All Articles Tagged "Personal Finance"

4 Times That You Should Think With Your Head Instead Of Your Heart

October 31st, 2014 - By Kara Stevens
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If money actually grew on trees and humans were 100 percent logical, there would be no need to be particular with how and with whom we spend our money. But since neither of these is true, we have to start thinking with our heads instead of our hearts if we ever want a chance to live without debt.

Here are four times when you need to think with your head when it comes to the world of money and emotion.

When deciding to cosign. If there is one thing that Black folk are known for is our love of family. Helping family can be a good thing as long as it does not make you broke or make them feel entitled to your income flow. If one of your family members asks you to cosign on a loan for a tuition or a car, please know that this is more than throwing a few extra dollars their ways when the end of the month is nearing. Cosigning is a binding agreement where you commit to making payments to a loan in the event that the primary borrower can’t pay. This is an absolute no-no, no matter how much you care for the family member.  Cosigning jeopardizes your financial future for someone that (probably) is already in financial disarray.

When you decide to quit your job to pursue your side hustle full time. Before you go and quit your job to pursue the side hustle that brings you a few coins in a month, be sure that you have enough money to keep all of your money expenses covered for at least six months. If you have yet to stack that set of cash away, kindly smooth out the wrinkles in your skirt and take a seat back at your desk until that item on your to-do list is done.

When confronting a coworker about unprofessionalism. Being assertive is a necessity at work. It sets the tone for how you treat others and how they treat you. With that being said, make sure that you approach a colleague that you are having an issue with after you have collected your thoughts and drafted what you wanted to say. You want to be effective in communicating your wishes and you don’t want to be escorted out of the building by security for turning somebody’s table over.

When saying “yes” to your bridal dress. I know. I know. You have been waiting to be the Princess Bride since you were knee high. And I get that you are uber-happy to either change that last name or hyphenate it. However, this does not justify buying a wedding dress that puts a crater into your credit because you want to feel special. Being solvent is more special. Being able to start and sustain a marriage without debt and financial baggage is the most special.

Connect with Kara @frugalfeminista. Learn more about The Frugal Feminista at www.thefrugalfeminista.com Download her free ebook The 5-Day Financial Reset Plan: Eliminate Debt, Know Your Worth, and Heal Your Relationship with Money in Just 5 Days.

The One Tool That Will Help You Lose Weight & Stop Overspending

October 24th, 2014 - By Kara Stevens
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A few years ago, the American Journal of Preventive Medicine published Kaiser Permanente’s Center for Health Research findings which concluded that keeping a food diary can double an individual’s weight loss effort. Similarly, a study in The New England Journal of Medicine found that those who did not jot down their food intake on a daily basis underestimated their caloric levels by an average of 1,050 calories.

Generally speaking, the act of journaling—the process of reflecting and thinking metacognitively on a particular set of behaviors and decisions— is an excess-management tool that can prove successful for not just overeaters, but for overspenders as well.

Many financial coaches encourage over spenders to keep meticulous notes about their purchases in order to identify patterns in their spending habits, holes in their budgets, and areas for money management improvement. Less attention is often paid to the psycho-emotional triggers that provoke and incite extraordinary consumption.

However, when it comes to embarking on the road to financial recovery, unearthing the why of spending, is just as important as detailing the what of spending.

Here are two areas in your life where journaling will help you improve your finances.

1.Track How You Spend with Your Friends.

Are you a teacher, social worker, or not-for-profit administrator that is expected to spend as freely as your investment banker and corporate lawyer friends at parties, social gatherings, or restaurants?  Are you an “up and coming” young professional with a lot of “starving artists,” “down-on-your-luck” friends that is expected to cover their expenses when it comes to most social outings? Writing down how your financial behaviors shift when dealing with friends will illuminate patterns. This data, if used, can shape your future interactions and money-related dealings with them.

2. Monitor Your Emotional Triggers While Overexposed to Media Antics

The tendency to overspend, like the tendency to overeat, is rooted in our emotions. Despite what people would like to think, money is a matter of the heart and soul. Our belief systems and our learned behaviors from friends and family dictate a lot of our spending habits. But you know what especially drives our consumption? Big ‘ol juicy insecurity! Yes, the fear that we just missed the mark, is not quite as good as (fill in the blank), and are inherently flawed. Overexposure to big business media antics compounds this fear and drives you to spend. Concretely, while watching television, pay close attention to how you feel after you imbibe the lies that media try to extol. Are you insecure about the amount of money that you make? Be cognizant of how you feel about yourself and your financial priorities after watching commercials for luxury vehicles, reality shows that flaunt wealth and fame, or movies that romanticize excess.

Connect with Kara @frugalfeminista. Learn more about The Frugal Feminista at www.thefrugalfeminista.com Download her free ebook The 5-Day Financial Reset Plan: Eliminate Debt, Know Your Worth, and Heal Your Relationship with Money in Just 5 Days.

