The Sun's Financial Diary » Personal finance

Five Pitfalls to Avoid When Buying or Selling A House

David Dierking — Thu, 18 Mar 2010 14:30:56 +0000

Like a lot of Americans across the country right now, my neighbors have put their house up for sale. They want to downsize and lower their monthly mortgage payment. The house has been on the market for a few months now. It’s a good size house, is well maintained and is in a desirable neighborhood but they’ve gotten nary a sniff of interest. It’s an all too common occurrence nowadays as the economy continues to work out the excesses of the housing bubble.

The margin for error for home sellers is extremely thin in the current market but home buyers need to be alert as well. Without the proper preparation and knowledge, people on either side of the home buying transaction can needlessly cost themselves thousands of dollars. Whether you’re in the market to buy or sell, here are five things that you’ll want to avoid doing so that you can save yourself money.

Asking too much

Housing prices have dropped precipitously all across the country and there’s no quicker way to make sure your house stays on the market than to overprice it. This is one of the mistakes my neighbors are making. They priced their house to ensure that they don’t lose money on the sale. Instead, what they’ve done is priced their house 10-20% above comparables in the area. Understand what your house is really worth in today’s environment and price it accordingly.

Paying too much

This is without a doubt a buyer’s market. Unlike several years ago where some people were paying OVER asking price for houses, times now have changed. Some real estate folks have suggested that you can start a negotiation at 10-15% below the asking price to start off. Offering the asking price right now will only cost you unnecessarily. And there’s a good chance that you’re only bidding against yourself. Supply is far exceeding demand for houses right now. If you’re a buyer, you’re holding all the cards.

Avoiding the home inspection

What’s the point in getting a good deal on a house if you’re going to have to spend a truckload of money to fix it up? Home inspections are there for your protection. An inspection by a qualified pro will let you know whether the house you’re about to make an offer on is the real deal or a well disguised lemon.

Ignoring the area around the house

Right next to the neighborhood I live in is a railway line that sees about five trains a day go by (and blow their horns). Rarely does a week go by where I don’t hear one of the neighbors complain about the noise from the trains or the unsightly appearance of some of the rail cars parked nearby. That railway line existed long before everybody moved into their houses. Remember, the house may be beautiful and it might be priced right but if you have a railroad or a freeway or a Walmart right next to it, you may end up wishing that you walked the other way.

Not considering property taxes

While principal and interest will undoubtedly make up the biggest chunk of your monthly mortgage payment, property taxes will be something you’ll need to escrow for as well and that’s something that could add several hundred dollars to your payment. Make sure you know what your TOTAL payment will be.

With the supply and demand imbalance in the housing market right now, it’s as important as ever to do what you can to put your house at the top of the “must see” list. Houses are still selling but you’ll need to work harder to get the asking price you want quickly. Getting reliable information on comparable houses for sale in your area and pricing your house accordingly is one of the best ways to accomplish this.

Likewise, buyers are in a terrific position to nab a great home at a significantly reduced price but the deal can be made even better with the right negotiation. Extras such as closing costs and appliances are all in play as sellers get eager to close the deal. Make sure you’re ready to take advantage.

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Five Pitfalls to Avoid When Buying or Selling A House

Is Your Budget Making You Bitter?

Yolander Prinzel — Wed, 17 Mar 2010 14:30:56 +0000

Last week, I wrote a post about the $70 night out I had with my husband. In the cheap night out post I knocked myself for spending a week’s worth of grocery money on one dinner and a movie. Luckily, Len Penzo of Len Penzo dot Com stopped by and slapped a little bit of sense into my overly restricted brain. He said:

You know what, Yolander? Unless I am missing something here, seventy bucks for two people over four hours seems like a pretty decent value to me.

That is about $8 per hour per person – that’s roughly equivalent the price of going to a movie on an hourly basis.

Don’t be so hard on yourself!

Naturally, he is right. Often when we work hard to stick to a budget and be frugal (two things that do not always go together) we take an overly negative stance toward any spending that could be considered wasteful. When I realized I spent a week’s worth of groceries on one night out—I was disappointed in myself. Len, however, saw the expense as reasonable and—dare I say it—a value.

If your budget is making you bitter and overly hard on yourself, think about the following:

1. A budgeted, frugal life that is spent obsessing over money and spending is no better than a non-budgeted, wasteful life spent obsessing over money and spending. Your budget and frugal activities should do more to free you than to bind you. They should free up your time to do things you love, free up your mind to enjoy your life, and free up your wallet from strain.

2. Frugality is too expensive if it makes you regret every penny splurged. Everyone’s financial situation is different, and some folks really can’t afford to splurge on much—but almost everyone can afford a $5 splurge here and there. Don’t beat yourself up over it.

3. Don’t let your budget work you — you should work your budget. You are not a prisoner to your budget. If something isn’t working or isn’t making you happy, take a look and readjust. You might have to spend less money somewhere else but if that keeps you more satisfied then it’s worth it.

4. Have a goal. When you have a generalized, “Spend less and save more” goal, you may find it more difficult to happily stick to your budget and you may find temptation harder to ignore. If you have a well-defined goal for your budgeting and frugality you will have a sense of purpose that makes your efforts less stressful.

5. Reward yourself. No, not every day and not for doing nothing, but when you have achieved an interim goal—reward yourself in a cost-efficient but fulfilling way.

6. Value yourself over your money. Like it or not, your money is really just another possession. Sure it’s a tool to reach your goals and keep your standard of living, but it is a thing. You should value all the people, experiences and relationships more than you do your money… even if it costs you $70 once in a while to do so.

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Is Your Budget Making You Bitter?

The IRS Creates New Programs to Assist Struggling Taxpayers

Guest — Tue, 16 Mar 2010 14:25:37 +0000

The Recession has hit many Americans hard. As we get into tax season, many people may not realize that events such as a job loss or new unexpected burdens may have tax implications that need to be addressed on your return. The good news is that the Internal Revenue Service recently announced that it is outlining additional steps to help unemployed taxpayers and other individuals meet their tax obligations. The IRS views the current economic climate as a way to reach out to taxpayers and promote new ways for people to receive help; the agency believes that its new initiatives will help ease the burden on taxpayers who are having a difficult time weathering the financial crisis.

Among the steps the IRS is taking to help taxpayers is an “open house” program. It is set up to allow taxpayers to interface with agents and work out tax problems in person. The IRS will announce locations, dates, and times shortly, and they expect to hold them on a few Saturdays throughout the year. If you are having financial difficulties or are looking for ways to save money, it may be a great idea to attend for two reasons:

The IRS is seeking to use these open houses as an opportunity to explain to taxpayers what tax breaks they may be entitled to. This includes the Homebuyer Tax Credit, which offers a credit to first-time homebuyers, the American Opportunity Credit, which credits full-time students or those who perform community service, the Making Work Pay Tax Credit, which is a credit for employed individuals who make under $75,000 in personal income, and the Expanded Earned Income Tax Credit, which credits low-income workers and helps offset the burden of payroll taxes.
If you are unemployed, the IRS states that it will offer taxpayers the opportunity to make payment arrangements (such as paying in installments) and have interest charges waived.

In addition to the open houses, the IRS opened a new section on their official website, titled “Tax Center to Assist Unemployed Taxpayers”, which provides online publications and videos about the impact unemployment has on taxes and possible tax credits, in addition to assistance with filing and paying taxes. The IRS also is providing advice to unemployed taxpayers about starting their own businesses.

Another helpful resource on IRS.gov is a dedicated section of “What If” questions. The section aims to answer taxpayers questions during the economic downturn. This is especially helpful because taxpayers can find out what tax credits they may be eligible for – credits that could add up to a big savings for them.

Here are some helpful tidbits from their “What If” section:

If you are unemployed, you may be able to deduct incurred expenses while looking for a job, even if your job search comes up empty – these include employment agency fees and travel expenses among other things.
If your income has been greatly reduced due to job loss or a salary cut, you may be eligible for the Earned Income Tax Credit, mentioned earlier. This tax credit assists individuals and families who earn low to moderate incomes.
Per the Mortgage Forgiveness Debt Relief Act of 2007, if you foreclose on your home or secure a mortgage loan modification, you may be able to exclude income from your taxes as a result of the foreclosure or modification.
If you don’t think you will be able to pay your taxes on time, the IRS will allow you to pay as much as you can and offer you an extension or have you agree to an installation plan.
If your income changed or you welcomed a new child into your family, you will be able to receive an economic stimulus check. The maximum credit is $1,200 for a married couple who earn less than $150,000, and a $300 credit for each qualifying child 16 years of age and younger.

As you can see, there are quite a few ways in which you can save money through tax credits, especially if you are unemployed or having financial difficulties. It is worth taking advantage of the new initiatives the IRS is putting into place, especially the opportunity to learn about these credits and solve any tax issues face-to-face, while it lasts. That way not only can you potentially save a lot of money this tax season, but you can prevent the IRS from giving you any trouble should you have difficulty paying your taxes.

This is a guest post from Kathryn Katz. Kathryn is a Certified Personal Finance Counselor and works for Consolidated Credit Counseling Services. The non-profit credit counseling agency specializes in debt consolidation and helps consumers that are in financial distress.

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Making a Limited Budget Work Today and Tomorrow

Shannon M. Medisky — Mon, 15 Mar 2010 14:50:22 +0000

It’s common knowledge that everyone should save for and prepare for retirement. Most parents would like to be able to save towards their children’s future college costs as well. Problem is, in today’s economy, the vast majority of household budgets are stretched so incredibly thin, that there’s usually not even two cents left to rub together let alone put away for future needs. As the saying goes, the squeaky wheel gets the oil, and it’s easy to not hear or even completely ignore the distant cry of future needs when you’re struggling to meet the clamoring, nagging needs of today. All is, fortunately, not lost, however. Use the tips and strategies that follow to help you stretch today’s dollar now and minimize the cost of tomorrow.

