“Frugality is admirable, but fear can be crippling to your wealth.”
~ Brad Klontz
Financial columnist, Kathy Kristof (author of Investing 101) believes that Gen Y might never retire because our current rocky market is causing young investors to shy away from aggressive and risky portfolios. As a result, 80% of 20-somethings are not investing in 401K’s, and instead, we are relying on bank accounts, Treasury’s or gold to keep our money safe. While this may seem like a good idea for short term investors, the best thing we can do is look at what may be the “worst decade for stocks in history” as the best decade for young investors.
Back during the Great Depression, “between 1929 and 1932, stocks lost roughly 85% of their value. But, in 1933, prices roared back, soaring nearly 54%. The next year, prices were down slightly again, but in 1935 and 1936, stock prices rocketed 48% and 34%, respectively.”
Just think of what the future holds this time around!
And Kathy reminds us; “If you invested $250 a month, or $3,000 a year, in bank deposits yielding 3.7% on average, you’d have $275,000 some 40 years later when you wanted to retire. If you invested the same $250 but earned the 11.67% average of small-company stocks, you’d have $2.6 million.”
…Where would you rather be in 40 years?
photo credit: casek
1) You’re that “coupon cutter” in the grocery line holding everyone else up while you sift through the heaps of coupons in your purse.
I save an average of $50 each month (or $600 a year) just by using coupons and grocery store savings cards. Also, avoid being “that guy” in the grocery line and organize your coupons to save both money and time.
2) When shopping, you immediately b-line it to the sales rack in the way back of the store without even glancing at the regular priced items en route.
Try buying clothes, sporting goods, etc. during the end of the season or during the off seasons to get the best deals.
3) You’re “that guy” at the new, trendy bar in town shouting to your buddies “that drink was how much?!”
One word: Pregame.
4) You look at a date, a dinner with your parents or a banquet for work as a “free meal.”
Going out to dinner with your friends on a regular basis can get fairly pricey. Instead, host a Potluck Dinner and have each guest bring a dish to past. It can save all of you a lot of money and you can have fun while doing it!
5) Before Christmas or Hanukkah, you find yourself clarifying with your siblings “Okay so how much are we spending on each other this year?”
There are many ways to save money during the holidays. For the past several years, my family has done a Yankee Swap for Christmas that has been cost-effective…and fun!
6) Your roommates consider you to be a “stage five clinger” because your shadow is constantly turning off lights behind them to cut costs on the electric bill.
Making a habit of turning off the lights when you’re not using them could save you several hundred dollars a year..and can help you become more green.
7) Going along with reason #6, your roommates also think that you are the human equivalent of a polar bear because you don’t mind the apartment being at a steady 60 degrees in the months of January and February.
Excuse me… do you know how much gas costs during the winter in Boston?
My roommates and I purchased a Window Insulation Kit (heavy duty shrink wrap for your windows) at Home Depot this past winter to save some extra money on our utility bill…and even though shrink wrapping a window looks somewhat ghetto, our heating bill is now $80 lower each month.
8) When shopping online, you immediately scroll to the “Sort by” menu at the top of the page and select “Price: Low to High.”
Browse Online Coupon sites such as DealCatcher.com to get the best deals on the web!
9) You wake up every morning craving a Grande Latte from Starbucks but instead head to the local Dunkin Donuts. Why spend $3.99 on a delicious cup of coffee when you can get crap coffee for $.99.
Better yet, skip both and get FREE coffee at the office!! Skimping on the $4/day cup of coffee could save you roughly $1500 a year.
Bonus Sign: After doing all this, you still go online and blog for ways to save even more moolah!
In the world of Business Travel, I am kind of a big deal. People know me… Okay, not really. But my job does require me to travel a lot and over the past 2 years I have learned all the in’s and out’s of traveling like a pro. And in the spirit of my recent trip to San Fransisco and Napa, I want to share some of my expert knowledge on how to travel on a budget.
1) Sign up for hotel and airline reward programs:
Whether you travel a little or a lot, sign up for as many travel rewards programs as you can. Most of them are free and easy to setup. Luckily, my work allows me to keep my airline and hotel points that I earn while on the job. As a result, I have already built up 8 free nights at all Hilton Hotels and 2 free flights from American Airlines that I can use toward my vacations… Money!!!
