Well, I’m at another one of these crossroads and it just so happens that it comes at a time when the S&P 500 has increased over 15% in the past 6 months. While I have no idea how to ensure this happens and I don’t try to time the stock market, as a general rule, I want to invest at low points and sell at high points.

So when there’s a big rally, do I really want to be investing after such big gains? It’s possible it will keep going, but it’s possibly there will be a pullback. I have a few options:

Invest Anyway Because I Shouldn’t Try To Time The Market

If timing the market were easy, people would be better investors and more people would sell at the top and buy at the bottom. But in reality, people are emotional and don’t want to sell when things are looking good and don’t want to buy when things are looking bad.

Since I know I can’t control or time the market, maybe I should invest the extra money and hope for the best? Since I don’t know what will happen in the next 6 months, year, or 5 years, what makes me think there will be a better time to invest? For all I know, the next 6 months could be the biggest rally of our lifetimes.

“Invest” At A Guaranteed 5.25% Interest Rate By Paying Off Student Loans

We’ve still got a lot of student loans to pay off and while most are in the 2-4% range, there are some still left at 5.25%. With the lower rate loans, I think that even with conservative investments, I will beat that over time. At 5.25%, should I take the guaranteed returns or risk it by investing in stocks? I think over the long-term, I will beat 5.25 (and by several percentage points), so I don’t think this is a great choice for me.

Invest in Alternative Investments That Don’t Track The General Market

Since I’m not 100% comfortable with the idea of sticking more money into the market right now, maybe I can invest with Lending Club? That type of investment is less correlated to market fluctuations and my investments have earned me nearly 11% since I started, so why not take those kind of returns that did well even during the recession?

Change My Investing Pattern To Dollar Cost Averaging And Automate My Investments

Maybe I’m just being too lazy and not admitting that I need to automate my investments. Why wouldn’t I automate this whole thing and not have to think about it or worry about market fluctuations?

The reason I don’t is that part of my income comes from my online endeavors and I never know how much I’m going to make. Some months are good and some months are not that good, so why would I set up a plan to invest that rests on making consistent contributions each month?

Plus, the amount I’m allowed to contribute also depends on this income, so quite often I don’t know how much I’m allowed to contribute until the end of the year.

My Decision

I’m leaning towards investing because over the long-term, it will beat that 5.25% and while I like diversifying my investments, I don’t want to put more time into managing my Lending Club account.

Readers, which option would you go for?

Where To Invest Extra Money When The Stock Market Is On A Hot Streak is a post from Sweating The Big Stuff: Spending Wisely

But guess what? We don’t have to use that 7% for every calculation. It’s sort of arbitrary and while it may have been useful as a baseline to many, I think we need to increase that by a percentage point or two for future calculations. We can’t predict the performance of our investments over the next 1, 5, 10, or 20 years. But we can use educated guesses and some historical data to estimate what the most likely scenarios will be. For most young people like me, we have 30-40 years until we retire and having even a vague idea of what our investments will do over a long period of time is helpful in planning.

I choose not to believe in that 7% number, for a few reasons:

• The 7% number comes not from standard market returns, which over a 30 year period averages between 9% and 10% annually (check out 25 year averages here). As a conservative estimate, taxes reduce the effective rate to about 7% after taxes. However, young people who start saving and use that long-term number should have savings in a Roth IRA, which allows money to grow tax free, so that pre-tax index number of 9-10% is actually more relevant in that case.
• Taxes are currently on the low end historically, and this is true of long-term capitals gains rates as well. If 7% was derived when taxes were higher (and more uncertain, the current low tax rates have recently been made permanent), it follows that a smaller percentage of those average earnings would go to taxes.
• Not all investments track the market index and technology has allowed for new, creative investment vehicles. I have been using Lending Club for part of my investments to the tune of a very consistent 11% interest rate (and the rate of return with peer-to-peer lending has been very consistent overall, even through a recession). Even with taxes taken out (I invest in a Roth IRA for a double win), there are new investment vehicles that may help us boost that number. Heck, my investments in blogs is well over 500% (thought it’s not nearly as scalable), so while 9-10% may be average, who’s to say it can’t be even higher?.

Sure, people want to be careful when making projections about returns over long-term periods of time so that they don’t run out of money. That’s totally understandable and being on the conservative side when making predictions about retirement, is probably a good idea. It’s far better to be careful and not run out of money in your 80s or early 90s than to be over-confident in our estimates and risk a crisis when there’s not enough savings to last.

7% may have been the old number to use for every calculation, but the rules have changed. I’m not suggesting we use 10% in every calculation, but I think 8-9% is still a safe number to use for planning, and as we know, even small increases in interest rates will have colossal effects on savings over a long period of time.

Can We Expect 9% As The New Average Market Return? is a post from Sweating The Big Stuff: Spending Wisely

1. Buy A New TV With Old Features

The top of the line features on TVs from just a few years ago are now incredibly cheap. If you don’t need a 3D television (and to be honest, who does?), you can get a large HD LCD television for just a few hundred dollars. If you have a slightly larger and want to take a step up, you can spring for an Internet enabled TV that lets you connect to your favorite apps and stream video straight to your TV.

2. Shop Online

My favorite is Amazon, but Overstock and WalMart always have cheap prices on surplus inventory and you can often snag home theater products at up to 50% off their retail prices. This includes Blu-Ray/DVD players, mounting supplies, and other video and audio accessories.

3. Buy a Refurbished System

A refurbished or factory reconditioned will be much cheaper since these systems were sent back to the factory and fixed. Usually they perform at the same level as a new TV, and they will be marked down by 30% or more. They also come with standard warranties so if  you get one of the unlucky systems that doesn’t function the same as a new TV, you’ll be covered.