“Yeah, I Forgot About That:” 9 Miscellaneous Expenses To Add To Your Budget

October 13th, 2014 - By Tanvier Peart
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As much as we do our best to budget, there’s always one or two things missing from our count. It can be very frustrating when you think you’re on the right track only to have less in your account than you calculated. Most of us know those repeat expenses we need pay, but what about the things that can pop up at random times? Here’s a look at some items you need to add to your budget. Hopefully you won’t get caught off guard.

9 Things Women Can Do To Save More For Retirement

October 13th, 2014 - By Tanvier Peart
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Ladies, the time has come for us to step up our game in the finance department. Even though we’re more likely to enroll in a retirement program, we just aren’t saving up what we should for our days out of the office. Now we can think of tons of reasons why we are lagging behind when it comes to building up a nest egg. Women earn less than men. Most single parents tend to be mothers. The list goes on and on. Rather than go through all the excuses, let’s focus on how we can save more for retirement.

Try To Find The Bright Side: 10 Ways Being Broke Can Work In Your Favor

October 1st, 2014 - By Tanvier Peart
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Not having money to support your family can be a horrible feeling. It can make you feel inadequate or as if you aren’t doing what’s necessary to provide for your household. If only passion and ambition came with an automatic paycheck–many of us would be loaded!

The lack of funds can make the most optimistic person feel low, so please try your best not to beat yourself up if you’re doing what you can. Rather than focus on what isn’t working, try to find positive moments that will keep your spirits lifted. Here are some ways being broke can work to your advantage.

Making Less Is Not Defeat: 10 Ways To Deal With Income Loss

September 23rd, 2014 - By Tanvier Peart
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No one ever wants to be in a situation where they lose money. What good can come from struggling and living from paycheck to paycheck? If you happen to find yourself strapped for cash, life might be tight right now, but it isn’t over. Here are some tips on ways to deal with income loss.

More Proof That Making Good Money & Being Financially Sound Are Two Different Things

September 22nd, 2014 - By Tonya Garcia
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Oftentimes when we talk about success, we include money in the equation. And it’s not necessarily about being on the Forbes list. Just being able to live comfortably, take a nice vacation (or two) every year, get the kids in college… live a nice middle class life.

There are a number of people who’ve got the nice job with the six-figure salary, yet they still don’t have that life. In fact, they’re living paycheck to paycheck just like people who are making much less. Some are very close to full-on bankruptcy.

Charles Bullock, a bankruptcy attorney in Southfield, MI tells The Wall Street Journal that he’s seen an increase in the number of people with seemingly solid financial backgrounds filing for bankruptcy. It’s “a trend he expects will continue as it becomes easier for consumers to borrow again and investors grow more confident about the stock market.”

Case in point: one woman included in that article, 40-year-old Sylvia Flores, was making $200,000 per year, took family vacations to Hawaii and had a personal chef. Three years ago, she made the decision to get her money situation sorted after she racked up $300,000 in credit card debt. In 2005, she declared bankruptcy after tallying $500,000 in debt.

After taking some cost-cutting measures — getting rid of the personal chef (duh) and getting a smaller condo — she’s managed to get her debt down to $40,000 with that same amount saved for retirement.

The Journal takes a closer look at how exactly a family pulling in hundreds of thousands of dollars can fall into so much debt. The first thing is housing. For many people, the first thing they upgrade when their salary increases is their home. Which means a higher mortgage and expenses for maintaining that home. That’s all fine and well if that’s your big expenditure. But oftentimes, people feel entitled to a more extravagant lifestyle as well. The Subaru gets traded in for an Audi. Date night goes from the local restaurant to the reservations-only fine dining spot. Who wants to work out with the regular folks when you can hire a personal trainer? And charities? Yes, folks start to feel more charitable.

“Karol Ward, a New York psychotherapist who helps clients try to control spending, says some people overspend to fit in with peers or a social circle they aspire to join,” the article says. “One client picked up restaurant tabs for friends and associates because it made him feel important.”

The steps to reaching financial security are the same for these people as for everyone else. Create a budget. Downsize where you can. Re-evaluate your spending habits. Start dedicating more money to saving and less to indulgences. In the case of these high earners, there also needs to be a realization that the salary you have today might not be the one you have tomorrow. Even if your means are higher, you still have to live within them.

The Surprising Truth About How Much You Need To Put Into An Emergency Fund

September 19th, 2014 - By Kara Stevens
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If you are working, living, loving, and doing grown woman things, then you need an emergency fund to help you through the times when life (at its worst) happens. Think: a leaky roof, a layoff, a blown gasket, a medical emergency. For the record, an emergency fund is an account that’s earmarked for spending on urgent, unplanned situations only. Finding a freak ‘um dress for a last minute date with the Idris look-alike in Accounting does not an emergency make.

