Qvisory - Blog

Generation Debt

2008-07-23T18:04:32Z

I'm a 27-year-old writer. In April 2004, when I was 23, I was assigned an article for the Village Voice to write about an exceptionally boring campaign appearance by John Kerry, as part of a series titled "Generation Debt: The New Economics of Being Young."

That summer, I started writing a book on the same concept. So for my whole career, aka the past four years, I've covered the economic challenges affecting Americans under 35. This includes student loans, credit card debt, and the changing job market and fraying social safety net that make stability, health care, and retirement benefits harder to get. I blog about them, write articles about them, talk about them on TV and the radio, and visit college campuses to talk with students about them.

Today, as we head into a recession, Generation Debt is a growing reality. College tuition has continued to increase at over 6% a year, twice the rate of inflation. People of color, immigrants, and lower-income people are still getting priced out.

Student loan balances keep rising too, especially the more-dangerous private loans, and there were a series of scandals about relationships between colleges and lenders, followed by a series of banks pulling out of making student loans because of the credit crunch (which also affected many young first time home buyers). Recently, because of tireless work by student advocates, an important package of new student loan relief came into play.

Credit card debt is still rising, too. Issues like the war in Iraq and global warming have vied with the economy as top-of-mind concerns for young people. At the same time, the political power of young voters, which was just a rumor back in 2004, has finally become an acknowledged fact. This may be the first presidential election in decades where voters under 30 will get a significant amount of credit for picking the winner--which will give us leverage to push the new president on the issues we care about most.

When I look at the likely solutions for this generation, as we face this epic array of challenges, I don't see us going back to any imagined past utopia. We are creating our own values and our own American Dream. So far, we are the first generation of Americans who are not doing better materially than our parents did--in fact, we're doing worse. But we still have the potential to change the nation's political consensus and create a more sustainable, ethical, equitable economy that brings more individual happiness in the long run.

Ditching the Credit Card & Going Cash Only

2008-07-22T17:31:55Z

I am the proud holder of two credit cards and one debit card. Despite my best efforts, my wasteful spending has gone up over the last few months, so its time to do something different. On August 1st, I’m going to stuff my credit cards into my desk and go cash only. I will only be using my credit cards for online automatic bill pay transactions (fixed expenses).

Trent at the Simple Dollar writes:

One common tactic adopted by people who are in severe financial straits is an all-cash lifestyle. They tear up all of their credit cards and move strictly to a cash-based personal finance plan, cashing each check and living strictly off of that money.

I personally feel that this is a good immediate response to the revelation that you’re in serious trouble with your personal debt. It forces you, in a very dramatic and obvious way, to become more responsible with your day to day money management - there are only so many $20 bills to go around, after all.

My plan is to adopt the “Envelope System.” I am going to calculate my average monthly spending (variable expenses) by reviewing previous credit card statements, etc., and figuring out how much I generally spend on food, gas, and other basic goods. My plan is to spend less, so I am going to allocate less money than I have in months past to each expense. I am then going to withdraw cash from the bank, and place money for each type of expense into different envelopes. Therefore, I will have X amount for food, X amount for gas, X amount for recreational spending, etc. Once the money in any of the envelopes is spent, I will be done for the month.

If you’re going to follow along and try this with me, consider whether you get a paycheck weekly, bi-weekly, or monthly, and take into account any special irregular payments that don't occur every month (e.g. car repairs). If you have no choice but to spend more than you make each month because your income isn’t where you’d like it be, your goal should be to reduce the difference between money in and money out.

Here are some reasons to try this system or a variation of it:

With cash only, you will need to plan in advance for each day/week/month, and this will help you to learn better money management skills.
The difference between needs and wants will become apparent quickly, and you will start to think more about your purchases.
You will stop the vicious cycle of credit card debt, as you will have stopped generating more of it. But don’t forget to continue paying down your credit card if you still have a balance.
Aside from the few rewards (e.g. 1% cash back) that come with using a credit card, unless you pay your balance in full each month, you are losing money to interest charges and/or late fees.

You will be in charge of your finances. Using credit gives creditors and lenders more power.

The Envelope System will take time to setup, but it may be worth doing to get your finances under control. I’m going to try it and report back in September.

Your First Car Loan: Know Before You Go

2008-07-22T00:02:01Z

So, you’re finally on your own with a new job. If you’re like most Americans, a car is a necessary item—88 percent of Americans use their car to get to work. The path to getting an auto loan is full of pitfalls that can extract extra money over the course of the loan. And with the price of gas at record levels, getting a car that will serve your needs and fit into your budget may require some planning.

Here are a few tips to keep in mind before you visit the car dealer. Avoiding these landmines could mean saving thousands of dollars over the course of your loan payments and can help you get a car that’s right for your budget.

Know the complete cost of owning your car over the next five years. Make sure that you include room in your budget for insurance, repairs, parking, and of course, gasoline. Online calculators like the one at edmunds.com can help you calculate costs over the long run. A recent analysis showed that if gas stays near $4 per gallon, a large vehicle like a Ford F-250 will cost about $100,000 over five years, which includes the costs of gasoline, insurance, and repairs. Compare this to a Ford Focus, which will cost only $40,000 over five years, and you can see how knowing the long-term costs of driving can make a big difference to your budget.

Follow the 20/4/10 rule for car loans. Make at least a 20 percent down payment, don’t borrow for more than 4 years, and keep your monthly payment below 10 percent of your income. A 20 percent down payment will mean that there will be plenty of equity in your car, which is important if your vehicle is totaled or stolen. Limiting the loan term to 4 years and monthly payment to 10 percent of your income will keep you from spending more on interest over the life of your loan or from devoting too much of your income to transportation. Calculators like the one at bankrate.com can tell you how much your payments will be—and how much extra interest you will pay—under different payment plans. Make sure to fit any rebates and incentives from the dealer into your calculation.

Know your credit score and get pre-approved. Negative items in your credit history may cause a lender to raise the interest rate of a loan, so it’s a good idea to know your score in advance of visiting the dealer. If you check it well enough in advance, you may even be able to improve your credit before it’s time to get a loan. It’s also wise to get pre-approved by a lender—a bank or credit union—before visiting the dealer. Car loans can be obtained from any number of sources, including banks, credit unions, and auto finance companies located on the dealer’s premises, so be sure to check multiple lenders to see which can give you the best deal.

Find a car that fits your budget. It’s okay not to have the flashiest car. Sam Walton, founder of Wal-Mart, continued to drive an old pickup truck to work when he could have afforded a limousine. Choosing the size of car that will serve your needs for the next 8 to 10 years will help you get your money’s worth. Resources like Kelley Blue Book can help you find the types of cars that are best at keeping their value over time.

Watch out for extras. Dealers will often push products like extended warranties and theft protection just before closing the deal with you. Make sure you consider them carefully before you agree—many of these products cost the dealer very little, but add a considerable amount to your price tag.

Living on the Edge

2008-07-22T00:00:43Z

Do you feel that you are living on the edge financially? I sure hope not, but if you do, you’re not alone.

Today, Qvisory is releasing a report that we commissioned, Young People: Living on the Edge. The results show that young people are facing tremendous and growing financial stress. Financial concerns top the list of problems facing young adults today, at 55 percent, an 11-point jump over the past year.

In addition, young adults face a growing credit crisis:

Three out of four young people report having gone deeper in debt over the past year.
More than half of young adults say they are only paying their minimum monthly amount on their credit card.
Nearly one in five (19%) report having had their phone, cable, or utilities cut off, and more than one in seven (15%) have faced repossession or had their credit card cancelled due to non-payment.
One in three young people who owe money on a credit card owe more than $10,000 overall.
28% of all young adults are carrying medical debt.
More than half of all young people have gone without health insurance at some point in the past five years – including 75% of those who are now carrying medical debt.