Any Start Is a Start in the Right Direction

Forget feeling guilty about not being able to stash away more savings. As with anything in life, the first step is often the hardest. The sheer fact that you’re beginning to anticipate and prepare for future needs puts you that much farther ahead. Even if it’s just a token dollar or two, get in the habit now so that when you are capable of increasing your savings deposit, you’re already used to doing so.

Think Small over the Long Haul to See Bigger Results

Start early enough and you needn’t necessarily jeopardize today’s budget for tomorrow’s future financial needs. Regardless of the future expense, the earlier you begin saving, the smaller deposits you’ll need to make in order to reach your target financial goal. This is true for two simple reasons. One, you’ll be making deposits for a longer period of time, spreading out the total target savings amount. And, two, you’ll have the ability to accrue interest for a longer period of time which can really add to your bottom line and make your job of saving that much easier.

Get Help Wherever You Can

Take advantage of employer retirement programs that allow you to contribute via pre-tax payroll deduction. A true win-win situation, you’ll likely never miss the extra funds in your paycheck if you’ve never had them to begin with and you’ll lower your taxable income at the same time. If your employer offers retirement matching, make sure you take advantage. Failure to do so is the equivalent of giving free money away. If you have children, look into investing in a 529 plan (also known as “qualified tuition plans”). Not only do they aid in the process of stashing away the savings today for tomorrow’s future tuition bill, 529 plans can actually lock in the price of today’s tuition and allow your child to take advantage of it tomorrow potentially saving you (and your child) thousands of dollars. Parents who take advantage of qualified tuition plans do incur fees, and most plans also have limited enrollment periods each year. The good news is that even though each state offers their own 529 plan, parents are not locked into their own state’s plan. A word to wise parents everywhere, take the time to comparison shop the various state plans and determine which one best suits your and your child’s potential needs best. For more information or to compare the various state plans, visit the College Savings Plan Network (CSPN) site.

Don’t Overlook the Standbys

There’s a lot to be said for not fixing what isn’t broken. If you simply don’t have the leftover funds each month to make contributions to a retirement or college savings plan, stick with making albeit small deposits in a traditional savings account or consider purchasing savings bonds to help your money grow with much less expensive contribution amounts. After all very little bit counts, and if you start counting (and saving today) you’ll have far less to worry about tomorrow.

(To download and print a worksheet of this topic, click here.)

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How to File a Tax Extension

Sun — Fri, 12 Mar 2010 14:42:27 +0000

It’s still more than a month away from the 2010 tax deadline, April 15, 2010. If you haven’t finished your tax return yet, there’s still plenty of time to get it done before the deadline, so it may be a little early to talk about tax extension. However, if for any reason that you believe you won’t be able to file your 2009 tax on time, you should prepare to request an extension of time to file your tax return which will automatically give you 6 more months to prepare your federal tax. But you must file the extension on or before the tax day.

There are a few options for you to file an federal extension, either free or with a small fee. First, you can use IRS’s free e-filing service to file an extension for free. Currently, the IRS has two options for taxpayers seeking an extension: On IRS Free File page, you can use either

Traditional free file, or
Free file fillable form

to request an extension electronically. Even though there’s an income limit (less than $56,000) to use IRS Free File to file federal income tax, the Free File is free for any taxpayer to file a federal extension request from a home computer by April 15, regardless of income. As I mentioned earlier, using free e-filing to get an extension is fast, secure and convenient. Of course, you can always fill out the paper Form 4868 and mail it to IRS if you choose to do so

BTW, to qualify for an extension, you must

Properly estimate your 2009 tax liability using the information available to you,
Enter your total tax liability on line 4 of Form 4868, and
File Form 4868 by the regular due date of your return.

Then, there are also paid services. For example, FileLater lets you file a federal extension for $9.95 (regular price $17.95), which can be done on April 15th.

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Ally Bank Has an CD That Raises Your Rate

Sun — Tue, 09 Mar 2010 18:59:19 +0000

Ally Bank now has a new CD product, the second new product in as many month.

The CD product, called 2 Year Raise Your Rate CD, isn’t entirely because it replaces the current 2-year high-yield CD which has a yield of 2.04% APY as of March 9th. What’s new in this product is the promise that if the yield goes up within the term of the CD later, you will have the opportunity to increase the rate of your CD once.

Like its online savings account, Ally Bank’s CDs are quite competitive among banks offer high-yield savings accounts. For example, for the same term CD, we have

EverBank 2-year CD 2.00% APY
American Express Bank 2-year CD 2.00% APY
Capital One Bank 2-year CD 1.25% APY
Discover Bank 2-year CD 2.05% APY
FNBO Direct 2-year CD 1.50% APY

While the idea of letting customers opt to a higher rate in the future is interesting, I don’t know how much savers can benefit from it in the current environment. If you also follow Ally Bank, you know Ally is the only bank which adjusts its rates, both savings account rates and CD rates, almost every week. I have complained about this many times in the past, but still couldn’t figure the rationale behind such frequent adjustments.

After the latest policy meeting in February, the Fed said it will maintain the interest rate at near zero for some time. This means that interest rates of bank savings and CD products could still fall in the coming months even when the Fed keeps its benchmark rate steady (the current rate has been in place for more than a year already). Even if the rate starts to go up, I suspect that Ally will use the same tactic as it’s using now when lowering rates: make tiny but frequent adjustments. In that case, you probably won’t get a rate that’s a lot better than what you already have before the term expires if you use your chance too early.

BTW, I have already received the debit card from Ally interest checking account that I opened last week. Now I am just waiting for the PIN before I can use it to withdraw cash from any ATM without a fee.

Ally Bank Rates Summary

The following are the up-to-date rates for Ally Bank products.

Ally Bank Rates Effective -
Duration	Rate
3 Month High Yield CD
6 Month High Yield CD
9 Month High Yield CD
12 Month High Yield CD
18 Month High Yield CD
2 Year High Yield CD
3 Year High Yield CD
4 Year High Yield CD
5 Year High Yield CD
9 Month No Penalty CD
Online Savings Account
Money Market Account

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Teaching Your Child to Save Can Be Fun

David Dierking — Tue, 09 Mar 2010 14:52:10 +0000

“I want (fill in the blank)!”

If you’re a parent to young children, you’ve undoubtedly heard your little one utter this phrase many times. Plus, it probably most often occurs at some pretty crowded locales such as the grocery store or Toys ‘R Us where the level of parental shame can be at its highest. At such a young age, kids really only have a comprehension of what they want and not what it takes to earn what they want.

But that doesn’t have to be the case. Studies have shown that our schools are doing a woefully inadequate job of preparing our young people to be financially wise in their later lives so it’s increasingly on the shoulders of parents to teach their kids fiscal responsibility.

With a few simple tools and a little preparation, you too can turn your avid spenders into eager savers. Here are a few ideas that will get you headed down the right track.

Start with an Allowance

Kids won’t have a good idea of what to do with money unless they have some so start them with a small weekly or monthly allowance. Birthdays and holidays provide chances for a quick windfall but an allowance will help them understand how to manage a regular “income”.

Show Your Kids How You Do It

Now that your child has an income stream of their own, don’t hesitate to show them what you do with yours. Explain to them that while you get paid a lot of money (in their eyes, at least), you have to use some of that money to pay for the house, food, clothes, etc. You can use the concept on them in that if they want something like a toy or a shirt they need to use some of their money to pay for it.

Give Spending Money ahead of Time

How many times have you walked into a grocery store to find your little one eying up a candy bar at the checkout aisle and want it? Kids don’t understand the value of something if they’re simply able to get it when they ask for it. Instead, give them a dollar or two at the beginning of the shopping trip and tell them they can spend it on whatever they want but that will be the only money they get. You’ll be surprised at how carefully they evaluate if that candy bar is really worth it. (And, yes, let them choose whatever they want to buy. Put your child in charge of the transaction and see how they react.)

Reward Their Savings

You have a 401(k) that rewards you (hopefully) with a matching contribution for the amount you save. Why not use the same idea for your kid? For every dollar of their allowance they choose to save, match it with an additional dollar. As your child gets older, you can pare back on the matching contribution you give them as they begin earning their own money and become more independent. Which brings us to….

Encourage Them to Get a Part Time Job

Your child will soon reach an age where they need to begin to help providing for themselves. If they want a car or an Xbox or anything else, have them save for it so they can at least pay for a good chunk of it themselves. Anything that they pay for with their own money you’ll find them taking a little better care of. Plus, it teaches them the value of working hard to achieve a goal.

Teaching your child the value of saving versus spending can actually become a fun process. Instead of worrying about trying to head off an argument in the checkout aisle, you can give your child the tools to help them determine for themselves how valuable something is. By encouraging certain behaviors, you can help them learn to separate what they want from what they REALLY want.

And those lessons can last years and years.

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Household Debt Panel

Yolander Prinzel — Fri, 05 Mar 2010 14:39:16 +0000

I think the goal of almost every single person on Earth is to go through many stages of upgrading his or her life. Remember the car you drove when you were a teenager? Well there is no way you want to drive that car foreve – heck no, you want to upgrade. From the car you once drove, the last apartment you lived in, the job you had or the neighborhood you were located in, chances are you have spent a great portion of the last 10 to 20 years upgrading and you probably plan to continue to do so.

