27 Dec
2009

Some people hesitate in starting to invest because they worry about losing their money or think they have too little to invest. Even if you have big student loans, credit card debts, and are thinking of getting a payday cash advance to see you through to your next paycheck, you can start investing with only $100 in many cases. Here are some steps to take:

1) Pick three resources to help you understand investing. For example, talk to someone in your bank’s investment department, read a book about investing and see a free library talk about beginning to invest. Set a date when you will start investing (no more than 30 days from today). Setting a deadline ensures you will take action.

2) Open an account or start putting aside money in some fashion so you will have money to invest. You can start with $100, but it may take you a few weeks to get there. That’s ok – start saving.

3) Open an account. To invest in some things, you will need to open an account. Your bank can help you set up a mutual fund account, for example, where you can start putting in money to invest. You can also find a trade broker who will help you buy exchange-traded funds (ETFs), stocks, and other things you can invest in. Look for a broker who is willing to work with no minimum account size and a broker with a low commission rate.

4) Start tracking your progress. Investments sometimes make money and sometimes lose money, so don’t start moving around your investments all the time. But do check in on your investments from time to time and develop a good budget so that you can put some money into investments each month.

27 Dec
2009

Getting started in investments means putting money aside and learning as much as you can about investments. It is a good idea to start doing both at the same time – right now. Starting today, start putting aside money you can invest. This should be separate from your emergency fund. You will want to create a budget to make sure that you have enough to pay your personal loans, credit cards, unsecured debts, other debts, utilities, necessities and still have cash for investments.

Next, find out as much as you can about investments. There are many simple ways to find out more. Many banks, for example, have investment advisors that will sit down with you and your budget and consider where and how you can invest. These professionals can help answer all your questions and can help you determine which products might be right for your specific situation. Most banks also offer these services for free.

Many investment professionals give free workshops and seminars at local colleges, libraries, and other venues. Check with your local library or school to find out about such events. Also, check your local events pages in the newspaper for investment clubs. Investment clubs are organizations where investors get together to learn from each other about investments and money. These can be a great way to learn more and even find a personal mentor for your finances.

27 Dec
2009

If you want to make money in the long term, you will need to start investing. You can invest in a retirement savings product, CDs, real estate, mutual funds, stocks, bonds, and other products. All investments work in a similar way: you spend your money and in exchange for offering value to someone, you earn money (called interest or a return) on your investment. For example, when you buy a stock, you are essentially paying for a small part of a company. That company will use the money you have paid to run and expand the business. As the business grows and becomes more valuable (with the help of your investment money), the stock may increase in value and you will be able to earn a profit because you helped the company.

Most investments come with risk. That is, there is no guarantee that you will earn money and you may even end up losing the money you invested. If you buy stock in a company and the company goes bankrupt, for example, you may lose the money you have invested. Generally, the higher the risk, the higher the possible returns on your investment. The riskier the investment, in other words, the more money you stand to make. The safer the investment, the lower the return or percentage of interest.

It is always important to consider carefully before you invest. If you invest too much and end up losing your money, you could find yourself unable to pay your mortgage, your personal loans, your unsecured debts, and other obligations.

26 Dec
2009

Improving your earning power doesn’t just mean getting a raise or making more money from your job – although those things are nice, of course. The problem with making your money from your job is that you are limited by two things: your hours and your hourly income. You can only earn so much per hour in most jobs and you can only work for so long. This means that you have a limit to what you can earn. Plus, if you get sick you might not be earning much (or anything at all) in some jobs.

You’ve probably heard of diversifying your investments. Well, you should diversify and increase your income, too. When you make money from multiple sources, you have more money coming in, and you have less of a need for personal loans. Plus, if you have cash coming in all the time (not just payday) you might be able to avoid payday loans entirely. Here’s how to add some diversity to your income.