Watch a presentation by Anna Greenberg who conducted the research for Qvisory.

[youtube: http://www.youtube.com/watch?v=LsxYcKnYdHA]

Our findings come during what seems to be a rising tide of corroborating evidence. The Rockefeller Foundation, which partially funds Qvisory, released similar data last week. And recent reports by Demos and the Center for American Progress also highlight the significant challenges that young people face today.

Another crucial finding from our survey is that only 32% of respondents think the leadership in Washington, DC represents their interests well, in contrast to their views about how well corporations (79%), veterans (52%), and seniors (53%) are represented. We know that advocating on behalf of young adults is desperately needed to help solve these problems, and that’s why we’re here.

The Personal is Political

2008-07-21T23:47:39Z

We’re all reeling from the spike in the cost of gas and food (those PB and J sandwiches and weekend road trips aren’t exactly the low-cost options they used to be). These money woes are compounded by a disturbing reality: most young people today are earning less than their parents did a generation ago. Young men without bachelor’s degrees have taken the biggest hit, with typical earnings nearly 30% lower in 2005 than they were in 1975. Today’s generation of non-college educated young women have also lost ground, but not as much. They typically earn about 10% less than their moms did at this age. You can check out all the details in The Economic State of Young America, a new report published by Demos.

So what gives? Why is the typical 20-something not keeping up with their parents?

To answer that question, we need to look back at what it was like to be a young adult just starting out three decades ago. First, our economy provided jobs with good wages even for those without bachelor’s degrees. Second, when the economy heated up, workers reaped the benefit in the form of higher wages. And finally, there was a range of public policies that helped people move up and kept them from hitting rock bottom—such as a strong minimum wage, affirmative action policies, low college tuition at state universities, generous grant aid to help lower income students afford college, and an unemployment insurance system that helped people pay bills when they lost their job.

Simply put, the economy and public policy worked hand in hand to make a middle class life possible for millions of young people. And to make the term “middle class” synonymous with economic security.

This world no longer exists.

And while globalization and technological change have fundamentally altered our nation’s economy—and share some blame for the new pressures on young Americans—much of the blame sits squarely on a set of failed policies and ideas that were set in motion long before many of us were born.

The generational decline we’re experiencing is the product of a decades-long attack on the social contract. This ideology ushered in a type of referee-free capitalism where the role of government in society was disputed, degraded, and demoted.

So, policies like the minimum wage were dismissed as interfering with the miracle of business. Public investment in higher education was slashed in favor of tax cuts. Federal financial aid became a debt-for-diploma system that made student loan companies rich while crippling access for lower income students. Mandatory minimum sentencing laws and racially biased drug laws were adopted, leaving millions of young men without hope or opportunity.

At the same time, the new realities of life that have been shaped by globalization, technological change, and shifting cultural norms have not been addressed by public policy. Our workforce development strategies are unsophisticated. Our family policies are woefully inadequate. And our safety net is antiquated. What’s left of the social contract was designed for a time when a high school degree was enough to earn a middle class living, when most women with young children weren’t in the labor force, and when a job lasted 20 or even 30 years and came with health care and pension benefits.

So what’s a 20-something to do?

Get organized—both personally and politically. Cut back on your personal spending and ramp up your political activities. If you haven’t already done so, check out where the candidates—Congressional and Presidential—stand on issues like job creation, college tuition, health care, and cracking down on credit card abuses so you can make an informed choice this November. Make sure your voter registration is up to date. Join Qvisory. Email your elected officials and let them know you’re out there and paying attention. Seek out organizations who work on these issues and join their campaign.

Our generational predecessors, the Baby Boomers, got one thing really right. They developed the idea that the Personal is Political—a mantra that came out of the women’s movement in the 1970s. It was meant to convey that every part of our personal lives could be impacted by the political situation. As we grapple with the enormous economic challenges confronting us, it’s helpful to remember that The Personal is Political.

BALANCE Your Finances

2008-07-21T21:03:31Z

Are you dealing with financial or credit difficulties? We want to help.

First, I urge you to read Stephanie Bittner’s guest post about credit counseling. If you are in a similar situation to what she describes, I encourage you to take advantage of the benefits of credit counseling today.

We know that credit counseling can really make a difference if you are having financial problems. Since debt and credit problems are issues for many of our members, I’m pleased to announce that Qvisory has added BALANCE, a financial and credit counseling service, to our array of membership benefits. So, members now get four products instead of three, for the same annual membership price of $36.

If you are a current member, log on and visit the BALANCE page to take advantage of this great service. And if you want to take advantage of BALANCE and are not yet a member, join today!

We hope you will benefit from using BALANCE. Please be sure to let us know.

The Progressive Generation: How Young Americans View Economic Issues and Why It Matters

2008-07-21T09:04:54Z

Every presidential election season, it seems like we hear rumblings about why the youth vote matters. And this year, politicians’ main focus may be on the economy. A May 2008 survey and report that I co-authored for the Center for American Progress shows that voters under 30—often known as the Millennial generation—have decidedly progressive views on the economy, possibly more so than any previous generation, especially compared to the more conservative views of Generation X.

According to CAP’s report, a majority of 18 to 29 year-olds (the ages the report used to define the Millennial generation) believe that in order to ensure strong and sustainable economic growth, we need increased public investments in health care, education, services, and other areas. Millennials also tend to think that government can and should play a positive role in the economy, and they don't necessarily believe that free markets always have the answers. For example:

Millennials are more likely to support universal health coverage than any age group in the 30-year history of the question, with 57 percent believing that health insurance should come from a government insurance plan.
61 percent of Millennials think the government should provide more services, the most support of any age group in any of the previous 20 years the question was asked.
87 percent of Millennials think the government should spend more money on health care even if a tax increase is required to pay for it. This is the highest level of support in the question's 20-year history.
95 percent of Millennials think education spending should be increased even if a tax increase is required to pay for it, the highest level ever recorded on this question in the 20 years it has been asked.
Millennials are supportive of labor unions, giving them an average ranking of 60 on a 0 to 100 scale (with a 100 rating as the most positive view), the second-highest level of support of any age group in the over 40-year history of the question.

Importantly, Millennials are already the most populous generation, totaling between 80 and 95 million people, or roughly 25 to 30 percent of the population. Studies have found that they are more likely to express interest in politics and elections, care a good deal who wins, try to influence others' votes, and attend political meetings.

Although young people remain less likely to vote than other age groups, Millennials are starting to close the gap. As the executive director of Rock the Vote argued earlier this year, "2008 is set to become the third major election in a row with an increase in turnout among young voters." Presidential candidates and the political analysts commenting on the race have taken notice of the potential impact of Millennials' votes and are making efforts to reach young voters.

Young adults rank the economy as the most important issue in this year's election, and it has already proven to be a bigger concern for Millennials than older generations. In 2006, 23 percent of voters under 30 cited the economy as the most important issue, compared with 14 percent of the rest of the electorate. And a 2003 survey of 15-to 25-year-olds found that "jobs and the economy" was the most important problem facing the country, nearly double the number that said the war in Iraq.

Young adults today face more significant economic challenges than other recent generations, including lower rates of health care coverage—the lowest rate in comparison to other age groups—worsening job prospects and earnings, a decline in benefits offered by their employers, and higher levels of student debt and other types of debt. As New York Times columnist Bob Herbert wrote in May, Millennials are "in danger of being left out of the American dream—the first American generation to do less well economically than their parents. And that economic uncertainty appears to have played a big role in shaping their views of government and politics."

