Learn Life From Your Losses

Today’s guest article is written by Forex day trader, Thomas Grow. Thomas is a staff writer for ForexTraders.com and certainly has some interesting things to share.

Life has been pretty rough for many of us, these last few years. Personally, in a very short amount of time, I’ve managed to lose my job, my house, my Hummer H2 (my baby), my 401(k), my pension, my savings, my lay-off severance, and I believe probably darn near my mind, as well.

I’ve learned a few valuable lessons along the way. Unfortunately, I learned these AFTER making the mistakes instead of before… but really, isn’t that the way most of us end up learning our life lessons?

In order to ensure that all of our suffering is not for naught, we should always make sure that we walk away from our mishaps with lessons to prevent us (and others whom we care about) from making these mistakes again.

I was fair to ruining all aspects of my life at once, not just in one area. I’m an equal opportunity destroyer. For me, here are some lessons that I have personally learned, from a trading and investing perspective:

1. Buy High, Sell Low… Not a Good Strategy

You’d think this one would be obvious. Yet, time and again, I seemed to be very good at mastering this strategy like some hidden super-talent. As a relatively new forex trader, I have had to learn the hard way that this is not a good strategy. I think I’ve mixed a couple of the words around in that phrase, “Buy High, Sell Low”… does the word order really matter? I’m thinking that, possibly, it does.

2. You Get What You Pay For Or At Least What’s Coming

Note to self:  If you’re going to be trading your last few dollars in the hopes of somehow buying yourself back onto the yellow brick road, then at the very least, be very selective in whom you choose to work with as your trading middle-man. Just because you are saving a pip on the spread, it doesn’t necessarily mean that your overall savings will be a pip. Choose the wrong forex broker, and you may soon find yourself the victim of habitual slippage, or even worse, a toaster to the back of your head when your wife realizes how much money you just lost on your last trade through the discount platform you are using.

3. Don’t Dive In The Shallow End

To have fun in a murky, piranha-infested pond (all the rage), you can’t just dip your big toe in the water and test the temperature. After all, it may feel fine to you, and the piranhas’ teeth may seem too small to cause much damage, but that big ol’ iron rod sticking up at the bottom pointing up may be a problem. Same goes with your investments. I “dipped my big toe” a couple times in an invested. I thought I was being really prudent by testing it out first before taking a major jump in the amount I was investing. Unfortunately, that little toe-dip wasn’t enough. Had I decided to wade out and do some more research, perhaps I wouldn’t have impaled myself financially on Murphy’s iron-stick-in-the-mud spike-o-rama in the middle of the dirty water. Instead of holding a new wad of greenbacks, I get to suffer from financial gangrene. Nice.

4. Mo’ Money, No Money (or, Easy Come, Easy Go Really Fast)

When you do find a little success in some of your decisions, whether it be a good investment (well, until it’s not anymore) or a good trade, it’s easy to start relating to the Top Gun-esque quote, “I feel a need… a need… for greed!”

The fact is, when you start make a little bit, it’s always better to take your money and run, rather than going double or nothing. I tried that the double or nothing thing. I won the nothing part. Yay. Don’t forget the song lyrics, “You got to know when to hold them, know when to fold them, know when to walk away, know when to run…” (Ha! I bet that song will be stuck in your head the rest of the day now!) Don’t forget… that song is called “The Gambler”. And that’s exactly what you’ll be if you take your chances and go for the big wins, instead of remaining cautious.

Summer Break’s Over

So when you look back on the trials you may have or may be going through, remember that there always is, if you choose to look hard enough, a silver lining to those very dark storm clouds. You are not a failure for going through the things you go through. You are only a failure if you don’t learn from the things you go through. Consider this a very expensive tuition in the college of life. Hopefully, lessons learned and applied will help you to be, not just well-weathered, but well-prepared for the future that lies ahead. May you make the most of your past, in order to make the most of your future.

Easy and effective ways to determine how much home you can afford

One of the principal questions that most of the prospective homebuyers have is ‘how much house can I afford?’ in reality. It is a fact that housing prices are low in 2010. But, it is also true that thousands of homeowners are losing their cherished homes to foreclosure. That is why it is necessary to know whether you can really afford to buy the house so that you don’t have to go through the humiliating process of foreclosure.

