UPDATE: This post was featured on the latest edition of the Carnival of Personal Finance.

I was listening to the radio today and a caller asked about beginning a credit card history...and the thought never occurred to me that some people either are just starting out and don't have a credit history or they're well-establish, yet still don't have a credit history.

How could this be?

Since college, I've been inundated with credit card offers and I've applied to nearly all of them, at least until my late 20s. My entire 30s were spend getting out of that debt, finally culminating in my wife and I moving into her parents house for 2 years while we paid every cent we earned into paying down the credit card debt.

I cannot even estimate the number of credit cards I've had over my lifetime. Yet I still came out of all this with a credit score near 800. So paying off your debts and being debt-free for a couple years does wonders for the FICO.

So imagine my surprise when I found out there were people out there who didn't have any credit cards now and never have! Preposterous!!!

Here's the deal: There are three main ways to get a credit card:

1. Become a college student
2. Get a secured card
3. Open a department store credit card

My first credit card, if memory serves, was a department store card. Then I got several "college" cards. I've never gotten, nor have I ever needed to get, a secured card.

However, today, #2 might be the best alternative for a lot of folks, especially those who are not attending college. Make no mistake, the offers made to college students for credit cards are pretty easy to get. But let's face it, most of us will not get that opportunity, as we've either graduated college and aren't going back or we're just never going to go.

A secured card can be acquired through your local bank, in most cases. The main thing to be aware of is the fee structure. I've heard of $500 secured cards that have about $400 in fees, leaving you with an open credit line of $100. This is not good. You might as well give somebody $500 and avoid the credit card altogether.

The idea behind a secured card is simple: Your bank gives you a credit cards that's tied to your bank savings account. $500 in your savings, you get a $500 credit line. When you pay your bill, you're paying yourself back. Once you've established some credit history (paying in full and on time every time), ask your bank to give you an unsecured credit card.

Most will.

Opening a department store card, like a Mervyn's or a Kohl's is even easier. Often you can apply while standing in the checkout line. Even more enticing, the department store often gives a percentage off purchase if you open a credit card account with them! How cool is that? The credit application process generally takes less than 5 or 10 minutes and off you go with your new Dockers, socks, and belt, 10 percent off list, and a $250-500 credit line.

Once you've established payment consistency, you can move on to the more univsal VISA, MasterCard, and/or American Express.

In summary, then, to establish a credit history, follow these steps:

• Get credit.
  
• Make your payments on time every time.
  
• Check your credit reports for accuracy (don't forget, too, that credit reports often alert you to ID theft). MyFICO is an excellent resource to use in this instance.
  
• If you must close an account, close the newest account first.
  

That's really all there is to it.

Sources & Links
Free credit report
Equifax
TransUnion
Experian
9 Ways to Build a Killer Credit Score
How to Build a Good Credit History
Build Credit
Carnival of Personal Finance

Technorati Tags: credit | credit history | credit reporting bureaus | Experian | TransUnion | Equifax | Carnival of Personal Finance

Normally, I save these money-saving tips for Two for Tuesdays, a weekly feature post that contains 2 money-saving tips each week, delivered on -- you guessed it! -- each Tuesday. However, I thought this post should stand on its own.

The telephone is one of the technologies that we use every day and totally take for granted. It's like a birth right in this country (at least) and we simply rely on making and taking calls from all across the globe. We love voicemail, caller ID, and call forwarding. Local and long distance service is pretty cheap. In fact, with the deregulation of the telecomm industry quite a few years ago (24 years ago?), long distance prices have fallen through the floor.

I'm about to tell you how to save even more money on your phone service. It's called Voice over IP, or VOIP for short, and it uses the public internet to route calls. How does it do this? Does it really matter :)

My VOIP provider is Vonage, whom I truly love. If I could marry a phone service, I'd marry Vonage. Now, don't get me wrong, I would not divorce my wife, but I would consider bigamy.

It's that great.

Here's how it works (not a technological, but rather an operational issue). Trot on over to vonage.com and sign up (or email me with your email and I will send you an invitation where you could save money on your first two months, rather than just on your first month, which is Vonage's standard offer). Wait for the package to arrive in the mail. Follow the directions. Within minutes, you'll be making and taking phone calls over the 'net. You can even keep your existing phone number (note, however, that doing so will add days if not weeks to your ability to use the service, and it's not Vonage's fault, it's your existing phone company's fault. There's this thing that became law a few years ago, where you could transfer your phone number to another service, but all the phone providers drag their feet on fulfilling your requests).

Vonage offers all of the same features, and more, that your current "landline" provider offers, all at an all-you-can-eat price of $24.99. All calls within the US and Canada are included in the flat rate. Calls cost a few cents per minute to most countries in Europe.

Here's a list of features:

• Caller ID with Name
• Call Waiting
• Voicemail Plus®
• Call Transfer
• Enhanced Call Forwarding
• 3-Way Calling
• Caller ID Block
• Call Return
• Do Not Disturb
• Anonymous Call Block
• Repeat Dialing
• International & Directory Assistance Block
• Call Hunt
• Ring Lists
• Vonage Access
• Bandwidth Saver®
• Network Availability Number®
• Click-2-Call®
• Vonage Online Account
• 211 Dialing
• 311 Dialing
• 411 Enhanced Dialing
• 511 Traveler Information
• 811 Dialing
• 1-700-WEATHER
• 1-700-GREETINGS

Some pretty nifty features! Back when I worked for "the phone company" I would have paid over $100 for all of this (had I not been an employee). I have had one issue with Vonage in the last 4 years and it was Comcast's fault.

I highly recommend the service. But I'd be remiss if I didn't tell you about 3 possible negatives (and their solutions). The first is that when you call 911, you're not really calling the national or state-level 911 system, but rather you're calling Vonage's who then connects your call to the 911 system. I cannot tell you whether there's any delay.

The second is if your power or internet connection goes down, your phone service is down. The power situation is easily mitigated: Buy a backup unit. If your internet connection goes south, count on using your cell phone, provided you have one.

The third issue is that Vonage may go bankrupt. They're been saddled with numerous multi-million dollar lawsuits from the phone companies, over patent infringement, and they've lost. So they're paying tons of dough in fines, fees, and settlements. They also were bleeding cash before the lawsuits due to huge marketing expenses.