4. Buy the Display Model

Those display models of televisions, Blu-ray players, and surround sound systems that you see at Best Buy can be purchased for the fraction of the cost of the same model in a box. Many of the newer display models are great because they are often still covered by the original warranty, so you aren’t even taking a bigger risk and you can still save a lot!

5. Prioritize

While we all want the best of the best, sometimes we have to give up a little something to get the whole package. Put the bulk of your money toward the item of most importance. If you’re a sports nut and want HDTV, go all out on the TV but realize you may have to give up a little on speakers.

Readers, how do you save on home entertainment upgrades?

Save On Your Home Entertainment System Upgrade is a post from Sweating The Big Stuff: Spending Wisely

With all the great features smartphones have and with all the communicating we do, it’s hard to go 45 minutes without someone trying to contact you by phone or email. Even worse, it’s hard not to want to check to see if someone is trying to get in touch with you.

Lauren and I are used to texting constantly and it turns out that it’s a lot harder not to text and drive than it sounds. We have a big problem not picking up the phone when someone texts and when you’re sitting in traffic, it’s hard not to reach for the phone.

We’ve agreed not to text, but it wasn’t a foolproof plan. We still succumbed to the pressure occasionally, and even though we knew how unsafe it was, we couldn’t help it.

I decided we needed to take drastic action, so while the fear of death enough, apparently $100 is. I told Lauren that each month she doesn’t text and drive, she can have $100 in cash to spend on anything she wants, whether it’s clothing, charity, presents for me, or saving (wouldn’t it be great for her to save that $100 each month for years and surprise me with $50,000 that she’s saved up for 20 years?).

This is above and beyond our normal budget. And she gets it in cash so that I don’t go tracking her purchases and asking her why she’s wasting money. Obviously, Lauren’s safety is more than worth the money and I don’t care what she does with that $100.

Of course, this wouldn’t work for me because I’d be inclined to just save that $100 so we’ll have to think of another way to keep me motivated not to text and drive. Maybe a special steak dinner for me once a month?

We put in this agreement so that we don’t have to get letters like this. The best $100 recurring bill I’ve ever committed to.

The Best $100 Monthly Payment Ever is a post from Sweating The Big Stuff: Spending Wisely

Those who wait until they are in their 40s or 50s to save are at a huge disadvantage. While it may take some rude awakening to realize you need to start saving, this advice is for all of you 20 somethings (or 30 somethings) who want to start off on the right foot.

There are a lot of excuses to not save (it’s very easy to convince ourselves to spend more and everyone gives into some amount of lifestyle inflation, but I think that saving while you’re young will not only teach good habits and make saving later easier, but there are several reasons why saving in your 20s is actually easier than waiting to save later on.

Why Saving Is Easier In Your 20s

When you exit college, you may have some student loans and your salary probably won’t be huge, but you have a big advantage over people in their 30s and 40s. You’re used to living like a college kid, so living with a roommate (or 3) is not that big of a deal and after living in dorms for a few years, even a small, cramped apartment will feel like a palace as long as there is air conditioning. Stay modest for a few years and you’ll be able to save quite a bit in just a few years.

When you exit college, what financial responsibilities do you have? Most of the responsibilities are the same (rent, food, alcohol), while transportation and some new work clothes are never a bad idea. But that doesn’t even compare to what you’ll be spending when you have a spouse or kids. You’re lucky to have so few financial responsibilities, so take advantage and save now!

Plus, there are tax advantages. When you’re young, you’re more likely to be under the Roth IRA income limit, so you’ve got even more incentive to save. It’s like getting an extra little boost when you start saving. And the earlier you start, the more years you’ll be able to take advantage of it!

The best way to save when you’re young is to make it automatic. If you make saving automatic, you won’t miss it. Have it transferred from your checking account the day you get paid and live off the rest. It will be natural and you definitely won’t miss it.

Readers, why else is it easier to save when you’re young?

Why Saving In Your 20s Is Easier Than Waiting is a post from Sweating The Big Stuff: Spending Wisely

Hi Daniel,

My wife and I just found the perfect house, but there’s a problem. We weren’t really planning on moving for another few months, and our down payment fund isn’t as high as we’d like it to be. We know we can save enough money to get us to the 20% mark over the next few months, but we also realize that if we wait until that point to put down an offer, our dream house will almost certainly be gone. Are we crazy to think about taking out a loan with PMI?

-John (not his real name)

With John’s permission – provided I keep his real identity anonymous – I’m going to give my opinion on his situation, and put it to you for some added advice. While Lauren and I are nowhere near buying a house (especially in our area), I’ve started to gain an interest in the housing market.

Today’s housing market is ever-changing; in some places, the recovery is in full swing, in other locations, housing prices and sales are still lagging. We’ve seen record or near-record low interest rates for much of the past year, and although we’d like to believe that rates will stay low indefinitely (word from the Fed suggests they will stay low, likely through at least 2013), there’s always the chance they could start to climb once again. Housing prices, too, could start their ascent. In other words, we can’t expect it to remain a buyer’s market forever. There are some really incredible deals out there, John, and if you think you’ve found one that meets your wants and your needs – and are in the position to afford the monthly payments comfortably – I don’t think it’s out of the question to do that.

But I would add this caveat about PMI (private mortgage insurance). First, aim to have a down payment of at least 10% of the purchase price, so you lock in the lowest tier of mortgage insurance. Next, continue saving after you purchase the property, just like you would if you were still working feverishly to save up for that down payment. Put those extra payments toward the principal of your home loan. Once you reach 22% equity in your home (meaning you’ve paid down the mortgage to 78% of the purchase price), your lender is required under the Homeowner’s Protection Act to automatically cancel your PMI.

