Personal Finance New Year’s Resolutions

Here are a few ideas for you to consider as Personal Finance New Year’s Resolutions:

1. Review all of your insurance policies. When it comes to your health, life, auto, and homeowners policies, do you have too little or much coverage? Also, don’t wait until the policy is about to expire before you shop around. Most of the time, when you switch companies and cancel your existing insurance policy you receive a refund for the unused portion.

2. Create a few specific savings goals for 2012. Create a plan that includes specific dates and dollar amounts. Create rewards for achieving each goal. Make sure you stick to the plan no matter what. You might want to contribute more than your budgeted amount each time period so when (not if) you have a tough financial month, you won’t fall behind on your savings goals.

3. Start getting serious about retirement planning. Don’t put it off another year or week for that matter. People are living longer than ever which is a good thing, but you don’t want to run out of money when you’re 85 or 90.

4. Educate your children about money so they can support you when you get old. Teaching them how to be financially successful is a powerful gift that keeps giving for years to come. It’s not an “Order online once” type of gift, but like most things in life, the more time and effort you spend, the better the results.

5. Max out your pre-tax savings opportunities instead of maxing out your credit cards. If your company offers a 401K plan, sign up. If you already contribute, increase your contribution. Also consider taking advantage of another powerful pre-tax savings tool – IRAs. Both of these allow you to invest your money before the government takes their cut out of your paycheck which can really add up to big dollars over time.

6. Work on paying off all of your credit card debt. Do more than just doubling your minimum payment. Start paying off big chunks of the highest interest credit card balances first. Start with a reasonable monthly amount and then increase it a little every month. When you calculate how much money you spend a year on credit card interest, you’ll instantly begin shock therapy and start spending only what you can afford to pay off at the end of each month.

Garrett Jay is a Money Coach who offers private money coaching via Skype and innovative financial literacy school programs.  He is the author of “Goodbye Money – 1,000 Ways to Waste It, or Not”, and Executive Producer of Amazon Bestseller, “Intro to Money” DVD for students.

Also check out TeachMoneyNow.com.

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6 Money Tips for Renters

More and more Americans are renting a place to live.  There are now 38 million U.S. households renting rather than owning a home.  Both new and experienced renters often learn how small oversights can lead to very expensive mistakes.  I like helping people learn about money mistakes before they make them.

The following practical money help is taken from my new slightly sarcastic, yet comprehensive personal finance guide, “Goodbye Money – 1,000 Ways to Waste It, or Not”.  Please note the style I used to make it different from other boring finance books.  These are ways to waste your money (or not).

For Tenants
Before Moving In

1.  Give a deposit to someone before verifying if they’re the owner or agent of the place you’re looking to rent.  Yes, I know you’ve been using Craigslist for years, but you just handed $4,000 to someone you just met a few minutes ago.

2.  Quickly scan the lease and sign it even if you don’t agree with all of the terms or don’t understand all of the conditions.  Don’t postpone signing the lease even if you have questions that the landlord or agent couldn’t answer.  Why waste time calling an expert or researching the information online when you can sign your life away quickly?  Why challenge or question some of the terms of the lease?  Is it because you can’t find anywhere else to live?  Being polite or executing a lease agreement too quickly can cost you a lot of aggravation and money later.

It’s much better to get clarification from an expert before you sign.  It won’t be easy to renegotiate the terms after you sign on the line.  If you eventually end up in court, pleading ignorance is not a defense, although the judge may find it amusing.  What do you mean you had no idea what you were signing?  Did someone put a gun to your head?

Learn about money mistakes before you make them!

3.  Sign a lease or give a deposit and then change your mind.  Good luck trying to get all or part of your money back.  You’ve entered into an agreement and then the landlord took the place off the market so that you could have it.  If you back out of the deal, he may not have enough time to find a qualified tenant before the beginning of the month.  But don’t worry, it’s not like he has to pay his mortgage or other bills on time.  The bank and utility companies will be nice and let him wait to pay until he finds another tenant.

4.  Be cheap or lazy and don’t buy renter’s insurance.  You don’t care about the possibility of replacing your furniture, electronics, clothing, jewelry and other household items.  The premium usually averages about $20 a month, but you’d rather wait for something bad to happen so you can lose hundreds or thousands of dollars.

5.  Rent an apartment that you think might not be a legal apartment and later sue the landlord for all the rent money you’ve paid.  You’re not entitled to live somewhere for free.  You could also be forced to move out with very little notice if a local agency decides that the apartment must be vacated until it complies with local occupancy codes and laws.