Ways to determine how much house you can afford:

The easy and effective ways to determine how much house you can afford are given below:

  1. Housing expense ratio: The housing expense ratio, also known as front-end ratio, is the percentage of your gross monthly income that will go towards paying your mortgage/ housing expenses. A major portion of your payment will go toward loan principal and interest (P+I).Your housing expenses have to be within 28% of your gross monthly income. However, a portion of your housing expenses will also include property taxes (T) and homeowner’s insurance (I). Thus, your total housing expenses can be represented as P+I+T+I. This is a smart way to know ‘how much house can I afford’ easily.
  2. Debt-to-income ratio: Your debt ratio is the total of your P+I+T+I and any other debt expenses divided by monthly gross income. Debt ratio will evidently be of higher percentage, as majority of people have credit card debt or other loans. Normally your debt ratio ought to be less than 36%. For example: If your monthly gross income is $5,000, then your total debt expenses must not be more than $1,800.
  3. Down payment: If you can’t afford to put down at least 20% of the home purchase price, then you will be required to buy a private mortgage insurance (PMI). Therefore, check whether you can make the required down payment.
  4. Home maintenance expenses: Most of the first time homebuyers don’t think about this but the fact is you will have to keep some spare cash for home maintenance cost. You will also be required to keep some extra cash for unforeseen expenses such as appliances break down, replacing carpets, renovating kitchen, remodeling bathroom, and etc. So check whether you can afford to bear those expenses.

Finally, the homebuyers may also be required to pay Homeowner’s Association Fees. So, another way to know ‘how much house can I afford’ will be to figure out the amount of money you have to spend towards Homeowner’s Association Fees.

12 Steps to Prepare Your Home for Sale

First impressions are very important to the prospective home buyer, so it’s important to put yourself in their shoes and look at your home as someone else would see it. Preparing a home for sale properly can make all the difference as to how fast your house sells.

First observations

All too often we are so used to our own home that we don’t see it quite the way a stranger would. We take a lot of things for granted or may not even notice – we are so used to them; so if you want a really objective view, why not ask one of your friends to give you their opinion. But make sure you ask someone who won’t be too afraid of hurting your feelings to tell you what they really think.

Ask them about first impressions, and how the house feels to them. Does the house look dirty or have any strange odours? It’s amazing the difference a coat of paint or tidying and rearranging the furniture can make.

Preparing a home for sale is not necessarily expensive, but a bit of time and effort can go a long way to improving first appearances. Here are a few tips to get you started.

12 home improvement tips

  1. Tidy up
  2. Put all those clothes and oddments away out of sight and back where they belong. Another suggestion is to put your personal items out of sight, family photos and souvenirs can take up a lot of space and can be distracting to the potential buyer. You already know you will be packing up to move so why not get a head start by packing up those things now?

  3. Rearrange your furniture
  4. Now you have cleared away the personal stuff you might have more room to move furniture around. Try and make your rooms feel spacious but arranged in such a way to feel friendly and comfortable. If your furniture is old and a bit on the shabby side maybe purchase a couple of throw overs or some slip covers, just to brighten the room, and distract the eye from the furniture. If you were planning on getting rid of any furniture or household items now would be a good time.

  5. Odour free
  6. One of the most offensive things when walking to any home is if there is a strange smell in the air. Old houses often have a musty stale smell, but it’s not that hard to freshen up your house these days – there are lots of products available that will mask or remove unwelcome odours from your home.

  7. Carpets & paintwork
  8. Dirty carpets give a terrible impression plus make the room look bad. If you can’t afford to have them professionally cleaned you can hire a carpet cleaning machine and do it yourself. You might be pleasantly surprised to see what colour your carpets really are once you wash them down.

  9. Pets
  10. Pets may well be man’s best friend but they don’t help you sell your house, if they are making it smell. Keep litter boxes clean, or even better put them outside; you might not smell anything but a person who doesn’t have pets will see animal hairs and smell pet odours instantly.

  11. Sparkling clean
  12. One of the best impressions you can give a person walking into your home is of sparkling clean windows and mirrors. Giving your chrome taps and fittings a polish is easy these days with wipe over cloths. Put out your crystal vases with a nice display of flowers to add a nice touch, and last but not least make sure you dust and polish the furniture.

