Free Money Finance

Millions Impacted by Personal Data Loss

This from the July 4 issue of Business Week:

"Millions of American have had their privacy breached this year, through lost files or computer hackers.  Data lost include credit card numbers, Social Security numbers, addresses, and phone numbers."

Below this statement appears a chart that shows the impact of just four incidents of lost information (Mastercard, Citifinancial, DSW Shoes, and Bank of America) this year.  People affected: 46.5 million.

Again, here's what to do if you are impacted.

Money Saving Tip: Caulk Your Way to Savings

Here's a money saving tip that's bound to save you a bundle during this hot summer:

Did you know that a 1/8-inch opening around just two door frames can let in as much warm air as a small window opened six inches all summer long? Prevent this by caulking all windows and doors and/or use weather-stripping. Use draft guards for doors to uncooled areas and outside doors. Fill gaps and cracks in the foundation, around windows and doors, vents, and so on, that let summer heat in and repair any holes in your roof, walls, doors, ceilings, windows and floors. Doing this can save you up to 10 percent of cooling costs!

Best Advice I Can Give -- Blogger Edition, Part 9

Here's part 9 of the series from top personal finance bloggers offering their single-best piece of advice.  Today, we'll hear from Joshua Kersey at Wealth Today.  Here's the introduction to Joshua's advice:

"The worst advice my real father gave me was no advice at all on money. Fortunately, the best advice I got was given to me by my step-father. When I was 12, he said, 'The first chance you get, begin investing.' At the time, my math skills were poor and I did not understand why I should, and I did not follow his advice. Now that I'm almost 30, and it makes a lot more sense to me. Hopefully I can show why it's important to start investing now, without going into the math details."

Check out the rest of his advice at this location.

It's a well-known fact that time is your ally in investing if you start early.  The impact of compound interest really adds up over the years.  If you haven't yet taken advantage of time in growing your money, please start today.

Click here to read part 10.

Money News

Here are some miscellaneous money news stories/articles I thought you'd like:

• GM Wants To Cut Retirees Health Benefits is a good follow-up to my rant about GM and the follow-up post on problems at GM
• How to Get Procrastinators to Save says it's harder than you think to give people money
• Finance Your Student Loan Wisely suggests what to do -- and what not to do -- for a smart refinancing of student loan debt
• The Sun Sets On the Golden Years notes "many millions of baby boomers realize as they approach retirement age that they can't afford to retire at all, much less retire early"
• Frugal Fight highlights how to run for public office against a well-funded opponent

You Can Save a Bundle Without Having a Large Income

I found a post today on Truck and Barter (via Financial Rounds) about:

"CNN/Money's ongoing series about the lives and habits of 'Extreme Savers' -- people who invest wisely, spend frugally, and live like there's no today."

Truck and Barter shares a few examples from the series and also points to a Google search that lists them all.

Financial Rounds gives his own example of an extreme saver:

"I have an "extreme saver" in my own extended family - the Unknown Brother In Law. Oh, the stories I could tell: He once saved money while on unemployment, and was able to pay off a $100,000 mortgage in a little over 7 years (on a family income of about $50-60,000 (this was in addition to other savings/investments). And let's not mention the paper bag we found in his basement with about a hundred elastic waistbands from old briefs."

Ultimately, Truck and Barter concludes that people who are such extreme savers are to be pitied and scorned.  I agree -- in part.  People who are overly obsessive about saving money (to the detriment of enjoying life, wasting time, compromising relationships, etc.) are way over top and are living in an unhealthy situation.  They need to relax a bit.

However, most Americans are in the exact opposite situation when it comes to saving -- they can't save a penny, but they can spend all (and even more) than they make.  Often their rationale is that they can't do without things that are "necessities" -- things like cable TV, manicures, a fourth car, and so on.  (You may think I'm making this up, but I've coached people who said they couldn't live without a monthly manicure!)

In the end, I think these extreme savers show us that anyone at any income level can save something, if they are just creative enough.  Read over their stories and see if there are a couple that may work for you.  Wouldn't you like to have some extra money available every month?

Update: Linking to the Beltway Traffic Jam.

Money Quote

Here's a quotation I found while surfing the web the other day that I thought you all would appreciate:

You cannot strengthen the weak by weakening the strong.

You cannot help small men by tearing down big men.

You cannot help the poor by destroying the rich.

You cannot lift the wage earner by pulling down the wage payer.

You cannot keep out of trouble by spending more than your income.

You cannot further the brotherhood of man by inciting class hatreds.

You cannot establish security on borrowed money.

You cannot build character and courage by taking away a man's initiative and independence.

You cannot help men permanently by doing for them what they could and should do for themselves.

William J. H. Boetcker, 1916 (often attributed to Lincoln)

Free T-Shirts at Free Money Finance

It seems like it wasn't all that long ago that Free Money Finance was celebrating it's 1,000th visitor by giving away three mini stuffed moose.  Well, today we just went over 5,000!!! All I can say is thank you so much to all of you who are reading.  I never take your visits here for granted and always try to post things that will help to increase your net worth.

