Assess Your Risk Tolerance

EXCITING NEWS: I was selected to deliver a national training in San Francisco this November entitled: Personal Finance Solutions for Busy Mental Health Professionals. This 3 hour workshop includes material from my upcoming eBook. Stay tuned to get first crack at the NEW EBOOK. And it’s FREE to my readers.

“Risk comes from not knowing what you’re doing.” Warren Buffett

I’ve been investing for many many years. In my 20’s all I could think about was “the great depression” and how so many lost so much. Although I had a Bachelor of Science degree in Economics and had taken a class or 2 in the stock market, I was scared of stock investing. I was terrified of risk and I certainly didn’t know much about investing.

As I acquired some cash, I went to visit a stock broker who respected my preferences and introduced me to some bonds and bond funds. He introduced me to the dollar cost averaging  and answered my investing questions by loaning me his investing training manuals. After dipping my toe in the investing pool, learning a bit about investments, and watching my net worth grow for a while, I gained some confidence. A lifelong passion was born.

MAIN TOPIC; Risk tolerance THEN and NOW

Although my investment portfolio went up and down, I got used to the volatility. I was still afraid of “losing it all,” but learned through study, that if I diversified my assets, the ups and downs of my portfolio would even out. I didn’t know it at the time, but my RISK TOLERANCE was governing my investment decisions.

For those of you just starting out, or learning about investing, start with introspection. When your investment value goes down 10-15%, are you a nervous wreck? Does this small percent drop in your portfolio terrify you and keep you up at night? If so, you need to titrate your portfolio to honor your temperament.

WHAT THE HECK DOES THAT MEAN?

Riskier assets with more ups and downs usually offer HIGHER RETURNS.

Stock investments: Individual stocks, stock mutual funds, international stocks offer the possibility of greater returns along with more risk.

Bond investments: Individual bonds, bond funds, corporate, and government bonds offer lower returns and less volatility.

SOUNDS SIMPLE; JUST INVEST IN STOCKS, GET HIGHER RETURNS.

OR –  SCARED OF RISK? INVEST IN BONDS AND ACCEPT LOWER RETURNS.

Wait a minute, not so simple.

These investing maxims have held up over the long term IN THE PAST; but what about the last 5 years? According to Morningstar.com,  during the last 5 years, bonds outperformed stocks by a large margin.

5 YEAR RETURNS-annualized

Morningstar US Market Index-0.67%

Morningstar Core Bond Index-6.04%

Practical Application: What should I do?

Are you totally confused? To summarize, long term stocks offer higher return with more risk; bonds have lower returns and lower risk. But in the past 5 years, stocks had high volatility and low returns and bonds outperformed stocks by a huge margin.

Welcome: DIVERSIFICATION

Those rules of risk and return have held true in the past over the long term, > 10 years.

 NO ONE KNOWS WHAT TYPE OF RETURNS AND VOLATILITY THE MARKETS HOLD IN THE FUTURE.

Protect your investments by spreading around the risk.

During the past 5 years, if your investment portfolio looked like this:

50% STOCKS

50% BONDS

Your annualized return would have been 3.36% with moderated volatility.

The lesson is to choose investment funds in a variety of asset classes. The ups and downs will balance out and moderate the returns and risks.

Conventional wisdom recommends a greater percent of your investment in stocks if you are younger and can tolerate more risk. If you are older and/or more risk averse, raise the percent of bond assets.

Continue reading this series and you will learn how I invest our family assets.

BEFORE YOU INVEST YOU MUST READ 10 STEPS YOU MUST TAKE BEFORE BEGINNING AN INVESTING PROGRAM.

Caveat: This article is for information purposes only and may not be appropriate for your individual situation.

ACTION STEP:

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans.

Take a RISK TOLERANCE QUIZ or 2 and jot down whether to weight your portfolio more toward stocks or bonds.

MSN Money Risk Quiz 

 Risk Tolerance Quiz from Rutgers University site by 2 finance professors (Source: Grable, J. E., & Lytton, R. H. (1999). Financial risk tolerance revisited: The development of a risk assessment instrument. Financial Services Review, 8, 163-181.)

image credit; purplemattfish

RECENT PERSONAL FINANCE CARNIVALS & Link Round up

I am honored to have my work showcased at these sites recently. Why not stop by & check out the fine articles?  

