Personal Finance Tips
This graph is in liters (1 US gallon = 3.785 liters) and it shows high gas prices in different countries around the world. The first thing that stands out is how much less the USA pays in gas compared to other countries. At 3.80 a gallon we’re paying more than we usually do but we’re far under what the world pays.
The next biggest thing that stood out is why gas prices are so high everywhere else. I always assumed it was because the US had better trade agreements thus getting a better deal on the fuel. This graph shows the real reason prices are so high every where else, taxes. Most European countries pay more in tax per liter than we pay per gallon. The percent of tax they are paying is staggering.
Just by eyeballing the graph it looks like everyone pays between $0.85 to $1.00 for the actual commodity of fuel and the rest is tax. This is a classic example of highway robbery by the governments of Europe (because where else you gonna go to buy gas?).
This graph gives me hope that the United State’s will have a chance at breaking our dependence on oil through entrepreneurship and ingenuity. As gas prices rise those supplying oil are tying their own noose. They will price themselves into obsolescence as new technologies come along. But the lingering concern of new technologies and Europe’s gas prices has always troubled me since they have been at $7 to $8 a gallon for years and no new technology has emerged from their market. The European governments have stripped so much money from the inventors and small business men that a solution hasn’t arrived there. The solution to high gas prices will come from the bottom up not from gigantic energy companies or bloated governments.
Home owners that owe more than their home’s are worth jumped from 23.1% in 2010 to 28.4% in 2011. This dramatic increase in homes that are “underwater” is further evidence that home prices have not yet hit ‘bottom’. There is still room for them to decrease. For those wanting to sell their home (or move) are in a bind because they simply can’t afford to pay the difference in their mortgage debt and what the house is worth.
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Something further complicating the matter is new potential home buyers would rather rent than buy, couples are moving back in with parents, and a bad economy isn’t providing enough money to make a mortgage payment. New lending standards have also made buying a new home much more difficult (requiring as much as 20% down on the purchase of a new home).
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According to Robert Shiller of Yale, the housing market should ‘bottom out’ sometime this year (2011). With interest rates at a record low now would be a great time to buy, if you can afford it.
This video highlights some of the points from two of histories famous economists Keynes and Heyek. Keynes famously said “We will not have any more crashes in our time.” a few years before the great depression.
Notice how the media and politicians ran to interview and congratulate Lord Keynes’ after he lost. How many times do we have to see the systemic failure of Keynesian economics before we discount those theories as fairy tales.
One of the best books on the subject of basic fallacies in economics is Economics in One Lesson by Henry Hazlitt . It’s very well written and entertaining.
Download Free PDF of Economics in One Lesson | Get it on Amazon
If you were to ask someone making $10 an hour what their ideal wage would be do you know what they would say? They would probably say something close to $20 an hour. This is called the DOUBLED INCOME FALACY. It doesn’t matter how much you make but some how doubling it will magically make everything better. Someone that makes 10 million dollars a year will say $20 million would be ideal. So how do we make more money? For most people they have to work at it, they don’t have the luxury of a large inheritance or wealthy parents that give them everything they want. You and I will have to earn more money but how?
1. Ask for it
You would be surprised how simply asking for more money will usually get you more money. If you are working for someone else, ask your employer for a raise. If they say no, ask them what you would need to do to get promoted or get the raise. Most employers will appreciate your willingness to take on more responsibility and your initiative to improve the work you do.
When selling yourself (in a job interview) or selling stuff you make ask for more money. If you are a freelancer ask for more money from your clients. It’s a fact that the lowest paying bargain bin scrounge type customers are usually your worst.
2. Act like you’re self employed, even if you’re not.
Approach everything you do like your money is on the line. Work at your job as if you are having to pay your salary. Bring value to your job, look for ways to save money, and take personal ownership of your work.
3. Get more education
Certifications, degrees, and training will put you head and shoulders above everyone else. In your own endeavors, or while working for someone else, the time you spend getting more education will help you make more money.
4. Start another source of income. (AKA practice income diversity)
You don’t need to quit your job to start making more money. A second job is usually pretty easy but it’s not my first choice. Start a business, a new website, do contract work, or develop one of your hobbies into something profitable. You can start small but diversifying your income should always be a priority. If you were a business and you only had one big client that provided all your income you should work very hard at making that single client less than 50% of your total income. It is extremely risky to live with a single source of income so start new streams often.
5. Spend money on things that will make you more money
One thing that most wealthy people have in common is their fascination with buying things that turn around and make money. Instead of drooling over the newest tech gadget or shiny car they usually drool over new businesses they can invest in, real estate deals, or emerging ideas. Try to avoid the trap of buying the greatest and best computer, tool, or machine because you think that’s what you need to start making money with it. Spending $100K on furniture on your new office before you have any clients is absolutely backwards.
