Hope to Prosper » Finances

What the End of Free Checking Really Means For Consumers

Bret — Sat, 31 Mar 2012 16:25:25 +0000

This is a guest contribution from Bill Hazelton, CEO of Credit Card Assist where he provides tips, news and advice on credit cards, balance transfers, rewards programs and all things credit-related.

While it’s not yet officially the end of free checking, consumers are finding it harder and harder to find banks that will waive fees on checking accounts. San Francisco-based banking giant Wells Fargo eliminated free checking accounts on all new customers effective as of July 1, 2010. They did grandfather-in existing customers to continue to receive free checking services on those older accounts, but all new accounts no longer enjoy fee-free checking. Many other banks have followed suit, instituting monthly service fees and even charging customers for new checkbooks and raising rates for bounced and canceled checks.

As a customer, what do you do? Checking accounts still offer a great deal of convenience and are necessary for many people, yet rising fees and service charges can take a significant bite out of your budget.

The good news is that most banks still offer ways to back into a free checking account, usually in the form of waived fees, so long as certain conditions are met. While monthly checking account fees and the terms and conditions under which they can be waived vary from bank to bank, here are some of the strategies you may be able to use in order to avoid the bite of those service charges:

Maintain a minimum balance. Some financial institutions will waive checking fees if you keep a minimum balance in your account every month. However, you need to be sure you watch carefully if your balance approaches this limit, as you may get dinged if you dip below it before the date on which monthly fees and service charges are levied.
Purchase other financial products from the bank. In the case of Wells Fargo, the bank continued to offer free checking to customers who had a mortgage with their bank. You might also qualify for waived checking fees if you open investment accounts or purchase investment products from a particular bank.
Go for direct deposit. Because having your paychecks directly deposited into your checking account eliminates the need for you to queue up in the teller line (and cost the banks money paying those pesky bank tellers), some banks will not charge you monthly checking fees if you utilize direct deposit services. Talk to your employer about the possibility of going electronic with a direct deposit of your paycheck rather than cash a physical check each pay period.
Meet minimum monthly transactions targets. Some banks will cancel your checking account fees if you make a minimum number of monthly transactions, typically in the range of about 10 to 15 a month. Examples of transactions that would qualify include cash withdrawals, debit card payments for products or services, bill payments, credit card payments, deposits and so forth. However, you will want to be careful in this case, as some banks will charge you for each transaction beyond a prescribed upper limit.

You can also investigate alternative financial institutions as a means of cutting back on service charges and fees. Credit unions are specialized financial institutions that are both owned and controlled by its customers, also known to the institution as “members.” While you will have to qualify to join a credit union, many of them are location-based so might be able to qualify on the basis of being a resident of a particular municipality or county, for example. You’re likely to find that credit union interest rates are as low or lower than those offered by regular banks. In fact, you just might be able to get free checking as well as advantageous interest rates on major purchases like car loans and mortgages. Best of all, many credit unions do not require members to maintain minimum balances, directly deposit paychecks, meet a minimum number of monthly transactions or purchase other financial products in order to qualify for that free checking.

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Problems caused by Sudden Wealth

Bret — Mon, 27 Feb 2012 06:09:30 +0000

I was reading an interesting article on Investopedia called Sudden Wealth Syndrome: The Great Destroyer of Prosperity. Evidently, the only thing worse than being broke is to suddenly become wealthy. This article provides a number of examples of people who won the lottery and it ruined their lives. Me personally, I would be willing to take the risk. But, I can see how easy money can become a problem.

Dream vs. Reality

Image by Mykl Roventine

I think the biggest problem with sudden wealth is that the dream is very different from the reality. People who dream of winning the lottery think it will solve all of their money problems, when it often creates more problems than it solves. Instead of a happy life of leisure they are now tasked with the responsibility of managing this wealth. Or, they quickly squander it and wind up in worse financial condition than before.

The reality is that wealth is a lot more difficult to manage than a humble paycheck. Finding the proper types of investments and avoiding unnecessary tax liability is complex and difficult. It can bring a lot of stress and pressure. I know someone who recently inherited some money and spent it before paying the taxes to the IRS. Needless to say, he is in a lot of trouble and way worse off than if he had never inherited the money.

Moochers & Opportunists

Another thing that happens to athletes, entertainers and lottery winners is they are overrun by people looking for a piece of their fortune. Soon, there are salesmen, agents and financial advisers contacting the recipient at their most naive and vulnerable time. They know the longer someone holds onto their money the less like they are going to give it up. But, if they can catch the athlete that just signed or the lottery winner who just cashed their check, they have a great opportunity to convince them to part with their money.

Another huge problem is that friends and family feel entitled to the good fortune of others. They have the same lottery mentality as the actual winner and see it as a way to end their own financial problems. Unfortunately, helping others in need often discourages them from helping themselves. The good deed soon becomes expected and the financial assistance becomes an ongoing liability. People with money are expected to pay for the meals, drinks and other expenses of those who don’t. Soon, there is an entourage.

Shiny Things & Divorce

Mansions, boats, exotic cars and jewelry can quickly deplete millions of dollars in income. In addition to the cost to buy them, there are very high taxes, insurance, operating and maintenance costs. Houses can become a huge liability for people who move often or lose part of their income. Shiny things lose a lot of their value the minute someone buys them. Purchasing baubles and liabilities can evaporate a lot of money in a hurry. Looking rich can make someone poor.

