Money Management

Money management is important for any individual. As long as you have income and expenses, it is vital that you are able to manage your money in order to remain financially independent. The good news is that money management is a skill that can be learned so even if you have been having trouble in this area, you can learn tools to help you manage your money more effectively.

Creating a Budget

A budget is the first step in money management. This involves listing all of your income and all of your expenses. When it comes to your expenses, you need to list them in order of importance, including every amount you spend (magazine subscriptions, daily coffees, chocolates from the vending machine etc). If your expenses are greater than your income you will need to cut down on your expenses.

Cutting Down Your Expenses

Having made a budget, cutting your expenses will be much simpler. You may not have even realized you were spending so much money on small expenses. It is often a shock how quickly the small expenses add up and make the difference between financial independence and struggling financially. Look to the bottom of your expenses list and cut off the unnecessary expenses. Perhaps you could bring lunch from home each day or you could bring a coffee with you instead of buying it from a machine. Once your budget works, you need to make sure to stick to it and review it regularly.

Saving

Another important aspect of money management is saving. You should be saving money every month and should cut enough unnecessary expenses off your list in order to do this. Create a direct debit and make your savings one of your expenses to ensure you save automatically every month.

Paying Off Debts

Many people have debts that they are struggling to pay off and paying high interest rates for. If you are getting your finances under control you should sort out your debt as much as possible. Personal cash loans such as car title loans can help. Personal cash loans can be used to pay off individual debts or you can use a loan such as car title loans in Sacramento to help you consolidate your debt. This will involve you paying off your smaller individual loans, leaving you with one larger loan with a more competitive interest rate. This will help you manage your finances.

source: 20smoney.com

From saving to investing: 5 tips for OFWs

MANILA - Most overseas Filipino workers (OFW) leave their homeland and loved ones to work abroad in pursuit of financial prosperity. If you are now working abroad, it is not enough to simply save up your money. Instead, you should invest these savings so that your money can grow faster.

For OFWs, the need to invest smartly is particularly urgent since your opportunity to raise funds is linked to the length of your contract. Once your contract of work is over, it is possible that you would find yourself without having a source of income, until you find a contract again. For this reason, you need to come up with the right investment choices that match your circumstances and make your money work harder for you.

Essentially, OFWs should be guided by the same investment principles as Filipinos who are working and based at home, save for a few considerations to reflect your circumstances, in particular not being in the country.

Here’s a simple five-step guide to help you in making your investment decisions:

1. Consider liquid and professionally managed investments.

Shop for investment products that are easy to purchase and dispose off even if you are not in the Philippines. The nice thing with today’s technology is you can scan online, start by looking at the individual websites of financial institutions. Your choices include the following:

· Mutual funds – These are pooled funds invested in different types of assets to match your desired time frame and level of risk. Some may have the potential for high gains but will also come with higher risk. These are available to retail investors for a beginning account of as low as P5,000.

· Unitary investment trust funds – These are also pooled funds invested in various assets to match your risk profile and investment horizon. These are available to retail investors for a beginning account of as low as P5,000.

· Insurance-linked investments – This is an insurance product combined with an investment fund, fulfilling your need for protection and capital gains. Your monthly payment would depend on the amount of coverage you purchased, as well as the type of asset you chose to invest in.

· Equities – These shares represent shareholdings in a company. You profit from the trading of these shares in the stock market. Online brokerages can facilitate your trades, with some of them requiring an opening balance beginning at P10,000.

· Bonds – These represent debt taken by either the Philippine government or companies. They usually have a fixed return and are therefore safer. They may be purchased through most banks for as low as P5,000.

2. Keep your papers in order.

Ensure that you have proper documentation to open and maintain these accounts, either while you are visiting the Philippines, or from abroad. Download their online forms, then mail a clear copy of your required IDs. Before sending these documents over, it may be helpful to personally contact the financial institution through their emails so that they can review your signed forms and requirements before you send these. This will save you a lot of time and effort.

3. Use safe and direct channels for sending money.

Find a secure and cost-effective way to put money into your investment from where you are. Online banking services, which are now available to those with accounts in local banks, are among the safest channels you can use. You can also use bank-to-bank transfers. If you wish to go through remittance channels, consider companies with long track records and recommended for customer service if something should go wrong. Unsafe ways of sending money are physically through people, no matter how much you trust them; through other people’s bank accounts; or by sending the money in the mail.

4. Make your payments or remittances regularly.

If you send money to the Philippines, it would be good to do so following a schedule, so that you and your loved ones back home can plan your cash flows better. Have the discipline to send money on schedule so that your loved ones can make payments on time, letting you avoid penalties in the process. Luckily, major financial institutions all allow you to make payments or transfers online. You may want to check out https://remittanceprices.worldbank.org/en to know how much it costs to send money from one part of the world to another.