Bottom line, every time you book a flight or a hotel, join their rewards club (if you are not already a member). I used to fly United Airlines on rare occasions but I decided to sign up for their rewards program anyways. I am now beginning to fly more frequently with this airline and it is nice to already have some points built up from my past flights with them… I am that much closer to a free flight! Just remember; when it comes to traveling, every point counts!
Also, when you become a member to airline or hotel rewards program, even if you do not have many points at all, the company will still send you emails on when and where they are having sweet deals. I get great exclusive deals through Marriott all the time even though I have only stayed there twice.
Another great tip is that if you do travel frequently (and especially if you are loyal to a particular hotel brand or airline), consider joining a travel rewards credit card to maximize your reward-earning abilities!
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2) Setup email alerts through Kayak and Farecompare to get the best prices on your airline tickets:
FareCompare makes forecasts on the direction air fares are headed, so that travelers planning weeks and months in advance have a better idea on when to buy the cheapest ticket. You can also track your desired itineraries on FareCompare and the wesbite will send you email alerts on when prices drop.
Kayak is very similar to FareCompare as it searches for the best travel deals. Kayak, however, is great because it compares quotes from Hotwire, Priceline, Expedia, and Travelocity. Kayak also has the capabilities to send email alerts when prices drop and the website allows you to search for the best Hotel and Car Rental deals as well.
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3) Know when to fly, know when to buy:
If you can be flexible with your travel plans, you may just be able to save some serious bucks. The best days to travel are in the middle of the week (Tuesdays and Wednesdays) as well as in the middle of the weekend on Saturdays. Not only will you get the best prices by flying on these days but you will avoid all the airport crowds of business travelers and weekend vacationers that you would normally encounter on the other days of the week.
You can also find the lowest fares by knowing the best purchase time for your flight. Many experts say that Wednesday around midnight is the best time to find the lowest prices for tickets because this is when airlines get rid of the reserved but unbooked lower fare reservations. Now, there are opinions on how legit this argument is. However, I recently booked a flight to Long Beach, CA and paid $329 on JetBlue when I purchased it on a Monday. That Wednesday at midnight I went back to the website and the price had dropped to $219…whoops!
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Lastly, the tourism industry is seeing major losses in today’s turbulent economy and prices are lower than ever. So do your research, pack your bags, and go on that dream vacation of yours…
You might just return home with your financial dignity still intact!
What is one of the biggest things we always stress about personal finance?
READ!!!
Despite what you think, Landing$tanding isn’t the only great source for knowledge about personal finance. Check out some of these great links:
- MoneyNing gives some great debt reduction tips with an immediate action plan. You could follow this list or a month and still have more to do.
- I don’t have a home, but learning about specific homeowner tax breaks would be near the top of my list for things to do if I did. I Will Teach You To Be Rich does most of the heavy lifting for us here.
- Very interesting guest post by Ryan Holiday on Tim Ferriss’ blog about the philosophy of stoicism and how it can help the hardworking entrepreneur. I know it’s a stretch to call this personal finance, but hey, it’s a cool topic, so deal with it.
- Think Your Way To Wealth discusses an idea that i’ve often thought about: how much money do you really need for retirement and does retirement mean you stop working entirely? The latter greatly affects the former. Think about it.
Enjoy the links and share some of your own. We’re always looking for great new sources of info.
photo credit: Sandy Austin whanau
Meg and I just finished our glorious cross-country trip and “land-standed” the heck out of it. Biggest savings came when the hotel made a mistake on our wine tour package in napa and comp’d us with a private tour… ballin!
Anyways, even though we had a blast we realize we left our dear landingstanding comrades in the lurch. Sorry for the noticeable lack of content but we will give you a Landing$tanding guarantee for a flurry of posts coming up in the near future. We take requests, but coming up in no particular order you can expect to see:
- Review of Ramit’s I Will Teach You How To Be Rich
- Tony taking action based on Ramit’s tips and finally implementing a fully realized financial system
- At long last, we will discuss the one thing about money that will hopefully put investing and saving into perspective… Compounding!
- Many, many more of Meg’s great tips of the week
- An illuminating article by Meg on how to consolidate your investing accounts and what that process feels like (hopefully not too painful)
- And if we get enough requests, Tony might even release that long lost shot of himself posing like Burt Reynolds…
Time to Land-$tanding, Baby!
