So yes, I’ve been in hiding for a while now, but it hasn’t been without keeping finances in mind! I’m a month away from having the third member of the family join us, our third little lady is due August 25 - so I’ve been working on some side projects - one of which is ready to roll!

Times are tough and the economy isn’t showing any signs of letting go in the near future so you’ve got to be tight with the funds; I can relate, but here’s a hands-down easy way to turn $400 bucks if you manage or KNOW someone that manages a retail store! Mjedi.com has just released their BETA site and are looking to build their name and they’re giving away $400 CASH if you can introduce them to your friendly local retailer, and in this case, size DOESN’T matter!  1 employee or 10,000 pays out the same amount!

What is Mjedi?

This is one of the reasons I’ve been in hiding, I’ve been working with them on their backend and website design!  I think I’ve done alright on it for version 1.0 and they’re ready to start helping people save!

I took on the project primarily because I liked the service it offered. It fits well with what we preach here and it is with people I know and trust. The basic pitch of the site is to keep you informed about the products YOU care about at your favorite local retailers via SMS or email. A lot of sites want you to see everything about everything on sale at their place, this is a new tactic – YOU tell Mjedi what YOU like at the store via an SMS, and they tell you when that item, and ONLY that item goes on sale!

It Benefits Both Sides

As a Retailer

In the past, retailers haven’t had a way to close the loop as to why a person left the store; usually it’s about price, but what items and what price would they want it at? There was no feedback loop.

With Mjedi, as a retailer you’ll see what people are interested in, and be able to adjust costs as you see fit on the items that people are really interested in! If you’re a retailer, you want people in your store; especially in a down economy. You want people buying your things and promoting your brand. Mjedi can help do that.

As a Customer

As a customer you don’t want everything that comes in from a store. You get their mailers, you know what’s out there, but it is likely not the things you want to be on sale. And if it is, it’s not what YOU want the price to be.

Additionally, you don’t have the time to search through the catalogs that get sent out about the stuff you don’t want. If you’re like me, you go into a store and shop around based off the store itself. I like certain stores for the TOTAL package of what they have, and if I’m in the market for something they have, I’ll go there to see if they’ll have it. If it’s too pricey or I see an item I’d rather have, I’ll usually take note of it search online, but Mjedi is set up so that you send one SMS with the UPC code in it and you’re done!

Log on to Mjedi.com from home to manage the UPC posts, update your preferences, and integrate with your Twitter and Facebook accounts of your favorite items that you’ve just picked up for well below Bluebook value! 

Conclusion

It really does have the full package and I’m sure the service will sell itself once it gets off the ground! That being said, the site is 100% legit and I can personally guarantee you’ll receive the $400 if you introduce them to a retailer that signs on for the service! I know the CEO and he’s absolutely dedicated to the process and is an honest guy!

I’m not sure how long the offer will last that he’s going to pay out $400, but he is doing it now, so if you know someone, I’d recommend them as soon as you can before the offer closes!

To refer someone either contact me and I’ll pass it on, or email tellmemore@mjedi.com!

In case you’re having some trouble understanding what they offer, here is a bit more simplied version with pictures!

I read an article today on Fool.com that discussed finding your “investing edge”.  It makes good sense.  With anyone in any profession they need to focus on one thing to put them ahead of the competition.  They mentioned Dennis Rodman who was an excellent basketball rebounder in his day.  He wasn’t a great shooter, or defender, or dribbler even; but he WAS good at one thing, rebounding.  And that was enough to put him at the top of his game throughout his career.

This logic makes sense in any activity at all though - if you daytrade all day for 5 years, I guarantee you’ll be better than 99% of the rest of the world at it; granted you’ll have to turn a profit at some point.  But take something basic and in a niche like municipal bonds.  Yea, they’re not very exciting, but I’d bet that if you researched and studied them for years, you’re going to be very good at it come 10 years.

As anyone that is reading this now, they’re clearly interested in their financial futures, but sitting around and thinking about getting into mutual funds or expanding your 401k, or starting a ROTH IRA isn’t going to just happen out of the blue.  Yes, you can probably muddle your way through it, but you’re going to get some bumps and bruises along the way if you don’t do  your research on each of them.  If you’re investing in it, KNOW about it first, don’t go in blind.  Learn about the funds in your 401k and compare them to other 401k plans out there - are they on target for your goals?

