Smarter Money Management

Credit Cards: Cash Back vs. Airline Miles

2015-06-14T15:50:00.001-07:00

When you have good credit you can qualify for great incentives on credit cards. The two most popular rewards are cash back and airline miles. So which should you choose?

I don’t know a single person who doesn’t say, “I want to travel more.” So a travel card seems like a no brainer right?

Wrong.

When you accrue airline miles they just sit in your account. Airline miles cards also just promote more spending. When is the last time you took an inexpensive vacation? Never! Because there is no such thing. Travel by its very nature is expensive.

I’m not saying to never travel. What I’m saying is you want to travel on your own terms, not just because your miles were about to expire, or those were the only dates available when you went to use them.

So let’s look at a smarter way.

We use a cash back credit card and redeem our rewards check each month. Then we park that money in an Ally bank account where it makes roughly 1% in interest. Now our rewards are growing themselves, and we can still use that money to buy a plane ticket, should we choose to do so.

Should I Rent Out My House? A Guide to Investing in Real Estate

2013-08-11T11:32:00.002-07:00

There is a whole new generation of investors is seeing the value in real estate but aren’t educating themselves before taking the plunge. A house is a huge, life-changing purchase so it is important to do the research prior to buying.

Robert Kiyosaki in his best-selling book Rich Dad Poor Dad, spends a lot of time talking about real estate as an investment vehicle. His strategy is to invest for positive cash flow as opposed to capital gains. Positive cash flow means you bring in more rental income than it costs you to have the house. Capital gains are the profit that you’d gain if you sold your house for more than you bought it for.

Buying and holding a house in hopes that the market will go up can be as risky as making an uneducated purchase in the stock market or gambling. Rather than taking this approach Rich Dad recommends that you do the math and ensure that after all expenses you are making money each month on the rental income. This way even if the home value goes down, you are still generating passive income.

Let’s look at an example...

As of this morning a local property management company stated I could rent out my house for between $1200-1450 per month. They charge 9% of the rental income plus a one-time setup fee of $250. The monthly mortgage is $1135.

Key Factors:
9% Management Cost
$1200-1450 per month rental income
$250 initial set up fee (Divide this by 12 to get $21 per month in expenses)
$1135 Monthly Mortgage Payment

With these factors we can now see how much I would need to rent my house for in order to make a positive cash flow. We remove all of the emotional decisions from this equation and just do the math.

I used 3 different figures based on the estimate from the rental company. 1200 on the low end, 1450 at the high end, and 1325 to split the difference in the middle.

$1200 @ 9% = $108 + 21 = $129 (expenses)
$1200 (rent) - $108 (expenses) = $1092 (Rental income before mortgage)
$1092 - $1135 (Mortgage) = -43

$1325 @ 9% = $120 + 21 = $141 (expenses)
$1325 (rent) - $141 (expenses) = $1184 (Rental income before mortgage)
$1184 - $1135 (Mortgage) = 46

$1450 @ 9% = $130.50 + 21 = $152 (expenses)
$1450 (rent) - $152 (expenses) = $1298 (Rental income before mortgage)
$1298 - $1135 (Mortgage) = 163

If my house were rented for $1200 per month, I would lose $43 per month. This is not a good investment. At $1325 I would make $46 per month. At $1450 I would make $163 per month but that is at the absolute high end.

So how do we use this data to make a decision whether or not to rent your house?

If you are at negative cash flow, it doesn’t make sense to rent the house as you are losing money. This is not an investment, it is a money pit. You will need to come up with an alternative solution. Potentially you could rent out by the room to tenants for higher prices than you’d get for the house as a whole, or bypass the management and do it yourself, however now you are adding several variables into the mix such as your time.

Caution On Waiting for Capital Gains:

You may be sitting on a property that has a negative cash flow just waiting for the market to recover. The real estate market does appear to be going up as more and more people are buying houses, however do not be fooled. The economic state of our country has not improved. Nothing has changed for the better to improve our financial situation; in fact it is the opposite because we continue to print money that we cannot pay for therefore devaluing our own currency. This model cannot withstand forever, so hedge yourself for the worst and hope for the best.

Additional Resources:

- Read Rich Dad Poor Dad
- Pick up a copy of the board game called “Cash Flow.” This will allow you to practice your real estate skills and make mistakes before your actual money is on the line. The game is expensive but you can usually find a used copy on eBay for an affordable price.

Loyalty to a Bank

2013-03-23T12:53:00.003-07:00

A friend recently told me how proud they were to have been a Wells Fargo Customer for the last 15 years. Knowing that Wells Fargo is not competitive, I showed her the interest rates at her bank as well as their fee structure and then compared it to a local credit union. Now that loyalty felt more like she was getting taken...

Had she simply been at the credit union vs. her bank the $1000 she had would have made $61.37 per year instead of the 0.50 that she made at Wells Fargo. We can make more than that picking up change in a parking lot!

As far as banks are concerned Wells Fargo is one of the least competitive banks as far as taking care of their customers. Most banks fall into similar categories.

I know what you are thinking, “BUT I’VE BEEN THERE FOR SO LONG!”

This is irrelevant. It is a simple process to change direct deposit information and to switch over your accounts. You work hard for your money; don’t let the banks take it away without a fight. Don’t be lazy, make the switch.

The bottom line is banks have no loyalty to you, so you should not be loyal to them. I don’t care how friendly your banker is or how cute the teller is at the counter, if your bank is charging you fees and not paying a competitive interest rate on your checking and savings accounts, it is time to find another financial institution.