 How to Design a Budget with Room for the Fun Stuff was selected for a link round up at KNS Financial

Carnival of Money Stories at Eventual Millionaire published No Brainer Money Management for College Students

Carnival of Wealth at Personal Dividends posted Follow these Instructions and Get Wealthy

YAKEZIE PERSONAL FINANCE BLOGS

After every article for the next several weeks, you will be introduced to several Personal Finance web sites in the Yakezie network. Each one has their own unique voice and style. The consistency in all is their desire to help others. Consider visiting a few each day!

My Personal Finance Journey
Narrow Bridge
Not Made of Money
One Money Design
Out of Debt Again
Parenting Family Money
Peak Personal Finance
Personal Finance by the Book

EXCITING NEWS: I was selected to deliver a national training in San Francisco this November entitled: Personal Finance Solutions for Busy Mental Health Professionals. This 3 hour workshop includes material from my upcoming eBook. Stay tuned to get first crack at the NEW EBOOK. And it’s FREE to my readers.

“Seek the lofty by reading, hearing and seeing great work at some moment every day.”
Thornton Wilder

Thornton Wilder offers some provocative advice. Are link posts in alignment with Wilder’s thinking or is this a stretch?

MAIN TOPIC: Help me out, please

I want your advice.

Yes or no, do you read link posts and find them useful or not?

Here is what I’ve been reading this week-end. There’s so much worthy info in the blogosphere, what do you think?

Would you prefer a typical article or do you enjoy the diversity of a link post?

How to Budget in Less than 20 Minutes a Week at Moolanomy  

How many of you earn over $100,000/year  It’s all about the comments! I Will Teach you to be Rich

Spending too much Money and Course Correcting at Financial Samurai

10 Money Lessons every College Student & Parent should Know at PT Money

Blogging Essentials at Free from Broke    

How to Invest in Vanguard Funds using ETFs and Save Money while you’re at it at Invest it Wisely

Financial Automation at Dividend Monk

Gather Your Data: Debt and Net Worth at Eventual Millionaire Millionaire

Making Money Challenge at Aspiring Millionaire

Are Gen Yers Different? Do I Follow the Stereotype? at My Journey to Millions

ACTION STEP:

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans.

Spend a few minutes reading something which will grow your wealth.

 image credit: Rachel Sian

RECENT PERSONAL FINANCE CARNIVALS & LINK ROUND  UPS

I am honored to have my work showcased at these sites recently. Why not stop by and check out the fine articles? 

The Yakezie Carnival at Aspiring Millionaire presented Reduce Money Stress; Get Rid of Dysfunctional Money Behaviors

Beating the Index published How to Design a Budget with Room for the Fun Stuff

 YAKEZIE PERSONAL FINANCE BLOGS

After every article for the next several weeks, you will be introduced to several Personal Finance web sites in the Yakezie network. Each one has their own unique voice and style. The consistency in all is their desire to help others. Consider visiting a few each day!

Personal Finance Journey
Personal Finance Student
PF Firewall
Planting Dollars
Punch Debt in the Face
Rainy-Day Saver
Redeeming Riches
Retirement Investing Today

Money Management for the OVERWHELMED

EXCITING NEWS: I was selected to deliver a national training in San Francisco this November entitled: Personal Finance Solutions for Busy Mental Health Professionals. This 3 hour workshop includes material from my upcoming eBook. Stay tuned to get first crack at the NEW EBOOK. And it’s FREE to my readers. 

“The greatest weapon against stress is our ability to choose one thought over another.”  William James 

Stress and adversity hit us all. What defines a person of strength is how she/he handles the challenges. Follow William James’ advice, choose calm thoughts, and tackle one task at a time. 

Be calm & hang on to your sense of humor.

MAIN TOPIC: THINGS AREN’T GOING AS PLANNED

Have you ever felt like the s—t is hitting the fan? At every corner there is a new problem or difficulty to contend with? All of your plans and expectations are in the toilet!

Welcome to my world. There are a lot of stressors in play now-not really financial – but other things going wrong ALL AT ONCE. Unfortunately, when things go wrong, we still need to go on living and keep up with our responsibilities, especially our financial ones. What happens if in the midst of chaos, you let your finances go on the back burner? …….TROUBLE FOLLOWS….   Fees, interest, and more expenses make things WORSE. 

This article is for those times when EVERYTHING SEEMS TOO MUCH. When your mind is consumed with lots of other things, do the bare minimum. Keep focused, don’t freak out, and only do what’s necessary.
 

PRACTICAL APPLICATION: READ THIS IN TIMES OF STRESS & CRISIS

Be in the present. I know your mind is going in all different directions, but you can’t concentrate with too much stimuli. Deal with the most important task first. 

Take a deep breath. No, really, do it. Now, take another one. 

