Personal Finance Tips

10 Career and Education Personal Finance Tips

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Investing in yourself is one of the best investments you can make. Warren Buffet makes the point that when you graduate from college (or anything else) you should hypothetically bet on the person you think will make the most money in their life. He argues that the person you should place all your money on is YOU. You have the best chance of making money as compared to anyone else. When you approach education and your career in those terms it places the responsibility on your own shoulders to be the best you can.

Tip 1 – Never Take a Job You Hate to Build Your Career.
“It’s crazy to take little in between jobs just because they look good on your resume. That’s like saving sex for your old age. Do what you love and work for whom you admire the most, and you’ve given yourself the best chance in life you can.” – Warren Buffet. If you aren’t singing and tap dancing coming to work each day you are wasting your life. Quit your job today and start doing what you love. If you have any kind of work ethic you will make money doing what you love. The problem with most ‘starving artists’ is that laziness and the creative process are one in the same to them. Most of the people that make it doing something they love are incredibly driven, hard working people.

Tip 2 – Get an education early in life.
People that go back to school when they are 50 kind of missed the boat (although it’s better than not finishing). Take AP classes in high school, take hard classes, and get your bachelors degree early in life. A bachelors degree used to mean a lot more 30 years ago but you almost need an masters degree and 10 years experience before most high paying jobs are available to you. Make education your top priority early in life and reap the rewards the rest of your life.

Tip 3 – Choose the most challenging paths.
When you’re choosing your degree always opt for the hardest option that will challenge you. The same holds true in your career. Don’t take easy projects or try to take the easy way out all the time. Do things that are difficult for you. Remember that history and english majors are never paid as much as engineers and physic majors.

Tip 4 – Manage your career.
Too many college graduates think that all their problems will go away once they graduate. A successful career takes careful planning, hard work, and sacrifice. Think ahead and take steps today that will help your career in the future. Your career is one of your most important assets.

Tip 5 – Start Saving Early for Your Kids College.
Some experts suggest saving for your kids college only after your retirement funds have been secured. The reasoning behind that is the options for funding education are plentiful while funding for your retirement don’t exist. Once you’re on track with your retirement try to save at least 30% of your kids’ projected college expenses.

Tip 6 – Consider public schools.
Many public or state schools have very good programs in certain areas. Finding a public university that specializes in your area of study can be just as good as attending a private school in many cases.

Tip 7 – Get your Associates Degree and then Transfer
Many universities will accept all your credits if you transfer with an associates degree. You can usually transfer from an online school or a community college but you’ll want to check before you commit to this idea. Start your first two years with a less expensive college and get your Bachelors with a more prestigious or well know university.

Tip 8 – Ask for raises and promotions.
Make sure you’ve done your homework, tracked your achievements, and deserve a raise. If so, don’t hesitate to ask for a raise. Most managers and companies will be happy to try to make sure you’re being paid the current market value of the position your filling.

Tip 9 – Become a Lifelong Learner
Commit to always be improving, educating, and advancing your knowledge in and outside your field of study and career. Getting professional certificates are a great way to keep your skills polished. You should always strive to be reading good books and attending classes on subjects that you’re interested in (and subjects you don’t know anything about). Try to attend seminars, classes, and listen to podcasts. Audio books are a great way to read the classics and career related material. Turn off the TV and stimulate your brain meat as often as you can.

Tip 10 – Take Time and Cherish the Simple Moments in Life
Playing peek-a-boo with your new child, cuddling with your spouse, and feeling the grass under your toes is what life is all about. Be very protective of the time you spend with the people you love and never let money, your career, or being a top achiever get in the way of that.

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Buying a Salvage Title Car

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Buying a car with a salvage title can save you a lot of money. If you have a goal to pay cash for your vehicles this is a little short-cut that can save you thousands of dollars in car payments, interest, and insurance. My dad has always bought salvage title cars and I’ve bought three myself. There are some tips to buying a salvage title that may help you get the best deal possible.

Advantages of Buying These Types of Vehicles
Save on Car Payments – Most likely you will pay cash for a car you buy in this situation. Funding on salvage title cars is non-existent. When I bought my first car like this I got a signature loan because the car didn’t qualify for a traditional auto loan If you pay cash for your car you won’t pay a penny in interest.

Save on Insurance – With a car of this type you can forgo paying for full coverage insurance. This is because the insurance company won’t give you anything if you were in an accident that was your fault. They will let you buy full coverage insurance but they won’t pay out when you crash (nice eh ;) ). The only insurance you need is the bare minimum required by law by your state, which is Limited Liability Insurance. It should be about a third the cost of comparable full coverage insurance for the same car.

Pay less and get more – You can expect to pay much less for a car with a salvage title. If you don’t mind working on the body of your car and like sanding Bondo (a filler adhesive) you’ll be set to get a car for half off or more!

