Every year for the past several years my employer has held a CMN Bowl-A-Thon in an attempt to raise funds for the Children’s Miracle Network. It’s been very successful for the past few years and this year will hopefully be better than ever. I have the opportunity to participate this year in the CMN Bowl-A-Thon and I’m hoping that I will be able to raise a nice sum of money to donate. I’m looking for people to sponsor me in the CMN Bowl-A-Thon.  In return I’ll be sure to take plenty of pictures and maybe even a video or two of the Bowl-A-Thon and post them here at Debit versus Credit.  You’ll be able to get a good laugh out of it and you’ll feel good for helping to brighten a child’s life.

All you have to do to donate is either send me money via PayPal or if you’d prefer to donate via cashier’s check or money order you can do that as well by sending an e-mail to joseph[at]debitversuscredit[dot]com and letting me know you’d like to donate.  If PayPal is your preferred method (you can send payments through paypal with either a credit card or your bank account information) then you can send the money to joseph.mcclellan@gmail.com. If you have any questions at all then feel free to send me an e-mail.

For more information on the Phoenix Children’s Hospital and their partnership with the Children’s Miracle Network please visit their website.

Here’s some awesome news and something I am excited to be a part of.  Daily Blog Tips has just kicked off the very first Blogging Idol competition.  Blogging Idol is a competition between (as of last count) 96 bloggers to see who can gain the most subscribers between today and the end of July.  I’m absolutely thrilled that I am able to be a part of Blogging Idol and I hope that Debit versus Credit can make some great gains between now and the end of the month with its subscriber count.

If you’re new here and have not had a chance to read through all of my previous posts then go ahead and check out some of the following links to see what sort of content you can expect to receive on a consecutive basis by subscribing to Debit versus Credit.

What I Learned In Mexico: Business Negotiation
The Worst Years of My Financial Life
My 33% Savings Plan
How Your Credit Score Defines You
Oh, America…

I’m writing this post with the hope that I will gain your support for this competition! All you have to do to show your support is either to subscribe to my RSS feed or subscribe to Debit versus Credit by e-mail.  It will only take a minute and you can be sure that you will receive constant updates with all of my newest blog content!  You can alternatively subscribe by e-mail by filling out the form below:

That’s a large number.  A much larger number than I thought it would be.  That number right there is how much we have paid on our primary Visa credit card this year.  I should explain something.  We don’t carry credit card balances on a month to month basis.  When I get a credit card bill I do everything I can to pay it off.  So far I have been successful.  Right now my success is just about to run out of steam.  In order to pay off this card we have to use a sizable chunk of our “short-term” savings.  Granted the bill this time around is not so bad.  Only about $1,700 dollars.  It’s all basically my Mexico trip right there.  Studying abroad does not come cheaply and it especially does not come free.  It was all worth it though.

The point to this whole post is that the wife and I are worried about draining our savings account.  We are hoping to buy a house in about a year and that savings account is going to be our down payment.  Naturally we’d like to keep a sizeable chunk of money in there due to this being the case.  With that being said we have decided to put ourselves on a strict no-spend diet.  In order to keep ourselves sane this will not apply to the small amount of mad money we get on a monthly basis, but other than that cash we will not be spending any money on any unnecessary items.

Enter the Wealth Tracking Tools

I’d like to make sure that I’m actually building wealth over time.  As I already mentioned we’re looking to purchase a home in about a year and we’d like to be prepared for such.  With that being said I’ve decided that after months of procrastination it’s about time that I start using some tools to track our progress (or lack thereof) with our financial goals.  Starting later this week I’ll be posting on a regular (monthly) basis updates to our net worth and other relevant financial tracking numbers.  Of course I’ll be using Excel to create these spreadsheet tools.  Hopefully with our increased vigilance of following our budget we will be able to accelerate the wealth building process.  One can only hope.

David at Moneyning posted some fantastic advice on how to take advantage of the wonder that is google, specifically google alerts, by setting up alerts for when coupons and deals are taking place for items that you have been searching for.  Check out Setup Google Alerts to Get Coupons and Deals.

Pinyo at Moolanomy is looking out for those who are looking at potentially buying a house in the near future.  He gives some fantastic advice on how you can test your finances and see if you can really afford that house payment.  Check out Test Drive Your Home Ownership Experience.

Is the price of gas killing your finances lately?  It’s getting warm outside now too… what are you going to do about your increased energy bill?  Trent at The Simple Dollar has some practical advice about using ceiling fans in order to be able to use your air conditioning less.  Check out Ceiling Fan Hacks: Save Big on Energy Use.

Here’s one for those of you interesting in investing ideas. Jonathan at My Money Blog posted an update talking about a new global index fund from Vanguard.  Might not be a bad fund to invest in if you’re interested in diversifying into the global market.  Check out Vanguard’s New Global Stock Index Fund.

