FRIDAY THE 13th

Are You Superstitions?

“Security is mostly a superstition. It does not exist in nature, nor do the children of men as a whole experience it. Avoiding danger is no safer in the long run than outright exposure. Life is either a daring adventure, or nothing.” Helen Keller

Wealth in money and life requires risk. Like it or not, there is no substitute for jumping in the ring. In my youth, I had lots of fears. I didn’t think I was capable and thus avoided trying. In high school, I was afraid to try out for the tennis team, even though I was a “good enough” player. As an Economics major in college, I was afraid to strive for a professional job, because I didn’t think I’d measure up. I went for a clerical job upon graduation instead. Fortutnately, I’ve come a long way since those fearful days of my youth and gone on to confront my insecurities whenever they crop up.

That doesn’t mean I’m without some superstitious behavior. I avoid getting too excited about successes, for fear they will fade. I wear my NY Giants sweatshirt during a game, to help the team win. When playing a tennis match or other game, I keep my mind on the present and avoid thinking of the outcome. Actually, that behavior has worked out quite well for my competitive performances. And who doesn’t knock on wood on occasion?

In life, there is no substite for EFFORT. My mom and dad never quit and because of that tenacity, have overcome tremendous obstacles. I believe that by putting one foot in front of the other, success will follow.

I accept my superstitions, but never let them deter me from my goals.

Please enjoy some great reads on this Friday the 13th!

Barb Recommends

The Simple Rules for Success at The Financial Blogger. I’m a sucker for motivational self improvement writing. From the time I was a teen, I devoured these writings, and I’m still at it. Enjoy!

The Business of Blogging and Bootstrapping an Online Venture at The Digerati Life. Take a peek into goals of one of the top personal finance bloggers on line.

Lindsey Knerl on 1099 Mom Blog wrote an article about the new law in the works to stop trademark piracy, SOPA. If you do ANYTHING on line, you must get educated.

Retire by Forty asks What’s Your Motivation. Another thoughtful end of year post looking at the past and requesting you ponder why you are doing what you are doing. Similar questions have been asked this year, I think I spot a trend.

Reflecting Back on 2011 at Sweating the Big Stuff. A new marriage and cross country move are some of the biggies in Daniels 2011, let’s see what’s on tap for 2012.

Turning My Resolutions Into Smart Goals at Tight Fisted Miser. Buying another blog is keeping Andy on track to up his income in 2012.

Atypical Tips for Writing Awesome Blog Posts at Smart Passive Income. Now this isn’t a New Years Resolution type post, it is very useful for those bloggers reading who are seeking to improve their blogs in the New Year! There’s a graphic in this one too which is really useful for any writer.

We’re Gonna Rock 2012 at Yes I am Cheap. Sandy is doing quite well with her goals and letting us in on her futur plans.

Do Your Commitments Match Your Convictions? at Wealth Informatics I think this one qualifies as an epic post, with charts and all.

20s Finances; What to do When You are Behind in Debt?

You Have More Than You Think; A Cool New Way to Make Living with Family Members Work for You

Novel Investor; Good-bye 2011; Best & Worst Market Awards

Tax Deductions and Year End Tax Planning Tips; The Frugal Toad

Did We Meet Our Goal of Saving 50% of Our Income?; Frugal Confessions

Analyzing the Perception of the 1%; My Journey to Millions

Home Security-To Spend or Not to Spend; Money Reasons

Barb Friedberg Across the Blogosphere

Carnival of Passive Investing at Boomer and Echo;  My article, Investing Rule 1: Know Thyself was chosen as an editors pick.

Roshawn from Watson Inc. focused on my “Sunk Costs” article in his well researched, Home Mortgage Leverage Sucks!

Carnival of Financial Planning #217 at The Skilled Investor; Best Articles this Week From Financial Blogs.

Yakezie Carnival-New Years Eve Edition at The Ultimate Juggle

Self-Directed Investing For Retirement Carnival – New Year’s Edition at Arbor Investment Blog

What are your superstitions?

image credit; betta design

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On Wednesdays I answer Reader Questions. If you have a money question, write in. You may be considered for a Wednesday column.

Here’s a thoughtful question from Buck Inspire from the article, Contribute to a Roth IRA Today

Buck Inspire: Thanks for the reminder to get more into my Roth!  I also fund my rollovers and Individul  401k.  Which do you think should be maxed out first?  Roth or 401k’s?

This is an excellent question, which to max out first, a 401K or a Roth IRA?

The easy answer, max out both the 401K and the Roth IRA!

What if I Can’t Max out Both My Roth IRA and 401K?

Obviously, if you had unlimited funds, you wouldn’t be reading this blog! In the real world we all need to make financial choices. Where to allocate retirement funds is a common question for investors.