What to look for in a new bank/credit union:

- Do they charge monthly fees?

- What is their interest rate?

- Do they charge ATM fees or have other hidden charges?

- What is the minimum balance for the account?

Fees: Majority of credit unions do not charge monthly fees, maintenance fees, and refund ATM charges. If your bank has fees THEY ARE NOT COMPETITIVE.

Interest Rate: Wells Fargo pays… I’m sure their rate is around here somewhere. Oh, it’s buried under loads of fine print. You may have guessed why… THEY ARE NOT COMPETITIVE.

Minimum Balance: Some accounts only pay interest if you have a certain amount of money in the account. Be sure to check what the minimum is to ensure your money is making the maximum amount of interest. If they want something crazy like $2500 to pay you any interest, you guessed it, THEY ARE NOT COMPETITIVE.

So where should you bank?

These are my recommendations in order of preference based on the interest rates/benefit to customers:

People’s Community Credit Union
Twinstar Credit Union
Addison Avenue Credit Union
iQ Credit Union

(I am not a representative for any of these establishments however I have had accounts at all 4 CU's listed)

Note. You do not see any big banks such as BofA, Chase, or even COLUMBIA CREDIT UNION (That one is really popular for some reason even though they ARE NOT COMPETITIVE).

Want me to review your bank or credit union? Send me the link to their site in the comments box below and I’ll be happy to check it out for you.

How I Made $445 Out of Thin Air in 4 Months (Financial Experiment Update)

2013-03-14T12:07:00.000-07:00

Am I magician? No. Am I really good with money? Yes.

Here’s how I did it.

I used a credit card offer to write myself a check for $5000 (This was a balance transfer offer, not a cash advance as the rates are usually better this way)

I put the money into a brokerage account and invested in an Exchange Traded Fund that correlates with the economy (SPY). Then I let it ride.

The overall position is up $605, I subtracted $150 for the 3% fee from the credit card company for the 0% loan for 12 months (5000 x 0.03 = 150). I subtracted another $10 for the commission to make the trade and buy the shares.

*I wouldn’t recommend doing this if you don’t have the money to cover losses you may incur or the time to check your account every few days. Once you have followed my other strategies and have money saved this is a great way to capitalize on some opportunities out there.

It doesn’t take money to make money, but having money makes making money a whole lot easier. So start saving today!

What I Do With My Tax Return

2013-03-13T12:01:00.002-07:00

Come tax season I see a lot of frivolous spending in the community. Rather than see this as an opportunity to get ahead people see it as unallocated money that they can use for whatever.

Our society makes this seem like the norm, which encourages others to do the same. The reality is, not everyone takes a shopping spree during this time. So I thought I’d share what I will be doing with my tax return.

Step 1: Complete taxes using online software.

This saves me close to $90 instead of having a “tax professional” plug it into this same software for me.

Step 2: E-file taxes and elect to get my return through direct deposit. This ensures I get my money back as soon as possible and reduces the amount of “float” time.

Step 3: Leave money in my interest bearing Loyalty Checking account at 2.05% (http://www.peoplescu.org/) where it generate me more income.

Receiving unexpected money means you can reach your financial goals that much quicker. Take advantage of this opportunity to get yourself ahead. We are still in a recession and every dollar counts.

“But everyone spends their tax return,” is no longer a viable excuse ;)

Tips for Taxes

2013-02-05T21:51:00.000-08:00

For the average American taxes are very simple. This makes it quite easy to prepare with the use of software like TurboTax or H&R Block. It will walk you through step by step, you just input the information from your W-2’s.

I used the homeowner edition of this http://www.hrblock.com/tax-software/index.html and split the cost with my family as you can use the same software to efile 5 times (5 different people’s taxes). Depending on how many members you have in your family this brings the cost of doing your taxes to $5-10 instead of what you’d pay your tax professional.

If you are getting a large refund at the end of the year you will want to adjust your W-4 with your current company to withdraw less from your paychecks for the following year. The reason you get back so much is because you paid too much in the first place, so your refund is merely you getting your own money back. The issue is that you did not make interest on this money for the entire year. Instead you just gave the government a free loan… and we see how the frugal the government is with our tax dollars.

Let’s say you got $3000 back on your taxes. If that same $3000 had sat in a checking account at 2.05% for the year (the current rate at People’s Community Credit Union) you would have had $3061.50 at tax return time.

Financial Experiment – 1 Month Update

2012-12-05T15:08:00.001-08:00

The account is currently up $53.13. That is a 1% return thus far in one month, on borrowed money. Typical balance transfer offers give you the money at 0% for 12-18 months, but charge a 3% fee. I’ll need to clear 3% or $150 in one year to be profitable on the experiment.

Financial Experiment

2012-11-05T14:38:00.001-08:00

I don’t know if I should call this an experiment or magic because I am going to demonstrate how to make money out of thin air.

Goal: To make as much money as I can using other people’s money (OPM) via a credit card.

WARNING: This is an advanced strategy that is considered risky if you don’t have money to cover the losses. I do not advise people try this, instead feel free to live vicariously through me.

I pulled $5000 off of a Credit Card through using a balance transfer check. I was charged a 2% fee for the transaction however there is no interest accrued for 12 months as long as the minimum balance is paid each month.

The theory is if I can make more than 2% in interest I keep all of the profit.

I can’t leave the money in a bank account at 2% because I would just break even.