That’s it for this weekend.  See ya next week!  ^_^

Today’s Friday Book Club will feature chapter 5 of The Automatic Millionaire which was written by David Bach, the New York Times Bestselling Author of Smart Couples Finish Rich and Smart Women Finish Rich.  Chapter 5 is entitled Automate for a Rainy Day and is all about creating an emergency fund, or a rainy day fund, for protection.  I’m a big believer in this.  In fact, my wife and I are already well on our way to having a six-month emergency fund saved up.  We’re about halfway there right now and it has been one of the easiest things that we’ve ever done.  You see when we got married we decided that we didn’t want to be like some of our friends who got into financial troubles (even little ones sometimes) and didn’t have any way to cover these “emergencies.”  So we decided that before we did anything else with our money that we’d establish an automatic savings plan which would begin an emergency fund for us.  It’s paid off quite well for us and we have peace of mind now if anything bad were to happen.  On to David’s advice then…

The “Sleep Well at Night Factor”

“How can you provide yourself with some financial security today?” is the question that David asks within the first few paragraphs of this chapter.  Are you prepared if something were to happen?  Could you pay your bills if you lost your job and were unemployed for two months?  Things happen and as he says, “circumstances change.”  So what can you do to provide yourself with some insurance against this chance of risk?  Of course the answer is quite simple.  By setting aside cash as an emergency fund you can help protect yourself and your family from any financially devastating changes.  How well are you prepared to weather any storms that life might throw at you?  David asks just a few simple questions where you can easily figure out the answer to this question.  I’ll ask them as well.

• My monthly expenses currently total: $_______________
• I currently have $_______________ saved in a money market or checking account
• This equals _______ months’ worth of expenses

How’d you come out?  I’ll do it with you.  My monthly expenses currently total (roughly) $1,162 dollars.  This includes some items which I could drop if needed (such as the internet and my phone).  I currently have $3,299 dollars saved in an emergency money market.  This equals 2.84 months worth of expenses.  Not the six months that my wife and I are shooting for, but like I said it’s a good start.

Let’s Make A Goal: Build An Emergency Fund

Let’s decide together - right now - to not let ourselves get caught in a bad situation made worse by not having any cash on hand to weather catastrophes.  It might sound like a difficult thing to do, but as long as you make it automatic every single month you’ll never even notice the money is missing.  It will not happen overnight but over time you’ll notice that you have a month, two months… four months and finally six months worth of expenses saved up.  So back to the book then.  At this point David lays out three rules of emergency money.

1. Decide how big a cushion you need.
2. Don’t touch it.
3. Put it in the right place.

Decide The Cushion Amount

When it comes to deciding an amount you’d like to have as a cushion it’s mostly a personal choice based on your personal situation.  Finance is not and should never be thought of as a one size fits all type of thing.  Since we call it personal finance, we ought to make sure it’s personal right?  Anyway back on track now.  I recommend personally at least a six month cushion, just to prepare for the worst.  Maybe it’s my old boy scout genes talking, I don’t know… but I think one ought to be prepared.  Of course if you’d feel comfortable saving more then please do.  Or on the other hand if you think three months is more than enough than fine… it’s all a matter of preference.

Don’t Touch It

Here’s where most people start to have trouble with these emergency funds: they use them for non-emergencies.  There’s a sale at the shoe store and you don’t have any cash?  Don’t take it out of your emergency fund.  Saw the latest and greatest gadget while browsing the lanes at Best Buy?  Don’t take it out of your emergency fund.  Lose your job and don’t find a new one for a month or two?  In this situation, you might consider using your emergency fund.

Put It In The Right Place

As David mentions in his book you should not be letting banks get rich off of your savings.  Don’t put your emergency fund in a savings account at your bank or credit union if you’ll only be getting .50% percent or even 2% interest on the balance.  Shop around.  See what rates you can find on savings and money market accounts at your bank, your credit union and even brokerages.  There are a billion places that are offering rates much more suited to your needs.  Give Vanguard a try, or ING or Edward Jones.  Look at Bankrate.com to see what rates are being offered in your hometown.  The point here is that if you’re going to have money you might as well have it work for you.  If you plop your money in the first 1% savings account you find it’ll take your money 72 years to double, but if you can find yourself a rate at something even like 2.5% you’ll cut that amount of time down to 28.8 years - and even less the higher the rate you can find.