The simple answer is, if your company matches your investment in a 401K, make sure to contribute enough to get the employer match.

After you receive the FREE employer money, then the decision whether to go with the Roth or 401K depends on your answers to these questions:

• What is your tax bracket now?
• Do you think you will be in a higher or lower tax bracket upon retirement?
• Do you like the investments offered in your workplace 401K?

Predicting the Future

I don’t know about you, but my fortune telling skill is limited. Although I believe that tax rates will be higher in the future, I’m not sure if my personal tax rate will be higher. After all, in retirement, my salary income will be gone and I’ll be

How Rich Will I Be?

living on pension, social security, and our invested assets! Again, my soothsaying tells me that this income will be lower than our current income.

How to Choose?

I can’t give Buck a definitive answer without looking at lots of personal information. I can give Buck some analytical ideas to help him decide.

If you really need a tax break now because your income and tax brackets are high, and you think that they will be lower in the future, then the 401K may be the one to max out first. As long as you are happy with the investment choices available in the 401K.

For the newbies out there, a 401K investment removes your contributions from federal taxation now (because you contribute pre tax dollars). The monies continue to grow tax free. But, when you take the funds out at retirement, you pay tax on them plus tax on any earnings as well.

With a Roth, you pay tax on all of your income, and then contribute “after tax” funds to the Roth. These funds grow tax free just like with the 401K. Upon retirement, or at anytime after age 59 1/2 you can withdraw these funds without paying tax on them! It’s a sweet deal.

If your tax bracket is not in the stratosphere now, the Roth IRA has some important advantages.

You choose your preferred investments.

All withdrawals are tax free.

There is never a requirement to withdraw the funds from a Roth IRA.

As with any investing decision, certain assumptions are made. In reality, those assumptions may turn out to be correct or incorrect. So, make the best decision now, with the information you have.

Have any of you dealt with this decision? Did you choose to max out your 401K or Roth IRA?

Caveat; As with all investment decisions, this is not a recommendation to buy or sell any investment product. Before making any investment decisions, please consult your own investment advisor.

Couple Money writes How to Begin Investing for Retirement with $1,000.

Invest it Wisely tells How to Plan the Ultimate Retirement.

Passive Family Income asks How Your Retirement Investments are Coming Along?

Personal Finance By the Book queries, Should a College Student Save for Retirement?

Redeeming Riches wants to make sure you are dealing with these 5 Retirement Risks.

image credit; Photo Knight

Welcome to another edition of Blog Swap a collaborative endeavor by members of the Yakezie Network, the world’s largest network of personal finance and lifestyle blogs. Each blogger writes on the same topic. Today’s question, “If you had one financial do-over, what would it be and why?” After you finish this article, stop by, MomsPlans to read my take on the topic!

Guest contributor, Melissa blogs about learning to live a fulfilling life on less at Mom’s Plans.  She also shares restaurant deals and her family’s attempts to dine out for less than $25 a week at Dining Out Challenge.

In 2005, my first child was one year old, and I wanted to fulfill a lifelong dream of being a stay-at-home mom.  However, my husband was in the middle of a combined M.A./Ph.D. program, and though he brought in some money as a teaching assistant, it was not enough to live on.  I was stuck at my full-time job that paid fairly but was stressful.  I didn’t enjoy my job that much and I still cannot think of my supervisor at the time without cringing.  (This woman got upset—very upset—with me once because I would not share a tuna fish sandwich.  I am not kidding!)

My cousin was having some luck selling on eBay, so we decided to try our hand at selling some Baby Gap holiday sweaters we had bought the year before.  I learned how to list items and was shocked and delighted when every single item was snatched up.  I somehow found an eBay seller who had over 8,000 items in her store, and I tried to learn from her.  She worked her eBay business full-time and had two young children.   I paid attention to the money she was making, not to the fact that she openly stated that she could not spend much time with her kids because her eBay business was so demanding and that she suggested no one buy their eBay inventory on credit. 

I worked hard at my job, and in the evenings and weekends, I worked hard at my second job, eBay.  If I wasn’t at the computer, I was dragging my very patient husband and son to the mall so I could shop for kids’ clothes.  (Never mind that my husband asked me over and over again not to go into this business.)  I missed out on spending time with my son on the weekends so I could grow this business.  The first year, I made no money, but I was okay with that. 

Second Thoughts

In 2007 and 2008, I went on wild spending sprees convinced the best way to make money from my store was to invest in inventory and grow it as quickly as possible.   By mid-2008, I was 5 months pregnant with my daughter and seriously starting to reconsider the eBay business which still had not made me any money. 

By the time my daughter was born, I realized something had to give, but the damage was already done.  I was thousands of dollars in debt and any money that I made went to debt repayment.