As a thank you, we'll be giving away three Moose Tracks t-shirts (pictured here -- click on the photo to see a larger image) provided by our sponsor, Moose Tracks ice cream.  To win one, simply leave a comment below (you can say anything).  I'll let everyone comment for a week, then select the three winners at random and post the results on this site.  Then you can contact me and we'll arrange to get you your shirt.

Here are a few ground rules:

• You can make one comment per day for the week leading up to the drawing.  That way, you'll have seven chances to win.
• You can only win one shirt. (If you comment seven times and get selected as a winner, your other six entries will be removed.)
• Sorry, U.S. residents only (I'm operating on a small shipping budget here.) :-)

Thanks again for your support of Free Money Finance and good luck in the drawing!!!

Money Saving Tip: Get the Right Air Conditioner

If you're in the market for a new air conditioner, be sure to get the right size.  Why?  Because it can save you a ton of money.  Here's today's money saving tip:

Getting an air conditioner that’s just the right size can save you thousands over the years.  An air conditioner that's too big for the area cooled will perform less efficiently than a smaller properly sized unit. This is because units work better if they run for relatively long periods of time than if they are continually, switching off and on. Longer run times allow air conditioners to maintain a more constant room temperature and also allows them to remove a larger amount of moisture from the air, which lowers humidity and, more importantly, makes you feel more comfortable.  Bigger units will cool more quickly, but will run shorter in doing so, actually costing you more money.

Need to know what size you need?  Visit Consumer Reports.

Best Advice I Can Give -- Blogger Edition, Part 8

Here's part 8 of the series from top personal finance bloggers offering their single-best piece of advice.  Today, we'll hear from Jason at The Alpha Guy:

"The best advice I can give is this: never stop learning.  This may seem easy, but so many people work 9 to 5 jobs, watch tv for a few hours, and then sleep.  Repeat cycle.  I firmly believe that if you have the dedication and focus to improve your knowledge, you will be greatly better off. 

Acquiring financial knowledge may seem like a huge task (and it can be) that takes patience and time, but think of this knowledge as another asset.  We're all trying to increase our assets and decrease our liabilities, and our financial knowledge is one of the most important assets we have.  My suggestion is to take it slow. 

Concentrate on a financial area that concerns you the most. For those saving and investing in mutual funds, learn more about mutual fund fees and the case for index investing.  For those who want to select stocks themselves start with the basics: learn more about fundamental analysis and what drives the price of the stock.  At times it will be frustrating because of the vast amount of information, but every journey is completed by taking steps.  So be patient and focus and take those first few steps towards increasing your knowledge asset.  Then, keep on walking."

If you spend just five minutes a day reading about finances, in a year, you'll have a good, solid base of knowledge.  In five years, you'll be an "expert". And in ten years, you'll be so busy counting your money, you won't have time to read. :-)

Click here to read part 9.

Dos and Don'ts of Home Repair

Money Magazine's July issue noted several dos and don'ts of home repairs including:

• Do ask friends and neighbors for recommendations when shopping for a contractor.
• Do make sure your contractor buys roofing, windows and other building materials that come with manufacturer's warranties.
• Don't hire and inspector who's popular with local real estate agents.
• Don't assume a licensed contractor is a good one.

I'd add one more "do": Ask contractors for several references. Then call or visit the references to see what they liked and what they didn't like about the contractor.  I've done this several times, and the information they provide is often invaluable.

Money Saving Tip: Keep Your Air Conditioner Running at Peak Efficiency

Here's a money saving tip from hot and steamy Michigan:

You can save hundreds by making sure your cooling system is functioning properly.  There are several ways to ensure it's running at peak efficiency:

• Start by testing, cleaning, and tuning up the system as the weather starts to warm up.
• Continue by cleaning or replacing air conditioner filters monthly. 
• Be sure to keep outside vents free of leaves or debris that may clog vents. 
• Provide shading for your air conditioning condenser by planting trees or shrubs that shade units but do not block the airflow. A unit operating in the shade uses as much as 10% less electricity than the same one operating in the sun. 
• Make sure all the cool air pumped out gets through your house by sealing and insulating cooling system ducts. 
• Check all registers to avoid having furniture or drapes blocking the flow of air. 

Keep cool!

Money in Your Phone

There's a new, interesting application relating to money and technology.

The June 27 issue of Business Week ran an article on the looming technology that can turn phones into digital wallets.  If accepted, this technology would allow you to pay for groceries, gas, and everything else with your cell phone.  The quote that summarizes the whole article the best is:

"The whole concept of money is going to change," says Sam Pitroda, CEO of one of the software companies making this technology.

Wow!  This will either be "big" or will end up as something consumers won't accept.  Which do you think it will be?

Best Advice I Can Give -- Blogger Edition, Part 7

Here's part 7 of the series from top personal finance bloggers offering their single-best piece of advice.  Today, we'll hear from Ramit Sethi, entrepreneur and author of IWillTeachYouToBeRich.com:

"When you invest, there's a difference between being sexy and being rich. When I hear people talking about the stocks they bought/sold/shorted last week, I realize that my investment style sounds pretty boring: 'Well, I bought a few good stocks 5 years ago and I haven't done anything. All I did was buy more when the price went down.' But investment isn't about being sexy--it's about making money, and when you look at the investment literature, buy-and-hold investing wins over the long term, every time. Forget what CNBC or the magazines say about the stock-of-the-month. Do a rigorous analysis, make the right decisions up front, and then re-evaluate your investment every 6 months or so. It's not as cool as those guys in red coats shouting and waving their hands on CNBC, but as an individual investor, you'll get far greater returns."