There’s a way to shed your PMI even earlier. Once you reach a loan-to-value (LTV) ratio of 80% or less, you can ask your lender to cancel your mortgage insurance. We’re talking LTV here, not a percentage of your loan or the sale price. You may be able to get an instant boost by having your house appraised soon after the purchase; this is a great idea if you’re buying a distressed property at a deep discount (the value is almost definitely going to be higher than what you paid for it). Even if you don’t have your home appraised for a better LTV ratio, making those extra payments until you reach the 20% equity level – then asking your lender to cancel PMI – will help you out immeasurably.

The way I see it, if you snag your dream home right now – and take on PMI in the process – but can put enough toward the principal over the next few months, you may be able to get rid of the mortgage insurance quickly. Say it takes you six months, during which time you’re paying $100 a month in PMI – that’s $600 to get your dream home. It’s not chump change, but if you’re on solid financial footing, it’s also not the end of the world.

Reader, what do you think? Do you think taking on PMI is a horrible idea altogether, or if John plans on paying down his principal – just like he would add to his down payment fund – that canceling the mortgage insurance a few months from now is a viable option?

Reader Question: How To Cancel PMI is a post from Sweating The Big Stuff: Spending Wisely

by turbotoddi

Retirement calculators out there offering to calculate how much you’ll need in retirement. I love thinking about retirement (even if it is 40+ years away), and am saving almost 50% of my after-tax income, a large portion of that in my Roth IRA and Individual 401(k).

Thinking in the long-term can be pretty depressing, and even looking at the ideal amount of savings by age 30 can be hard for some people to handle, so I got to thinking: how much additional money I would need to invest this year in order to retire one day early?

Assumptions

I’m making several assumptions. The first is that at the current rate, I would be saving enough to retire at age 65. Additionally, I’m assuming I would need $100,000 a year in retirement, which seems reasonable.. Finally, I would earn 8% on my investments until I reached retirement. I do not account for inflation in this calculation. Based on this, it seems that in order to take out $100,000 a year, I’d need about $274 a day.

I Need to Save $12.61 Today To Retire 1 Day Early

That means that I would be able to retire a day early if I saved an extra $274 for my 65 year old self, right? I’m 25, so I have 40 years ahead of me. By plugging all this into a time value of money calculator, I’d have to put away $12.61 today in order to have $274 when I’m 65 and be able to retire one day early.

Not terrible, but what if I only needed $75,000 a year in retirement? It drops to just $9.46

Try It Yourself

How much do you have to save to retire a day early?

If you want to check out how much you’ll need to save today to retire 1 day early, here’s a link to the spreadsheet. Feel free to play with the numbers for yourself!

If you bring your lunch to work one or twice this week instead of going out to lunch, that could mean you’ll be golfing one day earlier!

How Much Do You Need To Save To Retire 1 Day Early? is a post from Sweating The Big Stuff: Spending Wisely

And then there are those people who act as if money really grows on trees.

I’m always baffled when I hear these stories, whether I stumble across them on the news, another personal finance blog, or hear them directly from a friend. They’re always good for a laugh; hopefully, you’ll get a chuckle out of a few of these… that is, if you’re not guilty of them yourself.

1. Getting an oil change every 3,000 miles. Have you ever checked your vehicle’s owner’s manual? If you’re still following the advice of the folks at Jiffy Lube and changing your oil every 3,000 miles, I’m guessing the answer is no. Most vehicles only require an only change every 5,000 to 7,500 miles; some go as high as every 10,000 miles. Oil changes are a necessary expense, but at $25-$30 for each oil change, why double or even triple your costs by following the repair shop’s directives and not your vehicle manufacturer’s?

2. Buying brand name medications. Most name brand medications have a generic substitute; and most insurance plans reward you for making the switch. On our plan, a generic prescription costs as little as $5 a month, compared to $45 for a 30-day supply of the equivalent name brand pill. While it’s true that some name brand medications work better than the generic in some people, by and large, your health won’t suffer any negative consequences from asking your doctor to write you a prescription for the cheaper generic.

3. Not checking your receipts, invoices, bills, and statements. Every month, I review my transactions online. Why? Because my financial life does depend on it. Sometimes, companies make honest mistakes and accidentally bill you more; other times, they’re actively fleecing you, like AT&T has done to me countless times. Whether it’s a grocery store receipt or a bill at your vacation hotel, check it line by line as soon as possible, and report any errors immediately to a customer service representative.

4. Paying for things you’ll never use. A friend’s mother recently paid $110 to get a new passport book…which would be fine, except the woman has a fear of flying and hasn’t boarded a plane in 30 years. She could have saved herself $80 and purchased a passport card for $30 instead, which she could use when she drives to Mexico, or Canada, or takes a cruise to the Caribbean. But it’s not just passports; people pay huge amounts of money for huge data plans for their smartphones, then use next to nothing. My rule? If you don’t use it, then lose it.

5. Buying what you could get for free. One of the hottest gifts of the 2012 holiday season were tablet computers, like the Kindle Fire, the Barnes & Noble Nook, and Apple’s iPad. All these products let you download music, videos, books, magazines, and more, but at a cost. The thing is, most large, urban libraries contain all this and more, and it’s absolutely free. Sure, it may lack the convenience or novelty of an iPad, but why spend hundreds of dollars on a tablet, apps, and media materials you could get at the library for the price of a gallon of gas?

What crazy ways do you and those you know waste money?

5 Crazy Ways People Waste Money is a post from Sweating The Big Stuff: Spending Wisely

For me, the boring part has been managing the day to day and month to month bills and the interesting part is earning more money on my new projects.

The Problem

I usually have my credit card bills sent directly to my checking account, where I would manually select the amount I want to pay and hit send. It was an extra step designed to prevent the credit card company from charging me whenever they wanted, but it ended up making me crazy. After a few years of not actually looking at the bill and selecting the amount, it got quite tedious and annoying.

