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Archives For October 2012

Saving Money in Colder Weather

Corey —  October 29, 2012

Lately, we’ve been having some cold days where I live. Just the other day it was almost 90 degrees, then the VERY next day it was only 35 degrees. What?! This crazy weather is most likely hurting my wallet. One day I have the air conditioning on and then the next day I have my heat on.

Some of you probably don’t do this and would tell me just to adjust myself to the temperature, but I like to feel comfortable in my house :)

If you’re like me, all you did was flip the switch to turn on the heat but didn’t think of anything else that you could’ve been doing. However, every year my gas company gives me a comparison of my usage and costs compared to the year earlier, and this year I would like to beat that and use less heat and spend less money on my bill.

There are many things that you can do to save money on your heat bill this year. All of the tips below are really quick and easy things that you could be doing, but maybe you haven’t thought of them yet since we are so early into the cold weather season so far this year.

1. Curtains.

There are curtains that you can buy that can help keep the heat in and keep the cold drafts out. They might be fairly expensive near you, but they can be a good investment. Also, opening curtains on sides of the house where all of the sun’s heat comes in is good also. Open up those blinds and soak up the sun!

2. Wear warmer clothes.

I’m still running around in my warm weather clothes and pajamas around my house, when I should be bundling up. Wearing an extra layer of clothes such as a cardigan or pants can help a lot once it starts getting colder. Wearing socks and slippers definitely helps as well.

3. Thicker blankets.

Instead of cranking up the heat when you’re about to go to bed, buy a warmer blanket! Seems like a no brainer right? I’m sure you have extra blankets around the house, get them out of storage and put them on your bed. Heated blankets work wonders as well and they usually don’t cost too much.

4. Adjust the temperature for when no one is home.

If no one is home for hours and hours during the day, then turn the heat down so that you can save more on your bill. However, if you will only be gone for 1 or 2 hours, then it’s probably best just to leave it where it’s at, as your furnace will have to work extra to get it back to where it was before you left (thus eliminating any gain that you could’ve made).

5. Monitor the thermostat.

Do you notice a big difference between 68 degrees and 72 degrees? Your body may not notice that big of a difference, but your wallet definitely will. Adjust the thermostat to see what you are comfortable with. Higher temperatures of course equal higher bills. Lately we’ve been keeping it at around 68 degrees and I believe last year our bill averaged around $150 a month.

6. Change your fan setting/direction.

A tip that I didn’t know of until last year was that you should be adjusting your fan setting. Usually there is a “winter” setting that is located right on your fan. Just click it over and that will help you save money as well.

What do you do to save money on your heating bill?

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Basic Principles of Managing Your Personal Finances

Corey —  October 28, 2012

Everyone who is human has struggled financially at some point. It may not be to the same degree as others, but the statement still holds. Everyone makes mistakes and everyone is always learning new things. While many people will try to convince others that they have it all figured out, it is a lot of deception.

When lies are unveiled and the truth is not hidden from sight, we all begin to realize that personal finance is complicated. Not only do unexpected expenses pop up out of nowhere, but we also face difficult financial times that are beyond our control. This recent recession is evident of that idea. While managing your personal finance is often difficult and challenging, forcing you to make decisions without certainty of success, there some basic principles to managing your personal finances.

1. Spend Less Than You Earn

The one way that you can alleviate much of the stress associated with finances is by reducing your spending. In fact, the less you spend the better. Start with spending less than you earn. Not just some months, but all months. This will prevent you from financing your current situation on hopes of future pay raises and will keep you in the black. If there is one thing that I have learned over the past few years, it’s that life is much better in the black than in the red.

2. Create an Emergency Fund

The second thing that I have learned is that expenses pop up. Some people may have no other choice than to use payday loans, but you should do everything you can to give yourself a cushion. If you have a little extra money coming in each month, do yourself a favor and save that money in an emergency fund. Establish a certain amount and promise yourself that you will only touch it in an emergency. Some emergencies may be unexpected unemployment, car repairs, etc.

