's nice BIG lettering so you can't mistake each jar when you come home). And take another bigger sticker (white) and put it on the back of the jar with each month and a line....So if you start in November, put November ___________ then December ____________ and so on....if you move into another year, make sure you mark it for that year (this is for tax purposes later)
Now that you have kept all of your receipts, you have categorized them, AND you have your jars to store them it's time for the next step. EVERY DAY that you come home, I want you take out all of your receipts from your pockets or your purse, where ever you keep them and place each receipt into it's jar. Easy enough so far right?
Now here comes the bigger work. On the last day of every month, once all of your receipts have been collected for the day, I want you to take one jar at a time and add up all of the receipts for that category and put that total $ amount on the back of the jar for that month. Once all of your receipts for that jar have been added up, take a stapler and staple them together at the TOP of the receipt (this will make it easy for you to go through them later if need be and it will keep your next months receipts seperate from the old ones so you can keep using the jar efficiently).
You may be asking yourself, What is this going to do for you?...Well, it's going to give you a BIG picture of where EVERY penny of your money is going. For a lot of you , it WILL be a HUGE eye opener! Some of you may see that $400 every month is going towards entertainment, or your paying $600 a month towards debt....or that your everyday expenses are more than 60% of your total income. The point of this system is to make you more aware of where your money is being spent and hopefully help you make wiser choices in the future.
I know some of you are saying "I can use a program do that or that's what Quickbooks" is for." this may be the case for some of you, but most people don't really use these programs because they are not easy to follow and they take too much time. And what happens is, 6 months pass and then you have to sit down and input EVERYTHING for the last 6 months....and frankly, from my experience, most people don't bother.
This system is created SPECIFICALLY to keep you on track and mindful of your expenses while keeping it simple and efficient.
Paycheck Distribution Coaching helps make your money work harder for you than you do for it! I hope this helps you achieve at least a little bit of financial success!
Please follow me at... http://www.irenemcruz.com/ or www.facebook.com/paycheckdistributioncoach
Linkedin or Twitter (irenemcruz)
1. ASK for a receipt! Every time you purchase something! There are many places that don't automatically give you a receipt so you need to ask. EVERY TIME!
2. KEEP ALL OF YOUR RECIEPTS! This includes ALL of the small ticket items too. I don't care if it's for $1.00 or $10,000.00. If you pay cash, check, credit card, or debit doesn't matter. KEEP them all.
3. Put a note on the receipt at the register!- This is handy because you know why your buying the item at the time you bought it. A lot of times, you can get home, and weeks later when your organizing of just cleaning off your night stand, you can look at a receipt and wonder.....what did I buy and why? There are basically 5 different categories for your receipts. Food, Entertainment, Everyday (like Gas or tolls), Education, and Debt. See a detailed explanation below:
a. Food- now this can be groceries or it can be eating out so make sure you specify. Any time you don't cook at home it's considered eating out so they need to be counted seperately. Oh and don't forget your daily coffee in this equation. This category includes anything that you drink or eat when your NOT at a bar or at the movies.
b. Entertainment- this is play time. So if you like to go to the bar on thursdays, the movies on fridays, bowling on saturdays or anything else that would cost you money for fun, that's what this category is for.
c. Everyday- this is the necessities category. Like gas for your car, the bus or train pass, taxi fare, tolls to get to and from work. It also includes the bigger things like Mortgage/rent, car payments, utilities, cable, internet, phone, and other things that are needed for everyday living. If you utilize interent banking, print out the receipt that you get for paying your bill online! You will understand why soon.
d. Education- now wether your paying for your childs education or your own, don't forget to include any books, cd's, or dvd's that you use for that purpose....and NO the latest Harry Potter book doesn't qualify. If you take seminars or webinars....don't forget to include these too.
e. Debt-this would include any debt payments (don't include your car payment or your mortgage in here). This would be credit card debt or line of credits that you are paying.
Now that we have our categories figured out for each receipt let's move on to how to organize them. Some of you have heard of the 6 jar method for your money. Well after much consideration and a bit of personal troubleshooting of this method, I realized that the jars are more useful for receipts instead of money. And I'm sure you will understand why in a moment.
Once you have saved all of your receipts....and categorized them as you get them by putting your little note on them at the register....now it's time to seperate them into your 5 categories. But where do you put them? Some use file folders, other use accordian style folders. I suggest you use Jars. Jars are easier to fill and with them being out in the open, it keeps your goals fresh in your mind.
So, if you like the dollar store, go pick up 5 Generic Jars that you can put a sticker on (just make sure it's big enough to hold your receipts for a while). It is preferred that they are clear and see through so you can see your progress! Take each sticker and mark it with a category and stick it on the jar (make sure it's nice BIG lettering so you can't mistake each jar when you come home). And take another bigger sticker (white) and put it on the back of the jar with each month and a line....So if you start in November, put November ___________ then December ____________ and so on....if you move into another year, make sure you mark it for that year (this is for tax purposes later)
Now that you have kept all of your receipts, you have categorized them, AND you have your jars to store them it's time for the next step. EVERY DAY that you come home, I want you take out all of your receipts from your pockets or your purse, where ever you keep them and place each receipt into it's jar. Easy enough so far right?
Now here comes the bigger work. On the last day of every month, once all of your receipts have been collected for the day, I want you to take one jar at a time and add up all of the receipts for that category and put that total $ amount on the back of the jar for that month. Once all of your receipts for that jar have been added up, take a stapler and staple them together at the TOP of the receipt (this will make it easy for you to go through them later if need be and it will keep your next months receipts seperate from the old ones so you can keep using the jar efficiently).
You may be asking yourself, What is this going to do for you?...Well, it's going to give you a BIG picture of where EVERY penny of your money is going. For a lot of you , it WILL be a HUGE eye opener! Some of you may see that $400 every month is going towards entertainment, or your paying $600 a month towards debt....or that your everyday expenses are more than 60% of your total income. The point of this system is to make you more aware of where your money is being spent and hopefully help you make wiser choices in the future.
I know some of you are saying "I can use a program do that or that's what Quickbooks" is for." this may be the case for some of you, but most people don't really use these programs because they are not easy to follow and they take too much time. And what happens is, 6 months pass and then you have to sit down and input EVERYTHING for the last 6 months....and frankly, from my experience, most people don't bother.
This system is created SPECIFICALLY to keep you on track and mindful of your expenses while keeping it simple and efficient.
Paycheck Distribution Coaching helps make your money work harder for you than you do for it! I hope this helps you achieve at least a little bit of financial success!
Please follow me at... http://www.irenemcruz.com/ or www.facebook.com/paycheckdistributioncoach
Linkedin or Twitter (irenemcruz)
Wednesday, October 20, 2010
Considering Personal Finance Software?
Using a computer to track your money and investments used to mean just choosing software and getting started. It's not that simple anymore.
For the first time in years, you might wonder if you can bypass using personal software altogether and instead use a third-party financial tracking website or just use your bank's or brokerage's site. Here's the irony: Financial tools such as Quicken are supposedly easier to use, and trying to choose which product is best for you is increasingly complex. "There are more choices, that are growing increasingly more powerful each year plus more options from banks and brokerages and a number of other Web applications but none of them offer you the coaching and expertise you need to make the more difficult decisions.
Here is an analysis of the four major ways you can use your computer to monitor spending and investments. You'll discover the advantages and disadvantages of each method so you can spend less time choosing technology and more time getting your finances on track.
Solution No. 1: Quicken
They say Quicken is the gold Standard. And for those with the patience to get through it and set it up, it is. But for the rest of us, I think it complicates the process.
