Moneylicious Blog

Is Marriage All About Money?

2012-01-25T16:42:00.001-05:00

I’m having a dilemma in establishing the relevance of marriage in today’s world. It seems everyday someone is getting a divorce. It’s easier to say this when celebrities are divorcing in a blink of an eye. To the non-celebrity relationships (the rest of us) instead of regurgitating that 50 percent of marriages end in divorce because of money, I am going to take a different approach. Financial problems may not lead to divorce, but it does cause friction in the marriage. Although I don’t know what goes on behind closed doors, and assuming there is no abuse or domestic violence, what’s going on? Was the love lost? Infidelity? Money woes? Money is a hot topic in a marriage. Decisions arise about combining your finances or keeping them separate. Attitudes about money can differ among spouses leading to why finances can be a contentious issue.

Before I continue I will have you note I am not a marriage counselor and I’m not ridiculing the sanctification of marriage. Marriage is a PROCESS between two people who love each other. You make your relationship public and official to society—from a financial view—and awarded a financial incentive. Then there’s the religious part of marriage declaring your union under G-d, which is great but that’s not what today post is about. You make a momentous decision which impacts you financially. Assuming up until you were married, you and your fiancé where in a committed relationship, which in my opinion, shouldn’t change in a marriage. In my view, you are taking the next step in your committed relationship.

Is there a tax incentive to getting married?

I wonder if people are getting married for the right reasons. I like to think so. But here’s where I find marriage to be primarily about money. In the United States, if your taxable income is $50,000 and are single you have a tax rate of 25%. (The IRS says, "Your filing status is single if, on the last day of the year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree, and you do not qualify for another filing status.” Clearly your boyfriend/girlfriend relationship has no bearing on the IRS). If you are married filing jointly, your tax rate has dropped to 15%...a ten percent drop because you tied the knot. That’s quite an incentive or a benefit to being married.

Here’s the breakdown of the federal tax brackets in 2012

Tax Bracket	Single	Married Filing Jointly
10%	$0 - $8,700	$0 - $17,400
15%	$8,700 - $35,350	$17,400 - $70,700
25%	$35,350 - $85,650	$70,700 - $142,700
28%	$85,650 - $178,650	$142,700 - $21,7450
33%	$178,650 - $388,350	$217,450 - $388,350
35%	Over $388,350	Over $388,350

For simplicity sake, let’s further breakdown a $50,000 taxable income (assuming after all deductions and exemptions). Here’s how your taxes will be calculated:

Single:

($8,700 - $0) x .10 = $ 870.00

($35,350 - $8,700) x. 15 = $ 3997.50

($85,650 - $35,350) x .25 = $12,575.00

Total: $17,442.50

Married filing jointly:

($17,400 - $0) x .10 = $ 1,740.00

( $70,700 - $17,400) x .15 = $ 7,995.00

Total: $ 9,735.00

A difference of $7,707.50. In this example you could save a significant amount in taxes just for being married…a benefit to being married.

The government is giving a tax break for being married. Although, I don’t have empirical data or stats to prove marriage is about money, I can conclude an employed person who is unmarried and has no kids is penalized in paying more in taxes. As a percentage of the taxable income the tax is 34.89% for a single filing status and 19.47% for married filing jointly status. Clearly, there’s a tax financial benefit to being married.

Marrying Money?

Is it important to marry someone of equally high socioeconomic status? Getting married has its costs. Would you marry someone who was low on funds and poor employment prospects? This might be a significant impediment for women then for men. People who say they marry someone because you love them is missing an important aspect of money in a marriage. You need to be smart when it comes to marriage and money. There’s an economic partnership interwoven in a marriage. As I research my information, I came across an article in Psychology Today that said:

“Sociologists Pamela Smock, of the University of Michigan, and Wendy Manning, of Bowling Green State University, found that socioeconomic status is a key factor in a cohabitating woman's expectation of marriage. An analysis of a survey of family growth reveals that women living with men of lesser economic means and lower levels of education were less likely to anticipate marrying their current partner.”

Does this mean all women marry for money? Absolutely not. It reveals as women are juggling a career they want their current partner to be sufficient instead of possibly jeopardizing their financial future. On the other hand, you could question these women why they are living with “men of lesser economic means and lower levels of education.” Nevertheless, you can’t turn a blind eye that money plays a significant role in most marriages and potential marriages. As personal income grows you are less likely to fight over money and even increase happiness. According to a study conducted by economist Angus Deaton and psychologist Daniel Kahneman, as people earn more money their happiness increases. Eventually, it plateaus when income level reaches $75,000 per year.

This could be a reason why cohabitation exists and marriages are postponed.

Whether there is an income threshold or not to avoid money problems and increase in happiness the fact remains money is interwoven in a marriage. Money brings stability and security into marriage . I do believe you should marry someone who you love and shares your attitudes and beliefs about money. It could be the smartest financial decision you will ever make. Your marriage can be the most valuable asset.

Kodak Chapter 11 Bankruptcy: What You Can Learn From It

2012-01-23T15:31:00.000-05:00

Source: Kodak website

If you have been paying a whisper attention to the news flying on the internet, Kodak has filed for Chapter 11 (reorganization) bankruptcy. The legendary company, founded by Georgia Eastman in 1889, introduced the first camera. What has brought Kodak down to its knees? Well, some may blame on the lack of vision and some may blame on the lack of fierce competition known to be found in the dog eat dog world. Personally, I think it’s a combination of inconsistent leadership, fierce competition, a lack of sense of urgency and diversification. For those of you who can remember, most families and individuals would have a camera with film that needed developed. Consumer and movies have shuffled away from film to digital technology. I presume kids today think that taking pictures is only done through a camera phone which you can then instantly send to friends, family, or upload to Facebook and Twitter. Everything can be transferred from a camera to a computer using a USB drive. And if you want to make a photo album you can upload your photos from Facebook, Flickr, computer, or wherever you may have them stored and create your own photo book. Who needs film?

Kodak has remained complacent. Although they added digital cameras, they were replaced by competitors from Canon and Sony and tablets, cell phones and smart phones. As Kodak considers selling off or licensing its portfolio of patents to generate revenue, Kodak has until February 15, 2013 to come up with a reorganization plan. In the meantime, Citigroup has financed $950 million for Kodak to continue operations.

While I’m not typing this post up to give you a play by play of Kodak’s Chapter 11 Bankruptcy, I do believe there are things you can learn from Kodak’s situation. What can you learn from Kodak bankruptcy? To better position yourself.

· Take a survey or a poll. Find out from your target audience what interests them and what they would like to see more from you or your products. Do you know if they are satisfied with your service? Here are few sources to help you get started: Survey Monkey , Zommerang, Free Online Surveys

· Be aware of your competitors.

· Diversify your product lines/business lines.

· Have a vision and strong leadership.

· Know where your industry is heading and what new rules, regulations, products, technology, etc. are emerging to stay abreast.

· Change marketing tactics. Don’t spend 80 percent of your time doing the same thing over and over again thinking you are going to get a better result. How can you cut back on the amount of time exerted in order for 20 percent of your efforts to produce 80 percent of your results?

Tip: Track your numbers and the amount of time spent. Write down all of your marketing tactics –advertising, social media efforts, guest posting, etc—in one column. Then, draw another column and write down the amount of time spent on each tactic. Next, draw another column and write down the results it has produced—this could be an increase in your profits, blog traffic, etc. If you are someone who is selling a product how much time do you spent on each marketing tactics? And from each marketing tactics what’s the percentage of your sales? The same concept can be used if you are building traffic to your blog. What is driving more traffic to your blog? Guest posts, interviews, Facebook, Twitter? Focus your efforts on the respective tactic. If guest posting is driving traffic to your blog, focus your efforts in that area and let go or scale down on the other efforts. This way you will not overwhelm yourself increase your focus and it will cut back on time increasing your leisure; yet, still producing results with less effort.

Rolling over money from a 401(k) to a 403(b)?

2012-01-16T12:42:00.001-05:00

Every morning when I wake up and prep myself for the day, I’m faced with a quandary: how should I style my hair for the day? Sometimes I’ll wear it up, down, add a twist, or whatever depending on my time constraint. But it always takes me a moment to figure it out after trying a few styles. Similarly, people change jobs as often as I change my hairstyle. In my opinion, there are three reasons people will change jobs: more money, better career move, and unhappy with the job.

A Moneylicious reader sent me a question. She is changing jobs for a better career move. Here is her questions:

To answer my fan reader’s question, the answer is it depends. The word “depends” is the worst word because it doesn’t directly answer the question with a stern “yes” or “no.”

Moving the money from your previous employer 401(k) to your 403(b) can be possible. While the regulations allow for a rollover, the employer may not. They decide if they will accept a rollover from a 401(k). So, check with your current 403(b) plan provider to be certain you can rollover your old 401(k) money into your 403(b) plan.

Your Rollover Options (if you do not want to rollover to your 403(b) or if you are not allowed…honestly, these can be options even if you are not rolling over to a 403(b) plan)

To make this as perspicuous as possible, you want to maintain the benefits of tax deferral--which is the SMART financial thing to do-- you can consider a rollover IRA or leave the money alone with your ex-employer.

1. Rolling over to an IRA is an excellent way to keep the benefits of tax-deferred savings. For those of you who don’t know what tax-deferred means, here’s the rundown: your money avoids being taxed until you withdraw the money at retirement (on or after age 59 ½ you are eligible to withdraw the money). The best thing about your money accumulating on a tax-deferral basis is that more of it can be used to take advantage of compound interest.

Another benefit is greater investment flexibility. Typically, you will have more investment selections, including low-cost index fund, exchange-traded funds, stocks, bonds, international funds, etc. In most cases, there are no account fees. A few places that come to mind where you can open up a Rollover IRA are: T.Rowe Price, TD Ameritrade, Zecco, Fidelity, and Vanguard. No matter where you rollover your IRA always check for the fees and read the fine print.