3. Invest Aggressively

Investing regularly is one of the only ways to build wealth. Unless you plan to live off of the minimal payments you get from social security, you will need investments in order to retire. While it may be hard to eliminate the lifestyle inflation, it will be worth it in the long-term if you can prioritize your savings and investing now.

4. Help Others

One of the core tenets of this personal finance blog is to do everything you can to help others. Our wealth that we build is a privilege. We need to use this wealth to help others who are less fortunate than ourselves. If we ignore this aspect, we run the risk of losing sight of what is important and becoming obsessed with money. While money is nice to have, it’s a means for something greater – it is not the end result.

While these are some of the basic principles of managing your personal finances, these are only the beginning. They help us with the basic framework, from which we can overcome some of the greater challenges that come our way.

In Miscellaneous
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Finances and Going Back to School

Corey —  October 23, 2012

Is going back to school in your future? Maybe you can no longer move up in your company and a degree with help move you up, you want to brush up and increase your skills, increase your professional network, etc. However, what else should you think about when you finally decide to go back to school?

Your finances!

Your finances will be effected of course. Now that you’ve decided (or are planning) to go back to school, there’s a lot of planning to do, especially if you’ve been out of school for some time and have many bills to pay. Just quitting your job and going back to school isn’t a plan for most people. Those bills need to be paid and your debt that you currently have needs to be paid down. Also, what will happen to your retirement?

With the right amount of financial planning, going back to school doesn’t have to kill your budget and your goals for retirement, savings and paying down debt. If your financial plan is well thought out, then hopefully you’ll come out ahead after you graduate.

What you should financially think about when you decide to go back to school:

1. How often you’ll work.

Working while attending school can be tough. Will you attend school full-time while working still? Attend part-time and work full-time? Will your work allow you to do both at the same time? I’ve heard of companies that will not allow you to attend school full-time while working at their company because they don’t want you to have to choose which one that you’ll give more effort towards.

I did my whole undergraduate and graduate degrees while working full-time. It was definitely hard, and I only did it that way because I had things to pay for. Working part-time wasn’t really an option, but maybe if I had a better plan then it would’ve worked.

You can also majorly cut expenses and try as hard as you can to live like a student. You can find somewhere cheaper to live, find a better fuel efficient vehicle, eat cheaper, coupon, and so on. The list is really endless. Cutting expenses can really help you financially if you are unable to continue to work the same amount of hours while attending school.

2. What the costs are.

There are many costs to think about when going to school besides just the college tuition. How much will food cost between classes? Will you be able to go home and grab a snack? How much will the added cost of gas be? If you’re driving from work to class (or vice versa), then your gas costs will most likely increase.

Some people fund all of their costs by tacking it all onto their student loans, but I don’t think this is always a good idea as you will be adding a lot of unnecessary debt which will be a burden after you graduate.

3. Your budget.

Now that you’ve finally decided whether you’ll attend full-time or part-time, and whether you’ll work full-time or part-time, now is the time to decide your budget. You need to calculate how much you need every month, and also estimate how much you’ll be earning (if you’ll be working).

Also think about whether you will work on paying down debt (including any student loans that you may be adding toy our current debt) and if you’ll be saving any money towards retirement.

 

How were your finances affected when you decided to go back to school?

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When should you close a credit card?

Corey —  October 15, 2012

Credit cards can be a good thing, or they can be very bad for a person. If you’re looking to build your credit score, then you probably look forward to doing well with your credit card.  However, if you find that you have many spending temptations, then credit cards are probably not the best thing in your life.

I personally have 3 credit cards. I pay them off every month (I’ve never carried a balance) and I use them mainly for credit card rewards. I earn a decent amount and right now I have around $200 in credit card reward points saved up for Christmas presents that I plan on buying.

