Buying a new place, whether it be a condo, house, townhouse, and so on, can be a very long and difficult process.  When we bought our current house that we live in, it was extremely easy. Of course easy is relative, but it sure did seem easy.

We looked at a lot of houses, but we only put a contract down on one and it was accepted (after a couple of negotiations). Our move in date was set for just a couple of weeks after that and we moved in maybe less than one month from the day that we first toured the house. Even our loan officer said he’s never been through a home process as quick and as easy as process was.

However, I have heard others’ stories about how hard their home buying process was. Some have to wait months to sign the papers and move in. Some submit multiple offers just to be outbid by tons of other people.

There are so many things to think about when you buy a new home, and in today’s post I will be listing some of those.

Put 20% down

Putting 20% down has many positives for a home buyer. It will lower your payment in more than one way, mainly that you will take out a smaller home loan.

If you don’t put down at least 20%, then most mortgage companies will require that you pay Private Mortgage Insurance (PMI). This can add an extra $50 to $150 to your monthly mortgage amount, and possibly even more. We made the mistake of not putting 20% down and now have to pay PMI. We definitely won’t be making this mistake with our next house.

Get pre-approved

Getting pre-approved is a big step.  Not knowing what you can “afford” and looking can be a big problem because you might fall in love with something but then no bank approve you for that amount. If you are pre-approved, then you can eliminate houses out of your search that are not possible due to your budget. It will save you a lot of time and the possibility that you will buy way outside of your budget.

Buy what you can truly afford

Now, just because you were pre-approved for a loan, it does not mean that you can truly afford that loan amount. Banks are notorious for approving individuals for MUCH more than they can afford. When we bought our current house, we were pre-approved for much more than could truly afford. Also, you are pre-approved normally on your gross income, not net income. Your gross income is of course much higher than your net and can make it seem like you can afford a house, when in reality you cannot.

Our real estate agent also gave us a little tip: if you are pre-approved for much more than you ever plan on buying a house for, then ask the loan officer to send you a pre-approval letter stating that you are pre-approved for a smaller amount. This way when you put a contract on a house, the seller and/or their real estate agent do not see some crazy number that someone believes you can afford. This way there will be less negotiations as the seller won’t be trying to get you to your top dollar.

Think about the long-term

How long do you plan on living in your home? A lot of people will say that their first home will just be a starter home, but what if that ends up not being the case and you live there for quite some time? You might want to look into the school district there just in case you do decide to have children, make sure the house is something that you would like for quite some time, and so on.

What tips do you have for a potential homebuyer?

Any smart investor is going to look to look to both protect their investments while also securing the best return possible. It is always a juggling act for any investor, regardless of how much experience he/she may have. Investment tracking is quite a task. While there are many important ways to accomplish this balance, diversification is one of best ways to accomplish both values.

What is Diversification?

According to investopedia, diversification is defined as:

A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio. 

Diversification strives to smooth out unsystematic risk events in a portfolio so that the positive performance of some investments will neutralize the negative performance of others. Therefore, the benefits of diversification will hold only if the securities in the portfolio are not perfectly correlated.

Why Diversification is Important

Diversification is important, as I mentioned above, because it allows you to accomplish two things at once. The first, and perhaps more important, is to protect yourself from any significant loss. The basic idea is that one area of the market is performing poorly, the others will make up for it. It is also very unlikely for all markets or investments within a market to drop significantly at one time. The risk is inherently lower despite taking a more aggressive investment strategy.

The other major benefit to diversification is the ability to maintain an aggressive approach and thereby maximizing long-term return. Instead of sticking to conservative investments like bonds or cd’s, diversified investors are able to keep their money in high-yielding investments.

How to Diversify Your Investments

While a lot (maybe enough to fit in entire books) could be said about how to actually diversify your investments, I thought I would give you a picture of what I am doing to diversify my portfolio. Keep in mind that my investment history is quite short and over the next few years I plan to diversify it even further.

Employer 403b Account - One of the best ways to start investing is with your employer’s investment account. It often comes with some form of matching, so it automatically gives you a great return on your investment. I personally have mine set up with a mutual fund because of how little is being invested. It provides for some inherent diversification.

Real Estate Investing – One of the ways I am in the process of investing in over the next few months is real estate investing. I believe this to be a secure investment for decades to come and the revenue stream should only increase with inflation.

Dividend Stocks - While I am not an expert on dividend stocks, I have been learning a lot about the benefits of investing in dividend stocks. In fact, dividend stocks over a period from 1972 to 2010 provided a significantly larger return than non-dividend stocks. Dividend stocks offer some minor diversification as there are two revenue streams. The first is the dividend as a form of cash flow and the other in the potential increase in the stock value. If you want to learn more about dividend stocks, there are many great resources like the list of high yield dividend stocks by Dividend Stocks Online.

Side Business - Another way that I am trying to diversify my investments is to build up a side business for myself. Eventually I would like to see it develop into my full-time gig, but I have to sustain a decent income before I make that leap.

While diversification can (and often is) be simplified to investing in mutual funds or ETFs, it is much more than that. It should include different investment vehicles and markets.

