Week 13 How to Save Money by Eliminating 10 Things You Don't Need

How to Save Money by Eliminating 10 Things You Don't Need on Howcast

Week 12 3 money tips for every income

Financial advice should be tailored to income level, from families below the poverty line to earners in the upper 20%. These tips offer a good place to start for any household.

If you've ever read money advice that didn't seem to apply to your situation, you may have been right.
Guidance that makes sense for a middle-income household might not apply if you're under the poverty line. If your income is on the lower end, you'll have different priorities and concerns than if your W-2 has six figures before the decimal point.

So I've tailored some tips using five income brackets that correspond, roughly, with the five income quintiles defined by the latest Current Population Survey, conducted jointly by the Bureau of Labor Statistics and the Census Bureau. Each bracket represents about 20% of U.S. households. There's plenty of overlap, since tips that apply to one bracket often apply to the ones above it as well. But these bits of advice will give you some idea of what you should focus on now.

Low income: Below $20,000

The official poverty line for a family of four is just under $22,000. Even if you don't consider yourself poor, you don't have a lot of financial wiggle room at the bottom of the income ladder. So here's what's most important:

• Save $500. Forget, for now, all the advice about saving three to six months' worth of expenses. That's a worthy "someday" goal, but you just need to save a few hundred bucks to start getting ahead. Having $500 set aside can help you cover minor emergencies and avoid payday lenders and bounced-transaction fees. For more, read "Why you need $500 in the bank." (These days, you should also consider a credit union instead of a bank. The fees tend to be lower, which is important when every dollar counts.) 

• Get a break. If you earn income from a job or business, make sure you file a tax return and claim the earned income tax credit. This refundable credit, which is designed to help low- to moderate-income individuals and families, can put hundreds or even thousands of dollars in your pocket. Yet the Internal Revenue Service estimates one-fifth of taxpayers who qualify for this credit don't claim it. Another overlooked credit is the Savers Credit for low- to moderate-income workers. If you can put even a few bucks a year into a retirement account, you can get a tax credit for those contributions on top of being able to deduct them from your taxable income. 

• Avoid businesses that will rip you off. Some types of businesses will charge you outrageous amounts of money because you're poor and may not have access to mainstream credit. These include payday lenders, rent-to-own outfits and buy-here-pay-here car lots. If you want to hang on to the little money you have, you need to steer clear. For more, read "5 businesses that rip off the poor."

 Lower middle income: $20,000 to $40,000

Review the tips for those earning under $20,000, because they probably apply to you as well. Then consider the following advice to help you get by:

• Limit your overhead. If you want to have money enough to pay off debt, save for the future and still have a little fun today, it's important to limit your overhead. Keeping your "must-have" expenses -- the costs for shelter, transportation, food, insurance and minimum loan payments -- to 50% of your after-tax income isn't easy, but doing so can ensure you have money left over for other goals. For more details, read "The 50/30/20 budget fix." 

• Save for retirement. Social Security will provide a good-sized chunk of your income in retirement, because the system is set up to replace more of a lower-income worker's earnings than those of a higher-earning worker. (Someone earning $20,000 will get Social Security benefits equal to nearly 70% of his or her working income in Social Security, while someone making $40,000 will get a benefit equal to about half of pre-retirement income.) But you'll still want to put something aside to prevent a big drop in income once you quit work. Take advantage of any available workplace retirement plans. If you don't have a plan at work, open an individual retirement account at a discount brokerage or mutual fund, and set up automatic transfers to fund it. 

Pre-retirement income	Social Security replacement ratio
$20,000	69%
$30,000	59%
$40,000	54%
$50,000	51%
$60,000	46%
$70,000	42%
$80,000	39%
$90,000	36%
Source: Aon Consulting, 2008

 

• Set up savings buckets. Consider setting up separate savings accounts for irregular and nonmonthly expenses -- car repairs, holidays, vacations, property taxes, insurance payments. Online banks make this easy, since they typically don't have account minimums or monthly fees. You can set up automatic transfers so money is funneled into each account every payday. That way, the cash to cover bigger and unexpected expenses is there when you need it.

Week 11 Save Your Money, Save Your LIfe

How much money you really make

By Trent Hamm

Before you can calculate how much a job pays, you have to figure out how much it costs. Sometimes a higher salary can actually leave you with less time and money. 

One of the most painful realizations I had when I started getting my financial life in order was that I wasn't earning as much money from my job as it seemed.