It’s a well known statistic that 85% of professional athletes are either bankrupt or divorced within five years of their final paycheck. Child and spousal support is a big part of this equation. Kobe Bryant just got divorced and it’s estimated that it will cost him $75 million. I’m pretty sure Kobe will rebound from this financial setback, but others aren’t so lucky. Getting divorced near the end of their career can be devastating. Child support is another huge problem, since a career in professional sports rarely lasts 18 years, but the child support payments do.

The Bottom Line

The bottom line is that it’s far better to accumulate and enjoy wealth over time. If someone is fortunate enough to suddenly become wealthy, they will need a lot of wisdom and discipline to turn it into a positive experience.

“Who is rich? He who rejoices in his portion.”

The Talmud

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How to Balance Time and Money

Bret — Tue, 07 Feb 2012 07:32:07 +0000

When I was younger, most Americans took the future seriously. Now, it seems like people are living for today and neglecting the future. Some people spend more time planning vacations than for their retirement. The personal savings rate has risen back up from its low-point of this decade, but it’s still less than half of what it was in the 1970s.

Why Balance Matters

For now, the F-150 is my RV

I was talking with my uncle out in the desert last month and he asked me why I hadn’t bought a motor home yet. I told him that I was saving up and I was a couple years away from getting the motor home I really wanted. He told me that I need to think more about the present and not be so caught up with the future. My response was that I keep a balance in my life and it’s important for me to do both.

People often focus on one aspect with money, but I believe all three time-frames are essential. You can’t forsake the past, the present or the future. Sure, someone may get run over by a bus and never enjoy their hard-earned savings. But, they are way more likely to retire broke and struggle through retirement because they didn’t save for the future. Balance is the key to life and money. Whenever someone loses this balance, some aspect of their life will usually suffer.

Past, Present & Future

Past – Debts & Mortgage
Present – Bills & Spending
Future – Savings & Investments

I told my uncle that I live comfortably on 70% of my income right now, while I save 30% for the future. My actual breakdown is probably closer to 20% past, 50% present and 30% future. When my mortgage is paid off, I will probably reallocate to 60% present and 40% future, depending on my income. Since I’m used to living like this, I will be able to retire on a fraction of my current income, depending on inflation. In any case, I think it’s important to maintain a healthy balance.

What is your time & money balance?

Why Time Isn’t Money

There is an old saying that “Time is Money”, but I don’t agree with this. Sure, you can trade your time for money, but it’s not so easy to trade your money back for time. The truth is that money comes and goes in our lives, but we can never recover lost time. So, it’s not an equal trade, nor is one interchangeable for the other. Each has to be managed carefully so they don’t create a scarcity of the other.

When I was in my 20s and 30s, I traded away too much of my time for money. I skipped vacations, worked weekends, had a side-business and went to night school. Yes, I got ahead financially, but it came at a high cost to me personally. On my son’s 9th birthday I realized he was half grown up and that precious time with my kids was quickly slipping away. I made some career changes to increase my income and restore the time balance in my life. Now that my kids are both grown, I’m glad I made that choice.

The Bottom Line

The bottom line is that life is brief. Spending all of you precious time chasing dollars is just about as sad as being broke and unable to enjoy your time. A little balance goes a long way.

“If you would be wealthy, think of saving as well as getting”

Ben Franklin – American Inventor and Patriot

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Money Fail: Never Track Finances

Bret — Fri, 04 Nov 2011 07:01:59 +0000

One common thread between most people who are floundering financially, is that they don’t keep track of their finances. This happens for a number of reasons. Some people don’t like budgeting and reconciling. Others want to ignore their balances in order to keep spending. Some just don’t want to be held accountable for their finances. In any case, people can’t improve their financial lives, unless they know where their money is going.

This is the sixth post in a series of Money Fails.

Money Fail: Broke on Thursday
Money Fail: Dead End Job
Money Fail: The Payment Mentality
Money Fail: Ignoring Unpaid Bills
Money Fail: Spending to Impress
Money Fail: Never Track Finances
Money Fail: Lenders of Last Resort

Keeping a Budget

: Image by 05com

Anyone who has read my blog for any length of time knows I don’t keep a budget. But, I know how much I spend each month and where my money is going. I know the approximate balances on my investments and bank accounts. I know how much my bills are and when they are due. I have an income that leaves some wiggle-room and money put away for surprises. So, I don’t have to count my pennies at this stage in my life and I am thankful.

For people who don’t know where their money is going, can’t pay all of their bills or are sinking deeper into debt each month, a budget is a pretty good idea. In fact, it’s critical for financial survival. I have been there as well, but I was too stubborn to create a budget. So, I accumulated a lot of credit card debt. I don’t recommend the debt treadmill for anyone. It costs a lot of money in interest and creates a lot of stress. You are way better off with a budget.

It’s not fun to sit down and go over your expenses each month. But, it’s an eye opener to see where all of your money goes. And, it becomes obvious what needs to be cut to balance the budget. The credit card statements alone can give you enough buyer’s remorse to change your spending habits permanently.

If you were lost in the forest, you would need a compass. If you were lost in your car, you would need a GPS. If you are lost financially, you need a budget.

Bank Overdrafts

Before they reformed the overdraft laws for banks, I know a person who used to overdraw their checking account regularly. Two years ago, he spent nearly $1,700 on overdrafts. Some of them happened because the banks reordered the transactions, but most just happened because he wasn’t paying attention. One time, I looked at his statement and he had bought seven different small items in one day. So, for a total of about $40 in purchases, he wound up with $245 in overdraft charges. That was a pretty expensive energy drink and burrito.

