On the surface, they can seem like an oxymoron. Most of the time we squeeze every last cent into the piggy bank, because we know without discipline we’d likely be neurotic spendaholics who are worth more dead than alive. So what about charitable giving? How can we say to save as much as possible, while at the same time handing over money with no strings attached?

Is there any financial logic we can use to justify charitable giving as a responsible characteristic of financial discipline?

Give So That You Receive

Economists, and particularly activists, often try to argue that there is personal gain in giving. For example, “give to cancer research and help find a cure, because one day, you might get cancer yourself.”

I’ve heard that there can be truth to this argument. One of my former business professors worked on research that found that companies who practiced social responsibility often performed better in times of economic hardship. I would not wake up surprised tomorrow if it could be proven that when charity goes around it also comes around. However, I do find this motivation unsatisfying.

I have no problem with people who give in the hope of receiving some unknown, future benefit. However, the idea of giving to receive just doesn’t sit well with me.

Give To Achieve a Goal

If you are like me, you are looking for another argument for how giving can also be financially sound. You might find my next argument more to your liking.

Let’s face it, money isn’t an end, it’s a means. A means to what? That’s a much bigger question for a different post. Money is a means to achieve the goals we want: the dream vacation, the early retirement or the kid’s college education. If it’s all about fulfilling goals and avoiding spending that gets in the way of those goals, then making your charitable giving a personal goal makes perfect sense.

Why couldn’t it be this easy? Giving can be as enjoyable as any other activity, so long as giving fits into something you feel passionate about.

If you want to give to receive or give as an end, it doesn’t matter. The next time you want to open your wallet to a cause, go ahead. Charitable giving does make perfect financial sense and can even help promote personal financial discipline.

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What everyone thinks about while in summer classes

For many college students out there, summer is a time to find a job and reconnect with old friends from back home. I used my summer vacations during college to work at a factory so that I could have money for books and other expenses for the upcoming year (as well as to pay off some credit card debt I amassed). But for some students, taking classes over the summer may be the ideal solution to your situation. I know, taking more classes doesn’t sound like a whole lot of fun, but there are some advantages to it.

Advantage #1: Get Caught Up

For those that might have changed majors at some point in college, dual majors, or student athletes who took a few less classes during the season, summer courses offer a great way for you to get caught back up. By not taking summer courses, you might extend your college career another one to two years. While this doesn’t sound too bad considering how much you enjoy college, you may regret that decision when you have to pay for two more years of tuition. If you are in either of the situations listed, you may want to consider summer courses.

Advantage #2: Get Ahead

Maybe you are in the opposite end of the spectrum from those trying to get caught up. Maybe you want to get ahead and graduate a semester or a year early. Taking courses over the summer will definitely help. It doesn’t matter what your motivation is, whether it be lower overall cost or just want to move on with your life, summer courses could be your solution.

Advantage #3: Lower Costs

Obviously graduating in three years as opposed to four or even five years is going to save you money. But in addition to that, many colleges offer summer courses at a fraction of the cost of fall or spring classes. In addition, schools will reduce the cost for living on campus over the summer or even give it away for free. When you add these two expenses up, you could save thousands of dollars.

Advantage #4: Availability

When I was in college and registration opened for the upcoming semester, seniors were able to register first, followed by juniors, then sophomores and lastly freshman. Many times as a freshman and a sophomore, the classes I wanted to take were closed by the time I could register. Summer courses were a way to take those courses without having to wait for them to be free. Since so few students take summer courses, you are almost guarantees to get into the classes you want.

Final Thoughts

These are just a few of the advantages that taking summer courses can offer you. The main reason many students do take summer courses is to get caught up because of changing majors, dual majors or being a student athlete. There are those too that want to save money and/or graduate early. In my next post, I will look at the other side of summer courses and list some of the disadvantages you should take into consideration before making your final decision.

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Not only will two-thirds of us be buying for our own mothers; half of us are also buying for our wives. It’s not a surprise that the average guy is budgeting over $200 for the two most significant women in our lives.

If you are wondering what your peers are spending their dough on, here’s a look at the average guy’s budget.

