Archive for December, 2010

New Year’s Edition of What’s Cool

By: MD | Date posted: December 31, 2010 (6:00 am)

Let’s take a look at some interesting links from the past week:

1. Santa Suck This Year? Check out this Free eBook @ Studenomics.

2. The Best Personal Finance Articles of 2010 @ Free From Broke.

3. Why Your New Blog Won’t Make Any Money @ The Financial Blogger.

4. True Wealth Isn’t About Money @ Bargaineering.

5. How to Find Agreement with Your Spouse about Money @ Couple Money.

6. Small Business Growth & A Look At Parkinson’s Law @ The Digerati Life.

7. Budgeting in Time to Generate More Savings to Retire Early @ BITFS.

8. The Biggest Traveling Tool Of 2010 @ Wandering Earl.

9. 5 Tips To Simplify Your Personal Finances in the New Year @ Cash Money Life.

10. Why You Shouldn’t Prepay Your Mortgage @ Investor Junkie.

11. How To Drive Safely In The Snow @ Money Green Life.

12. Don’t Be Afraid To Make New Year’s Resolutions @ Financial Samurai.

13. Top 5 Things To Buy Online After Christmas @ Canadian Finance Blog.

14. Carnival of Personal Finance @ Blonde & Balanced.

15. Carnival of Money Stories @ Bucksome Boomer.

Three Most Popular Options For Life After College

By: MD | Date posted: December 30, 2010 (6:00 am)

Plans After College

Now that I’m done with college I’ve been talking with friends and relatives regarding plans for life after college. Everyone has a different answer depending on what they did and what they wish they did. There have been three general themes going around. These three themes for life post-grad will be discussed and analyzed here:

Straight to the workforce.

Many people either had a job lined up or they went straight on the job hunt. The most conventional option for life post-grad is to go straight into the workforce. This means that you’ll likely be a 22 year old looking to enter the field while trying to find a way to deal with hangovers at work. This can also mean that you get a head start on your retirement planning and starting a family.

Why this is a good idea?

  • You can start saving money. If you have student debt that you need to pay off, you want to build an emergency fund, or you want to start saving for retirement, finding a job right out of college is what you need. You can start saving money and building your portfolio at an early age.
  • You get experience. The corporate experience can be exactly what you need. You can leverage this experience to start your own business or to work your way up the ladder, earning more money as you climb.

Why this idea sucks?

  • No breathing room. You go from the heavy structured college environment to being confined to the work place. You have no buffer zone and no in-between time. You really will never get to see what else is out there.
  • You can get trapped. Once you get a steady paycheck you might get comfortable. Once you get comfortable you can find yourself buying a new car or saving up for a mortgage down payment. A few responsibilities later and you find yourself trapped at your job for a long period of time. Next thing you know and you’re 40 years old wishing you had done more and taken more chances.

Start your own business.

Your early 20s is the best opportunity to take some chances with your money and your time. When you talk to your parents, relatives, or older friends it feels like nobody ever has any time. As a 22 year old you essentially have nothing but time. Between your workouts, football marathons, and drinking sessions, you can start to build up a business.

Why this idea works?

Ability to take risks. You likely have no family and no dependents. You can take all the chances that you want. Risking some money or spending a whole month working on an assignment is much easier when you don’t have to put food on the table.

High chances of profitability. You might not start the next Facebook but you could very well establish a profitable business. You could be your own boss from a very early age. Your high energy levels and motivation in your early-2os can really take you far. Your 40 year old self will really thank you 20 years from now.

Why this plan sucks?

Financial investment. Most business plans require a decent financial investment. If your business doesn’t work out then you might start your working life out in the negatives.

Travel/vagabond for a bit.

This is a topic that I’ve been researching extensively lately. Traveling for a long period of time after college is an unconventional idea that is slowly becoming more popular. After being stuck in college for many years, one really wants to get out and see what else is out there.

Why this works?

  1. Experience the world. Going with a backpack and an open mind is probably the best way to experience the world. Travels will change as you get older, get married, and have a family. Your 20s can be an excellent opportunity to see what the world has to offer and to decide where you want work/live for the rest of your life.
  2. Have no regrets. Everyone that I know that has traveled for extended periods of time in their 20s tells me that they absolutely don’t regret it. I personally don’t want to have any regrets. I know that if at age 23 I don’t take advantage of my situation by traveling that I will really regret it one day. Who wants to live a life with regrets?

Why this plan is horrible?

  1. It’s easy to mess up. Going abroad to travel long-term or to find work can be an amazing once in a life time type of experience. Unfortunately, it’s also really easy to mess this whole process up. You can get caught up with the wrong crowd or you can develop some bad habits that will cause problems down the road.

