How Did We Get Here? And Where Are We?
The book starts off with a little bit of history concerning the recession that started just a few short years ago. There’s a ton of information concerning what steps the government took in terms of new regulations and stimulus funds after the financial meltdown occurred. Finally, there’s a very detailed list of the major types of debt Americans often carry – everything from mortgages to credit cards to student loans. This list explains how the debt works and alerts us to any new government or industry regulations.
Find Out Where You Stand
“Don’t lie to yourself about your money.” That’s the most important information in this chapter. Here, Goodman explains why you need to know the cold hard facts about your financial situation. You can’t improve your finances if you don’t know how much debt you have or how much money you’re actually spending every month.
Other People Are Grading You, Too
Be aware that other people (corporations and computers really) know a lot about your personal financial situation. Credit reports and scores allow other people to check how much debt you carry, if any, and how well you’re paying it off. There’s a good run down here of how exactly credit reports work and how to check yours.
Avoiding a Modern-Day Identity Crisis
Identity theft can cost you – both money and many wasted hours putting your life back together. This section provides some relatively common sense tips on how to prevent being a victim along with how identity theft really works.
Win the New Mortgage Game
The mortgage industry was a very effective catalyst in causing the financial crisis. Loans were being given to people who had no business borrowing money and the banks (along with many homeowners) got bitten when those individuals could no longer make payments. This chapter has a detailed run through of the different types of mortgages available now and some ways to pay your mortgage off faster.
Mortgage Free in Five to Seven Years
HE-What? This chapter explains the “secret” way to pay off a mortgage in 5 to 7 years (it is called a Money Merge Account). Did you just get that feeling in your stomach when you know something isn’t quite right? I know I did. Basically, this “system” has you take out a home equity line of credit on your house. You pay off your house with your HELOC. Then, you deposit your paycheck directly into the HELOC. You pay all of your bills through this line of credit. And because of the way interest is calculated on a HELOC, you end up paying it off very quickly.
I’m not saying that this method can’t work. On the surface, it seems like the math adds up. But the author’s promotion of companies tainted the information. This method also appears, to me at least, to only be appropriate for high income individuals with no debt other than a mortgage.
Credit Cards: Just Because It’s Called MasterCard Doesn’t Mean It’s the Boss of You
The credit card scene has changed dramatically over the past few years and this chapter spells out how to navigate those changes. Information on how to pay off credit card debt is present and how to get the most from cards (if you can use them responsibly).
Car Deals: Making Sure You’re in the Driver’s Seat
Buying a new car is almost never a fun experience. Chapter 8 deals mainly with how to pay for your car. Included is information on whether hybrids are really worth the upfront cost and what sources to use when researching a vehicle.
Oh and there’s a sales pitch for CarQ, a car buyer’s agent. Basically, you pay them a fee and they handle the business side of getting you into a vehicle.
Finally, there is lengthy discussion that presents leasing as a relatively good option when it comes to getting wheels. The author says “leases can be a particularly good deal for . . . drivers who like to get a new car every three years“. Who doesn’t want a new car every few years? I sure do. But that doesn’t mean I’m going to throw away money on a vehicle I won’t even own after 3 years. Leases are almost always a bad deal.
An Education in College Costs
Primarily, this chapter shows you how to save up for a child’s college education. More applicable to my own situation is the section that details how financial aid works and what federal loans are available.
Don’t Let Bad Luck Derail Your Finances
Look honestly at your debt situation to see whether or not you can handle paying everything off by yourself. You might need debt consolidation help from a credit counseling agency. There are tips and guidelines on how to handle calls from collection agents.
Surviving Bankruptcy
Why, When, and How to declare bankruptcy are discussed here. I thought that bankruptcy was presented a little too favorably, but I do agree that it’s the right thing to do for people who honestly don’t have other options.
Debt Strategies for Every Age
Everybody is different. Here, we see different strategies for different age groups. The section specifically for teens and 20-somethings was of interest to me and would be useful for anybody getting ready to graduate high school.
Permanent Mastery, Going Forward
The last chapter is a summary of previous information along with some general advice: keep good records, ask questions, watch the bottom line, etc.
Thursday, November 18, 2010
Tuesday, November 16, 2010
10 Ways to Build the Habit of Saving Money
by J.D. Roth
How much do you save? I hope you put money aside. You don’t? Neither did I until a few years ago. How do you become a money saver? I’ll first tell you how you don’t: Not by using discipline or willpower. Discipline and willpower only work in the short-term.
What works in the long-term is understanding your spending habits. Once you understand, you can change by building new habits. That’s how you become a money saver. And that’s the topic of this post — ten ways to build the habit of saving money.
1. Set a Goal. What do you want?
•Do you want to have your own place?
•Do you want to be financially independent?
•Do you want to get out of debt?
A goal will give you a reason to save money. If you have multiple desires, start with one goal. Once achieved, set a second one.
2. Set a Deadline. Set a date by which you want your goal achieved. Write both on a piece of paper. Put it somewhere you can look at it multiple times a day — your nightstand, for example. Look at your goal and deadline on waking and before sleeping. It will remind you why you’re saving money.