6.  Don’t bother inspecting the unit with the landlord or agent before moving in.  While you’re at it, don’t write down the condition of the floors, walls, and appliances and don’t take any pictures.

Remember, these tips and over 1,000 more can be found in my new comprehensive financial literacy guide, “Goodbye Money – 1,000 Ways to Waste It, or Not”.  It’s now also available for Kindle and Nook readers on Amazon.com and BarnesandNoble.com.

Money – It’s How Much You Keep that Matters

How much you earn matters, but how much you keep, and what you do with your money matters more.  Don’t overlook the importance of reviewing your financial statements for accuracy and completeness. 

Mistakes made by financial institutions with your money allow the money to slip away quietly when you’re not looking.  Oversights or mistakes that you make will, of course, have the same effect.  And don’t be afraid or too lazy to ask questions or to push the envelope a little and ask for discounts or fee reversals.  The worst that could happen is that they say no.

Don’t underestimate the importance of your credit rating or credit score, which is like your report card grade for the real life class, “Borrowing Money.”  A low score will cost you money with higher interest rates and fees.  A really low score may mean that no traditional lenders will want to lend you any money. 

Think a few late or missed payments are not a big deal?  Think again.  Here’s an example that likens a class grade point average with credit cards.  You take a class where the instructor gives four evenly-weighted tests in a semester.  It’s something like having four credit cards in your wallet.  If you score a 92 on your first test and an 88 on your second, you’d have a 90 average.  If you bomb the third test and score a 66, your average would drop to an 82.  You basically went from an A- to a C+ just because you had a bad day and didn’t do well on one test.  Even if you do really well on the last test and score a 90, your overall average for the semester would only be an 84.  This may be an oversimplification, but the consequences of missing one or two payments, or paying a few bills late, can be great.  Try to consider this before you delay payments.

This post is an excerpt from my slightly sarcastic, yet comprehensive personal finance guide, “Goodbye Money – 1,000 Ways to Waste It, or Not”.

Also check out my Amazon Bestseller, “Intro to Money” DVD for tweens and teens.

Money Lessons for Life offers innovative financial literacy assemblies, Money Field Trips, classroom workshops and individual money coaching.  These interactive programs are great for elementary school students, middle school students, high school students, college students and adults.

12 Reasons Why We Waste Money

The following is a small excerpt from my brand new book,
Goodbye Money – 1,000 Ways to Waste It, or Not.

We’ve heard over and over that we spend too much money.
We don’t save enough money.
But why?

1. We make excuses. Do any of these sound familiar?

• I’ve never been good with money.
• Financial information is too complicated for me to understand.
• I’m not good with numbers.
• I’ll never be rich.

2. We rationalize spending. “I work very hard. I deserve expensive vacations, lots of pricey designer clothing, and dining at gourmet restaurants every week.” It’s the “life is short” syndrome. Life won’t feel so short when you’re 85 and still working to pay your bills. Sometimes you convince yourself that you’re making the right decision to protect your ego. If, however, you’re responsible with your money most of the time, you can splurge once in a while. This helps to create balance in your life.

3. We don’t want to be thought of as cheap. We perceive that others may judge us by what we have, or may think less of us when we spend our money conservatively. Improving your self-esteem should not be an excuse for buying things. The momentary “high” you get from making a purchase fades quickly when you receive the credit card bill in the mail and you don’t have enough money to pay it.

4. We think it takes too much time and effort to be smart with our money. Actually, once you develop good habits and reinforce them, they will take less time and effort, and will be easier to maintain.

5. We’re afraid that we may sound foolish if we ask a question. If you don’t ask for clarification about a charge or a bill, you won’t know whether it’s a mistake that should be corrected so the money can be returned to your pocket. In addition, if you don’t ask for a discount, you won’t know if you can get one. Don’t be embarrassed to ask, “Is a discount available for this item or service?” If you don’t ask questions you won’t become smarter about your money.

6. We love instant gratification. Why wait when we can have it right now? We give ourselves permission to run wild and make purchases without thinking them through.

7. We fall for sob stories and let emotions control our behavior. Boyfriends, girlfriends, co-workers, friends, and our children beg us to help them by lending them or giving them money. Beware! Personal loans often turn into losses (uncollected debts). Sob stories can represent a red flag warning for you to run, not walk, away from! It’s harder to say no when your children (including adult children) ask you for money. You don’t want to enable more bad money behavior by giving or lending them money when they don’t have enough of their own saved. Tough love is hard, but necessary. You may want to read this paragraph again.