But where does all of this upgrading put us? Sure we have nicer cars, bigger homes and better job titles but if our assets are not much greater than our liabilities then all this forward movement isn’t really an upgrade – it’s a lie and eventually it will catch up to you. It’s like every episode of Scooby-Doo, when they pull the face off the ghost, ghoul, goblin or other spooky character. When they do, you find that the face was nothing more than a mask to hide the villain’s true identity, just like the expensive SUV, the big house and the Coach purse is nothing more than a mask that many people wear to hide their true financial identity.

If this sounds like you then it may be time for you to create your own debt panel. President Obama recently created a bipartisan debt panel to make many of the big decisions about which programs and funding efforts our government needs to cut and what taxes might need to be increased in order to get our national debt under control. Sometimes even in our own personal budget it is a good idea to get some outside feedback to help us decide what bills and services we should cut and how we should arrange our budget to reduce our debt.

While many people turn to professionals in order to help get them on the right track, you don’t have to take that route. Instead, you can go to friends and family members that you trust and create your own personal debt panel. In order for it to work you must be completely honest with them about your finances and you must be willing to adopt the changes they ask you to make in your spending.

Steps to Creating and Instituting Your Personal Debt Panel

1. Make a list of family and friends whom you trust with your personal financial details, whose financial judgment you trust and who will understand the commitment, scope and purpose of the project and ask them to join your debt panel. You should have at least three people on your panel in order to ensure a good number of ideas and input and no more than five to avoid confusion.

2. Gather your last 3 or more bank statements, credit card statements, mortgage statements and any other relevant financial records. These documents should give the full picture of your income, expenses and debts. Make copies of them and give a copy of the entire packet to each of your debt panel members.

3. Schedule an initial meeting between the debt panel members so that they can go over your financial situation and create a course of action. You should not be present at this meeting.

4. Schedule another meeting during which the debt panel members will meet with you to discuss their findings and give you direction for future spending.

5. Set up a monthly, recurring meeting that allows the entire panel to get together and review your finances and your progress.

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Household Debt Panel

Fed Discount Rate Increase Could Signal Change In Policy

David Dierking — Thu, 04 Mar 2010 18:43:34 +0000

Is the economy finally starting to turn around? If you pay attention to what the Fed is doing, you might get the impression that the answer to that question is yes.

But it’s more important to first take a look at exactly what the Fed’s been up to. A couple of weeks ago, the Fed made news by raising the discount rate – the rate that the Fed charges banks for emergency loans – a quarter point from 0.50% to 0.75%. This increase could signal a number of things regarding the Fed’s opinion of the state of the economy and that of financial institutions.

First of all, a change in the discount rate will have little effect on the average consumer. Consumers will be more affected by changes in the prime rate as that rate can be the basis for everything from credit cards to adjustable rate mortgages to HELOCs. The discount rate is used strictly for government to bank short-term lending.

But a change in the discount rate does offer a glimpse into the Fed’s current thinking. The fact that the Fed raised one of its rates is not surprising as rates really had nowhere to go but up after the Fed’s extended “free money” period. The fact that the rate was increased at this point indicates the Fed believes that the economy is on the road to recovery.

The Fed has long used rate policy as a means of containing the core inflation rate. Inflation in the recent recession hasn’t been a concern as much as easing monetary policy enough to fuel economic growth again. The Fed for the last several months has kept rates at a very low level to accomplish that but now they’re also indicating that they’re being watchful of inflationary pressures so that they won’t derail any potential economic recovery. Ben Bernanke and crew are essentially telling us that the wheels of resurgence are in motion but they don’t want to overheat the economy too fast either.

The Fed may also be stimulating banks to begin using the private sector more frequently to do business instead of the government. Through programs like TARP and a relaxed monetary policy, the government has become the de facto safe haven for many financial institutions to acquire the funds necessary to support their balance sheets and capital ratios. The Fed could now be signaling that they’re trying to start shedding this label and encourage a more normal pattern of lending amongst institutions.

The increase in the discount rate does tell us though that a more widespread tightening of monetary policy might not be too far off in the future. As the economy improves, the Fed will want to balance economic growth with inflation control. If the Fed raises rates too fast, it could push the economy back into recession. If the Fed is too slow to react, inflation will begin creeping back onto the radar. They could be looking to act in the second half of 2010 or perhaps even wait until 2011. It’ll be a balancing act worth watching.

The news of a discount rate increase should be taken as an encouraging sign. The stock market is well off its recent lows, the housing market has given indications of hitting a bottom and unemployment has slowly begun starting to move back down. It’ll be up to the Fed now to keep that momentum going.

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Best Interest Checking Accounts

Sun — Thu, 04 Mar 2010 14:37:13 +0000

A few years ago, I wrote a post about who offers the best deal in both the checking and savings accounts. Back then, 5+% yield on savings accounts and 3+% on interest checking accounts were very common. Now, we know things are totally different. With the Fed fund rates being held at close to zero for more than a year, you are lucky if your savings account pays 1.50% APY. From where we are now, it could take years for yields of online savings accounts to go back to where they were three years ago.

Though I have been chasing rates for quite a long time, with nearly a dozen savings accounts opened and closed in the past 5 years, I have never been a fan of interest checking accounts because I don’t see much use of it. I usually keep only a small amount in checking account with Bank of America by moving most of the money coming into the account to high-yield savings accounts, such as EverBank, so I can earn a better return. Most interest checking accounts, on the other hand, employ a tiered rate structure which usually pays interest rates that are close to zero (0.50% or less) for the balance of only a few thousand dollars. Besides, even with a high balance, the next tier of interest rate is still usually lower than the rate for saving account from the same bank. You can’t really get much from an interest checking account, in my opinion. That said, I did open an Ally Bank Interest Checking Account recently. But I am not going after the interest. I only want to have their debit card so I can withdraw cash from any ATM without paying any fee.

If you’d like to have both checking and savings account with the same bank, here are some online banks that offer high-yield savings account (well, some aren’t really that “high” yield) as well as interest checking account, with good interest rates and additional perks.

EverBank FreeNet Checking Account

EverBank has been quite aggressive in attracting new customers with its 2.25% bonus rate for its Yield-Pledge Money Market Account ($1,500 minimum to open account, $5,000 balance to avoid $8.95 monthly fee). I would love to put all my money in that bank if the rate were good more than the three-month introduction period. EverBank FreeNet Checking Account offers

2.25% 3-month bonus rate (current rate 0.61% APY for balance less than $10,000)
FDIC insurance
No monthly fee
$1,500 minimum initial deposit to open an account
Free online bill pay for monthly balance at least $5,000 (otherwise $8.95 monthly fee)
Unlimited ATM fee reimbursement for monthly balance of $5,000 or more

FNBO Direct Billpay Account

FNBO Direct used to have a very attractive Online Savings Account. However, with 1.25% APY, the savings account rate is hardly competitive, almost at the same level as ING Direct. But its Billpay account does look good. With FNBO Direct Billpay Account, you will get

1.25% APY, the same rate as the savings account
FDIC insurance
$1 minimum to open an account, no monthly fee
Free Visa check card
Four fee-free withdrawals per month from non-network ATMs with monthly balance of $25,000 or more
Free online bill pay
POPMoney service (send money to other people directly from FNBO account) at $2 fee for standard delivery

Ally Interest Checking Account

This is the account that I opened the other day. As I mentioned above, I am only interested in the No Fee ATM part of this account, but the Ally Interest Checking Account does have other features

0.50% APY for balance up to $15,000; 1.15% APY for balance above;
FDIC insurance
No account minimum and no monthly fee
Free online banking and bill pay
Free debit card, checks and unlimited check writing
Free overdraft service

Of course, by now you should be familiar with Ally Bank Online Savings Account which has an yield of 1.30%.

ING Electric Orange Checking Account

ING Direct is one of the first banks to offer both savings and interest checking account. It’s ING Electric Orange Checking Account offers

0.25% APY for balance from $0 to $50,000 and 1.20% APY for balance of $50K or more
No minimum, no monthly fee
FDIC insurance
Free online bill pay and free MasterCard debit card
Free ATM withdrawal from Allpoint network ATMs
P2P payment (send money directly to a person)

ING Direct Orange Savings Account now has an yield of 1.10% APY.

HSBC Online Payment Account

Used to be HSBC Direct, the new HSBC Advance is very much like ING Direct, in terms of rates. The HSBC Online Payment Account is another interest checking account that offers one single rate for any balance. You will get

0.80% APY
FDIC insurance
$1 to open an account and earn interest
Free debit card
No monthly fee
Free bill pay and free debit card

Like all other banks listed above, HSBC Advance also has an Online Savings Account. The current rate is 1.10% APY.

So as you can see, there isn’t really ONE best interest checking account that gives you everything. Some (Ally) has good rate, but only for very high balance; some (HSBC) offers a single rate regardless of balance, but the rate is rather low for high balance compared with other banks; some (Ally) offers free ATM, but you need a large balance to enjoy a good rate at the same time; some (FNBO) does have a good single rate, but then you don’t have free ATM all the time. Then you also have the bank (ING) that pays a ridiculously rate and limited free ATM, but doesn’t require anything to open an account and bank (EverBank) that requires high initial deposit and let you got to enjoy free ATM with even higher balance, but with a good rate for only a limited time.

What’s your choice?

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Best Interest Checking Accounts

Ally Interest Checking Account Opened

Sun — Wed, 03 Mar 2010 14:05:56 +0000

When I talked about Ally Bank Interest Checking Account in January when the product was introduced, I mentioned that I may get one for myself. What I like about the new checking account isn’t that it bears interest. With 0.50% APY for balance under $15K, there isn’t much I can earn. Rather, what attracts me is its No Fee ATM policy. Basically, there’s no ATM fee when using Ally Bank debit card to withdraw cash from ATMs, any ATM. Since Ally Bank is an online bank (that’s why it can pay interest rates that’s higher than other B&M banks), you won’t find an Ally ATM, so the ATM fee is charged by other banks for using their ATM. Under this policy, Ally will reimburse all the fees charged by other banks at the end of the statement cycle. Since I am a credit card person, I don’t usually carry or use a lot of cash (when I do need cash, I get it from my Bank of America ATMs which seem to be everywhere). However, I still feel that it would be nice to have an ATM card that allows me to get cash without paying any fee, just in case I ever need it.

