It seems that I’ve come down with a case of I-want-buy-itis lately.  Even though our economy has been hampered by the lack of consumer demand, this consumer isn’t quite ready to loosen her purse strings yet.  Unfortunately, it appears that retailers are doing a very good job of turning out products that I want.  So here are some things I’ve thought of to talk myself out of shopping, and instead put the money towards saving.

Here are a few ways what I’ve come up with… what are your methods to talk yourself out of shopping?

• The Hours Worked Required Formula: How many hours of after-tax income would it take you to make the money needed to purchase XYZ? If you make $40 per hour, then your take-home pay is probably around $30 per hour. A $3,000 couch will cost you 100 hours (or ~12 8-hour days) to pay off.

• The Wait-Period: Self-impose a 24-hour wait before you purchase anything over $100. More stringent followers of this method might impose an additional 24-hour wait for every $100. If a purchase costs $200, then you would wait a full 48 hours before you buy it. A $300 purchase would require 72 hours of wait time.

• The Compounding Interest Calculation: Figure out the return you can get from the money that you don’t spend and invest instead.  This works best for large-ticket items (think over $10,000), because I don’t find any motivational value from knowing that the $10 I spend on dinner tonight could grow into $43 in 30 years.

• The Look in Your Heart and Ask Do I REALLY Need It: This only works when you are clear-headed and honest with yourself, not when you are so head over heels for that new coupe or iPad or sheath dress from Theory.

• The Do I Have Something Similar Comparison: This works well for electronic gadgets and clothes / shoes. If you have an iPhone, a netbook, a Kindle, and a laptop, then maybe you don’t need an iPad right this moment.  Just maybe.  Or, if you have three black pencil skirts, then it’s probably not a necessity to get a fourth black pencil skirt. Even if it’s got a different waist band than the other three.

• The Regret Factor: Will you regret this purchase in the morning? If you will feel worse about spending $$$ on an impulse buy in the morning than you do now, don’t buy it.  Or at the very least, keep the receipt so you can return it.

• The Big Goal Factor: Can the money be better spent on one of your financial goals such as retirement, mortgage, college, etc? Maybe thinking of your 401K contributions might just be what stops you from swiping your credit card for the lovely, chocolate-brown pebbled leather bowler bag on Gilt (not that I am speaking from experience here. Not at all).

Copyright 2010 How to Talk Yourself Out of Buying and Spending? is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

Back in the heady days of 2005, 2006 and 2007, CNN had a series that profile “extreme savers” who behaved against the grain, tucking away 25%-50% of their income when most of us were spending it up. Well, it seems as if saving is back in vogue, because I just saw a new Extreme Saver slide show on CNN Money website.

The profiles are still interesting tidbits of different families and how they’ve managed to save so much (I think the saving percentage is calculated from net income instead of gross income).  The common themes of each featured family are: healthy income and financial discipline.

One story stood out to me: Nicole and Mitch of Lake Oswego, Oregon, has been saving $250 a month for their daughter since she was born. She is now 11, and they have $50,000 in her 529 college savings plan. WOW! (By the way, Don at Money Reasons is doing something similar for his kids). I hope that in the event that I become a parent, my partner and I will be in a position to and have the diligence to do the same.

These stories certainly inspire me to reexamine my own saving efforts. Granted, many of these people profiled make a higher income than I do, but they also have higher expenses (mortgage and kids are the two big ones). Still there are examples of single-earner families saving big percentages. Christin and Patrick of Williamsville, NY, live on his $75,000 a year salary, and save 38% with Christin as a stay-at-home mom and 2 kids.

I hope CNN Money continues with these Extreme Savers profiles.

Copyright 2010 CNN Extreme Savers Returns is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

Growing up, I never had personal finance as part of the curriculum. But everything I’ve learned about motivation to save for retirement, I’ve learned in high school.

Recently, TeacHer Finance wrote a post sharing her perspective – she hates saving for retirement.  I understand her reasons.. maybe that’s why I don’t really think about them – because I am afraid of mentally discouraging myself from saving!  It is difficult to balance retirement with shorter-term goals, that is for sure.  And although there are good, logical reasons to save for retirement, the motivation factor, like I mentioned at the beginning of this post, was completely from high school.

From High School to Retirement Saving

This might be a nerdy way to explain it, but here is it. When I was in high school, I’d often slack off a little at the beginning of the semester – I wouldn’t study as hard as I should have, or prepare for the occasional pop quizzes that I KNOW will come up in class.  It’ll be okay, I told myself, I will work harder for the next test, the next presentation, the next project.

Towards the second half or 2/3 of the semester, I’d look at my class progress reports, feel disappointed, and then I’d hunker down and put my nose to the grindstone. But the simple mathematical truth was that for every 80% I got in the first half of the class, I’d have to get a 100% to achieve the 90% ending score I wanted. Let’s just say that it was a rare day that I got those 100%s.

And every time before the final, when it’s 4 AM in the morning and I am still pouring over my notes on European history or statistics or macroeconomics, stressed out of my mind, I think, why didn’t I start preparing earlier? If I had JUST prepared a little more at the beginning of the term, I wouldn’t have to work so hard towards the end, I would give myself more wiggle room, and I would probably have gotten a better grade.

The lesson I learned? Put the work in early, get better results for less effort.