Card

Roughly 4 out of 5 of us are planning on getting a card for the moms in our lives. That makes the greeting card industry the most used for the mom celebrating male. It’s also one of the least expensive. Since most will be purchasing at least two cards, our average card budget is a mere $7.07.

Flowers

Let’s be honest. A greeting card is better than nothing, but most of us expect that a card isn’t going to be enough. That’s why 3 out of 4 men are headed to the florist to make flowers the second most popular gift for mom. With an average budget of almost $22 total, flowers seem like a reasonable gift choice and a frugal one as well.

Out to Dinner

If the average guy’s budget was $30, this article wouldn’t be all that interesting. It’s the big purchases that really make the average budget so extreme. One of the more expensive items is taking mom out to dinner.

Slightly less than 2 in 3 guys plan on a night out with mom. However, the average budget for men headed out to the restaurant is $55, or nearly twice the card and the flowers put together. Perhaps, making a meal for mom would be a little gentler on the wallet?

Jewelry

Diamonds are a woman’s best friend, or so they say. Men definitely believe it. Slightly less than 1 in 2 guys are headed to the jewelers to spend an average budget of over $120. By far, jewelry is the gift that guarantees an inflated budget. If you are headed for precious stones or metals, I hope you’ve been planning. Last minute purchases are likely to cost you more than what would be paid by those who have been planning a purchase.

Mother’s day is important to us guys. It’s an opportunity to focus on the women most important in our lives. However, not all budgets are created equal. The most popular gifts are not always the best ideas where our wallets are concerned. Keep your eye on the receipts, because credit card surprises can easily defeat your Mother’s Day plans.

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If you’ve read my post last week, then you know that I got into some credit card debt while in college. While I talked about working a summer job, I didn’t go into detail about the other ways I earned income throughout college. I thought that writing this might give some others that are in college (or even recent grads looking to earn a few extra dollars) a couple of ideas or at least start the creative thinking process begin.

Freshman and Sophomore Years

When I first began college, I held a work-study job. I worked in the library for 10 hours each week. Back then, minimum wage, which is what I was paid, was $5.15. Every two weeks, I would get a paycheck for roughly $100. During my freshman year, this was fine. I didn’t have a car and ate all of my meals in the cafeteria, so I really didn’t have any outside expenses.
But during my sophomore year, things began to change. I did have a car and while I did live on campus, I didn’t eat every meal in the cafeteria. With the addition of my girlfriend, my $100 bi-weekly income wasn’t lasting me.

Junior and Senior Years

During the summer of my junior year, I decided to forego the work study job and try to find a job outside of the college that paid more and allowed me to work more hours. This was great in theory, but didn’t work out because I was lazy and didn’t look that hard. I did however discover eBay (which was in its infancy) and was able to earn some money that way.

During my senior year however is when things really began to change. I again chose not to do the work study job but this time landed a job at Enterprise Rent-A-Car washing cars. It paid $6.00 per hour, but they were extremely flexible with my working hours. I was bringing home close to $100 each week.

I also began to use eBay as a source of income. For a little reference, back in the late 1990’s eBay was all of the rage. People didn’t use sniping tools and wait to bid at the last minute. They would bid early and often. Many times after including shipping, I would sell items for more than the item was worth. In fact, I sold a $5.00 bill that was in perfect condition, for $6.00. There was nothing special about this bill, other than it was in excellent condition.

Some of the ways my roommate and I made money were to attend estate and yard sales, join CD clubs (like BMG and Colombia House), and win prizes online and then resell them on eBay. I was able to make about $100 per month doing this as well. I’m certain I could have made more, but I had to balance being a student along with making money.

Lessons Learned

All told, once I started to find other ways to earn income my senior year, my finances slowly began to improve. While I don’t think you can use eBay like I did because of the novelty being worn off and “professionals” working that field, there are certainly other ways for you to make extra money in college. You just have to think a little bit out of the box. For example, if you are able to produce short videos (and if you have a Mac, this is relatively easy), you can get paid to help small businesses create videos.
Also look at the needs of the area you are in. When I was in college, I attempted to start my own business. I ended up not following through with it but it would have been web based and had very low startup costs.