If you’re looking to invest in an IRA, know the different types of IRAs.  Maybe you can contribute to a SEP IRA and cut your taxes, or a SD-IRA invested in pretty much anything.  Maybe this could add some pop to your current Traditional or ROTH IRA setup -

Learn what you’re getting into before jumping into it or you’re going to find yourself making a lot of the same mistakes I’ve made.  Granted, I’ve learned a good amount from them, but they’ve cost me in my portfolio.  Find your investing niche, be good at it, become the best in the business at it and experience alone will put you well ahead of the crowd…

So in regards to my post How Much Is Too Much I have been back and forth with my possible new insurance agent, and she has offered me an interesting tidbit:

“…regarding the home, currently you have it insured for $516,000.  Home insurance covers the dwelling itself and not the land because in the event of a total loss, the land would still be there. We use a system where I input all the information about your home and it calculates a dwelling coverage amount.  The cost to rebuild a home is approximately $120 per square foot which comes out to $324,000.  Our calculator came out to $320,000 so your current coverage of $516,000 is more than sufficient.  I would recommend insuring it for $330,000.”

What does this mean?  Well, basically that I have been paying for 500k of insurance when really I wouldn’t need that.  In the event of total destruction, you still own the land your house sits on, and THAT shouldn’t be harmed in the horrible event of total destruction.  That property would still carry a value and shouldn’t need to be insured.  It might be worth pinging your insurance agency to see if you’re paying too much for homeowners insurance.

I thought I had some good points to contribute, and stories to tell even though I’m nowhere near retirement. I really have had a few bad investment mistakes along the way, and I’m sure I’ll run into more in the future, but that’s one of the points of MyInvestingBlog.com - figuring this stuff out!

The BAD investments include:

1. I crafted a post earlier this month that touched on the get rich quick schemes I fell for. This was throughout my teenage years I fell for these ideas, what can I say, I was young, dumb and WANTED the money. At least I had the drive to push forward on it. I didn’t sit and let life come at me! Unfortunately, believe it or not, none of them paid off.

2. In 2003 I took a $10,000 loan out on my 401k to fund a possible startup company that ate it and along with it my money. I wasn’t interested in a retirement portfolio at the time. I knew I should put money into it, and it was amazing that I had that kind of money in there to borrow in my early 20’s, so in looking back, I applaud myself for putting the funds in originally. However, I’m still not through paying it off yet and it hits me several ways I didn’t research when I initially came up with the idea. The first way it cut me was that “loan installment fee” of $100 right off the bat. Then there was the double taxation:

“If you recall, your retirement plan contributions are made on a pre-tax basis. This means that you realize a tax break when making contributions to the plan, and you’re then taxed in the future when you take money out of the plan. Unfortunately, when you take a loan from your plan, you may be subjecting yourself to additional taxes.
While regular 401(k) contributions are taken out of your paycheck on a pre-tax basis, the loan repayments are not. This means that you are taking pre-tax money out of your account`and then repaying it with after-tax money. This can result in some of this money being taxed twice.”

Third point of #2 is the whole loss of interest in the compound interest structure from taking 10k from the 401k at age 23. Bad idea. As I’ve still not put everything back yet and won’t till 2010 on the current payback schedule, I’m losing big $ in the $ I have compounding in there. Yes, I may still be adding 10% per paycheck to my 401k, but 8% of that goes back to the loan I took out each check too, further pushing back that number. Lastly, that 8% they entice you to pay back to the 401k loan IS money you’re paying back to yourself, but you’re paying that with the after tax money now furthering that gap. I wrote an article on my brothers payback schedule for his wedding last week that shows how much you’re losing by digging into the nest egg now.

3. I gave Day Trading a shot when I was 19 and had a full-time job already. I breezed through 5k there in nothing flat. I couldn’t devote the time needed to watch the market, the tools or knowledge of how the software worked, nor the terms and pieces I needed to utilize (short selling, day orders, hard stops, long puts, etc.) the idea properly. My money was eaten up so fast from transaction fees and losses it’d make your head spin. I don’t deny that this may work for some, but you have to have the tools to do so, and I wouldn’t recommend starting in the stocks with anything less than $25,000 or the fees are just going to eat up any profits you make.

4. Undercut my ROTH IRA growth potential by cashing it out and rolling it into a land investment deal. Again I applaud myself for even contributing to this at a young age, so kudos to myself there, but I DIDN’T yet understand my undercut to my retirement (see #3) and should have realized that I’d be better off just sitting out this investment until I had enough money to put towards it. This actually still might not be a bad idea though. I’ve restarted another ROTH IRA in the interim with Edward Jones and the land deal is in a good area that is selling like hotcakes now, but still not a good idea to dump the NEAR sure thing in a ROTH IRA.