I finally got around to open the Interest Checking Account last night, which didn’t take much long. Because I already have an Ally Bank Savings Account, the whole process took about 5 minutes to complete. However, like what happened when I tried to open the savings account, it’s kind of tricky to open a new account when you are already a customer. You would think that it is natural to open the new account when you are already in your account so you can skip all those steps required only for new customers. That’s what I think how it should work for existing customers. Not so, apparently.

When I tried to open the new checking account from inside my account, only the left part of the application screen appeared (see screenshot below), making me feel that I have to start all over again by providing SSN and all other personal information. Then I remember what happened last time. So I logged out, started again. There I saw the option to start the application as a current customer. Why can’t they just make it a little simpler?

Afterwards, there were a few more steps to go through, such as verifying identity, choosing how to fund the account (either by check, or by transfer through existing Ally Bank account or external account that is previously linked to an Ally account), etc. But nothing time-consuming. Finally, there’s an option to select to receive 50 free checks or not. Though I don’t expect to write any check with this account, I still opted to receive the free checks.

Now I am just waiting for the debit card to arrive so I can check whether it’s really No Fee ATM, or not.

BTW, in addition to interest checking and savings account, Ally Bank also offers other products such as conventional CDs (terms from 3 months to 5 years) and no penalty CD. Check out my Ally Bank review post for details of Ally banking products. The following are the up-to-date rates for Ally Bank products.

Ally Bank Rates Effective -
Duration	Rate
3 Month High Yield CD
6 Month High Yield CD
9 Month High Yield CD
12 Month High Yield CD
18 Month High Yield CD
2 Year High Yield CD
3 Year High Yield CD
4 Year High Yield CD
5 Year High Yield CD
9 Month No Penalty CD
Online Savings Account
Money Market Account

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Know Thy (Financial) Self

Sun — Mon, 01 Mar 2010 14:30:29 +0000

You may be an introvert or an extrovert. Maybe you’re highly organized or barely able to stay afloat of the clutter. Whatever your personality type, you also have a spending type. Identifying and knowing your spending type and financial habits is one of the first steps to taking control of your monetary resources. Ignore or deny your financial self, and you might as well be throwing money away.

Traditionally speaking, financial personalities break down into two camps: the spenders and the savers. There are those for whom money burns a hole in the pocket and is spent nearly as quickly (or even before) it’s earned. Then, there are those for whom a penny saved is truly a penny earned and every cent is squirreled away in an effort to acquire more wealth and/or security. Obviously, the goal for most is to become better at saving. If this is the case for you, there is much good news and much you can do to help attain this goal. Spending and saving money are both habits, nothing more, and both can be learned behaviors. You may very well have a tendency towards the prior, but if your motivation and determination are strong enough the latter can soon become second nature.

Just as fad diets often don’t work and can lead to more weight gain, so, too, can going on a spending “diet” backfire financially. To achieve long term saving success, focus on making small, much more manageable changes that are more likely to stick. Forget giving up your favorite coffee drinks entirely, for example, and instead opt for putting yourself on a limit of one per week. If you enjoy reading magazines, skip buying them entirely, save the associated cost and instead commit to reading them while you’re in line at the grocery store or start checking them out at your local library. If you enjoy dining out, start ordering takeout instead and squirrel away the money you would have spent on tip and a beverage. An old German proverb says, “Who begins too much accomplishes little.” Same can be said of saving. Whoever tries to save too much at one time will likely save very little because they’re likely doomed to fail. Start small, make palatable changes and you’re much more likely to see lasting change when it comes to your saving habits, increasing the money in your bank account and lowering your financial stress over the long haul.

If you’re thinking you must resign yourself to a life of boredom sans any little luxuries in an effort to make the shift to “saver,” think again. Money is merely a tool, a tool that helps you live your life successfully by paying for all of the little necessities that pop-up as well as helps you to afford the things that help make life more enjoyable. That said, a life spent merely hoarding money is really no life at all. On top of that, working to simply acquire a bigger and bigger number in your bank account might very well leave you bitter and tired of work. After all, all work and no play makes Jack (and Jill) very dull. The key is to learn how to properly prioritize your funds, making sure there’s an adequate supply of money to go around for all the necessities as well as the luxuries. Spend some time figuring out your financial self, make small, easily attainable goals and work towards achieving them and a life of financial security (and balance) won’t be far behind.

(To download and print a worksheet of this topic, click here.)

Photo credit: Amy Messere

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Sallie Mae Savings Account 1.25% APY

Sun — Sat, 27 Feb 2010 20:28:04 +0000

A high interest rate savings account is an essential part of our financial system. With a large amount of money that is currently held in bank accounts, I’d love to get as much return as possible while making sure that the money will be there when we need it in the next few months. Unfortunately, the current status of high-yield savings accounts don’t offer too much help in terms of returns. In fact, I found that online savings accounts are increasingly becoming what we called “chicken rib” these days. On one hand, I really can’t get much from it as yields of most savings accounts are now in the low 1.0% APY, while on the other hand, it still won’t make any sense to just abandon the passive income generated in savings accounts because the interest rates are so low. Late last year, I was considering getting another savings accounts for myself. After looking around and watching rates at banks I was interested got cut repeatedly, I gave up that idea because I realized that it’s just not worth it to get another account with rate that’s only 0.1% higher than what I already have. Plus, with rates changing so fast even as the Fed funds rate has been held steady for more than a year, today’s winner could well be tomorrow’s loser. The rate-chasing game is not worth playing in this environment.

Anyway, if you are looking for a high-yield online savings account, here’s another option in addition to those I listed earlier: the Sallie Mae High-Yield Savings Account. Sallie Mae (NYSE:SLM), which is known for its operation in the student loan business, recently launched its own online savings account with an yield at 1.25% APY. The account is FDIC insured (FDIC Certificate number: 58177, member since November 28, 2005) with no minimum balance requirement and no monthly fee.

Here’s some other information about the Sallie Mae Savings Account:

Daily compounded interest
Sallie Mae routing/ABA number 124385119
ACH fund transfer to/from external accounts
Trial deposit account ownership verification
5-day hold period for deposit $5,000 or less, 10-day hold period for deposit more than $5,000
Maximum 6 free withdrawals per statement cycle ($10 per withdrawal over the limit)
Customer service toll free number (877) 346-2756

To be fair, 1.25% APY is a good rate (better than ING Direct, FNBO Direct), but not really that competitive (lower than Ally Bank and American Express Bank). However, if you are using Upromise like I do, then there is a little extra benefit for Sallie Mae Savings Account owners as Sallie Mae also operates Upromise. Here’s how the 10% annual match on Upromise earnings works

To be eligible for the 10% annual match on your Upromise earnings from Upromise, you must link your High-Yield Savings Account to your Upromise Account and, within 90 days of opening your High-Yield Savings Account, either: (1) set up an Automatic Savings Plan with a monthly deposit of $25 or more, or (2) fund the account with $5,000 or more. Upromise will match 10% of your Upromise earnings posted as ”funded” to your Upromise Account during the calendar year of January 1 through December 31. Your 10% annual match will be deposited into your High-Yield Savings Account in February of the following year provided that both accounts remain active and are in good standing at the time of transfer.

I have a Upromise 529 plan and the way I earn Upromise rebates, which are then invested in the 529 plan, is shopping through Upromise network and paying with BofA Upromise credit card. It’s not a lot of money you can make, but it doesn’t require much effort either if you already have a Upromise card and use it everyday.

Update: You may also want to check out other high-interest online savings accounts:

SmartyPig Savings Account 2.01% APY
Capital One InterestPlus Savings Account 1.25% APY
Ally Bank Online Savings Account 1.30% APY;
FNBO Direct Savings Account 1.25% APY;
EverBank Money Market Account 2.25% 3-month bonus rate, 1.51% APY for the first year.

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TurboTax 2009 Has Some Nice New Features

Sun — Fri, 26 Feb 2010 14:53:49 +0000

I have been a customer of TurboTax for a few years already. When I used the software to prepare my own taxes in the past, I always got the PC version, the software that requires installation on my own PC. I know Intuit has been offering the equivalent, online tax preparation software for sometime, but I never tried the web-based version because, somehow, I feel it’s safer to have all the important personal information on my own computer than on a website. Not that I don’t trust the website in securing my personal data, it’s just a habit that’s a little hard to break.

This year, however, I decided to give the web-based TurboTax a try because I heard there are some nice improvements in the 2009 version. Though those improvements are also included in the standalone version, I also want to see how the online software works. No, I am not planning to shift permanently to the web-based software, at least not with the first try.

Anyway, the first impression when I started TurboTax Premier Online with State and E-Filing was, well, it looks just like the PC version and the procedures are also identical, as far as I can tell: I first enter our personal information, then W-2s, then 1099s.

While I was putting my W-2 into the tax software, I intentionally made an error. In Box 13, I check-marked the second option, Retirement plan. However, I omitted the amount in Box 12, D – Elective deferrals to 401(k). When I tried to continue with my filing, I got an error message like this:

It looks like the software detected there was something wrong while I was entering my information. This brings the improvement of the new version of the software: The error check occurs as the filing goes, not at the end of the process as it usually did in the past as I can remember. Since it always takes me days, if not weeks, to complete our returns, I like the instant error check feature a lot. Catching the error right away and correcting it while things are still fresh make it much easier.