The upside: Quicken is an annually upgraded product backed by Intuit, it lets you create detailed budgets, as well as download all your bank and brokerage data and even see the ups and downs of your cash flow and portfolio.
For investors, Quicken is tough to beat, because it can track how much you've paid for stocks even if you've invested in the same security several times.
All your data are stored on your personal hard drive, so you can make copies yourself. And if you switch brokerage firms, you don't have to worry about losing your historical data.
The downside: Quicken is an app, and you must pay for it.
The Deluxe version costs $60. Quicken 2011 runs on computers running Windows, but the version for Apple’s Mac isn't nearly as powerful.
The online capabilities of the software, including stock quotes, expire every three years, so that forces you to update every three years.
Also, Quicken 2011 doesn't connect with any smartphones.
Solution No. 2: Other personal finance software
Microsoft dropped out of the personal financial software game, but that doesn't mean the competition is gone. Several viable rivals to Quicken exist.
The upside: Quicken's rivals focus on areas that irk some Quicken users. Moneydance, for instance, is designed to work equally well on computers running Windows as well as Macs and Linux. The software is also a bit less expensive at $50, and the part of the software that pulls online data doesn't expire. And like with Quicken, your data are stored on your hard drive so you can make copies and have access any time.
The downside: Many of the alternatives are much less polished have fewer features. Moneydance's asset allocation tool, which helps investors measure how their investments are diversified, is much less powerful than Quicken's. Another rival's software, iBank, works only on Macs and not on computers running the more popular Windows operating system. These software programs aren't free either: Moneydance costs $50, and iBank, $60.
Solution No. 3: Third-party websites
E-mail, photos and diaries are going online, so too is personal finance tracking. Personal finance websites, such as Mint.com and Yodlee MoneyCenter, are changing how many track their money. Rather than downloading your financial information to your computer, these sites pull data and store them on their own computers and make them available online. Some sites, including Wikinvest, provide websites that help you track just your investment portfolio.
The upside: All you need to check on your finances is a device with a Web browser. These sites are designed to be as simple as typing in your user names and passwords from your bank and brokerage accounts. In most cases, you can be up and running, tracking all your accounts, in just a few minutes. You can also tap your financial information from anywhere, either on a friend's computer or from your smartphone. Best of all, these sites are free.
The downside: The first HUGE hurdle is security. You'll need to enter your user names and passwords from all your financial accounts to get the most value. The providers all say they have security safeguards in place. But so have the Madoffs of the world.
In addition, because information sits on the providers' site, if that website goes down or your Internet connection is severed, you can't access it. These sites also lack a way for longtime users of financial software to import past transactions from software such as Quicken.
There's also no guarantee you can always get your information. There have been cases of smaller rivals that have discontinued their websites, leaving users stranded. And they still lack one main element, ASSISTANCE or COACHING.
Solution No. 4: Bank and brokerage websites
Seeing the advances in personal financial software and websites, banks and brokerages are beefing up their own sites so people won't switch.
The upside: If you want the least amount of work, bank and brokerage sites are tough to beat. All your information is already culled and imported. Some brokerages, such as Vanguard, will even let you track your portfolios at other financial institutions. Also, thanks to new IRS rules that kick in in 2011, these sites are required to track your cost basis on new investments, which is one of the biggest reasons why people use personal financial software and sites in the first place. These sites are free.
The downside: Unless you have all your money with one firm, the utility of these sites can be limited. The brokerage sites, for instance, can't help you create a budget with your checking account.
But the biggest drawback is that your institution controls your data, not you. If you switch banks or move to a brokerage with lower commissions, you could lose data on many historical transactions.
What's the bottom line? If you're worried about security and want tight control over your historical financial data, Quicken and other personal financial software apps are good choices. Quicken is the best-known app , but doesn’t mean it’s the best solution for you.
If you're looking to just keep a quick tab on all your financial accounts, including while traveling with your smartphone, online sites might be best.
And if you want little hassle, and want only the very basics, then your bank or brokerage websites may be just fine.
In the end all of these solutions will help you keep track of your money…but NONE of them will help you with the most important element, Self-control and understanding why your budget should consist of X, Y, and Z. Paycheck Distribution Coaching doesn’t want any of your passwords or account numbers and we don’t leave you alone to “figure” out what budget is best for you and your situation. We are there to hold your hand through the process and help you make the best decisions for your financial situation and to help you meet your goals.
Please follow us at www.facebook.com/paycheckdistributioncoach and http://www.irenemcruz.com/
For the first time in years, you might wonder if you can bypass using personal software altogether and instead use a third-party financial tracking website or just use your bank's or brokerage's site. Here's the irony: Financial tools such as Quicken are supposedly easier to use, and trying to choose which product is best for you is increasingly complex. "There are more choices, that are growing increasingly more powerful each year plus more options from banks and brokerages and a number of other Web applications but none of them offer you the coaching and expertise you need to make the more difficult decisions.
Here is an analysis of the four major ways you can use your computer to monitor spending and investments. You'll discover the advantages and disadvantages of each method so you can spend less time choosing technology and more time getting your finances on track.
Solution No. 1: Quicken
They say Quicken is the gold Standard. And for those with the patience to get through it and set it up, it is. But for the rest of us, I think it complicates the process.
The upside: Quicken is an annually upgraded product backed by Intuit, it lets you create detailed budgets, as well as download all your bank and brokerage data and even see the ups and downs of your cash flow and portfolio.
For investors, Quicken is tough to beat, because it can track how much you've paid for stocks even if you've invested in the same security several times.
All your data are stored on your personal hard drive, so you can make copies yourself. And if you switch brokerage firms, you don't have to worry about losing your historical data.
The downside: Quicken is an app, and you must pay for it.
The Deluxe version costs $60. Quicken 2011 runs on computers running Windows, but the version for Apple’s Mac isn't nearly as powerful.
The online capabilities of the software, including stock quotes, expire every three years, so that forces you to update every three years.
Also, Quicken 2011 doesn't connect with any smartphones.
Solution No. 2: Other personal finance software
Microsoft dropped out of the personal financial software game, but that doesn't mean the competition is gone. Several viable rivals to Quicken exist.
The upside: Quicken's rivals focus on areas that irk some Quicken users. Moneydance, for instance, is designed to work equally well on computers running Windows as well as Macs and Linux. The software is also a bit less expensive at $50, and the part of the software that pulls online data doesn't expire. And like with Quicken, your data are stored on your hard drive so you can make copies and have access any time.
The downside: Many of the alternatives are much less polished have fewer features. Moneydance's asset allocation tool, which helps investors measure how their investments are diversified, is much less powerful than Quicken's. Another rival's software, iBank, works only on Macs and not on computers running the more popular Windows operating system. These software programs aren't free either: Moneydance costs $50, and iBank, $60.
Solution No. 3: Third-party websites
E-mail, photos and diaries are going online, so too is personal finance tracking. Personal finance websites, such as Mint.com and Yodlee MoneyCenter, are changing how many track their money. Rather than downloading your financial information to your computer, these sites pull data and store them on their own computers and make them available online. Some sites, including Wikinvest, provide websites that help you track just your investment portfolio.
The upside: All you need to check on your finances is a device with a Web browser. These sites are designed to be as simple as typing in your user names and passwords from your bank and brokerage accounts. In most cases, you can be up and running, tracking all your accounts, in just a few minutes. You can also tap your financial information from anywhere, either on a friend's computer or from your smartphone. Best of all, these sites are free.
The downside: The first HUGE hurdle is security. You'll need to enter your user names and passwords from all your financial accounts to get the most value. The providers all say they have security safeguards in place. But so have the Madoffs of the world.
