Archive for March, 2010

My 5 Best Financial Moves While In College

By: Mike | Date posted: March 18, 2010 (5:00 am)

Only a few years ago, I was still in college and getting prepared for “real life”. Life has this irony that gives us tremendous energy and a great capacity to work when we are young but makes us wait years before delivering the knowledge, experience and wisdom to be truly successful. This is why we have the strength necessary to make financial mistakes when we are young and hopefully we learn from them.

Yet, those who are “lucky” enough to make the right decisions at a young age were able to get on the economic fast track. Because everything related to personal finance is exponential, if you have a fast start, chances are that you will enjoy more financial success in a few years from now.

While looking back, I noticed that I had made some serious mistakes but I also made some good moves. Today, I have decided to share my 5 best financial moves as a student (don’t worry, I’ll share my goofs in another post ;-) ).

#1 Get a Credit Card at 18

Yeah I know, most people will tell me that they got killed by their first credit card purchases since they are still paying interest on them  today! Yet, I am a firm believer that you must learn to tame the beast early so you don’t get caught with bigger financial problems later on. If you load your $500 credit card tomorrow morning and you get stuck with 18% interest payments on it for the next 2 years, I guess you can learn from this lesson instead of waiting for the $200K mortgage and the huge payments that come with!

When I took my first credit card, I had a simple rule that I started to follow (and still follow today): no matter what is the balance at the end of the month, I have to pay it in full. This is how I built a strong credit history early in life.

#2 Work Almost Full Time

I was fortunate enough that my parents were willing to (and could!) pay for my education. At trhe same time, I had decided to work 30 hours a week on top of going to college. I really wanted to make money and enjoy life.  Shortly thereafter, I discovered that having a really busy schedule forced me do my school work on time instead of waiting until the last minute.

So besides not having to apply for student loans, working 30 hours a week gave me the opportunity to buy a car and travel while in college.

#3 Live in my Parents‘ House

This was a tough decision as school was 1 and a half hours away from my parents’ house (and sometimes longer when I missed my bus!). While the commute was a big part of my day, it also gave me the opportunity to study and read my books so I didn’t have to do much at home. Saving rent money was probably the best thing I could have done as a student!

#4 Buy a Laptop

My laptop was (and still is!) my best friend. This expense was one of the best investments of my life in terms of efficiency. I was able to work everywhere at any time. The only downside is that I am already on to my 3rd laptop (and the one I have is filled with broken pixels…). So laptops help you become more productive but surely cost a few bucks along the way! This is probably my best earning money tool I have acquired so far!

#5 Spending most of my money in a foreign student exchange program

I had spent 6 months studying in France and travelling across Europe while I was in College. This was one of my biggest expenses ever (over $15,000 back in 2002) but it was also the most challenging and enlightening experiences of my life. Travelling at a young age strengthens your character and increases your autonomy and independence. I can’t say that I fear much since this trip!

What about you? What is your best financial move while in college?

Author: Mike.

Image source: SBA73

Consolidating My Student Loans

By: Green Panda | Date posted: March 17, 2010 (7:51 am)

Part of the delay was due to our house hunt. I didn’t want to mess with our finances while we were getting our mortgage company to review our finances. We managed to get a good deal on our mortgage loan (5% fixed for 30 years). After we painted and moved in the new place, things have settled down enough for me to go ahead and get this off my to do list.

Why Consolidate My Student Loans?

I’ve been wanting to consolidate my student loans to obtain a much lower interest rate.  Currently consolidating student loans with Direct Loan Servicing can lower them to around 2.49%, which is a great deal and would decrease the required monthly payment. That’s incredibly low and I want to take advantage of them.

The plan is to continue paying the same amount on the student loans, but with a lower interest rate, more of that payment would go towards principle.

Consolidating Student Loans

I stayed with federal loans for my education because they have a competitive rate and I went to an instate school (which lowered my costs and loan needs). If you have private student loans, please check with your specific  lender, as some do have minimum amount to consolidate.

Here are the loans I applied for consolidation:

  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Student Loans

The average interest rate for these loans is 5.368%. For a list of other loans that your can consolidate under Direct Loans, check their site.

You can apply for a student loan consolidation three ways:

  • Online: You file  and submit your application online with Direct Loan Servicing.
  • Phone: If you have your information in front of you, you can call 1-800-557-7392.
  • Paper: The slowest to due (I’m a procrastinator), but you can take the time to fill out at your leisure.