The biggest drawback can be cost (e.g. transactions costs and fees). However, if you had your account directly in the fund family you wouldn’t be charged a mutual fund trade fee. Also, keep in mind that if you rollover into a mutual fund company IRA, like Vanguard or Fidelity, your options are limited to the fund’s family offerings. While the fund companies do have plenty of options that work for most investors, you can’t own individual stocks, bonds, ETFs, etc. Don’t allow this drawback to discourage you right off the bat. You can keep your fees low by opening an (online) discount brokerage IRA such as Zecco or TD Ameritrade.

Understand the difference between a rolling over your employer-sponsored plan to a Rollover IRA vs a separate Traditional IRA. I don’t want to confuse you, but I do think it’s important you understand the difference as it may impact you later on.

Rollover IRA – It is an IRA that is used to only hold money that was from your previous employer sponsored plan, like a 401(k), 403(b), 457 plans. There’s no limit to the amount of money that can rolled in it. However, if you make contributions to the Rollover IRA, you will be commingling your regular contributions with the money from your previous employer’s retirement plans. And, you will not be able to rollover over the money to another employer-sponsored plan at a later date. If you think you may want to have the flexibility of rolling over your IRA money to another employer-sponsored plan later on, then open a Rollover IRA.

Separate Traditional IRA—It is a regular IRA (known as Traditional IRA) where you can make annual contributions and commingle your money. Open this type of IRA if you think you will not be rolling it over to another employer-sponsored plan and you want to make regular contributions.

2. Leave your 401(k) with your previous employer. Despite the advice of some experts to rollover over your 401(k), you might be better off leaving the money alone. If you are happy with the performance of your 401(k), you can opt to leave it, at least for awhile. Eventually, you may want to consider the rollover in favor of flexibility.

What’s the balance in your 401(k)? If your account is less than $5,000, your previous employer will distribute the money. Therefore, you will want to rollover your 401(k). If the account balance is great than $5,000, then you do have the option to leave it with your previous employer. Always check with the plan sponsor.

What happens if you cash out the money?

You will be taxed a mandatory 20 percent and assessed a 10 percent penalty. Do not do it! It would be foolish of you.

If it were me, I would roll it over to the 403(b) plan. Choose index funds to keep my costs low and have some of money allocated to real estate and international funds. Plus, I can contribute more money toward my 403(b)--up to $17,000 for 2012-- then with an IRA. And open a Roth IRA.

If I couldn’t roll it over or if I don’t like the investments selections, I would roll it over into a regular IRA where I can make regular contributions.

Social Security Trust Funds:Not My Investment Choice

2012-01-11T11:58:00.001-05:00

I wish I had the option to opt-out of paying into Social Security. The origins of my feelings are not because of the macroeconomic news stories: Greece’s debt crisis, decline in U.S. dollar, Social Security dire forecasts, or Dow Jones Industrial Average fell 2.72 points, .02% (honestly, I don’t even think most people know what it means). It’s purely based on three current facts of Social Security operation:

1. My money is not invested.

2. Full retirement age is 67 years old [for anyone born after 1960].

3. I will receive fewer benefits the more money I make, as a ratio to income.

I would rather opt-out of paying 6 percent (let’s say) of my gross income into Social Security and allocate it toward my retirement. Instead of the law making it mandatory to pay into Social Security, it would be better to make it mandatory to contribute toward your retirement. Personally, I would feel better having control over my contributions. My opposition of Social Security stems from a lack of confidence that my future benefits would minimally support my lifestyle when I reach my retirement years. With more than 30 years to reach the typically retirement age, I could take advantage of the opportunity of compound interest.

Let’s say I invest an extra $200 a month with 8% return over 30 years, I would, at least, an additional $300,000. Obviously, I would need it to purchase Medicare and other supplemental health insurance. In addition, I would have options:

1. Continue to conservatively invest.

2. Use an annuity to provide me with a stream of income

I don’t want to go off on a tangent, but the point of my rant was to show you some things you just can’t control. It occurred to me that one of the reasons most people don’t invest towards their future is because they blame much of their mishaps on the economy. Although, what we can’t control can impact our lives, what we can control can benefit our lives. Does that make sense? It’s important to be aware and acknowledge the events that are out of your control so you can make decision on the things you can control. According to The 2011 Retirement Confidence Survey, 27 percent of workers are not at all confident about their retirement. The survey continues with depressing percentages of workers who have no retirement savings goal and who are not saving toward retirement. But, what I think helps fuel the lack of confidence is the barrier myth: you think you need to have a lot of money to save toward retirement. Too much thinking will hold you back…you need to take action! What you need is time.

Avoiding to invest because you think you don’t have any money will result in sitting on the sidelines during the market upswings and you lose out on taking advantage of the market downswings. Volatility is important to the growth of your retirement. I will repeat that: volatility is important to the growth of your retirement. The challenge is that people are emotional when it comes to the market and make irrational decisions, such as selling when the market is on “sale” (down) and buying when the market is at “full price” (up). Did you know much of the volatility has to do with short-term investors? Over the long-term you are not heavily impacted when you have a diversified portfolio to minimize your risk.

Forgotten automatic investment

With time to invest, you should contribute with money you would otherwise waste on non-necessities. That’s why I love automatic deductions and payroll deductions. Automatic means without conscious effort. Plus, you won’t even miss the money and you don’t need a lot of money to begin. The whole point is to begin small to establish the appropriate financial behavior and build on it. Before you know it, you will end up forgetting about it before you can even see it or spend it.

Start small and build on it until your reach the “ouch” point.

So, all you need to do is start off with a small amount, say 5 percent, to be automatically deducted into your retirement account. After a few months, increase your percentage to 7 percent, and after a few more months, increase your percentage to 10 percent. If you can push it to 12, 15, 20 percent or until you reach the “ouch” point, you are on the right track. The ”ouch point” is the point at which your retirement contribution begins to have an adverse effect on your standard of living. Basically, you know you have reached it when you are on the verge of eliminating most of your social life…you don’t want to become a bore.

It’s easier to start with small incremental amounts, then to uncover large lumps of money at one time or to dramatically increase your investment returns (something that’s out of your control). The more and more is being invested on a regular basis, the less of a pressure it is to earn a higher return…this is what’s called minimizing your RISK.

Index Funds

When beginning to invest consider index funds. Most 401(k)s and other retirement accounts offer index funds. They are call index funds, so, you can’t miss them. They are low-cost and no hassle. All you need to is log on to your retirement account online and review the investment options. Further, find out if your company’s retirement plan administer offers a financial advisor to help you make your decisions. How do you find out? Simply, contact your HR or contact the plan administers.

Instead of ranting on things I can’t control, I will focus on what I can by continuing to contribute toward my financial goals.

IRS Offers Top 10 Tax-Time Tips

2012-01-04T08:50:00.000-05:00

This post is credited to the IRS. The IRS has offered 10 tax time tips.

The income tax filing season has begun and important tax documents should be arriving in your mailbox. Even though your return is not due until April, you can make tax time easier on yourself with an early start. Here are the Internal Revenue Service’s top 10 tips to ensure a smooth tax-filing process.

1. Gather your records Round up any documents you’ll need when filing your taxes: receipts, canceled checks and other documents that support income or deductions you’re claiming on your return.

2. Be on the lookout W-2s and 1099s will be coming soon; you’ll need these to file your tax return.

3. Have a question? Use the Interactive Tax Assistant available on the IRS website to find answers to your tax questions about credits, deductions, general filing questions and more.

4. Use Free File Let Free File do the hard work for you with brand-name tax software or online fillable forms. It's available exclusively at www.irs.gov. Everyone can find an option to prepare their tax return and e-file it for free. If you made $57,000 or less, you qualify to use free tax software offered through a private-public partnership with manufacturers.　If you made more or are comfortable preparing your own tax return, there's Free File Fillable Forms, the electronic versions of IRS paper forms. Visit www.irs.gov/freefile to review your options.

5. Try IRS e-file IRS e-file is the　safe, easy and most common way to file a tax return.　Last year, 79 percent of taxpayers - 106 million people - used IRS e-file. Many tax preparers are now required to use e-file. If you owe taxes, you have payment options to file immediately and pay by the tax deadline. Best of all, the IRS issues refunds to 98 percent of electronic filers by direct deposit within 14 days, if there are no problems, and some may be issued in as few as 10 days.

6. Consider other filing options There are many options for filing your tax return. You can prepare it yourself or go to a tax preparer. You may be eligible for free face-to-face help at a volunteer site. Give yourself time to weigh all the options and find the one that best suits your needs.

7. Consider direct deposit If you elect to have your refund directly deposited into your bank account, you’ll receive it faster than a paper check in the mail.

8. Visit the official IRS website often The IRS website at www.irs.gov is a great place to find everything you need to file your tax return: forms, publications, tips, answers to frequently asked questions and updates on tax law changes.

9. Remember this number: 17 Check out IRS Publication 17, Your Federal Income Tax, on the IRS website. It’s a comprehensive resource for taxpayers, highlighting everything you’ll need to know when filing your return.

10. Review! Review! Review! Don’t rush. We all make mistakes when we rush. Mistakes slow down the processing of your return. Be sure to double check all the Social Security numbers and math calculations on your return as these are the most common errors. Don’t panic! If you run into a problem, remember the IRS is here to help. Start with www.irs.gov.

In addition, here are few things I want to consider:

Have you moved because of a job? You can deduct your moving expenses if your new job is at least 50 miles away.

Did you donate or tithe in 2011? Hold on to those receipts. You might be eligible to itemize and deduct your charity contributions.

