Based on the awesome response we received for Studenomics’ guest post entitled How To Work Full Time While You’re In College, we decided to follow up on this same topic. The Studenomist is our guest contributor for today; he runs Studenomics, a great personal finance blog aimed at the college crowd. Please consider subscribing to his RSS feed here.

Image from ABC News.

Even if free college tuition isn’t in your cards, you may still afford going to college on your own. Want to know how to effectively balance your work and studies? It’s important to stay well-organized, and it also helps to develop a structured routine at school. Here are some suggestions based on my own experiences:

Create Your Own Work Study Program! How To Balance Your Job and School Work

1. Find a relatively easy job.

Are you too burned out after work that you can’t even keep your eyes open long enough to read a chapter out of your textbook? Well, you can try looking around for a job until you find one that’s relatively easy to handle. For example, my friend works as a teaching assistant at his school and on most hours, he just sits in the class with the students while a lecture is going on. When he has tutoring sessions after a class, he hands out tasks for the students to complete, then reviews the materials with them. Sometimes he works 40 hours a week and goes home without feeling any stress at all.

There was also a comment on my post, How To Work Full Time While You’re In College, which was made by a reader who wrote that he worked as a bus driver and had the opportunity to turn off his brain so to speak.

When you find a job that is relatively physically or mentally “easy”, you’ll find that you’re able to work full time hours without feeling much stress. What are some relatively easy jobs that college students can find? Well I hope I don’t offend anyone, but here are a few jobs that won’t burn you out mentally/physically:

• Library help. Nice and quiet while you stock books and work the desk.
• Custodial work or janitorial services. Mop the floor while your mind rests.

I could go on but you catch my drift. If you find that 10 hours of work a week is killing you, then maybe it’s because you need to find something lighter on your mind and body. You could argue that this is the lazy way out but the way I see it, your main goal is to complete college with high grades. If you can pay off your student loans as you go through college then you’re ahead of the game.

2. Try part time work first and SLOWLY pick up more hours.

Start off at 5 hours a week and try adding an hour each week until you reach your maximum capacity. What is your maximum capacity, you might ask? Well I could give the obvious answer and say it all depends on your situation, but here’s how I see it:

• If you find yourself with ample time in between lectures or with a light course load then add in some extra hours at work.
• If you are always struggling to meet deadlines, sleeping 3 hours a night, running from one class to another, then you’re definitely not in a position to pick up any extra work.

You may find that 15 hours a week is all you can spare or you may find that working 40 hours a week after a gradual transition actually feels quite comfortable. At the end of the day, if you find yourself spending time on mindless activities (e.g. playing Facebook games) then you can probably accommodate some work hours in your schedule. Some trial and error will be necessary here as you adjust what feels right for you. If you’ve got a truly challenging course load, then try to remain at a minimum of 5 hours a week of work.

3. Cut out pointless activities.

You must be willing to drastically limit the time you spend on “fun activities” (or should I say “pointless activities”?). If you see value in hanging out with your closest friends then this isn’t a pointless activity; it’s something you need to maintain balance in your life, so by all means, don’t miss out on this (social activities are important too, but anything taken to the extreme may simply be a waste of time and energy). But if you find yourself being bored (e.g. watching reruns on television or flipping channels), then you could just be misusing your time. If you’re not spending this time on your studies then this is valuable time that you could spend earning an income. The goal here is to maintain a balanced life and an efficient schedule.

4. Set up a “sleep in” day.

We all love to sleep in, but honestly, do you really need to do this every single day? True, the thing about working full time while studying full time is that you may not get the full 8 hours of sleep every night. So my suggestion here is to set up one day during the week where you have the morning off and get to sleep in for as long as you please.

5. Sucks to say this but sacrifice is needed.

So you want to earn a college degree but don’t have a 529 college savings plan in your name? I really don’t know how else to put this, but you must be willing to make some sacrifices in college. There will always be time to get wasted or time for just lounging around; however, based on your goals and priorities, you’ll need to make tradeoffs. If you’re determined to make a work schedule fit into your college life, then be prepared to make a few sacrifices: you can still have fun… but you’ll need to place limits. During last year’s fall semester, I went for 6 weeks completely focused on work and study. My girlfriend wasn’t happy about it, but those are the sacrifices that have helped me accumulate a decent savings account while studying in college full time.

