Financial Investments

We received a great question recently from Donna who asked us how to interpret moving averages on charts.  Specifically, Donna writes in to us and asks: “When I read charts for the 20, 50 & 200 day average, how far back should I get these averages for?  For example, do I compare 20/50/200 on the day’s trading, 5-days or 3-months? D Read the rest of article…

When you own a business, carrying the right amount of insurance is a must. Even if you’re trying to watch expenses, you can’t overlook or do without coverage. Not having insurance could mean that you are only one disaster away from a lawsuit, or worse, filing bankruptcy and closing your doors. If you are worried about the cost of insurance, you are much better off looking for ways to save than ignoring your need for insurance altogether.

Examine Your Needs

Take a good hard look at what type of insurance is really necessary for your business. Do you need property insurance? What about liability insurance or worker’s compensation? When you’ve established your true needs, the next step is to determine how much coverage you need. It’s possible you’re carrying too much in one area and not enough in others. Read the rest of article…

One of the things that I disliked the most about life pre-No Credit Needed was the pressure of living paycheck-to-paycheck.

Prior to getting serious about managing our finances, I struggled, always living on that fine line between just-enough and flat-broke.  One of the joys of my current lifestyle is that I have broken the cycle of paycheck-to-paycheck.

Before I proceed, let me point out the following:  Our annual household income, as compared to five years ago and adjusted for inflation, is roughly the same. Most (if not all) of the progress we’ve made has resulted from changes in behavior and better planning.

Here’s how I managed to escape paycheck-to-paycheck and get (at least) one month ahead of our financial obligations -

1.  I simplified and organized my finances.  It takes just a few hours once a month to create our monthly budget.  It is extremely important to me that I am well-prepared for each month, understanding that particular month’s expenses, opportunities, and obligations – and that I also understand the relationship between a particular month’s expenses and annual expenses.

2.  I committed to a fully-funded emergency fund.  In our ING Direct online savings account we have enough cash reserves to cover six month’s worth of expenses.  This account is for emergencies only (think job loss or long-term illness) and is not used for anything else.  (At one point, I tapped out emergency fund to help pay for the purchase of a newer automobile.  I did not like living with an under-funded emergency fund and vowed never to tap into it again, unless absolutely necessary.)  This fund provides sleep-better-at-night security.

3.  I temporarily (and in some cases, permanently) decreased monthly billable expenses. The goal was to have several months, in a row, where our monthly bills were lower than they had previously been.  I found ways to decrease bills for electricity, gas, satellite television, phone service, and cellular service.

4.  I began to save for the coming month’s bills.  Once the current month’s bills were budgeted-for, I then turned my attention to the next month’s.  At first, it was difficult to find enough “extra” to go towards the next month’s bills.  Over time, however, I slowly began to build up additional cash reserves.  After several months, I had enough money in savings to cover an entire month’s worth of household expenses.

5.  I deposited an entire month’s worth of pay into savings.  This was the tipping point.  After years and years of living paycheck-to-paycheck, I finally arrived at the point where I could deposit an entire paycheck into savings – and live an entire month without “touching” that money.

In effect, I have created a system where all of our income can be treated as irregular income.  I don’t have to worry about when I get a paycheck (before Christmas or after) or fret over slight fluctuations in take-home pay.  In fact, I no longer base my monthly budget on my monthly income – a mistake I made for years and years.  Now, I base my monthly budget on actual needs and wants!

In an odd way, living paycheck-to-paycheck actually gave me an excuse to spend more money.  How?  In a “good” month, I’d spend every penny, and in a “bad” month, I’d rack up credit card debt.  I always promised myself that, come the next “good” month, I’d pay off the debt, but I never did.  Instead, I rewarded myself with foolish purchases and wasteful spending.

Now that I’m no longer tied to the income = expenses model, my spending has evened out.  Over time, I’ve managed to move from one month ahead to several months ahead, with a comfortable savings buffer.

One final note: I still use a zero-based budget to manage our income.  When I say that I “no longer base my monthly budget on my monthly income”- I’m not saying that I disregard how much money I make and how much I spend.  What I’m saying is – Instead of planning my spending according to a given month’s income, I now plan my spending according to a given month’s actual expenses.  Each dollar that comes into our house is still routed through our budget, and given a  purpose, but the budget is no longer driven by income.  It’s driven by anticipated expenses and savings goals.

Negative amortization mortgages are basically a kind of adjustable rate mortgage. This means that rate of interest and your loan repayment can change every month. The negative amortization loans usually have low monthly payments and are more flexible.

As you have already understood, negative amortization loan has a few benefits. Several home owners opt for this because the monthly payments are lower than other types of loans and this makes additional interest payment possible. Moreover you will get the flexibility of deciding on lower or higher payments according you what you can afford. Moreover people qualify for negative amortization loans more easily than other kinds of loans.

However, the downside of negative amortization loan is if you pay the minimum payment due every month you stand the chance of losing equity in your property.

Read the rest of article…

As I sat down tonight to work on our budget for February – using the awesome You Need A Budget – I noticed something:  I stand rather firmly on the middle ground.  Allow me to explain -

There are some folks who choose to live without television.  There are some folks who pay for every possible channel.

I have basic satellite service, with no premium channels.

There are some folks who do just fine without cell phone service.  There are some folks who have the very latest in cell phone technology – and the most expensive data plans to match.

I have a basic cell phone with a family share plan.

There are some folks who make everything they eat from scratch.  There are some folks who eat out – for every meal.

I carefully shop sales for groceries, but I eat out once or twice a week.

There are some folks who buy all of their clothing from thrift stores – and some who make their own.  There are some folks who wear nothing but designer clothes – and buy all of it brand new, on sale or not.

I buy new clothing that is comfortable, affordable, and durable.

I think you can see what I’m getting at.  When it comes to making choices about convenience goods and services, I’m not quite ready to give them up, but I don’t want to spend a whole lot on them, either.

Personal money management is really about finding balances.  We balance wants vs needs, time vs convenience, today’s desires vs tomorrow’s dreams, practical vs fun, even smart vs foolish.

This is an inexact science.  There are those who would analyze my budget – and wonder how in the world I could miss so many opportunities to save.  At the same time, I think that there are those who would look at it – and consider me thrifty.

I’ll probably never be a truly “frugal” person.  I prefer the convenience of certain products and services.  At the same time, I don’t think I’ll ever be defined as a “spendthrift” either.  Instead, I think I’ll always be firmly standing on the middle ground.

Don’t you just love a great stock tip? I know you’ve received those pamphlets in the mail that spend pages and pages discussing the wonders of investing in a “can’t miss” stock, and the allure is driven by the fact that the stock price is so cheap that you can buy thousands of shares, so that if the share price rises even a dollar, you instantly make thousands of dollars as a result.  The pamphlets promise these stocks will double or triple, and sometimes even go as far as to claim they will soon be the next Microsoft, Google, or Apple–though they are priced usually less than $1.00 per share. Bu Read the rest of article…