My salary at the time of this realization was about $40,000 a year, so let's use that as a baseline.
Now, on the surface, that's really good money. If I worked 40 hours a week for 50 weeks a year, I would be earning $20 an hour, right?
Well, that's not entirely true.

First of all, we have taxes. Federal income taxes, state income taxes and FICA taxes. Federal taxes would eat about 11% of my paycheck, state taxes would eat about 4% or so, and FICA would eat about 2%.

Second, I had to pay for my commute. This was about 10 miles each way, and it was the primary reason I owned a vehicle. So, let's tack on top of that a monthly car payment of about $200, about $40 a month in gas, about $30 a month (prorated) in maintenance expenses, and about $40 a month in insurance, just to keep that car on the road.

I also had to wear a nicer wardrobe. I spent $200 a year to make sure I dressed appropriately for meetings, conferences, and the like -- and that's a low-end estimation.

I also ate at least two meals eaten out a week, costing $10 each. There was travel about three times a year, when many of my expenses would be challenged, meaning each of those trips set me back about $100 out of pocket.

Not only that, there were many times where I would put in extra, unbilled hours to meet a deadline. I easily averaged 50 hours a week at work.

Plus, there was the time I spent traveling -- about 50 hours spent going to places I didn't want to be per trip. And there was the time spent commuting -- about 40 minutes per day. There were also work-related meals and other activities to attend, eating an additional four hours per month.

When you start running the math on this, the equation starts to change.
After receiving my $40,000 salary, I'd pay out $6,400 in taxes each year. I'd pay out $3,720 in commuting costs. I'd pay out $200 in wardrobe costs. I'd pay out $1,000 in extra meals each year. I'd pay out $300 in extra travel expenses.

Suddenly, my $40,000 salary became $28,380.

Now, I'd work 40 hours a week, totaling 2,000 hours per year, right? On top of that, I'd add 10 hours of unbilled work a week (over 50 weeks), three hours of commuting a week (over 50 weeks), 150 extra travel hours a year, and 48 extra hours of activities a year. This would bring my total up to 2,848 hours, or an average of 57 hours a week spent devoted to my job.

My job is suddenly paying me less than $10 an hour.

Of course, there were other job benefits that had some significant value, but frankly, I wasn't actually using them. My wife and I sat down and compared the health insurance offerings at our two jobs, and her insurance was far better than mine, so we used her insurance. I had no use for my employer's life insurance option, either, and its retirement plan wasn't particularly strong. These things do have value when you're comparing jobs in this way, but only if you're using them.

Week 10 Investing Basics

Start investing with just $1 a day

 By JessReeves, InvestorPlace.com

You don't need a fortune to start investing -- or to get back in the game. These 5 steps can build confidence and help you figure out how to proceed.

You've read the stories about the dearth of "retail investors" out there as stock market volume remains thin and mutual funds keep seeing money flow out.

Many companies have also cut back on their 401k and other retirement benefits, and a number of Americans are cracking open their nest eggs and borrowing against retirement to keep afloat now.

It's tough out there. And while we all know we need to invest for retirement, it's sometimes hard to believe it's worth the trouble.

But as legend has it, the great mind of Albert Einstein believed that the most powerful force in the universe was compound interest -- the process of putting a little money away now to become a little more tomorrow, and a little more the day after that, in time growing to a very substantial sum.

If you think that retirement is out of reach or that investing is just too expensive, think again. It doesn't take a ton of seed capital to get started -- or to get back in. And the sooner you get going, the longer you have to compound your interest and supercharge your returns.

In short, it's not how much money you have now but how much you'll have with time. So get started!

Here's how you can begin building a successful retirement in five easy steps. And the first step can be as simple as socking away $1 a day.

 

Step 1: Save $1 a day for a year

If you can't do this, you're in serious trouble -- and not just as an investor or as a future retiree. While seemingly meaningless on the surface, this simple act has a philosophical value:

• It shows discipline. Making a concerted effort to save daily is a good lesson to learn, and a good thing to prove you can do.
• It's a long-term goal. Saving $1 a day is important because it proves you have the ability to keep your eyes on the prize, even if the going is slow.
• It builds confidence. This is a goal that you can easily achieve, so there's no risk of being disappointed or feeling like you're in over your head. Getting to $365 in 365 days will give you confidence to save and invest more going forward.