Someone always needs something, you just have to figure out what that thing is, whether you can make it and whether or not they would be willing to pay for it.

Lastly, be certain to work a summer job. Going into my freshman year of college, my Dad helped me to land a job at the local factory. It paid well, but was a horrible job. He helped me get the job so it would serve as a wake up call to me: if you don’t go to college, this is what you are doing for 40 years. By working every summer, it helped me to survive college financially. Had I not been foolish with my credit card, I am certain I would have come out of college ahead of the game.

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How investment strategies and styles differ

Not all companies are the same. Some grow faster than others. Some don’t grow at all, and instead pay out big dividends, like many REITs.

Here’s a short introduction into each style:

• Growth – Growth funds, or companies that fit a growth profile, are generally younger companies in new and emerging industries. Netflix, for example, is a perfect “growth” stock because it is in a new market (internet TV) and the market is growing quickly. Growth investors are typically focused on companies that are growing sales more so than profits. Netflix, for instance, will be investing most or all of its profits back into the business to get more market share. The idea is that the company can grow now and delay profitability until it is certain that it owns the market for internet TV.
• Value – Value funds and value stocks are generally slower-growing, mature companies in mature industries. Insurance is a classic value stock business because insurance is not a new product, nor does the insurance market grow very quickly. The car insurance business, for instance, generally grows with population growth and rising automobile prices. That is to say that it grows quite slowly. Of course, investors shouldn’t denounce this style because it lacks huge growth opportunity. Value stocks can provide high returns to shareholders because they trade less expensively, and often drive value by paying out dividends and buying back stock.
• Income – Income funds focus on a combination of growth from rising stock prices, and income from dividends. Income funds play on the idea of “getting paid to wait,” meaning that you collect dividends while waiting for a stock price to increase. Unlike growth funds which generate most of their return from rising stock prices, income investments provide balance between dividends and capital appreciation.

What’s the best style?

Over history, value has proven to be the best style. That’s over the very long haul, however. Each style runs hot and cold. During the 1990s, value-style funds were trumped by growth as a dotcom boom took hold. The Wall Street Journal writes that several years of lagging performance from value funds left investors to withdraw their funds, leading to the closure of many lagging value funds. Of course, the bubble later burst, and value funds caught back up.

Unless you have the conviction to hold through with one style even if it tests your patience for years, a mix of value, growth, and income-focused funds is a great way to go. Income funds will lead your portfolio in down years. Growth will likely lead in the most bullish of markets. And value funds will prevail as the occasional big winner, but lag for extended periods of time in between.

What if you want to be more simple? No problem – stick to an index fund.

A choice in strategy or style can be a false choice. The S&P 500 index comprised of the largest 500 stocks in industries that best align with the make up of the American economy has exposure to value, growth, and income-style stocks all in one single product. In short, it’s everything from every style in a collection that mirrors the economy as a whole. Plus, unlike style-specific mutual funds, index funds are very cheap to hold, which is why they often beat actively-managed funds over very long periods of time.

What’s the best for young adults? Simplicity. If your 401k provides for a way to pick an index fund over style mutual funds, go for the index. The cost-savings will make a bigger difference on returns than would picking a specific strategy.

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I know. After becoming a mother or a father, the last thing on your mind is taxes. You are thinking about waking up in the middle of the night and whether your relatives have washed their hands before handling the baby. I’m sure the price of diapers would be a higher priority for your finances.

It may be far down on your list, but having children has an immediate impact on your taxes thanks to several deductions that will now be available to you. Below are the most common.

Personal Deduction

So long as they live under your roof, (or the roof of a college institution), you get to claim an extra personal deduction on your 1040.  That’s a whopping $3,900 off the top of your reported income. For a married couple in the 15 percent tax bracket, that’s $585 back from Uncle Sam, and all you need to do is add your child’s name to the dependent line on your tax form.

Child Tax Credit

An added personal deduction is just the tip of the deduction iceberg. The biggest tax savings comes from the Child Tax credit. Middle class families get to take a $1,000 credit for each child, up to three children. As a credit, the savings from this deduction is subtracted off the amount of tax you owe instead of your reported income.  That means your tax bill just got $1,000 lighter just by giving birth.