During times of stress, your goal is this; do only these 4 money tasks. 

1. Pay all bills on time.
2. Continue with debt repayments, pay more than the minimum.
3. Continue to keep track of your money in your pocket and in your accounts.
4. Maintain adequate balances to avoid fees in your accounts.

THAT’S IT. NOTHING MORE. Or maybe you could smile and think about something funny, like penguins. 

When things get crazy, slow down and SIMPLIFY. But don’t forget basic money management. If you do, MORE STRESS WILL FOLLOW. 

Read more about this topic at Funny about Money in Getting over it, Strategies to Conquer Stress and Money. 

Add to the conversation. How do you deal with stressful and overwhelming times? What are the tricks that work for you? 

 ACTION STEP:

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans. 

Take a moment to slow down and follow the 4 steps.  

BarbaraFriedbergPersonalFinance Around Web 

I am honored to have my work showcased at these sites recently. Why not stop by the CARNIVALS and round ups to check out the fine articles?   

Carnival of Personal Finance at Budgeting in the Fun Stuff published No Brainer Money Management for College Students  

KNS Financial  referenced IF you Need Extra Money; Do not do this, on his site last week. 

Dividend Monk and Invest it Wisely both included  The Best of BarbaraFriedbergPersonalFinance; 6 Month Anniversary Edition in their round ups this week. 

YAKEZIE PERSONAL FINANCE BLOGS 

After every article for the next several weeks, you will be introduced to several Personal Finance web sites in the Yakezie network. Each one has their own unique voice and style. The consistency in all is their desire to help others. Consider visiting a few each day! 

Suburban Dollar
Sustainable Life Blog
Sweating the Big Stuff
The Amateur Financier
The Centsible Life
The Consumer Boomer 

I Feel Lucky; Gambling as a Road to Wealth

EXCITING NEWS: I was selected to deliver a national training in San Francisco this November entitled: Personal Finance Solutions for Busy Mental Health Professionals. This 3 hour workshop includes material from my upcoming eBook about Investing. Stay tuned to get first crack at the NEW EBOOK; and it’s FREE to my readers.

This article is the 4^th  in a series relating poor money behaviors with stress. The topics are inspired by an article entitled Emotions, Money, & Financial Stress by Nancy Losinno, published at the US Department of Energy, Brookhaven National Laboratory website.

Why not read the whole series?

Part 1: GO SHOPPING to solve your problems?

Part 2: Overcome a Passion for Procrastination (in dealing with financial matters)

Part 3: Money & Relationships-Make it Work!

“Here’s something to think about: How come you never see a headline like ‘Psychic Wins Lottery’?” Jay Leno

 Is this an indictment on psychics or the lottery? I’m not certain, but either way winning the lottery is highly unlikely.

MAIN TOPIC: Can you Believe this Guy?

Last week a well dressed business man pulled up a chair, laid down his laptop, and proceeded to the counter to pick up his coffee. As he walked into the shop, I marveled once again at the number of virtual office workers who congregate at the coffee shop.

 Wow, was I surprised when the man laid out his “work.” He had about 10 lottery tickets which he began scraping with a small tool. This time I forced myself to KEEP MY MOUTH SHUT! 

 Here’s what went through my mind:

 “Oh my G-d. Doesn’t this guy know that he is flushing his money down the toilet? Didn’t anyone tell him the odds of winning anything significant is at least 1 in a million? He should take the amount he regularly wastes on the lottery and put it in a broad based index mutual fund like the Vanguard Total World Stock Index! ……… I really want to talk to him, but I know it is none of my business.”

This is one of my biggest financial pet peeves; trying to WIN YOUR WAY TO WEALTH. Unfortunately, this stranger is not the only one I know with this mindset. Several family members share this distorted money-making attitude. It’s the demonstration of trying to GET RICH QUICK. It is very very unlikely! The lottery ticket buyers are frequently those individuals who carry large credit card balances, and collect the latest gadgets (even when they can’t afford them).

 These individuals are missing a key SUCCESS STRATEGY: the ability to DELAY GRATIFICATION.

 PRACTICAL APPLICATION: Get Rid of Toxic Thinking

Any sort of gambling will not lead to wealth; not lotteries, black jack, roulette, poker etc. The odds are IN FAVOR OF THE HOUSE.

If you even consider gambling or playing the lottery in the hopes of “STRIKING IT RICH,” ADJUST YOUR THINKING NOW.