Time will tell if they go belly-up.

But since there are so many other VOIP providers, Vonage going out of business is not that damning to me; I can simply pick another provider. With the wealth of value-packed features VOIP offers, I will never go back to traditional phone service.

Technorati Tags: Vonage | Voice Over Internet Protocol | VOIP | Money Hacks | phone | telephone | AT&T | Verizon | Sprint

Empty Spaces presents US Economy Going South? posted at Adventures in Money Making, saying, "A depressing look at the hardships that American families are now facing. But there's no recession, right!"

Kelsey presents Family Finance - Family Budget Making, Planning, Creating, & Saving posted at Vanilla Joy - Family Fun and Education.

KCLau presents Financial Security: How you feel it? posted at KCLau's Money Tips, saying, "Article on acquiring financial security and how to increase or protect finances."

Frank Vertin presents Buy an S&P 500 Index Fund with Low Costs posted at NO LOAD INDEX FUND.

Realm of Prosperity presents Great Financial Aid Advice For College Students!!! posted at Realm of Prosperity, saying, "Useful information for all college students."

Ana presents Teenager on Food Budget - First Try posted at DebtFREE-Revolution, saying, "The first week of my experiment to put my teenage son on his own grocery budget"

Michelle Dawn presents 10 Ways to Save When Your Child is Hospitalized posted at Frugal Parenting, saying, "Let me know if you are accepting hosts!"

7million7years presents Should you pay your children to read? I don?t think so! posted at How to Make 7 Million in 7 Years™.

Zork Brauk presents UFO Recession Tip 41 - Play in Park for Free posted at It's the Recession, Stupid!.

Barb A. Ryan presents Your Family Financial Planning posted at Pasadena Financial Planner.

Heather Allen presents Childhood Money Lessons posted at The DebtFree Playbook Blog.

Richard M. Rothschild presents The Best Mutual Funds Have NO Sales Loads and NO 12b-1 Fees posted at Best No Load Funds.

That concludes this edition. Submit your blog article to the next edition of kids and money using our carnival submission form.

Past posts and future hosts can be found on our blog carnival index page.

Trackbacks and/or links:
http://blogcarnival.com/bc/tb_19209.html
http://rpc.technorati.com/rpc/ping
http://moneyshaker.blogspot.com/2008/03/us-economy-going-south.html
http://www.vanillajoy.com/family-finance-part-ii-saving.html
http://kclau.com/wealth-management/financial-security-how-you-feel-it/trackback/
http://www.500indexfund.com/buy-an-sp-500-index-fund-with-low-costs-10.htm
http://www.realmofprosperity.com/2008/03/great-financial-aid-advice-for-college.html
http://www.debtfree-revolution.com/2008/03/24/teenager-on-food-budget-first-try/
http://7million7years.com/2008/03/24/should-you-pay-your-children-to-read-i-dont-think-so/
http://putinforpresident.typepad.com/itstherecessionstupid/2008/03/ufo-recessio-13.html
http://www.financialplannerpasadena.com/your-family-financial-planning-11.htm
http://debtfreeplaybook.com/blog/childhood-money-lessons.html
http://www.typepad.com/t/trackback/2799890/26898612
http://debtfreeplaybook.com/blog/childhood-money-lessons.html/trackback
http://www.bestnoloadmutualfund.com/best-mutual-funds-have-no-sales-loads-9.htm

Technorati Tags: kids and money | Money Hacks | blog carnival

Good instructional post on hedge funds.

What are hedge funds ? ~ Everything Finance

Technorati Tags: hedge funds | Everything Finance | Money Hacks

Many folks who have great credit histories and the ability to pay off debts are getting snubbed by potential lenders. The credit crunch has made lenders wary of any borrowers regardless of the borrowers' ability to repay the loan.

Traditional lending practices have really become conservative. It's like they're afraid of their own shadows. One of my fears is taking a job near a city I love (like Portland, Oregon, or Seattle, Washington) and not being able to get a mortgage, even though my wife and my credit scores are very good, we have no history of not repaying our debts, and we have good incomes.

This issue doesn't just affect mortgages any more. Used to be, a guy could get a single consolidation loan, pay off existing debts with it, and make one payment, often at a lower collective interest rate.

No more.

However, the article, Credit Crisis Solution Arises From Unexpected Source, gives some hope.

Peer to peer lending, as it's commonly known, matches individual lenders with individual buyers in a way that facilitates lending money to people who need it and can pay it back. One of the better peer to peer lending facilitators, Prosper.com, has come to the forefront and can make loans happen for such circumstances.

It's worth checking out. This is an innovative application of a time-honored method for matching "buyers" and "sellers" of products, services, and securities.

Technorati Tags: Prosper | lender | peer to peer lending | Money Hacks

My post, Private Mortgage Insurance Tax Deductibility, has been featured in Money Hacks Carnival #5 - Haute Couture Edition | Antishay Ventenne.

Thanks!!!

Technorati Tags: Money Hacks | Money Hacks Carnival | PMI | Private Mortgage Insurance | tax deduction | blog carnival

Here's another great article on the credit crunch.

Many economists, on the right and the left, now argue that the only solution is for the federal government to step in and buy some of the unwanted debt, as the Fed began doing last weekend. This is called a bailout, and there is no doubt that giving a handout to Wall Street lenders or foolish home buyers — as opposed to, say, laid-off factory workers — is deeply distasteful. At this point, though, the alternative may be worse.

Can’t Grasp Credit Crisis? Join the Club - New York Times

Background

Technorati Tags: credit crunch | mortgage meltdown | Money Hacks | economy | crisis

Last week, in Two for Tuesdays #10, we talked about saving money by canceling your gym membership and limiting eating out to only once per week.

This week, we're back to saving money on gasoline and internet access.


#1

Gasoline, by the time you read this, might be $4 per gallon (in some places, already, gas is over $5 per gallon). So it behooves us all to save where we can. By the way, the "green" movement will only become more than a fad when it hits -- and continually pummels -- people's pocket books.

Here's a short story (and I'll try to dig up the picture) about rising gas prices. When I was a kid in the early 70s, my grandparents, with whom my mom and I lived, owned a Mobil gas station. There's a picture of me, just a few months before the oil embargo began, standing in front of the price signboard where gas was somewhere south of 30 cents a gallon (I seem to recall 27 cents). That was full serve, too, by the way. In case you don't know what full serve is, it means somebody pumps your gas, cleans your windows, checks your oil and other vital fluids, and takes your payment. Those were the days!