But don't think you have to wait a full year before you can get started. Simply do an Internet search for "no minimum broker" or "zero minimum broker" and you'll find a host of online investing services that allow you to put even small amounts of cash to work. Depending on the offers at the time and the provider, you may even get free trades -- meaning you literally have no barriers to investing even a small sum. (You might start with the offers in MSN Money's Broker Center.)
That means you can start buying stocks and funds pretty quickly. Of course, unless you want a $1 stock, you might have to wait a few weeks to save up enough money -- and if it's a stock like Apple (AAPL +0.75%, news), you'll be waiting almost two years to gather enough cash for just a single share. But the good news is that you can buy stock in as little as one-share lots once you're ready. That could mean six $60 stocks your first year or 12 $30 stocks -- it depends on your strategy. But you have plenty of investments to choose from.

 

Step 2: Identify your 'flavor' of investing

While you are gathering your dollars in your piggy bank, you should be proactive about finding your first investment.
There are a few core types of investors, and you're probably most comfortable in one of these categories. So as you put your money to work, you should explore exactly what you want to do with it -- and equally important, what your risk tolerance is.

• Capital preservation: Is avoiding losses as important to you as tapping into profits? Than you should consider boning on up investments that focus on capital preservation -- whether they be certificates of deposit or ultralow-risk investments like U.S. Treasury bonds. The tradeoff: generally lower returns.
• Income: Do you want to do more to grow your money, but in a low-risk way? Then you're probably an income investor. That means you put your money in investments like bonds or dividend stocks, not with the expectation of big jumps in the prices of the assets but to get a nice stream of income from those investments in the form of regular distributions. Income plays include dividend stocks like Procter & Gamble (PG +0.04%, news), dividend stock funds such as the SPDR S&P Dividend (SDY -0.46%, news) exchange-traded fund or bond mutual funds like the world-renowned Pimco Total Return (PTTRX +0.35%, news) fund.
• Value: Are you looking for strong investments that remain relatively stable over the long term but that might be undervalued with room to run based on their long-term potential? Then you're what we call a "value" investor who looks for bargains. This is the school of investing made famous by Warren Buffett and Benjamin Graham before him. Look for the word "value" in mutual funds or ETFs to find the ones that use this strategy.
• Growth: Are you looking for, pardon the overused marketing phrase, "the next Apple," a stock that will soar in price and deliver significant gains to your portfolio? Are you prepared to swing for the fences even if it means you may strike out? If so, you're a growth investor. Look for the word "growth" in mutual funds or ETFs that have this strategy.
• Self-starter: Do you dream of being a cook and consider an expensive kitchen gadget a good investment? Do you want to learn new skills and start a second career, and think it's worthwhile to invest in your education via seminars or part-time courses? These are unconventional forms of investing, but they're no less powerful. Tapping into your personal potential is sometimes more of a moneymaker than anything else.

Decide out what kind of investor you are as you do your research. Then, when you find a few prospective investments, you will know how much you'll need (and how long it will take to save) in order to make that first move.

Week 9 "10 BIG Money-Saving Tips Worth Almost $10K"

And you don't have to kill your social life, either

 By Nancy Zambell,

I’m not an expert here, but I do know a little bit about saving and investing. And right now, you can’t pick up a newspaper or turn on the TV without finding some money-saving tips.

The problem with most of those tips is they often require what people might consider “sacrifice,” and therefore become more difficult to sustain. For instance, I bet you’ve heard at least a hundred times to ditch your daily $4 Starbucks coffee and make your morning pick-me-up at home, or to take your lunch to work instead of eating out every day. There’s nothing wrong with those behavioral changes, but because they often are associated with socializing with your friends, folks have a difficult time sticking to them.

And, truthfully, while the savings from them do add up, there are plenty of other — and easier — changes that will put a whole lot more money in your pocket.

Here’s my top 10 tips for saving money this year:

1. Get rid of your expensive bank. Bank fees can really eat into your nest egg, but opening an account with a local bank often can save you hundreds of dollars per year — just in fees. When I moved my business account from a super-regional bank in Florida to a community bank in Tennessee, my $42-per-month maintenance fees disappeared. That adds up to $504 in savings per year!

2. For any accounts in which you keep a balance, call your credit card company and ask them for a reduction in your interest rate. A $5,000 balance at 19.9%, reduced to 9.9%, can save you approximately $500 annually.

3. Realize that no matter what your insurance agent tells you, insurance is really not an investment. For example, let’s say you determine that $200,000 of life insurance would fit your family’s needs. On average, a 20-year term policy would cost you about $20 per month, or $240 per year. On the other hand, a $200,000 whole-life policy, that pays that amount in death insurance as well as a growing cash value, would set you back about $100 per month, or $1,200 per year.

