Personal Finance Daily

Paperwork Pile-up

2008-07-20T21:58:00.004-04:00

I have been extremely busy lately, and my desk became overwhelmed with paperwork. You know the kind: too important to throw out, but not important enough to deal with at the moment. I finally spent half an afternoon playing catch up and I feel as if a weight has been lifted off my shoulders.

My desk is now organized, my billing statements are nicely arranged in a binder and I can once again see my desktop. Keeping on top of your financial paperwork is important though. From retirement account statements, bank statements, cell phone, cable, insurance, ect, it can get a little overwhelming from time to time.

Do you have a system of financial organization? I'd like to hear from you. Comment on this post.

Reminder- Daylight Savings Time Ends

2006-10-28T13:25:00.000-04:00

Most people have a hectic schedule so be sure to take a moment and set your clocks back one hour before you go to bed. This will give all of us an extra hour to sleep, catch up on bills, relax, or whatever. The actual time change happens at 2am Sunday morning at which point it becomes 1am. I wonder if the auctions on ebay are affected?

Pets- Depreciating Asset or Quality of Life?

2006-10-27T14:37:00.000-04:00

I know many of you have a pet of your own, your children have pets, or you know someone who does. A trip to the local pet shop leaves everyone with smiles after picking out the family's first adorable furry pet. Once the initial moment passes and the clouds clear, there is quite a bit of underlying costs to owning a pet. Some people can't live without their pet and treat them as well or better than a human family member. Let's take a brief look at some of the costs associated with pet ownership and the ROI- Return on Investment from to angles, financial and emotional.
Let's say your family just bought the cutest kitten in the world that just couldn't be passed up. You could be one of the lucky ones getting it for free to a good home in your local classifieds, or on the other end paying a premium of $250-$400 for that soft ball of fuzz. Kitty needs to be checked out by the vet- $35 for a general visit plus additional charge for a stool and/or urine sample. As your new kitten grows, a series of shots will need to be administered by your vet- shots $5-$30 per visit in addition to the $35 vet service charge for showing up at the counter. Cat food can vary greatly depending on the quality you plan to feed your new loved one or the frequency of sales or coupons for the brand of cat food you purchase. Top quality Eukenuba costs $18 for a 6.5 lb bag. Then there is a litterbox to consider, $8 for the starter disposable trays to $25-50 for a litter box with lid, scooper, and baggies included. Back to the vet for an annual checkup if your cat has had a healthy year. Otherwise, there are medication and treatment costs to consider. More and more people are looking to pet insurance to cover medical expenses for their pet. From a financial standpoint, the ongoing maintenance costs after the initial sticker shock on your cat's collar is nothing to sneeze or meow at. So there is a solid case for pets as being depreciating assets.

Now lets look at owning a pet from an emotional or quality of life standpoint. How many times do you come home from work and your dog or cat is right by the door to welcome you home with rubs or kisses? Not too many humans are consistant in that regard. How many times have you felt sad, depressed, or stressed and when your pet comes into the room or is close by, you almost instantly feel a little better inside. Some people believe animals are capable of loving and they do provide good companionship. As a relative ages or nursing home members are visited by pet charities to help cheer them up and make life worth living, does the value of a pet increase? Emotionally? Financially? Both?

Pets may not rank up there with a new car during a mid-life crisis, but they have thier own intrinsic value that maybe a price can't be placed on. Regardless of what side of the fence you decide to sit on, pets can be a worthwhile investment if not financially, in many other aspects. Buying a pet includes the responsibilities and costs that go along with them. Be sure you have the financial backing to be a responsible pet parent. It will pay off rewards in the long run in ways a greenback never could.

Tim Haibach
personalfinancedaily.com

Kiplingers.com has Clean New Look

2006-10-25T07:55:00.000-04:00

Looks like the crew over at Kiplingers.com has been burning the midnight oil. The publishers of Kiplinger Personal Finance magazine, the first finance magazine in America, has a new look on their website that is both more informative and easy on the eye. Highlights include dropdown menus, segmented areas for Starting Out, Investing, Spending Wisely, Your Money, and Your Retirement. I'd like to mention that Starting Out is targeted strictly for those in their 20's-30's and is a good starting point before browsing the endless informative articles that Kiplingers.com has to offer.

