Barbara Friedberg Personal Finance

A Sneak Peak; Inside Barbara Friedberg’s Personal Portfolio-Part 1

Barb — Tue, 07 Sep 2010 22:29:14 +0000

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

WHAT DO YOU THINK ABOUT LINK POSTS?

Barb — Sun, 05 Sep 2010 15:20:51 +0000

“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

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

How to Design a Budget with Room for the Fun Stuff

Barb — Thu, 02 Sep 2010 19:46:37 +0000

“Fun is good.” Theodore Geisel

If anyone knows fun it is the author of The Cat in the Hat, Green Eggs and Ham, and countless other classics. Just thinking about his books makes me smile. Think about it, don’t you just FEEL BETTER smiling and thinking about something fun?

FUN

MAIN TOPIC: SPEND MINDFULLY

I was asked to guest post at Budgeting in the Fun Stuff (BFS). Before agreeing on a topic, I decided to write about her blog name. So away I went writing about how to pay for fun stuff in addition to the necessities. After a couple of emails, Crystal at BFS requested an article about investing, so lucky for me (and you); I get to publish this “FUN” article at BarbaraFriedbergPersonalFinance.

In the mental health/psychology field there is movement towards mindful living. Mindfulness is simply living in the NOW and focusing on whatever you are doing presently. This premise works great with money; spend on activities and expenses that you deliberately choose.

Spend mindfully and enjoy completely.

Much of your spending was decided a long time ago; your mortgage/rent, insurance, car payment, savings (if you’re smart) etc. Next you pay a certain amount for food, utilities, charity etc. Yet life is more than just the necessities.

A lot is written about saving and cutting expenses (especially by me). Check out Saving without Sacrifice for some helpful tips in this area. Unfortunately, much less focus is placed on paying for fun and pleasure activities. These rejuvenating activities have very real importance in life. Without time for fun and relaxation you have less energy and focus for work activities. Furthermore, if all you do is work, then what is the point?

Life is about balance and on the flip side of work is leisure and fun!

PRACTICAL APPLICATION; BUDGET IN THE FUN STUFF

Step 1: Brainstorm-What activities do you do for fun and recreation? After all, you don’t want to spend your hard earned cash on “fun” activities that don’t really give you A LOT of pleasure!

For example, El Carino (my hubby) and I LOVE TO TRAVEL. When we were just married with no cash (and lived in California) we satisfied our lust for travel with a CHEAP VACATION to Las Vegas. Back in the olden days, you could have a terrific week-end for 2, complete with buffets, souvenirs, a couple of blackjack hands at the $1.00 table, and souvenirs for under $250.00. We milked the coupon books, sat through timeshare presentations for free show tickets, & visited the incredible lobbies of the exclusive hotels. The memories are still with us! And we will never forget cooling ourselves with ice cubes as we drove through the desert without air-conditioning in the summer.

Here are some ideas to get you started, most are low cost, but don’t hesitate to include passions that cost a bit more:

Lots of folks love hiking, picnics, and outdoor activities; low cost & beautiful.
Museums frequently have FREE days.
Discount movies are a fun evening.
I love television and we budget in the complete cable package (it’s worth the cost for us).
Don’t skip eating out, if you enjoy it. Try lunch on the week-end instead of dinner! (2 for 1 coupons are everywhere)
Board games are hours of fun. Or what about a family videogame night. Make it a competition with prizes (from the dollar store) and popcorn!
Like to entertain-host a pot luck with a theme. Guests love it because they have ownership in the evening.
Wiffle ball, frisbee, soccer, tennis, mini putt are all great family fun and LOW COST. Why not get the neighborhood involved?
Like to ski? Skip the downhill and try cross country.
For you crafters out there, forget the expensive supplies, use your creativity to pick up remnants in the fabric store, supplies in the bargain bin at the craft store, or make something from stuff you already have.
Rent a canoe and go boating one week end.
Take the kids to laser tag or paint ball; everyone gets out their hostility!
Visit a local small town and enjoy a new experience.
Enjoy the thrill of the hunt while shopping at garage sales (see what you can snare for $5–$10)
Help-I can’t stop myself…. There are so many fun activities!!!

Step 2: Look over the “fun list” and put a DOLLAR AMOUNT next to each activity.

Step 3: Next to the cost of the activity, give it a FUN RANKING from 1 (not much) to 10 (most fun ever).

