Top Personal Finance and Money Books

If you are a novice in the personal finance world and would like to broaden your money management knowledge, a good start would be to kick off your reading with a few timeless personal finance books. But how should you pick the first few books to read considering there are thousands of books written and available on the topic of personal finance?

Today, to make your life little simpler, I will give you a list of my top picks – 5 simple and easy-to-comprehend financial books to kick off your financial journey. One point to emphasize – don’t stop reading after finishing these 5 books. Your financial well-being depends largely on your financial knowledge. Always continue reading more financial books and literature to enhance your personal finance knowledge. Read, learn, and follow your financial roadmap to become successful financially. A Dawn Journal will provide you with great and reliable information to help you go through your financial journey.

Basic personal Finance Books

1. Your Money or Your Life by Dominguez and Robin

A very different type of personal finance book. It will give you a new perspective on life, work, and money. By working for someone else, we are trading our precious time for money. You could spend this time with your family or doing something you enjoy, rather than working for someone else and making them rich. That’s why working for someone else is making a dying – it’s not making a living. The authors show in this book how you can gradually switch from making a dying to making a living. I encourage you to read my full review here: Your Money or Your Life – A. Dawn Journal Book Review

2. The Millionaire Next Door by Thomas Stanley & William Danko

This book reveals how ordinary people can achieve extraordinary financial success by living below their means and practicing discipline. True millionaires don’t spend, dress, or act like millionaires and they have not inherited wealth or won lotteries. You can be a millionaire too by making smart money decisions and following proven steps other millionaires take mentioned in this book.

3. The Automatic Millionaire by David Bach

There is no shortcut becoming a millionaire. All you need is to use common sense to cut unnecessary expenses, pay yourself first, and make your financial life automated. Bach shows how you can put your financial life on autopilot and reach your goals without spending hefty time on money management. Bach is the guy who coined the term “The Latte Factor®”. What is The Latte Factor®? It just simply means that you cut on unnecessary small spending everyday and save or invest them to reach your financial goals.

4. Getting Loaded: Get Ready, Get Set, Get Rich by Peter Bielagus

Is it possible to become financially successful just by saving a couple of dollars a day? Peter Bielagus shows how to do it in this simple yet insightful book, step-by-step. The author discusses all you need to know about money and how you can use time on your side to build a strong financial backbone. This book is specially recommended for young graduates who are just entering the workforce and to anyone else who wants to be financially strong without having lots of money.

5. Invest Now by A. Dawn

This is a beginner’s guide to show you step-by-step how you can start investing for the first time with very little money. Although Invest Now is written for Canadians, the procedures mentioned would work in any industrialized country. Invest Now is written in very simple and easy language – avoiding all financial jargon. A must-read for those who want to know how financial markets and products work.

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Canada Revenue Agency Website

Canada Revenue Agency (CRA) Website provides tax related information, publications, guides, forms, and other services that educate general public and promote compliance with Canada’s Tax system. CRA website has a vast amount of information, and it can be overwhelming. Here is a video clip showing how to easily navigate throughout CRA website and find tax information you need quickly and efficiently. Presented by  Canada’s Personal Finance Website – A Dawn Journal.

A Dawn Journal Tax Achieve

What Is The Difference Between A Tax Credit and A Tax Deduction?

Tax Deduction or Tax Credit – which one is better? The answer can be a tricky one and it may not as simple as it looks. In general, tax deduction seems to favour the higher income group, but I would suggest you to consult a tax professional. For more Info,
please visit – Canada Revenue Website.

Refinancing Your Mortgage

Often, we will all find ourselves daydreaming of something we would like to do or like to own, and immediately the part of our brain that dictates realism will snap shut on the daydream and remind us that we simply do not have the money to spend on indulging our idle fantasies. While there is every need to maintain a realistic outlook on life, it should not be at the expense of our dreams, and if the opportunity arises to enjoy ourselves in a way that will not bankrupt us, then sometimes we owe it to ourselves to at least consider it. However this does not change the fact that money is not always so easy to come by. One solution that a lot of people use is a refinancing option on their mortgage.

By refinancing your mortgage what you are effectively doing is extending the term of the arrangement in return for extra cash. This is something that a lot of people do for practical reasons like renovating their existing house. Others will extend the term of their loan in order to lower the repayments and enable them to remain in a house where they are finding the mortgage payments hard to maintain. Either way, when you refinance a mortgage you are allowing yourself financial breathing space in the short-to-medium term and accepting a longer time will be spent paying off debts. If you are happy with the fact that you will have less time mortgage-free once the loan is fully paid off, then refinancing can open a lot of doors for you.

