Money Beagle

Happy Birthday to me!  I turn 34 tomorrow.  Between that and the holiday weekend, I will be taking a day or two extra between posts.

Here are some personal finance articles I enjoyed this week that I thought I would share.

• Shtinkykat discussed some ‘manipulations’ she makes to her finances to calculate her net worth.  I do the same thing, where I mark certain money as ’spent’ if I know it’s earmarked for something specific.
• Uncommon Cents told a story of poor customer service received from Sprint.  I have actually had the opposite experience lately, but it goes to show that it’s hit or miss!
• Engineer A Debt Free Life explains how eating baked beans saves over $1,500 per year.  Maybe not the exact approach that’s best for everybody, but it shows how the little changes can add up to big savings!
• All Financial Matters used a day at the outlet mall to remind himself why he and his wife have money.
• The Digetari Life wants to work smarter, not harder.  If only I could figure this one out, too!
• Blunt Money faced a situation I’m sure many of us have run into.  She bought some bad produce and wants her money back.
• The Simple Dollar  presents nine things to do when personal finance becomes overwhelmingly tough.
• No Credit Needed caps things off with an uplifting reminder that taking control of your personal finances is possible.  A nice way to end the week!

Bonus:
This isn’t a personal finance blog entry, but it’s such a good article that I wanted to post it:

• Yahoo Finance posts 30 things you should never pay for, because you can get them for free.

Have a great holiday weekend!

It’s all over the news that Gustav is headed towards the Gulf of Mexico and could impact New Orleans.  Yikes.  This would be the first major test for the city and its levees since Katrina.  I hope for the sake of everybody that the storm fizzles, but it may not.  If it does hit, everybody is hoping that they learned their lessons from Katrina, and that they are prepared in the form of stronger levees, improved evacuation, and more efficient response afterward.

The same theory holds for personal finance.  We all make mistakes and have things go wrong.  Sometimes the mistakes are small and easily recovered from.  Sometimes, though, they are major events that might have led to a Katrina-sized mess such as bankruptcy or foreclosure.  No matter the size, it’s important to learn from past mistakes when it comes to finance, as it will help your future planning and help avoiding future mistakes.  This can apply to so many things:

• Debt - If you got into debt, make sure you plan on how to get out of it, but also look at how you got into it in the first place.  This will help you avoid making the same mistake.
• Savings - If you got stung by an emergency, look at how to recover, but also understand what you might have done differently, and start acting on that before the next emergency hits.
• Investing - If you made poor investing decisions in the past, make sure you understand what happened so you don’t repeat the same mistake over and over

There are so many other things that this can apply to in the personal finance world, but it’s advice to always remember.

I’m trying to get in the habit of blogging every day.  I haven’t decided about weekends yet, but I would like to get at least one post every day of the ‘work week’ for sure.  I think that this will lay the foundation for a successful blog, because once it becomes part of my life and daily activities, it will be second nature.  Regular posts will get people in the habit of coming back to read my blog, at least that’s the plan!

I was thinking about this concept, and it led me to think that there are habits in personal finance which can help improve any number of areas, including debt, budgeting, and spending, just to name a few.  Here’s a few ‘habits’ that I came up with that help me keep control of my personal finances.  Let me know if any of these help you too.

• Save money by getting in the habit of checking your account balances every day - If you check your balances regularly, you’ll see if you’re coming close to getting an overdraft fee.  You also might look and realize you’ve been spending a bit too much.  How many times have you gotten a credit card bill or bank statement and not realized how much you spent until you saw the balance?  If you kept track regularly, you can catch this sooner and curb your spending before it hurts you.
• Become a pro at budgeting by creating and sticking to a payment schedule - Create a list  of recurring payments.  Don’t just look at monthly payments, but look for those that might come around once a quarter, annually, etc. Estimate what the payments will be and when they’ll be due.  Organize them in calendar order.  This will ensure that you’ll never forget about them, and will also get you prepared so the payment due doesn’t sneak up on you.
• Use automatic payments - Just about anybody accepts payment online, it seems.  You can even have recurring payments automatically deducted so that you never have to think about it.  This is great! I love the technology that’s gotten us that far.   I would sign up for these as it can simplify your life.  But, there’s a catch.  Don’t forget to…..
• Prevent disasters by verifying automatic payments - Automatic payments are great….until one gets missed.  Whether the bank messes up, the system went down, you didn’t have enough money, it doesn’t matter.  Once that payment is missed, there’s a problem, and a missed auto-pay often takes longer to notice, leading to the possibility of bigger problems.  The sooner you realize it, the sooner that you can correct it and prevent a headache.  Don’t always assume the payment goes through.  Get in the habit of verifying your payments.

