Boosting Savings: Auto-Save Challenge

are-you-up-for-the-challenge

In a previous post I briefly discussed money challenges and how people use them as extra motivators to either boost savings or pay down debt. Whether you’re saving for a vacation, a house or just want to improve your money management skills, you can never have too many tools or tricks at your disposal. This is why I encourage people to get creative about improving their financial behaviors. Not everyone gets as excited about personal finances as I do, so it doesn’t hurt to find a way to spice it up.

Today’s post is dedicated to the Auto-Save Challenge.

What is it: You set up a set amount to be transferred from your checking to your savings account every month. I recommend a minimum of $100. It helps you not think about the act of saving, thus making it less painful and reducing any temptation you might have to spend the money as it will already be gone.

Outcome: The results will vary but you should at least have $1,200 at the end of the year.

Variations: Some employers that offer direct deposit give you the option of splitting your check into different bank accounts. I once worked somewhere I could split my check across 10 different accounts! If you think you might be tempted to cancel the automated transfers with your bank, doing it with your employer makes it more difficult. You’d have to contact HR, fill out a form and have to wait at least one pay period. If anyone has ever dealt with HR, you know that you’re more likely to give up on the whole thing out of sheer frustration, than you are to pursue the change. Maybe if you wanted to interrupt your savings for an impulse buy, you’ll have enough time to come to your sense.

Why I like it: It’s effortless. Not everyone enjoys managing finances the way I do and if you can find a technique that makes it easier, then it takes away any potential excuse you might have to not save. .

Advertisements

Budgeting 101: Start, Stick, Succeed

budget20-20istock_000041295790_large

Your budget is at the root of your financial success or failure. Having the right budget can be the determining factor in the outcome of your personal finances. Often times we hear about people who earn significant more than the median national income, yet they are struggling. These are the people who, regardless of what they make, manage to spend much more of it. I would think that people smart and fortunate enough to earn a good salary would know the importance of a budget. But knowing is half the battle. You must stick to you budget for it to work. If you bought a treadmill but did not run, you wouldn’t expect to lose weight. Budgeting is not that different.

Five ways you can stick to your budget

Be honest: The first step in having a successful budget is being honest with yourself. Don’t be unrealistic about how much money you’re going to make. Your overtime pay is not your salary. Hours can be cut at any time due to budgetary restrictions or new hires to fill the missing position. If you’re used to making an extra $5,000 a year in OT, don’t say your salary is $60,000. It’s $55,000 because the extra $5k is not guaranteed. Any budgeting that’s based on your OT pay, can create serious problems. My cousin once got a car repo’d after she included her OT income to determine whether or not she could afford it. When the company started cracking down on OT around the time of the recession, she couldn’t make her payments and lost the car.

Change your vocabulary: It is time that we learn to use the correct terms when we talk about a need versus a want. You don’t NEED these shoes. You want them. The only time you NEED shoes are when you have a hole in the ones you have. For example, just the other day my mom  bought a coat rack online. When it was delivered she said: “I’m so happy! I needed this.” When I said: “No you didn’t. You wanted it.” She tried to go into this lengthy explanation about how important it was for her to have a coat rack. That’s an artificial need. You went years without a coat rack. It’s not a need. Needs are shelter, clothing, food, health care and the things that go along with them like heating your home, etc. Everything else is frivolous.

Set specific attainable goals: If you make $12/hour and are drowning in debt, don’t say something vague like “I want to be a millionaire.” Instead, start small and specific. Maybe you can say: “I want to pay off my credit card debt.” The difference between those 2 goals is that one of them is realistic and specific while the other is vague and appears unachievable. This is not your mom saying you can be and do anything you want in the world. This is real life. You have to learn to start small and work your way up. I won’t tell you to shoot for the moon. You will not end up among the stars. You will be frustrated at your lack of success and give up.

Re-train yourself: Give up on instant gratification and do it immediately. “I deserve this.” You also deserve to not live in squalor in retirement. You also deserve to not be hounded by creditors. You deserve to save money on your loans by having a favorable interest rate and good credit. But instead, you focus on what you think you deserve now and not what you deserve in the long run. Instead, keep your eye on the prize. Invest in financial freedom and not stuff.