Did you contribute to your 401(k) or IRA? It's still not too late to make IRA contributions (not 401(k) contributions) that count toward tax year 2011. You have until April 17, 2012 to make an IRA deposit between January 1 and April 17, make sure you specify which year the contribution is for.

Did have to pay student loan interst in 2011? If your income is under $60,000 (or $120,000 for married couples filing a joint return), then you can deduct up to $2,500 in student loan interest.
If your income is over $60,000 but under $75,000 ($120,000 to $150,000 for married couples filing jointly), then your deduction will be prorated. If your income is over $75,000 ($150,000 for married couples filing jointly), then your student loan interest is not deductible at all.

How will you be filing your taxes? Consider TurboTax.

2012 New Year Resolutions: 3 Keys to Succeed

2012-01-03T06:48:00.011-05:00

The question of the beginning of the year is “What’s your New Year’s resolution?” Typically, the answers are earning more money, losing weight, building better relationships, eating healthier, or cutting back on excessive expenditures. Saying it and doing it are two totally different things. You may have good intentions and you might even start a plan of action. Within less than 90 days, the path toward accomplishing your New Year resolution(s) stops.

1. Have Checkpoints

If your goals become difficult for you to accomplish, ask yourself if they are too big or is the time allocated to accomplish your goals unrealistic? Shoot for smaller targets to reach your goals. Let’s say your goal is to lose 20lbs. Instead of taking a whole year to accomplish this goal break it down into checkpoints. If you have never lost 10lbs in a month, then avoid setting up demanding tasks. It’s more realistic to lose 5lbs in 30 days. Your 30^th day is your checkpoint—the point at which you evaluate your progression and make any necessary adjustments to your plan. Then, set up another checkpoint at the next 60^th day checkpoint. Every 30^th day you have another checkpoint. Within each 30 days, your goal is to lose, at least, another 5lbs. This approach keeps your goals simple, realistic, and doable. More importantly you don’t feel overwhelmed and have to make drastic changes. Losing, at least 5lbs a month means you will lose 20lbs in four months at the latest.

Checkpoints can be used when building better relationships, too. Let’s say you are trying to work on building a healthier relationship with your partner. Set up the goal and then your checkpoints. If the goal is to show that you can be a more thoughtful partner, then give it at least 3 months for your partner to, actually, believe you. Try setting up biweekly checkpoints. Reflect on your actions and words that are in conjunction with your goal.

When setting up a goal to save more money, checkpoints are awesome! As a side note, saving money is not always about reducing your lattes and avoiding impulse buys. I know this sounds contradictory to most experts, but, even in my book Moneylicious: A Financial Clue for Generation Y, I explain the importance of splurging. Set a goal of the amount of money you would like to have saved by a certain date. For example: May 1, 2011, $500 in savings. That’s $125 per month, $31.25 per week, or approx. $4.17 per day. Ask yourself where you can reduce your expenses without impeding on your lifestyle and how can you earn more money? Remember, to set up checkpoints: weekly or biweekly.

The purpose of checkpoints is only to evaluate your progression and if you have to make adjustments to reach your goal. It’s imperative you set up a step-action plan. If your goal is to earn more money, identify your skills and talents that can be of service for others. Can you ask for a raise? Forget about the economy for one moment. How can you improve or save your company any money? When asking for a raise, the subject is not only about you. Keep in mind, you will need to present in a 5 minutes or less the impact you have made and the impact you will make. If the company you work for is not giving any raises or is a company where the only person of importance is the owner/president/CEO, then you may want to consider finding another job or career. And, if you are considering finding another opportunity, always keep in mind you may have to create it. So, fine tune your skills and stay abreast in your industry.

2. Procrastination is a killer

A barrier we set up for our failure to accomplish our goal(s) is procrastination. And procrastination could sound like this:

“I will do it later. I have time.”

“When I figure it out, I will get to it.”

“Something came up.”

“I didn’t have time today.”

Stop it! Procrastination will hold you back from achieving success. You need to be proactive. I know there are other areas of concern you need to focus on such as children, spouse, work, economy, and health. Your proactive efforts should be focused on things you can change and do something about. If you take the reactive approach, you will focus on problems in your environment and circumstances that are outside of your control. Combining this with negative energy you will reduce your influence and fall by the gravity of procrastination.

3. Embrace conflict for growth

Any goal you are working will encounter conflict, adversity, or challenges. You can’t have the good without the bad. Is it possible to have joy without sorrow? I read a book which mentioned most people are engaged in the “microwave thinking.” A belief that you should be compensated right away following any effort you put forth. It will take sacrifice to achieve your goal. You will have to fight for your goal to become a champion. You want to focus on activities that bring about gratification. It will bring you better payoffs in the long-term rather than focusing on activities that bring you instant pleasure and are short lived. The challenges you will face are a healthy function to allow opportunities for growth.

Any progress you will make toward achieving your 2012 New Year resolution(s) is a win.

How to Lower Your Mortgage Payment Years

2011-12-27T13:06:00.000-05:00

Source: phoenixrealestateguy.com

Erik Braunitzer of Douglas Elliman Real Estate Company, Agents for NYC Apartments.

When it comes to buying a home, the most common way for people to be able to afford it is with a 30-year mortgage. This type of loan usually allows people to buy a larger home with a smaller payment. The drawback is that the monthly payments will last for thirty years. Over this period of time, the interest payments will cost you several hundred thousand dollars. This is money you could be investing in your retirement account if you are able to pay your mortgage off early.

One of the easiest ways to reduce the total number of payments is by adding extra money to your payment each month. Most monthly payment coupons have a space where you can designate this extra amount. One way to determine the amount of this extra payment is to find it on your amortization schedule. This printout shows the portion of each monthly payment that is applied to the principle and interest for your loan. Each month, pay your regular payment plus the amount of the next month’s principle payment. In the early years of a thirty year mortgage, this amount of the extra principal will be only a few dollars.

Another way to save is to determine if your mortgage company allows bi-monthly payments. By paying half your mortgage twice a month, you will make 26 total payments. This is the equivalent of thirteen monthly payments. If the mortgage company doesn’t have this capability, budget your money so that you can add this extra amount each month or make an extra payment at the end of the year.

Another smart option is to refinance to a shorter term. Change your mortgage from a thirty year term to a fifteen year mortgage. Usually the payments on a fifteen year mortgage are higher, but in today’s low interest rate environment, it may be possible to obtain financing with a payment that is equal to or lower than your current payment. If it is possible to lower both your term and the payment, check into the possibility of paying the same amount that you currently pay. This will pay off the new fifteen year mortgage even faster.

If you are unable to refinance to a 15 year loan, investigate the possibility of obtaining another 30 year mortgage with a lower interest rate and monthly payment. Continue to pay the same monthly payment that you had with your previous loan.

Refinancing may not always be the best choice, however; if you've had your mortgage for most of the term, more of your payment starts applying to your principle (instead of going toward interest) and build equity. Refinancing will restart the amortization process and you'll be paying more interest again and not building equity. Refinancing is a better plan for homeowners who plan on staying in the house since there are costs associated with refinancing, much like costs associated with taking out the original mortgage.

If you can’t refinance or your mortgage company requires a minimum dollar amount before an extra payment is applied, remember that even an extra ten or twenty dollars each month will shorten the length of your mortgage.

Sammy Shreibati: Interview with Co-Founder and CTO of SaveUp

2011-12-26T13:14:00.003-05:00

In my phone interview with, co-founder and CTO of SaveUp, Sammy Shreibati is part of the entrepreneurial-spirited, Generation Y cohort. As a Chief Technical Officer, there’s an abundance of work which needs to be completed. At times, under high pressures, it can be overwhelming. He handles more than programming and other technical issues; he handles much of the business side, getting pulled here and there. It shouldn’t be a surprise he handles his duties with equanimity, he’s a Stanford graduate in Electrical Engineering. Ironically, I wasn’t impressed with his cool, yet, enthusiastic composure…that’s a compliment! It’s expected and it’s these aforementioned commendable qualities that prepares him to succeed in growing and building an innovative start-up company—SaveUp.

My conversation with Sammy went something like this:

How did you meet Priya (co-founder of SaveUp)?

“One of the founders of PrepMe connected me with Priya.” Sammy was the first employee at PrepMe, an education company dedicated to bringing high-quality, customized learning to students across the world. He continued on to say, he helped to grow the company from the ground up. He said, “We met a couple of informal times at social events and were brought together, formally, last November.”

He knew Priya would be a “match made in heaven when starting a company.” He added they clicked right away and they had good rapport. Sammy knew when starting a company, working late nights is automatically expected. Sammy was drawn to Priya and knew this was a person he could work with to build a company from scratch. In my interview with Sammy, he emphasized the key characteristics of working with Priya is “being able to agree with each other and making the right decisions together.” Furthermore, having the same moral values and ideas are a must when working with a co-founder.

After he met Priya, they discussed SaveUp, which, at that time, they didn’t have a name for it. Rather, it was the idea of it in which the matter was discussed. Originally, SaveUp was known as the “Savings Game” when they pitched to the VCs to raise money. After the money was raised, the name was changed to SaveUp. Together, they launched the company on November 1, 2011.

Why did you decide to be a co-founder of SaveUp?

“To help people.” Sammy knew with his educational background and Priya’s social entrepreneurship background to create an online tool that was engaging and motivational for people to do the right thing with money. Last October, the WSJ had an article discussing the possibility of lotteries helping poor people to save. Last December, Freakonomics discussed the same concept as a “No-Lose Lottery.” Many countries around the world have been incorporating a financial instrument known as “Prize-Linked Savings account” (PLS). In a nutshell, it combines the thrill of “playing” the lottery with the safety of a savings account. You never lose your money.