How are you diversifying your investments?

As someone who is looking forward to purchasing a condo next year, I have been doing a crazy amount of research on mortgages.  Honestly, I keep stumbling upon mistakes that people have made with mortgages.  Since I don’t want to be someone who makes a mistake with their mortgage, I’m planning on soaking in all useful advice and attempting to make the wisest decisions I can going forward!

So, what are the worst mortgage mistakes one can make?  Well, I’ve compiled the top five mortgage mistakes and hopefully you can learn from what other people have done wrong and not make the same mistake!

1- Taking out an adjustable rate mortgage

Can someone say 2008?!  This is what caused our most recent recession among some other things.  An adjustable rate mortgage plays into the greedy side of Americans and allows you to buy a bigger house than you can afford.  The first few years, you’ll have a really low interest rate but then this rate ends up shooting up over time.  The problem with this is that you’ll end up drowning in interest payments and more than likely lose your home!  Talk about humiliating…

2- Settling for a reverse mortgage

For the crowd of age 62 and older, a reverse mortgage may seem inviting but it’s designed to bite you in the butt.  What a reverse mortgage does is provides a stream of income by pulling out funds from your home equity.  This can be paid out through an annuity or monthly payments.  It’s up to you what poison you pick because either way, you’ll be faced with hefty fees and you will slowly lose ownership over your home and have to hand it all over back to the bank.  Does not sound like fun to me!

3- Skipping the down payment

If there is one thing you need to remember from this article, it’s that you NEED to put down a down payment!  Why you ask?  It’s not unusual to find yourself upside down with your mortgage if you don’t.  You can end up owing more money than your home is worth.  At this point, it’s flat out painful.  You want to avoid this situation.

4- Can anyone say exotic mortgages?

I bet you’ve never heard of these bad boys.  Exotic mortgages may sound enticing but they are dangerous financial vehicles!  Instead of building up your equity, exotic mortgages produce negative equity.  Yes, you’re naming your payment price, but at some point, all the debt you took out for your mortgage is going to come due.  As the years go on, you are increasing the amount you owe.  It’s counter-intuitive and I advise that you avoid this at all costs.  Owning a home is not worth this risk!

5- Liar, liar, pants on fire: liar loans

Liar loans make me sick just thinking about them.  Not only are they irresponsible to take out but they can ruin your financial life.  At the core of a liar loan is that you don’t need to produce any verifiable documentation in terms of income and job stability.  In theory, people can lie on these loans and the bank will just assume you’re telling the truth.  Because you lied on your income statement, you will soon find yourself not being able to make the monthly payments.

Don’t fall for these mistakes!

In conclusion, don’t fall for these bad decisions.  While they may seem cool and unique, they are designed for your failure.  There is something to be said about ethical mortgages and choosing responsibility over showing off a big house.  At the end of the day, you should only be buying enough house for your needs.  It’s anti-American to do that but times are changing!

       This just in… today’s earthquake in Mineral, VA that prompted the evacuation of several buildings in Washington caused the stock market to soar. Stocks edged a full 1.23% higher before closing for the day after the temblor* hit the East Coast. In other news, butter production in Bangladesh was up 0.615% on August 23, 2010.

       And that’s why financial reporting is completely ridiculous… All the financial reporting that talks about stock market movements should come with a required phrase – “We think that the stock market…”. It’s amusing how we try to peg exactly what caused the market movements and why. The truth is these are only guesses.

       But seriously, the stock market really did go up after everyone in Washington had to leave their offices. Coincidence? I think not.

* Note: I picked this up from NPR. Gotta love thesauri…

       On Friday, Free Money Finance posted a link to Sound Mind Investing’s new and free ebook about investing in gold. You can sign up to get the ebook here if you’re interested. I’ve been reading about this issue of gold, inflation, and the declining dollar for a bit now so I thought I’d check it out.

       After reading it, I headed back to FMF’s site to leave a comment and was pleased to find an insightful comment from Rick Francis who writes at Pondering Money. Rick’s question was this: If you believe that the dollar will weaken, political gridlock will continue, and that these are bad things, why not hedge against inflation with something that hasn’t had a “meteoric” (as SMI puts it) price increase? And while you’re at it, why not choose a commodity that actually has practical uses like oil, real estate, or food? (Or if you’re really worried, shotgun shells and bottled water…my words, not Rick’s.)

       Take, for example, copper. Copper has a large number of practical applications while gold has only a limited few. Now I’m not saying copper is the right choice. I’m just giving you an example. Oil could be another good example.

       Here’s another one: real estate. Or even better, how about real estate with a commodity on it – land with standing timber. Again, I’m not saying these are the ideal alternatives for gold. Rather, I’m simply trying to make the point that there are some other commodities that you can make a better case for investing in than gold. So don’t try to take me to task for a possibly poor choice of replacements. The question still stands: can we find no better, more useful, more reasonably priced commodity to use as a hedge against inflation than gold?

       I recently had a friend comment that renting is “throwing away money”. This is a common misconception because home ownership has been touted as the best path to building wealth and a great decision for everyone. But the truth is that renting isn’t really as bad as some would have you think. In fact, it can be the best choice for many people – it all depends on your situation.