It’s easy to avoid overdrafts, if you are keeping track of your balance. If you don’t want to your balance your checkbook, you can check the balance quickly on your cell phone, before you pay an extra $35 with your debit card. Better yet, just say No to overdraft and let the purchase get declined. Your bank should have automatically turned off overdraft on your debit card after the reform act went into effect. But, the banks are going around trying to convince everyone to turn it back on. They were making billions on overdrafts and they aren’t happy about losing all of that easy money.

Late Fees & Penalties

Years ago, I paid my fair share of late fees and penalties. Then, I decided it was a colossal waste of money. So, I have been very vigilant in paying all of my bills on time to avoid them. However, I still miss the car registration from time to time and those penalties are huge. There is nothing worse than giving the bank or the government extra money they don’t deserve.

The best way I know to keep on top of the bills is with Bill Pay. Not only can you pay bills electronically, which is faster than snail mail, you can see the last time you paid each bill. You can even set up automatic payment of some bills, so you don’t have to worry about them at all. Online banking and Bill Pay are a Godsend. Take advantage of this technology. It’s often free.

Behind on Payments

One of the saddest things I see is people who get behind on their bills. Soon, they are facing collections, repossession or foreclosure. It’s nearly impossible for most people to catch back up once they are behind, so they can lose a lot of money. Not to mention the hassle and embarrassment of losing your house or vehicle. Another really important balance to keep current is for child support. The penalties are brutal and they can put you in jail.

There is no big mystery to keeping current on payments, you just have to pay them every month. The problems occur when the payments are too high for the income or the income stops. Then, payments can become a nightmare. I try to avoid payments at all costs. All of my cars are paid off and I intend to keep it that way. I look forward to paying off my mortgage in a couple of years, so my only monthly payments are for utilities and insurance.

The Bottom Line

The bottom line is that it’s critical to keep track of your finances in order to get ahead financially. The less attention you pay to your account balances, the more you wind up paying to the banks.

“In the old days a man who saved money was a miser; nowadays he’s a wonder.”

Anonymous

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Money Fail: Spending to Impress

Bret — Sat, 29 Oct 2011 19:46:19 +0000

Last weekend, we had some of the neighbors over and we were talking about the way some people act. One of my neighbors, who is a salesman, used to live in the new upscale part of town. He told us he was invited to a barbecue and his neighbor had almost nothing to eat or drink for 20 guests. My other neighbor, who owns a landscaping company, told us he has customers with two or three multi-million dollar houses that have a Camry or an old Mercedes station wagon in the garage. We all agreed most of the truly wealthy people we knew were some of the nicest and least pretentious. Most of the people flaunting their money, complained about being broke whenever they got a bid or had some work done.

This is the fifth post in a series of Money Fails.

All Show and No Dough

: Image by Rob Lee

A couple of years ago, I was sitting in Big O Tires, waiting for them to put some new tires on my wife’s Jeep. A doctor drove in with a new Mercedes and needed some tires. The reason I knew he was a doctor was because he made sure everyone in the waiting room knew he was Doctor so and so. Anyway, he tried to get some tires with their 90-Day Same as Cash, but his credit was declined. Honestly, I felt really bad for the guy. I’m sure he worked very hard and had a high income. He probably has a nice house to go with his new Mercedes, but he couldn’t afford tires. It left quite an impression on me.

Let’s face it; looking wealthy isn’t the same as being wealthy. It’s a lot easier to look successful than it is to actually become successful. To some people, image is everything. But, image doesn’t buy you much in the financial world. The irony is that some people spend themselves so heavily into debt to look successful, that financial security becomes almost impossible. Instead of living the dream life, they are living with the bills for the things they really couldn’t afford to buy.

Security is the Reward

Most of the wealthy people I know are more concerned with financial security than material possessions. Sure, they have nice cars and houses, but it’s knowing they could live for many years without an income that makes them happy. I believe it’s one of the reasons they are so down-to-earth. They don’t have the stress and worry that people on the debt treadmill have. They aren’t worried about losing everything, because it would take a catastrophic event for that to happen. They have a surplus of income and they can enjoy most of the things that make them happy.

That’s my dream for the future. I don’t need to live like a rock-star, in a mansion. But, I do want to live without stress and worry. I want to be able to buy a car or take a vacation, without wondering how long it will take me to pay it off. I want to be able to wake up without an alarm clock and take a day off of work, without filling out a form. I don’t know how long it will take before I can live my dream. But, I do know I am getting closer each and every payday.

The Mountain of Wealth

One thing I have noticed about wealth is that it’s like pushing a heavy rock up over a mountain. It takes a lot of effort to push it up the front side, but then it starts to roll down the back side almost by itself. I still remember how long it took me to save my first $5,000. It took almost 4 years and it was painful saving that $100 every month. But, it seemed to go from $5,000 to $10,000 in the blink of an eye. Not only was I putting more money away, but the money I had already invested started to grow. Now, I save more every month than I used to save in a year. And, the interest I earn doubles that amount in a good year. The hardest part is getting started and having faith your savings will pay off. The easy part is when your principle starts to double a couple of times. That is when you know you are on your way.

The Bottom Line

The bottom line is that every dollar you spend on bling is a dollar you won’t have to power your future. And, every dollar you go into debt, takes a couple of dollars to dig back out. If you really want to impress the world, power up your investments, instead of your loans and credit cards. Buy the bling when you can afford it.

“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.”

Will Smith – Actor and Entertainer

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Money Fail: Ignoring Unpaid Bills

Bret — Wed, 19 Oct 2011 06:40:53 +0000

A lot of people are out of work and under financial stress. Others have gotten sick or behind on payments. Some don’t make enough to pay all of their bills. There are millions of others who choose not to pay. They consider it unimportant, don’t feel obligated or just don’t care. Ignoring the unpaid bills is a colossal Money Fail.