5. Ensure the legality and integrity of your planned investment.

OFWs are often the target of investment scams. Check out the site of the Commission of Filipinos http://www.cfo.gov.ph/ to read the latest news and updates on legitimate and illegitimate business deals. You may also have relatives luring you into get-rich-schemes that offer nothing but false promises. While you may trust your loved ones, it is but prudent to check out everything about the proposed investment deal before you turn over your hard-earned money.

source: www.abs-cbnnews.com

5 Things Every Renter Should Know Before Buying

Buying a home can be financially rewarding, but it also has its challenges. Many renters can’t wait for the day when they’re able to get the keys to their own house. Ownership can provide a sense of stability, giving you full control to decorate and remodel as you like. But before buying, it’s important to know exactly what you’re getting into. Some people start the homebuying process with rose-colored glasses, or they feel the experience will be far better than renting—and sometimes, it is. At the same time, you need to be realistic and understand that buying might be more expensive and time-consuming than renting.

1. Profits aren’t guaranteed

Some people buy a home because they’re tired of wasting money on rent. Rather than put money in a landlord’s hand each month, they purchase a home to build their own net worth. Unfortunately, there’s no guarantee that buying a home will be financially beneficial.

If you purchase at the right time, your property may appreciate a little each year, which increases your equity, and you can earn a profit when you’re ready to sell. But sometimes, home prices go backwards. Rather than appreciate, property values depreciate. In a bad market, you could end up owing more than you paid for the house. And if you sell before home prices recover, you can lose money and pay out-of-pocket to sell the property.

2. Maintaining a yard takes time and money

If you lived in an apartment before buying a house, your landlord’s maintenance department likely handled the landscaping. As a homeowner, you’re responsible for your exterior, which involves mowing your lawn, pulling weeds, seeding, and fertilizing. Maybe you always dreamed of having a beautifully landscaped yard, but it takes money to maintain an outdoor masterpiece. You’ll also sacrifice your free time. According to the Bureau of Labor Statistics, the average American spends about 1 1/2 hours a week maintaining their lawns and gardens — but as a newbie, it might take you longer.

3. You might pay more for utilities

If you’re moving from an apartment to a single-family home, anticipate an increase in monthly utilities. The amount you pay for electricity depends largely on the size of the property. And if your apartment was smaller than your new home, you can realistically pay an extra $20-$30 every month. You’ll also pay more for utilities if your new home has natural gas, whereas your apartment was electric. Plus, homeownership means paying your own water and sanitation bills.

4. Your mortgage may slightly increase from year to year

Some people purchase a home because they’re tired of yearly rent increases. However, just because you buy a home with a fixed-rate mortgage doesn’t mean your mortgage payment will never change. Your property taxes can increase, which can increase the monthly payment a little each year, and if you file a claim with your homeowner’s insurance, your agency may raise your rate. Since both of these expenses are included in your mortgage payment, any increase or decrease affects your monthly payment.

5. Homeownership can slow your savings efforts

Saving money might be a priority, just know that buying a house can slow your efforts. Ownership can be financially beneficial in the long run, but in the beginning, you’ll drain your savings account buying the property, plus there’s ongoing repairs and maintenance which can cut into your disposable income.

If you’re ready to own your own place, buying can be rewarding and satisfying, but there are things you should know before you even think about starting the process. If you know what you’re getting into, you won’t have unrealistic expectations or be caught off guard.

source: totalmortgage.com

8 smart ways to save

MANILA, Philippines - We all realize the need to save money, whether to build up an emergency fund, take that vacation we’ve always wanted, make that dream purchase, or invest in something that will appreciate in value.

But whenever people talk about having to save money, the first thing that comes to mind is the need to sacrifice something, sometimes at great pain. While it is true that saving does entail discipline and a measure of self-sacrifice, saving also means doing things smartly or efficiently.

By being aware of how you conduct your everyday spending activities, you may discover areas where you can realize some savings. A good way to do this would be to review your expenses in detail for the past month. Your credit card bills and some receipts you have stored could give you a clue as to what you had spent on and what your spending patterns are. If you do not have these available, start logging your spending now. You might discover areas where you are spending more than you want to.

Here are some areas that you might want to look at:

1. Avoid penalties.

Are you habitually paying bills after the due date? Most companies either cut off your service or charge a late payment penalty to consumers to encourage early or on time payment. Check out your bills and find out how much penalties you’vd had to pay in the last three months. Late tax payments and filings – whether for income tax or property, tuition fee payments, and loan payments – also come with corresponding penalties. By paying attention to payment deadlines and planning your cash flow so that you can make these payments on time, you may avoid an unnecessary expense.

2. Take advantage of early payment discounts.

Conversely, are there early payment discounts that you can avail of and that will allow you to realize some savings? Real property tax payments are a good example, allowing you to save as much as 20% if you pay before the deadline. Even some utilities such as cable companies provide discounts on prompt or early payments. Do some research to find out which among the merchants and financial institutions you deal with offer these discounts and take advantage of these.

