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.

Campaign Against Financial Myths: Part 9 – Miscellaneous Topics

(This article is the last one in the series aimed at dispelling some of the popular financial myths. Please refer to the full index for myths related to other financial topics. Oh, and a quick 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.)

1. 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.”

This started out as a chain email in the 90’s and to this day, every year I get one of these mails stating that on some particular date (“No gas day”) if I do not fill gas, then we could all benefit from a fall in gas prices of 30 cents to a gallon. The problem however 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. Here is an article from MSNBC that explains in detail why one day gasoline boycott won’t work. If you really want to make a difference I would side with Stephanie’s idea of making every day a low gas day, instead of aiming for one no gas day.


2. 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. Here is a website that lists the lemon law statutes by state. For instance, in South Carolina defects that do not occur within the first 12 months or 12,000 miles are not covered (source). On the other hand, in Texas a consumer is protected under the lemon law provided the defects occur anytime within original manufacturer’s warranty. Even if the warranty is currently expired, if the problem initially started to appear while the vehicle was in the warranty period, you will be covered (source).


3. 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. At the extreme end of the spectrum, a few of them end up using more money for administrative purposes than actual charitable causes as indicated in this list. So before you commit to a charitable cause, it may be worth while to spend a little time to investigate the charity a little bit using websites such as The BBB Alliance for Wiser Giving or Charity Navigator.


4. Myth: “I am too poor to travel.”

The abundance of consolidation fare finders (eg. Orbitz, Expedia, Travelocity), discount airfare sites (e.g. Priceline, Hotwire) and aggregators (e.g. Mobissimo, kayak, sidestep) 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 (e.g. virtualtourist, tripadvisor) 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! If you find this topic interesting, you might want to look into this article about budget traveling myths.


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

Unless you are an oracle who knows exactly how life will turn out in the next week, month or year, please don’t fall for this myth! Everyone needs an emergency fund – how much or how little you should save in this fund is of course debatable. Personally, we don’t believe in stashing away huge amounts in an emergency fund. Our strategy is to rely on a small amount to tide us through small emergencies. In case of large emergencies, we will tap into the home equity line of credit. Not many people agree with this line of thinking but since we are just starting out, we would prefer to have our money in investments that can collect a higher rate of interest than the emergency fund which sits in an online savings account earning about 5% APY. There are others though who prefer to have 6 months to 1 year cost of living in a liquid fund to tide them over during emergencies. If you are interested in reading about emergency funds, I highly recommend these articles by fellow bloggers - article 1, article 2 and article 3.


6. 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 (which were serious contenders during our recent car purchase). 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. According to this article on CNN Money, “A hybrid Honda Accord costs about $3,800 more than the comparable non-hybrid version, including purchase, maintenance and insurance costs. Over five years, assuming 15,000 miles of driving per year, you'll make up that cost in gasoline money if the price of gas goes up immediately to $9.20 a gallon and averages that for the whole period.” The difference could be less stark for other cars though. Also, consider the cost of replacing batteries in hybrid cars. According to this article battery replacement can cost in the tune of thousands of dollars, but will not be an issue for most drivers since the batteries will last for over 100K miles.

That myth just about completes the series on financial myths. There are a lot more myths out there, but I hope I have covered some of the most popular ones. You will soon be able to navigate easily through all the myths listed in this series via this index.

Student Bloggers: Here Is You Chance To Make $10,000 From Your Blog!

Back in January, I had written about the Student Blogging Scholarships. Well, the deadline for the monster $10K scholarship is almost here! All you student bloggers out there have a little over 3 weeks to put the final shine on your blogs. The submission deadline for nominations is October 6th. Public voting will begin on October 8th and the winner will be declared on October 28th. For more information about the scholarship, check out the College Scholarships website.

Considering the hefty award amount and the broad scope, I suspect the competition will be quite stiff. I hope that one of you student bloggers writing about personal finance will win the scholarship – at least that way we can be sure that the winner won’t blow away the *entire* 10K on parties :) To help you add that final touch to your blog, here is a list of blogging tips shared by prominent personal finance bloggers. Good luck, and if you decide to put your name in the hat, be sure to leave a comment below so I (and hopefully some of the readers) can vote for you!

• 25 Steps To A Wildly Successful Personal Finance Blog by Jim at Blueprint for Financial Prosperity.