This is the fourth post in a series of Money Fails.

The Conscience of a Deadbeat

: Image by Jason Rogers

Have you ever gone out to eat or drink with someone who always shows up with no money? Have you ever been hit up for an emergency loan by someone who is short on the rent or needs a car repair? These are classic signs of a serial debtor. Their financial lifestyle is based on using their friends and coworkers as an emergency fund. They value money over friendship and convenience over integrity. Past loans are quickly forgotten and the next emergency brings a search for a new friend who will lend money.

I had someone show up at my apartment on vacation claiming to have lost their wallet. Normally, I take people at their word, but this person owed money to everyone we knew. She cleared customs and got on a plane, so I assume she had some form of ID. When we lent her $150, I considered it a gift, instead of a loan. I knew she wouldn’t pay us back and she didn’t. This is the mindset of someone who shirks their debts. They have no problem lying or taking money from others. They feel entitled to money that doesn’t belong to them.

Borrowing without repaying is a lot like stealing.

The Lifestyle of a Debtor

Being heavily in debt is about as close as a person can get to modern day slavery. Much of their future income goes to service the debt, which leaves little money to enjoy for themselves. Even after the payments are made, the debt often grows under its own interest and new spending. It can seem nearly impossible to shed the burden. Some debt, such as tax liens and student loans, can’t be discharged in bankruptcy. So, they can literally follow someone to the grave.

Here are some of the degrading things debtors face.

Wage Garnishments
Subprime Credit Rating
Harassing Phone Calls
Lawsuits and Judgments
Collection Agencies
Foreclosure and Eviction
Fines and Repossession

Ignoring debt only makes it worse.

Making Wiser Choices

How do people eliminate their debt?

File for Bankruptcy
Refinance with Home Equity
Transfer Balances
Debt Management Services

All of these popular options have one bad thing in common; they don’t change the spending habits. Unless someone lost their income, got divorced, experienced an illness or suffered a catastrophe, they probably spent themselves into debt. Unless the spending problem is addressed, debt will always be a problem. Even worse, most of these options don’t eliminate the debt, they only shuffle it around. This is more of a problem than a solution.

Shuffling debt is not the same as paying it off.

Taking Control of Debt

When it comes to paying off debt, the important first step is accepting personal responsibility. Every excuse or denial allows a reason to avoid dealing with the debt. Even if the bank changes their terms and raises the interest rate, they aren’t the ones who borrowed the money. They aren’t the ones who need to pay it back. When Citibank did this to me, it made me so angry I decided to stop doing business with them. So, I cut up their card and paid it off. I realized I had become too comfortable with the debt and allowed them to take advantage of me.

Blame is the opposite of responsibility.

Tasting Sweet Success

Nothing is quite as empowering as paying off a large amount of debt. I have done it and I can say with all honesty, it’s an amazing thing. It’s hard to describe how it feels to make the final payment on a debt that once seemed insurmountable. It’s like climbing a mountain, winning the lottery and unshackling chains, all in one moment. It took a dedicated effort over many years, but it was well worth it. I only wish I had of avoided that debt in the first place.

We hold the power to eliminate our debt.

The Bottom Line

The bottom line is that a debt is a responsibility. Whether someone owes a bank or a friend, their willingness to pay it back is a sign of character. Their care and caution to stay out of debt is a sign of intelligence.

“Home life ceases to be free and beautiful as soon as it is founded on borrowing and debt.”

Henrik Ibsen – Norwegian Playwright

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Carnival of Personal Finance 329: California Dreaming Edition

Bret — Mon, 03 Oct 2011 14:00:44 +0000

Welcome to my humble blog and the 329th edition of the Carnival of Personal Finance. I have been participating in the Carnival of Personal Finance since the 175th edition, way back in 2008. It is my honor and privilege to host the carnival this week. I certainly hope you enjoy it.

California Dreaming Theme

I figured everyone could use a cool break from the blazing hot summer. So, I thought we would cruise up the California coast together. Just imagine the sea breeze blowing, surf music playing, surfboards in the back and the warm sun shining. After all, the summer is officially over and soon it’s going to be a long dark winter. Let’s all enjoy the sunshine while it lasts.

Editor’s Choice

I selected articles for the Editor’s Choice award, based on how interesting and informative they were. Congratulations and well done to the winners.

Don’t Quit Your Day Job – Home Price Affordability Calculator
The Dividend Guy Blog – 6 Reasons Why You Should Panic and 1 Reason Why You Should Keep Investing
Net Worth Journey – Repairing Your Credit Yourself
Passive Income Now – How to Set Up an Online Store
Watson Inc. – Should You Pay-off The House?

San Diego

Image by Woute R

San Diego is known as the Birthplace of California. It is now the 8th largest city in the US and the 2nd largest city in California by population. Neighboring communities include Del Mar and Solana Beach. Famous surf breaks include Cortes Bank and Black’s Beach at Torrey Pines. Popular tourist destinations include Mission Bay, Sea World, Balboa Park and the San Diego Zoo. Popular activities include the Unlimited Hydro Boat Races and Over the Line Softball Tournament.