In addition, because information sits on the providers' site, if that website goes down or your Internet connection is severed, you can't access it. These sites also lack a way for longtime users of financial software to import past transactions from software such as Quicken.
There's also no guarantee you can always get your information. There have been cases of smaller rivals that have discontinued their websites, leaving users stranded. And they still lack one main element, ASSISTANCE or COACHING.
Solution No. 4: Bank and brokerage websites
Seeing the advances in personal financial software and websites, banks and brokerages are beefing up their own sites so people won't switch.
The upside: If you want the least amount of work, bank and brokerage sites are tough to beat. All your information is already culled and imported. Some brokerages, such as Vanguard, will even let you track your portfolios at other financial institutions. Also, thanks to new IRS rules that kick in in 2011, these sites are required to track your cost basis on new investments, which is one of the biggest reasons why people use personal financial software and sites in the first place. These sites are free.
The downside: Unless you have all your money with one firm, the utility of these sites can be limited. The brokerage sites, for instance, can't help you create a budget with your checking account.
But the biggest drawback is that your institution controls your data, not you. If you switch banks or move to a brokerage with lower commissions, you could lose data on many historical transactions.
What's the bottom line? If you're worried about security and want tight control over your historical financial data, Quicken and other personal financial software apps are good choices. Quicken is the best-known app , but doesn’t mean it’s the best solution for you.
If you're looking to just keep a quick tab on all your financial accounts, including while traveling with your smartphone, online sites might be best.
And if you want little hassle, and want only the very basics, then your bank or brokerage websites may be just fine.
In the end all of these solutions will help you keep track of your money…but NONE of them will help you with the most important element, Self-control and understanding why your budget should consist of X, Y, and Z. Paycheck Distribution Coaching doesn’t want any of your passwords or account numbers and we don’t leave you alone to “figure” out what budget is best for you and your situation. We are there to hold your hand through the process and help you make the best decisions for your financial situation and to help you meet your goals.
Please follow us at www.facebook.com/paycheckdistributioncoach and http://www.irenemcruz.com/
Wednesday, June 9, 2010
8 things your Financial Planner WON'T TELL YOU!!
More people are flocking to financial planners these days, convinced they need professionals to help them navigate the market's stormy seas.Unfortunately, not all planners are created equal. Some are thinly disguised investment salespeople, and many don't have the background or inclination to offer true, comprehensive financial advice. So before you sign on with a planner, or implement the advice offered, make sure you know these secrets the planner may be keeping. Such as:
1. I have no qualifications for this job.
Anyone can claim to be a financial planner. There are no education, experience or ethical requirements and no government agency that regulates planners as planners. Of the estimated 250,000 people calling themselves financial planners, only about 56,500 have earned the Certified Financial Planner mark -- the best-known financial planning designation. Fewer still are a Chartered Financial Consultant (ChFC) or Personal Financial Specialist (PFS), the financial planning designations offered by the insurance and accounting industries, respectively. Even if your planner has one of these designations, you're not home free. It generally takes years of experience and ongoing education -- not to mention integrity and ethics -- to become a truly good planner.
2. I have no obligation to put your interests ahead of my own.
Real financial planners take seriously their duties as fiduciaries -- professionals who are trusted to think of their clients' needs first and foremost. Most of those who call themselves planners, though, are really in the business of selling investments. As such, they may face scrutiny from various government agencies over their sales tactics. But instead of being obligated to create the best financial plan for you, they're only required by law not to sell you something that's utterly unsuitable.
3. I'm not being paid the way you think.
"Commissions" became a dirty word in the 1990s, when even the big brokerage houses like Merrill Lynch decided that people would rather pay fees than have advisers compensated by commissions for the investments they sold. True fee-only financial planners are still a rare breed, however. The leading association for fee-only planners, NAPFA, has fewer than 800 members. Most financial advisers still get some or most of their income from commissions, according to FPA. Many finesse the situation by calling themselves "fee-based" planners, or by simply avoiding the issue of how they get compensated.Commissions aren't bad, per se. But they do create a built-in conflict of interest. Your planner should volunteer information about how she gets paid. If you have to ask, you should at least get a straight answer.
4. I'm looking at only one small portion of your overall finances.
A good financial planner looks at every aspect of his or her clients' financial situations, from their budgets to their estate plans. That's the only way to give truly customized, comprehensive planning advice. Many of those calling themselves financial planners, however, focus on one narrow aspect of a client's monetary condition -- usually the area that corresponds with whatever financial training they've received.
5. The only products I understand are the ones I'm selling.
The old saw goes like this: When all you have is a hammer, everything looks like a nail. Advisers who lack training in comprehensive financial planning often know only what their companies tell them about the various investments they're told to sell. An insurance agent, for example, might sing the praises of variable annuities -- not realizing that annuities should only be considered after tax-favored retirement options, such as 401(k)s and IRAs, have been exhausted and less expensive alternatives, such as index funds or tax-efficient mutual funds, have been considered. I still remember a conversation a few years ago in which an insurance agent launched into a passionate defense of variable annuities, only to confess -- after much probing -- that he had never heard of alternatives like tax-efficient mutual funds and didn't know how much could be invested in a 401(k) or Roth IRA. Likewise, a stockbroker might push individual stocks or mutual funds, when the best use for your money might be increasing your emergency fund or paying down your mortgage.
6. I can't beat the market.
Many people think a financial planner can help them supercharge their investment returns. Many of the best financial planners, however, believe they're doing well if their clients' portfolios simply match the market averages. They don't even try for more, convinced that such efforts are a waste of their time and effort -- and of their clients' money. Those who do try often fall woefully short. The more they trade, the more money they spend in commissions and fees, and the farther they fall behind the market benchmarks. Good financial planners concentrate on making sure their clients are well-diversified and that other aspects of their finances -- their budgets, credit ratings, insurance coverage, tax situations, estate plans and retirement accounts -- are in the best shape possible. In contrast to the adviser who's trying to keep secrets, however, these good planners are upfront about the fact that they're not trying to beat the market.
7. I won't save you from yourself.
The best financial planners didn't let their clients overdose on technology stocks during the 1990s and insisted they stay invested during the roller-coaster ride of the past few years. The worst encouraged their clients to chase every hot trend, whether it was dot-coms or excessive investments in real estate. Many planners fall somewhere in between -- trying to make the case for diversification and common sense, but lacking the confidence and experience to insist their clients not make suicidal moves.
8. I have a checkered past.
Sooner or later, most financial planners will have a run-in with an unhappy client. If those disputes regularly escalate to lawsuits, however, or your adviser has been disciplined by a regulatory board, that's a red flag. The worst offenders skip from job to job or industry to industry, hoping their past never catches up with them.
I hope this was a true eye opener for most of you.....
In conclusion....Financial Planners invest your money and most don't do much more than that...some may try to sell you a financial product such as Insurace, Mortgage or Mutual Fund and even a smaller amount actually look at the most basic of your finances, where is your paycheck going? Paycheck Distribution Coaching was created with this in mind....How can you know where you need to go if you don't know where your coming from?
please feel free to comment and follow me on www.facebook.com/paycheckdistributioncoach
1. I have no qualifications for this job.
Anyone can claim to be a financial planner. There are no education, experience or ethical requirements and no government agency that regulates planners as planners. Of the estimated 250,000 people calling themselves financial planners, only about 56,500 have earned the Certified Financial Planner mark -- the best-known financial planning designation. Fewer still are a Chartered Financial Consultant (ChFC) or Personal Financial Specialist (PFS), the financial planning designations offered by the insurance and accounting industries, respectively. Even if your planner has one of these designations, you're not home free. It generally takes years of experience and ongoing education -- not to mention integrity and ethics -- to become a truly good planner.