5. I’m still not convinced that my Variable Universal Life insurance policy is a completely lost cause yet. I haven’t gotten any responses on the post I left for it last week and it sounds like I’ve sat out the bad years that the agent is taking her cut of the $ as I’ve been investing blindly for 4 years now, the mutual fund that is wrapped in it is almost catching up. Granted I’ve put in almost $10,000 in that time frame and the mutual fund value is nearing that mark giving me a o% gain over the past 4 years, but from what I’ve read, it might be worth sticking around for. I know the Suze Orman folks (TeachToRich, Queercents, Flexo, Select Quote) folks will tell me always recommends term life insurance and investing the rest of the $, but I’m not completely sold yet. I try to take everything with a grain of salt, so if someone has some knowledge to share, or comparison to share, please let me know. I don’t know if I can consider this an “investment” but I would like to hear an opinion either way on it if someone has a term policy that is simple while investing the rest. Clearly a 0% gain isn’t good, but am I over that “paying the agent” phase now? Will I see $ in the future here? Please let me know, but for now it sits in the “bad investment decision” tub.

6. Co-signing a student loan for a “then friend” saving him $8,000. He gave me $3,000 to co-sign with him as I didn’t think I’d find myself needing a very good FICO score to secure a new house for my new child and new easy-make family. When I signed on he told me that I’d not have to worry about it hitting my credit; I didn’t really care that much then. I didn’t own anything, didn’t have debt, and didn’t plan on moving in with the girlfriend and settling down within the next year. Well, long story short, the friendship was shot because he pushed me to sign the papers again the following year as I had “verbally agreed” to help him pay for his college. Yes, money between friends shouldn’t happen unless you’re 103% (Yes one hundred and three percent) certain of the terms and the effect it will have on your relationship. I was honestly best buddies with this guy and it all went out the window for $3,000. Strange how money works. So this was a bad decision on a personal AND a financial level both.

I’m sure there will be more in the future that I’ll hit myself on the head for, but experiencing is the best way to learn. Keep a clear head when making the financial decisions and think them out rationally or you could find yourself making the same mistake twice, I’m sure I won’t though thanks to these hard learned lessons.

One of the major goals of my site (written in my disclaimer) is to be able to give my children a better financial education than I received when I was growing up.  The most financial education I have now is that I should be as frugal as humanly possible in every situation as we didn’t have much growing up.  And yes, that has lead me to where I’m at now (my post about frugality here) to an extent, but that is hardly an education in finance.

In high school I was required to take shop, home economics, care for a baby for a week.  All of these classes clearly are VERY helpful in society today (pun intended).  As electives we had the choices of automotive, music, and creative writing; which have a bit more value, but stress, BIT.  How often do I use those combined skills per day?  Per week?  I’d say it’s closer to per month and in total I’d say maybe 2 or 3 times.  How often do I have financial decisions/choices?  DAILY!  How much more value would you have gotten out of a basic “money management” course in high school, or even middle school?

I have been chatting and agreeing with The Financial Blogger a bit recently regarding his Open Letter to All Governments and he has given the ok to post a few clips from the article.  I was trying to come up with something similar and in my research stumbled across his post.  I have a few additions, but I’ll quote a few of the choice parts:

“This is an open letter to all governments. I am addressing this situation to all countries because I think it does not matter if you live in the USA or in Japan, our constant need for money is one of our biggest common points.”

Everyone needs money, and almost everyone deals with it on a daily basis!  It doesn’t matter where you live, you likely need money there…

“…ignoring financial education will result into bigger financing issues. I think it is the time for stopping this vicious circle and bring personal finance into our schools. The overall population have very little finance related knowledge and this must be addressed urgently.”

Not educating the general public about financial issues they’ll face later on it life is only exacerbating the situation at hand.  We are already a nation of HUGE debt, and fall further and further into it each day.

“Unfortunately, our children will likely repeat our very same mistakes. They will think those 36 months without interests are the only way to acquire goods and that their credit card is the key to financial freedom. Sooner or later, they will wake up as we did; half dead of working so many hours to pay our monthly bills…”

Another key point to helping my kids learn; we really do need something outside normal day to day family activities and interaction to find an education platform.

“Educating children to be more responsible about money, explaining them how to manage a budget and planning their retirement will solve several economic issues…. …If one can manage his finance, save money and invest a part of his nest egg, the overall economy will prosper and write history. We would literally start a revolution in term of financial independency and overall wealth.”

I can’t even begin to ponder how any goverment CAN’T see then benefit here.  We’d be helping ourselves by becoming a financially literate and debt-free nation that is more proactive or creating wealth instead of creating debt and lining the pockets of credit card company executives.

“…I am asking you to seriously consider the addition of financial education into our primary and high schools. This matter could easily be used to combine and integrate other academic acquisition such as mathematic and languages. After all, personal financial management could only contribute to a better future…”

Ultimately we need to find a better way to dig out of the debt.  We’ve got a crumbling Social Security and medicare structure that may not be around when the GenX’ers are old enough to use it and teaching them to crawl deeper in debt is only distancing the finish line they may never reach for financial independence.  So to whom it may concern, how do we go about building a course in the early years of school for the New Silent Generation?  I’m happy to pay for it with my tax money, and happier to jump on board any party willing to support this initiative!