Most of my friends have no credit cards. When I tell them that I have 3, they usually think I’m crazy and that I must be in major debt. There is a correct way to use a credit card! Anyways, how do you know whether you should have any credit cards though? Maybe you should even close one?

A lot of people have credit cards for many different reasons. The cash flow from month to month is nice to have, the credit card rewards can add up nicely, and you can build your credit. However, many people are scared to close their credit card because they are afraid that they will destroy their credit score.

Your credit score is important in certain situations, but if you don’t know how to properly manage your credit card or credit cards, then closing them might be a better idea for the moment for you.

Reasons why you might want to close your credit card:

1. You can’t control yourself.

Do you see your credit card as free money? The other day my friend told me how she only had a $400 limit on her credit card, BUT that she could still go out to eat because she still had around $50 left to use on it. This makes no sense of me! She also said that she’s only been paying the minimum payment since she’s gotten it because she thought that was helping her credit score.

If you see yourself going to mall just because you have credit left on your card to use, then credit cards may not be good for you. Credit on your credit card is not something that you should just be spending and racking up just because it is there and available for you.

2. You don’t want to rely on credit.

One of my friends pays for everything with cash and refuses to have credit cards. While I wish I could say that this is the way that I live, some people actually DO (of course) pay for everything with cash so that they aren’t forced to rely on money that they don’t actually have.

Be Careful.

There are things to keep in mind if you do decide to close your credit cards. The effect of closing a credit card on your credit score can vary greatly. It all depends on your credit score now, how long you’ve had the specific card and your credit limits.

Maybe just hiding your card from yourself is a better idea, so that you can keep that long standing card that you’ve had. Freezing your credit card (such as putting it in ice in your freezer) may not be a good idea because the credit card company may close your account because of inactivity.

Also, if you close an account that had a high limit, this can affect your utilization ratio. If your ratio becomes too high, then this will negatively affect your credit.

Have you ever closed a credit card? Why?

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10 Ways to Save on Holiday Travel

Corey —  October 8, 2012

I’m sure you have all noticed that holiday stuff is everywhere now. Halloween stuff has been on the shelves for quite some time, and Christmas and winter items are starting to come out as well. It seems like just yesterday it was summer and 100 degrees out.

Traveling during the holidays can kill your budget, so there are many things to think about.

Below are ways to save on your holiday travel:

1. Think about your travel dates.

Can you be flexible with your traveling dates at all? Flying a couple of days before Thanksgiving and leaving a couple of days after will be very expensive, and also very busy at the airport. If it is possible, then try arriving or leaving the day of the holiday. Yes, this isn’t always ideal, but if it is possible, then it should be though about.

In general, days matter also. However, not when it comes to Thanksgiving though as these days I’m about to list are prime Thanksgiving traveling days. Flying on different days can also save you. Flying in on a Tuesday and leaving on a Saturday will save you much more money then leaving or coming back from your destination on Friday or Saturday.

Leaving at different times of the day can cost differently as well. Taking a 6am flight or an 11pm flight will most likely cost less than taking a flight during a more normal time.

2. Buy now.

Prices will most likely only go up from now until the holidays. There will be the occasional super sale on airfare, but would you want to risk that and possibly paying double if the sale never comes?

3. Use different airports.

Flying into airports that aren’t as busy can save you a lot of money. Farther airports might also be closer to your destination, so don’t always rule them out.

However, there are other factors to think about when doing this. How much will the additional cost is gas or a taxi cost? Can you use public transportation from this airport location?

 4. Use a Rewards Card.

If you can get any extra money back, then why not? If you already have a travel or rewards card, then look into the details to see how you can get the most money back.

5. Looks at bidding websites.

If you’re booking a hotel, try bidding on websites such as Priceline. If you look at bidding tips websites, they can tell you what most people pay and what hotels you most likely are bidding on. I greatly recommend this so that you aren’t just shooting in the dark for a price and a hotel.