That’s the thought process I bring to retirement saving. I am saving as much as I can right now so that I wouldn’t have to panic and start saving 30% of my income when I’m in my 30s or 40s, when I will surely have more financial obligations.  Now, when I think of not saving for retirement, I think of high school.

Do you love saving for retirement (is love too strong a word?) Do you hate it? How do you motivate yourself to save for something that is so abstract, and so far away?

Copyright 2010 Saving for Retirement: Love It? Hate It? is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

In life, there are luxuries then there are necessities. The true necessities are a certain level of food of appropriate nutritional value, health care, clothing, and shelter. But in a middle-class existence in a developed country, what we deem as “necessary” has a much broader scope than basic subsistence.

Here are several modern conveniences that have become necessities for my life:

• High-speed internet access ($20 per month): What would I do without reliable and speedy internet access? I don’t know. The internet isn’t set up at my current apartment yet, and it’s frustrating. That’s why high-speed internet is a nonnegotiable line item in my budget. I think there is a case to be made for internet access as a necessity as much as telephone is – communicating with family and friends, researching information, doing work from home, blogging all require access to the almighty information highway. I would also consider a personal computer a necessity.
• Cell phone @ free because on family plan: Given that my cell phone is my only phone, it’s definitely a necessity. Even if I had a land line, I wouldn’t feel comfortable venturing out without the cell phone on me. It’s funny how dependent I’ve come to be – I keep imaging what if I miss a really important call? Or what if I’m in a situation and I need help?
• AAA membership @ $50 a year: I just feel better to know there is one number I can call for help if my car breaks down. And with a car as old as mine, breaking down is a possibility that I can’t discount. For $50 a year, I get the peace of mind (and towing, and battery jumps) that AAA provides.
• Car and all related items (insurance, gas, maintenance) @ $400 a month: Maybe if I lived in another part of the country, I wouldn’t count a car as a necessity. But I live in Car Country, and I can’t go anywhere without a car. Public transportation is slow and unreliable, or too far away, or nonexistent. So I take good car of my Honda and hope it continues to take good car of me.

How about you? What do you look at in your budget and say, “but I need it!”

Copyright 2010 Modern Necessities: But I Need It! is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

Possible new car purchase?

When it comes to the buy new car vs. keep old car dilemma, the financially prudent answer seems to always lean towards the latter. Of course, a new car is a significant drain on one’s monthly cash flow, but when is the right time to finally buy a new car? I have never considered buying a new car quite as seriously as I am doing right now. This past Independence Day, I spent $350 on rest and pampering… for my car! (some recent repairs include: $120 in December 2009, $350 in May 2009, and $400 in November 2008).

The cost and headache of spending a holiday weekend on car-related issues has made me wonder: should I buy a new car? Has the time come to finally let go of my beloved Honda (who has served my Dad, then me, faithfully for 230,000 miles, and counting) and get something with side-impact air bags and a CD player?

Recently, my parents also suggested that I should buy a new car, mostly for safety reasons. I demurred, although driving 60 miles a day has made me somewhat more inclined to consider a new, more comfortable ride with updated safety features.  CB raised a good point – given that my car is so old (even though it’s still in very good condition for its age / mileage, knock on wood), I should do some research into the type and cost of car I want.

Estimated Cost of New Honda

My family has had pretty good luck with Hondas, so I pulled up the numbers on Edmunds’ Auto Loan Calculator to see how much a Honda Civic DX would cost.

Even with a $10,000 down payment on a 36-month loan, and at a very favorable 5.0% interest rate, I would be paying $234 a month in car payment.

New car vs. Old car in dollars

Keep Current Car: the cost of driving and maintaining my car total $400 a month, or $13.11 per day.

• $150 – gas
• $90-$100 for liability only
• $150 – repairs / monthly contribution to Repair Fund

Buy New Car: if I were to buy a new car, my repair expenses would decrease, but my other car-related expenses would increase.

• $150 – gas, maybe somewhat lower because of more efficient gas mileage? my current car gets around 29 miles per hour. I’m not sure what new Honda would get.
• $234 – monthly payment (according to Edmunds calculator)
• $130? – car insurance would go up because I’d be insuring a new car and I’d need comprehensive / collision coverage
• no out-of-pocket repair costs for the first 3 years (or so I’d hope)
• I would also be out the $10,000 for down payment

Safety concerns?

It seems that keeping my old car would be in my best financial interest. However, am I compromising my personal safety by not purchasing a new car? As cars get older, their safety features becomes outdated. Even though my Honda is rated very well for its year in terms of safety, and it has never been in a major car accident (again, knock on wood), a new model would of course have more up-to-date safety features. If I somehow end up in a match with a Hummer on the freeway (knock on wood, again, that that never happens), I will very much like to have side-impact air bags and new 2010 construction.

So, questions for readers: How did you decide to keep your old car or buy a new car? How did you reconcile the safety concerns with financial concerns when it comes to possibly buying a new car? If you were me, would you buy a new car?

Copyright 2010 Buy New Car vs. Keep Old Car is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

CB and I discussed the possibility of us combining our car insurance policies once we move in together. As it does with many unmarried couples, it took us some time and research (and discussions) to decide how we wanted to proceed. I actually couldn’t find too much information on joint car policy for unmarried couples, so I thought I’d share what I’ve learned from my insurance agent and other research here.  Disclaimer: I am not an insurance or legal professional, and everything I write here is what I’ve been told / researched on my own. I make no guarantees as to the information’s accuracy or completeness.

