The Best of Finance Blogosphere + Reminder for Book Giveaway

The giveaway for the book "The Quiet Millionaire" is in its last few days. So far, we have 49 entries for 3 books. The odds don’t look too bad :) So, if you have not yet entered, do so before the end of the weekend by leaving a comment on this post. Be sure to check back in on Monday to see if you are a winner, and on Tuesday for the announcement of a brand new giveaway!

Now onto some articles that caught my eye this past week.

This article from Single Ma takes the cake! I don’t have any kids (yet) and will probably not need to resort to these tricks any time soon – but the whole article is neatly filed away in some corner recesses of my brain. When the day comes for me to deal with a similar situation, I am pretty sure I will be able to pull it right out :) Believe me, all those of you with teen and tween age girls *want* to read this article!

Flexo at Consumerism Commentary has a great, detailed review of the online money management site Mint. I really liked that Flexo took the time to give a great introduction based on his personal financial life and then the in-depth analysis of Mint. Personally, I belong to the account-watchers-anonymous and would love to use a service like yodlee/mint. But I am so paranoid that if a hacker gets hold of such an account, he will end up having all my financial information that I have not ever opened an account at either Yodlee or Mint :(

Tricia at Blogging away debt decided yesterday was a feel good day and put up an article about Paul Potts. The first time I had seen his Britain’s Got Talent video on You Tube was probably the first time I sat through an entire opera performance! The emotional story of a dream coming true never ceases to amaze me! Head on over to Tricia’s post for some tidbits and videos about Paul Potts, for some lovely feel good weekend moments.

If you are familiar with the Sun’s Financial Diary, you probably know that he is very much into investment and does his own research. However, if you are “not quite there yet” and plan to hire a broker to handle you finances, then Sun can still provide you some great advice. In this post he offers some valuable resources for researching your broker.

Golbguru at Money, Matter and More Musings wonders whether signing the back of the card is really useful. In response to an earlier post I wrote, Anne who works at a retail store had said that at the place she works, the signature is only used to provide as proof if the credit card asks for it! In my own experience twice earlier, when my card was swapped once with my BIL and one with the better half, the signatures didn’t do diddly squat and we just kept using the other person’s card until somebody we realized that the name on the card wasn’t their own!

Pinyo at Moolanomy looks at compound interest with a slightly different perspective. He shows that the first million is the hardest to reach both psychologically and mathematically but it gets much easier after that (He actually hopes to get to 10 Mil!)

Sharon at The Frugal Duchess has a great find for all the thrift shop lovers - An Ebay style auction by goodwill stores!

Finally, Clever Dude has a very thought-provoking article titled Don’t let pride ruin your life that is not really about personal finance, but definitely worth a read.

That’s it for now folks! I hope you have a pleasant relaxed weekend.

DIY Projects for Frugal Home Owners: Carpet Cleaning Basics

This article is a part of the series “DIY Projects for Frugal Home Owners”, an attempt to get me (and hopefully a few readers) more interested in handling simple DIY projects around the house and saving some money along the way.


No matter who you are, there is a good chance that your home will get dirty from time to time. This holds true even if you clean your home each and every day. The most common area for dirt and grime are the carpets since it gets the most wear and tear. Carpets are what people walk on every day and are always coming in contact with dirty shoes, grease, dust, pets etc. The good thing is that you do not have to live with this type of dirt in your home. You can clean your own carpets very easily in order to present a better home.

Some homeowners think that they need to hire a professional to clean their carpets, but nothing could be further from the truth. Do it yourself projects, such as cleaning carpets is quite easy to complete. Sure, you are going to have to put a bit of time and sweat into these projects, but in the end you will be glad that you did this on your own. A job well done is a reward in itself – if that isn’t good enough there is all the money you can save by doing things yourself :)

Cleaning the carpets is all about getting the deep down dirt. The first step however is to start with vacuum cleaning to get rid of the surface dirt. I would highly recommend investing in a good vacuum cleaner. I have been drooling over a Dyson for a while, but we decided to settle for a Bissell (that was available on sale). The problem with such run of the mill vacuum cleaners is that after a few uses, they seem to lose the suction or worse, start to kick up dust. By the time we have kids, it will probably be time to retire this vacuum cleaner anyway, and maybe then we will buy a Dyson.

A neat trick I learnt from the time that we called maid service is to use a carpet cleaning and deodorizing powder. I think she used the “Resolve” brand and I really liked how fresh it made the room feel. It is supposed to contain absorbent granules that attract the tiny dirt particles in the carpet to attach to it. And since the granules are heavy and not “stuck in” they can be vacuumed right off. Leave it in for a few minutes and then vacuum, to get a clean fresh smelling carpet.

If you have set-in stains, you may need to spray a stain remover and scrub the area first before using a vacuum cleaner. Personally, we have a bit of an obsessive compulsive streak and we keep a can of carpet stain remover handy. Anytime there is a spill we immediately spray the foam and scrub it with the brush attached to the canister and then mop it up with a towel or paper napkin. Since we do not usually allow a stain to set in, I do not have much experience with removing set-in stains, but here is an index for removing pretty much any stain that you can think of from your carpet.

When regularly used, good vacuum cleaners can be quite effective in removing surface dirt and preventing it from settling in. However, if you prefer a more deeper cleaning, then it is time to get a heavy duty rug scrubber. You have two options here. You can either buy a rug scrubber so that you can use it whenever you want in the future, or you can rent one. If you anticipate deep-cleaning your carpets on a regular basis (got toddlers?), you might want to consider buying one. But in most cases, I suspect renting is going to work out just fine.

Rug scrubbers are available for rent in most big chain grocery stores as well as home improvement stores like Home Depot, Sears, Lowes etc. For a 24-hour period rental, they cost anywhere from $19.99 to $29.99 depending on the type of equipment you choose. You can choose to buy a deep cleaning solution or use warm water and soap (or a mild shampoo). The rug scrubber (“Rug Doctor”, “White track” etc) often comes with instructions about how to use it. If the instructions require you to stay off of the area for 12 to 24 hours make sure you plan your cleaning schedule accordingly.

Cleaning carpets is part of being a homeowner. Dirt will get into the house no matter how careful you are. But if you do what it takes to rid of it, you can reap some great benefits while trying to sell your stain-free house some day. Even though prevention is the preferred choice, the cure is not all that hard. The only thing that it needs is a bit of elbow grease :)

Is "Slow and Steady" Approach to Wealth Out of Fashion?

We have all heard the story of the “hare and the tortoise” when we were young. But somehow, many of us seem to have forgotten the lesson taught by the story as we grew older. In a world where the rich are placed on a pedestal and worshiped, the “gods” are those people that made it rich quick and with a bang. Larry Page and Sergey Brin, Chad Hurley and Steve Chen, David Beckham, Tiger Woods, Oprah Winfrey – these are the people that fascinate us. OC, the simple life – these are the TV shows that hold our attention. We dream that someday we will be rich and famous too.

There is nothing wrong, or for that matter new, with this dream. For generations, people have dreamt of becoming rich. But it seems to me that in the more recent times, this dream has somehow caught on a tone of urgency. We not only want to be rich, we want to be rich *now*. We don’t want to wait for our boat to come in – we just want to get there right away. In a world where everything moves at the speed of light, it seems like we have come to expect our dreams to become reality fast too.

Take for instance the example of a friend’s younger brother who recently graduated with an undergrad degree. He got a job right out of college and it pays him a fortune. Being a bachelor who shares an apartment and stays close to work, he could easily manage to splurge on parties and manage to save a fair amount at the same time. Considering that he is in his early 20’s, if his career grows at a reasonable rate and he maintains a consistent savings plan, he could easily be a multi-millionaire by the time he retires. But he does not see it that way. He looks at the folks who made their millions in the dot com boom and feels that he has already missed the boat. To him, the only way to make money is to make it fast and with a bang.

Last year, when he was in his senior year of undergraduate study, he was assaulted by severe doubts of whether he did the right thing by majoring in computer science. He was fascinated by the real estate boom and was convinced that that is where the money is. For a while his folks were seriously worried that he may throw the three years he spent on the engineering degree to pursue a real estate certification. Fortunately, he stuck it out and completed his undergrad. But with the real estate bust, he is again disheartened and fretting about missing “yet another” boom. He is already looking to see what the next wave it going to be. He wants to make his millions by 30 and retire to a life of traveling the world and driving expensive cars.

He is an extremely smart person. And I have no doubts that he has the potential to make it big. But if every smart person were to become a millionaire before 30, we would have a lot more stories to tell than we do now. In addition to being smart and talented, success requires a pinch of luck and a dash of timing. I wonder if in his quest for instant success, he is neglecting the more time tested way to riches – the slow and steady way. While the stories of the slow-and-steady millionaires may not be as fascinating as the stories of the got-rich-quick whizzes, the slow-and-steady approach has a much better probability of eventual success.

