Dealing With Financial Problems With A Loved One

Purity

There may come a time when a financial problem comes up between you and a loved one. Maybe it’s a late payment that runs up some fees.  It could be an old debt that rears it’s ugly head again.  Perhaps someone did a little too much damage with credit card spending?  Whatever it is the issue will have to be addressed so a solution can be figured out.

Here are some things to consider when confronting your loved one about their financial management problems:

Don’t blame or accuse the other person for the problem.  Arguing and blaming doesn’t help.  When you lay blame and argue it’s like telling the other person that you’re right and they are wrong.  It may be that’s the case but nobody likes to hear that.  Start off a discussion like this and you immediately turn your loved one off to what you are saying.  Remember the situation has already happened.  The point now is to figure out how to solve it.

State the facts.  Talk about what has actually happened.  Try not to get your emotions involved.  This means no name calling.  It also means talking about the situation at hand and not bringing up any past discretion.  The facts will help you find a resolution.

Talk to your loved one about how the problem arose.  How did it get to this point?  Ask what they think can be done to solve the problem.  Offer your help.  Suggest some ideas of your own as a solution.  Assure your loved one that you are their for them and that you are in this together.  This leads us to…

Take accountability for the problem with your loved one. “But it wasn’t my fault” you might say.  Maybe not directly but by sharing in the responsibility you let your loved one know that you are there to help them.  The fact that this person is a loved one makes their pain yours as well to some extent.  Take that extra step with the olive branch and assure them that together you’ll figure out a solution.

Remember you want to open the person up to discussion. Getting into a financial mess is embarrassing for most.  Your loved one probably knows they screwed up somehow so they don’t want to be reminded of how bad a blunder it was.  Listen to them.  Work on finding a way to both fix the problem at hand and prevent it from happening in the future.

Hopefully you don’t have many financial problems with loved ones in your life.  If you come across any, these ideas should help you work things out.

photo credit: timsamoff

A CD Ladder Plan For Beginning Savers

a ladderAre you just starting off building up your savings? I’ve mentioned before that a great way to save is by putting money in a high yield savings account such as Capital One 360 Savings.  A way to make a little more interest is to open a Certificate of Deposit, or CD for short.

What is a CD?

Here’s an excerpt from Wikipedia:

A certificate of deposit or CD is a time deposit, a financial product commonly offered to consumers by banks, thrift institutions, and credit unions.

CDs are similar to savings accounts in that they are insured and thus virtually risk-free; they are “money in the bank” (CDs are insured by the FDIC for banks or by the NCUA for credit unions). They are different from savings accounts in that the CD has a specific, fixed term (often three months, six months, or one to five years), and, usually, a fixed interest rate. It is intended that the CD be held until maturity, at which time the money may be withdrawn together with the accrued interest.

So if you are investing/buying a  CD you want to make sure you don’t need that money for the length of it’s term (otherwise you will have to pay a penalty to cash it in).

Here’s a great way a beginning saver can get started with CD’s:

  • Figure out a monthly amount of money you know you won’t need for 12 months.  Don’t be scared now.  It can be a small amount like $10.
  • Log into your ING account and go to their products page.  Click on CD’s and proceed to open up a $10 CD for a 12-month term.  (If you can afford more by all means do so.  Remember this is money you won’t touch for a year.)
  • Now every month do the same thing for a total of 12 months.
  • At the end of a year you will have 12 CDs worth more than $120 (imagine if you put more in each month?).  If you can, re-invest the CDs as they mature.  See if you can add to the amounts, again even if it’s only a few dollars.

“What have we done?  Anyone can buy CDs!”, you may ask?  Remember this is for a beginner who is starting to build up their savings.  Here is what the beginning saver has accomplished:

  • This builds up a habit of saving.  By putting the money in a CD we’re limiting the ability to take the money out (without a penalty at least).  Once this habit is in place a beginning saver may have the discipline to expand their savings.
  • It creates a great sense of self-esteem for the saver.  You get to see your CDs growing every month.  How great is it to see a year’s worth of savings?  Once a person realizes that saving is an achievable goal they will be more likely to continue!
  • You’re earning interest.  Not only have you saved but you’re savings are growing too!  You’re taking advantage of laddering.