• Some insurance companies will allow unmarried couples to be on a joint car insurance policy. Some won’t.  For example, in California, Progressive permits unmarried couples to go on the same policy, whereas All State does not (I don’t know if domestic partners can have a joint policy with a company that does not allow unmarried couples a joint policy – but that’s something you should check if you are in a legal domestic partnership).

• Married couples will receive more car insurance discount than unmarried couples because they receive a “marriage discount” as well as a “multi-car discount”.  I am not sure about the financial impact of legal domestic partnership on car insurance.

• In California, the primary holder of the insurance is the Named Insured. The person (or persons) added on to that policy are Second Named Insured.  The Named Insured can unilaterally remove Second Named Insureds from the policy without informing or receiving permission from the Second Named Insured. In other states, Second Named Insureds may need to give permission before the Named Insured can take them off the policy. Make sure you understand what the requirements are for your state. It’s easy to imagine a scenario (after an unfriendly breakup, perhaps?) that quickly turns ugly.

• Some insurance companies may require that two people living at the same residence to be “rated drivers” on each others’ cars – i.e. that both parties can drive each other’s cars.  CB and I decided not to have a joint policy, but because we live at the same address, my insurance company will not cover CB if he drives my vehicle. CB is hence an “excluded driver” on my policy.

• If a driver on the insurance is at fault for an accident, the insurance company will pay out the damages up to the limit of the coverage. The victims can sue for amounts beyond what the insurance company paid – they can sue for the assets of the driver, then, if they so choose, they can go after the other insured person on the joint policy.  I don’t know how common or successful these suits are usually, but just the possibility of opening myself up to such liability is disconcerting.

The last reason is why CB and I decided not to combine our insurance policy. If he causes an accident or I cause an accident, we wouldn’t want the other person’s assets to be at risk of a lawsuit.  We have separate assets, but, well, you just never know.  That’s the reason why my parents insisted I get my own car insurance as soon as I graduated college – it was unwise to open their much-more-substantial-than-my assets to the risk of ME being sued.

If we were married, we would take steps to mitigate that risk (probably through the use of a much higher coverage / umbrella coverage).  But I don’t want to open ourselves up to the risk of liability (however slight) without a structure in place to mitigate it.

Copyright 2010 Joint Car Insurance Policy Between Unmarried Couples is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

Exactly 6 months after I made my first contribution, I maxed out my Roth IRA for 2010, meeting one of my new financial goals for this year.  That makes 5 full years of maxing out, or $23,000 worth of contributions.  Of course this $23,000 will grow to $9,490,308,898 by the time I retire, right? Right?

All jokes aside, I am glad this is done. I want to give an anonymous shout-out to my middle-school science teacher, “Mr. Rob,” who explained to me both the concept of the Roth IRA and the mechanics of opening an account online over a meal of chicken salad at Appleby’s.  A more financially educational meal I’ve never had.  It’s funny, the most valuable things I’ve learned from teachers, I learned them outside of the classroom.  Thanks, Mr. Rob.

Qualified distributions and capital gains are tax-free

You put after-tax money into the Roth IRA, and then your money can grow tax-free. Qualified withdrawals are also tax-free. We don’t know what the federal tax rate will be in the future, but having a source of tax-free earnings can never hurt. Many people have traditional 401Ks (which are funded with pre-tax dollars and thus will be taxed when you withdraw in retirement), so having a Roth provides important tax diversification.

Available to all with earned income (i.e. not employer-sponsored)

You can start a Roth IRA as long as you have earned income. In other words, this option, unlike the 401K, is not dependent on employer sponsorship.  I didn’t have a 401K for 2008 and part of 2009, but I can save via Roth IRA. If parents want to encourage their teenager to save, this is also an excellent method. A 16-year-old who earns $2,000 babysitting in a year can contribute all of that $2,000 to the Roth. For added incentive, parents might provide matching funds,(say, 50 cents for every dollar saved.)

Spousal IRAs: because nonworking parents need to save too

Stay-at-home parents (SAHP) takes care of the family, but the Roth IRA gives them a way to take care of their retirement needs too. Tax law allows a working spouse to contribute $5,000 a year (the current federal IRA limit) to an IRA in the stay-at-home parent’s name, even though the SAHP may not have earned income. If you are a SAHP, insist on having a Spousal IRA set up for you so that you have a way to access tax-advantaged savings in your name.

Penalty-free withdrawal of contributions

You can withdraw your contributions (not gains) at anytime, penalty free. Ideally, you should leave your retirement bucks to work for you as long as possible, but in a pinch, money in the Roth IRA can also double as an emergency fund or a down payment.

Variety of investment options

Think of the Roth IRA as a basket, and specific investments (stocks, mutual funds, bonds, etc.) as eggs that you put in the basket. With so many firms offering Roth IRA services, it’s easy to select one that works for you. Those who wishes to invest in low-cost index funds can choose Vanguard, Fidelity, or Charles Schwab. If you want to select your own stock, brokers include Etrade and Scottrade. Many banks and investment firms also have Roth IRA options. Your 401K might be dependent on the investment choices your employer provides, but no such limitations exist with the Roth IRA.

A version of this article first appeared in BlogHer.

Copyright 2010 6 Reasons Why the Roth IRA Rocks is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

I sign my lease and get my keys to my brand new apartment at the end of this week.   Naturally, many of the posts that caught my eye have to do with housing, moving, budgeting, and talking money between partners.