Once you do these things regularly, they’ll become habit, and you will find yourself doing them automatically.  These are just a few things that you can do to make sure your finances are in your control!

In an earlier post, I discussed how I was thinking ahead to when I’d be buying our next car, and how I was concerned about having a payment.

That got me thinking about the loan, and a piece of advice popped into my head that I wanted to share that I think is one key to managing your car loan: When buying a car from a dealership, shop your loan around!

Most dealerships will set up financing for you and will be more than happy to do so.  Why are they so happy to provide this service?  Because they make money from it!  I know, a crazy concept, but it’s true!!  They will either get a cut of the loan or mark up the loan to add some profit for themselves.  Hey, you can’t really blame them, but you don’t have to line their pockets either, and all you have to do is shop your loan around yourself.

Make sure to know this when you’re shopping for your loan.  Here’s two situations where I’ve done this in the past:

• When buying a used car, I bought from a dealership and knew I’d have to finance it.  Once I had the estimated the amount I was financing and how long the loan would be for (it helps to have an idea of these things), I contacted my credit union and bank and got their rates.  When I went back to the dealer, I asked what my payment would be, and what the interest rate was.  It was, as I expected, higher than the rate from my credit union.  So, I let them know that I had an opportunity for a better rate, showed them the paperwork, and my salesperson disappeared to the back room.  When he came out, he offered that they would match the rate.  I went with them, at the same rate I found, and drove away in my car that day knowing I’d save some money on my loan.
• A few years later, the same situation repeated when I bought a new car.  This time, however, the dealer emerged from the back room and sadly informed me that they couldn’t match the rate.  So, it took me a couple of days longer to get the financing worked out between the lender and dealership, but I still drove away feeling like I was paying the lowest interest rate I could for my car.

The lesson is to make sure to shop your auto loan around!   You’ll need to provide the bank some information, some of which you may not be exact on, but they should be willing to work with you if they want your business.

I’ve found that you’ll generally get better interest rates with institutions that you do business with than those to which you’re a stranger.  I’ve also found that credit unions often have better interest rates than banks.  But, these things aren’t true 100 percent of the time, so make sure to shop around.  It only takes a couple of hours but can save you hundreds, if not thousands, over the life of your car loan!

There are many other things to know when it comes to shopping for your car, and I’ll get into this deeper with time, but this is a quick bit of advice that I know can be overlooked!

With warm temperatures, beach days, and trying to sneak in those last few BBQs, it seems crazy to think about the winter ahead, doesn’t it?  Well, it shouldn’t.  Two recent news articles show that we’d better start thinking about the winter months now, and more importantly, how to save, budget, and plan for those cold months.

First, the folks at USA today predict a rise in heating oil and natural gas costs. This isn’t good news and it only turns into a double whammy when you look at the second article from MSNBC, which discusses how the Farmers Almanac is forecasting a colder than normal winter for much of the country.    If the first article is correct, prices will go up even if it’s a normal winter.  This, in turn, means that prices will go up much higher if it’s a colder winter, simply because of the extra demand that will be placed for the heating oil and gas used to heat our homes.

So, rather than wait and see and get shocked later, consider a few ideas to help combat those possible increases, especially now while it’s still warm enough to do some of these ideas comfortably:

• Add extra insulation to your attic - Our home, which is less than ten years old, didn’t have the amount of insulation required by code today.  Adding some blown-in insulation is a one-day, two person,  do-it-yourself job that will typically pay for itself within 2-3 years.  With my father-in-law’s help (OK, he did most of the work, I helped), my attic received an extra 8 inches or so of insulation this past spring.  I’m looking forward to seeing how this helps our usage this upcoming winter.
• Caulk around the windows - I’ve heard it said that if you have missing or cracked caulk in all of your windows, it can have the same effect as leaving 1-2 windows wide open all winter long.  While that feels good in the summer, it’s sending shivers down my spine just thinking about an open window in the middle of a Michigan snowstorm.  It’s easy to remove old caulk with a putty knife and lay some new caulk.  If it’s been 5-10 years since this was last done, chances are it’s time.   It helps if you do both the inside and the outside.
• Install a programmable thermostat - The heat doesn’t need to be on when everyone’s at work/school for the day.  It can also be turned lower while everyone is sleeping and under the covers.  This can be done automatically, and one of these devices will typically pay for itself in under a year.
• Plan on turning down the heat - Every degree you dial down can reduce your usage by 2-3%.  We have ours set at 68 most of the winter (lower at night).  This is cool, but your body will adjust, especially if you make the adjustment when you first turn the heat on for the season, as well as….
• Buy a sweatshirt and slippers - Many people refuse to turn down the heat, but then walk around in shorts, a t-shirt, and barefoot!  Add a few layers and you won’t miss the few degrees you give up on the thermostat.  You’ll get the best selection on these items now since people aren’t thinking fall or winter….yet!
• Budget for higher costs - If you budget for your costs, first, congratulate yourself for doing so (and if you don’t, keep reading MoneyBeagle!).  Second, make sure that you account for a possible increase when you plan.  Don’t just assume that you will spend the same amount as you did last year.  Leave yourself a cushion for the possible increases in price and usage.