3. Make use of rebates.

You can save a fortune by taking advantage of rebates. Credit cards and utilities are good examples of organizations that often extend rebates to loyal customers. Note that many organizations will not automatically give you the rebate if you do not ask for it. Check out the rebate offers of the credit card and utility companies and other merchants that you regularly deal with and make good use of these.

4. Use coupons.

Don’t ignore savings that can be had from using coupons. Those sales people that meet you at the lobby of the malls? Don’t ignore their flyers that can carry limited offer coupons, which also means the discounts tend to be more generous. Also check out online sites that offer coupons . Most of these offer big discounts on deals covering different products and services—restaurants, travel packages, clothes, household furnishings, hair and skin treatments, gadgets, among others. Having said that, make sure you do not go overboard buying things or services that you do not really need.

5. Buy online.

Some services are cheaper when bought online. Hotel bookings and airline tickets are two common examples. That being said, note that there are also some online stores that charge more than traditional stores. The beauty of the internet is that it allows you to compare prices among sellers. Before making a big purchase, try to compare prices between the brick-and-mortar store and the online store to make sure you realize the most savings.

6. Buy during sales.

Sales are great money savers if you buy something that you need. Wait for seasonal sales and schedule your wardrobe shopping or supplies shopping around these times. However, if you buy items that have no real purpose from sales simply because they happen to be cheap, then you are not really saving.

7. Buy in bulk.

Take note of what you and your family consume in large quantities and buy this in the largest packaging possible. Buying in bulk would allow you to realize big savings as opposed to buying items in smaller packaging, which may come out more expensive in the long run. Toiletries and food items are good examples of items that come out much cheaper when bought in bigger packs. Make sure, however, that you buy in quantities that you and your family can consume. Going beyond this would result in wastage.

8. Plan your entertainment and travel schedules.
Eating out during weekends is fun, but do you realize that some restaurants charge higher fees during weekends and holidays? Buffet rates in most popular restaurants are 30-40% more expensive on weekends than on weekdays. If you are planning a vacation, try to schedule it during the low seasons or on weekdays, when hotel and airplane ticket prices are much lower than peak seasons and weekends or holidays.

source: www.abs-cbnnews.com

10 New Year's resolutions and how to make them work

MANILA – It’s that time again when people start making resolutions for the New Year. But how many of these are maintained and fulfilled?

Here are ten of the most common New Year’s resolutions and how you can make them work.

Resolution #1: I will lose weight.

How to make it work: Be more specific. How much weight do you want to lose? What is your time frame for reaching these goals? The more specific you are, the more likely you will be able to reach them. More importantly, make sure that you have a specific diet plan to fulfill this resolution. Here’s an example: “I will only eat half a cup of rice per meal and more vegetables.” The next thing you know, you are already two sizes smaller.

Click here for some safe weight loss tips.

Resolution #2: I will go to the gym.

How to make it work: Feeling guilty during the holiday binge, some people tend to sign up for gym memberships only to end up wasting them. If you have never stepped foot in a gym for the past six months, chances are it won’t change this coming year. There are plenty of ways to exercise outside the gym, from trying a sport to following fitness videos. If you don’t have time for both, you can start with this resolution: “I will take the stairs at work or when I’m out and about.” That will definitely burn some calories.

Click here for some exercise tips to kick start your day.

Resolution #3: I will save more money.

How to make it work: It’s easy to say this at the start of the year, but not when you are faced with a beautiful pair of shoes, or while you are hanging out at your favorite coffee shop. Skip the items you don’t need and watch your savings grow. Here’s a resolution that you can make: “I will drink coffee at home instead of buying that expensive latte.”

Read finance guru Suze Orman’s take on “latte expenses” here.

Resolution #4: I will never be late again.

How to make it work: This resolution requires breaking a habit by replacing it with another one. Make concrete steps -- sync your watches and clocks to follow the Philippine standard time. Sleep early. Set your alarm an hour earlier than you intend to wake up, and make this resolution: “I will stop hitting the snooze button.”

Resolution #5: I will keep my house clean and organized.

How to make it work: If you have always been disorganized, chances are you will have a hard time fulfilling this resolution. Start small by telling yourself: “I will organize my closet this Saturday.” Continue by cleaning other parts of your room until you finish the entire house.

Resolution #6: I will stop smoking.

How to make it work: Going cold turkey is not the most effective way for most people who want to stop smoking. Take baby steps instead – if you usually smoke two packs of cigarettes a day, reduce it by half. Here’s an example: “I will only smoke one pack of cigarettes a day.” After a few weeks, take it a step further by cutting the number of cigarettes you smoke daily to half a pack. The next thing you know, you won’t even miss it.

Resolution #7: I will spend less time on Facebook, Twitter, etc.