Sammy noticed that PLS worked in other countries, but, the question remained on how to bring it to the United States. According to Sammy, using the concept of PLS to motive the American people to make the right financial moves is interesting. He brought up an interesting point; your chance of winning the lottery is 1 out of 175 million people. Even with such low probability, “people still do it in great amounts and great numbers,” said Sammy. He added that by using game dynamics you can motivate someone to pay down debt and save money by providing rewards.

Why do you think SaveUp will work in the U.S.?

Sammy explained that banks, credit unions, and other financial institutions are used as partners and sponsors. Plus, it helps with customer retention. Since banks and credit unions, “can’t run themselves (a rewards program with a lottery-type jackpot) due to legal reasons, SaveUp runs as a sweepstakes.” He continued on to say they see it as an add-on. When a prospective user signs up (free) with SaveUp they can securely connect with their financial accounts (e.g. checking, savings, investments, and loans). They earn credits for paying down debt, watching financial educational videos, saving, investing, and more. Users have a chance to win cars, vacations and the SaveUp $2,000,000 Jackpot. Sammy mentioned that “people come back to know more about the prizes.” In addition to the partnerships and sponsorships, having the chance to win big rewards and having a team that makes it fun and engaging will help SaveUp succeed in the U.S, according to Sammy. Sammy continued to say that SaveUp is about creating a system that motivates people by rewarding them for engaging and adopting good financial behaviors.

What are the future plans in store for SaveUp?

Sammy responded “it would be interesting to see if we grow to 5 million users.” Sammy revealed they are considering partnering with prepaid card companies to help users start saving money and earn credits in the SaveUp system. He added that a long term goal is to create a sustainable lottery-type reward program and continue to offer prizes. Right now they are focused on partnerships and he is pretty excited about the future.

I presume SaveUp will be an awesome way to encourage people to save and pay down debt. Those are two of the biggest challenges Americans face today. Having a rewards program offering prizes encourages and motives people to adopt the positive financial behaviors in a fun way.

Use this link to signup with SaveUp and receive free 100 extra credits:

https://www.saveup.com/vip/975e0aa9f

Could You Be Creating Your Own Financial Worries?

2011-12-21T06:05:00.000-05:00

“Congress can’t agree on tax spending bills.” “Topsy-turvy market…” “Dow Jones dropped…”

When negative financial news headlines hit the airwaves they bounce in our ears, and dance in our faces. The negative news conga line – pensions frozen, the possibility of reversion of the payroll tax to 6.2 percent from 4.2 percent, increases to capital gains tax and income tax, loss of jobs, high unemployment, Europe facing more gloom, market volatility, and etc. - is all that’s left lingering in the forefront of our minds at the end of a work day. While the gravity of these current financial events merits extensive coverage, the stress has a cascading effect on our emotional wellbeing. You may not turn on the TV to hear any bad news, but the moment you walk in to work someone feels it’s their job to summarize the bad news. And, if you communicate through social media, the prevalence of financial news, good or bad, is further expanded.

Has the negative financial news made you feel good? No. At worst, it can stimulate a state of depression. You don’t need to be psychologist to figure out focusing on negative financial news will emotionally take a toll on you and you’ll more likely make unwise financial decisions, like selling investments at a loss, not investing, and avoiding consumer spending. I remember I made a comment to a friend of mine as we were discussing the recession. My comment was stated to the affect of nothing changed for some people during and after the recession, yet, the consistent talk about it and its aftermath has yielded a feeling that something in their life has to change. So, people become scared of the possibility of losing their job and spending their money. However, if you head to the movie theater on an opening night, like Twilight: Breaking Dawn at midnight, the place is packed—over capacity. A movie theater ticket alone is not an inexpensive amount for entertainment, not to mention the $4 water bottle and $7 popcorn sold at the concession stand.

Do we overreact to the unexpected and dramatic news events? Evidently, there’s an imbalance between negative news and positive news. When the economy and the markets are quoted to be in a “recession” it adds on to the pessimistic perception. The left side of our brain takes into account the emotional impact of unexpected and dramatic news events. There are many studies showing we care more about the negative things than we do about the possibility of good things.

Instead of focusing our limited energy on what we are not able to control, we should focus on what we can control.

You could cut back on the time spent on watching and tracking financial news.
Develop and execute your financial goals.
Take advantage of building your investment portfolio.
Interest rates are low because of the economy. Are you in position to take advantage of it?
Speak to your financial advisor or someone who’s good with money, before doing anything financially rash.
Be grateful for what you do have.
Focus on valuable things in your life, your family, friends, and your health.
Have room for optimism.

If history has taught us anything is that things eventually bounce back, stabilize, and cultivate. Learn to know when to take advantage of the economy, there are opportunities.

Low- and moderate-income workers can take steps now to save for retirement and earn a special tax credit in 2011 and the years ahead

2011-12-16T16:25:00.000-05:00

Today's post is from the IRS. I recieved it in my inbox today and would like to share it with you. You may be able to take advantage of the saver's credit for your 2011 taxes. It's not too late.

According to the Internal Revenue Service:

The saver’s credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and to 401(k) plans and similar workplace retirement programs. Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply.

Eligible workers still have time to make qualifying retirement contributions and get the saver’s credit on their 2011 tax return. People have until April 17, 2012, to set up a new individual retirement arrangement or add money to an existing IRA and still get credit for 2011. However, elective deferrals must be made by the end of the year to a 401(k) plan or similar workplace program, such as a 403(b) plan for employees of public schools and certain tax-exempt organizations, a governmental 457 plan for state or local government employees, and the Thrift Savings Plan for federal employees.

Employees who are unable to set aside money for this year may want to schedule their 2012 contributions soon so their employer can begin withholding them in January.

The saver’s credit can be claimed by:

Married couples filing jointly with incomes up to $56,500 in 2011 or $57,500 in 2012;
Heads of Household with incomes up to $42,375 in 2011 or $43,125 in 2012; and
Married individuals filing separately and singles with incomes up to $28,250 in 2011 or $28,750 in 2012.

Like other tax credits, the saver’s credit can increase a taxpayer’s refund or reduce the tax owed. Though the maximum saver’s credit is $1,000, $2,000 for married couples, the IRS cautioned that it is often much less and, due in part to the impact of other deductions and credits, may, in fact, be zero for some taxpayers.

A taxpayer’s credit amount is based on his or her filing status, adjusted gross income, tax liability and amount contributed to qualifying retirement programs. Form 8880 is used to claim the saver’s credit, and its instructions have details on figuring the credit correctly.

In tax-year 2009, the most recent year for which complete figures are available, saver’s credits totaling just over $1 billion were claimed on just over 6.25 million individual income tax returns. Saver’s credits claimed on these returns averaged $202 for joint filers, $159 for heads of household and $121 for single filers.

The saver’s credit supplements other tax benefits available to people who set money aside for retirement. For example, most workers may deduct their contributions to a traditional IRA. Though Roth IRA contributions are not deductible, qualifying withdrawals, usually after retirement, are tax-free. Normally, contributions to 401(k) and similar workplace plans are not taxed until withdrawn.

Other special rules that apply to the saver’s credit include the following:

Eligible taxpayers must be at least 18 years of age.
Anyone claimed as a dependent on someone else’s return cannot take the credit.
A student cannot take the credit. A person enrolled as a full-time student during any part of 5 calendar months during the year is considered a student.
Certain retirement plan distributions reduce the contribution amount used to figure the credit. For 2011, this rule applies to distributions received after 2008 and before the due date, including extensions, of the 2011 return. Form 8880 and its instructions have details on making this computation.
Begun in 2002 as a temporary provision, the saver’s credit was made a permanent part of the tax code in legislation enacted in 2006. To help preserve the value of the credit, income limits are now adjusted annually to keep pace with inflation. More information about the credit is on IRS.gov.

SaveUp Rewards You for Saving and Paying Down your Debt

2011-12-12T05:23:00.003-05:00

How wonderful would it be for you to be rewarded for saving and pay down your debt? I had the opportunity to chat with Ted and Jean at SaveUp about their nationwide rewards program. Americans who bank at more than 18,000 US financial institutions can sign up for SaveUp and begin earning credits that can be redeemed for a chance to win exciting or life-changing prizes by saving money, paying down debts and improving their financial literacy.

SaveUp rewards users for performing positive financial actions, such as contributing to their savings or retirement accounts; paying down their credit cards, mortgages or other loans; and engaging with SaveUp’s financial education content on the site. The credits players earn can be redeemed for chances to win instant prizes and entries into weekly and monthly drawings. SaveUp’s prizes range from the exciting (retail gift cards, consumer electronics) to aspirational (luxury vacations, home or wardrobe make-overs) to life-changing (a new car, money for college tuition or debt pay-off, or a $2 million jackpot).

All me to share some of SaveUp’s features that make saving a fun and gratifying experience:
Challenges and Educational Videos: Challenge yourself to saving more money each day and earn credits to win prizes. There are also short educational videos that review various financial topics so you can learn more about managing your personal finances

Financial Snapshot: You can see a running total of your financial progress on the top right of the screen. It gives you a quick glance when you log in and it reminds you how much financial progress you are making!

And of course, the Rewards! Here is what a typical “ticket” looks like on SaveUp. There are three types of tickets that you can play including instant tickets, drawings, and the $2 million jackpot.

Safety comes first. SaveUp has put a number of security measures in place to ensure your experience is a safe one.

“In addition to making SaveUp fun and rewarding, we’ve also made it safe and secure so that our users can participate in SaveUp’s innovative rewards program knowing that organizations like MacAfee, VeriSign and TRUSTe have certified our privacy and security policies and procedures,” said Sammy Shreibati, SaveUp’s CTO and co-founder. “SaveUp protects its users with the same high level of security employed by banks, and we don’t store any of our users’ financial account numbers or account credentials. We will never share our users’ personal information with anyone, so their privacy is protected as well.”