Gas really didn't shoot up again until the late 70s, then it pretty much stayed near a dollar for what seems like 20 years. Only in the last 15 years or so has gas risen in price enough to really have an effect on lots of budgets.

So, here's a quick tip on gas price watching (to get the best prices, pay attention). I've noticed that Costco, while usually a great source for the least expensive gasoline, is slower than most other gas stations to change its prices; this includes price increases as well as decreases. So, if, on the rare occasion, gas prices decline, you may be better served by visiting an AM/PM, Safeway, Valero, or Rotten Robbies. However, when prices are increasing (and, lately, when aren't they?), Costco is the go-to gas station.

Couple this strategy with a gasoline rewards card and you could save quite a bit on gas.


#2

Since you're reading this, I assume you're connected to the 'Net via an ISP of some sort; it could be your cable company, phone company, or satellite vendor. Here are a few simple things you can try to reduce your internet access bill.

First, solicit offers from several ISPs like Comcast, AT&T, DirecTV, and Earthlink. Use their best rates to negotiate a better deal with your existing provider. Tell them, simply, that you're thinking of moving to Competitor X because it offers what you get now for half the price. Your current provider most likely will route your call to a "retention specialist," whose job is to keep you as a customer. I've used this trick dozens of times.

Another thing you can do is seek to buy a bundle of services. For example, both Comcast and AT&T offer "triple play" packages of TV, internet, and phone. You can often save 20 to 30 percent on your overall bill by subscribing to a package.

One last thing: Buy as little bandwidth as possible to suit your needs. You have no reason, if all your do is email, to get a 10MBps connection. Low-tiered DSL will suit you just fine.

That concludes this edition of Two for Tuesdays. Thanks for stopping by!

Technorati Tags: Money Hacks|Two for Tuesdays|saving money|gasoline|gas|fuel consumption|internet|ISP|Comcast|DSL|cable|AT&T|Verizon|"triple play"

Money Hacks' post, Learning to Earn -- Part 1 of ... Many?, is featured in the latest edition of the Carnival of Personal Finance # 145: Baby Education Edition | Million Dollar Journey.

Thanks!!!

Technorati Tags: Carnival of Personal Finance, Money Hacks, Baby Education, Million Dollar Journey, Learning to Earn

Money Hacks: Getting Out of Debt, Part 1 of an Infinite Series was featured in the Carnival of Debt Reduction #132 - The Moving Edition, dated March 24, 2008. Thanks for including the post!

Technorati Tags: Carnival of Debt Reduction, Getting Out of Debt, Money Hacks, debt

Hope you like it! (It's still a little rough, but we'll get there.)

You may know that your credit reports are available online for free at Annual Credit Report. But what you may not know is the myFICO gives you (for a fee) a whole lot more, including your actual FICO score, your credit report, and a nifty FICO score simulator. They offer a whole host of products, so you can be sure to get what you need when you need it.

As you may know, the current mortgage meltdown and resulting credit crunch has caused lenders to tighten their credit practices, to the extent that they're being much stingier than in the recent past. Flawless credit reports and a very high FICO score might get you a loan. It behooves you, especially when contemplating getting a loan, to keep up with anything that might be going on with respect to your credit history.

This is where the FICO Score Simulator from myFICO comes in very handy. You can input various "what ifs" and it will generate a FICO score for you. For example, paying all your bills on time for the next 6 months might show an improvement in your credit score of 5 points.

Additionally, myFICO offers credit reports from all 3 credit reporting bureaus, whereas with Annual Credit Report, you get only one free per year.

Right now, you can save 25% off all myFICO products – 7 yr anniversary sale!

Did you know that Higher FICO Scores = Lower Monthly Payments?

Did you know that monitoring your credit report and FICO scores could possibly alert you to ID theft? Read more about that here -- Protecting Yourself From Identity Theft: Deter - Detect - Defend - Avoid

Get All 3 FICO Scores and Credit Reports!

Links
Why You Should Monitor Your Credit Card Accounts Very Closely
Demand Your FICO Score Now!

Technorati Tags: FICO|credit reports|credit score|Annual Credit Report|credit cards

Welcome to the March 21, 2008 edition of kids and money, our very first edition. This initial edition gathered some very good posts regarding kids and money. Here's a brief listing, with some of my comments at the end of each description.

Larry Russell presents 7 Ways to Pick the Best Noload Mutual Funds and ETFs posted at Best No Load Funds. 7 great reasons for buying no-load mutual funds and ETFs. Practical advice for the whole family. But better to teach your children these reasons now than to let them figure it out on their own.

Barb A. Ryan presents Bond Mutual Fund Fees posted at Bond Market Index Funds. Ditto the above post -- fees kill mutual fund performance. Why pay the fund manager when you can use Vanguard or other no-load and extremely low fee mutual fund family?

Jeremy Zongker presents Can Your High School Student Have a Credit Card? posted at Credit Card Articles. This is a very good post about kids and credit cards. Some very useful advice here.

Raymond presents My Super Sweet 16 - Messing Up and Spoiling Kids For The Next Generation posted at Money Blue Book. There's good social commentary in this post and I agree with Raymond that it's a bad show but like a train wreck. Those kids are spoiled little brats. Way to go, MTV -- not only have we given our kids false expectations with "Cribs" but now with this!

More4kids Parenting and Family Life presents Teen Credit Cards - A Smart Idea? posted at More4kids. Another submission on teens and credit cards. Very good balanced arguments for both sides of the debate.

Aussie Investor presents Stock Market For Beginners posted at Stock Market Investing For Beginners, saying, "Any beginners to investing should read as much as they can before they begin. What are stocks? What is the stock market? This article provides an introduction to the stock market for those just starting out." This is a very good post about the stock market; indeed, it really is the stock market for beginners.

Silveral presents Celebrity babies – new kids on the block posted at Celebrity News, and Gossip. This is an overview of celebrities and their babies and how they handle the all-too-bright spotlight.

NAOMI presents Diary From England: BABIES BORN WITH A SILVER SPOON IN THEIR MOUTH posted at Diary From England. It's funny how the same terminology means different things, even in England. "Pensions" equal "IRA?" But yeah, I agree for the most part -- raise your children with good money sense and they'll be alright come retirement.