 As Losinno said, “The reality is that most of us will have to work until we get to retire, and only a tiny percentage of people ever win lotteries.  It’s far better to use your wits to plan soundly towards making your retirement dream comfortable.  You’ll probably come out ahead anyway, by being a tortoise rather than the hare, since most Lotto winners have lost their winnings within the first five years.” 

Old thinking: Buy lottery tickets to get rich!

New thinking: There is no such thing as a free ticket to wealth. I have to plan, save, and invest in order to gain wealth. It’s not easy, but if I take it step-by-step, it’s possible. Delaying Gratification leads to financial success.

 ACTION STEPS:

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans.

1. Go to the human resources (HR) office at work to set up an automatic withdrawal from your paycheck into a savings account. If it’s taken out immediately, you will not miss the cash.
2. While you are at the HR office inquire about a savings plan &/or 401(K). Don’t get scared if you don’t understand the program, ask the human resources staff to help you. It’s their job!
3. Pick up my RSS feed (the big orange striped button on the top right) and read BarbaraFriedbergPersonalFinance regularly to learn how to achieve wealth.

RECENT PERSONAL FINANCE CARNIVALS

I am honored to have my work showcased at these sites recently. Why not stop by the CARNIVALS and check out the fine articles?  

The Carnival of Personal Finance at Miss Thrifty featured my article, 3 Amazing Career Tips

The Carnival of Money Stories 2 at Simply Forties ran How Daniel Makes Extra Money and you can too.

Grab a drink, a snack, and relax by the pool; Check out these excerpts of my favorites reads from around the blogosphere, then stop by the websites to get the full articles!

 Mark Riddix at MoneyCrashers writes about Strategies for Earning Passive Income 

 ”One of the easiest ways to generate passive income is by investing in high yielding dividend paying stocks. You can buy high yielding stocks like Verizon or AT&T which are currently paying almost 7% in dividends. Real estate investment trusts (REIT) are also great income producing investments. REIT’s are required by law to pay out 90% of their earnings back to shareholders…..” 

Mysti at Budgeting in the Fund Stuff wrote We Decided to Use the Emergency Fund to Pay off Debt 

“As I mentioned about a week ago, Mr. BFS and I paid off his car.  Yay!  Well, we made the last payment of $4600 by using our emergency fund.  In fact, the entire last $7500 came from that account.  I’ve had a couple of people seriously wonder about our mental health since we’ve also had to raid our cash for dental expenses, vet bills, a major vacation, and grad school payments.  This means we went from having more than $20,000 in cash to about $4500 in cash in less than 2 months…..” 

Smart on Money wrote a wise post entitled, When you Make Financial Mistakes, don’t allow them to Snowball.   

“It’s fine to make mistakes – we all do it.  What sets the successful apart from those who can’t seem to find their way out of debt is that they learn from their mistakes, and they move on…”

Jaime at Eventual Millionaire wrote You are Not the Numbers. 

“Whether you like them or not, the numbers show reality. They exemplify what is important to you. You might say being home with your children is the most important thing to you, but unless you are spending money consciously then the numbers don’t lie…….” 

The Ultimate Money Blog wrote about how to Make Money Online; These are Sites I Use. 

“Expo TV has been a HUGE source of my internet income. Basically you review a product on video and upload it to the site. I have made more money than I ever thought possible from this one site. I highly recommend it…..”  

Not Made of Money presents some important lessons in 10 Steps for Keeping your Personal finances Organized

“Use accounting software.
There are a number of companies that have created software specifically for the purpose of helping individuals to manage their finances. Accounting software can help you track your spending over time and to help you successfully maintain a budget. You also don’t have to worry about missing bill payments again, because most accounting programs will allow you to set up reminders…..” 

Jason at LiveRealNow writes about something we all can realate to: OVERSCHEDULED.  

“Everybody takes on too much at times.  How do you avoid over-committing? Learn to say no. It is okay to refuse to take on more projects.   You probably aren’t the first person to turn down the project and you probably won’t be the last.  Don’t assume it’s your responsibility.  It is fine to leave it for someone else….” 

Mike at The Dividend Guy Blog discusses Dividend Investing with Less than $1000 . 

“It is true that $1,000 is too small of an amount to start investing in the stock market…unless you consider ETFs! Exchange Traded Funds have been one of the most discussed investment products in the recent years….”    

Heather at Wild West Adventure Writes Ditching Plan B.   

