Archive for January, 2011

Yakezie Challenge Time

By: MD | Date posted: January 07, 2011 (6:00 am)

We started off January by asking you guys how much do you need for a home down payment? This is a topic that college graduates will be researching more and more as time goes on. It’s a discussion that doesn’t really have a solid answer. Do you believe in the 20% rule? Maybe you’re on the extreme side and think that you should only purchase a home with cash. Where do you stand? What impact do you think the 2008 recession has had on this number?

Time for the Yakezie roundup!

1. Pro’s Are Turning Bullish On Investing In The Stock Market @ Buy Like Buffet.

2. A Weight Loss Tip To Die For @ Financial Samurai.

3. The power of metaphors @ Early Retirement Extreme.

4. Personal Finance Rants: 2010 Version @ Cajun Finances.

5. Why You Need a Home Inventory @ Not Made of Money.

6. Free Online Checking Accounts @ Free From Broke.

7. 3 Ways to Break Old Habits and Make New Habits Stick @ PF By The Book.

8. 3 Ways To Set Up Your Child’s Allowance @ Couple Money.

9. Guide To Not Stress Out When You Are Broke @ Financially Poor.

10. Help! In Debt! | Get Out of Debt This Year @ One Money Design.

11. Has Travel Made Me Dumber? @ Wandering Earl.

12. Ten Ways to Jump Start Your Savings @ The Saved Quarter.

13. The Importance of Sleep for Wealth Creation @ Squirrelers.

14. Holiday Hangover: 23 Things to Do Instead of Spending Money @ Frugal Confessions.

15. Financial Resolutions @ Canadian Finance Blog.

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What’s Holding You Back From Traveling?

By: MD | Date posted: January 06, 2011 (6:00 am)

What's Holding You Back?

Are you tired of home life? Do you want to travel the world? Is something holding you back from following your dreams? The answer is likely yes to all three of these questions. There’s always something holding us back, especially when it comes to traveling. We all want to travel. We all dream about seeing the world that’s out there. Yet so few of us actually do. How many of your friends have actually traveled for long terms? I know many people that are older than me that have done so, but not so many my own age. Personally most of my trips have been under a month. I’m just as guilty of this as anyone.

Last week we took a look at the three most common options for life after college. One of these options was long term travel/vagabonding. This is a topic that many 20-somethings find to be really interesting and eye-opening. Instead of leaving you hanging, today we’ll look at how you can overcome what’s holding you back from your travels:

Debt.

Debt is likely the number one thing holding you back from leaving home. Debt is probably forcing you to work a job that you don’t care for. Debt likely has you stuck in a crappy situation. Plain and simple there’s nothing pleasant about debt.

What’s the solution? First and foremost, you must stop acquiring any further debt! Start to aggressively pay off your debt. You might have to work longer hours, sell your crap, or start making more money on the side. Either way you’re going to have to hustle to put extra money towards your debt. Once you pay off your debt or at least stabilize it, you can start planning your trip. Cutting down your debt can remove a lot of stress from your life. Stress that’s holding you back from chasing your dreams.

Lack of savings.

We all have it ingrained in us that long term travel is for the rich. What we fail to realize is that our own hometown has a high cost of living (I know Toronto does) and that most places around the world are pretty affordable. Another issue is that we always feel that we need to save a little bit more money before we can travel. Here’s a little secret: you will never have enough money. No matter how much money you have, you’re always going to want to have more. It’s pretty addicting. You can however set a financial goal for how much money you think you will need to travel and begin working towards it.

How can you overcome this?

  1. Create a separate sub-account with ING for this goal.
  2. Make weekly contributions to this account.
  3. Track your progress.
  4. Improve when you can.
  5. Worst case scenario– find a job where you travel to cover expenses.

Financial obligations.

Another financial roadblock is obligations. You know what I mean. Some typical financial obligations include: gym memberships, cell phone bills, rent, mortgage, debt payments, addictions, and subscriptions.