Step 4: Mindfully choose your FUN activities. Next month make sure your “SPENDING PLAN” includes activities with the best value for the FUN. That way, you deliberately spend your cash on the HIGHEST VALUE leisure FUN!

Give it a try and let me know how it works out for you! Mix it up, include some low cost fun along with a bit higher priced fun-just make sure that you choose activities with a high FUN RANKING.

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.

Gather the family around and list ALL THE FUN ACTIVITIES YOU CAN THINK OF. Go wild, don’t hold back. Then go through and price and label each one with a FUN RANKING.

image credit: Cuba Gallery

YAKEZIE PERSONAL FINANCE BLOGS

Saving Money Today
Single Guy Money
Single Mom, Rich Mom
Smart On Money
Smarter Spend
Squirrelers

HELP MY LIFE IS A WRECK; NOW WHAT?

Barb — Mon, 30 Aug 2010 21:26:30 +0000

Money Management for the OVERWHELMED

“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.

Pay all bills on time.
Continue with debt repayments, pay more than the minimum.
Continue to keep track of your money in your pocket and in your accounts.
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

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

NO-BRAINER MONEY MANAGEMENT FOR COLLEGE STUDENTS

Barb — Sat, 28 Aug 2010 17:27:27 +0000

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.

“Life consists not in holding good cards but in playing those you hold well.” Josh Billings

Build skills in all areas. Set goals. Success will follow.

MAIN TOPIC: Pay attention to your Spending

Esmerelda is a college student with lots of money trouble; ATM fees, overdrawn account fees, credit card late and interest fees, rescinded credit card, late fee on tuition account, and overspending in general. Hundreds of dollars in fees and interest ate up her meager savings and caused her LOTS OF STRESS!!

I want to save you from Esmerelda’s troubles.

At the beginning of the school year, you college students are on your own for the first time with worries about friends, school and MONEY. I’ll leave the friends and school worries to someone else. But I CAN TEACH YOU WHAT YOU NEED TO KNOW ABOUT MONEY MATTERS while you are in college.

IT IS YOUR RESPONSIBILITY TO HANDLE YOUR OWN MONEY whether you get cash from mom & dad, loans, jobs, or any combination. Follow these steps and you’ll have LESS MONEY STRESS NOW & LATER.

PRACTICAL APPLICATION: Get Control of your Cash

1. Open a checking account and savings account with NO FEES, for college students.

2. Arrange with employer to have check AUTOMATICALLY deposited in your savings account.

3. Use an on line account or bricks and mortar bank or credit union.

4. Ask these questions and only open if they say NO FEES in writing:

Do you have an account for college students with no fees at all?

Does this account offer free ATM withdrawals?

5. If you need a loan for school expenses, go straight to the Financial Aid office for HELP. Work with them as long as it takes to get the money you need. That’s what they’re there for!

6. TOTAL ALL YOUR INCOME- Estimate income from job, loans, parents, scholarship, and aid. WRITE DOWN YOUR INCOME IN A NOTEBOOK or chart like this one. Categorize by month or lump sum.

INCOME
INCOME TYPE	DATE RECEIVED	AMOUNT- how often – fixed or changes	HOW PAID- Check or on line (automatic or not)	DATE PAID	NOTES
Example: Job	1^st of the month	$350.00/ every month about the same	On line automatic deposit to savings	Last day of the month



TOTAL MONTHLY INCOME

7. Complete a chart like the following and write down every expense you are responsible for; cell phone, tuition, rent, utilities, car payment etc.; include amount; date due; how paid. These are charges that are FIXED and don’t have much flexibility.

8. Add up your expenses write in the last line of the chart.

9. Next, add any expenses that you control; beer, restaurants, entertainment, etc. These are your DISCRETIONARY EXPENSES. These are the easiest places to cut spending.

FIXED EXPENSES Monthly
BILL	DATE DUE	AMOUNT- fixed or changes	HOW PAID- Check or on line (automatic or not)	DATE PAID	NOTES
Example: T Mobile cell phone	15^th of the month	$45.00	On line automatic deduction from savings	Automatic on date due	Check minutes balance mid month.



TOTAL FIXED EXPENSES
DISCRETIONARY EXPENSES Monthly
EXPENSE		AMOUNT
Example: ENTERTAINMENT		$80.00



TOTAL DISCRETIONARY EXPENSES
TOTAL MONTHLY EXPENSES ( fixed + discretionary)

10. TOTAL ALL YOUR EXPENSES.

11. If you have a credit card, use only for emergencies. If you don’t have the cash, don’t spend it!

12. If you have a credit card, PAY THE BALANCE DUE IN FULL AT THE END OF EVERY MONTH.

13. The money that is not due monthly, like your tuition or insurance, should be in your savings account. Make sure that the amount you will need for these infrequent payments stays in the savings account until you need it.