       But specifically, I want to look at the idea that paying rent is just throwing away money. The unspoken assumption in that idea is that once you buy a home you’re no longer throwing away money. This simply isn’t true. Here are five ways you throw away money when you buy a home.

1. Mortgage Interest

       Assuming you get a mortgage when you buy a house, like most everybody does, you’re going to have mortgage payments to make. Part of those payments will go toward the principal (what you paid for the house minus your down payment) and part will go toward interest.

       The part of your mortgage payment that goes toward interest is just as much “throwing away money” as rent payments are. It’s money you’ll never get back and does nothing to improve your net worth. And on an average 30 year mortgage, it’s going to take you about 16 years before you’re paying more toward your principal than you are toward interest.

       Granted, this isn’t as big of an issue later in your mortgage and it doesn’t matter at all once it’s paid off. But don’t underestimate just how much money you’re going to be throwing away on mortgage interest – especially at the beginning.

       And while we’re on the topic of mortgage interest, let me just add that the mortgage interest tax deduction isn’t as good as you think…

2. Homeowner’s Insurance

       Homeowner’s insurance can cost anywhere from about $600 a year to $1,200 a year or more. By comparison, my renter’s insurance policy costs about $110 per year and it’s some pretty good coverage. So you’re looking at an additional $500 to $1,100 or more in insurance premiums because you’re covering the entire value of the home. (Renter’s insurance is mostly just for liability and contents of the home.)

       Part of the money that’s “thrown away” in rent goes toward the insurance coverage the landlord buys for the home. So make sure you take this into account when comparing the difference between renting and owning.

3. Property Taxes

       Own a home? Be ready for your property taxes, which can be anywhere from 0.25% of the value of your home up to 3% or more. The national average was around 1% the last time I looked. So for a $150,000 to $200,000 home, you’re talking $1,500 to $2,000 a year in property taxes.

       Renters don’t pay separate property taxes on the home they’re renting. Those taxes come out of the rent they pay, but renters never see a separate bill for property taxes owed.

       And no, you can’t refuse to pay your property taxes. Do so and you can say goodbye to your home.

4. Home Maintenance and Repairs

       As a homeowner, you’re completely responsible for all maintenance and repairs on your home. These costs are going to vary quite a bit based on each situation, but I’d say a reasonable estimate would be about 1-2% of your home’s value each year. So for our $150,000 to $200,000 home, we’re talking about another $1,500 to $4,000 a year in costs. Maybe you could get away with less, but you’re looking at a minimum of $500 to $1,000 per year.

       Renters? Yeah, they don’t have to deal with these costs. They’re the responsibility of the landlord. And while you could have a landlord that doesn’t take care of the property, it’s pretty easy to move somewhere else. Which brings me to…

5. Higher Costs for Moving

       Moving tends to be much more of a hassle for homeowners than renters. It can take some time to sell a home – time you may or may not have before you need to move or start paying on your next mortgage. On top of that, you’ve got costs associated with selling that come out of your final price (commissions, inspections, and sometimes closing costs if you’re in a real hurry). Some of these costs can be reduced by doing it yourself (for sell by owner) but then you’re looking at more time and effort on your part (and you’ll still want to get a real estate attorney).

       Renters have it pretty easy here. Assuming you’re at the end of your lease, it’s no big deal to find another place and move. And if you’re not at the end of your lease, it’s probably going to cost you less to break the lease than it would cost a homeowner to sell their house.

Repeat after me: “Renting is not always throwing away money.”

       It should be clear that there are plenty of ways to throw away money if you own a home – enough ways to make it worse than renting. That’s the case for me, at least, and that’s why I plan to rent for quite a while longer. I’d need a phenomenal deal to make buying a better choice than renting at this point. And it may be the case for you as well. The least you could do is take some time to play with a rent vs. buy calculator and see how the numbers work out for you.

       I should add that I didn’t even discuss the fact that many people tend to overbuy when they become homeowners. And did I mention the desire to remodel, upgrade, paint, redecorate, landscape, and on and on and on? Home ownership isn’t quite the great financial asset many make it out to be.

(photo credit: Phil Sexton on Flickr)

This post was included in the Carnival of Personal Finance.

This post was included in the Festival of Frugality.

       In all my reading about investing (especially online), I’ve noticed a disturbing trend. People tend to talk about investing in terms of their beliefs. One might say, “I don’t believe people can’t beat the market. You can find good stocks by using your brain and analyzing information. I believe in active investing.” Another says, “I don’t believe anyone can beat the market. Most professional fund managers can’t do it consistently, and you probably can’t either. I believe in passive investing.” Still others say, “Market timing doesn’t work. It’s like predicting the future. I don’t believe in trying to time the market.” While some argue, “You CAN time the market if you know how. I believe it is possible to miss the bad days and save yourself a lot of money. I believe in market timing.”

What’s Missing?