The attitudes and expectations of my friend’s brother is a bit disturbing to me, because I can understand and to a large extent relate to the way he feels. I look around me at the peers who joined start-ups that went public and who made a nice cushion of money. I know a few seniors who rode the dot com boom. And a colleague from an old job that day-traded his way into retirement at 32. And a friend who sold his home in California at just the right time, and owns a house now in Texas free and clear. It makes me wonder if I am doing the right thing. If I should look at other options than the regular 9-to-5 job (that is really more of a 8-to-8 job) and find my own ways to quick riches.

But when you look closely, for every friend that I can think of who can afford to retire in their 30’s, I can think of a hundred others that cannot. The common strand in many of the success stories is that, these people were going about their daily lives as usual, and the right opportunity came knocking. Seems to me that the best approach to riches would be to take the slow-and-steady approach, while keeping an eye open for an opportunity to make it rich quick. That way, if the stars align just right and you are the story that people talk about, great! If not, at least you have a Plan B already in place to make you rich eventually.

The nice thing about plan B, the slow and steady plan, is that it is tried and tested for centuries and as shown in the book Millionaire Next Door it works. In addition, there is a clear cut step-by-step manual to take you where you want to be. As long as you are persistent and follow the directions in the manual, you will get there. And instructions usually read something like this:

• Live below your means.


• Stay out of debt.


• Invest wisely.


• Avoid the temptation to keep up with the Joneses.


• Rinse and Repeat.

Now for something that can give you a guaranteed results (bar the unexpected curve balls that life may throw your way), those instructions aren’t all that hard to follow, are they?

In this fast paced world, the slow-and-steady approach to riches may be extremely uninteresting and seem out of fashion, but considering that it can make promises that no other approach can make, I doubt it will ever really lack a following. Count me in.

Blackwater Incident: A (Spineless) Taxpayer’s Rant

This is not a political blog. And I am not trying to make a political statement. But the Blackwater incident in Iraq from last weekend just doesn’t sit well with me. So, here is my rant. Do with it what you wish.

Here is what bothers me – Blackwater employees who are just regular citizens of America like you and me, shot and killed the citizens of another sovereign country Iraq, on their own soil. Now, since Blackwater is not part of the military, those responsible cannot be court martialled under the Uniform Code of Military Justice. Since they are not on US soil, the US laws do not apply to them. They cannot be tried by the Iraqi legal system due to the provisions of the Coalition Provisional Authority Order 17 in 2004. [source1, source2] And who paid for this mercenary operation that is above and beyond the reach of any law? You and me – the clueless, hapless, (spineless) taxpayers!

Blackwater was founded in 1997 by an ex Navy Seal with a keen entrepreneurial bent of mind. As a for-profit private organization that trains and provides security to diplomats, Blackwater has supposedly increased its profit by over 300% during the past few years. Finding its profit statements on the Internet is not very easy, but according to the wikipedia entry, during the past few years, Blackwater has received over 500 million dollars in government contracts (many of them being no-bid contracts)! While I was reading about Blackwater and its founder and trying to wrap my brain around the number of zeros in the financial figures involved, I couldn't help but visualize the smug face of Nicholas Cage from the movie Lord of War.

Frankly, I don’t know whether companies like Blackwater do a great service to the country (as their website claims) or they are mercenaries without a conscience. In the words of U.S. ambassador to Iraq, Ryan Crocker [told to the U.S. Senate]: "There is simply no way at all that the State Department's Bureau of Diplomatic Security could ever have enough full-time personnel to staff the security function in Iraq. There is no alternative except through contracts." [source]. The Blackwater employees do put their lives in harms way every single day and have suffered the chilling consequences more than once [Fallujah Ambush, Other Incidents]. In matters of war and conflict, the facts are so hazy and every story has so many sides that it becomes hard to make any judgment. That said I wish my hard earned money did not go into funding hazy operations flirting with the boundary between good an evil. I work hard for every penny and wish my tax dollars would go into projects where the benefits are clearly observable like improving the schools or the health care system or the public transport system.

I know I ought to be more involved and more active in the political decision making process, and yet I am not. I know I ought to question and hold the politicians who use my tax contributions accountable for their action and yet I don’t. I live my comfortable suburban life with my cushy job socializing with my equally clueless friends. Until the day the war is brought home by someone who straps on a dozen bombs (or flies an airplane) in a desperate and deliberate attempt to kill people who are near and dear to me. He is on a suicide mission because he does not have anything to live for. His father / mother / brother / sister / wife / child was “collateral damage” in a war funded by my money and he just could not find any other way to snap me out of my idyllic apathy and make me take notice.

And so, just this once when my conscience is pricked and I have decided to at least rant things out, let me come out and say - Please, stop using my tax dollars for funding your meaningless wars. And don’t tell me it is for freedom and democracy – I may be spineless, but I am not dumb.

Campaign Against Financial Myths: 82 Myths Busted!

Finally, I wound up the Campaign Against Financial Myths series last week. It was a lot of fun doing that series and I decided to consolidate the summary of all the myths in one long post. So, here it is. The table of contents below will take you directly to the myths in each category. The description contains only a short summary of the original description. Next to each section heading is a link marked as “detailed article” – clicking on it will take you to the original article that contains a more detailed description and several references. I am under no illusion that I have covered all the myths possible. As a matter of fact, I have intentionally left out a couple of topics such as taxes, insurance, etc – areas that I don't quite feel qualified to cover. If your interests lie in these areas and you would like to add an article about the financial myths in these categories – either as a guest post on this blog or as a post on your blog to which I can link back – I strongly encourage you to do so. And of course the standard disclaimer – I am not a financial advisor. I have made every effort to research the facts before presenting them here. But, if you have a reason to believe any of the statements are incorrect, please feel free to correct me.

All right, here we go -

• Attitudes


• Budgeting


• Mortgage & Home Ownership


• Credit Cards & Credit Score


• Stock Market Investing


• Debt


• Frugal Living


• Financial Planning


• Miscellaneous

Attitudes (detailed article)

1. Myth: “Money = Happiness”

While money can certainly make life a lot easier, several surveys have reported that rich people are not necessarily happier than the poor people.


2. Myth: “I could be hit by a bus and die tomorrow. So why bother to save?”

Yes, you could be hit by a bus and die tomorrow – so make the best of today. But just in case you don’t get hit by that bus, make sure you have some savings to tide you along.


3. Myth: “I bought the plasma TV/designer boots/widgets during a sale, so I saved a lot of money.”

Unless you really needed the plasma TV/designer boots/widgets, you are only fooling yourself by thinking that you saved money by buying these items - be it on sale or not.


4. Myth: “It is OK to loan money to friends/relatives.”

More often than not, loaning money to friends/relatives is a bad idea. Not only do you risk not getting back your money, it could really mess up your relationship with the person as well.


5. Myth: “It’s a man’s job to handle the investing and taxes. It’s a women’s job to create a budget and keep the family spending frugal.”

This would be a very bad idea in the unfortunate event of a divorce or death. In a relationship, even if different people are responsible for handling the different aspects of finances, make sure the other person is at least aware of the basic information and can get on by in case of an emergency.


6. Myth: “Rich people are greedy/lucky/privileged/scum/crooks. If I make a lot of money that is what people will think of me.”

On the one hand everyone wants to be rich. On the other hand they resent those that are already rich and worry that if they were to become rich someday, then all their friends and family will start resenting them. It’s up to you to develop a healthy attitude towards money (and people with money) if you eventually want to reach a state of financial freedom.


7. Myth: “A person must drive a flashy new car and live in a fancy mansion if he is rich.”

Not if you believe the research presented in the book The Millionaire Next Door: The Surprising Secrets of America's Wealthy by Thomas J. Stanley and William D. Danko about the U.S. households with net-worth exceeding one million dollars (USD).


8. Myth: “I have to make more money if I want to get rich.”

Sure, making more money can give you more opportunities for growing your wealth, but only if you make sure that an increase in income does not result in a corresponding increase in lifestyle. Alternately, even when you make less money if you can find ways to keep more of it, you can still get to become rich eventually.


9. Myth: “I don’t make enough money, so I can’t save”

Basic needs such as food, shelter and health expenditure do not take up a whole lot of what we make. What eats up the paycheck is usually unfortunate circumstances or excess expenditure on things we do not really “need”. If you are a victim of the circumstances, strive hard to get above them. If you are an excessive spender, try to curb the expenditure a little bit at a time.