I opened a brokerage account specifically for this experiment. Had I not already had an account with OptionsXpress I could have earned $100 through their referral program however that isn’t an option in this scenario so we will have to work a little harder to make money.

While I don’t like the stock market as an investment it is the best option to make money for this experiment. Historically the S&P 500 outperforms most other funds so I have begun the experiment with one trade for 10 shares of SPY for approximately $141 per share. SPY is a fund that mirrors the performance of the S&P 500.

I may choose to purchase additional shares, sell out of the position for a different investment, or trade utilizing margin.

The experiment begins today.

"I don’t have enough money for it to make a difference."

2012-10-19T17:05:00.001-07:00

Even in drastic times of economic hardship people fail to make smarter financial decisions because they resist change. The biggest concern I hear people say is “I don’t have enough money for it to make a difference.” If you are saying this you are missing the entire concept of financial efficiency. If you don’t have money these ideas are even more important to abide by. Every penny counts.

Only in very rare cases does money just suddenly appear in your account. You don’t want to wait for that to give you a reason to start good financial practices. It is time to be proactive. Implementing the strategies found on this site is how you make money.

Eventually these practices will save you money in addition to making you interest. It may be a few cents a month at first, then a few dollars, but free money is free money.

I like to think of it like this. Let’s say you make $4 in interest for the month. Doesn’t seem like a lot right? But think about it. Some people make $8 an hour. This means $4 in interest is technically 30 minutes that they wouldn’t have to work. That’s 30 minutes more with your loved ones, one more episode of your favorite TV show, an extra-long lunch break, etc.

“Commit to making the change, literally.”

The key is to start now. Whenever I speak to someone about this, they nod their head and I ask them, “What is stopping you from doing this right now?” At that point they have two choices, make a lame excuse and continue on their current path, or they commit to making the change, literally. The best feeling is when I hear from someone a few months later when they call me excited about the interest they just made just for switching over to smarter banking decisions.

Talk isn’t cheap as some people say. Talk is expensive, because talking doesn’t make you money. Taking the proper action will make you money.

So now is the point where you ask yourself, what is stopping me from making smarter financial decisions right now?

Choose wisely.

If you are ready to make a change, here is a good place to start http://www.smartermoneymanagement.blogspot.com/2011/04/5-steps-towards-smarter-money.html

Personal Finance Assignment: Where to Park $5000 for the Best Return (Savings/Checking)

2012-09-21T09:56:00.002-07:00

The following post was an assignment for a personal finance course I am enrolled in. The assignment: Find the best checking and savings options to put $5000. This paper got such a positive response from my teacher and classmates that I wanted to share it on here as well.

Where to Park $5000 for the Best Return (Savings/Checking)

The method described below will bring in approximately $289 on the initial $5000 for an overall rate of return of 5.78%.

In order to maximize the $5000 that we have available we are going to spread the money across multiple accounts. We first will establish a primary account that will be our main hub for earning interest, and then we will borrow money from this account to earn money from special bank promotions. While the banks offering these promotions do not offer competitive interest rates, we are only after the short-term gain from the promotion. If the rate is greater than the 2.05% APY that we will make in our checking account and the fine print seems attainable, then we go through with the deal.

The highest paying checking account currently available in Clark County is at People’s Community Credit Union. This will be our interest hub. They currently pay 2.05% on their Loyalty Checking account and hey also pay 7.5% on their Loyalty Savings account (On first $750. After that the rate decreases significantly to 0.05%). The more money you keep in this account, the more money will be paid to you each month in the form of a dividend check. It may seem small at first, but it will gradually build to a significant amount of extra cash.

To maximize your profits on this account: Maintain a balance of $750 in the savings account, no more and no less. When you receive your quarterly dividend check, transfer the dividend amount into your Loyalty Checking where it will make 2.05% instead of the 0.05% (Remember anything over $750 only makes 0.05% so we’d rather have it making 2.05%). Be sure you meet all of the requirements each month to get your 2.05%. I have posted the requirements below.

Information from http://www.peoplescu.org/chk-loyaltychk

There is a way to ALWAYS qualify for the dividend on your bank / credit union account. Typically there is a minimum of 5-12 debit transactions each month in order to qualify for a high interest dividend rate (@ Peoples it is 10 debit transactions per month). When it gets towards the end of the month and you know you don’t have enough transactions to qualify, you can use the following strategies. One way is to donate $1 to a charity online 10 times each month. While this does work, must of us are unwilling to spare that many funds every month, but we can adapt that concept to benefit ourselves.

Every month “donate” to your page and meet the transaction requirement for your account. For example, if each month you needed to hit a minimum of 10 transactions for a People’s CU Loyalty Checking account, you would “donate” 10 times @ $0.01 per donation costing $0.10 overall. Note you will need to use a different email address for the donation than the one you provided to open the PayPal account. After the 10 transactions have cleared, you can transfer the money from your PayPal account right back into your checking account.

Chart from http://www.peoplescu.org/save-loyalrate

We will then take advantage of the following promotional offers:

$25 for opening an account with ING Direct.
The minimum balance is $250 to open the account.
$25 is a 10% return on $250

$10 for opening an account with Virtualbank.
The minimum balance is $100 to open the account.
$10 is a 10% return on $100.

$125 for opening an account with Chase
The minimum balance on this account is $1500 to not be charged a $10 service fee each month. It is more beneficial for us to keep the money from the bonus and not pay out the fee of $60 ($10 per month times the minimum number of months the account must remain open) than to leave the $1500 in our hub where it will only make $30.75 @ 2.05% for the year.
$125 is an 8.33% return on $1500.