Create Your Work Study Program and Balance Your Job and School Work

What do you think of the Citi ThankYou Points network and rewards program? I’ve heard some mixed opinions about it from readers (see our article on the Citi Forward credit card for some discussion on this) and have also read criticisms of the recent changes in the ThankYou points program (with regards to how you earn and redeem your points), but there are certainly others who are positive about the program and are looking forward to trying it out. Our guest writer today, Stacey Doyle, shares how and why she’s decided to become a Citibank customer.

Shopping For A New Bank

My financial life has seen some flux and disruption lately, due to the current state of the financial industry. Here’s what I mean: these days, it’s been a challenge for me to keep up with the financial institutions I’ve been doing business with over the years. Several banks have failed or merged this past year and it’s not been that easy for customers, who’ve been “tossed around” in the chaotic wake of these mergers. For instance, my personal and business accounts with Washington Mutual are now with Chase. Our mortgage with Countrywide is now with Bank of America. Because of the transitions going on, my spouse and I met with representatives from Chase and Bank of America to touch base on our finances and accounts, but I was left somewhat disappointed.

With all these changes taking place, I figured it was time for me and my husband to make a fresh start with a new bank. Might as well, since loyal customers are getting the shaft in more ways than one anyway. The financial and banking industry should look upon this as a ripe opportunity to grab disillusioned customers (like me) who are seeking some stability.

To make a long story short, we decided to shop around to see what else was out there. Our goal was to decide whether we should shift our accounts and business to a different bank. We checked out online banks, credit unions and larger institutions. On my list was to schedule a meeting with an advisor at Citibank to take a look at what they’ve got. And that meeting went well: I discovered that Citibank’s accounts and products are extremely competitive compared to the “free checking” and other perks offered at my current banks. Furthermore, I came across their “ThankYou Points Network”, a rewards program that helps you earn points every time you use your debit card (yes, I prefer to use a debit card).

This is an advantage I don’t have with other banks. As a dedicated online shopper, I take advantage of multiple rewards programs ranging from Upromise to MyPoints to Memolink. The idea of earning points for gift certificates and merchandise for simply doing what I usually do is very appealing.

For my next steps, I wanted to do a bit more research on the Citi ThankYou rewards program before making our final decisions about signing up with Citibank. Here’s what I found:

Citi ThankYou Points Network: Rewards For The Shopper

With the ThankYou network, I discovered that you not only get points for using your Citibank checking account and debit card, you also get points for every $1 spent on purchases made with a Citi Credit Card (check out this list of Citi Card rewards cards). Other ways to earn points include:

• Booking eligible travel through Expedia.com, regardless of how you choose to pay,
• Shopping at your favorite retailers (including Macy’s, Target and Best Buy) through thankyou.com or in-store using a Citi Credit Card,
• Using your Citi Card at certain specialty stores such as FAO Schwartz, Eddie Bauer and Timberland,
• Making purchases from participating catalogs and buying gift certificates.

When you accumulate points, you get to cash them in for rewards. Cash outs start at 1,000 points. You can redeem your points online or on the phone. If you have 10,000 points or more, you can create your own reward through the “Your Wish Fulfilled” option (just contact a “wish specialist”). As for standard rewards, here’s a sampling:

• Gift certificates including the Gap, Bath and Body Works, Macy’s, Hard Rock Cafe and many more,
• Merchandise including books, DVDs, sporting goods, home and garden, kids and baby, electronic and office and more,
• Cash, savings or charity,
• Travel and experience.

With countless rewards to choose from, I was sold on this program. My other banks do not have an extensive rewards program like this plus they’ve also been hitting me with sneaky bank fees that I’m not thrilled about. As an alternative, Citibank has comparable financial products and accounts as other banks do, and I like how the Citibank representative offered to help me with several strategies for avoiding charges and for keeping my banking free. Adding the ThankYou Points network was enough to sweeten the deal. On top of capitalizing on the ThankYou rewards program, I’m also planning to use my Citibank debit card to accumulate other rewards such as those from MyPoints, thereby maximizing the rewards I earn.

Although switching my business and personal bank accounts with direct deposits to another financial institution can be a hassle, it’s worth it when you have such an alluring incentive. We’re going to be bracing to make the switch in the next few weeks after taking care of all the necessary arrangements.