14. Pay every bill early. At least a week before the bill is due, pay it.

15. Bunch up bill paying into 2 times per month.

16. Look at your income and expenses-Are you spending on things or experiences that are worthwhile to you? REALLY THINK ABOUT THIS ONE. If not, curb your spending.

17. Read The Secret to Saving without Sacrifice here.

18. Studies come first, but if you have extra time, consider partying less and get a part time job.

19. Every month, put your discretionary money from each category in an ENVELOPE and label it. For example, $80.00 cash goes in an envelope at the beginning of the month. After you spend that $80.00 you are done with entertainment for the month!!!

20. At the end of the month, analyze your income and spending. Complete another Income and expense tracking sheet. Make changes according to the info from the prior month.

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.

Read the entire article again.
Choose one or two steps to begin immediately.
Write in your planner the steps to take.
After completing the first steps, repeat until all are completed.

Write in with your questions and experiences.

YAKEZIE PERSONAL FINANCE BLOGS

The Debt Hawk
The Millionaire Nurse Blog
The Saved Quarter
The Wealth Artisan
Ultimate Money Blog
Watson Inc

The Best of BarbaraFriedbergPersonalFinance; 6 Month Anniversary Edition

Barb — Tue, 24 Aug 2010 17:54:20 +0000

BarbaraFriedbergPersonalFinance instructs and motivates you to become wealthy by teaching basic personal finance principles with engaging stories and understandable examples. Learn to become rich and happy from a real Portfolio Manager

“KNOWLEDGE IS POWER.” Sir Francis Bacon

Who would have thought this quote, from the 1500’s would still ring true today?

Many years ago I read a letter written to Dear Abbey. (Yes, I read Dear Abbey, please don’t laugh.) The gist of it was this, a 38 year old guy writes that he wants to be a doctor, but is worried that he’s too old to go to medical. He complains that he will be 42 years old when he finishes med school. Dear Abbey writes back, if you go to medical school now, in 4 years you will be a doctor, if you don’t go to medical school, then in 4 years you will just be 4 years older.

That letter stuck with me when I was deciding to return to school for a second graduate degree in mid life. It stuck with me when I began writing a book. And it was a factor in spurring me on to start a blog. In fact, my life is characterized by taking risks and moving forward no matter what. In the past, I was a huge procrastinator, insecure, and afraid of failure; I am proof of the power of stepping forward in spite of fear, age, obstacles, and criticisms of others.

On that note, I want to share my 6 month anniversary celebration as a personal finance blogger with you. My success in readership has far surpassed my expectations. I began with an Alexa ranking in the 1,000,000 range and have dropped to an impressive level of less than 160,000. I owe a large amount of that success to the YAKEZIE PERSONAL FINANCE NETWORK and Len Penzo dot com who encouraged me to join. The Yakezie mission is in alignment with my own; selflessly promote financial literacy and personal finance. El Carino, my biggest cheerleader, promotes my blog both to those interested as well as the uninterested and loves me no matter what. In fact his support has given me the confidence to “try anything.” My daughter is my social media consultant extraordinaire, offering many ideas, strategies, and tips to touch her generation. Additionally, she constantly provides insight into the GEN Y mind. Finally, my outstanding MBA professor, Dr. Oranee T. encouraged me to start the blog and continue with my book.

On this 6 month anniversary I want to share the links that “Google Analytics” the blog analyzer, said are your favorites. Some surprised me, others not so much. The TOP articles cover a variety of topics from investing, to mental money problems, and the financial challenges of the poor. If you haven’t read them before, please check them out and let me know what you think.

I am honored by your support and look forward to offering you quality PERSONAL FINANCE information to help you become wealthy.

# 1 ALL TIME FAVORITE: GET RICH WHILE YOU SLEEP WITH THE MAGIC OF COMPOUNDING

“Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it.”
Peter Lynch

One of the greatest investors of our time attests to the simplicity of investing in the stock market. Read this post and find out why. Following is the “Cliff Notes” version of why you need to put part of your long term investment dollars in the stock market.

