Credit and You

Credit is big business today. Credit cards, Home Loans, Personal Loans, Car Loans and Student Loans are all the rage these days. Credit always has to be paid back. On the surface it seems as though credit would be a good thing because it allows you to get things you might not otherwise be able to afford. Yet, Loan repayment requires a steady flow of cash, generally, over a long period of time. The problems come when this flow of cash is interrupted and the loan or loans cannot be paid back. It would also seem that it would be great to take out loans you were sure you could repay. This of course is part of the trick. The first part would be not to take out any loans, but if you have to, make sure that you can repay.

Rainy Day Fund Needed

This month I have had my stove go out, my washing machine go on the blink, and needed to have repairs done on my car. The stove we could not fix and it had to be replaced. We tried to find the best deal possible and in the end we did get a good deal but still $600 ouch! This is with self cleaning and other needed amenities.

The washing machine was a different story. One of the parts was under warranty and it cost less to repair the washing machine than to get a new one. I calculated how much it would have cost to get a service plan versus what we paid for the repair. We won. It turns out that it would have cost more ($100 more) to get the service plan and this is after 5 years. It is even more if you consider that in the early part of the service plan more of the parts are under warranty anyway.

The car repair turned out to be minor. The car was making a loud noise when I applied the brakes. I thought I might need new brakes but as luck would have it all I need was to have the brakes cleaned. What a life saver. the car runs better than ever and I feel safer too with a little extra cash in my pocket.

All of this was made possible by the rainy day fund we maintain. When the rain comes and you have no umbrella you get soaking wet, and possibly get sick on top of that. Without the rainy day fund there would be lots of problems, frustrations and worry. Start your fund today!

Five Principles of Wise Money Management

Happy New Year! Here are some time tested priciples for keeping more of your hard earned money.

1. Keep track of your money. Do you know where your money is really going? If you are like most the answer is no. This is an area I think we all need to do a better job of focusing on. When we started focusing in this area we found that our money stretched a little further than we thought.

2. Plan ahead. This takes practice but in time it can be managed. Remember Christmas is in December every year. If you start to prepare for the suprises that really aren't suprises you cut done on a lot of frustration and zero account balances.

3. Save consistantly. This is a habit and can be acheived if the other two principles are followed. Habits are formed over time so take it slow. The best way is to make it automatic.

4. Eliminate debt. Debt is the reverse of savings. Once you get rid of this monster you can move on to bigger and better things, like investing.

5. Give habitually. Those who give get. Remember that you give because it makes you more generous and compassionate. We could all use more of that.

Christmas and Giving

This year we are spending less than we have ever spent on Christmas gifts and we are giving more gifts than we have ever given. How did we do it? First we went to a book sale where we got hardcover books for $1.00 and soft cover books for 50 cents. Then we made one trip to Walmart, and for the wrapping paper and bows we went to the 99 cent store. Oh, we also made a small trip to Walgreens for some extra items.

There was no waiting in long lines, no driving around for bargains and the best part about it is we only have the wrapping to do now! Who said Christmas had to be expensive? Well, the things that make christmas really expensive are the electronic toys. But I have been told that you can get some really good deals for these items too, if you look hard enough.

Saving money should be fun. Just make a game out of getting good deals without sacrificing value.

Buy a house or refinance one now

I am refinancing my house. The time is right. Interest rates are at historic lows so you don't want to miss out. Plus there is the homebuyer tax credit. If you can muster up the cash and are fortunate enough to still have a job, refinance or buy a house now. Currently, the interest rate on a 30 year fixed rate mortgage is 5.02% and on a 15 year fixed rate mortgage its 4.55%.

Your credit rating must be over 700 to get these rates. I will talk more about mortgages and credit scores in another post but I want to make sure you don't miss the boat. Don't worry, I believe that rates will be low for sometime. At least until the middle of 2011 and if your not ready then they still will be lower than rates of 10-12%.

The best advice I ever received about buying a house is that it costs nothing to go and look. Even if you don't have any money take a drive on a Sunday afternoon and look in on some of the open houses, see what you like or don't like just to get some ideas. Have fun with it and watch what happens to your thinking. Need some inspiration, click here.

Our Relationship With Money

The thing that is most important to me about money is keeping it in perspective. The author that has done the best in this respect is Suze Orman. While I think she is the most knowledgeable about the current changes in law that effect our money she also has had an impact on the way we relate to money.

It is hard to deal with money issues if you don't get down to the root cause. Achieving success in this area is done, according to Suze, by first releasing our attachment to money itself. In her book, "The Laws of Money", she states that money has no power of its own. This statement is Law #5.

I listened to a recording of a seminar that she gave and the first thing that she had participants do was talk about their very first experiences with money as a child. Then she told everyone to take out a dollar bill and rip it in half. If you can't distance yourself from the green stuff, you might want to read this book.

Feed the Pig

For awhile now I have subscribed to a newsletter that gives me tips on saving and cutting expenses. You may have seen the short ads on tv. The ads feature a man in a pink suit with a pig's head. The idea of the ads is to try and promote smart savings by cutting unessesary spending. I think the ads are catchy and fun.

The ads are sponsored by the American Institute of Certified Public Accountants and the Ad Council. It seems a little odd now that we are in a recession and everyone is cutting back and saving. We needed to have these a couple of years back when things were really good.

The newsletter comes out once per week, usually on Monday, and the tips are really helpful and lead to links back to the website at http://www.feedthepig.org/

Enjoy the video.