Savings And Debt Debate: Where Should The Money Go?
The savings and debt debate has been ongoing since the first loan was created. With only so much income to spread around, a big decision must be made. Do you use any extra money to pay off debt or add it to savings?
It’s a fine line which is the right path to follow. On one side you have the debt first absolutists, the other is the futurist savers and some where in between you’ll find your comfort zone.
Debt First Argument
The debt first argument, in the savings and debt debate, is an easy one when you compare low savings account rates with high credit card interest rates. You can’t really argue against it. Pay off those 15% credit cards. But what about those other, lower rate loans, like a mortgage, car loan, or student loans? Read more…
Financial Emergency Kit: Are You Prepared?
Emergencies happen every day. But when the impossible happens, will you be ready? Having a financial emergency kit will make a big difference if the worst should ever happens.
The first step to preparing a financial emergency kit involves a well stocked emergency fund. You may only need enough to cover insurance deductibles or basic bills. But if income loss is involved, being ready for several months will be key. Ideally, it should be enough to cover 4 to 6 months of basic expenses.
Second, is to round-up all the important financial documents into a few safe places. Just having access to extra cash or contact information may be enough for the minor emergency. It’s still best to prepare for the worst, by securing all the important financial information, too.
Financial Emergency Kit Checklist
It’s important to keep all the information as up-to-date as possible. Doing an annual review of your financial emergency kit is a good idea. Just replace any old or outdated information when necessary. Read more…
An Under-Invested America: Is Conservative The New Norm?
Fortunes aren’t made being conservative. Nobody has gotten rich earning less than 1% on their money. Yet more money has been put into savings accounts than into stock and bond funds, since the market crash of ’08. This may sound like a good thing. At first glance it looks as though people are building up their emergency funds. A great sign of financial responsibility, if it were only true.
The first 11 months of 2011, retail investors put over $900 billion into savings accounts. During the same period only $109 billion was investing into stock and bond funds. Putting money into a mattress is never a good idea, but expecting to reach financial goals earning less than 1% is just as bad.
A look at the chart below shows how extremely different the amounts of money saved and invested have become since the ’08 crash. Which isn’t that surprising really. The fact that the numbers haven’t returned to a more normalized setting after four years should be questioned. Read more…
Set Up Automatic Saving For Success
The biggest reason anyone fails at their finances is because they never really start. Sure, they may get through a few weeks. But then it falls off. We lead busy lives and sometimes we let things slide. So it becomes tomorrow’s problem.
It happens with exercising, dieting, curbed spending, and how we save. It’s something that we have all done at some point and it’s a weakness everyone deals with at some point in their lives.
So, instead of trying harder next time, lets take advantage of what’s available, to do the work for us now.
An automatic saving plan will successfully end all the worry and procrastination we have with our finances and force habit change. Let’s work smarter and start automating our savings.
The Automatic Saving Plan
Most people get paid by direct deposit and it happens on a regular schedule. Read more…
Two Guaranteed Ways To Improve Your Finances
There are only two ways of improving your financial situation and neither involves an insurance scam, lottery, gambling, selling a kidney, or a myriad of other legal or illegal activities. In fact both are covered abundantly on finance blogs and websites. Yet the topic is skirted around rather than just getting to the point.
No matter how you dress it up, rewrap it, spin it, discuss it on a per item or action basis, improving your finances only comes down to two things. Spend Less and Earn More. Doing both is not required but it certainly makes improving things easier.
Spend Less
Spending less is a simple concept. Take what you spend now and stop spending so much of it. Take it down to a bare bones approach. Other sites will go on and on about all the different ways to spend less. If you can’t figure out how to do it on your own. You’ll never take the first step. Do a budget, write down everything you spend money on each month, grab a red pen and start marking all the areas that spending can be cut. See how much extra you have at the end.
This is a topic written about every day. I see dozens of posts each week telling me Read more…
Savings Stuck On Pause? Pay Yourself First
When it comes to saving money, sometimes it can be easily overlooked in these debt focused times. Deservedly so, paying down debt has its importance. Typically, with any budget, money is set aside each month for all the bills and other monthly costs. Leaving savings to sometimes take a backseat to those credit card bills or student loans. Which only puts off those savings goals another month. Before long that vacation fund is four months short and sitting on a beach in December is looking very unlikely.
There’s a reason company retirement plans tend to work well from a savings perspective. How many 401k deposits can you miss when the money is taken out before you get paid. It’s basically an automatic bill pay for your retirement account. As long as you show up for work, your retirement savings gets it’s monthly payment.
A Lesson From The Past
As a kid getting any amount of money is a big deal. It can be hard to grasp what things cost and how it relates to the value of the dollar. So, even getting a few quarters can be exciting. At least it was when I was growing up. A quarter back then got me a game of Pac-Man or a bunch of candy. Read more…
How Much Is Enough For An Emergency Fund
Have you ever had the small misfortune to wake up, take a shower, but have no hot water, or where you’re driving to work, only to get a flat. You hope these problems are just a quick fix. But when they’re not, you know it’s going to cost more than you want to spend. The good news is you have an emergency fund set aside just for these situations, right.
When these unplanned problems show up, it’s easy to turn to a credit card and slowly pay it off each month until the next big surprise happens. Of course paying off the extra debt won’t be fun and if it piles up too high, credit cards no longer become an option when the water heater craps out or worse, there’s a job loss.
How Much Should Be Save?
Financial experts give a wide range for how much should be saved for an emergency fund. A starting point is 4 to 6 months of basic expenses. With the recent recession, some experts go as far out as 9 to 12 months. Which may be a bit excessive. Read more…