How can you deal with this? Gym memberships are fairly easy to get out of. A cell phone contract might be more tricky and you might be stuck with it. Rent, you can always get away from with a few months notice or if you wait until your lease agreement runs out. You can rent out your home when you travel. Debt payments can be made when you work jobs while you travel. Subscriptions can be canceled. I know that I simplified hours of phone  calls and paper work into 3 lines. The point here is that all financial obligations can be dealt with.

Family obligations.

This is a tough one. I have two younger brothers and I know that they need my guidance the next few years. My youngest brother especially needs me since I’m the one that takes him to the gym. This is why in the past I have only left for short periods of time. In the future when I do travel it will be for a month at a time maximum. The only real solution here is to travel in bursts. Not all of us can just get up and leave for months at a time. We don’t all have the luxury of time. We all can however take off for a few weeks here and there.

Now I want to ask you again: what’s holding you back from following your dream of traveling?

(photo credit: laura padgett)

How Much Money Do I Need for a House Down Payment?

By: Green Panda | Date posted: January 05, 2011 (5:00 am)

Are you thinking of buying a house some time in the future? While it can be a financial prudent decision for some people, it’s not something you should just jump into. Buying a house is probably going to be the most expensive purchase you’ll make in your life, so you want to make sure the numbers work for you.

Speaking of numbers, have you decided how much money you’re going to save for your new place? If not, no worries – I’ll share some sites and ideas for you to consider. Hopefully you’ll find something that works well for you.

What Kind of Place Do You Want to Buy?

If you’re pretty certain about the area you want to purchase a home in, I would recommend sites like Zillow and Trulia where you can get a fairly good estimate of how much money you’d need. You may be surprised at how low or high the prices is currently. You should also check to see if there are any home association fees with the property. That can be a great deal or a nightmare as each one is different. Either way, it’s something that you should factor in with your finances.

How Much Down on the House?

The old standard for buying a house meant putting 20% down. With the housing bubble, some lenders were selling homes for 0% down.  One consequence of that was borrowers have a higher mortgage than what their finances could handle.

Even though there are some lenders that will allow buyers to put a small amount down, it’s in your best interest in many cases to save up for a bigger down payment. If you’re paying less than 20% down, then you have an added financial burden of private mortgage insurance.

Some try to get around that by getting a piggy back loan, where their mortgage is for 80% and the rest is covered under a separate loan. The second loan usually has a higher interest rate so that could be a big strain on your finances.

Another benefit of putting down a bigger down payment is how it can help you get a better (aka lower) interest rate on your home mortgage. That can save you quite a bit of money.

Thoughts on Buying on a House

I know some readers are already on the hunt for their house; I’d love to get your thoughts on the process. What kind of a house are you buying? How much do you want to put down for it? How are you saving up for it?

Financial Resolutions…Continued

By: Kristina | Date posted: January 04, 2011 (3:37 am)

Yesterday we discussed our personal Financial Resolutions for 2011.  A Financial Resolution is a specific financial goal for the New Year that we set along with a plan of action to achieve the goal.  Our Financial Resolution should have a specific goal, a defined action plan, and an achievement date.  I know it is only January 4, and it may still be early to set our New Year’s Resolutions and Financial Resolutions for 2011; but don’t worry, Green Panda is here to help.

Some common Financial Resolutions could include saving more money, paying down our debt, planning a trip, and buying a home.  These are all good goals, but a great goal also has to have a plan of action to help us achieve the goal.  In order to create an action plan we need to ask ourselves some questions.

Here are some questions that we should ask ourselves in order to create an action plan, and achieve our Financial Resolutions:

 

Resolution: To save more money.

Questions to ask:

How much more money do I want to save?

What am I saving for?

What expenses can I cut, and allocate the extra money towards my savings?