Main Topic; Stocks

The historical long term growth of American business is amazing. American business is frequently represented by the Standard and Poor’s 500 Stock Index (S & P 500). This index of 500 stocks is considered a barometer for the complete US Stock Market.

Forget about the recent recession and downfall of the stock markets for a minute and take a peek at some historical returns of the S & P 500. Although historical returns do not guarantee future returns, take a look anyhow. When looking at these returns, think about the stock market as a collection of U.S. businesses, not mutual fund or brokerage account statements. Then ask yourself if you think U.S. businesses and the economy will grow over the next 20, 30, or 40 years?

Click here to read more.

# 2 RUNNER UP: HOW TO AVOID LIVING PAYCHECK TO PAYCHECK

“Have compassion for all beings, rich and poor alike; each has their suffering. Some suffer too much, others too little.” Buddha

Wealth requires a commitment and responsibility to those with less. Offer your knowledge and expertise to those without.

MAIN TOPIC: The Problem with Check Cashing Services

I just returned from a quick trip to Wal Mart to pick up some groceries. It’s Friday afternoon and my check out lane was directly across from the “Money Center.” This “Money Center” is a place where you can cash checks; for a fee, buy money orders; for a fee, and do a lot of other financial tasks; FOR A FEE. It is not a bank.

Because at a bank, if you have the right type of account, you can get your paycheck deposited FOR FREE!

The line was really long at the money center. In fact, there were people trailing out into the main part of the store. Many lower income people DO NOT HAVE A BANK ACCOUNT.

I remember back to my first full time job as an invoice clerk; I was amazed on payday when my co-worker and I went to the bank. She CASHED HER ENTIRE CHECK AND TOOK ALL OF THE MONEY! I thought it was quite odd that she didn’t put any of it into the bank.

But I digress, back to the Wal Mart Money Center. I got very despondent after seeing the enormous line-because I knew most individuals were there because they didn’t have a bank account. And they were lower income and paying a fee that higher income people didn’t pay, just to gain access to their money.

I was struck by several things:

How can one save, if he/she has NO BANK ACCOUNT?
How can one move out of living “paycheck to paycheck” without a BANK account?
Where are those individuals in the Money Center line going to learn the principles of Financial Literacy?

Click here to read more.

#3 THIRD PLACE (it was a tie): REDUCE STRESS-GET RID OF DYSFNCTIONAL FMONEY BEHAVIORS-part 3

Money & Relationships-Make it Work!

“I’d marry again if I found a man (or woman) who had fifteen million dollars, would sign over half to me, and guarantee that he’d be dead within a year.” Bette Davis

You gotta take relationships with a bit of levity or you’ll never make it through! This quote is the perfect solution for money and relationship problems. Unfortunately, it’s a bit unrealistic. Maybe a million or two is more doable.

No really, read on and find out how to handle money stress in a relationship.

MAIN TOPIC: She’s a Saver, He’s a Spender

This article is the 3rd in a series relating poor money behaviors with stress (#1-Shopping to Solve your Problems & #2 Procrastinating Dealing with Financial Matters). 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 .

You know who I’m talking about. Bluetooth came out, he got it. Iphone, Ipad, flat screen TV, etc. he bought them all. New car every few years was required by him. Meanwhile the debt piled up. She tried to save, but his spending counteracted all of her efforts.

I’m hesitant to continue, as the story is so familiar. We all know how it turns out…… fighting, stress, anger, depression, marital discord and DEBT.

Overspending in a relationship is unhealthy whether practiced by one or both partners.

Losinno clearly stated, that in a relationship the partners have the choice of creating WEALTH or a “FINANCIAL HELL ON EARTH.” Money secrets are devastating. Unhealthy family money attitudes can be disastrous. Money problems in a relationship can be the beginning of the end.

Click here to read more.

#3 THIRD PLACE (it was a tie): WHEN NOT TO SPLURGE

“If I splurge on anything, it’s cologne. I love smelling good.” Zac Efron

This quote suggests that Zac Efron, the wealthy movie star sensation from High School Musical and many more projects, is so financially savvy that his one indulgence is cologne. If that’s his lone indulgence, then this guy is on a path of financial strength.

Personal disclosure: I have never met nor spoken to Zac Efron. (Although I wouldn’t turn down an invitation to meet him!)

MAIN TOPIC: I am ALL FOR SPLURGING

I carefully plan my our family splurges:

El carino (my hubby) indulges in his hobby of collecting sports memorabilia.
I go out to work at a coffee shop once or twice a week and buy a coffee.
Special occasions find me at the COACH outlet for a nice bag.
Travel is planned and a big priority for our family. This week-end it’s a quick family get away to Atlantic City! (No gambling for us!)