Here are some posts that I found helpful from the Yakezie bloggers:

• Want to know the secret behind emerald green lawns? See this article for details [Bargineering].
• Ladies who are in the market for a new vehicle should take a look at car buying tips for women [Car Negotiations Coach].
• How to save on housing costs with a roommate [Money Green Life]
• I’m not planning a wedding anytime soon. But when I do, I know where to find a free wedding budget template to make sure my big day doesn’t turn into a big debt [Money Help for Christians].
• If you are moving soon, like I am, these moving tips will come in handy [Free From Broke].
• Motivation to cook at home is what I sorely need. I’ve made a pledge to cook (and save) more in my new place, and I hope these tips will help me make good on my pledge [Not Made of Money].

Copyright 2010 Best of Blogs Link Roundup: The Moving & Grooving Edition is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

A rule of thumb I’ve read for rent is that your total housing costs shouldn’t exceed over 30% of your gross income.  Total housing costs for us renters is the rent payment plus utilities. Personally, I also include the cost of internet access in my housing calculation because not having internet is not an option for me.

Since college graduation, I will have lived in three places: a 2-bedroom apartment shared with my college friend, a studio apartment by myself, and soon I will be moving into a 1-bedroom apartment with CB.  In each of these instances, my housing costs stayed around 15%-20% of my total gross income.  Here are some tips that helped me to keep my rent cost down:

1.Have a roomate: the more the merrier cheaper

This is probably the best and easiest way to save on rent. 2 (or 3 or 4) people living in one place means that not only your rent is decreased, but that all the utilities is shared. In addition, much of the cost of furnishing the new place is also split among the roommates.  To avoid a roommate nightmare, however, it’s best to talk through your expectations (how the rent is split, who chips in for cable, do you share groceries, etc.) so that everyone feels good about the situation. If you are moving in with a significant other, it’s even more important to have clear expectations because many times it can be more awkward to talk about money with romantic partners than with roommates (why is that?).

2. Don’t pay for amenties that you don’t use

Our current apartment is somewhat of an anomaly in our area – it doesn’t have a pool or a jaccuzi. But I don’t care – I know we won’t be using those amenities, so I am glad that we won’t be paying for them. Along a similar vein, even if you know you won’t be going to the attached gym, or playing with its pool tables in the recreation room, understand that part of your rent each month will be going towards those perks.

3. Skip the nicest complexes: who needs travertine tile anyway?

Those units with travertine tile in the bathroom and granite on the kitchen countertops? Formica will serve as a counter just as well (or that’s what I keep telling myself…) Or the glossy hardwood floors and the new stainless steel appliances?  You will be paying a premium for premium features, so make sure those features are really worth the money because you fall to a luxury apartment’s charms.

4. Trade services for a reduced rent

In some cases, it might be possible to engaging in a little bartering. If you live in someone’s house, perhaps you can babysit the landlord’s kids 3x a week for lower rent. Or if you are a gardener, maybe you can keep up the landscaping.  A barter system can work well if both parties are clear about what services are required in exchange for what amount of rent reduction.  It’s best to have everything in writing.

5. Be realistic about the market and your budget

If you are looking for a 1-bedroom in Midtown Manhattan, there’s no way you can score a place for under $2,000.  It’s important to be realistic about both (1) the going price of real estate in your location, and (2) what you can comfortably afford while having enough money left over for your other goals / desires.  CB and I found a gorgeous complex with an Apartment For Lease sign on the outside – once we found out that the price was $1,900 a month, however, we didn’t even bother to go in.  Theoretically, we could afford the place, but we both had more pressing financial goals: saving for graduate school, paying off college loans, saving for retirement, and working on our Galapagos fund. And, we knew we could find something for much cheaper. Which we did, although of course it wasn’t as nice. But for $800 less? We’ll take it!

What’s the percentage of your housing costs compared to your gross income? What’s YOUR best tip for keeping your rent cost down?

Copyright 2010 Low(er) Rent: How to Make it Happen is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

It’s official. CB and I just put down the security deposit for our apartment. We will be signing the lease in a week and then getting the keys to move in.  I am looking forward to this phase of our lives together  (and I can’t say that the prospect of lower rent isn’t appealing!).

Everything moved pretty quickly – I honestly haven’t expected to find a place we both liked so soon. Our apartment was literally the 4th place that we looked at.  In two weeks, we will become the new tenants of a nice 1-bedroom apartment with ample natural light. Best of all, we get two parking spaces in the underground parking garage so neither one of us has to worry about finding a spot on the street.  This place has our must-have (2 designated parking spaces), most of our like-to-haves (upper unit, refrigerator), and even a few unexpected perks (a whole wall of closet space, dishwasher in the kitchen, wrought-iron chandelier in the dining area).

As for the finances of this move…

• We will be splitting the rent 60/40. Everything else housing-related (gas, electricity, and internet) will be split 50/50.
• I’m not sure how we will treat groceries, but we probably can just buy our own food. I tend to get more expensive groceries – for example, I think of nothing buying free-range eggs, whereas CB will eat regular eggs just as happily.  On the other hand, CB eats more in terms of quantity, so it probably evens out in the end.
• We may also be putting our cars with the same insurance carrier to save money. I need to research on what, if any, liabilities this step might expose us to.