Closing Up Shop

I straggled on for a two more years, filled with guilt and anxiety over my growing debt.  I thought I would just stay in business until the debt was paid off.  However, my third child arrived 17.5 months after my second, and there was no chance to work on the business.

Now, I have been whittling away at the debt, but I realize I will not get it all paid off.  I will have to pay “stupid tax” as Dave Ramsey says.  I hope to close my business in the next few months.  I am trying to sell off my remaining inventory at cost, just to be free of it.  Simply put, I no longer have the time or space for it.

Even now it pains me to think about the resources I put into this business, both in terms of time and money.  Looking back, I realize I was desperate, and like many desperate people, I tried to find a “quick” solution that only compounded my problems.

There is a happy ending though.  My husband is three months away from graduating, and I have finally stepped away from my job to stay home with our three kids.  I have found a new business—blogging and freelance writing, and it has already earned me much more, both in money and satisfaction, than eBay ever did.

For a quick overview of Investing Strategies, pick up my FREE eBook; 20 Minute Guide to Investing (top right of the page). If you like what you’re reading, sign up for my RSS feed or email subscription and follow me on twitter so you get the word immediately.

Have you ever sold anything on-line? What were your experiences?

image credit; liewcf

GARAGE SALE INSANITY

For a quick overview of Investing Strategies, pick up my FREE eBook; 20 Minute Guide to Investing (top right of the page). If you like what you’re reading, sign up for my RSS feed or email subscription and follow me on twitter so you get the word immediately.  

I’m three hours into the garage sale and Jr. Carino and I have made about $400.00. Is the cash worth the time and effort?

Our last garage sale was in 2003, when we moved from our former  home. At that time I swore I would never hold another yard sale. Seven and a half years later, I gave in.

I think I’m bordering on insane.

THE TALLY

• Two days sorting through our junk valuable goods
• Three days organizing, merchandising
• One day selling
• Total time spent about 48 hours
• $400 so far
• $8.33 per hour

So here’s the financial reward-$8.33 per hour.

It’s more money than I make blogging.

It’s less per hour than working at Wendy’s.

It’s A LOT less than my hourly wage as a Portfolio Manager .

IT IS A PAIN IN THE NECK TO HOLD A GARAGE SALE!

Financially, it is a loss.

Enjoyment, it is a loss.

Have I learned my lesson? I hope so.

THE ALTERNATIVE?

• Two days sorting through our junk valuable goods
• Donate all of the goods to charity
• Actual value of everything, close to $1,600.00
• Take tax deduction on income taxes
• Tax savings at 28% marginal tax rate = $448.00 
• At 16 hours of effort, I earned  $28 per hour.

THE CONCLUSION

The items that did not sell  will be donated to charity and valued at about $400.00.

So, we made a bit over $400.00 cash and will realize a tax deduction of $112.00 (28% of $400) for a total gain of over $500.00.

Financially, the best alternative is to have a garage sale and donate.

Emotionally, the best alternative is to DONATE EVERYTHING.

The lesson: Figure out for yourself what you value, how much your time is worth, and whether an activity gives you enough financial return for the effort expended.

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.

Today, as you complete your daily activities, ask yourself this question, “Is the time I am spending on this particular task, worth the benefit I am receiving?”

GARAGE SALE RESOURCES by Yakezie Bloggers

• Live Real Now
• Bucksome Boomer
• Not Made of Money
• Money Help for Christians
• The Saved Quarter
• Money Crashers
• PT Money

What are your garage sale stories? Like them or not?

As a member of the Yakezie, premier personal finance network, I get to particepate in cool activities such as THE BLOG SWAP. The participants all write an article on the same topic and guest publish it on another site. It’s enlightening to see how others respond to the exact same question.

HOW DO YOU HANDLE MONEY?

A recent swap question was; WHAT MOTIVATES YOU TO BE FINANCIALLY RESPONSIBLE? Each of the authors answered in their own way. I got chastised by the organizer for deviating from the assignment, and had fun being singled out :). 

Here are the links to all of the articles as described and organized by Kevin at Thousandaire.

