Money and Finance Articles

Learn to live a life of financial freedom and browse money-saving tips and tricks to stretch your dollar further than ever before. Browse dozens of great articles, hundreds of tips, and full tutorials to take control of your pocketbook!

From Simple Tips to Develop a Saver’s Attitude to understanding the difference between Paying Down or Paying Ahead to understanding When and Why to Give your Kids an Allowance, we have articles covering every money and finance question you have!

You can do it, we can help, and it starts with the articles here!

5 Home Buying Mistakes That Will Make You House Poor

Buying a home is likely the largest purchase you will ever make. This is not the time to make mistakes that could easily plunge you into a financial situation you cannot afford. 

During my 18-year career as a real estate broker, I learned a lot of things but none as valuable as what not to do! I didn’t learn this in a seminar or while studying to pass the licensing exam. I witnessed real-life situations where buyers did really dumb things related to buying real estate—buyers who then went on to regret the decisions they’d made.

Avoid these five home-buying mistakes and you will avoid getting in over your heads with a house you cannot afford—and save yourself many thousands of dollars and heartaches in the process.

 

Young couple looking at their dream house

Mistake: Allowing a lender to determine how much you can afford

When you meet with a lender to get pre-approved for a mortgage, that lender is going to tell you how much house you can afford and how much money the company is willing to lend to you. Understand this: He or she is concerned about only two things: 1) Your ability to repay the mortgage and 2) the size of his commission.

This lender wants to steer you into the biggest mortgage possible. Ignore that number. It is not based on what you can afford because the lender has no idea what you can afford.

You need to set your own housing budget before you ever sit down with a lender or other real estate professional, which is based on your specific financial situation and lifestyle. And that housing budget should be realistic enough so that you can afford to make progress on all your other important financial goals like maintaining a healthy emergency fund, getting debt-free, and funding retirement accounts. Read more

How to Live on a Budget and Love It

For many years I wouldn’t have anything to do with a budget because I couldn’t stand the idea of anyone—or anything—telling me how to spend my money. And where did that get me? Into one big financial mess.

 

Looking over the shoulders of a happy couple creating a budget they can live on and love

 

Every month, when I ran out of money, I would turn to MasterCard and Visa for a bailout. To me, any available credit was the same as income. It was my money to do with as I found necessary. Really bad idea.

What I learned from going through that experience and finding my way back to solvency is that, as much as we may loathe it, a budget is the ticket to financial happiness―not the straitjacket I feared it would be. I’ve come to prefer calling this a “spending plan” rather than a  budget, but honestly, the terms are interchangeable. It’s just a way to pre-spend your income on paper first.

A good spending plan gives every dollar a specific job to do. Once you have it just the way you want it, the plan becomes a handy road map for keeping your finances on track.

ALSO: Getting Back to Normal After a Disaster

So, take a deep breath and let’s walk through the basics for how to create a successful budget that you can love.

Step 1

Write down your total take-home monthly income

This is the easy part. Jot down what you earn—what you see in your paycheck. Because many expenses are billed monthly, it makes good sense to use your monthly income to create your budget.

Pro-tip

Here’s a cheat sheet to help you quickly convert your net take-home pay to your average monthly income:

  • paid weekly: multiply your weekly net income by 4.333
  • paid every other week: multiply your biweekly net income by 2.167
  • paid twice a month: multiply your semimonthly net income by 2
  • paid quarterly: divide your quarterly net income by 3

 

Step 2

Write down your fixed expenses

Start with fixed bills like savings, rent, mortgage, car payment, credit card debt, insurance, then factor in other monthly costs that are always the same. These are your essential fixed expenses. 

Step 3

List your variable expenses

You know you’ll have these bills, but the amounts vary. Examples are your phone, utilities, food, household expenses, gasoline, medication, public transportation, shoes, and clothing. These are your variable expenses and you can assign an estimated amount to each based on past experience, rounding to the closest $10.

 

Step 4

List reasonable amounts for nonessential expenses

This includes entertainment, eating out, hobbies and other ways you spend money on a regular basis.