Which option would you recommend for life after college? Which path did you travel down?

(photo credit: smudger888)

My 2 Biggest Financial Regrets

By: Green Panda | Date posted: December 29, 2010 (5:00 am)

One big reason I got into personal finance blogging is that I needed a way for me to improve my finances. As a college student I was making some poor choices with my money. It took away to open my eyes, but I eventually realized that unless I changed, I was going to be living paycheck to paycheck for the rest of my life.

As I’m working on financial goals for next year, I thought looking at my biggest financial mistakes and how they were fixed could be a bit motivating.

Paying Only the Minimum on My Credit Cards

While in college I used credit cards for many things, including bill payments and shopping. I justified my spending by only looking at the minimum payments required for the credit cards. If I could afford them, then I was ok. I figured once I’m out of college I’ll go ahead and pay them off. That was foolish on my part because not only was spending money on a lot of things I didn’t need, I was paying the student interest rate of about 15-20% for them.

Once I realized I needed to get rid of the debt, I made some adjustments to keep me on course.

  • Kept credit cards at home. I knew that the best way for me not to dig a deeper hole was to take away that option. Impulse spending was my weakness and leaving the credit cards at my place was a big help.
  • Negotiated a better interest rate. It doesn’t hurt to ask and while I wasn’t able to lower as much as I wanted, I was able to get some fees removed.
  • Use credit union’s bill pay system. This move eliminated late fees and the convenience fees some of the credit card companies were charging to use their system.

I was happy to be rid of credit card debt. It was a wedding goal I had and it felt good to get married without that around my neck.

Taking Out a Car Loan

Looking at my monthly budget, there was no real reason for me to take out that car loan. The interest rate was ridiculous and could have used a paid in cash car to get around just fine. There were definitely times during lean months that I was resentful of the car instead of appreciating it. My husband never had a car loan and he was willing to help out when I finally decided we need to get rid of it.

How did we pay off our car loan? I wrote about it before, but here are the highlights:

  • Created a realistic family budget. I knew we were going to keep eating out, so I adjust the budget include some money for that each month. It made it easier to stick with the plan.
  • Cut down or eliminated unnecessary bills. We found ways to bundle our cable, internet, and phone plus we cut our car insurance bill in half. That gave us more money to dump on paying the car loan down.
  • Snowflaked extra payments. Even if it was an extra $25 or $50, I sent in extra payments to reduce the principal of on the loan. Little by little it helped speed the process up.

It is possible to not have a car loan and still have a reliable vehicle. I learned the hard way, but I’m glad I picked up the lesson.

Thoughts on Improving Finances

I know I’m not the only person who has decided to fix their finances. I’d love to hear about your experiences. What has been some of your biggest financial regrets? How have you learned from them? Do you have any advice for others in the same situation?

5 Easy Tips for New Investors

By: Kristina | Date posted: December 28, 2010 (3:04 am)

If you are new to investing, or if you are thinking about making your first investment, we are here to provide some easy tips for New Investors.  Investing can be a lot of fun, but it can also be extremely frustrating if we don’t fully understand what we are getting in to.  Some people invest to save, and some people invest for the “thrill” of the stock market.  Whatever your reason is for investing, it is very important to fully understand what investing is all about…in a nutshell at least.

Of course we are not going to all be a financial expert; that is why we hire a financial advisor…like me.  Of course we all don’t have time to watch our investments daily; this is why we receive regular investment account statements.  As a financial advisor my job is to make sure that clients understand the basic elements of investing, the rest is up to the market.

Here are 5 easy tips for New Investors:

Don’t expect to save a lot over night.  No one becomes rich over night, it takes time.  The good thing about being a young adult is that we can set long term investment goals.  We can watch our investments grow over time as we reach our goal.  I recommend investing a percentage of our salary as opposed to a fixed dollar amount.  As our salaries increase over the years the dollar amount of our investment contributions will also increase, but the percentage will remain the same.

Be prepared for market fluctuations.  Investments, especially Mutual Funds and Stocks, will fluctuate daily.  Therefore if we invest $1000, our investment value can change to $900 one day and it could be $1100 the next day.  Fluctuations depend on the amount of risk that we choose to take for our investment.

Don’t be too aggressive. If we are new to investing, it is best not to start out too aggressively, and not invest our money into extremely high risk investments. Bond Mutual Funds or Balanced Mutual Funds are a good investment for new investors.  These are investments that have low to medium risk.  Investing in Bond or Balanced Mutual Funds will give us exposure to the market and allow us to experience small fluctuations in the value of our accounts, without taking too much risk.

