Personal Finance

Budgeting Extra Money vs Extra Income

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As a former financial planner in Denver, I get involved in a lot of interesting personal finance discussions. Recently, a writing colleague was remarking on the difference between getting money one time, and having a new stream of money. In particular, he noticed that while the latter should be better, the former is actually the more fun of the two. Psychology of Money One of the interesting things about money is that it is so concrete a mathematical concept, and yet, so nebulous as an actual artifact in our lives. On the first hand, money is easily understood as an exact match of mathematical numbers. For any decision, a spreadsheet-type answer is easily obtained. Higher interest rates are better for savings, worse for borrowing. Saving more is better than spending more, and so on. However, the reality is that the higher interest rate from an online bank that is less convenient and useful might not actually be better. And, is having an extra $5,000 in the bank really better than having spent a week seeing the great museums in Italy? Which brings us to the freelance writer‘s incongruous concept of steady income versus unreliable, extra income. Most people have a steady …

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Tesla Cars Too Expensive?

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There is an article on the CNN website with the headline that T. Boone Pickens thinks Tesla cars are too expensive. The article really isn’t about that, and T. Boone (man, I really hope people call him T. Boone) only says that he thinks the next thing Elon Musk should do is make them cheaper, so that isn’t really the most on point of headlines, but it probably draws in more clicks. Tesla Pricing There are a couple of things about the article that are interesting. First, and foremost, T. Boone is an oil school oil man. Frankly, he’s probably the old schoolest of all oil men. He’s rich because of what he, himself, did in oil, not as a money guy or CEO, or anything else. He found it, drilled it and sold it. You would think the old school oil guy would have some sort of cheap shot about electric cars then. That isn’t true. He just thinks they are a little pricey. Otherwise, I think he knows they are the future, just not right now. The thing about the pricing of Teslas is that they are luxury, sport automobiles. They are that on purpose. You see, before …

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What Is a Good Mortgage Rate Today?

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When shopping for a home loan, it can be tough to tell if a certain mortgage rate is good these days. The trick is that all matter of gobbledygook can complicate what you are looking at when shopping for a good mortgage rate. In fact, the mortgage companies and mortgage brokers have made it pretty hard to know exactly what is the best mortgage rate today, or any day. Lookup Good Mortgage Rates First, stop worrying about what the “best” mortgage rate is. Chances are that the best interest rate for your mortgage is different from someone else. This is due to differences in credit scores (check your credit scores for free with Credit Karma, or Credit Sesame), differences in home price, and differences in areas. Then, don’t forget that like anything else, the advertised price for a mortgage is only for a specific mortgage in specific circumstances. One of the few good things to come out of the Great Recession and the near-collapse of the banking system is the Consumer Financial Protection Bureau, or CFPB (who for inexplicably uses lowercase latter for their logo). The CFPB has been building out not only an enforcement division to help protect consumers, but …

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All Three Credit Reports Free

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Credit reports are a very important, and very frustrating part of personal finance. Nearly all financing requires a credit score, which is generated from the information in your credit report. However, you get no say in what is in your credit report. In fact, with one exception, you have to pay money if you even want to see what your own credit report says about you. Seems unfair? Blame the millions of dollars the finance industry spends on lobbying and the politicians that care more about where their next campaign contribution comes from than about what is right for the American citizens they supposedly represent. There are various services springing up to help fill this gap, but they all come with the potential for scams and abuse. You can get a free credit score from Credit Karma, or Credit Sesame, and you can buy a credit score from myFICO, but none of these come with full access to all three credit reports. Free Credit Scores Website The one (and only) thing the government has ever required the credit bureaus to do is give each person free access to their credit report, but only once per year. To comply the three …

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What Is Bitcoin Is It Worth It?

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bitcoin investing

Bitcoin is a topic that pops up in the news every now and then. It’s also the kind of thing a freelance writer with ADD might get distracted by when he was supposed to be rebuilding the content on an old website. In fact, he might feel guilty for spending so much time looking into it that he would have to write several articles about Bitcoin as a way to make it seem more like work. * Ahem. * What Is Bitcoin? Explaining Bitcoin is a little bit tricky. In essence, Bitcoin is a digital currency. There are no actual coins, only computer data. In many ways, this is not unlike most of the US currency, which exists electronically on bank computers and balance sheets, not in stacks of hundred dollar bills in the basement of GE headquarters. Bitcoin has no intrinsic value. That is, that there is no organization or group that gives it a value. Instead, it is simply a means by which bitcoins are generated in a limited supply. Like anything else, supply and demand can set a price for Bitcoins in other currency, including US Dollars. How you convert Bitcoins to Dollars is that you find …