Step 5

Find the extras

Go to your checkbook register, credit card statements, Quicken reports or what have you, to see what expenses you’ve left out. You’ll likely see items for car maintenance and repair, gifts, vacations, Christmas and holidays. For items that do not recur monthly, determine the annual cost, then divide by 12 to see how much you should set aside each month to anticipate that irregular expense.

Step 6

Figure out your totals

Add up your expenses, then subtract that amount from your income. Ideally, you’ll come out in the black, with at least a little money left over. But if your expenses exceed your income, you’ll see a negative sum. Don’t panic—this is just the start of an ongoing process.

Step 7

See where you can cut

If you came up short, go back to your monthly expenses and see what you can get rid of. Look first to your nonessential expenses. Which items can you remove altogether for a while (eating out seems like a fine target; perhaps hobby expenses, for a season)? Keep going through the list, making adjustments until your total expenses are less than your income.

MORE: 23 Ways to Chop Your Grocery Bill

Step 8

Follow your spending plan as closely as possible

Track your spending every day by writing down what you spend. Does it match up with what you planned in your budget for this month?

Take notes and research ways you’ll be able to do even better next month. At month’s end, add up your actual spending and compare it with what you planned. Use this information to create the next month’s Spending Plan.

Even if you find yourself in a particularly tight financial position right now, take heart. As you pay off debts and find more ways to cut expenses, you’ll begin to sense a significant loosening of financial pressure. Soon you’ll be ready to add new categories to your spending plan for things like saving for a new car, home improvements or going back to college.

The sooner you get started, the sooner you’ll be on your way to reaching financial freedom.


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Getting Back to Normal After a Disaster

Life on earth has never been perfect, but you’d have a hard time convincing some people of that. It’s not that they are ignorant. They have selective memories.

Perhaps you can identify if you long for the way things used to be—before the disaster, when life was predictable; when mortgages were simple, retirement accounts moved in only one direction (up) and students could carry their 100-percent-financed college degrees straight into six-figure jobs.

Young couple in distress and worry for the way things used to be

Now that it appears things are no longer quite so perfect, you’ve put your life on hold. You’re anxiously pacing the floor trying to hold on until the insurance claim pays out, you’re called back to work, real estate sales bounce back, your loan modification comes through or some debt-settlement scheme that returns your life to the “perfect” way it was.

Here are some immediate ways to bring order and calmness back into your family life after the chaos and confusion that follows a disaster.

Reconnect

You can’t get through a crisis alone. Since we all were impacted differently, it is vitally important to talk about the stress and pressures you have experienced with the people closest to you. Reach out to friends and family. It will empower and help both of you.

Accept what you cannot change

As hard as it is for some of us to accept the fact that we cannot control everything, that is the truth. If you’ve lost your home, a loved one, or filed for bankruptcy—as terrible as these events have been for you—you cannot change what has happened.

Read more

Common Money Myths and How to Stop Believing Them

The wedding was complicated and expensive. But it’s over and you are ready to settle back and enjoy your new life together. I’m here to warn you about some common money myths that newlyweds have been known to bring with them into their marriages.

But wait. You’re not a newlywed? No one is immune to believing these myths. No matter your marital status—learn these lies about money so you can stop believing them. It will improve your life.

 

 

Myth: Double the income, half the expenses

This is what I call newlywed fuzzy math: Merging your lives and incomes into one household is the equivalent of getting a raise. It goes like this:

When we live together, we split the rent or mortgage payment; we share the utilities and household expenses. We’ll have twice as much money.

Don’t believe that, not for a second. While there may be some truth in sharing expenses, the outcome is not what you think. Been there, done that, trust me on that. More likely, more money will immediately lead to more spending. Without a solid plan, that will quickly lead to more debt because you’ll use that money for a down payment on stuff you really want.

Read more

Your Consumer Behavior is Keeping You Broke

Do you know what I love? Walking into my supermarket the day after Thanksgiving and hearing the best Christmas music ever. Yeah! And if I wasn’t in the mood to bake Christmas cookies before I got there, just hearing that lovely music changes everything. Right there, that proves I am a quintessential, typical, impulsive consumer. That retailer’s got my number.