Budgeting

It’s Raining Pennies – Breaking Down the Cost of Food per Person
Wealth Pilgrim – Becoming A Stay At Home Mom or Dad – and Affording It
Money Smarts Blog – A Practical Way To Estimate Home Maintenance Costs
Master the Art of Saving – How Should I Use The Extra Money? You Decide
Smart on Money – How to Deal with Regular Bills when You Have an Irregular Income
20′s Finance – The Best Way to Track Expenses
I Personal Finances – You Won’t Be Happy, if You Don’t Feel at Financial Choice

Carlsbad

Image by Respres

Carlsbad, located in North San Diego County, is one of the highest-income areas of the US. It also developed the world’s first skateboard park in 1976. Popular surf breaks include Moonlight Beach and Swami’s in Encinitas. Neighboring communities include Encinitas and Oceanside. Popular tourist destinations include Legoland and the San Diego Wild Animal Park. Popular activities include golf and tennis at the La Costa Resort and visiting the flower fields of the Carlsbad Ranch.

Career

Bible Money Matters – Life as a Financial Blogger: What You Need to Know
Compounding Return – Military Personal Finance: Don’t Be a Statistic
The Financial Blogger – The Thing About Blogging That Most of us Forget
Experiglot – 5 Tips For Networking on a Budget

San Clemente

Image by Ricardo Diaz

San Clemente is known as the Spanish Village by the Sea. It claims to have the World’s Best Climate with 310 days of sunshine per year and a very narrow range of temperatures. Neighboring communities include Capistrano Beach, Dana Point and Laguna Beach. San Clemente is my home break and it borders on three famous surf breaks, Trestles, San Onofre and Doheney. Popular tourist activities include the Ocean Festival and whale watching excursions from Dana Point harbor.

Credit

Damon Day & Associates – Does Credit Counseling Hurt Your Credit
Sustainable Personal Finance – Alternative Credit Scores
Rewards Cards Canada – Best Gift Card Rewards For Employees
Smart Balance Transfers – September 2011 Report On 0% APR Balance Transfer Credit Cards
Canadian Personal Finance Blog – Surreal Paragraphs in Credit Card Statements
Help me Travel Cheap – Best Cash Back Credit Cards with Mileage Transfer Options
Studenomics – Do I Need a Credit Card?

Huntington Beach

Image by Magic Madzik

Huntington Beach is known as Surf City USA. They host the world surfing championships each year. Neighboring communities include Newport Beach, Sunset Beach and Seal Beach. Famous surf breaks include The Wedge in Newport and Huntington Beach Pier. Popular tourist destinations include the International Surfing Museum and South Coast Plaza in Costa Mesa. Popular activities include the US Open of Surfing and Cruise of the Light Boats.

Debt

Rabbit Funds – Timebox your way to Better Financial Health
Pay Down Debt Help – Dave Ramsey’s Debt Snowball
Growing Money – Benefits of Paying Off Your Mortgage Early
Money Help for Christians – The Simplicity and Complexity of Debt

Hermosa Beach

Image by AJ Creencia

Hermosa Beach is located in the South Bay area of Los Angeles. Neighboring communities include Redondo Beach and Manhattan Beach. Popular surf breaks include the Redondo Breakwater and the Manhattan and Hermosa Beach piers. Popular tourist destinations include Pier Plaza and The Strand, a beachfront trail that runs the length of all three cities. Popular activities include the AVP Pro Volleyball Tour and the Fiesta Hermosa Arts and Crafts festival.

Economy

Intelligent Speculator – 10 Ways To Stay Calm In These Crazy Markets
Taking Charge – U.S. economic recession shifted FICO credit scores
Wallet Blog – Usury Laws, Anyone?

Santa Monica

Image by Wolf Savard

The city was named after Santa Monica of Hippo, because the Spaniards celebrated her feast on this location. Neighboring communities include Venice Beach and Marina Del Rey. Popular surf breaks include Dockweilier State Beach and the Santa Monica pier. Popular tourist destinations include Venice Beach and the amusement park on the Santa Monica Pier. Popular activities include the Taste of Santa Monica and the Santa Monica Film Festival.

Finances

Malibu

Image by Chuck the Photographer

Malibu is located in northern Los Angeles County and is known for famous celebrity residents and natural disasters. It is home to 21 miles of beautiful beaches, which are used as the backdrop for countless movies and TV shows. Neighboring communities include Oxnard and Ventura. Popular surf breaks include Zuma Beach, Surfrider Beach and Malibu State Beach. Popular activities include the Malibu Arts Festival and the Malibu International Film Festival.

Frugality

Consumer Boomer – Cheap Medications For Seniors Online
One Money Design – Saving Money on Groceries by Not Wasting Food
Financial Highway – 45 Money Saving Tips
Totally Money – 6 ways to reduce the cost of your supermarket shop

Santa Barbara

Image by Dave Reichert

Santa Barbara is known as the American Riviera, because of its pleasant year-round weather and Mediterranean styled architecture. The city is home to legendary surfing champions Tom Curren and Kelly Slater. Neighboring communities include Isla Vista, Goleta, Montecito and Carpinteria. Famous surf breaks include Rincon and The Ranch. Popular activities include the Old Spanish Days Festival and the Summer Solstice Parade.

Investing

Your Life, Their Life – Too much money? Try day trading!
Darwin’s Money – This Investment Pays 100:1 – Timing is the Issue
ETF Base – 5 Reasons to Avoid the Most Popular Gold ETF GLD
Qwoter – Tracking Investments
Stumble Forward – Low Fee IRA – Is It Really The Best Way To Save For Retirement
Dividend Growth Investor – How dividend stocks protect investors from inflation
Dividend Growth Stocks – There’s Gold In Them Thar Dividend Stocks
Green Panda Teahouse – Are You Going To Graduate and Go Back To School?
FIRE Finances – Brokerage Went Belly Up – Where Are My Investments?