529 Plan College Savings Deductions

While the personal deduction and child tax credit require little more than possession of a child, the remaining deductions are more restrictive. However, that doesn’t mean they are uncommon.

If you want to save money for your newborn’s future college education, you should consider a state 529 plan. Most states with a state income tax offer tax deductions for contributions made to your children’s plans. You need to be careful to spend the money for college. Unqualified withdrawals come with taxes and penalties down the road.

Itemize Your Hospital Bills

It’s expensive to have a baby in the hospital. I hope that you have good insurance and did not need to spend thousands of dollars to deliver your child. There are many people who end up with large medical bills after discharging from the hospital. If you paid large sums of money out of pocket, your bills might be tax deductible.

So long as you itemize your deductions and your medical expenses exceed 7.5 percent of your adjusted gross income, you can deduct a portion of your hospital bills. Obviously, this won’t seem like a great benefit in light of the bills you’ll be receiving, but it certainly softens the shock on your finances to a small degree.

These are just a few of the most common deductions that can be realized now that you are a parent. A few other deductions worth looking into are the child care credit and earned income tax credit, both of which might now apply to your new family.

With that: congratulations, now go lower your tax bill.

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When I went away to college, all I had was a checking account and a savings account at the local bank. In fact, I just opened my checking account about two years earlier. When I arrived at college, I was not overwhelmed with credit card offers, but did receive a few. That fall, I opened my first credit card. I was granted a credit limit of $500.

Around the same time, my roommate also opened his first credit card and he had a $1,000 limit. As the year progresses, I used my credit card sparingly. I mainly used it to buy CD’s. (Yes, I went to college before the downloading music era began. This was also a time when you really couldn’t use your ATM card for online purchases – at least my ATM didn’t allow it.)

I will never forget the day during the spring semester when I walked in on my roommate on the phone with his credit card company. The conversation revolved around finance charges. It appeared that he didn’t pay his bill in full and was charged interest. He was questioning the “finance charges” because he didn’t place those charges. I assume that the customer service representative walked him through the understanding of what happens when you don’t pay your bill in full.

Credit Card Troubles

I finished off my freshmen year with no credit card debt and was rewarded with a higher credit line. I worked hard that summer and in the fall of my sophomore year, I met a girl. Unfortunately, I didn’t have very high self-esteem at the time and ended up needing to show her my love through buying her things. She would have been fine without me doing this as she was from a modest upbringing. I don’t remember what my balance was at the end of the school year, but all of the dining out and gifts caused me to basically use my earnings from the upcoming summer (between my sophomore and junior years) to pay off the debt.

This is when the spiral began. Over previous summers, I worked to have money for the upcoming year. There would be times when money would be tight, but I could manage to get by. But now, all of my summer earnings went to pay off old debt, meaning I had nothing for the upcoming year. Text books went onto my credit card along with buying dinners and gifts for the girlfriend. What was a small problem during my sophomore year, quickly exploded to a big problem by the end of my junior year.

Graduation and Lessons Learned

When it was all said and done, I graduated with close to $4,000 of credit card debt. This might not seem like a lot, but to a broke recent grad, knowing that student loans were going to be paid back, this was a big deal. Eventually, I was able to get out of credit card debt, but not for a while. Here are some things I learned along the way:

• First, having a credit card isn’t a bad thing. I initially used it responsibly and built up a good credit history. Don’t be frightened by a credit card. Get one and use it sparingly and pay it off in full.
• Don’t buy love. Whether it is the other person convincing you they are worth it, or yourself trying to prove it, love doesn’t work that way. At least healthy love doesn’t. Be confident in who you are and what you have to offer.
• This may be a little controversial, but if you do find yourself in credit card debt in college, don’t do what I did and use your summer earnings to pay off your credit card. Between my junior and senior years, I used some of my income to pay down my credit cards, but I saved the majority of the money for the upcoming year. Yes, I ended up paying interest charges. But it was a lot less than had I paid my credit card balance down and then had to charge everything all school year because I didn’t have any money. This is why many experts recommend having an emergency fund even if you are in credit card debt. Saving most of my summer income acted as my emergency fund.
• Talk to people about it. I was embarrassed to tell others about my debt. But looking back, I feel that if I had told people, somewhere along the way, I would have realized what I was doing and could have stopped much sooner than I did.