8. We’re in denial about how much we spend. Ignorance is not bliss. Often, we’re in such a rush that we don’t know what we spend our money on, or how much we spend. We confuse needs with wants. “I’ll buy this now and figure out how to pay for it later (or not).” Try writing down everything you spend money on for a week or two. This may help shock you into reality. “Make the pen your friend before you spend.”

9. We think that shopping is a hobby. Even if it makes us feel better, shopping shouldn’t be used as an excuse to get together with friends.

10. We trust people too easily. Proceed with caution when solicitors, salespeople, and self-proclaimed experts try to persuade you to buy something, to donate money, or “to get rich quick.” Remember the old adage, “If it’s too good to be true, it usually is.” Some may intentionally want to scam you. Others, who are just trying to earn a living, may persuade you to make decisions that are not in your best interest.

11. We procrastinate. Putting off financial responsibilities often leads to rushed decisions or missed deadlines. Costly choices we regret, late fees, penalties and missed opportunities all represent the price you can pay by not tackling money responsibilities on time.

12. We don’t plan ahead. At first glance, you may think that this reason is similar to the previous one. Although they both have to do with time, procrastination relates to putting something off, or a delay. Not planning ahead also affects your future, but usually more in the medium to long term. Often times, we forget to stop and think about the impact a decision today will have in the future. Not setting financial goals and making plans to achieve them can have severe consequences. More specifically, if you don’t plan for financial emergencies, although they are likely to happen to everyone at some point, guess what? You may be forced to do things you’d rather not do.

The publication date for Goodbye Money is June, 21, 2011. A limited number of prerelease copies are now. Visit http://www.goodbyemoney.net for more information. Garrett Jay, Author of Goodbye Money – 1,000 Ways to Waste It, or Not and Executive Producer of Amazon Bestseller Intro to Money DVD Money Lessons for Life provides innovative financial literacy with school assemblies, classroom workshops, public event speaking, Money Field Trips, individual money coaching for students and adults.

How Much Money Do You Waste on Credit Card Interest?

Average credit card debt is getting smaller here in the U.S. which is a good thing in the long run for our country.  The problem is that old habits die hard.  Will we be able to maintain these habits when the economy gets better?

How are you doing with your credit card debt?  It’s a lot easier to spend money than it is to pay it off, especially with high interest rates.  Do you know how much money you spend every month in credit card interest?  If you spend $60 a month, that’s $720 a year.  $110 a month = $1,320 a year.  Maybe once you figure out how much you spend on credit card interest, you will be more motivated to pay off your debt and to only charge what you can pay in full at the end of the month when the statement arrives.

Here are 3 easy steps to calculate how much you spend on credit card interest:

1. Gather your recent credit card statements.  Look for your interest rate and how much you spent on interest the previous month.  This information is usually located at the bottom of the last page of your statement.

2.  In a notebook or with a simple spreadsheet, list each credit card, its average monthly balance (also found on your statement) and the interest you paid for the month.  You should record these amounts every month for a few months to track your progress towards lowering your debt and interest paid.  Are you paying less every month as you move forward?  If not, why?  Have you reduced some of your unnecessary spending so you can have more money available to pay off your debt?

3.  Add up all of the monthly interest amounts and then multiply the total by 12 to arrive at your estimated amount of money you spend per year (or should I say waste) on credit card interest.  For example, if your total monthly interest is $86, just multiply $86 by 12 months to calculate how much you spend per year on credit card interest ($86 x 12 = $1,032 per year).

Could you use that money for a vacation?  How about to buy a flat screen TV?  Best of all you could pay off your debt faster and even start saving some money.  What a concept!

To learn more about your current financial situation and how to plan for a successful financial future, I offer personal Money Coaching for adults either in person or remotely.  You can also check out Money Lessons for Life for school assemblies, classroom workshops, Money Field Trips and learning materials for K-12 and college students.

Garrett Jay bio

If Justin Bieber’s mom can keep him on an allowance, why can’t you?

Are your children always asking you for money or to buy things for them?  You are not alone.  I am talking about your children whether they are just beyond toddlers, preteens, teenagers, or adult children.

Kudos to Justin Bieber’s mom who gives Justin $50 a day as allowance even though we all know he could well afford to spend thousands more.  If she can do it, why can’t you?  She is basically saying no to potentially wild and reckless spending.  Saying no to your children at any stage of their life can be difficult.  Your emotions or subconscious can take over and you may give in to any or all of the following:

1.  Parental guilt.
2.  Wanting your children to have a better life than you had at their age.
3.  It’s often easier to say yes than to say no.