Pismo Beach

Image by Puliar Fanita

Pismo Beach was known as the Clam Capital of the World in the 1950s. But, due to over-harvesting and the protected sea otters, the clams aren’t as plentiful as they once were. Neighboring communities include Oceano and San Luis Obispo. Popular surf breaks include Cable Landing and Avila Beach. Popular tourist destinations include the Oceano Dunes State Park for off-roaders. Popular activities include the Clam Festival and West Coast Classic Car Show.

Money Management

Humble Savers – Five Ways to Save – With the Children
Paid Twice – Seven Holiday Movies That Put Money and Materials into Perspective
Squirrelers – Financial Chemistry
Money Beagle – I Hope The New GM Contract Doesn’t Create A Bunch of Clark Griswolds
Free Money Wisdom – 3 Easy Ways to Reduce Personal Insurance Costs
Christian Personal Finance – 5 Lessons Learned From My First Job
Control Your Cash – Break Your Appliances, not the Bank
Bucksome Boomer – When Are You Retiring?
DollarVersity – Not All Financial Advisors Are Created Equal
Money Capsules – Asking Your Trusted Advisor(s) the Right Questions
Card Hub – Bank of America Joins Checking Account Fee Party with New $5 Charge for Debit Card Use

Morro Bay

Image by Chris Willis

Morro Rock was called El Moro by a Portuguese explorer, because he thought it looked like the head of a Moor. Morro Bay is a sleepy town in Central California, with a history in fishing and agriculture. Neighboring communities include Baywood and Cayucos. Popular surf breaks include Morro Rock, the Cayucos pier and Moonstone in San Simeon. Popular tourist destinations include Morro Bay, Hearst Castle and Morro Rock, which is a 576 foot high volcanic plug.

Real Estate

Boomer & Echo – Home Renovations: Do They Pay Off?

Monterey

Image by HTTP 2007

Monterey is known as California’s First City. The stunning coastline includes the famous 17 Mile Drive. Neighboring communities include Carmel and Seaside. Popular surf breaks include Ghost Tree and Sand Dollar Beach. Popular tourist destinations include Cannery Row and the Monterey Bay Aquarium. Popular activities include the Monterey Blues Festival (formerly the Monterey Jazz and Pop festivals) and golf at the Pebble Beach Resort.

Savings

Santa Cruz

Image by Rachel Kramer

Santa Cruz is also known as Surf City and it has a long-standing feud with Huntington Beach over the moniker. Neighboring communities include Capitola and Rio Del Mar. Famous surf breaks include Steamer Lane and Pleasure Point. Popular tourist destinations include the Santa Cruz Surfing Museum and the Santa Cruz Beach Boardwalk, California’s oldest amusement park. Popular activities include the Wharf to Wharf foot race and O’Neil Coldwater Classic surf contest.

Taxes

San Francisco

Image by HTTP 2007

San Francisco is often called The City by the Bay. It is known for liberal activism, technology companies and devastating earthquakes. Neighboring communities include Pacifica and Half Moon Bay. Famous surf breaks include Mavericks and Ocean Beach. Popular tourist destinations include Fisherman’s Wharf, Alcatraz, Chinatown and the Golden Gate Bridge. Popular activities include the Chinese New Year Parade and the Bay to Breakers foot race.

Other

Good Financial Cents – Banking Scams: How Banks Are Legally Stealing Your Money and What You Can Do About It
Free Money Finance – How the Typical Family Pays for College
My Dollar Plan – Pressing the Reset Button
Nicole and Maggie: Grumpy Rumblings – Sharing Finances
One Cent at a Time – Real War Of The Reel World: Netflix vs Blockbuster – The Fight Goes On

The Bottom Line

The bottom line is that Life’s a Beach. We can either enjoy the water and sunshine or complain about the sand and parking. Either way, the our attitude determines how we enjoy our lives.

“The voice of the sea speaks to the soul.”

Kate Chopin – American Author

Until Next Summer

Thanks to all of the talented bloggers for participating in the Carnival of Personal Finance. Don’t forget to Digg, Stumble, Like, Tweet and link back to the Carnival. Everyone benefits from the links and the community.

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Money Fail: Broke on Thursday

Bret — Sat, 17 Sep 2011 05:24:20 +0000

Last month, I went out to dinner with a group of people and someone hit me up to float their meal. It was Thursday night and they were broke. Thankfully, I had plenty of cash with me, so it wasn’t a problem. I have been there myself a number of times and I know how it feels. I also know that it’s no way to live. It is so much nicer to have the money available to handle a situation.

This is the first post in a series of Money Fails.

The Weekend Warrior

: Image by Daniel Moyle

One of my biggest problems when I was in my early 20s was that I was Friday rich. I would drink up all of my money clubbing on the weekends and then I would scrimp through the rest of the week until payday. Sometimes, I would run out of gas or have to skip lunch, but I didn’t consider it a problem. I was having a great time and saving money was the furthest thing from my mind. After I experienced a couple of financial setbacks, I realized it was a huge problem. I almost lost my car and my apartment.

The problem with the payday mentality is that it becomes a lifestyle. Instead of thinking about the future, people are thinking about payday. This is a cycle that repeats itself over and over again. Bad habits are hard to break and bad financial habits are the worst. In order to become successful, people need to think long-term. Nobody gets ahead in life by dropping back to zero every week.

Living on the Edge

Most people today don’t fear debt like our parents and grandparents did. They have been conditioned to think it’s OK to owe money on the things you want. Some kinds of debt are even considered “good” debt. But, all debt carries a risk. It’s called a liability for a reason. If your income stops or you can’t afford to make the payments, you start to lose all of the things you worked so hard for. And, people have a lot of unnecessary stress and anxiety related to the debt.