Research suggests that political attachments and attitudes formed in early adulthood often continue to be held later in life. The shared experiences of Millennials—like those who lived through the Great Depression and World War II—can form a lasting worldview that shapes their political views throughout their lifetimes. Evidence indicates that Millennials already have a distinct generational identity, with 69 percent thinking their age group is unique, compared to only 42 percent of Generation X, and 50 percent of baby boomers.

Millennials could well be poised to transform the American political landscape in 2008 and beyond due to their decidedly progressive positions on economic issues and the role of government in the economy. Regardless of what happens down the line, the 2008 election will be a chance for young Americans to take our concerns to the voting booth and be heard.

A La Carte Method: Use Psychology Against Yourself to Save Money

2008-07-17T00:03:03Z

Originally posted on I Will Teach You To Be Rich.

I was thinking about my friend who spent 30% of her income on subscriptions, and I wanted to share a method to dramatically cut down on unneeded subscriptions that you currently pay for.These subscriptions might include:

Netflix
Tivo
Gym
Cellphone
Internet
Cable
Amazon Prime
Magazines

Subscriptions are a business’s best friend: They let companies make a reliable, predictable income off of you — with no action on your part. Without doing anything, you invisibly pay money each month.

There’s a convenience to this, of course — I set up as many automatic subscriptions as possible — but there’s a significant cost: When was the last time you scrutinized your monthly subscription and canceled one?

Probably never. Yet compare this to any recent time you went shopping. When was the last time you saw something you liked, but decided not to buy it?

In the above paragraph — read it again! — is the key to cutting your spending on subscription items. I’ll show you how.

The A La Carte Method

The A La Carte Method takes advantage of psychology to cut our own spending. As Richard Thaler, a professor at the University of Chicago, illustrates in his excellent book, Nudge, we are much more likely to do things when no involvement is necessary.

Do you contribute to your 401(k)? In one study, 49% of employees contributed when they had to complete forms (i.e., actively take action) ….but that number skyrocketed to 86% when they were automatically enrolled in the 401(k) plan, not requiring them to take any action. (Of course, they could always opt out.)

Participation in 401(k)s before and after automatic enrollment.

Here’s how you can use the A La Carte Method for yourself. Cancel all the discretionary subscriptions you can: your magazines, annual Rhapsody plan, cable — even your gym. (It would be totally ridiculous to cancel your Internet, though. I’d cry like a little girl if I couldn’t get online from my house.)

Next, buy what you need a la carte:

Instead of paying for a ton of channels you never watch on cable, buy only the episodes you watch for $1.99 each off iTunes
Buy a day pass for the gym each time you go (around $5-$10)
Buy songs as you want them for $0.99 each from Amazon or iTunes

Why does this work?

The A La Carte Method works for three reasons.

You’re probably overpaying already. Most of us dramatically overestimate how much value we get from subscriptions. For example, if I asked you how many times a week you go to the gym, chances are you’d say, “Oh…2 or 3 times a week.” That’s BS. In fact, in one remarkable study of three health clubs, two researchers from Stanford and Berkeley showed that gym members overestimate how much they’ll use their gym membership by over 70%. In fact, members who chose a monthly fee of ~$70 attended an average of 4.3 times per month. That comes out to over $17/visit — when in reality they could have bought a pay-as-you-go pass for $10. Because these people are overly optimistic about how often they’ll use the gym, they lose over $700 over the lifetime of their membership. BAD MOVE.
The Method forces you to be conscious about your spending. The second reason that the A La Carte Method works is that it forces you to be conscious about your spending (like my friend who spends $21,000/year going out). It’s one thing to passively look at your credit-card bill and say, “Ah, yes, I remember that cable bill. Looks like a valid charge. Tallyho!” It’s quite another to spend $1.99 each time you want to buy a TV show — and when you actively think about each charge, you will cut consumption. As one of my mentors, Stanford professor BJ Fogg, wrote in his book Persuasive Technology, tracking is one of the most effective persuasive methods.
You value what you pay for. The third reason it works: You will value whatever you’re buying if you’re actively spending out of your pocket, rather than an invisible subscription.

The downside of the A La Carte Method

The big downside is that this method requires you to un-automate your life, which is the price you pay for saving money. I encourage you to use this if you find yourself short of cash and wondering why you can’t save more money each month.

Or give it a shot for 2 months and see how it feels. If you don’t like it, go back to your old subscription method. It can’t hurt.

How to implement the A La Carte Method

Target 1-3 discretionary subscriptions you have. I recommend any music subscriptions, Netflix, and the gym. (But don’t let the gym membership be your excuse to become a fat ass.)
Calculate how much you spent over the last month on these subscriptions.
Cancel the subscriptions and begin the A La Carte Method.
In exactly 1 month, check and calculate how much you spent over the last month. That’s the descriptive method.
Now, get prescriptive. If you spent $100, try to cut it down to $90. Then $75. Not too low — you want your spending to be sustainable — but in this step, you can control exactly how many movies you rent or how many magazines you buy, since each one comes out of your pocket.

Remember, this isn’t about depriving yourself. The minute your personal-finance infrastructure becomes oppressive is the minute you stop using it. The ideal situation is that you realize you were spending $50/month in subscriptions on stuff you didn’t really want — and you’ll consciously reallocate that money into something you love, whether it’s the gym, travel, or investing.

Good luck.

What We're Reading: Rich by Thirty: A Young Adult’s Guide to Financial Success

2008-07-14T21:02:46Z

Rich by Thirty: A Young Adult’s Guide to Financial Success by Lesley Scorgie

Lesley has been writing and speaking about young adult finances for more than six years. She has made numerous television appearances including The Oprah Winfrey Show and Montel Williams, and her financial writing has appeared in publications such as Unlimited Magazine, The Calgary Sun, The Calgary Herald, Maclean’s, and Cosmo Girl.

Her book, Rich by Thirty, is a must-read for anyone looking for practical advice and solid information on a wealth of financial topics. Scorgie shares the secrets of her success with tips and tricks on how to save what you earn as well as more advanced information investment vehicles and opportunities. This is an excellent read for anyone looking to better grasp the fundamentals of personal finance.

Read Lesley's guest posts for Qvisory here.

What We're Reading: Strapped: Why America's 20- and 30-Somethings Can't Get Ahead

2008-07-14T21:01:36Z

Strapped: Why America's 20- and 30-Somethings Can't Get Ahead by Tamara Draut

Tamara Draut, Director of the Economic Opportunity Program at Demos, is the author of numerous reports, and has conducted groundbreaking research on debt in America. Her work has been covered extensively by dozens of newspapers, including The New York Times, Washington Post, Chicago Tribune, Wall Street Journal, and USA Today.

Strapped is a groundbreaking look at the obstacle course facing young adults as they try to build careers, buy homes, and start families. Draut offers excellent insight into the social conditions that have fostered many of the debt struggles our generation faces today and ways to fight back politically. She draws heavily from analytical research that suggests that the debt crisis is not letting up, and supports this with tales of struggle that she has heard throughout the country.

Keep Up With Yourself Rather Than the Joneses

2008-07-11T17:29:59Z

Keeping up with the Joneses is a popular catchphrase, and failing to keep up with them is perceived as demonstrating socio-economic or cultural inferiority. Nevertheless, times have changed, and trying to keep up with whoever those Joneses are is kind of like buying a gas guzzling SUV, not wearing a bike helmet, or throwing recyclables into the trash. People who still try to “keep up” are a little behind. Being frugal and being more conscientious about your finances is an emerging trend, especially as the economy sputters along. Here are some tips to help you focus on yourself and your finances rather than the Joneses of yesterday:

Cut back on small pleasures. Don't expect to replicate the lifestyle of your parents who have worked for years. Read how a family of seven is able to live on $35,000 a year after taxes, and read What I do to Live Frugally from Grad Money Matters for even more tips.