Don't worry, for those who frequent the Kiplinger Forums, those have remained in tact. The link from the left hand menu entitled "Site Map" takes you back to the old familiar start page. What do you think of the new look? I'd like to hear from you. Post your comments at the end of this post using the comment link provided.

Featured article- "Student Loan Overload" at SmartMoney

2006-10-24T12:34:00.001-04:00

In an article titled "Student Loan Overload" found on the Smartmoney.com website, three options are mentioned as possible solutions when faced with repaying student loans with ever increasing payments. Many former students including myself are lured into the college=better job/$$$ mindset which doesn't always hold true. Unless you are willing to relocate nationwide to follow decent paying job opportunities, you are left with the leftovers as was the student mentioned in the article who ended up as an electronics store manager in Massachusetts where the cost of living is much greater.

If you find yourself in this situation, talk to your lender and make them aware of your situation. It is best for the lender to work with you than to pay for a collection agency to recover a portion of the full balance owed. Unfortunately, private school loans are not able to be consolidated at a fixed rate like Federal Plus loans are. It may be worth reconsolidating to combine multiple loans into one payment with a reduced variable rate. It doesn't hurt to shop around.

College doesn't guarantee you a good job any longer and you're lucky if you score an interview. For those of us who already bit the bullet, review the steps in this article to see if one of the 3 options may be viable to you. The full article can be found here.

Time Value of Money and a Financial Calculator- A Powerful Duo

2006-10-23T09:16:00.000-04:00

When is the last time you have heard the term TVM, if ever? This stands for Time Value of Money, and is a very powerful concept that may help assist you in making important financial decisions in life. What are some examples of this concept you may be asking? Here are a few that are able to be calculated using a financial calculator:

Compounding- determine the future value of a present amount, Discounting- finding the value of a future sum in today's dollars, Present&Future Value of a DollarOrdinary Annuity and Annuity Due, Future Value of an Ordinary Annuity and Annuity Due, Present Value of an Ordinary Annuity and Annuity Due, Payments Made or Recieved Other Than Annually, Present & Future Value of and Increasing (Inflation-Adjusted) Annuity, Combined Future Value of a Lump Sum and Annuity Payments.

This list may seem cumbersome, but let me give you a few everyday situations that may be more easily understood. You want to save for a downpayment on a house in 5 years. You put in $10,000 into a CD. Based on current rates, will this amount meet your goal for a downpayment for your house?

A second example would be someone making multiple payments toward that house downpayment throughout the year. With a financial calculator, you can take that into account and still determine if the amount compounded over your savings term will meet your goal. This is called Future Value of an Annuity.

A final example is a true Inflation-Adjusted Rate of Return. This is the return you expect from an investment after subtracting the current inflation rate but it's not that simple. Using that approach may give you a close approximation, but to be accurate, the use of a financial calculator would be involved.

A financial calculator does much more in addition to basic math functions. For $25-40 dollars, this type of calculator can be used as a tool to assist you in making better financial decisions throughout life and one can be found in just about every desk of a financial planner. I have one and it has helped me both plan for and achieve my financial goals.

When to File Taxes- Wesley Snipes Takes Hard Way

2006-10-18T13:28:00.000-04:00

An article posted this morning on cnn.com states that Wesley Snipes has tried to cheat the government out of $12 million dollars for falsely filed tax claims. It was also found that Snipes failed to file between 1999 and 2004. A warrant has been issued although his whereabouts are currently unknown. Snipes may face a maximum of 16 years in prison for tax fraud.
Filing a false claim or failing to file at all if required will quickly get you into hot water with the IRS. Flags are raised with obvious situations like reporting zero for your adjusted gross income or having earned income and not reporting it at all. So when are you required to file? Let's take a look. Publication 501 from the irs.gov website explains situations when you must file. The following is an excerpt from this publication.
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Who Must File- If you are a U.S. citizen or resident, whether you must file a federal income tax return depends upon your gross income, your filing status, your age, and whether you are a dependent. For details, see Table 1 and Table 2. You also must file if one of the situations described in Table 3 applies. The filing requirements apply even if you owe no tax.
You may have to pay a penalty if you are required to file a return but fail to. If you willfully fail to file a return, you may be subject to criminal prosecution.
Filing Requirements for Most Taxpayers- You must file a return if your gross income for the year was at least the amount shown on the appropriate line in Table 1. Dependents should see Table 2 instead.
Deceased Persons You must file an income tax return for a decedent (a person who died) if both of the following are true.
You are the surviving spouse, executor, administrator, or legal representative.
The decedent met the filing requirements described in this publication at the time of his or her death.
For more information, see Final Return for Decedent in Publication 559.
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With less than 3 months left in the calendar year, it's not too early to start thinking about year end tax savings and whether or not you need to file. In any case, don't try to work over the system because it will be sure to catch up with you sooner or later. Was it worth it Mr. Snipes?