It also happened to me before that there were times I wasn’t very sure about something during the process and I wanted to revisit the issue later. Going back to those places wasn’t that straightforward before since I had to remember where I left those issues myself. In the 2009 TurboTax, however, it’s easy with new Flag feature. As you can see above, I added a Flag at the place I want to back later, gave it a name, and saved it. Clicking on the Flag button at the top of the screen and selecting the name of the flag I created will take me right back to where I flagged.

Finally, the 2009 TurboTax also includes a Live Community. It’s a place where you can get your tax related questions answered. Before posting your own question, you can search through the archives to see if the same or similar question has been asked and answered before. If you can’t find the answer for your question, you can post it to the community and somebody, either users just like you or a tax experts from Intuit will provide an answer in a timely manner. It could be very helpful during the tax season.

Are you using the online version of TurboTax or the PC program? What do you think of these improvements if you have used the online version before?

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Squeezing One Last Deduction out of 2009

Yolander Prinzel — Thu, 25 Feb 2010 14:52:34 +0000

Surprisingly, many people do not realize that they can still get one last deduction out of 2009 even though their current calendar reads 2010. No, this isn’t fantasy or traffic grasping SEO hype — there really is one way for you to still get another deduction on your 2009 taxes. Ready? Here goes:

If you want to get just one more 2009 tax deduction then make a contribution to your already existing IRA account on or before April 15th, 2010.

It’s All In The Details

One of the most important points to note about this deduction is that, in order to take advantage of it, you must have had the IRA you make a contribution to opened in or before 2009. That means you cannot open an IRA account in 2010 and then fund it in 2010 while receiving a deduction for 2009.

The second point to make note of is the deadline to make this contribution. If you plan to make a contribution to a SEP, Roth or traditional IRA that was created in or before 2009 then you only have until April 15th to do so. In most cases, making a deductible contribution means that you must have the money in your IRA account by April 15th. If you mail it or bring it into your broker’s office on April 15th it may not be deductible for 2009. Your CPA is a great resource for determining whether or not your broker’s constructive receipt or an April 15th postmark is enough to get the deduction.

2009 Contribution Limits Still Apply

In case you are wondering, you can make contributions to both your Roth and traditional IRA and deduct the entire amount as long as you stay within 2009 contribution limits, which are:

$5,000 (cumulative) for a Roth or traditional IRA if you are under age 50 and $6,000 if you are 50 or over.
The lesser of $46,000 OR 25% of your income (up to $230,000) to your SEP regardless of your age.

In order to ensure that you get the deduction for 2009, be sure to mark the memo line of your check “Contribution for 2009.”

Don’t Forget To Direct the Funds

Now, while you are rushing to make that last minute deduction, don’t forget that the money inside an IRA will not necessarily invest itself. If your IRA is part of a managed account then you may be paying a fee to have financial decisions made for you, in which case your account manager or broker will likely invest the funds according to your risk tolerance and existing investments. If your account is not a managed account then your contribution may just be sitting in a money market until you call your brokerage firm and have the money invested. If you have a broker, chances are he or she will call you when they see the money come in but if you are using an online brokerage firm you may need to be proactive about the incoming funds.

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CARD Act Aims To Finally Protect Consumers

David Dierking — Wed, 24 Feb 2010 14:51:06 +0000

Last year, President Obama finally pushed legislation through Congress that is aimed at protecting American consumers from the unscrupulous practices of credit card companies. This week, the new credit card law finally takes effect.

On Monday, February 22^nd, the Credit Card Accountability, Responsibility and Disclosure Act (the CARD Act, for short) begins guarding credit card users from many of the common complaints levied against card companies such as being unfairly dinged with rate increases or charged exorbitant fees. It’s not a complete solution and there will be negatives for some cardholders but all in all this piece of legislation is a step in the right direction.

Consumers will immediately see a number of changes to their card agreements. The biggest change may come from card companies’ inability to make unannounced rate hikes. Issuers will no longer be able to make major rate increases on outstanding card balances and, additionally, must provide 45 days notice before making any type of significant change to your account. That includes increasing the rates on your line of credit, imposing additional fees to your account or changing the terms of the cardholder agreement. These changes are a big win for individuals who carry a credit card balance.

But not every practice has been reformed. There are some things that card issuers can still do. For example, there’s no cap on the interest rate charged to new customers (First Premier Bank made news recently with a 79.9% APR on its Premier Bankcard). Card issuers are also still allowed to reduce your credit line or close your account altogether without any type of notice. This has already taken place for many consumers and can be expected to continue.

So who comes out on the losing end with the CARD Act? That would be consumers who pay off their credit cards on time every month. Sounds a little unfair, right? People who pay off their full balance every month don’t incur late fees or interest charges in the first place so any rate changes associated with their cards are going to go largely unnoticed.

But credit card companies will be looking for ways to replace the lost revenue that came from fee and interest income. That lost revenue could be recovered in the form of higher annual fees, increased inactivity fees and lower rewards program benefits. It turns out that those who manage their credit card debt the best will be the ones who benefit the least. No good deed goes unpunished I suppose.

Let’s focus on the good though. Overall, the CARD Act is a positive step for the credit card industry. It won’t prevent every abusive practice but it undoubtedly puts consumers in a more advantageous position than they were in previously. Analysts have already been keeping an eye on card issuers to see if and to what degree they may try to find ways to circumvent the new law to their advantage. Many big issuers seem to be ready to comply with the spirit of the law but there will be others out there that will try to skirt the rules. Be sure to keep a close eye on your cardholder agreement to see exactly what your card issuer will and will not do.

And this isn’t an invitation to spend freely without consequence. If you pay late or pay less than the entire balance, you’ll still incur fees and interest charges. There’s no law that will protect you from that but for those of you who have gotten dinged from a card issuer in the past, the gray skies should be lifting this week.

Photo credit: TheTruthAbout…

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Switching to Virginia Education Savings Trust (VEST) Plan

Sun — Tue, 23 Feb 2010 14:27:51 +0000

When I opened the 529 college savings plan for our first daughter in 2005, the plan offered by New Jersey was never an option to me because there is not tax benefit for using NJ 529 plan even for the state residents. But that wasn’t all. What really made me stay away from NJ college savings plan, called New Jersey Best College Savings Plan that is managed by Franklin Templeton, was the poor performance of the plan and high cost of investing with plan. In fact, Morningstar has rated the plan as one of the worst 529 plans for years. Eventually, I went with two plans that also offer extra incentives: UPromise 529 Plan and Fidelity UNIQUE Plan. Both are tied to credit cards that I use often, the Bank of America UPromise Card (1% cash back) and Fidelity 529 College Rewards Card (2% cash back), so I can turn cash back earned from using the cards into savings for college. While it’s nice to have that extra money invested without much effort since I use the credit card for almost every purchase anyway, I have to admit now that the choice wasn’t the best that I could have made back then. Therefore, when it was time to get another 529 account for the younger one, I did my research more thoroughly and settled with Ohio CollegeAdvantage 529 Plan. So far, I am very happy with the Ohio plan, not only because the plan’s low cost and wide selection of funds, but also the periodic referral bonus offers, which has provided a huge boost to the account’s growth last year.

All the above investment decisions were made when we were living in New Jersey.

Now that we have settled in Virginia, it’s time to make some adjustments to our 529 plans. Unlike the state of New Jersey, Virginia offers a better option for saving for college and tax incentive for using the state sponsored program. Currently, Virginia has four college savings plans: Virginia Prepaid Education Program (VPEP), Virginia Education Savings Trust (VEST), CollegeAmerica and CollegeWealth. The plan I chose is the Virginia Education Savings Trust (VEST) because

It’s a direct-sold college savings plan that is open for enrollment all year long;
It offers a wide selection of low-cost investments, including stocks (domestic and international), bonds, TIPS, and REIT;
It was selected as one of the best 529 plans by Morningstar;
We can deduct up to $4,000 per year per account in Virginia income tax.

VEST Investment Portfolios

The tax benefit alone isn’t enough for me to make the switch. Fortunately, that’s not only benefit the VEST plan offers. The main advantage of the plan, in my opinion, is its investment choices. VEST plan has two types of porfolios: Age-based evolving portfolios and non-evolving portfolios.

The age-based evolving portfolios consist a total of nine portfolios: Eastern Shore, Alleghany, Chesapeake, Potomac, Southside, Blue Ridge, and Piedmont. With the age-based portfolios, as we know, the asset allocations, mainly between stock and fixed income, of each portfolio evolves as the beneficiary’s age approaches the age for college. It works a lot similar to the way that life-cycle funds work. For age-based evolving portfolios, the underlying investments include large-cap, small-cap/mid-cap domestic equity funds, foreign equity funds and fixed income funds, managed by Vanguard, Templeton, Capital Research and Management, INVESCO, etc.

On the other hand, non-evolving portfolios include ten portfolios: Aggressive Portfolio, Moderate Portfolio, Conservative Portfolio, Money Market Portfolio, Total Stock Market Index Portfolio, Total Bond Market Index Portfolio, Total International Stock Index Portfolio, Inflation-Protected Securities Portfolio, REIT Index Portfolio, and Socially Targeted Investment Portfolio, all but the last one are made of Vanguard index funds.