That’s All For Now

Chapter 5 wasn’t very long and wasn’t even very meaty - but it’s a ridiculously important concept that is far too often looked over by consumers and financial advisers alike.  To recap:

• Bad things happen and to be prepared for these bad things you should start an emergency fund
• Decide how much of a cushion you think you need
• Don’t touch - unless it’s a TRUE emergency
• Make sure you don’t just plop your emergency funds in a low-interest savings account
• Make it Automatic: set your paycheck up to direct deposit a predetermined amount into your emergency fund every month

If you’re interested in checking out my previous recaps of The Automatic Millionaire then check out the links below.  I highly recommend doing so.

The Automatic Millionaire: Chapter One
The Automatic Millionaire: Chapter Two
The Automatic Millionaire: Chapters Three & Four

The question that I’m asking at this point however is: is it too little and too late?  I’ll admit that the financial markets have been arduous lately.  I know this more than a lot of people, because I work at a credit union in Phoenix, AZ.  I’ve seen the massive slowdowns and read about the increasing loan delinquencies and writedowns that are taking place.  This with a relatively small (relatively speaking) and very conservative credit union with around $3 billion in assets.  Things must really be difficult for a lot of the larger financial institutions.  It’s obvious they are actually from the constant news of new write-downs.  This so-called recession has even taken from us one of the largest investing companies in the U.S., Bear Stearns.  Things are definitely crazy, but have these huge rate cuts been helping?  Or have they actually been hindering the recovery process?

These Things Take Time

Anyone who’s studied even the most basic of economics knows that market changes don’t happen overnight.  They also don’t happen in a week, or even a month.  Large changes in the financial markets can take months and even years to happen.  Keeping this in mind, one would ask why the Fed cut rates twice to a total of 1.25% percent over a matter of about a week and a half not too long ago?  These things take time, right?  So why so much over such a short amount of time?  I understand their reasoning.  They were hoping to restore confidence to the financial markets… specifically the stock markets.  Something that’s not exactly in their job description.  However I won’t go into that as it’s a completely new topic.  My point in bringing this up is that I’m actually fairly convinced that these large and frequent cuts have done much more harm than good.  All opinions are welcome on the matter, and keep in mind that I am no economist and this is only my opinion.

Have you seen the price of oil lately?  Or the consumer confidence index?  They’re at an all time high and low, respectively speaking.  Obviously there are many factors going into these things, but it’d be foolish to assume or to say that these fed rate cuts have nothing to do with it.  I’m of the opinion that because of the .75% emergency rate cut that the Fed made back in January, followed by the .50% percent cut a week later that consumer confidence was actually hurt.  As a generally uneducated crowd when it comes to finance and the ways of the financial markets we sort of come to expect what’s normal.  What’s normal to us are small and steady rate changes.  .25% here and there up or down are pretty normal in our eyes.  Naturally when we see a much larger change that was initiated by an emergency Fed session we’re going to think something bad is going on.  Self-fulfilling prophesy is a relatively common term that floats around in economics.  In the case of these ridiculously large cuts by Bernanke and company this term might be applied.  As consumers we noticed large emergency cuts and naturally starting to believe that things were much worse than we had previously thought.  Naturally this caused us to become skeptical of the whole situation and we began being more careful with our money.  Self fulfilling prophecy?  I do believe so.

What I’d Like to See

I’d love to see a rate increase in the next few months.  Inflation is going to be a huge problem if the Fed doesn’t do something to try and combat it.  Keeping rates steady will hopefully stop any more increases in the level of inflation, but it’s not going to cut it down.  Not at all.  

The Meat

I’ll get right into the good stuff… what I specifically was taught by my instructor at the Tecnologico de Monterrey.  Business negotiation practices are very different wherever you go, even between countries like the U.S. and Mexico.  There are several large differences between negotiation practices in the U.S. and negotiation practices in Mexico.  To make reading easier I’ll go ahead and list the most common negotiation characteristics and practices in a bulleted list (keep in mind these are very generic lists).

U.S. Business Negotiation Characteristics

• Superiority complexes are common, and as such they feel that everyone should speak their language (English, duh!)
• Direct and to the point - we do not like to waste time on informalities
• Quick to make decisions
• Aggressive and competitive
• Like to use social events to further business negotiations

Mexican Business Negotiation Characteristics

• Don’t always speak English and feel that if we want to do business with them we might try learning their language
• Feel strongly about developing trust and getting to know the other party before starting (and during) business negotiations
• Do not like to feel pushed or rushed when it comes to making business decisions
• Very cooperative with business associates when trust has been developed
• Do not wish to discuss business over social events and will probably be offended if you try

The Point Is?

I’m not going to get into any more details about the differences between U.S. and Mexican business negotiations as that’s not exactly the point of this post.  Rather I’m interested in the idea behind all of these differences and what I think is important to learn and accept if you plan on doing business anywhere outside of your home country (or even state or city).  I think it’s best if we remember the rule, “When in Rome, do as the Romans do.”  Even more appropriate would be to adopt as a general rule, “When you’re Roman doing business in Rome with an Italian, learn Italian negotiation practices.”  Here’s the punch line: Go the extra step to make your business counterparts and associates more comfortable and you will go far in your business negotiations.