  13. Lighting
  14. Another suggestion, particularly if your house is a bit on the dark side, is to switch on the lights. Just remember to get rid of any dead insects and dust.

  15. Kitchen
  16. Check for dirty dishes in the kitchen and that all surfaces are clean and spotless. Take extra special care to check the oven, you would be surprised how many people open the door and look inside.

  17. Bathroom
  18. Is your bathtub and shower recess spotless, no dark rims round the edges, no mould peeping out between the tiles? Good, because buyers will notice these things and a nice bright shower curtain helps if you haven’t got a glassed in shower.

  19. Leaks
  20. Check all your taps to make sure there are no leaks; replacing burnt out light bulbs is a good idea as well.

  21. Garage
  22. You might be surprised what’s hidden in your garage when you come to tidy it.

  23. Garden
  24. Cut the lawns and hedges; trim the flowers and any overhanging trees or bushes.

Whatever time you need to spend on preparing a home for sale will be worth the investment if the prospective buyer makes an immediate offer.

This article was written by William Eve. William writes about saving money, investment loans and real estate for Home Loan Finder. If your a first home buyer or looking to refinance, visit the Home Loan Finder website for great advice and competitive mortgage products.

Make Money by Giving Away Clothes for Free?

I am not kidding, the title doesn’t lie.  That is absolutely what happened to me a few weeks back.

I have been trying to get rid of superfluous items in my life and that includes clothing.  I don’t know if i could ever give up as much as Colin has over at Exile Lifestyle and have such a small wardrobe, but i think a good purge every once in a while is a satisfying experience.  Most recently, i was cleaning out my closet and stuffing items into a garbage bag for when i would eventually bring them to Goodwill.  I am not sure why, but for some reason i felt the urge to check the pockets in one of my old pairs of jeans.  What did i find, 2 slightly laundered Andrew Jackson’s!  I was giving away clothes for free, and all of a sudden i was $40 bucks richer.  There was no better story i told to friends for the next few weeks.

It may seem like a waste of time, but think about it; if you are giving these clothes away, odds are you haven’t worn them in ages.  Do you really remember if those pockets are empty from the night you went out clubbing 8 months ago?

Be smart, check your pockets, then donate those items.

How to Create a Minimalist Home

Minimalism is certainly being considered more and more nowadays as a life choice for people. However, before we can look at ways of creating a minimalist home, we need to be sure we understand the term “minimalism” and what it really means.

One of the clearest descriptions of minimalism is: A term used to describe something in it’s very basic, and most simplistic of forms. Uncomplicated.

So how does this translate to the home, and what steps can we take to create our ultimate minimalist home.

What’s The Benefit?

The minimalist home is often a choice of the more frugal among us, as one of the biggest side effects of a minimalist home is less “stuff”, meaning less money spent.

Other benefits of this lifestyle are:

Easy To Keep Tidy. When you clean an everyday home you have to spend an awful lot of time removing various objects from the top of tables, units etc before being able to actually clean the surface.

After which you then have to clean each individual item removed from the newly cleaned surface, and clean it before placing them all back tidily where they stood.

In a minimalist home there is very rarely anything placed on furniture surfaces, making cleaning them a very easy and stress free task.

Easy on the Eye. When you are surrounded by clutter, it can often look messy without actually being that messy. In other words, everything may be in it’s place but with “things on things”, and floor space taken up with units and piles of objects, a room can often give the effect of being messy.

A room empty of such visual distractions is likely to be much more easy on the eye.

Less Likely to Become Dirty and Dusty.

The more “stuff” you have, the more there is for dust to be attracted to. Because cleaning is made that much harder by the clutter, you are more likely to miss spots of dirt, and create a more dusty room than you would like.

In a more sparse environment there is of course also going to be less for you trip over, or hoover up whilst cleaning!

What Should it Look Like

Not all minimalist homes will look the same. Although they will all share similar characteristics they will all be individual, and where somebody may spend a fortune on the few items of furniture they have, in order to create a grand looking set up, the more frugal minimalist may plump for very plain and simple furniture.

The most common features of minimalist homes are:

Less Furniture – In a living room for example, you may only find a 3 piece suite, a coffee or dining table, a simple entertainment unit, the odd picture, and maybe a lamp or two.

In a bedroom you may just have a bed, a simple wardrobe, a bedside cabinet, and nothing else.