Citi ThankYou Points Network: Rewards For The Shopper

Learning to invest? Tim Parker from Elementary Finance covers some of the basics of stocks, mutual funds and ETFs.

If I were to ask 10 everyday people to tell me what they think of stocks, ETFs, and mutual funds, I bet the results would look something like this:

• All of them would have some preconceived notion about stocks.
• Most of them would have heard of mutual funds.
• And maybe 1 or 2 would know about ETFs.

Interestingly, the ETF, although widely unknown, is one of the fastest growing investment products in the financial realm. But let’s take a look at all three of these financial vehicles and see how they stack up.

Image from Fidelity Investments

The Scoop On Stocks

First, although in a strictly legal sense, a person who owns a share of stock doesn’t technically own a small piece of the company, it’s quite alright to think of it that way. Other than cash, a stock is the purest way to invest because it is a direct investment in one company. This can be both good and bad. It’s good because when good fortune follows that company, the investor will reap the rewards of that good fortune. The downside is that an individual stock exposes you to financial risk and is vulnerable to the effects of negative events at several levels: a stock is sensitive not only to shifts in the market but also to shifts in the underlying industry and company it represents. In order to control risk and have a reasonable shot at making money, an investor must diversify. This is impossible with a single stock so it is not advisable to have all of your money in one basket, so to speak. For more on this subject, check out our stock investing tips along with these other articles:

• How To Trade Stocks, Profiles of Stock Traders
• Why I Pick Stocks: Choosing Individual Stocks Over Mutual Funds
• Why Buying Penny Stocks Is Nothing But A Mistake

The Matter With Mutual Funds

There are two ways to ensure that your investments are adequately diversified, other than buying a fistful of unrelated stocks: you can choose to own mutual funds or ETFs (exchange traded funds). Many of us happen to be very familiar with the mutual fund as a type of investment that’s made available to us through our retirement plans at work. If you have a company sponsored retirement account such as a 401K, you probably own shares of a mutual fund. There’s the kind that’s actively managed and then there are the uber popular index funds. In both cases, there are baskets or collections of investments that form the fund. Think of them in terms of a puzzle. There are many pieces that come together to make the picture. There is a manager of the fund who is buying and selling mostly stocks and bonds for the fund in an attempt to make you money.

The sad truth is that these fund managers are largely unsuccessful about keeping pace with the market (forget about beating it!) because the fees that are charged to the customer (you and me) wipe out some of the gains made by these funds. In other words, fund managers must achieve extra gains just to make sure they’re able to cover the fees and charges that go with operating and managing their funds. But here’s the bright side: investing in mutual funds is a great investment strategy for those investors who do not have time to follow their money closely. Stock mutual funds (particularly index funds) are a nice step above extremely safe high interest savings accounts and money market funds, and a great way to get your feet wet with equities.

Exchange Traded Funds or ETFs

The ETF is similar to the mutual fund in that it is a basket of investments that’s often quite specialized. Just like mutual funds, ETFs have a particular investment focus. There are ETFs that are only made up of technology stocks, or energy stocks. There are those that follow the movement of the Chinese economy and those that track a basket of commodities like corn and wheat. While ETFs are traded on an exchange throughout the day just like a stock, a mutual fund only trades at the end of the day.

ETFs do have managers but they are not managed as actively as some mutual funds. Most of the underlying stocks stay the same over time which helps keep the fees on these funds much lower than what you’ll experience with many mutual funds.

Much like mutual funds, ETFs work well for the retail or part time investor because they have some diversification already built in, given that they represent a collection of stocks (or other assets). With an appropriate amount of research and patience, you may find that owning ETFs can be a successful investment strategy; these assets can certainly become a healthy part of your portfolio.

For a quick visual comparison of how stocks, mutual funds and ETFs compare, here’s a table I’m shamelessly borrowing from the ETF Database, a great resource for everything on ETFs:

So Where To Invest Your Money?

I and many others believe that you should think of your investments in two parts: your retirement money and your discretionary money. My opinion is that the best place for your retirement money should probably be in mutual funds. Your money should be in a mix of safe funds and relatively more aggressive funds depending on your age and how close to retirement you are. Although mutual funds may not soundly beat the market, they do tend to track it closely — particularly if they’re index funds — so over time, you can expect to accumulate a healthy retirement if you leave your accounts alone. I would certainly not take egregious risks with my retirement money.

