There’s money in trash!
If you want to earn extra income whether one-time or regularly, consider looking around your place for things you can sell. Here is what I realized. For the past year, we have had to throw regularly plastic water bottles, milk tin cans, used paper and cartons directly to our apartment’s garbage chute. It hit me hard one day when I passed by a nearby junk shop and overheard that they are buying the very stuff I am throwing away.
I have now regularly collected all I mentioned above, plus the used bottles of my colleagues, the used cans of my relatives, the scratch white paper of my friends and the old newspapers of my relatives and sell them for a sum in a junk shop. Done monthly, this has provided me with additional money for some of the household expenses. More importantly, I have cleaned my space and that of friends and relatives, and I have contributed for the recycling of said materials.
Additionally, I found out that computer stores have use for my unutilized printer, CPU, monitor and other computer equipment, and they also buy them for a discounted price. Old clothes and shoes are a finder’s keeper in garage sales. While, seldom used appliances can be sold in online stores.
Leakages and Budgeting
All of us have leakages in how we spend our money. It is very important that we identify these areas so we can either minimize or eliminate them in our system. How do you identify these leakages and transform them into savings?
First, you need to create your spending plan. Figure out your monthly net income and the areas where your money go. You may call these areas, spending areas or spending categories. Then take each area and sub-divide it into two more categories: required expenses and discretionary expenses. Required expenses need to be paid each month, such as groceries, amortization, etc. Discretionary expenses are your variable expenses, those you may control in some ways.
Second, identify how much you are actually spending on each spending category. You can get these information from receipts or listings of products and services that you paid for the previous months. Average the monthly expenses so you can get an idea of how much you can allocate for a particular category.
Third, compare your total spending with your total income and strive to reduce your expenses by spending a lot less for each category versus your average before. In this way, you either balance your spending with your income or spend less than what you earn.
So how do you identify your leakages. Most of the discretionary expenses are your leakages. Some of your required expenses will also show leakages. Here’s an example when I did this exercise:
For my transportation expenses, fuel is classified a required expense. But through time, understanding how I drive and and go around town let me understand where the leakages were. Today, I do not go above 60 kilometers per hour. I also plan my route to accomodate most errands.
For the same spending category, a discretionary type of expense is parking fees. Now, I strive to walk going to particular places, particularly if these destinations are near my office, which has free parking.
Achieve Financial Security
We live in a world of consumerism. We hardly save for the future, and we drown ourselves with debt further inhibiting our chances of saving for the future. Here are some ways to secure your future financially.
1. Kill your credit card debts: Before you can truly save for the future, you must make sure to kill your debts, credit cards in particular, as they have the highest of interest rates. Money tied with savings account will not grow much given the small interest rates from banks. But killing your debt now will put a plug on leakages or your payments to high interest rates. Focus on those with high balances and high interest rates. Alot bigger amounts, not just the minimum, on your credit card with the highest interest rate. Alot the minimum for the rest. Make sure that each month you pay all your credit cards. As soon as you pay off one credit card, transfer your payment from that card to the next one with the highest interest rate. In this way, you will be able to pay that card faster. While doing this, resist the temptation to charge payments via your credit cards. Put them in a freezer.
2. Treat your savings as an expense: As soon as you pay off all your debts, treat your savings as an expense or simply put, pay yourself first. Alot a certain percentage of your take home income as savings that will not be touch. Build at least three to six months of your disposable income and call this your emergency fund. You can put this in money market accounts or in a high-yielding savings account that can be easily withdrawn once the need arises.
3. Live below your means: Do this with proper budgeting and by focusing on necessities rather than wants. Strive to spend less than your income so you can have the money to save and to invest in the future. Pay for required things for daily living and avoid luxuries. Reasses your spending and you will find areas you can improve on, say avoiding that soda drink, which you consume weekly.
4. Make money work for you: By proper investing, you will be able to increase your wealth. A few rules to live by though. First, do not buy an investment you can not understand. Chances are you will never appreciate it and may actually lose money from it. Second, invest only excess money. This is money you saved outside of your emergency fund. Third, diversify your portofolio. Do not rely on a single investment. Diversifying reduces the risk associated with investing.
Use Tax Rebate Wisely
Many Americans are expecting or already beginning to receive a tax rebate to help and stimulate the economy. This can help many people that need assistance to fix finances. The first thing to do is to really look at your bills and your finances. It might be tempting to take a small vacation or even get a new television, video game or set of dishes. But, the key to fixing your finances is to look at the big picture.