Big Cajun Man presents Best of: The Singing Horse Parable posted at Canadian Personal Finance Blog, saying, "A useful parable about finances told to me by my Dad." Thought provoking and a great story.

Ana presents Putting Teenage Son on a Budget posted at DebtFREE-Revolution. One of my best memories of growing up is going to the grocery store with my grandmother and seeing how she, of the Great Depression generation, rationed her money. She squeezed every penny and got everything we ever needed.

KCLau presents Top 5 Regular Monthly Expenses We Don’t Need posted at KCLau's Money Tips, saying, "An article discussing some of the ways one can reduce unnecessary expenditure." Great advice!

vld2czech presents StockWeb: Bear market started and finished by Bear Stearns? posted at StockWeb, saying, "Have we seen the worst with collapse of Bear Stearns?" In a word, no. More to follow. Even the big boys can fall.

Alex M presents Some Good Ways to Save Money posted at eloanex.com. Student loans are still a good deal and consolidation a few years back when interest rates were really low allowed me to consolidate all of mine into one with a sub- 3 percent loan for the life of the loan. Not a bad investment. Plus, I am making double what I was making before I got my MBA, just 4 years ago.

Alex M presents Here’s a Quick Way to Pay for Your Education posted at Personal finance strategy. Ditto last comments.

7million7years presents What about the children? « How to Make 7 Million in 7 Years™ posted at How to Make 7 Million in 7 Years™. There are some great tips here: Give your child an allowance of $1 for every year of his age, and tell him to budget half for spending and half for saving. Starting at a very young age, kids can build up a sizable nest egg and retire very early.

Raymond presents Student Credit Card Rewards posted at Money Blue Book. 6 great concepts to teach kids about credit cards.

That concludes this edition. Submit your blog article to the next edition of kids and money using our carnival submission form.
Past posts and future hosts can be found on our blog carnival index page.

Technorati Tags: Money Hacks | kids and money | blog carnival

There's nothing better than free money! And you can be your own Fed Chairman by increasing the money supply on your own. No need to devalue the dollar, bail out the next Bear Stearns, or bow down to our Asian friends hoping they continue to buy our bonds.

Send me your email address and I'll send you an invitation to Revolution Money Exchange. The deal: I get $10 for your sign up, you get $25. It couldn't be easier.

(Well, it could, because the web site seems to have some bugs, like it would not accept some of my information. I emailed support and within a few minutes, I was up and running.)

This is clearly a PayPal competitor. It'll be interesting which, if any, of the "big guys" buy this one when it gets some traction.

Technorati Tags: Revolution Money Exchange, Fed Chairman, Fed, free, Money Hacks, PayPal

Click the link below for a free USB flash memory stick.

IBM: Reduce energy costs. Maximize greenness.

I got an email this morning that I've posted below, verbatim, about the deductibility of private mortgage insurance (PMI). I haven't done much research on this topic, so be warned: Any information below is to be taken as food-for-thought. DO YOUR OWN RESEARCH TO FIND OUT WHETHER THE INFORMATION BELOW CAN BE APPLIED TO YOUR OWN SITUATION.

Hi Bill - I’m David Wescott and I work for one of those monster PR firms that spams you relentlessly with useless stuff, but this time I have something that might actually be relevant. I wanted to make sure you (and your readers) were aware this spring marks the first time that qualified taxpayers will be able to claim a federal income tax deduction for mortgage insurance premiums.

I know most of the time bloggers write about private mortgage insurance it’s usually about how to get rid of it. But privately insured mortgages have helped more than 25 million families become homeowners. I hope you agree that PrivateMI is a much more sound option than some of those risky, exotic loans that were all too available a few years ago. About 2.6 million Americans will be eligible for this deduction.

The tax deduction for mortgage insurance enables households with an adjusted income of $100,000 or less to deduct the full cost of their government or private mortgage insurance premiums on their federal tax returns. Families with incomes between $100,000 and $109,000 are eligible for a reduced deduction. The deduction will provide an average annual savings of $350 for qualified taxpayers. There’s more information on the deduction available at http://privatemi.com/loanoptions/benefits/deductible.cfm and some background at http://www.privatemi.com/loanoptions/index.cfm.

I hope this is helpful – please let me know if you have any questions or would like to talk with an expert about PrivateMI.

Thanks for your interest!

Best,

David

Again, please do your due diligence on this information, including seeking out a professional tax adviser and/or attorney. Here are some additional links to the topic:

Bankrate.com
Mortgage News Daily

According to the Bankrate article, there are Important Caveats:

• Caveat No. 1: The tax deduction applies only to mortgages that are closed in 2007. If you have a loan with mortgage insurance in 2006, you won't be able to deduct the premiums in the 2007 tax year unless you refinance in 2007.
• Caveat No. 2: There are income limits. You get the full deduction if your adjusted gross income is $100,000 or less. The amount you can deduct phases out rapidly after that, and no mortgage insurance deduction is available if you make more than $110,000.
• Caveat No. 3: This is a one-year deal, and Congress would have to renew the deduction to make it apply for the 2008 tax year and beyond. Congress probably will extend the deduction, but you can't know for sure.
• Caveat No. 4: If you take the standard deduction instead of itemizing deductions, the new law makes no difference to you. "You need to have a mortgage of about $130,000 or so to even pay enough interest to hurdle the standard deduction," says Bob Walters, chief economist for Quicken Loans. In practice, he says, this means that the deduction is available to households with incomes between $50,000 and $100,000.

Anyway, for a limited -- but certainly not insignificant -- number of folks, this is some good information. If you have PMI, make less than $110,000, and closed your mortgage deal in 2007, it looks like you can take the deduction.

Technorati Tags: Money Hacks | Private Mortgage Insurance | PMI | income taxes | 1040 | Internal Revenue Service | IRS | deduction | Money Hacks Carnival

Former Chair of the Fed, Paul Volker, was recently seen on Charlie Rose. Here's an excerpt put together by Greg Ip at the Wall Street Journal. It sounds like while the Fed had no choice in the matter -- to stave off financial collapse -- Volker believes that the federal government ought to have played the principal role.