The idea here really is to have only the necessary furniture, and nothing more. The rooms are designed to house only furniture that serves a function.

Plain, Empty Surfaces – In a minimalist home, you will not find surfaces covered with pictures, decorations, and “bits and pieces”.

Often surfaces will be completely clear other than maybe a picture, and one other item of decoration.

The same is to be said of the walls. You will not have walls covered with holiday snaps or other artwork. Rather maybe one quality piece of artwork.

The key here is, being minimalist does not mean your house is empty. Merely that clear choices are made about decoration, and only small numbers of decorative items are placed around the home just to give accent, or “light and shade” to a room.

Where do I Begin?

So now you have decided you want to create a minimalist home, you need to know how to go about it.

The first thing is to decide what you want you home to look like. How much do you want to spend? Do you want to be frugal and create a plain look, or have a much grander looking setting for the small amount of furniture you will have.

Once you have decided on those things you then need to pen down a plan of action.

We have given you a rough guide of how to go about setting up your minimalist home in the easiest, and most stress free ways possible.

Don’t do it all at Once – If you intend to simplify your whole home, then one of the best pieces of advice we can give is, do not attempt the whole thing at once.

The best thing to do is to concentrate on just once room at a time. Begin with the rooms that you use the most, and only once you have completely finished one room should you move on to the next.

Once you get going you will surprised how quickly you can get through your whole home.

Furniture next – Look at the furniture you have, and try to figure out what pieces you can do without. If you have a unit that is full of knick knacks, decide what you are prepared to get rid of, and with what’s left, see if you could combine these with the contents of another item of furniture.

The idea is to end up with as fewer items of furniture as possible, without taking away from the functionality of the room.

If you don’t need it get rid – As harsh as it sounds if you are looking at something that does not serve a functional purpose then it has no place in a minimalist home.

Once your room is clear you can decide which accent items of decoration you wish to put back and keep, but for now lose it.

Nothing on the floors - If it isn’t an item of furniture it shouldn’t be on the floor.

That means no little decorations, or fancy door stops. The only things that should take up floor space is the furniture.

Empty the surfaces – This is where it can get difficult but you have decide on just a few photos, or decorations for your surfaces. The fewer the better. If you do not want to throw them away then store them, but do not keep them out on display.

Walls – Select one or two photos or pieces of art for your walls. No walls full of family snaps, or pictures drawn by the kids.

Window work – Windowsills should be left clear. Again no photos or decorations here. Ideally simple plain curtains, or even plain wood blinds will suffice here.

Take Your Time

Do not attempt to make the transformation at once. Enjoy the process, and once complete you can enjoy the benefits of your new frugal, clean, and de-cluttered minimalist home.

This is a guest post written by Timothy a personal finance writer for Balance Transfer Card.

The $32,000,000 Travelers Check

This past weekend I went shopping for a bunch of things, one of which was a pair of shoes.  The sales person rang up my credit card but apparently hit the wrong button.  The register read my card number as the amount of a travelers check.  The register read that the store owed me change of $32,000,000 (rounded).  I took it in stride and patiently waited for them to load up a few suitcases of cash which would allow me to be on my merry way before they would notice their error.  Unfortunately, that didn’t happen and they made the correction.

That leads me to another personal finance question though.  What happens if you are at a register, give the guy a $5 bill and he thinks you gave him a $20.  You end up with change far exceeding the amount you gave to the guy (or girl).  What is the right thing to do?  Accept it as free money?  Give it back to the guy and let them know their mistake?  Does it matter if the error is a huge amount of money or if its just a tiny sum?

Friday Financial Foul Ups: Uncorrected Investment Decisions

This week’s Friday Financial Foul Up will feature a post from Sarah of Paranoid Asteroid. She is a great person that I’m thrilled I’ve gotten to know since February’s Blogger Happy Hour. I hope you enjoy her good spirited post and her final remark may be the best thing I have read all month.  Enjoy.

_____

I am the sort of person who learns best by doing, messing up, and doing differently. My first car purchase taught me not to accept dealer financing. My first apartment taught me not to fall in love with a place so much that you ignore all of the drawbacks (I lived there for 4 years, and even by the end couldn’t remember that running the toaster and the dryer at the same time would blow the fuses). My first time making Chicken & Stars taught me that you’re supposed to add water to soups marked “condensed.”

