Thursday, March 25, 2010
I used to watch G.I. Joe as a kid and every episode ended with the phrase “Knowing is half the battle.” this has always stuck with me, because its so simple yet completely true. I am an avid learner and an even more avid reader. I love to learn new things about almost any subject that will hold my interest. I want to know. I have read books on cooking, automotive repair, history, warfare, finances, personal development, and a large amount of science fiction. My goal is to learn something new every day. I will read opposing points a view just so I knew the other side of the issue. Good sources of information are the Internet, professionals in the area of interest, and YOUR LOCAL LIBRARY! So many people I know don’t even know where their local library is or have a library card. The local library is a treasure trove of information on every subject you can think of and most of them have free internet access.
When I learn about a new subject I run a quick search on Bing for relevant topics or authors. This will give me a quick overview of sources such as blogs, books, magazine articles, and recent news coverage. for example, if I am researching personal finance, I search for blogs and forums on it and make note of them a pad of paper. Sometimes I will search Amazon.com for book titles or magazines on finance. Then I head to the library to check out the books on personal finance. If the books look interesting, I take them home for further study. Now I have two sources of information (books and internet articles) about personal finance, then if I have more questions I will call a local CFP or investment professional. Industry professionals like to talk about what they do, so give them a call and strike up a conversation. You may just benefit from it more than you know (think networking!). By then, I am well versed in the subject, or at least enough to talk to other people about the subject without sounding like an idiot.
You can do this with any subject or topic. The point is to keep learning. Never stop seeking out new information or expanding your knowledge base. There are many situations that I have been able to apply skills and knowledge I learned in the Boy Scouts while backpacking to areas such as planning my finances (i.e. the 3 piles of packing method explained in my old Scout manual applying to wishes, wants, & needs of budgeting). Right now, I am avidly learning about finances and how to become better with them. In a few years, I will be into buying a house and my knowledge on finances will come in handy in getting a loan because I will understand how the market is doing in relation to my mortgage rates. Every little bit of information helps whether you think its relevant or not.
Knowing is half the battle...
Wednesday, March 24, 2010
Monday, March 22, 2010
This past weekend, I was at my Uncle’s house enjoying a pre-St. Paddy’s Day dinner. My cousin Tiffany was looking to start a new job and the subject of planning for a retirement came up. We talked about the differences between a pension, 401(k) or Differed Compensation, and IRAs. As the night went on, Tiffany explained how she had managed to save a good amount of money to help pay for college and cover her bills while attending school. She is not a big spender though she does love fashion and trying out new things in San Francisco. What surprised me about the conversation was that Tiffany had never been taught about career finances but was really good with personal finances. I am no expert in both areas but I figured that a few other people like Tiffany could benefit from a little insight on the topic.
I define career finances as the financial benefits an employee has available to them through either their employer or a private financial institution linked to their employer. The financial benefits provided by your employer include items such as a pension, a 401(k), and Flex Spending Accounts. A private institution, like TD Ameritrade, would provide employees the ability to have a direct deposit made into an IRA, 529 college savings plan, or other long term investment. Some might suggest that the private institution is not involved with your employer but since they have the ability to do direct deposit, I place them in this category.
A pension is a form of retirement plan that an employer provides to a former employee for completing a pre-defined amount of years of service. Many companies still have pensions but even more are doing away with them because of the cost to the company. For example, if you work for the same company or government for 30 years, the company would pay you a percentage of your salary after you retire. Pensions are not to be confused with a 401(k) or deferred compensation plan. A pension is provided by the employer and not contributed to by the employee.
A 401(k) or differed compensation plan is the more common way for employers to help employees in retirement. These are accounts established by the employer for the employee and both parties can contribute to them. The funds are then invested in specific ways, such as target date mutual funds or company stock, chosen by the employee. The employee can contribute up to $16,500 each year towards their 401(k) and typically employers will match the first 1-5%. Note: in recent months employers have stopped matching contributions due to the economy. The money contributed into your 401(k) is pre-tax and is allowed to grow tax free until you begin withdrawing from the 401(k). Talk to your HR department for more information about your employer’s 401(k) plan.
A flex spending account is a relatively new concept in career finances. This account allows you to have a specific amount of money taken out of every paycheck which can be saved for medical, child care, or personal health expenses. The benefit is that the money comes before taxes which can place you into a lower tax bracket and the money is used tax free. The downside is that you have to use the money up every year or you lose it and pay outs are in reimbursement form. For example, if you usually spend $1000/yr on child care you could place $1000 into a flex spending account. Then as each monthly bill is due, you could pay the amount and then file for a reimbursement from your flex spending account. If you didn’t spend the $1000/yr, you’d lose the excess. I don’t have experience with these types of accounts so talk to your HR department for more information.
In future posts, I will expand a little more on the subject of retirement and career finances. I hope this helps as a good starting point.
Thursday, March 18, 2010
Back in high school and through college, I worked in retail stores and every season the store would conduct a roll-out. A roll-out is when the new merchandise gets displayed in the windows and the store is rearranged according to what is in style. It was a real pain in the ass for the employees because the work had to be completed after the store closed but before the store opened the next day. After doing a couple of these roll-outs at J.Crew, I had a revelation.