There are many other ideas that can be done to save energy and reduce heating bills.  I’ll talk about a lot more of these as it gets colder, but the above are things you can easily do now that could be easier in warm weather, and that you’ll be thankful for later.

Here are some personal finance posts that I enjoyed reading this week:

• Blunt Money discusses the financial impact that will come after her son gets his drivers license.  I liked this post because it shows that she is teaching her son the right things about personal finance, instead of just handing him the key to a car.
• Free Money Finance discusses the advantages of a whole house fan (also known as an attic fan).  This is something I remember my grandparents having and have often wondered about.
• Funny Money wonders if our national debt will end up causing a mess similar to the current mortgage meltdown.
• Make Love Not Debt discusses the importance of making sure that married couples have the same financial goal after their wedding.

MSN Money has an article on the incredible shrinking Doritos bag, discussing how many companies are making their package sizes smaller so that you get less product but pay the same price. It’s a way for them to raise prices, without actually raising prices.

I’ve noticed it in a few areas just recently:

• Ice cream - Soon, the half gallon of ice cream will be a thing of the past, as many ice cream makers have cut their sizes from 1.75L to 1.5L of product per contianer. That’s a 14% reduction in what you get. Pretty big price increase, wouldn’t you say?
• Cereal - I remember when boxes of cereal used to have a hard time fitting in the cupboard. Now, they’re getting smaller and smaller every year, it seems. Paying $8 or $9 for a box of cereal seems unimaginable, doesn’t it? But, really, many people probably are to get the same amount of cereal that they did 5-10 years ago.  That makes the cheaper generic brand look a little more appealing!
• Potato Chips - When my favorite chips got re-formulated to a ‘No Trans Fat’ recipe, they put three-quarters of an ounce less chips in each bag.  They made a big deal of pointing out the lack of trans fat, but I guess they ran out of room because they didn’t mention the reduction in the bag size!

So, it made me wonder, how far can they go? Will the cereal aisle of the future be one day be stocked exclusively with the tiny boxes that are now ’snack size’? Will the Ben and Jerry’s quart become industry standard?  Will they shrink the grocery carts so that it appears as if you’re still pushing around a full basket?  Yikes, where does it end?

My wife and I were talking about the future and how eventually we’ll need to purchase a new car (note: it may not be ‘new’ new but definitely new for us).  The main reason for this is looking down the road when we start our family, that our current cars are not adequate for a ‘family car’.  Right now, both of our cars are paid off, and I love that!  So, the prospect of adding a car payment back gave me concern.  This seemed like a negative thing, but as I thought about it today, I began to realize that my concern was actually a good thing.

How can that be?

It’s easy.  To start, here’s the history of cars and payments we’ve had:

• Shortly after college, I traded in my seven year old Saturn for a lease on a Chevy truck with monthly lease payments under $200;
• After the truck lease was up, I leased an Olds Alero with lease payments slightly over $200;
• After the lease for the Alero was up, I got another Alero, this time buying it, with payments around $250;
• At this time, I set caution to the wind and added a ‘fun car’ that I had for a couple of years, but had payments around $500 (yes, I *was* paying around $750 a month in car payments….what was I thinking?!?)
• I sold the fun car and also paid of my Alero, which I’m still driving
• Shortly after, my then fiance (now wife, of course) and I bought her car, so we added the payment back in.
• Now, it’s paid off.

Well, the reason being concerned about having a payment is a good thing, is because I’ve never really been concerned about it before.  I’ve always just sort of accepted that I’d have a payment.  Even when I had two payments, I wasn’t that concerned!  I just expected that a car payment was a given.  Now, I realize it doesn’t have to be.  That’s a good feeling because it shows that I’m making progress in my thinking and planning for our future?

So, we’ll have a car payment, but there’s good news and bad news.

First, the bad news. Well, of course it’s that we will most likely have a car payment.  We’ll have a significant down payment when that time comes.  It will be made up of the proceeds from selling my car (it’s older, so we’ll sell that first) and money that we’re saving specifically for a new car.  Unfortunately, it probably will not be enough, so we’ll have a car payment.

But, next is the good news. The amount we’ll finance will be relatively small.  Smaller than any car loan I’ve ever had.  We definitely won’t be upside down (owing more on the loan than the car is worth) and the time we’d be making payments will be short.