Where to Find Salvage Title Cars
Auctions – Insurance auctions is where you’ll find the biggest selection of salvage title cars. You need to go with a ‘buying agent’. These agents will have a used car dealership and will charge a small fee to take you to the auction. They’ll give you a lot of tips and information on each make and model of car. They will also help you evaluate the damage. After attending a few auctions I found the environment and selections of cars really aren’t the best. Almost every time I went to the auction I found myself paying way too much (especially for popular vehicles with light damage).

Friends and Family that have been in an accident. – If you know of someone that has been in an accident (and it’s not serious..cause you’re not a huge jerk) and the damage to their car isn’t that bad let them know you’re interested in buying it from them if the insurance company wants to total the car. Usually, the insurance company will allow the owner of the car to buy the car back at a deeply discounted price once the car has been totaled out. A new title will need to be assigned (thus making it a salvage title) and the transfer of ownership can be done at the same time.

Classified Ads – Many times you can find salvaged titled cars in the classifieds. If you see a car that has a price that is too good to be true you’re probably looking at a salvage car. Make sure when you buy a car you always run the VIN number to make sure the title is what is says it is.

Repair Shops and Junk Yards. Usually repair shops located close to junk yards will have a bone yard of salvage title cars you can look over. Many junk yards themselves will have a selection of these types of cars. The price is set on each car. This is my preferred method of finding a wrecked car because there’s no chance of someone bidding up the price like in an auction setting.

Tips on Selecting the Best Car and Damage
Find a car that has been hit lightly from behind. Front end damage is difficult to fix and may have worse issues with the engine or cooling system once you start driving it regularly. Avoid side damage or cars that have been in roll-over accidents. When you find a car that has been hit from behind try to make sure the trunk still works and seals. Ideally, you want a car that all you need to replace is a tail light and the bumper. These are rare.

Small Trucks are Nearly Impossible to Get a Good Deal On. There is a lot of demand for small ‘beater’ trucks. You’ll likely pay just as much or more for a salvage title truck then you will for a comparable used truck.

Would I Buy a Salvage Car Again?
Probably not. And here’s why. If you look regularly on craigslist for cars you’ll probably find a car in good condition in the price range you want. If you factor in the time you spend repairing a wrecked car and the money you spend on parts a private seller used car is going to be hard to beat. Now if a salvage car is presented to you that only needs a tail light go for it. You won’t find a better deal then that. The other exception to this is if you know someone that frequents the auctions or junk yards regularly and can call you when they see a really good deal. This is a proven way find a salvage car. If you don’t have the luxury to wait for the deal of a lifetime you’ll probably just break even at best trying to fix a car with damage.

Another thing to remember is most repairs won’t be perfect. If having a perfect car is your goal in life you won’t want to attempt buying a car like this.

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Master Your Monthly Bills

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For some people, bills control their lives. My friend is in this situation. Any time we talk about finances, which isn’t often, he brings up how he is drowning in bills. He complains about how big his mortgage is, his monthly car payments, and a number of other bills. Every month he has to work very hard just to make ends meet. His wife works a full time job as well. If something were to happen to either of them they would be in serious financial trouble. After one month of missed income they would start to get threatening letters. After a few months the phone would be ringing off the hook with aggressive bill collectors. Within six months they could lose everything. Most people would not be able to go six months without any income, I know I wouldn’t be able to. The difference between my situation and my friend’s situation is I could live on substantially less income without too much sacrifice to my lifestyle. Why is this? We have two approaches when it comes to bills and debt.

If you are familiar with He-Man you’ll remember his character going from a wimpy guy with a funny hair cut to a bulging muscle man with a funny hair cut. The difference comes after he holds his sword over his head and yells some stuff. The last line he screams to the sky is “I HAVE THE POWER!!!”. This, my friend, is key. You have complete control over your bills. When you get your first credit card in college, pay your own rent, or buy your first car, you have complete control over what your bills will be.

All the frugal living tips will be pointless if you bought too much house, drive new cars that are out of your league (most cars are), and live beyond your means via debt. Peeing in the shower to save on your utility bills won’t make any difference once you’ve made major mistakes in creating your bills.

Note: I’m joking about the peeing in the shower thing.

 

How I Paid Off My Credit Card Debt

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This last month I was able to pay off all my credit card debt. I’m not paying a single penny to the credit card companies anymore. It’s the first really big goal I’ve been able to achieve with my finances. It feels great and this is how I did it.


Step 1) Be really annoyed by interest (and fees) you are paying. This was the foundation of the goal to pay off all my balances. Every month I would look at my statement or check my personal finance software and see INTEREST PAYMENT or FEE coming from my credit card company. These words started really annoying me. The amount I paid in interest payments was the equivalent to doing something nice every month. When I calculated how much interest I was paying it made my resolution even stronger to pay off all my cards.


Step 2) Switch to an all cash budget. There is no question this step took the biggest bite out of our credit card debt. We used the envelope method of budgeting and it worked. One consideration to switching to cash is losing out on the credit card points. When I tallyed the sigh-up bonuses and other rewards I was actually in the red at the end of it all. Saying good-bye to using credit cards regularly was an adjustment but it feels good to use cash again. Another thing with envelope budgeting is that when the money is gone it’s gone. Prioritizing is something I haven’t done in a while and it feels good. I generally get the stuff I really need and don’t miss out on too many things.