READ HOW THESE PERSONAL FINANCE BLOGGERS KEEP UP THEIR FINANCIAL MOTIVATION

• Kevin’s article, Snubbed for “Most Likely To Succeed” was published at Life and My Finances. If I were in charge, I certainly would have cast my vote for him! He’s doing quite well!
• Derek posted about Fear, Family and Independence at Thousandaire was an insightful read!
• Khaleef writes about how how his faith drives his finances at My Personal Finance Journey
• Jacob shares the three things he does to keep focus and motivation at KNS Financial.
• Andrea writes about how she is finally done with debt even though her friend might not be at Money Sanity.
• Alan shares 5 Great Reasons to be Financially Responsible at So Over Debt.
• Kevin talks about experiencing the world at Financial Success for Young Adults.
• LaTisha D Styles says Financial Freedom Brings Options at Debt Eye.
• Robert tells the world 10 Things That Motivate Him to be Financially Responsible at The Single Saver.
• Denise talks about real life Horror Scenes and their Financial Impact at The College Investor.
• Jason shares how three little monsters, better known as children, keep him financially focused at Narrow Bridge.
• Eric just wants to Live the High Life, whether that’s being active and single today or settling down in the future, and shares at Live Real, Now.
• Penny talks about making a big change and saving a quarter of her family income for the sake of her children at Budgeting in the Fun Stuff.
• Crystal wants to live well today and retire early, and she has the plan to make it happen at The Saved Quarter.
• Justin talks about taking after his financially responsible mother and wants to provide for his family at Mom’s Plans.
• Melissa talks about finding enough money to send her kids to Japanese school so they can learn their dad’s language at Money is the Root.
• Dave learned his lessons about gambling in college and now wants to retire young. Check out his story at Barbara Friedberg Personal Finance.
• Joe is about to be an asset millionaire, but he’s in it for the kids, not the money, and shares at Invest it Wisely.
• Kevin (Editor’s note: another great name) shares a powerful story about growing up in poverty and taking control of his life as an adult at Smart Money Focus.
• Sandy from Yes I am Cheap shared how she overcame a poor childhood in an article entitled, Fear of Poverty at Beating Broke.
• Shane wrote about Financial Intentionality at Yes I Am Cheap. Being mindfulof how you spend and live is a life tenet of mine.

Here’s what Kevin said about my article; “We had one more participant, but Barbara didn’t like my topic (humph!). However, I forgive her and, if you’re lacking financial motivation, she has some tips for you at Money in the 20s.”

Barb Recommends; A Few More of My Favorites From Around The Blogosphere

• Romeo gave me a wonderful gift in this article at How We Prevent Wealth; a good laugh! And you get to see a great picture too!
• I’m a sucker for money making ideas. Wish I had the time to try them all out.Moneyreasonstells how to Become Rich Using Ebay
• My M.S. in Counseling gave me a special understanding of this cool take on Maslow’s Hierarchy of Needs at Squirrelers; read Personal Finance Hierarchy of Needs.

Barbara Friedberg Personal Finance Across the Blogosphere

Thank you to those bloggers who thought my work was cool enough to promote on their sites. I appreciate the honor.

• Oblivious investor
• Beating the Index
• Bible money Matters
• Family CEO
• Invest it Wisely

My recent guest articles on other blogs:

• Len Penzo dot com; There is a God-How Eating Donuts Can Help You Stay on Budget
• Centsible Life; Cheap Week-Spend Less, Splurge Later
• Everyday Tips and Thoughts; Why I Don’t Want a Smartphone

What motivates YOU to be financially responsible?

Welcome to another edition of Blog Swap a collaborative endeavor by members of the Yakezie Network, the world’s largest network of personal finance and lifestyle blogs. Each blogger writes on the same topic; “You’re homeless/poor, how would you change your situation?”. After you finish this article, stop by Narrow Bridge to read my take on the topic!

This post was written by Ashley over at Money Talks. She writes a personal finance blog to encourage you to get out of debt and start building wealth. You can subscribe to her feed or follow her on twitter. Ashley was excited to participate because she loves ”what if” experiments like this one!

Ashley’s Assmumtions

• I’m me, with all of my past experiences, talents, education, personality, etc.
• I don’t have a family to care for, it’s just me.
• I’m not ill, either physically or mentally.
• I have all the necessary paperwork such as ID and birth certificate.
• At some point I get a job, obviously in this economy this isn’t so easy, but for the purposes of the exercise it has to happen.
• I have no assets, no money, no home, no friends, nothing. I’ve been dropped out on the streets with nothing but the clothes on my back and my wits. Ah… scary!

The Plan:

1. Food
2. Shelter
3. Laundry services
4. Job
5. Clothing
6. Save save save
7. Cheap Apartment
8. Save save save
9. Better Transportation
10. Save save save
11. Better Job
12. Repeat

First Step

So I wake up on the streets of Phoenix. My first priority would be to figure out what type of services are available for the homeless. Food would be my first concern; a place to spend the night would be next. I would start walking while keeping my eye out for those in my situation. When I saw other homeless people I would ask them where services are provided. Eventually I would make my way to these services. Food banks and homeless shelters. I know these aren’t ideal. It’s a lot easier said than done to get into a food bank and shelter. But I’d start there. Same with shower and laundry facilities. I know there are some places in Phoenix that offer this service. I would find those and make as much use of them as possible. The people that work in these places would be my best sources of information. I would spend my time getting to know the ropes of being homeless. Additionally,  I’d start the paper work needed for state health insurance, food stamps, welfare, and whatever else I qualified for.