It is best practice to keep your emergency funds in savings accounts or money market accounts so that you have easy access. Emergency funds can also be warehoused in checking accounts. If, however, you have problems with self-control, opt for opening an emergency fund in a bank across town or via an online bank that disburses funds after two or three days. It will keep you honest.

How Big Should My Emergency Fund Be?
There is no consensus in the personal finance world about this topic. Some say that you should save anywhere between six months and 12 months of living expenses. Other pundits believe that you should have between six and twelve months of your net income.

With the former, you just need to calculate your cost of living, which—in theory— should total less than your monthly income. On the other hand, the latter means that you have to stash away more because you are fully replacing your monthly take-home, not your monthly expenses.

Both make sense. Here are some factors to help you consider how big your emergency fund should be.

Six months of living expenses or net income: If you are living in an expensive city, this is a bare minimum to hold you over in the event of a job loss, a medical expense, or any other unforeseen emergency. Keeping this amount of money will keep you from relying on credit cards, which could transform a financial emergency into a financial disaster. In other words, this emergency fund saves you from going into debt.

Nine to twelve months of living expenses or net income: It would be wise to save this amount of cushion if you you’re self-employed, if your income fluctuates (i.e. if you rely heavily commissioned-based) or if you work in a declining industry with lots of layoffs.

Twelve months of living expenses or net income: Save this amount of money if you earn $100,000 or more. There are fewer jobs offering this salary, so your job hunt may be longer than the typical candidate that is seeking positions for more modest salaries. You also want to save this amount if your job is highly specialized. It may take more time to find a job in your field. Independent of job replacement, it would be ideal for you to save this amount in your emergency fund if you have dependents and children.

These rules of thumb provide an ideal and normative framework for personal finance and money management. When it comes to creating an emergency fund, though, the most important thing is that you start building your emergency as soon as possible and keep your hands off the cash until you need it.

So, even if you can’t reach the six-month benchmark right now, don’t use that as an excuse not to start. Every little bit helps.

Connect with Kara @frugalfeminista. Learn more about The Frugal Feminista at www.thefrugalfeminista.com Download her free ebook The 5-Day Financial Reset Plan: Eliminate Debt, Know Your Worth, and Heal Your Relationship with Money in Just 5 Days.

Drinking Your Budget: Is Money Spent On Alcohol Money Well Spent?

September 13th, 2014 - By Tonya Garcia
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We talk about budgeting on this site all the time: ways to save money, things you might be wasting money on. One sacred thing we don’t talk about: the wine budget. Oh how we love to have a nice glass of wine at the end of the day.

Turns out that habit could be eating — or drinking — away at your bank account.

The Bureau of Labor Statistics finds that we spend on average $445 per year on beer, wine and spirits. And to be honest, that sounds low. If you consider that some portion of people don’t drink, or drink PBRs, box wine or a couple of less expensive half pints per week and that could be driving down the number. Still, even at $445, it’s one percent of household spending.

The latest Gallup poll shows that 64 percent of Americans drink occasionally. Beer is consumed the most. And the average person drinks four alcoholic beverages per week. Nine percent of people drink more than eight alcoholic beverages.

“It is not always the case that we can’t squeeze any more savings out of our budgets,” says Reuters. “It is that we choose not to, because we just don’t want to give up the booze.” The author points to a dietitian who calculated that her wine and gin habit was costing “$180 a month, or over $2,000 a year,” not counting drinks out with friends.

She stopped drinking all together (for a variety of reasons) and found that she saved a lot of money. Perhaps, if some of us thought about it, we could cut back some and save some cash.

But I once had a conversation with a friend about a similar indulgence: coffee. I’m one of those people who enjoys a large cup every morning. (Media people love their coffee.) This friend, also a member of the media, argued that the spend on coffee was a minor indulgence that helps us steer clear of larger ones. Spending $3 on coffee in the morning is a deterrent against spending, say, $12 at lunch to make up for the “deprivation.” We suggest often that people make coffee at home to save money. If you do that, or take some other belt-tightening measure, aren’t you entitled to do something special for yourself elsewhere?

For many, that’s what that glass of wine, pint of beer, or mixed cocktail is. Certainly, you shouldn’t go overboard; if you indulge all the time, it becomes a lifestyle. But a $15 bottle of wine like our dietitian friend describes doesn’t seem like the worst thing, does it? What do we work for if not to enjoy the fruits of our labor both big and small?

What’s your take?

Who You Kidding? The Worst Money Lies We Tell Ourselves

September 5th, 2014 - By Tanvier Peart
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We think we know, but sometimes we have no clue when it comes to personal finances. Sure you are doing things to get by, but is it really enough? You don’t have to work on Wall Street to understand money and how to use it. Common sense is a powerful thing. Here are some of the money lies we tell ourselves. Are you guilty?

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