Savings aren’t usually built overnight.  But by saving bit by bit you will see your savings blossom over time!

photo credit: naama

15 Things To Do With Your Economic Stimulus Check

The government Stimulus checks started going out on April 28th. If you are expecting one you should start looking for it in May (here’s a post listing the dates).

So what are you going to do with the extra money? Here are a list of ideas for using your stimulus check:

  • Pay off credit cards – If you have any credit card debt the stimulus check will be a great way knock some of that out! Paying off the debt gives you an instant return in savings of whatever you would have paid in interest fees. Psychologically, you will help in getting the debt monkey off your back.
  • Contribute to a Roth IRA – You can take your money and put it into your Roth IRA. For 2008 the contribution limit is $5000.
  • Start an emergency fund – If you don’t already have some sort of emergency fund (three to six months expenses seems to be the conventional wisdom) then your stimulus check is a good way to start one. Even if you have one you can use the money to increase your fund. A great place to start one is with ING Direct (you can even get a $25 bonus by opening your account with $250).
  • Contribute to a 529 college savings plan – You can use the money to help save for your kid’s education by putting the money in a 529 plan. Not only do you help save for college but you might get a tax break as well depending on your home state’s plan.
  • Pre-pay your mortgage – Take the money and make additional payments to your mortgage. By making additional payments you will own your home faster and pay less in interest. Just make sure the payments go towards the loan principle and not next month’s payment (also check that your lender will accept pre-payments without fees or penalties).
  • Go on vacation – You may have been planning to do this anyway so here is a good way to fund the vacation. Go and do something that will be a great experience for the family that you will all remember.
  • Improve the house – If there’s something you’ve needed to improve on your home, such as a furnace, you can use your stimulus check to pay for it (or at least help). Other options could be new paint job, carpet, furniture, appliances, etc…
  • Car maintenance – Have you been putting off a car repair? Need new brakes? New tires? Your stimulus money can fund it. If your car is about to go kaput your stimulus check could help pay for a new car (or a good new used car).
  • Learn to invest – Do some research and take the money and start investing. Companies such as Sharebuilder and Zecco offer low-fee investing. You have to do your homework with this option but it might be just enough money to start investing but not so much that you will be crazy worrying if you lose it. If you invest through Sharebuilder you can buy partial shares of Berkshire Hathaway B class shares. I hear that Warren Buffett is pretty good at investing.
  • Pay off student loans – If you have high interest student loans then your stimulus check can be a great way to help pay your student loans off. Just like with credit cards paying off your high interest student loans give you the instant return in savings of what you would have paid in interest.
  • Have a nice evening out – Take your spouse out to a really great meal. Get babysitting and go to that great restaurant you wanted to try. Go see that new show that everyone’s talking about. Make an experience you will always remember.
  • Get physically fit – The stimulus check should be enough to pay for a year’s gym membership (or more than a year). Use the stimulus check as a catalyst to get in shape and make your life healthier. Not sure about a gym? Find a class such as yoga or martial arts to join. Not into that? Buy a new bike and go riding. Or get yourself some good running sneakers and running attire. Join your local running club and enter a few small races. You never know, you may one day run a marathon.
  • Go to school – Use your stimulus check to enroll in a college course or two. This can be toward a degree or just continuing education. Hey, you can take a personal finance course. Maybe learn a second language?
  • Do nothing – This is the easiest of them all. Put the money in your savings account and forget about it. You don’t have to spend it or find any particular purpose for it. It doesn’t have to burn a hole in your pocket. One day you might find a good use for it but for now it adds to your savings.

Personally, we’re closer to the Do Nothing suggestion. Our stimulus check will come via direct deposit right into our ING account. We have no specific plans for the money so it will be added into our savings. Our check may pay parts of many of the suggestions or for none of them. Either way it will earn interest until it finds a home somewhere else.