I do not covet expensive jewelry, cars, fine dining (my birthday dinner was at Applebee’s this year). In fact, when el carino wants to tease me, he goads me with the offer to buy me jewelry (because he KNOWS I don’t value spending our money on expensive jewelry). In fact, I totally don’t get the women who want a huge diamond (bought on credit). Give me the cash any day to stick in the investment account.

Please don’t think this is a condemnation of cars, jewelry, or fine dining; it’s not. It is a recommendation to spend on those activities that YOU value, not what your neighbors, TV, or society tells you to value.

Click here to read more.

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.

Commit, write down, and take one step towards financial responsibility today.

Image credit: Kazeee

YAKEZIE PERSONAL FINANCE BLOGS

Zordane.com

Yes I am Cheap; Digging my Way Out of Some Serious Debt

Young and Thrifty; Saving Generation Y

Well Heeled Blog; Savvy Living through Personal Finance

Wealth Pilgrim; A Journey to Self, Wealth, & Health

Wealth Informatics; Financial Freedom through Education

NEED EXTRA MONEY?: Do Not Do This!

Barb — Sat, 21 Aug 2010 16:47:33 +0000

Do not withdraw Funds from your Retirement Savings

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.

“Develop success from failures. Discouragement and failure are two of the surest stepping stones to success.” Dale Carnegie

World renowned for his inspirational teachings, many a successful individual has started out on a foundation of Carnegie’s lessons.

MAIN TOPIC: Read this if you are Desperate for Cash

Financial problems are a reality today. We are not out of the economic woods with unemployment hovering around 9% or worse in some areas, and many homes worth less than several years ago. Foreclosures are rampant.

If you are on the brink of a financial disaster, and have a 401(K) or IRA from an employer, you may be tempted to withdraw those funds. In fact, last spring when I was volunteering for the IRS, preparing tax returns, I came across more than 1 individual who cashed out their retirement funds.

There are HARDSHIP standards which let you cash out your retirement account before the mandatory retirement age. According to the 401K Help Center:

“The following items are considered by the IRS as acceptable reasons for a hardship withdrawal:

Un-reimbursed medical expenses for you, your spouse, or dependents.
Purchase of an employee’s principal residence.
Payment of college tuition and related educational costs such as room and board for the next 12 months for you, your spouse, dependents, or children who are no longer dependents.
Payments necessary to prevent eviction of you from your home, or foreclosure on the mortgage of your principal residence.
For funeral expenses.
Certain expenses for the repair of damage to the employee’s principal residence.”

Here is why you DO NOT WANT TO WITHDRAW FROM YOUR 401(k) OR IRA:

Hardship withdrawals are subject to income tax and, if you are not at least 59½ years of age, the 10% withdrawal penalty. You do not have to pay the withdrawal amount back.

HERE IS HOW MUCH YOU LOSE:

Withdraw $2,000.00 and take away 10%, that leaves $1,800.00. If you are in the 28% tax bracket, subtract another $560.00. Now you are down to $1,240. And that is BEFORE state and local taxes.

In summary, withdraw $2,000.00 and walk away with less than $1,240.00. Does that sound like a good deal to you?

If you need more motivation, consider this, when you take out cash from your retirement account, not only are you paying fees and taxes, you are losing money that is VERY HARD TO REPLACE. Left in place, you are providing for your future and giving your funds a chance to grow TAX FREE.

In fact take that $2,000. Leave it in a stock index mutual fund for 20 years. With an average 9% return (long term historical return from stocks), in 20 years your original $2,000.00 is worth $11,208.82. Compare that with the $1,240.00 value NOW.

PRACTICAL APPLICATION: TAKE EXTREME MEASURES

Before even THINKING ABOUT withdrawing funds from your retirement account, do everything you possibly can to CUT EXPENSES DRASTICALLY. Leave no alternative unexplored.

My blogging colleague Jacob, at Early Retirement Extreme is an expert at cutting down expenses to the bare minimum. You would be surprised how little one needs to live on!

Before you TAKE MONEY OUT OF YOUR RETIREMENT ACCOUNT, follow these steps:

Reduce auto costs, get rid of one car or sell expensive car and buy CHEAP one.

Sell your home, move into an apartment.

Sell your stuff on eBay and Craig’s list.