       You know what’s missing in most of these “belief” statements? Data. Facts. Testable, verifiable information. Knowledge. You don’t often hear people say “I know active investing works.” unless they’re talking about anecdotal evidence. And sadly, you don’t often hear people say “I know passive investing works.” They believe it because someone else believes it. Or because someone else told them to believe it. Or because it just “makes sense”. (This is true of any investment philosophy…)

Check Your Facts

       The thing is we have data, albeit historical data, but data nonetheless. We can’t guarantee that the future will look like the past, but we can learn some valuable lessons from it. We can learn that it is absolutely true that most people don’t beat an appropriate market benchmark consistently. (And when I say most people I mean 90%+ and by consistently I mean at least 10+ years in a row.) And we can verify data about market timing by looking at the results of those who try it.

       Then we get into the dangerous area of trying to predict the future. We make conjectures about what we think may or may not happen in the future. Then we build up our investment philosophy around that. Too often, we build it only on those conjectures and ignore all the data. And that’s the problem I’m seeing.

Belief or Reality?

       I’m not going to get into the details of what we think we know and don’t know. I simply want to ask you to think the next time you talk about your investing “beliefs”. Are you basing your beliefs on facts, data, and information you can test? Or are you basing it completely on feelings, conjectures, and guesses about the future or what makes sense to you?

Photo Credit: (SAN_DRINO on Flickr)

       Last week I wrote about why I hate MLMs (multi-level marketing companies). It seems I’ve ruffled a few Primerica feathers with my comment on the company. I received two emails from Primerica agents last week – one who I know has been reading for a while and another I’ve never heard from before.

       Both emails essentially said that I don’t understand what Primerica stands for or the value of “network marketing”. (By the way, that’s just another name for multi-level marketing. You get your family, friends, and neighbors to buy from you and recruit them to work under you. Then they do the same and so on. You can make a little money selling products directly, but the big bucks come after you’ve developed a huge down-line or “organization” as Primerica calls it.)

       Now I don’t want to end up in a saga like Lazy Man and Money’s with MonaVie where people start threatening to kill me or blackmail me because of my opinions. But I do want you all to be aware of the truth about Primerica before working with them. My concerns about Primerica can also be applied to many other brokerage companies and insurance companies, but Primerica seems a little more dangerous to me because of the focus on recruiting you for their business opportunity and not just selling you their financial products.

       So I thought it might be worthwhile to do a bit more digging to see what I can learn about Primerica – their products, their “business opportunity”, their training, and so on. Since I’ve been trained in financial planning and have experience in the industry, I can cut through the jargon for you and plainly explain what’s going on.

       Unless you all have objections, I’ll begin writing some posts where I look at the different aspects of Primerica and help you understand what you need to know about the company. Here’s how you can help.

       If you’ve had an experience/encounter with Primerica, please share your story in the comments or contact me directly. This includes learning about the “business opportunity”, meeting with a friend of yours who started working for Primerica, or any other experience you’ve had with the company. I only have one limited experience with Primerica, and finding accurate and comprehensive information online about the company can be difficult.

       Also, if you’ve got some questions about Primerica that you need answered now, please feel free to leave a comment or contact me. I may use your question as the subject of a post, or I might just write you back with an answer/analysis.

       My goal is to give you the most honest, objective, and accurate information I can about Primerica, its products, and its business opportunity. My hope is that this information will help you make a good, informed decision so you won’t waste your money or your time. Until I have more information on here, I can only advise you to question everything. Thanks for helping me as I try to help you!

       I pulled this out of our mail the other day:





       Seriously? Someone at the Pennsylvania Lottery must be playing a joke. Big Savings? Let me get this straight. You’re going to use a coupon to buy a lottery ticket, and that’s going to bring you big savings? Let’s think about this just a bit.

What Are Your Chances of Winning?

       Let’s use the September coupon for our example. This coupon gives you one $2 Mega Millions with MegaPlier ticket for free if you buy one $2 Powerball with Power Play ticket. Basically, this is just one set of numbers because a regular ticket costs $1 for one play and the Power Play (or MegaPlier) doubles the cost of the ticket.

       The Pennsylvania Lottery’s website says your overall chances of winning a prize with a Powerball ticket are 1 in 35.11.

       We can figure out your chances for winning any of the specific prizes with some simple math. If your chances of winning a prize are 1 in 35.11, that means you have a 2.8482% chance ((1/35.11)*100) of winning every time you play Powerball. (Not very good, huh?) Basically, you can only expect to win something once out of every 35 tickets you buy. But that doesn’t tell us how much the ticket is really worth because your prize can range from $3 to $14,000,000 (or $6 to $14,000,000 if you buy the Power Play option) given the current jackpot. To figure out the value of your ticket, we’ll need to do a little more math.

What’s Your Ticket Really Worth?

       By using the odds given for each specific prize level, we can figure out the average prize for a winning ticket. Overall, you have a 2.8482% chance to win on any given ticket. You can use the same process to figure out your chances of winning a given prize. For example, the Pennsylvania Lottery website says you have a 1 in 61.73 chance of winning the lowest prize of $3. That’s a 1.61996% chance ((1/61.73)*100) of winning $3 on any given ticket. Since you have a 2.8482% chance of winning any prize, you’d expect a little more than half of your winning tickets to have a $3 prize. (The math is simple: 1.61996/2.8482 = 0.568766 * 100 = 56.8766%.)

