Archives For Saving

       On Wednesday, I had the pleasure of interviewing Chuck Bentley, the CEO of Crown Financial Ministries, about his upcoming book The Root of Riches: What If Everything You Think about Money Is Wrong?. The book will be released in the next week or so, but if you’d like to get a 20% discount you can go to http://www.crown.org/rootofriches and sign up to pre-order the book and get a free sample chapter.

       I had the chance to read the book before the interview and I highly recommend it to all of you. Chuck does a good job of getting to the heart of our issues with money by highlighting how being rooted in Christ is the only way to receive true riches. The interview below will give you a good overview of the central ideas in the book and help you determine if it’s something you’d want to read.

       I’ve included the audio here which you can listen to on the website or download for later. I’ve also transcribed the interview for those of you who prefer to read. I’d be interested in your feedback on how well you liked this because it’s the first time I’ve tried doing an interview/podcast. (I was quite pleased with how my intro and outro music turned out!) Feel free to leave your thoughts in the comments at the bottom of the page, and if you have any questions I’ll do my best to answer them.

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Download the audio by right-clicking here and choosing “Save as…”.
Credits: intro and outro music for the audio is from “Bucolique Utopique” by David on Jamendo

Note: I was not paid anything to post this interview. I only agreed to it after reading the book because I believed Chuck’s message in The Root of Riches is excellent and needs to become more prominent in Christian personal finance.

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Is Renting Throwing Away Money?

Corey —  December 20, 2010 — 6 Comments

Rent or Buy - Your Choice!       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.

Do You Have Enough or Too Much in Your Piggy Bank Emergency Fund?       I can hear the claims of “Heresy!” ringing out through the personal finance world right now. How can I say the 3 to 6 month emergency fund rule is stupid?! Before you give yourself a heart attack, you need to realize that I’m not saying an emergency fund is stupid. Not by any means! In fact, I’ve written several times already about why you need an emergency fund, where to keep your emergency fund, when you should use your emergency fund, and how to build up your emergency fund. Clearly, I have nothing against emergency funds.

       No, my problem is with the silly rules of thumb that get thrown around with the idea of the emergency fund. Some say you need 3 months of your expenses, some say 6, and some say 9. I’ve even heard 2 years! The problem is that all these simple rules of thumb make the same mistake that other rules of thumb make – they ignore your circumstances.

Base Your Emergency Fund on Your Circumstances

       An emergency fund based on 3 months of your living expenses may work fine if you’re married and both of you have stable jobs with comparable incomes and you have your finances under control. But change just one of those variables (marital status, job stability, income disparity, or financial situation) and you can forget about a 3 month emergency fund doing the job.

       The size of your emergency fund needs to be tailored to your circumstances because the riskiness of your situation is determined by what’s happening in your life – not what some rule of thumb tells you. Now, I’ll grant that a 6 to 12 month emergency fund is going to be in the right zone for most people, but I wouldn’t leave this to a guess. You need to take a few minutes to think about your situation and adjust accordingly.

       For example, if you’re single then you probably only have one source of income. That puts you at a higher risk in case of a job loss than someone who is in a two-income household. The same goes for your job stability. If there’s little risk you’ll lose your job (maybe a government position?), then you’re probably a bit safer than someone in a cyclical industry (car sales, perhaps).

       If you’re socking away 20% of your income, a small emergency might not bother you too much. You can easily divert your money away from saving for a bit and go back after the emergency has been covered. But if you’re struggling to make it from one paycheck to the next, even a small $100 car repair can throw your whole world into a giant mess.

       It’s these kinds of factors that should determine how much you need in an emergency fund. I’ve talked about how much you need in an emergency fund, so I’m not going to go over it again. But keep in mind that even my article is just a general guideline. You’ll still need to think critically about your specific needs and situation.

Beware Rules of Thumb

       I’ve written several of these types of articles over the last few months. I talked about the stupidity of the save 10% for retirement rule, the 2.5 or 3 times your income for a mortgage rule, and the 80% or 90% of your income for retirement rule.

       All of these rules are guilty of oversimplification, a complete ignorance of your unique circumstances, or both. Yet some people rely on these rules of thumb for their most important financial decisions. I’m not saying you need a financial planner. But please do yourself a huge favor and take some time to think about your situation and what makes sense for you. Don’t rely on stupid rules of thumb to determine your financial future!

Any Other Rules of Thumb?

       What financial rules of thumb have you heard of that you’d like to learn more about? Are there any you question but aren’t sure why they might be wrong? Let me know in the comments below and I’ll be happy to write an article specifically tailored to answer your questions!

(photo credit: Alan Cleaver on Flickr)

This article was picked as the Editor’s Top Choice in the Best of Money Carnival!

This article was also included in the Carnival of Financial Planning.

Should Christians Save Money?