10. Myth: “My children will take care of me when I am older.”

This may just be a culture thing, but in many Asian cultures it is common for parents to expect that their children will take care of them when they are older. But, relying on our children to provide for us in our old age is just not a viable option for retirement planning in this age of changing cultural influences and where old values are replaced with newer ones.

Budgeting (detailed article)

11. Myth: “Budgeting is tedious.”

That really depends on the granularity and the mechanism you use to track the expenses. So, choose what works for you and stick with it.


12. Myth: "I need a budget only if I am in debt" (Variation: "I need a budget only if I am poor").

Unless there is a system in place that sets some limits and tracks our expenses, we will slowly slip until the savings rate no longer correlates to our earnings rate. What's worse, in some cases, an increase in earnings can result in a disproportionate increase lifestyle forcing a person to get into debt!


13. Myth: “My situation is too far gone. A budget is not going to help me.”

It’s never ever too late to get out of a nasty situation. Read the detailed article for links to stories of people who have almost come back from the brink of bankruptcy by starting out with a simple budget.


14. Myth: “I need fancy/expensive software to track my budget.”

OK, hold on a minute. What do you think has been around for longer -- computers or budgeting? For all I know, budgeting must be as old as the concept of money itself!


15. Myth: “I don’t have time to track my budget.”

In most cases, this just turns out to be an excuse to get out of budgeting. You could use some simple techniques such as the envelope method or use automatic payments to keep track of your budget with minimal effort.


16. Myth: “I have to give up all my fun activities once I start a budget.”

No, you don’t. You just have to account for it, that’s all. Make a list of all the things that are important to you and prioritize them. If you want to keep a big chunk aside for “fun” activities, then learn to cut down on others that are not as important to you. There is nothing wrong in spending on “fun” activities, as long as they are planned and accounted for.


17. Myth: “Having a budget will make me rich.”

There is nothing mystic about a budget and it is not going to make more money magically appear in your account than what you had to begin with. It will however help you keep some of that money there if you execute it right.

Mortgage & Home Ownership (detailed article)

18. Myth: “If I can afford the mortgage payments, I can afford to own the house”

There is a lot more to owning a house than the mortgage payments. When you move to your own house which is likely to be larger in size than an apartment, almost all the bills will increase dramatically. In addition to that you have to pay property taxes, home-owner’s insurance, HOA fees, maintenance costs etc. So, if planning to buy a house, make sure you account for all these in your budget planning.


19. Myth: “I can save a lot of money on my taxes if I buy a house, since interest payments are tax deductible.”

This is not always true. If you are a median income family filing taxes as married and you buy a median priced home, then there is very little advantage to itemizing your taxes, and you may as well claim standard deductions.


20. Myth: “I cannot afford the payments for a 30 year mortgage. My bank offers me an option of 40 or 50 year mortgage. Sounds like a good idea!”

The 40 and 50 year mortgage usually come with a higher interest rate, and when amortized over the period of the loan, the monthly payments do not really go down much. Paying the larger interest for a longer period of time means you throw away a lot more money in the name of interest.


21. Myth: “I need to enroll in the mortgage company’s bi-weekly payment program to shave a few years off my mortgage.”

Many mortgage companies charge you a fee for bi-weekly payments. You can obtain similar benefits to the mortgage company’s bi-weekly payment program by making an extra payment every year on your own, or by increasing your monthly payment by (1/12)th of your regular payment and save yourself the fees charged by the mortgage company.


22. Myth: “Unlike renting where my rent can increase every year, if I lock in a fixed-rate mortgage, my monthly payments will remain constant.”

It is true that when you buy a fixed-rate mortgage, your monthly payments to the bank are fixed and locked in. But home ownership is way more than just paying the mortgage. Think preventive maintenance, routine repairs, emergencies, home improvement projects etc., and you will find that home ownership is anything but fixed expenses!!!


23. Myth: “If I cannot put 20% down payment, I have to pay PMI.”

A “piggyback” loan allows to you avoid the PMI even if you don’t have 20% to put in down payment. The way the loan works, instead of taking one single loan for more than 80% of the home purchase price, you take two different loans from the same lender.


24. Myth: “If I refinance my loan, my clock starts over and I have to pay mortgage for another 30 years.”

Many lenders that offer refinancing allow you to amortize the loan, so that you may payoff your loan using the same schedule as your original loan. Even if your lender does not offer this, as long as they do not charge a pre-payment penalty, you should be able to make additional payments towards the principal each month, and pay it off according to the schedule that you prefer.


25. Myth: “Shopping for the lowest rate can result in multiple inquiries and ding my credit score.”

This is not true. Read the detailed article for information from myFico website which shows that multiple inquiries during the time you shop for mortgage or car loans are bunched together into a single inquiry in your credit report.


26. Myth: “I should shop for the house first and only after I find the house, I need to start looking for loans.”

Most sellers do not take a buyer seriously unless he/she is already pre-qualified or pre-approved for a loan.

Credit Cards & Credit Score (detailed article)

27. Myth: “I need to carry a balance on my credit card to build credit history”

As long as you own a credit card, even if you pay your balance in full each month, you will still build credit history.


28. Myth: “I will be liable for all the charges if someone steals my card and runs up a huge bill”

Almost all credit cards today come with theft liability protection. According to the Fair Credit Billing Act (FCBA), if you report the loss of your credit cards before they are used, the card issuer cannot hold you responsible for any unauthorized charges. If you report the loss after the card is used by the thief the maximum you are liable for is $50.


29. Myth: “Checking my credit report will reduce my credit score.”

When you check your own credit report it is termed as “soft pull”. When other companies pull your credit report, for instance when you apply for a loan or new credit card, then it is termed as “hard pull”. Soft pulls do not result in reduction of credit score.


30. Myth: “I should cancel some of my cards since I have too many.”

By closing one (or more) of your accounts, you will reduce the total credit line. If you have any debt on your credit cards, this will result in causing the utilization (as a proportion of the total) to increase, causing your credit score to possibly go down. Also, closing cards could bring the average age of your credit history down, resulting in lowering your score.


31. Myth: “I have fixed APR on my card – that means I have locked in the rate for life.”

No, “fixed” APR only means that your APR is fixed until the next time the card company changes your contract. Usually the changes to the APR on a “fixed” APR card do not happen too often, but still there are no guarantees that the rate is locked in for life.


32. Myth: “Once I payoff a collections account or an account included in bankruptcy, the negative record will be erased from my credit history.”

The bankruptcy listed in the public record information section of a credit report, remains for either 7 years from the filing date if it was a Chapter 13, or 10 years from the filing date if it was a Chapter 7, 11 or 12. Charged-off accounts remain 7 years from the date of the initial missed payment that led to the charge off (the original delinquency date), even if payments are later made on the charged-off account.


33. Myth: “I only need to pay the minimum payments each month.”

If you pay only the minimum payments, it will take you a long time to clear your initial balance, during which time you pay an enormous amount in interest.


34. Myth: “I cannot keep up with my credit card payments – so I will consolidate all of them using a HELOC.”

If you clean your slate of credit card debt with a HELOC and then start piling on more debt on your credit card, this could be disastrous. Eventually, when you cannot keep up with the payments on your HELOC since you have used your home as collateral you could end up losing your home!


35. Myth: “Having a rewards card will save me money.”

Not if you don’t pay off your balance in full each month! Rewards cards tend to have a higher interest rate than those with no cash-back or miles or rewards. So, if you do not pay off your balance in full, then the interest you pay might offset the benefits of any rewards.


36. Myth: “Credit cards are necessary for online shopping.”

Not quite. These days many, if not most, online merchants accept alternate payments such as debit cards, pay pal or e-checks. So it is not necessary that you must have a credit card account to be able to shop online.


37. Myth: “My divorce agreement states that my spouse is responsible for the debt on our joint credit accounts. If he defaults, I will not be responsible.”

A joint credit account that your share with your spouse is a responsibility of *both* of you. A divorce does not automatically break up joint accounts, and if you share joint account with your ex, it is advisable to call the creditor and either cancel the account or convert it to individual account.


38. Myth: “If you are only an authorized user and not a joint owner or co-signer, then your credit report will not be affected if the primary holder defaults.”

The credit agencies consider you “guilty by association” and any activity on the accounts that you are an authorized user of will appear on your credit report.


39. Myth: “If I marry someone with a bad credit score, then my credit score will go down.”

Just as a divorce does not have any bearings on your credit report, a marriage does not automatically combine your individual credit reports either. However, after marriage if you open joint accounts and your spouse is irresponsible with it and causes negative marks, it will show up on both your credit reports.