If anybody has the video, please let me know and I'll share it here. I'll go looking on Voxant in a while. Maybe it's there...or PBS.

Economics Blog : Volcker: Fed's 'Extreme' Intervention 'Raises Some Real Questions'

More background on Volker
How Paul Volcker became a practical monetarist
Wiki
Official Bio

Technorati Tags: Paul Volker, the Fed, monetary policy, President Reagan, President Carter, stagflation

CAUTION: This is not good advice.

But it is funny.

10 Ways To Get Rich Quick | Amateur Asset Allocator

Technorati Tags: Get Rich Quick

In a previous post, I outlined the Ten Commandments of Personal Finance, the first of which was to earn more than you spend. I went on to say that in order to do this, you need to spend less, make more, and/or do both. This post is about earning more.

You can only cut your spending to zero. There are limited gains from doing this. You have limited upside and a lot of downside. Like living in a box and eating cat food.

But your income potential is limited only by your creativity. There are thousands of people less qualified than you who are making considerably more money than you. How do they do it? They create it. Here's how you can create more income.

Ask for a raise, but only after you've earned it. There is a shortage of great employees, so endeavor to become your boss' right hand person. Be your boss. Be indispensable. Be a revenue-making machine for your employer. Show your boss, in monetary terms, how much you do for the company.

Take time off. It's good for your health, your soul, and it will show your boss how much she needs you. Don't leave your boss hanging, but give him the chance to experience business life without you. If he doesn't miss you, you're as good as gone next time there's a "belt tightening" or, in today's vernacular, "rightsizing."

Network. Join LinkedIn. Go to fundraisers and business lunches. If you own a small business, join your local Chamber of Commerce. Always be on the lookout for a better opportunity. And here's the key: Always give your employer the courtesy of keeping you. You really may not want to change jobs, but you do want to be a free agent. Look at professional sports: As soon as players could "shop" themselves around, salaries skyrocketed. Don't be afraid to test the waters.

Put your resume on HotJobs, Monster, and CareerBuilder. Every few months, update it. Don't ever take it down, unless you retire, and even then, you never know...


Sell on eBay


Sell assets you no longer use. It's amazing what people will buy and how much they'll pay for it. I sold a speedometer on eBay for $200. I paid $85 for it brand new 20 years ago. Granted, it's not readily available any more and it was for a very popular car, but still. Sheesh.

Sell books. Amazon, eBay, and half.com are 3 places where you can sell your "previously read" (or in my case, "never read") books. Sure, you'll make less than you spent, but those are sunk costs. The idea here is to get "extra" money for things you no longer use or need. Getting rid of stuff you no longer need also will make you less likely to think that you need a bigger house, which can save you hundreds of thousands of dollars.

Sell assets others no longer use. For example, collect cans. I'm not kidding. One year, a friend of mine wanted to take his young son on a fishing trip to Alaska, which is very expensive. He collected aluminum cans for a year, by going up and down the highway searching for aluminum cans. It's good for the pocketbook as well as the environment. You can go around to local shops and offer to take their cardboard. Businesses never have enough space or recycling capacity. Help them and then help yourself by turning it in to your local recycling center or waste management facility. You'd be surprised how much you can make just being the middle man.

Start a side business. Do you have a hobby that you can "monetize" (which is a made-up word that means turning something into a revenue or income generating method)? Are you a photographer? Sell your photos online; there are many stock photo agencies that will pay you for your photos. Are you a computer geek? Talk to local businesses about their technology needs. Many businesses are wholly inadequate when it comes to technology. Offer ways to help them by cutting their costs, raising their revenues, or becoming more efficient. Office automation, once a buzzword, is ever-elusive.

Perhaps you're a "crafty" person. Start a scrapbooking service. Or a basket making business.

Are you an expert at work? Parlay that expertise into a side business. Or a book. You can publish your own books now with the availability of PDF programs and the Internet. Or you can publish your own traditional paper book by working with firms like Lulu.com.

Are you a homemaker? Do you love the Food Network? Try a business like Amway or Pampered Chef or Tupperware or Mary Kay.

If you're reading this post, you've found a method for getting online. Now, turn that expense into a revenue stream. Become an affiliate. Sell your own goods or services online. Become a publisher for advertisers through Commission Junction, LinkShare, or amazon. Set up an eStore through Amazon. Sell on eBay.

Doing one or more of these things will increase your income. One of the best paths to increase income is creating multiple streams of income. Don't just settle for a "job." In your spare time, learn to create income. It is a surefire way to the path of earning more than you spend, the First Commandment of Personal Finance.

Technorati Tags: Learning to Earn, earning income, more income, increasing income, selling online, auction, hobby, selling unused assets, recycling, revenue streams, Money Hacks, Carnival of Personal Finance, Baby Education, Million Dollar Journey

As most of you who don't live under a rock know, the Fed, along with JPMorgan Chase, kept Bear Stearns solvent. The word is that had the deal to buy BS (get it?) not come along over the weekend, there might have been a financial collapse not seen since 1929.

Ugly.

Here's the real deal behind the deal. It's a long read, but well worth the time. If nothing else, let's learn from this and avoid repeating it.

Bottom line: The Fed did the only thing it could, and it was the right move. There surely will be other macro events and outcomes as a result of the Fed "giving away" money (or Treasury securities, as the case may be), but, as the most well-known economist of the Great Depression has said, "In the long run, we're all dead."

Point being that if the Fed didn't save this one, you might as well have put your head between your knees and kissed your ass goodbye.

It was that scary. And kudos to JP Morgan Chase for stepping up and buying a big bunch of BS. Surely, it was a backroom deal facilitated by the Fed with assurances to JP that they'd be well taken care of in the event anything bad comes their way.

It'll be interesting to see if JP and other big banks go after some of the other banks teetering on the brink of insolvency.

InvestorsInsight : John Mauldin's Outside the Box

Technorati Tags: Fed|JP Morgan Chase|Bear Stearns|bankruptcy|mortgage meltdown|credit crunch|recession|depression|John Maynard Keynes

I just ran across an interesting site, Alltop.com that promises to be analogous to a physical magazine rack in the virtual space we call the 'net.