Use the mannequins to create a new stylish look for cheap. Retail companies pay people hundreds of thousands of dollars to design and create new outfits and wardrobes specifically for display in the stores. I realized that when I was putting these mannequins together complete with $200 jeans, $150 sweaters, and $90 t-shirts, that I could get the same look for a quarter of the price. The idea here is not to try to exactly duplicate the new look but to take style concepts from the new look.
Just a few weeks ago, I was shopping for some new jeans and t-shirts. I went into Banana Republic (great store for ideas for business casual guys) and J.Crew (everything fits me well and I like the classic looks) to get some ideas. Apparently the new look is loose or slim fit, dark jeans paired with a graphic t-shirt of contrasting color, and a neutral shaded zip-up sweatshirt hoodie or jacket. I took this “new look” and went to Kohl’s and Old Navy to see if I could replicate the “new look”. In about 30 minutes, I managed to find items on the clearance rack and on the shelves that gave me exactly the same look for a fraction of the price. In all, I got a pair of jeans ($15 – Old Navy), graphic t-shirt ($5 – Old Navy), long sleeve thermal knit top ($15 – Kohl’s), and a dark gray zip-up hoodie ($15 – Old Navy) for a total of $50, which is half the price of a pair of jeans at most designer stores.
Next time you are out shopping for a new outfit, check out the high end stores and take their looks with you, then go shop at the lower end stores, like Old Navy, Kohl’s, and Target. Hope this helps in gearing up for the summer months!
Here is another article on fashion and being frugal. Click Here.
Tuesday, March 16, 2010
I must apologize to my readers for not keeping up with my posts. I made a newbie error when it comes to blogging or starting a blog. I did not have enough posts saved to cover myself in case I was away for a long period of time. I was in training for work down in Miami, FL and my saved posts ran out. So, now I am back and ready to start blogging...again.
Thursday, March 4, 2010
I used to go backpacking all the time when I lived in Pennsylvania and I would carry my water in a Nalgene bottle. These bottles were indestructible & held 32 oz. of water. I moved out to California a few years back and my Nalgene got put away into a box. When I moved into my new place last month, I came across my Nalgene bottle. Since I am trying to save money anyway I can, my Nalgene gave me a great idea.
I drink a lot of water every day (you should too for a healthier body) and I was spending at least $2/day on bottled water and other drinks. I realized that I could save almost $10/ week just by filling my Nalgene up at the water fountain in my office. My Nalgene became my new way to save money and my new best friend. Not only does this friend save me money every week but promotes a healthy lifestyle by drinking more water and less (insert high sugary drink of your choosing). Also, I stopped buying bottled water which was creating more trash and consuming natural resources & energy.
The funny thing is that I by renewing my friendship with my Nalgene, I discovered another friend, Travel Mug. I don’t drink coffee but I do drink tea and a lot of it. I would drink almost two cups a day of tea (had to switch to herbal tea because of caffeine headaches) which was about $3/day at the local coffee shop. Because I drank so much tea, my aunt gave me a hot water heater for my new apartment. I found a Travel Mug and bought some herbal teas. The hot water heater is a small kettle pot that sits on my counter and keeps water always hot enough to make tea. Not only was Travel Mug saving me $15/week but was putting antioxidants into my body from the herbal teas. It is a known fact that herbal teas, especially green teas, have a large amount of antioxidants which helps promote a healthy body and heart.
Now I have two friends I take with me every day, Nalgene and Travel Mug. They are great because they save me $25/week and promote a healthy body. I feel good at the end of the week knowing that I did something to live a healthier life, reduce my debt, and help the environment.
Monday, March 1, 2010
I love history, especially a good story about an event in history. I would have never known about King Leonidas and the 300 Spartans or Capt. Winters and the 101st Airborne, if someone didn’t keep a record of the event. That’s why I started keeping a detailed record of everything I do to get out of debt. I don’t plan on making a book, well not yet at least, but I want to be able to look back on this time in my life and see how I overcame all of the obstacles of becoming debt free. I would recommend you do the same.
It doesn’t have to be something elaborate like a full blown webpage or a novel with the intention of turning it into a NY Times Best Seller. Just keep a record for you and you alone. I like using a simple journal that I write every few days in about some of the things I have done to get out of debt. An entry can be as simple as a few lines or as long as a few pages; whatever you need to get your thoughts across.
The added bonus of writing your actions down is that it allows you to clear your head and focus on the important things you have done. Also, some ideas will come into your head while you are writing and now you have a perfect place to put them, your journal. I routinely go back and review my entries just to make sure that I haven’t forgotten any ideas I had while writing. I actually keep an “idea book” with me so I can put down the random ideas I have during the day. A really good “idea book” is made by Moleskin because its small enough to carry around and its hardbound for long term keeping. The idea is from another blogger, I don't remember who, maybe "The Simple Dollar" or "Wisebread". Either way, I liked the idea of an "idea book" so now I use it everyday.
One of the things I like about writing in my journal is that all the ideas and thoughts that take up space in my head I now can get out of my head and onto paper. This allows me to focus my brain power on more important things, like controlling my spending habits.