40. Myth: “Credit repair agencies can help fix my bad credit history.”

If you have a negative record on your credit history due to a mistake on the part of the credit reporting agency, then the credit repair agencies may be able to help. On the other hand if there are legitimate reasons for your bad credit, then by law they will not really be able to help.


41. Myth: “Accepting pre-approved cards does not affect my score, since well, the offers are already pre-approved.”

In order to determine candidate for receiving the pre-approved offers, marketing companies utilize soft pulls. However, if you apply for one of those offers, the company issuing you a credit card will do a hard pull on your credit history to confirm your credit worthiness. Soft pulls are not recorded and does not affect your credit score, but a hard pull does.

Stock Market Investing (detailed article)

42. Myth: “You can expect to earn around 10.7% on your investment in the stock market since this is the average long-term returns so far.”

The source of the popular number 10.7% is the measurement made over a very long period of 76 years – 1926 through 2001. Since most of us will not invest for such a long time and 10 or 20 years is a more realistic number, how much you can expect to make from the stock market depends on when you start investing and in what direction the market is headed during the period for which you invest.


43. Myth: “To begin investing, I need to accumulate a lot of money first.” (Variation: “I cannot afford to invest”).

You can start investing with as little as $20 per month. As long as you make the commitment of doing this every month and stick with your commitment, you will be surprised at how much balance you will have after a while! Watch out for fees though!


44. Myth: “I can beat the stock market.” (Variation: “I should invest with a fund manager since fund managers know how to beat the stock market.”)

The stock market is quite unpredictable and there is no magic crystal ball to foresee exactly what will happen next. As a result, it is difficult for anyone – be it an amateur investor or a hotshot fund manager – to consistently beat the market.


45. Myth: “Timing your transactions is very important in order to succeed in the stock market.”

John Bogle, founder of the Vanguard Group, supposedly wrote: "After nearly fifty years in the business, I do not know of anybody who has done it [market timing] successfully and consistently. I do not even know anybody who knows anybody who has done it successfully and consistently." Enough said.


46. Myth: “I should leave investing to the pros’ since I don’t have enough time to follow the market.”

This is where index investing comes into picture! An index fund is essentially a collection of stocks that aims to replicate the fluctuations of an index of a particular financial market. Since Index funds aim to track the market, you will receive similar returns as the index that your fund tracks, and hence *you* do not have follow the market too closely.


47. Myth: “Buying stock is like buying a lottery ticket.”

When you go out and buy a lottery ticket, all you receive in return is “hope”. However, when you buy shares in a company, you actually own a piece of the company. How well this ownership of the company pays off depends on a whole bunch of factors, but you must agree with some good research and planning, the odds are far better than winning a lottery.


48. Myth: “What goes up must come down.” (Alternately, “what comes down must go up.”)

The stock market is not subject to the laws of Physics. Rather it is all about how the company is managed and what the investors perceive the value of the stock to be. By picking the right company, you could potentially ride the up wave for a long time. By picking a loser, you could wait and wait and never get out of the rut.


49. Myth: “If you are young, invest in the stock market. If you are old, invest in the bond market.”

While generally true, this is not advice that you should follow blindly. Rather than looking at whether you should invest in the stock market based on how old you are, you should look at how soon you may have to take the money out and what is your risk tolerance based on the station of life you are in.


50. Myth: “As an individual investor I do not have access to all the information available to a broker or fund manager”

The fact that a company is “publicly” traded means that they *must* make all the information available publicly through quarterly report, annual reports, prospectus, investor guidance etc. With the proliferation of online trading sites, it has never been easier to get access to this public information.


51. Myth: “A stock that pays out a dividend of $10 is always better than the one that pays out $2.”

When comparing two dividend stocks, you should not look at the absolute figures. Instead, the dividend payouts should first be converted into a percentage of the stock price (10% for stock A vs. 20% for stock B) to get a better idea of the value it provides.

Debt (detailed article)

52. Myth: “The furniture/appliance/gizmo store offers zero interest, zero payment loan. So I can afford it.”

The zero interest, zero payments are usually valid for a fixed period of time. At the end of the promotion period, the interest rate usually shoots up to a large figure. In addition, some lenders include a clause that the promo terms are valid only if you payoff your whole loan amount at the end of the introductory period. Beware of promotions that sound too good to be true!


53. Myth: “I am in such a crunch – maybe just this once I can get away with taking a payday loan.”

This is a very bad idea. Payday loans charge a flat rate fee for the amount you borrow with a maximum period restriction (e.g., two weeks) to repay the loan. Do you know that when the APR is calculated on an annualized basis (like credit cards and other legit loans do), this could result in anywhere from 400% to 1460% APR? Please avoid the payday loans like the plague.


54. Myth: “I can ignore the debt collection letter since it is only for a small amount” Variation: “I don’t owe any money, this is obviously fraud, so I can ignore this debt collection letter.”

Irrespective of whether you actually owe the money or not, please do not ignore the debt collection letter. The National Consumer Law Center says most collection suits and arbitration proceedings against consumers result in default judgments because consumers fail to respond to the legal notices in which case you will be forced to pay up even if the debt is not valid.


55. Myth: “I am under 18 years of age. So I am legally not liable for the debt I rake up on my credit card.”

Credit companies allow minors under the age of 18 to have a credit card if an adult adds the minor to their account or co-signs for a loan. By raking up a lot of debt you are getting the person who was kind enough to help you get the credit card into a lot of trouble.


56. Myth: “All my friends have more debt than me. So my debt is not all that bad.”

C’mon… that’s just lame and you know it! It is up to you to decide which statistic you want to be a part of – the growing number that spends most of their life struggling with debt or the small number of smarter people that stay out of it!


57. Myth: “I have dug myself into so much debt. I am such a loser!”

There is taking responsibility and then there is guilt. The first sentence above is about taking responsibility. The second is guilt. Taking responsibility is a good positive step in the direction of becoming debt free. Guilt on the other hand makes you take two steps backward. It makes you lose your self esteem and punish yourself unnecessarily. Instead of giving in to this negative feeling take charge of your life and your debt!


58. Myth: “With the amount of debt I have, I am never going to be debt free. So why bother even trying?”

If you have the will power and the discipline, you can get rid of any amount of debt. If you make becoming debt-free your goal, then you will learn to overcome the obstacles and find a way to get there. The detailed article has links to several inspiring real life stories – check it out.


59. Myth: “I have too much debt. Maybe I should just file for bankruptcy and start with a clean slate.”

Bankruptcy is not an option! It is neither easy nor pain-free to go through bankruptcy. It takes an enormous toll on your emotional well being and affects your relationships and outlook of life. And also how others look at you. And, as if all that is not bad enough, your credit history will be trashed and the black mark will remain on your records for anywhere between seven to ten years.


60. Myth: “I can help my friend in debt by co-signing a loan for him.”

The credit industry is a billion dollar industry. Lenders are willing to pay hundreds of dollars in referral bonus just to have clients walk in. In spite of all this, if the banks require your friend to have a “co-signer” what does it say about him? When you co-sign for a loan, you agree to bear the responsibility for the whole loan if your friend defaults. And considering that the banks do not have much confidence in him, there is a high probability that he will. So be very wary of co-signing for a loan.


61. Myth: “All debt is bad.”

At some point, when you have paid off the high interest consumer debt, you should take a short break and decide which debt is really bad, and which is OK from your perspective. Examples of “good” debt may be mortgage at a fixed low interest rate, credit card balance transfers with 0% APR etc.

Frugal Living (detailed article)

62. Myth: “Frugal living = Being cheap”

This myth is one of the biggest psychological barriers that prevents people from incorporating the concepts of frugal living in their daily habits. While one extreme of frugal living can mean being very cheap, you need not go to such extremes. Being frugal is a lifestyle choice, and you can choose the degree of frugality you are comfortable with and adopt it.


63. Myth: “Frugal living = buying things second hand.”

Frugality means different things to different people. The extent to which you want to incorporate it in your life should be decided only by you. Buying things second hand is definitely a great way to live frugally. But that does not mean you always have to buy everything second hand. Determine what works for you (example, books but not clothes) and buy only those things second hand that you are comfortable with.


64. Myth: “Frugal living = giving up on all your indulgences.”

Frugality does not mean you have to give up all your indulgences – it just means that you have to get creative about finding less expensive alternatives. Or cut down in other aspects of your life to be able to accommodate the indulgence.


65. Myth: “Living frugally will make me rich.”

Frugality is not a magic wand that will make money appear mysteriously! But, getting into the frugality mindset can help prevent you money from disappearing mysteriously :) You make what you make. At the end of the day what matters is how much of it you can keep. Incorporating frugality in your lifestyle simply helps you keep more of what you make.


