Archive for April, 2010

Avoid Lifestyle Inflation

By: Green Panda | Date posted: April 07, 2010 (8:15 am)

One of my financial goals is to be on the look out for unnecessary lifestyle inflation. It’s inevitable that as your income increases, you now have more opportunities to be pressured to increase your expenses.

Prioritizing Our Spending

We’re no longer college students living on a very tight budget, but we don’t want to spend frivolously what money we do have now. We hoping to watch our expenses on things that don’t really matter to use so we can spend our responses on thing and life experiences that matter to us. Here are some areas where we have to watch our for lifestyle inflation.

  • Cable TV: We were just talking to our friends about this last night. Cable TV isn’t a big deal for us since we don’t really follow many shows. (Our favorites tend to get cancelled.) Instead we spend our money on high speed internet and we create dour own little cable TV bundle to maximize the bang for our bucks.
  • Cell Phone: This expense has grown since we each got our own cell phones. I find cell phones very convenient to have and use. I’m willing to pay a little bit more to get an unlimited data plan rather than fret about going over my plan allowance. We switched from AT&T to Sprint to get a better deal and we’re willing to change companies again if necessary. I do hate the thought of getting an early termination fee, but thankfully we’ve had some good service.
  • Cars: We both own our cars and have no loan payments. While they are not the newest cars in the neighborhood, they’re pretty reliable and pretty affordable to keep. Since car don’t last forever, we have a small car replacement fund that we hope to focus on later this year.
  • Travel: We’re really enjoy traveling, whether it’s a last minute road trip or a planned vacation. We try optimize our spending by focusing on the unique experiences and not just the tours or souvenirs.

How to Fight Lifestyle Inflation

Keep a record of your spending. Identifying the problem is the most important step. If you do not follow this step you are setting yourself up for failure honestly. It’s hard to really assess where your money goes without keeping some kind of record. I like using Mint or Quicken to see our spending habits.

Adjust your plan as your values take shape. Life happens and as you grow and mature, some things will become more important and others less so. When you create a budget or spending plan, be realistic and include splurge areas on things that matter to you.

For example, my husband and I try to watch our spending by asking ourselves – is buying something or upgrading going to bring us closer to our 5 year goals? Right now we hope that within five years:

  • We have no debt except for our mortgage. Currently the only debt left right now is my student loans, which have a low interest rate since I consolidated them.
  • We have a steady mobile income of $50,000/year or more. While this is certainly a decrease in our current household income, if we can have work that can pay the bills and we’re following our passions, then we’re happy.

    • Asking ourselves if this will hinder or hurt our plans allows us to figure out if we really want something or not.  Sometimes you have wonderful opportunities come up that you should try out, but you have to be careful not to get too carried away. We’re trying to simplify our lives to things that matter to us.

    Your Thoughts on Lifestyle Inflation

    How do you keep your expenses manageable? Looking at your expenses, what is important to you?

    10 Promising Sectors for the Next Decade

    By: Mike | Date posted: April 06, 2010 (5:00 am)


    A few years ago, I wondered in which field I should study since I wanted to have a good job… and a safe job ;-) . Choosing your career at the age of 20 is not an easy thing. You have a few interests but you haven’t discovered yourself yet. Personally, I knew I was good with numbers and that I liked talking to people. This is why I went into the world of finance.

    I have looked into the topic and will share my thoughts about what will be promising sectors for the next decade. Which jobs will be paid well by employers for the next 10 years? Here are my top ten picks (in no particular order) of the best sectors:

    #1 IP Phone technology

    This is a fast growing market and businesses will need qualified technicians to design, install and troubleshoot solutions using this technology. Communications has been a key factor for many industries so IP phones will definitely be a hot market for jobs in the next 10 years.

    #2 Financial Planning

    All right, I must admit that I am a financial planner myself. However, with the recent economic crunch, financial planners are one of the most useful people you may know if you want to retire. They can help you establish an investment strategy and they can help you build a plan in order to retire with enough money.