3. Track Expenses. You probably have an idea of how much you spend, but unless you keep track of every cent, that idea is inaccurate at best. Here’s a simple way to track your expenses. You probably carry a phone wherever you go. Note everything you spend in your calendar. When you get home, copy everything to your personal finance tool. At the end of the month you’ll know exactly how much money you’ve spent and on what.
4. Analyze Costs. Check where your money goes. Reduce and remove costs. The first time you analyze your expenses can be shocking. The more the better. This is your first wake up call.
5. Make a Budget. Calculate how much money you need for:
•Food
•Rent
•Bills
•Clothes
•Leisure
•Etc
Remove costs from income. Now you know how much you can save each month. Even if it’s not much, it’s better than nothing.
6. Pay Yourself First. Make the first bill you pay each month the one to your savings account. Just like all your other bills, there’s no way around. You must pay it month after month, unless you’re in debt. Then the rule becomes: “Pay Your Debts First”.
7. Earn More Save More. Save a fixed percentage of your income. This way, as your income goes up, so will your savings. 20% is a good start. You can’t? Then you’re living beyond your means. Time to wake up.
8. Think Saving. If you have money left at the end of the month: save it. You don’t need to spend every cent earned. It’s okay to buy things. But make sure you really need them — don’t spend just for the sake of spending.
9. Wake Up. I wrote in the introduction that you need to understand your spending habits. You need to understand why you buy things. Do you buy things:
•To impress people?
•To be part of the group?
•To fill other’s expectations?
Next time you buy something, ask yourself: Why am I buying this? What are my real motives? Don’t judge. Just notice.
It takes time, but once you get it, it’s eye-opening. Your life will be simpler and you’ll avoid many financial headaches. Trying to keep the pace with others is a never-ending game, one you can’t win. Wake up.
10. Read Get Rich Slowly. Your environment influences your personality, and thus your habits. If you want to build the habit of saving money, surround yourself with people who save money. Get Rich Slowly is a good place to start. Subscribe. Read it on a daily basis. J.D.’s tips will become your second nature. You’ll become a money saver in no time.
Bonus Tip: Write this next to your goal and deadline: If I don’t save now, I’ll never have money. No matter how much I earn
How much do you save? I hope you put money aside. You don’t? Neither did I until a few years ago. How do you become a money saver? I’ll first tell you how you don’t: Not by using discipline or willpower. Discipline and willpower only work in the short-term.
What works in the long-term is understanding your spending habits. Once you understand, you can change by building new habits. That’s how you become a money saver. And that’s the topic of this post — ten ways to build the habit of saving money.
1. Set a Goal. What do you want?
•Do you want to have your own place?
•Do you want to be financially independent?
•Do you want to get out of debt?
A goal will give you a reason to save money. If you have multiple desires, start with one goal. Once achieved, set a second one.
2. Set a Deadline. Set a date by which you want your goal achieved. Write both on a piece of paper. Put it somewhere you can look at it multiple times a day — your nightstand, for example. Look at your goal and deadline on waking and before sleeping. It will remind you why you’re saving money.
3. Track Expenses. You probably have an idea of how much you spend, but unless you keep track of every cent, that idea is inaccurate at best. Here’s a simple way to track your expenses. You probably carry a phone wherever you go. Note everything you spend in your calendar. When you get home, copy everything to your personal finance tool. At the end of the month you’ll know exactly how much money you’ve spent and on what.
4. Analyze Costs. Check where your money goes. Reduce and remove costs. The first time you analyze your expenses can be shocking. The more the better. This is your first wake up call.
5. Make a Budget. Calculate how much money you need for:
•Food
•Rent
•Bills
•Clothes
•Leisure
•Etc
Remove costs from income. Now you know how much you can save each month. Even if it’s not much, it’s better than nothing.
6. Pay Yourself First. Make the first bill you pay each month the one to your savings account. Just like all your other bills, there’s no way around. You must pay it month after month, unless you’re in debt. Then the rule becomes: “Pay Your Debts First”.
7. Earn More Save More. Save a fixed percentage of your income. This way, as your income goes up, so will your savings. 20% is a good start. You can’t? Then you’re living beyond your means. Time to wake up.
8. Think Saving. If you have money left at the end of the month: save it. You don’t need to spend every cent earned. It’s okay to buy things. But make sure you really need them — don’t spend just for the sake of spending.
9. Wake Up. I wrote in the introduction that you need to understand your spending habits. You need to understand why you buy things. Do you buy things:
•To impress people?
•To be part of the group?
•To fill other’s expectations?
Next time you buy something, ask yourself: Why am I buying this? What are my real motives? Don’t judge. Just notice.
It takes time, but once you get it, it’s eye-opening. Your life will be simpler and you’ll avoid many financial headaches. Trying to keep the pace with others is a never-ending game, one you can’t win. Wake up.
10. Read Get Rich Slowly. Your environment influences your personality, and thus your habits. If you want to build the habit of saving money, surround yourself with people who save money. Get Rich Slowly is a good place to start. Subscribe. Read it on a daily basis. J.D.’s tips will become your second nature. You’ll become a money saver in no time.
Bonus Tip: Write this next to your goal and deadline: If I don’t save now, I’ll never have money. No matter how much I earn
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