66. Myth: “Instead of worrying about being frugal, I should just focus on making more money.”

There are two flaws in this argument. (a) If you increase how much money you make, but don’t keep an eye on how much you spend, you will eventually still be left with very little money at the end of the day. (b) If you need to have $X more, then you would have to make $X + $Y more in order to account for the taxes you have to pay Uncle Sam. Ideally, the best thing to do would be to live frugally *and* try to increase your income :)

Financial Planning (detailed article)

67. Myth: "Financial planning is for rich people."

Financial planning is important no matter what rung of the financial ladder you are on. Financial planning could mean something as simple as budgeting for day-to-day expenses, putting away money for future purchases so you don’t get into debt, making sure you pay your bills on time so you can avoid late fees and interest, etc.


68. Myth: "Financial planning = Investing."

Financial planning can be just about anything – budgeting, setting up a retirement account, investing, estate planning, vacation planning etc. Start out with some basic goals, and determine how you will get there, and voilá, you have a financial plan.


69. Myth: "I am very young. I don’t need to start planning for retirement just yet."

If you are very young, then this is the best time to start putting aside some money for retirement since you can have the full power of compounding behind you!


70. Myth: "It’s too late for me to start saving for retirement now."

This is a corollary to the myth above. While yesterday was unarguably a better day to start, today isn’t quite that bad either. Start now, if you have not already done so!


71. Myth: "Kids’ education comes first. So I need to put all my savings in college funds."

Push comes to shove, kids can still fund their college education using loans and grants. But there are no loans or grants to provide for retirement. So, make sure you put away enough money to support you through retirement before pumping all the money into a college education fund.


72. Myth: "I have a financial planner to take care of my money. So I don’t need to worry about it."

Well, it’s your money... if that’s how your want to deal with it, Good Luck!!!


73. Myth: "I can pick a financial advisor randomly from the Yellow Pages."

No! Unlike stock brokers, financial advisors are not required to be registered or certified. So look around and do your research first if you plan to hire a financial planner.


74. Myth: "Financial advisors mostly provide investment/retirement advice."

Since we have already established that financial planning ≠ investing, it follows through that financial advisors don’t just offer advice about investing (or retirement).


75. Myth: "All savings accounts are created equal."

Online savings accounts can offer much higher rate of interest than the traditional brick and mortar banks. While planning for retirement, it is better to park the money in tax-deferred accounts. Then there is a variety of other options such as Money Market Accounts (MMA), Certificate of Deposits (CD), brokerage accounts etc.


76. Myth: "Two incomes are *always* better than one. So, it is *always* better for both the partners to go to work."

While in many cases if both the partners earn, they can provide better quality of life for the family, in some cases this is not true. Especially if you have kids of young age, you need to consider the cost of day care.

Miscellaneous (detailed article)

77. Myth: “If everyone unites and does not fill gas on any one day, we can bring the gas companies to their knees and lower the gas prices.”

The problem is, if people do not fill gas on one particular day, they just will on the next couple of days or the previous couple of days. From the gas companies’ perspective, this probably doesn’t even make a ripple in the profit pool. Instead of aiming for one no gas day, make every day a low gas day.


78. Myth: “If I buy a vehicle that is defective the lemon law is there to protect me.”

Lemon laws are regulations that protect customers from defective vehicles. However, different states have different sets of rules when it comes to lemon laws – so be aware of what the rules are in your state.


79. Myth: “When I contribute to a charity, my entire contribution will be used for the charitable cause that they mentioned.”

This is not quite true. Few charities use the entire 100% of the contribution to the cause mentioned. The norm is that most charities use a part of the contribution for administrative purposes.


80. Myth: “I am too poor to travel.”

The abundance of consolidation fare finders and aggregators has made it easy for anyone to find cheap airfare, rental car rates and hotel rooms. In addition, the abundance of hostels, bed and breakfasts and cheap motels, make it easy for even people on a very tight budget to travel. There are several online discussion boards and forums that you can use to find the details of the cheap eats and entertainment and also be aware of common local scams well ahead of taking the trip. Overall, if you really want to travel, there has never been a better time than the current information age to find the cheapest way to do it!


81. Myth: “I don’t need an emergency fund.”

Everyone needs an emergency fund – how much or how little you should save in this fund is of course debatable.


82. Myth: “Buying a hybrid car will save me money over the long run.”

Don’t get me wrong – I am all for buying hybrid cars. That said don’t buy a hybrid car for the wrong reasons. Environmentally, buying a hybrid car is a great decision – something that you should be proud of and something that more of us should consider more seriously. But financially, hybrid cars don’t necessarily save you a lot of money.

Auto Insurance Discounts

15 Minutes Can Save You 15% Or More On Car Insurance… (even if you are not a Geico customer)

The Geico ads may be annoying, but they do have a point – if you can convince yourself to take out a little bit of time to shop for car insurance you can save a heck of a lot of money. After our recent car purchase our insurance rates went up and it just didn’t seem right to pay the high premium that was quoted to us for the minimal coverage we had! So we shopped around and made the switch. Our premium is now about 60% of premium quoted by our previous insurance provider, and our coverage is much better. So much so that I think we have too much coverage. But with the new company (Progressive), the difference between the minimal coverage and the one with bells and whistles was very less and so we opted for the coverage with the bells and whistles.

While shopping for auto insurance, I found that most companies give out a base rate and then apply a bunch of “discounts” to reduce your bottom line premium. Technically, the sales person is supposed to check with you if you qualify for the discounts. But just in case the person you get hooked up with isn’t thorough, here is a list of discounts that you can ask your sales person for. (Note that not all of these may be available from all the insurance companies or in all the states)

• Multi-Vehicle Discount
  If you have more than one car in your household (or even a car and a boat or a motorcycle), buying insurance for all the vehicles from the same company will qualify you for a discounted rate.


• Multi-Policy Discount
  If your home owners (or renters) insurance are from the same company as your auto insurance, you can get a discount on your combined insurance premium. Even if your auto insurance does not provide home-owners insurance, check if they have a preferred company list and if you have the insurance from a company on that list, you might qualify for a small discount


• Home Owner Discount
  Even if your homeowners insurance is from a different company, just the fact that you are a home owner might qualify you for a discount. I was quite surprised when the salesperson offered this discount to me!


• Garaged Car Discount
  If your car will be parked in a closed garage that is locked (and hence is at a lower risk of being stolen) then you might qualify for the garaged car discount.


• Defensive Driving Class Discount
  In TX, if you have taking a Defensive Driving class (ahem, to dismiss a ticket), you can send a copy of your completion certificate to the insurance company and request for a discount.


• Good Student Discount
  Under-age drivers who are full-time students with good grades may qualify for a good student discount. Sure will be helpful to offset the steep cost of “under 25” insurance rates!


• Safe Car Discount
  Different companies have different definitions for what qualifies as a safe car – some of the things they consider are anti-lock brakes (ABS), anti-theft alarm, lojack, airbags, automatic seatbelts, etc.


• Safe Driver Discount
  If you have a clean driving record for several years, then of course you are the kind of customer every insurance company wants, and so they will offer you a pretty hefty discount.


• Loyal Customer Discount
  If you are with the same insurance company for several years, make sure you call your existing insurance company first to see if they will offer you a loyal customer discount. Also, make sure you tell the new companies that you are calling up that you were with your previous company for several years – they might offer you a good rate to tempt you to switch.


• Low Mileage Driver Discount
  I think the national average for the miles a person puts on his car per year is ~12,000. If the number of miles you drive is less than the national average statistic that the insurance company uses, you might qualify for a low mileage driver discount.


• Green Car Discount
  Some insurance companies want to make a point that they are green, and consequently offer a small percentage of discount if you drive a hybrid car.


• Military Discount
  If you are in active military duty, retired from military or coast guard, you will qualify for a military personnel discount.


• Online Discount
  Even though I spoke to a sales person on the phone to make sure that I was getting all the discounts we qualified for, the sales lady was really nice to suggest that I actually buy the policy online which qualified me for a one-time $50 online discount. She entered all the data I had provided her into the system and gave me a quote number. All I did was plug in that quote number on the website, and voila, all the discounts appeared along with the additional (one-time) $50 discount.


• Pay Ahead Discount
  In addition, since I chose to pre-pay for the next six-months and provided them with a credit card number to bill me at six-month interval, the premium was a little lower than what we would pay if we chose to go month-to-month.

Well, that’s about what I have for now. If you have availed any other discounts, I hope you will share with me (and the other readers) so we can check if we qualify as well. TIA.

~~~oOo~~~

Want to check if you qualify for some of these discounts? Get auto insurance quotes from a reilable provider.