Get a Job

Once I had free food, shelter, and clean clothes figured out I’d move on to getting a job. Any job. I would spend all day everyday looking for work. I would concentrate my efforts on food service for several reasons. First, I have plenty of experience in food service from my younger days. Second, working in a restaurant means free food. I’ve relied on this fact many times in my poorer life. So even if the pay isn’t great, the fringe benefits can be. Third, you often get paid in cash, no waiting 2 weeks for a paycheck. And fourth, restaurants will usually work you to death if you let them. There is plenty of work for those who prove to be hard workers.

I would spend my time either working, or looking for work. Assume I eventually get two part time restaurant jobs working 50 hours and bringing home a total of $400 a week.

Go Shopping

Some of the first material things I would buy would be a duffle bag, a couple of changes of clothing, and personal items such as a tooth brush, hair brush, etc. I would try to stay in shelters for as long as I could and save up as much money as possible. I’m sure they are not pleasant and I would be itching to get out of there a.s.a.p. I’d have to stay for as long as I could stand it though. I would pay for the things I could afford; trip to the laundromat and food instead of using free services.

Let’s take stock of what I have so far:

• $1,600 a month wages.
• Bag with all of my personal belongings; 3 or 4 outfits, toothbrush, toothpaste, hairbrush, soap, deodorant, shampoo, and conditioner.
• Money for laundry, food when needed, and possibly some transportation to and from work.
• Bank account that is growing by approximately $300 per week.

How Much to Rent an Apartment?

I figure I would need about $1,350 saved up to get my own apartment. This would mean I would have to live in the shelter for about a month after I found a job. Searching around online I found a couple of 1 bedroom apartments for around $400.00 per month. So let’s say I need $800.00 to get the apartment. Furniture and household goods would set me back about about $550.00; bed ($400), bedding ($50), dishes ($30), other little things like trash bags, shower curtain, etc. ($40). I would do this all for as cheap as possible and buying used when reasonable.

Now isn’t the time to be proud.

My new budget:

• Income: $1,600
• Rent: $400
• Electric: $75
• Bus pass: $55
• Food: $200
• Misc: $20
• Savings: $850

More Expenses!

Since Phoenix is spread out and the public transportation system isn’t the best, I’m going to need a car to get a better job. I’d probably look to spend about $5,000 plus tax and registration which would take about seven months. If the new car costs $300 a month in gas and insurance, I’m still saving $605 a month (I no longer need the bus pass).

Another couple things I’m probably going to need in order to find another job is the internet and a phone. I could go to the library, if it was convenient, for as long as possible. But eventually, I’d buy a cheap computer ($300) and get internet ($50 a month). After snagging a prepaid cell at  $20 a month on this. This leaves me saving $535 a month.

In the meantime I would start looking for call center jobs. There are tons of call centers in Phoenix. They can pay pretty decently, offer room for growth, and I have plenty of experience. However you can’t just walk in and talk to the manager like you can in a restaurant so they are a little harder to get. But let’s say after 6 months of looking I finally get one paying a take home pay of $500 a week. I’d keep one of my part time restaurant jobs for a grand total of $650 a week take home.

My new budget:

• Income: $2600
• Rent: $400
• Electric: $75
• Car: $300
• Food: $200
• Internet: $50
• Cell: $20
• Savings: $1,555

Clearly there is room for some upgrades now. If I liked my apartment I would stay where I was. But considering I picked it only because it was cheap I’m guessing it’s not the greatest. If I moved to Tempe, which is generally a nice place, I would pay about $600 for rent in a one bedroom apartment. I would furnish my new apartment with a couch, table, chairs, TV, actual bedroom furniture. and cable.

My final budget:

• Income: $2,600
• Rent: $600
• Electric: $75
• Car: $300
• Food; $200
• Cable/Internet: $100
• Cell: $60
• Misc: $65
• Spending Money: $200
• Savings: $1,000

How long would this take? Well, it would take about 7 or 8 months after I found my second restaurant job. And that is assuming that nothing goes wrong. So realistically it would probably take a year or more. This plan means that I spend a year working my butt off and living a bare minimum lifestyle. But it is doable. You just have to be willing to put down your pride and pull up your sleeves.

Barb’s question; How would you handle the emotional impact of poverty?

After reading this post, stop by Yakezie.com for my guest article entitled; You Are Your Brand, Tips for Building Your Readership

FINANCIAL MISTAKES

Enjoy this creative article written by Dave Mateer at Money In The 20s where he writes about investing, personal finance, and life after college to help 20 somethings plan now so they don’t pay later.  The post is part of a collaborative endeavor by members of the Yakezie Network, the world’s largest network of personal finance and lifestyle blogs. This month’s, topic for our blog exchange is “What Motivates You to be Financially Responsible?”