The problem with living on the edge is that it only takes a small financial setback to push someone over a cliff. And, this small setback is going to happen sooner or later. An accident, illness or layoff can set someone back for years. They may lose their place and have to start over. And it’s completely avoidable, by saving a little money each week. Being broke on payday is an indicator that something is wrong. It’s a red flag that you are taking too much risk by having no cash reserve.

Struggling Financially

Imagine coming home from work and your wallet, gas tank and refrigerator are empty. The phone rings and it’s a bill collector. You don’t have the money to pay all of your bills, so you screen your calls. Last week, you got a ticket for an expired registration. It has gone up by 50%, because you missed the due date. Your bank account is overdrawn and you got hit with five separate $35 overdraft fees. On payday, you juggle some bills and pay others.

Why People Struggle

They pay a lot of interest, penalties and fees
They have no idea where their money is going
They pay extra to have the latest and greatest
They have very expensive habits and hobbies
They feel entitled to things they can’t afford
They try to impress others and look successful
They use credit when they run out of money
They don’t save for problems or opportunities

Are you one of the millions who are struggling financially?

A Prosperous Life

Now imagine payday rolls around and there is still some money left in your bank account. The bills come in and you can afford to pay them all. You invest some money for the future and buy something nice for yourself. An unexpected expense pops up and you have the money to handle it. You are saving for a vacation and researching destinations. Despite the fact you make the same level of income as before, you live better and have way more money.

How to Prosper

Invest part of your income from every paycheck
Watch your budget to keep from overspending
Save up for wants instead of using credit cards
Avoid monthly payments, except for a mortgage
Eliminate consumer debt as quickly as possible
Increase your income by any means necessary
Create a sound financial plan and stick to it

Would you change your spending habits in order to prosper?

The Bottom Line

The bottom line is that people shouldn’t be waiting for payday just to become solvent again. They should be paying themselves first and pulling ahead from every paycheck. There’s no joy on payday when others keep your pay.

“Being broke is a temporary situation. Being poor is a state of mind.”

Mike Todd – American Film Producer

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The Secret to Success for Working Stiffs

Bret — Sat, 06 Aug 2011 21:07:08 +0000

There is an unlimited supply of advice on how to become successful. Most of it was created to enrich the author, not the reader. I am about to share with you a simple yet reliable method for accumulating wealth for people of average income. It has been used by millions of people to become millionaires, yet only a small percentage take advantage of this amazing system.

Do you have what it takes to become successful? Then, read on.

Don’t skip down to the bottom or you’ll miss all of the good stuff.

It’s Not what you Earn

Image by Meddy Garnet

I met a lot of fun and interesting people in college. I also met some people who were fairly obnoxious. One particular guy in my Physics class was extremely arrogant. He kept interrupting the lecture to add his own comments. And, it was obvious to everyone he had no idea what he was talking about. Our professor, who was a brilliant Physicist, took this all in stride and kept on with his lecture. This student kept trying to prove how smart he was, but he wound up making a fool of himself.

One day, I was talking to a couple of my classmates at break and he blurted out, “How much do you make?” Even though I considered it fairly rude, I told him my salary. He immediately shot back, “Last year, I made $250,000.” I said, “Wow, that’s great. How much did you keep?” His response was, “Huh?” I said, “If you are a single guy and made a quarter mil last year, I sure hope you saved some of it.” The look on his face was priceless. It was obvious he had blown every penny. Instead of looking smarter than the rest of us, he looked pretty stupid.

No one gets rich by spending all of their money as fast as they earn it.

It’s Not what you Buy

Some people buy expensive things to look rich, when they aren’t. Some people want the finer things, even though they can’t afford them. Some people have no idea why they buy things they don’t even need. Some people hide their spending from their spouse, because they know it will cause a fight. In all of these cases, spending is a problem. Not only does it jeopardize that person’s financial future, it lowers their quality of life.

I know two people who loved to drive Cadillacs. Even though they both had working class incomes, they traded in their sweet Caddy for new a one every four years. Both of these people wound up broke at retirement and had to sell their houses. One moved to a trailer park and the other moved out of state. I appreciate a fine ride as much as the next guy. But, it’s a pretty heavy price some people pay to drive expensive cars. For people who can afford new cars, it’s not a problem. For those who can’t, it’s a financial disaster.

No one gets rich buying fancy things, but they sure can become poor.

It’s What you Keep for Yourself

No matter how you slice it, people have to keep some of their earnings in order to accumulate wealth. It doesn’t matter if they are barely scraping by or making money hand-over-fist. If they don’t keep some money for themselves, all of their hard work will only benefit others. It’s not rocket science. It’s easy for anyone to understand. But, most people just won’t do it. So, they give up their chance for a better life in the future.

I have a friend who used to own a telemarketing company and he made a lot of money selling copier toner. But, he spent most of the money on items that had little future value. I remember him buying a $10,000 statue in the ’80s, when that was a lot of money. He got sick a couple of years ago and lost everything. Now, he works at Lowe’s for the health insurance. This could have easily been avoided if he had just saved some of the money he was making.

Most people get rich by saving part of their income over a long time.

My Success Secret

I can’t tell you what works for other people, but I can tell you what works for me. As soon as my paycheck gets deposited into the bank, before I spend a dime or pay any bills, I Pay Myself First. I jump on the website of my brokerage account and my mutual funds and I transfer money into my investments. I could easily automate the process, but I like to do it manually. As I put the money into my investments, it reinforces that I am working for a better future, not just to make a living.