So when Brian asked me to write a Friday Financial Foul Up, I answered honestly, “I don’t make mistakes.” I just learn.

Most of my lessons come with minimal consequences. I probably paid a few hundred dollars extra in interest on the car loan before I wised up and refinanced through my credit union. I loved my apartment, and since my now-husband moved in shortly after I did, the only additional costs were a few extra calls to the landlord or running to the garage to reset the fuses. Adding water to the soup after the fact worked just as well as adding it in the beginning.

There is one mistake, however, that still bothers me, mostly because I’ve never gotten around to correcting it.

The Situation

I opened my IRA in 2007 under pressure from my father, from every financial website I read, and from my boss. The only problem was that I had no idea how to invest. Target retirement funds weren’t widely available, and Robert Kiyosaki had written an article about how mutual fund fees would eat up all of your returns.

Where I Fouled Up

Luckily, I had a subscription to Money Magazine! And they had an article on The Best Stocks To Buy NOW! Inexplicably, I decided to pick one company from this list and buy a few shares of their stock. To this day, I’m not sure why I thought that was a good idea. The company was General Electric, and if I’m not sure why I only picked one company, I’m 63857 times less sure why I chose GE. I’ve harbored a dislike of GE ever since they didn’t offer me a job in 2005.

I bought 50 shares at $36.89, for a total of $1844.50, on February 28, 2007. Today they are worth $18.30 per share, for a total of $915. That means I’ve lost $920.50, at least on paper. That’s over 50%! What’s worse is that I’m still holding onto those shares for all the stupid emotional reasons people always hold onto losing stocks. This mistake could even end up costing me more, and yet I feel powerless to extricate myself from the situation.

What I Learned

It sounds so simple now, but even the finance “experts” can’t predict the future. Blindly accepting recommendations from anyone without doing your own research will probably leave you shaking your fist in impotent rage at Money Magazine every time you check your account balance.

At the very least, I can satisfy myself knowing that GE is still down from their 2005 value, while my current company is up by $10 in the same period. People might argue that hiring one person couldn’t affect stock prices that much, but I know better.

———-

Do you like this series? Check Out The Previous Foul Ups:

Foul Up #26 – Brian (My Next Buck) – Final Four Weekend
Foul Up #25 – Peter (Bible Money Matters) – Being Ignorant of Your Finances Means Money Lost
Foul Up #24 – Daniel (Sweating the Big Stuff) – Paying for Value
Foul Up #23 – Kristin (Instigationology) – Giant Elves and the $86 Movie I Never Finished
Foul Up #22 – Kyle (Suburban Dollar) – Being Down on High Interest Checking Accounts
Foul Up #21 – Brian (My Next Buck) – Pale Dude’s Shouldn’t Go Tanning
Foul Up #20 – Shawanda (You Have More Than You Think) – How Financial Knowledge Can Hurt
Foul Up #19 – Christine (Money Funk) – Love Can Hurt Your Financial Situation
Foul Up #18 – Clayton (Just Good Financial Advice) – Trying to Get Rich Quick
Foul Up #17 – Craig (Budget Pulse) – Black Friday Purchase Becomes a Dust Collector
Foul Up #16 – Jesse (PF Firewall) – The Fine Print of Rental Properties
Foul Up #15 – Paul (Fiscal Geek) – Unsuccessfully Restoring American Muscle
Foul Up #14 – Mrs. Micah (Finance For a Freelance Life) – How Getting Married Wrecked My Finances
Foul Up #13 – Evan (My Journey To Millions) – Speeding Up Payments on Loan Interest, Not Principal
Foul Up #12 – Elle (Couple Money) – Stretching Yourself to have a Comparable Car to Your Friends
Foul Up #11 – Revanche (A Gai Shan Life) – Sibling Bailouts Cost More than Just Money
Foul Up #10 – Brad (Enemy Of Debt) – There’s Nothing Interesting About Interest-Only Loans
Foul Up #9 – Jason (Redeeming Riches) – Buying a Car with a Balloon Payment at the End
Foul Up #8 – David (Money Under 30) – Being Too Eager to “Move Out” and “Move Up”
Foul Up #7 – Matt (Debt Free Adventure) – Upside Down and Paying The Price
Foul Up #6 – Brian (MyNextBuck) – Overdue Books Prevent Me From Renting an Apt
Foul Up #5 – Kelly Whalen (The Centsible Life) – Poorly Planned Vehicle Purchase Costs $24,000
Foul Up #4 – Stephanie (Poorer Than You) – Signed My Life Away at Age 17
Foul Up #3 – Deliver Away Debt – How I Wasted Over $10K and 11 Months
Foul Up #2 – Brian (MyNextBuck) – Quick Fixes to Weight Loss
Foul Up #1 – Brian (MyNextBuck) – How I Didn’t Earn $3000 in Free Money