Solid advice all the way around.  The only thing I'd add to this (to make it even more "boring" but likely more effective) is to consider not purchasing individual stocks, but instead investing in index funds.  I detailed this strategy in my post on investing basics.

Click here to read part 8.

Money News: Interest-Only Mortgages Growing Wildly

The June 27 issue of Business Week talks about the risk in interest-only loans on homes (where you only pay the interest, no principal, for a set period of time).  The article states that:

• 20% of new mortgages in 2005 are interest-only, up from 5% in 2003.
• The cities that lead in interest-only loans are San Diego (48%), Atlanta (46%), and San Francisco (45%).

When people start taking out loans and only paying interest, we're headed down a slippery slope.  When 20% of the people begin doing this, the slope is a cliff.

Update: I'm linking to the Beltway Traffic Jam.

Great Buy at Costco

I just HAVE to share with you all a GREAT buy I made today.  Here are the details:

• My Norton Antivirus subscription is about to expire on my computer, so I needed to renew.
• I also wanted to get some extra software to guard against spam and get a spyware program.
• I purchased a Norton bundled package including antivirus, spyware software, spam protection, firewall, and a few other software programs today at Costco for $59.99.
• I had a Costco coupon for $20 off, making my purchase price only $39.99.
• Costco also offered a $35 rebate, which I spent 5 minutes online completing.  Now my net cost is $4.99.
• I would have paid $30 alone just to renew my virus program. So, in effect, I spent $25 less that I had planned and got all the software I wanted and more!!!

Oh, the JOY of SAVING MONEY!!!!!! :-)

Money Saving Tip: Save Money with Energy Star

Here's a money saving tip taken from a magazine article.

In the July/August issue of This Old House, it talks about how buying appliances with the Energy Star label can save you money.  Yes, these appliances generally cost more, but they save enough energy to usually recoup the extra cost within a year.  Last year, Energy Star helped consumers save $10 billion on their utility bills.

Better yet, consumers can also get rebates on Energy Star products by visiting the "Special Offers" section of the Energy Star website.

We're in the market for a new dishwasher soon, and we'll certainly consider this information when we buy.

Money Information from Magazines Week at Free Money Finance

I'm a magazine nut.  I currently subscribe to 19 of them (several were "free" in exchange for airline miles on airlines I no longer use).  My habit is to flip through each one, rip out the articles I want to read, then throw out the rest of the magazine.  There are always 5-6 articles I want to read in full, a number I consider well worth the price of the subscription (for the ones I pay for).

Several of these articles are money-related.  Even non-money magazines like Reader's Digest and This Old House can have tips that help you better manage your money.

Over the past month, I've accumulated quite a few articles that I want to share with you, and I'll be doing so over the next few days.  An interesting one to get started is found in July's issue of Kiplinger Personal Finance. It notes several interesting facts about bottled water including:

• Americans drank and average of 23.8 gallons of bottled water per person in 2004 versus 53.7 gallons of carbonated soft drinks
• Bottled water sales in the U.S. were $9.2 billion in 2004
• The leading bottled water brand is Aquafina -- with sales of $1 billion
• 73% of teens drink bottled water versus 43% of people over 65

Didn't water used to be free? :-)

Money Saving Tip: Cool with Fans

Here in Michigan, we've been roasting the past couple of weeks with high's in the high 80's and low 90's (mid-90's expected today).  So here's a money saving tip I'm using and one I thought you would like as well:

Fans are your best bang-for-the-buck cooling devices.  They can make you feel 10 or more degrees cooler but use about one-tenth as much electricity as air conditioning.  So use them as much as you can!  Use a regular or ceiling fan in conjunction with your window air conditioner to circulate cold air faster without greatly increasing your power use.  Open the windows and use a fan on cooler days.  Attic fans are great too as they pull cool air through the house at night and exhaust warm air trapped in the attic.

Stay cool!

Free Money Finance in Two Carnivals This Week as Well

Free Money Finance is part of two blog Carnivals for the second week in a row:

• Carnival of the Capitalists features The Best Advice I Can Give -- Blogger Edition, Part 1
• Carnival of Personal Finance features Yes, You Can Erase 15 Years of Debt in 14 Months

Stop by and check these Carnivals out.  There are lots of great articles on both of them.

Best Advice I Can Give -- Blogger Edition, Part 6

Here's part 6 of the series from top personal finance bloggers offering their single-best piece of advice.  Today, we'll hear from mbhunter at Mighty Bargain Hunter:

"The best advice I can give deals with purchasing habits. For most purchases, especially big ones, it almost always pays nicely to consider buying quality used over buying brand new.  The reason: Consumer items depreciate the fastest right after they're bought new.  New cars, for example, depreciate thousands of dollars the moment they're driven off the lot -- poof!  Gone!  So why not have someone else -- the original owner -- pay the premium price, and buy it used from them?  No reason, really, just as long as you've researched your purchase to make sure you're buying quality and as long as you've factored in any extra maintenance costs. This advice, if applied consistently for both big and small purchases, can keep thousands of dollars, or more, in your pocket every year."