Oh how many times has this very question rolled off the tongues of people over the past 100 years? You get your first car, you move to a new city, you broke down in the middle of a trip, you buy a lemon, etc, etc, etc… The list goes on, but the question is still asked generation after generation. Car mechanics go hand-in-hand with computer repair folks and contractors for being known for bending you over if you haven’t a clue about the subject.

I’m STILL looking for an honest mechanic since I moved to Washington 7 years ago. I’ve been in and out of dealerships, repair shops, friends mechanic friends, a guy who knows a guy, my real-estate agents mechanic, but none have fit with me yet. I still find they’re trying to squeeze me for something extra or something I don’t need. Everyone has a different version of what is wrong with my car and I get pretty frustrated.

I think the best way around the issue is to find a mechanic that has something YOU can offer THEM and make a trade. Say you’re good at computers, work out a plan to fix his computer issues for just parts, no labor charged and see if he’s willing to do the same for your car. Or perhaps you’re good at blogging or advertising, clearly possible trades come out. Trades in business aren’t as common as they once were it seems. I recall growing up with my father trading everything possible and never having any real money to stand on. We’d trade building a fence for a month of groceries. Carpeting a house for 2 weeks of gas. Honestly it was a common practice that I don’t see so much anymore, but really could and should work.

MotherLoad has written a post about finding a good mechanic it looks like she’d be happy to refer you to if you live in Indiana, USA.
FreeRangeLibrarian has also found some decent mechanics for folks also here.
TrustMyMechanic seems to also have a few good points and tips that you should investigate before jumping into the phonebook to search.
AutoEducation also offers some good tidbits on what to look for when looking for repair advice.
AceAuto might have some points and tips to finding what ales your car.

If you’re in a like mindset, feel free to post your information here and you might just find someone in the same area of the country looking for a trade also. You never know if you don’t try. It might be worth a few hundred dollars to at least give it a try. The best advice I can give is to investigate this info or try to find a mechanic BEFORE you have problems, or else you’re exactly where they want you to be, in need of repairs…

Heck, I’m still in the market for a good car mechanic here in Washington, so if you ARE this trustworthy person I’ve been looking for and need help blogging, computer problems, or just general labor for trade, I’m certainly willing to listen. Drop a comment here or get in touch via the contact me page.

I was sent this email a few weeks back but haven’t gotten to it yet, and I let it stew a little bit before digging in on it because it really dos hit on a few levels.  You’ve got to step back though and realize that the banks are in trouble too.

They’re out looking for handouts from Obama & Co just like everyone else.  They’re not willing to help because they’re still not done milking the “Great Depression 2″ for what it is worth.  Sure, they’re losing money, but it’s still not certain that they’re not getting any more.

The Email

Hello,
I have been trying to understand a couple of things about the current financial situation and perhaps you can answer them.   Number one, Whey are banks and mortgage companies unwilling to work with home owners that are at risk of foreclosure?  How is having an abandoned house with broken windows, long grass and all of the electrical and plumbing ripped out preferable to simply taking a loss on the house to begin with. 

The Situation

How many times have we heard so far of the “bailout money” - and how many times have we heard it’s going to be overhauled or redirected or realigned?  Probably more than we care to.  I think the short answer to the question of this post is “they’re not sure where they are yet.”

How many banks have been sold since the 2007 start of the collapse?  I looked around, but couldn’t find a solid number, but do you think that is done?  I hardly think so.  Last October when PNC bought National City (of which part of my loan is through),  we just heard the part about one bank helping out another, right?

Well, not really - the truth of it is that just hours after PNC Bank accepted $7.7 Billion of the governments handout from the rescue package. In other words, the deal would not have gotten done if the money wasn’t provided to them from the government through the bailout package.

Banks are looking for deals too.  Yes it is a crisis, but people are still people within the banks.  They know money (likely better than anyone) and they aren’t stupid.  They’re businessmen too; and businessmen look for deals.

It’s a Harsh Truth, But Put It In Perspective

It’s a harsh truth, but it’s the way it works.  Picture yourself involved in your favorite card or board game.  I’ll take poker for example which fits quite well for this.  Imagine that you’re down in a hand, have mediocre cards, but you’ve already invested 40% of your total money, and still have 2 chances (cards) left to help you out.  In a perfect world, you’d have 3 options:

1.  See those cards for free and then gauge what you can or can’t bet on it. (no bailout money).
2.  Have someone help front you the cash to see those cards (some bailout money).
3.  Or as a worst case scenario, see those cards for as little as humanly possible (use your own money).