How to make it work: This is another tricky resolution to make, especially if you already have the habit of checking your social media pages throughout the day. Try this resolution instead: “I will not check my Facebook, Twitter and other social media accounts when I’m outside the house, unless it’s really important.” If this is too much for you, start with keeping your phone during meals. Less screen time will help you cultivate and maintain relationships with the people around you.

Resolution #8: I will be more concerned about the environment.

How to make it work: You don’t have to be a vegetarian to express your concern for Mother Earth. All you need is to change a few habits, from turning off lights and appliances that are not in use to using recycled items. Here’s another example to help you get started: “I will bring my own water bottle to work or school.”

Click here for more eco-friendly tips.

Resolution #9: I will start dating other people.

How to make it work: You cannot just decide to go out and date the first person you meet. It is not only dangerous – it will also make you look desperate. Make this resolution instead: “I will go out and make an effort to meet new people.” Making yourself more “visible” will boost your chances of finding a long-term partner. If it doesn’t work out, you still end up having more friends.

Resolution #10: I will spend more time with my family.

How to make it work: This may be hard for career-oriented people to fulfill. Free up some time to spend with your family by making this concrete resolution: “I will have dinner at home with my family every Sunday.” This will lessen the chances of you working overtime or accidentally scheduling a night out with friends.

source: www.abs-cbnnews.com

How you can grow your money in 2014

MANILA, Philippines - It’s the time of the year when new year’s resolutions are made. Often, these have to do with improving one’s health and wellness. When thinking of these, why not try to include resolutions that will make you money smarter?

After all, being of sound financial standing could contribute enormously to both your mental and emotional well-being.

Since sound financial health results from good planning and discipline, it pays to have a few resolutions that can guide your decision making process in the months ahead. But as with all start-of-the-year promises, remember that resolutions only work if you keep them. Here are some seven suggestions on what you can look at to improve your financial health in the year ahead.

1. Set money goals.

Now’s a good time to set short-term, medium-term, and long-term money goals for you and for your family. Short-term goals would cover anything you’d like to do in the next 3 to 12months —possibly a gadget you’d like to buy, or a vacation you’d like to take.

Medium term would cover those plans you intend to do in the next five years — maybe purchase a car, or perhaps go back to school. Long-term plans would include a much longer horizon — say a comfortable retirement, or a vacation home.

List these down, plus timing when you would like to achieve them and how much you think they’ll cost. Knowing what you want is the first thing you need to be able to plan well.

2. Keep money records.

Gather records pertaining to your finances — your bank accounts, investments, credit card bills, tax filings, pay slips, to name a few. This will give you a better idea about your financial standing, and may provide you additional insight on your income, cash flow, and investment needs. Keep a record of these important documents. Many find this to be tedious and leave it for later, but later can be now and start you on the road to a better understanding of your money.

3. Have a budget.

Come up with a realistic budget that you can stick to. In creating one, make sure you look at all aspects of your life that you spend on. You may also wish to think of how your typical work day unfolds to identify the moments when you have to spend. For instance, on your way to work, you need to pay for gasoline or transportation. Once you get to the office, you need to buy breakfast.

Your updated records would provide important information you need in coming up with a realistic budget. Note that this budget is not only a tool that would help you manage your expenses and project your cash needs, but it could also help you achieve your financial goals in the long run.

4. Cut expenses.

Based on your budget and your updated records, you may be able to identify what you are spending a lot of money on. Look at those areas where you can cut expenses.

Could you have spent so much on gasoline because you are using a gas guzzler? Have you spent so much on car repairs because your 20-year old car is constantly breaking down? Are you spending way too much on food because you are getting your snacks and groceries from the 24-hour convenience store?

Of course, you may also have to do some cuts if you discover that you have spent way too much on something. For instance, do you really need to visit the coffee shop two times a day? Do you buy dresses weekly only to hoard them in your closet? Take a hard look at your life to know where you can make the cuts.

5. Save.

Pay yourself first whenever you receive your salary or earn a bonus. Do this before you spend on your other necessities. This way, savings becomes a basic need as well.

Most people prefer to pay off all their bills and buy the things they “need” before setting aside money for a rainy day. More often than not, they find there is nothing left over. But if you start the discipline of setting aside for your savings fund before settling all other expenses, you’ll find you have better chances of increasing your savings pot.

6. Invest.

Once you’ve built up a healthy savings fund, time to consider investing to make your money work harder for you. Whether it is for capital preservation or to grow your wealth, there are various investment funds and vehicles that may be worth looking at, depending on your individual needs. Consult a financial professional to better understand what will be best for your needs.

7. Live within your means.

There is nothing wrong with occasionally splurging on the finer things in life. You do have to reward yourself every so often However, it is necessary to know how much you can afford to spend on non-essential items.