~~~oOo~~~

Retirement Advice for Students

Some time back, FMF had written about free retirement advice days sponsored by Kiplinger’s Personal Finance magazine and the National Association of Personal Financial Advisors (NAPFA). I thought of giving it a try and sent in the following question –

Hi,

I am interested in finding what is the best way for students to save for retirement. I am looking at two specific cases

1) A student (grad/undergrad) who is a US citizen
2) A student (grad/undergrad) who is a not a US citizen and is here on an F1 visa.

Usually in both these cases, we do not have a very steady job or a good stream of income and work on assistantships or part time jobs in or around the campus. International students are limited to 20 hours of work per week. Any advice appreciated.

Thanks,
-ispf

I was not sure if I should really expect a response. Even if I did receive a response I thought it would be a cookie cutter mass response that would probably not be very relevant. I was pleasantly surprised last week when I not only received a response from a NAPFA Registered Financial Advisor (name withheld to preserve anonymity), but also that he had taken the time to provide customized advice. I hope some of you that are still students will find this advice useful. (If you are wondering why you should save for retirement while you are still a student, you might want to read this first.)

First of all, I think it is absolutely wonderful that you are interested in getting people started on saving for retirement. Starting early is actually the most important factor in accumulating an adequate retirement fund.
Some general comments:

1. BEFORE saving for retirement, they generally should eliminate high interest consumer debt and establish and emergency fund equaling at least three months of expenses in a safe liquid investment (such as a money market fund).

2. They should educate themselves on the basics of investing. In my opinion, that should include the topics of asset allocation, diversification and the impact of costs and taxes. An excellent book to begin this education is "The Random Walk Guide to Investing" by Burton Malkiel.

3. Some excellent specific fund choices for beginning investors are the STAR and Target Retirement funds from Vanguard. They offer instant diversification, appropriate asset allocations and very low costs. The difference between them is that the STAR Fund has a $1,000 minimum while the Target funds have a $3,000 initial minimum. A great strategy for anyone who does not yet have the $3,000 minimum would be to purchase the STAR fund and then transfer into a Target Fund once they have accumulated $3,000. The wonderful thing about the Target funds is that the allocation automatically is more aggressive when the investor has a long time horizon until retirement and becomes more conservative as they get closer to retirement. In other words, they have a higher percentage in stocks when the investor is young and shift more towards bonds as they get older. There are no sales charges and the ongoing expenses are very low. Over the long run, that means that the investor keeps more of the earnings. These funds can be purchased directly from Vanguard through their website www.Vanguard.com.

4. I highly recommend Roth IRA's for anyone that qualifies. I would assume that most of the people in question qualify (adjusted gross income less than approximately $100,000).

5. It is hard to give specific advice for non-US citizens. It depends on the laws of their country as well as the agreements between their country and the US. However, if they are able to save in US mutual funds, the Vanguard funds are a great choice.

Hope that is of help to some of you student readers out there!

Surviving Personal Productivity Down-Time

It happens to the best of us. An utter lack of interest. Unshruggable lethargy. Uncontrollable procrastination. Debilitating laziness. Uncaring apathy. With the kind of busy lives we live, it’s inevitable that once in a while our mind, body and spirit go on strike and no amount of coaxing seems to make things happen. No amount of cajoling can make you want to do the job in front of you. Unfortunately, none of the bosses (who themselves might be going through the same phase) care, since they have bosses and their bosses have bosses and so on. In a world where productivity and personal effectiveness are key, how do you survive through a phase of “down-time”?

Here are a few tips that I find helpful. Maybe some combination of the techniques will help you get through your down time. Some of you may find some of these suggestions blasphemous, but do remember – none of these are meant to be long-term solutions. They are just quick fixes to help you survive through a short patch of utter desperation while you try and figure out how to best get yourself out of the rut.

If at all possible, take vacation.
Just wanted to get that one out the way. If you have vacation time available and are not saving it up for an ear-marked purposed, this may be a good time to use some of it. A total lack of motivation maybe your tired brain’s way of telling you that it’s time to relax and take some time off. Workers in USA are supposed to take significantly less amount of time off compared to our peers in Europe. Are you one of the people responsible for these statistics? Vacation does not necessarily have to mean a week off on an exotic island (though, if you can afford it, I would say, go for it!). But it does mean days without computers, client calls or PDA. Spend the time with your kids – take them for a picnic, or hang out by the pool. Bake a cake together. Run with your pets in the park. Just do something that will help you forget your work for a day or two, heck maybe even a week or 10 days :) More often than not, just this one trick is enough to recharge your spirit.

But if that’s not an option, here are some other things you can do at the work place to survive the dry spell.

Break things up into small tasks.
If you have to show up at work, then the best thing to do conquer and rule. Do not think about your lifelong career goals, or even tomorrow– just focus on getting through today. Break up what needs to be done this day into several small tasks. And attack them one at a time. You could prioritize your tasks in several different ways depending on how far gone you are. The best technique would be to put them in the order of importance and start out with the most critical one. But if you totally lack the drive, then pick the task that you least detest and start working on it. The idea is to do *something*. And when the task is done, do the next one on the list and so on until the day is done.

Pick one thing about your job that you really like and focus on it.
More often than not, we expect too much from our jobs. We want lax hours, and at the same time we want the work to be challenging and stimulating. We want great pay and at the same time a good work-life balance. We want great benefits, short commute, good location… The list just goes on. I agree that all these things are great to have in a job, but more likely, there will be something missing for sure. This can lead to disillusionment and a possible lack of interest and motivation. If this is the case, then prioritize what is really important to you, and focus on just those aspects.

Remember your boss (or colleague) is just another guy in the rut.
A lot of times, the work environment makes it very difficult to stay interested on the job. Maybe it’s a demanding boss. Or an annoying colleague. How you let it effect you is up to you. I know it’s easier said than done, but if you let the people around you effect how you feel, then really, you have only yourself to blame. When you start to feel distraught by the way your boss or colleague treats you, just remember, they are people just like you. They have no authority or power over how you feel. Everything is in your head. Usually remembering that they are just the same as me – no better, no worse – helps me not get effected by what anybody else says or does.

Put a carrot on a stick and hold it before your eyes.
To make the days go by a little easy, allocate a break and stick to it. For instance, for the past few months, me and a couple of other colleagues get together around 3:00 for a short coffee break. We still drink the free coffee available at work – but instead of having it in the break room, we walk down to the break room of a different floor, settle into comfortable chairs and gossip to our hearts content :) Somehow knowing that the monotony of the afternoon will be broken by a juicy gossip, ahem, coffee break helps get through the monotony of the afternoons when nothing earth shattering happens (which is most days!).

Put yourself on “automaton” mode.
If things are really nasty and you just don’t think you can get through the day, then put your self on auto-pilot. Take on only those tasks that you know your can do with minimal effort. Keep at it without thinking too much – thought is your worst enemy. Just be a robot for the time being. Remember though, that has some really negative side effects and should not be done on an every day basis. (Well, you could, but then you have no right to complain after that that you are in a rut!). This is generally a good technique for surviving through very short periods of down-time while making sure that your personal productivity curve at least stays flat instead of showing a huge dip

Snap yourself out of it by taking on a challenge.
Obviously, it’s either this or the previous, but not both. This one is very helpful when you are ready to pull yourself back out of the dumps and get back into action. Take on something challenging that will keep pushing you into finally getting things done. It may seem hard at first, but once you are in the groove you know you can keep going. Before you take on the challenge though, make sure that know your limits and how much you can push yourself!

Think of all the worse circumstances you could be in.
No don’t laugh! When all else fails, this will work! When you think of all the people who are in a worse situation than you are, you will start to feel “not-so-bad” about your own situation. It’s just human nature to blow things out of proportion when it comes to our own miseries. But when we look at some of the “real” problems that people have out there, it will help put things in perspective and you might start to feel OK about yourself. Here, here and here are some ways to kill time and realize that your boss or your work isn't the worst one after all :)

Ultimately, it is up to you to pull yourself out of the “down-time” and get back in the groove. How good you do your job determines how much money you will make, which in turn determines your financial well being (that and whole bunch of other things, but you get the point). Since how well you do your job depends a lot on how motivated you are, it is in your best interest that you stabilize your situation using one of the tricks above (or other tricks – whatever works best). Then you can start to focus on improving your long-term outlook. I.e., looking at the chart below, for now focus on making your curve look at least OK(ish) and eventually get back to being "good".