2. I have no obligation to put your interests ahead of my own.
Real financial planners take seriously their duties as fiduciaries -- professionals who are trusted to think of their clients' needs first and foremost. Most of those who call themselves planners, though, are really in the business of selling investments. As such, they may face scrutiny from various government agencies over their sales tactics. But instead of being obligated to create the best financial plan for you, they're only required by law not to sell you something that's utterly unsuitable.
3. I'm not being paid the way you think.
"Commissions" became a dirty word in the 1990s, when even the big brokerage houses like Merrill Lynch decided that people would rather pay fees than have advisers compensated by commissions for the investments they sold. True fee-only financial planners are still a rare breed, however. The leading association for fee-only planners, NAPFA, has fewer than 800 members. Most financial advisers still get some or most of their income from commissions, according to FPA. Many finesse the situation by calling themselves "fee-based" planners, or by simply avoiding the issue of how they get compensated.Commissions aren't bad, per se. But they do create a built-in conflict of interest. Your planner should volunteer information about how she gets paid. If you have to ask, you should at least get a straight answer.
4. I'm looking at only one small portion of your overall finances.
A good financial planner looks at every aspect of his or her clients' financial situations, from their budgets to their estate plans. That's the only way to give truly customized, comprehensive planning advice. Many of those calling themselves financial planners, however, focus on one narrow aspect of a client's monetary condition -- usually the area that corresponds with whatever financial training they've received.
5. The only products I understand are the ones I'm selling.
The old saw goes like this: When all you have is a hammer, everything looks like a nail. Advisers who lack training in comprehensive financial planning often know only what their companies tell them about the various investments they're told to sell. An insurance agent, for example, might sing the praises of variable annuities -- not realizing that annuities should only be considered after tax-favored retirement options, such as 401(k)s and IRAs, have been exhausted and less expensive alternatives, such as index funds or tax-efficient mutual funds, have been considered. I still remember a conversation a few years ago in which an insurance agent launched into a passionate defense of variable annuities, only to confess -- after much probing -- that he had never heard of alternatives like tax-efficient mutual funds and didn't know how much could be invested in a 401(k) or Roth IRA. Likewise, a stockbroker might push individual stocks or mutual funds, when the best use for your money might be increasing your emergency fund or paying down your mortgage.
6. I can't beat the market.
Many people think a financial planner can help them supercharge their investment returns. Many of the best financial planners, however, believe they're doing well if their clients' portfolios simply match the market averages. They don't even try for more, convinced that such efforts are a waste of their time and effort -- and of their clients' money. Those who do try often fall woefully short. The more they trade, the more money they spend in commissions and fees, and the farther they fall behind the market benchmarks. Good financial planners concentrate on making sure their clients are well-diversified and that other aspects of their finances -- their budgets, credit ratings, insurance coverage, tax situations, estate plans and retirement accounts -- are in the best shape possible. In contrast to the adviser who's trying to keep secrets, however, these good planners are upfront about the fact that they're not trying to beat the market.
7. I won't save you from yourself.
The best financial planners didn't let their clients overdose on technology stocks during the 1990s and insisted they stay invested during the roller-coaster ride of the past few years. The worst encouraged their clients to chase every hot trend, whether it was dot-coms or excessive investments in real estate. Many planners fall somewhere in between -- trying to make the case for diversification and common sense, but lacking the confidence and experience to insist their clients not make suicidal moves.
8. I have a checkered past.
Sooner or later, most financial planners will have a run-in with an unhappy client. If those disputes regularly escalate to lawsuits, however, or your adviser has been disciplined by a regulatory board, that's a red flag. The worst offenders skip from job to job or industry to industry, hoping their past never catches up with them.
I hope this was a true eye opener for most of you.....
In conclusion....Financial Planners invest your money and most don't do much more than that...some may try to sell you a financial product such as Insurace, Mortgage or Mutual Fund and even a smaller amount actually look at the most basic of your finances, where is your paycheck going? Paycheck Distribution Coaching was created with this in mind....How can you know where you need to go if you don't know where your coming from?
please feel free to comment and follow me on www.facebook.com/paycheckdistributioncoach
Thursday, May 20, 2010
Basics of Effective Money Management (Systemized Budget) Part 1 of 2
Now that we know how important a good foundational education and true self-control is to having an effective money management system, we need to put the system in place.
Systems are used in just about every aspect of life and business. Ray Kroc created a system to build his McDonalds empire, franchising is popular due to proven systems, and a systemized budget can and will assist you in effectively managing your money correctly.
The real question is this, what systemized budget is right for me? I think we can agree that no two financial situations are the same and even if they were, each person has their own goals in mind. So when you put these two elements together we need something that is systemized yet flexible enough to accomplish the same end result. Effective Money Management.
Regardless of how you make your money, whether it be by paycheck, investment income, a social security check, or even if you own a business that pays you, in any of these cases, you have money coming in and you have to manage it effectively. So lets start with the basics and then we can tweak the numbers and percentages to fit your unique financial picture.
1. We need to calculate how much money you have coming in on a monthly basis. (we use monthly figures because most expenses are paid once a month)
a. If you get paid weekly, simply take that amount (after taxes) and multiply it by 52 and divide by 12.
b. If you get paid bi-weekly, take that amount (again after taxes) and multiply it by 26 and divide by
12. (this will give you an accurate $ amount for each month)
c. If you happen to get paid monthly, then there is no calculation needed.
2. If you are in a relationship where you share the expenses and pay the bills together then do the same
calculations in step 1 and then add the 2 totals together to get your TOTAL Monthly income.
3. Now we need to break down your expenses into categories. This makes it easier to systemize your
budget. There is usually about 6 different categories you will spend your money on every month.
a. Necessities or Everyday Life- these are examples of what belongs in this category
1. rent or mortgage
2. utilities (electricity, heat/ac, water etc)
3. phone (home and cellular)
4. food (home cooked food or groceries)
5. insurance (homeowners, auto, life, health etc)
6. car payments (lease or own)
7. minimum payments on your debt (credit cards, personal loans,)
8. banking fees (if any)
9. home alarm fees
10. transportation (can be gas for your car or bus pass or even a subway card)
b. Entertainment or Play time- again some examples
1. Eating out (even for lunch at work)
2. going to the movies
3. bowling
4. movie rentals
5. clubbing or dancing
6. club fees (playing any kind of sport)
c. Education- anything that would be considered a teaching tool or to continue your education.
1. student loans
2. seminars
3. webinars
4. book purchases
5. cd purchases (not music :) )
d. Charity- I think this is pretty self-explanatory
e. Investments or Interest Creating- this could be anything your expecting a rate of return on
that you contribute money to on monthly basis.
1. 401k or RRSP
2. savings accounts
3. real estate investments
4. IRA's
5. CD's
6. Mutual Funds
f. Debt Elimination- extra money you send to your debt to get it paid faster
Now even with a list like this and putting this money into these categories we are still missing the need for an "emergency fund" or as I like to call it "the in case of xyz" account and a "I want it soon" account. These two final categories help you eliminate the need to create more debt when these things happen.
Once you have created these categories the next thing you need to do to create a Systemized budget is to figure out what percentage of your income is being used for each category and then adjust as needed.
We will cover this adjustment and recommended percentages for each category in part 2 of the Systemized Budget portion of "Basics of Effective Money Management".
Please feel free to ask questions and comment as needed.
Follow me at www.facebook.com/paycheckdistributioncoach
Systems are used in just about every aspect of life and business. Ray Kroc created a system to build his McDonalds empire, franchising is popular due to proven systems, and a systemized budget can and will assist you in effectively managing your money correctly.