Now I realize that the setup I had was actually frustrating me and not letting me get on with my life. It was stressing me out and eventually I was going to forget to schedule the payment and I was going to regret it.

Now It’s Automatic

Now, I have set the credit cards to pay the full balance due automatically. I’ve never missed a credit card payment, and this setup will ensure that I never will. No more worrying, no more questioning whether or not I’ve scheduled the month’s payment. And now, I can spend less time stressing and more time working on my goals.

When you don’t make things automatic, you run the risk of missing your bills, but the main reason to pay manually is so that you check over the bill for any unexpected charges. There are other ways of keeping track of your financial life, I check mint.com regularly so by the time the credit card bill comes around, there aren’t any surprises anyway.

Readers, do you automate your finances or do you handle everything manually so you are aware of all your spending habits?

If It’s Not Automatic, It’s Problematic is a post from Sweating The Big Stuff: Spending Wisely

It’s pretty cool. You lend money to someone who uses it to buy supplies or use it for their small business, and they pay back the loan once it pays for itself. An example is someone who needs to buy pasta, rice, and vegetables to sell to at their business.

The best part is that right now, using the link below, they’re giving $25 for you to make a loan for free! Trust me, it feels really good. So you just sign up, and you get to loan $25 to people to help them become self-sufficient

Here’s how it works:

1. Go to Kiva.org

2. Search through the hundreds of loans until you find one that speaks to you. You can filter by country, gender, sector, or attribute.

3. Checkout

4. Get repaid and find a new loan to fund!

Through Kiva, I’ve made $150 worth of loans, all for free. And all loans have been paid back on time.

Most free money offer have a catch. But this is truly $25 that you can lend for free, and better yet, you feel good while using it. There are plenty of reasons to give money to charity, and this is a free way to truly make an impact on others!

What are you waiting for? Start lending with Kiva!

Lend $25 To Small Business Around The World For Free is a post from Sweating The Big Stuff: Spending Wisely

1. Earn $10,000 From Non-Blog Related Side Income

So far, I’ve earned very little from non-blog related side income. The only thing I’ve made is a few hundred dollars from selling stuff on eBay when we set a goal and made saving fun for a few weeks. But my goal won’t be achieved that way, rather I need a new venture to kick it up a notch (or start buying more lottery tickets).

The next few months will help determine whether the product I am building for bloggers to track their advertisements will pan out. I think the idea is really solid, and am hoping to team up to really take it to the next level. So not much going on right now, but that could change in a hurry.

2. Save 50% of My Post-Tax Income

Lauren spent a week partying visiting friends in New York, and we booked a vacation for May. Those were our only major non-monthly expenses, and our spending has been much more consistent in the first 3 months of this year. As a result, we’ve managed to save 57% of our after-tax income, which is a huge win. We’ve got some flexibility the rest of the year and can still hit our yearly goal.

Looking forward, we have another summer vacation planned, and we will pay for school for Lauren possibly 3 times (summer, Fall semester, and pay for Spring semester in December). So I guess it’s good that we’re ahead of the game. We will hopefully continue our progress reigning in our spending and any extra income I can earn will give us additional breathing room.

Readers, how has your progress towards achieving your goals going?

First Quarter Business and Personal Finance Goals Update is a post from Sweating The Big Stuff: Spending Wisely

I decided to set it up, because why not? There’s no harm, I plan on having my Google account for a long time, and if something catastrophic were to happen, someone should have access to all of my data. Google is an integral part of my life, with all my email, pictures, and voicemails stored somewhere.

Naturally, I gave access to Lauren, my wife. Of course I included a message for her with instructions for all my accounts.

The Inactive Gmail Letter To My Wife

——————————

To My Dearest Lauren,

I’m so sad that you have to receive this email. It can only mean one of two things:

1. I’m no longer here with you.
2. I’ve changed my email address and forgot to remove this setting.

Hopefully it’s the latter, in which case text my iPhone 9 (not my iPhone 8S, that’s for work only!) and tell me to check my account and turn this thing off.

This is basically all the information I once thought was important. The truth is that very little of it is, but if I am really gone, you should read my Blogger posts. It will help you miss me a little bit less, the quality of the writing is really terrible.

The pictures are what you should download and keep somewhere safe, but hopefully I trained you well and they’re already on your computer, hard drive, and in several clouds.

Finally, please make sure my Google+ page remains active. I can only assume my Google+ page was my most prized possession. I know it may look completely inactive, but just wait, this thing has over 350 million users so I’m sure it’ll be huge by the time you read this.

Please go watch our wedding video one more time, hopefully you’ve converted this into 3D format so that you can really experience it again: http://ahavafilms.com/lauren-daniel/

Love,
Daniel

The Letter My Wife Will Get If I Don’t Check Gmail For 6 Months is a post from Sweating The Big Stuff: Spending Wisely

The biggest thought on my mind about housing right now is that moving is a pain. Just thought of having to getting all of our furniture into a new place is scary. For the first time, I would pay someone not to have to deal with the removals.

But I started thinking about the future and wondered when I should start to get serious about buying our first home. Not that following what others are doing is a great strategy for making important life decisions, but knowing what others in my situation are doing is definitely helpful. The more information, the better.

According to the 2009 American Housing Data survey, the average age of first-time home buyers was 34, while a report put out in 2012 by the National Association of Realtors estimates the average age for first-time home buyers at 31.

So we’ve got a good 6-9 years ahead of us before we fall slightly behind our cohorts. Hopefully it won’t take that long, though we’re pretty far away from buying anything. And in Los Angeles,   housing is crazy expensive, so buying a place of our own would mean having to leave the neighborhood we currently live in. The age at which we’ll buy our first home depends greatly on where we’ll live. If we wanted to stay where we were, we’d probably need to wait many more years to save for a down payment. But the idea of paying rent for 10 years doesn’t sound all that inviting.