       Continuing this process for each prize level, we can figure out your chances of winning a specific prize any time you have a winning ticket. This table shows those chances for a regular Powerball winning ticket.

       Now we can figure out the value of a winning ticket simply by multiplying the prize by your chance of getting that prize on any given winner. Doing that tells us that the average winning ticket for regular Powerball is worth $7.65 ($8.65 – $1.00 for playing). Adding the Power Play to the mix changes the prize values, so the average winning ticket for Powerball plus Power Play is worth $24.04 ($26.04 – $2 for playing). (And technically, it would be worth a little less than that because there’s always the chance you might have to split the jackpot with someone else. But I don’t feel like finding the stats on that or doing the math.)

       That leads us to the next question. If the average winning ticket is worth $7.65 (or $24.04 for Power Play), then what is the average ticket worth? You only have a 2.8482% chance of winning that $7.65 (or $24.04). We need to take into account the cost of your losing tickets, which you’ll have 97.1518% of the time. Remember, you have to buy 35.11 tickets before you can expect to have a winning ticket (based on the odds). That leaves you with 34.11 losing tickets. If you’re playing regular Powerball, you’ll need to spend (that is, lose) $34.11 to win $7.65. If you’re playing Powerball with Power Play, you’re looking at a cost of $68.22 to win $24.04.

       Our last bit of math will tell us the average value of any given ticket. Let’s check regular Powerball first. On average, you’ll spend $34.11 to win $7.65 leaving you with an overall loss of $26.46. Divide that by the total number of tickets you had to buy (35.11) and you’ll find that the average regular Powerball ticket is worth -$0.75. To put it another way, instead of buying a $1 Powerball ticket you might as well throw three quarters in the trash. (Oh wait, I forgot…the Pennsylvania lottery benefits older residents – every day. So maybe you should just donate the three quarters instead.)

       What about Powerball plus Power Play? It certainly looks like a more attractive value proposition at first glance since the average winning ticket is worth so much more. On average, you’ll spend $68.22 to win $24.04 leaving you with an overall loss of $44.18. So that means the average Powerball plus Power Play ticket is worth -$1.26. This time, instead of donating three quarters rather than buy a Powerball plus Power Play ticket you should donate five quarters! In terms of absolute dollars, you lose more with Power Play but the % loss is better than regular Powerball. (In regular Powerball, you lose 75% of your money forever. With Power Play, it’s “only” 63%. Granted, it starts looking a little better when the jackpot is very large, but your chances of splitting the prize increase as more people buy tickets. This means the lottery is always going to be a losing bet.)

       Let’s put this all into a little perspective. Buying a Powerball lottery ticket would be the equivalent of getting a $10,000 gift, going out into your back yard, and then proceeding to burn $7,500 of it for “fun”. Big Fun – according to the Pennsylvania Lottery.

You Want Big Savings? I’ll Show You Big Savings.

       I’m not going to take the time to prove that the lottery (in any form) is a waste of your money. You can simply look at the July 2009 – June 2010 annual income and expense report from the Pennsylvania Lottery to see that they only end up paying out about 61% of their total sales to winners. Talk about a great business! I’d take a 30% net profit margin any day. (The other 9% goes to other expenses.)

       Looking at those numbers from the other end, we see that lottery players as a whole are buying something with a guaranteed return of -39%! You want big savings? Here’s a thought. Stop paying the poor people’s tax.

 
       Welcome to the Carnival of Personal Finance #271 – The Secret to a Successful Budget eBook Edition! My friend Craig Ford at Money Help for Christians is launching a new eBook today. It’s designed to help you discover the secrets to successful budgeting.

       I think it’s a great resource for anyone who’s ever struggled with budgeting, so I’ve included some quotes from his eBook throughout this carnival. You can get the book for 30% off if you buy before midnight (EDT) August 31st, 2010. Be sure to read through to the end of this carnival because I’ll be giving away two FREE copies to two lucky winners!

Editor’s Choice

       Here are my top picks from the submissions this week:

• Mike Piper from Oblivious Investor presents Dealing with Investment Confusion, and says, “What’s the best approach to dealing with the confusion that comes from being a new investor?” – [Mike shares some good advice for people who are confused about investing. It won't immediately cure your confusion, but applying this strategy over and over will help you make informed decisions you can stick to.]
• Briana Ford from Go Banking Rates presents Why Americans Can’t Afford to Die [Infographic], and says, “If you never thought about this problem before, take a look at how expensive funerals really are. You may discover you, like many Americans, simply can’t afford to die.” – [What can I say? I'm a sucker for infographics.]
• Len from Len Penzo dot Com presents A Simple Trick to Get Your Credit Card Interest Charges Waived. – [I wish more people realized the power of Len's simple trick!]
• Lauren from Richly Reasonable presents 4 Bad Deals, and says, “The term “Bad Deal” is relative. Not only is Necessity the mother of Invention, she is also the mother of many a Bad Deal. Necessity has a TON of children.” – [Funny, smart, and witty - and likely to open a few eyes at least!]
• Jacob A. Irwin from My Personal Finance Journey presents Adjusting My Monthly Budget to Account for Home Ownership, and says, “A look at the steps I have recently taken to adjust my personal budget to account for the various elements of home ownership.” – [At our current rent rate owning a home just doesn't make sense. Just look at all the costs involved!]