- Biggie is changing his tune…
It’s amazing how time flies during your first job. One minute you are sitting down for the interview and the next you are filing income taxes and meeting with the “big cheese” to go over your annual review. Now for most of us, the time to discuss your first raise is typically a year into your first job. Some of you go-getters might even get a raise before this time (go you!) and others may have to wait longer (sucks to be you!). Either way, no matter how big or small the jump in your paycheck, you’re pretty darn excited. So go ahead and celebrate a night on the town and call your parents to tell them the news. However, after the adrenaline wears off, it’s important to get down to business and decide how you are going to manage the extra cash.
First off, take a look at your financial lifestyle and answer these three questions:
1. Do you find yourself excessively budgeting and worrying about money?
2. Do you have a hard time paying off your credit card bills on time?
3. Do you have a lot of debt?
If you answered “yes” to any of these, back away from the computer and go use the extra income to cover your butt.
If these questions do not pertain to you, then thank the financial gods for allowing you to bring home the bacon worry free - and of course, keep on reading!
So here is the best (and yet simple) advice I can give you on what to do with your first pay bump:
Treat the extra cash like it doesn’t exist.
I apologize in advance for being a “Debbie Downer” and crushing your dreams of leasing that new Lexus you’ve been eyeing. But in all seriousness, if you’re already financially secure, take your first raise as an opportunity to build up your cash reserve by either putting away the extra income into savings, investing it, or both.
The best way to go about doing this is to figure out how much more your net pay is for each pay period.
Example of a bi-weekly pay period with a new raise:
Old Net Pay (per period): $1,200
New Net Pay (per period): $1,500
Extra Income per pay period: $300
In this example, by putting away an extra $300 per pay period, you can save roughly $7,800 more per year (given 26 pay periods for a 52 week year)….and remember, this amount does not take into account the Interest you will earn for having that money in the bank.
Helpful tip: Setting up a Direct Deposit account at work is great for the purpose of saving your extra income. With Direct Deposits (unlike a live check) that extra money becomes more invisible if it’s automatically deposited into your Savings account through your HR department. This way, you won’t be tempted to spend the extra money on unnecessary goods.
Sometimes when life hands you lemons, you don’t even have to lift a finger – life will make the lemonade as well.
Meg and I have been trying to plan a vacation for the past few months as she only has until October to use her vacation days and I am can’t use any past May. So we have been going back and forth on what to do and how to squeeze in a trip, when all of a sudden I am scheduled to be in San Fran this Friday for business.
BOOM!
Just like that – the lemon (i.e. our vacation days slowly melting away without being put to good use) had been squeezed into a nice, smooth glass of lemonade. We are now scheduled to be in San Fran until Sunday and then plan on spending two nights in Napa. Beeeeeeautiful.
So the moral of the story (besides learning better cliches to draw analogy’s from) is to keep your eyes open for hidden opportunities and to capitalize when given the chance.
In honor of our trip to San Fran, here is a link my friend gave me showing multiple good deals American Express offers for the ‘Cisco. For Napa, there are a ton of online coupons for wine tastings and websites devoted to tracking which wineries still offer free tours. Vacations can be expensive, so it’s always nice when you can save a few bucks.
Any suggestions for great places to see while out there…?
photo credit: John Brawley
Finance in general has always interested me, but not until I started to receive a regular paycheck. Caddying in high school and college brought in great cash flow, but the cash earned in the summer was always used to pay for the school year. Only once I had a job after college did I begin to look at how I spent those dollars.
So what did I do? What can you do?
READ! Read as much as you possibly can!
For indepth understanding and knowledge, there are numerous personal finance books that will give you a great foundation to take control of your own finances. We will look at some of these books and why they provide value in future articles… but before we get there, make sure you take advantage of the vast resources on the internet.
Investopedia: Type any financial term in here to receive not only a definition but an example of its use and similar concepts. This is a great site to keep open while you explore the rest.
Get Rich Slowly: Great blog by J.D. about personal finance and his family’s road out of debt. The mix of frugal living advice, self-help motivation, and personal finance wisdom that J.D. dispenses is charming and each article is thick with great ideas and sincere thought about how to improve one’s financial situation.
Marginal Revolution: Tyler Cowen’s insight into economics provides all of us with a better understanding and way to think about the world. While it is important to correct your own finances, it is also important to understand finance in general. Marginal Revolution will definitely start you on your way.
Money Ning: Hits upon all of the essentials of financial freedom: frugality, saving, and investing. This is one of those websites that will make you smarter just through osmosis. Browse the different sections to gain a better understanding of the different types of knowledge you will need to acquire to take control of your finances.