Obama is the dealer in this scenario and he’s not even sure if he’s going to give you 2 more cards or 5 more.  He’s not even sure how much will go to you to help you if you chose option #2, but one thing is for sure - it would be very bad business practice to base your decision on information that is not complete, which is what the banks would be doing if they helped you now.

They’re harsh words, I agree.  I’d like to see it fixed as well, but banks aren’t stupid.  They’ve been around a long long time and know how money works.  This is a bit of a wild card as it’s the first time the government has stepped in to pump so much cash into the environment.  It blurs things a bit - but not to the point where banks aren’t looking at all their options.

What CAN You Do To Try To Get Help

If I’ve established one thing, it’s that the banks aren’t going to proactively help you out at this stage of the game.  It’s not in their best interest right now (crappy, but true).  However, it’s not like they’ve never been asked the question before, you just have to know the right people to talk to and get a shot at a valid refi or help.  As I’ve always heard, if you want things done right, do it yourself.  Use that thought when checking out help for your house.

Call up your bank but don’t talk to customer service; their job is to tell you to get lost.  You want to talk to the “loss mitigation” department. They hold the chips you’re looking to get in o, but before calling them, make sure you have your ducks in a row:

1. Make sure you know the actual loan balance and true current value
2. Get comparable homes in your area from your local MLS or online system to verify similar properties that have sold within a 5 mile radius
3. Take pictures of the property - inside and out - indicating the present condition, and what repairs will be necessary to bring the possible foreclosure property back up to sale-able condition.
4. Take pictures of the neighborhood - especially of other properties for sale on the same street. This indicates competition for the bank.
5. Contact the financial institutions “Loss Mitigation” department - not the customer service dept. The customer service folks are trained and TOLD to tell you “no”!
6. Prepare and present an offer for a “Short Pay” to the loss mitigation department, using the recent sales, foreclosure numbers, pictures, rehab and repair costs and everything else to illustrate that it is in their best interest to lower your balance and payment. They say that a picture is worth a thousand words - in this, case it worth thousands more.

Conclusion

We’re on a long and dusty road that doesn’t appear to be getting any shorter anytime soon.  The short story is that people are waiting to be rescued and unfortunately if you take it that way, you’re just sitting on the sidelines and are likely hurting yourself.  Be proactive in getting what you want/need.  If they shut you down try another bank or another lender.

If you’re sitting late on payments, Obama isn’t your magical answer; unfortunately, he’s the magic answer for people working at the banks, and you can be assured that THEY’RE being proactive with Congress trying to state their case and need for the money, but to give you the bad news, it’s not our magic bullet. It may help us in the future, but the money isn’t going directly to us (at least as it stands now), it’s going to the banks.  After that, we’ll get our turn to deal with them based on how they’ve allocated it.

Don’t lose hope, you can still take a shot at the steps listed above to help you out; banks have always had that division in their structure but I’m sure it’s just a little tougher to get to now.  Yes, they want to help you, but not as much as they want to see the rest of their cards from Obama first, and I have to say, I don’t like it, but I don’t blame them.

Photos by: Martin Pettitt, roland

I was chatting about this over the weekend with a couple people and we really couldn’t put a good finger on what the detriment would be.  It saves money, stops inflation, and will give [good] credit to people that deserve it.

I’m talking about instead of Obama signing an $800BIL package to pump money into our economy, how about taking the debt away.  So not just banks or car makers - everyone.  What’s the problem?

Everyone Has Debt

The grocery store owner owes money to the farmer;  the farmer owes money to the banks; the banks that loan trillions of dollars a year have debts they have to pay to other banks.  Money is cyclical.

If you’re already in debt, getting another $1500 from Obama & Co. isn’t going to help you stave off the bank from taking your house for too long.  Just like the last payment, which hasn’t apparently done too much, is going to get used by the users how they use it.

If you’re a good saver, you probably put that money towards something good last year.  Your ROTH IRA or a high-yield savings account, or towards your house.  Something that’d grow.  And odds are, you weren’t one of the people that was in trouble.

If you’re on the flip side of that coin, you likely spent the stimulus package on a trip to Disneyland or a new car, while ignoring the point of it to put it towards something to give you some breathing room.

Yes, it was dubbed to “stimulate the economy” and you did with your vacation and your new car, but those were likely just last hurrah’s before you lost your house.Now here it comes again with another fat stack of cash to help these people out again.

The responsible people will do what is needed, but the irresponsible folks are likely just going to do something similar again.  The problem isn’t money, the problem is people’s management of money.