31-34 sounds exactly when I’d expect people to be purchasing their first home. After graduating college around age 22, people either go to graduate school or find an entry level job. It’s not until people reach 26 or 27 that they find their groove, are able to pay off student loans, and start saving for a house.

According to the US Census Bureau, the average age of men who married for the first time in 2011 was just under 29 years old and just under 27 for women. Without a family, most people aren’t considering buying a house, and after a few years of making progress paying down debt and saving for a down payment while earning two incomes, they’re ready to purchase that first home.

Readers, at what age did you purchase your first home?

The Average Age of First-Time Home Buyers is a post from Sweating The Big Stuff: Spending Wisely

While the large majority of my funds are in my online bank account, I do still keep around my big bank. It has a few features that make keeping it around worth it, including very convenient ATMs and transferring money to and from friends and family takes just a seconds.

I really dislike big banks. So while I use their service, I don’t want them to profit off of me, or profit as little as possible. I greatly prefer to give my money to those who provide excellent customer service and don’t charge fees.

There are a few things we can do to reap the benefits from the big banks but avoid letting them profit from us.

1. Always keep the minimum required balance, plus a little extra to avoid missing a payment. Make sure to avoid the fees but don’t keep money sitting in your checking account that could otherwise be kept earning real interest rates. The interest rates big banks offer in their savings accounts are incredibly low so keep your funds somewhere else!

2. Reap rewards without paying fees. I earn hundreds of dollars in credit card rewards each year. So they pay me hundreds of dollars and I get the convenience of paying in credit. Big win for me!

3. Use in-network ATMs. By only using ATMs in the network, you use the banks to access your money get access to your money while the bank doesn’t make a penny, no matter how often you use them.

And if you want to cut out the bank completely, use a Visa Prepaid card with
direct deposit, and you never have to worry about the bank profiting from you again. The process is super easy and gives you full control of your money!

This is how I take advantage of the bank and use them to my advantage while not paying them anything for all the benefits I get.

Do you use the big banks for the benefits without letting them profit?

I am blogging on behalf of Visa Prepaid and received compensation for my time from Visa for sharing my views in this post, but the views expressed here are solely mine, not Visa’s. Discover more at http://www.VisaPrepaid.com or view more Visa Prepaid videos at http://www.youtube.com/visaprepaid.

How To Beat The Big Banks is a post from Sweating The Big Stuff: Spending Wisely

If you love all things Hollywood, I’ve got six ways to save money:

Cut Costs At The Theater

Are you a student? Member of the military? A teacher? Work in public safety? Plenty of theaters have special discounts for these individuals, provided they can show identification. If that fails, check out a matinee – the crowds are smaller and you can save as much as 50% off the price of a ticket.

Stream Movies At Home

If you’re willing to be a little patient, you can watch movies for just a fraction of the cost of going to the theater. Whether you subscribe to Netflix, Amazon Prime, or another type of service that lets you stream movies and TV shows, this is a great way to see the latest flicks, in many cases before they are available on DVD or Blu-Ray.

Check Out Your Local Library

If you’re a fan of classic Hollywood films, then you need to visit your library. Many branches offer video rental at no cost, but beware: you’ll pay a premium on late fees and may have shorter rental periods than you would with books.

Visit Used Book Stores

There’s a great used book store in town that sells all types of media: books, CDs, video games, movies, etc. I’ve found great deals on movies – classics and more recent releases – here, often 75% off retail price. Bonus if you have old movies to trade in for store credit!

Buy a VCR

Yes, this sounds a little out-of-date, but hear me out. The Goodwill store in my area has a large selection of movies on VCR, most for sale for a mere dollar – and I’m talking about some classic flicks! You can still buy a new VCR player for under $20, but I’d look for a used one first.

Score Discount Gift Cards

From time to time, flash sale sites like Groupon and LivingSocial offer national deals on tickets to movie theaters; last year, I scored four tickets (normally $40) for $20 to Regal Cinemas. You can also check out discounted gift cards at sites like GiftCardGranny and PlasticJungle, where you can save up to 20%.

What are your favorite ways to save money on movies? Do you go to the theater, rent, or live stream your favorite films?

Six Ways to Watch Movies for Less is a post from Sweating The Big Stuff: Spending Wisely

I’ve been working on this for months to give users exactly what they want and need, so today I unveil the Sweating The Big Stuff Prepaid Debit Card!

There’s a lot of information to get through, so let’s start! Please see the notes at the bottom of the post for clarification.

Features

• We report your usage to the major credit bureaus!*
• Only costs $0.25 per transaction for you to use your money! On a $200 transaction, that’s just 0.125%!
• Free to Refill**

*We do not actually report your usage to the major credit bureaus, but maybe we’ll consider it in the future if it means more money for us!

**As long as you refill from a linked bank account on Tuesday-Friday between 2am CST-6am PST.

What Makes This Card Different

Most cards aren’t endorsed by me or have a big nest egg with a sweatband on them. They’re so blah. Now you get to think of me each time you use your card! Plus, those other cards don’t help me financially, which is why I teamed up with myself to create something with my name on it!

Fees

There are however, SOME fees**, including:

• $1 for pay by check
• $2 per paper statement
• $2 per over-the counter cash withdrawal
• $2 per call to talk to a live customer service agent (after one free call per month)
• $3 card replacement fee

***These fees are exactly the same as Suze Orman’s Approved Card

Sure you could just go to any branch of your local bank or credit union and have them set up a free checking account and give you a debit card with no fees, but where’s the fun in that? And more importantly, where’s the money for me?