The Rule of 72

2006-10-17T13:20:00.000-04:00

The Rule of 72
One of the simplest rules of investing, yet commonly forgotten, is the Rule of 72. By using this rule you can either determine how long for a single sum to double in value or determine the interest rate required for an investment to double within a specific number of years.

To calculate the number of years required for an investment to double in value, divide 72 by the annual interest rate. For example, if the objective is to double a $1,000 investment to $2,000 where the original investment is earning an annual compound rate of 9%, it will take approximately 8 years for this to occur (72/9=8).

To calculate the interest rate required for an investment to double in value, divide 72 by the number of years. If, for example, an investor wants to double his original investment in 10 years, it will require an approximate annual interest rate of 7.2 percent (72/10=7.2).

Home Heating Season- Is it here yet?

2006-10-03T12:08:00.000-04:00

The beginning of October is normally the time of year I consider turning on the heat at night to maintain a normal room temperature of 72. I figure if I can hold out at least until then, I can get a jumpstart on my home heating savings. The weather over the past couple weeks has been pleasantly suprising. Today Boston is reporting a high of 74 and tomorrow's forecast is expected to reach 80 before plummeting to the mid fifties for a high on Thursday. Natural gas reserves are supposedly much higher than expected currently and should be selling at a discount. Unfortunately, I am one of those who is stuck with electric heating for both my stove and my hot water. I'm curious to see what the preferred (economical) fuel will be for this winter.

Have you established a target date each season when you fire up the steel monster in the basement? If so, I'd like to hear from you. Please post your comment at the bottom of this post.

Financial Fitness WorkShop this Sat in NYC!

2006-09-29T09:04:00.000-04:00

Kiplingers Personal Finance magazine will be co-sponsoring the "4th Annual
Financial Fitness Workshop" with The Financial Planning Association of New
York this Saturday in Manhatten at New York University. The workshop begins
at 8am and lasts until 5pm. A variety of topics will be covered including
estate planning, international investments, elder care, retirement
planning, women & money, credit scores, identity theft, charitable giving,
and mutual funds.
Registration is $25 and includes both breakfast and lunch. Also, proceeds
are donated to Project Renewal. More details can be found at
http://fpany.org or call 1-877-773-7269 Toll Free. The PFDaily Team will be
attending so come out and join us for a day of learning in the Big City.
Hope to see you there!

Eloan.com Latest to Enter Online Savings Market

2006-09-26T11:11:00.000-04:00

E-LOAN, a company with a core function of providing a loan service has entered the Online Savings realm with a current rate of 5.5% APY. This is quite a margin over popular ING Direct with a corrosponding rate of 4.40% APY, and slightly more than Emigrant Direct's 5.15% APY. Unlike the majority of the major players in the online savings account business, E-LOAN requires a minimum investment of $5,000 to open an account.

So who has the best rate AND the best features? That depends on the individual, your time horizon, and your comfort level with each online merchant. If you have the dough, E-LOAN might be worth a try. Otherwise, stick with an online bank with no minimums and no hassles, like ING Direct.

Gasoline prices- Temporary Relief?

2006-09-25T20:34:00.000-04:00

Goodevening everyone,

As I was running some errands over this past weekend, I noticed a dramatic difference in the price of gasoline here in New England. Yes, call me one of the fortunate ones, but I am lucky enough to commute to work on foot. That being said, a tank of gas in my truck will last me about 3 weeks so I was pleasantly suprised since I haven't been monitoring fuel prices closely.