If you are behind on your bills or have credit card debts, don’t give into the temptation to use the tax rebate on non-essential items. Go ahead and catch up the bills. If you have enough left, send even just an extra $5 payment to each of your credit cards. This can really help you work on your bills and your credit cards to fix your finances.
If you don’t have a lot of bills piling up and the credit cards are all paid, put the money in savings. This will enable you to use it later down the road if you are having finance problems. Don’t take the tax rebate money and use it on things that you absolutely don’t need.
Use Your Hobbies to Create Income Streams
Whether your goal is to pay off debt or build wealth, chances are you can use some of your interests to generate extra money. Some of the ways to make money with your hobbies are to offer lessons, blogging, selling arts and crafts or providing services.
If nothing else, monetizing your interests can offset the costs of enjoying them in the first place, leaving more money for an emergency fund or investments.
Etsy and Silkfair.com are two Ebay auction alternatives to look into if you’re crafty. Rather than looking for the “best deal”, customers are looking for beautiful handmade items and recognize fair prices.
Are you a hobby photographer? Look into selling microstock pictures. Prices are low and buyers pay no royalites, but you cna sell the same picture hundreds of times. One major player is IStockPhoto.com, which requires quality approval, but a search on microstock brokers will yield many results.
Selling services related to your hobby is another way to build wealth. For example, if you are an animal or nature lover, advertise on places like Craigslist for dog sitting or organic landscaping. Painters can translate their experience to mural painting and faux finishes for peoples homes. Musicians can give lessons. Are you great with computers? Or writing resumes? The possibilities are endless.
Blogging about your hobby can also yield small amounts of money that add up. Pay per post forums, paid blogging networks, or monetizing your own blog with adsense are all ways to make money online with writing. Sites like Ehow pay your for your “How to’s” via revenue share and Associated Content pays $3-$20 plus a page view bonus.
While you won’t “get rich” from most hobbies, you can enrich your life by incoporating them into other income streams. How does an extra $50 a month towards debt or savings while still being able to enjoy your interests sound? Priceless.
Are Quicken 2007 & Money 2007 Worth It?
USA Today’s financial markets reporter Matt Kranz today wrote about personal finance software. The question was:
Intuit (INTU) and Microsoft (MSFT) have released new versions of Quicken and Money personal finance software. Are they worth trying?
And here’s part of the answer:
Overall, personal finance software is a great idea for most investors. Many of the things that scared people off before, mainly the need to type in every transaction, is essentially gone, since both Quicken and Money can download transactions from your banks, brokerages and credit card companies. If you’re a serious control freak, you’ll want to get the top-of-the line versions of Money or Quicken, called Premium and Premier respectively. They contain all the investing features you want.
But if you’re just hoping to track your checking and savings accounts, you may consider the stripped-down versions: Quicken Basic and Money Essentials. They’re less expensive and will get the job done.
What if you already own Quicken or Money 2006? Should you upgrade to 2007? Probably not in the case of Money. Money 2007 is virtually indistinguishable from Money 2006. Quicken users, though, might consider an upgrade. Quicken 2007 finally upgrades the product’s dated look and feel. It also adds a great new “home page” that helps you examine how much money you’re likely to save in the month.
The bottom line? If you’re serious about saving money, personal finance can help you get a bird’s eye picture of all your accounts in one place and track your spending and investments. If you don’t use it already, you should give it a try.
How Not To Fix Your Finances
When trying to sort out and fix your finances or before you even get to that point one of the things you want to remember to do is: PAY YOUR TAXES. I would think that the parade of famous celebs and random rich people being hauled off to jail or sued beyond belief would teach the little guys that lesson but many still try to find ways to skip out on paying taxes.
I call this the Richard Hatch advise. Richard Hatch for those unaware was better known as “the naked fat guy” on the very first season of the reality tv show Survivor. Through sneaking, deception and outright lies he went on to win the million dollars. After that he had deals from ads to a radio show.
Hatch claimed that he thought CBS would be paying the taxes (yeah, right) but CBS says that he knew all along that he would have to pay. Considering that they have to sign waivers saying if they die CBS and Survivor can’t be sued I would think that their high paid lawyers would cover this so I believe CBS on this one.
Also considering the fact that he was on one of TV’s highest rated shows not once but twice I think he should realize that someone at the IRS knew who he was. But whatever he thought to do the fact remains he didn’t pay his taxes and at the age of 45 he was sentenced to almost 5 years in prison.
The lesson? Try NOT to do what he did. You’ll get a lot farther. Keeping the IRS happy will keep you happy in the long run when they don’t seize everything you have and lock you up.
“Baby Steps” to Financial Fitness
Thes are finance expert Dave Ramsey’s famous ‘baby steps’ for financial fitness, courtesy of the San Antonio Express-News:
Baby step 1: Start a $1,000 emergency fund.