Keep in mind on the ING Account and the Virtualbank accounts we only need to keep $5 in the accounts to keep them open. After the account is open we can transfer the remaining funds back to our hub at People’s CU where we will make more interest. After the accounts are open we will transfer $245 from ING and $95 from Virtualbank. These accounts just need to remain open for 6 months to not forfeit the bonus. The bonus generally takes 30 days to be deposited into the accounts and cannot be withdrawn until the minimum time frame for opening the account has been completed.

Investment Breakdown

5000 – 750 (Loyalty Savings) - 250 (ING) – 100 (Virtualbank) – 1500 (Chase) = $2400

$2400 in Loyalty Checking @ 2.05% with monthly dividends
$750 in Loyalty Savings @ 7.5% with quarterly dividends
$250 in ING Direct for 1 month then reduce to $5 and transfer $245 to Loyalty Checking @ 2.05%
$100 in Virtualbank for 1 month then reduce to $5 and transfer $95 to Loyalty Checking @ 2.05%
$1500 in Chase for 6 months then close account and transfer funds to Loyalty Checking @ 2.05%
$2400 @ 2.05% for 12 months = $49.20
$750 @ 7.5% for 12 months = $56.25
$5 @ 0.8% for 12 months = $0.04 (ING Direct)
$5 @0.83% for 12 months = $0.04 (Virtualbank)
$245 + $95 = $340 @ 2.05% for 11 months = $6.40
$1500 @ 0.01% for 6 months = $0.07
$125 @ 0.01% for 5 months = $0
$1625 @ 2.05% for 6 months = $16.65
$35 @ 2.05% for 6 months = $0.35

$5000 + 160 (bonus $) + $129 (interest) = $5289
Average return of 5.78%

This number is an overall estimate. The end number will vary as I used the APY rather than the APR in the calculations. I also used round number estimates instead of computing the average daily balances.

We can increase our return by opening as many promotional accounts as we can find using money from the hub to fund the accounts. ING, Virtualbank, and other banks also offer referral bonuses when your friend opens an account so you can take advantage of this as well.

Resources

https://chaseonline.chase.com/resources/RateSheetForCons70219202012.pdf

https://home.ingdirect.com/orange-savings-account

https://www.virtualbank.com/Default.html

http://www.peoplescu.org/save-loyalrate

Auto Credit – Build Credit Automatically

2012-09-21T09:21:00.002-07:00

There is no reason why building credit has to be difficult. Remove human error from the equation by following these steps and build credit the easy way, automatically.

The first step is to open a credit card. You can’t build credit without using credit. I recommend a Capital One Rewards Card because it has a cash back rewards program where your cash is easy to redeem.

Next pick a recurring low monthly bill that doesn’t change each month. Netflix is perfect for this.

Change your Netflix (or other bill) so that it charges your credit card instead of your bank account.

Now login to your bank account online and set up an automatic payment or bill pay. Schedule your bank to pay off the credit card amount in full each month. To make it easy you can set it up for the 1st of every month.

That’s it. You’re done! Too easy right?

Each month Netflix will automatically bill your card and your bank will automatically pay it off on time. Then every month your credit card company will report to the credit bureau that you made an on-time payment.

Be sure to only pay a small bill because you want majority of the balance on the card to remain available. Having a large available credit line will help to improve your credit score.

Related Article: How to Attain a Free Credit Report 3 Times a Year

Not a Good Time to Invest in Real Estate

2011-09-18T12:59:00.000-07:00

The Government is looking to rent out its surplus of foreclosed properties, according to an August 11^th, 2011 article in the New York Times. This is a great way for the Government to generate income on liabilities that are currently sitting vacant, but this could prove extremely dangerous to real estate investors.

The Obama Administration states that the proposed solution will stabilize the market value of homes, however many real estate investors are no longer in the real estate market for capital gains (increases in home value). Instead investors are after the steady income generated through rental properties. The problem is the government will be able to undercut the local rental prices in the name of providing “affordable housing.”

When determining whether a property is a good investment you need to calculate if your property will produce positive cash flow according to Robert Kiyosaki, real estate investor and bestselling author of Rich Dad Poor Dad. The involvement of the Government will alter the average rental price thereby lowering the cash flow and turning investments that were once good into potential money pits.

Let’s use a hypothetical situation to demonstrate the problem. Let’s say you purchase a $100,000 3 bedroom 2 bath rental house with 30% down ($30,000) at 5% interest, and a 1.25% tax rate. The mortgage payment would be $641 per month (http://www.mortgagecalculator.org/). Let’s say you can rent this home out for $900 a month. That means our positive cash flow would be $259 per month, which adds up to $3108 per year on our initial investment of $30,000. This is over a 10% annual return and would be considered positive cash flow.

Now let’s throw the Government into the mix. The Government is currently making no money on their foreclosed houses so any money they can get for rent is better than nothing. In our example the Government rents out the same 3/2 house for $600 per month. With many of these houses available it drives the average rental prices down in the area. Now you can only charge $600 per month for your rental house as well, but the mortgage is still $641 per month. Your cash flow is now -$41 per month, and your rental house is costing you $492 per year.

In a time when there really are no solid investments out there, real estate was one of the only games left in town. With the possible scenario being put into effect, I would hold off on buying a rental property.