One reason why refinancing is so popular is that it is given at the same interest rate as most mortgages. If a mortgage holder also has credit cards or loans with a higher rate of interest, they can use the refinancing to pay off the higher interest credit, allowing themselves as a result to save a great deal of money on repayment. In consultation with your lender – or another lender altogether – you can negotiate a solution to most situations, one which will allow you to feel as though your future can be free of major financial worry. It is, nonetheless, worth paying attention to the fact that none of us can infallibly predict the future, and if you are to refinance it is a good idea to look at making the term as short as possible while still retaining some element of manageability in the repayments.

Whatever your reason for refinancing, it is certainly one of the more reliable and sensible methods of raising quick capital, and as long as you have a good payment history on your mortgage you should have very little difficulty securing a satisfactory refinancing deal. Ask yourself whether the refinancing deal gives you enough freedom to be worth it, and whether – once the money has been put to use – whether you will be able to live comfortably with the repayments. If the answer to both questions is yes, then refinancing can work for you.

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Real Return Bonds And Their Place In Your Future

With governments around the world insisting that their recessions are over and that the green shoots of economic recovery are now visible, there is an increasing line of opinion holding that there is no better time than now to start investing – or to call a halt to a self-imposed period of no investment – in order to see the benefits of this recovery period for all they are worth. However, caution is also a concern for many given how recent the recession’s lowest points were. At this time, a secure investment with a reasonable return is the absolute ideal for anyone looking to secure a bit of money for the future.

When it comes to secure investment, it is tricky to be absolutely sure of getting what you need for your money. While the economic indicators show that the recession has finished to all intents and purposes, buying shares at the present time is still a little perilous, with companies still having to make cutbacks to deal with the realities of a post-recession age. A secure investment, it must be said, is also an investment which is unlikely to bring a massive pay-off. High returns are still only likely from high-risk investments.

If you are in a position where a comparatively low return for no risk sounds like a good idea, however, then your best choice may well be a real return bond (RRB). Very similar in nature to the American TIPS (Treasury Inflation-Protected Securities), the real return bond is an investment which links your savings to the rate of inflation. As well as this interest is paid on the bond to the rate of interest. Practically speaking, this means that if you buy a $1,000 bond and at the six-month mark the interest rate is 4% and inflation at 2%, the principal of your bond will rise to $1,020 and you will receive a further interest payment of $20.40. As the interest rates climb, payments will continue to accrue based on the principal of your bond.

The important thing for an investor with an RRB is to hang on to it until it matures. If you do that, the realization price is based on the interest rate at maturity while if you sell it prior to maturity you will find that the price is based on the prevailing interest rate – and may be less than you originally invested. This poses problems for some, as the typical life of an RRB is thirty years. If you have the patience to wait this out then the return at the end can be considerable – although it is possible for the RRB to return less than face value if, over the life of the bond, there has been a net deflation.

The above warnings are simply worst-case scenarios however, as the fact of the matter is that should you invest in an RRB you will most likely be in it for the long run, and there have been almost no 30-year periods which have seen a net deflation in the market.

What RRBs should guarantee you is an above face value payout on maturity. This is useful if you are looking to support a future venture. With the 30 year life of most RRBS, many people buy them in their mid-thirties as a potential cushion for their retirement. As no-one is quite far-sighted enough to predict market behavior by the year for the next three decades, there is little benefit in assuming exactly how much you will get for a matured bond after it matures, but it is enormously unlikely to be any less than its face value and, with interest and inflation behaving normally, it can be considerably more.

Buying an RRB is something worth doing if you have a pot of money for investment and are content for it not to be liquid for an extended period of time. As long as you fit these criteria, it is an excellent way to feather your nest for the future. Most usually, the face value of a new RRB is $5,000, but there are many available for a lower price. There is also nothing to stop you from holding several bonds if you have the liquidity to invest in them. If you decide to invest in a real return bond, then your first stop should be the Bank of Canada website to consult the figures there for a bond’s “real yield” and “real price”. This will enable you to calculate the amount that you will have to pay for a bond, and how much you will get on maturity if the market behaves realistically.

Once you have gleaned this information it is time to call your broker and have a conversation, asking for information pertaining to the current and potential future benefits of buying the bond that you have identified. Once you are invested, settle in to see what the market has in store for you and be conscious that this is a long game.