The real question is this, what systemized budget is right for me? I think we can agree that no two financial situations are the same and even if they were, each person has their own goals in mind. So when you put these two elements together we need something that is systemized yet flexible enough to accomplish the same end result. Effective Money Management.
Regardless of how you make your money, whether it be by paycheck, investment income, a social security check, or even if you own a business that pays you, in any of these cases, you have money coming in and you have to manage it effectively. So lets start with the basics and then we can tweak the numbers and percentages to fit your unique financial picture.
1. We need to calculate how much money you have coming in on a monthly basis. (we use monthly figures because most expenses are paid once a month)
a. If you get paid weekly, simply take that amount (after taxes) and multiply it by 52 and divide by 12.
b. If you get paid bi-weekly, take that amount (again after taxes) and multiply it by 26 and divide by
12. (this will give you an accurate $ amount for each month)
c. If you happen to get paid monthly, then there is no calculation needed.
2. If you are in a relationship where you share the expenses and pay the bills together then do the same
calculations in step 1 and then add the 2 totals together to get your TOTAL Monthly income.
3. Now we need to break down your expenses into categories. This makes it easier to systemize your
budget. There is usually about 6 different categories you will spend your money on every month.
a. Necessities or Everyday Life- these are examples of what belongs in this category
1. rent or mortgage
2. utilities (electricity, heat/ac, water etc)
3. phone (home and cellular)
4. food (home cooked food or groceries)
5. insurance (homeowners, auto, life, health etc)
6. car payments (lease or own)
7. minimum payments on your debt (credit cards, personal loans,)
8. banking fees (if any)
9. home alarm fees
10. transportation (can be gas for your car or bus pass or even a subway card)
b. Entertainment or Play time- again some examples
1. Eating out (even for lunch at work)
2. going to the movies
3. bowling
4. movie rentals
5. clubbing or dancing
6. club fees (playing any kind of sport)
c. Education- anything that would be considered a teaching tool or to continue your education.
1. student loans
2. seminars
3. webinars
4. book purchases
5. cd purchases (not music :) )
d. Charity- I think this is pretty self-explanatory
e. Investments or Interest Creating- this could be anything your expecting a rate of return on
that you contribute money to on monthly basis.
1. 401k or RRSP
2. savings accounts
3. real estate investments
4. IRA's
5. CD's
6. Mutual Funds
f. Debt Elimination- extra money you send to your debt to get it paid faster
Now even with a list like this and putting this money into these categories we are still missing the need for an "emergency fund" or as I like to call it "the in case of xyz" account and a "I want it soon" account. These two final categories help you eliminate the need to create more debt when these things happen.
Once you have created these categories the next thing you need to do to create a Systemized budget is to figure out what percentage of your income is being used for each category and then adjust as needed.
We will cover this adjustment and recommended percentages for each category in part 2 of the Systemized Budget portion of "Basics of Effective Money Management".
Please feel free to ask questions and comment as needed.
Follow me at www.facebook.com/paycheckdistributioncoach
Thursday, May 13, 2010
Basics of Effective Money Management (Self-Control)
The I want it now mentality comes up alot in my discussions and for good reason. We live in a very "plastic" society where most people are living way above their means by using Credit Cards to supplement their income. Now, granted there are people who just don't make enough to live on but studies show, they are the minority. The vast majority of people using up their credit cards are of the "I want it now" mentality. They see the big screen tv or the fancy car and they think the worst words I think can ever be thought when it comes to finances "I think I can afford it" and/or "I wonder if I have enough room on my credit card". These two thoughts are the downfall of most people when it comes to financial intelligence.
Paycheck Distribution Coaching has been created to help stop this vicious cycle. If you ever say or even think these words while your shopping, then your not managing your money correctly. You should KNOW you can afford something and you should KNOW the balances on your credit cards. And to take this one step further, you should KNOW how much that item will really cost you in the long run after interest is calculated on the money your borrowing to purchase it.
This is where Self-Control comes into play. Too many people use shopping as a way to make up for other deficiencies or short falls in their lives. The "I deserve it" attitude plays a huge role in this common problem. When you take a good close look at your financial situation as a whole, I'm fairly certain that you have thought these thoughts at one time or another. And as it has been said before "your past decisions are a direct result to your future problems". This is where the cycle needs to be stopped.
Most people would be surprised how easy it is to manager your income correctly. But self-control is key. If you continue to make the bad financial decisions based on the these three key thoughts then your future will continue on just as you past did. To make a change you must change the way you think and how you manage your finances. If your thinking to yourself "I have it all under control" just look at your net worth....or if you don't know that....look at the amount of debt you have and honestly tell yourself what you have to show for it.
Financial Self-Control- Practice it, Love it and it will reap great rewards, ignore it and you will continue on the path you already created. More debt, more insecurity and continued servitude.
Thoughts to avoid following:
1. "I think i can afford it"
2. "I deserve it"
3. "I think I have room on my credit card"
please follow me at www.facebook.com/paycheckdistributioncoach
Paycheck Distribution Coaching has been created to help stop this vicious cycle. If you ever say or even think these words while your shopping, then your not managing your money correctly. You should KNOW you can afford something and you should KNOW the balances on your credit cards. And to take this one step further, you should KNOW how much that item will really cost you in the long run after interest is calculated on the money your borrowing to purchase it.
This is where Self-Control comes into play. Too many people use shopping as a way to make up for other deficiencies or short falls in their lives. The "I deserve it" attitude plays a huge role in this common problem. When you take a good close look at your financial situation as a whole, I'm fairly certain that you have thought these thoughts at one time or another. And as it has been said before "your past decisions are a direct result to your future problems". This is where the cycle needs to be stopped.
Most people would be surprised how easy it is to manager your income correctly. But self-control is key. If you continue to make the bad financial decisions based on the these three key thoughts then your future will continue on just as you past did. To make a change you must change the way you think and how you manage your finances. If your thinking to yourself "I have it all under control" just look at your net worth....or if you don't know that....look at the amount of debt you have and honestly tell yourself what you have to show for it.
Financial Self-Control- Practice it, Love it and it will reap great rewards, ignore it and you will continue on the path you already created. More debt, more insecurity and continued servitude.
Thoughts to avoid following:
1. "I think i can afford it"
2. "I deserve it"
3. "I think I have room on my credit card"
please follow me at www.facebook.com/paycheckdistributioncoach
Thursday, April 29, 2010
Basics of Effective Money Management (Education)
There are six basic elements of good money management:
1. Education
2. Self-Control
3. Systemized Budget
4. Set a Goal
5. Follow through with the strategies you accept
6. Support (Emotional and Practical)
These six fundamentals are essential to keeping you on track to managing your money correctly. Lets start with Education.
The first major component to managing your money correctly is Education. In school, we learned about History, Economics, Science, Physical Fitness, Mathematics and even Literature, but what happened to Income or Paycheck managment? Most of our financial education comes from our parents or from neighbours who are willing to share their opinion based on what they have seen on TV or "heard through the grapevine". When you consider all of the information that we learn in High School and even College, the only real subject that translates into practical use is Mathetmatics. It's everywhere and in everything. When your shopping at a department store trying to figure out what 20% off of $175 is or if your trying to figure out how much mileage your really getting to that gallon. Functional math skills are essential no matter how many of us try to avoid it. Isn't it interesting that math and money are the two things that permeate every part of our lives but yet most people don't have a good grasp of either subject. This is where Paycheck Distribution Coaching steps in.
Once you have acquired basic math skills, it's time to move on to realistic and practical knowledge of money and how it really works for you. We really don't need to go into how to earn an income, that was covered by your parents when you were a child, remember the "get a good education and get a good job" speech? We have all heard it at one time or another. Some of us followed it and others went the way of the wealthy, "get a practical, real life education and work for yourself making your money work harder for you". In either case, there is a paycheck coming in, so how do you manage it correctly?