Good tip.  I usually buy new (and hold forever) since I don't want to deal with the time hassles of maintenance (which are as big a "cost" as the financial costs) and because I don't have the expertise to judge the quality of a used car. But if you have expertise at being able to judge quality used versus just used, this is a good strategy.

Click here to read part 7.

Get Rich Slowly

There's an article over at Business Week Online on getting rich slowly that starts with a premise that I believe in 100%.  Many more Americans would have higher net worths if they simply took a longer view and weren't focused on hitting it big in one shot.  The article states:

"The truth is it's a lot easier to get rich -- and stay rich -- today by going it slow rather than latching onto a get-rich-quick scheme."

Yes, yes, yes!!!  It goes on to give the how-tos, which is where the article turns south a bit:

"Here are five steps to slowly gaining the kind of financial security most people only dream of:

1. Live below your means
2. Take calculated risks
3. Diversify your investments
4. Keep your nose clean
5. Keep your eyes on the prize"

I'm in agreement with #1 (in fact this is the single-biggest way most Americans can increase their net worths) and #3.  The others seem a bit out of place for me and wouldn't rank in my top 10 (things like "get out of debt" and "pay yourself first" would).  However, the truth remains that getting rich slowly is the one strategy that almost any American can use to grow a significant net worth. You don't have to be wealthy when you start to end up rich if you add to your net worth piece by piece over several years.

Update: Time to post to the Beltway Traffic Jam.

ID Theft Posts are Everywhere

Since my post yesterday ranting about how the government should do something about ID theft, I have run into several posts/articles on the topic.  Here are some I thought would interest you:

• Karyn at Well Spent talks about how her credit card got swiped
• Business Week gives some ideas on "Thwarting Identity Thieves"
• Blueprint for Financial Prosperity discusses "The Dark Underbelly of ID Theft and CC Fraud"

Best Advice I Can Give -- Blogger Edition, Part 5

Here's part 5 of the series from top personal finance bloggers offering their single-best piece of advice.  Today, we'll hear from ante_up at Let's Make Cents:

"You need to recognize where you are now and what is important to you. Prioritize needs and wants. Just because ‘everyone else’ is still clamoring for more, doesn’t mean you have to. If your family is a priority, then you need to address issues of life, disability, and medical insurance,  future retirement, college savings, and your personal finances. You can live for this week, or you can plan for your entire future. Take the basic advice of financial planners everywhere. Pay off debt, pay yourself first, save, and invest for the future."

Good, solid advice.

Click here to read part 6.

More Light on the Problems at GM

For those of you who read my post the other day on "I'm Miffed at General Motors", there's a new Business Week article that sheds some more light on the issue.  "GM: Flirting with the Nuclear Option" details the current situation, but what I found more interesting were the comments (at the bottom in the comments section) such as this one from an employee:

"I'm a GM retiree (11/1/03) and watch what's going on closely. GM's problems stem from 2 things: 1) poor products/product planning you can blame mainly on Bob Lutz, I can list 10 off the top of my head. And 2) ridiculously high increases in health care costs, which is now a NATIONAL crisis! I'm willing to help GM by paying something towards my health care, BUT!, GM has to put product planners in place who design cars and trucks the American buyer wants. The UAW didn't cause this problem, GM management did."

Good point.  This person agrees:

"If GM made good cars they would not have this problem at all. Their cars are poor and people have stopped buying them automatically."

That's my situation.  I won't buy a car that doesn't rate highly in quality -- something GM's cars rarely do.

From a different viewpoint:

"Probably everyone in this nation both working & retirees pay a premium for their health insurance (if they have any), so I don't feel sorry for the poor UAW employee and retirees."

What do you think?

Update: I'm linking this to the Beltway Traffic Jam.

Congress Needs to Do Something about ID Theft

I've commented on ID Theft before a couple of times and it seems like a story that's just not going to go away.

Today I saw an article titled "ID theft concerns grow, tools lacking" which started out as follows:

"Overwhelmed by a flood of bad ID theft news, consumers in search of a raft say the government isn’t doing enough to protect them."

Ya think?

Congress is too busy dealing with steroids in major league sports (obviously something that's of pressing national interest) to be worried about a "small" problem like this.

When will our representatives in Congress get a clue and do something to hold both criminals and companies accountable for the problems of stolen ID's and loss of sensitive information?

What do you think?

Best Advice I Can Give -- Blogger Edition, Part 4

Here's the next installment from top personal finance bloggers offering their single-best piece of advice.  Today, we'll hear from Michael from Retire Young and Wealthy:

"If you are serious about investing and personal finance, I believe you have to find something that you are interested in, something you enjoy learning about, and something you are happy to maintain without it feeling like a chore.  It doesn't matter if it is art, stocks or property.  Personally, I am interested in real estate and building web sites.  Real estate can produce a good passive income source, and bunch of successful websites can produce multiple income streams with sometimes only a little bit of effort and only minimal start-up costs.