Use debt sparingly. Try not to borrow more than you can repay.

Repay debt. Start paying down your credit card debt by paying more than your monthly minimum payment.

Know your credit score. Once you borrow money from a lender that reports to the major credit bureaus - Experian, Equifax, and TransUnion - you will have a credit report. Monitor your score!

Start an emergency fund. Start saving immediately even if the amounts are small, and consider setting up an automatic transfer online so that money from checking goes directly to your savings account.

Take the match. Many companies let you contribute part of your salary to a 401(k) or 403(b) plan, and government employers offer 457 plans. If your employer will match your contribution, take advantage of it!

Invest for the long term. If you have extra money, contribute to an individual retirement account (IRA).

Be skeptical. Be critical of anything a salesperson tells you. Read the contract and fine print.

Select your job wisely. Income is important, but so are benefits, especially healthcare and retirement. And don’t forget about job satisfaction and advancement opportunities!

Thinking Green, Investing Green

2008-07-10T20:18:25Z

Hi Everyone,

In my last post I focused on ethical investing. To enhance that initial piece, I thought it would be interesting to look into ‘Green’ investing. ‘Green’ investing focuses specifically on environmental protection.

In recent years, heavy focus on alternate energy sources has dominated many investor discussions around the globe. In fact, the American Stock Exchange now has an entire index, the Cleantech Index (CTIUS), dedicated to 76 companies that are global leaders in clean technology. As alternative energy gains popularity and attention, the thought is that unique and profitable investment opportunities will surface.

According to some experts, people invest in alternate energy for some of the following reasons:

Reverse the effects of Global Warming
To prepare for increasing oil costs and/or running out of oil period
To improve local economies through Energy Security
To make money

If you’re keen to invest in the alternate energy market, you have an opportunity to purchase stocks, mutual funds or exchange traded funds (ETFs). If you’re interested in stocks, tread with caution and do ample research as this sector isn’t well covered by analyst research. Additionally, many companies lack lengthy company histories which are helpful in determining future direction.

Professionally managed mutual funds are an alternative to individual stock purchases. For a management fee, often quite large, one can buy into mutual funds. Two mutual fund examples are Guinness Atkinson Alternative Energy Fund (GAAEX) or New Alternatives Fund (NALFX).

If you’re not interested in paying to have your money managed by an advisor, you can buy into ETF’s which are managed by a computer under the guidance of a professional. Fees are generally a fraction of what a mutual fund fee would be. Two ETF examples are Market Vectors Global Alternative Energy ETF (GEX) and Powershares Global Clean Energy Portfolio (PBD).

Many companies and funds focused on renewable energy have gained significant market share and stock price momentum in recent years. Whatever you decide to add to your portfolio, green or not, ensure it fits with your long term goals and risk tolerance.

All the best,
Lesley Scorgie

Tips to Consider with Inflation on the Rise

2008-07-02T08:17:14Z

Inflation, the general increase in the level of prices of goods and services over time, is on the rise, and we are all feeling it at the grocery store, gas pump, and so on. Jeremy at Generation X Finance recently wrote about the increase of Spam consumption. Spam musubi is a very popular snack in Hawaii! And what about trading in your gas guzzling car for something that gets better mileage. The sale of mopeds has substantially increased, as they get an estimated 80-110 MPG.

Inflation is changing our spending habits, and this is no surprise since it ranked as the No. 1 financial worry in a recent CNN/Money poll.

Here are a few tips I have started to follow through with:

Adjust your spending habits. Instead of buying coffee five days a week on your way to work, try every other day. Refill your water bottles with tap water or use a Brita Pitcher rather than buy a six pack at the grocery store.
Grocery prices are on the rise so try using coupons. Read Grocery Saving Tips From the Coupon Queen. Go for store brands over name brands, and get yourself a store rewards card to get automatic discounts.
Find the cheapest gas station in your neighborhood by doing some research online. Read Guzzle, Guzzle, Gas Going Up: Tips and Tricks to Save a Few Dollars.

Let us know what you're doing to combat inflation.

Ethical Investing

2008-06-27T15:56:03Z

Hi Everyone,

In a random coffee shop conversation last week, I was asked about ‘green’ investing. Going ‘green’ is a hot topic with a variety of favorable outcomes. In this post, I am going to discuss the broader concept of ethical investing.

Ethical investing has been around since the 1700s. It’s an investment style designed to make money while achieving social good. Ethical investing encompasses the protection of people, health, environment, and human rights. Ethical investors typically avoid companies involved in 1) harming the environment, 2) causing (directly or indirectly) illness, disease and death and/or 3) demonstrating harm and disrespect to human rights. Many ethical fund managers avoid businesses involved in tobacco, alcohol, gambling, and the development of weaponry. ‘Green’ investing, focuses specifically on environmental protection.

There are three strategic approaches to ethical investing. First, you can divest your interests and pull your money out of an unethical situation. You can screen out certain investments and avoid including them in your portfolio altogether. Lastly, you can become a shareholder activist, and thus attempt to produce change through advocacy and shareholder voting rights. If you don’t have time to manage your investing strategy, for a fee, you can always turn to professional money managers for help.

It’s possible to make money in the ethical investment market. But, the performance results are ‘hit and miss’ and many of these funds don’t have more than ten years worth of performance data – an essential element when making an informed investment choice. So, I’d encourage a thoughtful consideration of fund history, management, and future direction before you take the plunge.

Ethical investing is gaining momentum across all markets, so keep an eye on these opportunities.

All the best,
Lesley Scorgie

Lemonade Stand Savings

2008-06-25T07:10:54Z

As I pulled away from a lemonade stand where I bought a glass from two middle-school aged girls for 50¢, I wondered where their earnings would go. At that age, I spent most of my money on baseball cards, video games, and toys. Reflecting back, I probably should have saved more.

According to Lesley Scorgie's book, Rich by Thirty: A Young Adult’s Guide to Financial Success, "Saving money is different from investing money. You save money for things you want in the short term - things like a vacation, new computer, bicycle, or a down payment on a home or vehicle. Investing is for the long term. Think retirement." At 12 years old, lemonade stand earnings shouldn't have to go towards retirement, but short-term savings goals (e.g., clothes) and long-term investment goals (e.g., college) are appropriate.

During high school, most of my friends worked. I spent my weekends at a restaurant packing food to go. Without any financial responsibilities, I was pretty much free to do what I wanted with my money, and I made some pretty stupid decisions. But why? Are parents to blame? Frugal Dad believes that some parents are better role models than others when it comes to managing money, but there is plenty of blame to go around. On the top of his list is a lack of financial education in public schools. I agree!

The Jump$tart Coalition for Personal Financial Literacy determined that the average student who graduates from high school lacks basic skills in the management of personal financial affairs. According to their recent biennial survey, funded by the Merrill Lynch Foundation, high schools seniors correctly answered only 48.3% of the questions.

What or who most influenced your financial habits as you were growing up? Did your parents or schools help you on the right financial track?

With So Many Credit Card Choices, Which One Should I Choose?

2008-06-19T21:40:13Z

I have received more than a dozen credit card offers since my Too Much Shiny Plastic! post in March, and I don't plan to complete any of the forms. If I was looking for a new credit card, I would do my research online where I can easily review all the latest rates, fees, and terms. Bankrate is a good place to start.