But what do you think you are doing by saying yes to their wants and needs, even when the need seems desperate and worthwhile?  You are enabling bad behavior when it comes to money.  Your actions are speaking louder than words.  You are sending them the following message loud and clear, “Don’t worry.  Whenever you want or need something, I’ll buy it for you or give you the money”.  Or, “If you get into financial trouble, I’ll be here to bail you out.”  Paying off their credit card debt, making car payments for them or paying their cell phone bill are all ways to diminish the value of the dollar.  Why should they care how much things cost or how much they need to work in order to pay for certain “luxuries”?  You’re always there to fork over the cash.  Wait and see what happens when you try to remove the pacifier just a little.  I hope you are wearing gloves!  If not, your hand that normally feeds the mouth may become bloody.

There are lots of ways to slowly transition and transform your children’s financial behavior.   Drop me a line and maybe I’ll share one or two with you.   🙂

I offer Money Coaching for children of all ages and adults.  You can also check out our DVD. Elementary school, middle school, high school, college students and beyond can all learn useful money lessons from Money Lessons for Life’s DVD, “Intro to Money”.

http://MoneyLessonsforLife.com

Taxes are everywhere and multiplying like an epidemic

When we hear or read about how much money we pay in taxes here in America, it is usually in reference to income taxes. What bracket are you in? What percentage of your income will you pay? There are so many other taxes that we pay. It’s hard to calculate what percentage of our income we really pay every year.

Here’s a short example of taxes most people don’t think about. It does not refer to state or local income taxes, property taxes or sales taxes. How much money do you think you pay in taxes when you purchase a domestic airline ticket? What percentage is added to the base price? A few minutes ago, I checked on fares from Palm Beach International (PBI) to Los Angeles (LAX) and found the cheapest fare to be $218. The total cost of the ticket not including any baggage fees (not a tax, but another cost booster) would be $257.80. It looks like $39.80 in taxes (some of which are disguised as fees), but the total taxes and fees are actually $55.00, because the Federal Transportation Tax of $15.20 was already included (hidden) in the base price of the ticket.
U.S. Federal Transportation Tax $15.20
U.S. Security Service Fee $15.00
U.S. Passenger Facility Charge $10.00
U.S. Flight Segment Tax $14.80
Total $55.00

If you subtract the total taxes and fees ($55.00) from the total cost of $257.80, the true base ticket price is $202.80. The percentage of the base ticket price attributable to taxes and fees is over 27% ($55.00/$202.80). Note that there are no web service fees or processing fees included in this example. The fare and tax information was taken from the Continental Airlines web site.

Why does this matter? Well for starters not that long ago you would have paid a few dollars (probably less than $15) in taxes and charges for this same flight. Hidden taxes increase the cost to consumers which means they may buy fewer airline tickets or have less money to make other purchases. The taxes collected and spent quietly erode our spendable income and deteriorate our country’s ability to grow through saving and investment.

Just something to think about…

And, now to plug my Financial Literacy and Money Coaching business. Visit Money Lessons for Life for more information about our products and services that teach students and adults about money.

Financial Literacy is more than eating rice and beans

It’s April.  Do you know where your money is?  April is Financial Literacy Month and although you won’t get a 3 day weekend to celebrate this “holiday”, it’s a good time to reflect, set goals and learn about money. 

Financial Literacy is more than eating rice and beans for dinner every night or using 3 squares of toilet paper isn’t of 4.  Yes, saving and budgeting are important parts of building a successful financial future, but there’s so much more.  How much do you, your children and your adult children know about personal finance?

A lot of people don’t realize that paying their credit card bill, car payment or student loan payment late just once or twice can really take a dent out of their credit score.  Companies that loan money “talk” among themselves and bad news travels fast.  If you aren’t paying your FasterCard on time, Meeza card might also decide to raise your interest rate.  Paying late usually comes with an added bonus you didn’t ask for –> late fees.  Also, a lower credit score can cost you extra money with higher interest rates when you want to borrow money for something else like furniture or a home.  If your credit score is low enough, it may even prevent you from borrowing additional money.

Let’s switch gears to investing.  Do you and your children really understand what a stock is?  Here are a few brief points to explain stock:

• A company initially issues and sells stock to raise money to operate and grow their business.
• By purchasing stock, an investor actually owns a piece or portion of the company.
• If the company’s stock is actively traded on a stock exchange it can be sold rather quickly to someone else.
• Some companies pay a portion of their earnings as dividends to their stockholders.  Dividends increase the return earned on a stock investment.
• If you sell the stock for more than you paid you will have earned a capital gain which is the increase of the stock’s value.
• Your total return would be any dividends paid + the appreciation of the stock price – any commissions or fees paid.