It’s not a difficult idea but it is one that a lot of people have difficulties with.  Especially U.S. businessmen.  It may be stereotypical but I do believe that a superiority complex is far too common among our types.  If we are to succeed in the Global market we need to change and adapt.  We need to learn to do business in more ways than just our way.

Do you have any experience with doing business outside of your national market?  I’d love to hear any positive or negative experiences on the matter of global business negotiations.

David from moneyning wrote a fantastic post about practicing patience when it comes to making purchasing decisions.  He gives some nice practical advice about what you can do to avoid making impulse purchases which you might regret at a later time.  Check out Patience Will Keep Us From Spending Unnecessary Money.

Pinyo from Moolanomy wrote about a challenge he ran across called the 100 pushup challenge.  He explains why he thinks health is a huge part of personal finance.  Check out Better Health and Finances With 100 Pushups. (On a side note I’m going to participate in the 100 push up challenge.  More on this soon.)

Trent at The Simple Dollar wrote a profound post about addiction, how it affects personal finances and ways to overcome all types of addictions.  A must read for anyone, especially if you have this problem or know anyone with it.  Check out Addiction and Personal Finance.

I normally wouldn’t post mainstream articles posted on sites such as CNN Money or Yahoo Finance, but I ran across a really interesting article about Bill Gates and what he plans to do with his time now that he’ll be retiring from working full-time at Microsoft.  Definitely an interesting read.  Check it out at CNN Money.

That’s it for this week!  I’ll be back on June 23rd with some new updates!

Not A Bad Idea, But Will It Really Work?

Honestly I’m all for increasing spending where it’s important for the future of the country, and more importantly the future of the world.  Education is a great place to spend money on (efficiently of course) and I’m definitely all for developing alternative energy.  Overall the places which Mr. Obama has outlined as important to spending I agree with.  However I’m not so sure how realistic it is to assume that the money to fund these plans will actually come.  The war in Iraq is probably likely to end if Obama is elected (at least if he does what he is saying he will), but what does it really mean when someone says that they want to reduce government waste?  Or charge polluters for greenhouse gas emissions?  These are quite vague.  I drive my car to work which means I emit greenhouse gases.  Does that mean I’ll be taxed for these pollutions?  Any ideas out there?

Globalization Is Inevitable

Another interesting part of this article was Barack Obama’s response when asked about protectionist trade policies designed to protect American jobs.  He said, “it is impossible to turn back the tide of globalization.”  Good man.  I’m glad that someone in Washington is smart enough to at least realize the truth of this matter.  We’re going global, whether we like it or not.  If we prepare for it and stay competitive then we’ll survive in a global market.  If we don’t and instead whine and complain and fight for protectionist trade policies and increased tariffs, etc. we’ll crash and burn as a global economic superpower.  I’m actually a fan of his policies regarding this.  I’m glad that he’s realized that we need to change and adapt, if we want to stay competitive.  Now if we could only convince everyone else…

Ryan at The Better Credit Blog brings up a fantastic point regarding personal finance education (or the lack thereof) and how credit card companies specifically target college students because of their vulnerability. Check out How College Students are Taught Personal Finance by Credit Card Companies.

Tim Ferriss, author of The 4-Hour Workweek, recently attended the Berkshire Hathaway annual shareholders meeting and had the opportunity to ask Warren Buffett a question. He asked Mr. Buffett, “If you were 30 years old and had no dependents but a full-time job that precluded full-time investing, how would you invest your first million dollars, assuming that you can cover 18 months of expenses with other savings?” Warren Buffet responded with a very unexpected answer. Check out Tim’s post about this experience: Picking Warren Buffett’s Brain.

Michael at Money Musings talks about everyones favorite current subject: gas prices. It’s actually a redux to a previous post by him about the stress caused by increasing fuel costs. It’s an interesting read and also has a link to a downloadable excel spreadsheet which can be used to calculate fuel costs if it were to cost a certain amount ($6 a gallon, anyone?). Check Out Gas Price Stress Redux.

With the increase in fuel costs it’s becoming more difficult to stay within a budget, especially for us twenty-somethings. Trent at The Simple Dollar gives some practical advice on how to have fun and go out while keeping your costs low. Check out Sixteen Ways to Go Out on the Town on the Cheap.

Blake at Youngdough.com shares with his readers his strategy for investing in SOLID dividend paying securities. Check out How I Invest in Solid Dividend-Paying Securities.

That should be enough to keep you busy this weekend. I’d love to hear your comments on this weeks weekend reading. We’ll do this again next weekend.