I chose with the online option. The process was easy and it took about 20 minutes.Unfortunately for some reason I couldn’t submit my application online, so I printed my filled out forms and mailed them.

The application is in the mail and I’m hoping to be approved quickly. I’m happy to cross that off my list and I’m working to acheiving some other financial goals of mine in 2010.

Your Take

How about you? Have you consolidated your student loans? How much money have you saved?

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3 Tricks to Succeed When Making a Budget

By: Mike | Date posted: March 15, 2010 (5:00 am)

Tired of getting squeezed at the end of each month? Tired of counting your pennies and looking at the balance of your bank account on a daily basis? One of the very first steps to control your personal finance is to establish your budget. What is the coolest thing about a budget?  It is that it allows you to see things coming in ahead of time and helps you plan for how you are going to finance your expenses.

While you can use sophisticated budget tools like Microsoft Money or YNAB (You Need A Budget), a simple sheet of paper, a pencil and a calculator can do it just fine if you are starting your first budget. However, there are 3 basics rules to follow when writing down your budget:

#1 Start with a balance sheet first

Before knowing how much you make per month or how much you spend, you should know what assets you own and what debts you owe.

When considering your assets, put aside all your furniture, electronics and car (unless you have loans attached to them). They don’t really count as assets as their values will depreciate a  great deal over time and you will always need a couch to look at your TV ;-) . Concentrate on bank accounts, emergency funds, investments and real estate properties.

As for debts, this is much easier. List your credit cards, line of credit, student loans, mortgage, etc. Also, put the interest rates and the monthly payments beside each one. This will help you later on.

#2 See what is coming over the next 12 months

Knowing your day-to-day expenses is quite simple; every month you eat, pay rent, and pay down debt. However, the problems for most budgets doesn’t come from the monthly exercise of balancing income and expenses, it comes from all those little unpredictable expenses showing up from time to time.

You have an old car? You should budget a monthly amount saved toward a general emergency fund or a car repair/maintenance fund. Look at the gifts you will buy this year, are you going to a wedding? A baby shower? How can you handle Christmas gifts besides putting them on your credit card?

By planning ahead for what is coming, you will be able to save enough in order to get by and your credit card won’t be used as an (expensive) emergency fund!

#3 Set budget goals, set priorities

The first 2 steps prior to establishing your budget will help you arrive at step #3: setting budgeting goals. By establishing your balance sheet, you will be more aware of your net worth and conclude if you want to pay off debts or increase your assets.

I always set my budget priorities at the beginning of the year. This way, I can establish a realistic plan to make it and can follow my goals throughout the year and make any necessary adjustments.

Author: Mike.

Image source: Blyzz

Time to win an iTouch and do some link love!

By: Mike | Date posted: March 12, 2010 (5:00 am)


As I previously mentioned last Monday, I have recently bought Green Panda Treehouse. While I do not intend to change the reason why Green Panda was created (it will still be dedicated to people in their 20’s), I would like to hear more about what you think and what you would like to read about.

Tell me what you want to read on this blog and win an iPod Touch!

This contest is pretty easy, in order to entry the giveaway, you can:

#1 write a comment on this thread and tell me which topic you want to read about.

#2 start your journey to investing and register to this free webinar on trading terminology

#3 Follow me on Twitter!

All participants must be based in USA or Canada.

1 entry per action (so you can get up to 3 chances in the hat!).

Comments and subscriptions are accepted until Thursday, March 18th.

The winner will be announced on Friday, March 19th.

In the meantime, here are some great reads around the web this week:

Using and Understanding a Net Worth Statement @ Cash Money Life

How to start an online business @ Four Pillars

Is it smart to co-sign for your child? @ Million Dollar Journey

20 income generating ideas @ Bibble Money Matters

Why Parents shouldn’t pay for their kids’ college education @ Studenomics

How to remove spyware, malware or any computer virus @ The Digerati Life

Who Does Your Car Service? @ Prime Time Money

How To Become A Successful Financial Advisor @ Good Financial Cents

Do You Really Need A Mortgage In Your Twenties? @ Gen X Finance

Dividend Investing Supplements Passive Income @ Frugal Dad

Are your Less Frugal than you were a year ago? @ Being Frugal

Learn Effective Budgeting @ Mrs Micah

How to set up a monthly budget video @ No Debt Plan

Top 6 mindless money wasters @ Budget are Sexy

How Much our Debt Cost @ Debt Free Adventure

A Little Success Post @ Money Ning

10 Things Employers Love to See in Employees @ The Wisdom Journal

Sometimes, saving money is about principle @ Financial Samurai

Prepaid Debit Card VS Checking Account

By: Mike | Date posted: March 11, 2010 (6:34 am)


Since 2005, the popularity of an alternative to classic banking has emerged: the prepaid debit card. Many individuals have decided to drop their regular bank account and go with this option. Is it really worth it? Do you really save on fees? Is it that convenient? And more importantly, should you switch your bank account to a prepaid debit card?