My final points of wisdom are to diversify, save, reinvest all of your profits/dividends and only borrow money for income producing assets."

Generally, I agree with this advice, though I am guarded about borrowing money for any reason -- even for income-producing assets.

Click here to read part 5.

Money Saving Tip: Cut Your Own Hair and Save a Bundle

In this post, I have an announcement and a tip that could save you a bundle.

The announcement is that every so often (once a week or so), I'll be suggesting what I call a "Money Saving Tip" -- something that's simple and easy to implement but that could save you some cash that could be better used elsewhere.  Sometimes the idea will be my own and sometimes I'll link to others with a great suggestion.

The money saving tip for today comes from Uncle Jack, a new "blog" I ran into this morning.  (I put blog in quotes because he doesn't allow comments or have a blogroll and uses his site more as a newsletter than a blog (his words), so it has some limitations.)  He posts about how he cuts his own hair and has saved a bundle doing so.

This idea really hits home for me as I do the same thing.  I first started shaving my own head because I like the style and it's easy to maintain, but when I thought of it, it turned out to be a real money saver.  And since my son wants to be "just like dad", I shave his head and save the money I would have spent on his haircut as well. I calculate that I've saved just under $1,000 in the four years I've been cutting our hair.  Not bad at all.

Bank Marketing Gone Bad (And a Note to Sam's Club)

I get offers all the time from my bank offering me a great deal to open an account with them.  In the fine print, it says the offer is good for "new customers only."  I always want to scream at them:

• "I'm already a customer of yours -- stop sending me offers as if I'm not!!!!"
• "Why can't I get the same deal you're offering the new people?!!"

Now I feel better because I have company in my tirade.  :-)

And while I'm on the subject, I get very frustrated with an offer I've received several times from Sam's Club asking me to come and check out all the great things they have to offer.  They enclose a coupon that notes I need to pay a 10% premium on anything I buy there since I'm not a member.  So let me get this right -- you're sending me a coupon to come to your business and pay MORE than the listed price?  Are you trying to get me to be a customer or ensure I never walk through the door?  And BTW, where have you been the past four years?  Not working to get my business, that's for sure.  Maybe it's the fact that there are several new Costco's opening up in the area that you finally decide to contact me?  Well, I have joined Costco -- and I love it.

There, I feel better now.

Anyone else frustrated with bad marketing that makes no financial sense?

Update: Time to link to the Beltway Traffic Jam.

Best Advice I Can Give -- Blogger Edition, Part 3

Here's the next installment from top personal finance bloggers offering their single-best piece of advice.  Today, we'll hear from Jim Mahar from Finance Professor:

"The best financial advice I can give is to think long-term.  While this may seem simple to do, it is often very difficult to accomplish.  Thinking long-term means you save more than you think you need to save and spend less than you want to spend.  The best way that I have found to do this is with automatic investment plans.  These plans, which are available through all major mutual funds and through many employers, invest money directly from your checking account on a regular basis.  This forces you to invest regularly and has the added benefit of making it easier to cut back on spending since if you do not see the money, you are much less likely to spend the money."

Great advice all the way around.  For more on investing automatically, read The Automatic Millionaire by David Bach.  I highly recommend it.

Click here to read part 4.

A Tasty Way to Support Free Money Finance

And now, a word from our sponsor. 

It's by the generosity of the makers of Moose Tracks ice cream that this blog exists.  So if you appreciate what you read here, please stop by their website and check it out. Better yet, go out and grab a half gallon of Moose Tracks and enjoy yourself to no end!!!!!  It's an inexpensive way to have lots of fun. ;-)

Make Time for Finances

One of the lamest excuses for not actively managing your money is "I don't have the time to plan".  As Terri Cullen asks, "Some cheese with that whine?"

Seriously, she has written a great piece for the Wall Street Journal Online on Finding Time for Personal Finances.  A key point I'd especially like to highlight:

"Sure, managing money is time-consuming, but technology has increasingly made mundane tasks easier, leaving more time to focus on big-picture planning."

This goes along well with Flexo's advice yesterday.

And it really doesn't take much time to manage your finances properly.  Terri says:

"For my finances, that means scheduling a few hours once or twice month to tackle big decisions (researching where to invest for college, comparison shopping for insurance, updating my will), grabbing a half hour each week to take care of at least one routine duty (ordering a free credit report, dealing with paperwork for flex-spending account reimbursements), and grabbing a few minutes every day to fix problems and keep an eye on the books (monitoring accounts online, disputing a credit-account charge). And, thanks things like automatic bill payment, occasionally someone else shoulders the drudgery for me."

Check out the rest of the article at the Wall Street Journal Online, then get to work.  All it takes is a little bit of time to set yourself on the road to financial freedom.