And although your cash value does grow, it generally won’t make you rich or match the amount of money you could have made had you put that extra $80 per month in a real investment. Even if your investment earns no more than the average 10% per year that the S&P 500 historically has returned, that $80 per month could expand to almost $70,000 in 20 years. But if you bought whole-life, you will have spent about $24,000 during those 20 years, and your cash value is not going to make up the difference. Lesson learned: If you need insurance, buy insurance, but don’t think of it as an investment!

4. Wade into your phone and cable TV bills and eliminate services you aren’t using. You might find you don’t really need to spend $30 per month for texting (probably not, if you’re over 40!) or Internet data when you rarely use your smartphone to surf the Web, or the 14 movie channels that you don’t even watch, or that “bundled” package that’s costing you more than the selected individual services you really use.

And don’t forget to call your providers to find out what sweet deals they are offering this month. A friend of mine squawked loud enough that her cable provider just gave her the “all football” channel for free for a year! You will be surprised by how much you can shave off your phone and cable services if you really try (or maybe pick up an extra perk, like my friend).

Week 8 Think and Grow Rich: A Black Choice

"An inspiring an powerful success guide."

ESSENCE Author and entrepreneur Dennis Kimbro combines bestselling author Napolean Hilll's law of success with his own vast knowledge of business, contemporary affairs, and the vibrant culture of Black America to teach you the secrets to success used by scores of black Americans, including: Spike Lee, Jesse Jackson, Dr. Selma Burke, Oprah Winfrey, and many others. The result is inspiring, practical, clearly written, and totally workable. Use it to unlock the treasure you have always dreamed of—the treasure that at last is within your reach. (Barnes & Noble)

Table of Contents

	Foreword	xiii
	Introduction	1
1	Inner Space: The Final Frontier	17
2	Imagination: Ideas In Action	51
3	Desire: The Starting Point of All Achievement	80
4	Faith: The Prerequisite to Power	117
5	"By All Means--Persist"	145
6	What Are You Worth?	170
7	Self-Reliance	185
8	A Pleasing Personality	211
9	Enthusiasm!	235
10	A Message on Money, or Money Talks and You Would Do Well to Listen	255
11	Three Magic Words	287
12	Outer Space: Your Great Discovery	318
	Index	353

Week 7 Financial Clutter

Financial Clutter, What To Keep And What To Get Rid Of

 

What to keep for 1 month

• ATM Printouts (When you balance your checkbook each month throw out the ATM receipts)  

What to keep for 1 year

• Paycheck Stubs (You can get rid of once you have compared to your W2 & annual social security statement)
• Utility Bills (You can throw out after one year, unless you're using these as a deduction like a home office --then you need to keep them for 3 years after you've filed that tax return)
• Cancelled Checks (Unless needed for tax purposes and then you need to keep for 3 years)
• Credit Card Receipts (Unless needed for tax purposes and then you need to keep for 3 years)
• Bank Statements (Unless needed for tax purposes and then you need to keep for 3 years)
• Quarterly Investment Statements (Hold on to until you get your annual statement) 

 

What to keep for 3 years

• Income Tax Returns (Please keep in mind that you can be audited by the IRS for no reason up to three years after you filed a tax return. If you omit 25% of your gross income that goes up to 6 years and if you don't file a tax return at all, there is no statute of limitations.)
• Medical Bills and Cancelled Insurance Policies
• Records of Selling a House (Documentation for Capital Gains Tax)
• Records of Selling a Stock (Documentation for Capital Gains Tax)
• Receipts, Cancelled Checks and other Documents that Support Income or a Deduction on your Tax Return (Keep 3 years from the date the return was filed or 2 years from the date the tax was paid -- which ever is later)
• Annual Investment Statement (Hold onto 3 years after you sell your investment.) 

What to keep for 7 years

• Records of Satisfied Loans

Keep till warranty expires or can no longer return or exchange

• Sales Receipts (Unless needed for tax purposes and then keep for 3 years)

 
  By Suze Orman

 

Week 6 Do you think money can buy happiness?

Do you think money can buy happiness?
	Money can be helpful but it can't buy happiness.
	Yeah man I just bought me some happiness the other day.
	I'm not really sure.
	Money is just an illusion to keep us under control by the government.
	I don't really care I just like to buy stuff.
pollcode.com free polls

Week 5 Your FICO Credit Score

We are 5 weeks in. Since we are actively saving, let's also take a look at our credit. 
Below is an article on how to repair your credit and improve your FICO credit score.  