To participate in SaveUp, you can simply create an account for free at s aveup .com and link any savings and debt-bearing accounts so that SaveUp can award credits for their savings and payment transactions. SaveUp’s technology partner enables secure online data aggregation from more than 18,000 financial institutions, and supports many popular online and mobile financial applications currently used by millions of Americans. They have a special link that you can use to get 100 bonus credits when you sign up! Did I mention it was completely free?

Personally, I think Americans need to see effective behavioral financial changes. Being rewarded for doing what’s right for your finances proves to be motivational and engaging.

Shake your money maker

2011-12-05T10:39:00.000-05:00

Make an extra hundred dollars per month. Sounds easier said than done—which is so true. What would an extra hundred dollars per month do for you? Help pay off debt, increase your cash flow, increase your investment contributions, save towards a larger goal, or {insert your goal}? I understand there are those of you reading this article thinking making an extra Benjamin is rudimentary and barely makes a dent in your personal finances. However, it’s the building block to making more money. If you are dreaming of making an extra $1,000, $10,000, or $100,000 a month, then you may want to attempt with a small amount before shooting for the stars. Don’t allow your self-imposed barriers to interfere with your money maker. Prove to yourself you can accomplish a small goal and you will increase your confidence.

1^st Step: Write on a piece of paper your self-sabotaging excuses.

Do not skip this step. Write down your lame excuses:

“I don’t have enough time.”

“It’s easier said than done.”

“How am I suppose to do this?”

“___________________________”

2^nd Step: Recognize if what you are saying to yourself is true.

Be brutally honest with yourself. Is it more about you being lazy or telling yourself “I can’t” or “I’m afraid to fail”? Do your think things will never turn out right for you? Is this true? Because it’s not! We don’t realize the excuses we tell ourselves are subtle and are setting up low-level expectations. Don’t believe your own hype.

3^rd Step: Generate Ideas, a.k.a. brainstorming

Get your creative juices flowing by writing out your passions, skills, and hobbies. This section is not about the utopia, lovey-dovey idea that your hobby can instantly turn into a million-dollar business. Rather, it’s about identifying what you enjoy doing. Whatever comes to your mind write it down, even if you are repeating a word, phrase, or sentence. Trust me, you don’t want anything holding back your creative juices. What you are searching for is finding the right idea. This may not happen right away, but, it’s essential you don’t skip this step. You will be surprised what may spark your idea.

What interests or fascinates you?

What do you enjoy researching or reading about?

What do you enjoying doing for free? (sleeping is not an option)

I would encourage you to use a journal or notebook to write down your ideas. You could be good at photography, writing, drawing, creating or designing websites and blogs, etc. There is something you are good at, but, you need to dig deep in yourself and find out. Truthfully, no one can do this part for you. As simple of a process this sounds, when it comes to making extra money on this side with your hustle it shouldn’t be a complicating process. That’s not to say it isn’t hard work. No successful person has made money without the work behind it.

4^th Step: Write down your real skills and strengths.

Identify your skills: If you work in human resources, can you provide guidance to young people on how to be successful in the interview process? How can you turn it into a side business to make an extra $100/month, $200/month, $1000/month or more? Are you the person that friends always turn to for advice, e.g. dating, relationship, or fashion? What about starting up a free blog (Wordpress, Blogger) about lifestyle and relationships and having advertisers on your blog to generate revenue? Maybe you are good at taking photos. You can start charging a small fee. Are you good at writing or math? You can turn those skills into tutoring. Are you good at designing or playing an instrument? Can you speak another language. Your skills are tangible activities that you would put a resume.

Examples of skills:

Photoshop

Excel

Computer programming

Designing

Writing

Math

Photography

Listening and communicating

Identify your strengths: What do people notice about you? What comes naturally to you? Ask a few of your friends, family, or other people who you trust to describe you and what they think of you.

My strength is listening to people and understanding their underlying message. It helps with negotiation. Another strength is writing what’s on my mind. Therefore, writing a book and freelance writing on the side while incorporating what others have told me about their finances came naturally to me. Though, it’s hard work.

Examples of strengths:

Passion to hear other people’s stories

Patience

Multi-tasking various projects

Lucid teacher who provides clear understanding to complex problems

5^th Step: Test out your idea to find your target market.

Earning more money is a process to uncover and test a series of ideas. You will not know if your idea will work unless you test it out.

DON’T WASTE TIME ON EASY THINGS

· Getting business cards

· Setting up a blog that will not benefit you

· Setting up social media accounts: Twitter, Facebook, MySpace

It will not generate business for you. You actually have to talk to your prospects.

The reason I’m saying don’t waste your time is because too many people start with the “easy” things and quit when the going gets tough. These things will come in handy and could, eventually, be important part of your strategy, but, right now we are focusing on getting you off the ground.

Let’s continue. You have to find out what people are willing to pay and if they have the ability to pay. You will find people willing to pay for your service but don’t have the ability to pay for it.

Are your target market people with a certain income, a certain group, stay-at-home moms, young professionals, parents, etc? If you don’t know who you are speaking to, you are speaking to no one. You can’t have everyone and there will be people left out. In order to be successful you have to know who you are targeting. For example, Suze Orman, Dave Ramsey, and David Bach each have a different target market. However, it doesn’t mean there isn’t overlapping which would happen organically.

Your idea doesn’t have to be unique. Unique doesn’t always mean there’s a demand for what you can offer. Even if a market might seem saturated, there’s a demand. With your ingenuity you can beat them. You don’t want to be unique and then have to create a demand for it. You are doing too much work. The point is to make extra money with your hustle.

Let’s say a John Doe is good at photography, but he is a teacher during the day. He hops on Craigslist and notices there are other people offering photography. He puts an ad out for himself to test things out. But he needs to differentiate himself and to price his services in such a way to be a motivator, too. What could he offer? $150 per shoot for an hour and half and include up to five or seven photos to be polished with Photoshop.

As I wrap up this post, understand failure will meet you at the front door. You have to push it to the side. No one and I mean no one has acquired any type of success without adversity. You HAVE the skills, strengths, passion, and interest to earn more money.

“Every adversity, every failure and every heartache, carries with it the seed of an equivalent or greater benefit” —Napoleon Hill

How to Spend During Black Friday Frenzy

2011-11-24T15:18:00.000-05:00

As I type away the stores are preparing for the Black Friday frenzy. In my opinion, Black Friday should be a day when most of us have planned for it because it’s the busiest day of the year and it’s the kick-off to the Christmas shopping season. Every year, people are waiting in line and shopping online to purchase the best deals. According to the National Retail Federation, up to 152 million people plan to shop during Black Friday. Truthfully, you can find AWESOME deals during this time of the year; therefore, making it worth it to splurge.

Black Friday Guide:

To help you out for this coming weekend of holiday shopping festivities, I’ve set up a guide to help you survive the busiest shopping day of the year:

Avoid the temptation of buying everything in sight. Make a list of what to buy to make sure you don’t overspend.

Carry with you a post-it with the total monthly debt payment and balance you owe to remind you of important debt obligations to curve your appetite to overspend.

Hold on to the receipts and know the store’s return and exchange policy.
Copy your personal and financial information that’s in your wallet and purse in case you lose it.
Some stores are starting their Black Friday on Thursday evening. Check out the retail stores where you plan to shop if they will be offering their in-stores specials beginning tonight
.Compare prices online before shopping online or in stores. Check out a couple of popular sites: http://blackfriday.gottadeal.com and http://bfads.net
Use mobile apps: TGI Black Friday; Black Friday by Fatwallet; ShopSavvy barcode; Decide.com. If you can’t decide on buying an item, then Decide.com App allows you to scan the barcode and it will predict if the item’s price will go up or down in the near future.

Moneylicious Tip:

For next year’s Black Friday, set up a monthly or weekly automatic transfer into an account delegated for Black Friday and/or other holiday gift shopping beginning in January. Decide on the average amount you typically spend around this time of year to set up a savings goal.

Happy Thanksgiving!

The Gift on Layaway

2011-11-23T08:41:00.002-05:00

I will be honest with you. I have never used layaway. The idea is genius. The gift you are buying for your best friend, boyfriend/girlfriend, other friends, or family over the holidays could be bought with installments lessening the money-pocket pinch! If you are on a tight budget, layaway could be your solution. Instead of saving up the money up to the last minute to buy the gift, you can start the process of purchasing the item now. :)

Here’s how it works: Every store has a different policy; but, basically, it’s when the retailer and you agree to make installments payments on an item over a number of weeks or months. In the interim, the retailer will hold on to the item until it’s paid off interest free. But, there are other surprising benefits to using a layaway program:

Better money management. You can avoid or minimize holiday credit card debt.
Reduce clutter. You don’t have to figure out where in your closet you will hide the gifts. You can keep the gifts at the retailer until you are ready to pick them up.
Avoid the crowds...need I say more?

The next you see the layaway commercial, think about the conveniences. Will you be using a layaway program?

Scott Gerber: An Interview with a Generation Y Entrepreneur, founder of the Young Entrepreneur Council.

2011-11-22T15:45:00.000-05:00

Allow me to introduce you to a young man who never had a "real" job, is a self-taught entrepreneur, and will be changing the way young entrepreneurs mind think: Scott Gerber. Recently, I had a chance to catch-up and probe Scott’s mind on his endeavors. Gerber has a myriad of accomplishments: serial entrepreneur, angel investor, author of the book Never Get a “Real” Job, and the founder of the Young Entrepreneur Council. Despite his entrepreneurial spirit, he didn’t grow up with entrepreneurship pushed onto his shoulders. Throughout his experience, he recognized that 99 percent of Americans didn’t understand entrepreneurship. It could be that too many people, especially inspired young entrepreneurs see the glitz and sexiness of it on TV and think it’s easy to imitate such as success, according to Scott.