Long term, I think it’s possible to build up where you have smaller and smaller loans on cars until eventually, you can pay cash.  That’s where we’re headed.

So, as you can see, I’m concerned about adding a car payment.  And that’s a good thing!

I stumbled across personal finance blogs about a year and a half ago.  I can’t remember how it happened, exactly, but through some web surfing, I found one, found another.  Eventually I stumbled across pfblogs.org, which aggregates many personal finance blogs.  This led me to realize that there were a lot of these ‘money blogs’ out there…and I was hooked!  I began reading a few different blogs faithfully, and over time dropped some, added some, watched some go stagnant, and have gotten more and more immersed in the Personal Finance blogging world.

But, since I started reading blogs, the thought occurred to me, slowly at first, that I could enjoy writing a blog.  Here are some of the reasons I came up with:

• I enjoy writing - I have always enjoyed writing my thoughts down and engaging in conversation about topics that interest me.  In fact, many friends and co-workers who have had to read many a long e-mail can attest to the fact that I love to write! I promise, I’ll try to keep the blog from rambling too much!
• Personal finance has been an interest of mine for many years - Over time, I’ll go over some of my background and history on such things as money, budgeting, investing, retirement planning, and the like, which have all been a part of my life for nearly as long as I can remember.
• I love to educate and teach - I hope that my blog becomes a tool that helps people and can teach people about personal finance.  In fact, I’ve long said that if I could plan the rest of my career out any way I wanted to, I would work until I’m about 55, and then spend 5-10 years as a college professor / teacher.   This sort of gives me a head start!
• Some things can never be said enough - There are so many people that, for whatever reason, don’t know about money, that there’s always a need for resources and tools.  I can’t promise that every idea I have here is going to be original or that nobody else will have talked about it.  Quite the opposite, I epxect.  But, I hope to put my own unique spin on what I talk about, offer my own viewpoints, and  through it all hope that I’m reaching people and helping with personal finance.

After the idea  of my own blog grew bigger and bigger, I began reading other bloggers tips on how to get started.  I talked to my wife about it and she was immediately excited about the idea.   We came up with the name, and yada, yada, yada, here we are!  I should mention that it’s ironic that I now have a blog, because I remember a few years ago when I heard the word ‘blog’, I thought, “Oh, what a dumb word.  That’ll never catch on.”

All I can say now, is: “Oops!”

So, back to the original question, what do I hope to get from blogging at MoneyBeagle?

• As mentioned above, I hope to educate and teach.  It would mean a lot to know that I’m helping or making a difference in someone’s life (hopefully the blog grows and it becomes many someones, but I’ll start small);
• I also hope to learn - I will be the first to admit that I don’t know everything about personal finance, and have made mistakes.  I look forward to learning from other people, whether it be other bloggers, readers, or new doors that open as a result of blogging;
• I hope to build a network - It never hurts to know people who share the same interests.  Whether it be fellow bloggers, people in the area, or in the industries I work in, making contacts is always a good thing;
• I hope to have fun - If I ever stop having fun with my blog, I’ll stop.  So far, it’s been less than a week, but I get more and more excited about it all the time, and can’t wait to see it grow and evolve.

So, here starts MoneyBeagle.  I can only hope that this is the start of something amazing!  Thanks for reading.

An MSNBC.com article outlined how one Michigan company makes it mandatory for employees to get one-on-one financial planning.

The company mandates up to an hour of money education as a way to help its workers become more knowledgeable about the firm’s 401(k) plan, and also learn about debt management, college savings, and other personal finance topics.

Some might argue that this is ‘none of the employers business’ but I think it’s a great idea.  The paragraph above touches on three points: retirement, debt, and savings.  Let’s briefly look at each of these.

• Retirement - According to a Bankrate survey, only 28 percent of workers feel that they’re prepared for their eventual retirement.  Hmm, so it seems at least 72 percent of workers could instantly benefit from some help.
• Debt - According to another Bankrate fact sheet, over half of Americans don’t pay their credit card balance off monthly.  When you figure that many credit cards charge interest rates of nearly 20% (or more), this is taking a big chunk of money away from people.
• Savings - As a nation, we have been hovering around (or below) a negative savings rate, which means simply that we spend more than we earn.  This can’t go on forever, and it’s a big reason why we are seeing some of the messes in the mortgage and credit industries.

I think that this benefits the employee, and it also benefits the employer.  Think of it this way, if an employee is facing any one of the situations above, chances are they spend time having to deal with it, or there is stress that impacts their job performance.  If an employer sponsored financial adviser can help reduce that burden (and the associated stress), it not only helps the employee gain better control of their finances, it helps the employer gain a more productive worker.  Everyone wins!