Presenting the Sweating The Big Stuff Prepaid Debit Card is a post from Sweating The Big Stuff: Spending Wisely

The thing is that while I thought I was getting a $2,955 refund (yay for getting married and filing a joint tax return for the first time), the IRS only approved a $2,745 refund. Where did that $210 go? Where was my explanation?

It’s been over 4 weeks now, and I expected to get a letter in the mail from the IRS explaining what happened. But now I’m going to have to contact them. Which I’m sure will be very easy now that we’re just weeks away from the April 15th tax filing deadline. Nobody else will have questions, right?

I tried to think of any reason why the IRS would take out $210 from my refund. At a 25% rate, that means that they found $840 in income that they think I did not report. That’s a lot more than just a slight oversight!

I am brutally  honest with my taxes and try to report any and all income I earned during the year. However, I did find about $85 from a 1099 that I had not accounted for from an investment funds account I no longer use.

You can’t hide income reported on 1099 forms from the IRS. When, in this case, a bank sends you a 1099 form, they send the same one to the IRS. So if you don’t report it to the IRS, it’s glaringly obvious.

But that $85 was only a small fraction of the unaccounted for funds that the IRS thinks I did not include in my tax return.

I did some research and found information about IRS notices and letters. There are lots of reasons (210 options, according to their website) why you might get a letter from the IRS. For my situation, it would likely be the CP20 Notice, which you receive when the IRS believes “you incorrectly claimed one or more deductions or credits. As a result, your refund is less than you expected.”

So for now, I just wait. I already expected to receive some communication from the IRS, but now I’m going to have to try and seek out the information myself. I will definitely be following up with another post when I find out what was the issue was!

The IRS Took Money Out Of My Refund! is a post from Sweating The Big Stuff: Spending Wisely

University of Maryland by enygma

Like many high school seniors, I said that finances were not going to be a major part of the decision making process.

My College Decision Making Process

This is what my decision making process looked like while I was filling out that questionnaire:

• My parents had provided for all my education expenses up until that point
• I had some money saved up for college
• It was more important to go to a good school than to worry about how much it would cost

I had no idea how much my parents had set aside for me, and I had absolutely no concept of money at the time. So why should I care how much college is going to cost?

The Problem With Letting High School Students Make Financial Decisions

At age 17, the difference between $25,000 in student loan debt and $100,000 in student loan debt is really small. Many teenagers look at the options like this:

• In either case, it’s a lot of money that will get paid back eventually.
• With a college education, it won’t take long after graduating to start paying it off.
• Every else goes through the same thing, so I am not any different.

Why are these kids being put in charge of a potentially life-changing decision without being given all the tools to make the best choice?

How High School Students Decide Where To Go To College

Most high school students think more about the social and academic aspects of college than the financial aspects. Some schools are better when it comes to specific disciplines and for the most part, kids are looking at what their lives will be like during college instead of thinking about what their lives will be like after it.

I went off to the University of Maryland (Go Terps!), and at some point during my junior year, my father told me how much debt I was probably going to graduate with. OK, it was a fact of life that I was going to have to deal with. If he had said $70,000, my reaction would have been the same.

Parents Need To Help Make The Decisions

I’m glad my parents were looking out for me and didn’t allow me to take on more than a reasonable amount of student loan debt. I had absolutely no idea what I was doing, and if there hadn’t been any money set aside for my college education, I am confident that I still would have decided to go to the University of Maryland. I consider myself very fortunate that I had help during the entire process.

It’s not fair to make high school students decide between two enormous amount of debt. Parents need to be extremely involved and not only lay out the realities of what life after school will be like, but guide their children because they are much better suited to look at the whole picture.

How much student loan debt did you have when leaving college? As a high school senior, were you able to make an informed financial decision about where to go to school?

High School Students Can’t Make Financial Decisions About College is a post from Sweating The Big Stuff: Spending Wisely

I wasn’t as put off by his inability to find a spot for me in his schedule as I was shocked that he still went on business trips. During the Great Recession, a lot of my friends who used to travel a lot for business started using teleconferencing technology instead; even as the economy has picked back up in recent years, their employers have been slow to go back to the old model of routine business trips for all but the most crucial face-to-face meetings.

Benefits of Business Trips

The benefits of business trips have been debated for years. One of the more seminal studies on travelling for business came from Oxford Economics USA in 2009. The organization reported that companies that bailed on business travel stood to lose 17% of profits in the first year alone. On the surface, it’s hard to understand how using new technology instead of spending hundreds or thousands of dollars on an overnight business trip could cost a company so dearly; however, it just goes to show the importance of in-person meetings.

Are Business Trips Necessary?

But the facts show, business trips also have their downfalls. It keeps employees out of the office – sometimes for several days – for a short meeting. Case in point: I have a friend gave a 45-minute presentation in New York City a few months back, but spent 12 hours traveling to and from the meeting. Traveling for business also keeps parents away from their children, has negative health affects, and employees who travel a lot for business tend to burn out at a faster rate than those who travel infrequently or not at all.

Technology Makes Business Trips Obsolete

Today, new technology makes it easier – and cheaper – than ever for employees to avoid business travel without giving up on the best aspects of in-person interaction. Companies like AT&T and Cisco manufacture and market large-scale teleconferencing systems that include phones, cameras, and touch-screen presentation boards that can be used by individuals in multiple locations. If you don’t want to invest in infrastructure, you can use web-based software to connect virtually. I’ve used GoToMeeting multiple times, and find it very straightforward. I also have friends who have use free software – like that offered by iVisit – for one-on-one teleconferences. There are also software programs that charge you per minute, per teleconference, and per month. The website Top Ten Reviews has a great list of teleconferencing and virtual presentation software programs, if you’re interested.

How often do you travel for business? Has the frequency of your business trips declined since this type of new technology has become more prevalent?