More Net Worths

Here are a couple more net worths of financial bloggers to add to our list:

• Journey to Financial Freedom has a negative net worth of $7,900, monthly expenses of $500, and no income.  Yes, this should be an uphill battle to get to positive territory, but it could be very educational, so I'll be watching.
• Irregular Payments has an irregular post (listing May's net worth near the end of June) showing net worth of almost $19,000

Best Advice I Can Give -- Blogger Edition, Part 2

Here's the next installment from top personal finance bloggers offering their single-best piece of advice.  Today, we'll hear from Steve Mertz from In Cash Flow We Trust:

"If you were speaking to your best friend about your current financial prosperity, or lack of it, how would you finish this sentence ? 'I wish I would have done _____________.'

Whether it is buy rental properties, or build a portfolio that throws off $8,000 a month, state a specific desire. Then stop and brainstorm what you would have to do today to make that a reality. Who would you need to help you achieve your goal, what additional knowledge would be required of you? Draw out a timetable for your efforts and then ask yourself, 'Am I willing to start the work today?"

'All men dream, but not all equally. Those who dream by night, in the dusty recesses of their minds, wake to find it was all vanity. But the dreamers of the day are dangerous, for they may act their dreams with open eyes, and make things happen.'  -T.E. Lawrence"

I once heard it said that the best time to have planted an oak tree was 20 years ago.  The second best time is today.  Start working towards your financial goals today, do not delay another moment, and your dreams will be reached that much faster.

Click here to read part 3.

Update: Time to link to the Beltway Traffic Jam.

Yes, You Can Erase 15 Years of Debt in 14 Months

Here's one for those "I'll never get out of debt" naysayers. It once again reinforces my contention that it's not what you make, it's what you spend that determines your financial health.  Maybe Michael Jackson and Mike Tyson could learn something from this guy.

Check out the story of Greg Gallagher who racked up $12,000 on credit cards over 15 years.  One day he realized how much he had paid in interest over those 15 years and decided to do something about it.  He developed a plan, was aggressive about it (almost half of his admittedly low pay went to debt reduction), cut his expenses, and in a little over a year, he's debt free.  Now he's investing for retirement and saving to buy a house.

Here are all the reasons he had not to succeed:

• He had a small income
• He needed "things" (like DVDs, eating out, etc.)
• His debt was too big

I've heard all these excuses and more.  I'm sure Greg had heard them as well.  But instead of use those excuses, he took action, made some difficult changes, and is now far better off financially.  If he can do it, so can you (or someone you know).  It's just a matter of choice.

Free Money Finance Part of Two Carnivals

Free Money Finance is currently part of two blog Carnivals:

• Carnival of the Capitalists features Financial Horror Stories from Pet Owners
• Carnival of Personal Finance (brand new!) features The Best Advice I Can Give, Blogger Edition

Stop by and check these Carnivals out.  There are lots of great articles on both of them.

What People Need (Financial) Help With

One of my favorite financial advisors is Jean Chatzky.  She does a great job of blending financial issues with real-life practicalities to come up with suggestions that really work for the everyday person.

Her latest article is about money clubs (and how they aren't just about stocks anymore), but what caught my eye was the list of financial topics that Money Magazine readers said were the ones they needed help with.  I'm assuming that the needs of Money readers are different than those of the average person (after all, they are subscribing to a personal finance magazine so they should be a bit more savvy), but this does give us some insight into the financial topics people want to discuss (not to mention topics I should consider writing more about).  The top five:

1. Saving more for retirement
2. Diversifying a portfolio
3. Paying down debt
4. Saving more for kids' education
5. Investing in real estate or buying a home

Do these reflect the topics you want to hear about most?  If not, what would you like to read about?

Best Advice I Can Give -- Blogger Edition, Part 1

Last month I ran a series of articles where I asked five top personal finance experts to offer their single best piece of advice.  I received some great comments and feedback on the series (including a mention by Business Week's financial blog  and Carnival of the Vanities), so I thought I'd do it again, but this time with a twist.  This round, I asked top personal finance bloggers to offer their single-best piece of advice.  Over the next week or so, I'll be sharing their answers with you.

That said, let's get started with Flexo from Consumerism Commentary.  Here's what he had to say:

"Generally, I'm not the one giving advice.  Why?  Well, it took me a long time to learn what I already know in terms of finance, and frankly, it's not much.  It took me a long time not because I'm dense and I don't understand the concepts; for most of my life I didn't realize there was such an area of thought called 'personal finance.'  I knew I had to work to afford to live, but I never considered the fact that I had to make more money than I spend.  As I realized this truism, I needed to find a way to make it work for me.  My plan involved saving as much as I possibly could while minimizing my expenses, but most importantly, I had to keep track of my progress.  The personal financial software I used to chart my expenses didn't matter so much as the fact that I was able to visualize my money.  By 'visualize' I'm not talking about daydreaming about rolling around in gold coins like Scrooge McDuck; through the use of the software I was able to see my money grow over time.  And that is exciting...and motivating.  The motivation creates a feedback process -- the more you see you're able to save, the more you'll want to save. 

This is my non-professional advice: use computer software to visualize your expenses.  You'll find that saving money is more exciting and thus you'll be encouraged to perform better."

I've used Quicken for ten years now, and it's made a tremendous, positive impact to my financial health.  I'd agree with Flexo -- get some personal finance software and use it.  It will be a great asset in your quest for financial security.