A recent study from Breton Woods made an interesting comparison between the 2 banking options. It shows that in some cases, the prepaid debit card can turn out to be a great solution. In fact, they even claimed that “consumers who opt to use a network branded prepaid card could save 35-70% on fees as compared to low balance checking and debit accounts, making prepaid cards a far more valuable, cost-effective financial tool for many.”

The comparison reveals that:

  • A typical consumer with a low balance checking account can expect to pay $200 to $350 annually in the form of overdraft fees, ATM fees, and minimum balance fees.
  • Consumers using a system of money orders, check cashing and bill payment services can pay anywhere between $167 to $312 annually in various fees.
  • A consumer using prepaid debit cards without direct deposit can pay $215 to $320 in annual fees.
  • Users of prepaid debit card with direct deposit may pay between $108 to $207 in annual fees. For customers in the same income zone and usage patterns, this option may save a consumer about $96 to $146 over a basic checking account.

However, I would say that if you tend to manage your bank account responsibly, it will be cheaper for you to use a regular account. While the prepaid debit cards are easy to use and can help you manage your budget (since you can’t spend more than what is on it), the overall fees are quite high compared to a regular checking account (keeping in mind that you should avoid overdraft and NSF fees). Plus, many retailers, restaurants, professionals and so on use debit machine from Moneris or other companies for you to avoid ATM fees.

Which option is best for you?

If you want to make an educated choice, I suggest you take the time to read the Breton Woods study on this topic. Personally, I still prefer the regular checking account as it is easier for me to manage (I don’t have to load my card with money every month) and I pay minimal fees (because I always meet the minimum balance requirement).  Lastly, I should mention that the manner by which you manage your budget / cashflow could influence which choice is best for you.

Automation: Better Control or Loss of Control?

By: Green Panda | Date posted: March 10, 2010 (8:05 am)

I was reading Baker’s thoughts on automation in his new guide and he brought out something I hadn’t really thought about before. Many personal finance sites talk about automating your savings, retirement, and bill payments. It’s thought of as a great solution to your financial problems.

I definitely have seen the benefits of it. Before I got married, I’ve used automation to eliminate my credit card debt. It helped me to avoid late fees as well as create a record of on time payments (a big boost for your credit score). Automating extra payments lead us to paying off our car loan early and saving us money on interest. Not having a car payment boosted our monthly cash flow.

Have you ever considered,though,  if automation is complicating your life? How so? Let me run through some ways it can.

Organizing and Decluttering Finances

Automation can make it easy to focus how big your financial network really is. Do you have too many accounts to keep track of manually? Baker got me thinking, if I didn’t have automatic transfers and deposits, could I keep up with everything?

Looking at what we have, I think we have accounts many people have:

While it seems a lot on paper, automating it really has me just focusing on joint checking and savings. Everything flows from and to those accounts.

Financial Consciousness

The problem for some people is that they ‘set it and forget it’ to the point, they’re not really conscious of what they’re spending. They don’t see where they are wasting money, instead they’re just checking to see if they’re in the positive or negative for that month.

Don’t let automation make you lazy; use it to your advantage. If you can get a better deal on your cable bill because you have more time to check you bills, then do it! Occasionally see if you’ve gotten a bit off track with your savings plan and adjust accordingly.

Tracking Spending Actively

Another concern of about automation is that you’re not actively tracking the spending, you’re just reading reviews from past months. While going over last month’s income and expenses is valuable, you’re really able to make quick adjustments. I find some personal finance tool very helpful.

I have Quicken to run reports and we like to see how all of our accounts are doing. My only grip is that Wachovia charges for me to have my business accounts downloaded to Quicken, so I have to enter that in manually.

I like how ING Direct can have emails sent to you as money is pulled from your accounts. It’s a way for me to see daily how money flows. I also like Mint‘s tracking of my accounts. If I spend more than usual in certain categories I get an email in addition to my weekly review on Fridays.