It's a pretty cool idea. From the web site:

We help you explore your passions by collecting stories from “all the top” sites on the web. We’ve grouped these collections — ”aggregations” — into individual Alltop sites based on topics such as environment, photography, science, celebrity gossip, fashion, gaming, sports, politics, automobiles, and Macintosh. At each Alltop site, we display the latest five stories from thirty or more sites on a single page — we call this “single-page aggregation.”

There's a good chance that you'll find interesting stories, articles, and blog posts about something you want to read and explore further. I'm not sure it will ever take the place of a feed reader, like google's Reader, but I'd venture that it's not intended to be. Like they say on the site, Alltop is to be considered a starting point, not an end point.

It's now a staple in my daily reading. In fact, many of my favorite personal finance blogs are represented on Alltop.com.

Technorati Tags: Alltop|Guy Kawasaki|personal finance|virtual magazine rack

There's barely any wiggle room left for the Fed. What happens when the news gets really bad?

Fed cuts rates by three-quarters of a point - Mar. 18, 2008

It seems that there's often been a lot of news about the Fed reducing the Fed Funds rate, the discount rate, intervening in the markets, etc. But one economist says, "The Fed can't do it alone."

But give the Fed credit. They're trying to hold up the canvas (otherwise known as the sky) while everything literally falls around them. Home prices down. Stocks down. Dollar down. Confidence down.

Sounds to me like we're in a -- GASP!!! -- depression.

Now, depressions aren't inherently the end-all. But make no mistake, they're bad. But just as forest fires kill hundreds of years of growth and little furry animals, it paves the way for new, essential growth, ridding the forest of old, dead and dying growth in return for new growth with a chance for thousands of more years of life.

So too is how depressions work. They rid the economy of the junk that's built up over time, like subprime loans, "securitizations" of junky mortgage instruments, and idiotic leaders of failed companies. The collateral damage, unfortunately, is lost jobs, lost wages, greater debt, and an apprehension to get back into any market that's riskier than savings accounts.

But the Fed, I think, is doing some heavy lifting right now. It just seems like maybe they're lifting the wrong things. They need to work in concert with the US Treasury to bolster the dollar, keep inflation in check, maybe cut a deal with the Saudis and OPEC to increase production, at least for the short-term.

Links
Alan S. Blinder - The Fed Can't Do It Alone - washingtonpost.com
Calculated Risk
Bloomberg
Krugman: Liquidity Trap?

Technorati Tags: Fed | Treasury | economy | stagflation | depression | recession | mortgage | real estate | stock market | inflation | falling dollar | oil | Saudi | OPEC

Debt is truly a four-letter word. In MOST cases, it is to be avoided. We read every day stories about how debt has crushed yet another individual or business. Each and every American owes an average of over $8,000 in credit card debt.

But not all debt is bad. Businesses borrow money at attractive rates by borrowing from banks or other financial institutions in order to grow their revenues or cut their costs. People borrow money to start small businesses or increase income. We also take out the biggest loan of most of our lives when we buy a house.

Debt is good when it increases your ability to earn money (or, in the case of a mortgage, when it helps you gain access to an asset that benefits you). In other words, debt is okay -- even recommended -- when it can get you where you need to go at a cost that isn't prohibitive.

We use debt wisely when we get the opportunity to use a zero percent credit card to pay down an existing higher interest rate debt. Or when we buy a house with 5, 10, or 20 percent down at a low adjustable rate for 5 or more years or a fixed rate for 15 or 30 years. Or when we can turn the proceeds of the debt into something greater than the costs to pay the debt (like a loan from the SBA that allows you to increase your earnings from your business).

We are dumb debtors when we buy consumables that we cannot immediately afford, like fast food, groceries, and gasoline. Make no mistake, I am not suggesting that you pay for your gasoline with cash (I always use a rewards credit card); rather, I am suggesting that you pay for all your purchases with a credit card and then pay off that balance every single month. Of course, this is

Debt Principle #1: Don't get into Dumb Debt in the first place.

I know it's really difficult not to get into debt in the first place. Believe me, I'm in debt and will be for a long time (I bought a house in 2004. In California. Enough said.) and I had been, up to a few years ago, always mired in credit card debt. In fact, my credit card debts were nearly $60,000. I maxed out every card I had, and I had a bucket full of them. Since college, I was bitten by the credit card bug. If I needed books, I bought them. ON CREDIT.

• If I needed a meal, I bought it. ON CREDIT.
• If I needed spending money, I got it. ON CREDIT.
• If I needed to pay rent and didn't have the funds available in my checking account, I got it. ON CREDIT.
• If I needed groceries, you get the picture (ON CREDIT).

So I know how a lot of you feel. I dug myself out of debt with the help of some really great people and with the conviction of not getting into credit card debt ever again. But it's hard.

Nowadays, you cannot rent a car on vacation without a credit card. It's terribly easy to let the charge ride onto the next bill if you're short on cash this month (and who isn't?). The problem is, the charges snowball.

You've got to figure out a way to stop the snowballing and reverse the trend. In coming posts of Getting Out of Debt (Part of an Infinite Series), I will talk about how I stopped the trend and turned it around. I will also discuss prudent debt, as well as how to use the credit to which you have access from your credit card(s). Other topics will include specific debt reduction strategies, as well as how to maximize your credit score.

An extremely important thing to keep in mind, coming full-circle from where we started this article, is that debt can be good. So, in that light, we'll talk about good debt, bad debt, and how to maximize the difference (ideally, you'll have all good debt and no bad debt). But remember, a "good debt" can turn to bad really quickly (if you own a mortgage on a house that is depreciating in price, rather than appreciating, then your debt is bad. We'll explore ways to turn that around, too.

So, stay tuned for more Getting Out of Debt (Part of an Infinite Series) posts.

Meanwhile, here's a great guide to getting out of debt: DebtFree Playbook.

Tags: dumb debt, debt, credit card, mortgage, getting out of debt, using credit wisely, bad debt, good debt, staying out of debt, using debt to your advantage, Money Hacks, saving money

The link below is from the Consumerist about using credit cards wisely. There's some good advice here.

Here's a quick summary:

1. Pay off your balance each month
2. Get a rewards card and maximize use
3. Check your credit report (Fico Scores/Reports)
   
4. Pay all bills on time (Automate your finances)
   
5. Avoid ID theft
6. Take advantage of no interest, no payments deals, but pay off on time
7. Avoid paying interest on consumer debt
8. Don't max out your cards
9. Don't close credit card accounts
10. Don't obsess over your credit score
    

Be Good: Consumerist's 10 Commandments of Credit - Consumerist

Technorati Tags: credit cards | Money Hacks | consumer credit | FICO | ID theft | finances on autopilot

In our last post, we talked about how to save money by washing your own car (free step-by-step guide here) and buying in bulk with a twist.