Click here to read part 2.

Update: Time to post to the Beltway Traffic Jam.

New Series Starting Monday

Just wanted to let you all know that we'll be starting a new series on Monday -- one I think you will really like.  You'll not only get some great ideas to help increase your net worth, but you'll also be exposed to some wonderful new financial blogs.  So tune in -- it will be well worth your time.

Have a GREAT weekend!

More Blogger Net Worths

Here are a couple more net worths of financial bloggers to add to the ever-growing list:

• Capital Ideas is just over $110,000
• The Alpha Guy is at almost $26,000

Money News This Week

Here are some interesting, unusual, and important money news items for this week:

• Faith and finance collide for Muslim home buyers
• G8 finance ministers agree on deal to relieve debts of 18 poorest countries
• Americans increase charitable giving
• After acquittal, Jackson's finances still shaky
• JPMorgan to pay $2.2B in Enron case (Settlement comes in wake of Citigroup's $2 billion settlement)
• Campaign finance reform should do no harm
• The Poverty Factor
• Wall Street sees Austin venture as new model for church financing

Money Fun with Change

Who knew there were 293 different ways to make change for a dollar? The people at Teachnet, that's who.  Before you click on the link, see how many you can come up with by yourself.

Have a great weekend!

Gas Versus Water

Following up on my post earlier today of how to save on gas costs, here are some interesting facts about the cost of gas versus the cost of bottled water from Kiplinger's Personal Finance magazine:

Cost of one gallon of gasoline: $2.24

Cost of one gallon of domestic bottled water: $3.14

All you bottled water drinkers can now stop complaining about the cost of gas. :-)

I'm Miffed at General Motors

I'm really upset with General Motors.  I'm mad a Ford too (I would be made at Chrysler, but it's no longer an American company).  Why am I mad?  Because I want to buy an American-made car!  But I'm not going to settle for inferior quality, frequent breakdowns, and a price that's as high as any other brand.  Hence, our garage is filled with a Toyota and a Subaru.  These cars replaced our Honda and our Nissan after 13 years and 10 years of great use respectively.

Why can't America build a better car?  Why can't we be the best at something we invented?  There are a lot of reasons, but one really jumped out at me while I was reading the July issue of Smart Money magazine.  In an article titled "What Went Wrong at GM?", it said (I'm putting chart numbers into words here):

"In 1977, hourly wages without benefits were $9.64 and with benefits they were $12.56.  In 2004, hourly wages without benefits were $36.96 and with benefits they were $73.73."

Let's do a little math here:

40 hours per week x 52 weeks per year = 2,080 hours per year

2,080 hours per year x $36.96 = $76,877 (This is what the average GM worker makes without benefits.  Not bad.  Not bad at all.  It's a lot more than I would have imagined for factory work, but it's not outrageous.  Yet.)

2,080 hours per week x $73.73 = $153,358 (This is what the average GM worker makes with benefits.)

Holy baloney, Batman!  Are you kidding me????!!!!! 

Do you think this is a bit over-the-top?  Do you think Mr. and Mrs. Average American will have any sympathy for American car companies and their workers when this is going on?  Do Japanese auto workers make this much?  Probably not.  They likely spend their money on useless things like engineering, advanced technology, and safety features.

Now I'm REALLY mad!!!!

Saving on Gas

With escalating gasoline prices, many Americans are feeling a budget pinch every time they fill up.  And while it’s true that gas prices are the highest they’ve been in some time, drivers aren’t helpless as they try to stretch their gas dollars.  Here are some suggestions for curbing your fuel costs:

• Use the lowest grade of gasoline your owner’s manual recommends. Most cars don’t need premium gasoline.
• Buy gas early in the morning or later at night. Gas is densest during this time and you’ll get more for your money since gas is measured by volume, not fuel concentration.
• Purchase pre-paid gas cards. They’re convenient, renewable and may offer discounts depending on the amount of gas you buy.
• When the gas pump clicks off, get the extra half-cup of gas in the hose by lifting it higher than the handle while it’s still in the tank.
• Keep your tires properly inflated. Under-inflated tires can lower your fuel economy by up to two percent for every missing pound of pressure.
• Make sure your engine is tuned. If it’s not, it can use three percent to eight percent more gas.
• Drive the speed limit. Going sixty-five miles per hour instead of the posted fifty-five lowers your gas mileage by about fifteen percent.
• Save time and gas by planning out your errands and getting them finished in one day instead of lots of little trips over several days.
• Take road trips in the fall. Gas prices are generally cheaper during that time of year.
• Shut off your car instead of letting the engine idle too long. You can waste between half a gallon and a gallon of gas per hour.
• Use your air conditioner sparingly for better gas mileage. Your engine uses extra energy to power the air conditioner compressor.
• Protect your gas mileage by driving with the windows up. Car-top carriers, bike racks and ski racks also create air drag for the car, thus reducing gas mileage. Use them only when absolutely needed.
• Make sure your trunk is empty. Extra weight can negatively affect your fuel economy.

Follow these tips, and you’ll be sure to go farther and spend less doing so!