As mentioned at the beginning, RRBs are not dissimilar to the American TIPS. It is possible for Canadians to cut out the middleman and directly purchase a TIPS from an American broker or the US Treasury. However, unlike an RRB, a TIPS bought from the US Treasury cannot be held inside a tax-sheltered account such as an RRSP, so it makes little sense to do things this way. It makes considerably more sense to buy direct from a broker. The major substantive difference between these bonds is that TIPS are guaranteed to pay out at least face value on maturity. Additionally, the US and Canada have different tax rules and regulations, so when deciding which you should buy it is beneficial to check the market rates in both countries.

Naturally, each possibility has its advantages and disadvantages, and the two countries will often see different economic performance over the course of an economic period. Both should, however, see you with a creditable return on your investment for very little risk.

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China or India – Or China AND India?

There is an economic miracle of sorts taking place in today’s global economy, and it is coming as no shock to the people who have been watching the global picture develop these last ten years. However unsurprising it is in general, there will be people who, although they knew it was coming, may not have expected to see it happen in their lifetime. The economic miracle is taking place in Asia. That may not be terribly specific, given the size of the continent itself (the world’s largest continent), so to specify: Where the miracle is really happening is in two particular countries: China and India.

There was always the potential for this to happen, given the raw data that is available to anyone. China and India are two of the world’s largest countries by size, and easily the two largest by population with almost 40% of the world’s people living between them. This mix of landmass and population combined with the resultant ability to call on raw materials gives both China and India the opportunity to maximize any opportunity and become global powerhouses. But this dimensional magnitude has in both cases been both a blessing and a curse. The spread of both countries, allied to China’s historic insularity and India’s numerous dividing factors, has held both back from becoming quite as successful as they might have hoped.

As the 21^st century really gets going, with its first decade almost inked into the history books, both China and India look ready to make their big impact on the world’s economy. Both countries are expected to have a big century, and by the middle of this one will, on any reading of the situation, have economies which outstrip the current largest in the world, that of America. China will get there first – by 2030 on a conservative estimate, followed by India within the next 20 years. Will America and others be able to catch up in the mean time and overturn the predictions? It’s hard to say, but the economy does sometimes throw up unexpected situations.

Another question which might arise is that of whether competition between India and China will be a stalling factor in either country’s growth. This is not expected to be the case, as the economic strengths of both countries complement each other quite well, and may in fact enable mutual growth in countries which are showing greater expansion in their economies than any other major nation.

China is endlessly improving on a mass-manufacturing front, and expanding its range of industrial plants in order to cement its role as a world leader in that respect. India is marking its territory as a master of precision manufacturing and software innovation. The two working together will be able to supply the world with much of what it wants without stepping on each other’s toes. It is impressive to see how quickly both have developed, and interesting to wait and see what is next from these two future superpowers.

More India and China Posts

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Mortgage Risk Management

When taking out a mortgage it is important to be aware of the way that it will affect your future right from the start, in order to avoid messy situations later on. A mortgage is one of the most binding commitments you can make financially, as it ties you to a debt that will be with you for the foreseeable future, and maintaining payments to it is a non-negotiable part of your daily life for the period of the loan. Getting a mortgage that will suit your personal situation is essential because if you fail to make payments you risk losing your home and putting yourself in a situation where it will be impossible to get credit for the next several years.

It is genuinely of the utmost importance that you are aware from day one that these risks are real and serious. Although there are drawbacks to poor credit conduct on any kind of borrowing, the drawbacks on unsecured lending are considerably less. If you fail to meet the payments on a credit card then the card will be blocked and you will not be able to use it. This is not an ideal situation, but as long as you can make reduced payments for a specified period you will at least be able to maintain your way of life to a certain extent. The risks that come with a mortgage are proportionately increased by the fact that you have secured the loan against a property where you are living, and failure to meet those payments will see you evicted from your home if you cannot come to some kind of negotiated settlement.

In order to manage this risk, it is important to consider right from the start that a situation may arise where your income from work will be reduced. Do you have other sources of income that will allow you to at least maintain your mortgage payments? Will a claim on the insurance enable you to keep the account ticking over until your situation improves? Are you going to be eligible to claim on the insurance at all – this is dependent on what your current health and work situations are – or will you be turned down and need to rely on another source of income?

There are many questions that you need to ask yourself, and getting satisfactory answers in your mind for each of them is an absolute essential if you are going to successfully manage a mortgage account. If you are confident of living up to whatever is required of you, then you can be happy in the knowledge that one day, the house that currently belongs partly to the bank will be yours 100%. A mortgage is something that requires a lot of maturity and financial common sense to give you the best possible chance of owning your property and maybe one day realising a profit on it. You don’t want to be paying off debt after you retire, so keep all of your most important questions in mind when looking for the right mortgage for you.