Live by the 48-hour rule: This is the best way to kill your inner impulse shopper. If you see something you want, sleep on it for 48 hours. If you wake up in 2 days and the excitement has worn off, then it’s something you can go without and you shouldn’t buy it.

Networking for the Introvert: Through Volunteer Work

Networking might sound like a cliche buzzword as much as it’s  thrown around, but in today’s world, you won’t survive without a strong network. Technology has managed to achieve making the world both big and small. Our interconnection has made the world a much smaller place since anyone can now reach out to anyone else via the internet. Just look at twitter for example. We can now have the ear of any politician, movie star or athlete. They may ignore us, but we can contact them. At the same time, the world has become gigantic in the sense that your competition pool has expanded all around the world.

No longer do people in your town have to settle for the skills of the smartest person in a 5-mile radius. They can now offer relocation packages to any bright mind around the world who speaks the language. Are you the sharpest butter knife in a drawer full of blunt tools? You could have gotten a job back in the 70s. Today, not so much. The candidates are the best and brightest and if they’re willing to move on their own dime, even better. Who you know still matters greatly. Humans are social animals and a personal connection with the right person will give you an edge all else being equal.

Everyone tells you that you need to network but no one how best to do it. There are various ways that range from the laziest form of networking which we favor since it doesn’t actually involve talking to people (LinkedIn), to the most involved forms. Personally, I am starting to favor the get-your-hands-dirty approach. I think that the most involved approaches to networking have the most successful outcomes. Sure, you won’t make 50 connections in minutes our hours, but you should appreciate the quality of your network over the size of the network.

But how do you do it and why is it more effective?

Starting out is easy. Non-profit organizations are short on resources and are always looking for free help. If you demonstrate strong leadership and work ethic early consistently over time, you could very well find yourself “rising through the ranks” and end up serving on a board. Whether you are the boots on the ground or one of the trustees, you are likely going to rub elbows with some important people. Volunteering aka free work is a luxury that few can afford. Those who are successful and feel the need to give back to the community and/or those who are independently wealthy and can afford to dedicate a great deal of time to making the world a better place through philanthropy are exactly the kind of people who you want to know. You also then have common ground to start a conversation.

This is a more effective way of meting people because you’re working along side each other and have unprecedented access to people you may not have been able to talk to otherwise. With the hierarchy gone, the conversation can flow. You also know that you have at least one common interest: the cause for which you’re dedicating your time and effort. If you’ve ever been to a meet up group, you’ll understand what I’m talking about. There are 50+ people in a room with nothing in common and are focus exclusively on getting the attention of the highest ranking person in the room. They have no ability to showcase their skill and sometimes, if you’re unlucky enough, they’re trying to sell you something as part of a pyramid scheme. You walk out exhausted having to talk to all these people and compete with them for attention. You leave with more frustrations than valuable connections as you start walking from group to group ruling people out that you’d never want to connect with. On the other hand, you can be productive, do something for the greater good and rub elbows with potential mentors who have similar interests as  you. Seems like an easy choice.

 

Home-buying Guide

 

first-time-home-buyers-north-shore-real-estate-212702

Buying a house is a significant financial and emotional investment. It takes maturity, both financial and mental. Unlike renting, you can’t escape an undesirable property with 30-60 days notice if you are dissatisfied. Here are some tips to make sure that you are prepared for a commitment of that magnitude.

Here are 5 tips to prepare you to go house-hunting:

Get your finances in order

Get a full picture of your credit by obtaining your credit report and fix any problems you find. Next, find a suitable lender and get pre-approved for a loan. This will put you in a better position to make a serious offer when you do find the right house. Many sellers will not even entertain offers from buyers who are not pre-approved.

Find a house you can afford

Other than your lender’s pre-approval, there are a number of online tools and calculators that can help you understand what you can afford. However, don’t forget, too, that there other considerations beyond the price, including property taxes, energy costs, and your daily expenses.

Hire a professional

Recruit a buyer’s agent, who will have your interests at heart (as required by law) and can help you with strategies during the bidding process.

Do your homework

Before making a bid, do some research. Come up with an asking price that’s competitive, and realistic. You don’t want to kill off negotiations with a low-ball offer anymore than you want to over-pay for a property that is not worth it.