People’s definitions of non-essential items would vary but they could very well include all expenses that you do not necessarily need, but simply want. Try to keep non-essential purchases up to a certain percentage of your income. This way, you can enjoy some things you’ve always wanted without necessarily busting your budget.

source: www.abs-cbnnews.com

Want to make your first million? Here are some tips

MANILA, Philippines – Students planning for their future should not only start saving, but should also consider investing their money.

On ANC’s “On The Money,” financial planning expert Salve Duplito stressed the power of compounding, saying that while saving up is important, there are bigger rewards in investing.

Savings as little as P25 every day from daily allowances can make earning that first million possible before the age of 50 if it is invested.

“If you start saving P25 every school day starting today and invest that at an 8% return every year, your little savings will grow to a million by age 49,” she said.

Putting money in individual stocks of companies that you are familiar with should also be considered.

“If you invested P25,000 in Jollibee in 2003, your money would be worth around P234,882 by early September 2013,” she said. This amount does not include dividends paid out by Jollibee over the period.

“This historical returns in no way guarantee that you will enjoy the same earnings in the future, but they show you what can happen if you study investing and not afraid of losing some money while learning,” said Duplito.

She noted that students are in the best position to invest because they have the luxury of time to learn, to make mistakes, and to recover.

Students with huge savings and are not breadwinners of the family can also benefit from the power of compounding.

For instance, a student with P200,000 savings can invest half of the amount in direct investments in blue chip stocks or equity funds.

The amount of P50,000 can be placed in a time deposit or money market account, while the remaining P50,000 can be used to start a business.

Duplito advised that personal and business finances should be separated.

“This way, you won’t spend money on gadgets you suddenly think you need. When you do that, you cannibalize your own business and at the same time, you can also avoid putting all your money into the business and forget to save for your future,” she said.

When eyeing that first million, Duplito suggested laying out figures on an Excel worksheet to figure out how much to invest every month and what kind of returns to target to reach the goal.

“Let interest from your investments earn interest and you will see the miracle of compounding by the time you reach 30,” she said.

source: www.abs-cbnnews.com

Want to retire in 12 years? Follow these saving tips

MANILA, Philippines – Retirement is possible in 12 years for a young professional who is following the ideal formula of saving and investing, a financial planning expert said.

Joe Ferreria, president of MoneyDoctors Inc. said any person can plan finances by doing personal financial diagnostics in five steps -- calculating savings potential,
calculating personal liquidity, calculating personal liquidity ratio, calculating expenses, and expense audit.

He said it is ideal to save 30% of income into a product that yields an average of 12% interest a year.

An employee can calculate savings potential by getting a percentage of monthly income, multiply that by 12 months, then multiply the product by 5 years.

“Compare how much you have versus what you aspire for. So therefore you will know that if the amount you have in the bank is greater than your potential to save, you’re doing very well. If it’s not, therefore you need to do a little bit more work in saving money,” Ferreria said on ANC’s “On The Money.”

Calculating personal liquidity comes from annual job income and annual income from investment.

The goal is for funds to generate income equal to your own.

For example, if annual income from your job is P200,000, and annual income from investment is only P100,000, this only equals 50% of the active income.

The passive income should equal the active income.

“You can continue to work, but you can slow down a little bit and enjoy your life,” said Ferreria.

The personal liquidity ratio, meanwhile, is the percentage of assets you should have in cash, which ideally is the figure acquired by adding 10 to a person’s age.

“If you’re 70 years old, plus 10, 80% should be cash assets because as you grow older, you don’t need more real estate but more cash flow,” Ferreria said.

For expenses, Ferreria noted that it should be divided into three categories: survival, lifestyle, and work-related.

He said it is important to stay within 10% of income for lifestyle and work expenses and within 50% for survival expenses.

“I admire the Chinese for their thrift and one of the things I’ve noticed with them is that to save on expenses, they will live above their stores, and you will see that even if their income has grown exponentially, they still live above their stores. It takes a long while before they move to a better house. They allow the income to go far ahead while the expense, they keep it at a very simple ratio over income,” he said.

To slow down the outflow of cash, Ferreria advises to cut back on expenses and divide the expenses into a weekly basis.

He added that amortizations should not be serviced with more than 15% of income.

“You add up all of your assets. For example it comes up to about P500,000. Six months later you add all your assets again, if it gets to P600,000 from P500,000, it means that you have started to succeed. If it did not, then you need to be more honest with yourself,” he said.

After sorting out the diagnostics and with enough savings, employees can begin investing.

Ferreria said one month of expenses should be placed into disbursement account, another month of expenses into time deposit for unforeseen circumstances, and 30% of income into a fixed income mutual fund yielding 8 to 12%.