Here are a few related articles from elsewhere on the blogosphere that you might find interesting:

• Top 20 Motivation Hacks


• Triple Your Personal Productivity


• How to survive (and thrive!) in a job you hate


• 15 Things You Can Do Right Now To Help Your Career


• Thirteen Tricks to Motivate Yourself

The Best of Finance Blogosphere: New Blog Discovery Edition

While I was randomly browsing this week, I came across a new blog (new for me; via Clever Dude) which I just had to highlight in this Best of Finance Blogosphere edition. The blog is called The Wastrel Show and has the tag line Confessions of a Middle Aged Spendthrift. I must admit that, I almost dismissed the blog and moved on because of that tag line. But the article that landed me there – Debt Free Is A Lonely Road - painted a very different picture. In this article Boomie (the author) talks about how her choice to stay debt free and live a simple life has put her and her spouse at odds with some of the family and friends, but helped them amass a net worth of a million dollars. I was quite intrigued by the dichotomy of the flittery tagline and the sensibility of the post. As I wandered around the other recent posts, I found this dichotomy repeating itself - ‘Boomie’ seems like a interestingly complicated person – firmly grounded in reality but with a tendency towards surrealism; straight and to-the-point at times and intentionally vague at others. Here are a couple of interesting posts to get you started into her interesting world -

• How I Am Preparing For The Proposed Recession (A very practical post firmly grounded in reality).


• If Money Were Human (Exactly the opposite, but no less interesting!).

Now onto some other articles that caught my attention –

• Flexo at Consumerism Commentary is giving away Quicken 2008. I know I am diminishing my chances of winning by writing about it here and having you compete with me for it, but Flexo promises he has four more copies to giveaway – so what the heck, I might as well share the information and build up some good karma :)


• While we are on the topic of winning things, if you plan to participate in the $10K student blogging scholarship contest (I wrote about it here), then you should check out this wonderful collection of blogging resources by Pinyo at Moolanomy. Actually, even if you are not participating in the scholarship contest, you should check out the resources and book mark it for handy reference.


• MBH at Mighty Bargain Hunter has a list of prudent things to do with small windfalls - a good reminder for all of us to not blow away the little bits of found money.


• J.D. at Get Rich Slowly shares his experience of firing an employee. While an experience like this can be frustrating for both the employer and the employee, I really like the way J.D handled it.


• Sun at The Sun’s Financial Diary has an interesting article about investing in global REIT ETF’s - if you are looking to diversify your portfolio, you might want to check out this post for a not-so-commonly-discussed option.


• While we are on the topic of investing, check out
  this visual guide to morning start mutual fund comparison tool by Jeremy at GenX Finance. A really nice primer.


• Patrich at Cash Money Life has got himself into a nice little battle about credit card usage and here is a post where he discusses 10 reasons credit cards are good. I am with Patrick on this one, and just recently did another 0% balance transfer bringing the total to $55K that is earning a nice little interest at the rate of 5% for me. What’s not to like about free money?

That’s it from me for this weekend edition. Hope you all have a good break spending time with family and friends and relaxing!

The A-to-Z List of Online Money Management Software

Recently, in a comment, Adam Lehman asked -

grad money man,

i’m a college student who is looking for some free software to manage my various accounts (savings, checking, etc.) and a place to track my daily spending. I am currently using an excel doc, but do you know of anything better?

you could write a post about it or reply. I read all your stuff.

Adam

This is the first time anyone has asked me for advice on this blog and I am honored! However, I am totally un-qualified to give advice on this matter since I still use notepad and pencil :) That said, I will try my best to be of some help. Please find below a comprehensive list of online software for budgeting and money management tools (I have filtered out investing and invoicing tools). I have included a brief description of each tool available from the product’s website. When possible, I have included a link to the review available on the net or a fellow blogger’s site which could provide a more personal experience. I usually find such reviews far better than having to look through the product FAQ to get the feel. Finally, I hope some of the readers who use these software will pitch in with your experiences. Adam (and others), I hope you find this a good starting point for finding the tool that works best for you.

Free Software

1. Bill Monk
   
   From the website: BillMonk is a free service that makes it easy to track expenses between friends, and to settle them up instantly online. Particularly popular with roommates, young professionals, and college students, it has been used for splitting bills like rent, utilities, meals, and beers. BillMonk also allows users to keep track of books, DVDs, or other items that they have lent to or borrowed from their friends.
   
   Review: Rafe Needleman at CNET has written a short review of Bill Monk. Emily Change at eHub has interviewed the Founders.



2. Billster
   
   From the website: Billster can do the following extremely useful bits: (a) Record and report on your personal and group expenses (b) Make you very popular with the opposite sex (ISPF: What????) (c) Save reoccurring expenses, even those with direct debits or standing orders setup (d) Send reminders, either automatically or fired off by you, whenever you want to remind people who owe you money or to remind yourself about a payment (e) Automatically email you with a summary of the expenses you've put through billster.



3. BudgetEDGE
   
   From the website: The budgetEDGE concept grew out of a simple desire to access my personal financial information in an anonymous way (like an email account) online. After looking at the services that existed, I couldn’t find any other site that allows users to really understand the impact of their current spending patterns on the future or what potential purchases might mean to the future. While it’s great to see how much you have spent on chinchilla shearing lessons over the past 3 months, it’s more valuable to know how much my cash position will change if I attend another month of lessons. To solve that problem, I thought about it, and then hired the best (only) programmers I know.



4. Budget Pulse
   
   From the website: Money management software are usually complicated while online ones are too simple and featureless. BudgetPulse is built on principles of simplicity, user friendliness and comprehensiveness. As the application is easy to use, it is especially useful for people to manage and monitor their financial condition. For security reasons, we do not and have no intention to link direct to users' banking account data.
   
   Review: Jim Bruene at Netbanker expresses his concerns about Budget Pulse and other such online money management tools. This article is definitely worth a read before you pick your online tool!



5. Budget Tracker
   
   From the website: We allow you to track your Budget, Bills, Transactions and tie all these together in an easy to read Calendar that can send you reminders when Bills are due. You can also view most of the data stored on this site with your Cellular Phone so you can take all your data with you where ever you may be.
   
   Review: Brian Benzinger at Solution Watch has written a detailed review of Budget Tracker



6. Buxfer
   
   From the website: Our goal is to create the best personal finance application on the web. Money is typically not the topic of discussion for a group of twenty-somethings wanting to have fun with their lives. But that's only because today's finance applications make it difficult and boring. That's what we have set about to change! We want people to effortlessly understand their finances. And have fun while doing so.
   
   Review: Jim Bruene at Netbanker has a detailed review of Buxfer. Also, check out the founders’ interview right here on this blog :)



7. Cash Board
   
   From the website: Cashboard tracks time and money so you can worry about more important things. (a) Have you ever forgotten to send an invoice or collect a payment? (b) Do you have billable hours scattered all over the place? (c) Do you just need an easy to use invoicing solution? (d) Are you spending more time doing paperwork than actually making money? We feel your pain.



8. Clear Checkbook
   
   From the website: A lot of people ask us what separates ClearCheckbook from other websites or software that are supposed to help you manage your money. Microsoft Money and Quicken are so packed full of useless features that most people get so frustrated they don't even use it. Excel is good for keeping track of some withdrawals and deposits, but as soon as you start adding categories or multiple accounts, it all breaks down. Other websites like Mvelopes.com charge you outrageous amounts of money so you can manage your finances. Paper checkbook registers require you to do a lot of math just to try and keep things balanced. ClearCheckbook is in a level of its own when it comes to making it extremely easy to keep track of all your money. You won't be inundated with huge amounts of worthless features and it's extremely easy to manage multiple accounts of all types as well as multiple spending categories that you can define. Also, ClearCheckbook is completely free! You'll never have to worry about monthly fees or any costs to use this site.
   
   Review: I couldn’t find a review of Clear Checkbook, but the blog It’s your money has an interview with Brandon O'Brien, the Creator of ClearCheckbook.com.



9. Expensr
   
   From the website: Learn what percent of your spending is on Food or Clothes, then compare these values with similar people so you know where to improve. Forecasting tools let you know when you'll go broke, or when you'll be $5K richer. They show you what to expect in your financial future.
   
   Review: Dolores Parker at Download Squad has written a detailed review of Expnsr.



10. Expense View
    
    From the website: ExpenseView is a free, easy to use application that helps track your expenses, budgets and income. Use it to get an understanding of how you're spending your money. The application is still in beta mode.



11. Flow Catch
    
    From the website: FlowCatch.com was built around one simple principle; that a month is a long time. Most people don't track what they spend on a daily basis and then are in for a shock at the end of the month when they open the statement. FlowCatch is designed to change that, by having you track your spending as it happens so there are no more surprises.