Think Your Way To Wealth: One of the best things about this blog is that there are weekly updates loaded with personal finance links. In case you missed something from one of your own blogs that you’ve been meticulously following… this should catch you up.
I Will Teach You To Be Rich: Not only does Ramit write extremely well about personal finance for recent grads, but he hangs out with fascinating people like Tim Ferriss… not too shabby. What Ramit does that really speaks to me is provide not just inspiration, but clear direction. You will not only gain an understanding of the large concepts in personal finance, you will also appreciate the concrete steps needed to reach your goals. And since Meg and I are both grads of Babson College (which focused on entrepreneurship), his focus on the entrepreneurial spirit is an added bonus.
Ramit also recently published a book (same name as his blog) that I purchased through a great deal offered by Tim Ferriss’ website. I will be posting my own review of his book in a future post, along with my own experience trying to follow his advice. Until then, use the links above along with ones you find on your own to enhance your knowledge and lay the foundation for personal financial success!
If you have any of your own links that you can’t live without, please share them with us. We’d love to see what you read to stay knowledgeable and inspired.
photo credit: » Zitona « [09]
Just the tip… Of the week!!!
Please Click Next and Deduct $200
I consider myself to be one of the very few women on this planet that hates to shop (I imagine you GASPING in shock as we speak)… but it’s true. I can’t stand the crowds or lines, I get claustrophobic in malls, and trying on outfits seems like way too much work for me!
However, this game totally changes when it comes to online shopping. I always question why online shopping can be so much more impulsive than shopping in person. Maybe it’s because we don’t have to deal with screaming children and hordes of people like we would at the mall. Maybe it’s because online merchants have, more than ever, made return policies extremely consumer friendly. Maybe it’s because the thought of shopping while in pajamas sounds utterly delicious. Or maybe it’s because we do not look at online purchases as “real purchases.” We do not understand the ramifications that it has on our wallet. Shopping online is almost like shopping with Monopoly money - it simply does not feel real.
Bottom line: It is very real!
Like many people, I went through a phase where whenever I was bored at work, I found myself randomly browsing through amazon.com and within 10 minutes, I had $200 worth of items in my shopping bag and within another 30 seconds, I was clicking “Purchase Order.” It took a few months to fully understand the impact that this reckless behavior was having on my bank account… but then my credit card statements finally started pouring in.
I had to change my ways.
Now I follow one simple trick: Walk away!!
Whenever you have a loaded shopping cart online, just exit the screen and wait at least 2 days before revisiting your shopping cart again. This trick will help you avoid impulse purchases and you will find yourself widdiling down your items the second time around as you sit and think to yourself: “do I really need this?” There even have been many times that I have used this technique and have had the “what the bleep was I thinking?!” thought when logging back into my shopping account days later.
There are many more ways you can learn to control online shopping… but just remember: Unlike Monopoly, when shopping online, there is no such thing as a “get out of jail free card.”
photo credit: woodleywonderworks
- Bringin’ sexy back since 1942
Meg often mocks my man-crushes. But I can’t tell if she is more embarrassed by the fact that I have so many or that they include the likes of Warren Buffet, Abraham Lincoln, and Bill Simmons… (I’ve never been about looks - except for Meg that is… ed. note: nice save). Well for the first time here at Landing$tanding, I would like to announce a new addition to my Man-crush List: Charlie Rose.
Whenever I am browsing Reddit or Delicious and come across a Charlie Rose clip, I am always enthralled. Somehow, he is able to provide insightful interviews with fascinating guests without becoming the story himself (one of my favorites is with Marc Andreessen, who I wish would start blogging again!).
Here are two great clips of Charlie Rose interviewing a a slew of knowledgeable people (including: Paul Krugman, Andrew Sorkin, Daniel Alpert) about the Government’s toxic asset plan and the state of the economy.
Update on the economy with Charlie Rose
Discussion of toxic asset plan
We should never become too focused on things we cannot control, like the economy, but it is important to remain knowledgeable. And bosses do appreciate more than a blank stare when they try and engage you in a little morning chit-chat about the news.
So save these long clips for after work (or your lunch break), turn that vigilant inward focus about personal finance outwards for a few minutes, and enjoy! (And to answer the questions before they start: Yes. I am 24, but have the Man-crushes of an 80 yr old. Meg finds it sexy. Deal with it.)
(If anybody has other great Charlie Rose interviews that are must-see please let me know… I just can’t get enough!)