If were you to wipe the slate clean across the board and heavily wratchet down the available credit to those that couldn’t afford it, we’d save ourselves from getting caught in this trap in the first place.  The people that couldn’t afford the things they’d bought would get a free ride this time, and not just a temporary life jacket.  It’d be insane, but isn’t 800BIL across the board?

Additionally to the people that are responsible with their money, they’d be re-stimulating the economy by re-investing and reallocating funds properly.  They’d no longer have a car payment or a house payment, as it’d be wiped clean.

They’d be putting their money back into something that would turn a profit for them, and likely in America. To the people that only had 2 years left on their 30 year mortgage vs the people that just bought the house, tough luck and good work paying it down.  Timing is everything I’d reckon.

If that’s too dicey for you…

…how about a stair-step approach to it.  Something along the lines of if you’ve had good payments and credit for 15-20 years, you get your debts paid 90%.  If you’d had good credit for 10 years you get 80% paid, 5 years, 60%.  1 year 30%, etc.  Something so that you get rewarded for the things you’ve done, but get helped at any avenue along the way.

So if you’re a business owner, you know how it can be. Imagine you sell a product, and have just shipped off 50,000 units of your product. You’re no longer getting paid for those products, but you no longer have to pay for them either. No harm, no foul. Send back all the unused items and start again.

Conclusion

I’m not convinced that the first Stimulus Package did anything.  I’m not saying I don’t appreciate it, because I’m good with my money.  I put that money to a few beefier payments on my mortgage, and I’m happy to do it again.  But getting to the root of the problem would be a better stance at the highest office.

I think that “root” is the availability of funds.  It reminds me of the Steve Martin skit from SNL many moons ago - What Do You Do If You Can’t Afford It?  It rings really true for America, and we’ve gotten ourselves in a rut in thinking that credit is easy to come by and easy to get out of, when it is not.

It’s really straight forward to keep your credit clean.  Don’t use it if you don’t have it.  American banks have gotten loose with the cash and need to bring it back to the earlier days of frugality.  If you didn’t have the cash, you didn’t get what you wanted, period.

I say we give everyone a blanket wipe across the board.  We all screwed up, we all know it, and [some of us] think that tossing another nearly 1TRILLION dollars at the problem isn’t going to solve it.  Nip folks with bad credit and don’t let them get it again, would that solve the problem?

photos by: Jeff Keen, chegs

Has anyone else become desensitized to the gloom and doom that is reported daily about the state of the economy? Clearly there are huge issues facing the global economy which should concern each of us however as with anything else, when you see and hear the same thing over and over it becomes possible to just stop listening.

Unfortunately tuning out the news, skipping over the articles about the recession or otherwise putting your head in the sand will not change the reality of the current crisis. Instead of avoiding the news and hoping things will improve you have the option of taking control of one area of the economy, your own personal finances. Now would be an ideal time to gauge your own financial situation to determine how financially fit you are today.

Check your savings- Financial experts recommend having at least three to six months of living expenses in your savings account. I am not a financial expert therefore I will certainly not argue that advice, however if I may speak for the population that is living paycheck to paycheck without any savings to speak of, it might be a little tough to put that kind of money away. Tough- but not impossible.

The key to saving money even for families that are working with very limited funds is getting started. A few bucks each pay may not fit into the “standard” saving plan but the economy is anything but standard right now. If you already have a savings account and contribute regularly continue to do so and try to avoid situations that would require you dipping into your savings.

Check your credit score- Checking your credit report and credit score should be something that you get in the habit of doing at least once a year regardless of the economy. During a recession the importance of knowing your credit score becomes even more critical since obtaining credit may become difficult if not impossible as lenders scramble to reduce their risk. Add to that the current trend in the credit card industry of canceling dormant accounts and lowering credit limits you may discover your credit is taking a hit even if you have been financially responsible. By being informed you can actively work to repair or at least minimize the damage to your credit score.

Check your investments- Are you afraid to find out where your investments stand? Have you been avoiding checking your statements for fear of realizing how much you have lost? One thing is certain, not acknowledging the facts will not make them go away. Find out where you stand so you can make educated decisions about your investment goals for the upcoming year.

Check your taxes- Don’t worry they haven’t gone anywhere- but your tax planning strategy should be examined to make sure it is working properly. Are you claiming all eligible deductions, receiving applicable tax credits, paying too much money or too little throughout the year? Proper tax planning can take some of the guesswork out of tax season and ensure you won’t have any unwanted surprises when you file your tax return.

Check your retirement- Are you taking full advantage of retirement plans offered by your employer? Do not let the recent turn in the economy stop you from contributing to your retirement fund, especially if your employer offers a match. The best way to guarantee you outlive your retirement assets is by stopping contributions to your retirement account.