Managing your money correctly requires practical use of a systemized budget. But lets start with the basics. Someone once said "what you focus on expands" so let's get focused on your money and how to make it work harder for you than you have for it.
Here is a little excercise I want you to try:
1. Calculate your NET income (the amount of actual dollars you have coming in every month after taxes etc) (if your in a couple and pay the bills together then combine your numbers for this excercise)
2. 6 categories of money use (use last months numbers and get an actual $ amount for each category)
a. Everyday needs (rent/mortgage, electricity, food, gas, minimum payments on your debts, insurance
car payments,etc)
b. Entertainment (play time, movies, eating out, concerts, dvd rentals, etc etc, this includes what you
consider to be not an everday need or expense)
c. Education (college tuition, self help seminars, books, etc etc whatever you would consider an
educational expense)
d. Savings ( how much have you put away for a rainy day (monthly))
e. Big purchases (are you putting things on credit cards that you can't afford today?)
f. Debt reduction (how much extra have you put towards your debt reduction strategy?)
Once you have this done, it will be a real eye opener for most of you. If you don't really know what your spending your money on, then how can you manage your money efficiently???
CONGRATULATIONS, you have just been hired for a new part-time job, you are now your own PERSONAL MONEY MANAGER. And if you take this job seriously enough, it will pay you more than your full-time job does. Now if you find there are $0 being put into some of these categories, that's ok, I knew there was a reason you were reading this, we will fix that later.
I welcome your comments and please follow me at www.facebook.com/paycheckdistributioncoach for great daily money management tips.
1. Education
2. Self-Control
3. Systemized Budget
4. Set a Goal
5. Follow through with the strategies you accept
6. Support (Emotional and Practical)
These six fundamentals are essential to keeping you on track to managing your money correctly. Lets start with Education.
The first major component to managing your money correctly is Education. In school, we learned about History, Economics, Science, Physical Fitness, Mathematics and even Literature, but what happened to Income or Paycheck managment? Most of our financial education comes from our parents or from neighbours who are willing to share their opinion based on what they have seen on TV or "heard through the grapevine". When you consider all of the information that we learn in High School and even College, the only real subject that translates into practical use is Mathetmatics. It's everywhere and in everything. When your shopping at a department store trying to figure out what 20% off of $175 is or if your trying to figure out how much mileage your really getting to that gallon. Functional math skills are essential no matter how many of us try to avoid it. Isn't it interesting that math and money are the two things that permeate every part of our lives but yet most people don't have a good grasp of either subject. This is where Paycheck Distribution Coaching steps in.
Once you have acquired basic math skills, it's time to move on to realistic and practical knowledge of money and how it really works for you. We really don't need to go into how to earn an income, that was covered by your parents when you were a child, remember the "get a good education and get a good job" speech? We have all heard it at one time or another. Some of us followed it and others went the way of the wealthy, "get a practical, real life education and work for yourself making your money work harder for you". In either case, there is a paycheck coming in, so how do you manage it correctly?
Managing your money correctly requires practical use of a systemized budget. But lets start with the basics. Someone once said "what you focus on expands" so let's get focused on your money and how to make it work harder for you than you have for it.
Here is a little excercise I want you to try:
1. Calculate your NET income (the amount of actual dollars you have coming in every month after taxes etc) (if your in a couple and pay the bills together then combine your numbers for this excercise)
2. 6 categories of money use (use last months numbers and get an actual $ amount for each category)
a. Everyday needs (rent/mortgage, electricity, food, gas, minimum payments on your debts, insurance
car payments,etc)
b. Entertainment (play time, movies, eating out, concerts, dvd rentals, etc etc, this includes what you
consider to be not an everday need or expense)
c. Education (college tuition, self help seminars, books, etc etc whatever you would consider an
educational expense)
d. Savings ( how much have you put away for a rainy day (monthly))
e. Big purchases (are you putting things on credit cards that you can't afford today?)
f. Debt reduction (how much extra have you put towards your debt reduction strategy?)
Once you have this done, it will be a real eye opener for most of you. If you don't really know what your spending your money on, then how can you manage your money efficiently???
CONGRATULATIONS, you have just been hired for a new part-time job, you are now your own PERSONAL MONEY MANAGER. And if you take this job seriously enough, it will pay you more than your full-time job does. Now if you find there are $0 being put into some of these categories, that's ok, I knew there was a reason you were reading this, we will fix that later.
I welcome your comments and please follow me at www.facebook.com/paycheckdistributioncoach for great daily money management tips.
Wednesday, April 21, 2010
Paying off Debt, the RIGHT way!!!
Paying off debt can be a hefty task. Do you pay the higher interest rate first? The lowest? Do you send a little extra to all the bills? These are questions that are on everyone's mind when it's time to pay the bills... so why is it that most people don't ask someone how to do it correctly?
There are many ways to pay off your high interest rate debt (most don't work so great). So many of us get caught up in the "I want it now" mentality and end up stuck with some pretty big bills that most of us end up only paying the minimum payments on. The real question is... how do I pay off my debt correctly?
There are many schools of thought on this subject, but there is really only one that I have seen work and have used myself succesfully.
Debt Snowballing. This the most popular method and actually has 2 different ways to accomplish the same task.
List all of your debts, in descending order by interest rate, regardless of the balance (accounts with highest interest rates first).
Determine the most money you can make available from your budget to apply to the debt snowball. The more you can apply, the more money you'll save and the faster you'll pay off your debt.
Each month, apply the minimum payment PLUS the extra money you've made available from your budget to the first debt (the one with the highest interest rate). On all your other debts, pay only the minimum payment. Continue to do this until the first debt on the list is paid off.
Take the minimum payment AND the extra payment you were making on the first debt and add them to the minimum payment you've been paying on the second debt. Pay that amount on the second debt each month until it's paid off, then move on to the third debt. Continue to pay only the minimum payment on all debts except the one you're "snowballing."
Repeat this process until all of the debts are paid off.
This method is actually the most effective, fastest and cheapest way to pay off your debt.
Some others recommend listing your debts with the smallest balances first so you can get the emotional satisfaction of quickly crossing off a debt or two, in the hopes that this emotional satisfaction will keep you motivated, but this one costs you more in the long run.
Now, here are some questions that people ask all the time:
1. Does this really work? Yes it does, and it's proven with sound calculations of how interest is charged to each account
2. What if i fall into extra money, what should I pay first? If your following the methods above, you would use any extra money you want to pay towards your debt on the account your paying the "extra" money on every month, the faster you get rid of the higher interest rate debt the more you save!!
3. what if I don't have the extra money one month? send in at least the minimum payment to each debt and then start again the next month
4. I can't help myself, I feel the need to pay a little more to all of my debt? DON'T!!! Save yourself years and a lot of extra interest charges and STICK TO THE PLAN!!!
5. Do I treat credit card debt and car debt the same way? This is tricky, because these two different types of debts are not calculated the same way. But unless you have the greatest credit card interest rate on the planet, or you have a REALLY bad rate on your car loan, odds are, it's best to pay off the credit cards first.
6. What if I have a mortgage and a home equity line of credit? This is actually a great question, it's best to put extra money down on your mortgage principal. The reason say this is, your mortgage is usually over a 30 year period, so any principal on the mortgage gets charged interest for a much longer period of time, any time you can decrease that amount, the less interest you pay over the long run. Some models have show (and have been proven) that if you pay just $5000 to your mortgage principal it can save you $20,000-$40,000 in interest over the years (of course this is all dependant on your loan, interest rates etc, but you can see the power of paying down the principal on your mortgage payment)
Well this was just some information on how to pay down your debt faster and save you $$$ in interest. I hope this helps...