The following tips should help make your credit card search easier:

Look for a low interest rate. There are a lot of low interest credit cards currently available on the market; however, many credit card companies do not offer the lowest rate immediately, and will only offer more attractive interest rates to customers who ask for them. Don't forget that your annual percentage rate (APR) is negotiable, so negotiate!
Look for a low introductory rate. Look for companies that have great introductory offers, such as no interest on balance transfers for six months.
Make sure there is a low interest rate after the introductory period. When you find a zero percent interest or low interest card, read the fine print and make sure that the interest rate isn't going to drastically increase after the introductory period.
Look for a card with no annual fee. Unless you have credit problems, you should be able to find a card with no annual fee.
Check out the cost of interest on cash advances if you think you might use this feature. Although it is best to avoid cash advances if at all possible due to their higher cost, you may find yourself in a situation where you need one. Know how much it will cost you before you get one.
Look for a good reward program to put your expenditures to work for you. Check out Bankrate's recently released annual analysis of credit card rewards. The company analyzed data from 30 leading cards provided by nine of the top issuers to determine the values of each card's cash-back rewards offerings. This year, I have received over $50 back from Discover. Expect to find some credit cards with gas rewards.

If you're in the market for a credit card, know what you’re getting into before you sign your name. Shop around before signing up with the first credit card company or solicitation that you come across.

Why We Chose BALANCE

2008-06-19T13:45:34Z

Partnering with BALANCE is a natural for Qvisory. Like Qvisory, BALANCE is a national organization dedicated to helping you reach your financial goals. The organization’s values, like ours, include treating clients with respect and integrity; providing objective and comprehensive advice; and being accountable for their performance.

BALANCE’s financial counselors are trained and certified before working with BALANCE clients. This training continues throughout their tenure at BALANCE so that you can trust that the information you are given is up-to-date and accurate.

In addition, BALANCE is easy to use and available through a toll-free number days, evenings, and weekends.

We think BALANCE is a perfect addition to Qvisory’s existing educational resources and tools. We encourage all Qvisory members to take advantage of this valuable resource.

Are Tax Rebates for Splurging?

2008-06-16T22:01:11Z

The federal government assumes that most Americans are going to spend their economic stimulus tax rebate in a way that will help boost the economy. However, a March 2008 poll sponsored by CreditCards.com says that half of Americans don't plan to spend the money at all, and those who do are more likely to put it towards existing bills or basic necessities such as gas and food. Here are some of the numbers:

26% say they'll pay off some debt.
24% plan to save it.
21% will put it towards necessities such as groceries or utilities.

It is worth noting that younger adults (age 18-34) are the least likely age group to use the rebates to splurge on discretionary items. Only eight percent of our age group said they would do so.

If you decide to use the rebate to pay down your credit card, you'll definitely save money on interest payments. And if you're not sure which credit card to pay down, read Which Credit Card to Pay Off First.

If you're going to put the money elsewhere, consider reading Spend or Save With Your Tax Rebate for some ideas.

Take Action to End Unfair Credit Card Practices!

2008-06-13T13:28:31Z

Take action today to end unfair credit practices! Credit card companies have the power to change the rules - and we are paying the price. Credit companies can raise your interest rate ANY time and for ANY reason, and often do so if you're late paying a completely unrelated bill, like a student loan, heating bill, or medical payment. This is known as “universal default.”

And what about late fees? Did you know that the average late fee is now $35 and that it can trigger a substantial hike in your interest rate? Even more deceptive is the retroactive application of interest rates, where your new, higher rate gets applied to your entire existing balance so that you end up paying more for something you bought months ago. These practices are an outrage, and we want to see something done about it!

The Federal Reserve has asked for public feedback on a new set of regulations that would stop the most abusive credit card lending practices. The new rules are good for consumers, and that's why the credit card industry is doing everything it can to fight them. You can bet credit card companies are using the fees that consumers pay to fight rules that will hold them accountable.

We can't let the credit card companies win. Take action by signing our petition to the Fed supporting the new rules. Help put an end to sneaky and abusive credit card practices. We want credit card companies to grant you more time to pay, allow you to pay off your most expensive debt first, stop retroactive rate increases, and honor paid debt during grace periods.

Hundreds of people have signed our petition to the Fed to change these outrageous practices. Please add your voice and share your concerns about credit cards and debt by commenting below.

Rich by Thirty: The Fundamentals of Managing Money

2008-06-11T20:30:19Z

If you're looking for an accessible book to teach you the fundamentals of managing money, I recommend that you begin turning the pages of Lesley Scorgie's Rich by Thirty: A Young Adult's Guide to Financial Success.

From tips and tricks on how to save to advanced information on investment vehicles and opportunities, this book is appropriate for anyone in their 20s or 30s. Learn about saving money for the short term and investing for long term goals. From the basics of setting up financial accounts to budgeting systems, Lesley covers everything that people our age need to get their lives financially organized.

Here are five excellent tips pulled directly from the book:

Start now. Whatever your financial situation may be, start to invest right now. Time is of the essence. The longer you wait, the less wealthy you'll become.
Take control. Healthy money management requires that you learn to spend wisely, handle debt appropriately, and, sometimes, change your priorities. Use tools like realistic budgeting and planning to help you achieve your financial goals.
If you don't need it, don't buy it! Overspending can have an incredibly negative influence on your life. Couples who have spending problems, for example, are typically the first in line for a divorce! Overspending can spiral into bankruptcy - and that affects every area of your life. You can control your spending! It just requires a change in your mindset.
Try mutual funds. If you're looking for a relatively safe and easy way to maximize your return - even with a very small initial investment - mutual funds are the way to go. They allow you to get into the market, diversify, and contribute limited funds.
Strike a balance. Don't forget the three principles of wealth: spend wisely, save and invest, and give back to your community. This last item can be achieved by volunteering, or by donating funds or goods to a charity. You'll feel good knowing you've done something positive for the community, and for yourself.

Grocery Saving Tips From the Coupon Queen

2008-06-05T00:28:34Z

In my family, my mom is known as the Coupon Queen. A few years ago for Halloween, she wore a sash that read "Coupon Queen," a gold crown, and glued outdated coupons to her clothes. She won best costume. The Coupon Queen has never entered a grocery store without coupons to save money on food. She even has her own coupon pouch, which she replaces every few years because of wear and tear.

According to a survey from the Food Marketing Institute, 33% of all shoppers say they now use coupons almost every time they shop. I asked the Coupon Queen to send me a few coupon tips, and here they are:

Check your Sunday newspaper or visit websites such as SmartSource to find grocery coupons.
Keep your coupons organized in a holder, and look through it weekly so you can discard those that are outdated. You'll also start to memorize what you have, which will make shopping go faster. And don't forget to bring them every time you go to the grocery store.
Pass around and share coupons with your co-workers. Having more than 1 coupon of the same product is a bonus if it is an item that you use regularly.
Read the sale ads when they come in the mail or newspaper prior to shopping, so you can save extra by using coupons for products that are already on sale!
Cleaning products, laundry soap, paper goods, cereal, coffee, and condiments don't go bad. Stockpile them if you have a coupon and they are on sale. Often, you can get them for free or almost free!
Be willing to try new products if you have a corresponding coupon and the item is already on sale. It might only cost 50 cents to try a new shampoo, deodorant, toothpaste, or soap!
Some grocery stores (such as Vons and Ralphs) double coupons. Most will only double one of the same coupon.
Putting aside money saved in a special account or money jar each time you shop is a great way to see how much you save, and how quickly it grows.

Read Coupon Tips And Tricks That Can Cut Your Grocery Bill by 80% to gather more grocery saving ideas.