When you’re done reading this article, head over to Money In the 20s and check out my article on the same topic.

This is an interesting topic because it truly made me reflect on my past and ponder my future.  After taking some time to think this topic over, I came up with two key reasons that motivate me to be financially responsible.  These two reasons are PAST FINANCIAL MISTAKES and RETIRING YOUNG.

Past Financial Mistakes

 As I reflected on the past, I wanted to see if there was a specific moment or event that made me want to be financially responsible.  There is one point in my past that clearly sticks out above all the rest.  During college, I grew somewhat addicted to gambling.  My friends and I started playing poker once a week.  However, as time went on, I had the urge to play more often.  As a result, I began to play online poker nearly every night.   

When I got bored with playing poker, I would start playing online casino games. 

When I got bored with playing casino games, I would start betting on sports. 

I think you get the pattern… I’m not sure of the exact amount of money that I lost, but if I had to guess I would say $4,000 over 2.5 years. 

I started to see why so many people struggle with an addiction to gambling. It truly can ruin your life if you don’t get it under control.  However, I never felt the need to seek profession help, and luckily never needed it.  I was able to rationalize what I was doing and where it would lead me if I kept gambling.  That was all I needed to kick my gambling habit. 

That is by no means my only past financial mistake.  Check out my post Financially Stupid Decisions After College – Buying a New Car to read about one of my other past mistakes.  I hope I can help others avoid this mistake!

These missteps truly motivated me to get myself under control financially.  

Now, I can proudly say I no longer gamble and haven’t for quite some time.  I’ve matured well beyond my college years!

Retiring Young

I can’t bear to think about working until I am 65.  Currently, I am 25 years old and working for another 40 years just isn’t in my plans.   To be honest, I just don’t know that I will even be alive at the age of 65.  I can’t imagine saving for retirement the next 40 years only to never get a chance to enjoy it.  I don’t want to be the guy that saved his whole life and died on a giant nest egg.  

 I want to retire young so that I can enjoy retirement to its fullest.  I can think of quite a few things that I would like to do in retirement.  

First, I would like to spend a substantial amount of time traveling internationally.  The only places I have traveled internationally to date are Canada, Mexico and Argentina.  However, Argentina was for work and I didn’t have much time to explore.  I would really like to spend some time in Europe and go visit the town in Italy that my Grandma grew up in before immigrating to America. 

Second, I would like to get more involved in community service.   Third, I would like to run a full marathon.  Running a marathon is something I couldn’t even fathom doing right now.  There just doesn’t seem to be enough time in the day to train for one. I could go on with a long list of ideas for retirement, but I won’t bore you with that.

I struggled while writing this post because I wasn’t sure I wanted to discuss the gambling issue. However, it actually feels good to share because it’s not something I talk about often.  I’ve found that sometimes you just have to make mistakes to learn a lesson. 

My mistake taught me a valuable lesson about financially responsibility that I will never forget.

Barb’s comment; Dave’s disclosure is certainly a reflection of growth and strength. Acknowledging a mistake, dealing with it, and moving on is a key trait of successful individuals.

For a quick overview of Investing Strategies, pick up my FREE eBook; 20 Minute Guide to Investing (top right of the page). If you like what you’re reading, sign up for my RSS feed or email subscription and follow me on twitter so you get the word immediately.  

What are your reasons for being financially responsible? What obstacles have you overcome in your financial journeys?

image credit; MJ’s photographs

And Barb Recommends!

What is Money’s True Value?

As a personal finance blogger, MBA professor, and portfolio manager, I spend a lot of time thinking about money. In fact, I may even spend too much time on this topic. As my goal here is to improve financial literacy and teach smart money habits, this emphasis is understandable.

Russell Simmons

Yet, I rarely explore the philosophical aspects of money. After all, the only real value in money is what you can trade it for. If you were stuck out in the dessert with no water and $500.00, what good would money be? If you had no transportation and the water was 100 miles away, your $500.00 would be worthless. You’d probably we willing to trade it all for a thermos of water. 

So money is important in that you can trade it for things you want and need. But how much do you REALLY “need”? Len Penzo, a dad with two kids, one job, and a house in California alleges that you only need $40,000.00 to live on. At first glance, that seems kind of low for a four person family in a Los Angeles suburb. 

Russel Simmons the phenomenally successful entrepreneur touts the importance of YOGA and other non material wealth in his book, Do You!: 12 Laws to Access the Power in You to Achieve Happiness and Success. The Amazon book review states that, “ these laws stem from the belief that all success, be it professional or personal, comes from a connection with your higher self.” 

And Jean Chatzky’s research in The Ten Commandments of Financial Happiness; Feel Richer with What You’ve Got, found that above a certain point, additional income adds little happiness to life. 