    #3 Biotechnology

    Biotechnology has been and will continue to be an important part of our future for many decades. We will need a lot of innovation to overcome several health issues seen in society right now.

    #4 Ecommerce

    Making money off the internet? This is the future my friend! I am already making a few good bucks online and I think that there is a lot more to do in this field. All you need is inspiration and it doesn’t cost much to buy great domain names!

    #5 Environment

    Environmental protection has been a very popular topic for at least the past 5 years. We are more concerned about the health of our planet, which is a pretty good thing! My guess is that environmental consultants will be a good job for the upcoming years.

    #6 Interactive entertainment

    People want to interact with others but are too busy to schedule it. This is why online gaming exists! Nothing is easier than arriving home, turning on your computer (or Xbox) to go online and play with others. No scheduling, no late friends to deal with, there’s always someone somewhere to play with you.

    #7 Estate planning

    Believe it or not, sooner or later baby boomers will pass away. While they occupied a huge place in the employment market and they have changed the way we see the world today, they will also occupy a huge place in terms of estate planning and the transfer of wealth from one generation to another. This is when estate planning professionals and financial planners will come into play to support families and manage this money properly.

    #8 Search Engine Tool

    If Ecommerce will be the next way to make a lot of money, search engine tools will definitely be their bus pass to success. This is how Google, Microsoft and Yahoo plan to take over the net and provide powerful search engine tool. Working for a search engine optimization company will be pretty rewarding in the upcoming years…

    #9 Infrastructures

    Roads, bridges, highways… everything is falling apart! The construction industry will surely be a big actor of the 2010s economy. Governments need to invest a lot of money to keep their infrastructure up and running and this is something that will last for several years.

    #10 Real Estate

    Now that we are slowly emerging from the real estate meltdown in the States, several great deals are appearing at the same time. While most of us are too afraid to buy properties right now, a few smart investors will benefit from this one with a lifetime opportunity to grow their real estate empire…

    Any thoughts?

    Do you think I have forgotten some great job opportunities for the next decade? What is your favorite sector to get a job?

    Author: Mike.

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    4 Financial Lessons I Learned From My Family And Friends

    By: Mike | Date posted: April 05, 2010 (8:54 am)


    There are tons of ways to learn how to improve your personal finances; you can read books and personal finance ebooks, you can attend conferences, you can take courses through your local community college and university or you can have a personal finance mentor. Today, I want to focus on what I have learned from my friends and family. They are probably some of the best personal finance teachers in the world. As you remember their stories perhaps you can see how it may apply to your own situation. So here are a few financial lessons I’ve learned from them:

    From my friend Pete; I learned to avoid having regrets

    When I was at University, we did a foreign exchange student session in Europe. Before going to school, we (my friend Pete and I decided to go on a 40 day backpacking trip. We were running on a limited budget as we were in our early 20s. Every time we would discuss whether or not to go somewhere and looking at how much it would cost, my friend would ask me “once you are back home, will you regret not doing this? Not seeing it?”. This is when I really understood the importance of money vs what we were doing. This is also how we cut down on food and goods to concentrate on travelling and visiting monuments!

    From my parents: Going bankrupt is not the end of the world

    When I was 15, my parents lost an important contract (they were self employed) and they went bankrupt not long after. While it was quite a pain to lose everything and not having money for any extras; I watched my parents get back on their feet over the span of 2 years and start a new business. They overcame the pain of going bankrupt and learned from it instead of crying and whining that they were not lucky.

    From my aunt: Rewards belong to those who work hard and smart

    One of my aunts started one of the very first “fax offices” when small fax machines were not affordable for companies. She used to work day and night for 5 years. She even bought a bed for her office so she didn’t have to drive from home every morning.

    Since then (and you can tell it’s been a while since fax machines are about to disappear!), she never really had to work. If you work hard and smart on your own business, you will definitely succeed (while people think that you don’t even have to work!).