If you don’t already have one grand on hand, save for it. That means paying yourself before you pay the bills. In fact, you should give, save and then pay the bills. Oh, and this emergency cash is for just that — emergencies only.
Baby step 2: Pay off all debt with the ‘debt snowball.’
This is probably the toughest step of the bunch. List all your debts from least to greatest. (Don’t worry about interest rates.) When you’ve eliminated the smallest debt, add its payment to what you pay on the second debt until that is paid off. Then add those two payments to what you pay on the next debt, etc.
By compounding payments, you get out of debt faster — Ramsey figures two years on average with exception of the mortgage. Naturally, don’t incur debt during this period.
Baby step 3: Three to six months of expenses in the savings.
You should be debt-free at this point (except the house), so the money you spent paying credit cards can now go to building up this emergency fund.
Ramsey figures it takes six months to save ‘Murphy repellant’ — insurance to turn any financial crisis into mere inconvenience. Ramsey suggests money market accounts; they’re accessible and usually don’t penalize for early withdrawal.
Baby step 4: Invest 15 percent of household income into Roth IRAs and pre-tax retirement.
Ramsey loves Roth IRAs and 401(k)s. No surprise, he’s a big proponent of mutual funds as long-term investments. He suggests investing 25 percent in each of these fund types: growth and income, growth, international and aggressive growth.
Baby step 5: College funding for children.
Research the true cost of higher education (tuition, room and board, etc.).
Now the hard part: Pay cash. Why? Because the average college student graduates with almost $28,000 in student loan debt, plus $6,000 in credit card debt.
To bypass loans, go with an ESA (education savings account) or education IRA funded in a growth stock mutual fund. (Again, start early.) Avoid savings bonds and pre-paid tuition. Their rate of return is too low.
Baby step 6: Pay off the home early.
Don’t fall for home equity loans or mortgage tax deductions. Instead, pay off the house pronto with a 15-year fixed mortgage, with payments no larger than a fourth of your take-home pay.
At this point, you should have paid off your debts and saved a three- to six-month emergency fund. That means the money you were paying in those can now go toward eliminating the mortgage. (This would constitute the ‘early’ part.)
Baby step 7: Build wealth and give.
‘(Wealth) makes you into more of what you are,’ Ramsey says. Jerks become bigger jerks; givers become more generous. Ramsey favors the latter, noting that giving is probably the most fun you’ll ever have with money. And if you’ve made it this far, you should have plenty to give.
Online Calculators
Figuring out how much to save for retirement (or anything else, for that matter!) can be confusing, especially when you try to calculate how much interest will add to the final amount and how much inflation might decrease the buying power of your hard-earned and saved dollars. One source of help are the online calculators that take some of the head-scratching out of the process. Try this one at Pacific Life. Hint: look at the page first, maybe print it out, because you’ll probably have to gather some data on you and your spouse (if applicable) before you can actually use the service.
Another useful tool is found at the Wachovia Bank site. This one calculates how taxes and inflation affect your savings. It even gives you a depressing graphical representation of the results and offers some starting figures for you to play with before you decide to get serious with your own money.
Finally, try out the Northwestern Mutual Financial Network’s Longevity Game (you’ll have to unblock popup control) to see how long you’re expected to live. Actually, they have a whole raft of interesting calculators that are free to use.
Your mileage may vary.
Buy QQQQ Direct
Soon investors will be able to buy shares of the Nasdaq-100 ETF (exchange tracking fund) directly from the stock market, cutting out commissions to a middle market-maker like a stock broker or mutual fund company. The Nasdaq’s chief marketing officer, John Jacobs, explains, “This is a very inexpensive, web-based program that allows investors to directly send money in and have the trust pick up as much of the expense as possible.” He further told Jen Ryan of the Dow Jones Newswire:
The program – which Jacobs hopes will be up and running in the third quarter – is intended to target small investors who don’t have a brokerage account but want to invest directly in ETFs. Investors will pay just $1 or $2 at most per trade, which is dramatically less than what most brokerages charge. The QQQQ trust will assist with the transaction costs …
Here’s how the program will be set up: Investors will send money to a “direct purchase” program, where it will accumulate. After a certain point – Nasdaq is still exploring the frequency of these transactions – the money will be directly invested in the QQQQ trust, sans broker …
If the program – which is a joint effort by Nasdaq and a partner who Jacobs declined to name – is successful, Jacobs expects it will be expanded to include Nasdaq’s BLDRS – four ETFs based on Bank of New York Co.’s (BK) index of American depositary receipts.