Do you have any other ideas for using the economic stimulus check?

photo by Argenberg

7 Ways to Get Rich Quick

Large Denomination Bill

These are trying times for our economy.  The money in my 401(k) is going nowhere, my high-yield savings isn’t yielding very high, Bill Gates isn’t the richest in the world, the economy basically evaporated…

What’s a person to do?!?

I propose seven ways for you to get rich quick!

Stock speculation

We all know money can be made on the stock market.  You just have to invest in the right companies.   Find lots of small companies that look good.  Big companies weren’t always big – they started small.  Find an emerging industry and invest there.   Surely professional companies will grow and as they do so will your stock price.  Check this out – as recent as 2003 stocks returned over 28%!!

Buy property and flip it

Rates have dropped.   Housing prices have dropped.  Now is the time to start reaping the rewards of of the housing bubble burst!  Do you own a home now?   Leverage that home with a home equity loan and buy up what properties you can.  Housing prices will go up again and you will see the green!

Insider trading

We all know someone on Wall Street in the stock market today, don’t we?  Think they keep everything secret?  Why do you think they are rich?   Next time you run into one of your Wall Street buds hit him up for some tips.  These guys work with stocks all day so they know where they are moving.   Maybe they can tell you the best trades in penny stocks (those always seem to go up, right?).  Use those tips and buy what you can!

GamblingUsing cash instead of credit cards

Ever played blackjack? Craps?   These games have some of the best odds in the casino!   You can learn all sorts of different playing strategies online to help you win.   Heck, there’s even a movie about some MIT students who beat the casinos with blackjack.  Go get to the casinos before everyone sees the movie and has the same idea!

Blog

Anyone can blog.   Really.   Look at me, I’m no Dostoevsky and you’re reading this.   There are so many ways you can make money with a blog.   Just throw some ads on your site, write some posts, and voila!  Instant cash!  Make sure to link back to me when you start up!

Tax return

List anything you can as a deduction.  We can all find some way to justify an expense.  The more you put the better.   The money you donated to the orphanage?  That’s like having a whole bunch of dependents to declare!   Get your tax return to the point where the government is giving you back a huge return.   When the money comes in you can try the other six tips here.  Oh, don’t have your accountant do it.  Do it yourself.  You know what your deductions are.

Win the lottery

Someone has to win.  Yes the odds are bad.  But every ticket you get improves those odds.  What if you took your tax refund or stimulus check and bought lottery tickets?  There’s bound to be a winner in there.

What’s that?………Hold on one sec……uh-huh…ok.

My lawyer and accountant just barged in on me.  They’re telling me I might have gotten a few facts wrong.

Umm, lets see…stock speculation’s not a great idea.  Speculation without real research is actually closer to gambling than investing.

But I like gambling!

Cross off gambling too.  Something about if it were so easy to do well with it then everyone would do it.  And that casinos have the best odds in the long run.  And those MIT kids were an exception that didn’t last.

Remember those 2003 returns?   Here are the returns for the three years before 2003: 2000 -9.03%, 2001 -11.85%, 2002 -21.98%.

Ohh.

Past returns do not guarantee future returns.   And lots of small companies fail or never make the successful leap to become a large corporation.

Related: Online Brokers with Inexpensive Trades.

On the same note, there’s no telling where the bottom is in the housing market.  Many thought it would never drop and here we are.  Buying now could be ok if you’re looking to buy your own house but otherwise you’re back to speculating.  Leveraging what you own could be a sure-fire way to end up foreclosed.

My lawyer mentioned that insider trading is illegal.

Ouch.   Ok, don’t do that!  My accountant chimed in saying that just because someone trades a stock it doesn’t mean they research the fundamentals of any of the companies they trade.   That’s good to know.   So watch out for any stock tips too.   Do your own research!

I just checked my advertiser accounts for this blog.   There’s a few cents in there but nothing to live off of.  I might have jumped the gun saying that a blog was instant cash.  You can make money with a blog but I it takes persistence and hard work and even then it could fail.

Nope, not a way to get rich quick.

That looks funny!

My accountant and lawyer are jumping up and down pointing to Tax Return.  Wha?   oh.