       Congratulations to the editor’s choice picks! Here are the rest of the articles from this week’s submissions.

Money Management

• MD from Studenomics presents Quick College Students Guide To Personal Finance.
• Jason from One Money Design presents How Do You Live Well on Less Pay?, and says, “There are plenty of people that don’t make a lot of money and have trouble covering basic expenses each month. There are 5 essential tips to follow to live well on less pay.”
• Revanche from A Gai Shan Life presents Shopping for the single life .
• ispf from Grad Money Matters presents The American Dream of Home Ownership: 10 Things You Can Do as a Student.
• Jim from Wanderlust Journey presents Royal Caribbean Cruise Lines Shareholder Benefits.
• Jason from Live Real, Now presents Check Your Bills, and says, “Can you automate your finances too far?”
• Elle from Couple Money presents Financial Tips for College Success, and says, “Many college students are surprised to see how easy it is to build a financial foundation for themselves. Learn how to set up bank accounts, pay your bills, and start a graduation fund.”
• DE(a)BTh from Murder Your Debt presents Your Wasted Life, and says, “You thought financing a house and a fast car meant freedom. That an expensive education would lead you to a rewarding career where you could earn lots of money. You were wrong, weren’t you? You hate your career but you’re stuck. You’re stuck because you swallowed the lies you were sold. The lies that material possessions bring success. The lies that more money means more happiness. And now what? You’ve got it all; the cars, the house with the huge yard, the sexy outfits and shiny shoes. But you’re STILL not happy!”
• vh from Funny about Money presents Social Security’s Bizarre Rules, and says, “Social Security’s restrictive rules make it impossible to get out of poverty when unemployment forces one into early retirement and stock-market losses militate against retirement fund drawdowns.”
• J. Money from Budgets Are Sexy presents What would you do with an extra $1,000?, and says, “Montel Williams wants to know ”
• Bob from Christian Finances presents How to spend unexpected income: 3 questions to ask, and says, “It can be tough to know what to do when you receive a large sum of cash – this article will give you some questions to help you figure out what to do with it…”
• Mr. GoTo from Go To Retirement presents How Much Long Term Care Insurance Should You Have?, and says, “Insuring against a long term care event is part of personal risk management. Estimating the amount of long term care coverage to obtain requires careful consideration of several factors.”

If you are working 40 or more hours a week to earn your money, don’t you think it is worth an hour or two to set up a budget?

Isn’t it worth spending about an hour every week to manage the money you work so hard to earn? It is always better to manage what you have than to work yourself crazy trying to get more money.

- from page 21 of The Secret to a Successful Budget by Craig Ford

Finance

• eemusings from Musings of an Abstract Aucklander presents Does $60k constitute a high income?, and says, “Just what is a “high” household income? The stats are surprising.”
• Miss T from Prairie Eco-Thrifter presents 10 Important Steps You can Take to Better Plan For Retirement.
• RJ Weiss from Gen Y Wealth presents The Mike Tyson Guide to Financial Planning, and says, “You might be wondering, what in the world can Mike Tyson teach me about financial planning. I promise you, will be surprised.”

Investing

• Dividend Growth Investor from Dividend Growth Investor presents 33 Dividend Champions to Consider, and says, “Dividend investor David Fish has created a list of dividend stocks which have raised distributions for 25 consecutive years and has named it the dividend champions list. His list includes 100 companies, which is more than twice the size of the Dividend Aristocrats. I ran a screen on the list in order to identify stocks for further research.”
• Mike from The Financial Blogger presents Use the Loonie’s Strength to Invest in the Eagle Market, and says, “Canadian dollar is strong compared to the US dollar at this time. Use this as an opportunity to invest in US stocks.”
• Div Guy from The Dividend Guy Blog presents Dividend Investing with Less Than $1,000 Part 3: How to Pick Your ETFs and/or Dividend Funds, and says, “Starting to invest is quite motivating but as a young investor, you must put greed and hype aside and start by looking for sound investments.”
• Squirrelers presents Small Stocks = High Return and High Volatility, and says, “Small stocks, particularly those in the lowest deciles, have performed very well over the long-term. They can be an important part of your asset allocation, provided you can stomach the associated risks.”
• D4L from Dividends Value presents My Top 6 Performing Dividend Stocks Just Might Surprise You, and says, “As I have stated many times, my goal is to create an ever growing income stream from dividend stocks. Secondarily, it is my desire to beat the S&P 500 over time. With that said, I rarely look at the capital performance of individual stocks. However, I recently sorted my portfolio by Total Gain % (total gain/basis) and was mildly surprised at the top performers.”
• ElizabethG (Modern Gal) from Modern Gal presents Investing for Inflation in 2010.
• DSO from High Dividend Stocks presents Big GE and it’s big dividend, and says, “One of America’s oldest and most prestigious companies has become an accidental high yielder.”