Do all cooking from SCRATCH; no prepared foods. Cut food bill way down. Substitute beans & rice for meat!

Enlist your kids and get their ideas on cost cutting. No extravagances for them.

For an indulgence, bake a cake, take a walk, have a picnic!

Call all service providers and insurers to negotiate lower rates. Cut out cable, read instead. Cut out all subscriptions.

Read the list of blogs at the end of this article for more great cost cutting resources.

Don’t forget considering ALL ALTERNATIVES to make extra money!

Do your best to withstand the current financial hardship with PERSISTENCE, RESILIENCE, CREATIVITY, & PATIENCE. If you take action, your situation will improve. Borrowing from your future is a step to avoid AT ALL COSTS!

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.

Make a list RIGHT NOW of every way possible to cut expenses.

Make a second list of every way you can earn extra income. If you are unemployed, be sure to check out TIP #2 from this article. Consider a 2^nd job or freelance/entrepreneurial activities.

Write in with your cost-cutting stories and any related questions. I am happy to help!

SAVING & COST CUTTING ARTICLES FROM WELL REGARDED PERSONAL FINANCE BLOGGERS:

Redeeming Riches

Consumerism Commentary

Single Guy Money

Consumerism Commentary

One Money Design

Wealth Pilgrim

Early Retirement Extreme

Not Made of Money

Sweating the Big Stuff

Deliver Away Debt

Little House in the Valley (get her free eBook on credit)

Budgeting the Fun Stuff

FOLLOW THESE INSTRUCTIONS & GET WEALTHY

Barb — Wed, 18 Aug 2010 13:11:10 +0000

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 INVESTING ebook. Stay tuned to get first crack at the NEW EBOOK. And it’s FREE to my readers.

“Always bear in mind that your own resolution to succeed is more important than any other.” Abraham Lincoln

Many researchers have stated that taking control of ones’ own life, maintaining a positive attitude, and being resilient in the face of setbacks are the keys to success. Who can argue with the long lasting contributions of Abraham Lincoln?

MAIN TOPIC: Do you have these qualities of the RICH?

When El Carino (my hubby) approached me with enthusiasm over a Money Magazine article, I KNEW IT HAD TO BE FABULOUS. Thus I rushed to read, Do You Have What It Takes To Be Wealthy? from the September issue of Money. The article lists the qualities of the RICH and supports them with research.

Sound too good to be true? Just gain these qualities and you are on your way to the bank! Hold on, not so fast. No offense to El Carino, it is way too simplistic. Tell me what you think!

Wealthy Americans possess these attributes (according to Money Magazine):

Optimism: But not an over the top, Pollyanna attitude.

Loaded parents: Wealthiest 20% of families have a 55% chance of staying in that bracket.

Healthy: Chronic health problems are associated with financial problems.

Intelligent: But not too much-don’t need to be MENSA smart! The top 2% of the population (IQ>130) have a tough time keeping their cash!

Educated:

College degree-gain $450K in lifetime wealth

Graduate degree-gain $570,00K in lifetime wealth

Thin, tall, & attractive: Earn more (2 out of 3 isn’t too bad)

Only children earn the most: Ostensibly because they receive more parental attention

Married one time & stay married:

93% wealthier than unmarried

Divorce reduces wealth by 77%

Married-no kids: Wealthiest, next those with one offspring

Personality traits:

Persistence-the best

Materialistic-the worst

Niceness-not much

Exercise & no smoking: Not a huge surprise here

Men earn more than women: Traditional men (with stay at home wives) earn the most

Entrepreneurs are the wealthiest

Frugal lifestyle: Correlates with wealth (Go personal finance bloggers!)

PRACTICAL APPLICATION; Take this Article with a Grain of Salt

Many of the wealthy traits reflect qualities totally out of your control; wealthy parents, birth order, intelligence, appearance, height, and gender. This is not helpful! If you can’t control these qualities, then what difference do they make? Furthermore, there was minimal data to indicate the actual percent that these qualities contribute to wealth. For example, if 10% of the wealthy are married with no kids, who cares. Plus, some might argue that kids (not teenagers) add to one’s overall wealth!

Isn’t it common sense that persistence is an attribute of the rich? No smoking and exercising indicate discipline, another obvious success trait! If you don’t know men earn more than women and have more financial success then you must be living in a cave. If you are relatively intelligent, you don’t have to be a rocket scientist to figure out that you will probably be richer than someone less brainy.