There are many ways to pay off your high interest rate debt (most don't work so great). So many of us get caught up in the "I want it now" mentality and end up stuck with some pretty big bills that most of us end up only paying the minimum payments on. The real question is... how do I pay off my debt correctly?
There are many schools of thought on this subject, but there is really only one that I have seen work and have used myself succesfully.
Debt Snowballing. This the most popular method and actually has 2 different ways to accomplish the same task.
List all of your debts, in descending order by interest rate, regardless of the balance (accounts with highest interest rates first).
Determine the most money you can make available from your budget to apply to the debt snowball. The more you can apply, the more money you'll save and the faster you'll pay off your debt.
Each month, apply the minimum payment PLUS the extra money you've made available from your budget to the first debt (the one with the highest interest rate). On all your other debts, pay only the minimum payment. Continue to do this until the first debt on the list is paid off.
Take the minimum payment AND the extra payment you were making on the first debt and add them to the minimum payment you've been paying on the second debt. Pay that amount on the second debt each month until it's paid off, then move on to the third debt. Continue to pay only the minimum payment on all debts except the one you're "snowballing."
Repeat this process until all of the debts are paid off.
This method is actually the most effective, fastest and cheapest way to pay off your debt.
Some others recommend listing your debts with the smallest balances first so you can get the emotional satisfaction of quickly crossing off a debt or two, in the hopes that this emotional satisfaction will keep you motivated, but this one costs you more in the long run.
Now, here are some questions that people ask all the time:
1. Does this really work? Yes it does, and it's proven with sound calculations of how interest is charged to each account
2. What if i fall into extra money, what should I pay first? If your following the methods above, you would use any extra money you want to pay towards your debt on the account your paying the "extra" money on every month, the faster you get rid of the higher interest rate debt the more you save!!
3. what if I don't have the extra money one month? send in at least the minimum payment to each debt and then start again the next month
4. I can't help myself, I feel the need to pay a little more to all of my debt? DON'T!!! Save yourself years and a lot of extra interest charges and STICK TO THE PLAN!!!
5. Do I treat credit card debt and car debt the same way? This is tricky, because these two different types of debts are not calculated the same way. But unless you have the greatest credit card interest rate on the planet, or you have a REALLY bad rate on your car loan, odds are, it's best to pay off the credit cards first.
6. What if I have a mortgage and a home equity line of credit? This is actually a great question, it's best to put extra money down on your mortgage principal. The reason say this is, your mortgage is usually over a 30 year period, so any principal on the mortgage gets charged interest for a much longer period of time, any time you can decrease that amount, the less interest you pay over the long run. Some models have show (and have been proven) that if you pay just $5000 to your mortgage principal it can save you $20,000-$40,000 in interest over the years (of course this is all dependant on your loan, interest rates etc, but you can see the power of paying down the principal on your mortgage payment)
Well this was just some information on how to pay down your debt faster and save you $$$ in interest. I hope this helps...
8 Typical Financial Mistakes to AVOID!!!
1. Raiding your 401k!!! BAD IDEA. Your 401k was created with Tax benefits in mind and for RETIREMENT. Many people go to their 401k like a piggy bank and end up with major tax implications and not having enough money saved for retirement.
2. Running out on your mortgage!! In this day and age, especailly with the housing bubble, I have personally seen and heard some horror stories. Running out on your mortgage because your upside down is a really bad mistake. Not only does it destroy your credit, but when the bank forecloses on the home, they can come back and sue you for the difference between what you owed and what they sold it for.
3. Ignoring your credit card balance: This comes up alot in my discussions, "I want it now" attitude gets most of us in trouble. Credit cards can be a GREAT asset when they are used properly. But the major pitfall that most people fall into is trying to spend much more than they can afford. Then, what's worse, is that most people don't know how to pay the balances off correctly. Watch those balances, they will come back to bite you later!!!
4. BEWARE debt clearance companies/debt negotiation companies: most of them are scams (so if you NEED to do this, make sure you do your research), when they DO actually do their job and reduce your debt, check the mail during tax season, because your gonna get 1099'd for the amount that was forgiven on your debt!!!
5. Co-signing a loan: Ok we have all had that cousin, friend, sister or brother that just can't get that loan without someone to put their Name and CREDIT on the line for them, and some of us even went out on a limb for someone and had that limb break and your name and credit goes down with a BANG!!! Co-Signing a loan is a VERY big deal. If that person has messed up their credit or can't qualify with the income they make, then they don't deserve or can't afford the new loan they are trying to get. Keep your sanity and your CREDIT SCORE, and just don't do it!!!
6. Pay Day Loans: If you think your credit card is bad, try one of these. the interest rate can be as much as 521% on a 2 week loan. Enough Said.
7. Reverse Mortgages: Now this if for the senior crowd: be careful. The fees on these loans can be very high, and even though they market the product with the idea that you never have to make a payment on the money you recieve, it's just not true. Your children end up footing the bill because when you pass away, the bank needs to be paid back or they take the home. This option ONLY makes sense for those who have NO family to leave their property to and/or your in a such a bad financial position that all other options have been exhausted.
8. Stiffing UNCLE SAM: Uncle sam is the only entity that can garnish your wages, put a 1st position lien on your home (over and above the mortgage company) and charge you with fraud and put you in prison (remember Al Capone? he was imprisoned for Tax Evasion) Be sure that your honest about your taxes and pay the tax bill as soon as possible. This is one headache there is NO cure for!!!
2. Running out on your mortgage!! In this day and age, especailly with the housing bubble, I have personally seen and heard some horror stories. Running out on your mortgage because your upside down is a really bad mistake. Not only does it destroy your credit, but when the bank forecloses on the home, they can come back and sue you for the difference between what you owed and what they sold it for.
3. Ignoring your credit card balance: This comes up alot in my discussions, "I want it now" attitude gets most of us in trouble. Credit cards can be a GREAT asset when they are used properly. But the major pitfall that most people fall into is trying to spend much more than they can afford. Then, what's worse, is that most people don't know how to pay the balances off correctly. Watch those balances, they will come back to bite you later!!!
4. BEWARE debt clearance companies/debt negotiation companies: most of them are scams (so if you NEED to do this, make sure you do your research), when they DO actually do their job and reduce your debt, check the mail during tax season, because your gonna get 1099'd for the amount that was forgiven on your debt!!!
5. Co-signing a loan: Ok we have all had that cousin, friend, sister or brother that just can't get that loan without someone to put their Name and CREDIT on the line for them, and some of us even went out on a limb for someone and had that limb break and your name and credit goes down with a BANG!!! Co-Signing a loan is a VERY big deal. If that person has messed up their credit or can't qualify with the income they make, then they don't deserve or can't afford the new loan they are trying to get. Keep your sanity and your CREDIT SCORE, and just don't do it!!!
6. Pay Day Loans: If you think your credit card is bad, try one of these. the interest rate can be as much as 521% on a 2 week loan. Enough Said.
7. Reverse Mortgages: Now this if for the senior crowd: be careful. The fees on these loans can be very high, and even though they market the product with the idea that you never have to make a payment on the money you recieve, it's just not true. Your children end up footing the bill because when you pass away, the bank needs to be paid back or they take the home. This option ONLY makes sense for those who have NO family to leave their property to and/or your in a such a bad financial position that all other options have been exhausted.
8. Stiffing UNCLE SAM: Uncle sam is the only entity that can garnish your wages, put a 1st position lien on your home (over and above the mortgage company) and charge you with fraud and put you in prison (remember Al Capone? he was imprisoned for Tax Evasion) Be sure that your honest about your taxes and pay the tax bill as soon as possible. This is one headache there is NO cure for!!!