Final Thoughts

I hope that you can use the hardship I went through in taking on credit card debt in college as a wakeup call or even a call to action to not do what I did. Even if you are in the same shoes I was in then, know that you can overcome it. I was able to get out of credit card debt, pay off my student loans and build up a healthy amount of savings. Of course I could be much farther ahead had I not gotten into debt, but it was a lesson I had to learn. Learn the lesson and avoid repeating your (and my) mistakes.

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WAIT!

Stop right there.

Jumping directly from noninvestor to investor is a very big leap, one which is often understated. The decisions you make right now really will affect the rest of your life. So start slow…the markets will be there tomorrow. Here’s a quick survival guide for new investors who want to make the leap.

Step 1: Read

A little work goes a long way. Retirement is the only million-dollar question you’ll have to answer in your lifetime, so it makes sense to study up.

There is an excellent introductory book for beginning investors: The Little Book of Common Sense Investing. Written by John Bogle, founder of Vanguard Group, this book is an excellent quick read for understanding simple investment concepts.

In 216 pages, you’ll see why fees and transaction costs are the biggest drain on investment performance, why day trading to become a millionaire is a very unlikely possibility, and how to shape a portfolio so that you maximize your odds of success without risking your retirement. It’s the fastest quick-and-dirty intro into the land of saving and investing.

Step 2: Evaluate investment accounts

Your employer’s 401k and an individual retirement account (IRA) are the best places to keep your retirement dollars.

If you have access to a 401k, especially one that provides an employer match, use it. An employer match is literally free money that your organization uses to encourage its workers to invest for their future.

A match can come in all shapes and sizes. A common setup is a match up to a certain percentage of your annual salary. Example: 50% on up to 6% of your income. This means that if you put 4% of your salary in your 401k each year, your employer will add another 2%. If you put in 6%, your employer will add another 3%. An immediate return from a 401k match is the best deal you can find.

If you do not have the opportunity to open a 401k, or you do not get a match, consider an individual retirement account. An IRA is an account in which you can pick and choose your own mutual funds and exchange-traded funds without limitation. 401Ks usually offer only a handful of funds. (A 401k and IRA are not mutually exclusive – you can have both.)

Step 3: Examine potential investments

Each mutual fund or exchange-traded fund provides a prospectus for potential investors. This prospectus is filled with pages of legal jargon, disclosures, and other noise, but it also contains very pertinent information about what the fund owns, how it is managed (or unmanaged) and how much it will cost you to own.

As for fees, here’s what you want to find:

• Annual management fees – the fees the investment company charges you for owning a given mutual fund or ETF each year.
• Sales loads – Sales loads are fees paid for buying or selling a mutual fund. Avoid these at all costs! Big sales loads have a devastating effect on investment performance. A 3.5% sales load on a fund would mean that for each dollar you invest, only 96.5 cents would go to your fund. The broker takes the remainder.
• 12b-1 fees – This is really just a way for your broker to make risk-free money on your portfolio. Also known as a distribution fee, this is a way to cover a fund company’s marketing cost (the cost of paying someone to sell you a fund). Annual 12b-1 fees can add significantly to the long-run cost of holding a fund.

Knowing what a fund costs is truly half the battle.

Step 4: Select investments

Once you have collected all relevant information about potential investments, it’s time to make a selection. Use what you’ve about asset allocation (how you divvy up your portfolio between different investments) from Jon Bogle’s book to build an appropriate portfolio. I wrote an article on a really simple and diversified portfolio just two weeks ago.

An investment portfolio is not a toy. Long term investing is not about checking a fund every day, or moving money around at every move of the market. Investors in for the long haul should forget the idea of activity. Repeat the phrase “Don’t just do something, stand there!” over and over again.