Do you think the downward trend will continue? If so, for how long? Personally, I think this is just an adjustment period prior to the ramp up in prices during the winter season, although the winter grade mix of fuel is slightly less expensive than the summer grade that gas stations provide. Share your comments. I'd love to hear from you.

Software Review- Mvelopes

2006-09-23T15:20:00.000-04:00

As I was surfing various personal finance forums this morning, I came across a poster who mentioned a budgeting software item called Mvelopes. The program interface is Windows browser based view and shows you a breakdown of each category and sub-category with an envelope icon for each one. You can enter your monthly income manually, or if you have direct debit with your employer and enter your online bank access information, it will update automatically.

Each envelope shows you your budgeted balance for the month and the amount remaining as money is spent. If you link your checking account and credit card accounts, the software will recognize what category each expense should be drawn from and reduce the amounts accordingly. You also have the option to move budgeted money remaining from one envelope to another for flexibility, yet you still maintain your budgeted goal.

The program offers a 30 day trial and is a more user friendly, simpler version of quicken basic. The website http://www.mvelopes.com has a short demo video of the interface and some of the features. Check it out!

Tim Haibach
PFDaily

PFDaily launches PFD Forums

2006-09-22T12:51:00.000-04:00

It has been a busy week this week as I have been working behind the scenes on a .com website to be associated with my blog sometime this fall. However, today I am releasing a link to the forums to allow those who wish a "jumpstart" on posting and establishing a presence. The website will be general personal finance related and will emphasize on being more interactive than most. I have created a few posts to spark some discussion. You are welcome to post comments or Forum suggestions in the Feedback area. Just one more step to offering the most complete experience.

The link is posted on the right hand side of my blog. Stop in and say hi!

PFDaily to launch .com site this fall.

2006-09-20T13:36:00.000-04:00

PFDaily has recently aquired a "dot com" address and has begun construction of the site which is to be released sometime this fall. Features will include an RSS feed from this blog for integration, a posting forum for questions, scheduled live chat sessions, a links page, and a member's only section, just to name a few.

We are also looking for an original corporate logo for use with the site and are offering $100 as a prize based on quality, creativity, and originality. Deadlines for submission are October 31rst, 2006. This post will be amended with the email where to send submissions.

Online Banks- Are They Really Safe?

2006-09-19T08:54:00.000-04:00

Online banking has been around a few years now, and most people are fairly confident and able to at least log into their account from home to check the balance. But what about you? What about the pre-computer generation that is still hesitant to give it a try? Online banking can provide a new world of convenience, allowing you to do much more than checking balances. You can transfer funds between accounts within an institution or even to another institution, like ING Direct for example.

Online banking is safe, but you want to ensure your bank meets a few basic criteria. First, check to see if your bank is FDIC insured. This means your total deposits among all your accounts combined at a single institution is insured to $100,000. You can check to see if your bank is insured by clicking this link: http://www2.fdic.gov/idasp/main_bankfind.asp. Next, you want to review your banks privacy policy. Starting July 2001, banks are required to give you a copy of their privacy policy once you become their customer, regardless of whether you are conducting business online or offline. If they do share your information with other partner and/or third party companies, the bank should have clear directions how to opt out of sharing this information.

Third, check your banks website for security measures. You should see a locked padlock symbol in the lower right hand corner of your internet browser. Your bank should also have a PIN or personal identification number that is not usually the same number you use to access an ATM machine. You also want to make sure your computers antivirus software is up to date and you run a spy-ware checker like Spybot Search and Destroy which is free. Another freeware choice is Ad-aware. I run both, then make sure my auto-protect on my antivirus software is enabled.

Lastly, remember that links on your banks website to other outside websites are not FDIC insured. If you are unsure, you can always check using the link I mentioned earlier in this post.
Online Banking is not as complicated as it sounds. Actually quite the opposite is true. I have been using online banking exclusively for over four years and have no regrets. I sit down once a month, and set up all my bills to be paid on a date I specify (usually the date due unless it falls on a Sunday). This way, I have my money working longer for me, and I don’t need to get stamps, envelopes, or worry the bill will get re-shuffled into my pile of growing paperwork.
Go ahead, give it a try! Once you do, you will never look back.