Check your insurance policies- You need to make sure all of your policies are still relevant and the information is correct so you can maintain the proper coverage. This applies to all types of insurance from homeowners to life insurance. People often have policies and forget about them -assuming they are covered. Life is not predictable and situations change, it is important to check your policies at least once a year to ensure you are not over/under insured.

Check your estate planning- There is an alarming number of Americans who do not have a will and many who have wills that haven’t been updated in years. First if you do not have a will you need to remedy that as soon as possible. Estate planning is not just for the retired or wealthy. If you do not have your wishes documented the state will determine how your assets get distributed when you pass away. Your will should include your last wishes, appointing a power of attorney, a living will in the event you are unable to make decisions regarding your health care and how you wish your estate to be distributed.

When your financial “checkup” is complete you can feel confident that you have allowed yourself the opportunity to update information, change strategies and confirm your current financial fitness before moving forward into the new year.

Trisha Wagner is a freelance writer for DepositAccounts.com, where you can compare rates from dozens of banks in one place. Trisha writes regularly on the topics of personal finance and saving money.

This post is part of the Money Life Network’s latest buzz “Jumpstart Your Economy:  Tips For Starting Your New Year Off Right! 

It is a common held belief that everyone out there trying to help you make money is just trying to take your money. I think that it is true to a degree, I’m not saying there aren’t slimy people out there just looking to take your hard earned cash, but there are ways to minimize the chance that you’re going to run into such a person. Heed these warnings…

There Is Such Thing As Good Help

So before we go too far and get a slew of financial planners on here ripping us a new one, let me first state that there ARE good financial planners out there. However, I’d like the NON-financial planners out there to know that you need no certifications of any kind to put “financial planner” as your profession. A CERTIFIED financial planner has some tests to take that can distinguish them from the standard guy hacking it to become one.

Additionally, CNNMoney had a good Q&A about it last year that featured a good few lines: “Question: I am a financial adviser, and I feel it’s easy for you to be critical of our practices when you are at your desk and not in the field trying to help actual human beings. Can’t you find just one testimonial or write one article reflecting a scenario (and there are a lot of them, believe it or not) in which an adviser has helped a person achieve their financial goals?

The Mole’s Answer: Actually, I happen to be a practicing financial planner and am trying to help human beings every day. That’s what distinguishes me from other financial columnists.

Still, I think your point is well taken. I do know many good financial advisers who help their clients achieve their financial goals. I’ll get to why I don’t write about them in a moment. But first, I’d like to address your point on what a good adviser can do for clients.

Good advisers know how to take a step back and look at a client’s overall financial situation and let them know whether they are on track to meet their goals. They can then look at several areas of the financial plan and make recommendations on changes to increase the likelihood of reaching those goals.

So take the above into consideration with the below that may start to sound like it’s a pit of despair that you can’t get out of, because it’s not, and you can.

Utilize Your Free Options

It costs you nothing to hit up a handful of your closest financial advisers in the area to give you an initial consultation. They want to “earn” your business by giving you good advice to start off your relationship. However, I’ve found that this can be more of a crap shoot depending on how the market is at the time.

Shop around, they’ve all got things to tell you to woo you their way. Maybe you’ll make a connection above and beyond just the money that leads you to trust them. Not all of them are dry old bums that just have the job to have a job. There are good people in the industry that are really looking to help, you just need to do some digging to find them.

These People Aren’t Magical Wizards

Let’s be honest, you’re not reading this blog because of the stunning satire; you’re reading it because you like to keep abreast of what’s cooking in the financial waters. You want to know how to turn a buck in a sour economy and aren’t sure where to put your money to give it the best bang for its buck, right? Additionally, you assume that since these financial advisers live and breathe investing, that they know all the answers, right?

I’ve got news for you, they’ve got all the fanciest charts in the world, but when it comes down to it, a financial adviser has a job because you give them a job. If they were all-knowing with money, do you really think they’d have time to help you out while they’re counting their millions?

Or how about how the stock market has had thousands of people claim to have the “magic stock picking robot” or “fool proof investing strategy” - they’re ADVERTISING for you to buy from them. If they really had the magic pill that you could take and transform their finances, would they really need to advertise it?

It’s a business, and you’re the one that is keeping it going. There’s nothing wrong with it. These are big decisions not to be taken lightly. All I’m saying is that you’re not taking on a Herculean task in investigating on your own, it can be done.

Ask Questions - Lots Of Them

David Bach has the quintessential bit I believe of “get a referral”. Your friends know who they like, and you like your friends, right? “This is such a cliche, but it’s a cliche because it’s true. It doesn’t make sense to start your search for a financial adviser from scratch. Most likely, you already know someone who has a great financial adviser. You just need to ask.