This week, let's cut the fat. Literally. Many of us are out of shape and unsatisfied with how we look and/or feel. It's because we eat too much, get little if any exercise, and generally just don't give ourselves the time to work on our physical health.


#1
Exercise, but not at the gym. The first thing you ought to do is cut the gym membership fee. If you don't go, or you miss more than one time per week, you'll save hundreds, if not thousands, of dollars per year by canceling your membership.

Gyms, health clubs, fitness centers, whatever -- they all bank on you not showing up, so you can help them realize one of their goals by not showing up. However, cancel your membership too.

You can get a great workout for free at home by doing some simple exercises. What you want to do is approach fitness in 4 prongs: Food, stretching, strengthening, and cardio.

Here's the quick lowdown:

• Food. Don't eat junk. Don't eat out of packages. Eat 6 small meals per day.
• Stretch. Warm up before you exercise by stretching, and running in place or hopping.
• Strengthen. Hit the major muscle groups: Legs, chest, back. Squats, pushups, and pullups.
• Cardio. Walk, run, or cycle.

Cut the fat by cutting the gym membership dues and get fit for free at home.

Here's a great guide to getting started (courtesy Amateur Asset Allocator). I will write up my fitness plan and strategies in an upcoming column.


#2

Eat out, but eat out once per week, max. Eating out is fun, it can be healthy, and it's a great social interaction. But it's terrible for your pocketbook. Meals made at home can cost anywhere from one tenth to one half the cost of a restaurant meal. You also know exactly what you're getting when you cook at home. Prepared meals often are extremely high in calories. You can blow your whole fitness plan by eating out too often.

However, there are places that offer healthful meals. You just gotta find them in your locale. None of the chains are any good (Chili's, Applebees, Black Angus, etc.). The meals they offer are not only high in calories, but they're also high in saturated fats, sodium, and who knows what pesticides and other junk. And they cost a lot of money.

None of this is to suggest that you don't eat at restaurants, even those mentioned above. Just frequent them infrequently.

You'll save your diet, your health, and your money.

Technorati Tags: Money Hacks | eat out | eat in | gym membership | cut the fat | exercise | sound body sound mind | save money

The Frugal Dad presents a highly-recommended series of posts for getting your finances in order -- QUICKLY!!!

Read the full series for all the details. Here's the 2-word, day-by-day summary:

Day 1 Take inventory
Day 2 Emergency fund
Day 3 Credit cards
Day 4 Slashes expenses
Day 5 Retirement savings
Day 6 Education fund
Day 7 Early retirement

This, undoubtedly, is the "gorilla" approach, but the principles laid out present a perfect plan for getting your financial house in order.

7-Day Turnaround

Technorati Tags: Money Hacks, 7 Day Turnaround

I've started a Blog Carnival called "Kids & Money." Here I will take posts you submit and publish the best tips, tricks, and hacks for saving, earning, spending, investing, and teaching kids about money.

Here's a quick read on one "Kids & Money"-type topic.

Free Money Finance

Technorati Tags: Kids & Money, Blog Carnival, money hacks, kids, children, financial literacy

In Two for Tuesdays #9, I gave you a money-saving tip that could save your up to $600 per year, or more. That is, if you pay to get your car washed and detailed.

Wash your own car. Here's how to do it, step by step. Make sure you read the SECRET at the end of this post.

1. Get all your supplies ready.
1. Hose with spray nozzle
2. Car wash detergent
3. Wash mitten
4. Chamois
5. Bucket
6. Sponges, if needed
7. Old rags (terry cloth is good)
8. Glass cleaner
9. Paper towels
   
10. Spray-on wax
11. Spray-on tire cleaner/dressing
12. Spray-on wheel cleaner
13. Spray-on interior treatment
14. Spray-on bug remover
2. Preferably when the sun is low on the horizon (you don't want direct sunlight on a car you're washing), rinse car off with water. Use a fairly high-pressure spray nozzle. Pick one up for a few bucks at Orchard Supply or other hardware store (Home Depot or Lowe's works too). This first rinsing will wash away the surface dust.
   
3. Pour in a minimal amount of car wash solution in an empty bucket, and fill bucket with warm (not hot, not cold) water.
4. Put on your wash mitten and dunk it in the sudsy water. Start at the top of the car (the roof) and work your way down. Don't let the car dry at all while you're soaping. If it's taking too long, rinse the car again. Also, don't let the soap dry.
5. At this point, don't try to clean the wheels or tires.
   
6. Rinse liberally. The entire car must remain wet.
7. Look things over. If you've missed spots, rinse, wash, and rinse again.
8. Now, go for the wheels. Using your spray-on wheel cleaner, spray wet wheels one at a time. You don't want this stuff to dry on your wheels. Scrub with a terry cloth or sponge until all the grime is removed. Rinse liberally. You don't want any residue to remain on the wheels.
9. Next tires. Using the same method as you used in Step #8, except this time with your sudsy bucket of soapy water, clean like the dickens. Rinse liberally.
10. During steps #8 and 9, keep the entire car wet.
11. Now, go over any bug grime somehow left on your car. Use the bug remover to get off the gunk. Rinse liberally.
12. Give your car one more rinsing.
13. It's now time to dry. Wet your chamois and wring it out. Start at the top and work your way down. Wring out the chamois often (as in every two or three swaths).
14. Once dry, now's the time where the real magic happens. Again, starting at the top of your car, spray on the wax in sections. Wipe off immediately. Once the whole car has been "sprayed on, wiped off," you can begin with the windows.
15. Spray glass cleaner on one window at a time. Spray on, wipe off.
16. Open the doors. Spray the interior treatment all throughout the non-cloth interior (leather, vinyl, wood, plastic). Wipe off immediately.

That's about it. The SECRET is Buffalo Milke. They offer a full line of automotive care products in a convenient package and value price. All of your supplies can be carried in their Buffalo Bucket, which comes fully stocked for $59.95 plus shipping. They're an independent company (not affiliated with McGuiars, Mother's, Turtle Wax or any other "big name"). They will treat you right.

