I received an email from a gentleman on behalf of Liveperson.com with some great news for SingleGuyMoney readers. Do you have personal finance questions you would like to ask a personal finance expert? Well here's your chance.
What: Financial Chat with personal finance guru, Jean Chatzky.
When: Thursday April 2nd from 3-4pm Eastern Standard Time.
How: Logon to http://www.LivePerson.com/?
The Liveperson homepage has a link to the transcript for the last chat it hosted with Jean Chatzky.
If you haven't heard of Jean Chatzky, she has an impressive background. Jean has written for SmartMoney, Money magazine, New York Daily News and served as the featured money coach on Oprah. Jean has also written several books including: The 10 Commandments of Financial Happiness, Make Money Not Excuses, The Difference and Pay It Down.
A few days ago, I posted some of the "Warning Signs of Financial Trouble". Today's post focuses on when you've blown past the warning signs and you are hearing the sirens. If you've think you've hit rock bottom, you have no place to go but up. Things may seem bad right now but the most important thing is to start looking for ways to improve your financial situation.
Income and Expenses. The first key to improving your financial position is to make sure that your income exceeds your expenses each month. If your expenses exceed your income, you will only find yourself falling farther and farther behind each month. Simple math tells you that if you bring in $100 and spend $200, the only way to make ends meet is usually by taking on additional debt to cover your deficit.
What are some ways to increase the amount of money coming in each month?
- Ebay - Most people have things that they don't use anymore sitting around the house collecting dust. Maybe you don't need this item but someone else can probably use it.
- Second Job - This is a great time of year to get a part-time job. Most retailers are looking for seasonal help during the holiday season. Although this year looks pretty bleak for retailers.
- Garage Sales - This is a quick and easy way to make a little extra cash and clear clutter at the same time. I had a garage sale a few weeks ago and made a nice chunk of change. Not only that, I was able to make some extra space in my garage.
- Roommate - Do you have an empty room you can rent out or do you know someone who has an empty room for rent? I know most people don't like the idea of living with a roommate. I've lived with roommates before and it was not always a pleasant experience. Maybe there is a friend or relative that needs a roommate?
- Use Your Skills. Do you have a skill that you can use to generate income? I have a co-worker that grew up working in his father's construction business. He now uses those skills to make extra money on the side doing minor construction work.
- Online - Consider using a program like Mypoints which allow you to accumulate points for reading emails. You can redeem the points for gas cards or gift cards to your favorite store.
One word of advice: setup a different email address to use specifically for Mypoints. You'll cut down on the amount of mail coming into your regular email address. - Coupons - Consider using coupons to save on your everyday purchases. Be careful about things that you had not previously planned to purchase. This will negate your savings.
- Save on Utilities. The biggest way to save money on your utility bills is to use a programmable thermostat. A programmable thermostat allows you to control the settings of the heat and A/C when no one is home. Buy.com offers a programmable thermostat for less than $40. I purchased one of these for my rental property and installed it myself in less than 15 minutes. My tenant saw her utility bills drop by over 20% each month.
- Cable. Do you really need the top cable package offered from your cable company? Can you cut back on your cable package? Better yet ditch the cable completely and save alot more money. In addition to the money you save, you'll now have time to work on increasing your income.
- Phone. Do you need to keep your landline phone? Can you cut back on your cell phone package? Do you really need to keep a contract on your cell phone. Prepaid wireless is not only for those with bad credit. With a prepaid phone, you know exactly what your bill will be and you are not tied to a certain carrier for 1-2 years.
- Insurance. When is the last time you shopped for auto insurance? Remember, all insurance companies do not offer the same rates. If you don't want to waste your time going to different websites and having to repeatedly enter the same information over and over again, try using InsureMe. They work with all of the leading auto insurance companies to get you the best rate. If you are happy with your current insurance carrier, consider increasing your deductibles to lower your premium. Be sure you have enough money in your Emergency Fund to cover your deductibles!
If you are just starting out in the personal finance game, there are a some important basic concepts you need to know in order to be successful in the money game. Even if you've been in the personal finance game for a while, sticking to these basic financial concepts can help to improve your personal finances.
I feel part of the main reason people fail in their personal finances is that they fail to make sure they cover the basic concepts. Once you start making mistakes with your personal finances, the circumstances can haunt you for months or even years.
I'll cover the basics of personal finance in several parts so that it does not become too overwhelming. Let's get started with Part 1.
Once you start earning income or if you have any money at all, the first important concept is:
Spend less than you earn. This is one of the most important tips for handling your finances. If you spend more than you earn, you usually end up relying on credit to cover the difference. Spend less than you earn and you have money for those lean months or for the occasional perk.
Checking Account. If you deal with money in any way, it's best to have a checking account to manage your money. You will want to choose a checking account that is free to use and does not have a minimum balance requirement. You will want an account that does not "nickel and dime" you for every service and does not charge a monthly service fee.
If you frequently use an ATM, you will want to make sure you choose a bank that offers multiple ATMs that are closest to your home or office. There are numerous online banks that offer ATM fee refunds or they are affiliated with a large ATM network like Allpoint. Online banks like ING have partnered with the Allpoint Network which usually has ATMs in pretty common locations like Target, Costco, BP, Walgreens, etc.
You will want to make sure there are no fees for checks or you can at least get the first order of checks free. Most people write very few checks these days so the first order of checks should last for a long time. To make that first box of checks last longer, you will want to make sure they offer free online billpay.
Overdraft Protection. The fees for bouncing a check can be astronomical these days. The average fee these days can be around $25 but can go as high as $40. Most accounts offer the option of linking your checking account to a savings account and will transfer funds to your checking account if your balance falls below zero. Some banks charge for this service and some do not. Washington Mutual currently offers a checking and high-yield savings combo that you can open for $1.
Stay tuned for Part 2.
As most of you know or have experienced, the rates for savings accounts have been dropping like a rock after the recent rate cut. With the additional rate cut today, I'm sure the rates will fall even further.
Given the fall in interest rates, the monthly interest paid on my savings account will continue to fall. Looking at the numbers today, it no longer makes sense for me to have $31,000 sitting in a low rate savings account when my car loan is at 8.43%.
The only thing stopping me from pulling the trigger is the thought of my savings account balance going way down. Granted, I will have a balance of around $7k left in the account but what if I have a $10,000 emergency? I don't want to have to use credit again to get me through a rough financial patch. Even though this is one of the major factors of me not paying off the loan, there are numerous benefits to paying the loan off.
By paying the loan off, I am freeing up $551 per month I am no longer sending to the bank each month. Actually, I paid an additional $250 on principal this month so I am freeing up even more cash each month. Paying off the car loan will not only improve my monthly cash flow, it will greatly decrease my debt to income ratio. Paying off my car loan will also help to increase my credit scores above the 720 goal I have set for 2008.
I've asked two of my close friends for advice on how they would handle the situation. Now, I would like to know what you guys think? Should I pay off the loan in full or should I continue to make extra principal payments?
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This is definitely something you should not miss out on. Kiplingers is having Jump-Start Your Retirement Plan Days coming up on January 25, 2008. They are offering FREE advice from planners who are members of the National Association of Personal Finance Advisors (NAPFA).
Normally, the charge is anywhere from $100 to $250 an hour but on Friday, January 25, 2008 from 9am to 6pm ET, you can ask your questions absolutely FREE.
The planners are well versed in a number of topics including:
- Investments
- Taxes
- Insurance
- Estate Planning
- College Savings
- Retirement
You may submit your question online via this link, anytime between now and 6pm on Friday January 25, 2008.
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