Coupons May Not Be Saving You Money

Do you use coupons?  If you are a "smart" money manager, you do, right?  Well, maybe not.  Consider this tidbit from Money Magazine's May 2005 issue:

"Research suggests that coupons actually cost shoppers money. Tests of a new supermarket scanning gizmo in Syracuse, NY last fall showed that people who used coupons spent 8% more than folks who didn't. This follows a 2002 study co-sponsored by Washington University in St. Louis that found that shoppers spent an extra $8 on unplanned luxury items for every $1 coupon they used.  'Steak, flowers, candy -- people were treating themselves because they felt good after using coupons, and of course they spent a lot more on the treats than they saved on the coupons,' says marketing professor Ambar Rao, one of the 2002 study's authors.  Coupons can save you money on some things you buy a lot, but proceed with caution."

Interesting.  What do you think?

Gardening Money Facts

One of my favorite magazines is Kiplinger's Personal Finance.  And one of my favorite parts of the magazine is called "The Kiplinger Monitor".  It's half a page of facts about one selected topic.  In June, they selected "gardening", and here are a few of the facts that I found quite interesting (along with some of my comments):

• 82 million households gardened in 2004, up 22% since 1999 (I was added during this period -- started growing roses.)
• 1 in 4 gardening households have incomes of $75,000 or more (Wealthy people need hobbies too!)
• The average amount consumers spend on lawns and gardens annually is $449 (I'm probably in this range, maybe lower since my rose bushes are now mature.)
• The average amount households spend annually on professional tree care is $542 (Are you kidding?  There must be 10% of the people spending a bundle to get this average since I don't know anyone who has paid for this.)
• Average spent by households who hire professional landscape designers is $4,921 (These people are either too wealthy to care about this cost or they're deeply in debt.)
• Total sales for Scotts Miracle-Gro -- the largest consumer lawn-and-garden company -- were $2 billion, up 16% from 2002 (I LOVE Miracle-Gro.)
• Total share of lawn-and-garden retail sales at Home Depot, Lowe's, Wal-mart, and Kmart is 70% (Yikes! This is really bad news for independent stores and smaller chains.  I bet it was 50% only a few years ago. FYI, I buy about 90% of my supplies from these four.)
• Landscaping can increase townhouse and condominium values by 5% to 15% (Decent return for the investment.)

Stop Smoking -- It's Killing Your Finances

A short post today for all of you who smoke or know people who smoke. 

Summary: You're paying a lot of money to kill yourself.

Buying cigarettes can really add up.  If someone smokes half a pack a day and a pack costs $5, that's $913 per year wasted. If it's a pack a day, that's $1,825. And if it's two packs a day, that's $3,650 -- all money that's literally gone up in smoke. 

Then multiply this by five, ten, or twenty years (or more!) that people smoke, add in what they could have earned if they had invested the money. Then consider the extra health care and insurance costs of smokers and you can really see that from a financial point of view, smoking does not pay.

Update: Time to post to the Beltway Traffic Jam.

Michael Jackson and More: It's Not What You Make, It's What You Spend

As a follow-up on my post talking about It's Not What You Make, It's What You Spend, here are two real life examples from the news today:

First we go to Michael Jackson (everyone's talking about him, so I might as well too).  In an article titled "Michael Jackson's Money Troubles" it states:

"Jackson is thought to be in deep financial straits despite owning various music and real estate assets worth as much $600 million."

Why? It goes on:

"The King of Pop, for all his assets, spends far more money than he generates these days, according to an expert who testified at Jackson's trial."

Isn't that the same story for many today?

The second story is about Mike Tyson, the ex-heavyweight champ who lost his most recent fight this weekend.  ESPN reports:

"Though he once had $300 million in the bank, now Tyson is $24.4 million in the red, even after a settlement with promoter Don King that would pay the former champ $14 million."

If you need even more examples, check out "Debt Disasters of the Rich and Famous".

Once again: It's not what you make, it's what you spend that determines your net worth.

Update: Time to post on the Beltway Traffic Jam.

Credit Card Solicitations: The Answer

Yesterday I promised to tell you how many credit card solicitations I received in May.  After all, part of the problem with credit cards is that the companies marketing them are constantly bombarding the population with offer after offer.

Now for the results.

In May I received 21 credit card solicitations.  Yes, that many.  No one guessed the right number, though Common Cents did guess 19.

If I receive as many credit card solicitations every other month of the year, that means I'll get 252 solicitations in the mail this year for credit cards.  When you add in TV commercials, magazine ads, emails, banner ads, and the like, it's hard telling how many offers I get in a year.  Certainly hundreds, maybe thousands. 

I have lots of willpower (I only have two cards), but what about others that can't resist credit? Do they even stand a chance against this assault?

So what should we all do about this problem?  Get off as many mailing lists as possible.  Our postmen and our net worth statements will both thank us.

Free Money Finance Included in Carnival of the Capitalists

The Carnival of the Capitalists is up at Byrne's Marketview and Free Money Finance's post on The Cost of a Pet is $48,0000!!! is included.  Stop by the Carnival and read all the posts as you're sure to find some great blogs that will become some of your favorites.