Sources:
http://www.nytimes.com/2011/08/11/business/us-seeks-to-rent-out-its-foreclosures.html

Avoid This Scam - Cardilly.com Follow up

2011-09-03T12:35:00.000-07:00

Cardilly.com is a website offering discount gift cards for purchase online. It advertised a great deal, but looked like a scam. It was a relatively new site so there wasn't a lot of information about it yet so I figured I would try it out. Here are the results.

My order was scheduled to arrive no later than Aug 25 - Aug 27. I was order number 511. When I had not received my card by August 27^th, I sent an inquiry as to the location of my card. I received the following unprofessional reply:

What is the order number?

Regards,
Customer Support

They had my name and email on file... shouldn't they be able to look up my order number? Apparently they don’t know where my card is either.

I sent them another email including the order number. This time I received the generic email reply below.

From: support@cardilly.com
Subject: Re: Cardilly.com: I have not received any of the cards I ordered.
Date: Mon, 29 Aug 2011 18:26:48 -0400

Hello,

First let me say that I am sorry that your order seems to

be late or at the very end of the delivery timeframe.

As I’m sure you are aware, we are a new company and

I guess there will always be some growing pains.

Shipping from Canada without tracking was probably not

the best way to go. But wanting to offer our customers

free shipping and not hiding the shipping in the cost of

the item, we seemed to have dropped the ball on this one.

We will be changing our policies and all future shipments

will have full tracking.

We thank you for your patience.

Your order shipped from Canada and gift cards are often

inspected by customs due to there monetary value.

We will contact Canada Post and U.S.P.S and put a trace

on your order.

If the trace does not turn up your order within a week, we

will just reship. We will send express which will get to you

within a few days only.

Or if you rather, we can arrange for a refund if it does not

show up within a week. But please do allow for the trace

results.

Again, I’m sorry for the delay and thanks for your patience.

----

Cardilly.com Support
support@cardilly.com

Upon receiving this response I logged into my Cardilly account and copy and pasted the order numbers and transactions into an email asking them to cancel all the transactions I had made.

I then proceeded to contact my credit card company and disputed the transactions which are listed under “SG MARKETING ETOBICOKE ON” for not delivering the goods or services I was charged for. Thus far Capital One has been very cooperative with me in getting my money back.

I followed up by filing a complaint with the Better Business Bureau to help shut these crooks down. If you made a purchase at their site I recommend you file a complaint as well.

Part of being smart with your finances is to avoid scams like these.

AVOID THIS SCAM

The Top 4 Things That Keep People Poor

2011-08-25T21:44:00.000-07:00

Buying an Expensive Car: Contrary to popular belief, buying an expensive car is not “the cool” thing to do. Not everyone in the U.S. makes payments on a car; typically just those that don’t understand personal finance. To begin with, a car loses value incredibly quickly. Second, having a super nice car and a crappy apartment is hardly impressing anyone. In fact it typically gives off the opposite signal stating, “I have tremendous debt” or “My parents buy me stuff.”

You can buy a nice car once you are successful. For now stay out of debt and buy a car with cash that you can realistically afford. This will help you avoid a monthly payment and the insurance will be cheaper as well.

Smart Phones: Smart phones are expensive and unnecessary. Most people have computer access at home and do not need a smart phone for the Internet. Very few people can justify the expensive data plans associated with their phone plans. This is a monthly payment that automatically comes out of your bank account before you even think twice. I hear college students whine that they don’t have any money, and yet when they pull out their phone they always have the mobile device.

With a basic phone plan you could be paying around $40 a month with some carriers instead of $100 (which is the average for most phones with data plans). That means you could save $60 per month, which adds up to $720 per year in savings. I know playing Angry Birds is addicting, however it doesn’t justify spending an extra $720 per year.

Stick with a basic phone plan for now, at least until you have savings put away.

Fast Food: Paying $5.50 for your daily fast food purchase seems like a steal, but in reality your just stealing away from your savings account. Not only is this food typically unhealthy for your body, it is also unhealthy for your wallet. $5.50 per work day adds up to $27.50 per week and $110 per month. Think how many groceries you could buy at your local store for $110.

When you cook dinner, add extra portions to store in Tupperware for lunch that week. This way it won't require any additional work and you will already have a lunch packed and ready for when you are rushing out the door to leave for work.

Tattoos: People don’t buy tattoos when they are broke; they buy them with that extra bonus money they hadn’t accounted for. The problem is, this extra money could have been put in an account for a time when you have an unexpected problem, like car troubles, a medical bill, etc. Having emergency saving prevents small unexpected problems from becoming life-changing financial issues.

Wait to get the ink until you have some money tucked away for an emergency.

Cardilly.com - Scam or Deal of the Decade?

2011-08-25T07:34:00.000-07:00

When I came across this deal online it seemed too good to be true, then again the best deals usually are pretty unbelievable. My curiosity got the best of me. I read the entire website, checked for a few reviews online by searching “Cardilly scam” on Google. At the time it didn’t seem to be a significant threat, but I wanted to clarify their fine print so I chatted with a live rep to answer my further questions. After saving a copy of this chat transcript just in case, I went ahead and made a purchase. I figured the worst case scenario would be that I would need to cancel my order and contact my credit card company to dispute the charge.

Since placing my order I have seen several posts on the message boards such as Fat Wallet and Slick Deals claiming “scam” but I can’t validate these complaints yet as the terms of the site say, “we ask all customers to allow up to 4 weeks for the order to arrive,” as per their FAQ page at http://www.cardilly.com/index.php?option=com_content&view=article&id=101&Itemid=168. I don’t blame people for being skeptical, but most of these people offer no factual information to back up their opinions. I do appreciate the extra digging that went into the Better Business Bureau links and the posted chats with their live representatives.