For more unbiased financial information that’s made easy to understand, consider buying the “Intro to Money” DVD  and our lesson plans for classroom and home use.  Money Lessons for Life also offers Money Field Trips, School Assemblies and private money coaching.

This message has been brought to you by Money Lessons for Life and Garrett Jay.  You can also follow and list me on Twitter

New credit card rules affect students

Credit card companies have been feverishly changing their policies to recoup projected lost revenues due to the new credit card legislation that recently went into effect.   This means that if you haven’t already received a notice stating changes that will cost you more money, you probably will in the near future.  I just received a notice from Citibank stating that my credit card annual fee will increase from 0 to 60 in a few seconds (actually as of April 1, 2010).  They will refund the $60 fee if I spend at least $2,400 a year with that card.  Although they have 170 different types of credit cards, they were unable to tell me which ones won’t have an annual fee come April.  I will most likely cancel the card after I give Citi one more chance to keep me as a customer.  This may slightly decrease my credit score because I have had this account for over 12 years with an excellent credit history, but I am willing to take that chance.  The credit card companies literally earn billions of dollars a year.  They earn plenty of money from the merchants I shop with even though they earn nothing additional from people like me who pay their bill in full and on time every month.  They don’t need my $60 a year to remain hugely profitable.

I have not heard of any credit card company negative responses (yet) to the new credit card rules for young adults.  Maybe because the new rules don’t have as dramatic or as fast of a negative impact to their bottom line profits.  Credit card companies can no longer sign up new customers for credit cards without proof that they have the ability to repay the money they spend or without a co signor.   What a concept!  This is very good news and a great opportunity to teach your children and your grown children how a credit card works and how to use one responsibly.  It’s also a red flag warning about the dangers of cosigning a credit card account for your offspring or for anyone for that matter.  When you cosign a contract or loan, you are 100% responsible for paying the debt on time if the other person does not regardless of who spent or used the money.  Both parties credit score will be affected by both good and bad credit behavior.  I strongly urge parents to require their children to start working at least part-time before they get a credit card rather than having someone cosign for their account.  It will offer the greatest early life lessons of being responsible for repaying money they borrow.  No more excuses such as they have to spend their free time studying or I don’t want my children not to enjoy their youth.  A little work never hurt anyone and it definitely increases your appreciation for money.  Here are just a few simple, yet powerful money lessons:

• Earn before you spend and spend wisely.
• Money  mistakes can cost you a lot of money now and in your future.
• It’s also lot easier to spend money than to make money.

NEW for teachers and parents:  Credit Card Module designed for high school and college students includes lessons, activities, money tips and review questions.  You won’t find a better investment for your children’s future.  This environmentally friendly PDF version is available for only $10.  It is not yet available on our website, but you can call or e-mail to order your copy. 561$333$1220  friends@moneylessonsforlife.com

 Money Lessons for Life offers unbiased financial literacy for students and adults including school assemblies, classroom workshops, Money Field Trips, educational materials and individual money coaching.  http://moneylessonsforlife.com

Credit Cards aren’t bad, but habits can be

When I begin a Money Lessons for Life lesson about credit cards, I am often interrupted by students telling me that credit cards are bad.  I respond by explaining that credit cards are good if you use them correctly and very bad if you aren’t careful.  And, if you have a no annual fee credit card and pay your balance in full and on time every month you pay nothing to use the card.

 Here are a few benefits:

1.  Convenience.  You don’t have to worry about carrying enough cash in your pocket.

2.  Safety.  If your cash is lost or stolen you probably won’t ever get it back.  If your credit card is lost or stolen you are usually protected if you report it to your credit card company quickly.  Generally, $50 is the most you would be responsible to pay, but often you aren’t responsible for any charges you didn’t make.

3.  Act as a purchase record that can also be very helpful for income tax records.

4.  Sometimes offer bonus benefits such as frequent flyer miles.

5.  Dispute resolution.  If you have a problem with a product or service you buy with a credit card and you are not having any luck settling the dispute with the merchant, you can ask your credit card company to help mediate the matter.  They will reverse the charge until the dispute it settled.

But, buying more than you can afford to pay when the bill arrives in a few short weeks can cost you a lot of money in interest and fees.  If you pay late or even worse miss a payment your credit score will drop.  A lower credit score will make it harder and more expensive for you to borrow money with car loans, home mortgages and other credit cards.

For more money lessons including DVDs and school assemblies visit http://moneylessonsforlife.com