Back when I was young, poor and saving for a house, I would envision people trying to take my paycheck away from me. And, I would have to fight them off to keep some of my money. I imagined the landlord, Citibank and the utility companies all trying to bum-rush me on payday. And I would be punching and kicking them with my money clasped tightly in my hand. I know it may sound ridiculous, but it worked. I saved up a big down payment on a small income and I bought my house. If I hadn’t fought so hard to keep my money (at least in my own twisted mind) I would still be broke and paying rent.

Most people get rich by refusing to let others take away their income.

The Bottom Line

The bottom line is saving money is no secret, but it is the way to success. This is something many people know, but few people do. Saving money now is almost like winning the lottery in the future, except it’s a sure thing.

“It’s not the things you don’t know that will cause you problems in this class. It’s the things you think you know that just aren’t so.”

Professor Joel Levine - Master of Physics

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He who Dies with the Most Toys is Dead

Bret — Thu, 21 Jul 2011 07:54:14 +0000

It’s sad to me when people look to possessions for happiness. They can fill their lives with toys and have all of the money in the world, but that won’t bring contentment. We all know how fun and exciting it is to buy something we have been wanting for a long time. And, some of the things we buy can bring years of fun and enjoyment. But, anyone trying to fill a void in their lives with toys and trinkets may as well be tossing them into the ocean. True happiness comes from within and money is rarely the source.

Life is more Precious than Money

Image by Joel K

Money comes and goes in our lives, but time can never be replaced. It slowly ticks away and sometimes ends without warning. I’m not a big fan of the deprive yourself mentality. I spent way too much of my time in my 20s and 30s chasing after dollars. My new mantra is to prosper and enjoy my life and money. That doesn’t mean that I will forsake my future, because I could die tomorrow. It means I’m not afraid to spend some money on the things that bring quality to my life.

Money can be the means to a happy life. But, it can also become a source of problems and worry. It can destroy happiness just as quickly as it can bring it. Embrace life and see money for the simple vehicle it is. When your destination is the cemetery, money isn’t going to do you a whole lot of good. If your only legacy is your wealth, your precious life will have been squandered.

The Curse of Consumerism

When I think about the worst of consumerism, I think of the celebrities, musicians and athletes, who spend all of their money on jewelry, cars and houses, only to wind up broke a couple of years later. I think of people like Nicolas Cage who own mansions, yachts and private islands, yet they are on the brink of financial disaster. I think of people like Charlie Sheen whose insatiable thirsts mask a deep void in their lives that can’t be filled. But, most of all, I think of all the awesome hard-working people trying to live the dream, unaware that it’s only a mirage. As they walk across the desert of life towards prosperity, the oasis slowly keeps moving out of their range.

The reality is that consumerism is manufactured. It is created and encouraged by the people who benefit from our blind acceptance of this sham. And, it’s highly effective at separating people from their income. It takes a huge amount of courage to reject consumerism, when we are judged everyday by our cars, clothes, schools and houses. It’s hard to convince our loved ones that diamonds are only semi-precious or that luxury cars don’t represent the spirit of Christmas, because thousands of carefully crafted TV commercials have labeled everyone as failures, unless they can afford them.

Fighting the Urge to Splurge

Broke on Purpose – One way I avoid impulse spending is to constrain my budget on purpose. I have been doing it for decades and it works great for me. Basically, I save 20% of my net, pay extra on my mortgage, pay all of my bills and live on the rest. So, money usually gets pretty tight by the end of my pay period. This keeps me from blowing money on discretionary items. Other people freeze their credit cards in a block of ice or leave them home when they shop. Some people shop only with cash, so they won’t overspend.

Arms Race Treaty - I have two wealthy cousins who always try to one-up each other. One day, they realized their folly and tried a new tactic. They went into an RV dealership together and asked for a big discount for buying two motor homes at once. They both bought the same model, with slight differences, and I believe they still have them. Did you ever consider the Jonses might be keeping up with you? Maybe, you should call a truce.

Meticulous Budgeting – I’m not a budget fanatic, but it sure works for some people. Knowing what should be spent each month for each expense category can counteract the urge to splurge for an expensive item. Tracking your budget points out the frivolous purchases of the past, to help avoid budget busters in the future. If a budget helps you save, I recommend it.

Wait and See – Another strategy some people use is to have a “cooling off” period on any large purchase. A 30-day wait and see period can not only save you money, it can save you from purchasing the wrong items. By the time the 30 days is up, you have had plenty of time to research the item, to make sure it’s the best fit for your needs. An even better solution is the wait and save approach, where you save up the money and buy items with cash.

The Bottom Line

The bottom line is money can buy happiness, provided it isn’t squandered on a bunch of shiny baubles. For me, true happiness comes from a lack of stress and money problems. And, the financial dream of my future is the ability to create my own income, without depending on a paycheck.

“There is no dignity quite so impressive, and no independence quite so important, as living within your means.”

Calvin Coolidge – 30th President of the United States

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Carnival of Personal Finance 329: California Dreaming Edition

California Dreaming Theme

Editor’s Choice

San Diego

Carlsbad

San Clemente

Huntington Beach

Hermosa Beach

Santa Monica

Malibu

Santa Barbara

Pismo Beach

Morro Bay

Monterey

Santa Cruz

San Francisco

The Bottom Line

Until Next Summer

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Money Fail: Broke on Thursday

The Weekend Warrior

Living on the Edge

Struggling Financially

A Prosperous Life

The Bottom Line

Recommended Reading

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The Secret to Success for Working Stiffs

It’s Not what you Earn

It’s Not what you Buy

It’s What you Keep for Yourself

My Success Secret

The Bottom Line

Recommended Reading

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He who Dies with the Most Toys is Dead

Life is more Precious than Money

The Curse of Consumerism

Fighting the Urge to Splurge