6. Work on things that already have some momentum.
If you are making a little money with an eBay account try expanding that business instead of abandoning it for the next big project. It’s boring to work on old projects but think of the fly wheel principle and get some serious momentum on some of your existing projects.
7. Quit making excuses.
Your biggest enemy to your goal of making more money is YOU. You are your biggest critic too. If you need to spend some time reprogramming your brain do it. There are a ton of great books you can read so get to your library and start reading. If you like audio visit some podcasts for some free personal finance tips.
Based on some research where 22 million used car transactions were evaluated the best time to sell your car is before it rolls another 10,000 on the odometer. Dealerships get the most money out of cars that are just about to roll over to the next 10K mark and tend to get more inventory for cars in that range. Buyers don’t distinguish between 60,100 and 69,900 the same way they distinguish between 69,900 and 70,100. Even thought there is only a 200 mile difference between the two numbers buyers will pay less for cars that rolled past the next 10,000 mile mark (even if it’s only by a hundred miles).
What can we learn from this irrational behavior? Try to buy your cars when they have barely passed the next 10K mark on the odometer (ask for a discount!) and plan to sell your car when it approaches the next 10K mark on the odometer (but doesn’t cross over that mark).
This over-payment effect is the strongest from the first 10,000 miles to around the 90,000 mile mark. After 90K miles buyers seem to be more rational and pay less as the miles increase.
Buying a car is one of the most important decisions a person makes. The car most people buy needs to be dependable while balancing cost. One factor that needs to be addressed is insurance. There are some cars that will cost you an arm and a leg in insurance while other vehicles have much less expensive insurance. Insure.com releases a yearly report of the most and least expensive insurance costs for cars, trucks, suvs, and vans.
The winner in each class is highlighted below with the the two runner-ups for 2010.
Cars with the Lowest Insurance Cost
- Dodge Caliber
- Buick Lacrosse CX
- Toyota Yaris
Vans with the Lowest Insurance Cost
- Honda Odyssey LX
- Chrysler Town & Country LX
- Dodge Grand Caravan SE
SUVs with the Lowest Insurance Cost
- Mazda Tribute i (and S)
- Hyundai Tucson GLS
- Kia Sportage LX
Trucks with the Lowest Insurance Cost
- GMC Canyon WT
- Toyota Tacoma
- Chevrolet Colorado Work Truck
All of these cars are probably driven by people that don’t have anything to prove or anyone to impress. The five most expensive vehicles to insure are:
- Porsche 911 Carrera GT2
- Mercedes S65 AMG
- Dodge Viper SRT-10
- Porsche Panamera Turbo AWHEEL-DRIVE
- Mercedes CL600
Other Ways to Save Money on Cars
http://moneytipcentral.com/buying-a-salvage-title-car
http://moneytipcentral.com/negotiation-tactics-when-buying-a-new-car
Source: http://www.insure.com/car-insurance/low-cost-car-insurance-awards-2010.html
For the first time in many years the airlines have turned a profit. They are increasing hidden fees and charging you for extra checked bags. If you pay for a ticket you should probably add an additional 30-40% to the ticket price to get the same service you got a few years ago. Here’s a breakdown of the prices in this airline fees chart.
In the Airport Fees
Southwest is one of the only airlines that doesn’t charge a checked bag fee for first or second checked bags.
The average checked bag fee is $25, anymore than that and you’re getting ripped off.
The average fee for over 50 lb bags are is an additional $50. Frontier charges the most at $75.
In-flight Service Comparisions
Delta, United, & Continental have the highest pet fees.
A pillow fee is rare, with only one airline, Allegiant, charging for a pillow.
Southwest and Frontier have the lowest alcohol prices.
Hawaiian and Alaskan airlines have the highest meal cost, Southwest doesn’t even provide a meal.
Option brokers specialize in option trading. The best firms will provide robust tools, advanced analysis, and support complex option trading. Before you make a decision on where you’d like to open an account make sure you’ve read some reviews. Many of the companies below allow you to open an account without an minimum balance. Without maintence fees or a cancellation fees you can open a test account try out a few platforms before you settle in to your final decision.
Optionshouse is currently the low cost leader among discount online brokers. In addition to having the lowest cost per trade online they also have one of the best deals for new customers:
100 Free Trades for New Accounts.
But how does Optionshouse stack up against other brokers? This review will explore the pros, cons, and provide a summary and recommendation.
Pros:
Optionshouse has the best commission structure in the industry.
Fast execution and plenty of servers for a fast interface.
Ability to replicate an order very quickly.
One of the best margin rates anywhere.
Very good customer service.
They are backed by Peak6, a professional trading company.
Cons:
Their tools and resources are good but not the best.