Budgeting in and of itself is useless.

Budgeting is part of a larger financial plan.

- from page 9 of The Secret to a Successful Budget by Craig Ford

Budgeting

• Money Beagle from Money Beagle presents Why The Kindle Price Wars Mean Absolutely Nothing To Me.
• Craig Ford from Money Help For Christians presents You Might Need a Budget if …, and says, “31 signs that it is time to start a budget.”
• Michael from The Dough Roller presents 7 Tips To Help Manage Your Finances When Out of Work, and says, “Being out of work can be pretty awful but if you manage your finances properly, the blow can be lessened.”
• Betty from Control Your Cash presents Health Care. Cheaper than you Imagined., and says, “While a visit to the vet will probably never be enjoyable for the patient, a pet wellness plan can make that visit a lot more palatable for the patient’s chauffeur.”

Saving

• Jim from Bargaineering presents How to Deal with Losing Your Wallet While Traveling.
• Amanda from My Dollar Plan presents 7 Ways to Further Your Education Without Paying Full Price, and says, “This is a GREAT article for anyone looking to further their education at a low cost.”
• Laura @ Move To Portugal from Move To Portugal presents Could you increase the amount you’re saving?
• Adam from Magical Penny presents Financial Lessons from Toy Story 3, and says, “Amidst the humour and tension there are some powerful life lessons in Toy Story 3 so here’s a few I picked up and how they relate to growing and saving your pennies!”

Frugality

• ElizabethG from Modern Gal presents Are You Tired of the Smug Frugals?.
• Hedy from Penny for my Thoughts presents How to: Save money on College Textbooks.
• Matt from Debt Vigilante presents Extravagant Frugality.

You need to focus your finances on accomplishing one major task at a time.

If you don’t, the danger is that every dollar will be diluted to a point that it makes little impact helping you reach your goals.

- from page 9 of The Secret to a Successful Budget by Craig Ford

Debt

• Kris Bickell from Debt Tips presents Who should you turn to for honest advice about debt settlement?
• Ramsay from Moneyedup presents Debt Goal, and says, “Paying off a large sum of debt can be overwhelming. Setting debt goals can make the process much easier.”
• mbhunter from Mighty Bargain Hunter presents 15-year fixed mortgage rates are below 4%, and says, “You may have seen ads for cheap mortgages in the past, but I’ll explain why these rates are different.”

Credit

• Tim Chen from NerdWallet Credit Card Watch presents Amex is Hiking Fees on the Starwood Preferred Guest Nearly 50%, and it’s Still a Good Deal , and says, “American Express has started sending out letters to its cardholders, informing them that it plans to raise the annual fee from $45 to $65 starting October 14th, and it’s modifying the rewards program a bit. If you’re a cardholder, you may be considering canceling the card in anger at the prospect of a higher fee, but we don’t think you should.”
• Ramsay from Moneyedup presents Credit Report Vs Credit Score, and says, “Credit scores and credit reports are two very different things. Know the difference before you sign up for a free credit report.”
• Cecil Dellison from Clear Choice Credit Card Blog presents NFL Credit Card Owners Lose Points in Bank Change.
• Michael from The Dough Roller presents Get Your Free Credit Score with Identity Guard, and says, “The best source to view your three credit scores for free.”
• Jesse from The Penny Saved presents Fixing bad credit, building new credit, and how to be the tail that wags the dog.
• Adam from Rabbit Funds presents 3 Reasons Dave Ramsey is wrong about Credit Cards, and says, “I have been asked if and when using credit cards makes sense. As a general rule, I tell people to never use a credit card. However, if you can exhibit self-control, then there are three reasons I would use a credit card.”
• Clint from Accumulating Money presents Is Visa Signature Better Than Platinum?
• Neal Frankle from Wealth Pilgrim presents 5 Ways to Improve Your Credit Score Fast, and says, “You probably don’t need me to convince you that you should always be looking for ways to improve your credit score. A good credit score will help you get lower rates when you need to borrow money and much more. It can help you get a good job too.”
• Craig from Free From Broke presents What IS A Secured Credit Card?, and says, “Sometimes a person is unable to get credit either because they haven’t had credit or they had credit problems in the past. Enter the secured credit card! Here is what it is and why it can be useful.”
• Big Cajun Man from Canadian Personal Finance presents Large Wallet Syndrome, and says, “Just how many credit cards do I need to carry around these days?”
• Junior Boomer from Consumer Boomer presents What is Peer to Peer Lending and is it Risky?, and says, “Peer to Peer lending (sometimes called social lending or person-to-person lending) allows people to borrow money from other people, or lend money to others, without traditional bank participation.”
• David from Credit Card Offers IQ presents 5 Rules for Co-Signing, and says, “Don’t take co-signing lightly!”
• Julie Sherrier from Taking Charge presents What’s driving more women to seek debt help?.
• John from Passive Family Income presents 18 Tips on Using a Credit Card Rewards Program, and says, “If you are going to open up a credit card, my suggestion is to find one that offers a cash back or rebate program. While most financial experts tell you to stay clear of these type of accounts, I believe a credit card rewards program can be used to your advantage.”
• The Smarter Wallet from The Smarter Wallet presents Cash Back or Airline Credit Cards? What’s Best For Travel, and says, “Comparing cash back cards to airline cards. When should you choose one or the other?”
• Mr. Credit Card from Ask Mr. Credit Card presents New Card Act Provisions.
• Cecil Dellison from Clear Choice Credit Card Blog presents Bowlers Benefit from the New USBC Platinum Visa Credit Card.