I have documented my purchases on the site however I am neither posting my order numbers online nor the date of my purchases. If you were running a scam I’m sure you’d want to send valid cards to the order numbers posted in online complaint forums so that they would state “I received my cards” and give the site more credibility and keep the scam going. I want to give as objective of an opinion as possible.

The process of the site works as follows:
-You order the cards online at their site.
-You will receive a confirmation email.
-Later on the same day of purchase you will receive another auto-generated message that states your order has been “confirmed.”
-5 days after the purchase you receive another follow-up email that the order was “shipped.”

I can tell you the entire 4 weeks has not elapsed from the time I bought my first card, but I will make a follow up post next week with the results.

Thus far… no card.

Profiting from Junk Mail – How to Make Money with Credit Card Offers

2011-08-19T17:44:00.000-07:00

You may have easy money just waiting for you in your mailbox and not even know it. Typically after collecting the mail you end up with a pile that gets shredded without even reading it. Three weeks ago I found a credit card offer that I couldn’t resist. (I would have posted this deal sooner but I always have to verify the deals myself before I post them to my blog)

Chase recently offered the following deal:

- 0% APR Balance Transfer Checks (To pay off another card, a wedding, etc.)

- No transaction fee (Typically there is a 3% fee)

- Can write a check for a maximum of $3000

Here’s how you make money with this promotion:

Write the check to yourself for the max amount of $3000. Deposit the check into your interest-bearing checking account and let it make you money for a year. At the end of the promotional period either pay off the card with the money from your checking account or look for another balance transfer offer and transfer the balance to another 0% card. $3000 @ 2.75% (People’s Community CU) will make you $82.50 for the year in interest.

*Keep in mind you will still have to make a minimum payment each month or you will default on the 0% rate and it will jump back up to the standard percentage.

*Also note that if you currently have a balance on the card, do not write a check that will exceed your credit limit. This works best when you have multiple credit cards so you can stop using this card for purchases for the year and just use it for the interest-free money. Your other purchases will still have to be paid off on time. Thanks to the new Credit Card Act any payment the rules are now in your favor if you have two different APR’s on your card. The law states that any payment over the minimum payment will be applied to the balance with the highest interest rate.

Can You Pay Off a Student Loan with a Credit Card?

2011-08-12T11:07:00.001-07:00

Unfortunately the Student Loan lenders won’t let us play ball on this one, yet. Most lenders only allow payment of a student loan with a debit card which does not benefit our cause.

Why would you want to do this?
The main idea is to pay with cash back or airline miles credit cards to obtain rewards. Combine this with the use a 0% intro balance transfer offer (with no transfer fee) and you could have a stellar deal where you can utilize that money for free for a whole year before having to pay it back. The money could generate extra cash in an interest-bearing checking account for one year and then be used to pay off the balance at the end of the promotional period.

The argument against this method is that “you must read the fine print and that banks can be tricky.” It is true that banks can be tricky, but the reality is, fine print is just a rule book that they distribute in small print to intimidate the customer. If you have student loans you went to college so I am assuming you CAN read (If not I hope you kept the receipt for that college education)… therefore read the fine print and if you think you can make money on the deal, go for it. Watch out for things like “3% balance transfer fees,” short-term balance transfers (typically less than 6 months), and offers that are not at 0% APR for the intro period as these terms will make it more difficult to be profitable.

How to Make Money with a College Loan

2011-08-06T17:00:00.000-07:00

This is an advanced strategy about how to use OPM (Other People's Money) to generate income for yourself. This is only for those that have extreme discipline as you must be able to resist the urge to spend these large sums of money. This is valuable for someone serving in the military and can use tuition assistance or if you have an alternate method of paying for school and don’t need the loan to pay for tuition itself. Student loan money is paid directly to the student and in some cases does not accrue any interest while you are in school (These are the offers we are looking for). This money can then be deposited into an interest-bearing account where it will earn money for you for the duration of the time you are attending school. Once the deferred interest period is over, pay off the principal loan amount to avoid paying any interest, and keep the money that your account generated.

The only loans that are worth attempting this with are Stafford Subsidized Loan, or a Career Starter Loan through the military. These loans both DO NOT accrue interest while the student is attending school.

Subsidized Stafford Loan
Subsidized Stafford Loans as of this post have an interest rate of 3.4% after graduation. Your amount of “need” will dictate the amount of money you can receive for your loan. Note this is not a grant; it is a loan and the student will have to pay this money back. $10,000 is a realistic figure for your 4 years of school but will vary depending on the college. $10,000 @ 2.75% earns $275 annually. Over 4 years of college this would be in excess of $1100; not a bad graduation present. At this point in time pay the loan in full and pocket the interest.

Career Starter Loan
This is a loan only available to those entering officer training programs for the military. Generally this loan is obtained at the beginning of your senior year of college. Upon commissioning as an officer in the military, a Career Starter loan raises from 0% to a 3% interest rate. This loan is available through USAA. The amount is generally significant, totaling up to $30,000. $30,000 @ 2.75% is $825 for the year. At the end of the year, use the money to pay the loan in full and pocket the interest.

How to Attain a Free Credit Report 3 Times a Year

2011-07-30T22:18:00.000-07:00

The Fair Credit Reporting Act states that you are eligible to one free annual credit report from Experian, Equifax, and Transunion each year. You can request this report at https://www.annualcreditreport.com/cra/index.jsp.