(Not) Keeping Up With Our Parents

2008-06-03T00:21:58Z

On Thursday evening, I visited the The Elliot Bay Book Company Reading Room in Seattle, WA where Nan Mooney introduced her new book, (Not) Keeping Up With Our Parents: The Decline of the Professional Middle Class. After reading a few passages that introduced her personal story and those she learned about while conducting interviews around the country, Mooney expressed her concerns of how soaring college tuition rates, credit card debt, health care costs, and stagnant wages are shrinking the educated middle class - the educators, journalists, graphic designers, publishers, artists, social workers, and nonprofit employees.

Mooney cited statistics to back her argument that America's middle class is struggling to remain in the middle, but it was her message of, "you're not alone," that may help to stimulate more open discussion of the many unique issues we face today.

Many children of middle class families with college degrees aren't sure if they'll be able to provide their children with the same opportunities granted to them. It seems that more young adults feel that they have to choose between purchasing a house, saving for their children's education, or puting money away for retirement. Some are successfully following through with all three; others are too much in debt to presently consider these and other goals. Is the middle class standard being threatened? And what does it mean to be middle class anyway? In a society that sometimes believes it to be classless, is it possible that a new class is emerging?

As Mooney spoke to an age diverse group of young women (many with their young children), college-age students, and older adults, it is clear that the issues facing younger generations are equally affecting older generations, but in a different way. Parents are worried about the well-being of their children and grandchildren, and more of them are financially helping out and/or allowing them to move back in.

Mooney offered ideas on how individuals can push for change, suggesting improved government-backed education, healthcare, and childcare programs. Individual responsibility is important, but Mooney made it clear that current social conditions also require a collective response. Listen to Nan Mooney discuss her new book at NPR.

Follow Three Principles to Build Wealth

2008-05-28T21:58:38Z

My name is Lesley Scorgie and I’m the author of a national bestselling book entitled Rich by Thirty: A Young Adult’s Guide To Financial Success. Since 2001, I’ve been writing and speaking about young adult finances with the hope of increasing financial literacy throughout North America. I’ve made numerous television appearances including The Oprah Winfrey Show and Montel Williams.

I believe money is important because it builds a path to freedom. Without it, your choices can be limited. With it, you can pursue your dreams. Wealth is no longer just about money. It is about freedom. The sooner you start making money work for you, the more financial freedom you’ll have.

To build wealth, I encourage individuals to adopt a healthy and balanced approach using these three principles (hint, this is what rich people actually do): First, spend your money wisely. A great example of this is Sam Walton, the man who created Wal-Mart. He chose to drive the same red pick-up truck for 25 years even though he could afford a Ferrari. Second, save and invest for your future. When doing research for my book, I uncovered that rich people were saving approximately 15% of everything they made, not just the standard 10%. Lastly, give back to your community. There is a return on investment (ROI) when you give of your time, talent, and treasure.

I look forward to sharing with you through Qvisory’s blog, and hope you’ll offer your comments and ideas along the way.

It's Not a Bird or a Plane, It's the Cost of Gas!

2008-05-28T20:20:26Z

Ever since the cost of gas surpassed $4/gallon in my neighborhood, I’ve been doing a covert experiment. Whenever I fill up my gas tank, I discreetly observe the other gas station patrons and do you know what I see? Not a single smiling face. I even saw a guy grab his chest as though experiencing a heart attack when he saw that the total for his gas was over $75. Gas prices are jumping faster than frogs in a pot of boiling water, and we’re all feeling the burn.

I read an interesting article in the LA Times today that speculates that the only way for many of us to emerge from the obscene gas-price-crunch may be to start working from home.

I think this idea has merit to a certain extent. After all, if it costs a substantial portion of your paycheck just to get to work, how worthwhile is it to keep commuting? Thanks to the proliferation of efficiency-promoting products such as BlackBerrys and laptops with wireless access, work is easier to do from home than it’s ever been before.

Obviously, there will always be jobs that can’t be done from home (I doubt it would work very well to have doctors try working from home, for instance) but there’s no doubt that more of us could probably benefit a great deal from the freedom to work from home some, if not all, days of the week.

If this idea gains traction, I can easily see work as we know it shifting as well. Two well-known bloggers, Cali and Jody, frequently write about something called a Results Only Work Environment (ROWE.) The basic premise behind this idea is that work is measured in terms of results, not time put in. This means that if you’re capable of doing your job in 30 hours/week instead of 40, you’re entitled to do with your extra 10 hours as you wish.

This means a lot of people would need to start getting a lot better at relaxing! Think about it: if the average person spends 38 hours/year driving to work and who-knows-how-much time at work pretending to be busy, how much extra time would they have if they worked from home and could stop when the work was done?

Of course this is all “what-ifs”, but I suppose the idea that rocketing gas prices could trigger a nationwide shift toward healthier working habits intrigues me. What do you think? Do you think the gigantic gas prices will inspire more companies to allow their employees to work from home?

The Budget Tipping Point

2008-05-21T23:23:12Z

With at least ten free financial budgeting tools available and many others with low up-front costs on the marketplace today, small and large companies are trying to figure out how to reel you in. They have succeeded and they have failed.

Blog posts such as A Meeting of Minds: Ten Personal Finance Bloggers Talk About Money and Are Personal Finance Tools Ready To Go Web 2.0? suggest that personal finance leaders are still looking to develop a budgeting tool comparable to the iPod of portable media players or the Google of Internet search engines. The tipping point or the moment of critical mass has yet to be found. No budgeting tool clearly dominates the market.

Having talked with many friends about financial budgeting tools, I have yet to find one that has developed a budget - online or offline. The most common response I hear is, "I don't make enough money to need a budget, "I manage my money by reviewing my online bank accounts from time to time, or "I keep a budget in my head."

Change, especially radical change, often results from trigger event experiences that cause a shift in thinking. Learning that a friend who has similar spending habits has been forced to file bankruptcy or finding out that a baby is on the way may fundamentally change how you choose to manage money.

Events like these can cause a personal budgeting tipping point, and while learning about or using a particular tool has the potential to have a similar effect, it hasn't happened to me. I budget because I hope to buy a house in the not too distant future, and when I decided that 20% down is the best way to go considering the housing market collapse, I knew that a budget was necessary.

If you are not budgeting, let us know why. If you are budgeting, did a specific experience convince you that a budget was worthwhile?

Pushing Credit Cards on College Campuses

2008-05-19T20:59:51Z

On college campuses across the country, you will find our nation’s biggest credit card issuers, armed with truckloads of swag to entice students into signing up for a credit card. There’ll be free t-shirts, coupons for free food, and maybe even a drawing to win an iPod.

We’ve all seen them; it’s not like campus credit card marketing is a covert operation. But what is lesser known is that many of our nation’s colleges have formal contracts with credit card companies in which they stand to make millions of dollars. In a great piece of investigative journalism, the Des Moines Register exposed how two of the state's major public universities - the University of Iowa and Iowa State - have contracts with Bank of America (BofA) to exclusively promote their credit cards to students. The universities signed deals with BofA through their alumni associations to turn over student data to the company and promote the cards at major sporting events, and in exchange, accept what most people would consider “kickbacks” in the millions of dollars. How much money is at stake? The University of Iowa’s newest contract with BofA shows that the school is guaranteed at least $200,000 per year, all of which goes to the athletics departments.

While the Des Moines Register uncovered the extent to which its two major state universities are entangled with card companies, this isn’t just an Iowa phenomenon. In a BusinessWeek online series about credit cards and college students, Jessica Greenberg says that BofA has 900 agreements with colleges nationwide, making them far and away the top credit card pusher on campuses. For example, the University of Tennessee expects a payback of $9.8 million over seven years for its exclusive marketing deal with Chase credit cards.

These financial windfall agreements are often brokered through the alumni associations so that public universities can side-step having to publicly disclose the agreements. And they don’t have to own up to the shameful fact that nowhere in these agreements do the colleges assert the leverage they have - lots of data the card companies want - to protect their students or alumni from sky-high interest rates or abusive terms.