“You can’t go wrong if you stay with the top 3 banks. On a regular basis, whatever is in excess of your income, you just put it there,” said Ferreria. -- With a report from Melissa Gecolea, ANC

source: www.abs-cbnnews.com

5 Counterintuitive Financial Tips That Work

Russell Holcombe, a certified financial planner based in Atlanta, says he's tired of constantly warning clients against making bad money choices. Part of the problem, he says, is that popular financial advice is often wrong. That's why he finds himself urging people to rethink purchasing houses that would max out their budgets, or putting so much money into retirement accounts that they're unprepared for emergencies.

"I had a certain level of exhaustion from having to protect people from a bad decision-making process," he says. Through his work with clients, he says he realized that their ability to recover from negative financial events depended more on how they had structured their lifestyle than on any investment strategy. That's why in his book, "You Should Only Have to Get Rich Once," he offers counterintuitive advice that's centered more on life decisions than stock market ones.

Holcombe offers these five under-the-radar strategies to help you avoid what he calls "financial suicide":

Buy a smaller house. "During the housing boom of '04 and '05, you would hear people go out with real estate agents who said, 'Your income lets you buy an $800,000 house,' " Holcombe recalls. Most people would go ahead and buy a house at the highest end of what they could afford, while just a fraction would hold back and say, "We're only going to buy a house based on one income," Holcombe says. The people who made that choice ended up coming out ahead during the turbulent economy, when many people lost jobs, he adds.

Don't save for retirement. Okay, save for retirement, but don't tie up so much of your savings in post-tax retirement accounts like 401(k)s that you can't weather financial storms when they hit, Holcombe advises. "The ability to survive is based on the ability to adapt," Holcombe says, and tying up money in certain types of restrictive savings accounts, such as retirement and college savings accounts, means you have less flexibility to invest in other things or pay bills.

Many people end up paying fees and penalties when they have to withdraw from retirement accounts early, Holcombe points out. So yes, save for retirement, but don't forget to prioritize shorter-term savings accounts, too. If you're an entrepreneur, you might want to consider investing in your business instead of your retirement account, he adds.

Forget about stocks. "For financial advisers, all roads lead to stocks," Holcombe says, adding that such a one-track mindset is a problem. "For the people that I know who are successful and endure financial traumas, the market is irrelevant to them. It's not the reason for their success, it's a tool," he adds. So while investing in stocks might be part of a larger financial strategy, Holcombe recommends against getting too preoccupied with investment strategy.

Instead, focus on a "perpetual income stream." Holcombe says everyone should consider how they can build their own "perpetual income stream," which consistently pays out cash over time. A doctor might buy a medical building that generates rent, a writer might generate royalties off of a book, a retiree might invest in a dividend-paying portfolio. "Perpetual income streams are the holy grail in business, from Comcast to Netflix. Everybody is trying to move to that model because they get paid whether you tune in or not. Some people have the talent to create them and some don't," he says. "There's no one size fits all," he adds.

Holcombe urges people to avoid traditional investments that generate income, like annuities, because he says "they are super expensive and you can't change your mind."

Calculate your "lifestyle cash flow." When people try to get on top of their money, Holcombe says they often start tracking all of their expenditures, from gas to food, or their net worth. He calls such calculations "totally meaningless." Instead, he says, people should focus on the expenses that can't be changed quickly, including a mortgage or debt payments. "It shows how quickly you can adapt to a traumatic event [like a job loss]," he says. He uses the term "lifestyle cash flow" to describe the cash flow required each year to pay the bills.

As long as you're earning enough money to cover those expenses, then you can feel relatively financially secure, Holcombe says, adding, "If you're spending money on something that's not making you happy, then kill it quickly."

source: dailyfinance.com

Here's How the Way You Bank Dictates What You Pay to Bank

Few financial products are more popular than the basic checking account. According to an FDIC survey released last year, 90 percent of America's 115 million households have at least one checking account.

They're popular. They're ubiquitous. But what Americans pay for them varies greatly.

Recently, WalletPro released its 2013 Checking Account Cost Comparison Report, showing how expensive checking accounts have gotten for many types of customers. In particular, the report focused on the various behaviors that bank customers have and how they can lead to higher costs -- especially if you're not cost-conscious in choosing the bank that offers you the best value for your money.

How You Act and What You Pay

The WalletPro report separated Americans into five categories of customers based on the way they managed their checking accounts. The factors the report looked at included use of direct deposit, online banking resources, non-network ATMs, overdraft products, check writing, and international banking.
The least expensive category of checking account-holders were "old school" customers who used direct deposit but never used out-of-network ATMs or overdrafted their accounts. Their average annual cost was just $29.

The "young and high-tech" category came in at $47, based on the assumption that they'd occasionally use outside ATMs and have their account balances go below zero but would also save by using online tools to manage their accounts.

The "average Joe" category pays a bit more on average: $161 a year. They use direct deposit for their paychecks, and otherwise take advantage of standard account features like ATMs, online bill pay, check writing. They occasionally let their accounts go negative, but they don't opt-in to overdraft protection.