Tim Haibach
PFDaily

Software Review: Net Worth Tracker

2006-09-18T10:49:00.000-04:00

I registered this morning at NetWorthIQ.com in order to take advantage of their free software that allows you to track your net worth on a monthy basis. Registration takes less than two minutes after which a confirmation email is sent you must click a link to activate your membership. There is an option during registration to have them send you an email once a month to remind you to update your net worth. It is also possible to display a graphic of your net worth on your own website, which is customizable. You must choose "allow public display" in order to place a net worth graphic on your website.

The entries include your basic assets and liabilities. The "Cash" item is not broken down into checking, savings, or money market accounts, so you must group these items together, then enter the total on the line. Next is Stocks, Bonds, and Annuities. These items are the non-retirement, non-tax sheltered accounts. There is a seperate line item for Retirement assets. Real estate, Cars, Personal Property, and other round out the mix of assets. Personal Property might be less confusing if re-titled to "Personal Assets". These should include higher ticket items like jewelry, furs, electronic equipment, ect. It is not worth the extra time or effort to get an accurate value of your 10 year old Wranglers. Remember, these items are to be considered for their "fair market value" and not what you initially paid for the item at the store.

Liabilities listed include Mortgages, Student Loans, Credit Cards, and Other. The amount you place in the mortgage line is the balance of your mortgage remaining, and not your monthly mortgage payment or the original loan amount. Credit cards entry should be left blank if you pay off your balance in full each month. Only balances that carry over are considered current liabilities. Finally, the other category. Don't include monthly utility bills, rent, cable, internet, or others of the like. These are considered current liablities, because these services are offered month to month. These services simply end if you decide to discontinue. You don't have this option with a car loan or a home loan, which are long term liabilities (>1yr).

The program is very easy to use although fairly basic. An icon next to each line item that would open a small secondary window with a short description would be very helpful to those who are not familiar with financial statements or how net worth is intended to be used. Net worth is what an individual would have left after all personal assets are sold for their fair market value, and all liabilities (debts) are paid off. This is a good eye opener if you ask yourself "What would I have left if I lost my job tomorrow?"

Overall it is a good program and helps people keep more aware of their finances and will make them more aware of long term goals. The one monthly reminder email is handy to update your net worth. I'd recommend this interactive program to anyone who would like to get in better shape financially.

-Tim Haibach
PFDaily

Nitecap Notes- Trash or Treasure

2006-09-16T22:14:00.000-04:00

It's simply amazing what people discard these days. Everyone's lease in our neighborhood renews on or about Sept 1 of each year. During the week, just about everything imaginable is thrown out either for lack of room or lack of time to sell. I'm not what you would consider a "dumpster diver", but if I see something nice that is clearly out in the open (I don't dig through bags like an animal), I rescue it and bring it back home.

This year, it was pretty close to a pot of gold. There was a bag that I had inadvertantly bumped with my foot on the way to work and it jingled like a pocketful of change. Well, a closer look reavealed more than just a pocketful. Some fool threw out $52.14 worth of quarters, dimes, nickels and pennies after I finished rolling them this week. Simply amazing. After depositing at my local bank I'm going to transfer it to my ING account where it will earn 4.35% for me. Not too shabby, huh?

Beauty is in the eyes of the beholder, and don't judge a book by its cover. Think outside the box and examine the world more closely. True wealth is waiting there for you to uncover it.

Free Financial Advice (but only for 2 days)

2006-09-15T12:03:00.000-04:00

If you are a subscriber to the popular finance magazine Kiplinger's (I personally am), then you are already aware of the "Jumpstart your Retirement Plan Days" that will be held on Sept 21 and Oct 6 from 9am-6pm Eastern Time. NAPFA members will be available to answer all your retirement or financial planning questions during this time. Simply dial 888-919-2345. Both the call and the consultation are free!