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What Is The Pareto Principle And How To Use It

What Is The Pareto Principle

The Pareto principle, or the law of the vital few, or the 80-20 rule was the work of an Italian economist Vilfredo Pareto. Pareto observed in Italy in 1906 that 80 percent of the land owned by 20 percent of the population. Later on, Pareto observed the same 80/20 proportion applies to many other aspects of life. This observation gave us the Pareto effect or Pareto law which has been known universally. Simply stated, the Pareto principle is – a large proportion of results come from a small proportion of works or causes (a vital few).

Why You Need To Know the 80-20 Rule

You need to know the 80-20 rule to use your time and efforts more intelligently and efficiently to become more productive. If you can track the 20 percent products or works that bring you the most (80 percent) results, you can emphasise on these 20 percent and cut down the other 80 percent unproductive, time wasting tasks you do. Knowing your productive 20 percent and unproductive 80 percent will put you on the edge and you will be better equipped to handle your entrepreneurial journey than anyone else.

Some 80-20 Suggestions

Here are some common scenarios where you can apply 80-20. These are just some example to show you. Find out your own situations where you can apply the Pareto principle and prosper.

- 80 percent of your sales come from 20 percent of your products. Find out these 20
percent and improve them to get more sales.

- 80 percent of your work is being done by 20 percent of your employees. Take good
care of these few employees and decide what to do with the rest.

- 80 percent of your errors come from 20 percent of causes. Fix these 20 percent
causes first.

- 80 percent of the things you do daily or monthly, only 20 percent are really
important. Do these important 20 percent with utmost care.

- 80 percent of your results (or income) comes from 20 percent of your works. Do
these 20 more often to get better results.

- 80 percent of the time you use (wear) 20 percent of your stuffs (clothes). Eliminate
the other 80 percent you never use and live clutter free and less stressful life.

- 80 percent of your failures are coming from 20 percent of your wrongdoings. Eliminate
these 20 percent and succeed more often.

- 80 percent of your health problems are coming from 20 percent of your unhealthy
habits. Cut these 20 percent bad habits and live a healthy life.

Well, I can go on and on with this list forever. But these should be good enough to give you an idea. Find your own situations to apply Pareto rule and prosper.

Some Interesting A Dawn Journal Facts In Light Of The Pareto Principle

Here are a few interesting A Dawn Journal facts:

- 80 percent of visitors are coming from 20 percent countries

- 80 percent of traffic is coming from 20 percent articles

- 80 percent ad revenues are coming from 20 percent keywords

Final Word

I do believe in Pareto principle, but I don’t believe the 80-20 matrix is always constant. I think it fluctuates and disperses from the exact 80-20; however, it stays very close to, or within plus or minus 80-20 range. For example, it makes sense to assume that lots of times 80-20 proportion will actually be 70-30, 65-35, or even 85-15.

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IMF Says Recovery Looking Good

The latest news on the global economy from a widely trusted source is good news, but comes with at least one caveat. On Thursday October 1^st, the International Monetary Fund unveiled a report which states that the economy is recovering faster than expected. That’s the good news. And the bad? Well, although the rate of recovery is impressive, it is not so impressive that governments should kid themselves that they can now start dismantling the schemes that got it to that point. The economy has been boosted, but largely as a result of the timely intervention of governments, and to withdraw that help now could be damaging.

Maybe it is the once-bitten twice-shy feeling that pervades much in the world today, but the possibility of calling the recession over and returning to the old rules seems too much like a gamble right now. Yes, indicators are popping off all over the world showing that countries have left their recessions behind – but each of the countries to have such positive results has in common the fact that they voted through stimulus spending at a crucial point.

The downturn has eased, the fears that we would go back to a pre-World War II style of economic austerity has receded. But then again, you would be well advised not to go shouting that in the average town center hostelry just at the moment, with unemployment still on the rise in many areas. You might also find that economic recovery does not immediately translate to easy credit availability. That is one hot potato that banks are reluctant to touch even with the longest tongs in the world.

The IMF’s report may point to a likely eventual contraction of global GDP that tops out at 1.1% for 2009, against July’s prediction of 1.4% as well as a forecast for 3.1% growth in 2010 against an earlier prediction of 2.5% – but this need not be considered to be a green light for financial fun in the New Year. The IMF has produced a report which is the equivalent of your parents telling you that you’ve done really well on your mid-term exams, but it is a little too early for you to ask to borrow the car. The recovery is, as of now, somewhat tentative and supported heavily by stimulus spending and emerging economies in Asia.