After examining both types of portfolios, I decided to use funds in the non-evolving portfolios category to build my own portfolio in order to, I hope, boost the growth of the portfolio when our kids are both more than 10 years away from college. The four funds I chose are: Vanguard Total Stock Market Index Fund (50%), Vanguard Total International Stock Index Fund (33%), Vanguard REIT Index Fund (8%) and Vanguard Total Bond Market Index Fund (9%). Right now, the portfolio invests heavily in stocks as you can see from the above asset allocations. Going forward, I will have to the adjust the allocation of the portfolio myself as the portfolio is not evolving “automatically”. It’s an additional job that I will need to do myself, but it gives me the flexibility I want in building the portfolio. Will this be a good strategy or a bad one? Only time will tell

VEST Costs

When selecting an investment, whether it’s a regular investment such as a mutual fund, or an investment for college like the 529 plan, cost is always a top concern to me. Since most of VEST’s underlying funds are low-cost Vanguard index funds, the overall cost of investing in VEST plan is rather low. For example, the total annual fees for age-based portfolio range from 0.35% (Piedmont Portfolio) to 0.53% (Eastern Shore Portfolio). For non-evolving portfolios, the Socially Targeted Portfolio has the highest cost at 1.0%%. All other Vanguard funds are quite cheap, with costs from 0.30% (Total Stock Market Index Fund) to 0.52% (Total International Stock Index Fund).

In addition, VEST plan also charges an one-time application fee of $25 for each new account. Other fees include

Account cancellation: $25
Change of beneficiary: $10
Rollover to another QTP: $25
Change of account owner: $10
Non-sufficient funds: $25
Expedited distribution: $50

Overall, it seems that investing with VEST plan costs a little bit more than doing so with the Ohio CollegeAdvantage plan, especially for age-based portfolio, and Ohio plan doesn’t charge account setup as the VA plan does. However, both plans are rather cheap to own and both offer great investment choices. What makes the VA plan even sweeter is the $4,000 per account annual Virginia tax deduction. It will make that little additional cost worth it.

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Switching to Virginia Education Savings Trust (VEST) Plan

Creating a Home Directory

Shannon M. Medisky — Mon, 22 Feb 2010 14:18:14 +0000

Anyone who believes in the old adage, “An ounce of prevention is worth a pound of cure,” will also agree that the best way to save money is by managing what you already have well. Without some kind of organization in place, this can be easier said than done. That’s where a home directory comes in handy.

Years ago when I was put on bed rest in my fourth month of pregnancy, I was left with many, many hours to sit and wonder and worry about our finances. With a new baby on the way ready to suck every last cent from our already tightly squeezed budget, I was determined to turn a blind eye on our financial situation no longer. Knowing I would likely not find a better time to devote to this endeavor anytime soon, I grabbed the phone, the pile of bills and a notepad and began taking diligent notes.

Many pages and much chicken scratching later, I knew there must be a better way to keep all of this important information organized. Fortunately, as it turns out, I was right, and it didn’t cost me one-red cent, either. With a small, old 3-ring notebook and a few pieces of paper, I was able to make household tool with lasting value. So if you’re finding yourself enticed by such tools available for sale online and in the stores, keep your money right where it is, with you, and instead create a home directory of the “DIY” variety.

A home directory is tool that helps you manage everything related to your home and your household life. It’s a tool that helps you track outstanding debts and ongoing payments as well as saves you time when you quickly need to find a plethora of information. It can also be a real family safety net as well. Should a family member become unavailable, with a home directory, all the important information is readily accessible to anyone who may need it. For this very reason, it’s vitally important to keep it picked up and protected from theft.

To begin, gather all of your creditors’ information including due dates, account numbers, contact information and amounts due. Other information also worth considering for inclusion are pharmacy phone numbers, doctors’ contact information, phone numbers for children’s schools and even your car’s VIN and license information. If you’re like me and sometimes forget or misplace password and/or login information, consider adding a page just for that information as well. Next, create a page or listing for each so that it can easily be incorporated and/or later removed from the directory. Designating an entire page for each ensures that you will have plenty of space for recording important information, including making notes of any phone calls made to creditors. For ease of use later, clearly label each page with the contact’s name in the upper right-hand corner as this will make finding that contact’s information later much easier. One word of warning, however, for information that may change frequently, consider using a pencil rather than a pen.

The beauty of creating one yourself is that you can tailor it to your own needs and household habits. There is a variety of different ways to organize the pages, so choose a method that works best for you as any other way would be less effective. From strictly alphabetizing the pages by contact name to dividing the directory into smaller sections such as “house,” “car,” and “medical,” doesn’t matter how you organize it, the result is the same – a great, easy way to effectively organize all matters of finance and home. (Click here to download and print your own home directory pages for free.)

(To download and print a worksheet of this topic, click here.)

Photo credit: mag3737

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Sometimes, The Best Lessons Learned in Life Are Learned The Hard Way

Guest — Fri, 19 Feb 2010 14:40:23 +0000

If there were one phrase in life that sums up lessons learned the hard way, it would be the infamous “I told you so.” At one point or another, you were informed by a friend, family member, or a professional, exactly what you should do, disregarded it, and paid the price. So for your entertainment, I would like to share with you a terrible decision that I made not once but three times, simply because I’m a glutton for punishment.

Four years ago, I purchased a 2003 Ford Mustang, which was somewhat “tricked out” with a five year extended bumper-to-bumper warranty from eBay for $14,500 cash. It was the first car I’ve ever called my own and at the time I bought it, it had 23,000 miles on it. The car was in excellent shape, inspected, and only had one previous owner, who kept it garaged in the state of Florida, where I live now. Since owning the car, I make sure to take good care of it and have it fully inspected and tuned up at least twice a year. Since I work from home and don’t travel often, I have only added 20,000 miles to this car since purchasing it, so to me it’s still like new.

In June of 2009, I was driving to work when all of a sudden my left front tire blew out completely. Instantly I smelled the sulfur from burning rubber and luckily for me was right in front of Biscayne Tire and Auto, of which I had never been a patron of before. A young man named Raul came out to inspect my car and explained two things to me, of which one I listened to and one did not. The first thing he said was that I should probably have all four tires replaced because the other three showed significant wear and I would be a ticking time-bomb if I chose to ignore the problem. The second thing he told me was that because I have special rims, I would need to order special tires that kept the “muscle car” look and each front tire would cost $235, each back tire, $285. I don’t know about you, but spending over $1,000 for four pieces of rubber was definitely not in my budget and while I probably (maybe) could have scrounged around to make it work, I decided to get the immediate problem fixed and when the time came, take care of the other tires. After all, Raul was probably trying to sell me something I didn’t want and I’m pretty sure it wouldn’t be the first time a mechanic was less than honest.

So I went on my merry way, upset that my tires were so gosh-darn expensive. As a few weeks progressed, I forgot completely about the issue as my Mustang was back to running smoothly. In August of 2009, wouldn’t you know it, I experienced a second tire blowout. This time it was the front left tire and too far away from Biscayne Tire and Auto, forcing me to call a tow. I was able to drive the car back to my apartment, as I was only a few minutes out. Now you might be thinking, “Michael, why don’t you simply put the spare tire on, ride it out to the auto shop and save yourself the expense of calling a tow truck?” Indeed this thought crossed my mind, however I am amateurish at best in auto repair, even with something as simple as a flat tire, so I called the number on the back of my Citibank credit card, because MasterCard offers AAA assistance at a very discounted rate. I waited, and waited, and waited for SIX hours and finally some 18 year old kid showed up and could not change my tire either, because once again, my special rims and wheels required a special bolt removal device, of which he did not bring with him. How awesome!

So that night, I called a tow truck to come and pick up the Mustang, and the next morning he showed up promptly and dropped me and my ride off at the infamous Biscayne Tire and Auto. Raul must have ran out from whatever he was doing because his face was the first to greet me and while the last thing I wanted to see was his smile from cheek to cheek, it was somewhat amusing. He kindly reminded me that I should have the back two tires replaced as well but once again, I did not have the funds to cough it up, barely being able to have this second tire replaced. Raul pompously and deservedly told me we would once again cross paths very soon and set me on my way. The tow truck cost me $75 and a good day’s worth of time, so at this point my lesson learned was only minimal. I knew I could do better.

In September of 2009, just one month after having replaced the front left tire, the Mrs. and I were returning home from an Argentinean steak house when my back left tire felt a little “off”. Before you go thinking that if I have enough money to go out to steakhouses, I have enough money to pay for four new tires, think again, as I shamelessly whipped out my Restaurant.com $25 gift card, which cut the bill in half. Anyway, I pulled the car over just to find that I had a nail the size of Rhode Island logged pretty well into the tire. Luckily, I was able to drive the car home and woke up bright and early the next morning to meet my new best friend Raul at the auto shop. Once again, his grin reminded me of just how stupid I am. Even though this probably would have happened even if I had purchased a new tire, I would have been able to plug the nail hole instead of replacing the tire completely. After shelling out $285 bucks for one back left tire, Raul begged me to get the last tire replaced. To be honest, I could have had the last tire replaced but pride, principle, and stupidity ran through my mind, which caused me to laugh off his suggestion and inform him that I would never see him again.

Up until yesterday, my idiotic decisions had only cost me $75 and a couple days worth of inconvenience and travel. Avoiding accidents and other potential disasters, I’d say I got off easy. Then, driving home from a dentist appointment, I stopped at a red light where, as is routine in Miami, a homeless man walked up to my car asking for a donation. His words seemed to take an unusual turn when he told me he loved Mustangs and Fords in general and that my back left tire seemed to be a little flat. I informed him that this tire was somewhat new and that there is no way anything is wrong with it. He smiled and went on his way but I had the thought in the back of my mind that he could be right. After about 15 minutes of interstate driving, I began to lose control of the car and once again had the awful smell of sulfur permeate through the car. Daytime traffic on I-95 was light, so I was able to get the car over to the right shoulder, pissed off that (1) I was forewarned of this event and (2) lost a tire that I just replaced a few months ago! I got out of the car and was SHOCKED to see that the tire in question was just fine. Two seconds later my relief turned into pain when I found my back right tire ripped into shreds. The most expensive of my indiscretions, I lost $95 for the tow truck and a days worth of work as it took hours to get the right kind of tow to help us out. Back tire blowouts require a bed truck because the car can’t roll on its back tires. The first FOUR tows that we’re sent out to us were of no use, but like the cliché goes “Fifth times a charm.”