As for the other portion of your assets — your discretionary money — you can place this in any investment you feel comfortable about, whether it be in stocks, ETFs, mutual funds (or in bonds, REITs and other asset classes) but I’d be careful to do sufficient research before taking on any risk. The important thing is to stay well-informed, diversified and realistic about what you can earn from your investments. Keep in mind that whatever you invest and put at risk shouldn’t affect your family adversely should losses occur due to a bad decision.

Take a look at all these types of investments and decide what is appropriate for you. If you don’t feel comfortable making that choice, talk to a trusted expert in your area. And learn as much as you can.

Investing Money In Stocks, Mutual Funds and ETFs

The summer has been bringing out a number of sweet deals. I’m noticing a few companies reviving their seasonal promotional programs; they’re working to lure customers to their side with enticing offers, either through discounts or in this case, through cash bonuses (which for a while, seemed to go on hiatus for a little bit). Well, this isn’t the first time that WTDirect, that online bank known for catering to high balance clients, is offering a tempting sign up bonus for new customers. From now until the end of this month (July 31), you’ll be eligible to receive a cash sign up bonus of up to $150 if you open a WTDirect savings account.

Here are some particulars on the WTDirect Savings Account and the online bank behind it, for those in the market for a savings account:

WTDirect Bank Account Features

• There are no fees.
• There is no minimum balance required to open an account.
• There’s FDIC insurance, as expected.
• WTDirect High Yield Savings Account sports an interest rate that’s among the highest around; its rate is consistently among the top 5% of banks in the nation.
• WTDirect belongs to the Wilmington Trust family of companies, which has a strong reputation that’s lasted over a century.

WTDirect Savings Account Rate Table

If you can maintain a high balance in your savings account, then WTDirect could be a good option for you. While there is no minimum deposit required in order to open an account, you’ll need to keep at least $10,000 in the WTDirect Savings Account in order to receive their highest 1.76% APY return. Here are the details on their interest rate: you’ll initially earn 1.76% APY (the highest return possible) for the first 60 days from the time you open your account; after 60 days is up, your interest rate will be based on how large a balance you keep.

How To Earn the Cash Bonus

Here are the details for earning the sign up bonus, which is only available to new customers:

1. Open a WTDirect High Yield Savings Account. Visit this link to apply for an account.
2. Fund your account with at least $10,000 by the end of the month (July 31).
3. Keep your funds in your WTDirect account through October 31. Your account must remain open and in good standing during this time.
4. Earn a cash sign up bonus of up to $150 based on these parameters:
   • $50,000 balance earns a $150 bonus
   • $40,000 balance earns a $100 bonus.
   • $30,000 balance earns a $75 bonus.
   • $20,000 balance earns a $50 bonus.
   • $10,000 balance earns a $25 bonus.
5. Your bonus will be credited to your account on or around November 20, 2009.

That’s it! Happy saving folks!

Earn Cash Bonus of $150 With A WTDirect Bank Account

Have you seen this new internet search site yet? I got to playing with this fun, visual search web site called Spezify, which promises to be colorful, though I’m not sure if there’s anything more value added here, other than the cosmetics. Well technically speaking, it’s not a search engine per se, but a site that serves as a pretty front for your searches. Here’s an example of some results I got when I searched for myself:

I find it pretty neat — it’s definitely a novelty, but I’m wondering just how practical and functional it is. It reminds me of that Wordle thing I played with a while ago in this post. I like the cool presentations and the creativity here, and I can see the appeal of these applications on those who can appreciate some great visuals. I’m already thinking of the implications.

As for internet searches, what do you folks think of Bing? Is there finally a reason for Google to look over its shoulder? Here’s looking forward to more online competition, especially among the search engines! .

Now on to some great financial articles for the week!