Corey —  November 8, 2010 — 9 Comments

Saving Money - Greed or Wisdom?       My Sunday school class recently finished the book Crazy Love: Overwhelmed by a Relentless God by Francis Chan. I think it’s an excellent look at the dangers of being a lukewarm Christian, and Francis shares some valuable insights into the awesomeness of God’s love for us and how we should respond to that love.

       For the most part, I thought Francis was spot on in his assessment of lukewarm Christians and how we need to be obsessed with serving God. But one particular aspect of his ideas bothered me. Specifically, this part from page 78 concerned me:

Crazy Love:  Overwhelmed by a Relentless God by Francis Chan       Lukewarm People do not live by faith; their lives are structured so they never have to. They don’t have to trust God if something unexpected happens – they have their savings account. They don’t need God to help them – they have their retirement plan in place. They don’t genuinely seek out what life God would have them live – they have life figured and mapped out. They don’t depend on God on a daily basis – their refrigerators are full and, for the most part, they are in good health. The truth is, their lives wouldn’t look much different if they suddenly stopped believing in God.

from Crazy Love: Overwhelmed by a Relentless God by Francis Chan



       Francis then quotes the parable of the rich fool from Luke 12:16-21. Along with some other parts of the book, Francis seems to be hinting at the fact that Christians shouldn’t save money at all. They should be giving everything away.

       Make no mistake. I firmly believe that Christians should be marked by radical generosity. But I think the flaw in Francis’ ideas is that they ignore the counsel of Scripture as a whole.

Treasures in Heaven

       I think some people are quick to say Christians shouldn’t save because of Jesus’ words in Matthew 6:19-21:

       19 “Don’t lay up treasures for yourselves on the earth, where moth and rust consume, and where thieves break through and steal; 20 but lay up for yourselves treasures in heaven, where neither moth nor rust consume, and where thieves don’t break through and steal; 21 for where your treasure is, there your heart will be also.”

Matthew 6:19-21 (WEB)



       I’ve heard some comment on this passage as though Jesus is condemning anyone who saves up money. Their logic is that if you’re saving up money and not giving it away, then your heart is attached to that money rather than to God.

       But think for a moment about the word “treasures”. We’d hardly use that word to talk about just enough to meet our needs. Rather, it denotes the idea of wealth – an abundance that far exceeds our needs. When we look at the whole of Jesus’ teachings about money, we see that His warnings were targeted at greed and selfishness rather than prudent money management combined with contentment.

       I say this with some confidence because Jesus never contradicted Scripture. And throughout Scripture we see admonition and teaching to wisely manage our affairs while still trusting in God.

Prudence and Responsibility

       Consider the numerous verses in Proverbs that commend wisdom in handling money and our affairs. Here are just a few:

       The prudent sees danger and hides himself, but the simple go on and suffer for it.

Proverbs 22:3 (WEB)

       Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it.

Proverbs 21:20 (WEB)

       6 Go to the ant, you sluggard. Consider her ways, and be wise; 7 which having no chief, overseer, or ruler, 8 provides her bread in the summer, and gathers her food in the harvest.

Proverbs 6:6-8 (WEB)



       Additionally, the New Testament speaks to our responsibility to care for the needs of our family (including ourselves) so that we will not burden the Church.

       But if anyone doesn’t provide for his own, and especially his own household, he has denied the faith, and is worse than an unbeliever.

1 Timothy 5:8 (WEB)

       If any man or woman who believes has widows, let them relieve them, and don’t let the assembly be burdened; that it might relieve those who are widows indeed.

1 Timothy 5:16 (WEB)

       11 …and that you make it your ambition to lead a quiet life, and to do your own business, and to work with your own hands, even as we instructed you; 12 that you may walk properly toward those who are outside, and may have need of nothing.

1 Thessalonians 4:11-12 (WEB)



       Clearly, we are to do what is wise and honorable so that we can provide for our family and our needs within reason. This would also include saving, since we know that the unexpected happens. Car repairs, medical expenses, job loss – they often come without warning and we should be prepared for them. That doesn’t mean we aren’t depending on God or trusting in Him. We’re simply fulfilling our responsibility to do what we ought to do.

The Danger of Saving

       Despite the fact that we are encouraged to save and handle money wisely, we must still be on our guard against trusting in money. This is what Jesus was warning against. In our efforts to provide for our family, we can go overboard. We can save too much.

       But the Christian who is seeking contentment in Christ and the heart of God will be concerned for the poor as well as responsible money management. That’s where our total walk with Jesus works to help us understand our true needs, meet those needs through work and saving, and generously give away as much as possible. I think Paul’s words to the Corinthians summarize the basic idea of Christian giving well:

       13 For this is not that others may be eased and you distressed, 14 but for equality. Your abundance at this present time supplies their lack, that their abundance also may become a supply for your lack; that there may be equality.