Pocket Smith’s calendar feature give a great visual on how income and expenses are dispersed during the month.

What about you?

Do you automate your finances? What tools do you use to keep track of everything? Do you think automation can be a hindrance?

Introducing Myself

By: Mike | Date posted: March 08, 2010 (5:00 am)

As previously announced by Laura, she recently sold her blog to a guy called The Financial Blogger. Well that guy is me, Mike, and The Financial Blogger is the name of my first blog. Selling a blog is a tough decision to make for both the seller and the buyer. While Laura has to “leave a part of her life”, I am taking a risk that you won’t enjoy my articles as much as her’s. This is why I thought of introducing myself as my first article.
 
First of all, I have been married for 6 years to my lovely wife; my very first and only love (we have been together since we were 15!). I am a happy father of two beautiful children; William (4) and Amy (2). I work in the financial industry since 2003 and have been a financial planner since 2008. What I really like about my job is helping my clients achieve their dreams. Whether buying their dream home (first or otherwise), quitting their job to return to school, retiring financially safe, happy (and wealthy), these are the kinds of dreams I can help my clients achieve. I always say that I can’t complain about the pay cheque, but what I enjoy the most, is coming back home with the feeling that I have helped someone today.
 
I have been blogging on The Financial Blogger since November 2006. What I really like about blogging is that I can share my knowledge with a lot more people than I can at work. It also gives everybody a great opportunity to ask questions and add comments to my thoughts. Personal finance is a very wide and interesting topic since there are no single right answers. Each situation is unique and there is more than one good solution for each of them.
 
I started my blog with the help of one of my friends and partner in our online business: Pierre. He is my best friend (and William’s godfather too!). He also works in the finance industry, more precisely in the wonderful world of stock markets. He runs a blog, as well, called The Intelligent Speculator. Pierre has had some interesting financial adventures.
I will be working really hard to provide the best financial content on the web. We believe that there is a serious lack of financial education in North America, a huge gap to fill. There are no such programs in school curricula and we basically send future generations into the World at the age of 18 with credit cards in hand and tell them to buy whatever they feel like.
 

Back to what I learned in college
 
At the tender age of 16, I started to look at different ways to make money while studying. I want to share the positive and challenging experiences I went through while dealing with work, creating small companies, paying off debt while going to school at the same time. Our 20s is a very important decade of one’s life since it could lead you into deep financial distress or help you emerge from the middle of the pack.
 
Good news! I am able to keep Laura with Green Panda!
 
In order to avoid significant changes and because I like her writing skills, Laura will keep writing for Green Panda regularly. If you have specific questions, please feel free to ask them by email at thefinancialblogger(at)gmail(dot)com. If you want to know something about me, I invite you to ask your questions by commenting on this post.

New Leaf in 2010

By: Green Panda | Date posted: March 05, 2010 (6:42 pm)

I’ve been having an eventful couple of months between work and family. After some honest and tough self examination, I realized I needed to simplify my life to improve it. It’s hard for me to do this (writing this post was difficult), but I want to let you know that I’ve sold Green Panda Treehouse.

I didn’t make this decision lightly; I have started this site almost 3 years ago. It started as a personal blog and as a way to keep an account of things that interested me at the time. In July 2007, I focused on personal finances and how it related to me as a college student. Slowly it evolved as I graduated and the topics reflected finance issues I dealt with out of college and included our hunt for our first place.

This site is very special to me and I’ve really enjoyed writing about personal finance topics. I’ve learned so much from your personal experiences and from the books I’ve studied while preparing for posts.  While I know this is the best decision for me,  my family, and my readers, it’s still sad.

I want you to know though, I’m not abandoning Green Panda Treehouse. I love this site and I’ll be around with writing weekly posts here. I’m hoping to see Green Panda Treehouse grow and I hope that you’ll notice some great things happening here. As always, leaving comments with your genuine feedback is always appreciated. I’ll be keeping an eye out for the community and I’m going to chatting with you here on the blog.

One thing that makes this process much more easier is knowing who’ll be handling the reins now on the site. I have utmost confidence that the site will improve and you’ll continue to find useful posts on handling your college and post graduation finances. I genuinely believe this is a win-win for everyone. You’ll continue to get fresh perspectives and posts here on GPT and I hope you’ll  continue to share your own thoughts here.

So I’m not saying good-bye (more like ‘see you around’) as I’m still a part of the community and plan on being so for a while. I just wanted to say thank you for everything. I appreciated the support and advice of everyone.

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