“I’m pondering something Tyler Tervooren listed on his “5 Pillars of Awesome Risk Taking” over at the Advanced Riskology blog: “throw away Plan B.”  The idea being that we all know deep in our infinitely wise and visceral hearts exactly what it is that makes us burn with energy and desire, and we should do whatever it takes to achieve that Plan A, because, as Tyler puts it, “If you know deep down what you want (and I think everyone does, but most are afraid to allow themselves to believe it) then you should avoid having a Plan B at all cost. If you already have one, you should do everything within your power to dismantle it. Plan B is a major distraction to Plan A….”    

Mrs. Accountability at Out of Debt Again wrote, Did I get a New Washing Machine or Not?  

“Mr. A and I were having a hard time forking out $400 or more on a washing machine which was working, aside from having a small tub, and oh, that pesky stopping mid-cycle problem which had escalated….”

Shawn at Watson Inc. had a guest post on his site entitled, Hey Broke People, Stop Overpaying for College. 

“I need only point out the handful of people who “made it big”, whether we consider financial, intellectual, or public merit, who did not complete a degree at an expensive, private university. Bill Gates: Harvard dropout. Warren Buffett: Started out at the more prestigious University of Pennsylvania, but transferred to the University of Nebraska-Lincoln after being dissatisfied with the quality of education at his first school….”   

Geoff at Car Negotiation Coach sponsored a guest post by Wealth Informatics called Find the Best Car Rental Price.

“A rental car can be a big chunk of vacation expenses. If you add in all the state & local taxes, airport fees, facility use fees, underage fees, insurance, additional driver fee, refueling fees… it could get very expensive, very easily. But if you spend a little time you can save a lot of money and get the best rental car deal…”

Neal at Wealth Pilgrim lists 19 Great Jobs without a College Degree and How to get them Fast .

“Going to a trade school instead might be a brilliant move.  I read recently that only 1 in 4 college graduates find jobs. On top of that, according to the U.S. Bureau of Labor Statistics, 8 of the 10 fastest growing jobs don’t require college degrees….”  

Kevin at Invest It Wisely writes, What is It All About?  

“In life, we have three main resources at our disposal: our health, our mind, and our time. We are not equal in our capacities for health and mind, but we all have the opportunity to make the best with what we have, and increase our life expectation. …”

My Financial Objectives writes I Hate  Overdraft Fees. 

“Overdraft Protection.  Do I use it? No.  Do I wish I had it? No.  Do I ever think I will use is? No.  Should you use it? That depends on you. Quite simply, I feel that overdraft protection is not necessary at all for someone like me. …”  

Craig Ford writes a thought provoking article for Wise Bread called, 3 Reasons Not to Invest Now

“A common piece of investing advice (which is generally true) is that the best time to start investing is now. But we must also remember that investing requires a personalized plan….”

Mrs. Money from The Ultimate Money Blog asks the timeless question, What are Necessities?

“I was thinking the other day about what would happen if I lost my job.  If I lost my job, both Mr. Money and I would lose our health insurance, matching 401k contributions, and about 1/3 of our total income.  We’d have to make some cuts to our lifestyle to be able to make it work….” 

RECENT PERSONAL FINANCE CARNIVALS

I am honored to have my work showcased at these sites recently. Why not stop by the CARNIVALS and check out the fine articles?  

Carnival of Financial Planning at The Financial Blogger  featured, Here is an Investment Guaranteed to Keep up with Inflation. 

Carnival of Money Stories at Money Beagle 

Yakezie Carnival Link Round up at Not Made of Money

Yakezie Alexa Challenge Round up at Out of Debt Again 

Image credit: Visiteffingham

Summer’s a time when you can kick back, relax and read a bit more. In that vein, I’d like to recommend some enjoyable and informative articles I’ve come across recently. Get a taste here, and stop by the authors’ sites for the full versions.

Could the Free Market have Ended Racism?

Let me state, I am not a fan of racism (As a matter of fact, some might call me a “liberal.”)! I don’t think the free market is enough to end racism but read on to hear a fascinating discussion at The Amateur Financier:

“ ‘The free market, as usual, will address the problem.  It punishes racists.  A business that doesn’t hire blacks will lose customers and good employees.  It will atrophy while its more inclusive competitors thrive.’ (John) Stossel raises an interesting point: could the free market have ended discrimination without government intervention?  Or were the government actions like the Civil Rights Act and its prohibitions on employment discrimination a needed remedy to the segregation era?”