Think About This

Take a moment and think about the things that give you the absolute most enjoyment in life. If you’re like most folks, friends and family are near the top of the list. Price-zero. 

Do you hike, camp, go for long bike rides and walks? Price-zero. 

Frankly, a Saturday afternoon nap ranks way up there as one of my favorite relaxing activities. 

Of course, it would be stupid to imply that all good things are free. They aren’t! I love to travel, and travel is expensive. We own our own home in an nice part of the city. Clearly, our mortgage payment is not “free;” nor are our utility bills, food, cable, internet, medical visits, cat litter, and entertainment.  

I happen to love fashion and home decor. They are not free, but neither do they have to be expensive. 

Eating out is a special pleasure for El Carino and me. But we don’t eat out too frequently, so that when we do it’s a real treat. And our taste runs to the simple and get lots of pleasure out of a relaxing meal for $20.00!  

So What’s the Point?

A popular trend in psychology today is called “mindfulness.” It means acting deliberately and with intention. I expand the concept to imply that when you spend, make sure you are getting enough value and enjoyment from your spending. In other words, spend your money in a manner that is in line with what you think is important. If having a sporty car is important to you, and you can afford it, then great! But don’t get that car just to impress others. You will be sorry. 

I saw a woman on The Nate Berkus Show (my guilty pleasure) admit she bought a purse for $1,200. There is no scenario I can envision where I would ever spend $1,200 on a purse. On a vacation, sure. On a piece of furniture, absolutely. What about you?

As I furiously attempt to complete my next 20 Minute Guide Finance book, I am reminded not to lose sight of the point of money. Remember not to hoard nor squander money. Instead, spend it on things that you value. 

 I love that after I get a nice paycheck, I can take part of that cash and send it off to Japan with no worries! That’s important to me! 

Barb Recommends:

My personal finance network, Yakezie created this fun and informative BLOG SWAP. Each particpant gets paired with another blogger, we guest post on the others site and everyone writes about the same topic; MY BIGGEST FINANCIAL PET PEEVE 

• My favorite by Thousandaire at the College Investor, A ROTH IRA isn’t that hard to Understand.
• Robert, from the College Investor wrote about the Biggest 401K Mistakes You Can Make at Thousandaire.
• Jacob from Personal Finance Journey wrote about 3 of my financial pet peeves (spending too much money on drinks, financing expensive furniture, and active investing strategies) on Narrow Bridge Finance.
• Narrow Bridge Finance posted about how people not taking responsibility for their financial actions infuriates him on My Personal Finance Journey. 
• Prairie Eco-Thrifter posted about how sales tax is her biggest financial pet peeve at 101 Centavos.
• 101 Centavos posted about how wasting food makes his blood pressure rise at Prairie Eco-Thrifter.
• LaTisha D Styles writes about how greedy banks upset her at Retire by 40.
• Retire by 40 wrote about how bigger is not necessarily better at FSYA Online.
• Bucksome Boomer writes about how advertisers that hide the real price of a product is maddening at The Single Saver.
• The Single Saver wrote about parents who do not teach their children financial responsibility at Bucksome Boomer.
• Tim from Faith and Finance vents about financial institutions charging to send paper account statements, but still send out a plethora of paper junk mail at Live Real Now.
• Jason from Live Real Now politely rants about how aggravating it is to see people whine about their less-than-ideal financial situations, yet do nothing about it, at Faith and Finance.
• Money Sanity vents about people complaining about paying overdraft and bank fees, while at the same time, having no idea how much credit card debt they have or their checking account balance at The Saved Quarter
• The Saved Quarter writes about people who are financially irresponsible and want to complain about how broke they are while showing off the new things they bought at Money Sanity
• Happy Simple Living writes about how companies and people that exploit others aggravate her at Barbara Friedberg Personal Finance.
• I talk about how investment advisors that get paid to sell products (more salesman than investment advisors) upset me at Happy Simple Living

image credit: Wikipedia 

What is your money philosophy? 

Guest article by LaTisha D Styles, a finance graduate teaching young adults how to Manage Your Money Like a Banker at Financial Success for Young Adults. You can find more from her at www.FSYAonline.com. 

Yes, it’s coming. That looming certainty. Rates will rise, prices will increase and milk will cost an arm and a leg. We are already seeing the beginning effects of it. 

What causes it?

Too many dollars chasing too few goods. Remember that girl in school who always had three or four guys to choose from for Friday night dates? The guys went out of their way to do more and more extravagant stunts to impress her. Buying flowers, crushing the competition in football, tripping her when all else failed. You get the idea. Well that’s the same idea behind inflation. When the government prints more money, there is more inflation. Selling government bonds is one way that they print money and government spending is another way. 

It’s Inflation. Yes there are ways to prepare for inflation by stocking up on essentials, but what about your portfolio? How do you inflation proof your portfolio? There are two really easy ways to take advantage of inflation, especially if you are willing to take on a little risk. 