You can also request a report by phone at 1-877-322-8228 or by mail by completing the request form found at https://www.annualcreditreport.com/cra/order?phone

The site will allow you to select which agency you would like a report from. I recommend requesting a report from one agency at a time and spacing it out every 4 months. This will allow you to look into your credit 3 different times during the year.

You will need to submit your information (Name, date of birth, social security number, address, etc.). The site with then ask you some verification questions about addresses where you may have lived, credit cards you may use, etc.

After successfully answering the questions you will be provided with your credit report.

NOTE: YOUR CREDIT REPORT DOES NOT SHOW YOUR CREDIT SCORE.
You can view the Fair Credit Report Act at http://www.ftc.gov/os/statutes/031224fcra.pdf

The Smart Way to Make Big Purchases

2011-07-22T14:55:00.001-07:00

We all want nice things, isn’t that the point of saving money for down the road, so we can someday afford to have the lavish lifestyle that we’ve always dreamed about? Stuff like that comfortable king-sized bed, air conditioning for the house, surround sound for the big screen, you get the idea. The problem is many Americans purchase these things on credit before they actually have the money to pay for them. The new question is; Does the person own the item, or does the item own the person? If the person who buys everything on credit before and can’t cover it with their savings were to lose or quit their job today, could they still afford purchases that had made weeks sometimes years (cars) prior? We become slaves to the things we “own” when we buy on credit with money we don’t already have. People ending up having to work just to pay for things they already bought months ago and are constantly behind.

The solution is still to make purchases on credit. Credit is a great tool we can use in our favor. We are still going to make our big purchases, but we are going to wait until we have the money in our savings account to cover the expense in full. Here’s the strategy. Big purchases (usually totaling over $300) generally offer financing deals (The worse the economy generally the better the deals because these establishments are enticing you to buy). Finding “no interest or payments for a year” is not uncommon as many consumers know; the problem is we have to mentally allocate that money for the purchase because that money is technically already spent. The money that we saved to make these purchases is just in case we make a mistake. The “fine print” is notorious for screwing over the consumer. It happens to the best of us. The bottom line is everyone misses details now and then but through proper planning we can minimize the damage to our credit and our savings when we make one of these mistakes.

Let me give you a scenario to illustrate this point:

John N. Debt and Bob B. Saving both purchase an identical flat screen TV on a store credit card that offers no interest but minimum payments each month on the TV. The payments will only be around $80 per month which is a great deal. 3 months down the road they both get busy and forget to make a payment on their respective TV’s. The fine print of the deal now states that a late payment defaults on the original 0% interest and send it to a regular rate of 11%. John N. Debt is mad about his mistake but doesn’t have the extra money to cover the cost for the TV. He will now have to eat the extra interest each month that he hadn’t budgeted for. Bob B. Saving on the other hand is also mad about his poor financial decision but he had the money in savings to cover the cost of the TV he quickly pays off the cost of the TV and avoids paying the 11% interest.

Another more advanced solution would be to shop around for other 0% intro credit card balance transfer offers with no fees and to transfer the balance of the TV. This would extend the life of the 0% interest rate and allow you to retain your money for longer.

I have some money saved, should I invest in the stock market?

2011-07-15T08:48:00.001-07:00

I am no longer a fan of the stock market, as I lost a lot of money when the market crashed. In fact that is the main reason I turned back to running my own business and web marketing. At least with your own business you control your fate, and you aren’t at the mercy of people who manipulate the market (I’m still a little bitter about it as you can see). For those that do choose to get into the market anyway, you may like trading the Indexes. It is much easier to track (daily announcements on radio and almost any finance homepage), and they tend to outperform most mutual funds.

The stock market is basically high stakes gambling for the beginning investor. You read up on a company, and hope that they become successful. If they succeed, the price goes up and you make money. If they fail, you lose your money. Even when things are looking profitable you can never count your money from the market until you sell the stock. One day you may make large profits and feel untouchable, only to watch them disappear the following day as the market crumbles. This type of investing is not for the faint of heart.

Be wary of the market advice out there. Everyone states to “Diversify your portfolio,” meaning buy stocks in several different types of unrelated companies (Sectors like medical, oil, industrial, etc.) however most famous people that have made it big in the stock market did it on one large gamble. They came across what they perceived to be a good opportunity, went all in buying as many shares as they could, and when the stock performed well they made a lot of money. Only after they became successful did they promote diversification. What you don’t hear about are those that invested heavily on a position and ate a huge loss. These people are the majority.

There are many people that make a great living investing in the start market, just ensure you know what you are getting into before proceeding into this type of investment. Remember we are in a recession, and while the market has somewhat recovered, we have not fixed the issues with our economy that got us into this trouble in the first place.

I am an advocate of keeping money in a high interest savings or checking account where it is safe, until you have enough put away to start your own business.

Loose Change – Put it to Work

2011-07-01T10:55:00.000-07:00

Loose change gets lost all of the time; in the seat cushions, the floor of your car, the bottom of your purse, etc. This change is wasted money that could be working for you, earning you interest in your savings/checking account.

Think of your finances as a business and each penny as an employee; would you let you employees go for vacations for years at a time, just sitting around on the sofa, or in a jar on your desk? NO, you would put them to work.

If you are following the strategies I outline by using your rewards credit card for every purchase and paying it off each month then you won’t have change lying around, however if you do, here’s what to do.