They are highly against putting anything fraudulent on your tax return.  There’s this thing called an audit which is not something you want to go through.   Make sure your return is correct and if you have questions seek out a professional accountant.  Otherwise, you can find yourself with a whole bunch of income tax problems that need a team of tax attorneys.

Can I keep my lottery tickets at least?  I can?  Oh, but odds are I’m just giving money to the state?  Even though someone wins the odds are very much against winning.  Better off saving the money.

Do people sometimes get rich quick?

Yeah, it happens.  But it’s far more rare than you might think.  Rather than spend your time on some get rich quick scheme, put your energy into a legitimate way to earn money.  Work hard at what you do.  Find ways to make money on the side.  Save.  Invest.  Create something of value to people.  Save more than you spend.  Be honest in your work and to yourself.

You may not find instant riches, but wealth is something we can all attain.

ING $25 Referral Bonuses

Have you wanted to open an online savings account?

Well here’s your opportunity to open one with ING Direct! They offer high-yield savings with no minimum to open (this includes both savings and CD’s). This means better interest earnings than most other banks. I’ve been using them since April 2003.  If you use one of the referral links below you will receive a $25 bonus. You’ll also be giving me a bonus of $10 so it’s great for us both. In fact, once you open an account you can refer your friends and receive the same bonus as I would. The catch (isn’t there always one) is that you need to open the account with at least $250. What about those no minimums? You can always open an account with any amount lower than $250 but you won’t be eligible for the $25 bonus.

And check this out - If you open with $250 your $25 bonus is an instant 10% return!

Here are the links to use:

Shoot me an email for a link!

ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus

If you get the message “We’re sorry, but the referral link within the email you received has expired and is no longer valid. We recommend that you contact the sender and ask them to re-send the referral email. Or click ‘Continue’ to proceed with the application process without the account opening bonus” then the referral has already been used. Shoot me an email and I’ll send you a new link.Like I said, I’ve been using ING Direct for years and I highly recommend them. If I had kept my savings in my brick and mortar bank I would have missed out on a lot of savings and earnings. So what are you waiting for? Go open up a high-yield savings account!

If you don’t have $250 but still want to open an an ING account please click the banner below (please note this is for the Electric Orange account not savings):


As always read the fine print from ING to make sure their online savings is right for you. You should never sign up for anything online without understanding what you are getting into.

How AMEX And ING Gave Us A Wedding Gift

My wife and I have been married for almost two years now.

When we were planning our wedding (which we planned in three months) we didn’t want to get too extravagant and end up in debt because of the wedding (not a good way to start a life together). Still we knew there would be some hefty expenses to cover.  Luckily for us I got an offer for an American Express credit card with 0% interest on charges for a year.

I know, some of you may be thinking “Uh-oh credit card debt!”

Well yeah but look at how we made a new credit card work for us:

  • We charged what we could on the card. This included not only wedding expenses but also the honeymoon and many other charges over the course of a year (we would have charged more but some vendors preferred cash or check).
  • When the monthly bill came we paid only the minimum. I know, another red flag – Never pay just the minimum. Stay with me it gets better.
  • We took as much of the remaining monthly balance as we could and put it in our ING account and labeled it AMEX. This money would only be used to pay the Amex bill once the 0% offer was over!
  • Fortunately we already had money saved for the wedding so we were able to add money to our ING “AMEX” account. Essentially we could have covered the credit card bill at any time but let it sit since we weren’t being charged interest.
  • At the end of the offer we paid our bill in full. We continue to use the card paying off the statement in full every month.

Basically what American Express did was give us a free loan for our wedding! On top of that we were earning decent interest in our online high-yield savings account for money that could have paid off the card. AND for the charges we made on the card we were earning rewards points as well. The points translated into a nice gift certificate to the Pottery Barn! Thank you American Express and ING!

Understand, we had to be disciplined to do this. At no time did we go crazy making charges we couldn’t already pay off. We had a plan and stuck to it.

This shows you that credit cards don’t have to be bad if they are used correctly. Money can be saved and earned in all sorts of ways. We just have to be open to how it can be done.

Let me know what you have done creatively with a credit card or online bank account!