2010 Tax Brackets; Which Income Tax Bracket am I in?

No one is enthusiastic about paying taxes, that being said…. the more you understand about the system, the more likely it is that you will KEEP MORE OF YOUR CASH! Read on about this important issue at The Oblivious Investor:

“The Federal income tax is referred to as a “progressive tax.” Of course, it’s not progressive in the same way that a social movement could be said to be progressive. What the term means in this case is that, as your taxable income increases, so does the rate at which you are taxed. People will often make statements such as “I’m in the 25% tax bracket.” For example, as you can see in the table below, a single person with a taxable income of $40,000 would be in the 25% tax bracket. People frequently misunderstand this to mean that all of the person’s income is taxed at a rate of 25%. In reality, the person’s overall tax rate will be much lower.”

The TAO of the Intellect

Loved the title, and the content gets you thinking… just not too much! Read more at Early Retirement Extreme:

“Another very human trait is to weigh recent information more than historical information or worse, weigh it higher than  “what is not seen”. The latter causes an enormous amount of confusion. One might almost say that the entire field of economics is dedicated to solve this problem (the broken window fallacy), at least after a couple of beers.”

Six Tips from Yorkshire’s Top Thriftiest Grannies

Who wouldn’t want to read this post? The grannies have the best tips; here’s a sneak peek, read more at Miss Thrifty:

“TOP TIP 4 – Pack junk mail into the empty cardboard toilet roll tubes and use them as firelighters.”

Good Debt vs. Bad Debt 

I agree with MOST of the content here… but read on and see what YOU think. Young and Thrifty has a great writing style, enjoy….. 

“Yes.. I mentioned the “D” word. Debt. Just letting that word roll off your tongue makes you feel like you have halitosis. Well, get that tongue scraper and Listerine out, because as surprising(and somewhat crazy) as this may sound, there is such thing good debt AND bad debt.”

Crank up your Savings Goals at Smarty Pig

Right now, get a (relatively) high yield at this unique goal-oriented savings site as discussed at Free From Broke.

“Whether you want to save up $500 for back to school shopping, or $5,000 for a family vacation, it is possible to use SmartyPig to reach that goal.  The concept is fairly straightforward, and works simply.”

Could you Give it all Away?

The uber-wealthy Bill Gates and Warren Buffett are doing just that? Join the discussion at Beating Broke:

“At the real bottom of this is a more important question.  Why do we build wealth?  What purpose do we give our lives that we strive to attain wealth.  In Warren Buffetts case, I think you could argue that he has always seen it as a challenge.”

Buying Blogs, Selling Blogs: How I Built my Blogging Business

Sam at the Financial Samurai is somewhat of a “rock star” in the personal finance blogging world as founder of the Yakezie Network. This guest post on his site is a real peak inside the “business of blogging.”

“This is a guest post written by Mike, a young financial planner / web entrepreneur who is pursuing his dream of running his online business. You can follow his progress at The Financial Blogger and read his other financial blogs at Green Panda Treehouse and Intelligent Speculator. 3 years ago, I was told by many bloggers: “You will never make money blogging. And if you do, $200/month will be your highest peak ever”. Three year ago, The Financial Blogger was averaging 500 visits per month and I was ecstatic when I made my first deal of $10 for a link. Three years later, I now run three financial websites, bought 2 of them and flipped a blog within a year.”

My Teen-age Son, the Cell Phone, & a Bill for $1,055.20

Len Penzo dot com is one of the most hilarious personal finance writers around. He DOES NOT DISAPPOINT with this uproarious post about his son’s adventures with texting & a new cell phone:

 ”I can’t remember the exact day he first requested his own cell phone, but I am quite certain the first letters he learned in school weren’t A-B-C.  They were A-T-(T). When Matthew turned 12 last year, we decided it was finally time to grant his wish.   The only condition was that he had to pay us $25 per month to maintain his account.  Knowing that he could easily earn $40 per month by simply mowing the lawn and doing chores around the house, Matthew readily agreed – and so we got him his phone.”

CARNIVAL of Money Stories 2 featured my article this week; Reduce Stress Get Rid of Dysfunctional Money Behaviors-Part 2. Read my article as well as other money stories at this informative round up.

“Overcome a Passion for Procrastination (in dealing with financial matters). ‘Procrastination is like a credit card: it’s a lot of fun until you get the bill.’ Christopher Parker

This young actor hit the nail on the head! Avoiding and procrastinating seem fine, for a while. Later- the price you pay for procrastination is quite HIGH. Charge away with the credit card; if you don’t have the cash to pay it off every month, you are walking on a treadmill of pain.”

ACTION STEP:

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans.

Today, and every day, LEARN SOMETHING NEW!

What do you think about this summer reading? Agree, disagree, join the discussion……leave a comment.

