Tuesday, April 9, 2013

The Basics of Saving Money

I recently had a conversation with a friend who is having issues with money. She was constantly late on bills and was living paycheck to paycheck. It wasn't that she wasn't making enough - she definitely had enough money but did not know where she was spending it. She was frustrated because at her pay-level she expected that she would not have any money problems at all. She made the mistake a lot of people make when they start making more money. They don't keep track of it!

Getting your money together can be one of the easiest things for you to do and allows you to do more with your money. Whatever your income level, you should maintain control of every dollar that you earn and spend. Here's how:

Checking Accounts and Debit Cards -
This is the one that most people have and use ineffectively. Many people use their checking account not just as a wallet extension but also use it to pay every bill that comes in. This is why many people cannot handle their bills on time. In order to use your checking account to it's fullest you should have two- one for bills and one for spending. Many of the most organized people set aside budgets in different accounts so they do not overspend money that they will need later on. Done correctly you will be able to direct deposit your paycheck into the right accounts and you will never spend money that is meant for your bills because it is not accessible through your 'spending' checking account. Be sure to shop around and find the account with the best rates and ask about minimum balances and deposit balances and fees before you commit to a bank.

Savings Account -
This account should stand alone and never be linked to your checking account. Personally, I deposit 10% of my paycheck into my savings account and just watch it grow. Remember that there may be fees for withdrawing more than a certain amount of times during the month in some states so be sure that no matter how much you save it is a comfortable enough amount that you will not be hurting for money and be tempted to dip into your savings. Over time even 5% of your paycheck will add up so be sure to save as much as you can because you never know when you will need the money!

You don't need a financial advisor to tell you that starting to save for your retirement is a good idea. I put about 12% of my income into my 401k and did my own research into a portfolio mix that fits my age and investment style and the returns definitely beat interest rates for savings accounts. I suggest saving at least the minimum amount matched by your company and definitely do not borrow against your 401K. The tax penalties on withdrawal are too high and should only be used as a last resort. Your savings account should have enough in it that you can afford car repairs, emergency medical bills and other unexpected expenses. Start saving now and you will be leaps and bounds ahead of most of your peers.

These are the first accounts that any young person should have. You can always put aside more of your income later on and start investing but you want to form a rock solid base for your financial freedom.

These are the same principles I shared with my friend and she's already started to see the difference in how she spends her money. It is not that she was wasteful, she was just unorganized. If you want an example of how I saved over 700 in one hour head on over to my article: How I Paid for (Most of) My Vacation in one hour!

'Till next time, live smarter, not harder!

Monday, April 8, 2013

Finding Purpose in a World of Uncertainty

The first quarter of 2013 is history. Kim Jong-Un threatens nuclear war in Asia. Kim Kardashian is on the cusp of motherhood. In times of uncertainty we as a species tend to stick to what we know against the tides of change. Unfortunately, this stubbornness is leaving a whole generation in limbo- unable to find a decent job with just a Bachelor's degree and leaving many disillusioned as they either apply for job after job or get stuck in a field unrelated to their degree. Stir in student-loan debt repayments and you have a recipe for a frustrated, directionless generation who feel left behind. Sounds like you? Good.

Now it's time to change and live smarter to achieve your goals.

Sit down and ask yourself, "How am I doing the most I can for my future right now?". If it takes you more than 5 seconds to answer then you don't have an answer. You don't have an answer because you don't take ownership of your own life. A man who is confident in his own skin will be able to tell you what they are and don't need to think about their future because they have a plan in place that will get them there.

Finding direction is simply eliminating excuses from your habits. As Aristotle once said:

"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

You probably already know most of your bad habits. Challenge yourself to be excellent in every facet of your daily life. Be the best in your position at your job and love every opportunity offered to you. There will always be work for top performers. Take on more work and make sure the right people know. Love others to the extent they deserve and leave those who don't deserve your energy. Take some time out and call a loved one.
Love yourself above all else.

Remember that last one.

Next time we'll discuss exactly how to excel at your job, your relationships and your life. But start brainstorming now. What have you already done to take your future into your own hands?

'Till next time, live smarter, not harder!

How I Paid for (Most of) My Vacation in one hour!

Summer is approaching fast and and many people are looking into booking a vacation now to get away from life's routine for a week or two. I recently booked a trip to Barbados and the best part is that the whole vacation is practically free! All I had to do was take a look at my bills and cut out a lot of the fat.

A co-worker of mine had recently told me that I could get a discount off of my cellphone bill due to our employee discount program. I decided to walk down to the nearest store for my carrier with my ID badge and pay stub to speak with a representative. I was in for a surprise! I was able to save ~$15 a month from my discount alone and another $5 per month by fixing my bank's automatic bill pay (I had it set on the wrong day and was late every month). On top of that, I was on an outdated plan and was able to get more data for another 10 dollars less! The whole process took 20 minutes and I ended up saving $360 per year plus taxes just on my cell phone bill alone!

Naturally, I then took a look at some of my other bills and saved:

  • $17 per month on Cable after dropping HBO (I buy seasons of Game of Thrones on iTunes instead for $38.99 per season)
  • $20 per month on Netflix (Cancelled DVD subscription after watching all the movies I wanted to).
  • $55 per year on Contact Lenses (Rebate from a major online retailer)

All-in-all, by the end of 2013 I will have saved $726 after doing an hour of work.. I only had to put in $200 dollars on top of that and I had round-trip airfare and an all-inclusive hotel to stay at for 6 days!

Stay tuned and remember to bookmark this page and read up more on how to maximize your budget and how to live like a Millionaire Bachelor!

'Till next time, live smarter, not harder!