Take your change to your local bank or credit union. Just about all banks and credit unions have a change counting machine that you can use for FREE if you are a member/customer. DO NOT USE KIOSKS like CoinStar. These will charge you fees just for allowing use of their machine. Why would you pay for this when you can already get it for free?! It’s like throwing money away.

Your change will multiply as it sits in your interest bearing checking or savings account. I recommend People’s Community Credit Union as it is currently paying the highest amount in the Clark County area.

*For other areas conduct a Google search and look for accounts in your area that pay high amounts of interest and have no monthly fees.

How to Always Meet the Debit Transaction Requirement On Your Bank / Credit Union Account

2011-06-25T08:51:00.001-07:00

There is a way to ALWAYS qualify for the dividend on your bank / credit union account. Typically there is a minimum of 5-12 debit transactions each month in order to qualify for a high interest dividend rate. When it gets towards the end of the month and you know you don’t have enough transactions to qualify, you can use the following strategies. One way is to donate $1 to a charity online 10 times each month. While this does work, must of us are unwilling to spare that many funds every month, but we can adapt that concept to benefit ourselves.

This will require you create a blog page (I recommend www.Blogger.com), and a PayPal account at www.paypal.com. Both accounts are free and take minimal time to setup. Once you have established these accounts, create a "Donate" button through PayPal and copy and paste the code into your blog (You can see a sample at the top right corner of this blog). It’s that simple.

Every month “donate” to your page and meet the transaction requirement for your account. The only down side is that it will cost $0.33 per dollar donated. For example, if each month you needed to hit a minimum of 10 transactions, you would “donate” 10 times @ $1 per donation costing $3.33 overall. Note you will need to use a different email address for the donation than the one you provided to open the PayPal account. After the 10 transactions have cleared, you can transfer the money from your PayPal account right back into your checking account.

The money you obtain from using a credit card with a good cash back rewards program instead of a debit card will offset the $3.33 cost. It also allows the money that is technically already spent to accrue interest the entire month in your high interest checking account instead of being paid out immediately through a debit card transaction. Pay off the credit card at the end of the month to avoid paying any interest.

This new idea concept is going to save me $4.35 per month on my Chase account that has a maintenance fee of $6 per month (Due to inactivity). I keep the account open because I received a $125 to open it, and it doubles the rewards interest I get on my Chase credit card.

Fix the Leaks in Your Budget – Make your Finances Efficient

2011-06-17T09:49:00.001-07:00

One main misconception about saving money is that “I don’t make enough to put any extra aside, all of my money goes towards bills.” While this may be somewhat true, in general we all have that extra money that should be used towards savings that is trickling out of your account in the form of several small purchases.

Many times we don’t even realize how much we are spending on the subtle things like ATM fees or a night at the bar. One tool to help you keep track is a website called www.Mint.com.

Mint links to all of your accounts; checking, credit cards, loans, etc. to give you real-time updates of how much money you have available in your account. It will also give you a budget, track your expenses, and provide you with warnings when you are close to over-drafting an account. When you use a credit card or debit card it is easy to forget how much money you are actually spending. This will help make you aware of the issue before it becomes a problem. Preventing bad spending will save you a lot of money in the long run.

If you notice you have a bank account charging you a maintenance or ATM fee, get rid of it. The bottom line is, if your bank charges these fees they are not competitive and it is time to move to a business that does right by its customers. Credit Unions generally pay a better interest rate and tend to have fewer fees.

Recurring charges for magazines, tanning, and unused gym memberships are other “bills” to get rid of. Eliminating these automatic purchases will provide you with some excess cash each month.

Once you eliminate these bills and charges, allocate this money towards savings. Do not fall into the trap of making another big purchase, or living more luxuriously. The lavish lifestyle will come in time, but first we need to build a good foundation with savings.

Educate Yourself – 3 Must Read Business Book

2011-06-10T10:37:00.000-07:00

You can never learn too many tips to make you financially efficient. Here are 3 books that are a great way to improve your financial intelligence.

Rich Dad, Poor Dad
by Robert Kiyosaki

This book discusses how the author learned about money while growing up. His birth father also known as “Poor Dad” was a middle class citizen who worked for the school district in a secure government position. His “Rich Dad” was the father of his best friend who was an entrepreneur. The book discusses the different views held by those that are wealthy and those that live from paycheck to paycheck.

This is a medium length book that will create a good foundation for a new way of financial thinking in regards to using money and obtaining a financial education.

The Richest Man in Babylon
by George S. Clason

This book takes place in ancient Babylon however its principles are still valid today. It tells the tale of a chariot maker who works hard, but still is only scraping by. He grows tired of living in poverty while watching those around him grow wealthy. He lives in a city that has the greatest amount of wealth in the world. The book gives financial lessons in the form of a story as he learns the foundations and basic rules of investing and saving money.

This is a short book and a very easy read.

Atlas Shrugged
by Ayn Rand

This story takes place during the time of rail barons’ in America. America is in a deep state of depression (similar to current economic times) and many citizens have lost hope. The economy now relies on a few key players in industries that are essential to everyone; transportation, oil, and steel.

This book has changed the way many people view the world. People either love it or hate it. Most business-minded people will agree with the concepts however it is strongly biased towards self-reliance and entrepreneurship.

A movie was recently made about this book, however due to a lack of proper financial backing; it is disappointing and doesn’t even come close to doing the book justice.

This is a lengthy read.

Good luck with your reading, and may it help you with your financial future!