Common Tax Mistakes To Know If You Haven’t Filed Yet

The following is a guest post by Matt Robinson, a tax accountant at Tax Debt Help, LLC. Matt’s firm specializes in providing help with tax debt for State and Federal taxes.

When filing your taxes this year you should be aware of some of the most common tax mistakes that people make. Making even one error can cause you a larger tax bill, a smaller return, a delay in your refund or set you up for a dreaded IRS audit. Before sending in your returns make sure to check for the following: 

Math Errors
Double and triple check your math. While more and more people are using tax preparation software that automatically does this for you, surprisingly a good number of people are still filing their taxes the old fashioned way onpaper. One of the most common mistakes people make when filing their taxes is in the math.

Personal Information
Make sure you have entered the correct social security numbers, the correct address and correct filing status. Believe it or not some people will even forget to fill in this information all together. Incorrect or missing information can cause a huge delay in your return.

Refund Information
If you are receiving a refund and opt to have your money directly deposited into your account, make sure you have the correct account and routing number. Being just one number off can cause you a huge headache.

All Required Documentation
Make sure that you have included with your return all required documentation like your W-2’s and 1099’s. If the IRS cannot verify your information they will not be able to process your return. Along with this always make surethat you have back up documentation for all deductions and credits you are claiming.

Deductions and Credits
Take the time to know what deductions and credits you are entitled to. Every year tax payers miss millions of dollars in deductions that they have a right to. Some of the most common ones that are missed are children and other dependents, child care, student loan and tuition deductions, moving expenses and alimony or child support payments.

Charitable Contributions
Be careful when it comes to your charitable contribution deductions. While it is important to take the deductions that you are entitled to, this area is often abused and can be a red flag for tax audits. Make sure you only claim charitable contributions that went to legitimate organizations that are tax exempt. Also be careful in calculating the amount of charitable donations like clothing and household items. New regulations require that theseitems are in good or better condition. Make sure you always get a receipt and do not claim anything you do not have a receipt for. If you donate any one item with a value over $200.00 you will need the charitable organizationto write you a letter.

Income Reporting
Double check and make sure you have reported all of your income. Failure to report all of your income can be a costly mistake that you will want to avoid. Make sure you include all earnings even those you did not receive a 1099 for.

Business Deductions
If you own a business be careful about your business deductions. Make sure you claim only expenses that are ordinary and necessary for your business. Also, if you plan to write off mileage for you business, make sure you havea mileage log for the year with accurate documentation. Finally, keep a copy of your return and documentation of all deductions. If you are audited you will want to have all this information ready and available at your fingertips.

Do You Really Need a Credit Card?

Today is a guest post from personal finance writer, Alban.  He offers tips on how to use credit cards effectively and helps people to compare the best credit cards online.

Having a credit card is something that many people simply take for granted as a necessity. However, a credit card can in reality cost you more than the convenience could ever be worth when you consider the interest charges, annual fees and transactions costs associated with owning and using a credit card. If you’re still not convinced, consider the benefits and drawbacks of owning a credit card, and consider the alternatives to this most expensive of all ‘must-haves’.

The Good Things

There is little doubt amongst credit card users that their cards are a useful item to keep in their wallets. A credit card can get you out of an expensive dinner or allow you snap up that online bargain. Are you benefiting from using your credit card:

  • For an emergency purchase. A credit card can be a lifesaver if you receive an unexpectedly high bill, or your car breaks down and needs expensive repairs. You can even use your credit card in an emergency situation in a restaurant with friends if it comes time to split the bill and you’ve only budgeted for the one glass of wine, not a share of the three bottles for the table.
  • Online or over the phone. You can use a credit card to make online purchases in internet auctions, online stores or with businesses which have real life shop fronts but offer discounts for online purchases. Similarly you can use your credit card over the phone if you are having a purchase shipped from out of town. Plus, you can also make phone and internet bill payments which save you time waiting in line at the post office to pay your bill in person – instead you can deal with an automated system over lunch and pay just about any bill with credit.
  • For secure purchases and purchase insurance. Many credit card issuers will offer you an extended warranty or purchase insurance if you use your credit card to make the sale. This often allows you to recoup the cost of a purchase if your item is stolen, lost or damaged, and if you are making purchases online or overseas, you can often benefit from purchase insurance if the product is not what you expected or what was promised when it arrives.