Personal Finance Articles

• Wise Bread: Would You Accept $200,000 If You Didn’t Know Where It Came From?
• Ask Mr. Credit Card: Airline Transaction Gone Bad
• All Financial Matters: Watch Those Expiration Dates on Rebate Cards!
• Almost Frugal: Know Where You’re Going
• The Financial Blogger: Think Outside the Box Before Quitting Your Job
• One Mint: Indian Budget
• Personal Finance Playbook: For Those Of Us Who Hate Change
• Lazy Man and Money: Amazon Friday Sale - “Hammock Finally?” Edition
  
• The Sun’s Financial Diary: June 2009 Score Card — Part I: Net Worth
• Brip Blap: There Is No Cost To Good Health

Recent Carnivals

• Carnival of Money Stories: It’s getting harder and harder to make the Editor’s Choice in these carnivals, so when I make the cut, I am truly excited! Thanks to My Journey To Millions for choosing my story on how my credit card account got closed as one of his top picks! Make sure to stop by his carnival (it has a great theme about the richest Americans).
• Carnival of Personal Finance
• Festival of Frugality
• Carnival of Debt Reduction

Internet Search Site For The Visually Inclined: Spezify

It’s time for a vacation! Here’s a solid list of travel resources for anyone who’s preparing for a trip.

Since I have some vacation time coming up, it seems like a good idea to see what resources are out there for cheap travel.  From flights and hotels to car trips and attractions the whole family can share, there’s bound to be something for every budget traveler. These days, it may actually be an opportune time to travel — I’ve noticed smaller crowds at entertainment venues, what with the recession causing such anemic turnouts. So how about we take a tour of the travel sites that are aching for your business?

Image by Room Candy

Best Travel Sites for Cheap Vacation Deals

Priceline. One of the bigger, more recognizable travel sites out there is Priceline, well known for their Name Your Price feature. You can snare a good vacation deal through bidding, if you’re willing to make tradeoffs on certain aspects of your trip. Check our review of Name Your Price to find out exactly how it works and what kind of parameters you’ll need to work with to receive the best prices.


Expedia. Here’s another top site when it comes to offering travel deals. If you need ideas on where to go, you can browse through Expedia’s Travel Deals.  Here, you’ll find bargains on flights, hotels, car rentals, cruises, vacation packages, and even last-minute deals.  Their coverage is comprehensive — their site covers practically any location in the world.

 To save even more and enjoy a wider selection, you might prefer to book early for popular destinations like the Caribbean, Hawaii, Florida, and Mexico.


Travelocity. Another contender in the travel world is Travelocity, which you’ll probably be pretty familiar with thanks to its mascot, the travel gnome (I know them for being such an integrated sponsor of one of my favorite reality shows, The Amazing Race). You can book almost anything through this site, including airfare, cars, cruises, hotels, vacation packages and so on; they give you a lot of flexibility to perform your searches. Travelocity functions a lot like its major competitor, Expedia, and does a good job with providing you a lot of extra resources to help you develop your itinerary.


Hotwire is another source for discounts on airfare, hotel rooms, and other travel choices. Its Trip Watcher has the same objectives as Priceline’s Name That Price feature — it can help you snag the best deals if you can be flexible with your travel dates, destinations, and the airports you’d use if you’re planning to fly.

Budget Travel Guides

Budget Travel has a lot of resources for those of us who are looking to spend less.  The Trip Ideas section covers areas of interest such as adventures, road trips, long weekends, wine trips, and more.  The How-to Handbook discusses strategies and secrets for airfares, cruises, car rentals, and dining.

 You can stop by the Real Deals section for discounted airfares, hotels, and tours throughout the U.S. and international destinations.



Let’s Go offers travel guides for a variety of destinations such as the U.S., Europe and parts of Asia.  Written by students, these resources can guide you to great experiences without the luxury prices.  Also of interest are the stories written by various editors based around the world, so you can get an insider’s perspective of your destination of choice. 

Road Trips!


One way to save on travel is to plan a road trip.  If you’re a member of AAA, you can access maps and travel directions, take advantage of travel deals, and find assistance if you happen to need emergency road service. 

 Now to find cheaper gas during your road trip, don’t forget to visit GasBuddy.com or GasPriceWatch.com! 





Campgrounds & National Parks

National Parks. 
For many, cheap travel means camping.  KOA can help you find locations for tent or RV camping. 

Also, the National Park Service has a Find a Park locator.  Clicking on a park location will give you information on fees and reservations, tour fees, and the interagency pass program, in case you want to visit other national parks.

Camping Equipment. For equipment, you can browse through the offerings at Dick’s Sporting Goods or try your luck at eBay or Craigslist.  Buying discounted tents, cooking gear, and other items throughout the year will make upcoming trips become less of a one-time expense too!  And why not tap anyone in your local network of campers with equipment you can borrow? If you’ve got other families and friends you can share equipment with (along with its cost), why not?