Health Insurance... What you need to know!!!
Health insurance has been on everyone's minds these days. You see it in the news and you hear about it on the radio, and you probably have heard people talking about it at work or in a restaurant. But the real quesiton is, how much do people really know about their health coverage?
Words like "deductible", "co-insurance", "pre-existing conditions" "major medical vs limited indemnity plans". Where do you start? Today's post will be dedicated to what I call the "health insurance well of knowledge" or lack thereof.
What is a deductible? In insurance policy terms, a deductible is the amount of money which the insured party must pay before the insurance company's own coverage plan begins. In other words, you must pay 'x" before your insurance will pay for anything. This amount can vary per policy, usually the less you pay on your monthly premium, the higher your deductible is. Also, keep in mind your deductible is reset every year!!!
What is co-insurance? Co-Insurance is the amount of the bill that you are also responsible for after your deductible is met. So let's say your bill is $10,000 (to make it easy) and your deductible is $5000. You pay your deductible FIRST, which brings your total amount due to $5,000 of which your co-insurance is 20% (sometimes can be as high as 30%). 20% of $5,000 is $1,000. So after paying your deductible and your co-insurance (in this example), your out of pocket for this $10,000 medical bill is $6,000. The insurance company pays the rest.
What is a pre-existing condition? this is a medical condition that was present BEFORE you purchased your insurance. It can be a serious condition, such as Asthma or Diabetes, or even a simple issue like Eczema. Either way, the insurance company can do a couple of things.
1. Deny you coverage- basically saying your too much of a risk to insure.
2. Rate your application- when they rate your application, it basically means your more of a risk to insure so you have to pay a higher monthly premium.
3. Put a waiting period (usually 12 months)- which means if you need to use your health coverage for that condition (that was there before you got the coverage) then your insurance coverage would not cover those expenses until the waiting period is over.
4. Rider out your pre-existing condition- the insurance company can say "we'll approve your coverage" but you can NEVER use it for that illness or health problem.
What is Major Medical/Catastrophic Insurance? Major Medical Insurance is health insurance that most people are used to. You can get it through your employer or on your own through a licensed health insurance agent. It usually has Co-Pays for Dr visits, prescription drugs and Emergency Room visits. It will always have a deductible and most of the time will also have a co-insurance too. It covers regular visits to the Dr or Specialist, labs, x-rays and hospitalization. You can either be on an HMO or PPO network (depends on the plan you choose). And most people don't realize this, but it also comes with a lifetime cap of about 3-5 Million Dollars. This is the most common type of coverage that people know about and can be very expensive.
What is a limited Indemnity Plan/Limited Benefit Health Insurance? Limited Health Insurance can also be called "guaranteed issue". This is also True Health Insurance. This coverage is great for those with pre-existing conditions that can't get coverage elsewhere. These types of plans are very affordable compared to the Major Medical plans, and most have NO DEDUCTIBLE. The idea behind these plans are to make your out of pocket expense as little as possible. Some offer NO waiting period for pre-existing conditions, many offer very good coverage for your dollar. There is usually 3 or 4 tiers or types of plans for each company, the higher you pay the more coverage you get, so you can usually find a plan that fits your budget and your needs at the same time. This if for the everyday, I need to see a Dr or get an x-ray type of coverage. Most have decent hospitalization coverage in case of an accident and most offer stackable benefits, which makes these plans very attractive. See an example of this type of plan here http://www.myhomelandhealth.com/ .
This was just a basic overview of health insurance and what to look for. The best way to find the plan that best suits your needs and your budget at the same time is to speak directly to an INDEPENDENT LICENSED INSURANCE AGENT. This person, is not tied or captive to one company. They can literally shop around for you. And remember, insurance rates are fixed on the federal level, so one agent can't offer you a discount on the same plan compared to another agent, they MUST offer it at the same price. Just find an agent that you trust and remember to ask questions.
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Words like "deductible", "co-insurance", "pre-existing conditions" "major medical vs limited indemnity plans". Where do you start? Today's post will be dedicated to what I call the "health insurance well of knowledge" or lack thereof.
What is a deductible? In insurance policy terms, a deductible is the amount of money which the insured party must pay before the insurance company's own coverage plan begins. In other words, you must pay 'x" before your insurance will pay for anything. This amount can vary per policy, usually the less you pay on your monthly premium, the higher your deductible is. Also, keep in mind your deductible is reset every year!!!
What is co-insurance? Co-Insurance is the amount of the bill that you are also responsible for after your deductible is met. So let's say your bill is $10,000 (to make it easy) and your deductible is $5000. You pay your deductible FIRST, which brings your total amount due to $5,000 of which your co-insurance is 20% (sometimes can be as high as 30%). 20% of $5,000 is $1,000. So after paying your deductible and your co-insurance (in this example), your out of pocket for this $10,000 medical bill is $6,000. The insurance company pays the rest.
What is a pre-existing condition? this is a medical condition that was present BEFORE you purchased your insurance. It can be a serious condition, such as Asthma or Diabetes, or even a simple issue like Eczema. Either way, the insurance company can do a couple of things.
1. Deny you coverage- basically saying your too much of a risk to insure.
2. Rate your application- when they rate your application, it basically means your more of a risk to insure so you have to pay a higher monthly premium.
3. Put a waiting period (usually 12 months)- which means if you need to use your health coverage for that condition (that was there before you got the coverage) then your insurance coverage would not cover those expenses until the waiting period is over.
4. Rider out your pre-existing condition- the insurance company can say "we'll approve your coverage" but you can NEVER use it for that illness or health problem.
What is Major Medical/Catastrophic Insurance? Major Medical Insurance is health insurance that most people are used to. You can get it through your employer or on your own through a licensed health insurance agent. It usually has Co-Pays for Dr visits, prescription drugs and Emergency Room visits. It will always have a deductible and most of the time will also have a co-insurance too. It covers regular visits to the Dr or Specialist, labs, x-rays and hospitalization. You can either be on an HMO or PPO network (depends on the plan you choose). And most people don't realize this, but it also comes with a lifetime cap of about 3-5 Million Dollars. This is the most common type of coverage that people know about and can be very expensive.
What is a limited Indemnity Plan/Limited Benefit Health Insurance? Limited Health Insurance can also be called "guaranteed issue". This is also True Health Insurance. This coverage is great for those with pre-existing conditions that can't get coverage elsewhere. These types of plans are very affordable compared to the Major Medical plans, and most have NO DEDUCTIBLE. The idea behind these plans are to make your out of pocket expense as little as possible. Some offer NO waiting period for pre-existing conditions, many offer very good coverage for your dollar. There is usually 3 or 4 tiers or types of plans for each company, the higher you pay the more coverage you get, so you can usually find a plan that fits your budget and your needs at the same time. This if for the everyday, I need to see a Dr or get an x-ray type of coverage. Most have decent hospitalization coverage in case of an accident and most offer stackable benefits, which makes these plans very attractive. See an example of this type of plan here http://www.myhomelandhealth.com/ .
This was just a basic overview of health insurance and what to look for. The best way to find the plan that best suits your needs and your budget at the same time is to speak directly to an INDEPENDENT LICENSED INSURANCE AGENT. This person, is not tied or captive to one company. They can literally shop around for you. And remember, insurance rates are fixed on the federal level, so one agent can't offer you a discount on the same plan compared to another agent, they MUST offer it at the same price. Just find an agent that you trust and remember to ask questions.
Follow me at www.facebook.com/irenemcruz
www.twitter.com/irenemcruz
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