The Bad Things

Accruing interest is not the only thing you have to worry about when you use a credit card. A credit card requires constant vigilance whenever you make a purchase to ensure you remain in control of your debt. Disadvantages of having a credit card include:

  • High fees and exception fees. Credit cards can charge you an annual fee from as little as $50 a year to as much as $400 a year simply to allow you to have the card as that doesn’t include any usage fees. Exception fees are the ones which you can avoid if you stay within your credit limit and pay your monthly bills on time, but which skyrocket when you are the exception to the credit card rules.
  • High interest rates. Most credit cards will offer interest free days and low interest introductory periods, however at the end of a promotional period, and if you don’t pay your balance back to zero you will forfeit those interest free days and all your purchases will be charged interest. As a result you will be paying for the same purchases again and again in interest charges which can be as much as 20% and even higher if you make a cash advance from your credit card.
  • You must always remain in control and informed. As soon as your credit card purchases get out of control or you approach your credit limit you are at risk of high fees and high interest. If you have a credit card you continually have to remain aware of your balance and count your purchases to make sure you are not getting into debt you can’t afford.

So, Do You Really Need A Credit Card?

Remembering the drawbacks of using a credit card, do you need to use credit for:

  • Emergencies? No. To cover your emergency expenses, a much more financially sound option is to have a dedicated emergency fund. It is easy to start an emergency fund by opening an online savings account and starting an automatic payment from your wages each week. This payment can be as little as $10 a week and this can quickly add up to a healthy emergency fund. Then, if the car breaks down or you get a large power bill after a hot summer you can access your own funds to pay for the emergency, rather than getting into credit card debt, which can create an emergency all of its own.
  • Online or phone purchases? No. A debit card looks and acts like a credit card in that you can make purchases online or over the phone by entering your card numbers. However, a debit card access your own funds, from a linked transaction account so rather than accruing a balance which will be charged interest, you are spending your own money and when your account is empty, you have to stop spending.
  • Secure purchases and purchase insurance? No. You can get these same benefits from a debit card too as debit cards are issued by both Visa and MasterCard, through your existing financial institution. Therefore, you have the same security features you would with a credit card to protect your card details when buying online or over the phone, plus you also often have purchase protection included as issued by Visa or MasterCard on their regular credit cards.

If you think there are no alternatives to using credit, think again. it is easier than you think to be financially responsible, spend your own money on day to day and emergency purchases, and break free from the hold of credit card debt.

Friday Finacial Foul Ups: Final Four Weekend

If you have read my about page you will know I went to Butler University, the 4600 student private school in Indiana that made this weekend’s Final Four in Indianapolis.

Not only did I go to the school, but I worked for the Men’s Basketball program when they made it to their first Sweet 16 back in 2003. Their current coach was the third assistant at the time and was my boss.

The Situation

Well, obviously Butler is playing this weekend just 5 miles from where I went to undergrad. I have lots of friends still there and have plenty of people to crash with if I were to decide to go to the games this weekend.

Where I Fouled Up

I fouled up this weekend because I an NOT going. Part of this is because of the expense and the other part is because of the new job and the uncertainty surrounding when I would be coming home (pending a win on Saturday night for the Bulldogs).

Both of these reasons make sense. Afterall, between flights and tickets, it would probably end up being a $2500 weekend. That is certainly a lot. Especially because i would likely miss work on Monday, which wouldn’t be good for the projects I am working on nor for me finanacially as I would sacrifice income (one of the negatives of being hourly).

What I Learned

Obviously I didn’t learn jack from this post because I am not going this weekend.

How about you sports fans?  Am I missing out on something huge even though I could afford it and probably swindle the day off?  What would you do in my shoes?