• How to Get Your Blog to 100,000 Visitors and Beyond (Series) by FMF at Free Money Finance


• How Not to Blog: Self-Defeating Behaviors by jdroth of Get Rich Slowly (Published at Meta Best Blog Win)


• Building a Better Blog for 2007 (Series) by Trent at The Simple Dollar.


• 50 Tips for New Personal Finance Bloggers by Clever Dude at Clever Dude.


• How to Start a Blog by Kira at Penny Foolish.

(I am sure there are many more good articles that I have missed - please feel free to share your favorites with the aspiring student bloggers!)

Two other sites that are not related to personal finance, but you must read (if you want to be a serious contender, that is) are Problogger and Copyblogger. Now be warned though, you could spend days together on each of these sites and not even realize it! And with the deadline so close, the more time you spend on reading about blogging, the less time you have to write on your blog – so watch out! I would recommend setting a restriction on how much time you allocate for improving your blog and how much for writing, *before* you visit either of these sites. To improve your efficiency, here are two good starting points for your quest

• 31 Days to Building a Better Blog (@ Problogger)


• How to Attract Links and Increase Web Traffic – The Ultimate Guide (@ Copyblogger). While you are there don’t forget to check out the magnetic headlines series too.
  

Well, good luck y’all. I sure hope a fellow finance blogger will take in the trophy this year. God knows there are enough of you out there who are well capable!

Book Giveaway: The Quiet Millionaire

I’m back after a short hiatus. Last weekend (the Labor day weekend) we had a family get together. When I got back to work, there were a few small fires that needed to be put out. And this past weekend, I was busy helping a friend pack and move. Finally, it looks like I will have some time to get back to my love-hate relationship with this blog. What better way to kick off a return than a giveaway?

I was recently contacted by the publicist for "The Quiet Millionaire: A Guide for Accumulating and Keeping Your Wealth" by Brett Wilder with a request to review the book. With the kind of schedule I have, I can hardly find time to read a magazine, let alone read a book and review it. So I mailed her that I was interested in the opportunity but have too tight a schedule. We agreed on doing a giveaway instead. So, I have three extra copies of the book up for grabs.

Participation is easy - just leave a comment below that describes in one sentence how you plan to become a millionaire. That’s it. And you could be one of the three lucky winners to receive a copy of the "Quiet Millionaire". The comment form will be open through September 30, 2007 and the winners will be announced on (or around) Oct 1st. Please, note that I use the blogger platform which does not have the provision for you to enter the email ID with you comment. If you have a blog and leave a link to your blog in the comment, I will find a way to get in touch with you if you win. If not, please be sure to check back to see if you are a winner. You will have a week to send me your mailing address (US addresses only, please) after I post the winners, after which I will pick new winners for unclaimed books until all of them are given away.

I personally participate in free giveaways whenever I can, but just in case you are the picky types, here is a description of the book sent by the publicist to help you decide whether to enter or not :)

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As a Certified Financial Planner® Brett Wilder has helped thousands of individuals become what he calls "quiet millionaires" – people with clear financial objectives who have set themselves on a path toward financial security. From career, lifestyle, and education goals to retirement and estate planning, quiet millionaires are purposeful and forward-thinking in how they spend and invest their money, and in how they handle their debt.

In his new book, THE QUIET MILLIONAIRE: A Guide for Accumulating and Keeping Your Wealth, Wilder, who has forty years of experience as a personal and business financial adviser, shows readers how they, too, can journey toward financial security. He guides readers through all aspects of financial decision-making, showing how to grow and protect one’s wealth, from the early stages of a career through retirement. Wilder also covers such topics as:

• Cash flow,
• Assets and liabilities,
• Investments,
• Taxes,
• Employee benefits,
• Insurance,
• College Funding,
• Business ownership, and
• How not to run out of money during retirement.

Wilder’s proven strategies for building wealth over time equip readers with the tools and the knowledge to achieve their lifelong financial goals – whether they choose to do so on their own or by working with a financial advisor. THE QUIET MILLIONAIRE presents a straightforward and thorough approach to financial and investment management, and is loaded with valuable strategies for maintaining and growing wealth throughout one’s life.

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Sounds like an interesting book and right up the alley for a lot of the readers of this blog. So go ahead, leave a one sentence comment about how you plan to become a millionaire and win a book that will help you get there sooner and stay there longer!