Step 3) Sell Junk Laying Around. You would be surprised at how much valuable stuff you have laying around your house. Think about all the old things you don’t use anymore and make a list. Post your items on craigslist and put the cash you make towards your debt. This exercise helped me realize how much crap I’ve bought over the years and makes me think twice before I buy anything else.

Step 4) Use all extra income towards your debt. Paying the minimum payment won’t cut it anymore. When you get a bonus, raise, or cash put it towards your debt.

Step 5) Cancel your cards. Pull your free credit report and look over all your accounts. Pay off and close all your credit cards as soon as you can. Some people will argue that keeping your accounts open will help improve your credit score but Dave Ramsey would counter by saying you don’t really need a credit score because you’re not going to use debt like a junkie anymore.

In Summary
This is a big deal for us because we had a lot of credit card debt. We bought a fixer upper home and put all the improvement costs on our credit cards. In retrospect that wasn’t the best idea but we’ve learned what not to do in the future. We are now using all the extra money we would have made on credit card payments and are applying it to our student loan, second mortgage, and other debt.

Please share you experiences in the comments if you’re actively paying down debt or are living a debt free lifestyle.

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ThinkorSwim Review – Best Online Broker Ratings

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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.

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OptionsXpress Review – Discount Broker Ratings

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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.

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eOption Review – Online Broker Ratings

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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 Think or Swim offers). As time goes on eOption’s set of tools and capabilities will match those of 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. Shawn from eOptions commented that the .10 per contract is their very best contract price.

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.

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OptionsHouse Review – Discount Broker Ratings

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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.

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How to start a budget.

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Starting a budget is harder than it may appear. I’ve tried multiple times and failed as many. A budget takes discipline and there are a bunch of things that can screw it up. Just look at the federal government if you want an example of how hard it is to stick to a budget. If the best political minds in the country can’t budget what hope is there for you and me? Well for one thing we have the power to say “no” and the only person it makes mad is ourselves (and maybe our significant other…which we’ll talk about later). Deep down we know it’s in our best interest to stick to a budget. We can see the results almost immediately. In a few weeks you can start to feel the results of managing your money. Here are the steps to starting a budget.

Make the choice today. Let’s face it, we’re all addicted to easy money. Just like any addict we need to make the choice that we have power over our addiction. No one can make this choice for us. We need to decide that we aren’t going to be controlled by money anymore. We are the masters of our destiny!

Get someone else involved. Just like exercise it always helps to have a partner. You can encourage each other and talk about your progress with each other. Ideally this other person would be your wife, girlfriend, or significant other. If you’re the only one in your relationship trying to manage the money it may not work out the way you’d like it to. Sit down and talk through your ideas on a budget.

Have some historical data to go off. If you have used some personal finance software to track spending you’ll be light years ahead of most people. Use what you know you’ve historically spent in major categories and see if you can cut back in some areas.

Keep an Eye on Your Money Like You Are the Mafia. If something is costing you money send the boys over to bust their knee caps. Not really, but you should be very conscious of where you’re loosing money. When you find somewhere you can improve be the mafia boss and take it out.

Key to Starting a Budget

The key to starting a budget is to first plan for the extra curricular items. These items include 1) Eating Out 2) Toys 3) Entertainment 4) Gifts 5) Travel. Once you’ve nailed down these elements of your budget you can start working on gasoline, big ticket items, and long term saving plans. If you do anything, budget how much you spend on eating out. This one step will set you on a path of financial growth.

Avoiding Pitfalls

Keep Like-Minded People Around You. When I started budgeting it became clear that there are some people I needed to avoid. Just like with other addicts you need to avoid areas where the addicts hang out and stay away from some of your money addicted friends. I’m not saying you should shun your entire social circle but you should try to avoid certain risky situations with some people. Everyone has a friend that loves to eat out, go on shopping sprees, and rupture money like they were bleeding. Try to plan things with them where you’re at least 1 mile away from any credit card machines. Sadly, these people don’t understand what budgeting is all about and will probably want to buy you lunch and anything else you want. I’ve never felt comfortable with this option but if you are your budget will stay in tact and you’ll still get to eat out as much as you want.

Budget for the Unexpected. One of the budget killing events are an unexpected disasters like a major car repair. These types of things can really throw off your momentum and be a wrench in the gears. The best budgets are flexible and can adapt to most changes. But the best solution is to plan ahead for the unexpected parking ticket, repair, or doctor’s bill. Make sure part of your budget goes towards this every paycheck.

Keep it Reasonable Don’t make your budget too restrictive. While you can technically live on rice, beans, and water forever you might need to budget in the nice things in life too. The trick to making a budget work is consistency. Just like the tortoise and the hare it’s the slow and steady budget that wins the race.

The Myth of Credit Card Budgeting
The whole point of credit cards is to spend more than you should today and pay for it later. Until you master your budget you should get rid of the credit cards, pay off the debt, and go to an all cash lifestyle.

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