Other than that, we have no plans to combine our money.  I’m not sure if we need to have a written cohabitation agreement, but I do plan on discussing all relevant financial issues.

What’s the most useful money-related tip you’ve received for living together? What financial topic is a MUST-discuss for you?

Copyright 2010 Financial Topics for Living Together is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

Ah.. balance. That holy grail most personal finance bloggers (including this one) searches for. Saving for retirement is one of my biggest financial priorities, but I know that I have to balance saving for the far off future with saving for the near-term future.  Prepare for tomorrow but enjoy life today, right? I recently wrote about my dilemma: should drastically decrease my cash for near-term expenses by contributing the full $16,500 to my 401K, or should I opt for more cash on hand?

After considering the should I max out my 401K? question (thank you for all your helpful insights), I’ve decided to compromise, and contribute $15,000. I’ll leave the maxing out for 2011.

I admit, I was a little worried about the impact the $2,500 monthly contributions ($2,500 x 6 months = $15,000) would have on my net cash flow.  So in comes the Paycheck City calculator.  After I crunched the numbers, I saw that if I am careful with budgeting, I should be able to contribute the $15,000 for the rest of this year.  It also helps that I will have rent that’s $200 cheaper starting in a month.   I can theoretically afford to contribute $16,500, but that would be cutting things very tight.

Of course I want to save as much as I can in the 401K, but I wasn’t quite comfortable with putting away the entire $16,500 this year.  A few things tilted me towards that decision:

• My car seems okay, but it’s nearing 230,000 miles. Though I hope it lasts me another 2 years, I have to be prepared to get a new / new-to-me car at a moment’s notice.  Having to purchase a new vehicle will knock about $10,000 of my cash savings.
• I want to save $30,000 for graduate school. My mother had previously indicated to me that she will put $30,000 of her inheritance from my grandmother towards my graduate school costs. That makes $60,000, or roughly 1 year of tuition + living expenses at a full-time MBA program.  My goal is to only take out loans for the second year.  If I were to need a new car, I will need to rebuild that cash cushion.
• Enjoying life today is also important to me. I want to eat! and travel! And eat while traveling… and all that takes cash.  I don’t want to end up so cash-poor for the rest of the year that I will be taking money out of my savings.

Near-term goals have to be balanced against retirement goals, so this is the compromise. Including $5,000 in Roth IRA, I’ll be able to put away $20,000 for 2010.  Considering how I spent a quarter of the year making barely $2,000 a month because I was freelancing / collecting unemployment, I think I am doing OK. Next year I will plan on putting away the maximums allowed under 401K and Roth IRA.

How do you balance retirement goals with big-ticket short-term goals such as travel, graduate school, down payment, car purchases, weddings, etc?

Copyright 2010 Balancing Retirement with Short-Term Goals is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

This weekend was dedicated to apartment hunting for our place together. CB and I spent an entire afternoon visiting 6 apartments and walking around the surrounding areas.  We found one place that we both loved and is in our budget.  I am crossing my fingers because we were the first and (as of the time I spoke with the manager) the only applicants for the place.

Based on my experience apartment hunting, here are five items to make the whole process just a little bit easier (note: I have no idea if this advice applies to renting in New York City, which is a whole another beast altogether. I have nothing but respect for the fortitude of NYC apartment-hunters.):

1. A map of your apartments. I created a map in Google My Maps, and had the location and address of each apartments I wanted to check out.  I made different color-codes for apartments with appointments and apartments that I’d like to see if we had time.  A map is also a useful tool to gauge how much time you need to give yourself when going from one viewing appointment to another.

2. Printed copies of apartment rental ads. I printed out a copy of our apartments so that I had their address, pictures, and contact numbers.  I also took notes on those papers.

3. Comfortable shoes, sunscreen, and water. There’s a lot of legwork to do in apartment-hunting – literally! There’s no better way to see a neighborhood than walking, so be prepared to walk, see apartment, and then walk some more.

4. Checkbook. When you see an apartment that you’re sure you want to apply for, it’s a good idea to submit the application on the spot and pay the credit check fee. I forgot my checkbook today, but luckily we scraped together all the cash we had on hand, filled out the applications and submitted the credit check fees right then and there.

5. Camera. After seeing so many apartments, I couldn’t remember in detail what each one looks like. It would have been helpful if we bought a camera and snapped pictures as we went along.

What else would you bring?

Copyright 2010 Apartment Hunting? 5 Things to Bring is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

Most personal finance experts recommend contributing to the 401K up to the match.  Even without a match, the plan provides a fairly easy way to automate your savings while lowering your taxes.  With open enrollment approaching at my job, I’m faced with the question: Should I max out my 401K? When I first got this position, I set a goal to contribute $16,500, the maximum possible.  Now, that figure seems a bit intimidating. Spread over 6 months, $16,500 will be $2,750 per month, or more than a majority of my monthly paycheck.