 

Woman with debt worried about bills to pay

 

While I don’t want to stop loving music (I swoon to the Beach Boys during the summer months because this store has an uncanny way of knowing what I like) what I have changed is the way I hear it while loading up on groceries. They’re doing this on purpose, by design because retailers have irrefutable evidence that the right music can result in increased sales of targeted products to impulse buyers.

The Journal of Scientific Research suggests that loud music gets people to move through a store more quickly where slower and quieter music makes them stay longer and spend more money. Classical music at a restaurant makes people buy more than does pop music or no music at all. Music is like tasty bait retailers purposely thread onto the end of a sharp hook.

Read more

6 Simple Ways to Develop a Saver’s Attitude

Cutting expenses is the way to spend less so you have money to save. But unless you are actually putting that money into a safe place to be held for some future use, you’re not really saving at all. You’re just spending less.

Even if you cannot save a great deal of money right now, that’s okay. It’s not the amount you save that matters as much as the fact that you make saving money a regular habit.

Stacks of $5 bills showing the result of a saver's attitude

Grab all the discounts

Many mortgage lenders and student loan companies offer incentives for their customers who set up automatic payments for their monthly payments. It’s worth knowing you’ll never be late, and if you can get even 1/4-point reduction in the interest rate, over time that will really add up to be something significant. Automobile insurers give discounts to good drivers, non-smokers, good students, cars with particular safety-equipment and any number of other situations. But you have to ask. Make the call. Then save the difference.

Get fanatic about coupons, coupon codes and getting cash back when it’s available. But don’t stop there. Once you have that discount, be disciplined enough to actually save that $.50 or $5.00 or whatever it is. Stash that cash. Rakuten, formerly Ebates, is the best way I know to keep all those small cash-back amounts in a safe place. If you don’t have an account and are not adding even the smallest amounts to it every time you shop, you’re really missing out. Open a Rakuten (Ebates) account here, then remember to use it.

MORE: Ebates—an Awesome Way to Build a Cash Stash

Set dollar limits

Okay, so this sounds curiously like “budgeting.” It is. Deciding ahead of time the amount you are willing to spend for anything is to impose important limitations on yourself. Maybe it’s time to let your inner parent out—that part of you that knows how to demand discipline and good behavior.

MORE: How to Create a Household Budget

Read more

What to Do When You Can’t Pay All Your Bills

You’ve lost your job or for some other reason don’t have enough money to pay all of your bills. Which bills should you pay first and which ones can slide for a while?

 

 

Couple stressed and worried looking at bills

 

Here’s a basic rule of thumb according to the Boston-based National Consumer Law Center in its book, Surviving Debt:

“Always pay essential expenses and debts first. If any money is left, you can decide which nonessential debts, if any, to keep in your expense budget.”

An essential debt represents a serious obligation that if not paid could produce severe, even life-threatening consequences.

Do not make payments on nonessential debts when you have not paid essential ones even if your nonessential creditors are breathing down your neck. Keep your priorities straight.

Please do not misunderstand! I am not suggesting that you should just walk away from your financial obligations. You must pay your creditors, you must pay your bills. To not pay them is not an option.

Of course, it is not ideal to let some of your bills slide for awhile. But your situation is what it is. Your resources are severely limited. In time, as things improve (they will) you will be able to get caught up completely.

But for now, you need to know how to get through this month.

Once you’ve determined which bills are essential, prioritize them according to the severity of the consequences you will suffer for non-payment.

Here is a guide to follow, listed by priority. Read more

19 Realistic Ways to Make Money Online

For all the convenience and access to information that the Internet offers, the ability to make money online, honestly and legitimately just might be one of the most useful. At a minimum, you need an Internet connection and computer. Or for some jobs, just a smartphone will do.

The challenge is to wade through all the sales pitches for free get-rich webinars to find authentic ways to make money. The opportunities for online jobs are there. But it’s not like winning the lottery. Most require hard work and dedication before you get paid for your time. But isn’t that true of just about any kind of job? None of what follows will make you an overnight millionaire, but each represents a legitimate way to earn extra money online.

 

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