Local Attractions for Less


A state or city’s travel or visitors’ bureau can be a guide to local deals.  For example, a state’s tourism site can contain information for seasonal activities, in addition to city and regional adventures.  And here’s something I do — when I stay at hotels, I check the lobby for coupons, brochures and the local paper for events like plays, concerts and restaurant reviews.

 I also like the idea of becoming a member of a museum, zoo, or other attraction in my hometown, because then I can ask about reciprocal membership or discounted admission to attractions in other cities.  For example, if you’re a member of the Zoological Society of Milwaukee, the 2009 Reciprocal Zoo list shows that you can enjoy free or discounted admission to various zoos across the country.  Plus you can also get a discount at some zoo gift shops!

So how are you planning your vacation? As for me, all I have to do is figure out where I’m going next…

Best Travel Sites For Cheap Vacation Deals

With MS Money now out of the personal finance software market (it’s been discontinued for good as of last month), we recently wrote about some options you can use in its place. You can check out this article I’ve written on budgeting tools and software products that can serve as alternatives to Microsoft Money. Or you may want to take up the offer of some of MS Money’s competitors who have announced discounts and sales on their desktop products for a limited time.

With MS Money Discontinued, Budget Planners and Tools Are On Sale

Quicken Products

We already pointed out that there’s an ongoing Quicken download sale going on right now both at Amazon and at the Quicken site, where you’ll receive at least $20 off the regular prices of Intuit’s products (Quicken Online is always FREE).

YNAB (You Need A Budget)

But another popular desktop budget planner is currently being offered at 10% off its usual price of $49.95. The YNAB (You Need A Budget) personal budget software is one of our favorite tools for expense management and budgeting, and is known to be pretty effective with helping you reduce your debt.

You can order YNAB Pro here with the coupon code “msmoney” to receive the discount.

YNAB uses a built in methodology that encourages you to build a savings buffer pretty easily; it’s a proactive tool with features that support short and long term budget planning. You can check out what this tool can do for you by going through this tour. One more thing to note: YNAB is only available on Windows, but can be made to run in an emulator if you’re using other platforms.

Quick Features (just a sample of what you’ll see):

• Automatically import data from your bank accounts.
• Categorize your savings into buckets using features that support envelope budgeting.
• Schedule recurring transactions easily.

YNAB Extras:

• Try it for free; you can download a 15 day free trial.
• Check out how the YNAB methodology actually works to help you manage your money more successfully.
• There’s a community that’s built around the use of this tool. Visit the YNAB forums.
• There’s also a Quick Start Guide, online video tutorials, YNAB live coaching classes (!) and a User Manual. Check their support page for all the materials you need.
• There’s a 60 day return guarantee.
• Get 5 free bonus spreadsheets plus a free copy of the e-book called “The YNAB Way”.

YNAB News and Updates
In other news, YNAB will be discontinuing their YNAB Basic version, which is based on Excel, and will only be supporting it throughout the rest of this year. But you may still purchase this version if you so wish (it’s $24.95). Those who want to upgrade from Basic to YNAB Pro will be eligible for a 50% upgrade discount, just use the site’s contact form for this request. I also cheered the news that the YNAB folks are developing a new version of their application called YNAB 3, using Adobe AIR, which will allow it to run on both the Windows and Mac platforms.

Budget Planner On Sale For 10% Off

I am a steadfast believer of the Pay Yourself First strategy, but today, I wanted to publish the ideas and thoughts of someone with some unconventional, alternative viewpoints about the saving process. Earlier, we had a chance to discuss the money saving advice of Rob Bennett, a personal finance writer (theorist?). Rob wanted to follow up on the saving concept he’s dubbed “Paying Yourself Last” and tells us why it’s a better long term strategy for savers. Do you agree with him? Herewith are his words:

Image by The New York Times.

Thoughts On Paying Yourself First

The most popular saving advice of all time is: Pay Yourself First. It does work. There are millions of people who swear by it. There are millions who were never able to save until they adopted a “Pay Yourself First” strategy. If you don’t save at all today, you might want to try this popular approach that has worked for so many others.