As you'd expect, the costliest category included those "cash-strapped" account holders who frequently overdrafted their accounts and had non-network ATM use. They paid a whopping $527 on average, due largely to expensive overdraft-related fees.

Similarly, "international and on-the-go" account holders paid up for global access to their money, with average fees of $327.

The Elusive Free Checking Account

Almost as disturbing as the amounts that some people are paying for their checking accounts is the fact that different banks charge much different rates for their accounts.

Make the wrong choice of bank, and you could end up paying hundreds more a year than a smarter selection would have produced.

For instance, smart banking shoppers who fell into the old school and young-and-high-tech categories were able to find multiple banks that offered them fee-free checking. Yet accounts with similar features at other financial institutions often imposed substantial fees, with amounts at the costliest institutions falling into the $200 to $300 range in certain circumstances.

The penalty for choosing a bad bank was even greater for customers in higher-cost categories. Cash-strapped customers could find banks that would charge as little as $174 annually, but other banks had costs of as much as almost $750. International-oriented accounts could cost as much as $500 at some banks, while the best came in at $218.

Tips to Save On Your Checking

From the report, you can draw some conclusions about the best ways you can save the most money on your checking account:

Never overdraft your account. Among the fees examined, overdrafts were the highest by far. Moreover, the report notes that "complex overdraft policies make it nearly impossible for borrowers to understand which account is more affordable." The best way to avoid that complexity and confusion is never to let your account go below zero.

Find the right bank for your needs. One key finding of the report was that with one notable exception, most banks that had low costs for one category of customers often weren't the cheapest for other categories. That means that when you open an account, it pays to take the time to look at the particular features each bank offers and figure out which ones you'll benefit most from.

Look for special deals. The report specifically chose not to look at checking accounts that had special requirements, such as being online-only or requiring a minimum deposit. Some banks, however, offer lower costs or higher interest to certain customers or for accounts with certain features and requirements. If those accounts fit your needs, then they can sometimes produce greater savings.

When it comes to bank accounts, one size definitely does not fit all. If you want a cheap checking account that meets all your needs without charging you an arm and a leg, it pays to take the time to do some comparison shopping.

source: dailyfinance.com

How to get the best deal on a refrigerator

Well, it was bound to happen some time, and now we’re left looking for the best deal on a refrigerator.
We bought our current fridge about 2.5 years ago, used from a co-worker, for $50. At the time, we were downsizing from a one-bedroom apartment to a shack—or guesthouse in someone’s backyard. We were broke newlyweds, and barely had any money left after we put in the deposit. $50 was pretty much all we could afford to spend on a fridge.

The fridge was great for us. It had a bottom freezer, and was the perfect size for us. About two weeks ago, it started making noises and we knew that it wasn’t a good sign. So we weren’t too surprised when we woke up and found most of our freezer food half-defrosted.

I quickly bagged up as much as I could, and took it to my parents’ house. I placed the rest of refrigerated food in the freezer with a huge bag of ice and hope it will stay cold enough until we can get a replacement.

In researching the purchase of a refrigerator, I came across several tips to help us make a better decision and land us a good deal on a refrigerator.

• Online research: Doing online research allows us to look at different kinds of fridges, and not just what’s available in the store.
• Price compare: You can also price compare online. However, several apps, such as RedLaser and ShopSavvy allow you to scan the barcode of an item and see where you can get it for cheaper.
• Price match: Several stores offer price match, and some stores, like Lowe’s, will even give you a competitor discount—meaning they’ll offer 10% off if you find your appliance for cheaper somewhere else. Check your local store’s guide for complete details.
• Rebates: Many manufacturers, and even utility companies, like electric companies, will offer rebates for purchasing a certain refrigerator. I know our local electric company offers a rebate for the purchase of an energy-efficient model, and there is usually a wide range to choose from.
• Know what you really need: Some people automatically purchase the nicest model just because it looks the best. But there are several features that aren’t really necessary. For us, it was the built in water and ice dispenser. I never put ice in any of my drinks, or even my water. And the only time we really use ice is for smoothies. For that reason, it didn’t make sense to pay an extra three to five hundred dollars (in some cases, even more!) just for the sake of the fancy looking water dispenser.
• Space: Do you really need the biggest fridge available? Going for a smaller sized fridge will not only be cheaper, it will also save you money on electricity bills.
• Sign up for the discount card: It may be worth it to sign up for a company’s credit card in order to get the 5-10% discount.

source: everythingfinanceblog.com

Drowning in credit card debt? Here's Suze Orman's advice

MANILA, Philippines - Personal finance guru Suze Orman on Wednesday offered some advice for Filipinos who can't control their urge to spend and end up with credit card debt that they can't pay.

Before buying anything, Orman said you should ask yourself this: Is it a need or is it a want?

"If it's a want, walk away. If it's a need, you buy it. If you live below your means... and purchasing only your needs and walking away from your wants, you will find money to save," she said in an interview with Karen Davila on ANC's Headstart.