6. Use Airbnb or other home rental websites.

I have used Airbnb once before, and I got a great deal. Renting a place for a couple of days is most likely much cheaper than getting a room at a hotel.

7. Get the economy car.

If you need to rent a car, then try getting the economy car. It is most likely the cheapest and will get the best gas mileage. Also, see if your hotel will spring for the rental car cost, as some hotels do this nowadays.

8. Use public transportation.

If it is possible in the place that you are going to, then trying using their metro system. It will most likely be much cheaper, and you might possibly be able to get places faster since you will be avoiding traffic.

9. Use coupons on food.

Food on vacations can be a budget buster. Try looking for coupons or specials for the restaurant that you are about to go to. Also, eating during happy hour or during lunch time will be much cheaper than eating during dinner at most restaurants.

10. Cook at your place.

If you have a kitchen in your room, then cook! Go to the grocery store and stock up on foods that you will be eating.

How do you save on holiday travel?

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7 Housing Costs That Many Forget

Corey —  October 1, 2012

A mistake that many new home buyers make is not looking at the total cost of the house that they are about to buy. Only looking at the actual mortgage amount is a big mistake, as looking at that amount alone can fool you.

The principal and insurance amount of your monthly home budget can actually be relatively small when compared to the whole amount.

My friend and her fiance are looking at houses right now, and they are making a mistake when calculating their housing costs. They are looking at houses farther away because houses in the more rural areas are much, much cheaper. However, the costs that they are saving by being able to get a newly built house in a far away area are eliminated because of the long drive they will have to venture on every morning. They will both work more than 60 miles from their jobs and won’t be able to commute together.

Commuting costs should definitely be thought as, as demonstrated above! They also both have horrible gas guzzling cars, and will most likely be spending a little over $1,000 on gas every month.

When looking at houses, you should be looking at the overall costs such as the costs listed below:

1. Property taxes.

Many estimate that these will be lower, but in reality, property taxes are high. For us, property taxes equal approximately one-third of our total monthly house payment.

2. Private Mortgage Insurance (PMI).

If you don’t put a large enough down payment on the house that you are about to buy, then you will have to pay PMI most likely. This can end up being a large amount tacked onto your monthly mortgage amount, such as $50 or $150 per month.

3. Home Insurance.

The neighborhood you live in and the type of house that you buy play a big role in how expensive your home insurance will be. You can of course try shopping around to find the best price, but there can be other things making your home insurance high. If you live in a risky weather area (such as floods, high winds, tornadoes, etc.), then this will cause your home insurance expenses to rise.

4. Maintenance.

With houses, there will something that will go wrong eventually. Pipes might need to be placed, water heaters will need to be repaired and so on. Some of these expenses might be “low” and only be a couple hundred dollars, while others might be thousands. A family member needs their roof replaced, and they had multiple people bid on the replacement. The lowest bid they received was $65,000. And no, they are not being duped, they have a VERY steep roof and asbestos, so that’s the lowest that any place would offer. Keep these maintenance costs in mind!

Also, the furnace can be an expensive fix or replacement as well. A friend of mine had to spend $6,000 to get hers replaced. Keeping a home maintenance fund is very important just in case something does come up.

5. Landscaping.

Your house looks nice now, but will it require a professional person to come by every now and then to make the landscaping look the same? Will you be able to do it yourself? If you have a very large yard (acres and acres), then you will have to either hire someone to come often, or you will have to put time, labor and buy a reliable mower to cut your lawn.

6. Utilities.

Even if a bigger house may seem like a “deal,” it might not actually be. A bigger house will require more maintenance, landscaping, and higher utility bills.

7. Extras.

You might say “oh I’ll buy this house but I won’t get internet, cable, cell phone, etc. so that I can afford the house payment.” How realistic is this though? If you know that you will be buying these things, then you should budget this into your housing costs so that you aren’t running later.

 

Did you forget about any housing costs when you first bought?

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