The more I write this post, the more frustrated I am with the Money article. This article definitely goes in the “tell me something I don’t already know” category!

My unscientific OPINION: Control what you can in life and forget about the rest. Set the goals that are important to you. If you desire wealth, make a plan, break it down into manageable steps, persist in spite of obstacles, and be patient. Focus on the PROCESS, the outcome will follow. Although Money is one of my long term favorite magazines, skip this article.

What do you think? Am I just being cranky or does Do You Have What It Takes To Be Wealthy? adds very little to the pool of knowledge related to wealth?

WHAT DO YOU THINK IT TAKES TO BE WEALTHY?

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.

Set some personal success goals. Make them specific and quantifiable. For example, present 2 new ideas to the boss every other week, commit to saving 15% of your income, brain storm ways to earn extra cash.

Follow this action step and take control of your future, don’t leave it to your birth order!

Read these articles by my personal finance colleagues with more ideas for getting wealthy; there’s something for everyone!

Compare Yourself to a Millionaire by Jaime at Eventual Millionaire
Mike at Oblivious Investor writes about one of the greatest investors of all time, Benjamin Graham on Asset Allocation
Single Guy Money writes How to Make Money on Craigslist
Neal at Wealth Pilgrim tells how to Make Money During Retirement
Learn how Saving Money Today made $60 for Eating French Fries
Matt at Dividend Monk tells you 8 Reasons to go with Dividends
Joe Plemon at Personal Finance by the Book states, You Can Afford that Baby
Kevin at Invest it Wisely recommends Couple Living in a Small Space (great way to SAVE MONEY)

BarbaraFriedbergPersonalFinance around the web this week:

Monevator and Oblivious Investor selected The Magic of Compounding for their link round ups this week
The guest post from BFS, No Debt if I was a Doctor was featured on her site, Budgeting in the Fun Stuff and at KNS Financial

image credit: Anadelmann

When to NOT to Splurge

Barb — Sun, 15 Aug 2010 19:58:30 +0000

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.

“If I splurge on anything, it’s cologne. I love smelling good.” Zac Efron

Personal disclosure: I have never met nor spoken to Zac Efron. (Although I wouldn’t turn down an invitation to meet him!)

MAIN TOPIC: I am ALL FOR SPLURGING

I carefully plan my our family splurges:

El carino (my hubby) indulges in his hobby of collecting sports memorabilia.
I go out to work at a coffee shop once or twice a week and buy a coffee.
Special occasions find me at the COACH outlet for a nice bag.
Travel is planned and a big priority for our family. This week-end it’s a quick family get away to Atlantic City! (No gambling for us!)

PRACTICAL APPLICATION: When not to Splurge

Do not splurge if these are your reasons:

I really really want it
I deserve it
I owe it to myself
I feel like getting it
Why not, you only live once
It will make me happy or important

These reasons to splurge are usually justifications to overspend; just thinly veiled self deceptions.

Look, if you can afford it, pay for it this month, and it’s in your budget, then why not.

But, if you just “WANT IT” but don’t have the cash to pay for it, even if you work hard….. you will regret the IMPULSE PURCHASE.

The August 2010 issue of Money magazine includes 7 Secrets of Super Savers. And although some of the strategies were a bit over the top, many included quite a few luxuries. Delay purchases over a certain amount was a sensible option. After all, the Elovitz family didn’t say “NO” to any purchase, but just to think about it and delay. Another family did not buy anything until they could pay for it in cash. No credit for them. Live below your means is a “no brainer;” but what about living on one spouse’s salary and banking the other?

On the flip side….it is IMPORTANT TO SPLURGE ONCE IN A WHILE. After all, if all you do in life is restrict yourself, you will feel deprived and be more likely to go on a spending binge.

How to make the decision to SPLURGE? Plan a splurge and consider your own personal splurging guidelines.

These are the FRIEDBERG SPLURGE GUIDELINES:

Plan , the purchase, not an impulse buy.
It is something we will enjoy for a while; either thinking about, watching, remembering, or using. Vacations and Broadway shows fit this category. For our splurge, el carino and I budget in trips to NYC to see Broadway Shows (frequently purchasing half price tickets).
Never buy on credit.
Consider whether it is worth the cost, TO US. On a recent trip to visit my parents, my mom offered to take us to a really fancy restaurant to celebrate my birthday. Even though my parents were treating, the cost of an extravagant restaurant is not worth the expense. I value eating out, in fact, I love to eat out…. But really upscale restaurants are not of value for me. I chose a nice seafood restaurant; healthy and tasty!!!
Pays lasting dividends: Education!