So what did I learn from this? Well the first and most obvious lesson is that when a professional suggests I need something done, I should either listen, or get a second opinion to confirm the first. Idiots like me cause accidents that can be avoided and bad decisions are usually a result of earlier bad decisions. The second and less obvious lesson is that even though the consequences of my actions were on the lighter side, they could have been FAR worse. Before making another decision like this, I need to think about the possible consequences and realize that I’m not always going to be this lucky. That is if you can call this little experience “lucky”.

This guest post comes from Michael, a contributing editor of the Dough Roller, a personal finance and investing blog, and Credit Card Offers IQ, a credit card review site.

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Sometimes, The Best Lessons Learned in Life Are Learned The Hard Way

Those Who Don’t A-S-K Don’t G-E-T

Shannon M. Medisky — Thu, 18 Feb 2010 14:50:04 +0000

When it comes to saving money (and even getting more for your money), the old saying is true: the squeaky wheel truly does get the oil. So speak up to make sure you’re getting your fair share and then some.

It’s amazing how simply being friendly and approachable can turn into real profits for your pocketbook. Don’t be afraid to ask fellow consumers in the store for their opinions on products before plunking down your money. Whether the reply is a ringing endorsement or a staunch warning, avoid making a costly mistake on their dime. When it’s time to ring up your purchases, don’t forget the friendly small talk with the checker person either. More than once, I’ve had clerks pull out a seemingly secret coupon that had slipped through my radar or alerted me to unadvertised upcoming sales and discounts. Not surprisingly, being just plain nice can do really great things for your bottom line.

The hunt for savings and value needn’t stop once your purchases are made either. If you find a previous purchase on sale within a certain amount of time afterwards, you may be entitled to a refund of the difference simply just by asking. Stores have varying policies, so speak up to find out more. Worried that you’ve lost your receipt? No problem! Many retailers offer receipt look-up as a service. If you use a store loyalty or reward card or remember what form of payment you used to make the purchase, the store can often look up the purchase record in a matter of moments. In many cases, the better pricing needn’t just be offered at the same store either. “Price matching” will often be honored retroactively. Again, check with the retailers in your area to learn about their specific policies. Word to the (fiscally) wise, however, price adjustments and price matching are offered as a courtesy and many retailers bank on consumers not taking advantage. Make sure you – and your wallet – do!

Avoid reserving your efforts just for consumer complaints, though. If you’re a loyal consumer of a particular product, speaking up and saying so can translate to real savings. Whether you call the toll-free customer service line, visit the company’s website or sign up for product newsletters, making contact with the companies you purchase products from ensure that you’ll be first in line to receive product samples, valuable coupons and even advanced notice of product upgrades and changes.

Speaking up can also help keep you in the know when it comes to your credit history and FICO scores. Whenever you are asked for permission to pull a credit report, make sure to ask for the information for your own records as well. While the person assisting you may not be able to send you a copy, they usually are more than willing to answer any specific questions you may have regarding the credit results. Keep a record of the date the credit report was pulled as well as all three scores. (There will be one from each of the three credit bureaus: Experian, TransUnion and Equifax.) Also ask if they could briefly go through any outstanding debts showing or anything that may look not quite right. Doing this can help you keep tabs on your credit history and help protect your ability to get good interest rates in the future.

(To download and print a worksheet of this topic, click here.)

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Those Who Don’t A-S-K Don’t G-E-T

Why You Should E-File Your Taxes

Sun — Mon, 15 Feb 2010 14:35:54 +0000

Do you file your 2009 income taxes electronically or still do it the old fashion way?

I never used E-file, not since when I knew there’s such an option to file my tax returns. The reason for me to avoid e-filing my taxes is very simple: I didn’t have a refund to claim. Since we seem to always own Uncle Sam money, I really wasn’t that eager to let the IRS take the money from us faster. So every year for the past few years, I printed out our tax forms and waited till April 15th to mail them out. I know this isn’t the most efficient way to file our taxes and waiting in the long line on the deadline day in the post office wasn’t fun at all, there’s just not enough motivation for me to use e-filing. However, if the government owns me money instead, I would file our taxes on the day when I have all the tax documents (I still haven’t got all the tax forms yet) and file our returns with e-filing right away because I know that all the benefits of using e-filing will get me the refund faster. If you expect a refund, there are plenty of reasons to use e-file, just like there are many benefits of using direct deposit.

Still not convinced? The following are some tips to help you better understand the benefits of e-filing your taxes:

It’s easy. You can usually file a state tax return at the same time you electronically file your federal tax return.
It’s accurate. No more human errors because e-file checks for math errors and necessary information. This not only increases the accuracy of your return, but it also reduces the need for correspondence with the IRS to clarify errors or omissions.
It’s fast. You don’t have to make a trip to the post office. In fact, you won’t even need to walk to the mailbox to send your return. Just click Send.
You’ll get your refund faster. When you use e-file, you can get your refund in as little as ten days.
No more second-guessing yourself. When you file electronically, the computer software or online program guides you through the process step-by-step.
There are more payment options. With e-file, you can file your return early, but wait to pay any balance due by the April deadline. You can also pay electronically using a credit card, electronic funds withdrawal or in some cases the Electronic Federal Tax Payment System.
You’ll know the IRS received your return. The IRS will send you an electronic notification acknowledging receipt of your return.
You’ll have peace of mind. After clicking send and receiving your notification from the IRS that they received your return…kick back and relax – you’re done!

And when it comes to federal tax returns, e-filing makes more sense because you get it done for free. That’s right, you actually don’t have to pay to file your federal tax. Here are a few places to get your free federal filing.

IRS: If you adjusted gross income is $57,000 or less in 2009, you can choose traditional free file by selecting a free file company. Or you can use free file fillable forms which has no income limit. In case your income is over the limit, you can also find a tax filing company that’s authorized by the IRS for free e-filing.
TurboTax Free Edition: If you use 1040EZ and have simple tax situation, TrubTax Free Edition lets you file your federal tax for free online. E-filing is also free.
H&R Block At Home Free: If you don’t have self-employment income (Schedule C), rental and royalty income (Schedule E), farm income (Schedule F) and shareholder/partnership income or loss (Schedule K-1), then you can also use H&RBlock At Home Free with e-filing to file your federal tax.
TaxAct Free Federal Edition: TaxAct has been offering free federal filing for a long time and unlike TurboTax or H&R Block, there’s no restriction (income or tax situation) on who can use it. Thus, it may be a better option for free federal filing, including free e-filing.

BTW, as you can see, the above free e-filing options don’t include state filing. If you also want to file you state taxes electronically, you will have to pay an additional fee: TurboTax $27.95, H&R Block $29.95, and TaxAct $14.95. TaxAct is again cheaper than the other two.

Are you going to use e-file this year?

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Why You Should E-File Your Taxes

Finding Money Where There’s None

Shannon M. Medisky — Fri, 12 Feb 2010 14:48:22 +0000

If your household finances have become a juggling act – or worse – have you upside down entirely, have no fear. There are many ways you can find money where there is seemingly none and, thankfully, none of them require you to get another job or give up any sleep!

The best place to begin is to take better control of how much money is going out. I’ll avoid wasting your time and insulting your intelligence by going on and on about how to you should eat in instead of out to save money and how you can stretch your dollars further by taking advantage of coupons and sale prices. Instead, I’ll focus on ways you can bring your monthly costs down that you might not have even thought possible.

Take your monthly bills, for example. If the sum of your payments are excessively draining your monthly budget, leaving you little room for the other necessities, remedy it by contacting your creditors. If you’re current on your payments and have a proven track record of having paid previous bills on time, a quick call and an honest inquiry about lowering your payment might very well prove to be worth your while. If it’s your power company, ask about a budget payment plan that spreads the cost of the expensive winter months across the entire year. This helps free up more cash during several months of the year that would ordinarily have you digging deep in your pocket and provides you with a predictable amount that you can more easily anticipate and budget for. If it’s your credit card payment leaving your budget strapped for breathing room, call up and ask for a lower interest rate or, if your credit score and history enable you, consider taking advantage of an attractive transfer offer from a competitor. (Just be sure to read and heed the fine print!) Don’t forget, also, to mention your intent to your current creditor. If you’re a customer with good credit who pays on time, they’d likely much rather keep you as a customer and match the competitor’s offer, a win-win for you indeed. You snag a better rate without incurring any associating transfer fees.

Once you’ve worked to bring down the monthly expenses over which you have little control, next focus on everything else. Aside from the obvious use of coupons and sale prices mentioned before, you can cut your grocery bill by taking advantage of more untraditional ways to get food in your house. Consider purchasing your monthly groceries online. Delivery is often free with a minimum purchase and skipping the trip to the store entirely can mean keeping more cash in your pocket by avoiding overspending and impulse purchases. Take advantage of purchasing in bulk at warehouse clubs as well to keep your pantry stocked with staples and you out of the store. If you’re unable to use up the purchases prior to the expiration date, either prepare and freeze meals in advance or find a friend or relative to split the purchases and the cost. If you’re a die-hard fan of eating out, enjoy the same tastes without the extra cost by placing orders for takeout that save you from having to fork out cash for a tip. Or, better yet, order sides of special sauces, salad dressings or entrée sides to make your own “eating out while staying in” experience even more affordable.

(To download and print a worksheet of this topic, click here.)