Mid-day Money Minute- MMM it's so good

2006-09-14T11:09:00.000-04:00

The Mid-day Money Minute (MMM) has been created to serve as a quick tip or commentary on current financial news matters that affect you. This will allow you to get away with eating lunch at your desk with one hand, and reading my blog with plenty of time to swap browser windows if you boss walks by!

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Wal-Mart to end Layaway Service- Wal-Mart will no longer provide layaway service after 2006 due to rising costs and decreased demand. Layaway has been a tradition since Sam Walton founded the chain in 1962. The deadline for stopping to accept layaways is Nov 19th and a pick up deadline of mid-December. This step is one of many to help spark the slowing growth Wal-Mart has been experiencing compared with rival Target stores.

College and Credit- A Student's Guide

2006-09-13T13:28:00.000-04:00

Credit, what is it and why should you care? College students are faced with enough stress dealing with classess, exams, and extra activities to put much thought into their personal credit. Many think it is a topic they don't have to worry about until after graduation. Wrong! It is during your college years that you will establish and lay the foundation of your credit history whether you realize it or not. School loans and credit card solicitations from recruiters visiting campus can greatly effect your credit score in either a positive or negative way and negative entries can stay on your credit report for 7 years! It is up to you to manage your credit responsibly now, so that your future will be as bright as you hope for after graduation.

Many students do not realize the importance of having good credit. The ability to borrow large sums of money and to pay it off in accordance with the loan terms is essential to meet current and future financial needs. Good credit means there is no late payments and that these debts are repaid according to any contract, invoice, or agreement.

How do you know where you rank? The three major credit bureaus Equifax, Experian, and Trans-Union are each obligated by Federal Law to provide you with one free copy of your credit report per year. It is up to you if you request them all at once or to request a report every four months, so that you end up at the end of the year with 1 copy from each credit bureau. Be aware that the format and some information may vary between companies. If you find a mistake on your report from Experian and called them to have the mistake corrected for example, Experian is not obligated to notify the other credit reporting agencies of the error. You must call each one individually to follow up.

Students can visit one of the credit reporting websites and request their credit score or what is called sometimes referred to as a FICO score (named after Fair, Isaac and Company) for a small fee, usually under $10. This will give you a snapshot of how you are viewed by lenders and potential creditors as of the date you requested the score. FICO scores fluctuate constantly, and may vary from month to the next based on factors like paying down credit card balances, applying for new credit, length of credit history, and any late payments. It is also possible to have a different score at each credit agency because each agency updates its records at different times of the month.

How do I know if my score is good? The FICO scores range from 300-850 with a median score being 723. The larger the number, the better your score. If you fall below the median, you should seriously consider making a goal of improving your score.

How is my information protected? Well, fear not because there are several Acts that have consumers best interests at heart. The Consumer Credit Protection (Truth in Lending) Act requires lenders to disclose both the dollar amount of finance charges and the annual percentage rate (APR) charged, as well as other loan terms and conditions. The owner of a credit card is also limited to $50 in liability per card. The Equal Credit Opportunity Act prohibits credit discrimination on the basis of sex or marital status or to ask questions regarding these and childbearing plans on loan forms.

The Fair Credit Billing Act is the most noteworthy. Under this Act, consumers must notify the creditor in writing of any billing errors within 60 days of the date they recieve the statement. Creditors have 30 days to respond and 90 days to resolve the complaint, during which time creditors may not collect the bill or issue an unfavorable credit report. Three other Acts to be aware of are the Fair Debt Collection Practices Act, the Fair Credit and Charge Card Disclosure Act, and the Consumer Credit Reporting Reform Act.

What can I do now to establish or boost my credit rating?

1> Pay your loans on time- Defaulting on a student loan can trigger income tax return withholding to satisfy outstanding debt and will take seven years to be removed from your credit history.

2> Use Credit Cards Wisely- Live within your means, don't use your card for purchases you can't pay off within the same month, and don't apply for new credit several times within a short period of time.

3> Review your Credit Reports- Be aware of any unauthorized activity or mistakes. Errors should be followed up on by contacting each credit bureau seperately through their 800 number.

Maintaining good credit doesn't have to be as involved as chem lab, but is just as important as that grade on your final. Use these tips to aid in keeping your credit in Grade A status.