What inspired you to create the Young Entrepreneur Council (YEC)?

Scott founded Young Entrepreneur Council in 2010. Scott talked about “barriers of entry that needs to be removed” to allow young minds to create and develop their business. After listening to a lot of people, he learned “what has been prohibiting them to become entrepreneurs,” such as high student loan debt. Therefore, he is “slowly rolling out initiatives to alleviate and create” the opportunity for them.

“Concept was basically bringing together Americans’ most talented young entrepreneurs to help the next generation with tools and resources and pass legislation. Internally, it is a high end ecosystem group of entrepreneurs under 35 years old. And to provide resources to whatever they need. Externally, is (YEC) is providing mentorship and pushing legislation on the hill,” such as the creation of the Youth Entrepreneur Act.

What is the Gen Y Capital Partners?

“Gen Y Capital Partners is a collaboration with the White House. It will invest as many as 100 startups over the next five years. We will be utilizing the benefits of the Income Based Repayment as part of our business model and for up to 3 years will pay the federal student loans payments.” We talked about how it removes such a huge barrier to entry for young business owners, student loan debt.

According to Scott, it will provide housing with its collegiate partners by providing housing on various college campuses for up to two years and educational resources. In addition, Gen Y Capital Partners will provide mentorship through YEC.

Gen Y Capital Partners is currently accepting application at http://genycap.com/criteria/

What is the Youth Entrepreneur Act?

“It’s about removing the barriers to entry to young people starting businesses, ” said Scott. During our phone conversation, I was telling Scott when I was interviewed by Jim Blasingame, host of the Small Business Advocate, I said there will be more entrepreneurs from Gen Y than any other before. Apparently, we were in congruency. The Youth Entrepreneur Act recognizes Gen Y as having the potential to be the Entrepreneurial Generation. Scott continued on to say that entrepreneurship has declined for young people in the past five years. The Act is call for federal action to support incentives for education in entrepreneurship, better access to capital, federal student loan deferment, reduction, and forgiveness, and other incentivize innovative programs.

You can support Youth Entrepreneur Act by signing the petition.

As an author who had written a personal finance book for Generation Y, Moneylicious: A Financial Clue for Generation Y, Scott had wrote a entrepreneurship book for Generation Y called Never Get a “Real” Job. I’ve had a chance to read his book. His no-nonsense approach is appealing and motivational. His methodology is simple, yet, effective.

As I’m creating my own brand, one of the things I stayed away from was writing a long, drawn out business plan. I had only written a 1-page business plan. According to Scott, business plans suck.

Business Plans Suck is a chapter about writing a one paragraph plan, how did you come up that format?

Scott Gerber his “ 90 page biz plan went nowhere.” According to Scott, his one-paragraph business plan was a theory of hypothesis. Furthermore, Scott evaluated the older generation idea of need a “solid plan.” Although, Scott agrees there’s merit to thinking through it all and trying to create a detailed proposal, he wondered if it really makes sense. As Scott said, “what do you really know?” And, “write what you want to find out.”

In Chapter 4, I love that you touched on the notion “do what you love and the money will follow.” How important is it when starting up a company that you recognize what you can do and what you can’t do?

“Understanding a real business model is not just about what you love to do.” He continued on with your business having “to earn you a living…grow organically over time.” In addition, he pointed out you will not always raise money. “You have to be able to start with your own two hands and taking practical skills to make something that makes sense,” he said.

Scott understands that Generation Y realism needs to be brought down to reality. He said, “too many people are watching Social Network or are looking at Groupon founders” as overnight successes that they, too, can achieve.

I could go on and on about how great and information his book is to young entrepreneurs. As a personal finance expert, I’m happy to see Scott emphasized the importance of handling your personal finances when creating your business, which he explains as your Life Burn Rate. You will have to pick up his book to learn more about it. Scott’s Gerber Never Get a “Real” Job shows what it takes to accomplish your business endeavors. The reality is you must assume and consider the worst case scenarios. It takes a lot of work and it can take years to build a successful business and to become a “real” entrepreneur. I know Generation Y has a unique set of skills and are thinking outside-the-box. Therefore, they need to know how to harvest their skills and talents to create an established foundation of entrepreneurship.

I will end today’s post with Scott’s last words: To continue to push on every level for young entrepreneurs to be successful by knocking down barriers.

5 End of the Year Tax Tips to Save Money in 2011

2011-11-14T04:16:00.000-05:00

529 plans: If you are contributing to your to your child’s 529 plan, you may want to consider putting a little more before the end of the year. There are states that allow parents to deduct their annual contributions up to a certain amount. Check with your plan provider to ensure the contributions are deduction before making the extra contributions.

Donations: The fabric of the American society is deeply woven around the holidays. Those of you who are considering to donate money should do it before the year end to deduct it from you 2011 taxes. Before you donate, ask to make sure the organization is a 501c(3). Whether it’s cash or the fair value of your donated items (e.g. furniture, clothing), make sure you are itemizing your taxes on your tax return to deduct the value of your donations. If you want an easier way to total up and track your donations check out TurboTax ItsDeductible Online. Also, you can deduct $0.14/mile for volunteer work.

Moving Expenses: The economy may have forced people to search for jobs in other cities or states. As long as the job was at least 50 miles from where you lived you can deduct mileage and other moving expenses. According to the IRS, mileage rates of moving has changed. For the first half of the year you can deduct 19 cents per mile and the second half of the year the rates increased to 23.5 cents per mile.

Pay your mortgage bill early: If you decide to pay your January mortgage in December you can deduct the January interest payment for your 2011 taxes. If the property bill is due in January or February 2012, you can pay it this month and deduct it.

Sell your losing stocks: If there are stocks you do not believe will recoup their losses, you may consider selling them before year’s end. The IRS allows you to deduct up to $3,000 of your total losses each year. Any amount greater than $3,000 can be carried over to future tax years. Please speak to your financial or tax professional if you are considering this strategy.

Are You Saving Money or Spending Money on Holiday Shopping?

2011-11-10T12:21:00.001-05:00

Is it a surprise to anyone the holidays are back, again? It’s almost hard to believe another year has gone by. Gees…what did I do this year??? Personally, I’ve done plenty. And now it’s time we focus on the upcoming holidays: Thanksgiving to Hanukah to Kwanzaa to Christmas.

Despite consumer confidence beaten up by global and personal debt crisis, market volatility, stagnant job growth, slow U.S. economic recovery, nearly “three out of five (59 percent) will put aside economic worries and spend the same or more this holiday season,” according to Deloitte 2011 Holiday Survey. I understand economic woes will not impact everyone. Truthfully, there are people who were not considerably impacted or at all impacted by the economic challenges. There are people who feel they were impacted because of perpetual negative news reporting engrained in the forefront of their minds manifesting a false reality. Their reality could’ve been they were able to sustain and push forward but with negative news headlines running around in their minds they felt their finances had taken a back seat. Therefore, if economic woes have not impacted you and you have the funds to spend the same or more this holiday season, then continue on with your life. On the flip side, I’m quite aware of the millions of people who were significantly impacted by the economic woes.

You must be wondering why I’m encouraging you to spend money this holiday season. Well, on one hand, the holidays are about giving. Holiday season is when most families and friends can get together to spend time and exchange gifts. I’m not eluding to the idea of spending $500 on an iPad2. Plus, there’s the personal enjoyment of buying a gift for people you love and watching their eyes gleam with joy as they unwrap their presents. A mother who shines with happiness when their child receives a specific item that they’ve “always” wanted (for the last 3 weeks since it came out) can enjoy the elated moment with their child as they unwrap their present. With your camera phone you can take a snapshot and immediately send it to the rest of your family, tweet it, Facebook-it, or create a holiday photo album.

To the readers who may be over thinking this post with the “what if this” and “what if that” scenarios, please don’t take what I’m saying out of context. I understand there are shoppers who need to be placed on a budget to minimize what they spend. I agree. You have to know your personal financial situation in order to allow room for a $2,000 budget or $200 budget on holiday gifts.

To the person making over six figures a year, maxing out their retirement contributions, has six to eight of monthly expenses in their emergency fund, and has their financial plan and goals set up, they can afford a higher budget for holiday gifts. If you make $45,000 a year, then a $2,000 budget can be far-fetch and it would only make financial sense for you to have a lesser budget. And there’s nothing wrong with a lesser budget to make the right financial choices.

Regardless of the amount, you want to avoid over spending. Remember, a budget is a strategy used to keep you on track to meeting your financial goals. Decide on what is the maximum amount you will spend on holiday gifts. The best advice is to create a list and stick to it. On your holiday list include the names of the recipient, their gift, and the price. Research online and with your phones before and during your trips to the retail stores.

If you really want to save money this year on holiday spending, then don’t spend any money. Find other ways to bring enjoyment. You are not forced to buy a gift or give cash or gift cards because the holidays are around the corner. When money is tight, the gifts need to be tight, too.

Truthfully, it’s your prerogative to do what you want with your money. Saving money or spending money on holiday shopping is about preparation and staying on task.

Please remember the holidays are about being THANKFUL for what you have and to APPRECIATE the time you spend with the ones you love…don’t ever forget it.

What is a financial advisor?

2011-11-07T16:57:00.002-05:00

Financial advisors are professionals who have the expertise of providing a comprehensive financial plan. Unlike, lil' man. :)

Financial advisors are misconstrued as avaricious, money-hungry individuals who only care about satisfying their bottom line. Although, there are the predatory advisors, there are attentive financial advisors.