Paying Yourself First is mindless saving. But I don’t mean that as a dig. The reason why this strategy works is precisely because it is mindless. The idea is to save a specified percentage of your income (usually 10 percent) automatically, without thinking about it. For Pay Yourself First savers, saving becomes the default money management option. And it really does work for millions.

But I see a downside. My concern lies in its long-term effects. Here’s where I ask a few questions starting with “Why?”

Why is mindlessness such a great thing in the saving arena when it is generally viewed as a bad thing in most other areas of life endeavor?

I believe that the reason is that most of us have negative mental associations tied to saving. We think of savers as responsible but boring and even somewhat small-minded (non-generous) people [yeah, just check this post about the cheapest people out there]. We know we have to save. But we don’t really like the idea all that much. So we force ourselves. We save automatically because we cannot bring ourselves to do it any other way.

I believe that we need to encourage a more uplifting view of the saving experience. Saving is wonderful. Saving brings us financial freedom. Who doesn’t want to be more free? We shouldn’t have to force ourselves to save. We should be excited about it, we should be thrilled about it.

The reason why we are not is that even great savers have fallen prey to the conventional idea that saving is boring. When we save unthinkingly, most of the time we are also agreeing to the idea that saving is painful, not fun, and that it needs to be forced. Does it? I don’t think so.

Save Your Money By Paying Yourself Last

I favor an approach to saving that I call “Passion Saving.” The idea is never to save unthinkingly, never to save automatically, never to Pay Yourself First but instead always to Pay Yourself Last.

To Pay Yourself Last is to decide on your savings rate after comparing the value proposition associated with spending vs saving percentages of your income, and to elect to save only when you know it will offer you greater life enhancement. Passion Savers acknowledge that both spending and saving can both be wonderful choices. Pay Yourself Last savers often choose saving without having to force themselves to do so.

The Pay Yourself First strategy is a good way to get started saving if you have never before been able to save. The Pay Yourself Last strategy can take you to more exciting places. It’s a more positive approach to money management and one that can take you to an appreciation of the benefits of saving not possible for those who automatically put aside a percentage of their income. Paying Yourself Last allows you to think through what saving and spending can add to your life as you work to accomplish your most important life goals.

Rob Bennett is the author of A Rich Life blog. The “RobCasts” section of his web site contains over 120 podcasts in which Rob describes the Valuation-Informed Indexing investing strategy, an approach to indexing that greatly reduces the risks of stock investing by having investors lower their stock allocations at times of insanely dangerous valuations.

Save Your Money By Paying Yourself Last

I wrote about OptionsXpress the other day, which is a suitable online broker for active traders. Their support for options trading is their specialty, although they are careful to note that they also support stock, ETF and mutual fund investors as well.

Today, I’d like to cover another online stock broker with the term “Options” in its name: OptionsHouse. And yes, it’s another brokerage that promises to offer you a ton of features for very low cost. So what makes them stand out in the sea of discount brokers out there? And how different are they from OptionsXpress?

Don’t let the word “options” scare you though. It’s true that OptionsHouse has its roots in the world of options trading, having been founded by PEAK6 Investments, which is one of the biggest options trading brokerages around. But while their main goal is to help the investor understand how to trade options effectively, they also offer a platform for stock investors who want to own stocks, ETFs or mutual funds for their core portfolio. Here’s a little bit more about them:

Awards

The Barron’s 2009 Online Broker Survey has listed OptionsHouse as the “Best For Options Traders”, with a score of 4 and a half stars. OptionsHouse is rated #1 in Trade Experience, above notable brokers like OptionsXpress and ETrade.

The awards are good, but fall a little short of highly awarded brokers like ETrade, which just won the all around top ranking for SmartMoney’s Broker Survey for three years in a row (from 2007 through 2009), and TradeKing, which has garnered similar awards in previous years.

Pricing

What may catch your eye about OptionsHouse though, is their rates. For ultra-cheap stock trades, you can’t get cheaper than a flat transaction fee of $2.95 a trade (online or broker-assisted). Their commission rates for options is a flat $9.95, which is better than what other discount brokers offer, since rates from OptionsHouse remain the same regardless of how many trades you actually make.

With many other brokers, your trading fees may vary based on the volume of your transactions, and not always for the better. Thus, if you’re looking for the cheapest trading commissions, you may want to check out OptionsHouse. The only brokers that may possibly beat their rates are those that offer limited free stock trades (such as Zecco) that you’ll get if you meet certain conditions (e.g. you make a lot of trades or have a high balance).