Think long term

While you shouldn’t buy with the expectation that you will sell soon, you should also want to be in an area where you can maintain if not increase your property values. One of the ways you can accomplish that is by buying in a neighborhood with good schools and other desirable amenities.

Intuit & Personal Finance

Intuit which is a Financial Software company is the parent company of TurboTax, QuickBooks & Mint. I used TurboTax on and off for years and they just keep pulling me back. Their competitive advantage is in the details. The features are user friendly and very educational. As my taxes got increasingly more complicated, I stopped shopping around for the best price in tax preparation software and started looking for the best bang for my buck. I do have to admit that it does not hurt that USAA members get a discount on their product.

I am not an early adopter of technology or financial tools. Not because I don’t see value in  them, but because I prefer to not be a beta tester for something that might be full of bugs and vulnerable to hackers looking to steal my identity or resources. I prefer to let other people take the hit, have the company establish the proper safeguards and then decide whether or not the remedy is sufficient for me to take on the risk of joining. So while my friends used Mint for years, I stayed true to my excel sheet which was less vulnerable to threats since it was not connected to the internet. However, early last year, I decided that Mint was seasoned enough for me to entrust them with my data and it has made my life infinitely easier.

As if that was not enough, as I completed my taxes this year, I found out that anyone who submits their taxes using the self-employed version of TurboTax, gets a one year subscription to the basic version of QuickBooks. I am not one to turn down free anything, so this was an easy decision to make. In fact, the same username and password applied to the QuickBooks account, and it was simply a matter of accepting or declining the offer. The subscription renews with every “self-employed” tax filing. Which means that Intuit is now servicing my household finances, my small real estate endeavors and overall my taxes. They are truly a personal finance powerhouse for those who value a one-stop shop that helps alleviate the burden of financial planning.

Say NO to Tax Refunds

Tax Refund

Can we kill the habit that low to moderate income people have of celebrating tax refunds? I think we are old enough to know that no one gives anything for free, not even the government, regardless of what some people on the certain end of the political spectrum like to claim. Yet, we get up every January anticipating receiving that W2 in the mail as our ticket to run down to the next H&R Block office or to pay a visit to that guy who dances on the corner wearing a cheap Statue of Liberty costume made of polyester. All because we are anticipating a big windfall from the past 12 months of over payment.

While our tax code is complex, taxes themselves can be boiled down to a simple concept: You owe the government a certain amount of money based on services provided. Any amount you may have paid that was less than what you owed (based on income) will result in a tax bill the first business day after April 15. Any amount you paid that was in excess will be refunded.

The government determines what you owe based on a combination of factors, primarily your taxable income and your exemptions. While it is very difficult to determine exactly how much you owe and avoid a refund or a bill, I think the goal of the individual tax payer should be to reduce their refund as much as possible while avoiding a tax bill. I think a $1,000-1,500 refund is a reasonable margin. That equates to $80-125/month of over payments during the course of a year.

Why does any of this matter?

Ask yourself: Where can you get an interest-free loan? Who is willing to lend you $5,000-10,000 for 12 months with just a “thank you” in return? That is exactly what your big refund is: a interest-free loan to Uncle Sam to use for one year, while you paid interest on your own student loans, credit card balances and mortgages. If you get a $2,500 refund, this year, what could you have done with an extra $200/month? How much would you have saved yourself in interest if you were able to pay your credit cards off?

I think if we change our perspective about what a tax refund actually is, we will accomplish two things: 1) understanding the importance of reviewing and revising our W4s throughout the year as our situations change 2) realizing that refund checks are not “free money” that allow us to get tattoos and throw parties, but our own money that was withheld from us all year and we need to manage wisely.

Are You Maximizing LinkedIn?

photo

When I first heard of LinkedIn some years ago, someone explained it to me as the “Big kids’ Facebook”. That made me think of it as a social networking site for older people who have “adult” things to talk about. I promise that I don’t mean that in the XXX-rated sense. It did not take long for me to join the site before I realized that this was a simplistic view of a powerful platform that helps connect professionals all over the world.

Unlike Facebook, your ability to lurk on LinkedIn are limited to connections at the 2nd or 3rd levels. The controls in place also limit who you can contact and connect with, which is an attempt at curbing those who might want to artificially boost their network by sending out random connection requests. The website has matured tremendously since I first joined. You can now search and apply for jobs directly using the information on your profile, the recommendation feature has been enhanced, as well as users ability to build their portfolio through articles, posting media and publishing prior writings.