“When I chased after money, I never had enough. When I got my life on purpose and focused on giving of myself and everything that arrived into my life, then I was prosperous.”
Wayne Dyer

 Ironic isn’t it that a personal finance blog writes so much about non-financial matters. If one focuses on passion and service in life, practices discipline in all things, then money becomes less of a target and life becomes richer.

 MAIN TOPIC: Behavior is Everything

This article is the first in a series relating poor money behaviors with stress.

What you do and how you act determines the outcome of your life. We have a visiting college student, Juan, in our home for the summer. He is a bright, talented, and accomplished young man who has developed some unhelpful habits. Like many of us, he procrastinates which leads to distress. He has difficulty discerning the important from the unimportant. On top of that, this young man is graduating college soon and is defining his next career step. Recently, Juan realized that he is an adult and must behave as one. No more partying and spending with abandon, with no regard for the consequences.

Wow, it’s a lot for a young person today to contend with. Juan isn’t so different than many adults; he has difficulty managing his finances and paying his bills. We are attempting to help him focus on his future and learn the link between HEALTHY BEHAVIORS AND LIFE SUCCESS.

If I said it once, I said it 1000 times to my own daughter; your behavior defines who you are! It’s not what you say, but what you do that matters! This article will steal borrow some concepts from an article I came across called, “Emotions, Money & Financial Stress.”

Feel free to pass along these ideas to anyone who is looking to clean up their financial lives.

PRACTICAL APPLICATION: 1st Dysfunctional Money Behavior and How to Combat it

Depression, stress, and anxiety are all byproducts of money stress. Current “happiness” research shows that those individuals who experience more control over their lives are happier. Learn to recognize unhealthy money behaviors, control them, and reduce stress.

 PROBLEM 1: GO SHOPPING to solve your problems.

 In the same way that overeaters use food to solve emotional issues, over-shoppers go to the mall to “feel better.” In both cases, the relief is short lived, and creates more long lasting problems. If you use food to fill the emotional hole, you get fat and unhealthy. Use shopping the same way and you get debt, bills, & bad credit. Not to mention a home filled with stuff you don’t need!

SOLUTION:

1. Next time you feel the urge for emotional shopping-STOP.
2. Slow down, take a deep breath, and ask yourself what the real problem is.
3. Really examine what is bothering you, and then determine whether the BEST solution to this problem is shopping.
4. Is the solution to your stress and problems a trip to the mall? Will shopping offer a lasting answer to the problem?
5. If shopping will not provide a long term answer to the stress, then do not shop. First, accept the fact that life has its stressors and all successful individuals have learned to TOLERATE A CERTAIN DEGREE OF DISCOMFORT. Do not feel like it is imperative to immediately eliminate the anxiety.
6. Next, take a step to relax, take a walk, write in a journal, or talk to a friend. Find an activity that does not involve spending, to practice for a bit. Realize that the stress will not continue forever.
7. Finally, brainstorm possible solutions to the problem/stressor. Do it alone or with a friend. Write down any possible resolution you can think of.
8. Take a break and do nothing for a bit. Let your mind clear.
9. Come back later and plan your next step.

Work on this dysfunctional money behavior first. Recognize when ”the urge to splurge” happens and follow the steps to develop a healthy alternative.

 Stay tuned for part 2: Passion for Procrastination, in Dealing with Financial Matters 

ACTION STEPS:

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans.

• When the urge to spend, as a problem solving solution arises: DO NOT GIVE IN.
•  Make a list of relaxing activities.
•  Post your personal RELAXING ACTIVITIES prominently.
•  Practice one of these behaviors instead of shopping.

 RECENT FINDS IN THE PERSONAL FINANCE ARENA; No spending required!

CARNIVAL: Please visit the Carnival of Personal Finance at Funny About Money, where I’m featured, for more personal finance articles.

Check out the FREE sites I’ve been visiting recently, and enjoy:

Watson, Inc.-Free giveaway edition

Monevator

Wealth Pilgrim

Little House in the Valley  

Frugal Confessions

The Saved Quarter

 Len Penzo dot Com

My Journey to Millions

Digging Out from our Mess

Please check out the PERSONAL FINANCE CARNIVAL list on the right. Every week I participate in these wonderful events jam packed with entertaining and informative information about money and life. Click on any title and enjoy a personal finance festival!

COMING TOMORROW: 

MAKE MORE MONEY, HAVE MORE TIME, & FEEL AMAZING: Part 2

SHOW ME THE MONEY!

DON’T MISS IT!