    From my wife and children: Money is not everything

    I have a 4 year old son and a 2 year old daughter. Before they arrived in my life, I was a career person. I didn’t mind working 10 hours a day as long as I could get a promotion at the end of the year!

    But when I look into their eyes, I see immediately that they don’t really care if their dad makes 6 figures or not, they only care to be in my arms and we play together. Sure money will bring you security and will pay for activities, but it should never be a goal by itself. You should want a better education for your children, a nice home so you can spend quality time with your family near the fire place, or great vacation on a beach so you can build sand castles all day long. But you should never want more money in your bank account just for the sake of being richer than your neighbor.

    »crosslinked«

    Green Panda; What is Cool Around the Web This Week

    By: Mike | Date posted: April 02, 2010 (5:00 am)

    Every Friday, I’ll pull out the 15 coolest personal finance article I found on the blogs I read weekly:

    #1 Starting a vegetable garden @ Canadian Finance Blog

    #2 Going full time with your side business – when is it the right time? @ Studenomics

    #3 The limits of frugality @ Joe Taxpayer

    #4 How I saved 98% on overseas phone calls @ Money Help For Christians

    #5 You are self employed even if you work for someone else @ Fiscal Geek.

    #6 The redistribution of health; excuse me but I think I’m going to be sick @ Len Penzo.

    #7 How to get an expensive college education for 80% less @ The Wealth Pilgrim.

    #8 Manage your money final week @ Enemy of Debt

    #9 Why I don’t pick stocks @ The Oblivious Investor

    #10 The principle that keep you rich or keep your broke @ Money under 30.

    #11 Time is a valuable commodity @ Four Pillars.

    #12 5  personal finance goals for your 30’s @ 20 Something Finance.

    #13 A look at historical investment performance @ The Digerati Life.

    #14 How to get healthy without going broke @ The Smarter Wallet.

    #15 Wealth is an illusion of happiness @ Financial Samurai

    5 Experts to help you Buy or Sell A House

    By: Mike | Date posted: April 01, 2010 (5:36 am)


    I recently mentioned that I was homestaging my property to put it up for sale. Since I am in a real estate mood, I’ve decided to continue on and post about which professionals can help you prepare for a real estate transaction.

    Real Estate Agent

    I’ll tell you upfront, I don’t appreciate real estate agents. I think we are paying them too much for what they offer.  Just about anyone can take picture of their property and put it on a website.

    However, when you are looking to buy a property, they can be a invaluable. Once they understand your needs, they can pull out the listings and make the appointments for visits without you having doing anything. They can also help you analyze a few properties if you can’t make a decision. So in my opinion, using a real estate agent for a sale is a big no, but I would consider one to help me buy a property.

    Notary / Lawyer

    Notaries and lawyers are very important in real estate transactions as they prepare the legal documents to ensure a safe, honest, transparent transaction between both parties. Their advice can be very useful when you are considering making your offer.

    Inspector

    I would definitely use the services of an inspector if you are buying a property older than 5 years. He will go from the basement to the roof to make sure there are no defects in the property. Definitely a must when you want to avoid further pain in the future!

    Appraiser

    The appraiser is not much of a big help but I wanted to mention it because people are often confused between the inspector and the appraiser. The real estate appraiser will assign a current market value to your property but won’t examine it to make sure it’s in good condition (besides obvious thing like crack in the walls).

    Financial Advisor / Banker

    Your financial advisor or banker will be of a great help in terms of choosing the type of mortgage and how much you can borrow to buy your property. If he’s smart enough, he will be able to explain the different advantages of variable and a fixed rate mortgages as well as home equity lines of credit. He will challenge you about your original plan and offer you a “real” credit solution to your project.

    These are probably the 5 experts that will help you out when buying or selling a property. Besides the real estate agent, I am using them all ;-)

    Author: Mike.

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