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It's important to note that repairing bad credit is a bit like losing weight: It takes time and there is no quick way to fix a credit score. In fact, out of all of the ways to improve a credit score, quick-fix efforts are the most likely to backfire, so beware of any advice that claims to improve your credit score fast. The best advice for rebuilding credit is to manage it responsibly over time. If you haven't done that, then you need to repair your credit history before you see credit score improvement. The tips below will help you do that. They are divided up into categories based on the  data used to calculate your credit score.

3 Important Things You Can Do Right Now

Check Your Credit Report – Credit score repair begins with your credit report. If you haven't already, request a free copy of your credit report and check it for errors. Your credit report contains the data used to calculate your score and it may contain errors. In particular, check to make sure that there are no late payments incorrectly listed for any of your accounts and that the amounts owed for each of your open accounts is correct. If you find errors on any of your reports, dispute them with the credit bureau and reporting agency.

Setup Payment Reminders – Making your credit payments on time is one of the biggest contributing factors to your credit score. Some banks offer payment reminders through their online banking portals that can send you an email or text message reminding you when a payment is due. You could also consider enrolling in automatic payments through your credit card and loan providers to have payments automatically debited from your bank account, but this only makes the minimum payment on your credit cards and does not help instill a sense of money management.


Reduce the Amount of Debt You Owe – This is easier said than done, but reducing the amount that you owe is going to be a far more satisfying achievement than improving your credit score. The first thing you need to do is stop using your credit cards. Use your credit report to make a list of all of your accounts and then go online or check recent statements to determine how much you owe on each account and what interest rate they are charging you. Come up with a payment plan that puts most of your available budget for debt payments towards the highest interest cards first, while maintaining minimum payments on your other accounts.

More Tips on How to Fix a Credit Score & Maintain Good Credit

Payment History Tips

Contributing 35% to your score calculation, this category has the greatest effect on improving your score, but past problems like missed or late payments are not easily fixed.

• Pay your bills on time.
  Delinquent payments, even if only a few days late, and collections can have a major negative impact on your FICO score.
• If you have missed payments, get current and stay current.
  The longer you pay your bills on time after being late, the more your FICO score should increase. Older credit problems count for less, so poor credit performance won't haunt you forever. The impact of past credit problems on your FICO score fades as time passes and as recent good payment patterns show up on your credit report. And good FICO scores weigh any credit problems against the positive information that says you're managing your credit well.
• Be aware that paying off a collection account will not remove it from your credit report.
  It will stay on your report for seven years.
• If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor.
  This won't rebuild your credit score immediately, but if you can begin to manage your credit and pay on time, your score should increase over time. And seeking assistance from a credit counseling service will not hurt your FICO score.

Amounts Owed Tips

This category contributes 30% to your score's calculation and can be easier to clean up than payment history, but that requires financial discipline and understanding the tips below.

• Keep balances low on credit cards and other "revolving credit".
  High outstanding debt can affect a credit score.
• Pay off debt rather than moving it around.
  The most effective way to improve your credit score in this area is by paying down your revolving (credit cards) debt. In fact, owing the same amount but having fewer open accounts may lower your score.
• Don't close unused credit cards as a short-term strategy to raise your score.
• Don't open a number of new credit cards that you don't need, just to increase your available credit.
  This approach could backfire and actually lower your credit score.

Length of Credit History Tips

• If you have been managing credit for a short time, don't open a lot of new accounts too rapidly.
  New accounts will lower your average account age, which will have a larger effect on your score if you don't have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.

New Credit Tips

• Do your rate shopping for a given loan within a focused period of time.
  FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
• Re-establish your credit history if you have had problems.
  Opening new accounts responsibly and paying them off on time will raise your credit score in the long term.
• Note that it's OK to request and check your own credit report.
  This won't affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.

Types of Credit Use Tips

• Apply for and open new credit accounts only as needed.
  Don't open accounts just to have a better credit mix – it probably won't raise your credit score.
• Have credit cards – but manage them responsibly.
  In general, having credit cards and installment loans (and paying timely payments) will rebuild your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
• Note that closing an account doesn't make it go away.
  A closed account will still show up on your credit report, and may be considered by the score.

To summarize, "fixing" a credit score is more about fixing errors in your credit history (if they exist) and then following the guidelines above to maintain consistent, good credit history. Raising your score after a poor mark on your report or building credit for the first time will take patience and discipline.

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