Splurging is important! Who wants to live a life of total deprivation? Wealth in life is actually more important than wealth in money. Of course, the irony is that you need a certain amount of financial wealth in order to splurge without debt. Although, a bubble bath is a great (cheap) splurge, it isn’t the same as a trip to Puerto Rico! Choose your splurges to fit into your own budget!

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.

Write out a list of your personal SPLURGE GUIDELINES.

What do you splurge on? How do you plan for it?

Check out what other personal finance bloggers are saying about Splurges.

Cool to be Frugal asks: Is it ok to Splurge when you are in Debt?

Well Heeled Blog wonders if Abnormal Penny Pinching Justifies Splurges?

Money Reasons discusses Losing Control to Lifestyle Inflation

Mea Culpa, I just Spent $1,450 at Apple said the Financial Samurai

Money Funk bemoans her Emotional Spending

Ramit Sethi at I Will Teach you to be Rich shares The Money Diaries of a 25 year old Single Mom who Writes Bad Checks

Image credit: Swamibu

NO DEBT IF I WAS A DOCTOR

Barb — Fri, 13 Aug 2010 03:25:07 +0000

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.

The following is a guest post from Crystal at Budgeting in the Fun Stuff, where she writes about finding the balance between paying your bills, saving for your future, and budgeting for the fun stuff along the way.

Free Money Finance (FMF) had this post which went over an article from Yahoo that listed the worst paying jobs for doctors. The absolute worst paying position still brought in $175,000*.

Well, based on past posts at FMF and others I’ve seen online, some commenters argue that doctors still carry high debts because they “have to” live in the nicest neighborhoods, drive the best cars, and send their kids to expensive private schools. They also have student loans.

FMF’s post argued that even with liability insurance and student loans, a doctor should be able to build wealth quickly. I completely agree.

Let’s say a doctor has to spend 50% of his/her salary on insurance, taxes, and expenses like that. That would still leave the worst paid doctor with about $87,500 a year. I’ll also say that this hypothetical doctor has $150,000 in student loans as the average college debt for doctors was listed at $140,000.

Well, if I made $87,500 a year, I’d live and save a little off of $40,000 and put the other $47,500 towards my student loan debt. I’d be debt free in less than 4 years. Then I could send that extra towards my average $200,000 mortgage in Texas (paying it off in less than 5 years) or even add more to retirement savings.

This would mean that I could be completely debt free within 9 years of graduating and own a really nice house to boot. I’d also have $2 million saved for retirement within another 21 years if I could get an average return of at least 6%.

What about the nice car and expensive private schools?

Well, do you know what your doctor drives? I have no idea. That $40,000 a year budget could easily include a car payment of $350 a month (ours did). If I was a doctor, I’d drive whatever I’d like that could comfortably and consistently get me from Point A to Point B. I like the Toyota Prius, so I’d buy one of those with cash or use my awesome credit to get a low rate in the beginning when I’m strapped. I’d still have it bought outright within my first 2-3 years out of college.

I don’t have kids, but even if I did, the public schools where I live currently are one of the highest rated districts in Texas. My kids could go there. If they needed more mind stimulation, I could hire them a personal tutor or even afford to send them to private school with cash by the time they were in middle school. I might have to drive a worse car or retire on less or push back retirement a few more years, but I could remain debt free.

Some of you may argue that it is impossible to live on $40,000 a year. It’s not – we do it and live pretty happily. We make about $60,000 a year after taxes, insurance, and benefits. We save about 40% of that ($24,000) - 30% for retirement and 10% for shorter-term goals. We live on the other $36,000 a year. We have a pretty nice house (1750 sq.ft. 3 bedroom that was built in 2004), 2 cars, and even fun extras.

This article made me regret not liking science, math, or college enough to pursue a medical degree.

*That $175,000 is an average and doesn’t take into account the doctors that make scraps working for charities or non-profits – please don’t yell at me for them.

How about you, could you build wealth pretty quickly by taking home “just” $87,500 a year?

YAKEZIE SHORT CARNIVAL

Enjoy this personal finanance reading; stop by their sites to read more.

How to Create a Budget-Setting Goals at KNS Financial

How do you know if you are rich? at Living Financially Free Ministries

Crank Up Your Money Saving Goals With SmartyPig at Free From Broke