-Tim Haibach
PFDaily

We Remember 9/11

2006-09-11T21:46:00.000-04:00

I wanted to take a moment to reflect on how life has changed over the last 5 years since 9/11 and how many sacrified their own lifes to save others. I'd like to thank my fellow service members who vigilantly stand guard on our shores to deter the threat of terrorism in this country and the long hours they work so you and your family can feel safe to carry on with daily life. I'd especially like to thank everyone who has or will be serving in Iraq and other middle eastern theatres. You don't really appreciate the freedoms we take for granted every day until you see first hand the life these soldiers are forced to lead. They give their all for us. A bad day at work is no comparison to trying to get some sleep in a trench, eating little, working long hours, and getting shot at for a lot less than what most of us make at regular jobs.

We salute you members of the military, and state and local response services (Police+Fire) for your dedication and continued service to the community.

The Foundation of Personal Finance: Part 2- Tracking your Expenses

2006-09-08T09:17:00.000-04:00

In Part 2 of the PF Foundation series we discuss the importance of tracking your expenses.

Another simple concept, yet so important to developing good financial habits that will follow you throughout life. Just like historians have recorded for centuries, our history tells us where we have been and can be used as a tool to help guide us where we plan to go. Another example would be a bodybuilder who wants to gain muscle mass. He or she can't just stumble around the gym using only the machines that suit their fancy at that time. They need to keep progress reports and have a goal with a plan where they want to be at some pre-determined time in the future. The same goes for our financial lives.

In Part 1 I discussed how to get yourself organized and keep all your financial paperwork/receipts in one place. Now that you have that established, we can more accurately track where the money that comes in each month is being spent. The next step is to create a spreadsheet, log entries in a notebook, or use one of the two popular financial software called Quicken or Microsoft Money. I recommend tracking your expenses at least a month, since utility bills come due at different dates and the month is the most common planning period for a clear short term picture.

Whatever method you decide works best for you is the one you should stick with. I recently purchased the 2007 version of Quicken since my credit union is listed as one of the finance institutions that can extract data into the program. Log everything! Some commonly overlooked expense are ATM fees and your own banks charge for using a non-network machine, convenience store trips for that newspaper, milk, or candybar, and trips to the coffee shop for that tasty latte. Even a small spiral bound notebook would suffice for logging daily expenses. The most difficult part is keeping up. I have desk calendar at home that I write on if I forget to log last minute store trips in my primary log.

This should keep you busy for the next 4 weeks. Part 3 will discuss Creating a Budget and how to plan so that your monthly expenditures don't exceed your monthly income sources.

Tim Haibach
PFDaily

Morning Coffee and Comments

2006-09-08T09:03:00.000-04:00

Goodmorning everyone,

TGIF, right? One of the news stories posted on CNN Money talks about the many delays of Microsft's latest operating system, Windows VISTA. Steve Jobs from Apple stated that in the time Microsoft took to release one new version, it has released 5 versions for the MAC. VISTA is due to hit store shelves early next year. My question to all of you is this- Do you have any plans for upgrading your current OS? Most newer computers sold today come with some flavor of Windows XP which has been a significant improvement over Windows 2000 and the buggy Windows Millenium Edition (ME).

Post your comments at the bottom of this blog. I'd love to hear from you.

Nitecap Notes

2006-09-07T21:22:00.000-04:00

As Thursday comes to an end, I'd like to leave you with an observation I became aware of yesterday while applying for a new credit card. You know those deals that touted you could earn cash back- 5% for this and that and so on. Well, those days are quickly coming to an end. Of the 4 top cashback cards that still offer actual cash and not points on certain purchases, only 1 is still available for new accounts- the Direct Rewards Platinum Mastercard offered through HSBC.

I still remember reading my April issue of Kiplinger's Personal Finance and reading an entire article on cash back cards. Guess that's my fault for not keeping up on my magazine reading. They weren't joking when the phrase "Time is Money" was created.

I was lucky enough to still apply for this HSBC Card online. It doesn't offer the best rates out there despite my "excellant" credit rating of 805, but I pay off my balance monthly. In the terms, the statements actually come every 20 days.

Tomorrow I will pick a topic of discussion from my hat too keep a variety of topics revolving.