Why I should NOT max out my 401K:

• $16,500 is a lot of money to be tying up – I may very well need money for a new car, graduate school tuition, big moving expenses, etc. in the next 1-5 years
• The next open enrollment period is January 2011, so basically once I set my contributions, I’m locked in. I can’t decide in September that I’d like to scale back.
• I don’t have an employer match
• I can access lower expense ratios in my Rollover IRA / Roth IRAs

Why I SHOULD max out my 401K:

• There is no better way of enforced savings. Truly. 401K contributions come out before Federal Income tax, for goodness sakes. You know how Uncle Sam always gets his money where it’s due? Well, maybe it’s time for Auntie Retirement to get hers too.
• Lower taxes. Right now, about 28% of my paycheck is gone before the money even hit my checking account. Maxing out my 401K will dramatically reduce my Federal income tax.
• I will be very thankful that I maxed out 401K if I go back to graduate school in a few years. An MBA comes with big loans, not tax-deferred retirement vehicles.
• On a related note, the next 5 years will likely be filled with a lot of moving pieces, both personally and professionally. Hopefully I will be earning a higher salary in 5 years, but I will also have more personal obligations (some possible big expenses that come to mind are: wedding/honeymoon, grad school, new car, cross-country relocation, etc). So it’s probably wise to save as much as I can right now.
• I didn’t have a 401K for 2008. So really I’m only saving $8,250 a year if you spread the contribution over 2008 and 2010.
• When I roll over my contributions, I can invest the money in a much wider variety of funds. But I have to have the money in a 401K first before I can roll anything over.

So.. there you have it. I have until June 30th to make a decision. A reasonable suggestion might be to contribute $10,000 to the 401K, but I admit I really like the sound of maxing out 401K!  I have been saving for the past couple of month in an savings account that I dubbed the “cash-flow subsidy account” to supplement my paycheck for the rest of the year.  I have enough cash savings so that even if my car dies tomorrow (knock on wood!), I can buy a new economy car or a 2nd hand Honda and my emergency fund will still be in fairly decent shape.

What do you think? Should I max out my 401K or not?

Copyright 2010 Should I max out my 401K? is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

So a year after I found my perfect studio, I am on the apartment hunt again. CB and I are looking at various vacancies and hopefully we will be able to find the right unit at the right price. Since graduating, this will be my THIRD time apartment hunting. I look at a lot of Craigslist ads. I’m constantly struck by the difference between the best apartment rental ads and the poorest ones. Landlords don’t need to put up fancy multimedia slide shows of their place, but a few simple steps can make a real difference to prospective renters. Seeing how it’s a renter’s market in many areas of the country, an effective ad makes sure that your apartment stands out.

1. Use proper spelling & grammar

I’ve seen ads WITH ALL CAPS or wRiTteN LiKe tHiS. When I was in middle school, I went through a brief phase when I used randomly placed capital letters. Hey, I thought it was cool. Are you cringing? Because I am. Posts that are hard to read will be glanced over.

2. Don’t be too nitpicky

One ad I read had a laundry list of “thou shalt not’s” (although this is more common with renting rooms or apartment sharing) – the renter cannot have overnight guest, cannot have guests after 9pm, cannot cook too much, cannot use the laundry facilities, cannot parking the parking lot. It seems as if the renter’s sole responsibility is to sleep in the room and pay the landlord a not-so-insignificant amount of money every month! I understand such situations when the rent is drastically reduced to make up for the inconveniences, but when it’s not, rational people will pass up the ad. My thoughts are: if the landlord seem so difficult to deal with in an ad, what will he/she be like in person?

3. Provide enough information

Some of the information at a minimum should be: (1) rent, (2) security deposit, (3) hardwood or carpet? (4) fridge included? (5) laundry on premises? (6) # of parking spots and parking situation – street parking, carport parking, subterranean parking? (7) available move-in date (8) specific address (9) proximity to freeways, (10) availability of AC, (11) utilities – what will the tenant be responsible for and what is the landlord responsible for? (12) upstairs or lower unit, (13) length of lease required

Here are some information that is good to provide: (1) proximity to shops, nightlife, notable attractions (museums, zoo’s, colleges, etc.), (2) number of units in the complex, (3) cost of credit check, (4) phone number for prospective renters to call

4. Pictures!

Some apartment hunters will bypass ads without pictures. As to the number of pictures, I always like 4-5 pictures: 1 picture of the outside of the complex, 3-4 pictures of the interior (kitchen, living room, and bedroom). Be sure to take pictures when there is plenty of natural light so you can show off the unit to its best advantage.  Pictures of the floor plan are also a plus.

5. Link to address in Google Maps

I love this feature and heartily applaud any landlord who makes apartment hunting just that wee bit easier.

6. Be upfront with the monthly rent

This is a personal pet-peeve of mine (and might not extend to other renters), but I don’t want to see $1,000 as the “effective rent” when the apartment is normally $1,300 and is offering a 1-month free deal. If I expect to stay in this apartment for longer than a year, this is something I’m concerned about. Because I don’t want the second year rent to suddenly jump up from $1,300 to $1,500.

And lastly, a word on rent. If you overprice your unit, prospective renters will know. We saw one unit that was small, dark, and not well-maintained. It was 2 blocks from a bigger unit, priced $25 lower, that was bright and cheery. Anyone who is looking seriously at Apartment Dark & Dingy will probably come across Apartment Big & Bright in their search. And I can’t imagine anyone choosing the first apartment after they’ve seen what they can get with their money with the second. If you can afford it, try to price your apartment $25 to $50 below the market rate. My parents did this with a house that they are renting out (they priced at $1,750 instead of $1,800, which was what a similar house across the street wanted), and within a day they had two applications. They rented out the unit in 2 days. A good tenant is worth $600 a year.

Apartment hunters, is there anything else you really want to see in an ad? Landlords, what do you think of this list?