They don’t have charts for each individual option.
Strictly web-based.
Summary
If you are a bargain shopper OptionsHouse cannot be beat. If you like trading both stocks and options these guys are a great choice. It would be safe to say these guys are here to stay and they’ll be releasing improved services each year.
Background
OptionsXpress was one of the first brokers to embrace options as an online discount broker. Their development brought options trading online much faster. As a company they have always pushed the envelope on professional trading tools and have always provided them for free. OptionsXpress was one of the first companies providing entry-level and advanced education for free to their customers. Their pricing strategy has driven down the cost of commissions and per contract fees industry wide. Overall they are an excellent company.
Pros
Has the best tools and resources for the active options trader.
Advanced option trading.
Very good execution on trades.
Considered the best options trading broker.
No minimum account balance required to start trading.
Charts for individual options are available.
Cons
Their commissions are competitive but not the lowest online.
Please visit the online discount broker review page to see the best brokers compared.
eOption is one of the newest discount brokers to hit the online scene but they have over 30 years of experience in trading options. Since 2007 they have offered one of the lowest commissions in the industry to win market share. Their interface is straight forward and very good strategic option trading. While trading capabilities are as good as other brokers eOption’s tools aren’t as advanced as Think or Swim’s tools (but very few brokers have the caliber of tools TOS offers). As time goes on eOption’s set of tools and capabilities as other online option brokers. Direct access and multiple platforms are available for active traders. One of the standout features eOption provides is the ability to close multi-leg trade in a single click.
They provide free IRA accounts with no maintenance fees and are overall very good with not charging unnecessary fees. They are one of the few brokers that allow you to open account if you’re not a US citizen (good for international customers). They provide after-hours trading which is a nice feature not provided by most brokers. Execution routes through Citibank and speed is relatively fast and accurate. They support a number of ways to access and transfer your cash including a checking account, a visa check card/ATM card, and web bill pay.
The downside to eOption is that they require a minimum balance of $500 to open an account. Live streaming quotes are $15/month unless you trade at least 10 times.
Fees
Option + Contract = $3.00 + 0.10 per contract
Stock Trade = $3.00 per trade
Note: Some investors are claiming if you call eOptions you can get the per contract fee down to 0.05 per contract.
Pros:
One of the lowest cost brokers online.
No Fee IRAs.
Offer a wide range of investment options including stock, bonds, options, and more.
Supports international accounts (Accounts can be created for people outside the USA)
One click execution of multiple leg orders.
Cons:
Minimum of $500 to start an account required.
Streaming quotes and live charts are an additional $15/month if you trade infrequently.
Please visit the online discount broker review page to see the best brokers compared.
Company
Based out of Illinois, Think or Swim is a broker specializing in option trading. Their pricing structure caters to high volume traders and is intended to weed out smaller investors not willing to purchase large quantities in a single trade. They don’t charge some of the maintenance or inactivity fees you’ll see at other brokers. Their customer service is top notch and actually proactive if you are a big enough client. Overall ThinkorSwim is pushing the envelope on tools, software, and charting but may not be the best choice for newbie investors. If you are new to the game it doesn’t hurt to open an account because they don’t have an inactivity fee.
Pros:
No inactivity or IRA fees.
Three free mutual fund trades per month.
Top rated software and mobile applications.
Barron’s top choice two years in a row (2009 & 2010).
One of the best educational services around (including free paper trading accounts).
Desktop application is rated one of the best tools for option trading.
Charts provided are some of the best for technical analysis.
Cons:
Can be intimidating for newbie investors.
Minimum Required Balance of $3,500.
Bond pricing is not favorable.
FOREX Trading is not optimal here but have improved lately.
Commission structure can be expensive for newbies and penny stock traders.
Notes on ThinkorSwim
Some investors have been able to price match a competitors commissions just by asking for them. These investors have confirmed receiving TradeKing commission on their thinkorswim account. It’s worth a try.
Coupons & Promotions
Refer a friend and get $50 for each successful account created.
$100 Account Transfer Rebate – When you transfer to Think or Swim (TOS) they will reimburse any fees you incurred from your previous broker up to $100.
Active Trader Rebate – If you make more than 40 trades a month they’ll credit you $39 to cover some of your internet bill.
According to the U.S. Department of Labor’s Bureau of Labor Statistics, there are nearly 31 million people currently unemployed — that’s including those involuntarily working parttime and those who want a job, but have given up on trying to find one. In the face of the worst economic upheaval since the Great Depression, millions of Americans are hurting. “The Decline: The Geography of a Recession,” as created by labor writer LaToya Egwuekwe, serves as a vivid representation of just how much. Watch the deteriorating transformation of the U.S. economy from January 2007 — approximately one year before the start of the recession — to the most recent unemployment data available today.