But whom do you ask and what do you ask them? A logical place to start is with your accountant or attorney. Both should be able to offer you more than one referral. (In fact, I suggest asking for three referrals).

Another great way to get a referral is to ask the wealthiest person you know, “Who do you use as a financial adviser?” It doesn’t have to be a close friend. Ask someone you respect — your boss, or a friend of a friend. The wealthier they are the better, because the rich tend to have the best advisors.”

CNNMoney again helps out in pointing out a few good ones including: “1. What was your largest mistake over the past 10 years?

Be wary of self-serving or trivial examples, such as “I’m too dedicated to my clients.” I’d rather hear my adviser say that she used to underweight international stocks or even tried to time the market and failed. The key is that she’s willing to admit to real errors and can tell you what she learned from them. After all, nobody’s perfect. If Warren Buffett can own up to past mistakes, so can your adviser.

2. Do your financial incentives always line up with my best interests?

Knowing what you’ll pay for a planner’s services isn’t enough. All payment models - yes, even hourly fees - create inherent conflicts between advisers and clients, and your adviser should be up front about that too. For example, a planner who charges based on a percentage of assets should let you know that he has an economic incentive to capture all of the money you have to invest.

3. How have your clients’ portfolios performed over the past 10 years?

Your adviser will likely tell you she outperformed the market, and she may even be willing to provide performance data as proof. But that only tells you she’s trying to time the markets, which will add to your fees and lower returns over the long haul. A much better answer: Your adviser’s explanation of how she provided focus and discipline to allow clients to earn market returns.

4. If I wanted to buy a couple of broad index funds or ETFs, which would you recommend?

This is a particularly important question, as it will give you a glimpse into the adviser’s priorities and show where your interests fit in. An expensive index fund has no chance of outperforming the lower-cost equivalent index fund. So if he suggests an S&P 500 or total index fund that has an expense ratio of 0.5% or more, you know your interests aren’t coming first.”

I personally like the last one because it relates to the point above of shopping around first. If you poll 5 or 6 different people from different firms and they all recommend the same few funds, you’ve got a pretty good idea that they may be good.

From what I’ve seen in the past is that your Edward Jones, Merrill Lynch, Ameriprise, or whoever are going to toss you the funds that fall under their management 95% of the time right off the bat if you go in there saying you’re not sure what you’re looking for.

They do that because that is their biggest payday kickback. They are getting a commission from you buying their funds. The big boss up the chain is happy to kick a bit of your cash to the little guy for signing you up for their stock, who wouldn’t?

Treat The Search Like You’re Buying A New Car

You’re making a decision that you’re likely going to be in for a while. The thing is, we put more effort and time into buying a car than we do to planning our retirements. Take that same approach when finding a planner.

“Most of us definitely consider brand reputation when we decide to buy a car. Some of us will buy the tried and true makes that our parents bought, while other people will take a risk with a newly-introduced car company.

Similarly, you may want to look for a financial adviser who has a longer track record, or you may decide to take a chance with a new graduate who is building the foundations of his or her reputation.

Typically, the financial advisers who have been around for a long time with a good track record will cost more than the new graduates with little experience. That’s not to say that the new graduates can’t make you profits or help you save money, but they do pose more uncertainty.”

Conclusion

Life really does come at you fast. Before you know it you’re at retirement age with no retirement money to show for it. It’s not rocket science to figure out what everyone else is doing. You’re reading a personal finance blog at this very moment. In just doing this you’re ahead of 90% of the people out there.

It just takes practice like everything else - know what you’re getting into and know how to squeeze the most out of what you are able to keep. If you’ve gotta ask a few questions along the way, be prepared. If they can’t answer what you’re tossing out, they’re likely not going to be able to help you.

It’s not impossible, but you do have to stay on your toes to keep them on their toes!
Please do stick around contribute and participate in the rest of the Money Life Network’s Series titled “Jumpstart YOUR Economy: Tips For Starting The New Year Off Right“.  In case you’ve missed the other posts in the series, you can find them here:

• Sunday January 25th: SenseToSave.com Maximize Your Money, Review Your Exemptions Now!
• Monday January 26th: I’ll be delving into the topic of setting up your first budget.
• Tuesday January 27th: FreeFromBroke.com explains why we need a high-yield savings account.
• Wednesday January 28th: PTMoney.com helps us make some extra money (to put in that savings account).
• Thursday January 29th: MilkYourMoney.com dives into a mystery topic.
• Friday January 30th: MyInvestingBlog.com gives us tips to finding a fit financial helper!
• Saturday  January 31st:  Remodelingthislife.com explores how to prepare for a year of holidays.

photos by:  Untitled blue, Playingwithbrushes, Marxchivist