The goal of the budget is to help you spend less than you earn.

Therefore, this becomes the single criteria for an effective budget – does it help you spend less than you earn?

- from page 12 of The Secret to a Successful Budget by Craig Ford

Reviews

• PT from PT Money presents Free Prepaid Credit Cards, and says, “A thorough, original review of the best free prepaid credit cards, including those that are free of activation and monthly fees. These cards are great for those who need to avoid debt, or those that can’t get a traditional bank account.”
• Silicon Valley Blogger from The Digerati Life presents Citi Dividend Platinum Select MasterCard Review, and says, “Here’s a review of a credit card I actually like.”

Real Estate

• FMF from Free Money Finance presents How to Hire a Home Inspector, and says, “When you buy a home, you need to be sure you hire a good home inspector to identify any potential problems. This post gives tips on how to do this.”
• Jeff Rose from Good Financial Cents presents Should You Upgrade to a Larger Home”, and says, ”
  In many markets, home owners are looking at homes in the next price range up as good buys, since foreclosures and a slow market are resulting in good deals. But, as tempting as it is to upgrade to a larger home, is it really a good idea? Here are some things to consider before upgrading to a larger home.”
• Rob from Two Wise Acres presents 3 Things to Avoid When Buying a Home, and says, “When buying a home, it’s critical that you avoid these three credit mistakes.”
• ctreit from Money Obedience presents Do renters really save money in the end?.

Taxes

• pkamp3 from Don’t Quit Your Day Job… presents Tax Incidence, and says, “Who really pays for a tax when it is enacted? If the government enacts a new tax on washing machines, is the entire tax on Maytag? The consumer? Cameron Daniels breaks down the details.”

A budget lets your spouse see your values and priorities in a tangible way.

A budget forces you to communicate not just about your life goals, but also about your daily financial preferences.

- from page 16 of The Secret to a Successful Budget by Craig Ford

Career

• Kristina from Dinks Finance presents A DINK in The Office, and says, “As a married or unmarried employee with no children, are you treated differently than your colleagues with kids?”
• Nicole from Nicole and Maggie: Grumpy Rumblings presents Why did you go to graduate school?, and says, “Nicole and Maggie discuss reasons for graduate school and how sometimes we’re directed into a career for the right reasons and sometimes we fall into it for the wrong reasons. But it turns out OK anyway (or maybe it doesn’t, but you can always change your mind).”

Economy

• Bret from Hope to Prosper presents Trillion Dollar Public Pension Shortfall, and says, “An article in the New York Times stated that there is a $1 Trillion dollar public pension shortfall. Despite repeated denials from PERS and public employee unions, public pensions are in big trouble.”
• JLP from AllFinancialMatters.com presents Democrats, Republicans, and the Federal Debt Since 1979, and says, “Though the title may suggest it, this is not a “political” post.”

Budgeting is a process, not an event.

You won’t wake up tomorrow with an effective budget. Instead, you will start with a decent budget that later becomes a good budget. Eventually, it is a great budget.

- from page 16 of The Secret to a Successful Budget by Craig Ford

Other

• Donna Freedman from Bargaineering presents Sick happens: How to prepare for an illness or injury, and says, “Sick happens. And sometimes it happens to YOU. Get your finances, your work life and your support network in order.”
• Ken from Spruce Up Your Finances presents Why Start A Home Based Business.
• Paul Williams (that’s me!) from Provident Planning presents I Am More Than My Income, and says, “Do you value your self-worth based on your income? Do you beat yourself up because you’re not making enough, or do you gloat because you earn so much? I did that to myself, but now I’m realizing that my worth has nothing to do with money.”
• Kevin from Financially Poor presents Grow Up And Stop Acting Like A Child.
• Suba from Wealth Informatics presents Credit cards take from the poor and give to the rich, and says, “Credit card users (rich) are taking money from the the cash users (poor)? Is the reverse Robin Hood theory true?”
• Sean Smarty from Grow Money presents Why You Need Life Insurance.
• Myke from In Search of Salt presents Spending Can Be Good

The Secret to a Successful Budget eBook Giveaway!

       As promised, I’m giving away two free copies of The Secret to a Successful Budget courtesy of Craig. To enter, all you need to do is leave a comment on this post telling me how budgeting has helped you OR your biggest struggle with budgeting. I’ll use random.org to select two winners tomorrow evening (August 24, 2010) at 5:00 PM EDT so be sure to enter by then!!! I’ll update this post to announce the winners, but use a valid email address when you comment so I can reach you if you win. Good luck!

[Update: Laura has won a free copy of The Secret to a Successful Budget! Congratulations!!!]