———-

Do you like this series? Check Out The Previous Foul Ups:

Foul Up #25 – Peter (Bible Money Matters) – Being Ignorant of Your Finances Means Money Lost
Foul Up #24 – Daniel (Sweating the Big Stuff) – Paying for Value
Foul Up #23 – Kristin (Instigationology) – Giant Elves and the $86 Movie I Never Finished
Foul Up #22 – Kyle (Suburban Dollar) – Being Down on High Interest Checking Accounts
Foul Up #21 – Brian (My Next Buck) – Pale Dude’s Shouldn’t Go Tanning
Foul Up #20 – Shawanda (You Have More Than You Think) – How Financial Knowledge Can Hurt
Foul Up #19 – Christine (Money Funk) – Love Can Hurt Your Financial Situation
Foul Up #18 – Clayton (Just Good Financial Advice) – Trying to Get Rich Quick
Foul Up #17 – Craig (Budget Pulse) – Black Friday Purchase Becomes a Dust Collector
Foul Up #16 – Jesse (PF Firewall) – The Fine Print of Rental Properties
Foul Up #15 – Paul (Fiscal Geek) – Unsuccessfully Restoring American Muscle
Foul Up #14 – Mrs. Micah (Finance For a Freelance Life) – How Getting Married Wrecked My Finances
Foul Up #13 – Evan (My Journey To Millions) – Speeding Up Payments on Loan Interest, Not Principal
Foul Up #12 – Elle (Couple Money) – Stretching Yourself to have a Comparable Car to Your Friends
Foul Up #11 – Revanche (A Gai Shan Life) – Sibling Bailouts Cost More than Just Money
Foul Up #10 – Brad (Enemy Of Debt) – There’s Nothing Interesting About Interest-Only Loans
Foul Up #9 – Jason (Redeeming Riches) – Buying a Car with a Balloon Payment at the End
Foul Up #8 – David (Money Under 30) – Being Too Eager to “Move Out” and “Move Up”
Foul Up #7 – Matt (Debt Free Adventure) – Upside Down and Paying The Price
Foul Up #6 – Brian (MyNextBuck) – Overdue Books Prevent Me From Renting an Apt
Foul Up #5 – Kelly Whalen (The Centsible Life) – Poorly Planned Vehicle Purchase Costs $24,000
Foul Up #4 – Stephanie (Poorer Than You) – Signed My Life Away at Age 17
Foul Up #3 – Deliver Away Debt – How I Wasted Over $10K and 11 Months
Foul Up #2 – Brian (MyNextBuck) – Quick Fixes to Weight Loss
Foul Up #1 – Brian (MyNextBuck) – How I Didn’t Earn $3000 in Free Money

Do the Clothes make the Man, or the Man makes the Clothes?

One thing I didn’t expect at this new job was the dress code. Even though it’s business casual, it is more “wear whatever you’d like besides sweats.” I think it gets explained away because the people there are “marketing people”. Now, I am totally cool with this. I like wearing jeans most days. However, those [...]

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Feeling Guilty about Overtime

The new job is going well I feel. It’s been less than three weeks and already I am immersed in the marketing field (something I swore I had little interest in when I was at Butler University — Go Dawgs!). No offense to my previous jobs, but I feel like I am doing challenging and [...]

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Friday Financial Foul Ups: Being Ignorant Of Your Finances Means Money Lost

This week’s Friday Financial Foul Up will feature a post from Peter of Bible Money Matters.  Peter is an awesome individual and runs a top notch site that I often use as a reference for my own personal finance decisions.  Look for Peter on twitter (@moneymatters) and be sure to subscribe to his feed.  Enjoy [...]

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Gone is the Creepy Orange Dude

Over the weekend I upgraded to Headway 1.6 (from 1.01) and had a blast using the visual editor to update everything on my site.
I am still not done, but that doesn’t mean I am not interested in feedback.
If you ask why the change from the “orange” site? Well on top of people finding the “guy” [...]

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Friday Financial Foul Ups: Not Paying For Value

This week’s Friday Financial Foul Up will feature a guest post from Daniel Packer of Sweating The Big Stuff.  I met Daniel last month at our monthly blogger happy hours and was really impressed by his enthusiasm for his site.  Daniel writes about maintaining a high quality of life while working to improve his finances. [...]

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