Copyright 2010 Apartments Rental Ads: How to write an effective ad on Craigslist is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

This guest post was written by Go Banking Rates, bringing you informative personal finance content and helpful tools, as well as the best interest rates on financial services nationwide. Follow them on Twitter at @GoBankingRates.

Living for the moment is a rule that some people love to live by. However, since the onset of the recession, many people became serial penny pinchers, determined to hold money in their bank accounts until the banks crumble with their money inside (well at least it’s insured, right?).

Despite the choice many have made to tighten their financial reins, some people are still working overtime for their guilty financial pleasures, refusing to let high expenses stop them from nurturing their favorite hobby or interest. But is this an acceptable thing to do? How can we know whether we should always penny pinch or whether it’s okay to go ahead and dive headfirst into our guilty pleasures?

Determine Whether Your Guilty Pleasure is Worth the Money

Obviously there are tons of benefits to saving money, just as many as there are downfalls to spending too much on something that doesn’t necessarily benefit you. So if you’re spending an arm and a leg on your guilty pleasure, it’s good to at some point ask yourself if it’s actually worth the money you’re paying.

For instance, if you love to purchase stamp collections because you love the way they look, you may have to ask yourself if spending $1,000 here and $5,000 there is worth it, especially if you are left trying to figure out how to pay your mortgage.

The same goes for the love you may have for fixing up cars or purchasing the latest cell phone every time one is released. Just because you see it and want it doesn’t necessarily mean you should spend your hard-earned money on it. So before you throw money away, it’s good to make sure what you buy is actually worth the money.

Turn Your Guilty Pleasure into Profit

What’s one way to determine whether your guilty pleasure is worth it? It helps to see if your hobby can offer you a profit. For instance, we all know that stamp collections can be very valuable. But if you are spending hundreds of dollars on stamps that aren’t worth much then your pleasure is not worth the money.

To make your hobby financially worth it, you could conduct plenty of research on the stamps you choose to gain knowledge of what’s valuable. That way, you would know that your stamps are actually making you a profit.

Same goes for fixing up your cars or even purchasing the latest cell phones. You could fix up your cars then enter them into car shows with cash rewards. And as you buy cell phones, you could blog about all of their elaborate upgrades and rake in money through advertisements for offering your expertise.

After you’ve collected your money, you could open one or more high interest savings accounts or looking into some investment strategies that could help you grow your money even further.

Create a Budget that Loves Your Guilty Pleasure

If you are engaging in a guilty pleasure that you can’t seem to turn into a profit. then it’s good to consider making sure that your budget accommodates your hobby. Many people find that they have drained their checking account because they spend haphazardly on what they love.

However, if you place your hobby into your budget, you could find ways to make spending work without breaking the bank. Adding your guilty pleasure to your budget could help you:

• Organize: By taking a closer look at your budget, you have the opportunity to look at how much you’re bringing in and need to spend on bills. This could help you determine just how much leeway you have to spend on your hobby.
• Make adjustments: Working on a budget helps us take a closer look at items we spend money on unnecessarily. For instance, you may have five subscriptions to magazines that you don’t read. By cutting those loose, you might be able to create space for your guilty pleasure.
• Become financially responsible: The key to good money management is learning to restrict your wild spending. By adding your hobby to your budget and allowing yourself only a certain amount to spend on it each month, you learn the value of money and what it means to be financially responsible.

There’s nothing wrong with having a guilty pleasure. For many of us, it makes us feel that we’re actually living our lives to the fullest. However, if your pleasure is causing you financial pain, it’s good to take a look at how it could be budgeted into your finances — or even turned into a profit — so that you don’t go broke having fun.

Copyright 2010 Guilty Financial Pleasure: keep your hobby on a budget and make money from it is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

In today’s brave new world of dating, mating, and personal finance, couples who are moving in together may well be considering a “dating prenup.”  What is that, you ask?  Well, I’ve never heard of the term either, until I started Googling. A prenuptial agreement is a legal document that spells out what happens to a couple’s assets and liabilities in the event of death or divorce.  A dating prenup is like a prenup for unmarried couples who move in together (and thus have none of the protection or guidelines offered to married people), providing terms and guidelines for a host of issues surrounding a breakup.

There might be some cohabitation in the not-so-far off future, and while CB and I have casually discussed the financial mechanisms of such a move, we haven’t really drilled down to the nitty-gritty.  Despite a penchant for all things personal finance, I don’t particularly want to make everything out to be so, well, contractual.  In other words, we both agree that if we make different salaries, it’s fairer to divide the rent according to percentage of total income instead of 50-50.  But we don’t (nor do we plan to – I hope) expect the one person to reimburse the other for a gallon of water that was not equally consumed.

When I typed in “moving in together finances” into Google, however, most of the websites that popped up mentioned the importance of a moving-in-together contract.  There are many names for this phenomenon: dating prenup, cohabitation contract, written agreement, pre-prenups, live-in contract, etc. I think prenups are generally a good idea (especially for community property states), but I’m surprisingly lukewarm to the prospect of drafting and signing a live-in contract with CB.

According to Kiplinger, though, I’m letting my heart rule over my head.  Kiplinger says that it’s essential to put your arrangement in writing:

This little piece of paper can help you keep your trial of domestic bliss from becoming a nightmare. In it, you should detail how much each partner will pay for rent, who will cover what household expenses, when bills are due, and other space-sharing arrangements.