1) Passive income. Passive income is one of the best ways to make money, because it means that it require no extra effort or time to make money in this way. There are many ways you can create a passive income. You can buy a modest home and rent it out or rent out part of your home (or you can rent your car, boat, or other stuff when you’re not using it). You can also make passive income by selling things online, by joining an affiliate program or by creating a members-only website that brings in extra cash. Look around you and find ways you can make money this way. Just research your options carefully and make sure that you take on only legitimate opportunities.

2) Monetize. You’re probably already doing some things in your spare time that you could create into a side business. If you blog, for example, you could monetize your blog with ad space or by getting paid to write reviews. If you create crafts, you could sell them (or teach people how to make their own) for a nice bit of extra cash. Look at the things you already do in your spare time – how could you make money from these activities?

3) Earn more on your work time. You could take on another job or overtime hours. Although both require more time and effort, they could help you earn cash while you boost your career.

4) Invest. Investing in stocks and bonds takes some know-how, so read up first or join an investors’ club. Investing, though, can mean that you cash starts making you more cash while you sleep, work, and just relax.

26 Dec
2009

Once you know what you are earning, it is time to try to maximize your earnings. Go online and do a little bit of research. What is the average income for a person in your position in your city? Some businesses post earnings of some employees. If your company does, look up this information and compare it to the top salaries of other similar companies in the same area. If your top executives are making more than the top executives at another company, you might have some wiggle room to negotiate for a better salary for yourself.

Once you know what an average salary is for your job, consider how much you would like to earn. Can you reach that goal from your current job or will you need to focus on moving up in the company where you work? If you need to move up, create a plan on how to do this. For now, you might want to negotiate a raise. To do this, start by creating a new resume for yourself. What are your skills, accomplishments, and contributions? Work on becoming indispensable in your company – the more value you offer in your job, the more likely you are to get a raise.

If you have been in your current job for more than a year, your performance has been stellar lately, and you think you deserve a raise based on the research you have done into average salaries in your area, it may be time to ask for a raise. This is a nerve-wracking experience, so prepare a short presentation about your contributions and performance and practice until you feel comfortable. If you cannot get a raise, you might need to think hard about improving your performance, finding a new position, or both.

One more caveat: Before you start seeking out a bigger salary, make sure that you plan for it. If you start earning more money, how much more can you expect to make? What will you do with the extra cash? Create a budget with your new income and figure out how much you will add to your emergency fund now that you are making more and how much will go towards unsecured loans, student loans, and other debts.

26 Dec
2009

Earning more money is not necessarily the cure-all many people imagine. Even if you were suddenly making more money, if you don’t have the budget skills and saving skills you need, you could just end up spending more money. Many people find that they more money they earn the more personal loans, unsecured loans, and debt they have. It can be a tricky thing, but there is no doubt that more money isn’t necessarily a problem. With some good financial habits (which you can learn right here on this blog), more money can mean more savings, more fun, and more money to put towards debt-free living.

Mastering your earnings means taking a look at what you earn. What is your take-home pay each month and each year? What is deducted from this paycheck? What are your total earnings after taxes and deductions? Hopefully, you will have a good idea of what you earn by having created your budget.

25 Dec
2009

One reason why people don’t save is because they don’t see the point of it. Retirement seems far away, emergencies seem unlikely, and those after-Holiday sales are beckoning. If you don’t see the point of saving, it could be because you don’t have specific saving goals. Savings aren’t just for emergencies or far-off retirement. You can use savings to buy what you have always wanted.

The trick is this: don’t see savings as money you no longer have access to but rather see it as getting you closer to the life you want. Then, get three savings accounts. One will be your emergency fund. You will put one-third of your savings here and keep it there until there is a real emergency (such as a loss of job or a medical emergency). Keep putting in money into this account until you have at least 6 months of income in there. After that, every 12 months or so, remove half of your money from this account and put it in your long-term account. Then keep saving. Your long-term account, by the way, is the savings account where you will keep money for long-term goals – such as retirement, paying off your personal debts, and so forth. At least half of this you will want to invest for retirement. The other half should go towards debt-free living and getting rid of those personal loans. The final savings account is your fun account – here is the money you will use for medium-range goals (such as a new boat or a great new suit). Just remember not to pick this account dry all the time. Splurge on two or three big purchases that make you feel amazing each year.