Are Business Trips Obsolete? is a post from Sweating The Big Stuff: Spending Wisely

College internships are a huge stepping stone into the real world. For many, it is their first work experience where they get a taste of what is means to work in an office and hate your life get a taste for what working might be like.

Internship Advice

So as he searches for internships on the Internet, I asked for some recommendations for him. I don’t expect anyone to offer him a job, just some friendly advice to increase his chances of finding a good fit for an internship over the summer. This is what I got:

@danielpacker Recommendations from professors.Any other internships.List any societies to which he belongs.

— Yes, I Am Cheap (@yesiamcheap) March 12, 2013

@danielpacker A good cover letter. Cover letter/resume get you the interview. YOU get the job. Hook them with the cover letter.

— Catherine (@PlungedinDebt) March 12, 2013

@danielpacker look in the alumni database and start cold-emailing for informational interviews. Then do the same with LinkedIN.

— Well Heeled Blog (@WellHeeledBlog) March 12, 2013

These are all really good ideas, and I really like the first one. Professors can be excellent resources. I remember meeting with a professor before deciding on my major and it was one of the best things I could have done.

I also don’t want him to worry just yet. I was studying abroad during my spring semester of my junior year and it took me awhile to get an internship. All I could do was email back and forth, so I think he has a big advantage. If anyone wants to interview him, they’ll learn a lot more about how we can be valuable to their team instead of just reading about his 3.94 GPA.

Readers, what other tips do you have for him? How did you get your summer internship in college?

How Did You Get a Summer Internship? is a post from Sweating The Big Stuff: Spending Wisely

Many people think that they should invest a brokerage account through E*TRADE if they want to invest, but for most people, there are better options and a very clear hierarchy that should be followed to be sure you’re taking advantage of all the perks our many investment vehicles offer.

Everyone has a different mix of investment options, but it’s very easy to follow. If you don’t have a type of account mentioned, that’s OK. Just move on to the next option.

Investment Vehicles

Most of have the opportunities to invest through 401(k)s and IRAs as well as non-tax-advantage accounts, but not everyone knows which ones are best for different situations.

The most common situation for young people is the choice of 401(k), IRA (Roth and Traditional), or a regular brokerage account.

If you need a refresher course, check out the explanation of each of the types of retirement accounts. The only account we’ll discuss not included is the standard brokerage account. This is the type of investing account that is promoted most, so think E*TRADE.

As opposed to all the other investing accounts, which are retirement accounts, a standard brokerage account is not targeted toward people looking to invest for retirement (but you can still invest in one with an eye toward retirement). There are no tax advantages to this account, but for those who want to save for other goals, this could be the right place to do it. All earnings are taxed, but you can always withdraw both contributions and earnings with no penalties.

Where Should 20 Somethings Be Putting Their Investments?

So how should young people invest?

First, start with any 401(k) contributions that would earn a match through your employer. This is just free money, so if you get a match on up to 5% of your salary, deposit 5% of your salary. They’ll match with 5%, so you’re getting 5% of your salary for free! This is definitely your first step.

Next, invest in your Roth IRA. This account has far more flexibility than a 401(k), and your contributions can be withdrawn at any time with no penalty. Contribute up to the maximum, which is $5,500 in 2013 as long as you’re under the income limit (and you will be if you’re just starting out).

Once your Roth IRA is fully funded, keep funding the 401(k) through your employer if you are eligible, up to the maximum $17,500 for 2013. You might as well take advantage of any tax deferred savings incentives while you can!

Finally, you have my permission to invest in a regular brokerage account. This should be the last option because there are no tax advantages of this type of account.

If you’ve got enough to invest that you make it to the brokerage account, you’re doing a great job. But can you beat my savings goal?

The Best Investments for People in Their 20s is a post from Sweating The Big Stuff: Spending Wisely

Our Saving Rule: Only Count New Money

What would count? Anything we sold on eBay, any real savings from discount that we weren’t expecting, and anything that we planned on paying for but paid less than full price.

The goal was $300 (we knew someone selling one they won at a discount). We immediately set to work.

How We Reached Our Savings Goal

I sold a bunch of random stuff that was sitting in our closet. After all the eBay and PayPal fees, it came out to $167.

I asked TurboTax for a discount on their tax filing software, so instead of paying $74.99 for my federal return and $36.99 for my state return, I was only charged $19.99. That’s another $91.99. There was really no way around filing my taxes and I was expecting to have to pay the full price, so simply asking for a discount saved me a lot of money.

We returned a pair of jeans I bought on sale but never wore (but spent part of that savings on a new tie). Add another $18.

Lauren was able to get us under our food budget by about $25 this month, so we added it on.

Add that all up, and it comes to $302. We hit our goal in about 3 weeks!

For the past 5 months, I’ve complained to Lauren that we were spending too much on food. I just didn’t see how we could be spending so much money. We bring lunches to work/school. We eat out about twice a month, so almost all of the spending came from groceries. It seemed like we would come home from the supermarket and still have nothing to eat. After a few months, I stopped believing that we were still just stocking up on ingredients that we’d be able to use over and over.

Why Saving For Goals Helps So Much

We’re still spending more than I’d like, but for 2 weeks, I think the savings is impressive. Maybe we got smarter about what we bought and paid attention to what was on sale instead of keeping to a strict live. But when saving on groceries meant spending on something else, saving became fun.

There was a carrot out there that we wanted, and we were willing to work hard to get it. Hopefully this carries over going forward because who wouldn’t like an extra $300 to put toward a vacation fund?

Once we reached our goal, we sat down and thought about all the things we’d use an iPad for. It turns out, not much. So we put that idea on hold and have a $300 in fun money that we’ll spend at some point, either on a weekend getaway or some fun activity or purchase that won’t make us feel guilty. But for 3 weeks we made saving fun instead of a chore.

Readers, do you save with a goal in mind?