If all of that sounds like bad news dressed up as good, it is not meant to. The bullet which has just been dodged was very real and poised to do an incredible amount of damage. Without government intervention in several areas there would have been even greater strictures than those which have been suffered. What needs to be accepted and absorbed is that although the bullet has been dodged, there may yet be shrapnel to deal with. Hasty cuts at this point would be unwise, and would leave countries in recovery at risk of another recession, so 2010 will be about taking the first steps towards financial comfort.

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Personal Finance Software Review by Financial Author A. Dawn

Free Canadian Personal Finance Software Review

I have been contemplating writing a single article discussing all of the available major personal finance software for a while. There are lots of personal finance review articles you will find online, if you perform a search by entering these keywords “personal finance software.” However, I wanted to write something different and unique than these traditional articles. How can I give you a personal finance software review that is practical, simple, short, and yet serves the purpose? Here are the points that I kept in mind while working on this article:

- It’s Simple: I tried to keep everything simple. If you are looking for personal finance software, you want things to be simple. You are not going to spend days and months just comprehending the article itself. I have not provided any ratings or assigned any scores based on any complicated methodology. You don’t want to complete an MBA on these ratings and scorings; you just want to pick software you would like to try.

- It’s Short: Instead of giving you a traditional summary for each software, I have listed a few bulleted points for these personal finance software programs. Information is at its best when it is in the form of a list and short. You don’t want to spend hour after hour reading each program’s features, pros and cons.

There is a wide variety of personal finance software available. I have picked a few of the best ones. However, if you are in the hunt for more, do a search for ‘personal finance software.’ Now, let’s begin.

Microsoft Money Plus Deluxe

- Microsoft has discontinued Microsoft Money Plus and it is no longer
available for purchase. Click on the above link to learn more.

Quicken Deluxe – Windows Version

- Full fledged personal finance software you have to install on your
computer to use.
- Offers tons of features and array of options – yes, it can be
overwhelming.
- Offers features such as expense tracking, budgeting, bill payment tools,
and cheque (check in U.S.) writing capability.
- Quicken is not free. It costs money and offers both Canadian and
American versions.

Quicken Online

- Organize all your accounts in one place online.
- Simple design offers clean interface
- Easy to setup and simple navigation.
- Does not offer Canadian version.
- Free to use.

Mint

- Very popular online personal finance software that has won many awards
and created heavy Internet buzz.
- Clean, neat, and visually pleasing interface.
- Easy to use; a great fit for first-time users.
- Mint uses Yodlee technology.
- Mint is now owned by Quicken.
- Does not offer Canadian version but planning to add Canadian support in
2010.
- Free to use.

Yodlee

- Offers most features and provides maximum ability to overview entire
financial situation at a glance.
- Yodlee technology powers many banks and financial institutions’ online
banking applications.
- Interface is not as neat as Mint.
- Does not offer Canadian version.
- Free to use.

Wesabe

- Wesabe is little different than other software. It combines a money
management tool and social-media application (like Digg, Facebook,
Myspace) into one.
- Has strong privacy and security commitment.
- Support staff is very responsive.
- Other Wesabeans provide you tips based on your shopping habits to save
you money.
- Wesabe works with Canadian banks.
- Free to use.

moneyStrands and rudder

- These two are two separate personal finance software but they are very
similar, providing a wide array of basic tools and applications with a clean
and nice interface
- Some of the tools moneyStrands offers: Debt Management Software,
Home Budget Software, Track This Bill, Monthly Budget Planner, Budget
Spreadsheet, Personal Budget Software, Personal Budget Worksheet,
Personal Money Management and much more.
- Some of the tools rudder offers: personal finance software, free budget
software, personal budget calculator, personal excel budget worksheet
and much more.
- moneyStrands does not support Canadian banks. Support some
Canadian banks. See the comment below. rudder supports TD
Canada Trust online banking.
- Free to use.

I have not recommended any particular software, nor have I provided any scores or ratings. This is something you have to decide after reading this review and checking out a few of these sites. Most of them are free, so try them out, and be sure to switch if anything does not meet your expectations.

For Canadians, Quicken Canada is the only one that offers full Canadian functionality but it’s not free. Among the free ones, Wesabe and rudder have some (if not full) Canadian functionality. Let’s wait and see what Mint brings for Canadians in the future.

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