The article even helpfully provides a sample cohabitation agreement.  AOL Personals shares horror stories of couples who didn’t have a cohabitation agreement and ended up fighting over a pen.  NY Post reports that more NYC couples are signing dating prenups. In addition to the more mundane financial aspects of living together, these pre-prenups can also set the terms of pet ownership / visitation after a breakup, expectations for graduate school support, even who pays for a termination of pregnancy, etc.  A recent CBS News did a segment on this trend, featuring a real life couple who has a dating prenup.

As sensible as these dating prenups seem though, I just can’t muster much enthusiasm for them.  Part of the reason is because CB and I don’t have combined finances (unless you count our joint savings account for Galapagos), and we have no plans to enter into major asset purchases before we are married.  We are both fairly financially-responsible.  We have been in a committed relationship for a long time.

Part of the reason is good old-fashioned optimist: I don’t think we will break up, though of course there are no guarantees.  Or, if we do, I harbor the hope that in the event that we break up after we move in together, we will both behave with grace, dignity, and respect for each other.  But I understand the prudence of a cohabitation agreement for couples who do have significant assets together, or if one partner would be giving up a job to move in with the other person.

My question is: Did you have dating prenup before you moved in? If so, what did you include? If not, how did you decide to forgo it?

Copyright 2010 Do You Need a Dating Prenup Before You Move In Together? is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

I am far from the suavest of sushi aficionados (try as I might, the most adventurous I get in terms of raw fish is with tuna sashimi, and I love rolls). Even at a more pedantic level of enjoyment, however, sushi is an expensive culinary habit.

Case in point: Last Saturday night CB and I went to a new sushi restaurant that had gotten rave reviews from my friends. The place did not disappoint and was entirely reasonable for a nice Saturday evening meal. Still, for two people, with no drinks, the total tax & tip came out to $50 for three specialty rolls (with all of my favorite ingredients – spicy tuna, unagi, crab, roe, avocado, cucumber, tuna, and salmon), and a bowl of green tea ice cream. The food was beautifully presented and delicious, the service was friendly, and the atmosphere cozy.

It was a wonderful dinner, and I view our $50 bill as money well spent. After all, sushi are truly works of art – it costs money to prepare the labor-intensive dishes and to purchase high-quality fish and other seafood. At some other restaurants, the cost of sushi can go as high as your wallet will expand (or is it contract?). I doubt that I will develop the sense of adventure or sophistication necessary to truly enjoy sea urchin, squid, or octopus sashimi. I do know, however, that I’ve graduated from $5 spicy tuna rolls at the mall sushi shops, and I don’t think I can go back. We’ve all heard of lifestyle inflation. This might be the very first step on my road to sushi inflation.

How often do you eat sushi? Are you willing to spend more on sushi than on other meals? What is your favorite dish?

Copyright 2010 Sushi: An Expensive Culinary Habit is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.

One of my readers, “Em,” is thinking about going back to graduate school so she can transition in a career in Human Resources.  I thought I’d open her question up to all of you.

I am in a bit of a career rut.  I received my BA in 2006, and have since been working in assistant/office manager/receptionist-type roles.  I am 26, and have been thinking it’s time to start thinking seriously about my career and the steps I need to take so that I can start down an official Career Path.  I know there are no typical, proven, Total Success Guaranteed ways to approach the elusive Career Path, that different careers have different requirements, and that people find their dream jobs in multitudes of ways.  However, I am finding myself stuck in this rut, and not sure how to move forward.

I would like to pursue a carer in Human Resources, specifically in the area of employee onboarding/training and learning and development programs.  In this job market, I’m finding that you need previous HR experience even for the most entry-level jobs in the field, and because I cannot figure out how one gains experience in a position that requires the experience to be hired (which came first, the chicken or the egg?!), I’m thinking about going back to school.

However, school costs money.  I do not want to stay at my current job long enough to take advantage of their education reimbursement program (I’d be required to stay at least another two-three years, if I even qualify for it, which I might not, since it is hard to justify how an HR program is important to my role as a receptionist in a company that doesn’t even have an actual HR department), but I have been thinking about my options, and trying to see what is worth the investment.

There are a few Human Resource Management Certification programs that I’ve been looking into, ranging in cost from $1500-$6000.  The higher cost comes with the UC Berkeley (extension) label, better classes, and a (somewhat) closer proximity to where I live (though it’s still about a half hour.  The lower cost comes with a California State school label, less interesting-sounding classes, and a location that I might not even be able to get to (I would likely be attending these classes at night after work).  The other option is a strictly online university, but I’m not sure that would carry the same weight as even a state school.

The other option that I have just started thinking about is some sort of Masters program, though I haven’t begun to research programs, schools or costs yet.  I always said I would only go back to school if it was necessary for furthering my career, and I’m starting to think that it’s time, but we’re talking about a lot of money here! Although the other side of me says “$1500?  That’s like one, nice vacation.  Or my portion of two month’s rent.  It’s not THAT much, if it means doors opening to a new career.”

How do you decide when a higher degree is a necessity for career advancement, and then how do you decide how much money is worth it to spend?

image source: studentbranding.com

Copyright 2010 Question From a Reader: Where and When to go to Graduate School? is a post from Well-Heeled Blog - Savvy Living Through Personal Finance. This feed is for non-commercial purposes only.