2 Corinthians 8:13-14 (WEB)



       The goal is not to live on the edge but to give generously from our abundance so that we can meet the needs of others. The idea is almost communistic except that it is not forced. This is the kind of giving that flows from love. We restrict our standard of living by not satisfying all of our wants so that we can show love to others through generosity. That’s the key to Jesus’ message on wealth and giving.

Your Thoughts

       Do you think Christians shouldn’t save money? Why? And if not, have you ever encountered someone who felt this way? How did you approach this issue with them? Share your thoughts in the comments below!

(photo credit: Liz West)

       I pulled this out of our mail the other day:


PA Lottery Coupons


       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.

Match Prize Chance of Winning This Prize on a Winning Ticket
5 Numbers + Powerball Jackpot (currently $14,000,000) 0.000018%
5 Numbers $200,000 0.0006833%
4 Numbers + Powerball $10,000 0.0048552%
4 Numbers $100 0.1845%
3 Numbers + Powerball $100 0.2573%
3 Numbers $7 9.7787%
2 Numbers + Powerball $7 4.4604%
1 Number + Powerball $4 28.4363%
Powerball Only $3 56.8772%



       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.

Don’t play the lottery!


       This is the final article in a ten part series on how to get out of debt. If you haven’t already, you should check out the previous articles:


Step 10 – Don’t Get Trapped Again!

       You’ve finally paid off the debts that have been dragging you down. You’ve topped off your emergency fund so you don’t have to rely on credit cards when things go wrong. You feel like you can rest easy. But your journey isn’t quite over.

       It’s taken a lot of work to get here. The last thing you want to do is go back to the patterns that got you into debt in the first place! I’ll be the first to congratulate you for reaching your goal, but the true measure of your success will be your ability to continue using the skills you’ve learned in this process. If you get back into overspending and not preparing for emergencies, you’ll have to do this all over again. I don’t think you want to go there.

       So to make sure you don’t get trapped by debt again, let’s take a few moments to consider what you’ll need to do to retain this success. My hope is that the process of paying off your debt has changed your habits so that you’ll maintain them for the rest of your life. But you’ll have to keep your eyes open so you never fall into the pits of debt again.

  • Limit Your Use of Debt – Debt can be useful for some situations, but using a credit card because you don’t have the money isn’t one of them. Limit your use of debt so that you only consider it as an option when it is wise. Buying a home, getting an education, or starting/expanding a business can be good reasons for using debt (but not always). There may be times when debt appears to be your only option, but make sure it’s your choice of last resort and that you absolutely need whatever it is you’re paying for.
  •  

  • Continue to Track and Optimize Your Spending – The single best way to make sure you prevent overspending is to keep an eye on what you’re spending and review it regularly. The simple action of tracking your spending will naturally lead you to spend less because you’re consciously thinking about every dollar that leaves your hands. You can also use the information you collect to find the areas where you can cut back on things that aren’t important to you.
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  • Look for Ways to Earn More – If you’ve been in debt for a while, it’s likely you’re a bit behind on saving for retirement and other financial goals. To catch up you not only need to decrease your spending but you also need to increase your earnings. Combining those strategies will leave you with the money you need to save and reach your goals. Advance your career, earn some money on the side, or start your own business – there are many ways to increase your income.
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  • Keep Your Emergency Fund Stocked Up – If you have to use your emergency fund, be sure to replenish those savings as soon as possible so you’ll be ready for the next Murphy’s Law event. Also, don’t look at that money as your “spend on anything” fund. It’s there for a purpose. Only use it for that purpose!
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  • Have a Plan and Save for the Future – You got into debt because you didn’t have a plan. Fail to make a plan now and you’ll probably end up in debt again. Make a plan, choose your goals, and figure out how you’ll get there. Save for those goals so you won’t be tempted to use debt on a whim.
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  • Learn to Find Contentment – Finally, seek contentment in all things. Comparing ourselves to others, wanting what “they” have, and not being happy with our situation all lead us to living beyond our means. And living beyond our means leads to debt. Discover what’s truly important in your life, eliminate what isn’t, and set your own standards for success and happiness rather than letting others do it for you.



       That’s it for this series! As I mentioned in the last part of this series, my plan is to combine these ten steps with some valuable resources to help make getting out of debt achievable and easier. Make sure you’ve signed up for free updates to Provident Planning so you don’t miss out when I release this invaluable package! If you’ve signed up for free updates, you’ll be sure to see it as soon as it’s available.

       Have you gotten out of debt and stayed out of debt? How did you do it? What has been key to your success? Let me know in the comments below!

The Secret to a Successful Budget eBook
 
       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


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


Saving


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


Credit


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


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!!!]


The Secret to a Successful Budget eBook