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Finding Money Where There’s None

Lessons Learned While Watching MTVs True Life: I Have Broke Parents

Yolander Prinzel — Thu, 11 Feb 2010 14:35:17 +0000

Hi, my name is Yolander and I sort of have an addiction. What am I addicted to? Well, it’s not dangerous, it’s not expensive, and I can safely operate a vehicle after I’ve indulged in it… I’m addicted to the MTV documentary series, True Life. I tend to be a bit of a voyeur which makes me particularly attracted to documentary style shows and movies but I actually love True Life because I often learn things while watching people live their lives.

This weekend I watched True Life: I Have Broke Parents which followed two families struggling to make ends meet after losing jobs. Some of the things they did in this episode were, from an outside point of view, counterintuitive to actually fixing their financial and employment situation. As I watched I started to wonder if many people make the same mistakes as the adults in these families were, so I thought I would talk about some of them.

1. Look for work WHILE you are on unemployment. One of the parents in this episode did not begin looking for a job until his unemployment benefits were about to run out. He had been hustling for cans and bottles to recycle and had been selling blood but it wasn’t until after his unemployment was close to running out that he talked about really hitting the pavement and actively looking for employment.

2. When you need money, NO JOB is embarrassing. One of the parents found that applying for work at a grocery store was embarrassing. If you are about to lose your home and can’t feed your family, then NO JOB is embarrassing. Wearing a life jacket while walking around the mall is embarrassing, but it sure isn’t embarrassing to be wearing one when you fall off a boat. That embarrassing job could be your family’s life jacket while you are drowning in financial ruin.

3. If you need money now, college is NOT the answer. A couple of the people in this episode decided that they needed to go to college in order to get work. While a college education is a good idea for your long-term career aspirations, if you need money and a job right now, college is a bad, bad idea. First, you’ll decide that living on student loans makes sense — and it doesn’t. Second, college takes a lot of time and effort and not everyone will make it through. You could be wasting time and money on something that you won’t even finish. Third, college does NOT guarantee you a job. It is not like a golden ticket into Willy Wonka’s factory. There is not mathematical equation that says college diploma = job. Instead, you need to focus on getting a job that feeds your family now, and enrolling in college once you are settled into your new routine.

4. Don’t make employment awkward. In one scene, one of the parents comes on way too strong with a potential employer and is extremely inappropriate. He stands too close to the employer, makes a desperate plea for “under the table” work at a pay rate that is less than minimum wage and tells the employer that he’s trying to make an offer the employer can’t refuse. You can’t bully, cajole, or beg people into employing you — and it’s not a good idea to try. Also, suggesting illegal actions to a potential employer puts you in a really bad light. Lastly, there is a difference between eager and grateful and desperate. Everyone wants their employees to be eager and grateful, no one wants them desperate.

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Lessons Learned While Watching MTVs True Life: I Have Broke Parents

How to Open An IRA Account

Sun — Sun, 07 Feb 2010 21:32:25 +0000

As we’re getting into the tax season, how to lower tax payment legally is probably on everybody’s mind. While most techniques you could employ to reduce your tax bill for the previous tax year already expired at the end of the year from, there is still one thing you can do to significantly cut your taxes before April 15th, depending on your income level. Not only that, it will also benefit your finance in the long term.

What I am talking about here is open an IRA account before April 15th tax deadline and make contribution for 2009 tax year. And if your modified adjusted gross income (MAGI) is $53,000 or less ($85,000 or less for married filing jointly), you can deduct the entire contribution up to $5,000 from your 2009 taxes. Because the contribution deadline for previous tax year is the same as the tax deadline, you still have time to make 2009 IRA contribution and take the tax deduction. That’s why this time around you will also see promotions from brokerage firms if you open your IRA account with them.

Even if you can’t make tax deductible IRA contribution or are not eligible for contributing to a Roth IRA directly, the new law that eliminates income limit for converting from a traditional IRA to a Roth IRA effectively make investing in Roth IRA possible for everyone.

Do you have an IRA account? If not, are you planing to get one before April 15th?

Where to Open an IRA Account

Actually, opening an IRA account is simple and you can set up with almost any brokerage firm, mutual fund company, or even peer-to-peer lending site such as Lending Club. But which one should you use?

One of the rules when I invest, not just in IRA accounts but taxable accounts as well, is to keep cost low in order to maximize the possible return. For an IRA account, you can get an account either from a broker or from a mutual fund company, depending no what you want to invest. If you want to buy stocks in your IRA account, then look for discount brokers such as Zecco, TradeKing, Firstrade, or Scottrade, may be the place to go because of their relatively low commission for trading stocks/ETFs. However, what you do have to keep in mind when selecting the broker for your IRA account is whether the broker charges IRA custodian fee or not.

Personally, I don’t buy individual stocks in IRA accounts because I want my IRA investments in the set-and-forget mode. For that reason, I only invest in diversified mutual funds. Though brokers like those mentioned above (the so-called mutual fund supermarkets) also offer thousands of mutual funds, buying funds from them will add unnecessary cost because they charge fees, usually much higher than commissions for trading stocks, for buying and selling mutual funds (see my discount broker comparison post to see how much brokers charge for investing in mutual funds). Though many discount brokers have funds in their no-transaction fee category (meaning you won’t pay commission to buy those funds), but it’s likely that the fund you want to buy is not included.

In contrast, mutual fund company doesn’t charge extra fees when investing with them directly. Thus, it makes sense to buy funds you like from the fund company directly in the long-term. The only drawback with this method is that if you buy several funds, all from different companies, you will have multiple IRA accounts to manage instead of just one. As for which fund company to use, a good place to start are reputable companies such as Vanguard, Fidelity, and T. R. Price, etc. With them, you can find a full line of products at relatively low costs.

What to Invest in Your IRA Account

Getting an IRA account is simple. Investing in it is not much complex either. In fact, you don’t have to know everything about stocks, mutual funds to start to invest for your retirement. Even if you know absolutely nothing, there are simple choices to let you start right away: just buy two funds while you are educating yourself about investing:

A total stock market fund
A total bond fund

at a 80/20 ratio (i.e., if you have $100 to invest in your IRA account, buy $80 in total stock market fund and $20 in total bond fund). Very simple, right? The best thing about this investment strategy is that by owning the entire stock market, you are exposed to all asset classes. Though the mix of each asset class in a total stock market fund may not give you the return you are looking for, it’s a simple and safe strategy. To make your life even easier, those fund companies, Vanguard, Fidelity, and T. R. Price, also offer lifecycle funds, a single fund consisting of both stocks and bonds that is managed by professionals who will determine the right mix of the two based on your time frame!

Once you know enough about stocks, mutual funds, ETFs, Treasury bills and bonds and investing and no longer satisfy with the two-fund portfolio, you can start to add other elements into your investments bases on, for example, the asset allocation of your choice with increasing diversification and reducing risk in your mind. You may as well increase your return

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How to Open An IRA Account

Become Master of Your Financial Domain

Shannon M. Medisky — Thu, 04 Feb 2010 14:20:50 +0000

A few years ago, after a long bout of worrying about money, I came to the realization that it’s expensive to be poor. If you don’t have the money to pay bills on time or at all, you incur expensive late fees and higher interest rates. A lack of available funds to purchase items when they’re on sale, leave you at the mercy of when you do have money and whatever the purchase price may be at the time. If you don’t have the extra money to purchase items you regularly buy in bulk, you’re left paying a premium for purchasing the same items at a higher cost in smaller sizes. Honestly, it’s expensive to not have money.

Be that as it may, how can the average Joe or Joanna climb out of this financial pit? Believe it or not, it’s easy. Instead of worrying on how you can bring in more money by working harder and stretching yourself even thinner, refocus your thoughts and energy towards becoming master of your financial domain. Begin taking better charge of what goes out that you work so hard to bring in. Keep reading to find out exactly how.

You can’t control what you don’t know, so begin by figuring exactly how much money reliably comes in each month and how much goes out. Don’t worry about how the two figures measure up yet, concern yourself only with getting the two most accurate figures for both. Notice, too, that I said money that reliably comes in each month. There’s no use in counting money that you can’t reliably count on. Doing so could land you in a heap of financial trouble.

Getting an accurate picture of the money that goes out can often be a bit more tricky. If you find yourself wondering often, “Where did all that money go?” Now’s the time to find out. Begin with the obvious, monthly bills that have set payments and due dates. Next, move on to the bills that have fluctuating minimum amounts due and use the highest previous amount paid. Create an itemized list so that you can clearly see your monthly financial obligations. Don’t forget, too, to factor in payments that occur regularly, but may not come due each month such as auto or homeowner’s policies. While you might not have to pay these premiums each month, they must still be factored in as an ongoing expense.

Ah, the best for last, the expenses over which you have the most control. Granted, these are often necessary expenses, but the dollar amount spent can often be directly controlled (at least to a certain extent) by you. Groceries and gas, for example, are all necessities, but you can certainly impact the overall cost of each by where you shop and how much you drive. A great way to place to get an accurate view of exactly how much you’ve spent on these items in the past is your checkbook. So grab your old check register and a calculator and flip through a month’s worth of spending.

(Want a FREE downloadable Excel spreadsheet to help itemize and automatically calculate all of your expenses for you? Click here.)

Now if you’re like me, you’ve probably rushed to subtract your expense total from your income total. Again, if you’re like me, you probably noted a negative number staring back at you. Do not panic. Ignorance may indeed feel like bliss, but when it comes to your money, it most certainly is not. Getting an accurate picture of your financial situation is the first step to becoming a masterful manager of it. Now that you’ve got an accurate representation of each, put a moratorium on spending and check back next week to learn exactly how to get back in the positive and become a true master of your financial domain.

(To download and print a worksheet of this topic, click here.)

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Become Master of Your Financial Domain