Once per year, rebalance your portfolio to your ideal asset allocation. Stocks and bonds rise and fall throughout the year. Rebalancing is a way to easily sell what is expensive, and buy what’s cheaper.

Step 5: Relax

Money isn’t everything. After you’ve done the above, it’s time to relax.

One weekend of work reading a short and light investing read (Bogle’s book), evaluating retirement accounts, and sifting through fund prospectuses for key information will have you on the path to financial freedom. By this step you’ll have done 99% of all the work you’ll ever need to do to manage your retirement accounts. Investing should be the easiest money you’ve ever made. Letting your money work for you is much easier than working for your money.

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Jacob @ My Personal Finance Journey writes Guide to Student Loans That Everyone Should Know – The post describes a few tips on how to pay off your student loans.

Lance @ Money Life and More writes Brookstone: Who Buys This Stuff Anyway? – Brookstone has a ton of awesome stuff. However, the awesome stuff is… very unique and normally not super useful or practical. Oh yeah… it is normally outrageously expensive too! How expensive and impractical? Let’s take a look!

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Tony @ We Only Do This Once writes How I Paid off $100,000 in Debt (and How You Can, Too) – Read How I Paid off $100,000 in Debt (and How You Can, Too). Such goals are not as impossible as the initially sound!

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For most of us, income taxes are a major annoyance, but the overall stress or frustration is usually unnecessary. In fact, I’ve found that organizing and proactively thinking about my tax issues throughout the year saves me a great deal of tax pain every April.

I’d expect paying taxes to be painful, but if it is the process that eating away at your ch’i, you might want to consider one of these suggestions below.

Store New Tax Information Throughout the Year

How much of your stress is related to disorganization? I remember frantically tearing my office apart one year because I couldn’t locate my W2 and it was April 14th. Luckily, I never threw important pieces of mail away, but massive piles of mail in several locations didn’t help the process.

These days, I’m organized. I have a plain, old tax folder that sits on the desk next to the checkbook. Whenever I receive a piece of mail that I need for tax purposes, it goes into the folder until I go to prepare my taxes. No digging up the old stock sale records – it’s all in the same folder. In one year, I spend a few minutes at a time putting these things in the folder and save hours of stress looking for them later.

Keep Your Taxes Handy

The new trend in IRS auditing is to heavily rely on computers to find problems with tax returns. Sadly, this means more notifications from the IRS even if you filled out your taxes correctly. Since taxes are often subjective (thanks to tax law), machines are better at finding questionable things than actual errors.

It means that now more than ever, you want to keep your tax information in an easily accessible place. More than that, you need to make sure you’ve printed out all your necessary tax information. Often tax forms let your report expenses and costs without requiring you to submit that documentation to the IRS. Make sure you aren’t just writing these figures down on a napkin. If you don’t have hard copies at the time you file, make sure you put them together before you’ve moved on to the next tax season.

Get a Tax Preparer

Most people don’t realize it, but they are wasting their money on expensive tax programs. Often, a tax preparer is as much or only slightly more than software. My tax stress went down dramatically when I started using a tax preparer who charges a flat $50, thus saving myself the hassle of preparing my taxes and saving $5 on the Turbo Tax program. If you find yourself talking to the IRS year after year, that $50 might save you a fortune in time and hassle.

I know that a tax preparer is not going to be the right choice for everyone, but in my case, with the complexity my taxes have reached, it’s a good $50 spent.

Where Can You Improve?

This might sound strange, but the confusion that makes taxes so frustrating often gives tax filers the opportunity to save on taxes by changing behavior. For example, the Saver’s Tax Credit gives a tax deduction for low income and middle income families that put money in a retirement account. Finally starting your retirement savings this year can mean more money at tax time.

It could take several articles to discuss all the possibilities. It might be time to look at them and decide if there are any changes that can be made in your life so you pay less in  taxes.

Now that tax season is over, it’s easy to forget about taxes for the next nine months. However, if you wait until December, you are going to find that many of the tips above will be useless unless you make plans now. Most of these tips take only a little bit of time or effort, but they can have large impacts on your refund and tax preparation.

Start now, because the year will be over before you know it.

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