Aggressive on-campus marketing and the behind-the-scenes collusion between colleges and card companies have paid off: in 2004, nine out of ten college seniors had credit cards. In fact, the average co-ed has five different cards with an average credit card debt of just over $2,100.

So, what exactly are students charging?
While it’s no surprise that some of these balances are racked up ordering a late-night pizza and a six pack of beer (been there, done that), college students are also using credit cards to help pay for tuition and other school expenses (also been there and done that). A full 75% of students said they used credit cards to pay for basic school supplies such as paper, notebooks, lab supplies, etc., and another 71% said credit cards were used to help pay for textbooks. About one in four students said they used their credit cards to pay for part of their tuition.

I, like most college students, had a credit card when I was in college, and was often seriously thankful for it. So, I’m not for banning them or putting strict requirements on their usage by students. What I am for is better accountability by the colleges who could use some public pressure to stop selling their students out to the highest bidder. On top of that, I think we should end the swag brigade, so college students can make a rational decision about what card they want in their wallet - instead of making it because they’ll score a free pizza or burrito. Some states have already done just that, but most haven’t done anything to boot the lenders off campus.

You can take action by contacting your alumni association and asking for details about any agreements they have with card companies. Call your state legislator to tell them you’d like to require schools to disclose these agreements and that you’d support efforts to curb aggressive on-campus marketing.

To Transfer or Not to Transfer Your Credit Card Balance

2008-05-12T23:51:51Z

Opening a new credit card may seem like a bad idea if you're trying to pay down credit card debt, and it often is, but you may want to consider it if the financial institution offers low interest balance transfers.

Often, credit card companies offer low introductory rates (2%, 1%, and even 0%) that last for six months to a year after the balance transfer takes place. A 0% interest rate balance transfer allows you to pay down the balance on the new credit card without incurring interest charges for a given period of time. The money saved in interest can then be applied towards the principal each month, thus reducing your debt even further. But before you go for it, here are a few things to consider:

Some credit card companies charge fees for each balance you transfer to their card. Read the fine print!
Just because you're offered a low rate, it doesn't mean that you are guaranteed that rate, and this is especially true if your credit history isn't that great. Read the fine print!
Your interest rate after the introductory period may be higher than what you're paying right now. Read the fine print!
Many offers now stipulate that if you transfer balances from the new card within a 12 month period, the normal interest rate will be applied to all outstanding balances retroactively. Read the fine print!
Some credit cards require that you pay off the balance transfer amount first, leaving the new and higher interest rate charges buried underneath. Read the fine print!

If you're going to move forward with a balance transfer, it's important to continue making minimum payments on your old card while waiting for the balance transfer to take effect; this can take a few weeks. And most importantly, read the fine print!

Reuniting With our Bedrooms of Years Past

2008-05-09T22:23:09Z

In a Dallas Morning News article titled, "The child-man," Kay Hymowitz critiques today's young males, their reluctance to grow up, and their tendency to avoid responsibility while spending considerable time playing video games, drinking, and hooking up.

Hymowitz starts her article by introducing what she attributes to be you, "Now meet the 21st-century you, also 26. You've finished college and work in a cubicle in a large Chicago financial-services firm. You live in an apartment with a few single guy friends. In your spare time, you play basketball with your buddies, download iTunes, have some fun with the Xbox 360..."

Is this you?
Many of us are stumbling along playing video games (I play Wii Sports) to help us deal with unsatisfactory wages, credit card debt, and college loans. As a result, more graduating students are reuniting with their bedrooms of years past - an estimated 65% according to the U.S. Census Bureau. Here are some tips if you're moving back in.

Sure, years ago, the average twenty-something year old was more financially independent, married with children, and owned a home. Some of us are there already, and some of us don't want to be there ever. The housing market is falling apart, and credit card debt is soaring. Commitment is hard when the ground keeps shaking.

And sure, the ground always shakes a little, but money matters, and some of us don't have enough - with or without a budget. Hymowitz is spot on when she says that, "tens of millions more young men are blissfully free of mortgages, wives and child-care bills." And this shouldn't be a surprise. Is it responsible or is it irresponsible for men our age to avoid mortgage, marriage, and children until more financially secure?

And many of us are not running away from marriage or deep attachments, as Hymowitz suggests. Many of us want what our parents have or something similar, but we're living longer and it's taking longer. In the words of John Mayer, many of us are "waiting on the world to change." But is that enough? Maybe, we should exert more effort to change the world.

Have You Heard the Credit Card Song?

2008-05-07T23:30:42Z

Whenever I pull my credit card from my wallet and see its wear and tear, I am reminded of how much it has been used. This is often enough to keep me from spending too much. But I received a replacement card yesterday, and it looks more spend friendly. It is new and shiny, and this is a problem. What am I going to do about my new shiny credit card? I am going to play frisbee with it in the street and drag it through some dirt, so I think twice before I use it. I'm serious!

If you're struggling to get a better grip on spending, check out the Credit Card Song. Don’t let the siren voice of your credit card trap you into buying things you don’t need, which you’ll pay dearly for later!

[youtube:http://www.youtube.com/watch?v=2JwdIWjVHaU]

Amy of Two Pennies Earned says "learn self control now, not later." In Eight Financial Tips for Young Adults, she explains:

If you're lucky, your parents taught you this skill when you were a kid. If not, keep in mind that the sooner you learn the fine art of delaying gratification, the sooner you'll find it easy to keep your finances in order. Although you can effortlessly purchase an item on credit the minute you want it, it's better to wait until you've actually saved up the money. Do you really want to pay interest on a pair of jeans or a box of cereal?

Here are some more tips:

Think twice or even three times before you buy something. Just before you make a purchase, think about the amount of time and work it will actually cost you. Is it worth it?
Think about what's important to you. To what extent was spending money necessary for your enjoyment?
Create a budget and save your receipts. At the end of each month, evaluate your spending. Did you enjoy your purchases as much as you thought you would?

Lower Your APR Today

2008-05-05T23:10:41Z

Did you know that 56% of consumers who ask their credit card company for a lower APR got one? It’s true. A study by the State PIRGS showed that most people can lower their APRs by just asking.

Here’s how to do it:

Find your current APR online or on your most recent credit card statement.
Call your credit card company. Introduce yourself. Tell them that you have received a number of credit card offers with lower rates in the mail (don’t be specific about which one, the sales reps are prepared to tell you why every other card is bad). Tell them you would like to stick with your current card, but if they can’t lower your rate, you will cancel it and switch to another company.

That’s it, really. By simply threatening to switch, good customers get their rates lowered.

If this doesn’t work, it could be because you got a tough customer service rep, or because you have a high rate due to a bad credit history. Either way, don’t actually cancel your card. Canceling a credit card may hurt your credit report. If you have other cards with lower rates that you can use instead, just put the higher-rate cards away in a safe place and don’t use them.

Have you tried to get your APR lowered? Let us know what you did and whether it worked.

Share and Share Alike

2008-05-02T18:57:50Z

Have you ever heard your mother or father talk about how much they make? How about your grandparents? If you’re like most people, you’ve probably never heard your parents talk about money, unless it was to ask you to stop increasing the phone bill every month when you were a teenager.

Money has traditionally been a verboten topic among friends and colleagues, rarely discussed publicly nor even privately among families. But cultural norms and traditions are constantly evolving, and Gen Y does not have as secretive an attitude about money.

An article in the New York Times reveals a glimpse of this shift. Gen Y workers are disclosing their salaries to friends and colleagues as a way of measuring the current job market. The idea is that, by determining what your friends and colleagues are making, you’ll know better whether you can ask for a raise, switch to another company for more money, or change professions entirely.