A financial advisor is a contemporary job title for what used to be called a stockbroker. I will note that the financial advisor roles have changed. Changes in the financial industry from client’s demands have necessitated the role to take on a holistic view of the client’s financial needs and goals. A bona fide financial advisor is a professional who will never sell you a product on the first day you meet them. Truthfully, a financial advisor is a professional who provides financial services for individuals, businesses, and government.

In my opinion, the majority of financial advisors are more like investment advisors. Based on your risk tolerance and financial goals they will create an investment portfolio. A financial planner takes on a holistic view of your personal finances. They begin at Point A (where you are right now) and drive you to Point B (where you have accomplished your financial goals) by providing a roadmap. The best financial planners/advisors listen to what you have to say and understand your perspective.

To contradict myself, don’t shy away from a financial advisor because they have the title “financial advisor.” As I’ve said, the majority of them are more like investment advisors, not all of them. If they have acronyms at the end of their name, you can be sure they have completed additional education. For example, someone who has a CFP (Certified Financial Planner) or ChFC (Chartered Financial Consultant), have completed comprehensive financial planning courses. There’s no real difference between the two. So, you know, the CFP requires passing a standard exam and the ChFC means taking on more courses than the CFP without the exam. To me, there’s no difference. And the way I feel about standardized exams, it doesn’t always mean a CFP is better than a ChFC and vice versa.

How are they making their money?

It all depends. Here are three ways they make their money:

1. By the hour

2. A percentage of your investments

3. Commission based

What’s the difference between fee-based and fee-only advisors? A fee-based advisor charges a set percentage fee (e.g. 1%-1.5%) for assets under management, but may also collect commission. A fee-only advisor will only charge a fee based on assets under management. You can search for fee-only advisors at NAPFA – National Association of Personal Financial Advisors

Use your canny sense abilities to decide whether you should use a particular advisor/planner or not. Therefore, if you don’t have a substantial amount of assets to be managed, then avoid an investment advisor. A financial advisor works in several settings—banks, credit unions, small financial planning businesses, and other financial institutions. Most importantly you should be provided a comprehensive financial plan.

Since not all financial advisors specialize in the same area, you should interview several prospective advisors or planners before choosing the one that best meets your needs and with whom you feel comfortable.

Four rules for hiring a financial expert:

Excerpt from Moneylicious: A Financial Clue for Generation Y

Rule 1: During your first meeting, a financial planner should be asking you the questions. The financial planner shouldn’t spend a lot of time talking about how great he/she is and promise you wonderful returns. The conversation should be focused on you and what the planner can do for you.

Rule 2: Ask this question: “How do you define a client-planner relationship?” You will want to know how the planner intends to establish a relationship with you. This way, you will know what the planner’s expectation is of you as his/her client, and you will know what to expect from the planner as your advisor.

Rule 3: Ask what the financial planner charges for his/her services. You will want to know if it’s something you can afford now or later.

Rule 4: Check out your potential CFP’s background. Here are a couple of websites to do a quick background check:

1) Financial Industry Regulatory Authority (FINRA):

http://www.finra.org/

2) Certified Financial Planner Board of Standards:

http://www.cfp.net/

Therefore, if a financial advisor is hesitant to explain how they make their money, then you should run away, fast! Although Rule 4 mentions a CFP, you can do a background check on FINRA regardless if they are a CFP.

6 Money Trick or Treat Tips

2011-10-31T06:04:00.000-04:00

Source: good-wallpapers

1. Emergency fund as a #1 Priority

Trick: Creating an emergency fund can take more than 2, 3, 4, 5, and more years for many people to build at least three months of monthly expenses. If your only priority was to save toward your emergency fund you would have missed out on saving toward other important goals, such as down payment, retirement savings, college savings, etc.

Treat: You are better prepared to meet unexpected expenses, such as job losses, medical expenses, car repairs, etc.

2. Using Cash vs. Credit

Trick: At some point in your life, you will need access to credit. And you would be better served by creating a positive and thick credit report.

Treat: You are more likely to save money and less likely to overspend.

3. Automatic Bill Pay

Trick: If you don’t balance your account and fail to realize you don’t have enough money, the automatic bill pay could overdraw your account causing overdraft bank fees. This would defeat the purpose.

Treat: You will never be late and have a ding on your credit report.

4. Purchasing Extended Warranties

Trick: Making sure the warranty covers what’s broken. Some items will last for a long time. By the time that item may need to be replaced or repaired the warranty has expired.

Treat: It can provide you with a piece of mind (My timing belt on my car was covered under my warranty. I didn’t have to pay to replace it). There are a few times when an extended warranty makes sense. Evaluate the possibility of actually using the warranty outweighs the cost of the warranty.

5. Opting in for Overdraft Protection

Trick: Provides a false sense of security. It doesn’t solve the real issue: spending more than you have in your account. It’s best to get to the root of the problem and solve it.

Treat: You will avoid the embarrassment of having your purchase denied.

6. Closing unused account(s)

Trick: The length of history makes up 15 percent of your FICO score. Closing your unused account will lower your credit score. You could possibly increase your credit utilization.

Treat: Your finances are more manageable and less temptation to overspend.

HAPPY HALLOWEEN! BE SAFE! :)

Reason Successful People Will Not Mentor You…

2011-10-26T12:39:00.000-04:00

If a person doesn’t know who you are, your skills, and your goals they will very rarely give up their time for you. You must have the courage to find a mentor.

I’ve had some mentors in my life. Some were face-to-face, some were over the phone, and some are through the books I read. In today digitally incline world, we connect through many ways. I find with the advent of social media you could really find a mentor or two. Here’s how I see it, if they are on social media than that means they don’t mind the connection. I have a strong interest in behavioral finance; however, there’s not a graduate degree offered for it. But, there are those who have pioneered the industry and those who have studied it. I began my search on social media to connect with professional/professor who shares the expertise that I am seeking. I’ve connected with him through Twitter and LinkedIn. I’ve placed him as one of my mentors whether he realized it or not. Through correspondence on LinkedIn, I’ve learned he is opened to providing me with additional guidance. And, I’m very thankful for his time. In addition, he was kind enough to mail me a few chapters of his work. That’s more than what I could ask.

Sometimes all it takes to find a mentor is simply reach out. Remember, to do a little homework on the mentor to be familiar with their work.

We gradually lose our ambitious desires when we hit a stagnant place in our careers.
Besides a good education and talent to building a successful career, finding a mentor is a way to propel you forward. Get a stable of mentors for guidance on different aspects of your career to help you establish momentum.

Most people don’t do a great job to ask for mentoring, instead they make up excuses:

• I don’t have anything substantial to show

• They don’t have time for someone like me

• I don’t know what I’m suppose to say

• I don’t know where to find a mentor

Unless you have a privileged network of family and friends, finding a mentor is not easy. A mentor doesn’t always have to be someone who is on a grandiose scale, but they are someone who has done what you want to accomplish. The mentor you are looking for could be a person in a company similar to yours (not a competitor :) ), in a professional organization where people with your goals meet up, chamber of commerce, or at seminars.

There are successful people who have never had a real life mentor, but they have had heroes and heroines. You can find a mentor through your studies or readings. Study the lives of experts in your field. Read and get to know their work: books, journals, DVDs, etc. Connect with them through social media, blogs or websites if they have one.

Decide what kind of mentoring you want. Mentoring is not stipulated to one person who can provide you guidance, but it could be multiple people offering different perspectives.

As you actively begin to search for a mentor think about two things:

1. Begin with the people you regularly interact, professors, or other professionals with who may have experiences and expertise you are seeking. Remember, your mentor may not be on your list. However, someone could point you in the direction of a mentor for you. You never know who is in their sphere of influence.

2. Decide what you want to get out of the mentorship relationship. Do you need a mentor for short-term or long-term goals; is it for a specific problem or does it need to be ongoing. Remember, you might benefit by spending time with different people

When you do get a mentor make sure your mentor understands you and what you are focused on accomplishing. Be ready to invest in your new meaningful mentor relationship. Ask questions and listen very carefully, critically to learn what you can use toward your success. Don’t exhaust your relationship. Respect your mentor’s time and be thankful for the experience.

Always remember YOU are responsible for your success.

How to Pick a Financial Advisor: Asking the Right Questions

2011-10-24T04:09:00.002-04:00

Author Bio:
This is a guest post by Nadia Jones who blogs at accredited online colleges about education, college, student, teacher, money saving, movie related topics. You can reach her at nadia.jones5 @ gmail.com.

[The questions Nadia mentions are a great start, especially question number 3. Similarly, I have a chapter in Moneylicious: A Financial Clue for Generation Y dedicated for hiring a financial advisor. Enjoy the read!]

With the economy and financial market in complete uproar for the last several years, managing your money wisely has become a challenge for many different reasons. With continual reminders of fraud and a terrifyingly unstable market, it is no surprise that investors and individuals wishing to do something with their money are reluctant about trusting the experts. More and more in today's economy people are moving their money out of the control of their financial advisors and holding on to it themselves. However, there are numerous reasons that investing your money and seeking advice from a financial expert is a good path to take.

With so many of us constantly working to earn more money, the average individual just doesn't have the amount of time it takes to properly invest and manage their assets. Finding a trustworthy and knowledgeable financial advisor can be a great way to keep a better handle on your money and even earn some profit off of your savings. Choosing a financial advisor to manage your life's savings can be a very difficult process. If you have a chunk of savings that you would like to invest in the market or do something more than earning next-to-nothing interest in a savings account, seeking a financial advisor may be a great option. With the right advisor, you can help stimulate the economy by participating in the markets and you may be able to make a little extra money off of your already earned cash. When "interviewing" financial advisors there are several important questions you should always ask them:

1. What's the Advisor's Professional Background Experience?

The process of finding the right financial advisor is in many ways like being the boss and hiring a new employee. You will want to conduct interviews with several different advisors and be sure to carefully discuss each individual's background experience. While this may sound extreme, it is important to look at a potential adviser's criminal record as well as references from past employers. You can look up the regulatory records for stockbrokers, investment advisors, insurance agents, and their firms online with the Financial Industry Regulatory Agency. This is a great place to start when choosing a personal finance advisor. Of course, if the individual you are considering has some sort of malpractice or criminal record, you will want to carefully evaluate them.