How We Made Saving Fun is a post from Sweating The Big Stuff: Spending Wisely

Keep Lenders Informed

Ignoring lenders when they attempt to collect money that is due is the worst path a borrower can take, but admitting an inability to pay a debt as agreed upon can be embarrassing. It is important to work with lenders to try to come up with a solution that works for both the lender and the borrower.

Find a Temporary Income Source

If payday loan payments are impossible with a borrower’s current income level, finding a second job that just lasts until the loan is paid off could help. Another method of bringing in more money to pay loan balances is selling unwanted personal belongings.

Budget Smarter

Payday loan amounts are typically for the amount of money that an individual makes in one pay cycle. Even though fees are added to this amount to equal the total debt, payday loans are often more manageable than other forms of unpaid debt because of their size.

Being able to pay off payday loans may be a matter of getting the household budget under control. Consider giving up extras in order to have more money to pay toward debt balances. This technique is most useful for payday loans that have not accrued significant fees.

Get Payday Loan Debt Help

When payday loan debt has spiraled out of control and a borrower owes money to numerous companies, it is time to turn to a professional for payday loan debt advice. A debt management company can help negotiate with payday loan companies to keep interest and penalties from being continuously added to current balances. Since the effective interest rates on payday loans are exorbitantly high, getting these fees under control is a major step in the right direction.

Debt management professionals are also able to work out a payment plan that works for the borrower. Since payday loans tend to be targeted to individuals who are struggling with credit issues and have mounting bills that are due immediately, problems with repayment are not unheard of. Contact a debt management company for help with working on paying down debt.
To avoid experiencing the cycle of taking out payday loans and being unable to pay them off, choose to forgo these loans in the future. While it is tempting to borrow money with a seemingly guaranteed payoff method, it is not uncommon for people who have taken out a payday loan to find themselves struggling with repayment.

Tips To Effectively Erase Payday Loan Debts is a post from Sweating The Big Stuff: Spending Wisely

Today when you say “social networking,” the first words that come to mind are likely Facebook and Twitter. But social networking goes far beyond these two. There’s LinkedIn, a site for professionals; there’s CafeMom, a site for parents, predominately mothers; there’s CaringBridge, a site for medical patients and their families. There are Tumblr pages and ways to Digg everything from blog posts to news articles to pictures; there’s Flickr and Facebook-owned Instagram. The ways to share information on the web are endless.

But this wasn’t always the case, and I said as much to my friend’s brother.

“When I was your age, it was all about Instant Messenger. And chat rooms.”

“What? It was once cool to be in chatrooms?” he asked, automatically making me feel about a decade older than I really am.

“Hell yah it was! A/S/L baby!” The reference flew way over his head. “Texting didn’t become popular until about 2001, so to communicate, it was all done on AIM,” I said.

I had to explain to him that Gchat was just AIM integrated into his email, but what we used was the original.

“What about MySpace?” I asked, wondering if I was only setting myself up for failure.

“Oh yeah, I’ve heard of that,” he replied. “Isn’t that what paedophiles use?”

Wow.

Just for kicks, I logged on to my old Instant Messenger account to see if anyone used it anymore. It took me a few guesses on the password (I will never forget my 6th grade password), but I was logged in. My list of friends on Instant Messenger, once hundreds strong, was empty; not a single one of my 164 friends was logged on.

I never had a MySpace account, so there are no embarrassing photos there, but I’m sure that many of my friends still have active accounts. I asked a few people, who said that over the past few years, they deleted their MySpace accounts to shield it from potential employers, not that anything they posted in high school would be relevant to their careers.

Today, it seems like just about everybody is on Facebook; the social networking site has over a billion members. Twitter is a household word, and most of the people I know have an Instagram app on their smartphone. But 10-12 years ago, we were just getting used to having a cell phone in our pockets (I didn’t have one until my freshman year of college), and social networking was confined to sites that are, apparently, obsolete.

Do You Remember AOL Instant Messenger? is a post from Sweating The Big Stuff: Spending Wisely

However, one new online coupon code savings site, Save1, is different. Not only do they test every code to make sure they are working (yeah, no more unsuccessful codes!), but they also donate a portion of the money they make when you use the coupon to feed the hungry.

If you don’t have a lot of money to donate but would still like to help others, Save1 offers the perfect win-win scenario. You get to save on your purchase by using a coupon code you know will work, and you get to help someone around the world get a meal and fend off starvation.

You can’t put a limit on how much you should give to charity, and when giving is this effortless, it’s a no-brainer.

Who Started Save1?

Save1 was started and is currently run by Joy and Todd Smith as well as two of their oldest children and their spouses. All of the families involved have a long history of working with the poor and starving. This family seeks to help others, and with Save1, it’s easy for consumers to donate while saving money when they shop online. Since consumers aren’t giving money out of their pocket, this is a perfect way to donate for people who want to help but don’t have much money to do so.

How Does Save1 Work?

To use Save1, simply type in the name of the store you’re looking to buy from or the product you would like to purchase. You’ll get results, if they’re available. Then, click on the small box on the right that says, “Use this offer.” You’ll receive the discount, and a portion of the commission Save1 receives from the company offering the promotion will go to Save1′s feeding partners to help feed those in need.

Who Are Save1′s Feeding Partners?

Save1 has several feeding partners that they work with including Action Against Hunger, Feeding America, Feed My Starving Children, and Project Peanut Butter. Thus far, Save1 has provided 93,263 meals to those in need thanks to consumers using the coupons from Save1′s site.

If you would like to receive a discount on your online purchases (who doesn’t?) AND help those in need, Save1 may be the perfect site for you to use, especially since all of the discount codes are tested and will work, unlike some codes found at other sites.

Shop Online and Make a Difference is a post from Sweating The Big Stuff: Spending Wisely