One more thing, if you do decide to sign up with Options House, you’ll get any transfer fees reimbursed up to $100.

My Review of OptionsHouse, A Low Commission Broker

Here were a few more things that stood out for me when I checked out their site.

Virtual Trading. This online discount brokerage offers a Virtual Trading environment, much like its competitor, OptionsXpress. Once you sign up for an account, you’ll get instant access to a virtual account that’s funded with fake money and you can raise your funds anytime without risk.

Products and Accounts. You can open pretty much any type of account and rollover your IRA into this firm. You also have the ability to write checks — first 40 checks are free, reorders are $5.00 for every 100 checks — and you can use a debit card. The debit card has an annual fee though, and you need a minimum of $10,000 to qualify. OptionsHouse allows you to trade and own equities, mutual funds, options, U.S. treasury bonds and listed corporate bonds. But you’ll need to do phone orders for the bonds.

Investment Platform. This broker pitches a trading and investing platform that is simple, and devoid of those extra bells and whistles that may only serve to confuse or distract you from managing your transactions. You can also customize your dashboard and screens, which I suppose adds some points for usability. Now one thing I like about certain top online brokers like TradeKing and Zecco is the fact that they have built in investment communities. OptionsHouse, like most other brokerages, hasn’t incorporated this feature into their site just yet.

Tools and Education. My take is that OptionsHouse’s tool chest is geared for more sophisticated and professional traders who are dealing with options trading. Their broker’s education resources section is also heavily focused on the subject of options, with books, guides, papers as well as learning tools, calculators, simulators and screeners available to support traders. They’ve got regular webinars on more advanced investing and trading topics that you can register for.

Conclusion

My opinion? If you’re a new investor who’s still learning the ropes, this is not the place for you. I believe that the ideal customer for OptionsHouse is someone who already has some background with investing and trading, who’s fairly comfortable with the markets and who’s really looking for the cheapest trading fees and lowest commissions and transaction rates. But if you fit this profile and you’re watching your trading costs carefully, then this discount brokerage is one I’d consider signing up with. For more details, you can visit them here.

OptionsHouse Review: Low Commission Broker

Last time, I wrote about how we can predict inflation using a market index as an inflation indicator. For the chartists and other crystal ball readers out there, here’s something else for you: is there a way to predict when the economic downturn has ended?

Is The Economic Downturn Really Over?

Based on some simplistic observations, here’s how I can tell when things are getting better: the stock market has recovered somewhat from its lows (despite claims by some technical analysts that it’s supposed to “retest” previous lows before any meaningful recovery can resume) and the job market has either stabilized or begun to improve, with more companies looking to hire again. I’m actually getting more inquiries from headhunters about my availability for technical jobs around here in Silicon Valley (imagine that: they still have my resume!), and I’m getting more inquiries from online advertisers as well. Signs of life?

According to a certain economist, the recession is indeed now over. Do you believe it? It may be hard to catch on to the idea that we’re now supposedly out of the economic slump that was so dramatically sparked by the twin American nightmares that were the subprime mortgage mess and credit crisis. Then again, the thing about recessions, they’re in with a bang and out with a whimper (or if you prefer another analogy, they’re in like a lion, but out like a lamb).

Robert Gordon is the economist who’s responsible for this call. He is using a single indicator upon which to base his conclusions: unemployment benefit claims. According to MSN Money’s article on this, history has shown that when the number of employees who file for unemployment benefits has peaked, the recession bottoms out shortly after that. It appears that this has in fact been true over the last 6 recession cycles we’ve had. Just check out this intriguing chart, care of MSN Money:

The chart plots the recession cycles (pink shaded areas) against Initial Jobless Claims. As you can see, the peak in claims coincides with the end of each recession since the late ’60s. But if you aren’t entirely convinced that you can read the recession this way, then there are also a few other variables that have been used to make determinations about the health of the economy: total payroll jobs, industrial production and the unemployment rate.

Well, I’m all for better times ahead. So what happened to all that talk about the “Next Great Depression”? Do you feel that we’re finally out of the woods? I want to exhale just a little, but my spouse is still waiting for the next shoe to drop. I wonder if he’ll be waiting for a while.

Is The Economic Downturn Over?