Have a set goal.  It is easier to invest when we are working towards a set goal.  Long term investment goals for young adults could be to buy a car, to buy a home, and plan for our retirement.  Having a set goal also helps us determine how much we need to save on a biweekly or monthly basis.

Ask Questions.  It is ok to talk with our family and friends about investing.  People may not be very open about the actual monetary value of their investments, but generally people are open about their investment choices.  It is also ok to go into your bank and ask questions.  Make an appointment with a financial advisor; let them know that you are thinking about starting to invest.  There is a lot of information available for new investors.

Photo by Victoria Peckham

Resume Tips for Recent College Graduates

By: Kristina | Date posted: December 27, 2010 (2:56 am)

After we graduate from college, we need to start applying for our first full time job.  With the current economic and financial crisis, the full time workforce is more competitive than ever.  Therefore, we need to make an excellent first impression on potential employers.  Our resume and cover letter are very important because they are the first impression that we make upon potential employers. If we don’t have a strong resume and an excellent cover letter, we may not be contacted for a job interview.

Sandra  is a Human Resources Manager with over 20 years of Hiring Experience.  She currently works as a Career Counsellor and Professional Resume Writer.  If you are graduating soon it is important to invest some time and money into a professional resume and cover letter.  It may cost you $200 now for a professional resume and cover letter, but it will be worth it later when you have a job that pays $45,000 per year.

According to Business Week the average starting salary for a recent college graduate has dropped.  The average recent college graduate earns $40,000 to $50,000 per year.  There are a lot of factors that companies use to determine a recent graduates salary such as location, profession, relevant work experience, as well as the size of the company.  The starting salary for a recent graduate is not very often negotiable.

The average mid career range salary for some professional industries is over $100,000 per year.  Keep in mind that our career will be approximately 30 years long if we enter the full time workforce at 25 years old, and we retire at 55 years old.  It is not realistic to expect to earn $100,000 as a recent college graduate.

The average starting salary varies among industries. Industries such as customer service, retail, and arts pay significantly less than professional industries such as accounting, finance, and engineering. An average employee in the customer service industry makes less than $40,000 per year.

Here are some more great tips for recent graduates who are applying for their first job:

Sandra  tells us that resume without a cover letter is a waste of time.  It is best to make the extra effort and create a tailored cover letter.  She doesn’t consider candidates who submit a resume without a cover letter.

A resume and cover letter should be specific and include only relevant work experience. We know that in one day a college graduate can apply for several different jobs, but a tailored resume can make a big difference.

Always follow up. Sandra advises recent graduates to follow up 3-5 business days after we submit our resume. Following up with the hiring manager shows initiative and responsibility.

A Professional Resume Writer and Career Counsellor are beneficial to recent graduates because they prepare tailored professional resumes that focus on education and experience. A professional resume writer will also prepare us for job interviews, and provide all relevant information including a history of the company.

It is important to be prepared for a job interview.  Sandra advises us to research the company online. We should know at least 2-3 different facts about the company such as the founded date, the name of the President, locations where they do business and the type of services/products they offer.

Recent graduates should be dressed appropriately for a job interview.  Investing in good business attire is just as important as having a professional resume and cover letter. Appearance is important because it makes our second impression before a potential employer even speaks with us.  Hair and nails should be neat and nail polish should be neutral.  Men do not necessarily have to wear a tie, but they should.  A suit jacket with matching pants makes a good first impression.

Photo by Faramarz

Yakezie Challenge Time

By: MD | Date posted: December 24, 2010 (6:00 am)

This week we had the slacker’s guide to following New Year’s Resolutions posted. For those of you that ever failed to reach a resolution or a set goal, this is a post that you need to check out. Once you start to set small and realistic goals you will find yourself much happier.

For now we just wanted to wish you a Merry Christmas and we hope that you enjoy the roundup!

1. 8 Financial Mistakes to Avoid for 2011 @ Not Made of Money.

2. What’s The Key To Building Great Wealth? @ Buy Like Buffet.

3. Potato pancakes – dinner for less than $1 @ Early Retirement Extreme.

4. 10 Free Sites for Personal and Family Budgeting @ Canadian Finance Blog.

5. Financial Samurai 2010 Year In Review @ Financial Samurai.

6. If I Got to Pick the Gifts in ‘The 12 Days of Christmas’… @ Len Penzo.

7. Use Life Experiences as Motivation for Saving Money @ PF By The Book.

8. HELP, I HAVE NO MONEY; Cash Management for New College Grads @ Barbara Friedberg Personal Finance.

9. Give This Christmas Away @ Inexpensively.

10. People Who Helped Make My 2010 Memorable @ Wandering Earl.

11. 2011 Dividend Aristocrats @ Investor Junkie.