The article highlights several instances where sharing salaries has worked out to the benefit of those involved. In addition to being able to use the information to help you in your career, you can also derive a lot of comfort from knowing what others make. If sharing salaries with friends will help you improve your lot at work, then take advantage of the opportunity if your colleagues are willing. You may have to take the risk of revealing your salary first, and see whether they respond in kind.

The article also pointed out, however, that the outcome is not always positive. Karen Burns, on her blog Working Girl, made an excellent point that, should you decide to disclose your salary to friends and coworkers, bear in mind that jealousy happens. Tensions can arise from discussing money, especially at work, and it’s important to keep in mind the ramifications of doing so. Tread carefully. Also, as with any personal information, remember that once you’ve shared, you likely won’t be able to control where it goes next!

How do you feel about sharing your salary information? Do you do it?

Have You Checked Your FICO Score Lately?

2008-05-01T23:53:48Z

A few years ago, I decided to check my credit report and score for the first time. I was a few years into college, and just curious. I wasn’t looking to buy a house, a car, or anything like that. I just wanted to know. The credit report was free, but there was a charge for the score.

What did I learn?
My credit report stated that I had five open accounts. It was pretty clean, but I didn't realize that having an authorized card years earlier under my parents name helped with my score. It was for emergency use only. I have thanked them since.

Have you checked your FICO score lately?
Your FICO score, created by Fair Isaac & Co., is your credit rating. There are really three FICO scores computed by data provided by Experian, Equifax, and TransUnion. Read Credit Cards and Credit Scores: What is the Connection? to learn more.

Of great importance, the new FICO credit scoring will no longer benefit authorized user accounts like the one I had years ago! If you have an authorized user account, your score may go down, or at least not up.

What to do?
One possible way to counteract the negative effects of this change is converting to a joint account, but parents or significant others may not go for this.

To learn more about these changes, read Consumer Alert: FICO Scores Dropping Authorized User Accounts, review the Will your score be affected by the authorized user changes poll, or listen to Better know about the new Fico. To learn what your FICO score doesn't tell you, read What Your FICO Score Doesn't Say About You.

A Loaf of Bread into a Bag of Croutons

2008-04-30T23:55:02Z

I love a good sourdough bread, especially with a touch of olive oil, balsamic vinegar, and fresh pepper. My wife and I use to go through a loaf in a week.

We don't eat quite as much bread as we use to, so we're often stuck with a corner chunk worthy of the trash. But no longer. On Sunday, I decided to cut the remaining piece into cubes and feed them to the ducks that wander about in our apartment complex. We're not supposed to, but oh well.

The bread didn't get to the ducks though. Rather, my wife drizzled some olive oil, garlic, and pepper on the bread cubs. She then placed them in the oven for 30 minutes, and out came croutons - the best croutons I have ever eaten!

This isn't quite the same as making orange juice from oranges, but before you throw away your food that's almost gone bad, consider transforming it into something different. With food prices on the rise, good croutons may change how you feel about salad, and they may satisfy your craving for chips.

Next, we're going to find something to do with our browning bananas.

If you want to read an interesting article on increasing grocery prices, check out Maybe Higher Food Prices Are Actually Good For Us as a Society by Jeremy of Generation X Finance.

How much more is food costing you? Have you decided to eat at home more often?

What's Your Money Mindset?

2008-04-28T21:34:59Z

Our generation is facing financial challenges due to the rising costs of health care and education, diminishing employer benefits, and uncertainty about the future of Social Security. As the economy bumps along, more and more studies and surveys will be conducted to better understand how you feel.

In February 2008, the Gen X Money Mindsets Study was released by Schwab, one of the largest financial services providers. They commissioned the study in order to better understand and serve Gen Xers. The study of more than 5,000 Americans aged 25 to 40 revealed six distinct money mindsets:

Paycheck to Paycheck - 25%
- Stressed out, pessimistic, and not confident about financial matters.
Spend Now, Pay Later - 17%
- Optimistic, unrealistic, and incurring significant debt.

Confident and Risk-Tolerant - 15%
- High income, active lifestyles, and fully engaged in their financial future.

No Money, No Worries - 15%
- Low income, very optimistic, little trust of financial firms or advisors.

Cautious Savers - 14%
- Financially conservative and concerned about money.
Overwhelmed but Optimistic - 13%
- Significant debt, financially anxious, but positive about the future.

The study also identified some other interesting trends. Almost 45% of those interviewed said that they have too much debt to even think about saving or investing, and more than 35% feel they will be in debt for the rest of their lives.

What do you think about this study? Do you find yourself falling into one of the above categories, or is your mindset more complex? The data collected is significant, but I must say that I find it hard to fit myself into just one of the categories. I have felt confident, cautious, overwhelmed, and optimistic all in the same week. What about you? Do you use any strategies or tools to help you alleviate your financial anxieties?

Which Credit Card Should I Pay Off First?

2008-04-25T11:21:56Z

If you're shuffling through your credits cards and trying to figure out which one to pay off first, here are a few tips.

The best way to get rid of debt is to pay down the credit card with the highest interest rate first. This doesn't mean you should hold off payment on your lower interest rate cards while you pay off the higher one. Rather, start paying more than the minimum on the highest one, and continue on as usual with the others. Once paid off, move onto the credit card with the next highest interest rate. Focus on the interest rate and don't worry so much about the balance amount.

Why pay more than the minimum?
Your debt will begin to disappear once you start paying more than the minimum, and your credit score may begin to improve as well. Read Credit Cards and Credit Scores: What is the Connection? to learn how they are related.

If you're paying just the $30 minimum payment on a credit card with a $1,000 balance (3% of total) and an interest rate of 17%, it will take you 115 months to pay it off, and cost you $717.51 in interest. By paying an additional $70 a month, you can pay off your debt in 11 months, and your credit card company would only make $86.03 in interest. That's a huge difference! Calculate the true cost of paying the minimum using a Bankrate calculator.

What about paying off some low-balance bills first so you can eliminate a bill or two?
It makes better sense to pay down the highest interest rate first, but it can be more gratifying to pay off smaller balances in a shorter period of time. If this will motivate you, go for it, but once you eliminate a bill or two, re-focus on your higher interest rate credit cards.

Free Access to Your Credit Report

2008-04-23T15:08:57Z

Even if you think your credit report is clean, it's free to review.

The Fair and Accurate Credit Transactions Act of 2003 is a law passed by Congress that allows you to obtain a free credit report once every twelve months from Equifax, Experian, and TransUnion. You can access your report at Annual Credit Report, and purchase a credit score if you choose.

How often should I review my credit report?
Rather than retrieve your reports from all three reporting agencies at the same time via www.annualcreditreport.com, you can rotate your requests. For example, in January request from TransUnion, in May from Equifax, and then in September from Experian. Generally speaking, the reporting agencies will provide you with similar information in their reports.

What should I look for?
Inaccuracies! They may include:

Personal Information - Is your name spelled right?
Public Records - It says you filed for bankruptcy, but have you?
Accounts - Check for unfamiliar accounts or activity.
Inquiries - How many credit cards have you applied for? Check for accuracy.

I found a mistake. What should I do?
If you find a mistake or even two, then you have the right to dispute the information free of charge. You should contact the credit bureau that provided the information and dispute the inaccurate information. Read How to Dispute Credit Report Errors from the Federal Trade Commission for more information.

It's better to begin dealing with your credit report now rather than later so you can begin to improve your score. Read Credit Cards and Credit Scores: What is the Connection by Qvisory blogger Anita Ramasastry for tips.