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What You Need To File Your Taxes

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If you are an American, chances are you have started receiving tax forms and reports from various companies. Recently, many companies, banks, brokerages, mortgage companies, and charities have started providing tax reports and forms electronically. Ironically, you may get a notice in the mail from these entities telling you that you will get your tax documents electronically. Forms Required to File Taxes Exactly which forms you need to file your income taxes depends upon your individual tax situation. People who own their own business have more tax forms they need. Likewise, people with more deductions, or various financial vehicles such as trusts require additional documents as well. If you have any financial accounts or situations that are not “standard” you’ll need to check with an accountant or tax professional to find out what is required for you to file you taxes. Employed by an Employer If you, or you and your spouse, are not self employed, then you will need a W2 Form from your employer to file your taxes. The W2 form lists several numbers including your total wages for the year, as well as various contributions to things such as 401k plans, or cafeteria accounts, or pre-tax insurance …

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Spend Your Values

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I have written here before about how people are not robots and that earning, spending, savings and investing money is seldom done in an emotionless vacuum. Of course, that doesn’t mean you shouldn’t understand what is the “right” move according to an unemotional spreadsheet, but actually living with your money and personal finance is much more important than trying to pretend you should strive toward never doing anything but what the calculator says is right. Spending My Values The concept of spending your values, is not mine. I’m not sure where it came from originally, but now that I’ve heard of it from someone else, I thought it would be interesting to take a look at it, and pass the idea on to you. When we look at spending money responsibly, the first thing we do is look at a budget, whether formally written down and calculated, or just sort of sketched out mentally. The main component of spending responsibly is not spending more than you have. After that, personal finance at its most basic level is paying your obligations in any given month, and then, determining where to spend and save whatever is left over. For many of us, …

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Your First Basic Financial Plan

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As a former Certified Financial Planner, or CFP, I tend, like many other financial experts, to think (and write) in terms of the tricky, the convoluted, and the complex. The truth is that money and personal finance can be very intricate and complex. However, it is also true that the biggest bang for the buck financial planning wise comes from doing the most basic things. Too often, we get caught up in things that actually end up being tiny details of your overall financial life. For example, many people shop endlessly for higher savings account interest rates. Whether you have a high-yield savings account, a regular savings account, or even a kids savings account, the interest rate matters far less than how much money  you put in it. If you have $10,000 and you put it in a regular savings account earning 0.5 percent, your interest for the year will be approximately, $50. If you got double that rate, 1.0%, then you’d have $100 in interest. In either case, you would still basically just have $10,000 at the end of the year, $10,050 or $10,100, respectively. Neither has a meaningful impact on your overall financial status. On the other hand, if …

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Saving Money Into 529 Plan

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OK, if you have already opened a 529 plan, and you have chosen which investments to use in your 529 plan, then the next step is to actually start getting money into your college savings account. And, it is here where the most important thing about saving money for college comes into play. The most important thing, more important than choosing the right college savings plan, more important than choosing which investments to use in your college savings plan, and more important that updating your higher education financial plan, is consistently automatically investing money in your college savings accounts. Let me go into a little more detail, it’s that important. We get caught up in the notion that what matters when saving or investing money are things like investment returns, taxes, using the right account, or getting the right financial advice. None of those things matters nearly as much as consistently investing more money. When I was a financial advisor some of the biggest 401k accounts, or 457 plans, I ever saw were from people who didn’t know a thing about them. These people opened the account when they were hired, set some sort of amount to contribute, picked an investment, or …

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Types of College Savings Accounts

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When it comes to saving money for college, there are a lot of options. A parents saving money for children’s college fund there are different ways to title those accounts, jointly or otherwise. Believe it or not, saving up money so your kid can go to college is a lot more about actually doing it, than how you do it. Most parents let a sizable amount of time pass in between college investments and that is a much bigger deal than exactly which kind of college savings account is right for you. Ways to Save Money for College Assuming you don’t want to stick money into a mattress, you are going to need some kind of bank account or other financial account to store up that money you need to save and invest. Here are the options. 529 College Savings Plans If the 529 plan came first, there wouldn’t be so many other ways to save for college. It is, quite simply, the best possible way to invest for college for most people. A 529 college account works a lot like a Roth IRA plan for college. You don’t get a federal income tax deduction for your contributions, but the …

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