Categories: values, personal finance, saving, leisure

“A man is rich in proportion to the number of things he can afford to let alone.”
Henry David Thoreau

Only you can decide what you want to focus on in life, it is up to you to choose whether to live to “keep up with the Jone’s” or to determine your own priorities. Thoreau was a master at living life according to his own rules. If you set the rules for your life, including what you want, how to spend your time, how you spend your money; then you define your own happiness.

MAIN TOPIC

Have you ever asked someone about their favorite TV shows and met with the haughty response; “Oh…..I don’t watch television, I read?” Or maybe you are that person who believes that TV is evil and rots the brain. Well…. I’ll let you in on a little secret; I used to be that person!

In my family, TV was looked at as a “time waster” and that “reading” was of a higher order. But, I’m here to tell you, that I have been converted into a loyal and vocal TV watcher; HGTV, sports, CNN, CNBC, Law and Order, The Today Show, Medium, The Good Wife, Two and a Half Men, you name it, I watch it! First, I’ll tell you how and why. Next, you’ll learn what this has to do with personal finance!

When my husband came to pick me up for our 1st date, he immediately looked around my apartment for the television. He was dumbstruck when, after turning on the big hand-me-down console TV, that it only got 1 or 2 channels, and not too clearly at that! You see, he was from the complete opposite camp of TV watching. While he was growing up, the television was ALWAYS ON. In the evenings after dinner, the only activity ever, was TV. So you see, upon realizing I embraced the opposing television viewpoint, he was shocked and dismayed! In fact, from what I know about him today, I’m surprised he remained in our relationship!

So began my conversion, first with the sitcoms and dramas of the day. In the evenings, after dinner, if we stayed in, we watched TV! And, lo and behold, I kind of liked it. But let me digress, my husband is not a slacker, in fact, when we met, he had a Master’s degree in psychology and had a high paying job in a hospital setting. Little by little, over time, I changed and became a big fan of TV. And along with my conversion, my life satisfaction and productivity increased.

Now, don’t get me wrong, I’m not saying that TV caused my happiness and productivity to increase, but it is an interesting correlation!        

PRACTICAL APPLICATION

So, how can television save you money? Let’s list the benefits and rewards of watching TV:

ü  Relaxation-TV Helps you relax and everyone needs relaxation to recharge their resources.

ü  Entertainment-Distracts the mind and relieves the pressures of the day. Think Law and Order, CSI, Medium, The Good Wife, Two and a Half Men, Wheel of Fortune, NCIS, Bones, Movies galore and more.

ü  Educational-Learn Spanish, history, business, sports, decorating, crafts, fishing, current events, science, reading, and the alphabet (for kids).

ü  Health and fitness-Exercise and wellness channels offer everything from Pilates and yoga to hip hop dancing, healthy cooking, and nutrition.

ü  Sports and Recreation-Baseball, basketball, tennis, soccer, golf, fishing, sports tips and more.

ü  Total Trash-Reality shows and other trashy shows can make you feel lots better about yourself by watching people crazier and worse off than you are.

Consider the price and the value of a satellite, FIOS, or cable subscription. How much is a basic cable or satellite subscription/month today? Next, do what you can to lower that price. Be sure to look for a deal, i.e. bundling with internet and/or phone; or look for special promotions. Don’t forget to call your current cable provider to ask for a lower rate.

If you use television to meet some of your fitness, educational, entertainment, and relaxation expenses, TELEVISION IS A HUGE BARGAIN. When you are trying to get more pleasure and life satisfaction from your money, don’t overlook television!

ACTION STEPS:

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance thoughts, activities, and plans.

Jot down:

1. The benefits you can get from television in a month

2. An approximate amount of time per month you watch TV

3. What you pay per month for cable

4. Now, Divide $ cost per month/hours watched=Cost per hour of TV watching

5. Look at the cost per hour for all of the enjoyment you get from television!

Write and tell me your thoughts on television. Do you belong to the TV rots your brain camp, the opposite end, or somewhere in between?

Categories: Taxes, Carnival

A carnival of tax tips sounds like an oxymoron!  Believe it or not, even tax tips can be fun!

If you want the latest TAX info in one place visit the  DON’TMESSWITHTAXES site!

Listed FIRST is my “feel good” article and it is  a good motivator for getting your taxes done. 

Other posts include:

13 deductions you don’t want to miss

Evaluating a Roth IRA

How to File Your Taxes for Free

16 Ways Not to Blow your Tax Refund

and many more useful posts!

If you’ve never been to a PERSONAL FINANCE carnival before, now is a great time to visit and brush up on your tax tips.