However, despite all the positive changes, many have not found LinkedIn to be as useful as it proclaims. Although I do not have any complaints about the site, I don’t think it’s fair for me to dismiss their claims. After all, I am not looking for a job, so if no one contacts me, I don’t see a flaw in the system. And even though I am not looking for work, I still receive “InMail” approximately every 3 months from recruiters with offers that I kindly turn down every time.

So for those who are looking, how can you position yourself to be noticed by all the right people?

Your Picture

Have a professional picture. Unlike a resume that does not require a picture, your LinkedIn profile is not complete without one. To someone who has never met you, this is their first impression of you. Your picture should portray you as you would look in a job interview. Your attire should not be too casual, your hair should be neat, your posture should be appropriate, and your face should be groomed adequately (no heavy night-life make up for women, no edgy facial hair on men).

The Headline

A headline is defined as: “denoting a particularly notable or important piece of news“. Your headline is not your life story. It should tell the reader the first and most important thing you want them to know about you. Don’t make jokes (unless you’re a stand-up comic), don’t leave it blank, don’t write about your childhood. Keep it short and to the point. Anything more or less shows that you can’t follow instructions. For example: “Oncology Nurse Practitioner with more than 15 years of experience.” is a much better headline than “Every day for the past 15 years, I’ve looked at death in the face through the eyes of my cancer patients. I have wanted to do this since my best friend died when I was 13.”

Summary

The name says it all. You are supposed to write a summary of your background and what makes you a valuable asset. Recruiters have a lot of prospects to consider. They will not look at every section of your profile unless they are very interested in you. You should write your summary with that fact in mind. Your goal should be that you say as much as possible to catch the reader’s eye and entice them to keep reading, but doing so in as few words as you can get away with.

For example, “I am an attorney in Massachusetts at a full service business law firm, located in Boston. Areas of expertise include real estate financing and development, including affordable housing development and financing. Projects include those with public funding sources and multi-tiered financing and tax credits.” is short enough for us to scan through it very quickly, however, we know a few key things about this person: s/he is a lawyer admitted to the Massachusetts Bar, with experience in business law and a focus on real estate, including affordable housing. If s/he started by telling us why they attended law school, we would have been bored and might have moved on before getting to the most relevant parts.

Experience

Your most recent job should have the most detail. While your past experience is relevant, they don’t care as much about the job you did 5 years ago unless it was a stepping stone that helped you transition to a higher position. If you used to be a teller and now you’re a lawyer, your reader will not put as much weight on your customer service skills as they will put on your litigation skills.

Connecting

Don’t be afraid to connect with people. If you’ve met someone and you had a meaningful professional conversation with them, chances are they will remember you, as long as you do it shortly after you had the opportunity to talk to them and they still remember you. For example, my 3 most recent connections are with people who I talked to at length about things we were passionate about, then within a week I received request from all of them. LinkedIn is the 21st century business card. It is the best way to stay in touch. I happily take someone’s card, however, eventually it starts to pile up and create clutter and I am tempted to recycle them. However, I can have 500+ connections and never have to worry about having to find a way to maintain tiny rectangular cards in a drawer or folder. This will help you build your network and will make it much easier for you to reach out to people if you need to.

Skills

Include your skills in your profile. Updating your skills not only allows users to see who else shares their skills, but it gives your connections the ability to endorse your abilities.

Be Professional

LinkedIn is not Facebook. Your ability to restrict what others see is limited. In fact, the website controls it as part of their marketing to get others to sign up. However, your profile and activity are relatively wide-open to thousands of people you don’t know. Do not post anything that you would not want your boss or potential boss to see. Stay away from political conversations, don’t discuss religion and do not complain or vent. It is important to understand your audience when you interact on a professional networking platform. Your reader is looking to learn more about your skills and network, either because they want to hire you or they want to connect with you. If you appear to be unstable, controversial, or vengeful, you will not get a lot of positive attention.

These are just some of the things that I can think of that will help improve traffic as well as the quality of the mail you reach. Take the time to review your profile and see what changes you can make today to get the right call tomorrow.