Look for savings accounts that offer few or no fees. Some banks now offer online accounts that include no fees unless you withdraw money. This is a great idea, as it encourages you to keep your money in your savings accounts.

25 Dec
2009

Many people don’t save because it seems too hard to do so; spending money is just so much easier. Part of the secret to success, though, is making saving so easy that you don’t even have to think about it. Here’s how:

1) Automatic savings from your paycheck. If you get your employer to deduct a certain percentage of your paycheck (such as 10%) and place it into savings or a retirement fund, you won’t even miss the money and you’ll be making regular contributions to your savings account. Ask your employer if they can do this.

2) Debit cards with automatic savings. Some banks have special accounts which allow you to save each time you use your debit card. It works like this: each time you pay with a debit card, your purchase is rounded up to the nearest dollar (or the nearest five dollars, if you wish) and this difference is placed in your savings. Again, this is money you won’t miss and it can really add up to a nice savings account you can use for retirement or to pay off unsecured loans.

3) Automatic account withdrawal. Any bank will withdraw a specific amount of money if you ask them to and place this amount in a savings or investment account. The money is automatically taken out, so there is no temptation to spend it somewhere else. You can even do this with your personal loans: have the bank automatically make payments on your personal loans so that you don’t forget or spend the money another way.

4) Check out our savings guide which will help you free up more cash to put aside.

25 Dec
2009

If you want 2010 to be a much better year financially, you will need to start saving. The saving habit is one of the best habits you can cultivate to enjoy long-term financial success. Savings help you set up an emergency fund, help you put aside money for big (and smart) financial investments, and help you enjoy money in the bank. Having “extra” money in the bank is a great feeling, and knowing that you have savings set aside helps you feel better about your finances.

The biggest myth about savings is that you need to be making more money to save. In fact, many people who don’t save claim that it is because they just don’t have enough. Even if you are living paycheck to paycheck and paying down big personal loans, there are still plenty of ways to save money each month:

1) Cancel a subscription or service you don’t need and put the difference into your savings account. Even $50 a month every month will start to make a difference over time. Every little bit helps.

2) Ask for a raise and have the difference in your paycheck automatically taken out of your account and put into a savings account.

3) Develop a budget and pay yourself first. Before you decide how much you will spend on other things, write down how much you will spend on savings. You then can just adjust the amount of money you spend on other things (such as dining out).

4) Save your pocket change at the end of the day and take it into your bank once a week or once a month. You won’t even miss this money, but it can help build a nice emergency fund or can help you pay off some personal loans.

24 Dec
2009

Now that we’ve examined some fundamentals of budgeting, here’s how to make it happen:

1) Use our budget worksheet to type in the numbers – what you will be spending each month on clothes, housing, utilities, personal loans, etc.

2) Develop some way of tracking your spending. How will you know whether you’ve gone over your budget? You won’t unless you keep track of where you actually do spend your money. At first, especially, you may not know where you spend your money unless you keep an eye on spending. There are lots of ways to keep track – you can use online banking or online spending trackers or just jot your spending in a planner or notebook. One simple way is to get receipts for everything and tally them up at the end of the day or the week to see how on track you are.

3) Don’t use your budget as a straightjacket. Budgets aren’t about “shoulds” – they’re about get-tos. If you want to get together with friends for a beer once a week, budget that expense in. And if there is a long-term goal (a trip to Paris, a great car) that you really want, open a savings account and budget some savings to be put towards your dream account each month. As you watch your dream get closer, you will become a big believer in budgeting.