12. Foonance
    
    From the publisher’s description at download.com: Foonance.com is the new flexible way for families, individuals, and couples to manage their personal finances and track their Net worth over multiple Money Stores. Chuck out those spreadsheets and complicated finance and budget tools. With foonance.com you can tag your expenses and import your Internet bank statements.
    
    Review: Two short reviews here and here.



13. Geezeo
    
    From the website: Geezeo is a social finance application that helps you make educated financial decisions. With Geezeo, you can securely access all your bank accounts in one place, join and create groups to discuss specific financial topics with others and check your balances before you buy using sms/text messaging right from your mobile phone. Currently in beta.
    
    Review: Henry at Binary Dollar has a short review of Geezio . You might also want to check out this discussion of Geezeo on Wall Street Journal.



14. Gastus
    
    From the website: Every month you spend lots of money ... with Gastus you can keep track of your daily expenses.
    Gastus offers an incredibly easy way to know exactly how much you've paid every month. You can categorize expenses by types and concepts, and make nice pie charts and graphs to analyze your data.
    
    
15. iOWEYOU
    
    From the website: iOWEYOU is an innovative expenses sharing system, originally designed for use in a shared student house. The key features are Expenses logging, Instant reports, Access anywhere, works in any currency and is Completely free!
    
    Review: Gina Trapani at Lifehacker has written a short review of iOWEYOU.



16. Just Budget
    
    From the website: Justbudget is a free online web application to manage your personal budget, easily and succesfully. The idea behind it is to track your expenses. Trying to plan ahead is difficult for many people, most likely due to the fact that we don't really know how we spend our money. So tracking is the first step, then you can think about making changes to your daily habbits so you can reach your financial goals. Most methods to track your expenses are very painful. Think of just maintaining a spreadsheet. It's hard to read, search through. And if you really want to learn something from it, you gotta build tons of stats and graphs. justbudget just does that. it tries to make it easier and faster for you. So the task isn't too much time consuming. It gives you stats about your spending and graphs showing your habits.
    
    
17. Mint
    
    From the website: Mint is building a free, simple, and secure personal finance web-app. Designed to be effortless, Mint consolidates your financial life in one place. Easily see how much you have, how much you owe, and where your money goes. Advanced alerts notify you before you bounce a check or forget to pay a bill. Patent pending algorithms even show you personalized ways to save and make more money. If your finances could use organization without effort, Mint is for you. Currently in invitation-only beta.
    
    Review: Jim Bruene at Netbanker has this take of Mint



18. Moneytrackin’
    
    From the website: Moneytrackin’ is a free online webapp that allows you to track all your expenses and incomes easily and without effort, thus allowing you to have a clear view of your financial situation. It intends to be a simple yet powerful online budget management tool. List of features include analysis tools, social tools, mobility support, export to CVS etc.
    
    Review: Tim at demo marks has written a nice review of Moneytrackin’.



19. My Spending Plan
    
    From the website: MySpendingPlanTM is free secure online personal finance budgeting software that can help you manage your spending to save money, reduce debt, manage tasks and reach your financial goals faster. […]Our predictive Auto-Assign BudgetTM technology will even recommend a future budget by examining your past and present spending habits and matching them with your income.
    
    Review: Sarah at Frugal Underground has written a detailed review of My Spending Plan.



20. NetworthIQ
    
    From the website: No one wants a physical, but we all need one now and then, just to keep tabs on our well being. Your finances deserve nothing less, and determining your net worth is a good first step. It's all about keeping track of your overall financial health. NetworthIQ™ is a social personal finance manager designed to make monitoring your net worth easy and, dare we say it, maybe even fun. Heck, it's even FREE!
    
    Review: Sun at The Sun’s Financial Diary has a descriptive explanation of NetworthIQ whereas Pinyo at Moolanomy has a nice review.



21. Plan2Spend
    
    From the website: With Plan2Spend, a friendly and totally free tool, you can perform several simple tasks which will help you understand the dynamics of your expenses: (a) Organize your bills and payments (b) Track your daily expenses (c) View summary and detailed budget (d) Learn to manage money from the Plan2Spend community (e) Learn to budget your monthly spending.
    
    Review: Tim at DemoMarks has written a step-by-step review of plan2spend.



22. Spending Profile
    
    From the website: SpendingProfile.com is an online record of your finances. Track your spending by recording your purchases and assigning them to categories. The graphs then show the overall breakdown and represent your personal spending profile.
    
    
23. Spend View
    
    From the website: SpendView is a personal finance application that empowers you to effortlessly analyze, track and manage where you spend your money. Will go to public beta soon.
    
    
24. Spicy Digits
    
    From the website: If you and your geeky friends are busy crafting next google in your garage, keep your focus on the technology and let SpicyDigits manage your recurring project expenses. With SpicyDigits, managing your recurring expenses is a breeze. Login to your free account, enter names and amounts paid, and SpicyDigits manages every aspect of keeping a tab and alerting the group via e-mail on all expenses.
    
    
25. Track Your Budget
    
    From the website: TrackYourBudget is a new and exciting web application that allows you to take control of your personal finances. You can set up cash, checking, savings, and credit card accounts and enter standard withdrawal, deposit, and transfer transactions for each account. You'll have the ability to tag and jot down notes about your transactions for easy reference. There is also the ability to set up a monthly budget and when you enter transactions, you can immediately see how it affects your budget, making it much easier to stay on top of your money.
    
    
26. Wesabe
    
    From the website: Wesabe is a community site that makes managing your money easy. Enjoy secure access to all your accounts, painless tools for taking control of your money and reaching your goals, and members’ tips and discussions to help you find the best values.
    
    Review: J. D. Roth at Get Rich Slowly has written a great review of Wesabe.



27. Yodlee
    
    From the website: Yodlee delivers innovative financial applications that make online banking more profitable. Yodlee's financial software solutions help customers and small businesses achieve greater financial awareness, control, and satisfaction through their online channel.
    
    Review: Golbguru at Money, Matter and More Musings has written several articles about yodlee.

Paid Software

1. Active Allowance
   
   From the website: Active Allowance is a revolutionary web service that helps you create a thoughtful and sustainable allowance and responsibilities system for your kids. We provide easy-to-use online tools and an easy-to-maintain process to help you teach your kids, as part of everyday life, about responsibility, values, making choices and appreciating things.
   
   Cost: BASIC membership is free. FULL membership costs $49.95 per year.
   
   Review: Rafe Needleman at webware has a review of Active Allowance.



2. BillQ
   
   From the website: (Abridged by me) We created billQ to help people stay on top of their finances. But billQ is only a tool, you also have to know what you're building. [ISPF: BillQ is designed to help you with the following tips – ] #1 Avoid penalties, late-fees, and interest charges by paying the bills you have, on time; #2 Do not abuse credit. Credit leads to debt, and debt is a big threat to financial health; #3 Be a conscious consumer. Always understand all terms surrounding purchases and loans.
   
   Cost:BillQ comes in two versions. The first version of billQ is the free version.and has some feature limitations. The second version, billQ Plus, costs $5/month or $50/year and gives you access to a number of advanced features.
   
   Review: Jim Bruene at Netbanker reports that billQ Named Best of the Web by Online Banking Report and Bean Counter Blog has a short review of BillQ.



3. BudgetOnWeb
   
   From the website: Start now to manage online your budget, schedules and
   contracts, with simple and effective tools! BudgetOnWeb is a free online system that integrates project management with contacts management and financial tools.
   
   Cost: Up to 5 megabytes for free; 5 to 25 megabytes $50; 25 to 45 megabytes $100
   
   
4. BudgetSnap
   
   From the website: BudgetSnap puts everything in one place. You will not find a more straightforward program for arranging your finances. Think of it as a checkbook register that's linked to everything. See your current balance and financial pain points. Make changes and rearrange transactions. Pay and post items from a single screen!
   
   Cost: Current special rates 1 Month @ $7.96; 3 Months @ $19.96; 6 Months @ $33.57; 12 Months @ $62.97; 24 Months @ $89.97
   
   Review: Jim Bruene at Netbanker has a detailed review of BudgetSnap.



5. Mvelopes
   
   From the website: Mvelopes Personal is the most effective online personal finance and spending management system ever. This revolutionary, award-winning system applies innovative financial software technology to the traditional envelope method of budgeting to help you manage your finances, while living within your income - and most of it's done automatically!
   
   Cost: 2 Year Plan: $189.60 (i.e., $7.90 per month); 1 Year Plan: $129.60 (i.e., $10.80 per month); Quarterly Plan: $39.60 (i.e., $13.20 per month);
   
   Review: Shelley Elmblad, the guide for Financial Software section at About.com has written a detailed review of Mvelopes.