Using their system of products and the steps above, you can wash and wax your car in about half an hour. Assuming you wash one car per month, you're getting a car wash for about $5 a pop (plus your time, but it's so zen-worth it).

Technorati Tags: car wash, saving money, Two for Tuesdays, Money Hacks, Buffalo Milke

I've been paying for Personal Computer software for a long time. I bought my first computer back in the 80s and I've been paying for software ever since: Upgrades, new programs that promise increased productivity, ease of use, or some other wonderful benefit.

I've been a fan of Microsoft's Office suite forever. I like it. But it's gotten bloated: For the money, if I were to use all of the features, it's probably still a bargain. I, like most others, don't use 90 percent of the features that Word, for example, offers. So, for what I use it for, it's far too expensive; I simply can no longer justify the cost. I could try some of the free office suites out there, like StarOffice, but I don't want to.

I use Google's Docs set of online applications: Always available wherever an Internet connection is, completely interchangeable with other apps, and has the minimalist features I need. All at the very low cost of FREE.

For other utilities, like firewalls, anti-virus, anti-spam, and the lot, I use Comodo, also free.

Music: iTunes

But there's one piece of software that I bought a few months ago after having tried it for a while and I find it so completely perfect for my use that I will gladly pay the $50 or so again and that software is called

ROBOFORM

I absolutely LOVE this program! I, like you probably, have dozens of usernames and passwords to remember. I, like you probably, cannot remember them all. I don't even try because I don't have to. You see, whenever you visit a site with any form fields on it, RoboForm offers to remember the information. It's all encrypted, too, so if you lose your data (I store mine in the portable version on a flash drive, so I take it with me wherever I go), whomever comes up with it will have a time cracking the encryption without your password.

It also offers to generate really strong passwords and then remembers them! So, again, you don't have to.

Without any reservations or hesitation, I highly recommend this software!!!

Technorati Tags: free, free software, RoboForm, Microsoft Office, Personal Computer, Money Hacks, saving money, technology

I just created a Kids & Money Blog Carnival. Please submit any posts you wish of a financial matter that concerns children. It could be a story about how a child saved x number of dollars, how you're saving for their education, or how you teach them about all things money. It could also be methods of teaching them: Doing chores, giving an allowance, creating a business.

As long as it concerns Kids & Money, submit it. I'll take the best links and post them here. If you could link back to me, I'd appreciate it.

The idea is to get some really good material out on the 'net about Kids & Money.

Submit your post here.

Technorati Tags: children, money, kids, finance, economics, personal finance, money hacks, saving money, kids & money blog carnival

65,000 percent inflation!

Inflation Reality Check (The Korea Times)

Technorati Tags: inflation

I'm using a new tool to post to Money Hacks called Google Docs. In that light, there may be some weirdo stuff going on here for a few posts. I'm going to try to use a few more illustrations, some different formatting, in the hopes that the posts are more readable, informative, and enjoyable.

So, stay with me here.

Fitch, the credit-rating agency, lowered its ratings on WaMu and others as a result of its analysis and realization that it totally screwed up in its earlier ratings of the luckless lenders.

There might be a shred of good news: The catastrophe now being called the "subprime problem" may end sooner that originally anticipated. It seems that a lot of the losses have already been accounted for or will occur in the first couple of quarters of 2008. Once all the losses have been digested, and bank stocks fully beaten down (can anybody say WM at $5?), a new frenzy will ensue.

All thanks to capitalism. And ratings agencies like Fitch and S&P who could not, and still cannot, rate debt instruments with any accuracy. Who the heck believes these guys anymore?

Fitch

Tags: Mortgage Meltdown, Fitch, Standard & Poors, S&P, Washington Mutual, bonds, mortgage, home equity, HELOC

Quick read on the economists behind the presidential candidates.

Economy: Who the candidates really listen to: Financial News - Yahoo! Finance

Technorati Tags: economy, economists, economics

This is a great post about teaching kids about economics and personal finance. Every child should learn about money.

Teaching Financial Literacy In Elementary School | Amateur Asset Allocator

Last week, we showed how you could save $500 per year on car insurance and thousands of dollars when you purchase a car through Costco's insurance and car buying services, respectively.

This week, we'll talk about some frugal measures to save you some cash.

#1
Wash your own car and save $5 to $50 or more. Sure, it's convenient to have somebody else do it, but it's not a good use of your money. In the old days, I spent hours washing my car, drying it with the finest chamois, detailing it with premium wax, cleaning every crevice in the wheels, putting on the tire dressing, Armour Alling the interior.

Whew. Just writing about it is making me sweat!

The convenience of dropping off your car and having it worked over by a team of 12 minimum-wage earning car washers is tempting.

Don't do it. First of all, they can never do as good a job as you can. They have no skin in the game; it's not their car.

Second, their markup is huge. They can wash your car in 5 or 10 minutes and they charge you upwards of $20, sometimes $50 or more.

In a future post, I'll give you some money- and time-saving tips to wash your car in less time, with little expense, and with superior results. Suffice it to say for now, that the only expenses you'll incur are water, soap, once for a chamois or drying cloth, and a small amount for some detailing products. Buffalo Milke is my favorite line of premium car detailing products at a very reasonable price. You know it's good when high-dollar car customizers use it unreservedly.


#2

The second tip for today is one you've heard of before, but with a twist. Save money by buying in small quantities. The idea here is to buy the quantity you need at the best price possible without letting the goods spoil.

Buying a case or two of shaving cream on sale is prudent. Buying 10 pounds of hamburger without a way to freeze most of it is wasteful. Unless you're having a BBQ, in which case I hope you'll invite me. I'd be happy to Q a few things. It's something I really like to do and I'm darned great at it.

So the key is to buy what you need in a quantity that you won't waste. Trust me on this one: I've wasted more food buying in bulk than I can remember. It never pays to save a few dollars if you waste what you bought.

Remember that side of beef your aunt bought when you were a kid? She had a giant freezer and you ate beef every time you came over. Her children grew up to be vegans. You get the picture.

That concludes this week's Two for Tuesdays. Come back next week for 2 more money-saving tips.

Tags: Money Hacks, Two for Tuesdays, saving money, buy in bulk, wash your own car