Buy Commodities

Commodities like gold and silver benefit from inflation. That’s because smart investors know that these physical commodities will hold their store of value. I have a friend that buys silver bars regularly. When the recession hit in 2008 and once things eased up a bit in 2010, he sold them for a nice profit. 

The price of gold has been steadily rising. At GoldPrice.org, you can see the price of gold in dollars per ounce since 1971. During times of recession, the price of gold increased. In the 80′s, it hit a high but the recent “Great Recession” created fresh highs in the price of gold. No one knows when the price of gold will begin to drop, but I do know that when I see the next bubble burst, I will be ready to buy. 

Buy and Sell Currency

When banks print money, i.e. make loans, they are causing the value of their currency to fluctuate. The federal reserve controls the fiscal policy and the incentive behind printing money by changing the discount rate. Banks print more and more money and you can benefit from the fiscal policy changes caused by inflation by trading currency. 

Despite the negative connotations that surround the foreign exchange market, it’s one of the last places that small investors can still trade. There are accounts that allow you to get started trading for as little as $25 dollars. There are no trading fees besides the spread. For these reasons more and more investors are beginning to see the foreign exchange market as a viable investment vehicle. 

If you expect inflation in the U.S. Dollar, for example, and you think the Australian Dollar will be stronger, then you would buy the Australian Dollar and sell the U.S. Dollar. 

Both of these strategies are high risk for investors without knowledge of the commodity and forex markets so you should learn more about each of them before you make any decisions for your portfolio. As always, consult your financial advisor before making any decisions. 

Barb’s remarks; This is an extremely advanced strategy and should only be practiced with money you can afford to lose. Real estate is also a hedge against inflation. Buying non-perishable items in bulk when on sale can not be underestimated. Consider generics instead of name brands for all of your shopping needs. That includes store brands in the department stores as well as the grocery.

What did I miss? Do you have an investing strategy for inflation?

IS THIS A SCAM?

Enjoy this creative article written by Eliza Cross of Happy Simple Living.com.  The post is part of a collaborative endeavor by members of the Yakezie Network, the world’s largest network of personal finance and lifestyle blogs. This month’s, topic for our blog exchange is “What is your biggest financial pet peeve?”

When you’re done reading this article, head over to Happy Simple Living and check out my article, “Financial Advisors Who Get Paid to Sell Products Bother Me.“

 So what bugs me? I’ll tell you what bugs me – companies and people that try to take advantage of others, often by exploiting them when they’re financially ‘down.’ Here are some examples:

• Pyramid scams

We’ve all seen the ads that promise big money: “Sleep until noon!” “Work in your pajamas!” Unfortunately, the only people that usually make any money in these schemes are the organizers at the very top. Ripoff Report also lists 846 Multilevel marketing (MLM) company complaints, many with reports high monthly thresholds and low commission rates, misleading promises and loss of initial investment.

• Lottery tickets

Sadly, high-frequency players tend to be poor and uneducated. Here’s a shocking statistic:  On average, households that make less than $12,400 a year spend 5 percent of their income on lotteries.

• Gambling

Whether it’s a casino, racetrack, or the local bookie, the lure of gambling preys heavily on those with meager financial resources by inducing false hope and often making a financial problem even worse when the gamble doesn’t pay off.

• Phishing schemes

Thieves create official looking e-mails requesting personal financial information or passwords, usually with a warning that your account will be disabled or other time-sensitive deadline. For those who unwittingly enter their sensitive information, identity theft soon follows.

• Rent to own stores  Some charge inflated interest rates (up to 400%) and repossess the item if a single payment is missed.

Even smart, successful people occasionally get taken in by scams; Ponzi schemer Bernie Madoff’s victims included several billionaires and even Hollywood director/producer Steven Spielberg’s foundation. How can you protect yourself?

 Here are some tips to help you bypass these scams: 

1. Remember the old adage, “if it sounds too good to be true, it probably is.” 

2. Check out a company on the Better Business Bureau to find out if it’s reputable. Before signing up to sell products for any company that uses the MLM model, thoroughly research the company and its sales tactics.

3. If an e-mail looks suspicious, call or forward the e-mail to the customer service department of your institution to make sure it’s legitimate before divulging any personal information. Most companies rarely e-mail asking for password information.

4. Snopes.com is a great source for researching information that circulates around the internet. 

5. Keep your antivirus, spyware, firewall and operating systems up to date. 

6. Use secure passwords and change them often. 

7. Rather than gambling away a nickel of your hard-earned money, work with a trusted advisor to develop a long-term financial plan. 

Have you been the victim of identity theft or another sleazy scheme? What are your financial pet peeves? We’d love to hear your comments. 

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