According to Orman, the first law of money is "to live below your means, but within your needs." The best-selling author and motivational speaker said people should not make the mistake of thinking the goal of life is to buy things.

"The goal of money is for you to buy your needs to feed yourself, feed your children, buy a roof over your head that doesn't blow away... That's the goal, so you can sleep at night, not to buy five watches," she said.

How to get out of credit card debt

The most common "financial sin", Orman says, is credit card debt.

"Debt is bondage. You will never have financial freedom if you have bondage," she emphasized.

On ANC's Headstart, Orman took questions from Filipino callers. A Filipina asked the "money lady", who hosts CNBC's The Suze Orman Show, for advice on how to pay off her credit card debt.

"Before you save money, before you invest, your number one goal is to take whatever extra money you have and pay off that credit card debt because at 36% (interest), you are digging a hole deeper and deeper," she said.

But the more important question is how a person gets into credit card debt.  Orman noted people who spend more than what they can afford are usually insecure.

"When you spend money you don't have, what does that say about you? It says you care about these things that money can buy more than you care about having money in a savings account," she noted.

"It means you care about these things and why do you care? So that other people will look at you, 'she has a lot of money,' 'look at his watch,' 'look at her clothes'. Whenever you see somebody with credit card debt, I already know it's a self-esteem issue. You can't fix a financial problem with money ever. You should first fix why a person spends more than they have. Until you fix that, they'll just get into credit card debt over and over again."

Save, save, save

Since the savings rate here is still quite low, Orman hopes to encourage Filipinos to save more. She noted one should save a minimum of 10% of one's salary, and have an emergency fund in case one gets sick or fired.

"You want to make sure you have a savings account that has at least 8 months of what it would cost you to live for your everyday needs," she said.

Orman said one should also start investing money every month on a mutual fund. "After you've done that, every month set aside a specific amount and invest in that fund... It's peso cost averaging, that way when the fund goes down, your pesos buy more shares. When the fund goes up, your pesos buy less shares but over time you've averaged the cost of the share with your pesos and you won't lose money," she said.

Dollar or peso?

Some Filipinos have a habit of saving their money in dollar accounts, instead of peso accounts. Orman said Filipinos should invest in pesos, especially if the peso continues to strengthen.

"At this point, I would be saving in pesos. If they save in dollars, and the peso continues to go up, they will lose money in the long run. You have to believe in your country. You have to invest in yourself. If you don't beleive in PH, in your own peso here, what does that say? I would be investing right here in this country. Forget the US," she said.

The best-selling author had high praise for the Philippine economy. "This is a country that is starting to grow. The economy is growing. The stock market is booming. So the whole country is doing great but its people are not doing great yet," she said.

Before leaving the show, Orman had this message for Filipinos: "Can you just learn to be safe with your savings? Can you want to be safe? Can you want to be secure? Can you put yourself first once and for all over the things that money can buy?"

source: www.abs-cbnnews.com

How to Shop Online the Right Way

If you have a tight budget, the Internet is a wonderful option for helping you save money. When you spend your money wisely, you ensure that your finances will remain secure as you move into the future. But before you can take advantage of the wisdom of frugality you must internalize a few ground rules, such as the following:







Know the Difference between Need and Want

If you frequently go on shopping trips, you may run into temptation. You may spot an attractive purse or the newest gadget. However, do you truly need the item? It is necessary to know the difference between a need and a want. Consider where the item may end up once it reaches your home. Will it sit somewhere? Will you actually use it? If you believe that you do not truly need the item, move on and find something else. It may be difficult to take on this habit; with practice you will learn how to avoid tempting situations.

Look For Coupons and Sales

It is a terrific idea to look for coupons and sales if you wish to spend money wisely while online. It may be possible to obtain a coupon by joining a mailing list. If a person does not wish to give away personal information, it is also possible to visit websites that specialize in helping consumers find deals. You may learn about an upcoming sale, or you may come across advice and tips from fellow online shoppers.

Be sure to pay attention to the expiration date of a coupon. Do not assume that an item will remain in stock for the duration of the sale. Coupons may come in the form of promo codes. If you go to the Newegg website and obtain newegg promo codes, you may save money on electronics and office products. This is an excellent website to use in order to obtain practice.

Only Purchase from Reputable Websites

If you want to be safe while you are shopping online, only purchase from reputable websites. Some websites appear to be reputable and professional; however, if you give the website your personal information, you may run into a scam. You may lose a lot of money, and your deal may quickly turn into a nightmare. Read online reviews about a website and ensure that it is trustworthy. If you are not sure, do not buy from the website.

Many people shop online; it is not unusual for a person to talk about the deals available on the Internet. If you want to be smart and save money, the information above may help. If you are confused, do not be afraid to ask a loved one for assistance.

source: lifeandmyfinances.com