12. I Finally Found a Gift for My Boss that She Likes @ Out Of Debt Again.

13. Silence. It’s just good business. @ Control Your Cash.

14. Who Would Lend to This Guy??? @ Darwin’s Money.

15. Holiday Tipping Guide – How much and to whom? @ Wealth Informatics.

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The Slacker’s Guide to Following Your Resolutions.

By: MD | Date posted: December 23, 2010 (6:00 am)

Following Resolutions

I personally hate New Year’s Resolutions. I find them to be nothing but a false sense of hope. Most people will set ridiculous resolutions with no real game plan or execution strategy. With that being said, the New Year can be an excellent opportunity for a “restart.”  Sometimes we all need a restart. We might need to restart our diets, restart our productivity, or switch up our social circles. Since I trust that you guys are serious about goal-setting and meeting your resolutions, I wanted to provide a quick slacker’s guide to reaching your resolutions…

Set small goals.

Gaining 20 lbs of muscle by Spring Break is not a small task. Never spending money on clothes again is not a small goal either. You must realize that the reason most of us don’t hit most of our goal targets is because they are simply too high. Not to discourage anyone but small goals are ideal for the slacker in you. There’s no sense in setting your sights to high and then feeling discouraged after.

Be realistic.

The problem with the majority of our goals is that they’re simply not realistic. Small and realistic goals are the way to go. A dollar at a time and your debt will eventually get paid off. Attempting to pay off all of your debt by February will not happen because it’s not realistic. If it took you a few years to acquire your debt, it will take you a long time to pay it all off.

Monitor your progress.

My favorite mental hack for tracking my progress on anything is the classic “calendar technique.” I keep a huge calendar on the wall in my room. Every time I produce a desired daily result (eat well, write a blog post) I give myself a huge X on that day in the calendar. After a few consecutive days of X’s on your calendar, you’re going to want to see more.  This mental hack alone can be enough to help you monitor your progress and keep yourself motivated. Your scale may not always produce the desired numbers, but if you know that you’re eating healthy then you can feel confident knowing that your resolution of weight loss will come to fruition one day.

Tell everyone you know.

By telling others of your goals it will keep you accountable. You’ll be accountable to all of your friends that are curious about your progress. For me knowing that others are following my journey is often enough to push through the difficult times because I don’t want to let these people down.

Don’t wait for a specific date.

I never understood why people wait for a specific date to get something started. There’s no sense in waiting if you’re truly passionate about something.

Start right now.

With that being said, why are you still waiting? Why are you waiting to start working out? Why don’t you press the X button and bust out 50 pushups right now? Whatever it is that you’re waiting for, stop! There’s no better time than right now to get started on your goals.

Hopefully this year will be different. This will be the year that you follow all of your New Year’s Resolutions. Good luck and keep us updated here!

(photo credit: chatirygirl)

Minimize Heating Bills this Winter

By: Green Panda | Date posted: December 22, 2010 (5:00 am)

It has been COLD! We took a trip to New York City from Raleigh last week and the sad thing was I didn’t notice a real temperature change. In fact, I think for at least two days New York was a couple of degrees higher than Raleigh! I can’t wait for spring weather to come. I can’t imagine how expensive heating bills are for people living  in the Northeast and other places.

If you’re a college graduate and you moved into your first apartment, it can be a real wake up call to get your electric bill.  Winter is here and you’ve noticed that your electric bill has skyrocketed and the sweet deal you thought you found for your apartment is sucking your dry. How can you reduce your heating bills this winter? I’ll share some tips on minimizing your electric bill; hopefully it’ll help you out this season.

Frugal Tips to Stay Warm

Here are some practical tips on cutting your heating expenses.

  • Use your oven more. There’s another reason that learning to cook can save you some money. Having the oven on to get your meals done can warm the place up as well.
  • Master curtain and blinds. Believe or not, you can inexpensively warm your place up a bit open the curtains when the sun’s out and closing them when it’s no longer direct sunlight.
  • Insulate your water heater. If you have an old water heater, get an insulation blanket to reduce the heat loss.
  • Get a good space heater. If you have a small place or you like to stay in a certain room in the apartment, it could be worth it to get a space heater.
  • Layer up. If you’re only a little chilly, try putting on a sweater or wrapping yourself in a warm blanket.
  • Close vents. Redirect the heat to rooms that you’re in by closing the vents in rooms you don’t use often.

These are just a few tips we’ve done personally or heard our friends do to stay warm.

Thoughts on Heating Bills

I’m curious to see how cold-weather GPT readers have adapted for the winter. How have your heating bills been so far this cold season? What has helped you to warm and toasty this winter?

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