2. What do the Advisor's Previous or Current Clients Say?

Of course, you do not want to entirely rely on the reputation of a firm or individual as a determining factor, but it is a good thing to examine. Take a look at various opinions out there on the financial advisor you are considering and the firm that they work with. It is important to remember that the reviews you hear about advisors likely comes from people with completely different financial goals than you and an entirely different financial situation than you have. A good place to start during your interview is to ask for references from past and current clients with similar life situations to your own. Talk to these references and ask them questions about the advisor. This is a great way to see how involved that financial advisor is in your financial life, how often they expect to communicate, how they manage specific situations, and much more.

3. How Does the Advisor Make Money for the Arrangement?

Possibly one of the most important questions you need to have answered when you are seeking a financial advisor is knowing how that advisor gets paid from your business arrangement. Financial advisors have several different compensation methods that they use. Some will make commission on the money that they make off of your investments. Others will charge a flat fee or percentage of the money that they manage for you. It is important that you understand which method of payment your advisor works with, so that you can better understand their motivation. Working on commission as a financial advisor can be both a good and bad thing. On one hand it can motivate the advisor to make more money for you because they will get a larger payout that way. However it can also cause them to make riskier choices that are more self-motivated.

Is it worth saving $.10 on gas?

2011-10-18T07:50:00.012-04:00

Yesterday, I filled up my gas tank. My car's gas tank can hold 20 gallons. But, when the gas light turns on, my next trip is the gas station.

I frequently shop at Kroger (for those of you who don't know, it's a grocery store) where you can save $.10 per gallon when you spend $100 at Kroger in a month. There's a Kroger gas station where you can fill up. I decided to use my $.10 discount. Like most people, I thought I was saving some serious bucks. It turns out my total saving was $1.84...less than $2!

Think about when you or your friends make the effort to fill up your tank at the gas station across the street because it's offering $.10 less. Is it really worth it? It amazes me how we complain when gas prices go up by ten cents, but, spend a few extra dollars on [insert your vices] and never complain about it.

Kept it short and sweet! This was more of a "thought for your money" post.

5 Lessons Moms Can Teach Their Children About Money

2011-10-18T04:25:00.002-04:00

I’m drooling over a toy I had wanted forever. I asked my mom if we could buy it and she politely responded with a firm “No.” I remember asking, “why?” to which she responded, “because I said so.” I must have been six or seven years old. I couldn’t grasp the concept of why I couldn’t get what I wanted. In my mind, I don’t ask for much and I really, really wanted this specific toy that I was dreaming about since I saw it on TV. At 28 years old, I’m thankful my mother knew when to put her foot down.

Growing up, talking about money in my household wasn’t a challenge. My mother was my educator, mentor, hero, and healer. As a kid, she would give a gentle kiss to my wounds, stay up all night with me as I coughed the night away, and helped me with my homework. Moms make everything better.

Moms are there to protect their children and prepare them for life’s journey. There’s an aspect to life that I find, at times, moms maybe unaware which is teaching their children about money. By starting early, your children are more likely to save money as an adult as well as avoid the slippery-slope of debt. Here are five lessons any mom can teach their kids about money.

Lesson 1: Value of a dollar. I find it is vitally important to have your children do specific chores without pay. My mother was not a believer in giving her children an allowance for certain chores around the home, such as cleaning your room and bathroom and other areas of the home. Some moms may find this odd. On the other hand, if your child doesn’t need an allowance for that week, is it acceptable not to do chores? And, do you want your children asking you “How much?” every time you ask them to do a chore? You may end up in a trade-off or negotiation process with your child! Besides, as a mom you know what it takes to keep a home clean, smelling fresh, and to never be paid for it. It’s part of taking care of a place you call home. My momma always said, “Sometimes in life you will have to do things you don’t like to do.”

Nevertheless, the question remains when do you give your children an allowance? Before I answer the question, understand the point of an allowance is to teach your children how to manage money with a regular income and if one week your child decides it’s not worth the three bucks to do a certain chore, then it blows the consistency. I have two answers:

1. Estimate how much you spend each week for your children on the “I want this and I want that” items and allocate some or all of it as an allowance.

2. Paying for “extra chores” is all right especially if your child wants a high-ticket item, like the new pair of $170 Jordan. I would caution you to make sure that the “extra chores” are not what is usually expected of them.

The lessons your child will learn are the value of money and you can work harder to get the special things you want.

Lesson 2: Save and invest early. It’s critical you sit down with your child and tell them exactly what they are expected to pay for from their allowance. Instead of telling them what to buy encourage them to use their allowance in three areas:

1. Spending – clothing items, toys, and other entertainment items.

2. Saving – Ten to twenty percent in a savings account and a custodial investment account.

3. Sharing –Birthday presents for family and friend and/or for charitable donations.

I would like to bring your attention to number two…saving. I understand if some moms may feel uncomfortable with teaching your children to invest because you may not have a full understanding. I want you to know that by educating yourself a little bit on investing you and your child could turn it into a fun project. Your child doesn’t need a lot of money to begin investing. For instance you and your child could consider setting up an account with ING - Sharebuilder where there’s no minimum investment requirement. It’s never too early for your child to learn to invest.

The lesson your child will learn is to have patience, discipline, and money smarts.

Lesson 3: Plan for needs and wants. Showing your children how to effectively manage their money by setting up their goals will make it easier to establish a budget. Part of your child’s goals is to identify their needs and wants and when they would like to achieve these goals. A need could be a pair of school shoes, but they want the designer-label, high-end price brand. Explain to them how the price of an expensive pair of shoes could really hinder them for achieving their other goals. Encourage them to shop around for better deals to make better use of their money. Furthermore, this will instill better money management and even if your kids decide to buy the expensive brand they will soon realize they may have to forfeit other goals. Help them to determine how much they should contribute every month to each individual goal and make them accountable to you. It’s best if they write down each goal and why it’s important for the goal to be achieved.

The lessons your child will learn is live within their means and establish their goals.

Lesson 4: Keep a running balance. Teach them how to record or monitor their account. I would encourage you to make sure they have a money journal. The money journal is to be used to record all transactions with a running balance and include a column where your child has to explain the reason for each transaction.

The lessons your child will learn are to understand their spending habits and monitor their account.

Lesson 5: Understand debt. What if your child asks you they need a little help to buy a certain item that you know is expensive or excessive? Would you give the money, not give the money, or lend the money? This could turn out to be a great learning lesson about debt. Opt for lending the additional money to your child under the circumstances they are to pay you back within one month or they will be charged interest, similar to a credit card when you don’t pay it off before the monthly cycle is over. Furthermore, as you are educating your child about debt introduce them to the concept of credit. Explain to your child why credit is important and the disadvantages and advantages. For example, an advantage of credit is lower interest rates to help you leverage buying a home. A disadvantage is the compound effect of paying only the minimum balance on a credit card.

The lessons your child will learn are leveraging debt for the appropriate reasons and the consequences if your child chooses otherwise.

The most important thing to remember when educating your children about simple financial concepts is to allow room for error. Along the way they will make incorrect financial decisions, but it’s best they learn it under your supervision. Also, it’s important you are role model. Children look up to their moms to help them heal a wound and avoid a financial cicatrice.

Analysis Paralysis: It’s not always your fault you don’t have your finances in order.

2011-10-17T04:51:00.020-04:00

Have you ever been faced with making a decision but there were too many detailed options? Where you over-thinking it?

Every time I’m asked why I had written my book, the answer is simply to provide Generation Y (and Gen-X) to begin taking control of their money right away. I could have written the book to be twice as long with twice as much information, but, why? With too much information you will overdose and nothing will get accomplished. The point of Moneylicious: A Financial Clue for Generation Y was to avoid giving you too many choices that would lead you to a decision paralysis.

Personal finance isn’t the most interesting subject. With all the “how-to” guides on the internet, such as from the Wall Street Journal and CNN Money, the objectives of the advice are not tailored to the regular person. Education alone will not fix the problem. Analysis paralysis is when you are given too much information to the point where you will feel overwhelmed and not sure where to begin. Therefore, a decision is never made. Instead, we have the tendency to think:

"I will do this later"
"I don’t see how this fits in with my situation"
"I know I should be doing this but [a reason why you can’t start right now]"

Why do you need to know about stocks, bonds, insurance, etc? How will it benefit you? What will motivate you to assure your success with your personal finances is the centralism theme of “me.” People are motivated to make changes or implement certain behaviors if they knew how it will benefit them.

Companies and organizations feel that if they provide an outreach or community event targeting a specific group and “educate” them on all-things personal finance, then they have done their job. For example, banks are constantly reiterating the importance of saving and investing. GREAT! But, guess what? They are stating the obvious. We all know we need to save and invest. The real question is “why aren’t we doing it?” The truth is “educating” could end up meaning “stating”…stating general facts. Stating general facts about personal finance will not change a behavior. A change in behavior occurs when there is a change in habits. Habits are formed by behaviors that are regularly repeated and, typically, occur subconsciously (without conscious effort…it's automatic).

To execute any type of change in personal finance behavior there must be an understanding what your audience needs and address those concerns first. The marketing tactics of personal finance/financial literacy needs to change. Less information and more specific action steps to optimize their saving, investing, and spending.