How will I save the extra money? Is it best if I save through an Employee Savings Plan with my employer? Or should I set up an Automatic Transfer between my checking and savings account?

 

Resolution: To pay down our debt.

Questions to ask:           

How much debt do I have to pay off?

When do I want to have it all paid off?

How much can I afford to pay per week or per month?

 

Resolution: To take a vacation.

Questions to ask:

Where do you want to go and for how long?

How much will it cost me?

How much will I need to save monthly? 

When do I want to travel? It is best to select a few different date options, and then compare pricing to see which is the least expensive.  We also have to consider the exchange rate of our dollar versus the destination country.

 

Resolution: To buy my first home

Questions to ask:

Do I want a house, a townhouse, or a condo?

How much can I afford? Most financial institution websites have a section with various Mortgage Calculator Tools.  These calculators can help us determine how much we can afford to pay each month with our current monthly income.

What amount of Mortgage will I need to borrow?  Visit your financial institution and get a Mortgage pre approval. This will give us the price range for our home.

How will I save for my down payment? A down payment is the amount of our own savings that we put towards our mortgage.  As a basic example, we want to purchase a house for $250,000, we will have a 10% down payment of $25,000 therefore our mortgage will be $225,000.

It is best to set specific goals with a specific action plan.  However, things can always change and we have to be prepared for the unexpected.  We may not always be able to stick to our action plan, if we get off track it is ok.  We can always revise and reset our action plan in the future.

New Year’s Goals and Financial Resolutions

By: Kristina | Date posted: January 03, 2011 (2:36 am)

It’s January 3 and that means that we are officially into 2011.  I would like to take this opportunity to wish everyone the best of love, life, and luck, in 2011.  I know that it is cliché to write about our resolutions and goals at this time of the year, but I would like to do it anyways.  After all, my personal motto is…Why be different, when I can just be me.

Instead of making New Year’s Resolutions this year, I propose that we all make Financial Resolutions.  New Year’s resolutions are usually so broad and general, that we may probably don’t achieve them.  Then, we are left setting the exact same New Year’s Resolution the next year.

A resolution is always easier to achieve when we have a clear defined goal with a direct path to follow. Let’s throw out our general New Year’s resolutions, and all set at least one specific Financial Resolution for 2011. 

It is great to say that we would like to earn more money in 2011, but that is a general goal.  Ask yourself, how will I earn more money? What will I change in my life? We need to think about how we are going to find a solution, or a resolution, to our goal.  As an example our goal could be to earn more income, and our resolution could be to go back to school and study marketing, or economics, or finance.  When we set a goal, we also need to make a plan to achieve our goal After all, the solution is a part of our resolution.

A Financial Resolution could be as simple as saving 2% of your pay check every week. Or, it could be a more complex resolution, such as starting your own business. 

What are your Financial Resolutions for 2011?

Here are my Financial Resolutions for 2011:

Goal: To pay off my credit card balance in full by August 31 without using my savings and without increasing my monthly expenses.

Resolution: I will set up a pre authorized payment from my bank account to my credit card on a biweekly basis.  I will not use my credit card for the next 8 months until it is paid off in full by August 31.  I don’t want to stop saving, and I don’t want to save less in order to pay off my credit card.  I want my monthly expenses and savings to remain the same. To achieve this I will cut back some personal expenses such as eating out and buying clothes that I don’t need.  I will allocate the extra money to my debt repayment.

Goal: To take a one week vacation to Portugal the last week in September.

Resolution: I will open a vacation savings account, and set up an automatic transfer on a biweekly basis to start saving money and keep it separate from my other savings.  The first step will be to renew my passport. I will then have to research the cost of a trip to Portugal.   If I know how much the trip will cost, then I will know how much I need to save on a biweekly basis. I know that the cost of living in Portugal is significantly lower than in other Western European countries such as Italy. This means that I will be able to stretch out my money, even with the Euro exchange versus the US Dollar. 

Photo By Ben Sutherland

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